Aircastle LTD (Form: S-1, Received: 06/02/2006 07:32:47)

(State or Other Jurisdiction of
Incorporation or Organization)

(Primary Standard Industrial
Classification Code Number)

(I.R.S. Employer
Identification No.)

As filed with the Securities and Exchange Commission on June 2, 2006

Registration No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

AIRCASTLE LIMITED

(Exact name of registrant as specified in its charter)

c/o Aircastle Advisor LLC
300 First Stamford Place
5th Floor
Stamford, Connecticut 06902
(203) 504-1020

(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)

David Walton, Esq.
Chief Operating Officer and General Counsel
c/o Aircastle Advisor LLC
300 First Stamford Place
5th Floor
Stamford, Connecticut 06902
(203) 504-1020

(Name, Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent For Service)

Copies to:


Joseph A. Coco, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036-6522 (212) 735-3000			Edward F. Petrosky, Esq. J. Gerard Cummins, Esq. Sidley Austin LLP 787 Seventh Avenue New York, New York 10019 (212) 839-5300

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of earlier effective registration statement for the same offering.

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

Calculation of Registration Fee


TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED	PROPOSED MAXIMUM AGGREGATE OFFERING PRICE ⁽¹⁾⁽²⁾			AMOUNT OF REGISTRATION FEE ⁽¹⁾
Common shares, par value $0.01 per share		$	175,000,000		$	18,725


⁽¹⁾	Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.


⁽²⁾	Includes offering price of shares that the underwriters have the option to purchase to cover over-allotments, if any.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities, in any state or jurisdiction where the offer or sale is not permitted.

Subject to completion, dated June 2, 2006.

Prospectus

Aircastle Limited

Common shares

This is an initial public offering of common shares of Aircastle Limited.

All of the common shares are being sold by Aircastle. After this offering, funds managed by affiliates of Fortress Investment Group LLC will beneficially own approximately % of Aircastle's common shares. These funds are not selling any shares in this offering.

Prior to this offering, there has been no public market for the common shares. It is currently estimated that the public offering price per share will be between $ and $ . Aircastle intends to list the common shares on the New York Stock Exchange under the symbol ‘‘ ’’.

Per Share

Total

Public offering price

Underwriting discounts and commissions

Proceeds to Aircastle (before expenses)

We have granted the underwriters a 30-day option to purchase up to additional common shares at the public offering price less underwriting discounts and commissions for the purpose of covering over-allotments, if any.

Investing in our common shares involves a high degree of risk. See ‘‘Risk factors’’ beginning on page 11.

Neither the Securities and Exchange Commission, state securities regulators, the Minister of Finance and the Registrar of Companies in Bermuda, the Bermuda Monetary Authority nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares against payment in New York, New York on , 2006.


JPMorgan	Bear, Stearns & Co. Inc.	Citigroup

, 2006

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	Page
PROSPECTUS SUMMARY		1
RISK FACTORS		11
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		39
MARKET AND INDUSTRY DATA AND FORECASTS		40
USE OF PROCEEDS		41
DIVIDEND POLICY		42
CAPITALIZATION		43
DILUTION		45
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA		47
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		49
INDUSTRY		73
BUSINESS		82
MANAGEMENT		92
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		103
PRINCIPAL SHAREHOLDERS		107
DESCRIPTION OF INDEBTEDNESS		109
DESCRIPTION OF SHARE CAPITAL		117
SHARES ELIGIBLE FOR FUTURE SALE		128
MATERIAL TAX CONSIDERATIONS		130
UNDERWRITING		137
LEGAL MATTERS		144
EXPERTS		144
WHERE YOU CAN FIND MORE INFORMATION		144
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		F-1

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information or to make representations as to matters not stated in this prospectus. You must not rely on unauthorized information. This prospectus may be used only where it is legal to sell these securities. The information in this prospectus is only accurate on the date of this prospectus.

Consent under the Exchange Control Act 1972 (and its related regulations) has been obtained from the Bermuda Monetary Authority for the issue and transfer of our common shares to and between non-residents of Bermuda for exchange control purposes, provided our shares remain listed on an appointed stock exchange, which includes the New York Stock Exchange. This prospectus will be filed with the Registrar of Companies in Bermuda in accordance with Bermuda law. In granting such consent and in accepting this prospectus for filing, neither the Bermuda Monetary Authority nor the Registrar of Companies in Bermuda accepts any responsibility for our financial soundness or the correctness of any of the statements made or opinions expressed in this prospectus.

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Prospectus Summary

This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the section entitled ‘‘Risk Factors’’ and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision to purchase common shares. Unless the context suggests otherwise, references in this prospectus to ‘‘Aircastle,’’ the ‘‘Company,’’ ‘‘we,’’ ‘‘us,’’ and ‘‘our’’ refer to Aircastle Limited and its subsidiaries. References in this prospectus to ‘‘AL’’ refer only to Aircastle Limited. References in this prospectus to ‘‘Aircastle Bermuda’’ refer to Aircastle Holding Corporation Limited and its subsidiaries. References in this prospectus to ‘‘Fortress’’ refer to Fortress Investment Group LLC, affiliates of which manage the Fortress shareholders, and certain of its affiliates and references to the ‘‘Fortress shareholders’’ refer to AL shareholders which are affiliates of Fortress. Throughout this prospectus, when we refer to our aircraft, we include aircraft that we have transferred into grantor trusts or similar entities, for purposes of financing such assets through securitization. These grantor trusts or similar entities are consolidated for purposes of our financial statements. All amounts in this prospectus are expressed in U.S. dollars and the financial statements have been prepared in accordance with U.S. generally accepted accounting principles (‘‘GAAP’’).

Aircastle Limited

We are a global company that acquires and leases high-utility commercial jet aircraft to passenger and cargo airlines throughout the world. High-utility aircraft are generally modern, operationally efficient jets with a large operator base and long useful lives. As of March 31, 2006, our aircraft portfolio consisted of 42 aircraft that were leased to 24 lessees located in 16 countries and managed through our offices in the United States, Ireland and Singapore. All of our aircraft are subject to net operating leases whereby the lessee is generally responsible for maintaining the aircraft and paying operational and insurance costs. We also make investments in other aviation assets, including debt securities secured by commercial jet aircraft. As of May 22, 2006, we had acquired and committed to acquire aviation assets having an aggregate purchase price equal to $1.2 billion and $244.2 million, respectively, for a total of $1.4 billion. Our revenues and income from continuing operations for the quarter ended March 31, 2006 were $33.0 million and $7.8 million, respectively.

We expect to benefit from the size and growth of the commercial aircraft market and to increase our revenues and earnings by acquiring additional aviation assets. The current worldwide commercial aircraft fleet consists of more than 17,000 aircraft with an aggregate estimated value in excess of $330 billion and is expected to grow at a compound annual growth rate of 6.1% through 2015. The market is highly fragmented, with over 1,800 owners, including airlines, other aircraft lessors and financial institutions. Operating lessors, including us, own approximately 30.1% of the global fleet, up from 17.6% in 1996. The continued growth in air traffic, driven in large part by emerging markets with strong economic growth and rising levels of per capita air travel, has increased the demand, and lease rates, for certain high-utility aircraft types. We believe that we are well positioned to take advantage of these favorable industry trends with our international platform, experienced management team and flexible capital structure.

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enable us to pay predictable dividends to shareholders based on contractual lease cash flows net of expenses, interest and scheduled principal amortization. On , 2006, our board of directors declared an ordinary dividend of $ per common share for the three months ended , 2006, which is payable on , 2006.

Competitive Strengths

We believe that the following competitive strengths will allow us to capitalize on the growth opportunities in the global aviation industry:

•

Diversified portfolio of high-utility aircraft. We have a portfolio of high-utility aircraft that is diversified with respect to geographic markets, lease maturities and asset type. As of March 31, 2006, our aircraft portfolio consisted of 42 aircraft that were leased to 24 lessees located in 16 countries and had lease maturities ranging from 2006 to 2014. Our lease expirations are well dispersed, with a weighted average remaining lease term of 4.2 years at March 31, 2006, and only six of our aircraft require re-deployment within the next 12 months. We believe that our focus on portfolio diversification reduces the risks associated with lessee defaults and any adverse geopolitical or economic issues and results in generally predictable cash flows.

•

Disciplined acquisition approach and broad sourcing network. We evaluate the risk-adjusted return of any potential acquisition first as a discrete investment and then from a portfolio management perspective. To evaluate potential acquisitions, we employ a rigorous due diligence process focused on: (i) cash flow generation with careful consideration of macro trends, industry cyclicality and product life cycles; (ii) aircraft specifications and maintenance condition; (iii) when applicable, lessee credit worthiness and jurisdiction favorability; and (iv) legal and tax implications. We source our acquisitions through well-established relationships with airlines, other aircraft lessors, financial institutions and other aircraft owners. We believe our ability to execute acquisitions expeditiously and without financing contingencies has benefited us in competitive bidding situations.


•	Scaleable business platform. We operate globally through offices in the United States, Ireland and Singapore, using state-of-the-art asset management systems. We designed this platform to allow us to grow our revenue and asset base without a proportional increase in overhead costs.

•

Experienced management team with significant technical expertise. Our management team has significant experience in the acquisition, leasing, financing, technical management, restructuring and sale of aviation assets. This experience enables us to evaluate a broad range of potential investments in the global aviation industry. With extensive industry contacts and relationships worldwide, we believe our management team is highly qualified to manage and grow our aircraft portfolio. In addition, our senior management personnel have extensive experience managing lease restructurings and aircraft repossessions, which we believe is critical to mitigate any potential default exposure.

•

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securitization cash flows; instead, those cash flows are required to further amortize, and thus lower the leverage on, the securities. We have also structured Securitization No. 1 to maintain ‘‘constant leverage’’ in that scheduled principal payments during the first five years are expected to amortize the aircraft lease-backed securities such that the balance thereof is always equal to 54.8% of the initial appraised value of such aircraft, as decreased over time by an assumed amount of depreciation.

Growth Strategy

We plan to grow our business and increase our dividends per share by employing the following business strategies:

•

Selectively acquire commercial jet aircraft and other aviation assets. We believe the large and growing aircraft market provides significant acquisition opportunities. We regularly evaluate a large number of potential aircraft acquisition opportunities and expect to continue our investment program through additional aircraft purchases. In addition, we plan to leverage our experience to make opportunistic acquisitions of other asset-backed aviation assets, including debt securities secured by aviation assets and other non-aircraft aviation assets. As of May 22, 2006, we had acquired or committed to acquire approximately $1.4 billion in aviation assets, including 57 commercial jet aircraft and $122.0 million of debt securities secured by commercial jet aircraft, in 31 separate transactions.

•

Reinvest amounts approximately equal to non-cash depreciation expense in additional aviation assets. Aircraft have a finite useful life. To account for the expected decline in value of our aircraft, our earnings reflect a non-cash depreciation expense in accordance with GAAP. We expect to pay substantially all of our earnings to shareholders as dividends. Through our strategy of reinvesting amounts approximately equal to non-cash depreciation expense, we will seek to maintain our asset base and grow our revenues, earnings and dividends.


•	Maintain an efficient capital structure. We expect to finance acquisitions on a long-term basis using aircraft lease portfolio securitizations. We believe that our long-term debt structure and dividend payment strategy result in a low cost of capital and a high degree of financial flexibility, allowing us to grow our business and dividends to shareholders.

Industry Trends

The following industry dynamics create a favorable environment in which to expand our business, including:

•

Large and growing commercial aircraft fleet. The current worldwide commercial aircraft fleet consists of more than 17,000 aircraft with an aggregate estimated value in excess of $330 billion. This fleet is expected to grow over the next two decades to meet expected increases in passenger and cargo demand. According to The Airline Monitor, the worldwide commercial aircraft fleet is expected to increase to approximately 23,000 aircraft by 2015. Over this period, Boeing and Airbus are expected to increase annual new aircraft deliveries from 785 units in 2006 to 1,100 units in 2015.


•	Increasing use of operating leases. The high cost of aircraft fleet renewal and expansion, and the competitive environment of the commercial airline industry have led many airlines to outsource aircraft ownership to operating lessors like us. Over the last ten years, the percentage of the global commercial aircraft fleet owned by operating lessors increased from

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	17.6% to 30.1%, while the percentage owned by airlines declined from 55.5% to 48.4%. Operating leasing is an attractive alternative to ownership for airlines because leasing (i) increases fleet flexibility, (ii) requires a lower capital commitment and (iii) significantly reduces aircraft residual value risk.

•

Increasing air traffic and demand for commercial aircraft. Global passenger and cargo traffic has grown rapidly in recent years, driven by factors such as globalization, strong economic growth in developing countries, and liberalization of global aviation markets. According to the Economist Intelligence Unit, over the next five years global gross domestic product, or GDP, is expected to grow at an average rate of 4.2% per year. Since 1994, for every 1.0% increase in global GDP, passenger and freight traffic have, on average, grown by 1.4% and 1.6%, respectively.

•

Improving lease rates. Following a downturn from 2001 to 2003, the global commercial aviation industry has experienced a broad based recovery of aircraft values and lease rates. The relative increase in lease rates, however, has exceeded the increase in values for certain aircraft types. As a result, lease rate factors, or the ratio between lease rates and current market values, have been increasing for popular aircraft types such as 737 classics, A320s and 767-300ERs.

Recent Securitization

On June , 2006 we closed Securitization No. 1. The securitization generated gross proceeds of $560 million through the issuance of aircraft lease-backed securities. We expect to refinance the securitization on or prior to June 2011. We have entered into a series of interest rate hedging contracts which, together with related costs, result in a fixed-rate financing cost of % per annum, before issuance fees and expenses. The obligations under the aircraft lease-backed securities are secured by the ownership interests in our subsidiaries that own 40 of our aircraft, or Portfolio No. 1, and the related aircraft leases. A portion of the proceeds from Securitization No. 1 were used to repay amounts outstanding under our $525 million senior secured credit facility, which we refer to as Credit Facility No.1.

The aircraft in Portfolio No. 1 had an aggregate initial appraised value, or Initial Appraised Value, of $1.022 billion, based on the lesser of the mean and the median of the base values with respect to such aircraft determined in three base value appraisals from three internationally recognized appraisal firms as of dates from October to December 2005.

Fortress

Fortress is a leading global alternative investment management firm founded in 1998 with over $21 billion of equity capital currently under management. Fortress is headquartered in New York City and has affiliates with offices in Dallas, Frankfurt, Geneva, Hong Kong, London, Rome, San Diego, Sydney and Toronto. Fortress manages capital for a diverse group of investors, including pension funds, university endowments and foundations, financial institutions, funds-of-funds and high-net-worth individuals.

Additional Information

We are a Bermuda exempted company and were incorporated on October 29, 2004 under the provisions of Section 14 of the Companies Act 1981 of Bermuda. To date, Fortress has contributed approximately $400 million in equity capital to us. Our registered office is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda, and our principal executive offices are located

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at c/o Aircastle Advisors LLC, 300 First Stamford Place, 5th Floor, Stamford, Connecticut 06902. Our subsidiaries also maintain offices at Harcourt Centre, Harcourt Road, Dublin 2 Ireland; and 6 Battery Road, #30-00, Singapore, 049909. Our main telephone number is 203-504-1020. Our internet address is www.aircastle.com. Information on our website does not constitute part of this prospectus.

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The Offering


Common shares offered by us in this offering			shares


Common shares to be issued and outstanding after this offering			shares


Use of proceeds		We expect to use the net proceeds from this offering to repay a portion of amounts outstanding under our $500 million senior secured credit facility, which we refer to as Credit Facility No. 2, and for general corporate purposes. See ‘‘Use of Proceeds.’’


Dividend policy		On , 2006, our board of directors declared an ordinary dividend of $ per common share, or an aggregate of $ , for the three months ended , 2006, which is payable on , 2006. We expect to pay substantially all of our earnings to our shareholders as dividends. We plan to grow our earnings and dividends per share through the acquisition of additional aviation assets. The payment of dividends is subject to the discretion of our board of directors and will depend on many factors, including our ability to make and finance acquisitions, our ability to negotiate favorable lease and other contractual terms, the financial condition and liquidity of our lessees, unexpected or increased expenses, the level and timing of capital expenditures, principal repayments and other capital needs, the value of our aircraft portfolio, our results of operations, financial condition and liquidity, general business conditions, restrictions imposed by financing arrangements, legal restrictions on the payment of dividends and other factors that our board of directors deems relevant. In any quarterly period, we may pay dividends in excess of net income for such period as determined in accordance with GAAP. See ‘‘Dividend Policy.’’ We expect that our dividends will not be eligible for either the dividends-received deduction for corporate U.S. Holders or treatment as ‘‘qualified dividend income’’ (which is taxable at rates generally applicable to long-term capital gains) for U.S. Holders taxed as individuals.


Proposed New York Stock Exchange symbol

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Risk factors		Please read the section entitled ‘‘Risk Factors’’ beginning on page 11 for a discussion of some of the factors you should carefully consider before deciding to invest in our common shares.


Important tax considerations		We expect that we will be treated as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. In order to avoid possible deferred tax and interest charges under the U.S. Internal Revenue Code and regulations thereunder, you will need to make a ‘‘qualified electing fund,’’ or QEF, election, with respect to your investment in common shares and with respect to each of our PFIC subsidiaries. Investors should consult with their tax advisors as to whether or not to make such election and the related consequences and should carefully review the information set forth under ‘‘Material Tax Considerations — Material United States Federal Income Tax Considerations — Consequences to U.S. Holders — Passive Foreign Investment Company Status and Related Tax Consequences’’ for additional information.

The number of common shares to be issued and outstanding after this offering is based on 40,992,000 common shares issued and outstanding as of , 2006, and excludes an additional 3,138,000 common shares which remain available for issuance under our equity and incentive plan.

Except as otherwise indicated, all information in this prospectus:


•	assumes an initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus; and


•	assumes no exercise by the underwriters of their option to purchase an additional common shares from us to cover over-allotments.

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Summary Consolidated Financial Information

The following tables summarize the consolidated financial information for our business. You should read these tables along with ‘‘Management's Discussion and Analysis of Financial Condition and Results of Operations,’’ ‘‘Business’’ and our consolidated financial statements and the related notes included elsewhere in this prospectus.

We derived the summary historical consolidated statements of operations data and consolidated statements of cash flows data for the period from inception through December 31, 2004 and the year ended December 31, 2005 and the summary historical consolidated balance sheets data as of December 31, 2004 and 2005, set forth below, from our audited consolidated financial statements included elsewhere in this prospectus. AL was incorporated and commenced operations on October 29, 2004. The statements of operations data and consolidated statements of cash flows data for the three months ended March 31, 2005 and 2006 and the balance sheets data as of March 31, 2006 are derived from our unaudited consolidated interim financial statements included elsewhere in this prospectus. The results for any interim period are not necessarily indicative of the results that may be expected for a full fiscal year.


	Period from October 29 (Commencement of Operations) Through December 31,			Year Ended December 31,			Three Months Ended March 31,
	2004			2005			2005			2006
	(Dollars in thousands, except per share data)
Consolidated Statements of Operations Data:
Total revenues		$	78		$	36,026		$	2,187		$	33,012
Selling, general and administrative expenses			1,117			12,595			1,548			5,954
Depreciation			390			14,460			1,462			9,915
Interest expense, net			(9)			7,739			313			7,717
Income (loss) from continuing operations			(1,465)			(879)			(1,374)			7,781
Discontinued operations			—			1,107			—			3,399
Net income (loss)			(1,465)			228			(1,374)			11,180
Basic income (loss) per share:
Income (loss) from continuing operations		$	(.04)		$	(.02)		$	(.03)		$	.19
Discontinued operations		$	—		$	.03		$	—		$	.08
Net income (loss)		$	(.04)		$	.01		$	(.03)		$	.27
Diluted earnings (loss) per share:
Income (loss) from continuing operations		$	(.04)		$	(.02)		$	(.03)		$	.19
Discontinued operations		$	—		$	.03		$	—		$	.08
Net income (loss)		$	(.04)		$	.01		$	(.03)		$	.27
Other Operating Data:
EBITDA(1)			(1,084)			22,260			570			26,417
Consolidated Statements of Cash Flows Data:
Cash flows provided by (used in) operating activities		$	4,290		$	20,562		$	(1,886)		$	13,904
Cash flows used in investing activities			(97,405)			(742,144)			(51,313)			(255,159)
Cash flows provided by financing activities			93,115			801,525			96,656			188,866

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	As of December 31,							As of March 31,
	2004			2005				2006
	(Dollars in thousands)
Consolidated Balance Sheets Data:
Flight equipment held for lease, net of accumulated depreciation		$	94,430		$	746,124			$	941,692
Debt securities available for sale			—			26,907				120,558
Total assets			104,981			967,532				1,218,462
Borrowings under credit facilities			—			490,588				568,859
Repurchase agreements			—			8,665				84,434
Shareholders' equity (2)			99,235			410,936				475,800
Other Data:
Number of aircraft (at end of period)			3			32				42
Total debt to total capitalization			N/A			54.9	%			57.9	%

(1) EBITDA is a measure of operating performance that is not calculated in accordance with GAAP. EBITDA should not be considered a substitute for net income, income from operations or cash flows provided by or used in operations, as determined in accordance with GAAP. EBITDA is a key measure of our operating performance used by management to focus on consolidated operating performance exclusive of income and expense that relate to the financing and capitalization of the business.

We define EBITDA as income (loss) from continuing operations before income taxes, interest expense and depreciation and amortization. We use EBITDA to assess our consolidated financial and operating performance, and we believe this non-GAAP measure, is helpful in identifying trends in our performance. This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance. It provides an indicator for management to determine if adjustments to current spending decisions are needed. EBITDA provides us with a measure of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. Accordingly, this metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure or expenses of the organization. EBITDA is one of the metrics used by senior management and our board of directors to review the consolidated financial performance of the business.

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The table below shows the reconciliation of net income (loss) to EBITDA for the three months ended March 31, 2005 and 2006 and the period from October 29 through December 31, 2004 and the year ended December 31, 2005.


	Period from October 29, 2004 (Commencement of Operations) Through December 31, 2004				Year Ended December 31, 2005				Three Months Ended March 31,
					Year Ended December 31, 2005				2005				2006
	(Dollars in thousands)
Net income (loss)		$	(1,465	)		$	228			$	(1,374	)		$	11,180
Depreciation			390				14,460				1,462				9,915
Interest, net			(9	)			7,739				313				7,717
Income tax provision			—				940				169				1,004
Earnings from discontinued operations, net taxes			—				(1,107	)			—				(3,399	)
EBITDA		$	(1,084	)		$	22,260			$	570			$	26,417

(2) The following table sets forth our capitalization at March 31, 2006 and our capitalization as of such date as adjusted to give effect to: (i) the use of a portion of proceeds from Securitization No. 1 to repay $487.0 million of indebtedness under Credit Facility No. 1 and to return $36.9 million to Fortress in exchange for the cancellation of 3,693,200 common shares; (ii) the payment of an ordinary dividend from current earnings in the amount of $ per common share, or an aggregate of $ million, declared by our board of directors on , 2006 and paid on , 2006; and (iii) the purchase of 277,000 common shares by employees and a director nominee in May, 2006.


	Actual			Adjusted
Borrowings under credit facilities		$	568,859		$
Securitization debt			—
Repurchase agreements			84,434
Common shares			444
Additional paid-in capital			438,189
Retained earnings			9,943
Accumulated other comprehensive income			27,224
Total shareholders' equity			475,800
Total capitalization		$	1,129,093		$

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Risk Factors

Investing in our common shares involves a high degree of risk. You should carefully consider the following risk factors, as well as other information contained in this prospectus, before deciding to invest in our common shares. Generally, the risks facing us fall into five categories – Risks Related to Our Business, Risks Related to the Aviation Industry, Risks Related to Our Organization and Structure, Risks Related to this Offering, and Risks Related to Taxation. The occurrence of any of the following risks could materially and adversely affect our business, prospects, financial condition, results of operations and cash flow, in which case, the trading price of our common shares would decline and you could lose all or part of your investment. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, prospects, financial condition, results of operations and cash flow.

Risks Related to Our Business

Risks related to our operations

We have limited operating history and we are therefore subject to the risks generally associated with the formation of any new business.

We were incorporated in October 2004, prior to which we had no operations or assets. We are therefore subject to the risks generally associated with the formation of any new business, including the risk that we will not be able to implement our business strategies. Because of our limited operating history, it will be difficult for investors to assess the quality of our management team and our results of operations, and our financial performance to date may not be indicative of our long-term future performance. Furthermore, due to the lack of comparative annual historical financial statements, investors will find it more difficult to evaluate our performance and assess our future prospects than it would be were such information available. In addition, over our brief history we have incurred net losses of approximately $1.5 million for the period from October 29, 2004 through December 31, 2004, net income of only $228,000 for the year ended December 31, 2005, and net income of approximately $11.2 million for the three months ended March 31, 2006. There can be no assurance that we will be able to achieve, maintain and/or increase profitability in the future.

We have significant customer concentration and the loss of one or more of our major customers could have a material adverse effect on our cash flow and earnings and our ability to meet our obligations and pay dividends on our common shares.

Lease rental revenue from our four largest customers, US Airways, Inc., Hainan Airlines, Swiss International and Air India, accounted for 50.1% of our total revenue for the three months ended March 31, 2006. The lease rental revenue, as a percent of our total revenue, for these four customers for that period was 28.1%, 11.5%, 5.5% and 5.0%, respectively. These customers operate under 13 operating lease agreements that have terms ranging from 1.5 to 8.0 years. In addition, US Airways, Inc. reorganized under Chapter 11 in August 2002 and exited bankruptcy in March 2003. US Airways, Inc. again reorganized in September 2004 and, in September 2005, exited bankruptcy and merged with America West Airlines. The loss of one or more of these customers or their inability to make operating lease payments due to financial difficulties, bankruptcy or otherwise could have a material adverse effect on our cash flow and earnings and our ability to meet our debt obligations and pay dividends on our common shares.

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Unforeseen difficulties and costs associated with the acquisition and/or management of our aircraft portfolio could reduce our future growth and profitability.

Our growth strategy contemplates future acquisitions and leasing of additional commercial aircraft. Despite our extensive due diligence and marketing procedures, aircraft that we acquire in the future may generate unexpectedly low or no returns or may not meet a risk profile that our investors find acceptable. In addition, we might encounter unanticipated difficulties in acquiring aircraft on favorable terms or at all, including increased competition for assets, as well as unanticipated difficulties and expenditures relating to any aircraft acquired, including unforeseen costs, expenditures for significant repairs or capital improvements or the inability to procure a lessee on favorable terms or at all. Such difficulties might require significant management and financial attention that would otherwise be devoted to growing our ongoing business. These costs could reduce our future growth and profitability.

Under our current business model, we will need additional capital to finance our growth, and we may not be able to obtain it on terms acceptable to us, or at all, which may limit our ability to grow and compete in the aviation market.

Continued expansion of our business through the acquisition of additional aircraft and other aviation assets will require additional capital, particularly if we were to accelerate our acquisition plans. Financing may not be available to us or may be available to us only on terms that are not favorable. In addition, the terms of certain of our outstanding indebtedness restrict, among other things, our ability to incur additional debt. Our Credit Facility No. 2, subject to certain limited exceptions, prohibits us from incurring additional recourse debt or guaranteeing, the indebtedness of our subsidiaries. If we are unable to raise additional funds or obtain capital on terms acceptable to us, we may have to delay, modify or abandon some or all of our growth strategies. Further, if additional capital is raised through the issuance of additional equity securities, the percentage ownership of our then current common shareholders would be diluted. Newly issued equity securities may have rights, preferences or privileges senior to those of our common shares. See ‘‘Description of Share Capital.’’

We may not be able to issue aircraft lease-backed securities on attractive terms, which may require us to seek more costly or dilutive financing for our investments or to liquidate assets.

We intend to continue to finance our aircraft portfolio on a long-term basis through the aircraft securitization market. We use short-term credit facilities to finance the acquisition of aircraft until we accumulate a sufficient quantity, quality and diversity of aircraft, at which time we intend to refinance these facilities through a securitization, such as an issuance of aircraft lease-backed securities, or other long-term financing. As a result, we are subject to the risk that we will not be able to acquire, during the period that our credit facilities are available, a sufficient amount of eligible aircraft to maximize the efficiency of an issuance of aircraft lease-backed securities. We also bear the risk that we will not be able to obtain additional credit facilities or may not be able to renew or refinance any of our existing credit facilities should we need more time to acquire aircraft necessary for a long-term securitization financing. In addition, we anticipate refinancing our securitization transactions within five years of closing each such transaction. The inability to renew or refinance our credit facilities may require us to seek more costly or dilutive financing for our aircraft or to liquidate assets. In addition, conditions in the capital markets may make the issuance of aircraft lease-backed securities more costly or otherwise less attractive to us when we do have a sufficient pool of aircraft or during the period of time when we anticipate refinancing a securitization portfolio. We also may not be able to structure any future securitizations to allow for distributions of excess securitization cash flows to

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us. If we are unable to access the securitization market to finance these assets, we may be required to seek other forms of more costly, dilutive or otherwise less attractive financing or otherwise to liquidate the assets.

An increase in our borrowing costs may adversely affect our earnings and cash available for distribution to our shareholders.

As our repurchase agreements and other short-term borrowing instruments mature, we will be required either to repay or refinance these instruments by entering into new repurchase agreements and other short-term borrowings, using cash on hand or by selling certain of our assets. An increase in short-term interest rates at the time that we seek to refinance our repurchase agreements and other short-term borrowing instruments may reduce the spread between our returns on our portfolio investments and the cost of our borrowings. A change in interest rates would adversely affect the market value of our debt investments that are fixed-rate and/or subject to prepayment or extension risk, which may adversely affect our earnings and cash available for distribution to our shareholders.

At March 31, 2006, substantially all of our indebtedness was floating-rate debt with interest rates which vary with changes in one-month LIBOR. To the extent interest rates increase, we would be liable for higher interest payments to our lenders. Our practice has been to hedge the expected future interest payments on a portion of our floating-rate liabilities by entering into derivative contracts. However, we remain exposed to changes in interest rates to the extent we decide to remain unhedged and the degree to which our hedges are not perfectly correlated to the future cash flows on our liabilities.

Departure of key officers could harm our business and financial results.

Our future success depends, to a significant extent, upon the continued service of our senior management personnel, particularly: Ron Wainshal, our Chief Executive Officer; Mark Zeidman, our Chief Financial Officer; and David Walton, our Chief Operating Officer and General Counsel. If we were to lose the services of any of these individuals, our business and financial results could be adversely affected. See ‘‘Management’’.

We may not be able to pay or maintain dividends and the failure to do so would adversely affect our share price.

On , 2006, our board of directors declared an ordinary dividend of $ per common share, or an aggregate of $ , for the three months ended , 2006, which is payable on , 2006. In the future, we expect to pay substantially all of our earnings to shareholders as dividends. However, our ability to pay, maintain or expand cash dividends to our shareholders and to execute our dividend payment strategy is subject to the discretion of our board of directors and will depend on many factors, including our ability to make and finance acquisitions, our ability to negotiate favorable lease and other contractual terms, the level of demand for our aircraft, the economic condition of the commercial aviation industry generally, the financial condition and liquidity of our lessees, the lease rates we are able to charge and realize, our leasing costs, unexpected or increased expenses, the level and timing of capital expenditures, principal repayments and other capital needs, the value of our aircraft portfolio, our results of operations, financial condition, liquidity, general business conditions, restrictions imposed by our securitizations or other financing arrangements (including our credit facilities), legal restrictions on the payment of dividends and other factors that our board of directors deems relevant. Some of the factors are beyond our control and a change in any such factor could affect our ability to pay dividends on our common shares. We can give no assurance as to our ability to pay or maintain dividends. We also cannot assure you that the level of dividends will be maintained or increase over time or that increases in demand for our aircraft and operating lease payments will

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increase our actual cash available for dividends to our common shareholders. See ‘‘Dividend Policy.’’ The failure to maintain or pay dividends would adversely affect our share price.

Implementation of required public company corporate governance and financial reporting practices and policies will increase our costs and may place significant demands on our management, requiring them to devote substantial time to related compliance initiatives.

We have never operated as a public company. As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the Securities and Exchange Commission, or the SEC, and the New York Stock Exchange, impose various requirements on public companies, including strict requirements relating to corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and other liability insurance, and we may be required to incur substantial costs to maintain current levels of coverage.

In addition, the Sarbanes-Oxley Act of 2002 requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluation and testing of our internal controls over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal controls over financial reporting at December 31, 2007. Our management may not be able to timely and effectively implement controls and procedures that adequately respond to these increased regulatory and reporting requirements. We may need to hire additional accounting and financial staff. Any failure by us to timely implement these required public company corporate governance and financial reporting practices and policies could materially and adversely impact our financial condition and results of operations and the price of our common shares.

We are subject to risks related to our indebtedness that may limit our operational flexibility and our ability to pay dividends on our common shares.

General Risks. Our indebtedness subjects us to certain risks, including:


•	we may not be able to repay, refinance or extend our indebtedness on favorable terms or at all;


•	substantially all of our aircraft leases serve as collateral for our secured indebtedness and the terms of certain of our indebtedness require us to use proceeds from sales of aircraft, in part, to repay amounts outstanding under such indebtedness;


•	we may be required to dedicate a substantial portion of our cash flows from operations, if available, to debt service payments, thereby reducing the amount of our cash flow available to pay dividends, fund working capital, make capital expenditures and satisfy other needs;


•	our failure to comply with the terms of our indebtedness, including restrictive covenants contained therein, may result in additional interest being due or defaults that could result in the acceleration of the principal, and unpaid interest on, the defaulted debt, as well as the forfeiture of the aircraft pledged as collateral;


•	as a result of limitations contained in our debt agreements on the ability of our subsidiaries to distribute any excess cash flow to us under certain circumstances, we may be unable to pay dividends on our common shares or to access such cash flow for other purposes; and

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•	we are not permitted to pay dividends on our common shares to the extent a default or an event of default exists under Credit Facility No. 2.

Risks relating to Securitization No. 1 . The terms of Securitization No. 1 require us to satisfy certain financial covenants, including the maintenance of debt service coverage ratios. Our compliance with these covenants depends substantially upon the timely receipt of lease payments from our lessees. In particular, during the first five years from issuance, Securitization No. 1 has an amortization schedule that requires that lease payments be applied to reduce the outstanding principal balance of the indebtedness so that such balance remains at 54.8% of the assumed future depreciated value of the portfolio. If the debt service coverage ratio requirements are not met on two consecutive monthly payment dates in the fourth and fifth year following the closing date of Securitization No. 1, and in any month following the fifth anniversary of the closing date, all excess securitization cash flow is required to be used to reduce the principal balance of the indebtedness and will not be available to us for other purposes, including paying dividends to our shareholders.

In addition, under the terms of Securitization No. 1, certain transactions will require the consent or approval of one or more of the securitization trustees, the rating agencies that rated the Portfolio 1 certificates and the financial guaranty insurance policy issuer for the securitization, including (i) sales of aircraft at prices below certain scheduled minimum amounts or, in any calendar year, in amounts in excess of 10% of the portfolio value at the beginning of that year, (ii) the re-leasing of aircraft to the extent not in compliance with the lessee and geographic concentration limits, and the other operating covenants, pursuant to the terms of the securitization (iii) modifying an aircraft if the cost thereof would exceed certain amounts or (iv) entering into any transaction between us and the Securitization No. 1 entities not already contemplated in the securitization. Absent the aforementioned consent, as to which no assurance can be given, the lessee and geographic concentration limits under Securitization No. 1 will require us to re-lease the aircraft to a diverse set of customers, and may place limits on our ability to re-lease Portfolio No. 1 aircraft to certain customers in certain jurisdictions, even if to do so would provide the best risk-adjusted returns at that time.

Risks relating to our credit facilities . The terms of our credit facilities restrict our ability to:


•	create liens on assets;


•	incur additional indebtedness;


•	sell assets;


•	make certain investments or capital expenditures;


•	engage in mergers, amalgamations or consolidations;


•	engage in certain transactions with affiliates;


•	incur secured indebtedness; and


•	receive payments from subsidiaries.

Credit Facility No. 2 requires us to make principal payments to the extent that amounts outstanding under the facility exceed 85% of the depreciated book value of the aircraft financed with proceeds from the facility. In addition, upon completion of this offering, we will be required to maintain a consolidated net worth of at least $500 million under the terms of Credit Facility No. 2.

Risks Related to Our Aviation Assets

The variability of supply and demand for aircraft could depress lease rates for our aircraft, which would have an adverse effect on our financial results and growth prospects and on our ability to meet our debt obligations and to pay dividends on our common shares.

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The aircraft leasing and sales industry has experienced periods of aircraft oversupply and undersupply. The oversupply of a specific type of aircraft in the market is likely to depress aircraft lease rates for and the value of that type of aircraft.

The supply and demand for aircraft is affected by various cyclical and non-cyclical factors that are not under our control, including:


•	passenger and air cargo demand;


•	fuel costs and general economic conditions affecting our lessees’ operations;


•	geopolitical events, including war, prolonged armed conflict and acts of terrorism;


•	outbreaks of communicable diseases and natural disasters;


•	governmental regulation;


•	interest rates;


•	airline restructurings and bankruptcies;


•	the availability of credit;


•	manufacturer production levels and technological innovation;


•	retirement and obsolescence of aircraft models;


•	manufacturers merging or exiting the industry or ceasing to produce aircraft types;


•	reintroduction into service of aircraft previously in storage; and


•	airport and air traffic control infrastructure constraints.

These factors may produce sharp decreases or increases in aircraft values and lease rates, which would impact our cost of acquiring aircraft, and may result in lease defaults and also prevent the aircraft from being re-leased or, if desired, sold on favorable terms. This would have an adverse effect on our financial results and growth prospects and on our ability to meet our debt obligations and to pay dividends on our common shares.

Other factors that increase the risk of decline in aircraft value and lease rates could have an adverse affect on our financial results and growth prospects and on our ability to meet our debt obligations and to pay dividends on our common shares.

In addition to factors linked to the aviation industry generally, other factors that may affect the value and lease rates of our aircraft include:


•	the particular maintenance and operating history of the airframe and engines;


•	the number of operators using that type of aircraft;


•	whether the aircraft is subject to a lease and, if so, whether the lease terms are favorable to the lessor;


•	any renegotiation of a lease on less favorable terms;


•	any regulatory and legal requirements that must be satisfied before the aircraft can be purchased, sold or re-leased; and


•	compatibility of our aircraft configurations or specifications with other aircraft owned by operators of that type.

Any decrease in the values of and lease rates for commercial aircraft which may result from the above factors or other unanticipated factors may have a material adverse effect on our financial results and growth prospects and on our ability to meet our debt obligations and to pay dividends on our common shares.

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The advent of superior aircraft technology could cause our existing aircraft portfolio to become outdated and therefore less desirable, which could adversely affect our financial results and our ability to compete in the marketplace.

As manufacturers introduce technological innovations and new types of aircraft, certain aircraft in our existing aircraft portfolio may become less desirable to potential lessees. In addition, the imposition of stringent noise or emissions regulations may make certain of our aircraft less desirable in the marketplace. Any of these risks may adversely affect our ability to lease or sell our aircraft on favorable terms or at all or our ability to charge the rental amount that we would otherwise seek to charge lessees for our aircraft, which would have an adverse effect on our ability to compete in the marketplace and on our financial results.

The concentration of aircraft types in our aircraft portfolio could lead to adverse effects on our business and financial results should any difficulties specific to these particular types of aircraft occur.

As of March 31, 2006, our aircraft portfolio included 14 aircraft types, the three highest concentrations of which together represented 51.8% of our aircraft by net book value:


•	A310-300F constitute 1.7%;


•	A319-100 constitute 5.1%;


•	A320-200 constitute 12.6%;


•	A330-200 constitute 6.2%;


•	A330-300 constitute 23.0%;


•	737-300 constitute 4.5%;


•	737-300QC constitute 4.4%;


•	737-400 constitute 5.9%;


•	737-500 constitute 3.3%;


•	737-700 constitute 2.6%;


•	737-800 constitute 16.2%;


•	767-200ER constitute 1.0%;


•	767-300ER constitute 10.0%; and


•	747-400PC constitute 3.5%.

Should any of these aircraft types (or other types we acquire in the future) or Airbus or Boeing encounter technical, financial or other difficulties, a diminution in value of such aircraft, an inability to lease the aircraft on favorable terms or at all, or a potential grounding of such aircraft could occur. The composition of our aircraft portfolio may therefore adversely affect our business and financial results. In addition, the abandonment or rejection of the lease of any of the aircraft listed above by one or more carriers in reorganization proceedings under Chapter 11 of the U.S. Bankruptcy Code or comparable statutes in non-U.S. jurisdictions may diminish the value of such aircraft and will subject us to re-leasing risks.

The advanced age of some of our aircraft may expose us to higher than anticipated maintenance related expenses, which could adversely affect our financial results and our ability to pursue additional acquisitions.

As of March 31, 2006, the average age of our aircraft portfolio calculated from the date of delivery by manufacturer, and weighted by net book value, was 8.7 years. In general, the costs of operating an aircraft, including maintenance expenditures, increase with the age of the aircraft. Also, older aircraft typically are less fuel-efficient than newer aircraft and may be more difficult to re-lease or sell. Variable expenses like fuel, crew size or aging aircraft corrosion control or

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modification programs and related airworthiness directives could make the operation of older aircraft less economically feasible and may result in increased lessee defaults. We may also incur some of these increased maintenance expenses and regulatory costs upon acquisition or releasing of our aircraft. Any of these expenses or costs will have a negative impact on our financial results and our ability to pursue additional acquisitions.

We operate in a highly competitive market for investment opportunities in aviation assets.

A number of entities compete with us to make the types of investments that we plan to make. We compete with financial companies, public and private funds, commercial and investment banks and commercial finance companies with respect to our investments in debt securities. We compete with other operating lessors, airlines and other investors with respect to aircraft acquisitions. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. Some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments, establish more relationships than us and bid more aggressively on aviation assets available for sale. We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we can offer no assurance that we will be able to identify and make investments that are consistent with our investment objectives.

We may not realize gains or income from our debt investments.

We seek to generate both current income and capital appreciation. The debt securities in which we invest may not appreciate in value, and, in fact, may decline in value and default on interest and/or principal payments. As of March 31, 2006, all of the obligors under our debt investments are U.S. airlines. During the past 15 years a number of North American passenger airlines, including US Airways, Inc, filed Chapter 11 bankruptcy proceedings and several major U.S. airlines ceased operations altogether. The outbreak of SARS, the war and prolonged conflict in Iraq and the September 11, 2001 terrorist attacks in the United States have imposed additional financial burdens on most U.S. airlines through tightened security measures and reduced demand for air travel.

As in Europe, North America has experienced the development of low-cost carriers and the resultant increased competition among such carriers and between such carriers and traditional carriers. This evolution in the North American airline industry may have a material adverse effect on the ability of North American lessees to meet their financial and other obligations under our leases. Accordingly, we may not be able to realize gains or income from our debt investments. Any gains that we do realize may not be sufficient to offset any other losses we experience. Any income that we realize may not be sufficient to offset our expenses.

Declines in the market values of our debt investments may adversely affect periodic reported results and credit availability, which may reduce earnings and, in turn, cash available for distribution to our shareholders.

Our debt investments are, and we believe are likely to continue to be, classified for accounting purposes as available for sale. Changes in the market values of those assets will be directly charged or credited to shareholders' equity. As a result, a decline in values may reduce the book value of our assets. Moreover, if the decline in value of an available for sale security is considered by our management to be other than temporary, such decline will reduce our earnings.

A decline in the market value of our debt investments may adversely affect us particularly in instances where we have borrowed money based on the market value of those debt investments.

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If the market value of those assets declines, the lender may require us to post additional collateral to support the loan. If we were unable to post the additional collateral, we would have to sell those assets or other assets at a time when we might not otherwise choose to do so. A reduction in available credit may reduce our earnings and, in turn, cash available for distribution to shareholders.

Market values of our debt investments may decline for a number of reasons, such as causes related to changes in prevailing market rates, increases in defaults, increases in voluntary prepayments for any debt investments that we have that are subject to prepayment risk, and widening of credit spreads.

Risks related to our leases

We generally will need to re-lease or sell aircraft as current leases expire to continue to generate sufficient funds to meet our debt obligations, to finance our growth and operations and to pay dividends on our common shares, and we may not be able to re-lease or sell such aircraft on favorable terms, or at all.

Our business strategy entails the need to re-lease aircraft as our current leases expire in order to continue to generate sufficient revenues to meet our debt obligations, to finance our growth and operations and to pay dividends on our common shares. The ability to re-lease aircraft will depend on general market and competitive conditions. Some of our competitors may have greater access to financial resources and, as a result of restrictions on us contained in the terms of certain of our outstanding indebtedness, may have greater operational flexibility. If we are not able to re-lease an aircraft, we may need to attempt to sell the aircraft to provide adequate funds for debt payments and to otherwise finance our growth and operations. Further, our ability to re-lease or sell aircraft on favorable terms or at all or without significant off-lease time is likely to be adversely impacted by the effects of the war and prolonged conflict in Iraq, terrorist attacks in the United States and abroad, avian influenza, SARS, recent major airline bankruptcies, the sale of large numbers of repossessed aircraft by financial institutions, increased supply of new aircraft and continued political and economic uncertainties and would be further adversely impacted by any future terrorist attacks or future armed hostilities in the Middle East, North Korea, Iran or elsewhere or any future outbreak of epidemic disease or the occurrence of natural disasters.

A schedule of contractual lease expirations by year and aircraft type is presented in the table below. Leases subject to extension options are shown at the expiration of the current lease term. The table assumes that, except as indicated, no lease terminates prematurely, no substitute aircraft are delivered, no aircraft are sold and no additional aircraft are purchased. Contractual revenues represented by expiring leases totaled $2.6 million in 2006, $4.0 million in 2007 and $11.7 million in 2008. More aircraft will need to be re-leased to the extent leases terminate prematurely.

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Lease Expiration by Year, at March 31, 2006


	2006	2007	2008	2009	2010	2011	2012	2013	2014
A310-300F	0	0	1	0	0	0	0	0	0
A319-100	0	2	0	0	0	0	0	0	0
A320-200	1	1	0	2	1	0	0	0	0
A330-200	0	0	0	0	1	0	0	0	0
A330-300	0	0	0	0	0	0	4	0	0
737-300	0	0	5	0	0	0	0	0	0
737-300QC	0	0	1	3	0	0	0	0	0
737-400	0	2	0	2	0	0	0	0	0
737-500	0	0	0	1	3	0	1	0	0
737-700	1	0	0	0	0	1	0	0	0
737-800	0	1	0	0	0	2	0	0	2
747-400PC	0	0	1	0	0	0	0	0	0
767-200ER	0	0	1	0	0	0	0	0	0
767-300ER	0	0	0	2	0	0	0	0	0
Total	2	6	9	10	5	3	5	0	2

If lessees are unable to fund their maintenance requirements on our aircraft, our cash flow and our ability to meet our debt obligations or to pay dividends on our common shares could be adversely affected.

The standards of maintenance observed by the various lessees and the condition of the aircraft at the time of sale or lease may affect the future values and rental rates for our aircraft.

Under our leases, the relevant lessee is primarily responsible for maintaining the aircraft and complying with all governmental requirements applicable to the lessee and the aircraft, including, without limitation, operational, maintenance, and registration requirements and airworthiness directives (although in certain cases we have agreed to share the cost of complying with certain airworthiness directives). Failure of a lessee to perform required maintenance with respect to an aircraft during the term of a lease could result in a diminution in value of such aircraft, an inability to lease the aircraft at favorable rates or at all, or a potential grounding of such aircraft, and will likely require us to incur maintenance and modification costs upon the expiration or earlier termination of the applicable lease, which could be substantial, to restore such aircraft to an acceptable condition prior to sale or re-leasing.

As of March 31, 2006, 25 of our leases provide that the lessee is required to make periodic payments to us during the lease term in order to provide cash reserves for the payment of maintenance tied to the usage of the aircraft. In these leases there is an associated liability for us to reimburse the lessee for such scheduled maintenance performed on the related aircraft, based on formulas tied to the extent of any of the lessee’s maintenance reserve payments. In some cases, we are obligated and in the future may incur additional obligations pursuant to the terms of the leases to contribute to the cost of maintenance work performed by the lessee in addition to maintenance reserve payments.

There can be no assurance that our operational cash flow and available liquidity will be sufficient to fund our maintenance requirements, particularly as our aircraft age. Actual rental and maintenance payments by lessees and other cash that we receive may be significantly less than projected as a result of numerous factors, including defaults by lessees and our potential inability to obtain satisfactory maintenance terms in leases. Seventeen of our leases at March 31, 2006 do

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not provide for any periodic maintenance reserve payments to be made by lessees to us in respect of their maintenance obligations, and there can be no assurance that future leases will contain such requirements. Maintenance reserves may not cover the entire expense of the scheduled maintenance they are intended to fund. In addition, maintenance reserves typically cover only certain scheduled maintenance requirements and do not cover all required maintenance and all scheduled maintenance. Furthermore, there can be no assurance that lessees will meet their obligations to pay maintenance reserves or perform required scheduled maintenance. Any significant variations in such factors may materially adversely affect our business and particularly our cash position, which would make it difficult for us to meet our debt obligations or to pay dividends on our common shares.

Failure to pay certain potential additional operating costs could result in the grounding of our aircraft and prevent the re-lease, sale or other use of our aircraft, which would negatively affect our financial condition and results of operations.

As in the case of maintenance costs, we may incur other operational costs upon a lessee default or where the terms of the lease require us to pay a portion of those costs. Such costs include:


•	the costs of casualty, liability and political risk insurance and the liability costs or losses when insurance coverage has not been or cannot be obtained as required or is insufficient in amount or scope;


•	the costs of licensing, exporting or importing an aircraft, airport taxes, customs duties, air navigation charges, landing fees and similar governmental or quasi-governmental impositions, which can be substantial; and


•	penalties and costs associated with the failure of lessees to keep the aircraft registered under all appropriate local requirements or obtain required governmental licenses, consents and approvals.

The failure to pay certain of these costs can result in liens on the aircraft and the failure to register the aircraft can result in a loss of insurance. These matters could result in the grounding of the aircraft and prevent the re-lease, sale or other use of the aircraft until the problem is cured, which would negatively affect our financial condition and results of operations.

Our lessees may have inadequate insurance coverage or fail to fulfill their respective indemnity obligations, which could result in us not being covered for claims asserted against us and may negatively affect our business, financial condition and results of operations.

While we do not directly control the operation of any of our aircraft, by virtue of holding title to the aircraft (directly or through a securitization related special purpose entity), in certain jurisdictions around the world, aircraft lessors are held strictly liable for losses resulting from the operation of aircraft or may be held liable for those losses on other legal theories.

The lessees are required under our leases to indemnify us for, and insure against, liabilities arising out of the use and operation of the aircraft, including third-party claims for death or injury to persons and damage to property for which we may be deemed liable. Lessees are also required to maintain public liability, property damage and hull all risks and hull war risks insurance on the aircraft at agreed upon levels. However, they are not generally required to maintain political risk insurance. The hull insurance is typically subject to standard market hull deductibles based on aircraft type that generally range from $250,000 to $1,000,000. These deductibles may be higher in some leases, and lessees usually have fleet-wide deductibles for liability insurance and occurrence or fleet limits on war risk insurance. Any hull insurance proceeds in respect of such claims shall be paid first to us as lessor in the event of loss of the aircraft or, in the absence of an

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event of loss of the aircraft, to the lessee to effect repairs or, in the case of liability insurance, for indemnification of third-party liabilities. Subject to the terms of the applicable lease, the balance of any hull insurance proceeds after deduction for all amounts due and payable by the lessee to the lessor under such lease must be paid to the lessee.

Following the terrorist attacks of September 11, 2001, aviation insurers significantly reduced the amount of insurance coverage available to airlines for liability to persons other than employees or passengers for claims resulting from acts of terrorism, war or similar events. At the same time, they significantly increased the premiums for such third-party war risk and terrorism liability insurance and coverage in general. As a result, the amount of such third-party war risk and terrorism liability insurance that is commercially available at any time may be below the amount stipulated in our leases and required by the market in general.

There can be no assurance that our lessees’ insurance, including any available governmental supplemental coverage, will be sufficient to cover all types of claims that may be asserted against us. Any inadequate insurance coverage or default by lessees in fulfilling their indemnification or insurance obligations or the lack of political risk, hull, war or third-party war risk and terrorism liability insurance will reduce the proceeds that would be received by us upon an event of loss under the respective leases or upon a claim under the relevant liability insurance, which could negatively affect our business, financial condition and results of operations.

Failure to obtain certain required licenses and approvals could negatively affect our ability to re-lease or sell aircraft, which would negatively affect our financial condition and results of operations.

A number of leases require specific licenses, consents or approvals for different aspects of the leases. These include consents from governmental or regulatory authorities for certain payments under the leases and for the import, re-export or deregistration of the aircraft. Subsequent changes in applicable law or administrative practice may increase such requirements. In addition, a governmental consent, once given, might be withdrawn. Furthermore, consents needed in connection with future re-leasing or sale of an aircraft may not be forthcoming. Any of these events could adversely affect our ability to re-lease or sell aircraft, which would negatively affect our financial condition and results of operations.

Competition from other aircraft operating lessors with greater resources and/or a lower cost of capital than us could have an adverse effect on our business, financial condition and results of operations.

The aircraft leasing industry may be divided into two leasing segments: (i) leasing of new aircraft acquired directly or indirectly from manufacturers and (ii) leasing or re-leasing of aircraft in the secondary market. Currently, we compete primarily in the latter segment, and our competition is comprised of other aircraft leasing companies, including GE Capital Aviation Services, International Lease Finance Corp., CIT Group, AerCap, Aviation Capital Group, Pegasus, GATX Air, RBS Aviation Capital, AWAS, Babcock & Brown and Singapore Aircraft Leasing Enterprise.

In addition, in both segments, we may encounter competition from other entities such as:


•	airlines;


•	aircraft manufacturers;


•	financial institutions (including those seeking to dispose of re-possessed aircraft at distressed prices);


•	aircraft brokers;


•	special purpose vehicles formed for the purpose of acquiring, leasing and selling aircraft; and


•	public and private partnerships, investors and funds.

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Some of our direct competitors and many of our indirect competitors have significantly greater financial and other resources than we do and may have higher risk tolerances or different risk assessments which could allow them to consider a wider variety of investments. In addition, certain competing aircraft lessors may have a lower overall cost of capital than our cost of capital and, as a result, may be able to offer lower lease rates than us. In addition, they may provide financial services, maintenance services or other inducements to potential lessees that we cannot provide. We cannot assure you that we will be able to compete effectively against present and future competitors or that the competitive pressures will not have an adverse effect on our business, financial condition and results of operations.

Due to the fact that many of our lessees operate in emerging markets, we are indirectly subject to many of the economic and political risks associated with competing in such markets.

Emerging markets are countries which have less developed economies that are vulnerable to economic and political problems, such as significant fluctuations in gross domestic product, interest and currency exchange rates, civil disturbances, government instability, nationalization and expropriation of private assets and the imposition of taxes or other charges by governments. The occurrence of any of these events in markets served by our lessees and the resulting instability may adversely affect our ownership interest in an aircraft or the ability of lessees which operate in these markets to meet their lease obligations and these lessees may be more likely to default than lessees that operate in developed economies. For the three months ended March 31, 2006, 12 of our lessees which operated 21 aircraft and generated lease rental revenue representing 40.7% of our total revenue, are domiciled or habitually based in emerging markets.

Risks related to our lessees

Lessee defaults and other credit problems could materially adversely affect our business, financial condition and results of operations.

We operate as a supplier to airlines and are indirectly impacted by all the risks facing airlines today. Our ability to succeed is dependent upon (i) the financial strength of our lessees, (ii) the ability to diligence and appropriately assess the credit risk of our lessees and (iii) the ability of lessees to perform their contractual obligations to us. The ability of each lessee to perform its obligations under its lease will depend primarily on the lessee’s financial condition and cash flow, which may be affected by factors beyond our control, including:


•	competition;


•	fare levels;


•	air cargo rates;


•	passenger and air cargo demand;


•	geopolitical and other events, including war, acts of terrorism, outbreaks of epidemic diseases and natural disasters;


•	operating costs (including the price and availability of jet fuel and labor costs);


•	labor difficulties;


•	economic conditions and currency fluctuations in the countries and regions in which the lessee operates; and


•	governmental regulation of or affecting the air transportation business.

As a general matter, airlines with weak capital structures are more likely than well-capitalized airlines to seek operating leases, and, at any point in time, investors should expect a varying

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number of lessees and sublessees to experience payment difficulties. As a result of their weak financial condition, a large portion of lessees over time may be significantly in arrears in their rental or maintenance payments. As of May 22, 2006, no rental payments, maintenance reserves or security deposits due under leases for our aircraft were past due for a period greater than 30 days. We can give you no assurances that we will correctly assess the credit risk of each lessee or charge risk-adjusted lease rates or that lessees will be able to continue to perform their financial and other obligations under our leases in the future.

A lessee may experience periodic difficulties that are not financial in nature, which could impair its performance of its maintenance obligations under the leases. These difficulties may include the failure to perform under the required aircraft maintenance program in a sufficient manner and labor-management disagreements or disputes.

We will typically not be in possession of any aircraft while the aircraft are on lease to the lessees. Consequently, our ability to determine the condition of the aircraft or whether the lessees are properly maintaining the aircraft will be limited to periodic inspections we perform or that are performed on our behalf by third-party service providers or aircraft inspectors. A continuous failure by a lessee to meet its maintenance obligations under the relevant lease could:


•	result in a grounding of the aircraft;


•	in the event of a re-lease of the aircraft, cause us to incur costs, which may be substantial, in restoring the aircraft to an acceptable maintenance condition in order to induce a subsequent lessee to lease the aircraft;


•	result in us not being able to re-lease the aircraft promptly or result in a lower rental rate or a shorter term lease following repossession of the aircraft; and


•	adversely affect the value of the aircraft.

We cannot assure you that, in the event that a lessee defaults under a lease, any security deposit paid or letter of credit provided by the lessee will be sufficient to cover the lessee’s outstanding or unpaid lease obligations and required maintenance expenses.

Due to the fact that many of our lessees are in a weak financial condition and suffer liquidity problems, we may have trouble collecting lease payments on a timely basis or at all, which would adversely affect our revenues and cash flows and may adversely affect our ability to meet our debt obligations and to pay dividends on our common shares.

Many of our existing lessees are in a weak financial condition and suffer liquidity problems, and this is likely to be the case in the future and with other lessees and sublessees of our aircraft as well. In addition, many of our lessees are exposed to currency risk due to the fact that they earn revenues in their local currencies and certain of their liabilities and expenses are denominated in U.S. dollars, including lease payments to us. Given the size of our aircraft portfolio, we expect that some lessees from time to time, and possibly in the near future, will be slow in making or will fail to make their payments in full under the leases. Some lessees encountering financial difficulties may seek a reduction in their lease rates or other concessions such as a decrease in their contribution toward maintenance obligations. Also, as a result of the war and prolonged conflict in Iraq, terrorist attacks in the United States and abroad, avian influenza, SARS, the recent hurricanes that hit the United States and the continued depressed economic conditions in the airline industry, including the current and potential airline reorganizations, the financial condition and liquidity of many of our lessees have weakened or worsened, as the case may be, and in some cases significantly weakened and worsened, which in turn is likely to cause an increase in delayed, missed or reduced rental payments. Any future terrorist attacks, or future

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armed hostilities in the Middle East, North Korea or elsewhere or any future outbreak of an epidemic disease or the occurrence of natural disasters, could greatly exacerbate the weakened financial condition and liquidity problems of our lessees and further increase the risk of delayed, missed or reduced rental payments.

A delayed, missed or reduced rental payment from a lessee decreases our revenues and cash flow and may adversely affect our ability to make payments on our indebtedness and to pay dividends on our common shares. While we may experience some level of delinquency under our leases, default levels may increase over time, particularly as our aircraft portfolio ages and if economic conditions deteriorate.

If our lessees encounter financial difficulties and we decide to restructure our leases with those lessees, this would result in less favorable leases and could result in significant reductions in our cash flow and affect our ability to meet our debt obligations and to pay dividends on our common shares.

When a lessee (i) is late in making payments, (ii) fails to make payments in full or in part under the lease or (iii) has otherwise advised us that it will in the future fail to make payments in full or in part under the lease, we may elect to or be required to restructure the lease. Restructuring may involve anything from a simple rescheduling of payments to the termination of a lease without receiving all or any of the past due amounts. Since our formation in October 2004, none of our lessees have been granted reductions in or deferrals of rental payments due under the leases, although some have been slow in making the required lease payments. If any future requests are made and granted, we expect that the reduced or deferred rental payments would be payable over all or some part of the remaining term of the lease although no assurance can be given as to the terms of any revised payment schedules or that such payments will be made. We may be unable to agree upon acceptable terms for some or all of the requested restructurings and as a result may be forced to exercise our remedies under those leases. If we, in the exercise of our remedies, repossess the aircraft, we cannot assure you that we will be able to re-lease the aircraft promptly at favorable rates, or at all. You should expect that restructurings and/or repossessions with some lessees might occur.

The terms and conditions of possible lease restructurings may result in significant reductions of rental payments, which may adversely affect our cash flows and our ability to meet our debt obligations and to pay dividends on our common shares.

Operational and financial restrictions in our constituent documents and certain indebtedness could impair our ability to effectively compete in the marketplace and grow our business.

Restrictions contained in our constituent documents and under our securitization transactions and certain of our other indebtedness may impair our ability to operate and compete with our direct and indirect competitors. For instance, we may not be able to grant privileged rental rates to airlines in return for equity investments or debt financings in order to lease aircraft and minimize the number of aircraft on the ground (unless such equity investments or debt financings are in connection with the bankruptcy, reorganization or similar process of a lessee in settlement of expected or already delinquent obligations, as permitted under the terms of certain of our indebtedness). Certain of our competitors, however, may enter into similar arrangements with troubled lessees to restructure the obligations of those lessees while maximizing the number of aircraft remaining on viable leases to such lessees and minimizing their overall cost. Such disparity could impair our ability to effectively compete in the marketplace, maximize our revenues and grow our business.

Significant costs resulting from lease defaults could have an adverse effect on our business.

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As of May 22, 2006, none of our lessees owed rental payments, maintenance reserves payments and/or security deposit payments under their respective leases that were past due for a period of 30 days or more. Although we have the right to repossess the aircraft and to exercise other remedies upon a lessee default, repossession of an aircraft after a lessee default would result in us incurring costs in excess of those incurred with respect to an aircraft returned at the end of the lease. Those costs include legal and other expenses of court or other governmental proceedings (including the cost of posting surety bonds or letters of credit necessary to effect repossession of aircraft), particularly if the lessee is contesting the proceedings or is in bankruptcy, to obtain possession and/or de-registration of the aircraft and flight and export permissions. Delays resulting from any of these proceedings would also increase the period of time during which the relevant aircraft is not generating revenue. In addition, we may incur substantial maintenance, refurbishment or repair costs that a defaulting lessee has failed to pay and that are necessary to put the aircraft in suitable condition for re-lease or sale and we may need to pay off liens, taxes and other governmental charges on the aircraft to obtain clear possession and to remarket the aircraft effectively. We may also incur other costs in connection with the physical possession of the aircraft.

We may also suffer other adverse consequences as a result of a lessee default and the related termination of the lease and the repossession of the related aircraft. Our rights upon a lessee default vary significantly depending upon the jurisdiction and the applicable law, including the need to obtain a court order for repossession of the aircraft and/or consents for de-registration or re-export of the aircraft. When a defaulting lessee is in bankruptcy, protective administration, insolvency or similar proceedings, additional limitations may apply. Certain jurisdictions will give rights to the trustee in bankruptcy or a similar officer to assume or reject the lease or to assign it to a third party, or will entitle the lessee or another third party to retain possession of the aircraft without paying lease rentals or performing all or some of the obligations under the relevant lease. Certain of our lessees are owned in whole or in part by government-related entities, which could complicate our efforts to repossess our aircraft in that government's jurisdiction. Accordingly, we may be delayed in, or prevented from, enforcing certain of our rights under a lease and in re-leasing the affected aircraft.

If we repossess an aircraft, we will not necessarily be able to export or de-register and profitably redeploy the aircraft. For instance, where a lessee or other operator flies only domestic routes in the jurisdiction in which the aircraft is registered, repossession may be more difficult, especially if the jurisdiction permits the lessee or the other operator to resist de-registration. Significant costs may also be incurred in retrieving or recreating aircraft records required for registration of the aircraft and obtaining a certificate of airworthiness for the aircraft.

If our lessees fail to appropriately discharge aircraft liens, we might find it necessary to pay such claims, which could have a negative effect on our cash position and our business.

In the normal course of business, liens that secure the payment of airport fees and taxes, custom duties, air navigation charges (including charges imposed by Eurocontrol), landing charges, crew wages, repairer’s charges, salvage or other liens, or ‘‘Aircraft Liens,’’ are likely, depending on the jurisdiction in question, to attach to the aircraft. The Aircraft Liens may secure substantial sums that may, in certain jurisdictions or for limited types of Aircraft Liens (particularly fleet liens), exceed the value of the particular aircraft to which the Aircraft Liens have attached. Although the financial obligations relating to these Aircraft Liens are the responsibilities of our lessees, if they fail to fulfill their obligations, Aircraft Liens may attach to our aircraft and ultimately become our responsibility. In some jurisdictions, Aircraft Liens may give the holder thereof the right to detain or, in limited cases, sell or cause the forfeiture of the aircraft.

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Until they are discharged, Aircraft Liens could impair our ability to repossess, re-lease or resell our aircraft. We cannot assure potential investors that our lessees will comply with their obligations under their respective leases to discharge Aircraft Liens arising during the terms of their leases, whether or not due to financial difficulties. If they do not, we may, in some cases, find it necessary to pay the claims secured by such Aircraft Liens in order to repossess the aircraft. Such payments would adversely affect our cash position and our business generally.

Failure to register aircraft in certain jurisdictions could result in adverse effects and penalties which could materially affect our business.

Pursuant to our existing leases, all of our aircraft are required to be duly registered at all times with the appropriate governmental civil aviation authority. Generally, in jurisdictions outside the United States, failure to maintain the registration of any aircraft that is on lease would be a default under the applicable lease, entitling us to exercise our rights and remedies thereunder if enforceable under applicable law. If an aircraft were to be operated without a valid registration, the lessee operator or, in some cases, the owner or lessor might be subject to penalties, which could constitute or result in an Aircraft Lien being placed on such aircraft. Lack of registration could have other adverse effects, including the inability to operate the aircraft and loss of insurance coverage, which in turn could have a material adverse effect on our business.

If our lessees fail to comply with government regulations regarding aircraft maintenance, we could be subject to costs that could adversely affect our cash position and our business.

In addition to the general aviation authority regulations and requirements regarding maintenance of aircraft, our aircraft may be subject to further maintenance requirements imposed by airworthiness directives, or ‘‘Airworthiness Directives’’, issued by aviation authorities. Airworthiness Directives typically set forth particular special maintenance actions or modifications to certain aircraft types or models that the owners or operators of aircraft must implement.

Each lessee generally is responsible for complying with all or some of the Airworthiness Directives with respect to the leased aircraft and is required to maintain the aircraft’s airworthiness. However, if a lessee fails to satisfy its obligations, or we have undertaken some obligations as to airworthiness under a lease, we may be required to bear (or, to the extent required under the relevant lease, to share) the cost of any Airworthiness Directives compliance. If any of our aircraft are not subject to a lease, we would be required to bear the entire cost of compliance. Such payments would adversely affect our cash position and our business generally.

Risks associated with the concentration of our lessees in certain geographical regions could harm our business.

Our business is exposed to local economic and political conditions that can influence the performance of lessees located in a particular region. Such adverse economic and political conditions include additional regulation or, in extreme cases, requisition. The effect of these conditions on payments to us will be more or less pronounced, depending on the concentration of lessees in the region with adverse conditions. For the three months ended March 31, 2006, lease rental revenues, as a percentage of total revenues, from lessees in the following regions, were 37.0% in Europe, 24.9% in Asia (including 14.4% in China), 28.1% in North America, and 5.0% in Latin America.

European Concentration

Lease rental revenues from 16 lessees based in Europe accounted for 37.0% of our total revenues for the three months ended March 31, 2006. Commercial airlines in Europe face, and can be expected to continue to face, increased competitive pressures, in part as a result of the deregulation of the airline industry by the European Union and the resultant development of low-cost carriers.

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European countries generally have relatively strict environmental regulations and traffic constraints that can restrict operational flexibility and decrease aircraft productivity, which could significantly increase aircraft operating costs of all aircraft, including our aircraft, thereby adversely affecting lessees. The airline industry in European countries, as in the rest of the world generally, is highly sensitive to general economic conditions. A recession or other worsening of economic conditions or a terrorist attack in one or more of these countries, particularly if combined with either or both high fuel prices and a weak euro or other local currency, may have a material adverse effect on the ability of European lessees to meet their financial and other obligations under our leases.

Asian Concentration

Lease rental venues from five lessees based in Asia accounted for 24.9% of our total revenues for the three months ended March 31, 2006. The outbreak of SARS in 2003 had the largest negative impact on Asia, particularly China, Hong Kong and Taiwan. More recently, the Asian airline industry is demonstrating signs of recovery; however, a recurrence of SARS or the outbreaks of another epidemic disease, such as avian influenza, which many experts think would originate in Asia, would likely adversely affect the Asian airline industry.

Lease rental revenues from two lessees based in China accounted for 14.4% of our total revenues for the three months ended March 31, 2006, with one lessee, Hainan Airlines, accounting for 11.5% of our total revenues. Major obstacles to the Chinese airline industry’s development exist, including the continuing government control and regulation over the industry. If such control and regulation persists or expands, the Chinese airline industry would likely experience a significant decrease in growth or restrictions on future growth, and it is conceivable that our interests in aircraft on lease to or our ability to lease to Chinese carriers could be adversely affected.

North American Concentration

Lease rental revenues from one lessee based in North America, US Airways, Inc. accounted for 28.1% of our total revenues for the three months ended March 31, 2006. During the past 15 years a number of North American passenger airlines, including US Airways, Inc, filed Chapter 11 bankruptcy proceedings and several major U.S. airlines ceased operations altogether. The outbreak of SARS, the war and prolonged conflict in Iraq and the September 11, 2001 terrorist attacks in the United States have imposed additional financial burdens on most U.S. airlines through tightened security measures and reduced demand for air travel.

Risks Related to the Aviation Industry

As high fuel prices continue to impact the profitability of the airline industry, our lessees might not be able to meet their lease payment obligations, which would have an adverse effect on our financial results and growth prospects.

Fuel costs represent a major expense to companies operating within the airline industry. Fuel prices fluctuate widely depending primarily on international market conditions, geopolitical and environmental events and currency/exchange rates. As a result, fuel costs are not within the control of lessees and significant changes would materially affect their operating results.

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Factors such as natural disasters can significantly affect fuel availability and prices. In August and September 2005, Hurricanes Katrina and Rita inflicted widespread damage along the Gulf Coast of the United States, causing significant disruptions to oil production, refinery operations and pipeline capacity in the region and to oil production in the Gulf of Mexico. These disruptions have resulted in decreased fuel availability and higher fuel prices.

Fuel prices currently remain at historically high levels. The continuing high cost of fuel has had, and sustained high costs in the future may continue to have, a material adverse impact on airlines’ profitability (including our lessees). Due to the competitive nature of the airline industry, airlines have been and may continue to be unable to pass on increases in fuel prices to their customers by increasing fares in a manner that fully off-set the costs incurred. In addition, airlines may not be able to manage this risk by appropriately hedging their exposure to fuel price fluctuations. If fuel prices remain at historically high levels or increase further due to future terrorist attacks, acts of war, armed hostilities, natural disasters or for any other reason, they are likely to cause our lessees to incur higher costs and/or generate lower revenues, resulting in an adverse impact on their financial condition and liquidity. Consequently, these conditions may (i) affect our lessees' ability to make rental and other lease payments, (ii) result in lease restructurings and/or aircraft repossessions, (iii) increase our costs of servicing and marketing our aircraft, (iv) impair our ability to re-lease the aircraft or re-lease or otherwise dispose of the aircraft on a timely basis at favorable rates or terms, or at all, and (v) reduce the proceeds received for the aircraft upon any disposition. These results could have an adverse effect on our financial results and growth prospects.

If the effects of terrorist attacks and geopolitical conditions continue to adversely impact the financial condition of the airlines, our lessees might not be able to meet their lease payment obligations, which would have an adverse effect on our financial results and growth prospects.

As a result of the September 11, 2001 terrorist attacks in the United States and subsequent terrorist attacks abroad, notably in the Middle East, Southeast Asia and Europe, increased security restrictions were implemented on air travel, airline costs for aircraft insurance and enhanced security measures have increased, passenger demand for air travel has decreased and airlines have faced and continue to face increased difficulties in acquiring war risk and other insurance, at reasonable costs. In addition, war or armed hostilities in the Middle East, North Korea or elsewhere, or the fear of such events, could further exacerbate many of the problems experienced as a result of terrorist attacks. The situation in Iraq continues to be uncertain and tension over Iran's nuclear program continues, and either or both may lead to further instability in the Middle East. Future terrorist attacks, war or armed hostilities, or the fear of such events, could further negatively impact the airline industry and may have an adverse effect on the financial condition and liquidity of our lessees, aircraft values and rental rates and may lead to lease restructurings or aircraft repossessions, all of which could adversely affect our financial results and growth prospects.

Terrorist attacks and geopolitical conditions have negatively affected the airline industry and concerns about geopolitical conditions and further terrorist attacks could continue to negatively affect airlines (including our lessees) for the foreseeable future depending upon various factors, including: (i) higher costs to the airlines due to the increased security measures; (ii) decreased passenger demand and revenue due to the inconvenience of additional security measures; (iii) the price and availability of jet fuel and the cost and practicability of obtaining fuel hedges under current market conditions; (iv) higher financing costs and difficulty in raising the desired amount of proceeds on favorable terms, or at all; (v) the significantly higher costs of aircraft insurance coverage for future claims caused by acts of war, terrorism, sabotage, hijacking and other similar perils, and the extent to which such insurance has been or will continue to be

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available; (vi) the ability of airlines to reduce their operating costs and conserve financial resources, taking into account the increased costs incurred as a consequence of terrorist attacks and geopolitical conditions, including those referred to above; and (vii) special charges recognized by some airlines, such as those related to the impairment of aircraft and other long lived assets stemming from the grounding of aircraft as a result of terrorist attacks, the economic slowdown and airline reorganizations.

Future terrorist attacks, acts of war or armed hostilities may further increase airline costs, depress air travel demand, depress aircraft values and rental rates or cause certain aviation insurance to become available only at significantly increased premiums (which may be for reduced amounts of coverage that are insufficient to comply with the levels of insurance coverage currently required by aircraft lenders and lessors or by applicable government regulations) or not be available at all.

Although the Aircraft Transportation Safety and System Stabilization Act adopted in the United States and similar programs instituted by the governments of some other countries provide for limited government coverage for certain aviation insurance, there can be no assurances that these programs will continue or that any such government will pay under these programs in a timely fashion.

If the current industry conditions should continue or become exacerbated due to future terrorist attacks, acts of war or armed hostilities, they are likely to cause our lessees to incur higher costs and to generate lower revenues, resulting in an adverse effect on their financial condition and liquidity. Consequently, these conditions may affect their ability to make rental and other lease payments to us or obtain the types and amounts of insurance required by the applicable leases (which may in turn lead to aircraft groundings), may result in additional lease restructurings and aircraft repossessions, may increase our cost of re-leasing or selling the aircraft and may impair our ability to re-lease or otherwise dispose of the aircraft on a timely basis at favorable rates or on favorable terms, or at all, and may reduce the proceeds received for the aircraft upon any disposition. These results could have an adverse effect on our financial results and growth prospects.

The effects of SARS or other epidemic diseases may negatively impact the airline industry in the future, which might cause our lessees to not be able to meet their lease payment obligations to us, which would have an adverse effect on our financial results and growth prospects.

The 2003 outbreak of SARS was linked to air travel early in its development and negatively impacted passenger demand for air travel at that time. While the World Heath Organization’s travel bans related to SARS have been lifted, SARS had a severe impact on the aviation industry, which was evidenced by a sharp reduction in passenger bookings and cancellation of many flights and employee layoffs. While these effects were felt most acutely in Asia, SARS did spread to other areas, including North America. Since 2003, there have been several outbreaks of avian influenza, beginning in Asia and, most recently, spreading to certain parts of Africa and Europe. Although human cases of avian influenza so far have been limited in number, the World Health Organization has expressed serious concern that a human influenza pandemic could develop from the avian influenza virus. In such an event, numerous responses, including travel restrictions, might be necessary to combat the spread of the disease. Additional outbreaks of SARS or other epidemic diseases such as avian influenza, or the fear of such events, could negatively impact passenger demand for air travel and the aviation industry, which could result in our lessees' inability to satisfy their lease payment obligations to us, which in turn would have an adverse effect on our financial results and growth prospects.

If recent industry economic losses and airline reorganizations continue, our lessees might not be able to meet their lease payment obligations to us, which would have an adverse effect on our financial results and growth prospects.

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As a result of reduced fares, international economic conditions, a significant increase in oil prices, the September 11, 2001 terrorist attacks in the United States, the war and prolonged conflict in Iraq and outbreaks of epidemic diseases such as SARS and avian influenza, the aviation industry as a whole suffered significant losses since 2001 and such losses are expected to continue for the foreseeable future for certain parts of the industry. Many airlines, including a significant number of our lessees, have announced or implemented reductions in capacity, service and workforce in response to industry-wide reductions in passenger demands and fares. In addition, since September 11, 2001, several U.S. airlines have sought to reorganize (and, in certain instances, have reorganized) under Chapter 11 of the U.S. Bankruptcy Code, including United Air Lines, Inc., Delta Air Lines Inc., Northwest Airlines Corp., US Airways, Inc. (one of our largest customers), Hawaiian Airlines, ATA Airlines, Inc., Atlas Air Worldwide Holdings, Inc. and Aloha Airlines, and further U.S. airline reorganizations are possible. Certain European and Latin American airlines, including Sabena Air Lines, Swiss Air Transport Company Limited, Volare Airlines S.p.A., Varig Brazilian Airlines and Avianca, have also filed for protection under applicable bankruptcy laws. In addition, Air Canada (the largest Canadian airline) filed for protection under Canada's Companies' Creditors Arrangement Act. Historically, airlines involved in reorganizations have undertaken substantial fare discounting to maintain cash flows and to encourage continued customer loyalty. Such fare discounting has led to lower profitability for all airlines, including certain of our lessees. The bankruptcies and reduced demand generally have led to the grounding of significant numbers of aircraft and negotiated reductions in aircraft lease rental rates, with the effect of depressing aircraft market values. In addition, requests for additional labor concessions may result in significant labor disputes which could lead to strikes or slowdowns or may otherwise adversely affect labor relations, thereby worsening the financial condition of the airline industry and placing downward pressure on lease rates and aircraft values. Additional reorganizations or liquidations by airlines under Chapter 11 or Chapter 7 of the U.S. Bankruptcy Code or other bankruptcy or reorganization laws in other countries or further rejection of aircraft leases or abandonment of aircraft by airlines in a Chapter 11 proceeding under the U.S. Bankruptcy Code or equivalent laws in other countries may have already exacerbated and would be expected to further exacerbate such depressed aircraft values and lease rates. Additional grounded aircraft and lower market values would adversely affect our ability to sell certain of our aircraft on favorable terms, or at all, or re-lease other aircraft at favorable rates comparable to the then current market conditions, which collectively would have an adverse effect on our financial results and growth prospects.

Risks Related to Our Organization and Structure

If the ownership of our common shares continues to be highly concentrated, it may prevent you and other minority shareholders from influencing significant corporate decisions and may result in conflicts of interest.

Following the completion of this offering, entities affiliated with Fortress will beneficially own shares, or approximately % of our common shares. As a result, Fortress will be able to control fundamental corporate matters and transactions, including: the election of directors; mergers, amalgamations, consolidations or acquisitions; the sale of all or substantially all of our assets; the amendment of our bye-laws; and our dissolution. This concentration of ownership may delay, deter or prevent acts that would be favored by our other shareholders. In addition, under our Amended and Restated Shareholders Agreement, which we and the Fortress shareholders will execute upon the completion of this offering, an affiliate of Fortress will be entitled to designate up to four directors for election to our board of directors, depending upon the level of ownership of the Fortress shareholders in us. See ‘‘Certain Relationships and Related Party Transactions — Shareholders Agreements’’. As a result, the market price of our common shares

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could decline or shareholders might not receive a premium over the then-current market price of our common shares upon a change in control. See ‘‘Description of Share Capital — Anti-Takeover Provisions.’’

We are a holding company with no operations and rely on our operating subsidiaries to provide us with funds necessary to meet our financial obligations.

We are a holding company with no material direct operations. Our principal assets are the equity interests we directly or indirectly hold in our operating subsidiaries. As a result, we are dependent on loans, dividends and other payments from our subsidiaries to generate the funds necessary to meet our financial obligations and to pay dividends on our common shares. Our subsidiaries are legally distinct from us and may be prohibited or restricted from paying dividends or otherwise making funds available to us under certain conditions.

We are a Bermuda company and it may be difficult for you to enforce judgments against us or our directors and executive officers.

We are a Bermuda exempted company and, as such, the rights of holders of our common shares will be governed by Bermuda law and our memorandum of association and bye-laws. The rights of shareholders under Bermuda law may differ from the rights of shareholders of companies incorporated in other jurisdictions. Some of the named experts referred to in this prospectus are not residents of the United States, and a substantial portion of our assets are located outside the United States. As a result, it may be difficult for investors to effect service of process on those persons in the United States or to enforce in the United States judgments obtained in U.S. courts against us or those persons based on the civil liability provisions of the U.S. securities laws. Uncertainty exists as to whether courts in Bermuda will enforce judgments obtained in other jurisdictions, including the United States, against us or our directors or officers under the securities laws of those jurisdictions or entertain actions in Bermuda against us or our directors or officers under the securities laws of other jurisdictions.

Our bye-laws restrict shareholders from bringing legal action against our officers and directors.

We have anti-takeover provisions in our bye-laws that may discourage a change of control.

Our bye-laws contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors. These provisions provide for:


•	a classified board of directors with staggered three-year terms;


•	directors to be removed with or without cause, only by a resolution including the affirmative vote of shareholders holding shares carrying at least 80.0% of the votes of all outstanding common shares;


•	our board of directors to determine the powers, preferences and rights of our preference shares and to issue such preference shares without shareholder approval;


•	advance notice requirements by shareholders for director nominations and actions to be taken at annual meetings; and

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•	no provision for cumulative voting in the election of directors, which means that the holders of a majority of our issued and outstanding common shares can elect all the directors standing for election.

These provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many shareholders. As a result, shareholders may be limited in their ability to obtain a premium for their shares. See ‘‘Description of Share Capital — Anti-Takeover Provisions.’’

There are provisions in our bye-laws that may require certain of our non-U.S. shareholders to sell their shares to us or to a third party.

Our bye-laws provide that if our board of directors determines that we or any of our subsidiaries do not meet, or in the absence of repurchases of shares will fail to meet, the ownership requirements of a limitation on benefits article of any bilateral income tax treaty with the U.S. applicable to us, and that such tax treaty would provide material benefits to us or any of our subsidiaries, we generally have the right, but not the obligation, to repurchase at fair market value (as determined in the good faith discretion of our board of directors) common shares from any shareholder who beneficially owns more than % of our issued and outstanding common shares and who fails to demonstrate to our satisfaction that such shareholder is either (i) a U.S. citizen or (ii) a qualified resident of the U.S. or the other contracting state of the applicable tax treaty (as determined for purposes of the relevant provision of the limitation on benefits article of such treaty).

The number of common shares that may be repurchased from any such shareholder will equal the product of the total number of common shares that we reasonably determine to purchase to ensure ongoing satisfaction of the limitation on benefits article of the applicable tax treaty, multiplied by a fraction, the numerator of which is the number of common shares beneficially owned by such shareholder, and the denominator of which is the total number of common shares beneficially owned by such shareholders subject to this repurchase right.

Instead of exercising the repurchase right described above, we will have the right, but not the obligation, to cause the transfer to, and procure the purchase by, any U.S. citizen or a qualified resident of the U.S. or the other contracting state of the applicable tax treaty (as determined for purposes of the relevant provision of the limitation on benefits article of such treaty) of the number of issued and outstanding common shares beneficially owned by any shareholder that are otherwise subject to repurchase under our bye-laws as described above, at fair market value (as determined in the good faith discretion of our board of directors). See ‘‘Description of Share Capital — Bye-Laws — Acquisition of Common Shares by Aircastle’’.

Risks Related to This Offering

An active market for our common shares may never develop.

We intend to submit an application to have our common shares listed on the New York Stock Exchange, or NYSE, under the symbol ‘‘ .’’ However, we cannot assure you that our common shares will be approved for listing on the NYSE or, if approved, that a regular trading market of our common shares will develop on that exchange or elsewhere or, if developed, that any market will be sustained. Accordingly, we cannot assure you of the likelihood that an active trading market for our common shares will develop or be maintained, the liquidity of any trading market, your ability to sell your common shares when desired, or the prices that you may obtain for your common shares.

The market price and trading volume of our common shares may be volatile, which could result in rapid and substantial losses for our shareholders.

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Even if an active trading market for our common shares develops, the market price of our common shares may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our common shares may fluctuate and cause significant price variations to occur. If the market price of our common shares declines significantly, you may be unable to resell your shares at or above your purchase price, if at all. We cannot assure you that the market price of our common shares will not fluctuate or decline significantly in the future. Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our common shares include:


•	variations in our quarterly operating results;


•	failure to meet our earnings estimates;


•	publication of research reports about us, other aircraft lessors or the aviation industry or the failure of securities analysts to cover our common shares after this offering;


•	additions or departures of key management personnel;


•	adverse market reaction to any indebtedness we may incur or preference or common shares we may issue in the future;


•	changes in our divided payment policy or failure to execute our existing policy;


•	actions by shareholders;


•	changes in market valuations of similar companies;


•	announcements by us or our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments;


•	speculation in the press or investment community;


•	increases in market interest rates that may lead purchasers of our common shares to demand a higher dividend yield;


•	changes or proposed changes in laws or regulations affecting the aviation industry or enforcement of these laws and regulations, or announcements relating to these matters; and


•	general market, political and economic conditions and local conditions in the markets in which our lessees are located.

Future issuances of debt, which would be senior to our common shares upon liquidation, and future offerings of equity securities, which could dilute the percentage ownership of our then current common shareholders and may be senior to our common shares for the purposes of dividends and liquidation distributions, may adversely affect the market price of our common shares.

In the future, we may attempt to increase our capital resources by issuing debt or additional equity securities, including commercial paper, medium-term notes, senior or subordinated notes and series of preference shares or common shares. Upon liquidation, holders of our debt securities and preference shares and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our common shares. Additional equity offerings may dilute the holdings of our then current common shareholders or reduce the market price of our common shares, or both. Preference shares, if issued, could have a preference on liquidating distributions or a preference on dividend payments that could limit our ability to make a distribution to the holders of our common shares. Because our decision to issue debt or additional equity securities in the future will depend on market conditions and other factors

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beyond our control, we cannot predict or estimate the amount, timing or nature of our future capital raising activities. Thus, holders of our common shares bear the risk of our future debt and equity issuances reducing the market price of our common shares and diluting their percentage ownership in us. See ‘‘Description of Share Capital’’.

The market price of our common shares could be negatively affected by sales of substantial amounts of our common shares in the public markets.

After this offering, there will be common shares outstanding. There will be shares issued and outstanding if the underwriters exercise their over-allotment option in full. Of our issued and outstanding shares, all the common shares sold in this offering will be freely transferable, except for any shares held by our ‘‘affiliates,’’ as that term is defined in Rule 144 under the Securities Act of 1933, as amended, or the Securities Act. See ‘‘Shares Eligible For Future Sale.’’

Pursuant to our Amended and Restated Shareholders Agreement, which we and the Fortress shareholders will execute upon the completion of this offering, the Fortress shareholders and certain of their affiliates and permitted third-party transferees will have the right, in certain circumstances, to require us to register their 40 million common shares under the Securities Act for sale into the public markets. Upon the effectiveness of such a registration statement, all shares covered by the registration statement will be freely transferable. See ‘‘Certain Relationships and Related Party Transactions — Shareholders Agreement.’’

We and our executive officers, directors, shareholders and participants in our directed share program have agreed with the underwriters that, subject to certain exceptions, for a period of 120 days after the date of this prospectus, we and they will not directly or indirectly offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer, dispose of or hedge, directly or indirectly, our common shares or any securities convertible into or exercisable or exchangeable for our common shares, or enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences associated with the ownership of common shares, or cause a registration statement covering our common shares to be filed, without the prior written consent of the representatives. The 120-day restricted period described above is subject to an automatic extension under certain circumstances. See ‘‘Underwriting.’’ The representatives may waive these restrictions at their discretion.

In addition, following the completion of this offering, we intend to file a registration statement on Form S-8 under the Securities Act to register an aggregate of common shares reserved for issuance under our incentive plans. Subject to any restrictions imposed on the shares and options granted under our incentive plans, shares registered under the registration statement on Form S-8 will be available for sale into the public markets subject to the 120-day lock-up agreements referred to above.

The issuance of additional common shares in connection with acquisitions or otherwise will dilute all other shareholdings.

After this offering, assuming the exercise in full by the underwriters of their over-allotment option, we will have an aggregate of common shares authorized but unissued and not reserved for issuance under our incentive plans. We may issue all of these common shares without any action or approval by our shareholders, subject to certain exceptions. We intend to continue to actively pursue acquisitions of aviation assets and may issue common shares in connection with these acquisitions. Any common shares issued in connection with our

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acquisitions, our incentive plans, the exercise of outstanding share options or otherwise would dilute the percentage ownership held by the investors who purchase common shares in this offering.

Investors in this offering will suffer immediate and substantial dilution.

The initial public offering price of our common shares will be substantially higher than the as adjusted net tangible book value per common share issued and outstanding immediately after this offering. Our net tangible book value per share as of , 2006 was approximately $ . Our net tangible book value per share as of , 2006 represents the book value of our total tangible assets minus the book value of our total liabilities, divided by the number of our common shares then issued and outstanding. Investors who purchase common shares in this offering will pay a price per share that substantially exceeds the net tangible book value per common share. If you purchase our common shares in this offering, you will experience immediate and substantial dilution of $ in the net tangible book value per common share, based upon the initial public offering price of $ per share. Investors who purchase common shares in this offering will have purchased % of the shares issued and outstanding immediately after the offering, but will have paid % of the total consideration for all shares then issued and outstanding.

Market interest rates may have an effect on the value of our common shares.

One of the factors that investors may consider in deciding whether to buy or sell our common shares is our dividend rate as a percentage of our share price relative to market interest rates. If market interest rates increase, prospective investors may desire a higher dividend yield on our common shares or seek securities paying higher dividends or interest. As a result, interest rate fluctuations and capital market conditions can affect the market value of our common shares. For instance, if interest rates rise, it is likely that the market price of our common shares will decrease, because potential investors may demand a higher dividend yield on our common shares as market rates on interest-bearing securities, such as bonds, rise.

Risks Related to Taxation

If Aircastle Limited, or ‘‘AL’’, were treated as engaged in a trade or business in the United States, it would be subject to U.S. federal income taxation on a net income basis, which would adversely affect our business and result in decreased cash available for distribution to our shareholders.

If, contrary to expectations, AL were treated as engaged in a trade or business in the United States, the portion of AL’s income, if any, that was ‘‘effectively connected’’ with such trade or business would be subject to U.S. federal income taxation at a maximum rate of 35%. In addition, AL would be subject to the U.S. federal branch profits tax on its effectively connected earnings and profits at a rate of 30%. The imposition of such taxes would adversely affect our business and would result in decreased cash available for distribution to our shareholders.

If substantially all of the U.S. source rental income of Aircastle Bermuda is attributable to activities of Aircastle personnel based in the United States, Aircastle Bermuda could be subject to U.S. federal income taxation on a net income basis rather than at a rate of 4% of its U.S. source gross rental income, which would adversely affect our business and result in decreased cash available for distribution to our shareholders.

We have adopted certain operating procedures designed to limit the amount of income generated by Aircastle Bermuda that is treated as effectively connected with a U.S. trade or business. Accordingly, it is generally expected that Aircastle Bermuda’s U.S. source rental income

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will be subject to U.S. federal taxation, on a gross income basis, at a rate not in excess of 4%. If, contrary to expectations, we do not comply with certain administrative guidelines of the Internal Revenue Service, or the IRS, such that 90% or more of Aircastle Bermuda’s U.S. source rental income were attributable to the activities of personnel based in the United States, Aircastle Bermuda’s U.S. source rental income could be treated as income effectively connected with the conduct of a trade or business in the United States. In such case, Aircastle Bermuda’s U.S. source rental income would be subject to U.S. federal income taxation at a maximum rate of 35%. In addition, Aircastle Bermuda would be subject to the U.S. federal branch profits tax on its effectively connected earnings and profits at a rate of 30%. The imposition of such taxes would adversely affect our business and would result in decreased cash available for distribution to our shareholders.

One or more of our Irish subsidiaries could fail to qualify for treaty benefits, which would subject certain of their income to U.S. federal income taxation, which would adversely affect our business and result in decreased cash available for distribution to our shareholders.

Our Irish subsidiaries do not expect to have any U.S. federal income tax liability with respect to (i) rental income attributable to aircraft used in international traffic or (ii) gain from the sale of aircraft used in international traffic. For this purpose, ‘‘international traffic’’ includes all flights other than those that are conducted from one point in the United States to another point in the United States. In order for each of our Irish subsidiaries to avoid U.S. federal income taxation of such income, it may be necessary for such subsidiary to qualify for the benefits of the income tax treaty between the United States and Ireland, or the ‘‘Irish Treaty’’. Qualification for the benefits of the Irish Treaty depends on many factors, including in certain circumstances, being able to establish the identity of the ultimate beneficial owners of our common shares. No assurances can be given that each of the Irish subsidiaries will satisfy all the requirements of the Irish Treaty and thereby qualify each year for the benefits of the Irish Treaty. Failure to so qualify could result in the rental income from aircraft used for flights to, from or within the United States being subject to U.S. federal income taxation at a maximum rate of 35% (plus the 30% U.S. federal branch profits tax on effectively connected earnings and profits). The imposition of such taxes would adversely affect our business and would result in decreased cash available for distribution to our shareholders.

We may become subject to income or other taxes in the jurisdictions in which our aircraft operate or where our lessees are located which would adversely affect our business and result in decreased cash available for distributions to shareholders.

Certain Aircastle entities are expected to be subject to the income tax laws of Ireland and/or the United States. In addition, we may be subject to income or other taxes in other jurisdictions by reason of our activities and operations, where our aircraft operate or where the lessees of our aircraft (or others in possession of our aircraft) are located. Although we have adopted operating procedures to reduce the exposure to such taxation, no assurances can be given that we will not be subject to such taxes in the future and that such taxes will not be substantial. The imposition of such taxes could have a negative effect on our business and would result in decreased earnings available for distribution to our shareholders.

AL expects to be a passive foreign investment company, or PFIC, and a controlled foreign corporation, or CFC, for U.S. federal income tax purposes.

We expect to be treated as a PFIC and a CFC for U.S. federal income tax purposes. If you are a U.S. person and own less than 10% of our voting shares and do not make a qualified electing fund, or QEF, election with respect to us and each of our PFIC subsidiaries, you would be subject to special deferred tax and interest charges with respect to certain distributions on our common shares, any gain realized on a disposition of our common shares and certain other events. The effect of these

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deferred tax and interest charges could be materially adverse to you. Alternatively, if you are such a shareholder and make a QEF election for us and our subsidiaries, or you own 10% or more of our voting shares, you will not be subject to those charges, but could recognize taxable income in a taxable year with respect to our common shares in excess of any distributions that we make to you in that year, thus giving rise to so-called ‘‘phantom income’’ and to a potential out-of-pocket tax liability. See ‘‘Material Tax Considerations—Material United States Federal Income Tax Considerations.’’

Distributions made to you if you are a U.S. person that is an individual will not be eligible for taxation at reduced tax rates generally applicable to dividends paid by certain United States corporations and ‘‘qualified foreign corporations’’ on or after January 1, 2003. The more favorable rates applicable to regular corporate dividends could cause individuals to perceive investment in our shares to be relatively less attractive than investment in the shares of other corporations, which could adversely affect the value of our shares.

Changes in current tax laws or the interpretation thereof could adversely affect our business and could result in decreased cash available for distribution to our shareholders.

Any change in current tax laws or the interpretation thereof in the United States, Ireland, Bermuda or any other jurisdiction in which our aircraft operate or where our lessees are located, or any renegotiation, amendment or modification of the Irish Treaty or any change in interpretation thereof by either Ireland or the United States could adversely affect our business and could result in decreased cash available for distribution to our shareholders.

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Special Note Regarding Forward-Looking Statements

Some of the statements under ‘‘Prospectus Summary,’’ ‘‘Risk Factors,’’ ‘‘Management's Discussion and Analysis of Financial Condition and Results of Operations,’’ ‘‘Business’’ and elsewhere in this prospectus may contain forward-looking statements which reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as ‘‘outlook,’’ ‘‘believes,’’ ‘‘expects,’’ ‘‘potential,’’ ‘‘continues,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘seeks,’’ ‘‘approximately,’’ ‘‘predicts,’’ ‘‘intends,’’ ‘‘plans,’’ ‘‘estimates,’’ ‘‘anticipates’’ or the negative version of those words or other comparable words. Any forward-looking statements contained in this prospectus are based upon the historical performance of us and our subsidiaries and on our current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, a decrease in the overall demand for commercial aircraft and aircraft leasing, the economic condition of the global airline industry and the ability of our lessees and potential lessees to make operating lease payments to us, acquisition risks, competitive pressures within the industry, risks related to the geographic markets in which we and our lessees operate and other factors described in the section entitled ‘‘Risk Factors’’ beginning on page 11 of this prospectus. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. We do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have projected. Any forward-looking statements you read in this prospectus reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. You should specifically consider the factors identified in this prospectus that could cause actual results to differ before making an investment decision to purchase our common shares.

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Market and Industry Data and Forecasts

This prospectus includes market share and industry data and forecasts that we have developed from independent consultant reports, publicly available information, various industry publications, other published industry sources and our internal data and estimates. This includes information relating to the aviation industry and operating leasing industry from several independent outside sources including BACK Aviation Solutions or BACK, an aviation consulting firm; Simat Helliesen & Eichner, Inc, or SH&E, an aviation consulting firm; International Bureau of Aviation or IBA, an aviation consulting firm; Aviation Specialists Group or ASG, provider of aircraft appraisals, market analysis and aviation industry insights; The Airline Monitor, an independent journal which provides data and forecasts for the world's airlines and commercial aircraft; Economist Intelligence Unit or EIU, provider of country, industry and management analysis; Innovata LLC, or Innovata, a travel information company; and OAG Worldwide Limited, or OAG, an aviation information company and International Air Transport Association.

Independent consultant reports, industry publications and other published industry sources generally indicate that the information contained therein was obtained from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. Although we believe that the publications and reports are reliable, neither we nor the underwriters have independently verified the data.

Our internal data, estimates and forecasts are based upon information obtained from our customers, partners, trade and business organizations and other contacts in the markets in which we operate and our management's understanding of industry conditions. Although we believe that such information is reliable, we have not had such information verified by any independent sources.

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Use of Proceeds

The net proceeds to us from the sale of the common shares offered hereby are estimated to be approximately $ , assuming an initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus) and after deducting the estimated underwriting discounts and commissions and offering expenses payable by us. Our net proceeds will increase by approximately $ if the underwriters' over-allotment option is exercised in full. We expect to use the net proceeds to repay a portion of amounts outstanding under our $500.0 million senior secured credit facility, which we refer to as Credit Facility No. 2, and for general corporate purposes. Pending these uses, we intend to invest the net proceeds in short-term interest-bearing instruments or money market accounts.

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus) would increase (decrease) the net proceeds to us from this offering by $ million, assuming the number of common shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

As of May 22, 2006, we had $100.2 million outstanding under Credit Facility No. 2, which is scheduled to mature on August 28, 2007. Borrowings under Credit Facility No. 2 bear interest at the one-month LIBOR rate plus 1.25% which at May 22, 2006 was 6.33% per annum. Borrowings under Credit Facility No. 2 were used to finance a portion of the net book value of certain of our aircraft. Amounts repaid under Credit Facility No. 2 may be reborrowed from time to time, subject to compliance with borrowing conditions. Certain of the underwriters or their affiliates are lenders under Credit Facility No. 2 and will receive their pro rata share of amounts repaid thereunder with the net proceeds of this offering. See ‘‘Underwriting.’’

We may also use a portion of the proceeds for the potential acquisition of, or investment in, additional aviation assets, including the $244.2 million of aviation assets we had committed to acquire as of May 22, 2006.

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Dividend Policy

On , 2006, our board of directors declared an ordinary dividend of $ per common share, or an aggregate of $ , for the three months ended , 2006, which is payable on , 2006. Purchasers in this offering will not be entitled to receive that dividend.

We expect to pay substantially all of our earnings to our shareholders as dividends. We plan to grow our earnings through the acquisition of additional aviation assets. Through our strategy of reinvesting amounts approximately equal to non-cash depreciation expense, we will seek to maintain our asset base and grow our revenues, earnings and dividends.

The payment of dividends is subject to the discretion of our board of directors and will depend on many factors, including our ability to make and finance acquisitions, our ability to negotiate favorable lease and other contractual terms, the level of demand for our aircraft, the economic condition of the commercial aviation industry generally, the financial condition and liquidity of our lessees, the lease rates we charge and realize, our leasing costs, unexpected or increased expenses, the level and timing of capital expenditures, principal repayments and other capital needs, the value of our aircraft portfolio, our results of operations, financial condition and liquidity, general business conditions, restrictions imposed by financing arrangements (including our credit facilities), legal restrictions on the payment of dividends and other factors that our board of directors deems relevant. We are not permitted to pay dividends on our common shares to the extent a default of an event of default exists under Credit Facility No. 2. In addition, we are a holding company with no direct operations and depend on loans, dividends and other payments from our subsidiaries to generate the funds necessary to pay dividends, and our subsidiaries may be prohibited or restricted from paying dividends to us or otherwise making funds available to us under certain conditions. See ‘‘Description of Indebtedness.’’ We expect that in certain quarters we may pay dividends in excess of our net income for such period as determined in accordance with GAAP.

We expect that our dividends will not be eligible for either the dividends-received deduction for corporate U.S. Holders or treatment as ‘‘qualified dividend income’’ (which is taxable at the rates generally applicable to long-term capital gains) for U.S. Holders taxed as individuals.

Pursuant to Bermuda law, we are restricted from declaring or paying a dividend, or making a distribution out of contributed surplus, if there are reasonable grounds for believing that (i) we are, or would after the payment be, unable to pay our liabilities as they become due, or (ii) the realizable value of our assets would thereby be less than the aggregate of our liabilities, our issued share capital and our share premium accounts.

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Capitalization

The following table sets forth our capitalization as of March 31, 2006:


•	on an actual basis;

•

as adjusted to give effect to (i) Securitization No. 1, which closed on June , 2006, and the use of proceeds therefrom, (ii) the payment of an ordinary dividend from current earnings in the amount of $ per common share or an aggregate of $ million, declared by our board of directors on , 2006 and paid on , 2006, and (iii) the purchase of 277,000 common shares by employees and a director nominee in May 2006; and


•	as further adjusted to give further effect to the sale of common shares in this offering at an assumed offering price of $ , after deducting the underwriters' discounts and commissions and estimated offering expenses payable by us, and application of a portion of the proceeds from this offering towards repayment of amounts outstanding under Credit Facility No. 2.

This table contains unaudited information and should be read in conjunction with ‘‘Management's Discussion and Analysis of Financial Condition and Results of Operations’’ and our historical consolidated financial statements and the accompanying notes that appear elsewhere in this prospectus.


	As of March 31, 2006
	Actual			Adjusted(1)		As Further Adjusted(1)(2)
	(Dollars in thousands)
Borrowings under credit facilities:
Credit Facility No. 1		$	486,973		$		$
Credit Facility No. 2 (3)			8,554
Credit Facility No. 3			73,332
Securitization No. 1 (1)			—
Repurchase agreements			84,434
Shareholders' equity (4):
Common shares, $0.01 par value: 100,000,000 shares authorized, actual and as adjusted, 250,000,000 shares authorized, as further adjusted; 44,408,200 shares issued and outstanding, actual, shares issued and outstanding, as adjusted, shares issued and outstanding, as further adjusted			444
Additional paid-in capital			438,189
Retained earnings			9,943
Accumulated other comprehensive income			27,224
Total shareholders' equity			475,800
Total capitalization		$	1,129,093		$		$

(1)

Pursuant to Securitization No. 1, ACS, a newly formed trust, issued $560 million of floating rate aircraft lease-backed securities secured by ownership interests in certain of our subsidiaries that own 40 of our aircraft and the related aircraft leases. We retained 100% of the residual economic interests in the aircraft underlying Securitization No. 1. Proceeds from Securitization No. 1, after deducting $ in expenses, were used to repay $487.0 million of indebtedness under, and to terminate, Credit Facility No. 1, to return $36.9 million to the Fortress shareholders in exchange for the cancellation of 3,693,200 of our common shares and the purchase of 277,000 common shares by employees and a director nominee in May 2006.

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(2)

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus) would increase (decrease) each of additional paid-in capital, total shareholders' equity and total capitalization by $ million, assuming the number of common shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.


(3)	As of May 22, 2006, we had $100.2 million outstanding under Credit Facility No. 2, which amounts we expect to repay in full with proceeds from this offering.

(4)

On January 31, 2006, the Fortress shareholders committed to contribute up to an additional $100 million of equity to AL. On February 8, 2006 the Fortress shareholders contributed $36.9 million pursuant to the aforementioned commitment in exchange for 3,693,200 of our common shares. On June , 2006, we returned $36.9 million to the Fortress shareholders in exchange for the cancellation of 3,693,200 of our common shares. After the return of the cash, the $100 million commitment was reinstated in full. This commitment will terminate upon completion of this offering.

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Dilution

If you invest in our common shares, your interest will be diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share after this offering. Adjusted net tangible book value per share represents the book value of our total tangible assets less the book value of our total liabilities divided by the number of our common shares then issued and outstanding after giving effect to (i) Securitization No. 1 and the use of proceeds therefrom, (ii) the payment of an ordinary dividend from current earnings in the amount of $ per common share, or an aggregate of $ million, declared by our board of directors and paid on , 2006 and (iii) the purchase of 277,000 common shares by employees and a director nominee in May 2006.

Our adjusted net tangible book value as of March 31, 2006, was approximately $ , or approximately $ per share based on the common shares, including restricted shares, issued and outstanding as of such date. After giving further effect to our sale of common shares in this offering at the initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus), and after deducting estimated underwriting discounts and estimated expenses related to this offering, our as further adjusted net tangible book value as of March 31, 2006 would have been $ , or $ per share (assuming no exercise of the underwriters' over-allotment option). This represents an immediate and substantial dilution of $ per share to new investors purchasing common shares in this offering. The following table illustrates this dilution per share:


Assumed initial public offering price per share				$


Adjusted net tangible book value per share as of March 31, 2006				$
Decrease in adjusted net tangible book value per share attributable to this offering


As further adjusted net tangible book value per share after giving effect to this offering
Dilution per share to new investors				$

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus) would (decrease) increase our as further adjusted net tangible book value (deficit) by $ million, the as further adjusted net tangible book value (deficit) per share after this offering by $ per share and the decrease in as further adjusted net tangible book value (deficit) to new investors in this offering by $ per share, assuming the number of common shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The following table summarizes, on a pro forma basis as of March 31, 2006, the differences between the number of common shares purchased from us, the total price and the average price per share paid by existing shareholders and by the new investors in this offering, before deducting the underwriting discounts and commissions and estimated offering expenses payable by us, at an assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus).

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Common Shares Purchased

Total

Average
Price Per
Share

Number

Percent

Amount

Percent

(in Thousands)

Existing shareholders

New investors

Total

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus) would increase (decrease) total consideration paid by new investors in this offering, total consideration paid by all shareholders and the average price per share paid by all shareholders by $ million, $ million and $ , respectively, assuming the number of common shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and other expenses of the offering.

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Selected Historical Consolidated Financial Data

The following tables set forth our selected historical consolidated financial data as of December 31, 2004 and 2005 and for the period from our inception to December 31, 2004 and the year ended December 31, 2005 and selected historical consolidated financial data as of and for the three months ended March 31, 2005 and 2006. We commenced operations in October 2004 and therefore the information presented for the year ended December 31, 2004 reflects our results of operations for the period from October 29, 2004 through December 31, 2004 only. You should read this information in conjunction with the information under ‘‘Management's Discussion and Analysis of Financial Condition and Results of Operations,’’ ‘‘Business’’ and our historical consolidated financial statements and the related notes thereto included elsewhere in this prospectus. Our historical consolidated statements of operations data and consolidated balance sheets data as of December 31, 2004 and 2005 and for the period from our inception through December 31, 2004 and the year ended December 31, 2005 have been derived from our audited consolidated financial statements and are included elsewhere in this prospectus. The statement of operations data and consolidated balance sheets data as of and for the three months ended March 31, 2005 and 2006 have been derived from our unaudited consolidated interim financial statements included elsewhere in this prospectus. The results for any interim period are not necessarily indicative of the results that may be expected for a full fiscal year.


	Period From October 29, 2004 (Commencement of Operations) Through December 31,				Year Ended December 31,				Three Months Ended March 31,
	2004				2005				2005				2006
Statements of Operations Data (Dollars in thousands, except per share data):
Lease rentals		$	78			$	32,978			$	1,862			$	31,371
Interest income			—				2,942				325				1,641
Other revenue			—				106				—				—
Total Revenues			78				36,026				2,187				33,012
Depreciation			390				14,460				1,462				9,915
Interest, net of interest income			(9	)			7,739				313				7,717
Selling, general and administrative expenses			1,117				12,595				1,548				5,954
Other Expenses			45				1,171				69				641
Total expenses			1,543				35,965				3,392				24,227
Income (loss) from continuing operations before income taxes			(1,465	)			61				(1,205	)			8,785
Income tax provision			—				940				169				1,004
Income (loss) from continuing operations			(1,465	)			(879	)			(1,374	)			7,781
Earnings from discontinued operations, net of income taxes			—				1,107				—				3,399
Net income (loss)		$	(1,465	)		$	228				(1,374	)			11,180
Basic earnings (loss) per share:
Income (loss) from continuing operations		$	(.04	)		$	(.02	)		$	(.03	)		$	.19
Earnings from discontinued operations, net of income taxes			—				.03				—				.08
Net income (loss)		$	(.04	)		$	.01			$	(.03	)		$	.27
Diluted earnings (loss) per share:
Income (loss) from continuing operations		$	(.04	)		$	(.02	)		$	(.03	)		$	.19
Earnings from discontinued operations, net of income taxes			—				.03				—				.08
Net income (loss)		$	(.04	)		$	.01			$	(.03	)		$	.27

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	As of December 31,						As of March 31,
	2004			2005			2006
Consolidated Balance Sheets Data (Dollars in thousands, except per share data):
Cash and cash equivalents		$	—		$	79,943		$	27,554
Debt securities, available-for-sale			—			26,907			120,558
Restricted cash and cash equivalents			—			40,652			92,666
Flight equipment held for lease, net of accumulated depreciation			94,430			746,124			941,692
Total assets			104,981			967,532			1,218,462
Borrowings under credit facilities			—			490,588			568,859
Repurchase agreements			—			8,665			84,434
Security deposits and maintenance payments			3,474			37,089			62,518
Total liabilities			5,746			556,596			742,662
Total shareholders' equity			99,235			410,936			475,800
Total liabilities and shareholders' equity			104,981			967,532			1,218,462
Cash dividends declared per common share		$	—		$	—		$	—

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Management's Discussion and Analysis of
Financial Condition and Results of Operations

This management's discussion and analysis of financial condition and results of operations contains forward-looking statements that involve risks and uncertainties. Please see ‘‘Special Note Regarding Forward-Looking Statements’’ for a discussion of the uncertainties, risks and assumptions associated with these statements. You should read the following discussion in conjunction with our historical consolidated financial statements and the notes thereto appearing elsewhere in this prospectus, including ‘‘Capitalization,’’ ‘‘Summary Consolidated Financial Information’’ and ‘‘Selected Historical Consolidated Financial and Operating Data.’’ The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods, and our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those listed under ‘‘Risk Factors’’ and included elsewhere in this prospectus.

OVERVIEW

We expect to pay substantially all of our earnings to our shareholders as dividends. We plan to grow our earnings and dividends per share through the acquisition of additional aviation assets using cash on hand and available credit facilities. We expect to finance our acquisitions on a long-term basis using low-cost, non-recourse securitizations. In June 2006, we closed our first securitization, a $560 million transaction comprising 40 aircraft. This transaction was structured to enable us to pay predictable dividends to shareholders based on contractual lease cash flows net of expenses, interest and scheduled principal amortization. On , 2006, our board of directors declared an ordinary dividend of $ per common share for the three months ended , 2006, which is payable on , 2006.

Segments

We manage our business and analyze and report our results of operations on the basis of the following two business segments: Aircraft Leasing and Debt Investments. We present our segment information on a contribution margin basis consistent with the information that our Chief Executive Officer (the chief operating decision maker) reviews in assessing segment performance and allocating resources. Contribution margin includes revenue, depreciation, interest expense and other expenses that are directly connected to our business segments. We believe contribution margin is an appropriate measure of performance because it reflects the marginal profitability of our business segments excluding overhead.

Aircraft Leasing

All of our aircraft are currently subject to net operating leases whereby the lessee is generally responsible for maintaining the aircraft and paying operational and insurance costs. We retain

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the benefit, and bear the risk, of re-leasing and the residual value of the aircraft upon expiry or early termination of the lease. As of March 31, 2006, our portfolio consisted of 42 aircraft on lease to 24 lessees in 16 countries with a net book value of $941.7 million. The weighted average (by net book value) age of the aircraft in the portfolio from the date of delivery by manufacturer to March 31, 2006, was 8.7 years. The weighted average (by net book value) remaining lease term as of March 31, 2006 was 4.2 years.

Debt Investments

We also invest in debt securities secured by commercial jet aircraft, including enhanced equipment trust certificates, and other forms of collateralized debt. We believe our experience in the aircraft leasing business coupled with knowledge of structured finance, enables us to make opportunistic investments in this market sector. Our intent is not to actively trade debt investments, and accordingly we have classified debt investments purchased to date as available-for-sale as defined in Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities . As of December 31, 2005, we owned debt securities secured by aircraft with a fair value of $26.9 million. From January 1, 2006 through March 31, 2006 we made two additional investments in debt securities secured by aviation assets. At March 31, 2006, our debt investment portfolio consisted of six such debt securities with a fair value of $120.6 million.

Revenues

Revenues in our Aircraft Leasing segment are comprised of operating lease rentals on flight equipment held for lease. The amount of rent we receive depends on various factors, including the type, size and age of the aircraft in our portfolio. Lease rental revenue is recognized on a straight-line basis over the term of the lease. Our aircraft lease agreements generally provide for the periodic payment of a fixed amount of rent over the life of the lease. However, the amount of rent we receive may vary due to several factors, including the credit worthiness of our lessees and the occurrence of delinquencies and defaults. Our lease rental revenues are also affected by the extent to which aircraft are off-lease, and our ability to remarket aircraft that are nearing the end of their leases in order to minimize their off-lease time. Our success in re-leasing aircraft is affected by market conditions relating to our aircraft and by general industry trends. An increase in the percentage of off-lease aircraft or a reduction in lease rates upon remarketing would negatively impact our revenues.

Revenues in our Aircraft Leasing segment for the quarter ended March 31, 2006 were $31.4 million as compared to $33.0 million for the full year ended December 31, 2005. Our revenues are expected to increase significantly from 2005 to 2006 as a result of aircraft acquisitions in late 2005 as well as actual and planned aircraft acquisitions throughout 2006.

Revenues in our Debt Investment segment are recognized using the effective interest method. Certain investments which represent residual interests are accounted for using a level yield methodology based upon a number of cash flow assumptions that are subject to uncertainties and contingencies. Such assumptions include the rate and timing of principal and interest.

Revenues in our Debt Investment segment for the quarter ended March 31, 2006 were $1.6 million as compared to $3.0 million for the full year ended December 31, 2005. We expect revenues to increase in 2006 as a result of the purchase of $92.7 million of debt securities in February 2006.

Operating Expenses

Operating expenses are comprised of depreciation of flight equipment held for lease, interest expense, selling, general and administrative expenses, or SG&A, and other expenses. As we

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continue to grow, we expect that depreciation of flight equipment held for lease and interest expense will grow proportionately with revenue growth. We also expect that SG&A will decline as a percentage of revenues as we leverage our existing infrastructure over a greater revenue base.

Since our operating lease terms generally require the lessee to pay for operating, maintenance and insurance costs, our portion of other expenses relating to aircraft reflected in our statement of operations has been nominal.

History

We were formed in October 2004 with a capital commitment of $400 million from funds managed by Fortress for the purpose of investing in aviation assets. This commitment was fully contributed by the end of 2005. On January 31, 2006, the Fortress shareholders committed to contribute up to an additional $100 million of equity to us. On February 8, 2006, the Fortress shareholders contributed $36.9 million pursuant to the aforementioned commitment in exchange for 3,693,200 of our common shares. On June , 2006, we returned the $36.9 million to the Fortress shareholders in exchange for the cancellation of 3,693,200 of our common shares. After the return of the cash, the $100 million commitment was reinstated in full. This commitment will terminate upon the completion of this offering.

We are organized under Bermuda law and have received confirmation from the Bermuda government exempting us and our subsidiaries from local Bermuda income, withholding and capital gains taxes until March 2016. All of our aircraft-owning subsidiaries are non-U.S. corporations that, depending upon the flight activities of the leased aircraft, generally earn income from sources outside the United States that are not subject to U.S. federal income tax. Income earned by our non-U.S. subsidiaries that is attributable to leased aircraft used for flights to or from places within the United States may be subject to U.S. federal income tax. In addition, certain of our non-U.S. subsidiaries may be subject to state and local income taxes on a portion of their income as a result of aircraft used for flights to or from particular states or localities. We own our debt securities in a Bermuda corporation. Earnings of this corporation are not subject to U.S. federal income tax because we qualify for the portfolio interest exception. We have a U.S. based subsidiary which provides management services to our non-U.S. subsidiaries and is subject to U.S. federal, state and local income taxes.

Acquisitions and Dispositions

Our financial results are impacted by the timing and size of acquisitions and dispositions we complete. As of May 22, 2006, we had acquired and committed to acquire aviation assets having an aggregate purchase price equal to $1.2 billion and $244.2 million, respectively, or a total of $1.4 billion. To date we have sold one aircraft, and one debt security.

We believe the large and growing aircraft market continues to evolve, generating significant additional acquisition opportunities. Our acquisition strategy is flexible and allows us to take advantage of the best available market opportunities. Currently, we are primarily focused on acquiring high-utility commercial jet aircraft and we may also make opportunistic acquisitions of other asset-backed aviation assets. Our business strategy has been to pursue acquisitions through multiple channels across the world, such as sale-leasebacks with airlines and purchases from operating lessors, banks and other aircraft owning entities. We also explore opportunities to purchase aircraft from manufacturers from time to time. Our ability to successfully and efficiently acquire and integrate additional aviation assets on favorable terms will significantly impact our financial results and growth prospects.

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Finance

A key aspect of our growth strategy is our capital management approach, which supports the financing of our acquisitions of aircraft and other aviation assets. We typically finance the initial purchase of aircraft and other aviation assets using flexible, committed short-term credit arrangements and cash on hand. We believe our ability to execute acquisitions expeditiously and without financing contingencies has benefited us in competitve bidding situations. Our short-term borrowed funds for our aircraft acquisitions and repurchase obligations for our securities are provided by secured term credit facilities from banks. See ‘‘— Liquidity and Capital Resources — Credit Facilities.’’

We intend to access the securitization market or other cost effective markets to provide long-term financing for our aircraft portfolio. On June , 2006, we closed our first securitization of 40 aircraft, which we refer to as Securitization No. 1. The ACS 2006-1 Pass Through Trust, a newly formed trust, issued certificates representing undivided interests in $560 million of floating rate asset-backed notes, which we refer to as notes, supported by 40 aircraft which we refer to as Portfolio No. 1. The principal balance of the notes is equal to 54.8% of the Initial Appraised Value of Portfolio No. 1 of $1.022 billion. Initial Appraised Value is the lesser of the mean and the median of base value appraisals obtained from three internationally recognized appraisal firms. during the period October 2005 through December 2005. We retained 100% of the residual economic interests in Portfolio No. 1.

The notes bear interest at one-month LIBOR plus 0.27%. Financial Guaranty Insurance Company, or FGIC, issued a financial guaranty insurance policy to support the payment of interest when due on the certificates and the payment of the pool balance of the certificates on the final distribution date. The certificates are rated Aaa and AAA by Moody's Investor Service and Standard & Poor's rating services, respectively. We have entered into a series of interest rate hedging contracts intended to hedge the interest rate exposure associated with issuing floating-rate obligations backed by primarily fixed-rate lease assets. These contracts, together with the guarantee premium, the spread referenced above and other costs of trust administration, result in a fixed rate cost of % per annum, before the amortization of issuance fees and expenses.

We are currently utilizing a $500 million senior secured credit facility to finance up to 85% of the net book value of certain aircraft not included in Securitization No. 1. For a detailed description of this credit facility, see ‘‘Description of Indebtedness — Credit Facility No. 2.’’ We expect to continue to purchase aircraft using our credit facilities plus cash on hand and, once a portfolio of 30 to 50 aircraft has been acquired, finance the portfolio on a long-term basis using a securitization structure similar to Securitization No. 1.

Based on our expected aircraft acquisition plan, we anticipate completing one or two portfolio securitizations per year and one or two additional equity offerings per year. Our ability to successfully complete these securitizations and equity offerings on favorable terms will have a significant impact on our results of operations and financial condition.

RESULTS OF OPERATIONS

Comparison of the Period from October 29, 2004 (Commencement of Operations) to December 31, 2004 to the Year Ended December 31, 2005

Our financial results for 2004 are not representative of a full year of operations and are not significant because our operations commenced on October 29, 2004. Similarly, our results of operations for the year ended December 31, 2005 are not representative of a full year of

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operations as we continued to ramp up operations through the purchase of aircraft and the employment of key personnel. In general, the changes for the period from October 29, 2004 (Commencement of Operations) to December 2004 as compared to the year ended December 31, 2005 are not comparable.

During 2004, we operated in one business segment, Aircraft Leasing. In the first quarter of 2005, we commenced a second segment, Debt Investments, engaged in investing in debt securities.

Revenues and Contribution Margin

Contribution margin by segment for the year ended December 31, 2005 is as follows:


	Year Ended December 31, 2005
(Dollars in thousands)	Aircraft Leasing			Debt Investments			Total
Revenues
Lease rentals		$	32,978		$	—		$	32,978
Interest income			—			2,942			2,942
Other revenues			2			104			106
Total revenues			32,980			3,046			36,026
Expenses
Depreciation			14,295			—			14,295
Interest			8,930			173			9,103
Other expenses			1,078			—			1,078
Total expenses			24,303			173			24,476
Contribution margin		$	8,677		$	2,873		$	11,550

Aircraft Leasing

For the year ended December 31, 2005, the contribution margin of our Aircraft Leasing segment was $8.7 million on $33.0 million of revenue. At December 31, 2005, we owned 32 aircraft held for lease, all of which were on lease. During 2005, the number of aircraft we owned increased from three aircraft at December 31, 2004 to 32 aircraft at December 31, 2005. For the year ended December 31, 2005, our aircraft leasing revenue of $33.0 million, depreciation expense of $14.3 million and interest expense of $8.9 million reflect the growth of operations during 2005.

For the same period, other expenses primarily consisted of aircraft insurance of $526,000, lease rental expenses of $317,000 and flight equipment repairs of $235,000.

We expect revenue and all of our aircraft leasing expenses to increase in 2006 as we continue to acquire and lease more aircraft and record a full year of lease rental revenue and expenses related to aircraft purchased in 2005.

Debt Investments

For the year ended December 31, 2005, the contribution margin of our Debt Investments segment was $2.9 million on $3.0 million of revenue. At December 31, 2005, we owned $26.9 million of aircraft related debt securities. For the year ended December 31, 2005, revenues from Debt Investments consisted of interest income totaling $2.9 million and interest expense consisted of interest on repurchase agreements totaling $173,000.

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Selling, General and Administrative and Other Expenses

Total contribution margin for reportable business segments is reconciled to income from continuing operations before income taxes as follows:

(Dollars in thousands)


Contribution margin	$	11,550
Selling, general and administrative expenses		(12,595	)
Depreciation and other expenses		(258	)
Interest income on cash balances		1,364
Income from continuing operations before income taxes	$	61

For the year ended December 31, 2005, selling, general and administrative expenses of $12.6 million primarily consisted of personnel expenses and other SG&A expenses. Personnel expenses totaling $7.4 million consisted of compensation costs of $6.1 million, relocation and recruiting costs of $1.1 million and benefits of $163,000. At December 31, 2005, we had 29 employees. We expect compensation and benefits costs to increase in 2006 as we hire additional personnel and incur a full year of costs related to employees hired in 2005.

For the year ended December 31, 2005, other SG&A expenses totaling $5.2 million consisted of legal, accounting and tax fees and other expenses. Legal fees incurred in 2005 related primarily to the legal organization and administration of Aircastle and its various subsidiaries. We anticipate an increase in legal, accounting and tax fees in 2006 in connection with this offering and operating as a public company.

Income Tax Provision

We have confirmation from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 that, in the event that any legislation is enacted in Bermuda imposing any tax computed on profits or income, or computed on any capital asset, gain or appreciation or any tax in the nature of estate duty or inheritance tax, such tax shall not, until March 28, 2016, be applicable to us or to any of our operations or to our shares, debentures or other obligations except insofar as such tax applies to persons ordinarily resident in Bermuda or to any taxes payable by us in respect of real property owned or leased by us in Bermuda.

All of our aircraft-owning subsidiaries are foreign corporations that, depending upon the flight activities of the leased aircraft, generally earn income from sources outside the United States and therefore are exempt from U.S. federal, state and local income taxes. We have a U.S. based subsidiary which provides management services to our non-U.S. subsidiaries and is subject to U.S. federal, state and local income taxes.

Our provision for income taxes for the year ended December 31, 2005 was $0.9 million. Income taxes have been provided based upon the tax laws and rates in the countries in which operations are conducted and income is earned. Consequently, the provision for income taxes recorded relates to income earned by certain subsidiaries of the Company which are located in jurisdictions that impose income taxes.

Discontinued Operations

During 2005, we purchased an aircraft and immediately held it for sale. The aircraft is classified on the balance sheet as flight equipment held for sale and all operating activities are classified as discontinued operations. No depreciation expense was recorded on this aircraft.

For the year ended December 31, 2005, earnings from discontinued operations, net of taxes, totaled $1.1 million. The aircraft earned lease rentals in the amount of $1.6 million and incurred

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interest expense of $404,000 for the year ended December 31, 2005. Income taxes associated with the aircraft was $115,000. The aircraft was sold on March 29, 2006 for a $2.2 million gain and the related debt in the amount of $36.7 million was repaid on March 30, 2006.

Comparison of the Three Months Ended March 31, 2005 to the Three Months Ended March 31, 2006

Our results of operations for the three months ended March 31, 2005 are not comparable to our results of operations for the three months ended March 31, 2006 primarily due to our significant growth. We owned 42 aircraft with a net book value of $941.7 million at March 31, 2006 as compared to six aircraft with a net book value of $123.4 million at March 31, 2005. At March 31, 2005 and 2006, we had borrowed $43.1 million and $568.9 million, respectively, under our credit facilities. We had eight employees at March 31, 2005 as compared to 32 employees at March 31, 2006. In general, the increases for the three months ended March 31, 2006 as compared to the three months ended March 31, 2005 are related to the acquisition of aviation assets, increased borrowings under our credit facilities and the addition of employees.

Revenues and Contribution Margin

Contribution margin by segment for the three months ended March 31, 2005 is as follows:


(Dollars in thousands)	Aircraft Leasing				Debt Investments			Total
Revenues
Lease rentals		$	1,862			$	—		$	1,862
Interest income			—				325			325
Total revenues			1,862				325			2,187
Expenses
Depreciation			1,462				—			1,462
Interest			342				—			342
Other expenses			69				—			69
Total expenses			1,873				—			1,873
Contribution margin		$	(11	)		$	325		$	314

Aircraft Leasing

For the three months ended March 31, 2005, the contribution margin of our Aircraft Leasing segment was ($11,000) on $1.9 million of revenue. At March 31, 2005, we owned six aircraft, of which three were on lease. For the three months ended March 31, 2005, our aircraft leasing revenue of $1.9 million, depreciation expense of $1.5 million, interest expense of $342,000 and other expenses of $69,000 reflect the growth of operations during this period of time.

Debt Investments

For the three months ended March 31, 2005, the contribution margin of our Debt Investments segment was $325,000 on $325,000 of revenue. At March 31, 2005, we owned $23.1 million of debt securities with no associated debt. At March 31, 2005, the debt securities had $77,000 of unrealized gains as reflected in accumulated other comprehensive income.

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Contribution margin by segment for the three months ended March 31, 2006 is as follows:


(Dollars in thousands)	Aircraft Leasing			Debt Investments			Total
Revenues
Lease rentals		$	31,371		$	—		$	31,371
Interest income			—			1,641			1,641
Total revenues			31,371			1,641			33,012
Expenses
Depreciation			9,802			—			9,802
Interest			7,912			868			8,780
Other expenses			641			—			641
Total expenses			18,355			868			19,223
Contribution margin		$	13,016		$	773		$	13,789

Aircraft Leasing

For the three months ended March 31, 2006, the contribution margin of our Aircraft Leasing segment was $13.0 million on $31.4 million of revenue. At March 31, 2006, we owned 42 aircraft held for lease as compared to 32 aircraft held for lease at December 31, 2005 and six aircraft held for lease at March 31, 2005. All of the aircraft were on lease at March 31, 2006. Aircraft leasing revenue of $31.4 million, depreciation expense of $9.8 million, interest expense of $7.9 million and other expenses of $641,000 all increased relative to the three months ended March 31, 2005 due to the increase in the size of our aircraft portfolio.

Debt Investments

For the three months ended March 31, 2006, the contribution margin of our Debt Investments segment was $773,000 on $1.6 million of revenue. The debt securities earned $1.6 million in interest income for the three months ended March 31, 2006. At March 31, 2006, we owned $120.6 million of debt securities with $13.7 million of unrealized gains as reflected in accumulated other comprehensive income at March 31, 2006.

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Selling, General and Administrative and Other Expenses

Total contribution margin for reportable business segments is reconciled to income from continuing operations before income taxes as follows:


	Three Months Ended March 31,
(Dollars in thousands)	2005				2006
Contribution margin		$	314			$	13,789
Selling, general and administrative expenses			(1,548	)			(5,954	)
Depreciation and other expenses			—				(113	)
Interest expense (interest income on cash balances)			29				1,063
Income from continuing operations before income taxes		$	(1,205	)		$	8,785

For the three months ended March 31, 2005 and 2006, selling, general and administrative expenses of $1.5 million and $6.0 million, respectively, primarily consisted of personnel expenses and other SG&A expenses. Personnel expenses of $1.2 and $3.8 million, respectively, consisted primarily of compensation costs totaling $633,000 and $3.7 million and relocation and recruiting costs of $571,000 and $91,000, respectively. We expect compensation and benefits costs to increase in 2006 as we hire additional personnel and incur a full year of costs related to employees hired in 2005.

For the three months ended March 31, 2005 and 2006, other SG&A expenses totaling $0.3 million and $2.2 million, respectively, primarily consisted of legal, accounting and tax and other expenses. Legal fees incurred in 2005 and 2006 related primarily to the legal organization and administration of Aircastle and its various subsidiaries. We anticipate an increase in legal, accounting and tax fees in 2006 in connection with this offering and operating as a public company.

Income Tax Provision

Our provision for income taxes for the three months ended March 31, 2006 was $1 million. Income taxes have been provided based upon the tax laws and rates in the countries in which operations are conducted and income is earned. Consequently, the provision for income taxes recorded relates to income earned by certain subsidiaries of the Company which are located in jurisdictions that impose income taxes.

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Discontinued Operations

For the three months ended March 31, 2006, earnings from discontinued operations totaled $3.4 million. During 2005, we purchased an aircraft and immediately held it for sale. The aircraft earned lease rentals in the amount of $2.1 million and incurred interest expense of $528,000. Income taxes associated with the aircraft were $448,000. This aircraft was sold on March 29, 2006 for a $2.2 million gain and the related debt in the amount of $36.7 million was repaid.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP, requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying footnotes. Our estimates and assumptions are based on historical experiences and currently available information. Actual results may differ from such estimates under different conditions, sometimes materially. A summary of our significant accounting policies is presented in Note 2 to our consolidated financial statements included elsewhere in this prospectus. Critical accounting policies and estimates are defined as those that are both most important to the portrayal of our financial condition and results and require our most subjective judgments, estimates and assumptions. Our most critical accounting policies and estimates are described below.

Lease Revenue Recognition

Our operating lease rentals are recognized on a straight-line basis over the term of the lease. We will neither recognize revenue nor record a receivable from a customer when collectibility is not reasonably assured. Estimating whether collectibility is reasonably assured requires some level of subjectivity and judgment. When collectibility is not certain, the customer is placed on non-accrual status and revenue is recognized when cash payments are received. Management determines whether customers should be placed on non-accrual status. When we are reasonably assured that payments will be received in a timely manner, the customer is placed on accrual status. The accrual/non-accrual status of a customer is maintained at a level deemed appropriate based on factors such as the customer credit rating, payment performance, financial condition and requests for modifications of lease terms and conditions. Events or circumstances outside of historical customer patterns can result in changes to a customer’s accrual status.

Income and Valuation of Debt Securities

Income on debt securities is recognized using the effective interest method. Certain investments which represent residual interest are accounted for using a level yield methodology based upon a number of cash flow assumptions that are subject to uncertainties and contingencies. Such assumptions include the rate and timing of principal and interest receipts (which may be subject to prepayments and defaults). These assumptions are updated on at least a quarterly basis to reflect changes related to a particular security, actual historical data, and market changes. These uncertainties and contingencies are difficult to predict and are subject to future events and economic and market conditions, which may alter the assumptions. We have classified our investments in debt securities as available for sale. As such, they are carried at fair value with any net unrealized gains and losses reported as a component of accumulated other comprehensive income. Fair value is based primarily upon broker quotations, as well as counterparty quotations, which provide valuation estimates based upon reasonable market order indications or a good faith estimate thereof. These quotations are subject to significant variability based on market conditions, such as interest rates and credit spreads. Changes in market conditions, as well as changes in the assumptions or methodology used to determine fair value, could result in a

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significant increase or decrease in our results of operations and financial position. At March 31, 2006, each of our debt securities available for sale has unrealized gains.

Flight Equipment

Flight equipment held for lease is stated at cost and depreciated using the straight-line method over a 25 year life from the date of manufacture to estimated residual values.

Estimated residual values are generally determined to be approximately 15% of the manufacturer's estimated realized price for flight equipment when new. Management may, at its discretion, make exceptions to this policy on a case-by-case basis when, in its judgment, the residual value calculated pursuant to this policy does not appear to reflect current expectations of value. Examples of situations where exceptions may arise include but are not limited to:


•	flight equipment where estimates of the manufacturer's realized sales prices are not relevant (e.g., freighter conversions);


•	flight equipment where estimates of the manufacture's realized sales prices are not readily available; and


•	flight equipment which may have a shorter useful life due to obsolescence.

In accounting for flight equipment held for lease, we make estimates about the expected useful lives, the fair value of attached leases and the estimated residual values. In estimating useful lives, fair value of leases and residual values of our aircraft, we rely upon actual industry experience with the same or similar aircraft types and our anticipated utilization of the aircraft.

Determining the fair value of attached leases requires us to make assumptions regarding the current fair values of leases for specific aircraft. We estimate a range of fair values of like aircraft in order to determine if the attached lease is within a fair value range. If a lease is below or above fair value range, we present value the estimated amount below or above fair value range over the remaining term of the lease. Lease premiums or discounts are amortized into lease rental income over the remaining term of the lease.

Our flight equipment held for lease is evaluated for impairment when events and circumstances indicate that the assets may be impaired. Indicators include third party appraisals of our aircraft, adverse changes in market conditions for specific aircraft types and the occurrence of significant adverse changes in general industry and market conditions that could affect the fair value of our aircraft.

Derivative Financial Instruments

In the normal course of business we utilize derivative instruments to manage our exposure to interest rate risks. We account for derivative instruments in accordance with SFAS No. 133 Accounting for Derivative Instruments and Hedging Activities , as amended and interpreted (‘‘SFAS No.133’’). In accordance with SFAS No.133, all derivatives are recognized on the balance sheet at their fair value. We obtain the values on a quarterly basis from the counter party of the derivative contracts. When hedge treatment is achieved under SFAS No.133, the changes in fair values related to the effective portion of the derivatives are recorded in other comprehensive income or in income, depending on the designation of the derivative as a cash flow hedge. The ineffective portion of the derivative contract is calculated and recorded in income at each quarter end.

At inception of the hedge, we choose a method of ineffectiveness calculation, which we must use for the life of the contract. For a majority of our hedges, we use the ‘‘change in variable cash

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flows method’’ for calculation of hedges not considered to be perfectly effective. In the case of swap transactions, the calculation involves a comparison of the present value of the cumulative change in the expected future cash flows on the variable leg of the swap and the present value of the cumulative change in the expected future interest cash flows on the floating-rate liability. The difference is the calculated ineffectiveness and is recorded in income.

We use the ‘‘hypothetical trade method’’ for hedges that do not qualify for the ‘‘change in variable cash flow method’’ under SFAS No.133. The calculation involves a comparison of the change in the fair value of a hypothetical trade to the change in the fair value of the hedge. The difference is the calculated ineffectiveness and is recorded in income.

Share Based Payments

Compensation costs relating to share based payments are recognized based on the fair value of the equity instruments issued in accordance SFAS No. 123(R), Share Based Payment . We use the straight line method of accounting for compensation cost on share based payment awards that contain pro-rata vesting provisions. The fair value of the equity instruments was determined based on a valuation which takes into account various assumptions that are subjective. Such assumptions involved projecting our earnings through the date of the anticipated initial public offering to develop an estimated annualized rate of earnings and annualized earnings and dividends per share. Key assumptions used in developing the projection included expected monthly acquisition volume through the date of an initial public offering, leverage and interest costs, revenues from new aircraft acquisitions and the growth of selling, general and administrative expenses. We anticipate that the current requisite service periods will be obtained for employees with awards.

LIQUIDITY AND CAPITAL RESOURCES

We have been able to meet our liquidity requirements from several sources, including:


•	Lines of credit and other secured borrowings;


•	Equity contributions from our shareholders;


•	Aircraft lease revenues; and


•	Principal and interest payments received on debt securities.

We expect that cash on hand and cash flow provided by operations, as well as our credit facilities, will satisfy our short-term liquidity needs with respect to our current portfolios of aircraft and debt securities over the next 12 months.

The acquisition of aircraft and debt securities drives our growth and fuels our long-term need for liquidity. It is our intention to fund future aircraft acquisitions initially through borrowings under our credit facilities, and to repay all or a portion of such borrowings from time to time with the net proceeds from subsequent securitizations and additional equity issuances. It is also our intention to finance investments in debt securities with borrowings arranged at the time of the investment which may include entering into repurchase agreements. Therefore, our ability to execute our business strategy, particularly the growth of our acquisitions, depends to a significant degree on our ability to obtain additional debt and equity capital. Depending on the volume of aircraft acquisitions and opportunities to invest in debt securities, we will likely seek to execute one or two additional securitizations and may seek to execute one or two secondary equity offerings during the course of the next 12 months. Decisions by investors and lenders to enter into such transactions with us will depend upon a number of factors, such as our historical and

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projected performance, compliance with the terms of our current credit arrangements, industry and market trends, the availability of capital and the relative attractiveness of alternative investments. We believe that funds will be available to support our growth strategy and will enable us to pay dividends to our common shareholders as contemplated by our dividend policy. However, future deterioration in our performance or our markets could limit our ability to access these sources of financing and/or increase our cost of capital, which may negatively impact our ability to raise additional funds, grow our business and to pay dividends to our common shareholders.

Cash Flows


	Period Ended December 31,				Year Ended December 31,				Three Months Ended March 31,
(Dollars in thousands)	2004				2005				2005				2006
Net cash flow provided by (used in) operating activities		$	4,290			$	20,562			$	(1,886	)		$	13,904
Net cash flow used in investing activities			(97,405	)			(742,144	)			(51,313	)			(255,159	)
Net cash flow provided by financing activities			93,115				801,525				96,656				188,866

Net cash flow provided by operating activities totaled $4.3 million and $20.6 million for the period ended December 31, 2004 and for the year ended December 31, 2005, respectively. Operating activities used cash of $1.9 million in the first quarter of 2005 and provided cash of $13.9 million of cash in the first quarter of 2006. Operating activities generated cash in all periods except for the first quarter of 2005. Operating activities used cash in the first quarter of 2005 because only three of our six aircraft were on-lease, and because of an increase of $4.0 million in restricted cash related to the execution of Credit Facility No.1 on February 2005 and the resulting requirement to deposit security and maintenance payments into restricted cash accounts. Cash flow provided by operations is primarily generated from rents received pursuant to the lease agreements on our aircraft. It is reduced by interest expense on our borrowings and by selling, general and administrative expenses. The amount of rent we receive depends on various factors, including the type, size and age of our aircraft portfolio. Our aircraft lease agreements generally provide for the periodic payment of a fixed amount of rent over the life of the lease. The amount of rent we receive may vary due to several factors, including the credit-worthiness of our lessees and the occurrence of delinquencies and defaults. It is also affected by the extent to which aircraft are off-lease, and our ability to remarket aircraft that are nearing the end of their leases. Our success in re-leasing aircraft on favorable terms is affected by market conditions for our aircraft and by general industry trends. At December 31, 2005 and March 31, 2006, all of our aircraft were on-lease, compared to 65% on-lease (or two out of the three aircraft in our portfolio), based on book value, at December 31, 2004. An increase in the percentage of off-lease aircraft or a reduction in lease rates upon remarketing would negatively impact our revenue and cash flow from rents.

Cash flow from (used in) operations is also affected by the interest expense we pay on our credit facilities and by our decisions to hedge the risk of changing interest rates. All of our debt is currently floating rate and varies with changes in LIBOR. To the extent interest rates increase, we may be liable for more interest payments to our lenders. Our practice has been to hedge the expected future interest payments on a portion of our floating rate liabilities by entering into derivative contracts. However, we remain exposed to changes in interest rates to the extent we decide to remain unhedged and the degree to which our hedges are not perfectly correlated to the hedged future cash flows.

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Net cash flow used in investing activities totaled $97.4 million and $742.1 million in 2004 and 2005, respectively, and $51.3 million and $255.2 million for the first quarters of 2005 and 2006, respectively. The period to period increases reflect an increase in investments in aircraft and debt securities available for sale as we have grown our business activities during this time. In the first quarter of 2005 we invested in $27.8 million of aircraft acquisitions and $23.0 million of debt securities as compared to acquisitions of $200.5 million of aircraft and $92.7 million of debt securities in the first quarter of 2006. In 2004, we acquired $97.4 million of aircraft (including $255,000 of capitalized improvements) and no debt securities. In 2005 we acquired $719.6 million of aircraft (including $30.5 million of capitalized improvements) and $29.4 million of debt securities.

Net cash flow provided by financing activities provided most of the cash used to invest in assets. In 2004, Fortress committed to invest $400 million of equity in us. Of this amount, $93.1 million was contributed in 2004 and $306.9 million was contributed in 2005. On January 31, 2006, the Fortress shareholders committed to contribute up to an additional $100 million of equity to us. On February 8, 2006, the Fortress shareholders contributed $36.9 million pursuant to the aforementioned commitment and in exchange for 3,693,200 of our common shares. On June , 2006, we returned the $36.9 million to the Fortress shareholders in exchange for the cancellation of 3,693,200 of our common shares. After the return of the cash, the $100 million commitment was reinstated in full. This commitment will terminate upon the completion of this offering. We also rely on variable rate liabilities to fund part of our acquisitions. In 2005, we borrowed a total of $490.6 million on secured credit facilities and $8.7 million on repurchase agreements. During the first quarter of 2006, we received cash from credit facilities of $78.3 million, net of repayments, to finance investments in aircraft, and we received cash from repurchase agreements of $75.8 million, net of repayments, to finance the acquisition of debt securities. The borrowings under our credit facilities were collateralized by leases on our aircraft, ownership interests in the subsidiaries that own the aircraft, cash on deposit in lockbox accounts and other assets held by the collateral agent and rights under the service provider agreement and certain other agreements.

Credit Facilities

At March 31, 2006, we had a $525 million secured credit facility, which we refer to as Credit Facility No. 1, to finance the acquisition of aircraft and related improvements. Of this amount, $487.0 million had been borrowed and $38.0 million was available. The interest rate on this facility was one-month LIBOR plus 1.50%, which at March 31, 2006 was 6.25% per annum. This facility was repaid in full with proceeds from Securitization No. 1 in June 2006 and terminated.

On February 28, 2006, we entered into another secured revolving credit facility to finance aircraft acquisitions, which we refer to as Credit Facility No. 2. This facility has a $500 million facility limit and a term of 18 months. As of March 31, 2006, we had borrowed $8.6 million under this facility. Borrowings under the credit facility are used to finance up to 85% of the net book value of aircraft. The facility requires the monthly payment of interest and principal, to the extent of 85% of any decrease in the net book value of the assets, through the final maturity of the facility on August 28, 2007. Borrowings under the credit facility bear interest at the one-month LIBOR rate plus 1.25% which at March 31, 2006 was 6.33% per annum. Additionally, we are subject to a 0.25% fee on the average daily amount of the unused portion of the facility. The facility limits our ability to pay dividends prior to any initial public offering. After this offering, the facility has no restrictions on the amount of dividends we can pay, provided we are not in default. Additionally, after the offering, we are required to maintain net worth, determined according to GAAP, of no less than $500 million.

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Also at March 31, 2006, we had a $73.3 million secured credit facility to finance the acquisition of two aircraft which we refer to as Credit Facility No. 3. This was initially a $110.0 million facility and had also been used to finance the acquisition of a third aircraft, but was repaid in part upon the sale of one of our aircraft on March 29, 2006. The interest rate on the facility is one-month LIBOR plus 1.50%, which at March 31, 2006 was 6.20% per annum. The facility requires a monthly payment of interest and matures on October 24, 2006. We expect to either sell and/or obtain alternative sources of financing for these assets prior to the maturity date. However, we can give no assurances that we will be able to do so.

From time to time, we also enter into repurchase agreements to finance certain of our securities available for sale. At March 31, 2006, we had five outstanding repurchase transactions totaling $84.4 million. Four of the agreements provide for the payment of interest at one-month LIBOR plus 0.50% and one of the agreements, totaling $5.9 million, provides for the payment of interest at three-month LIBOR plus 0.75%. At March 31, 2006, the weighted average interest rate on our repurchase agreements was 5.25% per annum. The repurchase agreements provide for an original term to maturity ranging from six months to one year. At March 31, 2006, three of the repurchase transactions totaling $8.8 million are scheduled to mature in June 2006 and two of the repurchase transactions totaling $75.6 million are scheduled to mature in March 2007. If we cannot renew or replace these repurchase transactions as they mature we will be required to repay them from internal funds or alternative sources of financing, as to which no assurance can be given.

Our debt obligations contain various customary non-financial loan covenants. Such covenants do not, in management’s opinion, materially restrict our investment strategy or our ability to raise capital. We are in compliance with all of our loan covenants as of March 31, 2006.

The following table provides a summary of our credit facilities at March 31, 2006 (dollars in thousands):

Debt Obligation

Collateral

Commitment

Outstanding

Interest Rate

Final Stated
Maturity

Credit Facility
No. 1

Interests in aircraft leases, beneficial interests in aircraft owning entities and related interests

525,000

486,973

1-Month LIBOR + 1.50%

02/24/07

Credit Facility
No. 2

Interests in aircraft leases, beneficial interests in aircraft owning entities and related interests

500,000

8,554

1-Month LIBOR + 1.25%

08/28/07

Credit Facility
No. 3

Interests in aircraft leases, beneficial interests in aircraft owning entities and related interests

73,332

1-Month LIBOR + 1.50%

10/24/06

Repurchase Agreements

Securities available for sale

78,554

1-Month LIBOR + 0.50%

6/24/06 and 3/1/07

Repurchase Agreement

Securities available for sale

5,880

3-Month LIBOR + 0.75%

06/06/06

1,182,766

653,293

Securitization

On June , 2006, two of our subsidiaries, ACS Aircraft Finance Ireland plc and ACS Aircraft Finance Bermuda Limited, which we refer to together as the ACS Group, issued $560 million of Class A-1 notes, or the notes to a newly formed trust, ACS 2006-1 Pass Through Trust , or the trust.

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The trust simultaneously issued a single class of Class G-1 pass through trust certificates, or the certificates, representing undivided interests in the notes. Payments on the notes will be passed through to the holders of the certificates. The notes are secured by ownership interests in aircraft-owning subsidiaries of ACS Bermuda and ACS Ireland and the individual aircraft leases, any cash or other assets held by the security trustee and rights under the service provider agreements and certain other agreements and assets. Each of ACS Bermuda and ACS Ireland has fully and unconditionally guaranteed each other's obligations under the notes. However, the notes are neither obligations of or guaranteed by Aircastle Limited. The ACS Group used the proceeds from the sale of the notes to acquire directly or indirectly 40 aircraft from us and we paid for certain expenses incurred in connection with the offering of approximately $ million. We used $ million of the proceeds we received from the sale of the aircraft to ACS Group to repay in full the amount outstanding under Credit Facility No. 1 and to return $36.9 million to Fortress in exchange for the cancellation of 3,693,200 of our common shares. The notes provide for monthly payments of interest at a floating rate of one-month LIBOR plus 0.27% and scheduled payments of principal. The scheduled payments of principal have been calculated such that the principal balance of the notes will be equal to 54.8% of the Initial Appraised Value of the aircraft, as such Initial Appraised Value is decreased over time by an assumed amount of depreciation. During the first five years of the transaction, subject to compliance with the debt service coverage ratio test in years four and five, all cash flows attributable to the underlying aircraft after payment of expenses, interest and scheduled principal payments, or excess securitization cash flows, will be available for distribution to us. We intend to use the excess securitization cash flow to pay dividends and to make additional investments. We expect to refinance the notes on or prior to June 2011. In the event that the notes are not repaid on or prior to June 2011, the excess securitization cash flow will be used to repay the principal amount of the notes and will not be available to us to pay dividends to our shareholders. If during year four or five of the transaction, the debt service coverage ratio test fails on two consecutive payment dates, the excess securitization cash flow will be used to repay the principal amount of the notes and will not be available to us to pay dividends to our shareholders.

During the twelve months subsequent to the closing of Securitization No. 1, the gross contracted lease rental revenues payable on Securitization No. 1 are scheduled to be approximately $121.8 million. Cash outflows of the securitization, not including remarketing expenses, are expected to be comprised of operating expenses, interest expense and principal amortization. The operating expenses incurred directly by Securitization No. 1 (exclusive of the servicing and administrative fees paid to us) are expected to be $3.8 million for the twelve month period. Interest expense incurred on the certificates and amortization of principal are expected to be $32.2 million and $21.5 million, respectively, for the twelve month period. Additionally, total depreciation on a GAAP basis for the initial twelve month period is expected to be $39.3 million, or $17.8 million in excess of principal amortization. Actual amounts may differ from estimated amounts. For a more detailed description of the securitization, see ‘‘Description of Indebtedness — Securitization.’’

Contractual Obligations

Our contractual obligations consist of principal and interest payments on variable rate liabilities, binding letters of intent to purchase aircraft and rent payments pursuant to our office leases. Total contractual obligations increased by $142.3 million during the first quarter of 2006 to $865.5 million as compared to year end 2005. The primary reasons for the increase are additional borrowings under our credit facilities to purchase aircraft and an increase in repurchase agreements to finance the acquisition of securities available for sale. The increase in payment obligations maturing in less than one year during the first quarter of 2006 reflects the February 24, 2007 maturity of Credit Facility No. 1.

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We had no contractual obligations at December 31, 2004. The following table presents our contractual obligations and their maturity dates as of December 31, 2005:

Payments Due By Period as of December 31, 2005


Contractual Obligations	Total			Less than 1 year			1-3 years			3-5 years			More than 5 years
	(dollars in thousands)
Credit Facility No. 1 ⁽¹⁾⁽²⁾		$	404,257		$	38,145		$	366,112		$	—		$	—
Credit Facility No. 3 ⁽¹⁾			115,063			115,063			—			—			—
Repurchase agreements ⁽¹⁾			8,864			8,864			—			—			—
Operating leases ⁽³⁾			3,416			474			969			995			978
Purchase obligations ⁽⁴⁾			191,620			191,620			—			—			—
Total		$	723,220		$	354,166		$	367,081		$	995		$	978


(1)	Includes interest on variable rate, LIBOR-based instruments at the December 31, 2005 rate.


(2)	Credit Facility No. 1 is was paid in full in June 2006 from a portion of the net proceeds of Securitization No. 1.


(3)	Represents contractual payments on our office lease in Stamford, Connecticut.


(4)	At December 31, 2005 we had binding letters of intent to acquire nine aircraft. All of the aircraft were acquired during 2006.

The following table presents our contractual obligations and their maturity dates as of March 31, 2006:

Payments Due By Period as of March 31, 2006


Contractual Obligations	Total			Less than 1 year			1-3 years			3-5 years			More than 5 years
	(dollars in thousands)
Credit Facility No. 1 ⁽¹⁾⁽²⁾		$	492,740		$	492,740		$	—		$	—		$	—
Credit Facility No. 2 ⁽¹⁾			9,294			1,071			8,223			—			—
Credit Facility No. 3 ⁽¹⁾			75,327			75,327			—			—			—
Repurchase agreements ⁽¹⁾			86,126			85,154			972			—			—
Operating leases ⁽³⁾			3,297			476			972			998			851
Purchase obligations ⁽⁴⁾			198,700			198,700			—			—			—
Total		$	865,484		$	853,468		$	10,167		$	998		$	851


(1)	Includes interest on variable rate, LIBOR-based instruments at the March 31, 2006 rate.


(2)	Credit Facility No. 1 was repaid in full in June 2006 from a portion of the net proceeds of our Securitization, No. 1.


(3)	Represents contractual payments on our office lease in Stamford, Connecticut.

(4)

At March 31, 2006, we had binding letters of intent to acquire 10 aircraft. Although the closing of each purchase is contingent on the seller meeting certain conditions precedent, we expect that all of the aircraft will be acquired during the second quarter of 2006. The purchase price of certain of the commitments are subject to variable price provisions that typically reduce the final purchase price if the actual closing occurs beyond an initially agreed upon date.

Our hedging transactions using derivative instruments and our securities repurchase transactions also involve counterparty credit risk. The counterparties to our derivative arrangements and repurchase agreements are major financial institutions with high credit ratings. As a result, we do not anticipate that any of these counterparties will fail to meet their obligations. However, there

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can be no assurance that we will be able to adequately protect against this risk and will ultimately realize an economic benefit from our hedging strategies or recover the full value of the securities underlying our repurchase agreements in the event of a default by a counterparty.

Margin Calls

Our repurchase agreements and interest rate derivative instruments are also subject to margin calls based on the value of the underlying security and the level of interest rates. Margin calls resulting from decreases in the value of our debt investments or mark-to-market losses on our derivative instruments due to decreasing interest rates could require that we post additional collateral. Management believes that we maintain adequate cash reserves and liquidity to meet any reasonably possible margin calls resulting from these risks, but can make no assurances that we will have adequate additional collateral under all potential scenarios.

Capital Expenditures

We make capital expenditures from time to time in connection with improvements made to our aircraft. These expenditures include the cost of major overhauls necessary to place an aircraft in service and modifications made at the request of lessees. In 2004, we incurred $255,000 of capital expenditures. In 2005, we made a total of $30.5 million of capital expenditures related to the acquisition of aircraft. For the quarter ended March 31, 2006 we made a total of $1.5 million of capital expenditures related to the acquisition of aircraft.

As of March 31, 2006, the weighted average (by net book value) age of our aircraft was approximately 8.7 years. In general, the costs of operating an aircraft, including maintenance expenditures, increase with the age of the aircraft. Under our leases, the lessee is primarily responsible for maintaining the aircraft. We may incur additional maintenance and modification costs in the future in the event we are required to remarket an aircraft or a lessee fails to meet its maintenance obligations under the lease agreement. Under 23 of our leases, the lessee is required to make periodic payments to us in order to provide for the payment of maintenance tied to the usage of the aircraft. Under 17 of our leases the lessee may be required to make a maintenance payment to us at the end of the lease based upon certain utilization criteria. Two of our leases require that the lessee make both a monthly maintenance payment and an additional maintenance payment to us at the end of the lease term in certain circumstances. At March 31, 2006, we held $38.3 million of maintenance reserves. These maintenance reserves are paid by the lessee to provide for future maintenance events. Provided a lessee performs scheduled maintenance of the aircraft, we are required to reimburse the lessee for scheduled maintenance payments. In certain cases, we are also required to make lessor contributions, in excess of amounts a lessee may have paid, towards the costs of maintenance events performed by or on behalf of the lessee.

Actual maintenance payments in the future may be less than projected as a result of a number of factors, including defaults by the lessees. Maintenance reserves may not cover the entire amount of actual maintenance expenses incurred and there can be no assurance that our operational cash flow and maintenance reserves will be sufficient to fund maintenance requirements, particularly as our aircraft age. See ‘‘Risk Factors ‘‘If lessees are unable to fund their maintenance requirements on our aircraft, our cash flow and our ability to meet our debt obligations or to pay dividends on our common shares could be adversely affected.’’

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of December 31, 2004, December 31, 2005, March 31, 2005 or March 31, 2006.

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Foreign Currency Risk and Foreign Operations

At March 31, 2006, except for one lease expiring in October 2006, where the lease rentals are payable in euros, all of the leases are payable in U.S. dollars. However, we incurred euro and Singapore dollar denominated expenses in connection with our branch offices in Ireland and Singapore. At the end of March 31, 2006, six of our 32 employees were based in Ireland and one employee was based in Singapore. For the three months ended March 31, 2006, expenses denominated in currencies other than the U.S. dollar, such as payroll and office costs, aggregated approximately $0.7 million in U.S. dollar equivalents and represented approximately 10% of total selling, general and administrative expenses. Our international operations are a significant component of our business strategy and permit us to more effectively source new aircraft, service the aircraft we own and maintain contact with our lessees. Therefore, it is likely that our international operations, and our exposure to foreign currency risk, will increase over time. Although we have not yet entered into foreign currency hedges because our exposure to date has not been significant, if our foreign currency exposure increases we may enter into hedging transactions in the future to mitigate this risk. For the quarter ending March 31, 2005 we incurred a loss of $13,000 and for the quarter ending March 31, 2006 we incurred a loss of $9,000 on foreign currency transactions.

Interest Rate Risk

Interest rate risk is the exposure to loss resulting from changes in the level of interest rates and the spread between different interest rates. Interest rate risk is highly sensitive to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control. We are exposed to changes in the level of interest rates and to changes in the relationship or spread between interest rates. Our primary interest rate exposures relate to our lease agreements, debt investments, floating rate debt obligations and interest rate derivative instruments. Our lease agreements typically require the payment of a fixed amount of rent during the term of the lease. Similarly, our debt securities are generally collateralized largely by fixed rate aircraft leases, and provide for a fixed coupon interest rate. However, our borrowing agreements generally require payments based on a variable interest rate index, such as LIBOR. Therefore, increases in interest rates may reduce our net income by increasing the cost of our debt without any corresponding increase in rents or cash flow from our securities. We are also exposed to loss on (i) our fixed-pay interest rate swaps to the extent interest rates decrease below the contractual fixed rates of our swaps and (ii) on our other interest rate derivative instruments.

Changes in interest rates may also impact our net book value as our debt securities and hedge derivatives are periodically marked-to-market. Generally, as interest rates increase the value of our fixed rate debt securities decreases. The magnitude of the decrease is a function of the difference between the coupon rate and the current market rate of interest, the average life of the securities and the face amount of the securities. We are also exposed to loss on (i) our fixed-pay interest rate swaps to the extent interest rates decrease below the contractual fixed rates of our swaps and (ii) on our other interest rate derivative instruments. In general, we would expect that over time, decreases in the value of our debt securities attributable to interest rate changes will be offset to some degree by increases in the value of our derivative instruments, and vice versa. However, our policy is to hedge only a portion of the variable rate interest payments on our outstanding and/or expected future debt obligations rather than hedge the amount of our investments, therefore, our assets remain partially unhedged. Furthermore, the relationship between spreads on debt securities and spreads on derivative instruments may vary from time to time, resulting in a net aggregate book value increase or decline. Changes in the general level of interest rates also can affect our ability to acquire new investments and our ability to realize gains from the settlement of such assets.

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Hedging

The objective of our hedging policy is to adopt a risk adverse position with respect to changes in interest rates. Accordingly, we have entered into a number of interest rate swaps and interest rate forward contracts to hedge the current and expected future interest rate payments on our variable rate debt. Interest rate swaps are agreements in which a series of interest rate flows are exchanged with a third party over a prescribed period. An interest rate forward contract is an agreement to make or receive a payment at the end of the period covered by the contract, with reference to a change in interest rates. The notional amount on which a swap or forward contract is based is not exchanged. Our swap transactions typically provide that we make fixed rate payments and receive floating-rate payments to convert our floating-rate borrowings to fixed-rate obligations to better match the largely fixed-rate cash flows from our investments in flight equipment and debt securities. Similarly, our interest rate forward contracts typically provide for us to receive a payment if interest rates increase and make a payment if they decrease. However, we can give no assurance that our net income will not be adversely affected during any period as a result of changing interest rates. We held the following interest rate derivative contracts as of March 31, 2006:


Hedged Item	Notional Amount			Effective Date	Maturity Date	Floating Rate	Fixed Rate			Fair Value of Derivative Asset or (Liability)
	(Dollars in thousands)
Anticipated securitization ⁽¹⁾		$	400,000	Mar-05	Aug 2010	1-Month LIBOR		4.61	%		$	9,791
Anticipated securitization ⁽¹⁾			200,000	Nov-05	Aug 2010	1-Month LIBOR		5.03	%			1,733
Credit facility ⁽²⁾			100,000	Mar-06	Mar 2011	1-Month LIBOR		5.07	%			2,186
Repurchase Agreement ⁽³⁾			74,000	Feb-06	Jul 2010	1-Month LIBOR		5.02	%			(264	)
Repurchase Agreement ⁽⁴⁾			5,000	Dec-05	Sep 2009	3-Month LIBOR		4.94	%			52
Repurchase Agreement ⁽⁵⁾			2,900	Jun-05	Mar 2013	1-Month LIBOR		4.21	%			188
Total		$	781,900								$	13,686

(1)

At March 31, 2006, we had two ten-year interest rate swaps with an aggregate notional amount of $600 million. The purpose of these swaps is to fix the anticipated future interest payments on the expected issuance of securitized notes. The terms of the interest rate swaps require us to pay a weighted average fixed rate of 4.75% per annum to the counterparty and to receive one-month LIBOR from the counterparty. The combined market value of the two swaps was a receivable of $11,524 at March 31, 2006. The interest rate swaps were treated as cash flow hedges for accounting purposes with fair value adjustments recorded as a component of other comprehensive income on our balance sheet.

(2)

On March 21, 2006, we entered into a series of interest rate forward contracts to hedge the variable interest rate payments on debt we expect to incur to finance aircraft acquisitions over the next year. The notional amounts of the initial forward contracts in that series start at $100 million with respect to the March 2006 forward contract and increase to a maximum of $500 million with respect to the September 2006 forward contract. The terms of the forward contracts provide for a comparison of, on average, a fixed rate of 5.07% per annum and of one month LIBOR. The aggregate market value of the forward contracts at March 31, 2006, was a receivable of $2.2 million. The interest rate forward contracts are treated as cash flow hedges for accounting purposes with fair value adjustments recorded as a component of other comprehensive income in our balance sheet.

(3)

In March 2006, we designated an interest rate swap which we had entered into in February 2006 as a hedge of the future variable-rate interest payments on a repurchase agreement we executed to finance our acquisition of securities. The interest rate swap has an initial notional principal amount of $74 million and decreases periodically based on estimated projected principal payments on the securities. The interest rate swap, which matures in July 2010, requires that we make semi-annual payments of a fixed rate of 5.02% per annum and receive monthly an amount based on the one-month LIBOR rate and the then current notional principal amount. At March 31, 2006 the market value of the swap was a payable of $264,000. The interest rate swap is treated as a cash flow hedge for accounting purposes with fair value adjustments recorded as a component of other comprehensive income on our balance sheet.

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(4)

On December 5, 2005, we entered into a four-year interest rate swap with a notional amount of $5 million to hedge a floating-rate securities repurchase agreement we had entered into to finance our acquisition of securities. The swap requires that we make semi-annual fixed rate payments of 4.942% per annum and receive quarterly floating rate payments equal to three-month LIBOR. The market value of the swap was a receivable of $52,000 at March 31, 2006. The interest rate swap is treated as a cash flow hedge for accounting purposes with fair value adjustments recorded as a component of other comprehensive income on our balance sheet.

(5)

On June 28, 2005, we entered into a seven-year interest rate swap with a notional amount of $2.9 million to hedge a floating-rate securities repurchase agreement we had entered into to finance our acquisition of securities. The swap requires that we make quarterly fixed rate payments at 4.205% per annum and receive monthly floating rate payments equal to one-month LIBOR. The market value of the swap was a receivable of $188,000 at March 31, 2006. The interest rate swap is treated as a cash flow hedge for accounting purposes with fair value adjustments recorded as a component of other comprehensive income on our balance sheet.

Related Party Transactions

Prior to this offering, substantially all of the ownership interests in Aircastle were beneficially owned by funds managed by affiliates of Fortress and our employees. In 2004, Fortress committed to invest $400 million of equity in AL, all of which was drawn as of December 31, 2005. On January 31, 2006, the Fortress shareholders committed to contribute up to $100 million of additional equity to us. On February 8, 2006, the Fortress shareholders contributed $36.9 million pursuant to the aforementioned commitment in exchange for 3,693,200 of our common shares. On June , 2006, we returned the $36.9 million to the Fortress shareholders in exchange for the cancellation of 3,693,200 of our common shares. After the return of the cash, the $100 million commitment was reinstated. This commitment will terminate upon the completion of this offering.

During 2004 and part of 2005, our primary operations were managed by Fortress. Fortress, acting as manager, incurred direct operating costs on our behalf. These operating costs primarily included payroll costs, office supplies and professional fees paid to third parties. These costs are included in selling, general and administrative expenses in the consolidated statement of operations. As of December 31, 2004, ‘‘Due to affiliate’’ represented reimbursable expenditures of $1.1 million paid by Fortress in 2004. As of December 31, 2004, ‘‘Due from shareholder’’ represented cash of $7.6 million held on our behalf by a shareholder managed by Fortress. In 2005, all amounts due to or from affiliates were settled by cash payment. During a portion of 2005, we occupied space in facilities leased by Fortress and rent of $43,000, determined based on actual costs to Fortress, was reimbursed to Fortress.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to the impact of interest rate changes through our securities portfolio, our variable rate liabilities and our interest rate swap and forward contracts. Significant increases in interest rates could decrease the fair value of our debt securities, increase the amount of interest payments on our variable rate debt and reduce the spread we earn between our generally fixed-rate revenues and our variable rate interest expense. We enter into interest rate swaps and forward contracts to minimize the risks associated with variable rate debt.

The following table provides information about our derivative financial instruments and other financial instruments that are sensitive to changes in interest rates. For our debt securities and variable rate liabilities, the table presents principal cash flows by expected maturity date and related weighted-average interest rates as of the end of each period. Weighted-average variable rates are based on implied forward rates as derived from appropriate annual spot rate observations as of the reporting date. For interest rate swaps and forward contracts, the table presents notional amounts by expected maturity date and weighted-average interest rates as of the end of each period.

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	Face/Notional Amount March 31, 2006				Face/Notional Amounts Maturing																							Fair Value at 3/31/06
					Twelve Months Ending March 31,
					2007				2008				2009				2010				2011				Thereafter
	(Dollars in thousands)
Fixed-Rate Assets
Securities Available for Sale		$	120,943			$	34,431			$	19,604			$	17,419			$	26,601			$	6,473			$	16,416		$	120,558
Average coupon rate, end of period ⁽¹⁾			7.78	%			7.79	%			7.80	%			7.81	%			8.04	%			8.14	%
Variable-Rate Liabilities ⁽²⁾
Borrowing Under Credit Facilities		$	568,859			$	560,886			$	7,993			$	—			$	—			$	—			$	—		$	568,859
Average interest rate, end of period ⁽²⁾			6.24	%			5.64	%			6.38	%			—				—				—
Repurchase Obligations		$	84,434			$	8,787			$	75,647			$	—			$	—			$	—			$	—		$	84,434
Average interest rate, end of period ⁽³⁾			5.25	%			5.64	%			5.63	%			—				—				—
Interest Rate Swaps Related to Repurchase Agreements
Pay fixed/ receive variable		$	81,900			$	7,000			$	28,000			$	11,500			$	19,500			$	13,000			$	2,900		$	(24	)
Average pay fixed rate			4.98	%			4.98	%			4.96	%			4.94	%			4.87	%			4.21	%
Average receive variable rate, end of period ⁽⁴⁾⁽⁵⁾			4.65	%			5.14	%			5.13	%			5.20	%			5.25	%			5.30	%
Interest Rate Forwards Related to Credit Facilities
Notional amount ⁽⁶⁾		$	100,000			$	—			$	—			$	—			$	—			$	—			$	500,000		$	2,186
Average pay fixed rate			5.74	%			5.74	%			5.74	%			5.74	%			5.74	%			5.74	%
Average receive variable rate, end of period ⁽⁴⁾⁽⁵⁾			4.80	%			5.14	%			5.13	%			5.20	%			5.25	%			5.30	%
Interest Rate Swaps Related to Anticipated Securitization
Pay fixed/ receive variable		$	600,000			$	600,000			$	—			$	—			$	—			$	—			$	—		$	11,524
Average pay fixed rate			4.75	%			—				—				—				—				—
Average receive variable rate, end of period ⁽⁴⁾⁽⁵⁾			4.75	%			—				—				—				—				—


(1)	Refers to the weighted-average interest rate on the face amount of securities remaining at the end of each period.


(2)	Amounts shown as projected future variable-rate liabilities maturing exclude cash interest receipts or payments when due. Amounts will not correspond to the contractual obligations table due to the inclusion of interest payments in the contractual obligations table.


(3)	Refers to the weighted-average interest rate on the face amount of variable-rate liabilities outstanding at the end of each period.


(4)	Refers to the weighted-average interest rate on the notional amount of interest rate swaps and forward contracts outstanding at the end of each period.


(5)	The variable rate on our interest rate swaps and equivalent rate on our forward contracts is reset monthly at one-month LIBOR or quarterly at three-month LIBOR, as applicable.


(6)	On March 21, 2006, we entered into a series of interest rate forward contracts to hedge the variability of future interest payments on our credit facilities. The notional amounts of the forward contracts in that series start at $100 million with respect to the March 2006 forward contract and increase to a maximum of $500 million with respect to the September 2006 forward contract.

The fair value of securities available for sale, repurchase obligations and interest rate swaps related to repurchase agreements all increased from December 31, 2005 to March 31, 2006 because of our purchase of additional debt securities in the first quarter of 2006, our execution of repurchase agreements to finance the acquisition of debt securities and our execution of interest rate swaps to hedge the variable interest payments on the LIBOR–based repurchase agreements. The amount of borrowings under credit facilities also increased in the first quarter of 2006 in connection with the financing of additional aircraft acquisitions. Also, in the first quarter of 2006 we entered into a new series of interest rate forward agreements to hedge the variable interest payments on the additional debt we expect to incur from Credit Facility No. 2, which was executed in March 2006.

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Inflation

Inflation generally affects our costs, including SG&A expenses and other expenses. However, we do not believe that our financial results have been, or will be, adversely affected by inflation in a material way.

Management's Use of EBITDA

We define EBITDA as income (loss) from continuing operations before income taxes, interest expense, and depreciation and amortization. We use EBITDA to assess our consolidated financial and operating performance, and we believe this non-GAAP measure is helpful in identifying trends in our performance. This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieve optimal financial performance. It provides an indicator for management to determine if adjustments to current spending decisions are needed.

EBITDA provides us with a measure of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. Accordingly, this metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure or expenses of the organization. EBITDA is one of the metrics used by senior management and the board of directors to review the consolidated financial performance of our business.

Limitations of EBITDA

EBITDA has limitations as an analytical tool. It should not be viewed in isolation or as a substitute for GAAP measures of earnings. Material limitations in making the adjustments to our earnings to calculate EBITDA, and using this non-GAAP financial measure as compared to GAAP net income (loss), include:


•	depreciation and amortization, though not directly affecting our current cash position, represent the wear and tear and/or reduction in value of our aircraft, which affects the aircraft's availability for use and may be indicative of future needs for capital expenditures; and


•	the cash portion of income tax (benefit) provision generally represents charges (gains), which may significantly affect our financial results.

An investor or potential investor may find this item important in evaluating our performance, results of operations and financial position. We use non-GAAP financial measures to supplement our GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.

EBITDA is not an alternative to net income, income from operations or cash flows provided by or used in operations as calculated and presented in accordance with GAAP. You should not rely on EBITDA as a substitute for any such GAAP financial measure. We strongly urge you to review the reconciliation of EBITDA to GAAP net income (loss), along with our consolidated financial statements included elsewhere in this prospectus. We also strongly urge you to not rely on any single financial measure to evaluate our business. In addition, because EBITDA is not a measure of financial performance under GAAP and is susceptible to varying calculations, the EBITDA measure, as presented in this prospectus, may differ from and may not be comparable to similarly

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titled measures used by other companies. The table below shows the reconciliation of net income (loss) to EBITDA for the three months ended March 31, 2005 and 2006 and the period from October 29 to December 31, 2004 and the year ended December 31, 2005.


(Dollars in thousands)	Period from October 29, 2004 (Commencement of Operations) Through December 31,				Year Ended December 31,				Three Months Ended March 31,2006
(Dollars in thousands)	2004				2005				2005				2006
Net income (loss)		$	(1,465	)		$	228			$	(1,374	)		$	11,180
Depreciation			390				14,460				1,462				9,915
Interest, net			(9	)			7,739				313				7,717
Income tax provision			—				940				169				1,004
Earnings from discontinued operations, net of income taxes			—				(1,107	)			—				(3,399	)
EBITDA		$	(1,084	)		$	22,260			$	570			$	26,417

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Industry

We obtained the information in this prospectus about the aviation industry and operating leasing industry from several independent outside sources, including BACK Aviation Solutions (or BACK), an aviation consulting firm; Simat Helliesen & Eichner, Inc, or SH&E, an aviation consulting firm; International Bureau of Aviation or IBA, an aviation consulting firm; Aviation Specialists Group, or ASG, a provider of aircraft appraisals, market analysis and aviation industry insights; The Airline Monitor, an independent journal which provides data and forecasts for the world's airlines and commercial aircraft; Economist Intelligence Unit, or EIU, a provider of country, industry and management analysis; Innovata LLC, or Innovata, a travel information company; and OAG Worldwide Limited, or OAG, an aviation information company.

Aircraft Fleet

According to BACK Aviation Solutions, the current active worldwide commercial aircraft fleet consists of more than 17,000 aircraft. As illustrated in the table below, approximately 13,000 of these aircraft are Western-built. Of the Western-built fleet, approximately 11,000 aircraft were manufactured by Boeing and Airbus, the two largest aircraft manufacturers. These aircraft are typically compliant with noise (Stage 3) and other environmental standards, relatively fuel efficient and technologically advanced. The remaining aircraft in the global fleet tend to be older, have higher direct operating costs (driven largely by less fuel efficient engines) and a smaller installed base of users.

Active World-Wide Commercial Aircraft Fleet


	Age distribution (years)
	0-5		5-10		10-15		15+		Total
Airbus and Boeing
New Narrow-Body Models: 737,A318,A319,A320,A321		1,984		2,002		348		254		4,588
Classic 737		—		290		639		1,407		2,336
Other Narrow-Body Models: 707,717,727,757		115		331		277		694		1,417
Mid-Body Models: 767,A300,A310,A330		270		361		371		493		1,495
Wide-Body Models: 747, 777, A340		315		587		322		295		1,519
Total Airbus and Boeing		2,684		3,571		1,957		3,143		11,355
Freighters (Western-built)		101		159		182		1,295		1,737
Total Western-Built Commercial Aircraft		2,785		3,730		2,139		4,438		13,092
Other Western-Built Commercial Aircraft		—		132		360		1,260		1,752
Other Eastern-Built Commercial Aircraft and Freighters		27		23		360		2,125		2,535
Total Active Worldwide Commercial Aircraft Fleet		2,812		3,885		2,859		7,823		17,379


	Source: BACK Aviation Solutions as of 4/24/06 Note: Excludes Regional and Parked Aircraft

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According to The Airline Monitor , the world fleet is expected to increase to approximately 23,000 aircraft by 2015. Over this period, Boeing and Airbus are expected to increase annual new aircraft deliveries from 785 units in 2006 to 1,100 units in 2015, with an expected average annual value of $76 billion.

According to SH&E, the current fleet of 17,000 aircraft has an aggregate value of approximately $330 billion and is expected to grow to approximately $580 billion in 2015, representing a compound annual growth rate of 6.1%.

World Fleet Projections


	Source: The Airline Monitor

Both Boeing and Airbus are planning to introduce new aircraft models over the next 5-15 years including the super jumbo A380 and 747-800, the 200-300 seat 787 and A350. Both are also contemplating new models for the next generation of narrow-body aircraft using state-of-the-art composite technology.

Geographic Distribution of Aircraft Fleet

As indicated in the table below, the majority of the global fleet is located in North America and Europe, while the fastest fleet growth since 1995 occurred outside of these regions. In particular, the number of aircraft operating in Asia has increased by approximately 59.3% since 1995, while the fleet operating in the Middle East and Latin America increased by almost 82.0% and 25.2%, respectively, over this same period.

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Historical Geographic Distribution of Aircraft Fleet


Region	1995		2000		2006		1995-2006 total growth
Africa		498		539		765	53.6%
Asia		1,831		2,121		2,916	59.3%
Australia		315		298		530	68.3%
Europe		5,272		5,324		5,651	7.2%
Latin America		842		920		1,054	25.2%
Middle East		538		646		979	82.0%
North America		5,119		5,864		5,484	7.1%
Total		14,415		15,712		17,379	20.6%


	Source: BACK Aviation Solutions as of 4/24/06

Current Freighter Fleet


	Current fleet		% of total			Models
Small Narrow-Body		510		29.4	%	727, 737, DC-9
Medium Narrow-Body		304		17.5	%	707, 757, DC-8
Mid-Body		375		21.6	%	767, A300, A310, DC-10-10
Large Wide-Body		548		31.5	%	747, DC-10-30, DC-10-40, MD-11
Total		1,737		100.0	%


	Source: BACK Aviation Solutions as of 4/24/06

Freighters are either conversions from passenger aircraft or production freighters, which are aircraft built specifically for freight transportation. Passenger-to-freighter, or PTF, aircraft conversion have traditionally supported aircraft residual values and extended the useful economic lives of the aircraft by 5-10 years. Approximately 75% of freighters were PTF conversions while 25% were production freighters.

The conversion market has become very active with the launch of a number of original equipment manufacturer, or OEM, and third-party PTF programs for such Boeing aircraft as the 737-300, 737-400, 757-200, 767-200, 747-400 and MD-11. Current OEM Airbus programs gaining momentum include those targeting A310-300 and A300-600 aircraft. The increased market activity, combined with competition surrounding conversion slots and sourcing of aircraft conversion candidates, indicates a growing market that will help maintain certain aircraft values.

1,040 aircraft or approximately 60% of the existing global freighter fleet is expected to be scrapped within the next 20 years and replaced by an estimated 1,050 new production freighters and 2,000 PTF conversions. The bulk of these replacement freighters will be mid-body and wide-body aircraft types.

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Aircraft Ownership

As the table below shows, aircraft ownership is highly fragmented, with over 1,800 owners consisting of airlines, operating lessors, banks, manufacturers, governments and others. Airlines are currently the largest aircraft owners, accounting for 48.4% of the global fleet. Since 1995, operating lessors have significantly increased their ownership percentage from 17.6% to 30.1%.

Market Size and Ownership


	1995						Current
Category	Aircraft		% total			# of owners	Aircraft		CAGR ('95-'06)			% total			# of owners
Airline		7,998		55.5	%	614		8,415		0.5	%		48.4	%	694
Operating lessor		2,534		17.6	%	254		5,235		6.8	%		30.1	%	505
Bank/Manufacturer		2,291		15.9	%	461		2,292		0.0	%		13.2	%	382
Government		1,459		10.1	%	121		1,287		(1.1	%)		7.4	%	127
Others		133		0.9	%	110		150		1.1	%		0.9	%	127
Grand Total		14,415		100.0	%	1,560		17,379		1.7	%		100.0	%	1,835


	Source: BACK Aviation Solutions as of 4/24/06 Note: Excludes Regional Jets and Parked Aircraft

Operating Lessor Market

The high cost of aircraft fleet renewal and expansion, and the competitive environment of the commercial airline industry has led many airlines to outsource aircraft ownership to operating lessors. Airlines find operating leases to be attractive because they (i) maximize fleet flexibility by matching capacity with demand and by maintaining a variety of aircraft types, (ii) require a lower capital commitment, which provides greater financial flexibility and (iii) significantly reduce aircraft residual risk. In addition, as legacy carriers continue to restructure, aircraft operating leasing is being used regularly to finance both new and existing aircraft (sale-leaseback transactions).

As indicated in the graph below, over the last 20 years, the percentage of the global commercial aircraft fleet owned by operating lessors increased from 7.5% in 1986 to 30.1% in April 2006, while the percentage owned by airlines declined from 74.3% to 48.4% over the same time period.

Operating Lessor vs. Airline Ownership


	1986			1990			1995			2000			2006
Operating lessors		7.5	%		12.6	%		17.6	%		21.9	%		30.1	%
Airlines		74.3	%		62.1	%		55.5	%		52.3	%		48.4	%


	Sources: BACK Aviation Solutions as of 4/24/06 Note: Excludes Regional Jets and Parked Aircraft. 2006 Data as of April 2006

The two largest competitors in the aircraft leasing industry are GE Commercial Aviation Services, or GECAS, and International Lease Finance Corporation, or ILFC. GECAS, an arm of General Electric, owns/manages over 1,400 aircraft. ILFC, a wholly owned subsidiary of American International Group, Inc., or AIG, owns/manages over 860 aircraft. The remaining population of operating lessors is highly fragmented. As of February 2006, the top 20 lessors owned and managed approximately 5,400 aircraft.

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Top 20 Aircraft Operating Lessors by Active Aircraft Fleet


Leasing company	Number of Aircraft Owned and Managed	% Owned Aircraft	% Managed Aircraft
GECAS	1,405	81.1%	18.9%
ILFC	866	93.0%	7.0%
BAE Systems	375	33.3%	66.7%
Boeing Capital	341	97.1%	2.9%
CIT Group	313	98.1%	1.9%
Aviation Capital Group	224	90.6%	9.4%
Aercap	216	61.6%	38.4%
Raytheon	195	100.0%	0.0%
Pegasus	186	100.0%	0.0%
GATX Air	181	68.5%	31.5%
RBS Aviation Capital	179	100.0%	0.0%
AWAS	155	99.4%	0.6%
Babcock & Brown	149	72.5%	27.5%
Saab Aircraft leasing	141	22.7%	77.3%
ATR Asset Management	118	96.6%	3.4%
Finova Capital	90	100.0%	0.0%
Pembroke	88	93.2%	6.8%
SALE	79	91.1%	8.9%
ORIX	75	100.0%	0.0%
Jetran	63	96.8%	3.2%
Total	5,439


	Source: International Bureau of Aviation, February 2006

Macro Fundamentals

Although the airline industry is cyclical, negative world traffic growth has only occurred twice in modern aviation history: in 1990-1992 with the first Gulf War and in 2001-2003 due to several factors, including the September 11, 2001 terrorist attacks in the United States, global economic recession, military actions in the Middle East, health concerns, SARS, natural disasters and the continuing threat of terrorist attacks.

Global passenger and freight traffic has grown rapidly in recent years, driven by factors such as globalization, strong economic growth in developing countries, and liberalization of global aviation markets. According to the Economist Intelligence Unit, over the next five years, global GDP is expected to grow at an average rate of 4.2% per year. Since 1994, for every 1.0% increase in global GDP, passenger and freight traffic have, on average, grown by 1.4% and 1.6%, respectively. Excluding the downturn in 2001 and 2002, for every 1.0% increase in global GDP, passenger and freight traffic have, on average, grown by 1.7% and 1.9%, respectively.

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Global Passenger Traffic Growth/GDP Growth and Global Freight Traffic Growth/GDP Growth


	Source: Economist Intelligence Unit, The Airline Monitor, SH&E

Large emerging market countries such as Russia, China, India and Brazil are projected to have high GDP growth rates over the next five years. In addition, current GDP per capita and the enplanement ratios (enplanements/ population) for these countries are far below the United States, suggesting high growth potential in these markets.

Global Macro Fundamentals and Outlook


	US			Russia			China			India			Brazil
GDP Growth estimates (2006 – 2011)		3.9	%		13.1	%		10.9	%		8.5	%	7.8%
2005 GDP/ Capita (US$)		42,101			5,369			1,703			714		4,316
GDP/Capita Growth estimates (2006 – 2011)		3.0	%		13.6	%		10.3	%		7.0	%	6.5%
2005 Population (000s)		298,213			143,202			1,315,844			1,103,371		186,405
2005 Enplanement Ratios		242.9	%		15.1	%		10.5	%		2.3	%	21.2%
2005 RPM (millions)		783,567			37,162			127,058			25,292		33,661
RPM growth estimates (2006 – 2011)		4.0	%		4.2	%		7.8	%		6.4	%	7.0%


	Source: International Bureau of Aviation

Airline Industry Developments

Over the last several years, low-cost carriers, or LCCs, have become major players in the airline industry. LCCs offer generally lower fares in exchange for eliminating many traditional passenger services while also driving lower unit costs. The aggressive growth by LCCs in both developed and emerging markets, spurred by some of the highest profit margins in the industry, has created the need for large quantities of additional aircraft.

Although much of the early growth was in North America, the LCC presence has strengthened in other world markets. For example, Asia has experienced significant LCC growth, with 3.6% of intra-regional capacity served by LCCs, up from 0.3% in 2000. Penetration is expected to increase further with new airport developments and liberalization of air traffic rights. Both India and China are expected to be the new frontiers for expansion. Similarly, LCCs as a percent of intra-regional capacity in Europe and Africa/Middle East grew at a compound annual growth rate of 30.0% and 9.3%, respectively, in 2000-2005.

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LCCs as Percent of Intra-Regional Capacity (%)


Region	2000			2005			Compound Annual Growth Rate (2000-2005)
North America		13.9	%		26.3	%	13.8%
Europe		7.3	%		27.0	%	30.0%
Asia Pacific		0.3	%		3.6	%	66.7%
Latin America		0.0	%		7.1	%	NM
Africa/Middle East		2.6	%		4.0	%	9.3%


	Source: SH&E, Innovata and OAG, June 2000 - 2005

Fleet management is especially important for LCCs, as it is critical for them to sustain low operating costs by utilizing new generation aircraft. As the table below indicates, the world's top global LCCs rely heavily on operating leases to develop their fleets and have a significant backlog of aircraft orders.

Selected LCCs Aircraft and Backlog Ownership Profile


	12/31/2005							April 2006 Aircraft Backlog
	Current # of Aircraft		Leased		% Leased			April 2006 Aircraft Backlog
GOL		42		42		100.0	%		66
Air Deccan		29		26		89.7	%		85
Airtran		105		92		87.6	%		46
Easyjet		109		91		83.5	%		67
Southwest		445		93		20.9	%		138
Ryanair		91		17		18.7	%		132
Air Asia		27		N/A		N/A			54
Total		848		361		42.6	%		588


	Source: BACK Aviation Solutions as of 4/24/06, Company filings

Aircraft Prices and Lease Rates

The downturn in the industry due to a series of events such as the September 11, 2001 terrorist attacks in the United States and subsequent global events like the Middle East conflicts and outbreak of SARS had an adverse effect on the global aviation industry, consequently putting pressure on aircraft values and lease rates. Values and lease rates fell from their highs in 2000 to new lows by 2002-2003.

Following this downturn, the global commercial aviation industry has experienced a broad based recovery of aircraft values and lease rates. The graph below displays the recovery in lease rates for various aircraft types over the last 6 years.

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Aircraft Lease Rates (US$000s per month)


	Source: Aviation Specialists Group

The relative increase in lease rates however, has exceeded the increase in values for certain aircraft types such as 737 or A320. These are commonly used to replace the MD80, F100 and 717 aircraft that are reaching the end of their useful economic lives or do not operate as efficiently. As a result, lease rate factors, or the ratio between lease rates and current market values, have been increasing for these popular aircraft types as illustrated below.

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	Source: SH&E

In addition, there is strong demand for mid-body aircraft types, such as the 767-300ER and A330. The increase in traffic levels has supported the economic use of these mid-body aircraft. These mid-body aircraft are often used as interim stage aircraft prior to delivery of the 787 aircraft (expected at the earliest in 2011), resulting in increased lease rates. In addition, the uncertainty around the delivery schedule for the A350 aircraft has increased the near-term demand for existing mid-body aircraft. Lease rate factors for the B767-300ERs are also at or near their historical highs as illustrated below.


	Source: SH&E

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Business

Business Overview

Competitive Strengths

We believe that the following competitive strengths will allow us to capitalize on the growth opportunities in the global aviation industry:

•

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•


•	Scaleable business platform. We operate globally through offices in the United States, Ireland and Singapore, using state-of-the-art asset management systems. We designed this platform to allow us to grow our revenue and asset base without a proportional increase in overhead costs.

•

Innovative long-term debt financing structure. We closed our first aircraft lease portfolio securitization on June , 2006. We have structured Securitization No. 1 to provide for the release to us during the first five years of ‘‘excess securitization cash flows,’’ or the cash flows attributable to the underlying aircraft after payment of expenses, interest and scheduled principal payments. We intend to use this excess securitization cash flow to pay dividends and to make additional investments in aviation assets. By way of comparison, a typical aircraft securitization starts with significantly higher leverage and allows no release of excess securitization cash flows; instead, those cash flows are required to further amortize, and thus lower the leverage on, the securities. We have also structured Securitization No. 1 to maintain ‘‘constant leverage’’ in that scheduled principal payments during the first five years are expected to amortize the aircraft lease-backed securities such that the balance thereof is always equal to 54.8% of the initial appraised value of such aircraft, as decreased over time by an assumed amount of depreciation.

Growth Strategy

We plan to grow our business and increase our dividends per share by employing the following business strategies:

•

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•


•	Maintain an efficient capital structure. We expect to finance acquisitions on a long-term basis using aircraft lease portfolio securitizations. We believe that our long-term debt structure and dividend payment strategy result in a low cost of capital and a high degree of financial flexibility, allowing us to grow our business and dividends to shareholders.

Our Aircraft Portfolio

As of March 31, 2006, our aircraft portfolio consisted of 42 aircraft on lease to 24 lessees in 16 countries. The weighted average (by net book value) age of our aircraft as of March 31, 2006, was 8.7 years and the weighted average (by net book value) remaining lease term for those aircraft was 4.2 years. In addition, as of May 22, 2006, we had acquired an additional six aircraft for an aggregate purchase price of $107.9 million and had committed to acquire an additional nine aircraft for an aggregate purchase price of $244.2 million.

As of March 31, 2006 our aircraft portfolio includes (13) Next Generation Boeing / Airbus A320 family aircraft, (9) mid-body Boeing 767ER / Airbus A330 aircraft, (6) cargo aircraft and (14) Boeing 737 Classic aircraft.

The following table sets forth, as of May 22, 2006, certain information with respect to our aircraft portfolio.

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Aircraft Type

Year of Delivery by
Manufacturer

Lessee

Country of
Domicile

Lease
Expiration

Aircraft Owned as of March 31, 2006

A310-300F

1989

Turk Hava Yollari

Turkey

Dec-08

A319-100

2000

SN Brussels Airlines

Belgium

Mar-07

A319-100

2000

SN Brussels Airlines

Belgium

Mar-07

A320-200

1999

China Eastern Airlines

China

Apr-09

A320-200

1998

TAM - Linhas Aereas S.A.

Brazil

Apr-07

A320-200

1997

Valuair Limited

Singapore

Dec-09

A320-200

1997

Lotus Air

Egypt

Mar-12

A320-200

1997

Niki Luftfahrt GMBH

Austria

Oct-06

A330-200

2000

Swiss International Air Lines

Switzerland

Mar-10

A330-300

2000

US Airways, Inc.

USA

Aug-12

A330-300

2000

US Airways, Inc.

USA

Dec-12

A330-300

2000

US Airways, Inc.

USA

Oct-12

A330-300

2000

US Airways, Inc.

USA

Nov-12

737-300

1988

GOL Transportes Aereos S.A.

Brazil

Jun-08

737-300

1988

GOL Transportes Aereos S.A.

Brazil

Jul-08

737-300

1990

Capital Aviation Services B.V.

Netherlands

Nov-08

737-300

1990

Capital Aviation Services B.V.

Netherlands

Sep-08

737-300

1990

Futura International Airways

Spain

Dec-08

737-300QC

1987

Hainan Airlines Company Ltd.

China

Apr-09

737-300QC

1988

Hainan Airlines Company Ltd.

China

Oct-08

737-300QC

1988

Hainan Airlines Company Ltd.

China

Jan-09

737-300QC

1989

Hainan Airlines Company Ltd.

China

Jan-08

737-400

1992

Air One S.P.A.

Italy

Mar-07

737-400

1992

Air One S.P.A.

Italy

Mar-07

737-400

1993

Ukraine International Airlines

Ukraine

Jun-12

737-400

1991

Ukraine International Airlines

Ukraine

Nov-09

737-400

1992

Aerosvit Airlines JSC

Ukraine

Nov-09

737-500

1990

Siberia Airlines

Russia

Oct-10

737-500

1991

Siberia Airlines

Russia

Oct-10

737-500

1991

Siberia Airlines

Russia

Nov-10

737-500

1995

British Airways PLC

England

Mar-09

737-700

1999

Sterling Airlines A/S

Denmark

Jun-11

737-800

2000

Thomsonfly Limited

Apr-07

737-800

1999

Hainan Airlines Company Ltd.

China

May-14

737-800

1999

Hainan Airlines Company Ltd.

China

Feb-14

737-800

1999

Air Europa Lineas Aereas S.A.U.

Spain

Nov-11

737-800

1999

Air Europa Lineas Aereas S.A.U.

Spain

Apr-11

747-400PC

1991

Air India Limited

India

Apr-08

767-200ER

1990

US Airways, Inc.

USA

Aug-08

767-300ER

1991

Sahara Airlines Limited

India

Dec-11

767-300ER

1997

Polskie Linie Lotnicze ‘‘LOT’’ S.A.

Poland

Dec-09

767-300ER

1990

TUI AG

Germany

Nov-09

Aircraft Acquired Subsequent to March 31, 2006 through May 22, 2006

A319-100

2000

SN Brussels Airlines

Belgium

Mar-07

757-200

1994

US Airways, Inc.

USA

Feb-07

757-200

1994

US Airways, Inc.

USA

Feb-07

757-200

1994

US Airways, Inc.

USA

Feb-07

767-300ER

1988

Air Canada

Canada

Apr-09

767-300ER

1991

Icelandair ehf

Iceland

Oct-10

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Acquisitions

We source our acquisitions through well-established relationships with airlines, other aircraft lessors, financial institutions, and other aircraft owners. We are currently focused on acquiring high-utility aircraft in the secondary market and through sale-leasebacks. We believe that sourcing acquisitions both globally and through multiple channels provides for a broad and relatively consistent set of investment opportunities.

We have an experienced acquisitions team based in Stamford, Connecticut; Dublin and Singapore that maintains strong relationships with a wide variety of market participants throughout the world. We believe that our seasoned personnel and extensive industry contacts facilitate our access to acquisition opportunities.

Potential investments are evaluated by teams consisting of marketing, engineering / technical, credit, financial analytic and legal professionals. These teams consider a variety of aspects before we commit to purchase an aircraft, including its price, specification / configuration, condition and maintenance history, operating efficiency, lease terms, financial condition and liquidity of the lessee, jurisdiction, industry trends and future redeployment potential and values, among other factors. We believe that utilizing a cross-functional team of experts to consider the investment parameters noted above will help assess more completely the overall risk and return profile of potential acquisitions and will help us move forward expeditiously on letters of intent and acquisition documentation. Our letters of intent are typically non-binding prior to board of directors approval, and upon board of directors approval are binding and subject to the fulfillment of customary closing conditions.

Our aim is to develop and maintain a diverse and stable portfolio and, in that regard, our investment strategy is oriented towards longer term holding horizons rather than shorter-term trading.

Finance

A key aspect of our growth strategy is our flexible capital structure which supports the financing of our acquisitions of aircraft and other aviation assets. We typically finance the initial purchase of aircraft and other aviation assets using committed short-term credit arrangements and cash on hand. We believe our ability to execute acquisitions expeditiously and without financing contingencies has benefited us in competitive bidding situations. Our short-term borrowed funds for our aircraft acquisitions and repurchase obligations for our securities are provided by secured credit facilities from banks. See ‘‘— Liquidity and Capital Resources — Credit Facilities.’’

We intend to access the securitization market to provide long-term financing for our aircraft operating lease portfolio. On June , 2006 we closed Securitization No. 1. Securitization No. 1 generated gross proceeds of $560 million through the issuance of aircraft lease-backed securities, secured by ownership interests in our subsidiaries that own the 40 aircraft included in Portfolio No. 1 and the related leases. The face value of the notes represents 54.8% of the Initial Appraised Value of Portfolio No. 1 of $1.022 billion. We retained 100% of the residual economic interests in the 40 aircraft in Portfolio No. 1.

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Based on our expected aircraft acquisition plan, we anticipate completing one or two securitizations per year and one or two additional equity offerings per year. Our ability to successfully complete these securitizations and equity offerings on favorable terms will have a significant impact on our results of operations and financial condition.

Our Leases

As of March 31, 2006, all of the aircraft in our portfolio were subject to operating leases. Under an operating lease, we retain the benefit, and bear the risk, of re-leasing and the residual value of the aircraft upon expiry or early termination of the lease. Operating leasing is an attractive alternative to ownership for airlines because leasing (i) increases fleet flexibility, (ii) requires a lower capital commitment, and (iii) significantly reduces aircraft residual value risk. Under our leases, the lessees agree to lease the aircraft for a fixed term, although in some cases the lessees may have purchase options, termination rights and extension rights, each as more fully discussed below. As at March 31, 2006, the weighted average (by net book value) remaining term of our leases was 4.2 years with scheduled expirations ranging from 2006 through 2014.

As of March 31, 2006, the maturities of our leases by aircraft type were as follows:


	2006	2007	2008	2009	2010	2011	2012	2013	2014
A310-300F	0	0	1	0	0	0	0	0	0
A319-100	0	2	0	0	0	0	0	0	0
A320-200	1	1	0	2	1	0	0	0	0
A330-200	0	0	0	0	1	0	0	0	0
A330-300	0	0	0	0	0	0	4	0	0
737-300	0	0	5	0	0	0	0	0	0
737-300QC	0	0	1	3	0	0	0	0	0
737-400	0	2	0	2	0	0	0	0	0
737-500	0	0	0	1	3	0	1	0	0
737-700	1	0	0	0	0	1	0	0	0
737-800	0	1	0	0	0	2	0	0	2
747-400PC	0	0	1	0	0	0	0	0	0
767-200ER	0	0	1	0	0	0	0	0	0
767-300ER	0	0	0	2	0	0	0	0	0
Total	2	6	9	10	5	3	5	0	2

Lease Payments and Security. Each of our leases require the lessee to pay periodic rentals during the lease term. Rentals on three of our leases are payable on a floating interest-rate basis and rentals on our remaining leases are fixed for the base lease term. All lease rentals are payable either monthly or quarterly in advance. Under some of our leases, maintenance payments are due monthly in arrears and additional amounts based on excess hours of operation or cycles may be payable either monthly or annually in arrears. Except for one lease expiring in October 2006, where the lease rentals are payable in euros, all of the leases are payable in U.S. dollars.

Under our leases, the lessee must pay operating expenses accrued or payable during the term of the lease, which would normally include maintenance, operating, overhaul, airport and navigation charges, certain taxes, licenses, consents and approvals, aircraft registration and aircraft hull and public liability insurance premiums. The lessees are obliged to remove liens on the aircraft other than liens permitted under the leases.

Our leases generally provide that the lessees’ payment obligations are absolute and unconditional under any and all circumstances and require lessees to make payments without withholding payment

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on account of any amounts the lessor may owe the lessee or any claims the lessee may have against the lessor for any reason, except that under certain of the leases a breach of quiet enjoyment by the lessor may permit a lessee to withhold payment. The leases also generally include an obligation of the lessee to gross up payments under the lease where lease payments are subject to withholdings and other taxes, although there may be some limitations to the gross up obligation, including provisions which do not require a lessee to gross up payments if the withholdings arise out of our ownership or tax structure. In addition, changes in law may result in the imposition of withholding and other taxes and charges that are not reimbursable by the lessee under the lease or that cannot be so reimbursed under applicable law and lessees may fail to reimburse even when obligated under the lease to do so. Our leases also generally require the lessee to indemnify the lessor for tax liabilities relating to the leases and the aircraft including, in most cases, value added tax and stamp duties, but excluding income tax or its equivalent imposed on the lessor. Our leases require the lessees to pay default interest on any overdue amounts.

As of March 31, 2006, lessees under 36 of our leases, representing 70.4% of our total revenue for the three months ended March 31, 2006, had provided cash security deposits and/or letters of credit.

Lessees' Options. As of March 31, 2006, none of our leases provide the lessee the option to purchase the aircraft at the end of the lease term.

Ten of our leases, as of March 31, 2006, give the lessee the option to extend the term of the lease. The rent payable during the extension period may vary from the rent payable prior to the extension. None of our leases provide the lessee an option to terminate its lease prior to the scheduled expiration date.

Risk Management

Our objective is to build and maintain an operating lease portfolio which is balanced and diversified and delivers returns commensurate with risk. We have portfolio concentration objectives to assist in portfolio risk management and highlight areas where action to mitigate risk may be appropriate, and take into account the following:


•	individual lessee exposures;


•	average portfolio credit quality;


•	geographic concentrations;


•	lease maturity concentrations; and


•	aircraft model concentrations.

We have a risk management team which undertakes detailed credit due diligence on lessees when aircraft are being acquired with a lease already in place and for placement of aircraft with new lessees following lease expiry or termination.

Lease Management and Remarketing

Our aircraft re-leasing strategy is to develop opportunities proactively, well in advance of lease expiries, to enable consideration of a broad set of alternatives, including both passenger and freighter deployments, and to allow for reconfiguration/ maintenance lead times where needed. We have invested significant resources in developing and implementing what we consider to be a state-of-the-art lease management information system to enable efficient management of aircraft in our portfolio.

Potential re-leasing opportunities are sourced globally and screened with respect to multiple factors, including rental rates, lease term, redeployment costs, lessee credit and jurisdiction, and the level of security deposits, maintenance reserves and other protections.

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Remarketing of aircraft for placement on new operating leases is undertaken by a highly experienced marketing team with a well established market profile and extensive contacts. We have representatives based in the United States, Europe and Asia who provide global coverage. Our marketing team has an ongoing dialogue with a wide cross section of airlines, the original equipment manufacturers and other significant industry participants to keep closely apprised of market developments affecting airline fleet requirements and emerging aircraft supply and demand opportunities.

Our current strategy is to focus on the acquisition, leasing and management of owned aircraft rather than seeking to enter third-party aircraft management business. We currently manage five aircraft on behalf of Fortress-related entities, but we are not actively pursuing other third-party aircraft management business.

Our Debt Investments

We also invest in debt securities secured by commercial jet aircraft including enhanced equipment trust certificates and other forms of collateralized debt. We believe our experience in the aircraft leasing business, coupled with our knowledge of structured finance, enables us to make opportunistic investments in this market.

We believe our debt investments complement our aircraft leasing business. Through our aircraft leasing business, we have extensive experience with the pertinent airline credits and valuation of underlying aviation collateral. By leveraging this knowledge and experience we believe we are able to earn attractive risk-adjusted returns.

As of March 31, 2006, our debt investment portfolio had a fair value of $120.6 million and consisted of six debt securities. A majority of the opportunities available in this segment presently entail U.S. airline obligors. Consistent with our overall investment approach, we consider return thresholds for investments in secured debt on a risk-adjusted basis.

Consistent with our strategy in our aircraft leasing business, we generally invest in secured debt with a long-term holding horizon. Among other factors, we periodically monitor the investment value, collateral coverage and credit standing of the relevant obligors. As part of our portfolio management approach, we will consider liquidating or reducing our exposure to specific securities to the extent collateral coverage, credit profile or other factors deteriorate.

We utilize a deal team approach to pursue secured debt transactions, wherein functional experts such as technical, credit and legal personnel support our analytics/ valuation and finance functions in order to make investments consistent with our portfolio management strategy. At the current time, funding for our secured debt investments is undertaken on a transaction-specific basis.

Other Aviation Assets

As of May 22, 2006, our overall portfolio of assets includes commercial jet aircraft and asset-backed debt securities, however, we believe that acquisition opportunities may arise in such sectors as jet engine and spare parts leasing and financing, aviation facility financing or ownership, and commercial turboprop aircraft and helicopter leasing and financing. In the future, we may make opportunistic investments in these sectors or in other aviation related assets.

Competition

The aircraft leasing industry is highly competitive. The aircraft leasing industry may be divided into two leasing segments: (i) leasing of new aircraft acquired directly or indirectly from manufacturers and (ii) leasing or re-leasing of aircraft in the secondary market. Currently, we compete primarily in the

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latter segment, and our competition is comprised of other aircraft leasing companies, including GE Capital Aviation Services, International Lease Finance Corp., CIT Group, AerCap, Aviation Capital Group, Pegasus, GATX Air, RBS Aviation Capital, AWAS, Babcock & Brown and Singapore Aircraft Leasing Enterprise. We believe that only a few comparably sized companies focus primarily on the same segment of the aircraft leasing market as we do. In addition to those companies listed above, a number of other aircraft manufacturers, airlines and other operators, distributors, equipment managers, leasing companies, financial institutions, and other parties engaged in leasing, managing, marketing or remarketing aircraft compete with us, although their focus may be on different market segments. Competition in aircraft leasing is based principally upon the availability, type and condition of aircraft, lease rates and other lease terms. Some of our competitors have, or may obtain, greater financial resources than us and may have a lower cost of capital. However, we believe that we are able to compete favorably in aircraft acquisition and leasing activities due to the reputation and experience of our management, our expertise in acquiring aircraft and our flexibility in structuring lease rates and other lease terms to respond to market dynamics and customer needs. We also face competition in remarketing activities from the same type of competitors. Competition in the sale of aircraft is based principally on the availability, type and condition of aircraft and price.

Employees

We operate in a capital intensive rather than a labor intensive business. As of March 31, 2006, we had 32 full-time employees. Management and administrative personnel will expand, as necessary, to meet our future growth needs. None of our employees are covered by a collective bargaining agreement and we believe that we maintain excellent employee relations. We provide certain employee benefits, including retirement, health, life, disability and accident insurance plans.

Property and Facilities

We lease approximately 13,000 square feet of office space in Stamford, Connecticut for our corporate operations. This lease expires in December, 2012 and requires payments of approximately $500,000 per year.

In addition, we lease one office in Ireland for our leasing operations in Europe. The lease for the Irish facility expires in October 2006. Upon expiration, the lease for the Irish facility will be automatically renewed for six months unless terminated earlier by either party upon advance written notice prior to the expiration date of the then current term. We lease an office space in Singapore for our leasing operations in Asia. The initial lease for the Singapore facility expired in January 2006. Upon expiration, the lease for the Singapore facility provides that it will be automatically renewed for six month intervals unless terminated earlier by either party upon advance written notice prior to the expiration date of the then current term. The Singapore lease was renewed for another six month term beginning February 1, 2006. We also lease an office space in Oak Brook, Illinois for our leasing operations in North America. The lease for the Oak Brook facility expires in March 2007. Upon expiration, the lease for the Oak Brook facility will be automatically renewed for 12 month intervals unless terminated earlier by either party upon advance written notice prior to the expiration date of the then current term.

We believe our current facilities are adequate for our current needs and that suitable additional space will be available as and when needed.

Insurance

We require our lessees to carry with insurers in the international insurance markets the types of insurance which are customary in the air transportation industry, including airline general third party legal liability insurance, all-risk aircraft hull insurance (both with respect to the aircraft and with

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respect to each engine when not installed on our aircraft) and war-risk hull and legal liability insurance covering risks such as hijacking, terrorism, confiscation, expropriation, nationalization and seizure. We are named as an additional insured on liability insurance policies carried by our lessees, and we and/or our lender normally are designated as a loss payee in the event of a total loss of the aircraft. Coverage under liability policies generally is not subject to deductibles except those as to baggage and cargo that are standard in the airline industry, and coverage under all-risk aircraft hull insurance policies generally is subject to agreed deductible levels. We maintain contingent liability insurance coverage with respect to our aircraft which is intended to provide coverage in the event the liability insurance maintained by any of our lessees should lapse without notice to us.

We maintain insurance policies to cover risks related to physical damage to our equipment and property (other than aircraft), as well as with respect to third-party liabilities arising through the course of our normal business operations (other than aircraft operations). We also maintain limited business interruption insurance and directors’ and officers’ insurance providing indemnification for our directors, officers and certain employees for certain liabilities.

We believe that the insurance coverage currently carried by Aircastle and our lessees provides adequate protection against the accident-related and other covered risks involved in the conduct of our business. However, there can be no assurance that we have adequately insured against all risks that lessees will at all times comply with their obligations to maintain insurance, that any particular claim will be paid or that we will be able to procure adequate insurance coverage at commercially reasonable rates in the future. Consistent with industry practice, our insurance policies are subject to commercially reasonable deductibles or self-retention amounts.

Government Regulation

The air transportation industry is highly regulated. Since we do not operate aircraft, we generally are not directly subject to most of these laws. However, our lessees are subject to extensive regulation under the laws of the jurisdiction in which they are registered or under which they operate. Such laws govern, among other things, the registration, operation and maintenance of our aircraft. Most of our aircraft are registered in the jurisdiction in which the lessee of the aircraft is certified as an air operator. As a result, our aircraft are subject to the air worthiness and other standards imposed by such jurisdictions. Laws affecting the airworthiness of aircraft generally are designed to ensure that all aircraft and related equipment are continuously maintained in proper condition to enable safe operation of the aircraft. Most countries’ aviation laws require aircraft to be maintained under an approved maintenance program having defined procedures and intervals for inspection, maintenance, and repair.

Legal Proceedings

The Company is not a party to any material legal or adverse regulatory proceedings.

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Management

Directors and Executive Officers

The following table sets forth certain information about our directors and executive officers as of the consummation of this offering, together with their positions and ages. Each of our executive officers holds office until his or her successor is elected or appointed and qualified or until his or her resignation or removal, if earlier. Each director listed below holds office until his or her term expires, until his or her successor is duly elected or appointed and qualified or until his or her earlier death, retirement, disqualification, resignation or removal.


Name	Age		Position
Wesley R. Edens		44	Chairman of the Board of Directors
Ron Wainshal		42	Chief Executive Officer
Mark Zeidman		54	Chief Financial Officer
David Walton		45	Chief Operating Officer and General Counsel
Joseph Schreiner		48	Executive Vice President, Technical
Jonathan Lang		38	Chief Technology Officer
Joseph P. Adams, Jr.		48	Deputy Chairman of the Board of Directors
Randal A. Nardone		50	Director
Peter Ueberroth		69	Director

Wesley R. Edens is the Chairman of our board of directors and has served in this capacity since our formation in October 2004. Mr. Edens has been a Principal and the Chairman of the Management Committee of Fortress Investment Group LLC since co-founding the firm in May 1998 through which he manages investments in various asset-related investment vehicles and serves on the board of two registered investment companies, Fortress Registered Investment Trust and Fortress Investment Trust II. He is the Chairman of the board of directors and Chief Executive Officer of Newcastle Investment Corp., an affiliate of Fortress listed on the New York Stock Exchange. He is also Chairman of the board of directors of Brookdale Senior Living Inc., a senior living company listed on the New York Stock Exchange, since its inception in November 2005, and Chairman of the board of directors of Global Signal Inc., an NYSE listed company, since its reorganization in October 2002 and was Chief Executive Officer of Global Signal, Inc. from February 2004 to April 2006. Since its inception in 2003, he has also served as a director and the Chief Executive Officer of Eurocastle Investment Limited, an affiliate of Fortress which is currently listed on the Amsterdam Euronext Exchange and Chairman of the board of directors of Mapeley Limited, which is listed on the London Stock Exchange since June 2005.

Ron Wainshal became our Chief Executive Officer in May 2005. Prior to joining Aircastle, Mr. Wainshal was in charge of the Asset Management group of General Electric Commercial Aviation Service, or GECAS, from 2003 to 2005. Since joining GECAS in 1998, Ron also led many of GECAS' U.S. airline restructuring efforts and its bond market activities, and played a major marketing and structured finance role for GE in the Americas. Before joining GECAS, he was a principal and co-owner of a financial advisory company specializing in transportation infrastructure from 1994 to 1998 and prior to that held positions at Capstar Partners and The Transportation Group in New York and Ryder System in Miami. He received a BS in Economics from the Wharton School of the University of Pennsylvania and an MBA from the University of Chicago's Graduate School of Business.

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Mark Zeidman became our Chief Financial Officer in August 2005. Prior to joining Aircastle, Mr. Zeidman was Chief Financial Officer and Chief Investment Officer at Ocwen Financial Corporation, a mortgage finance firm listed on the NYSE, from May 1997 to March 2005. Prior to Ocwen, Mr. Zeidman was a managing director at Nomura Securities International from May 1987 to May 1997. Mr. Zeidman brings a strong finance background to Aircastle. He received a BA from the University of Pennsylvania, a Master of International Affairs from the School of International Affairs at Columbia University and an MBA from the Wharton School of Business at the University of Pennsylvania.

David Walton became our General Counsel in March 2005 and our Chief Operating Officer in January 2006. Prior to joining Aircastle, Mr. Walton was Chief Legal Officer of Boullioun Aviation Services, Inc. from 1996 to 2005. Prior to that, Mr. Walton was a partner at the law firm of Perkins Coie in Seattle and Hong Kong. Mr. Walton has over 15 years of experience in aircraft leasing and finance. He received a BA in Political Science from Stanford University and a JD From Boalt Hall School of Law, University of California, Berkeley.

Joseph Schreiner became our Executive Vice President, Technical in October 2004. Prior to joining Aircastle, Mr. Schreiner oversaw the technical department at AAR CORP.,a provider of products and services to the aviation and defense industries from 1998 to 2004 where he managed aircraft and engine evaluations and inspections, aircraft lease transitions, reconfiguration and heavy maintenance. Prior to AAR, Mr. Schreiner spent 19 years at Boeing (McDonnell-Douglas) in various technical management positions. Mr. Schreiner received a BS from the University of Illinois and a MBA from Pepperdine University.

Jonathan Lang became our Chief Technology Officer in May 2005. Prior to joining Aircastle, Mr. Lang was Senior Vice President of Information Technology at Paloma Partners, an international hedge fund, from 1994 to 2005. Prior to that, Mr. Lang worked as the Manager of Information Technology for U.S. Homecare, a provider of home health care services. Mr. Lang brings over 16 years of information technology experience to Aircastle. He received a BA in Business Administration from George Washington University.

Joseph P. Adams, Jr. became a Director in October 2004 and the Deputy Chairman of our board of directors in May 2006. He is a managing director of Fortress Investment Group, which he joined in April 2004, and focuses on the acquisitions area. Previously, Mr. Adams was a partner at Brera Capital Partners and at Donaldson, Lufkin & Jenrette (later Credit Suisse First Boston) where he was in the transportation industry group and later in the restructuring group. Mr. Adams was the first Executive Director of the Air Transportation Stabilization Board for 2002. Mr. Adams received a BS in Engineering from the University of Cincinnati and an MBA from Harvard Business School.

Randal A. Nardone has been a director since October 2004. Mr. Nardone is a member of the Management Committee of Fortress Investment Group and has been Chief Operating Officer of Fortress Investment Group since its inception. Mr. Nardone was previously a Managing Director of Union Bank of Switzerland from May 1997 to May 1998. Prior to joining Union Bank of Switzerland in 1997, Mr. Nardone was a principal of BlackRock Financial Management, Inc. Prior to joining BlackRock, Mr. Nardone was a partner and a member of the executive committee at the law firm of Thacher Proffitt & Wood. Mr. Nardone received a BA in English and Biology from the University of Connecticut and a JD from Boston University School of Law.

Peter Ueberroth has been nominated to our board of directors and will be appointed to our board of directors prior to the completion of this offering. Mr. Ueberroth is currently, and has been since 1989, the Managing Director of Contrarian Group, Inc., an investment and management company. In 1962, Mr. Ueberroth founded First Travel Corporation and sold it to the

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Carlson Travel Group in 1980. From 1979 to 1984, Mr. Ueberroth served as president of the Los Angeles Olympic Organizing Committee. From 1984 to 1989, he served as the sixth commissioner of Major League Baseball. In July of 1999, Mr. Ueberroth successfully orchestrated the purchase of the Pebble Beach Company and he now serves as an owner and co-chairman. Mr. Ueberroth also serves as the chairman of the United States Olympic Committee. He is also chairman of Ambassadors International Inc., a travel services company, and a member of the board of directors of Adecco SA, a Swiss staffing company, The Coca-Cola Company and Hilton Hotels Corporation.

Board of Directors

Our bye-laws provide that our board shall consist of not less than three and not more than eight directors as the board of directors may from time to time determine. Our board of directors will initially consist of seven directors. Our board of directors is divided into three classes that are, as nearly as possible, of equal size. Each class of directors is elected for a three-year term of office, but the terms are staggered so that the term of only one class of directors expires at each annual general meeting. The current terms of the Class I, Class II and Class III directors will expire in 2007, 2008 and 2009, respectively. As of , 2006 Messrs. , and served as a Class I director, Messrs. and served as a Class II director and Messrs. and served as a Class III director. All officers serve at the discretion of the board of directors. Under our Amended and Restated Shareholders Agreement, which we and the Fortress shareholders will execute upon the completion of this offering, Fortress willl be entitled to designate up to four directors for election to our board of directors, depending upon the level of ownership of the Fortress shareholders. We currently have directors, of whom we believe will be determined to be ‘‘independent’’ as defined under the rules of the NYSE.

Committees of the Board of Directors

Prior to the consummation of this offering, we will establish the following committees of our board of directors:

The audit committee, which:


•	reviews the audit plans and findings of the independent certified public accountants and our internal audit and risk review staff, and the results of regulatory examinations and tracks management's corrective action plans where necessary;


•	reviews our financial statements, including any significant financial items and/or changes in accounting policies, with our senior management and independent certified public accountants;


•	reviews our risk and control issues, compliance programs and significant tax and legal matters;


•	has the sole discretion to appoint annually the independent certified public accountants and evaluates their independence and performance, as well as to set clear hiring policies for employees or former employees of our independent certified public accounting firm; and


•	reviews our risk management processes.

The members of the audit committee have not yet been appointed. We intend to appoint at least three members that are ‘‘independent’’ directors as defined under NYSE rules and under section 10A-3 of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

The nominating and corporate governance committee, which:

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•	reviews the performance of the board of directors and incumbent directors and makes recommendations to our board of directors regarding the selection of candidates, qualification and competency requirements for service on the board of directors and the suitability of proposed nominees;


•	advises the board of directors with respect to the corporate governance principles applicable to AL; and


•	oversees the evaluation of the board of directors and AL's management.

The members of the nominating and corporate governance committee have not yet been appointed. We intend to appoint at least three members that are ‘‘independent’’ directors as defined under NYSE rules and under section 10A-3 of the Exchange Act.

The compensation committee, which:


•	reviews and recommends to the board of directors the salaries, benefits and share-based grants for all employees, consultants, officers, directors and other individuals compensated by us;


•	reviews and approves corporate goals and objectives relevant to Chief Executive Officer compensation, evaluates the Chief Executive Officer's performance in light of those goals and objectives, and determines the Chief Executive Officer's compensation based on that evaluation; and


•	oversees our compensation and employee benefit plans.

The members of the compensation committee have not yet been appointed. We intend to appoint at least three members that are ‘‘independent’’ directors as defined under NYSE rules and under section 10A-3 of the Exchange Act.

Compensation Committee Interlocks and Insider Participation

Compensation decisions during the year ended December 31, 2005 pertaining to executive officer compensation were made by the chairman of our board of directors, Wesley R. Edens. We have entered into certain transactions with Fortress as described in ‘‘Certain Relationships and Related Party Transactions.’’

Compensation of Directors

We will pay an annual fee to each independent director equal to $ , payable semi-annually. In addition, an annual fee of $ will be paid to the chairs of each of the audit and compensation committees of the board of directors. Fees to independent directors may be made by issuance of common shares, based on the value of such common shares at the date of issuance, rather than in cash, provided that any such issuance does not prevent such director from being determined to be independent and such shares are granted pursuant to a shareholder-approved plan or the issuance is otherwise exempt from any applicable stock exchange listing requirement. Affiliated directors, however, will not be separately compensated by us. All members of the board of directors will be reimbursed for reasonable costs and expenses incurred in attending meetings of our board of directors. Following the consummation of this offering, each independent director will be eligible to receive awards of our common shares as described in ‘‘— Equity Incentive Plan.’’

Executive Officer Compensation

The following summary compensation table sets forth information concerning the cash and non-cash compensation earned by, awarded to or paid to our Chief Executive Officer and our

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four other most highly compensated executive officers (with their current positions with us) for services rendered to us in 2005. We refer to these executives as our ‘‘named executive officers’’ in other parts of this prospectus.

Summary Compensation Table


			Annual Compensation
Name and Principal Position	Fiscal Year		Salary ($)		Bonus ($)		Other Annual Compensation ⁽¹⁾ ($)	All Other Compensation ⁽²⁾ ($)
Ron Wainshal, Chief Executive Officer		2005		123,656		400,000	—	3,995
Mark Zeidman, Chief Financial Officer		2005		164,063		550,000	1,312	5,334
David Walton, Chief Operating Officer, General Counsel and Secretary		2005		170,580		395,000	22,270	6,690
Joseph Schreiner, Executive Vice President, Technical		2005		200,060		260,000	31,481	6,756
Jonathan Lang, Chief Technology Officer		2005		122,118		150,000	—	3,940


(1)	The reported amounts were reimbursements of relocation expenses.

(2)

The following reported amounts were employer contributions to each named executive officer's 401(k) account: Wainshal – $3,709; Zeidman – $4,961; Walton – $6,300; Lang – $3,663; and Schreiner – $6,300. The following reported amounts were insurance premiums paid with respect to term life insurance for each named executive officer: Wainshal – $286; Zeidman – $373; Walton – $390; Lang – $277; and Schreiner – $456.

Option Grants in Last Fiscal Year

No share options were granted during the year ended December 31, 2005.

Equity Incentive Plan

On January 17, 2006, we adopted a new equity incentive plan for our employees, the Aircastle Investment Limited 2005 Equity and Incentive Plan, or the Plan. The Plan was approved by our shareholders on January 31, 2006. The purposes of the Plan are to provide additional incentive to selected management employees and directors of, and consultants to, AL or its subsidiaries, to strengthen their commitment, motivate them to faithfully and diligently perform their responsibilities and to attract and retain competent and dedicated persons who are essential to the success of our business and whose efforts will impact in our long-term growth and profitability. To accomplish such purposes, the Plan provides for the issuance of share options, share appreciation rights, restricted shares, deferred shares, performance shares, unrestricted shares and other share-based awards.

While we intend to issue restricted shares and other share-based awards in the future to key employees as a recruiting and retention tool, we have not established specific parameters regarding future grants. During 2005 we made the following grants of restricted shares: 250,000 shares to Ron Wainshal; 50,000 shares to David Walton and 15,000 shares to Jonathan Lang. The board of directors ratified these grants in January 2006. Additionally we made the following grants of restricted shares in the first quarter of 2006: 30,000 shares to Ron Wainshal; 100,000 shares to Mark Zeidman; 25,000 shares to David Walton; and 60,000 shares to Joseph Schreiner.

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All of the restricted shares subject to the aforementioned grants vest over four or five years. In April 2006, the following named executive officers purchased restricted common shares pursuant to the Plan, as follows: Ron Wainshal, 20,000 shares; Mark Zeidman, 20,000 shares; David Walton, 5,000 shares; and Joseph Schreiner, 15,000 shares. All of these purchased restricted shares vested immediately. Our board of directors (or the compensation committee of the board of directors, after it has been appointed) will determine the specific criteria surrounding other equity issuances under the Plan in the future. The following generally describes the terms of the Plan.

A total of 4,000,000 common shares has been reserved for issuance under the Plan. When section 162(m) of the Internal Revenue Code, or the Code, becomes applicable, the maximum aggregate awards that may be granted during any fiscal year to any individual who is likely to be a ‘‘covered employee’’ as defined under section 162(m) will be 2,500,000 shares.

The Plan will initially be administered by our board of directors, although it may be administered by either our board of directors or any committee of our board of directors including a committee that complies with the applicable requirements of section 162(m) of the Code, Section 16 of the Exchange Act and any other applicable legal or stock exchange listing requirements (the board or committee being sometimes referred to as the ‘‘plan administrator’’). The plan administrator may interpret the Plan and may prescribe, amend and rescind rules and make all other determinations necessary or desirable for the administration of the Plan. The Plan permits the plan administrator to select the directors, management employee and consultants who will receive awards, to determine the terms and conditions of those awards, including but not limited to the exercise price, the number of common shares subject to awards, the term of the awards and the vesting schedule applicable to awards, and to amend the terms and conditions of outstanding awards.

We may issue incentive share options or non-qualified share options under the Plan. The incentive share options granted under the Plan are intended to qualify as ‘‘incentive stock options’’ within the meaning of section 422 of the Code and may only be granted to our employees or any employee of any of our subsidiaries. The option exercise price of all share options granted under the Plan will be determined by the plan administrator, except the exercise price of incentive share options granted to shareholders who own greater than 10% of the voting common shares will not be granted at a price less than 110% of the fair market value of our common shares on the date of grant. The term of all share options granted under the Plan will be determined by the plan administrator, but may not exceed ten years (or five years for incentive share options granted to shareholders who own greater than 10% of the voting common shares). To the extent that the aggregate fair market value (as of the date the options were granted) of common shares subject to incentive share options granted to an optionee that first become exercisable in any calendar year exceeds $100,000, the excess options will be treated as non-qualified share options. Each share option will be exercisable at such time and pursuant to such terms and conditions as determined by the plan administrator in the applicable share option agreement.

Unless the applicable share option agreement provides otherwise, in the event of an optionee's termination of employment or service for any reason other than for cause, retirement, disability or death, such optionee's share options (to the extent exercisable at the time of such termination) generally will remain exercisable until 90 days after such termination and then expire. Unless the applicable share option agreement provides otherwise, in the event of an optionee's termination of employment or service due to retirement, disability or death, such optionee's share options (to the extent exercisable at the time of such termination) generally will remain exercisable until one year after such termination and will then expire. Share options that were not exercisable on the date of termination for any reason other than for cause will expire at

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the close of business on the date of such termination. In the event of an optionee's termination of employment or service for cause, such optionee's outstanding share options will expire at the commencement of business on the date of such termination.

In the event of a change in control (as defined below), certain other corporate transactions, changes in corporate structure, special dividends and similar corporate events, the plan administrator has discretion to cancel outstanding awards (except fully vested restricted shares, deferred shares and performance shares) in exchange for payment in cash or other property. Unless otherwise determined by the plan administrator and evidenced in an award agreement, if a change in control transaction occurs that includes a continuation, assumption or substitution with respect to share options and other awards under the Plan, and a plan participant's employment is terminated by the employer other than for cause within the 12 months following the change in control, and, in the case of participants who are entitled to receive severance under an employment agreement upon termination by the participant for good reason (as defined in the participant's employment agreement), upon such a termination for good reason within the 12 months following a change in control, then the participant's outstanding and unvested options will become fully vested and exercisable as of the date of such termination and the restrictions will lapse (or performance goals will be deemed to be achieved) with respect to the shares covered by any other award. The term ‘‘change in control’’ generally means: (i) any person or entity (other than (a) an affiliate of Fortress or any managing director, general partner, director, limited partner, officer or employee of any such affiliate of Fortress or (b) any investment fund or other entity managed directly or indirectly by Fortress or any general partner, limited partner, managing member or person occupying a similar role of or with respect to any such fund or entity) becomes the beneficial owner of securities of AL representing 50% or more of AL's then outstanding voting power; (ii) a change in the majority of the membership of the board of directors without approval of two-thirds of the directors who constituted the board of directors on January 17, 2006, or whose election was previously so approved; (iii) the consummation of an amalgamation or a merger of AL or any subsidiary of AL with any other corporation, other than a merger immediately following which the board of directors of AL immediately prior to the amalgamation or merger constitute at least a majority of the board of directors of the company surviving or continuing after the merger or, if the surviving company is a subsidiary, the ultimate parent thereof; or (iv) AL's shareholders approve a plan of complete liquidation or dissolution of AL or there is consummated an agreement for the sale or disposition of all or substantially all of AL's assets, other than (a) a sale of such assets to an entity, at least 50% of the voting power of which is held by AL shareholders following the transaction in substantially the same proportions as their ownership of AL immediately prior to the transaction or (b) a sale or disposition of such assets immediately following which the board of directors of AL immediately prior to such sale constitute at least a majority of the board of directors of the entity to which the assets are sold or disposed, or, if that entity is a subsidiary, the ultimate parent thereof.

Share appreciation rights, or SARs, may be granted under the Plan either alone or in conjunction with all or part of any share option granted under the Plan, provided that the common shares underlying the SARs are traded on an ‘‘established securities market’’ within the meaning of section 409A of the Code. A free-standing SAR granted under the Plan entitles its holder to receive, at the time of exercise, an amount per share equal to the excess of the fair market value (at the date of exercise) of a common share over a specified price fixed by the plan administrator (which shall be no less than fair market value at the date of grant). An SAR granted in conjunction with all or part of a share option under the Plan entitles its holder to receive, at the time of exercise of the SAR and surrender of such all or part of the related share option, an amount per share equal to the excess of the fair market value (at the date of exercise) of a

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common share over the exercise price of the related share option. In the event of a participant's termination of employment or service, free-standing SARs will be exercisable at such times and subject to such terms and conditions determined by the plan administrator on or after the date of grant, while SARs granted in conjunction with all or part of a share option will be exercisable at such times and subject to terms and conditions as set forth for the related share option. SARs will be designed to comply with section 409A of the Internal Revenue Code.

Restricted shares, deferred shares and performance shares may be granted under the Plan. The plan administrator will determine the purchase price and performance objectives, if any, with respect to the grant of restricted shares, deferred shares and performance shares. Participants with restricted shares and performance shares generally have all of the rights of a shareholder. During the restricted period, deferred shares may be credited with dividend equivalent rights, if the award agreement so provides. If the performance goals and other restrictions are not satisfied, the participant will forfeit his or her restricted shares, deferred shares and/or performance shares. Subject to the provisions of the Plan and applicable award agreement, the plan administrator has sole discretion to provide for the lapse of restrictions in installments or the acceleration or waiver of restrictions (in whole or part) under certain circumstances, including, but not limited to, the attainment of certain performance goals, a participant's termination of employment or service or a participant's death or disability.

Except as otherwise provided by the plan administrator, on the first business day after our annual meeting of shareholders in 2007 and each such annual meeting thereafter during the term of the Plan, each of our non-employee directors will automatically be granted under the Plan a number of unrestricted common shares having a fair market value of $15,000 as of the date of grant.

In the event of a merger, amalgamation, consolidation, reorganization, recapitalization, bonus issue, share dividend or other change in corporate structure affecting the common shares, the plan administrator may make an equitable substitution or proportionate adjustment in (i) the aggregate number of common shares reserved for issuance under the Plan, (ii) the maximum number of common shares that may be subject to awards granted to any participant in any calendar year, (iii) the kind, number and exercise price subject to outstanding share options and SARs granted under the Plan, and (iv) the kind, number and purchase price of common shares subject to outstanding awards of restricted shares, deferred shares, performance shares or other share-based awards granted under the Plan, provided that no such adjustment will cause any award under the Plan that is or becomes subject to section 409A of the Code to fail to comply with the requirements of that section. In addition, the plan administrator, in its discretion, may terminate all awards (other than fully vested restricted shares, deferred shares and performance shares) with the payment of cash or in-kind consideration.

The Plan provides that our board of directors may amend, alter or terminate the Plan, but no such action may impair the rights of any participant with respect to outstanding awards without the participant's consent. The plan administrator may amend an award, prospectively or retroactively, but no such amendment may impair the rights of any participant without the participant's consent. Unless the board of directors determines otherwise, shareholder approval of any such action will be obtained if required to comply with applicable law. The Plan will terminate on January 17, 2016.

In connection with the purchase of 77,000 common shares by certain of our employees in April of 2006, the purchasers of those common shares, including Messrs. Wainshal, Zeidman, Walton and Schreiner, will receive a cash bonus sufficient, on an after-tax basis, to cover our withholding obligations with respect to those shares.

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Employment Letters, Termination of Employment and Change-in-Control Arrangements

Through our subsidiary, Aircastle Advisor LLC, we have letter agreements with our executive officers named in the Summary Compensation Table which state certain terms and conditions of their employment. These employment letters provide that each named executive officer is an employee ‘‘at will,’’ whose employment may be terminated at any time, either by us or by him.

Ron Wainshal's employment letter provides for a base salary of $200,000 and discretionary bonuses for 2006 and subsequent years. He agreed to invest at least $50,000 in our common shares. We agreed to make a grant of restricted shares, which resulted in grants totaling 280,000 restricted shares pursuant to a separate restricted share agreement discussed below. Mr. Wainshal is eligible to participate in our 401(k) plan and in other benefit plans and arrangements generally made available to our senior executives. Mr. Wainshal's employment letter provides that, if we terminate him without ‘‘cause’’ or he terminates his employment for ‘‘good reason’’ (as such terms are defined in the letter), we will pay him an amount equal to one-half of his base salary at the time of the termination plus $200,000. Mr. Wainshal agrees not to compete with us during his employment, and, if we terminate his employment with ‘‘cause’’ or he terminates his employment other than for ‘‘good reason,’’ he must not compete with us for six months after termination as to any aircraft leasing and/or aircraft finance business. Mr. Wainshal is required to maintain our confidential information in strictest confidence. Mr. Wainshal is prohibited from making critical statements about us that are likely to become public. During his employment and for one year thereafter he will not solicit any of our employees to leave our employment or hire any of our former employees within one year of such employee's termination. Pursuant to a separate restricted share agreement, grants totaling 280,000 restricted shares were made to Mr. Wainshal. In accordance with the restricted share agreement, if we terminate his employment without ‘‘cause’’ or he terminates his employment for ‘‘good reason’’ (as such terms are defined in his employment letter), 50% of the restricted shares that are unvested as of the date of termination (if any) will immediately vest, and if such a termination occurs within 12 months following a change in control of the Company (as defined in our 2005 Equity and Incentive Plan), all of the restricted shares that are unvested as of the termination (if any) will immediately vest.

Mark Zeidman's employment letter provides for a base salary of $200,000, a guaranteed bonus of $550,000 for 2006, and discretionary bonuses for 2007 and subsequent years. He agreed to invest at least $100,000 in our common shares. We agreed to make a grant of restricted shares, which resulted in the grant of 100,000 restricted shares pursuant to a separate restricted share agreement discussed below. Mr. Zeidman is eligible to participate in our 401(k) plan and in other benefit plans and arrangements generally made available to our senior executives. Mr. Zeidman's employment letter provides that, if we terminate him without ‘‘cause’’ (as defined in the letter) prior to December 31, 2006, we will pay him an amount equal to the difference between (i) the aggregate amount he would have been paid from the day he started his employment with us through December 31, 2006, on the basis of his base salary and his guaranteed bonus, and (ii) the aggregate amount he was actually paid in salary and bonus through the date of termination. Mr. Zeidman agrees not to compete with us during his employment, and, if we terminate his employment with ‘‘cause’’ or he terminates his employment for any reason, he must not compete with us for six months after termination as to any aircraft leasing and/or aircraft finance business. Mr. Zeidman is required to maintain our confidential information in strictest confidence. During Mr. Zeidman's employment and for one year thereafter he will not solicit any of our employees to leave our employment or hire any of our former employees within one year of such employee's termination. During Mr. Zeidman's employment and for two years thereafter he will not intentionally interfere with, or endeavor to entice away, any of our investors. Pursuant to a separate restricted share agreement, we made a grant of 100,000 restricted shares to

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Mr. Zeidman. Our restricted share agreement with respect to the grant provides that, if we terminate his employment without ‘‘cause’’ (as defined in our 2005 Equity and Incentive Plan), the restricted shares which are due to vest at the next vesting date under the agreement will immediately vest, and if such a termination occurs within 12 months following a change in control of the Company (as defined in our 2005 Equity and Incentive Plan), all of the restricted shares that are unvested as of the termination (if any) will immediately vest.

David Walton's employment letter provides for a base salary of $200,000 and discretionary bonuses for 2006 and subsequent years. Mr. Walton is eligible to participate in our 401(k) plan and in other benefit plans and arrangements generally made available to our senior executives. Mr. Walton's employment letter provides that, if we terminate him without ‘‘cause’’ (as defined in the letter) prior to December 31, 2007, we will pay him an amount equal to his base salary. Mr. Walton agrees not to compete with us during his employment, and, if we terminate his employment with ‘‘cause’’ or he terminates his employment for any reason, he must not compete with us for three months after termination as to any aircraft leasing and/or aircraft finance business. Mr. Walton is required to maintain our confidential information in strictest confidence. During Mr. Walton's employment and for one year thereafter he will not solicit any of our employees to leave our employment or hire any of our former employees within one year of such employee's termination. Pursuant to a separate restricted share agreement, grants totaling 75,000 restricted shares were made to Mr. Walton. In accordance with the restricted share agreement, if we terminate his employment without ‘‘cause’’ (as defined in our 2005 Equity and Incentive Plan), the restricted shares which are due to vest at the next vesting date under the agreement will immediately vest, and if such a termination occurs within 12 months following a change in control of the Company (as defined in our 2005 Equity and Incentive Plan), all of the restricted shares that are unvested as of the termination (if any) will immediately vest.

Joseph Schreiner's employment letter provides for a base salary of $200,000 and discretionary bonuses. Mr. Schreiner is eligible to participate in the benefit plans and arrangements generally made available to our employees. Mr. Schreiner agrees not to compete with us during his employment, and, if we terminate his employment with ‘‘cause’’ or he terminates his employment for any reason, he must not compete with us for six months after termination as to any aircraft leasing and/or aircraft finance business. Works of authorship, discoveries, computer programs and other intellectual property that Mr. Schreiner makes or conceives during his employment with us will constitute ‘‘work for hire’’ under the United States Copyright Act. Mr. Schreiner is required to maintain our confidential information in strictest confidence. During Mr. Schreiner's employment and for one year thereafter he will not solicit any of our employees to leave our employment or hire any of our former employees within one year of such employee's termination. Pursuant to a separate restricted share agreement, a grant of 60,000 restricted shares was made to Mr. Schreiner. In accordance with the restricted share agreement, if we terminate his employment without ‘‘cause’’ (as defined in our 2005 Equity and Incentive Plan), the restricted shares which are due to vest at the next vesting date under the agreement will immediately vest, and if such a termination occurs within 12 months following a change in control of the Company (as defined in our 2005 Equity and Incentive Plan), all of the restricted shares that are unvested as of the termination (if any) will immediately vest.

Jonathan Lang's employment letter provides for a base salary of $200,000 and discretionary bonuses for 2006 and subsequent years. Mr. Lang is eligible to participate in the benefit plans and arrangements generally made available to our employees. Mr. Lang agrees not to compete with us during his employment, and, if we terminate his employment with ‘‘cause’’ (as defined in the letter) or he terminates his employment for any reason, he must not compete with us for six months after termination as to any aircraft leasing and/or aircraft finance business. Works of authorship, discoveries, computer programs and other intellectual property that Mr. Lang makes

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or conceives during his employment with us will constitute ‘‘work for hire’’ under the United States Copyright Act. Mr. Lang is required to maintain our confidential information in strictest confidence. During Mr. Lang's employment and for one year thereafter he will not solicit any of our employees to leave our employment or hire any of our former employees within one year of such employee's termination. Pursuant to a separate restricted share agreement, a grant of 15,000 restricted shares was made to Mr. Lang. In accordance with the restricted share agreement, if we terminate his employment without ‘‘cause’’ (as defined in our 2005 Equity and Incentive Plan), the restricted shares which are due to vest at the next vesting date under the agreement will immediately vest, and if such a termination occurs within 12 months following a change in control of the Company (as defined in our 2005 Equity and Incentive Plan), all of the restricted shares that are unvested as of the termination (if any) will immediately vest.

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Certain Relationships and Related Party Transactions

The following is a summary of material provisions of various transactions we have entered into with our executive officers, directors or 5% or greater shareholders since our formation in October 2004. We believe the terms and conditions set forth in such agreements are reasonable and customary for transactions of this type.

Our Formation/Original Capital Investment

Aircastle was incorporated by Fortress in Bermuda on October 29, 2004 to enter into the aircraft leasing business. Wesley R. Edens, our Chairman of the Board of Directors is a Principal and Chairman of the Management Committee of Fortress Investment Group LLC, Joseph P. Adams, Jr., our Deputy Chairman, is a Managing Director of Fortress Investment Group LLC and Randal A. Nardone, one of our Directors, is the Chief Operating Officer of Fortress Investment Group LLC. On November 19, 2004, AL entered into subscription agreements with Fortress affiliated shareholders under which AL sold 12,000 of AL's common shares to such shareholders at a purchase price of $1.00 per share for aggregate consideration of $12,000. Fortress also contributed an additional $100.7 million to AL in 2004 and an additional $299.3 million in 2005 pursuant to our Shareholders Agreement, dated November 24, 2004, and our Amended and Restated Shareholders Agreement dated, June 23, 2005. The Fortress shareholders committed to contribute up to an additional $100 million of equity to AL pursuant to our Second Amended and Restated Shareholders Agreement, dated January 31, 2006. The Second Amended and Restated Shareholders Agreement provided for an increase in the authorized number of our common shares from 12,000 common shares of $1.00 par value to 100 million common shares of $0.01 par value, and the subdivision of issued and outstanding common shares from 12,000 common shares of $1.00 par value to 40,000,000 common shares of $0.01 par value. On February 8, 2006 the Fortress shareholders contributed $36.9 million pursuant to the aforementioned commitment in exchange for 3,693,200 of our common shares. On June , 2006, we returned $36.9 million to the Fortress shareholders in exchange for the cancellation of 3,693,200 of our common shares. After the return of the cash, the $100 million commitment was reinstated. This commitment will terminate upon completion of this offering in connection with the execution of the shareholders agreement described below.

Shareholders Agreement

General

Upon the completion of this offering, we will enter into an Amended and Restated Shareholders Agreement, or the Shareholders Agreement, with Fortress Investment Fund III LP, Fortress Investment Fund III (Fund B) LP, Fortress Investment Fund III (Fund C) LP, Fortress Investment Fund III (Fund D) L.P., Fortress Investment Fund III (Fund E) LP, Fortress Investment Fund III (Coinvestment Fund A) LP, Fortress Investment Fund III (Coinvestment Fund B) LP, Fortress Investment Fund III (Coinvestment Fund C) LP, Fortress Investment Fund III (Coinvestment Fund D) L.P., Drawbridge Special Opportunities Fund LP, Drawbridge Special Opportunities Fund Ltd. and Drawbridge Global Macro Master Fund Ltd., which we refer to, collectively, as the ‘‘Initial Shareholders.’’ The Shareholders Agreement will amend and restate our Second Amended and Restated Shareholders Agreement referred to above.

As discussed further below, the Shareholders Agreement provides certain rights to the Initial Shareholders with respect to the designation of directors to our board of directors for election as well as registration rights for certain of our securities owned by them.

Designation and Election of Directors

The Shareholders Agreement requires that the Initial Shareholders and their respective affiliates and permitted transferees vote or cause to be voted all of our voting shares beneficially owned

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by each and to take all other reasonably necessary action so as to elect to our board of directors so long as the Initial Shareholders beneficially own (i) more than 50% of the voting power of AL, four directors designated by FIG Advisors LLC, an affiliate of Fortress which we refer to as FIG Advisors, or such other party designated by Fortress; (ii) between 25% and 50% of the voting power of AL, three directors designated by FIG Advisors; (iii) between 10% and 25% of the voting power of AL, two directors designated by FIG Advisors; and (iv) between 5% and 10% of the voting power of AL, one director designated by FIG Advisors.

In accordance with the Shareholders Agreement, FIG Advisors will designate Wesley R. Edens, Joseph P. Adams, Jr., and for election to our board of directors.

If at any time the number of our directors entitled to be designated by FIG Advisors to the Shareholders Agreement shall decrease, within ten days thereafter, FIG Advisors shall cause the appropriate number of directors to resign and any such vacancy shall be filled by a majority vote of our board of directors.

Registration Rights

Demand Rights. We have granted to the Initial Shareholders, for so long as such shareholders collectively and beneficially own an amount of our common shares at least equal to 5% or more of our common shares issued and outstanding immediately after the consummation of this offering (a ‘‘Registrable Amount’’), ‘‘demand’’ registration rights that allow them at any time after six months following the consummation of this offering to request that we register under the Securities Act an amount equal to or greater than 5% of our common shares that they own. Each of the Initial Shareholders is entitled to an aggregate of two demand registrations, which can be a shelf registration. We are also not required to effect any demand registration within six months of a ‘‘firm commitment’’ underwritten offering to which the requestor held ‘‘piggyback’’ rights and which included at least 50% of the securities requested by the requestor to be included. We are not obligated to grant a request for a demand registration within four months of any other demand registration, and may refuse a request for demand registration if in our reasonable judgment, it is not feasible for us to proceed with the registration because of the unavailability of audited financial statements.

Piggyback Rights. For so long as they beneficially own an amount of our common shares at least equal to 1% of our common shares issued and outstanding immediately after the consummation of this offering, the Initial Shareholders also have ‘‘piggyback’’ registration rights that allow them to include the common shares that they own in any public offering of equity securities initiated by us (other than those public offerings pursuant to registration statements on Forms S-4 or S-8) or by any of our other shareholders that have registration rights. The ‘‘piggyback’’ registration rights of these shareholders are subject to proportional cutbacks based on the manner of the offering and the identity of the party initiating such offering.

Shelf Registration. We have granted each of the Initial Shareholders, for so long as they beneficially own a Registrable Amount, the right to request a shelf registration on Form S-3 providing for offerings of our common shares to be made on a continuous basis, subject to a time limit on our efforts to keep the shelf registration statements continuously effective and our right to suspend the use of the shelf registration prospectuses for a reasonable period of time (not exceeding 60 days in succession or 90 days in the aggregate in any 12 month period) if we determine that certain disclosures required by the shelf registration statements would be detrimental to us or our shareholders. In addition, the Initial Shareholders may elect to participate in such shelf registrations within ten days after notice of the registration is given.

Indemnification; Expenses. We have agreed to indemnify each of the Initial Shareholders against any losses or damages resulting from any untrue statement or omission of material fact in

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any registration statement or prospectus pursuant to which they sell our common shares, unless such liability arose from such shareholder's misstatement or omission, and each such shareholder has agreed to indemnify us against all losses caused by its misstatements or omissions. We will pay all expenses incidental to our performance under the Shareholders Agreement, and the Initial Shareholders will pay their respective portions of all underwriting discounts, commissions and transfer taxes relating to the sale of their common shares under the Shareholders Agreement.

Other Transactions with Fortress

During 2004 and 2005, Fortress provided certain support services to us. These direct operating costs in the amount of approximately $1.1 million in 2004 and $0.3 million in 2005, primarily included payroll and benefit costs, office supplies and professional fees paid to third parties. These expenses were charged to us at cost and are included in selling, general and administrative expenses in our consolidated statement of operations in the year in which such expenses were incurred. As of March 31, 2006, approximately $0.2 million remains payable to Fortress.

For the year ended December 31, 2005, we paid approximately $0.2 million for legal fees related to the establishment and financing activities of related Bermuda companies and approximately $0.2 million for Bermuda corporate services related to our Bermuda companies to a law firm and a secretarial services provider, respectively, affiliated with a Bermuda resident director serving on certain subsidiary company boards. The Bermuda director serves as an outside director of these subsidiaries.

Our employees participate in various benefit plans sponsored by Fortress, including a voluntary savings plan (401(k) plan) and other health and benefit plans. See ‘‘Management — Equity Incentive Plans’’. We reimbursed Fortress approximately $0.2 million in 2005 for the cost of our employees’ coverage in the various health and benefit plans. Similarly, we will reimburse Fortress for the matching 401(k) plan contribution, of up to 3% of eligible earnings paid by them on behalf of our employees, when that contribution is actually funded. At March 31, 2006, our estimated contribution was approximately $71,400 and was recorded as an accrued liability. After the completion of this offering we expect to establish our own 401(k) savings plan.

In addition, in May 2006, two of our operating subsidiaries entered into service agreements to provide certain remarketing, administrative and technical services to a Fortress entity. Aircastle Advisor LLC, and Aircastle Advisor (Ireland) Limited, each an AL subsidiary, provide services to FIT Aero Investments Limited, an affiliate of Fortress which we refer to as FIT Aero, with respect to four aircraft owned by FIT Aero and leased to third parties. Aircastle Advisor LLC's responsibilities include remarketing the aircraft for lease, invoicing the lessees for expenses and rental payments, reviewing maintenance reserves, reviewing the credit of lessees, arranging for the periodic inspection of the aircraft and securing the return of the aircraft when necessary. Aircastle Advisor (Ireland) Limited's responsibilities include remarketing the aircraft for lease or sale and certain related technical and other services. The agreements also provide that FIT Aero will pay Aircastle Advisor LLC 3.0% of the collected rentals with respect to leases of the aircraft under service, plus expenses incurred during the service period and Aircastle Advisor (Ireland) Limited 2.5% of the gross sales proceeds of the sale of any of the aircraft under service plus expenses incurred during the service period. As of May 22, 2006, Aircastle Advisor LLC had accrued $77,700 in fees due from FIT Aero. Another Aircastle subsidiary, Aircastle Advisor (Ireland) Limited, provides lease marketing and sales remarketing services and certain related services with respect to the same four aircraft owned by FIT Aero. Both service agreements were effective as of January 1, 2006 and have a term of 24 months, but will continue thereafter unless one party terminates the agreement by providing the other with advance written notice.

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We have entered into a letter of intent with an affiliate of Drawbridge Special Opportunities Fund LP, one of our shareholders and an affiliate of Fortress, to purchase an aircraft for $11,450,000. The purchase is subject to customary conditions, such as satisfactory inspection, due diligence, completion of satisfactory sale documentation and novation or assignment of the lease governing the aircraft.

Other Transactions

On April 28, 2006, we entered into a subscription agreement with a family trust of Peter Ueberroth, who has been nominated and will be appointed to our board of directors prior to the completion of this offering. Under the subscription agreement, we sold 200,000 of our common shares to the trust for aggregate consideration of $1,000,000, effective as of May 19, 2006.

Other Investment Activities of our Principal Shareholders

The Fortress shareholders and their affiliates engage in a broad spectrum of activities, including investment advisory activities, and have extensive investment activities that are independent from, and may from time to time conflict with ours. The Fortress shareholders and certain of its affiliates are, or sponsor, advise or act as investment manager to, investment funds, portfolio companies of private equity investment funds and other persons or entities that have investment objectives that may overlap with ours and that may, therefore, compete with us for investment opportunities.

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Principal Shareholders

Prior to this offering, substantially all of the ownership interests in AL were beneficially owned by affiliates of Fortress Investment Holdings LLC and our employees.

The following table sets forth the total number of common shares beneficially owned, and the percent so owned, as adjusted to reflect the sale of the shares offered hereby, by (i) each person known by us to be the beneficial owner of more than five percent of our common shares, (ii) each of our directors and named executive officers and (iii) all directors and executive officers as a group.

The percentage of beneficial ownership of our common shares before this offering is based on 40,992,000 common shares issued and outstanding as of , 2006. The percentage of beneficial ownership of our common shares after this offering is based on common shares issued and outstanding. The table assumes that the underwriters will not exercise their over-allotment option to purchase up to common shares.

Amount and Nature of Beneficial Ownership ⁽¹⁾

Before Offering

After Offering

Name of Beneficial Owner ⁽¹⁾

Number of
Shares ⁽²⁾

Percent ⁽³⁾

Number of
Shares ⁽²⁾

Percent

Executive Officers and Directors ⁽⁴⁾

Wesley R. Edens ⁽⁵⁾

40,000,000

Ron Wainshal

300,000

Mark Zeidman

120,000

David Walton

80,000

Joseph Schreiner

75,000

Jonathan Lang

15,000

Joseph P. Adams, Jr.

—

Randal A. Nardone ⁽⁵⁾

40,000,000

Peter Ueberroth

200,000

All directors and executive officers as a group ( persons)

5% Shareholders

Fortress Investment Holdings LLC ⁽⁵⁾

40,000,000


*	Less than 1%

(1)

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Common shares subject to options or warrants currently exercisable, or exercisable within 60 days of the date hereof, are deemed outstanding for computing the percentage of the person holding such options or warrants but are not deemed outstanding for computing the percentage of any other person.


(2)	Consists of common shares held, including restricted shares, shares underlying share options exercisable within 60 days and shares underlying warrants exercisable within 60 days.


(3)	Percentage amount assumes the exercise by such persons of all options and warrants exercisable within 60 days to acquire common shares and no exercise of options or warrants by any other person.


(4)	The address of each officer or director listed in the table below is: c/o Aircastle Advisor LLC, 300 First Stamford Place, 5 ^th Floor, Stamford, CT 06902.

(5)

Includes 10,109,187.50 shares held by Fortress Investment Fund III LP (‘‘Fund III’’), 8,643,528.00 shares held by Fortress Investment Fund III (Fund B) LP (‘‘Fund B’’), 1,807,436.60 shares held by Fortress Investment Fund III (Fund C) LP (‘‘Fund C’’), 4,148,448.00 shares held by Fortress Investment Fund III (Fund D) L.P. (‘‘Fund D’’), 291,399.90 shares held by Fortress Investment Fund III (Fund E) LP (‘‘Fund E’’), 850,005.50 shares held by Fortress Investment Fund III

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(Coinvestment Fund A) LP (‘‘Coinvestment Fund A’’), 1,669,951.90 shares held by Fortress Investment Fund III (Coinvestment Fund B) LP (‘‘Coinvestment Fund B’’), 430,101.60 shares held by Fortress Investment Fund III (Coinvestment Fund C) LP (‘‘Coinvestment Fund C’’), 2,049,941.00 shares held by Fortress Investment Fund III (Coinvestment Fund D) L.P. (‘‘Coinvestment Fund D’’), 3,750,000.00 shares held by Drawbridge Special Opportunities Fund LP (‘‘Special Opportunities LP’’), 1,250,000 shares held by Drawbridge Special Opportunities Fund Ltd. (‘‘Special Opportunities Ltd.’’), and 5,000,000.00 shares held by Drawbridge Global Macro Master Fund Ltd (‘‘Global Macro Master’’). Drawbridge Special Opportunities GP LLC (‘‘Special Opportunities GP’’) is the general partner of Special Opportunities LP. Fortress Principal Investment Holdings IV LLC (‘‘FPIH IV’’) is the sole managing member of Special Opportunities GP. Pursuant to management agreements, Drawbridge Special Opportunities Advisors LLC (‘‘Special Opportunities Advisors’’) is the manager of each of Special Opportunities LP and Special Opportunities Ltd. Global Macro Master is wholly-owned by Drawbridge Global Macro Fund LP (‘‘Global Macro LP’’) and Drawbridge Global Macro Fund Ltd. (‘‘Global Macro Ltd.’’). Drawbridge Global Macro GP LLC (‘‘Global Macro GP’’) is the general partner of Global Macro LP. Fortress Principal Investment Holdings II LLC (‘‘FPIH II’’) is the sole managing member of Global Macro GP. Pursuant to management agreements, Drawbridge Global Macro Advisors LLC (‘‘Global Macro Advisors’’) is the manager of each of Global Macro LP, Global Macro Ltd. and Global Macro Master. Fortress Investment Group LLC (‘‘FIG’’) is the sole managing member of both Special Opportunities Advisors and Global Macro Advisors. Fortress Fund III GP LLC (‘‘FF III GP LLC’’) is the general partner of each of Fund III, Fund B, Fund C, Fund D, Fund E, Coinvestment Fund A, Coinvestment Fund B, Coinvestment Fund C and Coinvestment Fund D (collectively, the ‘‘Fund III Funds’’). FPIH II is the sole managing member of Fortress Investment Fund GP (Holdings) LLC which is the sole managing member of FF III GP LLC. Pursuant to a management agreement, FIG is the manager of each of the Fund III Funds. FIG is 100% owned by Fortress Investment Holdings LLC (‘‘FIH’’). FIH, FPIH II and FPIH IV are each owned by certain individuals, including Wesley R. Edens, our Chairman of the board and Randal A. Nardone, a director. By virtue of their ownership interests in FIH, FPIH II and FPIH IV, Mr. Edens and Mr. Nardone may be deemed to beneficially own the shares listed as beneficially owned by FIH, FPIH II and FPIH IV. Mr. Edens and Mr. Nardone disclaim beneficial ownership of such shares. The address of FIH is 1345 Avenue of the Americas, 46 ^th Floor, New York, New York 10105. The address of the other entities listed above is c/o Fortress Investment Holdings LLC, 1345 Avenue of the Americas, 46 ^th Floor, New York, New York 10105.

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Description of Indebtedness

Credit Facility No. 2

General. Certain of Aircastle's wholly-owned subsidiaries entered into a senior secured revolving credit facility, which we refer to as Credit Facility No. 2, with JPMorgan Chase Bank, N.A., Bear Stearns Corporate Lending Inc., and Citibank, N.A. Credit Facility No. 2 provides for loans in an aggregate amount of up to $500.0 million. Borrowings under Credit Facility No. 2 are used to finance up to 85% of the net book value of aircraft. As of May 22, 2006, we had $100.2 million outstanding under this facility. Subject to compliance with customary conditions precedent and to the extent of availability, revolving loans are available at any time prior to the final maturity of Credit Facility No. 2. Subject to certain exceptions, amounts repaid under Credit Facility No. 2 may be reborrowed prior to the final maturity of Credit Facility No. 2, provided that the availability requirements are met. All borrowings under Credit Facility No. 2 are subject to the satisfaction of customary conditions, including the absence of a default and the accuracy of representations and warranties.

Interest Rate. Borrowings under Credit Facility No. 2 bear interest (a) in the case of loans with an interest rate based on the applicable base rate, or ABR, the ABR plus an applicable margin or (b) in the case of loans with an interest rate based on the eurodollar rate, the eurodollar rate plus an applicable margin. The ABR is determined by reference to the higher of (i) the prime rate of JPMorgan Chase Bank, N.A. and (ii) the federal funds rate plus ½ of 1%. The eurodollar rate is determined by reference to one-month LIBOR adjusted by the maximum rate, established by the Board of Governors of the Federal Reserve System, at which reserves are required to be maintained. The applicable margin is 0.25% with respect to ABR borrowings and 1.25% with respect to eurodollar borrowings. Additionally, we are subject to a 0.25% fee on any unused portion of the total committed facility. We are also required to pay customary agency fees.

Prepayment. Advances under the credit facility may be prepaid without penalty upon notice, subject to certain conditions. The credit facility requires mandatory prepayments of borrowings under Credit Facility No. 2:


•	upon the sale of certain assets by a borrower, including any aircraft or aircraft engines financed or refinanced with proceeds from Credit Facility No. 2;


•	upon the refinancing of indebtedness under Credit Facility No. 2;


•	if the aggregate principal amount of loans outstanding under Credit Facility No. 2 is greater than 85% of the borrowing base (as defined in Credit Facility No. 2);


•	if the estimated amount of out of pocket costs incurred by a borrower in connection with the acquisition of an aircraft or an aircraft engine financed with proceeds from Credit Facility No. 2 exceed the actual amount of out of pocket costs included in the purchase price of such asset;


•	upon the occurrence of an event of loss (as defined in Credit Facility No. 2) with respect to an aircraft or aircraft engine financed with proceeds from Credit Facility No. 2; and


•	upon the securitization of any interests or leases with respect to aircraft or aircraft engines financed with proceeds from Credit Facility No. 2.

Maturity Date. Credit Facility No. 2 matures on August 28, 2007.

Guarantors. All obligations of each borrower under Credit Facility No. 2 are unconditionally guaranteed by Aircastle, each of Aircastle's direct subsidiaries, Aircastle Investment Holdings 2 Limited, Aircastle Ireland No. 3 Limited, each borrowing affiliate (as defined therein), each subsidiary of a beneficiary and the other borrowers under the facility.

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Collateral. Borrowings under Credit Facility No. 2 are secured by first priority perfected security interests in and pledges or assignments of equity ownership and beneficial interests in certain Aircastle entities, including certain of our affiliates and subsidiaries and the borrowers and borrowing affiliate (as defined in Credit Facility No. 2) under Credit Facility No. 2, as well as by the borrowers' interests in leases of assets.

Certain Covenants. Credit Facility No. 2 contains a number of covenants that, among other things, restrict, subject to certain exceptions, the ability of the borrowers and all of the guarantors (other than Aircastle and any other guarantor that is a direct subsidiary of AL), to:


•	sell assets;


•	incur additional indebtedness;


•	create liens on assets, including assets financed with proceeds from Credit Facility No. 2;


•	make investments, loans, guarantees or advances;


•	make certain acquisitions;


•	incur secured indebtedness;


•	engage in amalgamations, mergers or consolidations;


•	engage in certain transactions with affiliates;


•	change the business conducted by the borrowers and their respective subsidiaries;


•	make certain capital expenditures, other than those related to the purchase, maintenance or conversion of assets financed with proceeds from Credit Facility No. 2;


•	own, operate or lease assets financed with proceeds from Credit Facility No. 2; and


•	enter into a securitization transaction involving assets financed with proceeds from Credit Facility No. 2 unless certain conditions are met.

In addition, Credit Facility No. 2 requires us to maintain a minimum ratio of certain aircraft assets to principal amount of loans outstanding under Credit Facility No. 2, of 85%.

The terms of the guaranty by AL contains a number of covenants that, among other things, restrict, subject to certain exceptions, the ability of AL and in some cases its subsidiaries to:


•	create liens on assets;


•	incur additional indebtedness;


•	sell, lease, transfer or otherwise dispose of assets;


•	make certain investments;


•	engage in amalgamations, mergers or consolidations;


•	engage in certain transactions with affiliates;


•	incur secured indebtedness;


•	pay dividends;


•	redeem or repurchase the capital sock of any guarantor that is a parent of any borrower;


•	make other restricted payments; and

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•	restrict payments from subsidiaries.

However, in the event of an initial public offering by AL, the restriction on restricted payments by AL ceases to be in effect. Additionally, upon completion of such initial public offering, AL must maintain a consolidated net worth (as defined in the guaranty) of at least $500.0 million.

Credit Facility No. 2 also contains certain customary affirmative covenants and events of default.

Credit Facility No. 3

General. In October 2005, certain of our subsidiaries entered into a senior secured credit facility, which we refer to as Credit Facility No. 3, with Wells Fargo Bank Northwest, National Association, as trustee, and Citibank, N.A., as lender and agent, to finance the acquisition of three aircraft. Credit Facility No. 3 provided for a term loan of up to $110.3 million. As of May 22, 2006, $73.3 million was outstanding under Credit Facility No. 3 after taking into account the sale of one of the aircraft financed with proceeds from the facility and the subsequent repayment of a portion of the term loan with the proceeds of such sale.

Interest Rate. Borrowings under Credit Facility No. 3 bear interest (a) in the case of loans with an interest rate based on the applicable base rate, or ABR, the ABR plus an applicable margin or (b) in the case of loans with an interest rate based on the eurodollar rate, the eurodollar rate plus an applicable margin. The ABR is determined by reference to the higher of (i) the base rate of Citibank, N.A. and (ii) the federal funds rate plus ½ of 1%. The eurodollar rate is determined by reference to one-month LIBOR adjusted by the maximum rate, established by the Board of Governors of the Federal Reserve System, at which reserves are required to be maintained. The applicable margin is 0.50% with respect to ABR borrowings and 1.50% with respect to eurodollar borrowings. Currently, borrowings under Credit Facility No. 3 bear interest at one-month LIBOR plus 1.50%, which at March 31, 2006 was 6.20% per annum. We are also required to pay customary agency fees.

Prepayment. Borrowings under the credit facility may be prepaid without penalty upon notice, subject to conditions. Credit Facility No. 3 requires mandatory prepayments of borrowings:


•	upon the sale of certain assets by a borrower, including any aircraft financed with proceeds from the credit facility;


•	upon the sale of all of the beneficial interest or ownership of a borrower;


•	upon an event of loss (as defined in the lease governing the applicable aircraft) with respect to the aircraft financed with proceeds from the credit facility; and


•	of certain amounts from cash accounts that serve as collateral for borrowings under Credit Facility No. 3.

Maturity Date. The facility matures on October 24, 2006.

Guarantors. All obligations of each borrower under Credit Facility No. 3 are unconditionally guaranteed by Aircastle Ireland Holding Limited, Aircastle Ireland No. 2 Limited, any applicable lease intermediaries (as defined in the credit facility) and the other borrowers under Credit Facility No. 3. Also, AL has agreed not to commence a bankruptcy case (directly or indirectly through the borrowers or guarantors) against the borrowers or guarantors under Credit Facility No. 3.

Collateral. Borrowings under Credit Facility No. 3 are secured by first priority perfected security interests in and pledges or assignments of (i) all of Aircastle Ireland No. 2 Limited's equity

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ownership and beneficial interests in the borrowers and related trusts, (ii) any cash, securities or other property declared or distributed in respect of or in exchange of the equity ownership and beneficial interests in the borrowers and related trusts, including any proceeds therefrom, (iii) Aircastle Ireland Holding Limited's share ownership interest in Aircastle Ireland No. 2 Limited and (iv) the borrowers' interests in leases of aircraft financed or refinanced with proceeds of the credit facility, in lockbox accounts and in the borrowers' general bank accounts.

Certain Covenants. Credit Facility No. 3 contains a number of covenants that, among other things, restrict, subject to certain exceptions, the ability of the borrowers and all of the guarantors (other than Aircastle Ireland Holding Limited) and their respective subsidiaries, to:


•	sell or otherwise dispose of its assets;


•	incur additional indebtedness;


•	create liens on assets, including assets financed with proceeds from Credit Facility No. 3;


•	make investments, loans, guarantees or advances;


•	make certain acquisitions;


•	incur secured indebtedness;


•	engage in amalgamations, mergers or consolidations;


•	engage in certain transactions with affiliates;


•	change the business conducted by the borrowers and their respective subsidiaries;


•	make certain capital expenditures, other than those related to the purchase, maintenance or conversion of assets financed with proceeds from Credit Facility No. 3; and


•	own, operate or lease assets financed with proceeds from Credit Facility No. 3.

Credit Facility No. 3 also contains customary affirmative covenants and events of default.

Securitization

General. On June , 2006, we completed an aircraft lease portfolio securitization. Under the terms of the transaction, a single class of certificates were issued by the ACS 2006-1 Pass Through Trust, or the trust. The proceeds of the sale of the certificates were used by the trust to acquire senior secured notes issued by ACS Bermuda Finance Limited and ACS Ireland Finance Limited, the Bermuda and Irish special purpose entities we formed in May and March, respectively, 2006 and in which we will continue to hold substantially all of the equity interests. ACS Bermuda Finance Limited and ACS Ireland Finance Limited, together with their respective subsidiaries, are referred to herein as the ACS group.

The proceeds of the sale of the notes were used by ACS group entities to acquire, directly or indirectly, a total of 40 aircraft from wholly owned subsidiaries of Aircastle and to pay the expenses relating to the securitization. The aggregate principal amount of the notes sold to the trust was $560 million, and the expenses incurred in connection with the sale of the certificates was equal to $ million.

Payments on the notes will be passed through to the holders of the certificates. The primary source of payments on the notes will be lease payments on the aircraft to be owned by ACS group entities. ACS Bermuda and ACS Ireland have each unconditionally guaranteed the amounts due under the notes issued by the other.

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Financial Guaranty Insurance Company issued a financial guaranty insurance policy to support the payment of interest when due on the certificates and the payment of the pool balance of the certificates on the final distribution date.

The certificates are rated Aaa and AAA by Moody's Investor Service and Standard & Poor's rating services, respectively.

Liquidity. The ACS group will be required to maintain, as of each monthly payment date, unrestricted cash in an amount sufficient to cover its operating expenses over the one month, or in the case of maintenance expenditures, the three months following such payment date. In addition, Calyon, a subsidiary of the Crédit Agricole Group, will provide a liquidity facility in the amount of $42 million to the ACS group, which may under certain circumstances be drawn upon to pay expenses of the ACS group, interest rate hedge payments and interest on the notes.

Servicing. Our wholly-owned subsidiary, Aircastle Advisor LLC, provides lease remarketing services to ACS Bermuda, and Aircastle Advisor (Ireland) Limited provides lease remarketing services to ACS Ireland, and sales remarketing services to the ACS group entitles and each receives a fee equal to 2.0% of the aggregate rentals received in relation to the aircraft it is remarketing and, in the case of Aircastle Advisor (Ireland) Limited, 1.0% of the net sales proceeds of any aircraft sold. Aircastle Advisor LLC also provides administrative services to the ACS group entities and is paid an annual fee equal to 0.5% of the aggregate rentals received each month on the ACS group aircraft.

The remarketing servicers and administrative agent may be terminated in certain circumstances by the ACS group or policy provider in the event of a default by or insolvency of any of them, and in addition the remarketing services may be terminated if (i) at least 15% of the aircraft of the ACS group remain off-lease for four months or more after having been reasonably available for lease, (ii) our tangible net worth falls below $250 million, (iii) our leverage ratio exceeds 8.5, or (iv) Fortress fails to maintain certain minimum shareholding levels at a time when our net worth is also below certain levels. More particularly, a termination right with respect to the remarketing services will arise if Fortress fails to maintain (i) a 23% ownership interest in Aircastle until the date of the first anniversary of the closing date unless our net worth is at least $500 million, (ii) a 21% ownership interest in Aircastle from the first anniversary up to the second anniversary of the closing date of the offering unless our net worth is at least $500 million, (iii) a 19% ownership interest in Aircastle from the date of the second anniversary up to the third anniversary of the closing date unless our net worth of Aircastle is at least $500 million, (iv) a 17% ownership interest in Aircastle from the third anniversary of the closing date up to the fourth anniversary of the closing date unless our net worth is at least $550 million or (v) a 10% ownership interest in Aircastle from the fourth anniversary up to the fifth anniversary of the closing date unless our net worth is at least $600 million: provided , however , that the foregoing will not be a termination event if Fortress has not sold any shares of Aircastle.

International Lease Finance Corporation acts as the back-up remarketing servicer and will provide remarketing services if the remarketing service agreements terminate prior to repayment of the notes. The back-up remarketing servicer receives a stand-by fee equal to $200,000 per annum, payable monthly in advance. Upon the termination of the remarketing services agreements, the back-up remarketing servicer will receive a monthly rent-based fee paid in arrears equal to the amount of 3.0% of the aggregate rents received on the ACS group aircraft and a sales-based incentive fee with respect to each sale of an aircraft in the amount of 3.0% of the value of the total consideration paid for the aircraft in such sale.

Interest Rate. The notes will bear interest at one-month LIBOR plus 0.27%. We have entered into a series of interest rate hedging contracts intended to hedge the interest rate exposure

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associated with issuing floating-rate obligations backed by primarily fixed-rate lease assets. These contracts, together with the guarantee premium, the spread referenced above and other costs of trust administration, result in a fixed rate cost of % per annum, before the amortization of issuance fees and expenses.

Payment Terms. The interest and principal payments on the notes are due on a monthly basis. The scheduled payments of principal have been calculated such that the principal balance of the notes will be equal to 54.8% of the Initial Appraised Value of the aircraft, as such Initial Appraised Value is decreased over time by an assumed amount of depreciation. During the first five years of the transaction, subject to compliance with the debt service coverage ratio test in years four and five, all cash flows attributable to the underlying aircraft after payment of expenses, interest and scheduled principal payments, or excess securitization cash flows, will be available for distribution to us. We intend to use the excess securitization cash flow to pay dividends and to make additional investments. We expect to refinance the notes on or prior to June 2011. In the event that the notes are not repaid on or prior to June 2011, the excess securitization cash flow will be used to repay the principal amount of the notes and will not be available to us to pay dividends to our shareholders. If during year four or five of the transaction, the debt service coverage ratio test fails on two consecutive payment dates, the excess securitization cash flow will be used to repay the principal amount of the notes and will not be available to us to pay dividends to our shareholders. The debt service coverage ratio test will fail to the extent that the trailing six month debt service coverage ratio is less than 1.7:1.

If the notes are voluntary redeemed, other than in certain limited circumstances, the redemption price will be 103% of the then outstanding principal balance of the notes, if the redemption occurs in the first ten months following the closing of the securitization. The redemption price reduces to 102% during the period between 11 and 20 months following closing, and to 101% in the period between 21 and 30 months following closing, and 100% thereafter. A redemption premium would also be payable to the financial guaranty insurance policy issuer in the event of a voluntary redemption prior to the third anniversary of the closing date, and the financial guaranty insurance policy issuer’s monthly premium will increase if the certificates are not fully repaid within 72 months of the closing date.

Maturity Date. The final maturity date will be the twenty-fifth anniversary of the closing date. We intend to refinance the certificates on or before the fifth anniversary of the closing date.

Collateral. The property of the trust includes the notes and rights under the financial guaranty insurance policy. The notes are secured by first priority perfected security interests in and pledges or assignments of equity ownership and beneficial interests in certain ACS Bermuda and ACS Ireland entities, as well as by their interests in leases of the aircraft they own, by cash held by or for them and by their rights under agreements with the service providers. Rentals and reserves paid under leases of the ACS Bermuda and ACS Ireland aircraft will be placed in collection accounts and paid out according to a priority of payments.

Default and Remedies. ACS Bermuda and ACS Ireland will be in default under the transaction documents in the event, among other things, interest on the notes or principal due at final maturity is not paid, certain other covenants are not complied with and noncompliance materially adversely affects the noteholder, any significant ACS group member becomes the subject of insolvency proceedings or a judgment for the payment of money exceeding five percent of the then assumed portfolio value is entered and remains unstayed for a period of time. Following any such default and acceleration of the notes by the controlling party, the security trustee may exercise such remedies in relation to the collateral as may be available to it under applicable law, including the sale of any of the aircraft at public or private sale and on such terms as it may determine to be commercially reasonable. After the occurrence of certain

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bankruptcy and insolvency related events of default, or any acceleration of the notes after the occurrence of any event of default, all cash generated by the ACS group will be used to prepay the notes and will not be available to us to make distributions to our shareholders.

Certain Covenants. The remarketing service providers and administrative agent each have broad authority, within its internal operating guidelines, to manage the ACS group aircraft without requiring any consent or approval from the security trustee, rating agencies or the financial guaranty insurance policy issuer consent; however, certain transactions will require the consent or approval of one or more of the foregoing parties, including (i) sales of aircraft (a) for prices below 107% of the then-applicable note balance for such aircraft or (b) in any calendar year, in amounts in excess of 10% of the assumed portfolio value at the beginning of that year, (ii) re-leasing aircraft to the extent not in compliance with the lessee and geographic concentration limits, and the other operating covenants, in the transaction documents, (iii) modifying an aircraft if the cost thereof would exceed 105% of the cost of a heavy airframe check and an engine overhaul or (iv) enter into any transaction between Aircastle and the ACS group entities not already contemplated by the transaction documents. The lessee and geographic concentration limits will require us to re-lease the aircraft to an obligor- and jurisdictional-diverse set of customers, and may place limits on our ability (absent a third-party consent) to re-lease ACS group aircraft to certain customers at certain times, even if to do so would provide the best risk-adjusted cash flow and would be within any Aircastle group risk policies then in effect.

ACS Bermuda and ACS Ireland (and their subsidiaries) will not be permitted to acquire any aircraft other than the initial 40 aircraft subject to the securitization unless certain conditions are satisfied, including that the acquisition does not result in an event of default under the transaction documents, does not result in a default under the applicable concentration limits and, if the acquisition is of a remaining or substitute aircraft for the initial 40 aircraft or, if not, is made by means of the issuance of additional securities (other than certain equity securities of ACS Ireland), ACS Ireland or ACS Bermuda as applicable obtains prior written consent of each of the policy provider and Calyon and a confirmation from the rating agencies rating the certificates that they will not lower, qualify or withdraw their ratings on the certificates as a result of the acquisition.

Under the transaction documents, there are certain restrictions on the ability of the ACS group to make certain capital expenditures outside of the ordinary course of business. However, subject to certain restrictions, the ACS group will be permitted to convert aircraft from passenger to freighter and/or mixed use configurations and fund such conversions by using cash paid into an aircraft conversion account held by the security trustee. The aircraft conversion account will hold amounts accumulated in lieu of cash used to make what would otherwise constitute minimum principal payments and cash which would otherwise be made available for distribution to the Aircastle equity interest holders. Aircraft conversions funded by aircraft conversion account would be permitted only if certain conditions are met and, if more than three narrow-body aircraft are to be converted in the aggregate or for any conversion after the fifth anniversary of the closing or after the trailing six-month debt service coverage ratio failed to be met on two consecutive monthly payment dates, with rating agency confirmation and financial guaranty insurance policy issuer consent. After payment in full of any aircraft conversion or if a planned conversion is not undertaken, the balance of the amounts originally deposited in the aircraft conversion account for such aircraft conversion will be transferred to the collections account for application in accordance with the agreed priority of payments.

The transaction documents contain other operating covenants applicable to the ACS group entities, including covenants that restrict the investment and business activities of the ACS group,

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limit the amount of debt that can be assumed by the ACS group entities and the payments they may make outside the payment priority provisions of the transaction documents, restrict their ability to grant liens, and limit their ability to merge, amalgamate, consolidate or transfer assets.

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Description of Share Capital

The following description of our share capital summarizes certain provisions of our memorandum of association and our bye-laws. Such summaries do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of our memorandum of association and bye-laws, copies of which have been filed as exhibits to the registration statement of which this prospectus forms a part. Prospective investors are urged to read the exhibits for a complete understanding of our memorandum of association and bye-laws .

Share Capital

As of , 2006, our authorized share capital consisted of 250,000,000 common shares, par value U.S. $0.01 each and 50,000,000 preference shares, par value U.S. $0.01. Upon completion of this offering, there will be common shares issued and outstanding (assuming no exercise of the underwriters' over-allotment option), excluding an additional 3,138,000 common shares which remain available for grant, and an additional 70,000 common shares approved for grant or subject to restricted share units, under our equity and incentive plan, and no preference shares issued and outstanding. All of our issued and outstanding common shares prior to completion of this offering are fully paid, and all of our shares to be issued in this offering will be issued fully paid.

Pursuant to our bye-laws, subject to any resolution of the shareholders to the contrary, our board of directors is authorized to issue any of our authorized but unissued shares. There are no limitations on the right of non-Bermudians or non-residents of Bermuda to hold or vote our shares.

Common Shares

Holders of common shares have no pre-emptive, redemption, conversion or sinking fund rights. Holders of common shares are entitled to one vote per share on all matters submitted to a vote of holders of common shares. Unless a different majority is required by law or by our bye-laws, resolutions to be approved by holders of common shares require approval by a simple majority of votes cast at a meeting at which a quorum is present. Our bye-laws provide that persons standing for election as directors at a duly constituted and quorate annual general meeting are appointed by shareholders holding shares carrying a plurality of the votes cast on the resolution. In the event of our liquidation, dissolution or winding up, the holders of common shares are entitled to share equally and ratably in our assets, if any, remaining after the payment of all of our debts and liabilities, subject to any liquidation preference on any issued and outstanding preference shares. We intend to apply to list our common shares on the New York Stock Exchange.

Preference Shares

Pursuant to Bermuda law and our bye-laws, our board of directors by resolution may establish one or more series of preference shares having such number of shares, designations, dividend rates, relative voting rights, conversion or exchange rights, redemption rights, liquidation rights and other relative participation, optional or other special rights, qualifications, limitations or restrictions as may be fixed by the board without any further shareholder approval. The rights with respect to a series of preference shares may be greater than the rights attached to our common shares. It is not possible to state the actual effect of the issuance of any preference shares on the rights of holders of our common shares until our board of directors determines the specific rights attached to that preference share. The effect of issuing preference shares could include one or more of the following:

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•	restricting dividends in respect of our common shares;


•	diluting the voting power of our common shares or providing that holders of preference shares have the right to vote on matters as a class;


•	impairing the liquidation rights of our common shares; or


•	delaying or preventing a change of control of Aircastle.

Dividend Rights

Under Bermuda law, a company's board of directors may declare and pay dividends from time to time unless there are reasonable grounds for believing that the company is, or would after the payment be, unable to pay its liabilities as they become due or that the realizable value of its assets would thereby be less than the aggregate of its liabilities and issued share capital and share premium accounts. Under our bye-laws, each common share is entitled to dividends if, as and when dividends are declared by our board of directors, subject to any preferred dividend right of the holders of any preference shares. There are no restrictions on our ability to transfer funds (other than funds denominated in Bermuda dollars) in and out of Bermuda or to pay dividends to U.S. residents who are holders of our common shares.

Variation of Rights

If at any time we have more than one class of shares, the rights attaching to any class, unless otherwise provided for by the terms of issue of the relevant class, may be varied either: (i) with the consent in writing of the holders of 50% of the issued shares of that class; or (ii) with the sanction of a resolution passed by a majority of the votes cast at a general meeting of the relevant class of shareholders at which a quorum consisting of at least two persons holding or representing two-thirds of the issued shares of the relevant class is present. Our bye-laws specify that the creation or issue of shares ranking equally with existing shares will not, unless expressly provided by the terms of issue of existing shares, vary the rights attached to existing shares. In addition, the creation or issue of preference shares ranking prior to common shares will not be deemed to vary the rights attached to common shares or, subject to the terms of any other series of preference shares, to vary the rights attached to any other series of preference shares.

Election and Removal of Directors

Our bye-laws provide that our board shall consist of not less than three and not more than eight directors as the board may from time to time determine. Our board of directors will initially consist of seven directors. Our board is divided into three classes that are, as nearly as possible, of equal size. Each class of directors is elected for a three-year term of office, but the terms are staggered so that the term of only one class of directors expires at each annual general meeting. The current terms of the Class I, Class II and Class III directors will expire in 2007, 2008, and 2009, respectively.

Any shareholder wishing to propose for election as a director someone who is not an existing director or is not proposed by our board must give notice of the intention to propose the person for election. Where a person is to be proposed for election as a director at an annual general meeting by a shareholder, that notice must be given not less than 90 days nor more than 120 days before the anniversary of the last annual general meeting prior to the giving of the notice or, in the event the annual general meeting is called for a date that is not 25 days before or after such anniversary the notice must be given not later than ten days following the earlier of the date on which notice of the annual general meeting was posted to shareholders or the date on which public disclosure of the date of the annual general meeting was made.

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A director may be removed with or without cause by a resolution including the affirmative vote of shareholders holding shares carrying at least 80.0% of the votes of all shares then issued and entitled to vote on the resolution, provided that notice of the shareholders meeting convened to remove the director is given to the director. The notice must contain a statement of the intention to remove the director and must be served on the director not less than 14 days before the meeting. The director is entitled to attend the meeting and be heard on the motion for his removal.

Corporate Opportunity

Our bye-laws provide that the Fortress shareholders, and their respective subsidiaries and affiliates (collectively, the ‘‘Significant Shareholders’’) have the right to, and have no duty to abstain from, exercising such right to, engage or invest in the same or similar business as us, do business with any of our clients, customers or vendors or employ or otherwise engage any of our officers, directors or employees. If the Significant Shareholders or any of their officers, directors or employees acquire knowledge of a potential transaction that could be a corporate opportunity, they have no duty to offer such corporate opportunity to us, our shareholders or affiliates.

Our bye-laws also provide that, in the event that any of our directors and officers who is also a director, officer or employee of any of our Significant Shareholders acquires knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person’s capacity as our director or officer and such person acted in good faith, then such person is not liable to us if any of the Significant Shareholders pursues or acquires such corporate opportunity or if such person did not present the corporate opportunity to us.

Acquisition of Common Shares by Aircastle and Option to Require Sale of Shares

Our bye-laws provide that we have the option, but not the obligation, to require a non-U.S. shareholder to sell its common shares for their fair market value to us, to other shareholders or to third parties if we determine, that failure to exercise our option would result in adverse tax consequences to us or certain U.S. Persons the shares held by whom constitute controlled shares. Our right to require a shareholder to sell its shares will be limited to the purchase of a number of shares that will permit avoidance of those adverse tax consequences.

Shareholders Agreement

For a description of the Amended and Restated Shareholders Agreement that we will enter into with the Fortress shareholders upon the completion of this offering, see ‘‘Certain Relationships and Related Party Transactions — Shareholders Agreement.’’

Anti-Takeover Provisions

The following is a summary of certain provisions of our bye-laws that may be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that a shareholder might consider to be in its best interest, including those attempts that might result in a premium over the market price for the shares held by shareholders.

The authorized but unissued common shares and our preference shares will be available for future issuance by the board of directors, subject to any resolutions of the shareholders. These additional shares may be utilized for a variety of corporate purposes, including future public

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offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued common shares and preference shares could render more difficult or discourage an attempt to obtain control over us by means of a proxy contest, tender offer, amalgamation or otherwise.

Certain provisions of our bye-laws may make a change in control of Aircastle more difficult to effect. Our bye-laws provide for a staggered board of directors consisting of three classes of directors. Each class of directors are chosen for three-year terms upon the expiration of their current terms and each year one class of our directors is elected for a three-year term of office by our shareholders. The terms of the directors in the first, second and third classes will expire in 2007, 2008 and 2009, respectively. We believe that classification of our board of directors will help to assure the continuity and stability of our business strategies and policies as determined by our board of directors. The classified board could have the effect of making the replacement of incumbent directors more time consuming and difficult. At least two annual meetings of shareholders, instead of one, will generally be required to effect a change in a majority of our board of directors. Thus, the classified board could increase the likelihood that incumbent directors will retain their positions. The staggered terms of directors may delay, defer or prevent a tender offer or an attempt to change control of us, even though a tender offer or change in control might be in the best interest of our shareholders. Our bye-laws provide that persons standing for election as directors at a duly constituted and quorate annual general meeting are appointed by shareholders holding shares carrying a plurality of the votes cast on the resolution. In addition, our bye-laws provide that directors may be removed with or without cause by a resolution including the affirmative vote of shareholders holding shares carrying at least 80.0% of the votes of all shares entitled to vote on the resolution. Our bye-laws also give us the option, but not the obligation, to require a non-U.S. shareholder to sell the shareholder's common shares to us, to another shareholder or to third parties at fair market value if we determine, that failure to exercise such option would result in adverse tax consequences to us or certain U.S. Persons the shares held by whom constitute controlled shares.

Pursuant to our bye-laws, our preference shares may be issued from time to time, and the board of directors is authorized to determine the rights, preferences, privileges, qualifications, limitations and restrictions. See ‘‘— Preference Shares.’’

Certain Provisions of Bermuda Law

We have been designated by the Bermuda Monetary Authority as a non-resident for Bermuda exchange control purposes. This designation allows us to engage in transactions in currencies other than the Bermuda dollar, and there are no restrictions on our ability to transfer funds (other than funds denominated in Bermuda dollars) in and out of Bermuda or to pay dividends to United States residents who are holders of our common shares.

The Bermuda Monetary Authority has given its consent for the issue and free transferability of all of the common shares that are the subject of this offering to and between non-residents of Bermuda for exchange control purposes, provided our shares remain listed on an appointed stock exchange, which includes the New York Stock Exchange. Approvals or permissions given by the Bermuda Monetary Authority do not constitute a guarantee by the Bermuda Monetary Authority as to our performance or our creditworthiness. Accordingly, in giving such consent or permissions, the Bermuda Monetary Authority shall not be liable for the financial soundness, performance or default of our business or for the correctness of any opinions or statements expressed in this prospectus. Certain issues and transfers of common shares involving persons deemed resident in Bermuda for exchange control purposes may require the specific consent of the Bermuda Monetary Authority.

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This prospectus will be filed with the Registrar of Companies in Bermuda pursuant to Part III of the Companies Act 1981 of Bermuda. In accepting this prospectus for filing, the Registrar of Companies in Bermuda shall not be liable for the financial soundness, performance or default of our business or for the correctness of any opinions or statements expressed in this prospectus.

In accordance with Bermuda law, share certificates are only issued in the names of companies, partnerships or individuals. In the case of a shareholder acting in a special capacity (for example as a trustee), certificates may, at the request of the shareholder, record the capacity in which the shareholder is acting. Notwithstanding such recording of any special capacity, we are not bound to investigate or see to the execution of any such trust. We will take no notice of any trust applicable to any of our shares, whether or not we have been notified of such trust.

Differences in Corporate Law

You should be aware that the Companies Act 1981 of Bermuda, which applies to us, differs in certain material respects from laws generally applicable to Delaware corporations and their shareholders. In order to highlight these differences, set forth below is a summary of certain significant provisions of the Companies Act (including modifications adopted pursuant to our bye-laws) and Bermuda common law applicable to us which differ in certain respects from provisions of the General Corporation Law of the State of Delaware. Because the following statements are summaries, they do not address all aspects of Bermuda law that may be relevant to us and our shareholders or all aspects of Delaware law which may differ from Bermuda law.

Duties of Directors. Our bye-laws provide that our business is to be managed and conducted by our board of directors. At common law, members of a board of directors owe a fiduciary duty to the company to act in good faith in their dealings with or on behalf of the company and exercise their powers and fulfill the duties of their office honestly. This duty includes the following essential elements:


•	a duty to act in good faith in the best interests of the company;


•	a duty not to make a personal profit from opportunities that arise from the office of director;


•	a duty to avoid conflicts of interest; and


•	a duty to exercise powers for the purpose for which such powers were intended.

The Companies Act imposes a duty on directors and officers of a Bermuda company:


•	to act honestly and in good faith with a view to the best interests of the company; and


•	to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

In addition, the Companies Act imposes various duties on directors and officers of a company with respect to certain matters of management and administration of the company.

Directors and officers generally owe fiduciary duties to the company, and not to the company's individual shareholders. Our shareholders may not have a direct cause of action against our directors.

Under Delaware law, the business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of its shareholders. The duty of care requires that directors act in an informed and deliberative manner and inform themselves, prior to making a business decision, of

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all material information reasonably available to them. The duty of care also requires that directors exercise care in overseeing and investigating the conduct of corporate employees. The duty of loyalty may be summarized as the duty to act in good faith, not out of self-interest, and in a manner which the director reasonably believes to be in the best interests of the shareholders.

Delaware law provides that a party challenging the propriety of a decision of a board of directors bears the burden of rebutting the applicability of the presumptions afforded to directors by the ‘‘business judgment rule.’’ The business judgment rule is a presumption that in making a business decision, directors acted on an informed basis and that the action taken was in the best interests of the Company and its shareholders, and accordingly, unless the presumption is rebutted, a board's decision will be upheld unless there can be no rational business purpose for the action or the action constitutes corporate waste. If the presumption is not rebutted, the business judgment rule attaches to protect the directors and their decisions, and their business judgments will not be second guessed. Where, however, the presumption is rebutted, the directors bear the burden of demonstrating the entire fairness of the relevant transaction. Notwithstanding the foregoing, Delaware courts may subject directors' conduct to enhanced scrutiny in respect of defensive actions taken in response to a threat to corporate control or the approval of a transaction resulting in a sale of control of the corporation.

Interested Directors. Bermuda law and our bye-laws provide that if a director has an interest in a material transaction or proposed material transaction with us or any of our subsidiaries or has a material interest in any person that is a party to such a transaction, the director must disclose the nature of that interest at the first opportunity either at a meeting of directors or in writing to the directors. Our bye-laws provide that, after a director has made such a declaration of interest, he is allowed to be counted for purposes of determining whether a quorum is present and to vote on a transaction in which he has an interest, unless disqualified from doing so by the chairman of the relevant board meeting. Under Delaware law, such transaction would not be voidable if (i) the material facts as to such interested director's relationship or interests are disclosed or are known to the board of directors and the board in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors, (ii) such material facts are disclosed or are known to the shareholders entitled to vote on such transaction and the transaction is specifically approved in good faith by vote of the majority of shares entitled to vote thereon or (iii) the transaction is fair as to the Company as of the time it is authorized, approved or ratified. Under Delaware law, such interested director could be held liable for a transaction in which such director derived an improper personal benefit.

Voting Rights and Quorum Requirements. Under Bermuda law, the voting rights of our shareholders are regulated by our bye-laws and, in certain circumstances, the Companies Act. Under our bye-laws, at any general meeting, two or more persons present in person at the start of the meeting and representing in person or by proxy shareholders holding shares carrying more than 50% of the votes of all shares entitled to vote on the resolution shall constitute a quorum for the transaction of business. Generally, except as otherwise provided in the bye-laws, or the Companies Act, any action or resolution requiring approval of the shareholders may be passed by a simple majority of votes cast except for the election of directors which requires only a plurality of the votes cast.

Any individual who is a shareholder of the company and who is present at a meeting may vote in person, as may any corporate shareholder that is represented by a duly authorized representative at a meeting of shareholders. Our bye-laws also permit attendance at general meetings by proxy, provided the instrument appointing the proxy is in the form specified in the bye-laws or such other form as the board may determine. Under our bye-laws, each holder of common shares is entitled to one vote per common share held.

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Under Delaware law, unless otherwise provided in the company's certificate of incorporation, each stockholder is entitled to one vote for each share of stock held by the stockholder. Delaware law provides that unless otherwise provided in a company's certificate of incorporation or bylaws, a majority of the shares entitled to vote, present in person or represented by proxy, constitutes a quorum at a meeting of stockholders. In matters other than the election of directors, with the exception of special voting requirements related to extraordinary transactions, and unless otherwise provided in a company's certificate of incorporation or bylaws, the affirmative vote of a majority of shares present in person or represented by proxy at the meeting entitled to vote is required for stockholder action, and the affirmative vote of a plurality of shares is required for the election of directors.

Dividends. Under Bermuda law, a company may not declare or pay dividends if there are reasonable grounds for believing that: (i) the company is, or would after the payment be, unable to pay its liabilities as they become due; or (ii) that the realizable value of its assets would thereby be less than the aggregate of its liabilities, its issued share capital and its share premium accounts. Under our bye-laws, each common share is entitled to dividends if, as and when dividends are declared by our board of directors, subject to any preferred dividend right of the holders of any preference shares. Issued share capital is the aggregate par value of the company's issued shares, and share premium is the aggregate amount paid for issued shares over and above their par value. Share premium accounts may be reduced in certain limited circumstances.

Under Delaware law, subject to any restrictions contained in the company's certificate of incorporation, a company may pay dividends out of surplus or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year. Delaware law also provides that dividends may not be paid out of net profits if, after the payment of the dividend, capital is less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets.

Amalgamations, Mergers and Similar Arrangements. The amalgamation of a Bermuda company with another company or corporation (other than certain affiliated companies) requires the amalgamation agreement to be approved by the company's board of directors and by its shareholders. Unless the company's bye-laws provide otherwise, the approval of 75% of the shareholders voting at such meeting is required to approve the amalgamation agreement, and the quorum for such meeting must be two persons holding or representing more than one-third of the issued shares of the company. Our bye-laws provide that a merger or an amalgamation (other than with a wholly owned subsidiary) that has been approved by the board must only be approved by a majority of the votes cast at a general meeting of the shareholders at which the quorum shall be two or more persons present in person and representing in person or by proxy shareholders holding shares carrying more than 50% of the votes of all shares entitled to vote on the resolution. Any merger or amalgamation not approved by our board must be approved by shareholders holding shares carrying not less than 66% of the votes of all shares entitled to vote on the resolution.

Under Bermuda law, in the event of an amalgamation of a Bermuda company with another company or corporation, a shareholder of the Bermuda company who did not vote in favor of the amalgamation and is not satisfied that fair value has been offered for such shareholder’s shares may, within one month of notice of the shareholders meeting, apply to the Supreme Court of Bermuda to appraise the fair value of those shares.

Under Delaware law, with certain exceptions, a merger, consolidation or sale of all or substantially all the assets of a corporation must be approved by the board of directors and a majority of the issued and outstanding shares entitled to vote thereon. Under Delaware law, a shareholder of a corporation participating in certain major corporate transactions may, under

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certain circumstances, be entitled to appraisal rights pursuant to which such shareholder may receive cash in the amount of the fair value of the shares held by such shareholder (as determined by a court) in lieu of the consideration such shareholder would otherwise receive in the transaction.

Takeovers. An acquiring party is generally able to acquire compulsorily the common shares of minority holders in the following ways:

•

By a procedure under the Companies Act known as a ‘‘scheme of arrangement’’. A scheme of arrangement could be effected by obtaining the agreement of the company and of holders of common shares, representing in the aggregate a majority in number and at least 75% in value of the common shareholders present and voting at a court ordered meeting held to consider the scheme of arrangement. The scheme of arrangement must then be sanctioned by the Bermuda Supreme Court. If a scheme of arrangement receives all necessary agreements and sanctions, upon the filing of the court order with the Registrar of Companies in Bermuda, all holders of common shares could be compelled to sell their shares under the terms of the scheme or arrangement.

•

If the acquiring party is a company by acquiring pursuant to a tender offer 90% of the shares or class of shares not already owned by, or by a nominee for, the acquiring party (the offeror), or any of its subsidiaries. If an offeror has, within four months after the making of an offer for all the shares or class of shares not owned by, or by a nominee for, the offeror, or any of its subsidiaries, obtained the approval of the holders of 90% or more of all the shares to which the offer relates, the offeror may, at any time within two months beginning with the date on which the approval was obtained, require by notice any nontendering shareholder to transfer its shares on the same terms as the original offer. In those circumstances, nontendering shareholders will be compelled to sell their shares unless the Supreme Court of Bermuda (on application made within a one-month period from the date of the offeror's notice of its intention to acquire such shares) orders otherwise.

•

Where the acquiring party or parties holds not less than 95% of the shares or a class of shares of a company, such holder(s) may, pursuant to a notice given to the remaining shareholders or class of shareholders, acquire the shares of such remaining shareholders or class of shareholders. When this notice is given, the acquiring party is entitled and bound to acquire the shares of the remaining shareholders on the terms set out in the notice, unless a remaining shareholder, within one month of receiving such notice, applies to the Supreme Court of Bermuda for an appraisal of the value of their shares. This provision only applies where the acquiring party offers the same terms to all holders of shares whose shares are being acquired.

Delaware law provides that a parent corporation, by resolution of its board of directors and without any shareholder vote, may merge with any subsidiary of which it owns at least 90% of each class of its capital stock. Upon any such merger, dissenting shareholders of the subsidiary would have appraisal rights.

Shareholders' Suits. Class actions and derivative actions are generally not available to shareholders under Bermuda law. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result in the violation of the company’s memorandum of association or bye-laws. Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company’s shareholders than that which actually approved it.

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When the affairs of a company are being conducted in a manner which is oppressive or prejudicial to the interests of some part of the shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the company's affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company.

Our bye-laws contain a provision by virtue of which our shareholders waive any claim or right of action that they have, both individually and on our behalf, against any director or officer in relation to any action or failure to take action by such director or officer, except in respect of any fraud or dishonesty of such director or officer. We have been advised by the SEC that in the opinion of the SEC, the operation of this provision as a waiver of the right to sue for violations of federal securities laws would likely be unenforceable in U.S. courts.

Class actions and derivative actions generally are available to shareholders under Delaware law for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court generally has discretion to permit the winning party to recover attorneys' fees incurred in connection with such action.

Indemnification of Directors and Officers. Section 98 of the Companies Act provides generally that a Bermuda company may indemnify its directors, officers and auditors against any liability which by virtue of any rule of law would otherwise be imposed on them in respect of any negligence, default, breach of duty or breach of trust, except in cases where such liability arises from fraud or dishonesty of which such director, officer or auditor may be guilty in relation to the company. Section 98 further provides that a Bermuda company may indemnify its directors, officers and auditors against any liability incurred by them in defending any proceedings, whether civil or criminal, in which judgment is awarded in their favor or in which they are acquitted or granted relief by the Supreme Court of Bermuda pursuant to section 281 of the Companies Act.

We have adopted provisions in our bye-laws that provide that we shall indemnify our officers and directors in respect of their actions and omissions, except in respect of their fraud or dishonesty. Our bye-laws provide that the shareholders waive all claims or rights of action that they might have, individually or in right of the company, against any of the company’s directors or officers for any act or failure to act in the performance of such director’s or officer’s duties, except in respect of any fraud or dishonesty of such director or officer. Section 98A of the Companies Act permits us to purchase and maintain insurance for the benefit of any officer or director in respect of any loss or liability attaching to him in respect of any negligence, default, breach of duty or breach of trust, whether or not we may otherwise indemnify such officer or director. We have purchased and maintain a directors’ and officers’ liability policy for such a purpose.

Under Delaware law, a corporation may indemnify a director or officer of the corporation against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in defense of an action, suit or proceeding by reason of such position if (i) such director or officer acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and (ii) with respect to any criminal action or proceeding, such director or officer had no reasonable cause to believe his conduct was unlawful.

Inspection of Corporate Records. Members of the general public have the right to inspect our public documents available at the office of the Registrar of Companies in Bermuda and our registered office in Bermuda, which will include our memorandum of association (including its objects and powers) and certain alterations to our memorandum of association. Our shareholders have the additional right to inspect our bye-laws, minutes of general meetings and audited financial statements, which must be presented to the annual general meeting of shareholders.

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The register of members of a company is also open to inspection by shareholders without charge, and by members of the general public on payment of a fee. The register of members is required to be open for inspection for not less than two hours in any business day (subject to the ability of a company to close the register of members for not more than 30 days in a year). A company is required to maintain its share register in Bermuda but may, subject to the provisions of the Companies Act, establish a branch register outside of Bermuda. A company is required to keep at its registered office a register of directors and officers that is open for inspection for not less than two hours in any business day by members of the public without charge. Bermuda law does not, however, provide a general right for shareholders to inspect or obtain copies of any other corporate records. Delaware law permits any shareholder to inspect or obtain copies of a corporation's shareholder list and its other books and records for any purpose reasonably related to such person's interest as a shareholder.

Shareholder Proposals. Under Bermuda law, shareholder(s) may, as set forth below and at their own expense (unless the company otherwise resolves), require the company to: (i) give notice to all shareholders entitled to receive notice of the annual general meeting of any resolution that the shareholder(s) may properly move at the next annual general meeting; and/or (ii) circulate to all shareholders entitled to receive notice of any general meeting a statement in respect of any matter referred to in the proposed resolution or any business to be conducted at such general meeting. The number of shareholders necessary for such a requisition is either: (i) any number of shareholders representing not less than 5% of the total voting rights of all shareholders entitled to vote at the meeting to which the requisition relates; or (ii) not less than 100 shareholders. Delaware law does not include a provision restricting the manner in which nominations for directors may be made by shareholders or the manner in which business may be brought before a meeting although restrictions may be included in a Delaware company's certificate of incorporation or bylaws.

Calling of Special Shareholders Meetings. Under Aircastle's bye-laws, a special general meeting may be called by the President, the chairman of the board, the board of directors or by Fortress so long as they hold shares carrying 10% of the votes of all shares, in issue from time to time. Bermuda law also provides that a special general meeting must be called upon the request of shareholders holding not less than 10% of the paid-up capital of the company carrying the right to vote at general meetings. Delaware law permits the board of directors or any person who is authorized under a corporation's certificate of incorporation or bye-laws to call a special meeting of shareholders.

Amendment of Organizational Documents. Bermuda law provides that the memorandum of association of a company may be amended by a resolution passed at a general meeting of shareholders of which due notice has been given. Certain amendments to the memorandum of association may require approval of the Bermuda Minister of Finance, who may grant or withhold approval at his or her discretion.

Under Bermuda law, the holders of an aggregate of not less than 20% in par value of a company's issued share capital have the right to apply to the Bermuda courts for an annulment of any amendment of the memorandum of association adopted by shareholders at any general meeting, other than an amendment which alters or reduces a company's share capital as provided in the Companies Act. Where such an application is made, the amendment becomes effective only to the extent that it is confirmed by the Bermuda court. An application for an annulment of an amendment of the memorandum of association must be made within 21 days after the date on which the resolution altering the company's memorandum of association is passed and may be made on behalf of persons entitled to make the application by one or more of their designees as such holders may appoint in writing for such purpose. No application may be made by the shareholders voting in favor of the amendment.

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Under Delaware law, amendment of the certificate of incorporation, which is the equivalent of a memorandum of association, of a company must be made by a resolution of the board of directors setting forth the amendment, declaring its advisability, and either calling a special meeting of the shareholders entitled to vote or directing that the proposed amendment be considered at the next annual meeting of the shareholders. Delaware law requires that, unless a different percentage is provided for in the certificate of incorporation, a majority of the voting power of the corporation is required to approve the amendment of the certificate of incorporation at the shareholders meeting. If the amendment would alter the number of authorized shares or par value or otherwise adversely affect the rights or preference of any class of a company's stock, the holders of the issued and outstanding shares of such affected class, regardless of whether such holders are entitled to vote by the certificate of incorporation, are entitled to vote as a class upon the proposed amendment. However, the number of authorized shares of any class may be increased or decreased, to the extent not falling below the number of shares then issued and outstanding, by the affirmative vote of the holders of a majority of the stock entitled to vote, if so provided in the company's certificate of incorporation that was authorized by the affirmative vote of the holders of a majority of such class or classes of stock.

Amendment of Bye-laws. Aircastle's bye-laws provide that the bye-laws may only be rescinded, altered or amended upon approval by a resolution of Aircastle's board of directors and by a resolution of our shareholders approved by 66% of votes cast.

Under Delaware law, unless the certificate of incorporation or bylaws provide for a different vote, holders of a majority of the voting power of a corporation and, if so provided in the certificate of incorporation, the directors of the corporation have the power to adopt, amend and repeal the bylaws of a corporation. Those bye-laws dealing with the election of directors, classes of directors and the term of office of directors may only be rescinded, altered or amended upon approval by a resolution of the directors and by a resolution of shareholders carrying not less than 66.0% of all shares entitled to vote on the resolution

Those bye-laws dealing with the removal of directors and corporate opportunity may only be rescinded, altered or amended upon approval by a resolution of the directors and by a resolution of shareholders carrying not less than 80.0% of all shares entitled to vote on the resolution.

Registrar and Transfer Agent

A register of holders of the common shares will be maintained by Codan Services Limited in Bermuda, and a branch register will be maintained in the United States by , who will serve as branch registrar and transfer agent. The telephone number of Codan Services Limited is +1(441) 295-5950 and of is .

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Shares Eligible for Future Sale

Prior to this offering, there has been no public market for our common shares, and we cannot predict the effect, if any, that market sales of shares or availability of any shares for sale will have on the market price of our common shares prevailing from time to time. Sales of substantial amounts of common shares (including shares issued on the exercise of options, warrants or convertible securities, if any) or the perception that such sales could occur, could adversely affect the market price of our common shares and our ability to raise additional capital through a future sale of securities.

Upon completion of this offering, we will have common shares issued and outstanding (or a maximum of shares if the underwriters exercise their over-allotment option in full). All of the common shares sold in this offering (or shares if the underwriters exercise their over-allotment option in full) will be freely tradable without restriction or further registration under the Securities Act unless such shares are purchased by ‘‘affiliates’’ as that term is defined in Rule 144 under the Securities Act. Subject to certain contractual restrictions, holders of restricted shares will be entitled to sell those shares in the public securities markets if they qualify for an exemption from registration under Rule 144 or any other applicable exemption under the Securities Act. Subject to the lock-up agreements described below and the provisions of Rules 144, 144(k) and 701, additional shares will be available for sale as set forth below.

In addition to the issued and outstanding common shares, we intend to file a registration statement on Form S-8 to register an aggregate of common shares reserved for issuance under our incentive programs.

Lock-Up of our Common Shares

We and our executive officers, directors, shareholders and participants in our directed share program have agreed with the underwriters, subject to certain exceptions, not to (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer, dispose of or hedge, directly or indirectly, our common shares (including, without limitation, common shares which may be deemed to be beneficially owned by such executive officers, directors, shareholders and participants in accordance with the rules and regulations of the SEC and securities which may be issued upon exercise of a share option or warrant) or any securities convertible into or exercisable or exchangeable for our common shares or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of our common shares, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of common shares or such other securities, in cash or otherwise during the period from the date of this prospectus continuing through the date 120 days after the date of this prospectus, except with the prior written consent of the representatives.

The 120-day restricted period described in the preceding paragraph will be automatically extended if (i) during the last 17 days of the 120-day restricted period we issue an earnings release or announce material news or a material event relating to us occurs or (ii) prior to the expiration of the 120-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 120-day restricted period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or material event.

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All participants in our directed shares program described under ‘‘Underwriting’’ have also agreed to similar restrictions in respect of common shares purchased in this offering. See ‘‘Underwriting.’’

Rule 144

In general, Rule 144 of the Securities Act as currently in effect, provides that a person may sell within any three month period a number of common shares that does not exceed the greater of:


•	1% of the total number of common shares then issued and outstanding, which will equal approximately shares immediately after this offering; or


•	the average weekly trading volume of the common shares on the New York Stock Exchange during the four calendar weeks preceding the filing of notice on Form 144 with respect to the sale

subject to a requirement that any ‘‘restricted’’ shares have been beneficially owned for at least one year, including the holding period of any prior owner which was not an affiliate.

Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us. An ‘‘affiliate’’ is a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with an issuer.

Rule 144(k)

Under Rule 144(k), a person (or persons whose shares are aggregated) who is not deemed to have been our affiliate at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years (including the holding period of any prior owner other than an affiliate), is entitled to sell these shares under Rule 144(k) without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. Therefore, unless otherwise restricted, ‘‘144(k)’’ shares may be sold immediately upon completion of this offering.

Registration Rights

Pursuant to our Amended and Restated Shareholders Agreement, Fortress shareholders and certain of their affiliates and permitted third-party transferees will have the right, in certain circumstances, to require us to register all of their common shares under the Securities Act for sale into the public markets. Upon the effectiveness of such a registration statement, all shares covered by the registration statement will be freely transferable. See ‘‘Certain Relationships and Related Party Transactions — Shareholders Agreement.’’

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Material Tax Considerations

Bermuda Tax Considerations

At the present time, there is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax payable by us or by our shareholders in respect of our shares. We have obtained an assurance from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 that, in the event that any legislation is enacted in Bermuda imposing any tax computed on profits or income, or computed on any capital asset, gain or appreciation or any tax in the nature of estate duty or inheritance tax, such tax shall not, until March 28, 2016, be applicable to us or to any of our operations or to our shares, debentures or other obligations except insofar as such tax applies to persons ordinarily resident in Bermuda or to any taxes payable by us in respect of real property owned or leased by us in Bermuda.

Material United States Federal Income Tax Considerations

The following is a discussion of the material U.S. federal income tax considerations applicable to the purchase, ownership and disposition of common shares by U.S. Holders (as defined below) and Non-U.S. Holders (as defined below). This discussion deals only with our common shares held as capital assets by holders who purchase common shares in this offering. This discussion does not cover all aspects of U.S. federal income taxation that may be relevant to the purchase, ownership or disposition of our common shares by prospective investors in light of their particular circumstances. In particular, this discussion does not address all of the tax considerations that may be relevant to certain types of investors subject to special treatment under U.S. federal income tax laws, such as the following:


•	brokers or dealers in securities or currencies;


•	financial institutions;


•	pension plans;


•	regulated investment companies;


•	real estate investment trusts;


•	cooperatives;


•	tax-exempt entities;


•	insurance companies;


•	persons holding common shares as part of a hedging, integrated, conversion or constructive sale transaction or a straddle;


•	traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;


•	persons liable for alternative minimum tax;


•	U.S. expatriates;


•	partnerships or entities or arrangements treated as partnerships or other pass through entities for U.S. federal tax purposes (or investors therein); or


•	U.S. Holders (as defined below) whose ‘‘functional currency’’ is not the U.S. dollar.

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Furthermore, this discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’), the Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as of the date hereof. Such authorities may be repealed, revoked, modified or subject to differing interpretations, possibly on a retroactive basis, so as to result in U.S. federal income tax consequences different from those discussed below. This discussion does not address any state, local or non-U.S. tax considerations.

For purposes of this discussion, you will be considered a ‘‘U.S. Holder’’ if you beneficially own our common shares and you are for U.S. federal income tax purposes one of the following:


•	a citizen or an individual resident of the United States;


•	a corporation (or other entity taxable as a corporation) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;


•	an estate the income of which is subject to U.S. federal income taxation regardless of its source; or


•	a trust if you (i) are subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all of your substantial decisions or (ii) have a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

You will be considered a ‘‘Non-U.S. Holder’’ if you beneficially own our common shares and your are not a U.S. Holder or a partnership or an entity or arrangement treated as a partnership for U.S. federal income tax purposes. If you are a partnership or other entity or arrangement treated as a partnership for U.S. federal income tax purposes, the U.S. federal income tax treatment of your partners generally will depend upon the status of such partners and your activities.

If you are considering the purchase of our common shares, we urge you to consult your own tax advisors concerning the particular U.S. federal income tax consequences to you of the purchase, ownership and disposition of our common shares, as well as any consequences to you arising under state, local and non-U.S. tax laws.

Taxation of Aircastle

AL expects that it will not be treated as engaged in a trade or business in the United States and thus will not be subject to U.S. federal income taxation. No assurances can be given, however, in this regard. Certain subsidiaries of AL may be treated as engaged in a trade business in the United States. Unless otherwise exempted by an applicable income tax treaty, a non-U.S. corporation that is engaged in a trade or business in the United States is generally subject to U.S. federal income taxation, at the graduated tax rates applicable to U.S. corporations, on the portion of such non-U.S. corporation’s income that is ‘‘effectively connected’’ with such trade or business. In addition, such non-U.S. corporation may be subject to the U.S. federal branch profits tax on its effectively connected earnings and profits at a rate of 30%, or at such lower rate as may be specified by an applicable income tax treaty.

We expect that each of our Irish subsidiaries will be eligible to claim the benefits of the Irish Treaty. Accordingly, even if such Irish subsidiaries earn income that otherwise would be treated as effectively connected with a trade or business in the United States, such income is expected to be exempt from U.S. tax under the Irish Treaty to the extent that it is (i) rental income attributable to aircraft used in international traffic or (ii) gain from the sale of aircraft used in international traffic. For this purpose, ‘‘international traffic’’ means transportation except where flights are solely between places within the United States. Although any income of the Irish subsidiaries that

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is attributable to aircraft used for flights solely between places within the United States may be subject to U.S. federal income taxation at a maximum rate of 35%, such income would be subject to a reduced 5% branch profits tax under the Irish Treaty. No assurances can be given, however, that each of the Irish subsidiaries will qualify each year for the benefits of the Irish Treaty.

Although Aircastle Bermuda may be treated as engaged in a trade or business in the United States, we expect that Aircastle Bermuda generally will not earn income that is treated as effectively connected with a U.S. trade or business. Accordingly, we expect that Aircastle Bermuda generally will not be subject to U.S. federal income taxation on a net income basis. No assurances can be given, however, that Aircastle Bermuda will be able to avoid generating income (unless exempt from tax pursuant to Section 883 of the Code as described below) that is effectively connected with a U.S. trade or business. We expect that Aircastle Bermuda’s U.S. source rental income generally will be subject to U.S. federal taxation, on a gross income basis, at a rate of not in excess of 4% as provided in Section 887 of the Code. If, contrary to expectations, we do not comply with certain administrative guidelines of the IRS, such that 90% or more of Aircastle Bermuda’s U.S. source rental income were attributable to the activities of personnel based in the United States, Aircastle Bermuda’s U.S. source rental income could be treated as income effectively connected with the conduct of a trade or business in the United States. In such case, Aircastle Bermuda’s U.S. source rental income would be subject to U.S. federal income taxation at a maximum rate of 35%. In addition, Aircastle Bermuda would be subject to the U.S. federal branch profits tax on its effectively connected earnings and profits at a rate of 30%.

Section 883 of the Code provides an exemption from U.S. federal income taxation for income derived from aircraft used in international traffic by certain foreign corporations. To qualify for this exemption in respect of rental income, the lessor of the aircraft must be organized in a country that grants a comparable exemption to U.S. lessors (Bermuda and Ireland each do), and the direct and indirect shareholders of the lessor must satisfy certain residency requirements. We and our subsidiaries may qualify for this exemption from U.S. tax, in which case income earned by us from aircraft used in international traffic would not be subject to U.S. federal income tax.

Consequences to U.S. Holders

The following discussion applies to you only if you are a U.S. Holder.

Dividends

Subject to the passive foreign investment company rules and the controlled foreign corporation rules discussed below, distributions of cash or property that we pay in respect of our common shares will constitute dividends for U.S. federal income tax purposes to the extent paid out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) and will be includible in your gross income upon receipt. Distributions to you in excess of our earnings and profits will be treated first as a return of capital (with a corresponding reduction in your tax basis in the common shares) to the extent of your tax basis in the common shares on which the distribution was made, and then as capital gain from the sale or exchange of such common shares. We expect that our distributions will not be eligible for the dividends-received deduction for corporate U.S. Holders or ‘‘qualified dividend income’’ (which is taxable at the rates generally applicable to long-term capital gains) for U.S. Holders taxed as individuals.

Sale, Exchange or Other Taxable Disposition of Common Shares

Subject to the passive foreign investment company rules and the controlled foreign corporation rules discussed below, upon the sale, exchange or other taxable disposition of common shares, you will recognize capital gain or loss equal to the difference between the amount realized on

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such sale, exchange or taxable disposition and your tax basis in the common shares sold. Such gain or loss generally will be long-term capital gain or loss if your holding period with respect to such common shares is more than one year at the time of its disposition. The deductibility of capital losses is subject to limitations.

Passive Foreign Investment Company Status and Related Tax Consequences

We expect AL and certain of its subsidiaries to be passive foreign investment companies, or PFICs, for U.S. federal income tax purposes. Accordingly, you will be subject to different taxation rules with respect to an investment in our common shares depending on whether you make a qualified electing fund, or QEF, election with respect to your investment in common shares and with respect to the subsidiaries of AL that are treated as PFICs. Different rules may apply to you if you are a ‘‘10% U.S. Holder’’ (as described below under Controlled Foreign Corporation Status and Related Tax Consequences).

If you make timely QEF elections with respect to your common shares and the subsidiaries of AL that are treated as PFICs, you must report for U.S. federal income tax purposes your pro rata share of each PFIC’s ordinary earnings and net capital gain, if any, for each taxable year for which it is a PFIC that ends with or within your taxable year, regardless of whether or not you received any distributions on the common shares you own. No portion of any such inclusions of ordinary earnings would be eligible to be treated as ‘‘qualified dividend income.’’ If you are a non-corporate U.S. Holder, any such net capital gain inclusions would be eligible for taxation at the preferential capital gains tax rates. If you are a regulated investment company, such ordinary earnings and net capital gain inclusions will be treated as qualifying income described in Section 851(b)(2)(A) of the Code. Your adjusted tax basis in your common shares would be increased to reflect any taxed but undistributed earnings and profits. Any distribution of earnings and profits that previously had been taxed would not be taxed again when you receive such distribution, but it would result in a corresponding reduction in the adjusted tax basis in your common shares. You would not, however, be entitled to a deduction for your pro rata share of any losses that any such PFIC incurs with respect to any year. You generally would recognize capital gain or loss on the sale, exchange or other disposition of common shares. You may make timely QEF elections with respect to your investment in common shares by filing one copy of IRS Form 8621 with your U.S. federal income tax return for the first year in which you hold our common shares. AL will provide you with all necessary information in order for you to make QEF elections as described above. Another election generally available with respect to publicly traded PFICs, the ‘‘mark-to-market’’ election, will not be available with respect to the subsidiaries of AL, making such an election ineffectual with respect to an investment in AL common shares.

Finally, if you do not make QEF elections with respect to your investment in common shares and to any subsidiary of AL that is a PFIC, you would be subject to special rules with respect to (i) any excess distribution (i.e., the portion of any distributions you receive on your common shares in a taxable year in excess of 125% of the average annual distributions you received in the three preceding taxable years, or, if shorter, your holding period for the common shares), and (ii) any gain realized on the sale, exchange or other disposition of common shares. Under these special rules:


•	the excess distribution or gain would be allocated ratably over the aggregate holding period for the common shares;


•	the amount allocated to the current taxable year would be taxed as ordinary income and would not be ‘‘qualified dividend income’’; and

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•	the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.

If you do not make QEF elections with respect to AL and its subsidiaries that are treated as PFICs, if the stock of a subsidiary of AL that is treated as a PFIC is sold or otherwise disposed of, you will be required to recognize gain in an amount equal to your pro rata share of the gain realized by the direct owner of the disposed PFIC stock. The amount of such gain will be treated as an excess distribution and will be subject to the rules set forth above with respect to excess distributions.

These special rules should not apply to a beneficial owner of our common shares that is a pension, profit sharing or other retirement trust or other tax-exempt organization that does not borrow money or otherwise utilize leverage in connection with its acquisition of our common shares.

YOU SHOULD CONSULT YOUR TAX ADVISOR ABOUT THE APPLICATION OF THE PFIC RULES TO YOUR PARTICULAR SITUATION.

Controlled Foreign Corporation Status and Related Tax Consequences

We also expect that AL and certain of its subsidiaries currently are controlled foreign corporations, or CFCs, for U.S. federal income tax purposes. AL will be a CFC for any year in which U.S. Holders that each own (directly, indirectly or by attribution) at least 10% of AL’s voting shares (each a ‘‘10% U.S. Holder’’) together own more than 50% of the total combined voting power of all classes of AL’s voting shares or more than 50% of the total value of AL’s shares. The classification of AL as a CFC has many complex results, one of which is that if you are a 10% U.S. Holder on the last day of AL’s taxable year, you will be required to recognize as ordinary income your pro rata share of certain income of AL and its subsidiaries (including both ordinary earnings and capital gains) for the taxable year, whether or not you receive any distributions on your common shares during that taxable year. In addition, special foreign tax credit rules would apply. Your adjusted tax basis in your common shares would be increased to reflect any taxed but undistributed earnings and profits. Any distribution of earnings and profits that previously had been taxed would result in a corresponding reduction in your adjusted tax basis in your common shares and would not be taxed again when you receive such distribution. Subject to a special limitation in the case of individual 10% U.S. Holders that have held their common shares for more than one year, if you are a 10% U.S. Holder, any gain from disposition of your common shares will be treated as dividend income to the extent of accumulated earnings attributable to such common shares during the time you held such common shares.

For any year in which AL is both a PFIC and a CFC, if you are a 10% U.S. Holder, you would be subject to the CFC rules and not the PFIC rules with respect to your investment in common shares.

YOU SHOULD CONSULT YOUR TAX ADVISOR ABOUT THE APPLICATION OF THE CFC RULES TO YOUR PARTICULAR SITUATION.

Information Reporting and Backup Withholding

In general, information will be reported to the IRS each year regarding the amount of any dividends on our common shares and the proceeds of any sale of our common shares paid to you during such year unless you are an exempt recipient (such as a corporation). A backup withholding tax will apply to such payments if you fail to provide your taxpayer identification number or to make required certifications or you have been notified by the IRS that you are subject to backup withholding. Backup withholding is not an additional tax and any amounts

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withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability provided that you timely furnish the required information to the IRS.

If you are a U.S. Holder that owns more than 10% of the aggregate value of our common shares (or you are an officer or director of AL and you are a United States citizen or resident) you may be required to file an information return on IRS Form 5471. A U.S. Holder that purchases common shares with cash generally will be required to file Form 926 with the IRS if (i) immediately after the transfers such investor holds, directly or indirectly, at least 10% of our voting shares, or (ii) the amount of cash transferred in exchange for common shares during the 12-month period ending on the date of the transfer exceeds $100,000. In the event a U.S. Holder fails to file any such required form, such holder could be required to pay a substantial penalty. In addition, depending on your particular circumstances, you may be required to file certain other IRS information returns with respect to an investment in common shares.

Consequences to Non-U.S. Holders

The following discussion applies you only if you are a Non-U.S. Holder. Special rules may apply to you if you are a CFC or a PFIC or are otherwise subject to special treatment under the Code. In such case, you should consult your own tax advisor to determine the U.S. federal, state, local and non-U.S. tax consequences that may be relevant to you with respect to an investment in common shares.

Dividends

You generally will not be subject to U.S. federal income tax or withholding tax on dividends received from us with respect to the common shares, unless that income is effectively connected with your conduct of a trade or business in the United States. If you are entitled to the benefits of a U.S. income tax treaty with respect to those dividends, that income is generally taxable only if it is attributable to a permanent establishment maintained by you in the United States.

Sale, Exchange or Other Taxable Disposition of Common Shares

You generally will not be subject to U.S. federal income tax or withholding tax with respect to any gain recognized on a sale, exchange or other taxable disposition of shares of our common shares unless:


•	the gain is effectively connected with your conduct of a trade or business in the United States, or, if certain tax treaties apply, is attributable to a permanent establishment you maintain in the United States; or


•	if you are an individual and you are present in the United States for 183 or more days in the taxable year of the sale, exchange or other taxable disposition, and you meet certain other requirements

If you are an individual and are described in the first bullet above, you will be subject to tax on any gain derived from the sale, exchange or other taxable disposition of common shares under regular graduated U.S. federal income tax rates. If you are an individual and are described in the second bullet above, you will be subject to a flat 30% tax on any gain derived from the sale, exchange or other taxable disposition of common shares that may be offset by U.S. source capital losses (even though you are not considered a resident of the United States). If you are a corporation and are described in the first bullet above, you will be subject to tax on your gain under regular graduated U.S. federal income tax rates and, in addition, may be subject to the branch profits tax on your effectively connected earnings and profits for the taxable year, which would include such gain, at a rate of 30%, or at such lower rate as may be specified by an applicable income tax treaty.

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Information Reporting and Backup Withholding

You may be required to establish your exemption from information reporting and backup withholding by certifying your status on Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY, as applicable.

If you are a Non-U.S. Holder and you sell your common shares to or through a U.S. office of a broker, the payment of the proceeds is subject to both U.S. backup withholding and information reporting unless you certify that you are a non-U.S. person, under penalties of perjury, or you otherwise establish an exemption. If you sell your common shares through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to you outside the United States, then information reporting and backup withholding generally will not apply to that payment. However, U.S. information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made to you outside the United States, if you sell your common shares through a non-U.S. office of a broker that is a U.S. person or that has some other contacts with the United States. Such information reporting requirements will not apply, however, if the broker has documentary evidence in its records that you are a non-U.S. person and certain other conditions are met, or you otherwise establish an exemption.

The IRS may make information reported to you and the IRS available under the provisions of an applicable income tax treaty to the tax authorities in the country in which you reside. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability, if any, provided the required information is timely furnished by you to the IRS. You should consult your own tax advisors regarding the filing of a U.S. tax return for claiming a refund of any such backup withholding.

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Underwriting

J.P. Morgan Securities Inc., Bear, Stearns & Co. Inc. and Citigroup Global Markets Inc. are acting as joint book-running managers of the offering, and as representatives of the underwriters named below.

We and the underwriters named below have entered into an underwriting agreement covering the common shares to be sold in this offering. Subject to the terms and conditions of the underwriting agreement, we have agreed to sell to the underwriters, and each underwriter has severally agreed to purchase, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus, the number of common shares listed next to its name in the following table:


Name			Number of Shares
J.P. Morgan Securities Inc.
Bear, Stearns & Co. Inc.
Citigroup Global Markets Inc.

Total

The underwriters are committed to purchase all the common shares offered by us if they purchase any shares. If an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased or the offering may be terminated. The underwriting agreement also provides that the obligations of the underwriters are subject to certain conditions precedent, including the absence of any material adverse change in our business and the receipt of certain certificates, opinions and letters from us, our counsel and our independent auditors.

The underwriters propose to offer the common shares directly to the pubic at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession of up to $ per share. Any such dealers may resell shares to certain other brokers or dealers at a discount of up to $ per share from the initial public offering price. After the initial public offering of the shares, the offering price and other selling terms may be changed by the underwriters. Sales of shares made outside of the United States may be made by affiliates of the underwriters. The representatives have advised us that the underwriters do not intend to confirm discretionary sales in excess of 5% of the common shares offered in this offering.

The underwriters have an option to buy up to additional common shares from us to cover sales of shares by the underwriters which exceed the number of shares specified in the table above. The underwriters have 30 days from the date of this prospectus to exercise this over-allotment option. If any shares are purchased with this over-allotment option, the underwriters will purchase shares in approximately the same proportion as shown in the table above. If any additional common shares are purchased, the underwriters will offer the additional shares on the same terms as those on which the shares are being offered.

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The underwriting fee is equal to the public offering price per common share less the amount paid by the underwriters to us per common share. The underwriting fee is $ per share. The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters assuming both no exercise and full exercise of the underwriters’ over-allotment option.

Without
over-allotment
exercise

With full
over-allotment
exercise

Per Share

Total

We estimate that the total expenses of this offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding the underwriting discounts and commissions, will be approximately $ .

A prospectus in electronic format may be made available on the websites maintained by one or more underwriters, or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters and selling group members that may make Internet distributions on the same basis as other allocations. The information on any such website is not part of this prospectus.

We have agreed that we will not offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer, dispose of or hedge, directly or indirectly, or enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of our common shares or relating to our common shares or any securities convertible into or exercisable or exchangeable for our common shares, without the prior written consent of the representatives for a period of 120 days after the date of this prospectus. Notwithstanding the foregoing, if (i) during the last 17 days of the 120-day restricted period, we issue an earnings release or material news or a material event relating to us occurs; or (ii) prior to the expiration of the 120-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 120-day period, the restrictions described above shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

Additionally, our executive officers, directors, shareholders and participants in our directed share program have entered into lock-up agreements with the underwriters pursuant to which we and each of these persons or entities, subject to certain exceptions, for a period of 120 days after the date of this prospectus, may not, without the prior written consent of the representatives, directly or indirectly (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer, dispose of or hedge, directly or indirectly, our common shares (including, without limitation, common shares which may be deemed to be beneficially owned by such executive officers, directors, shareholders and participants in accordance with the rules and regulations of the SEC and securities which may be issued upon exercise of a share option or warrant) or any securities convertible into or exercisable or exchangeable for our common shares; or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the common shares, whether any such

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transaction described in clause (i) or (ii) above is to be settled by delivery of common shares or such other securities, in cash or otherwise. In addition, each of such executive officers, directors, shareholders and participants has agreed that, without the prior written consent of the representatives, it will not, during the 120-day restricted period, make any demand for or exercise any right with respect to the registration of our common shares or any securities convertible into or exercisable or exchangeable for our common shares. Notwithstanding the foregoing, if (i) during the last 17 days of the 120-day restricted period, we issue an earnings release or material news or a material event relating to us occurs; or (ii) prior to the expiration of the 120-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 120-day period, the restrictions described above shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

We may issue common shares or securities convertible into or exercisable or exchangeable for common shares for the benefit of our employees, directors and officers under incentive plans described in this prospectus, provided that recipients are subject to the lock-up described above.

At our request, the underwriters have reserved for sale, at the initial public offering price, up to of the shares offered hereby to be sold to certain directors, officers, employees and persons having relationships with us pursuant to a directed share program. The number of common shares available for sale to the general public will be reduced to the extent such persons purchase such reserved shares under this program. Any reserved shares which are not orally confirmed for purchase by 9:00 a.m. Eastern Time on the first day of trading will be sold by the underwriters to the general public on the same terms as the other shares offered hereby.

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act.

We will apply to have our common shares approved for listing on the NYSE under the symbol ‘‘ ’’. The underwriters intend to sell our common shares to a minimum of 2,000 beneficial owners in lots of 100 or more so as to meet the distribution requirements of the NYSE.

In connection with this offering, the underwriters may engage in stabilizing transactions, which involves making bids for, purchasing and selling common shares in the open market for the purpose of preventing or retarding a decline in the market price of the common shares while this offering is in progress. These stabilizing transactions may include making short sales of the common shares, which involves the sale by the underwriters of a greater number of common shares than they are required to purchase in this offering, and purchasing common shares on the open market to cover positions created by short sales. Short sales may be ‘‘covered’’ shorts, which are short positions in an amount not greater than the underwriters’ over-allotment option referred to above, or may be ‘‘naked’’ shorts, which are short positions in excess of that amount. The underwriters may close out any covered short position either by exercising their over-allotment option, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which the underwriters may purchase shares through the over-allotment option. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common shares in the open market that could adversely affect investors who purchase in this offering. To the extent that the underwriters create a naked short position, they will purchase shares in the open market to cover the position.

The underwriters have advised us that, pursuant to Regulation M of the Securities Act, they may also engage in other activities that stabilize, maintain or otherwise affect the price of the

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common shares, including the imposition of penalty bids. This means that if the representatives of the underwriters purchase common shares in the open market in stabilizing transactions or to cover short sales, the representatives can require the underwriters that sold those shares as part of this offering to repay the underwriting discount received by them.

These activities may have the effect of raising or maintaining the market price of the common shares or preventing or retarding a decline in the market price of the common shares, and, as a result, the price of the common shares may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The underwriters may carry out these transactions on the NYSE, in the over-the-counter market or otherwise.

Prior to this offering, there has been no public market for our common shares. The initial public offering price will be determined by negotiations between us and the representatives of the underwriters. In determining the initial public offering price, we and the representatives of the underwriters expect to consider a number of factors, including:


•	the information set forth in this prospectus and otherwise available to the representatives;


•	our prospects and the history and prospects for the industry in which we compete;


•	an assessment of our management;


•	our historical financial statements;


•	our prospects for future earnings and cash flows;


•	the general condition of the securities markets at the time of this offering;


•	the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and


•	other factors deemed relevant by the underwriters and us.

Neither we nor the underwriters can assure investors that an active trading market will develop for our common shares, or that the shares will trade in the public market at or above the initial public offering price.

Certain of the underwriters and their affiliates have provided in the past to us and our affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. The representatives or their affiliates acted as lenders for one or more of our credit facilities and as initial purchasers in Securitization No. 1.

Certain of the underwriters or their affiliates may receive more than 10% of the proceeds of this offering. Generally, in an offering in which this is the case, Rule 2710(h) of the NASD Conduct Rules mandates that the initial public offering price can be no higher than that recommended by a ‘‘qualified independent underwriter’’ meeting certain standards. Accordingly, has assumed the responsibilities of acting as a qualified independent underwriter and will recommend a price in compliance with the requirements of Rule 2720. , in its role as qualified independent underwriter, has performed due diligence investigations and reviewed and participated in the preparation of this prospectus and the registration statement of which this prospectus is a part. will receive $ for acting in this capacity; however, we have agreed to indemnify for acting as a qualified independent underwriter against specified liabilities under the Securities Act.

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United Kingdom

Each of the underwriters has represented and agreed that:

•

it has not made or will not make an offer of shares to the public in the United Kingdom within the meaning of section 102B of the Financial Services and Markets Act 2000 (as amended) (FSMA) except to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities or otherwise in circumstances which do not require the publication by the company of a prospectus pursuant to the Prospectus Rules of the Financial Services Authority (FSA);

•

it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) to persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or in circumstances in which section 21 of FSMA does not apply to the company; and


•	it has complied with, and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each Underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of Shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of Shares to the public in that Relevant Member State at any time:


•	to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;


•	to any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43,000,000 and (iii) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or


•	in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an ‘‘offer of Shares to the public’’ in relation to any common shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Shares to be offered so as to enable an investor to decide to purchase or subscribe the common shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

Hong Kong

Our common shares may not be offered or sold by means of any document other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or

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in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, and no advertisement, invitation or document relating to the shares may be issued, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to common shares which are or are intended to be disposed of only to persons outside Hong Kong or only to ‘‘professional investors’’ within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made thereunder.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of our common shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (or, the ‘‘SFA’’), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where our common shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (i) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (ii) where no consideration is given for the transfer; or (iii) by operation of law.

Japan

Our common shares have not been and will not be registered under the Securities and Exchange Law of Japan (or, the ‘‘Securities and Exchange Law’’) and each underwriter has agreed that it will not offer or sell any of our common shares, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

Switzerland

Our common shares may be offered in Switzerland only on the basis of a non-public offering. This prospectus does not constitute an issuance prospectus according to articles 652a or 1156 of the Swiss Federal Code of Obligations or a listing prospectus according to article 32 of the Listing Rules of the Swiss exchange. Our common shares may not be offered or distributed on a

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professional basis in or from Switzerland and neither this prospectus nor any other offering material relating to our common shares may be publicly issued in connection with any such offer or distribution. Our common shares have not been and will not be approved by any Swiss regulatory authority. In particular, our common shares are not and will not be registered with or supervised by the Swiss Federal Banking Commission, and investors may not claim protection under the Swiss Investment Fund Act.

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Legal Matters

Certain legal matters will be passed upon for us by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York, and Conyers Dill & Pearman, Hamilton, Bermuda will pass upon the validity of the common shares. Sidley Austin LLP, New York, New York is representing the underwriters in this offering. Skadden, Arps, Slate, Meagher & Flom LLP also represents Fortress on a variety of past and current matters. Sidley Austin LLP has represented us and Fortress on a variety of past and current matters.

Experts

The consolidated financial statements of Aircastle Limited at December 31, 2004 and 2005, for the period from October 29, 2004 (commencement of operations) through December 31, 2004 and for the year ended December 31, 2005, appearing in this prospectus and registration statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

Where You Can Find More Information

We have filed a registration statement, of which this prospectus is a part, on Form S-1 with the Securities and Exchange Commission relating to this offering. This prospectus does not contain all of the information in the registration statement and the exhibits and financial statements included with the registration statement. References in this prospectus to any of our contracts, agreements or other documents are not necessarily complete, and you should refer to the exhibits attached to the registration statement for copies of the actual contracts, agreements or documents. You may read and copy the registration statement, the related exhibits and other material we file with the Commission at the Commission's public reference room in Washington, D.C. at 100 F Street, Room 1580, N.E., Washington, D.C. 20549. You can also request copies of those documents, upon payment of a duplicating fee, by writing to the Commission. Please call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The Commission also maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file with the Commission. The website address is http://www.sec.gov. You may also request a copy of these filings, at no cost, by writing or telephoning us as follows: Aircastle Limited, c/o Aircastle Advisor LLC, 300 First Stamford Place, 5 ^th Floor, Stamford, CT 06902, (203) 504-1020.

Upon the effectiveness of the registration statement, we will be subject to the informational requirements of the Exchange Act, and, in accordance with the Exchange Act, will file reports, proxy and information statements and other information with the Commission. Such annual, quarterly and special reports, proxy and information statements and other information can be inspected and copied at the locations set forth above. We will report our financial statements on a year ended December 31. We intend to furnish our shareholders with annual reports containing consolidated financial statements audited by our independent certified public accountants and with quarterly reports containing unaudited consolidated financial statements for each of the first three quarters of each fiscal year.

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Index to Consolidated Financial Statements


Consolidated Financial Statements – December 31, 2004 and 2005
Report of Independent Registered Public Accounting Firm					F-2
Consolidated Balance Sheets at December 31, 2004 and 2005					F-3
Consolidated Statements of Operations for the period from October 29, 2004 (Commencement of Operations) through December 31, 2004 and for the Year Ended December 31, 2005					F-4
Consolidated Statements of Shareholders' Equity for the period from October 29, 2004 (Commencement of Operations) through December 31, 2004 and for the Year Ended December 31, 2005					F-5
Consolidated Statements of Cash Flows for the period from October 29, 2004 (Commencement of Operations) through December 31, 2004 and for the Year Ended December 31, 2005					F-6
Notes to Consolidated Financial Statements					F-7
Unaudited Consolidated Financial Statements – March 31, 2005 and 2006
Consolidated Balance Sheets at December 31, 2005 and March 31, 2006					F-24
Consolidated Statements of Operations for the Three Months Ended March 31, 2005 and 2006					F-25
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2005 and 2006					F-26
Notes to Unaudited Consolidated Financial Statements					F-27

F-1

Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Aircastle Limited

We have audited the accompanying consolidated balance sheets of Aircastle Limited and subsidiaries as of December 31, 2004 and 2005 and the related consolidated statements of operations, shareholders' equity and cash flows for the period October 29, 2004 (commencement of operations) through December 31, 2004 and for the year ended December 31, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Aircastle Limited and subsidiaries at December 31, 2004 and 2005, and the consolidated results of their operations and their cash flows for the period October 29, 2004 (commencement of operations) through December 31, 2004 and for the year ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

New York, New York
March 31, 2006

F-2

Table of Contents

Aircastle Limited and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share data)


	December 31,
	2004				2005
Assets
Cash and cash equivalents		$	—			$	79,943
Accounts receivable			350				3,115
Receivable from shareholders			7,585				—
Debt securities, available-for-sale			—				26,907
Restricted cash and cash equivalents			—				40,652
Flight equipment held for sale			—				54,917
Flight equipment held for lease, net of accumulated depreciation of $390 and $14,685			94,430				746,124
Leasehold improvements, furnishings and equipment, net of accumulated depreciation of $0 and $165			30				1,529
Fair value of derivative assets			—				3,608
Other assets			2,586				10,737
Total assets		$	104,981			$	967,532
Liabilities and Shareholders’ Equity
Liabilities
Borrowings under credit facilities		$	—			$	490,588
Accounts payable, accrued expenses and other liabilities			272				12,038
Payable to affiliates			1,098				105
Lease rentals received in advance			902				6,241
Repurchase agreements			—				8,665
Security deposits and maintenance payments			3,474				37,089
Fair value of derivative liabilities			—				1,870
Total liabilities			5,746				556,596
Commitment and Contingencies – Note 10
Shareholders’ Equity
Common shares, $.01 par value, 100,000,000 shares authorized, 40,000,000 shares issued and outstanding			400				400
Additional paid-in capital			100,300				400,009
Accumulated deficit			(1,465	)			(1,237	)
Accumulated other comprehensive income			—				11,764
Total shareholders’ equity			99,235				410,936
Total liabilities and shareholders’ equity		$	104,981			$	967,532

The accompanying notes are an integral part of these consolidated financial statements.

F-3

Table of Contents

Aircastle Limited and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share data)


	Period from October 29 (Commencement of Operations) to December 31, 2004				Year Ended December 31, 2005
Revenues
Lease rentals		$	78			$	32,978
Interest income			—				2,942
Other revenue			—				106
Total revenues			78				36,026
Expenses
Depreciation			390				14,460
Interest (net of interest income of $9 and $1,364)			(9	)			7,739
Selling, general and administrative (including share based payments expense of $0 and $409)			1,117				12,595
Other expenses			45				1,171
Total expenses			1,543				35,965
Income (Loss) from continuing operations before
income taxes			(1,465	)			61
Income tax provision			—				940
(Loss) from continuing operations			(1,465	)			(879	)
Earnings from discontinued operations, net of income taxes			—				1,107
Net income (loss)		$	(1,465	)		$	228
Basic earnings (loss) per share:
Loss from continuing operations		$	(.04	)		$	(.02	)
Earnings from discontinued operations, net of income taxes			—				.03
Net income (loss)		$	(.04	)		$	.01
Diluted earnings (loss) per share:
Loss from continuing operations		$	(.04	)		$	(.02	)
Earnings from discontinued operations, net of income taxes			—				.03
Net income (loss)		$	(.04	)		$	.01

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Table of Contents

Aircastle Limited and Subsidiaries
Consolidated Statements of Shareholders’ Equity
(Dollars in thousands)


	Common Shares					Additional Paid-In Capital			Accumulated Deficit				Accumulated Other Comprehensive Income			Total Shareholders’ Equity
	Shares		Amount			Additional Paid-In Capital			Accumulated Deficit				Accumulated Other Comprehensive Income			Total Shareholders’ Equity
Shareholders’ equity, October 29, 2004 (commencement of operations)		—		$	—		$	—		$	—			$	—		$	—
Issuance of common shares		40,000,000			400			—			—				—			400
Capital contributions		—			—			100,300			—				—			100,300
Net (loss)		—			—			—			(1,465	)			—			(1,465	)
Balance, December 31, 2004		40,000,000			400			100,300			(1,465	)			—			99,235
Capital contributions		—			—			299,300			—				—			299,300
Amortization of share based payments		—			—			409			—				—			409
Comprehensive income:
Net income		—			—			—			228				—			228
Other comprehensive income:
Change in fair value of derivatives		—			—			—			—				1,864			1,864
Unrealized appreciation on debt securities		—			—			—			—				9,900			9,900
Total comprehensive income																		11,992
Balance, December 31, 2005		40,000,000		$	400		$	400,009		$	(1,237	)		$	11,764		$	410,936

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Table of Contents

Aircastle Limited and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)


	Period from October 29 (Commencement of Operations) to December 31, 2004				Year Ended December 31, 2005
Cash flows from operating activities
Net income (loss)		$	(1,465	)		$	228
Adjustments to reconcile net (loss) income to net cash provided by operating activities (inclusive of amounts related to discontinued operations):
Depreciation			390				14,460
Amortization			30				2,072
Deferred income taxes			—				333
Accretion of purchase discount on debt securities			—				(787	)
Share based payments expense			—				409
Ineffective portion of cash flow hedges			—				126
(Loss) on sale of debt securities			—				7
Changes in certain assets and liabilities
Restricted cash and cash equivalents			—				(40,652	)
Accounts receivables			(350	)			(2,765	)
Other assets			(61	)			(535	)
Payable to affiliates			1,098				(988	)
Security deposits and maintenance payments			3,474				33,615
Accounts payable, accrued expenses and other liabilities			272				9,700
Lease rentals received in advance			902				5,339
Net cash provided by operating activities			4,290				20,562
Cash flows from investing activities
Acquisition and improvement of flight equipment			(97,405	)			(664,643	)
Investment in purchase of flight equipment held for sale			—				(54,917	)
Purchase of debt securities			—				(29,376	)
Leasehold improvements, furnishings and equipment			—				(2,892	)
Deposits on aircraft purchases			—				(3,465	)
Principal repayments on debt securities			—				10,461
Proceeds from sale of debt securities			—				2,688
Net cash used in investing activities			(97,405	)			(742,144	)
Cash flows from financing activities
Issuance of common shares			400				—
Credit facility borrowings			—				490,588
Deferred financing costs			—				(4,613	)
Proceeds from repurchase agreements			—				8,679
Principal repayment of repurchase agreements			—				(14	)
Capital contributions			92,715				306,885
Net cash provided by financing activities			93,115				801,525
Net increase in cash and cash equivalents			—				79,943
Cash and cash equivalents at beginning of period			—				—
Cash and cash equivalents at end of period		$	—			$	79,943
Supplemental disclosures of cash flow information
Cash paid during the period for interest		$	—			$	6,695

The accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)


1.	Organization

Aircastle Limited, formerly Aircastle Investment Limited, (‘‘Aircastle’’, the ‘‘Company’’, ‘‘we’’, ‘‘our’’) is a Bermuda company that was incorporated on October 29, 2004 by Fortress Investment Group LLC and certain of its affiliates (together, the ‘‘Shareholders,’’ or ‘‘Fortress’’) under the provisions of Section 14 of the Companies Act 1981 of Bermuda. Aircastle’s business is investing in aviation assets, including acquiring, managing and leasing commercial jet aircraft to airlines throughout the world and investing in aircraft related debt investments.

Pursuant to a Shareholders Agreement executed November 24, 2004 (‘‘the Shareholders Agreement’’), the Shareholders committed to contribute $400,000 in initial equity to Aircastle. As of December 31, 2005, the Shareholders had completed making their initial $400,000 capital contribution.

The Shareholders Agreement requires that all transfers of shares by shareholders require the prior approval of the Board of Directors.


2.	Summary of Significant Accounting Policies

Basis of Presentation

Aircastle is a holding company that conducts its business through subsidiaries. Aircastle owns directly or indirectly all of the outstanding common shares of its subsidiaries. The consolidated financial statements presented are prepared in accordance with U.S. generally accepted accounting principles (‘‘GAAP’’).

Certain prior year amounts have been reclassified to conform to the current year’s presentation.

Principles of Consolidation

The consolidated financial statements include the accounts of Aircastle and all of its subsidiaries. All significant intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. While Aircastle believes that the estimates and related assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could differ from those estimates.

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Aircastle considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

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Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

Restricted cash and cash equivalents consists primarily of maintenance deposits and security deposits received from lessees pursuant to the terms of various lease agreements, and rent collections held in lockbox accounts pursuant to our credit facilities.

All of our cash and cash equivalents and restricted cash and cash equivalents are held by three major financial institutions.

Debt Securities

Aircastle accounts for debt securities in accordance with Statement of Financial Accounting Standards (‘‘SFAS’’) No. 115, Accounting for Certain Investments in Debt and Equity Securities . As of December 31, 2005 all of our debt securities are classified as available-for-sale and are reported at fair value, based on quoted market prices, with unrealized gains and losses included in shareholders’ equity as a component of accumulated other comprehensive income, net of applicable taxes, if any. The cost of securities sold is based on the specific identification method. Interest on these securities is accrued as earned and included in interest income. Unrealized losses considered to be ‘‘other-than-temporary’’ are recognized in earnings.

Flight Equipment Held for Lease

Flight equipment held for lease is stated at cost and depreciated using the straight-line method over a 25 year life from the date of manufacture to estimated residual values. Estimated residual values are generally determined to be approximately 15% of the manufacturer’s estimated realized price for the flight equipment when new. Management may, at its discretion, make exceptions to this policy on a case-by-case basis when, in its judgment, the residual value calculated pursuant to this policy does not appear to reflect current expectations of residual values. Examples of situations where exceptions may arise include, but are not limited to:


•	Flight equipment where estimates of the manufacturer’s realized sales prices are not relevant (e.g., freighter conversions)


•	Flight equipment where estimates of the manufacturer’s realized sales prices are not readily available (e.g., older flight equipment)


•	Flight equipment which may have a shorter useful life due to obsolescence.

Lessee specific modifications are capitalized and depreciated over the life of the related lease and are included in other assets.

Generally, lessees are required to provide for repairs, scheduled maintenance and overhauls during the lease and to be compliant with return conditions of flight equipment at lease termination.

Lease premiums relate to leases acquired with the purchase of an aircraft that were determined to be above fair value. This premium is capitalized and amortized using the straight-line method over the lease term, and is included in other assets.

Flight Equipment Held for Sale

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (‘‘SFAS No. 144’’), flight equipment held for sale is stated at the lower of carrying value or fair value less estimated costs to sell.

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Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

Flight equipment held for sale is not depreciated and related deferred costs are not amortized. Subsequent changes to the asset’s fair value, either increases or decreases, are recorded as adjustments to the carrying value of the flight equipment; however, any such adjustment would not exceed the original carrying value of the flight equipment held for sale. The rent received from flight equipment held for sale and related interest expense, net of income taxes, are reported in income from discontinued operations.

Impairment of Flight Equipment

In accordance with SFAS No. 144, Aircastle reviews its flight equipment for impairment when indicators of impairment exist. Impairment exists when the carrying value of an aircraft exceeds the sum of the undiscounted cash flows and its fair value. Our review for impairment includes a consideration of the existence of impairment indicators including third party appraisals of our aircraft, adverse changes in market conditions for specific aircraft types and the occurrence of significant adverse changes in general industry and market conditions that could affect the fair value of our aircraft. When indicators of impairment suggest that the carrying value of an aircraft may not be recoverable we determine whether SFAS No. 144’s impairment recognition criteria have been met by evaluating whether the carrying value of the asset exceeds the undiscounted future cash flows expected to result from the use and eventual disposition of the asset. The preparation of the undiscounted cash flows requires the use of assumptions and estimates, including the level of future rents, the residual value expected to be realized upon disposition of the asset, estimated downtime between re-leasing events and the amount of re-leasing costs.

If we determine that the carrying value may not be recoverable, we will assess the fair values of the assets. In determining the fair value of the assets, we consider market trends, published values for similar aircraft, recent transactions of similar aircraft and quotes from third party appraisers.

Security Deposits and Maintenance Payments

Most of Aircastle’s operating leases require the lessee to pay Aircastle a security deposit or provide a letter of credit. At December 31, 2004 and 2005, security deposits represent cash received from the lessee that are held on deposit until lease expiry. Aircastle’s operating leases also obligate the lessees to maintain flight equipment and comply with all governmental requirements applicable to the flight equipment, including, without limitation, operational, maintenance, registration requirements and airworthiness directives. In all of Aircastle’s operating leases, the lessee is obligated to pay maintenance payments or end of lease payments for certain scheduled maintenance, which may be used to reimburse lessees for costs of certain agreed upon maintenance. We do not record any portion of maintenance payments as revenue at the time of receipt.

Income Taxes

Aircastle provides for income taxes under the provisions of SFAS No. 109, Accounting for Income Taxes (‘‘SFAS No. 109’’). SFAS No. 109 requires an asset and liability based approach in accounting for income taxes. Deferred income tax assets and liabilities are recognized for the future tax

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

consequences attributed to differences between the financial statement and tax basis of existing assets and liabilities using enacted rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is established when necessary to reduce deferred tax assets to the amount estimated by Aircastle to be realizable.

Hedging Activities

In the normal course of business, we utilize derivative financial instruments to manage our exposure to interest rate risks. We account for derivatives in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (‘‘SFAS No. 133’’). All derivatives are recognized on the balance sheet at their fair value. Through December 31, 2005 all of our derivative activities were cash flow hedges. On the date that we enter into a derivative contract, we formally document all relationships between hedging instruments and hedged items, as well as risk management objectives and strategies for undertaking various hedge transactions.

This includes linking all derivatives that are designated as cash flow hedges to specific assets or liabilities on the balance sheet. We also assess (both at the hedge’s inception and on an ongoing basis) whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in the cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. If it were to be determined that a derivative is not (or has ceased to be) highly effective as a hedge, we would discontinue hedge accounting prospectively.

Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash flow hedge, to the extent that the hedge is effective, are recorded in accumulated other comprehensive income, until earnings are affected by the variability of cash flows of the hedged transaction (e.g., until periodic settlements of the variable rate liability are recorded in earnings). Any hedge ineffectiveness (which represents the amount by which the change in the fair value of the derivative exceeds the variability in the cash flows of the forecasted transaction) is recorded in current period earnings. Changes in the fair value of derivative financial instruments that did not qualify for hedge treatment under SFAS No. 133 are reported in current period earnings.

Repurchase Agreements

Debt securities sold under agreements to repurchase (‘‘repurchase agreements’’) normally do not constitute economic sales and are therefore treated as collateralized financing transactions and are carried at the amount of cash received. Repurchase agreements are recorded as liabilities, with the underlying debt securities sold continuing to be classified as debt securities available-for-sale. Liabilities recorded under these agreements are accounted for on an accrual basis with interest reported in interest expense. At December 31, 2005, substantially all of our repurchase agreements are with parties from whom we did not originally acquire the debt securities.

Lease Rentals

We lease flight equipment under operating leases. Lease rentals are recognized on a straight-line basis over the term of the lease. Revenue is not recognized when collection is not reasonably assured.

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Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

Comprehensive Income

Comprehensive income consists of net income (loss) and other gains and losses, net of income taxes, if any, affecting shareholders’ equity that under GAAP are excluded from net income (loss). At December 31, 2005 such amount consists of the effective portion of fluctuations in the fair value of derivatives designated as cash flow hedges and unrealized gains on the fair value of debt securities classified as available-for-sale.

Share Based Compensation

Aircastle adopted SFAS No. 123(R), Share Based Payment (‘‘SFAS No. 123(R)’’), effective January 1, 2005. Pursuant to SFAS No. 123(R), Aircastle recognizes compensation cost relating to share-based payment transactions in the financial statements based on the fair value of the equity instruments issued. Aircastle uses the straight line method of accounting for compensation cost on share-based payment awards that contain pro-rata vesting provisions.

Deferred Financing Costs

Costs in connection with borrowings are deferred and amortized over the life of the revolving credit facility and are charged to interest expense.

Leasehold Improvements, Furnishings and Equipment

Improvements made in connection with the leasing of office facilities are capitalized as leasehold improvements and are amortized on a straight line basis over the minimum lease period. Furnishings and equipment are capitalized at cost and are amortized over the estimated life of the related assets which range between 3 and 5 years.

Impact of Recently Issued Accounting Standard

In November 2005, the Financial Accounting Standards Board (‘‘FASB’’) issued Staff Position No. FAS 115-1, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments (‘‘FSP 115-1’’). FSP 115-1 provides accounting guidance for determining and measuring other-than-temporary impairments of debt and equity securities, and confirms the disclosure requirements for investments in unrealized loss positions as outlined in EITF issue 03-01, The Meaning of Other-Than-Temporary Impairments and its Application to Certain Investments . The accounting requirements of FSP 115-1 are effective for Aircastle on January 1, 2006 and are not expected to have a material impact on our consolidated financial position, results of operations or cash flows.


3.	Fair Value of Financial Instruments

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

term nature. Borrowings under our credit facilities and repurchase agreements bear floating rates of interest which reset monthly or quarterly to a market benchmark rate plus a credit spread. We believe that, for similar financial instruments with comparable credit risks, the effective rate of these agreements approximates market rates. Accordingly, the carrying amounts of these agreements are believed to approximate their fair values. The fair value of our debt securities and cash flow hedges are generally available from broker quotations.


4.	Lease Rental Revenue and Flight Equipment Held for Lease

Minimum future annual rentals contracted to be received under our existing operating leases at December 31, 2005 are as follows:


Year Ending December 31	Amount
2006		$	113,000
2007			103,900
2008			92,100
2009			73,800
2010			58,100
Thereafter			98,500
		$	539,400

Geographic concentrations of lease rental revenues earned from flight equipment held for lease are as follows:


	Period from October 29, 2004 (commencement of operations) through December 31, 2004					Year ended December 31, 2005
Region	Number of Aircraft		Revenue %			Number of Aircraft		Revenue %
Europe		1		100	%		16		40	%
Asia		1		—			9		32	%
North America		—		—			4		19	%
Latin America		—		—			3		9	%
Off-lease		1		—			—		—
		3		100	%		32		100	%

The classification of regions above and below is determined based on the principle location of the lessee of the aircraft.

For the year ended December 31, 2005 four customers accounted for 55.0% of all lease revenue. The lease rental income, as a percent of total lease income, for these four customers was 19.3%, 13.4%, 11.4% and 10.9%. No other customer was responsible for lease revenue in excess of 10%.

Amortization of lease premiums related to certain acquired operating leases was $30 and $734 for 2004 and 2005, respectively, and is netted against lease rental revenue.

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Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

Geographic concentrations of net book values of flight equipment held for lease were as follows:


	December 31, 2004					December 31, 2005
Region	Number of Aircraft		Net Book Value %			Number of Aircraft		Net Book Value %
Europe		1		33	%		16		40	%
Asia		1		30	%		9		26	%
North America		—		—			4		29	%
Latin America		—		—			3		5	%
Off-lease		1		37	%		—		—
		3		100	%		32		100	%


5.	Discontinued Operations and Flight Equipment Held for Sale

As of December 31, 2005, we had one aircraft classified as flight equipment held for sale. The flight equipment has been under lease since the date of the acquisition and revenue and related interest expense has been recorded as part of earnings from discontinued operations, net of income tax provision. Earnings from discontinued operations for the year ended December 31, 2005 were as follows:


Earnings from discontinued operations
Lease rental revenue	$	1,626
Interest expense		(404	)
Earnings before income tax provision		1,222
Income tax provision		(115	)
Earnings from discontinued operations	$	1,107

The aircraft is financed in part using $36,666 borrowed under one of our credit facilities. Interest expense allocated to the discontinued operation was directly attributable to the funds borrowed to purchase the aircraft. We are actively marketing this flight equipment and expect to sell it within one year from acquisition. The net cash flows from the aircraft are expected to continue until the aircraft is sold.


6.	Debt Securities

At December 31, 2005 all of our debt securities are corporate debt obligations and are classified as available-for-sale. These debt obligations are interests in pools of loans and are collateralized by interests in commercial aircraft of which $4,066 are investment grade and $22,841 are subordinate to other debt related to such aircraft. The aggregate fair value of our debt securities at December 31, 2005 was $26,907. All of our debt securities had unrealized gains at the end of 2005. The total unrealized gain of $9,900 is included in accumulated other comprehensive income.

One of our debt securities with a fair value of $7,041 at December 31, 2005 has a stated maturity in 2010. Our remaining three debt securities, with an aggregate fair value of $19,866, have

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

remaining terms to stated maturity in excess of ten years after December 31, 2005. All of our debt securities provide for the periodic payment of both principal and interest and are subject to prepayment and/or acceleration depending on certain events, including sale of the underlying collateral aircraft and events of default. Therefore, the expected maturity of our debt securities may be less than the stated maturities.


7.	Borrowings Under Credit Facilities

We used two separate credit facilities to fund a portion of the purchase price of our acquisitions of flight equipment. These borrowings are secured by our interests in the leases on the flight equipment, including our rights to receive rents and other income from the flight equipment, our ownership interests in the special purpose entities that own the flight equipment, funds on deposit in lockbox accounts established to collect rents and any security deposits and/or maintenance payments received from the lessees and certain other interests.

In February 2005, we entered into a $300,000 revolving credit facility with a group of banks to finance the acquisition of flight equipment and related improvements. The interest rate on the facility is the one month LIBOR plus 1.50%. The interest rate, which resets monthly, was 5.87% at December 31, 2005. Additionally, we are required to pay a 0.25% fee on the amount of any unused portion of the total committed facility. The facility required monthly payments of interest only until the end of the revolving period on February 24, 2006. Thereafter, the facility requires monthly payments of interest and amortization of principal through the final scheduled termination of the facility on February 24, 2007. In August 2005, the terms of the credit facility were amended to increase the amount of the facility to $600,000. At December 31, 2005, we had borrowed $380,590 and had $219,410 unused and available on the facility. Scheduled principal installments to be paid on this credit facility in 2006 and 2007 are $19,830 and $360,760, respectively.

In October 2005 Aircastle entered into a credit facility for $109,998 with a bank to finance the acquisition of three aircraft. The interest rate on the facility is one month LIBOR plus 1.50%. The interest rate, which resets monthly, was 5.86% at December 31, 2005. The facility, which matures on October 24, 2006, provides for the monthly payment of interest only. On or prior to maturity, we plan to refinance this credit facility with long-term financing.


8.	Repurchase Agreements

We entered into repurchase agreements to fund a portion of the purchase price of certain of our debt securities. The repurchase agreements are secured by liens on the debt securities that were acquired. At December 31, 2005, debt securities available-for-sale with a fair value of $11,107 were pledged as collateral for the repurchase agreements. The repurchase agreements provide for the payment of interest at LIBOR based rates plus spreads ranging between 0.50% and 0.75% (4.88% to 5.20% at December 31, 2005). At December 31, 2005, the repurchase agreements are scheduled to mature through June 2006. Upon maturity, we plan to refinance the repurchase agreements on similar terms and conditions. The weighted average interest rate paid on these repurchase agreements at December 31, 2005 was 5.09%.


9.	Income Taxes

Income taxes have been provided based upon the tax laws and rates in the countries in which operations are conducted and income is earned. The Company received confirmation from the

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

Bermuda government exempting it and its subsidiaries organized under Bermuda law from local income, withholding and capital gains taxes until March 2016. Consequently, the provision for income taxes recorded relates to income earned by certain subsidiaries of the Company which are located in or earn income in jurisdictions that impose income taxes, primarily the United States and Ireland.

The sources of income (loss) from continuing operations before income taxes for the year ended December 31, 2005 are as follows:


	Year Ended December 31, 2005
Bermuda		$	(2,651	)
Non-Bermuda			2,712
		$	61

The components of income tax provision from continuing operations for the year ended December 31, 2005 consist of the following:


	Year Ended December 31, 2005
Current		$	607
Deferred			333
Total		$	940

Significant components of the Company’s deferred tax assets and liabilities at December 31, 2005 consist of the following:


	Year Ended December 31, 2005
Deferred tax assets
Share based payments		$	152
Net operating loss carryforward			49
Other			6
Total deferred tax assets			207
Deferred tax liabilities
Accelerated depreciation			(333	)
U.S. withholding taxes on unremitted earnings			(207	)
Total deferred tax liabilities			(540	)
Net deferred tax liability		$	(333	)

The Company has approximately $390 of net operating loss carryforwards available to offset future taxable income in Ireland. Deferred tax assets and liabilities are included in other assets and accounts payable and accrued liabilities, respectively, in the accompanying balance sheet.

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

We do not expect to incur income taxes on future distributions of undistributed earnings of non-U.S. subsidiaries and, accordingly, no deferred income taxes have been provided for the distribution of such earnings. Withholding taxes have been provided on unremitted U.S. earnings.


10.	Commitments and Contingencies

Rent expense, primarily for the corporate office and sales and marketing facilities, was approximately $293 for the year ended December 31, 2005. Amounts for 2005 include $43 of rent expense paid to Fortress for occupancy of shared space.

As of December 31, 2005 Aircastle is obligated, under non-cancelable operating leases relating principally to office facilities, for future minimum lease payments in each of the years ending December 31, as follows:


2006	$	500
2007		500
2008		500
2009		500
2010		500
Thereafter		1,000
	$	3,500

At December 31, 2005, Aircastle had letters of intent to acquire nine aircraft for an estimated purchase price of $191,620. Although the closing of each purchase is contingent on the seller meeting certain conditions precedent, the Company expects that all of the aircraft will be acquired during the first quarter of 2006. The purchase price of the aircraft under these letters of intent is subject to variable price provisions that typically reduce the final purchase price if the actual closing occurs beyond an initially agreed upon date.

All of our credit facilities contain standard provisions present in credit facilities of this type that obligate us to reimburse the banks for any increased costs associated with continuing to hold the loan on their books which arise as a result of broadly defined regulatory changes, including changes in reserve requirements and bank capital requirements. These indemnities would have the practical effect of increasing the interest rate on our debt if they were to be triggered. In all cases, we have the right to repay the credit facility and avoid the increased costs. The term of the indemnities matches the length of the related credit facility.


11.	Related Party Transactions

During 2004 and 2005, Fortress provided certain support services to Aircastle. These direct operating costs in the amount of $1,098 in 2004 and $311 in 2005 primarily included payroll and benefit costs, office supplies and professional fees paid to third parties. These expenses were charged to Aircastle at cost and are included in selling, general and administrative expenses in our consolidated statement of operations.

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Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

As of December 31, 2004 and 2005, $1,098 and $105, respectively, were payable to Fortress. As of December 31, 2004, receivable from shareholders represented cash for a capital contribution of $7,585 held by Fortress on Aircastle’s behalf. This amount was received in the first quarter of 2005.

For the year ended December 31, 2005, Aircastle paid $235 for legal fees related to the establishment and financing activities of Bermuda companies and $155 for Bermuda corporate services related to our Bermuda companies to a law firm and a secretarial services provider, respectively, affiliated with a Bermuda resident director serving on certain subsidiary company boards. The Bermuda director serves as an outside director of these subsidiaries.

Aircastle employees participate in various benefit plans sponsored by Fortress including a voluntary savings plan (401(k) plan) and other health and benefit plans. Aircastle reimbursed Fortress $13 and $155 for 2004 and 2005, respectively, for the cost of its employees’ coverage in the various health and benefit plans. Similarly, Aircastle will reimburse Fortress for the matching contribution, up to 3% of eligible earnings, when that contribution is actually funded. At December 31, 2005, Aircastle’s estimated contribution was $52 which was recorded in other liabilities.


12.	Derivatives

We enter into derivative financial instruments designated as cash flow hedges for the purpose of hedging the risks of certain existing and forecasted transactions. In general, the types of risks hedged are those relating to the variability of interest payments on our existing and expected future variable rate debt caused by movements in benchmark interest rates. Aircastle enters into designated cash flow hedge derivatives only for the purpose of hedging such risks, not for speculation. Aircastle generally intends to hedge only the risk related to changes in the benchmark interest rate, typically LIBOR.

We enter into interest rate swap transactions that require the Company to make periodic fixed payments on a notional amount and receive floating rate payments to match the floating rate payments on its existing repurchase agreements, which require payment based on a variable interest rate index. At December 31, 2005, we had interest rate swaps outstanding with a notional amount of $7,900 to hedge against future interest payments on $8,665 of repurchase agreements. For the year ended December 31, 2005 Aircastle recognized ineffectiveness amounting to $51 related to these cash flow hedges. This amount is included in interest income on the consolidated statements of operations.

We also entered into forward starting interest rate swaps to hedge the risk of interest rate fluctuations with respect to anticipated financings. The primary risk involved is that interest rates may increase between the date flight equipment is acquired and the closing of the anticipated financings. At December 31, 2005, future interest payments on the anticipated financings that were expected to be issued in the first quarter of 2006 were designated as the hedged items to interest rate swap agreements with a total notional amount of $600,000. These swaps, which had a start date of December 15, 2005, have a mandatory termination date of April 28, 2006. At that time, it is expected that any gain or loss will be realized, and the resulting deferred gain or loss will be amortized into income over the life of anticipated financing, which is expected to be five

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Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

years. For the year ended December 31, 2005, Aircastle recognized ineffectiveness of ($177) related to these cash flow hedges. This amount is included in interest expense on the consolidated statements of operations.

As of December 31, 2005, the accumulated other comprehensive gain related to cash flow hedges, was $1,864. It is expected that approximately $214 of these existing gains will be reclassified into earnings in the next twelve months.


13.	Shareholders’ Equity, Share Based Payments and Earnings (Loss) Per Share

Aircastle is required to present both basic and diluted earnings (loss) per share (‘‘EPS’’). Basic EPS is calculated by dividing net income (loss) by the weighted average number of shares of common shares outstanding during each period. The weighted average shares outstanding exclude our unvested shares for purposes of Basic EPS. Diluted EPS is calculated by dividing net income (loss) by the weighted average number of shares of common shares outstanding during the period while also giving effect to all potentially dilutive common shares that were outstanding during the period based on the treasury stock method. For the period from October 29 (commencement of operations) through December 31, 2004 the company had no common stock equivalents. For the year ended December 31, 2005, based on the treasury stock method, we had 24,071 anti-dilutive common share equivalents resulting from restricted shares.

The calculations of both basic and diluted earnings (loss) per share are as follows:


	Period from October 29 (Commencement of operations) to December 31, 2004				Year Ended December 31, 2005
Numerator:
Loss from continuing operations		$	(1,465	)		$	(879	)
Earnings from discontinued operations, net of income taxes			—				1,107
Net income (loss)		$	(1,465	)		$	228
Denominator for basic earnings per share			40,000,000				40,000,000
Effect of dilutive restricted shares			—				—	^(a ⁾
Denominator for diluted earnings per share			40,000,000				40,000,000
Basic earnings (loss) per share:
Loss from continuing operations		$	(.04	)		$	(.02	)
Earnings from discontinued operations, net of income taxes			—				.03
Net income (loss)		$	(.04	)		$	.01
Diluted earnings (loss) per share:
Loss from continuing operations		$	(.04	)		$	(.02	)
Earnings from discontinued operations, net of income taxes			—				.03
Net income (loss)		$	(.04	)		$	.01


(a)	Anti-dilutive

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

On January 31, 2006, the Shareholders approved the Second Amended and Restated Shareholders’ Agreement (the ‘‘Amended Shareholders Agreement’’). The Amended Shareholders Agreement provided for an increase in the authorized number of shares from 12,000 shares of $1.00 par value to 100 million, and the subdivision of the Company’s issued and outstanding common shares from 12,000 shares of $1.00 par value to 40,000,000 shares of $0.01 par value. All share and per share data for periods presented in the accompanying consolidated financial statements and notes thereto give retroactive effect to this transaction.

During 2005, the Company entered into employment agreements in connection with recruiting and hiring of certain employees. The employment agreements provide for grants of restricted shares (the ‘‘initial grants’’) that vest over five year periods based on continued service. Based on these employment agreements, the Company granted 347,500 shares in the first half of 2005 and 25,000 shares on July 5, 2005 with a weighted average fair value at grant date of $8.50. None of the shares vested in 2005. Compensation cost in 2005 for the awards was $409.

As of December 31, 2005, there was $2,757 of total unrecognized compensation cost related to nonvested, share-based compensation arrangements. That cost was expected to be recognized over a weighted average period of 4.4 years. The fair value of the shares was determined based on a retrospective valuation performed by an unrelated valuation specialist. The valuation relied on observed equity investments made by the Shareholders, adjusted to reflect the lack of marketability of the shares granted to employees.


14.	Segment Information

We have two reportable segments: Aircraft Leasing and Debt Investments. We present our segment information on a contribution margin basis consistent with the information that our chief executive officer (the Chief Operating Decision Maker or ‘‘CODM’’) reviews in assessing segment performance and allocating resources. Contribution margin includes revenue, depreciation, interest expense and other expenses that are directly connected to our business segments. We believe contribution margin is an appropriate measure of performance because it reflects the marginal profitability of our business segments excluding overhead.

Aircraft Leasing

The Aircraft Leasing segment consists of amounts earned from our commercial aircraft leasing operations. All of our aircraft are subject to net operating leases whereby the lessee is responsible for maintaining the aircraft and paying all operational and insurance costs. We retain the benefit, and bear the risk, of re-leasing and the residual value of the aircraft upon expiry or early termination of the lease.

Debt Investments

In the first quarter of 2005 the Company commenced a segment that is engaged in the investing in debt securities from structured financings in the airline industry. For the year ended December 31, 2005, this segment's activities consisted of amounts earned from our investments in debt securities secured by commercial jet aircraft including enhanced equipment trust certificates, or EETCs, and other forms of collateralized debt.

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

Information on reportable segments and the reconciliation to income from continuing operations before income taxes for the year ended December 31, 2005 is as follows:


	Year Ended December 31, 2005
	Aircraft Leasing			Debt Investments
	Aircraft Leasing			Debt Investments			Total
Revenues
Lease rentals		$	32,978		$	—		$	32,978
Interest income			—			2,942			2,942
Other revenues			2			104			106
Total revenues			32,980			3,046			36,026
Expenses
Depreciation			14,295			—			14,295
Interest			8,930			173			9,103
Other expenses			1,078			—			1,078
Total expenses			24,303			173			24,476
Contribution margin		$	8,677		$	2,873		$	11,550
Segment Assets		$	803,253		$	27,369		$	830,622

Total contribution margin reported as segment profit for reportable business segments is reconciled to income from continuing operations before income taxes as follows:


Contribution margin	$	11,550
Selling, general and administrative expenses		(12,595	)
Depreciation and other expenses		(258	)
Interest income on cash balances		1,364
Income from continuing operations before income taxes	$	61

The Company's CODM does not consider other selling, general and administrative expenses in the evaluation of the operating segment’s results as such costs are semi-fixed and do not bear a direct correlation to operating results. Additionally, during 2005, the Company's first full year of existence a substantial portion of costs excluded from segment results were either one-time organizational charges or were incurred in a ramp up phase.

Total assets reported as segment is reconciled to total assets as follows:


Segment assets	$	830,622
Operating cash accounts		79,943
Flight equipment held for sale		54,917
All other		2,050
	$	967,532

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)


15.	Subsequent Events

Shareholders’ Equity

In January 2006, the Board of Directors and Shareholders adopted the Aircastle Investment Limited 2005 Equity and Incentive Plan (the ‘‘2005 Plan’’). The purpose of the Plan is to provide additional incentive to selected management employees. The 2005 Plan provides that the Company may grant (a) share options, (b) share appreciation rights, (c) awards of restricted shares, deferred shares, performance shares, unrestricted shares or other share-based awards, or (d) any combination of the foregoing. The 2005 Plan includes four million shares that are reserved and available for issuance. The 2005 Plan provides that grantees of restricted shares will have all of the rights of shareholders, including the right to receive dividends, other than the right to sell, transfer, assign or otherwise dispose of the shares until the lapse of the restricted period.

In February and March of 2006, the Board ratified the initial grants of 372,500 shares provided for in certain employment contracts and approved new grants of 412,500 shares of restricted shares pursuant to the terms of the 2005 Plan. Generally, the restricted shares vest over five year periods, based on continued service. The terms of the grants provide for accelerated vesting under certain circumstances, including termination without cause and termination without cause following a change of control. The grant also imposes lock up restrictions on restricted shares from the date of grant through 120 days after the date of any initial public offering, and provides for certain further restrictions and notice periods thereafter.

The total fair value of the shares granted under the 2005 Plan in 2006 is estimated to be $8,353. After giving effect to the 2006 grants, the weighted average period over which the compensation cost is expected to be recognized is 3.6 years. The fair value of the restricted shares granted in 2006 was determined based on a retrospective valuation performed by management of the Company and approved by the Board of Directors. The valuation involved projecting the Company’s earnings through the date of the anticipated initial public offering (‘‘IPO’’) to develop an estimated annualized rate of earnings and annualized earnings and dividends per share. Key assumptions used in developing the projection included expected monthly acquisition volume through the IPO date, leverage and interest costs, revenues from new aircraft acquisitions and the growth of selling, general and administrative expenses.

On January 31, 2006, the Shareholders committed to contribute up to $100,000 of equity to Aircastle. On February 8, 2006, the Shareholders contributed additional capital of $36,932 of this amount.

Financing Activities

On February 24, 2006, the revolving period of our $600,000 credit facility was extended to May 31, 2006, and the maximum amount of the credit facility was reduced to $525,000.

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

daily amount of the unused portion of the total committed facility on an annualized basis. The facility requires the monthly payment of interest and principal, to the extent of 85% of any decrease in the net book value of the assets, through the final maturity of the facility on August 28, 2007. The facility limits our ability to pay dividends prior to an initial public offering (IPO). After any IPO, the facility has no restrictions on the amount of dividends we can pay, provided that we are not in default. Additionally, after any IPO, we are required under the credit facility to maintain a net worth of no less than $500,000.

Debt Securities

On March 10, 2006, we purchased two debt securities for $94,097. The purchase was funded in part by entering into a repurchase agreement for $75,647 with a bank from whom we did not purchase the securities. The repurchase agreement, which matures on March 1, 2007, provides for the monthly payment of interest at one-month LIBOR rate plus 0.50%. We designated an interest rate swap which we had entered into on February 2, 2006 as a hedge of the future variable rate interest payments on the repurchase agreement. The interest rate swap has an initial notional principal amount of $74,000, which decreases periodically based on estimated projected principal payments on the debt securities. The interest rate swap, which matures on July 1, 2010, provides for the semi-annual payment of a fixed rate of 5.02% and the monthly receipt of the one-month LIBOR rate on the notional amount.

Discontinued Operation

On March 29, 2006, we sold the aircraft held for sale for a gain. The related outstanding debt of $36,666 was repaid plus accrued interest.


16.	Other Subsequent Events (Unaudited)

Registration Statement

On May , 2006, the Company’s board of directors authorized the filing of a registration statement with the Securities and Exchange Commission for an initial public offering of its common shares.

Aircraft Acquisitions

From January 1, 2006 through May 22, 2006 we acquired an additional 16 aircraft for an aggregate purchase price of approximately $312 million. The acquisitions were partially funded with borrowings under our credit facilities. At May 22, 2006 all of the purchased aircraft are subject to operating leases.

As of May 22, 2006, Aircastle had letters of intent to acquire nine aircraft for an estimated purchase price of $244 million. Although the closing of each purchase is contingent on the seller meeting certain conditions precedent, the Company expects that all of the aircraft will be acquired during the second quarter of 2006. The purchase price of certain of the commitments are subject to variable price provisions that typically reduce the final purchase price if the actual closing occurs beyond an initially agreed upon date.

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Consolidated Financial Statements (continued)

(Dollars in thousands, except per share amounts)

Financing

On June , 2006, we agreed to the terms of our first securitization. ACS 2006-1 Pass Through Trust (‘‘ACS’’), a newly formed trust, will issue $560 million of trust certificates representing undivided interests in floating rate asset-backed notes supported by 40 aircraft. The principal balance of the notes will be equal to 54.8% of the Initial Appraised Value of the 40 aircraft of $1.022 billion. Initial Appraised Value is the lesser of the mean and the median of base value appraisals obtained from three nationally recognized appraisal firms. We retained 100% of the residual economic interests in the 40 aircraft. The notes bear interest at LIBOR plus 0.27%. Financial Guarantee Insurance Company, issued a financial guarantee insurance policy to support the payment of interest when due on the certificates and the payment of the pool balance of the certificates on the final distribution date. The certificates are rated Aaa and AAA by Moody's Investors Service and Standard & Poor's rating services, respectively. A portion of the proceeds will be used to repay the outstanding debt under our existing credit facilities associated with the 40 aircraft. No assurance can be given that this transaction will be consummated.

Purchases of Restricted Shares

In May 2006, a family trust of an individual who will be appointed to the Company's Board of Directors and certain members of management of the Company purchased an aggregate of 277,000 of the Company's common shares. The purchase price of the shares was below the fair value of the Company's common shares and accordingly, the Company will record compensation expense of approximately $3,839 in the quarter ending June 30, 2006.

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Table of Contents

Aircastle Limited and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share data)


	December 31, 2005				(Unaudited) March 31, 2006			(Unaudited) (Pro Forma) March 31, 2006
Assets
Cash and cash equivalents		$	79,943			$	27,554
Accounts receivable			3,115				3,492
Debt securities, available for sale			26,907				120,558
Restricted cash and cash equivalents			40,652				92,666
Flight equipment held for sale			54,917				—
Flight equipment held for lease, net of accumulated depreciation of $14,685 and $24,355			746,124				941,692
Leasehold improvements, furnishings and equipment, net of accumulated depreciation of $165 and $278			1,529				1,615
Fair value of derivative assets			3,608				13,950
Other assets			10,737				16,935
Total assets		$	967,532			$	1,218,462
Liabilities and Shareholders' Equity
Liabilities
Borrowings under credit facilities		$	490,588			$	568,859
Accounts payable, accrued expenses and other liabilities			12,038				19,193
Payable to affiliates			105				233
Lease rentals received in advance			6,241				7,161
Repurchase agreements			8,665				84,434
Security deposits and maintenance payments			37,089				62,518
Fair value of derivative liabilities			1,870				264
Total liabilities			556,596				742,662
Commitments and contingencies — Note 11
Shareholders' Equity
Common shares, $.01 par value, 100,000,000 shares authorized, 40,000,000 shares issued and outstanding at December 31, 2005; 44,408,200 shares issued and outstanding at March 31, 2006			400				444
Additional paid-in capital			400,009				438,189
(Accumulated deficit) retained earnings			(1,237	)			9,943
Accumulated other comprehensive income			11,764				27,224
Total shareholders' equity			410,936				475,800
Total liabilities and shareholders' equity		$	967,532			$	1,218,462

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Table of Contents

Aircastle Limited and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)


	(Unaudited) Three Months Ended March 31
	2005				2006
Revenues
Lease rentals		$	1,862			$	31,371
Interest income			325				1,641
Total revenues			2,187				33,012
Expenses
Depreciation			1,462				9,915
Interest (net of interest income of $29 and $1,063)			313				7,717
Selling, general and administrative (including share-based payments expense of $9 and $1,292 respectively)			1,548				5,954
Other expenses			69				641
Total expenses			3,392				24,227
Income (loss) from continuing operations before income taxes			(1,205	)			8,785
Income tax provision			169				1,004
Income (loss) from continuing operations			(1,374	)			7,781
Earnings from discontinued operations, net of income taxes			—				3,399
Net income (loss)		$	(1,374	)		$	11,180
Basic earnings (loss) per share:
Income (loss) from continuing operations		$	(.03	)		$	.19
Earnings from discontinued operations, net of income taxes			—				.08
Net income (loss) per share		$	(.03	)		$	.27
Diluted earnings (loss) per share:
Income (loss) from continuing operations		$	(.03	)		$	.19
Earnings from discontinued operations, net of income taxes			—				.08
Net income (loss) per share		$	(.03	)		$	.27

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Table of Contents

Aircastle Limited and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)


	(Unaudited) Three Months Ended March 31
	2005				2006
Cash flows from operating activities
Net income (loss)		$	(1,374	)		$	11,180
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities (inclusive of amounts related to discontinued operations):
Depreciation			1,462				9,915
Amortization			157				630
Deferred income taxes			64				155
Accretion of purchase discount on debt securities			(73	)			(266	)
Share based payments expense			9				1,292
Ineffective portion of cash flow hedges			—				(253	)
Gain on the sale of aircraft held for sale			—				(2,240	)
Changes in certain assets and liabilities:
Accounts receivable			80				(377	)
Restricted cash and cash equivalents			(4,020	)			(31,689	)
Other assets			175				(222	)
Accounts payable, accrued expenses and other liabilities			865				(698	)
Payable to affiliates			161				128
Lease rentals received in advance			62				920
Security deposits and maintenance payments			546				25,429
Net cash (used in) provided by operating activities			(1,886	)			13,904
Cash flows from investing activities
Acquisition and improvement of flight equipment			(27,828	)			(200,456	)
Disposition of flight equipment held for sale			—				57,157
Restricted cash from disposition of flight equipment held for sale			—				(20,325	)
Purchase of debt securities			(22,981	)			(92,726	)
Leasehold improvements, furnishings and equipment			(4	)			(199	)
Deposits on aircraft purchases			(500	)			(1,716	)
Principal repayments on debt securities			—				3,106
Net cash used in investing activities			(51,313	)			(255,159	)
Cash flows from financing activities
Issuance of common shares			—				36,932
Credit facility borrowings			43,146				114,937
Credit facility repayment			—				(36,666	)
Deferred financing costs			(1,254	)			(2,106	)
Proceeds from repurchase agreements			3,313				75,968
Principal repayment on repurchase agreements			—				(199	)
Capital contributions			51,451				—
Net cash provided by financing activities			96,656				188,866
Net increase (decrease) in cash and cash equivalents			43,457				(52,389	)
Cash and cash equivalents at beginning of period			—				79,943
Cash and cash equivalents at end of period		$	43,457			$	27,554
Supplemental disclosures of cash flow information
Cash paid during the period for interest		$	23			$	8,231
Cash paid during the period for income taxes		$	—			$	87

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)


1.	Organization and Basis of Presentation

Aircastle is a holding company that conducts its business through subsidiaries. Aircastle owns directly or indirectly all of the outstanding common shares of its subsidiaries. The consolidated financial statements include the accounts of Aircastle and all of its subsidiaries. All significant intercompany transactions and balances have been eliminated.

The accompanying consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the ‘‘SEC’’) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our consolidated balance sheets, operating results, and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for 2006. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (‘‘GAAP’’) have been omitted in accordance with the rules and regulations of the SEC. For further information refer to the audited consolidated financial statements and accompanying notes thereto included elsewhere in this Prospectus and Registration Statement.


2.	Fair Value of Financial Instruments

Aircastle’s financial instruments, other than cash, consist principally of cash equivalents, restricted cash and cash equivalents, accounts receivable, debt securities, accounts payable, amounts borrowed under credit facilities, repurchase agreements and cash flow hedges. The fair value of cash, cash equivalents, restricted cash and cash equivalents, accounts receivable and accounts payable approximates the carrying value of these financial instruments because of their short term nature. Borrowings under our credit facilities and repurchase agreements bear floating rates of interest which reset monthly or quarterly to a market benchmark rate plus a credit spread. We believe that, for similar financial instruments with comparable credit risks, the effective rate of these agreements approximates market rates at the balance sheet dates. Accordingly, the carrying amounts of these agreements are believed to approximate their fair values. The fair value of our debt securities and cash flow hedges are generally available from broker quotations.

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)


3.	Lease Rental Revenue and Flight Equipment Held for Lease

Minimum future rentals contracted to be received under our existing operating leases at March 31, 2006 are as follows:


Year Ending December 31,	Amount
Remainder of 2006		$	102,800
2007			123,700
2008			110,000
2009			88,200
2010			62,100
2011			53,000
Thereafter			46,700
		$	586,500

Geographic concentrations of lease rental revenues earned from flight equipment held for lease are as follows:


	Three Months Ended March 31,
	2005					2006
Region	Number of Aircraft		Revenue %			Number of Aircraft		Revenue %
Europe		2		51	%		23		39	%
Asia		1		49	%		11		26	%
North America		—		—			5		30	%
Latin America		—		—			3		5	%
Off-lease		3		—			—		—
		6		100	%		42		100	%

The classification of regions above and below is determined based on the principle location of the lessee of the aircraft.

In the three months ended March 31, 2005, two customers accounted for all revenues. In the three months ended March 31, 2006, two customers accounted for 41.7% of revenues. The lease rental revenues for these two lessees were 29.6% and 12.1% for the three months ended March 31, 2006 and no other customer accounted for more than 6% of lease revenues.

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

Geographic concentrations of net book values of flight equipment held for lease were as follows:


	December 31					March 31
	2005					2006
Region	Number of Aircraft		Net Book Value %			Number of Aircraft		Net Book Value %
Europe		16		40	%		23		47	%
Asia		9		26	%		11		25	%
North America		4		29	%		5		24	%
Latin America		3		5	%		3		4	%
		32		100	%		42		100	%


4.	Discontinued Operations and Flight Equipment Held for Sale

As of December 31, 2005, we had one aircraft classified as flight equipment held for sale. During the three months ended March 31, 2006, we completed the sale of this aircraft. A portion of the proceeds were used to repay $36,666 of debt related to the aircraft plus accrued interest.

Earnings from discontinued operations for the three months ended March 31, 2006, related solely to the aircraft held for sale, were as follows:


Earnings from discontinued operations
Lease rentals	$	2,135
Gain on disposition		2,240
Interest expense		(528	)
Earnings before income tax provision		3,847
Income tax provision		(448	)
Earnings from discontinued operations	$	3,399


5.	Debt Securities

As of December 31, 2005 and March 31, 2006 all of our debt securities are corporate obligations and were classified as available-for-sale. The aggregate fair value of our debt securities at March 31, 2006 was $120,558. These debt obligations are interests in pools of loans and are collateralized by interests in commercial aircraft of which $4,014 are investment grade, $93,943 are senior subordinated instruments within their pools and $22,601 are subordinate to other debt related to such aircraft. All of our debt securities had unrealized gain positions, which aggregated $9,900 and $13,665 at December 31, 2005 and March 31, 2006, respectively.

Three of our debt securities, with a fair value of $101,307 at March 31, 2006 have stated maturities in 2010. Our other three debt securities, with an aggregate fair value of $19,251, have remaining terms to stated maturity in excess of ten years after March 31, 2006. All of our debt securities provide for the periodic payment of both principal and interest and are subject to prepayment and/or acceleration depending on certain events, including sale of the underlying collateral aircraft and events of default. Therefore, the actual maturity of our debt securities may be less than the stated maturities.

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)


6.	Borrowings Under Credit Facilities

We have used borrowings from three separate credit facilities to fund a portion of the purchase price of our acquisitions of flight equipment. These borrowings are secured by our interests in the leases on the flight equipment, including our rights to receive rents and other income from the flight equipment, our ownership interests in the special purpose entities that own the flight equipment, funds on deposit in lockbox accounts established to collect rents and any security deposits and/or maintenance payments received from the lessees and certain other interests.

On February 28, 2006, we entered into a $500,000 revolving credit facility with a group of banks, as lenders, to finance the acquisition of aircraft and related improvements. The borrowing base is equal to 85% of the net book value of the aircraft. Borrowings under the credit facility incur interest at the one-month LIBOR rate plus 1.25%. Additionally, we are subject to a 0.25% fee on any unused portion of the total committed facility. The facility requires the monthly payment of interest and principal, to the extent of 85% of any decrease in the net book value of the assets, through the final maturity of the facility on August 28, 2007. The facility limits our ability to pay dividends prior to an initial public offering (IPO). After any IPO, the facility has no restrictions on the amount of dividends we can pay, provided that we are not in default. Additionally, after any IPO, we are required under the credit facility to maintain a net worth, of no less than $500,000. As of March 31, 2006 $8,554 was outstanding under this facility.

On February 24, 2006 the revolving period of our existing $600,000 credit facility was extended to April 28, 2006 and the maximum amount of the credit facility was reduced to $525,000. The other terms of the facility remain the same. Monthly payments of interest will continue through May 31, 2006. After that date monthly payments of principle and interest will commence. As of March 31, 2006, $486,973 was outstanding under this facility. Scheduled principal installments to be paid on this credit facility in 2006 and 2007 are $17,774 and $469,199, respectively.

In October 2005 the Company entered into a credit facility for $109,998 with a bank to finance the acquisition of three aircraft. On March 30, 2006 $36,666 of this facility was repaid using a portion of the proceeds from the disposition of flight equipment held for sale which had been financed under this facility. The facility, which matures on October 24, 2006, provides for the monthly payment of interest only. On or prior to maturity, we intend to refinance this credit facility with long-term financing. However, there is no assurance the Company will be able to obtain this financing.


7.	Repurchase Agreements

We entered into repurchase agreements to fund a portion of the purchase price of certain of our debt investments. At December 31, 2005 and March 31, 2006, the repurchase agreements are secured by liens on the debt investments with a fair value of $11,107 and $104,770, respectively. The repurchase agreements are substantially all with parties other than those from whom we originally purchased the debt investments. At March 31, 2006 the repurchase agreements are scheduled to mature through March 2007. Upon maturity, we intend to refinance the repurchase agreements on similar terms and conditions. However, there is no assurance the Company will be able to refinance the repurchase agreements. The weighted average interest rate of these repurchase agreements at March 31, 2006 was 5.22%.

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)


8.	Shareholders’ Equity, Share Based Payments and Earnings (Loss) Per Share

In January 2006, the Board of Directors and Shareholders adopted the Aircastle Investment Limited 2005 Equity and Incentive Plan (the ‘‘2005 Plan’’). The purpose of the Plan is to provide additional incentive to selected management employees. The 2005 Plan provides that the Company may grant (a) share options, (b) share appreciation rights, (c) awards of restricted shares, deferred shares, performance shares, unrestricted shares or other share-based awards, or (d) any combination of the foregoing. The 2005 Plan sets aside four million shares that are reserved and available for issuance. The 2005 Plan provides that grantees of restricted shares will have all of the rights of shareholders, including the right to receive dividends, other than the right to sell, transfer, assign or otherwise dispose of the shares until the lapse of the restricted period.

In February and March of 2006, the Board ratified the initial grants of 347,500 shares in the first half of 2005 and 25,000 shares on July 5, 2005 which were provided for in certain employment contracts, and approved new grants of 412,500 restricted shares. Generally, the restricted shares vest over five year periods, based on continued service and are being expensed on a straight line basis over the requisite service period of the awards. The terms of the grants provide for accelerated vesting under certain circumstances, including termination without cause following a change of control. The grant also imposes lock up restrictions on restricted shares from the date of grant through 120 days after the date of any initial public offering, and provides for certain further restrictions and notice periods thereafter.

A summary of the fair value of nonvested shares is as follows:


Nonvested Shares	Shares (in 000's)			Weighted Average Grant-Date Fair Value			Fair Value of Nonvested Shares
Nonvested at January 1, 2006		372.5			$	8.50		$	3,166
Granted		412.5				20.25			8,353
Vested		(43.0	)			16.90			(727	)
Forfeited		—				—			—
Nonvested at March 31, 2006		742.0			$	14.54		$	10,792

The fair value of the restricted shares granted in 2006 was determined based on a retrospective valuation performed by management of the Company and approved by the Board of Directors. The valuation involved projecting the Company’s earnings through the date of the anticipated initial public offering (‘‘IPO’’) to develop an estimated annualized rate of earnings and annualized earnings and dividends per share. Key assumptions used in developing the projection included expected monthly acquisition volume through the IPO date, leverage and interest costs, revenues from new aircraft acquisitions and the growth of selling, general and administrative expenses. The Company anticipates that the current requisite service periods will be obtained for employees with awards. The total unrecognized compensation cost as of March 31, 2006 in the amount of $9,818 is expected to be recognized over a weighted average period of 4.0 years.

During the three months ended March 31, 2005, 50,000 restricted shares were granted at a fair value of $8.50. The fair value of the restricted shares granted in 2005 was determined based on a

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Table of Contents

Aircastle Limited and Subsidiaries
Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

retrospective valuation performed by an unrelated valuation specialist. The valuation relied on observed equity investments made by the Shareholders, adjusted to reflect the lack of marketability of the shares granted to employees.

Aircastle is required to present both basic and diluted earnings (loss) per share (‘‘EPS’’). Basic EPS is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during each period. The weighted average shares outstanding exclude our unvested shares for purposes of basic EPS. Diluted EPS is calculated by dividing net income (loss) by the weighted average number of shares of common shares outstanding during the period while also giving effect to all potentially dilutive common shares that were outstanding during the period based on the treasury stock method. For the three months ended March 31, 2005, based on the treasury stock method, we had 318 anti-dilutive common share equivalents resulting from restricted shares.

The calculations of both basic and diluted earnings (loss) per share are as follows:


	Three Months Ended March 31
	2005				2006
Numerator:
Income (loss) from continuing operations		$	(1,374	)		$	7,781
Earnings from discontinued operations, net of income taxes			—				3,399
Net income (loss) per share		$	(1,374	)		$	11,180
Denominator for basic earnings per share			40,000,000				41,322,604
Effect of dilutive restricted shares			—	^(a ⁾			90,868
Denominator for diluted earnings per share			40,000,000				41,413,472
Basic earnings (loss) per share:
Income (loss) from continuing operations		$	(.03	)		$	.19
Earnings from discontinued operations, net of income taxes			—				.08
Net income (loss) per share		$	(.03	)		$	.27
Diluted earnings (loss) per share:
Income (loss) from continuing operations		$	(.03	)		$	.19
Earnings from discontinued operations, net of income taxes			—				.08
Net income (loss) per share		$	(.03	)		$	.27


(a)	Anti-dilutive


9.	Income Taxes

Income taxes have been provided based upon the tax laws and rates in countries in which our operations are conducted and income is earned. The Company received confirmation from the Bermuda government exempting it and its subsidiaries organized under Bermuda law from local income, withholding and capital gains taxes until March 2016. Consequently, the provision for income taxes recorded relates to income earned by certain subsidiaries of the Company which are located in or earn income in jurisdictions that impose income taxes, primarily the United States and Ireland.

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Aircastle Limited and Subsidiaries
Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

The sources of (loss) income from continuing operations before income taxes for the three months ended March 31, 2005 and 2006 are as follows:


	Three Months Ended March 31,
	2005				2006
Bermuda		$	(1,306	)		$	4,106
Non-Bermuda			101				4,679
		$	(1,205	)		$	8,785

The components of the income tax provision from continuing operations for the three months ended March 31, 2005 and 2006 consist of the following:


	Three Months Ended March 31,
	2005			2006
Current		$	105		$	849
Deferred			64			155
Total		$	169		$	1,004

Significant components of the Company’s deferred tax assets and liabilities at December 31, 2005 and March 31, 2006 consist of the following:


	December 31, 2005				March 31, 2006
Deferred tax assets:
Share based payments		$	152			$	320
Net operating loss carryforwards			49				49
Other			6				5
Total deferred tax assets			207				374
Deferred tax liabilities:
Accelerated depreciation			(333	)			(641	)
U.S. federal withholding tax on unremitted earnings			(207	)			(221	)
Total deferred tax liabilities			(540	)			(862	)
Net deferred tax liabilities		$	(333	)		$	(488	)

The Company has approximately $390 of net operating loss carry forwards available at December 31, 2005 to offset future taxable income in Ireland. Deferred tax assets and liabilities are included in other assets and accounts payable and accrued liabilities, respectively, in the accompanying balance sheet.

We do not expect to incur income taxes on future distributions of undistributed earnings of non-U.S. subsidiaries and, accordingly, no deferred income taxes have been provided for the distribution of such earnings. Witholding taxes have been provided on unremitted earnings of our U.S. subsidiary.

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Aircastle Limited and Subsidiaries
Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)


10.	Comprehensive Income

Comprehensive income includes net income (loss) and the changes in the fair value of derivatives, reclassification into earnings of amounts previously deferred relating to our derivative financial instruments and the change in unrealized appreciation on debt securities.

Other comprehensive income is as follows:


	Three Months Ended March 31
	2005				2006
Net income (loss)		$	(1,374	)		$	11,180
Change in fair value of derivatives			2,834				11,695
Change in unrealized appreciation of debt securities			77				3,765
Other comprehensive income		$	1,537			$	26,640


11.	Commitments and Contingencies

At March 31, 2006, Aircastle had letters of intent to acquire 10 aircraft for an estimated purchase price of approximately $198,700. Although the closing of each purchase is contingent on the seller meeting certain conditions precedent, the Company expects that these aircraft will be acquired during the second quarter of 2006. The purchase price of the aircraft under these letters of intent is subject to variable price provisions that typically reduce the final purchase price if the actual closing occurs beyond an initially agreed upon date.


12.	Related Party Transactions

Aircastle employees participate in various benefit plans sponsored by Fortress including a voluntary savings plan (401(k) plan) and other health and benefit plans. For the three months ended March 31, 2005 and 2006 Aircastle incurred $33 and $93, respectively, for its costs under the health and benefit plans. In addition, in the quarter ended March 31, 2006, Aircastle remitted $179 in annual contributions for the 2005 plan year for our employee’s participation in a voluntary 401(k) savings plan sponsored by Fortress.

In addition, Fortress requires Aircastle to reimburse it for costs of services which it has incurred on behalf of Aircastle. These expenses are charged to Aircastle at cost and are included in selling, general and administrative expenses in the consolidated statement of operations. In the quarter ended March 31, 2006 no such costs were incurred. For the three months ended March 31, 2005 such costs were $174 and were primarily for professional fees.

For the three months ended March 31, 2006, Aircastle paid $163 for legal fees related to the establishment and financing activities of Bermuda companies and $85 for Bermuda corporate services related to our Bermuda companies to a law firm and a secretarial services provider, respectively, affiliated with a Bermuda resident director serving on certain subsidiary company boards. The Bermuda director serves as an outside director of these subsidiaries.


13.	Derivatives

On March 10, 2006, we designated an interest rate swap which we had entered into on February 2, 2006 as a hedge of the future variable rate interest payments on the repurchase

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Aircastle Limited and Subsidiaries
Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

agreements for debt securities we purchased during the quarter. The interest rate swap has an initial notional principal amount of $74,000, which decreases periodically based on estimated projected principal payments on the debt securities. The interest rate swap, which matures on July 1, 2010, provides for the semi-annual payment of a fixed rate of 5.02% and the monthly receipt of the one-month LIBOR rate on the notional amount.


14.	Segment Information

Aircraft Leasing

Debt Investments

The Debt Investments segment consists of amounts earned from our investments in debt securities secured by commercial jet aircraft including enhanced equipment trust certificates, or EETCs, and other forms of collateralized debt.

Information on reportable segments for 2005 is as follows:


	Three Months Ended March 31, 2005
	Aircraft Leasing				Debt Investments			Total
Revenues
Lease rentals		$	1,862			$	—		$	1,862
Interest income							325			325
Total revenues			1,862				325			2,187
Expenses
Depreciation			1,462				—			1,462
Interest			342				—			342
Other expenses			69				—			69
Total expenses			1,873				—			1,873
Contribution margin		$	(11	)		$	325		$	314
Segment Assets		$	134,664			$	23,393		$	158,057

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Aircastle Limited and Subsidiaries
Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

Information on reportable segments for 2006 is as follows:


	Three Months Ended March 31, 2006
	Aircraft Leasing			Debt Investments			Total
Revenues
Lease rentals		$	31,371		$	—		$	31,371
Interest income			—			1,641			1,641
Total revenues			31,371			1,641			33,012
Expenses
Depreciation			9,802			—			9,802
Interest			7,912			868			8,780
Other expenses			641			—			641
Total expenses			18,355			868			19,223
Contribution margin		$	13,016		$	773		$	13,789
Segment Assets		$	1,064,772		$	122,853		$	1,187,625

Total contribution margin reported as segment profit for reportable business segments is reconciled to income (loss) from continuing operations before income taxes as follows:


	Three Months Ended March 31,
	2005				2006
Contribution margin		$	314			$	13,789
Selling, general and administrative expenses			(1,548	)			(5,954	)
Depreciation and other expenses			—				(113	)
Interest income on cash balances			29				1,063
Income (loss) from continuing operations before income taxes		$	(1,205	)		$	8,785


	March 31,
	2005			2006
Segment assets		$	158,057		$	1,187,625
Operating cash accounts			43,457			27,801
All other			77			3,036
		$	201,591		$	1,218,462

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Aircastle Limited and Subsidiaries
Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)


15.	Pro Forma Capitalization

The following table sets forth our capitalization at March 31, 2006 and our capitalization as of such date as adjusted to give effect to proceeds received in connection with Securitization No. 1 and the repayment of $487.0 million of indebtedness under Credit Facility No. 1 and the return of $36.9 million to Fortress as a partial use of proceeds from Securitization No. 1, the payment of an ordinary dividend from current earnings in the amount of $ per common share, or an aggregate of $ million, declared by our board of directors on , 2006 and paid on , 2006, and the purchase of 277,000 shares by employees and a director nominee in May 2006.


	Actual			Adjusted
Borrowings under credit facilities		$	568,859		$
Securitization debt			—
Repurchase agreements			84,434
Common shares			444
Additional paid-in capital			438,189
Retained earnings			9,943
Accumulated other comprehensive income			27,224
Total shareholders' equity			475,800
Total capitalization		$	1,129,093		$

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Common shares

Prospectus

JPMorgan Bear, Stearns & Co. Inc. Citigroup

, 2006

Through and including , 2006 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Table of Contents

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS


Item 13.	Other Expenses of Issuance and Distribution

The following table sets forth the estimated fees and expenses (except for the Securities and Exchange Commission registration fee, the National Association of Securities Dealers, Inc. filing fee and the NYSE, Inc. listing fee) payable by the registrant in connection with the distribution of the common shares:


Securities and Exchange Commission registration fee	$	18,725
National Association of Securities Dealers, Inc. filing fee	$	18,000
NYSE listing fee			*
Printing and engraving costs			*
Legal fees and expenses			*
Accountants' fees and expenses			*
Blue sky qualification fees and expenses			*
Transfer agent fees			*
Miscellaneous			*
Total	$		*


*	To be furnished by amendment.


Item 14.	Indemnification of Directors and Officers

Our bye-laws contain a broad waiver by our shareholders of any claim or right of action, both individually and on our behalf, against any of our officers or directors. The waiver applies to any action taken by an officer or director, or the failure of an officer or director to take any action, in the performance of his or her duties, except with respect to any matter involving any fraud or dishonesty on the part of the officer or director. The waiver limits the right of shareholders to assert claims against our officers and directors unless the act or failure to act involves fraud or dishonesty. Our bye-laws also indemnify our directors and officers in respect of their actions and omissions, except in respect of their fraud or dishonesty. The indemnification provided in the bye-laws is not exclusive of other indemnification rights to which a director or officer may be entitled, provided these rights do not extend to his or her fraud or dishonesty.

Section 98 of the Companies Act 1981 of Bermuda (the ‘‘Companies Act’’) provides generally that a Bermuda company may indemnify its directors, officers and auditors against any liability which by virtue of any rule of law otherwise would be imposed on them in respect of any negligence, default, breach of duty or breach of trust, except in cases where such liability arises from fraud or dishonesty of which such director, officer or auditor may be guilty in relation to the company. Section 98 further provides that a Bermuda company may indemnify its directors, officers and auditors against any liability incurred by them in defending any proceedings, whether civil or criminal, in which judgment is awarded in their favor or in which they are acquitted or granted relief by the Supreme Court of Bermuda pursuant to Section 281 of the Companies Act. The registrant maintains standard policies of insurance under which coverage is provided (a) to its directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act, and (b) to the registrant with respect to payments which may be made by the registrant to such officers and directors pursuant to the above indemnification provision or otherwise as a matter of law. Reference is made to the form of Underwriting Agreement filed as Exhibit 1.1 hereto for provisions providing that the Underwriters are obligated, under certain circumstances, to indemnify the directors, certain officers and the controlling persons of the Registrant against certain liabilities under the Securities Act of 1933, as amended.

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Item 15.	Recent Sales of Unregistered Securities

Since our formation in October 2004, we have issued unregistered securities to a limited number of persons, as described below. None of these transactions involved any underwriters or any public offerings and we believe that each of these transactions was exempt from registration requirements pursuant to Section 4(2) of the Securities Act, Regulation D promulgated thereunder, Rule 144A of the Securities Act, or Rule 701 of the Securities Act pursuant to compensatory benefit plans and contracts related to compensation as provided under Rule 701. The recipients of the securities in these transactions represented their intention to acquire the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and instruments issued in these transactions.

Initial Capitalization

In connection with our initial capitalization, on November 19, 2004, we issued common shares in the following amounts to the following persons. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act as transactions by the issuer not involving a public offering. We determined that the purchasers of the securities in these transactions were either accredited or sophisticated investors and were provided access to all relevant information necessary to evaluate the investment.


	•	We issued 3,252 common shares to Fortress Investment Fund III LP, for an aggregate purchase price of $3,252.00.


	•	We issued 2,716 common shares to Fortress Investment Fund III (Fund B) LP, for an aggregate purchase price of $2,716.00.


	•	We issued 583.50 common shares to Fortress Investment Fund III (Fund C) LP, for an aggregate purchase price of $583.50.


	•	We issued 948 common shares to Fortress Investment Fund III (Fund D) LP, for an aggregate purchase price of $948.00.


	•	We issued 255 common shares to Fortress Investment Fund III (Coinvestment Fund A) LP, for an aggregate purchase price of $255.00.


	•	We issued 501 common shares to Fortress Investment Fund III (Coinvestment Fund B) LP, for an aggregate purchase price of $501.00.


	•	We issued 129 common shares to Fortress Investment Fund III (Coinvestment Fund C) LP, for an aggregate purchase price of $129.00.


	•	We issued 615 common shares to Fortress Investment Fund III (Coinvestment Fund D) LP, for an aggregate purchase price of $615.00.


	•	We issued 1,500 common shares to Drawbridge Global Macro Master Fund Ltd., for an aggregate purchase price of $1,500.00.


	•	We issued 1,125 common shares to Drawbridge Special Opportunities Fund LP, for an aggregate purchase price of $1,125.00.


	•	We issued 375 common shares to Drawbridge Special Opportunities Fund Ltd., for an aggregate purchase price of $375.00.

Stock Option Grants and Grants of Restricted Shares

From time to time, we have issued restricted shares to our employees under our 2005 Equity and Incentive Compensation Plan. A portion of the grants of restricted shares set forth below was exempt from registration under Section 701 of the Securities Act because they were made under written compensatory plans or agreements and the remainder were exempt under Section 4(2) of the Securities Act.

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	•	In February 2006, we issued to certain of our employees an aggregate of 780,000 restricted shares and restricted share units, scheduled to vest over a four to five year period from the grant date.


	•	In March 2006, we issued to an employee 5,000 restricted shares, scheduled to vest over a five year period from the grant date.


	•	In April 2006, we issued to certain of our employees an aggregate of 77,000 restricted shares, which immediately vested, for an aggregate purchase price of $770,000.

Sale of Common Shares

On April 28, 2006, we issued 200,000 of our common shares to Peter V. Ueberroth and Virginia Ueberroth, as trustees of the Ueberroth Family Trust, for an aggregate offering price of $1,000,000. No underwriters were involved in this sale of securities. The securities described in this paragraph were issued to a U.S. investor in reliance upon the exemption from the registration requirements of the Securities Act, as set forth in Section 4(2) under the Securities Act and Rule 506 of Regulation D promulgated thereunder relating to sales by an issuer not involving any public offering, to the extent an exemption from such registration was required. The purchaser of our common shares described above represented to us in connection with their purchase that they were an accredited investor and were acquiring the shares for investment and not distribution, that they could bear the risks of the investment and could hold the securities for an indefinite period of time. The purchaser received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a registration or an available exemption from such registration. The sales of these securities were made without general solicitation or advertising.


Item 16.	Exhibits and Financial Statement Schedules

A. Exhibits


Exhibit No.			Description
	1	.1	Form of Underwriting Agreement*
	3	.1	Memorandum of Association*
	3	.2	Form of Amended and Restated Bye-laws*
	4	.1	Specimen Share Certificate*
	4	.2	Form of Amended and Restated Shareholders Agreement among Aircastle Limited and Fortress Investment Fund III LP, Fortress Investment Fund III (Fund B) LP, Fortress Investment Fund III (Fund C) LP, Fortress Investment Fund III (Fund D) L.P., Fortress Investment Fund III (Fund E) LP, Fortress Investment Fund III (Coinvestment Fund A) LP, Fortress Investment Fund III (Coinvestment Fund B) LP, Fortress Investment Fund III (Coinvestment Fund C) LP, Fortress Investment Fund III (Coinvestment Fund D) L.P., Drawbridge Special Opportunities Fund LP, Drawbridge Special Opportunities Fund Ltd. and Drawbridge Global Macro Master Fund Ltd.*
	5	.1	Opinion of Conyers Dill & Pearman*
	10	.1	Aircastle Limited 2005 Equity and Incentive Plan
	10	.2	Form of Restricted Share Purchase Agreement
	10	.3	Form of Restricted Share Grant Letter
	10	.4	Form of International Restricted Share Grant Letter
	10	.5	Letter Agreement, dated May 2, 2005, between Aircastle Limited and Ron Wainshal
	10	.6	Letter Agreement, dated February 3, 2005, between Aircastle Limited and Mark Zeidman
	10	.7	Letter Agreement, dated March 8, 2006, between Aircastle Advisor LLC and Mark Zeidman

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Exhibit No.			Description
	10	.8	Letter Agreement, dated February 3, 2005, between Aircastle Limited and David Walton
	10	.9	Letter Agreement, dated March 8, 2006, between Aircastle Advisor LLC and David Walton
	10	.10	Letter Agreement, dated July 15, 2004, between Fortress Investment Group LLC and Joseph Schreiner
	10	.11	Letter Agreement, dated February 24, 2006, between Aircastle Advisor LLC and Joseph Schreiner
	10	.12	Letter Agreement, dated April 29, 2005, between Aircastle Advisor LLC and Jonathan Lang
	10	.13	Letter Agreement, dated May 3, 2005 between Aircastle Advisor LLC and Jonathan M. Lang
	10	.14	Letter Agreement, dated March 8, 2006 between Aircastle Advisor LLC and Jonathan M. Lang
	10	.15	Credit Agreement, dated as of February 28, 2006, by and among Aircastle Investment Holdings 2 Limited, Aircastle Ireland No. 3 Limited, certain Holding Subsidiary Trusts and Holdings SPCs designated as Borrowing Affiliates, JPMorgan Chase Bank, N.A., Bear Stearns Corporate Lending Inc. and Citibank, N.A.
	10	.16	Parent Guarantor Guaranty Agreement, dated as of February 28, 2006, by Aircastle Limited to JPMorgan Chase Bank, N.A.
	10	.17	364-Day Senior Secured Credit Agreement, dated as of October 25, 2005, by and among Aircastle Ireland No. 2 Limited, the borrowers party thereto, Citibank, N.A. and the other lenders party thereto from time to time
	10	.18	Subscription Agreement, dated as of April 28, 2006, between Aircastle Limited and Ueberroth Family Trust
	10	.19	Remarketing, Administrative and Technical Services Letter, dated as of January 1, 2006 between Aircastle Advisor LLC and FIT Aero Investments Limited
	10	.20	Remarketing, Administrative and Technical Services Letter, dated as of January 1, 2006 between Aircastle Advisor (Ireland) Limited and FIT Aero Investments Limited
	10	.21	Third Amended and Restated Credit Agreement, dated as of October 24, 2005, by and among Aircastle Investment Holdings Limited, Aircastle Ireland No. 1 Limited, certain Holding Subsidiary Trusts and Holdings SPCs designated as borrowing affiliates, ABH 12 Limited JPMorgan Chase Bank, N.A. and Bear Stearns Corporate Lending Inc.
	10	.22	First Amendment, dated as of November 7, 2005, to the Third Amended and Restated Credit Agreement
	10	.23	Second Amendment, dated as of February 24, 2006, to the Third Amended and Restated Credit Agreement
	10	.24	Third Amendment, dated as of April 28, 2006, to the Third Amended and Restated Credit Agreement
	21	.1	Subsidiaries of the Registrant
	23	.1	Consent of Ernst & Young LLP
	23	.2	Consent of Conyers Dill & Pearman* (included in Exhibit 5.1)
	24	.1	Power of Attorney (included as part of the signature pages)


*	To be filed by amendment.

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B. Financial Statement Schedules


Item 17.	Undertakings

(1) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted against the registrant by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(2) The undersigned registrant hereby undertakes that:

(a) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.

(b) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) The undersigned hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on June 2, 2006.


AIRCASTLE LIMITED
By:			/s/ Ron Wainshal
			Name: Ron Wainshal
			Title: Chief Executive Officer

POWER OF ATTORNEY

In accordance with the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates stated. Each person whose signature appears below constitutes and appoints Wesley R. Edens, Ron Wainshal, Mark Zeidman and David Walton and each of them severally, as his or her true and lawful attorney-in-fact and agent, each acting along with full power of substitution and resubstitution, for him or her and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) and exhibits to the Registration Statement on Form S-1, and to any registration statement filed under Securities and Exchange Commission Rule 462, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission and/or the Registrar of Companies in Bermuda, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.


Signature	Title	Date

/s/ Wesley R. Edens	Chairman of the Board of Directors	June 2, 2006

Wesley R. Edens

/s/ Ron Wainshal	Chief Executive Officer	June 2, 2006

Ron Wainshal

/s/ Mark Zeidman	Chief Financial Officer	June 2, 2006

Mark Zeidman

/s/ Joseph P. Adams Jr.	Deputy Chairman of the Board of Directors	June 2, 2006

Joseph P. Adams Jr.

/s/ Randal A. Nardone	Director	June 2, 2006

Randal A. Nardone

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INDEX TO EXHIBITS


Exhibit No.			Description
	1	.1	Form of Underwriting Agreement*
	3	.1	Memorandum of Association*
	3	.2	Form of Amended and Restated Bye-laws*
	4	.1	Specimen Share Certificate*
	4	.2	Form of Amended and Restated Shareholders Agreement among Aircastle Limited and Fortress Investment Fund III LP, Fortress Investment Fund III (Fund B) LP, Fortress Investment Fund III (Fund C) LP, Fortress Investment Fund III (Fund D) L.P., Fortress Investment Fund III (Fund E) LP, Fortress Investment Fund III (Coinvestment Fund A) LP, Fortress Investment Fund III (Coinvestment Fund B) LP, Fortress Investment Fund III (Coinvestment Fund C) LP, Fortress Investment Fund III (Coinvestment Fund D) L.P., Drawbridge Special Opportunities Fund LP, Drawbridge Special Opportunities Fund Ltd. and Drawbridge Global Macro Master Fund Ltd.*
	5	.1	Opinion of Conyers Dill & Pearman*
	10	.1	Aircastle Limited 2005 Equity and Incentive Plan
	10	.2	Form of Restricted Share Purchase Agreement
	10	.3	Form of Restricted Share Grant Letter
	10	.4	Form of International Restricted Share Grant Letter
	10	.5	Letter Agreement, dated May 2, 2005, between Aircastle Limited and Ron Wainshal
	10	.6	Letter Agreement, dated February 3, 2005, between Aircastle Limited and Mark Zeidman
	10	.7	Letter Agreement, dated March 8, 2006, between Aircastle Advisor LLC and Mark Zeidman
	10	.8	Letter Agreement, dated February 3, 2005, between Aircastle Limited and David Walton
	10	.9	Letter Agreement, dated March 8, 2006, between Aircastle Advisor LLC and David Walton
	10	.10	Letter Agreement, dated July 15, 2004, between Fortress Investment Group LLC and Joseph Schreiner
	10	.11	Letter Agreement, dated February 24, 2006, between Aircastle Advisor LLC and Joseph Schreiner
	10	.12	Letter Agreement, dated April 29, 2005, between Aircastle Advisor LLC and Jonathan Lang
	10	.13	Letter Agreement, dated May 3, 2005 between Aircastle Advisor LLC and Jonathan M. Lang
	10	.14	Letter Agreement, dated March 8, 2006 between Aircastle Advisor LLC and Jonathan M. Lang
	10	.15	Credit Agreement, dated as of February 28, 2006, by and among Aircastle Investment Holdings 2 Limited, Aircastle Ireland No. 3 Limited, certain Holding Subsidiary Trusts and Holdings SPCs designated as Borrowing Affiliates, JPMorgan Chase Bank, N.A., Bear Stearns Corporate Lending Inc. and Citibank, N.A.

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Exhibit No.			Description
	10	.16	Parent Guarantor Guaranty Agreement, dated as of February 28, 2006, by Aircastle Limited to JPMorgan Chase Bank, N.A.
	10	.17	364-Day Senior Secured Credit Agreement, dated as of October 25, 2005, by and among Aircastle Ireland No. 2 Limited, the borrowers party thereto, Citibank, N.A. and the other lenders party thereto from time to time
	10	.18	Subscription Agreement, dated as of April 28, 2006, between Aircastle Limited and Ueberroth Family Trust
	10	.19	Remarketing, Administrative and Technical Services Letter, dated as of January 1, 2006 between Aircastle Advisor LLC and FIT Aero Investments Limited
	10	.20	Remarketing, Administrative and Technical Services Letter, dated as of January 1, 2006 between Aircastle Advisor (Ireland) Limited and FIT Aero Investments Limited
	10	.21	Third Amended and Restated Credit Agreement, dated as of October 24, 2005, by and among Aircastle Investment Holdings Limited, Aircastle Ireland No. 1 Limited, certain Holding Subsidiary Trusts and Holdings SPCs designated as borrowing affiliates, ABH 12 Limited JPMorgan Chase Bank, N.A. and Bear Stearns Corporate Lending Inc.
	10	.22	First Amendment, dated as of November 7, 2005, to the Third Amended and Restated Credit Agreement
	10	.23	Second Amendment, dated as of February 24, 2006, to the Third Amended and Restated Credit Agreement
	10	.24	Third Amendment, dated as of April 28, 2006, to the Third Amended and Restated Credit Agreement
	21	.1	Subsidiaries of the Registrant
	23	.1	Consent of Ernst & Young LLP
	23	.2	Consent of Conyers Dill & Pearman*
	24	.1	Power of Attorney (included as part of the signature pages)


*	To be filed by amendment.

II-8



                          AIRCASTLE INVESTMENT LIMITED

                         2005 EQUITY AND INCENTIVE PLAN

          SECTION 1. PURPOSE OF PLAN.

          The name of this plan is the Aircastle Investment Limited 2005 Equity
and Incentive Plan (the "Plan"). The Plan was adopted by the Board (as
hereinafter defined) on January 17, 2006 and approved by the shareholders of the
Company on January 31, 2006 prior to the initial public offering of shares in
the capital of the Company (the "Initial Public Offering"). The purpose of the
Plan is to provide additional incentive to selected management employees,
directors and Consultants of the Company or its Subsidiaries whose contributions
are essential to the growth and success of the Company's business, in order to
strengthen the commitment of such persons to the Company and its Subsidiaries,
motivate such persons to faithfully and diligently perform their
responsibilities and attract and retain competent and dedicated persons whose
efforts will result in the long-term growth and profitability of the Company. To
accomplish such purposes, the Plan provides that the Company may grant (a)
Options, (b) Share Appreciation Rights, (c) awards of Restricted Shares,
Deferred Shares, Performance Shares, unrestricted Shares or Other Share-Based
Awards, or (d) any combination of the foregoing.

          SECTION 2. DEFINITIONS.

          For purposes of the Plan, the following terms shall be defined as set
forth below:

                    (a) "Administrator" means the Board, or if and to the extent
          the Board does not administer the Plan, the Committee in accordance
          with Section 3 hereof.

                    (b) "Affiliate" means an affiliate of the Company (or other
          referenced entity, as the case may be) as defined in Rule 12b-2
          promulgated under Section 12 of the Exchange Act.

                    (c) "Award" means any Option, Share Appreciation Right,
          Restricted Share, Deferred Share, unrestricted Share or Other
          Share-Based Award granted under the Plan.

                    (d) "Award Agreement" means any written agreement, contract
          or other instrument or document evidencing an Award.

                    (e) "Beneficial Owner" (or any variant thereof) has the
          meaning defined in Rule 13d-3 under the Exchange Act.


                                      -1-



                    (f) "Board" means the Board of Directors of the Company.

                    (g) "Cause" means (i) the continued failure by the
          Participant substantially to perform his or her duties and obligations
          to the Company or any Subsidiary or Affiliate, including without
          limitation repeated refusal to follow the reasonable directions of his
          or her employer, knowing violation of law in the course of performance
          of the duties of Participant's employment with the Company or any
          Subsidiary or Affiliate, engagement in misconduct which is materially
          injurious to the Company or any Subsidiary or Affiliate, repeated
          absences from work without a reasonable excuse, or intoxication with
          alcohol or illegal drugs while on the Company's or any Subsidiary's or
          Affiliate's premises during regular business hours (other than any
          such failure resulting from his or her incapacity due to physical or
          mental illness); (ii) fraud or material dishonesty against the Company
          or any Subsidiary or Affiliate; or (iii) a conviction or plea of
          guilty or nolo contendere for the commission of a felony or a crime
          involving material dishonesty. Determination of Cause shall be made by
          the Administrator in its sole discretion. Notwithstanding the
          foregoing, to the extent that a Participant's employment agreement
          with the Company, any Subsidiary or any Affiliate expressly states
          that the definition of cause set forth in such agreement shall
          override the definition of Cause in this Plan, then the definition of
          cause in such employment shall constitute "Cause" for such Participant
          under this Plan.

                    (h) "Change in Capitalization" means any (i) merger,
          amalgamation, consolidation, reclassification, recapitalization,
          spin-off, spin-out, repurchase or other reorganization or corporate
          transaction or event, (ii) dividend (whether in the form of cash,
          Shares or other property), share split or reverse share split
          consolidation or subdivision, (iii) combination or exchange of shares,
          (iv) other change in corporate structure or (v) declaration of a
          special dividend (including a cash dividend) or other distribution,
          which, in any such case, the Administrator determines, in its sole
          discretion, affects the Shares such that an adjustment pursuant to
          Section 5 hereof is appropriate.

                    (i) "Change in Control" shall be deemed to have occurred if
          an event set forth in any one of the following paragraphs shall have
          occurred:

          (i) any Person other than any Permitted Transferee is or becomes the
     Beneficial Owner, directly or indirectly, of securities of the Company
     representing 50% or more of the combined voting power of the Company's then
     outstanding securities; or

          (ii) the following individuals cease for any reason to constitute a
     majority of the number of directors then serving on the Board: individuals
     who,


                                      -2-



     on the date hereof, constitute the Board and any new director (other than a
     director whose initial assumption of office is in connection with an actual
     or threatened election contest, including but not limited to a consent
     solicitation, relating to the election of directors of the Company) whose
     appointment or election by the Board or nomination for election by the
     Company's shareholders was approved or recommended by a vote of at least
     two-thirds (2/3) of the directors then still in office who either were
     directors on the date hereof or whose appointment, election or nomination
     for election was previously so approved or recommended; or;

          (iii) there is consummated a merger or amalgamation or consolidation
     of the Company or any direct or indirect subsidiary of the Company with any
     other corporation, other than a merger or consolidation immediately
     following which the individuals who comprise the Board immediately prior
     thereto constitute at least a majority of the Board of the entity surviving
     such merger or amalgamation or consolidation or, if the Company or the
     entity surviving such merger or amalgamation is then a subsidiary, the
     ultimate parent thereof; or

          (iv) the shareholders of the Company approve a plan of complete
     liquidation or dissolution of the Company or there is consummated an
     agreement for the sale or disposition by the Company of all or
     substantially all of the Company's assets, other than (a) a sale or
     disposition by the Company of all or substantially all of the Company's
     assets to an entity, at least 50% of the combined voting power of the
     voting securities of which are owned by shareholders of the Company
     following the completion of such transaction in substantially the same
     proportions as their ownership of the Company immediately prior to such
     sale or (b) a sale or disposition of all or substantially all of the
     Company's assets immediately following which the individuals who comprise
     the Board immediately prior thereto constitute at least a majority of the
     board of directors of the entity to which such assets are sold or disposed
     or, if such entity is a subsidiary, the ultimate parent thereof (it being
     understood that no transaction determined by the Administrator, in its good
     faith, to be a securitization or financing transaction shall be deemed a
     sale of all or substantially all of the assets of the Company).

     Notwithstanding the foregoing, a "Change in Control" shall not be deemed to
have occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the holders of shares in the
capital of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.

                    (j) "Code" means the Internal Revenue Code of 1986, as
          amended from time to time, or any successor thereto.


                                      -3-



                    (k) "Committee" means any committee or subcommittee the
          Board may appoint to administer the Plan. Subject to the discretion of
          the Board, the Committee shall be composed entirely of individuals who
          meet the qualifications of an "outside director" within the meaning of
          Section 162(m) of the Code, a "non-employee director" within the
          meaning of Rule 16b-3 under the Exchange Act and any other
          qualifications required by the applicable share exchange on which the
          Shares are traded. If at any time or to any extent the Board shall not
          administer the Plan, then the functions of the Administrator specified
          in the Plan shall be exercised by the Committee. Except as otherwise
          provided in the Company's Certificate of Incorporation or Bylaws, as
          amended from time to time, any action of the Committee with respect to
          the administration of the Plan shall be taken by a majority vote at a
          meeting at which a quorum is duly constituted or unanimous written
          consent of the Committee's members.

                    (l) "Company" means Aircastle Investment Limited, a Bermuda
          exempted company (or any successor corporation).

                    (m) "Consultant" means a consultant or advisor who is a
          natural person, engaged to render bona fide services to the Company,
          or any of Subsidiary.

                    (n) "Deferred Shares" means the right to receive Shares at
          the end of a specified deferral period granted pursuant to Section 9
          below.

                    (o) "Disability" means that a Participant (i) is unable to
          engage in any substantial gainful activity by reason of any medically
          determinable physical or mental impairment which can be expected to
          result in death or can be expected to last for a continuous period of
          not less than 12 months, or (ii) is, by reason of any medically
          determinable physical or mental impairment which can be expected to
          result in death or can be expected to last for a continuous period of
          not less than 12 months, receiving income replacement benefits for a
          period of not less than 3 months under an accident and health plan, or
          disability plan, covering employees of the Company or an Affiliate of
          the Company.

                    (p) "Eligible Recipient" means a key employee, director or
          Consultant of the Company or any Subsidiary who has been selected as
          an eligible participant by the Administrator.

                    (q) "Exchange Act" shall mean the Securities Exchange Act of
          1934, as amended from time to time.


                                      -4-



                    (r) "Exercise Price" means the per share price at which a
          holder of an award granted hereunder may purchase the Shares issuable
          upon exercise of such award.

                    (s) "Fair Market Value" as of a particular date shall mean
          the fair market value of the Shares as determined by the Administrator
          in its sole discretion; provided, however, that (i) if the Shares are
          admitted to trading on a national securities exchange, fair market
          value of the Shares on any date shall be the closing sale price
          reported for such Shares on such last day preceding such date on which
          a sale was reported, (ii) if the Shares are admitted to quotation on
          the National Association of Securities Dealers Automated Quotation
          ("Nasdaq") System or other comparable quotation system and has been
          designated as a National Market System ("NMS") security, fair market
          value of the Shares on any date shall be the closing sale price
          reported for such Shares on such system on the last date preceding
          such date on which a sale was reported, or (iii) if the Shares are
          admitted to quotation on the Nasdaq System but have not been
          designated as an NMS security, fair market value of the Shares on any
          date shall be the average of the highest bid and lowest asked prices
          of such Shares on such system on the last date preceding such date on
          which both bid and ask prices were reported.

                    (t) "Incentive Share Option" shall mean an Option that is an
          "incentive share option" within the meaning of section 422 of the
          Code, or any successor provision, and that is designated in the
          applicable Option agreement as an Incentive Share Option.

                    (u) "Non-Officer Director" means a director of the Company
          who is not (i) an officer or employee of the Company or of any
          Subsidiary or (ii) the Beneficial Owner, whether directly or
          indirectly, of ten percent (10%) or more of the Shares.

                    (v) "Nonqualified Share Option" means any Option that is not
          an Incentive Share Option, including any Option that provides (as of
          the time such Option is granted) that it will not be treated as an
          Incentive Share Option.

                    (w) "Option" means an option to purchase Shares granted
          pursuant to Section 7 hereof.

                    (x) "Other Share-Based Awards" means a right or other
          interest granted to a Participant under the Plan that may be
          denominated or payable in, valued in whole or in part by reference to,
          or otherwise based on or related to, the Shares, including but not
          limited to restricted share units, dividend equivalents or performance
          units, each of which may be subject to the attainment of Performance
          Goals or a period of continued employment or other terms or conditions
          as permitted under the Plan.


                                      -5-



                    (y) "Participant" means (i) any Eligible Recipient selected
          by the Administrator, pursuant to the Administrator's authority in
          Section 3 below, to receive grants of Options, Share Appreciation
          Rights, awards of Restricted Shares, awards of unrestricted Shares,
          Deferred Shares, Performance Shares, Other Share-Based Awards or any
          combination of the foregoing, and upon his or her death, his or her
          successors, heirs, executors and administrators, as the case may be
          and (ii) any Non-Officer Director who is eligible to receive Shares
          pursuant to Section 11 below.

                    (z) "Performance Goals" means performance goals based on one
          or more of the following criteria: (i) earnings including operating
          income, earnings before or after taxes, earnings before or after
          interest, depreciation, amortization, or extraordinary or special
          items or book value per share (which may exclude nonrecurring items);
          (ii) pre-tax income or after-tax income; (iii) earnings per Share
          (basic or diluted); (iv) operating profit; (v) revenue, revenue growth
          or rate of revenue growth; (vi) return on assets (gross or net),
          return on investment, return on capital, or return on equity; (vii)
          returns on sales or revenues; (viii) operating expenses; (ix) share
          price appreciation; (x) cash flow, free cash flow, cash flow return on
          investment (discounted or otherwise), net cash provided by operations,
          or cash flow in excess of cost of capital; (xi) implementation or
          completion of critical projects or processes; (xii) economic value
          created; (xiii) cumulative earnings per share growth; (xiv) operating
          margin or profit margin; (xv) share price or total shareholder return;
          (xvi) cost targets, reductions and savings, productivity and
          efficiencies; (xvii) strategic business criteria, consisting of one or
          more objectives based on meeting specified market penetration,
          geographic business expansion, customer satisfaction, employee
          satisfaction, human resources management, supervision of litigation,
          information technology, and goals relating to acquisitions,
          divestitures, joint ventures and similar transactions, and budget
          comparisons; (xviii) personal professional objectives, including any
          of the foregoing performance goals, the implementation of policies and
          plans, the negotiation of transactions, the development of long term
          business goals, formation of joint ventures, research or development
          collaborations, and the completion of other corporate transactions;
          and (xix) any combination of, or a specified increase in, any of the
          foregoing. Where applicable, the Performance Goals may be expressed in
          terms of attaining a specified level of the particular criteria or the
          attainment of a percentage increase or decrease in the particular
          criteria, and may be applied to one or more of the Company, a
          Subsidiary or Affiliate, or a division or strategic business unit of
          the Company, or may be applied to the performance of the Company
          relative to a market index, a group of other companies or a
          combination thereof, all as determined by the Committee. The
          Performance Goals may include a threshold level of performance below
          which no payment will be made (or no vesting will occur), levels of
          performance at which specified payments will be made (or specified
          vesting will occur), and a


                                      -6-



          maximum level of performance above which no additional payment will be
          made (or at which full vesting will occur). Each of the foregoing
          Performance Goals shall be determined in accordance with generally
          accepted accounting principles and shall be subject to certification
          by the Committee; provided that the Committee shall have the authority
          to make equitable adjustments to the Performance Goals in recognition
          of unusual or non-recurring events affecting the Company or any
          Subsidiary or Affiliate or the financial statements of the Company or
          any Subsidiary or Affiliate, in response to changes in applicable laws
          or regulations, or to account for items of gain, loss or expense
          determined to be extraordinary or unusual in nature or infrequent in
          occurrence or related to the disposal of a segment of a business or
          related to a change in accounting principles.

                    (aa) "Performance Shares" means Shares that are subject to
          restrictions based upon the attainment of specified performance
          objectives granted pursuant to Section 9 below.

                    (bb) "Permitted Transferee" shall mean, (i) any Affiliate of
          Fortress Investment Fund III LP, a Delaware limited partnership, (ii)
          any investment vehicle (whether formed as a private investment fund,
          stock company or otherwise) managed directly or indirectly by Fortress
          Investment Group LLC, a Delaware limited liability company, or any of
          its (or its successors' or assigns') Affiliates (a "FIG Fund"), or
          (iii) any general partner, limited partner, managing member or person
          occupying a similar role of or with respect to any FIG Fund.

                    (cc) "Person" shall have the meaning given in Section
          3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)
          and 14(d) thereof, except that such term shall not include (i) the
          Company or any of its subsidiaries, (ii) a trustee or other fiduciary
          holding securities under an employee benefit plan of the Company or
          any of its Subsidiaries, (iii) an underwriter temporarily holding
          securities pursuant to an offering of such securities, or (iv) a
          corporation owned, directly or indirectly, by the shareholders of the
          Company in substantially the same proportions as their ownership of
          share of the Company.

                    (dd) "Restricted Shares" means Shares subject to certain
          restrictions granted pursuant to Section 9 below.

                    (ee) "Retirement" means a termination of a Participant's
          employment, other than for Cause, on or after attainment of age 65.

                    (ff) "Shares" means shares of $0.01 per share each in the
          capital of the Company reserved for issuance under the Plan, as
          adjusted


                                      -7-



          pursuant to the Plan, and any successor (pursuant to a merger,
          consolidation or other reorganization) security.

                    (gg) "Share Appreciation Right" means the right pursuant to
          an award granted under Section 8 below to receive an amount equal to
          the excess, if any, of (i) the aggregate Fair Market Value, as of the
          date such Share Appreciation Right or portion thereof is surrendered,
          of the Shares covered by such right or such portion thereof, over (ii)
          the aggregate Exercise Price of such right or such portion thereof.

                    (hh) "Subsidiary" means any company or corporation in an
          unbroken chain of corporations beginning with the Company if, at the
          time of granting of an Award, each of the corporations (other than the
          last corporation in the unbroken chain) owns share possessing 50% or
          more of the total combined voting power of all classes of share in one
          of the other corporations in the chain.

          SECTION 3. ADMINISTRATION.

                    (a) The Plan shall be administered by the Administrator and
          shall be administered in accordance with the requirements of Section
          162(m) of the Code (but only to the extent necessary and desirable to
          maintain qualification of awards under the Plan under Section 162(m)
          of the Code) and, to the extent applicable, Rule 16b-3 under the
          Exchange Act ("Rule 16b-3").

                    (b) Pursuant to the terms of the Plan, the Administrator,
          subject, in the case of any Committee, to any restrictions on the
          authority delegated to it by the Board, shall have the power and
          authority, without limitation:

                         (1) to select those Eligible Recipients who shall be
               Participants;

                         (2) to determine whether and to what extent Share
               Options, Share Appreciation Rights, awards of Restricted Shares,
               Deferred Shares, Performance Shares, Other Share-Based Awards or
               a combination of any of the foregoing, are to be granted
               hereunder to Participants;

                         (3) to determine whether Options are intended to be
               Incentive Share Options or Nonqualified Share Options, provided,
               however, that Incentive Share Options can only be granted to
               employees of the Company or any Subsidiary (within the meaning of
               Section 424(e) and (f) of the Code);


                                      -8-



                         (4) to determine the number of Shares to be covered by
               each award granted hereunder;

                         (5) to determine the terms and conditions, not
               inconsistent with the terms of the Plan, of each award granted
               hereunder (including, but not limited to, (x) the restrictions
               applicable to awards of Restricted Shares or Deferred Shares and
               the conditions under which restrictions applicable to such awards
               of Restricted Shares or Deferred Shares shall lapse, and (y) the
               performance goals and periods applicable to awards of Performance
               Shares);

                         (6) to determine the terms and conditions, not
               inconsistent with the terms of the Plan, which shall govern all
               written instruments evidencing Share Options, Share Appreciation
               Rights, awards of Restricted Shares, Deferred Shares or
               Performance Shares or any combination of the foregoing granted
               hereunder;

                         (7) to determine the Fair Market Value;

                         (8) to determine the duration and purpose of leaves of
               absence which may be granted to a Participant without
               constituting termination of their employment for purposes
               Nonqualified Share Options granted under the Plan;

                         (9) to adopt, alter and repeal such administrative
               rules, guidelines and practices governing the Plan as it shall
               from time to time deem advisable; and

                         (10) to construe and interpret the terms and provisions
               of the Plan and any award issued under the Plan (and any Award
               Agreement relating thereto), and to otherwise supervise the
               administration of the Plan and to exercise all powers and
               authorities either specifically granted under the Plan or
               necessary and advisable in the administration of the Plan.

                    (c) Notwithstanding paragraph (b) of this Section 3, (i) the
          automatic, nondiscretionary grants of Shares shall be made to
          Non-Officer Directors pursuant to and in accordance with the terms of
          Section 10 below and (ii) neither the Board, the Committee nor their
          respective delegates shall have the authority to reprice (or cancel
          and regrant) any Option or, if applicable, other Award at a lower
          exercise, base or purchase price without first obtaining the approval
          of the Company's shareholders.

                    (d) All decisions made by the Administrator pursuant to the
          provisions of the Plan shall be final, conclusive and binding on all
          persons, including the Company and the Participants. No member of the


                                      -9-



          Board or the Committee, nor any officer or employee of the Company or
          any Subsidiary acting on behalf of the Board or the Committee, shall
          be personally liable for any action, omission, determination, or
          interpretation taken or made in good faith with respect to the Plan,
          and all members of the Board or the Committee and each and any officer
          or employee of the Company and of any Subsidiary acting on their
          behalf shall, to the maximum extent permitted by law, be fully
          indemnified and protected by the Company in respect of any such
          action, omission, determination or interpretation.

          SECTION 4. SHARES RESERVED FOR ISSUANCE UNDER THE PLAN.

                    (a) Subject to Section 5 hereof, the total number of Shares
          reserved and available for issuance under the Plan shall be equal to
          4,000,000 shares. Such Shares may consist, in whole or in part, of
          authorized and unissued Shares. From and after such time as the Plan
          is subject to Code Section 162(m), the aggregate Awards granted during
          any fiscal year to any single individual who is likely to be a
          "covered employee" as defined under Code Section 162(m) shall not
          exceed 2,500,000 Shares. Determinations made in respect of the
          limitation set forth in the preceding sentence shall be made in a
          manner consistent with Section 162(m) of the Code.

                    (b) Shares issued under the Plan shall be authorized but
          unissued Shares. If any Shares subject to an Award are repurchased or
          if an Award otherwise terminates or expires without a distribution of
          shares to the Participant, the Shares (or in the event of a repurchase
          of Shares the equivalent number of Shares) with respect to such Award
          shall, to the extent of any such repurchase, termination or
          expiration, again be available for Awards under the Plan.

          SECTION 5. EQUITABLE ADJUSTMENTS.

          In the event of any Change in Capitalization, an equitable
substitution or proportionate adjustment shall be made, in each case, as may be
determined by the Administrator, in its sole discretion, in (i) the aggregate
number of Shares reserved for issuance under the Plan and the maximum number of
Shares that may be subject to Awards granted to any Participant in any calendar
year, (ii) the kind, number and Exercise Price subject to outstanding Options
and Share Appreciation Rights granted under the Plan, and (iii) the kind, number
and purchase price of Shares subject to outstanding awards of Restricted Shares,
Deferred Shares, Performance Shares or Other Share-Based Awards granted under
the Plan, in each case as may be determined by the Administrator, in its sole
discretion, provided, however, that any fractional shares resulting from the
adjustment shall be eliminated. Such other equitable substitutions or
adjustments shall be made as may be determined by the Administrator, in its sole
discretion. Without limiting the generality of the foregoing, in connection with
a Change in Capitalization, the Administrator may provide, in its sole
discretion, for the cancellation of any outstanding award granted hereunder
(except fully vested Restricted


                                      -10-



Shares, fully vested Deferred Shares and fully vested Performance Shares as to
which all restrictions, except any restrictions described in Section 16(d)
hereof, have lapsed) in exchange for payment in cash or other property of the
aggregate Fair Market Value of the Shares covered by such award, reduced by the
aggregate Exercise Price or purchase price thereof, if any. Notwithstanding the
foregoing, with respect to Incentive Share Options, any adjustment shall be made
in accordance with the provisions of Section 424(h) of the Code and any
regulations or guidance promulgated thereunder, and provided further that no
such adjustment shall cause any Award hereunder which is or becomes subject to
Section 409A of the Code to fail to comply with the requirements of such
section. The Administrator's determinations pursuant to this Section 5 shall be
final, binding and conclusive.

          SECTION 6. ELIGIBILITY.

          Except as set forth in Section 11 below, the Participants under the
Plan shall be selected from time to time by the Administrator, in its sole
discretion, from among Eligible Recipients; provided however that Incentive
Share Options may only be granted to employees of the Company or any Subsidiary.
Notwithstanding the foregoing, Non-Officer Directors shall be eligible for
awards other than those set forth in Section 10, as determined by the
Administrator from time to time.

          SECTION 7. OPTIONS.

                    (a) General. Each Participant who is granted an Option shall
          enter into an Award Agreement with the Company, containing such terms
          and conditions as the Administrator shall determine, in its
          discretion, which Award Agreement shall set forth, among other things,
          the Exercise Price of the Option, the term of the Option and
          provisions regarding exercisability of the Option granted thereunder.
          Each Option shall be clearly identified in the applicable Award
          Agreement as either an Incentive Share Option or a Nonqualified Share
          Option. The provisions of each Option need not be the same with
          respect to each Participant. More than one Option may be granted to
          the same Participant and be outstanding concurrently hereunder.
          Options granted under the Plan shall be subject to the terms and
          conditions set forth in this Section 7 and shall contain such
          additional terms and conditions, not inconsistent with the terms of
          the Plan, as the Administrator shall deem desirable and set forth in
          the applicable Award Agreement.

                    (b) Exercise Price. The Exercise Price of Shares purchasable
          under an Option shall be determined by the Administrator in its sole
          discretion at the time of grant. If a Participant owns or is deemed to
          own (by reason of the attribution rules applicable under Section
          424(d) of the Code) more than 10% of the combined voting power of all
          classes of share of the Company or of any Subsidiary and an Incentive
          Share Option is granted to such Participant, the option price of such
          Incentive Share Option (to the extent


                                      -11-



          required at the time of grant by the Code) shall be no less than 110%
          of the Fair Market Value on the date such Incentive Share Option is
          granted.

                    (c) Option Term. The maximum term of each Option shall be
          fixed by the Administrator, but no Option shall be exercisable more
          than ten years after the date such Option is granted. Each Option's
          term is subject to earlier expiration pursuant to the applicable
          provisions in the Plan and the Award Agreement. Notwithstanding the
          foregoing, the Administrator shall have the authority to accelerate
          the exercisability of any outstanding Option at such time and under
          such circumstances as it, in it sole discretion, deems appropriate.

                    (d) Exercisability. Each Option shall be exercisable at such
          time or times and subject to such terms and conditions, including the
          attainment of preestablished corporate performance goals, as shall be
          determined by the Administrator in the applicable Option agreement.
          The Administrator may also provide that any Option shall be
          exercisable only in installments, and the Administrator may waive such
          installment exercise provisions at any time, in whole or in part,
          based on such factors as the Administrator may determine in its sole
          discretion. Notwithstanding anything to the contrary contained herein,
          an Option may not be exercised for a fraction of a share.

                    (e) Method of Exercise. Options may be exercised in whole or
          in part by giving written notice of exercise to the Company specifying
          the number of Shares to be purchased, accompanied by payment in full
          of the aggregate Exercise Price of the Shares so purchased in cash or
          its equivalent, as determined by the Administrator. As determined by
          the Administrator, in its sole discretion, with respect to any Option
          or category of Options, payment in whole or in part may also be made
          (i) in the form of a net repurchase of Shares by the Company at Fair
          Market Value equal to the aggregate exercise price of such Shares
          purchase by the Participant upon exercise and issued by the Company to
          the Participant (ii) in the form of repurchase for par value of
          unrestricted Shares already owned by the Participant which, (x) in the
          case of unrestricted Shares acquired upon exercise of an Option, have
          been owned by the Participant for more than six months on the date of
          surrender, and (y) have a Fair Market Value on the date of surrender
          equal to the aggregate option price of the Shares as to which such
          Option shall be exercised, (iii) any other form of consideration
          approved by the Administrator and permitted by applicable law, (iv) if
          the Shares are traded on a public exchange, through an arrangement
          with a broker whereby payment of the exercise price is made with the
          proceeds of the sale of Shares or (iv) any combination of the
          foregoing.

                    (f) Limitations on Incentive Share Options. To the extent
          that the aggregate Fair Market Value with respect to which Incentive


                                      -12-



          Share Options are exercisable for the first time by a Participant
          during any calendar year under the Plan and any other share option
          plan of the Company shall exceed $100,000, the portion of such
          Incentive Share Options in excess of $100,000 shall be treated as
          Nonqualified Share Options. Such Fair Market Value shall be determined
          as of the date on which each such Incentive Share Option is granted.
          No Incentive Share Option may be granted to an individual if, at the
          time of the proposed grant, such individual owns (or is deemed to own
          under the Code) share possessing more than 10% of the total combined
          voting power of all classes of share of the Company unless (i) the
          Exercise Price of such Incentive Share Option is at least 110% of the
          Fair Market Value per Share at the time such Incentive Share Option is
          granted and (ii) such Incentive Share Option is not exercisable after
          the expiration of five years from the date such Incentive Share Option
          is granted.

                    (g) Rights as Shareholder. A Participant shall have no
          rights to dividends or any other rights of a shareholder with respect
          to the Shares subject to an Option until the Participant has given
          written notice of exercise, has paid in full for such Shares, has
          satisfied the requirements of Section 15 hereof and, if requested, has
          given the representation described in paragraph (b) of Section 16
          hereof.

                    (h) Transfers of Options. Except as otherwise determined by
          the Administrator, and in any event in the case of an Incentive Share
          Option, no Option granted under the Plan shall be transferable by a
          Participant otherwise than by will or the laws of descent and
          distribution. Unless otherwise determined by the Administrator in
          accord with the provisions of the immediately preceding sentence, an
          Option may be exercised, during the lifetime of the Participant, only
          by the Participant or, during the period the Participant is under a
          legal disability, by the Participant's guardian or legal
          representative. The Administrator may, in its sole discretion, subject
          to applicable law, permit the gratuitous transfer during a
          Participant's lifetime of a Nonqualified Share Option, (i) by gift to
          a member of the Participant's immediate family, (ii) by transfer by
          instrument to a trust for the benefit of such immediate family
          members, or (iii) to a partnership or limited liability company in
          which such family members are the only partners or members; provided,
          however, that, in addition to such other terms and conditions as the
          Administrator may determine in connection with any such transfer, no
          transferee may further assign, sell, hypothecate, charge or otherwise
          transfer the transferred Option, in whole or in part, other than by
          will or by operation of the laws of descent and distribution. Each
          permitted transferee shall agree to be bound by the provisions of this
          Plan and the applicable Option agreement.

                    (i) Termination of Employment or Service.


                                      -13-



                         (1) Unless the applicable Award Agreement provides
               otherwise, in the event that the employment or service of a
               Participant with the Company or any Subsidiary shall terminate
               for any reason other than Cause, Retirement, Disability, or
               death, (A) Options granted to such Participant, to the extent
               that they are exercisable at the time of such termination, shall
               remain exercisable until the date that is 90 days after such
               termination, on which date they shall expire, and (B) Options
               granted to such Participant, to the extent that they were not
               exercisable at the time of such termination, shall expire at the
               close of business on the date of such termination. The 90-day
               period described in this Section 7(i)(1) shall be extended to one
               year after the date of such termination in the event of the
               Participant's death during such 90-day period. Notwithstanding
               the foregoing, no Option shall be exercisable after the
               expiration of its term.

                         (2) Unless the applicable Award Agreement provides
               otherwise, in the event that the employment or service of a
               Participant with the Company or any Subsidiary shall terminate on
               account of the Retirement, Disability, or death of the
               Participant, (A) Options granted to such Participant, to the
               extent that they were exercisable at the time of such
               termination, shall remain exercisable until the date that is one
               year after such termination, on which date they shall expire and
               (B) Options granted to such Participant, to the extent that they
               were not exercisable at the time of such termination, shall
               expire at the close of business on the date of such termination.
               Notwithstanding the foregoing, no Option shall be exercisable
               after the expiration of its term.

                         (3) In the event of the termination of a Participant's
               employment or service for Cause, all outstanding Options granted
               to such Participant shall expire at the commencement of business
               on the date of such termination.

                    (j) Other Change in Employment Status. An Option shall be
          affected, both with regard to vesting schedule and termination, by
          leaves of absence, changes from full-time to part-time employment,
          partial disability or other changes in the employment status of an
          Participant, in the discretion of the Administrator. The Administrator
          shall follow the written policies of the Company (if any), including
          such rules, guidelines and practices as may be adopted pursuant to
          Section 3 hereof, as they may be in effect from time to time, with
          regard to such matters.

          SECTION 8. SHARE APPRECIATION RIGHTS.

          (a) General. Share Appreciation Rights may be granted either alone
("Free Standing Rights") or in conjunction with all or part of any Share Option
granted under the Plan ("Related Rights"), provided that, in each case, the
Shares underlying the


                                      -14-



Share Appreciation Rights are traded on an "established securities market"
within the meaning of Section 409A of the Code. In the case of a Nonqualified
Share Option, Related Rights may be granted either at or after the time of the
grant of such Share Option. In the case of an Incentive Share Option, Related
Rights may be granted only at the time of the grant of the Incentive Share
Option. The Administrator shall determine the Eligible Recipients to whom, and
the time or times at which, grants of Share Appreciation Rights shall be made;
the number of Shares to be awarded, the price per share, and all other
conditions of Share Appreciation Rights. Notwithstanding the foregoing, no
Related Right may be granted for more shares than are subject to the Share
Option to which it relates and any Share Appreciation Right must be granted with
an exercise price not less than the Fair Market Value of the Shares on the date
of grant. The provisions of Share Appreciation Rights need not be the same with
respect to each Participant. Share Appreciation Rights granted under the Plan
shall be subject to the following terms and conditions set forth in this Section
8 and shall contain such additional terms and conditions, not inconsistent with
the terms of the Plan, as the Administrator shall deem desirable, as set forth
in the applicable Award Agreement.

          (b) Awards. The prospective recipient of a Share Appreciation Right
shall not have any rights with respect to such Award, unless and until such
recipient has executed an Award Agreement and delivered a fully executed copy
thereof to the Company, within a period of sixty days (or such other period as
the Administrator may specify) after the award date. Participants who are
granted Share Appreciation Rights shall have no rights as shareholders of the
Company with respect to the grant or exercise of such rights.

          (c) Exercisability.

               (1) Share Appreciation Rights that are Free Standing Rights
("Free Standing Share Appreciation Rights") shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Administrator at or after grant; provided, however, that no Free Standing Share
Appreciation Right shall be exercisable during the first six months of its term,
except that this additional limitation shall not apply in the event of a
Participant's death or Disability prior to the expiration of such six-month
period.

               (2) Share Appreciation Rights that are Related Rights ("Related
Share Appreciation Rights") shall be exercisable only at such time or times and
to the extent that the Share Options to which they relate shall be exercisable
in accordance with the provisions of Section 7 above and this Section 8 of the
Plan; provided, however, that a Related Share Appreciation Right granted in
connection with an Incentive Share Option shall be exercisable only if and when
the Fair Market Value of the Shares subject to the Incentive Share Option
exceeds the Exercise Price of such Option; provided, further, that no Related
Share Appreciation Right shall be exercisable during the first six months of its
term, except that this additional limitation shall not apply in the event of a
Participant's death or Disability prior to the expiration of such six-month
period.


                                      -15-



          (d) Payment Upon Exercise.

               (1) Upon the exercise of a Free Standing Share Appreciation
Right, the Participant shall be entitled to receive up to, but not more than,
that number of Shares equal in value to the excess of the Fair Market Value as
of the date of exercise over the price per share specified in the Free Standing
Share Appreciation Right (which price shall be no less than 100% of the Fair
Market Value on the date of grant) multiplied by the number of Shares in respect
of which the Free Standing Share Appreciation Right is being exercised, with the
Administrator having the right to determine the form of payment.

               (2) A Related Right may be exercised by a Participant by
surrendering the applicable portion of the related Option. Upon such exercise
and surrender, the Participant shall be entitled to receive up to, but not more
than, that number of Shares equal in value to the excess of the Fair Market
Value as of the date of exercise over the Exercise Price specified in the
related Option (which price shall be no less than 100% of the Fair Market Value
on the date of grant) multiplied by the number of Shares in respect of which the
Related Share Appreciation Right is being exercised, with the Administrator
having the right to determine the form of payment. Options which have been so
surrendered, in whole or in part, shall no longer be exercisable to the extent
the Related Rights have been so exercised.

               (3) Notwithstanding the foregoing, the Administrator may
determine to settle the exercise of a Share Appreciation Right in cash (or in
any combination of Shares and cash) to the extent that such settlement does not
result in an excise tax being payable pursuant to Section 409A of the Code.

          (e) Non-Transferability.

               (1) Free Standing Share Appreciation Rights shall be transferable
only when and to the extent that an Option would be transferable under Section 7
of the Plan.

               (2) Related Share Appreciation Rights shall be transferable only
when and to the extent that the underlying Option would be transferable under
Section 7 of the Plan.

          (f) Termination of Employment or Service.

               (1) In the event of the termination of employment or service with
the Company or any Subsidiary of a Participant who has been granted one or more
Free Standing Share Appreciation Rights, such rights shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Administrator at or after grant.

               (2) In the event of the termination of employment or service with
the Company or any Subsidiary of a Participant who has been granted one or more


                                      -16-



Related Share Appreciation Rights, such rights shall be exercisable at such time
or times and subject to such terms and conditions as set forth in the related
Share Options.

          (g) Term.

               (1) The term of each Free Standing Share Appreciation Right shall
be fixed by the Administrator, but no Free Standing Share Appreciation Right
shall be exercisable more than ten years after the date such right is granted.

               (2) The term of each Related Share Appreciation Right shall be
the term of the Share Option to which it relates, but no Related Share
Appreciation Right shall be exercisable more than ten years after the date such
right is granted.

          SECTION 9. RESTRICTED SHARES, DEFERRED SHARES AND PERFORMANCE SHARES.

          (a) General. Awards of Restricted Shares, Deferred Shares or
Performance Shares may be issued either alone or in addition to other awards
granted under the Plan. The Administrator shall determine the Eligible
Recipients to whom, and the time or times at which, awards of Restricted Shares,
Deferred Shares or Performance Shares shall be made; the number of Shares to be
awarded; the price, if any, to be paid by the Participant for the acquisition of
Restricted Shares, Deferred Shares or Performance Shares; the Restricted Period
(as defined in paragraph (c) of this Section 9), if any, applicable to awards of
Restricted Shares or Deferred Shares; the performance objectives applicable to
awards of Restricted Shares, Deferred Shares or Performance Shares; and all
other conditions of the awards of Restricted Shares, Deferred Shares and
Performance Shares. The Administrator may also condition the grant of the award
of Restricted Shares, Deferred Shares or Performance Shares upon the exercise of
Options, or upon such other criteria as the Administrator may determine, in its
sole discretion. The provisions of the awards of Restricted Shares, Deferred
Shares or Performance Shares need not be the same with respect to each
Participant.

          (b) Awards and Certificates. The prospective recipient of awards of
Restricted Shares, Deferred Shares or Performance Shares shall not have any
rights with respect to any such award, unless and until such recipient has
executed an Award Agreement and delivered a fully executed copy thereof to the
Company, within a period of sixty days (or such other period as the
Administrator may specify) after the award date. Except as otherwise provided
below in this Section 9(c), (i) each Participant who is granted an award of
Restricted Shares or Performance Shares shall be issued a share certificate in
respect of such shares of Restricted Shares or Performance Shares; and (ii) such
certificate shall be registered in the name of the Participant, and shall bear
an appropriate legend referring to the terms, conditions, and restrictions
applicable to any such award.

          The Company may require that the share certificates evidencing
Restricted Shares or Performance Shares granted hereunder be held in the custody
of the Company until the restrictions thereon shall have lapsed, and that, as a
condition of any award of


                                      -17-



Restricted Shares or Performance Shares, the Participant shall have delivered a
share transfer form relating to the Shares covered by such award.

          With respect to awards of Deferred Shares, at the expiration of the
Restricted Period, share certificates in respect of such shares of Deferred
Shares shall be delivered to the Participant, or his legal representative, in a
number equal to the number of Shares covered by the Deferred Shares award.

          (c) Restrictions and Conditions. The awards of Restricted Shares,
Deferred Shares and Performance Shares granted pursuant to this Section 9 shall
be subject to the following restrictions and conditions and any additional
restrictions or conditions as determined by the Administrator at the time of
grant or thereafter:

               (1) Subject to the provisions of the Plan and the Restricted
Shares Award Agreement, Deferred Shares Award Agreement or Performance Shares
Award Agreement, as appropriate, governing any such award, during such period as
may be set by the Administrator commencing on the date of grant (the "Restricted
Period"), the Participant shall not be permitted to sell, transfer, charge,
pledge or assign shares of Restricted Shares, Deferred Shares or Performance
Shares awarded under the Plan; provided, however, that the Administrator may, in
its sole discretion, provide for the lapse of such restrictions in installments
and may accelerate or waive such restrictions in whole or in part based on such
factors and such circumstances as the Administrator may determine, in its sole
discretion, including, but not limited to, the attainment of certain performance
related goals, the Participant's termination of employment or service as a
director or Consultant to the Company or any Subsidiary, the Participant's death
or Disability. Notwithstanding the foregoing, upon a Change in Control, the
provisions of Section 12 shall apply to such outstanding Awards.

               (2) Except as provided in paragraph (c)(l) of this Section 9 or
in any relevant Award Agreement, the Participant shall generally have the rights
of a shareholder of the Company with respect to Restricted Shares or Performance
Shares during the Restricted Period. The Participant shall generally not have
the rights of a shareholder with respect to Shares subject to awards of Deferred
Shares during the Restricted Period; provided, however, that dividends declared
during the Restricted Period with respect to all or any number of Shares covered
by such award of Deferred Shares may be paid to the Participant in accordance
with a Deferred Shares Award Agreement approved by the Administrator at the time
of the grant of such award. Certificates for unrestricted Shares shall be
delivered to the Participant promptly after, and only after, the Restricted
Period shall expire without forfeiture in respect of such awards of Restricted
Shares, Deferred Shares or Performance Shares except as the Administrator, in
its sole discretion, shall otherwise determine.

               (3) The rights of Participants granted awards of Restricted
Shares, Deferred Shares or Performance Shares upon termination of employment or
service as a director or Consultant to the Company or to any Subsidiary
terminates for any reason during the Restricted Period shall be set forth in the
Award Agreement.


                                      -18-



          SECTION 10. OTHER SHARE-BASED AWARDS.

                    (a) The Administrator is authorized to grant Awards to
          Participants in the form of Other Share-Based Awards, as deemed by the
          Administrator to be consistent with the purposes of the Plan and as
          evidenced by an Award Agreement. The Administrator shall determine the
          terms and conditions of such Awards, consistent with the terms of the
          Plan, at the date of grant or thereafter, including any Performance
          Goals and performance periods. Shares or other securities or property
          delivered pursuant to an Award in the nature of a purchase right
          granted under this Section 10 shall be purchased for such
          consideration, paid for at such times, by such methods, and in such
          forms, including, without limitation, Shares repurchased, other
          Awards, notes or other property, as the Administrator shall determine
          (provided that the par value of my issued Share is paid), subject to
          any required corporate action.

                    (b) To the extent that the Plan is subject to Section 162(m)
          of the Code, no payment shall be made to a "covered employee" (within
          the meaning of Section 162(m) of the Code) prior to the certification
          by the Committee that the Performance Goals have been attained. The
          Committee may establish such other rules applicable to the Other
          Share-Based Awards, provided, however, that in the event that the Plan
          is subject to Section 162(m) of the Code, such rules shall be in
          compliance with Section 162(m) of the Code.

          SECTION 11. NON-EMPLOYEE DIRECTOR GRANTS.

          (a) Annual Grant. Except as otherwise provided by the Administrator,
on the first business day after the annual shareholders' meeting of the Company
and each annual shareholders' meeting thereafter during the term of the Plan
(beginning with the annual shareholders' meeting in 2007) each Non-Employee
Director shall be granted that number of Shares, the aggregate Fair Market Value
of which shall equal $15,000 on the date of grant (the "Non-Employee Director
Shares"). The Non-Employee Director Shares shall be fully vested as of the date
of grant.

          (b) Share Availability. In the event that the number of Shares
available for grant under the Plan is not sufficient to accommodate the awards
of Non-Employee Director Shares, then the remaining Shares available for such
automatic awards shall be granted to each Non-Employee Director who is to
receive such an award on a pro-rata basis. No further grants shall be made until
such time, if any, as additional Shares become available for grant under the
Plan.

          SECTION 12. ACCELERATED VESTING UPON A CHANGE IN CONTROL.

          Unless otherwise determined by the Administrator and evidenced in an
Award Agreement, in the event of a termination of employment by the Company
without Cause


                                      -19-



within twelve (12) months following a Change of Control, and in the case of
those Participants who are entitled to receive severance under an employment
agreement with the Company upon a termination by the Participant for good reason
(as defined in such employment agreement) upon such a termination for good
reason within twelve (12) months following a Change in Control:

                    (a) any Award carrying a right to exercise that was not
          previously vested and exercisable shall become fully vested and
          exercisable and shall remain exercisable; and

                    (b) the restrictions, deferral limitations, payment
          conditions, and forfeiture conditions applicable to any other Award
          granted under the Plan shall immediately lapse and such Awards shall
          be deemed fully vested, and any performance conditions imposed with
          respect to Awards shall be deemed to be fully achieved.

          SECTION 13. AMENDMENT AND TERMINATION.

          The Board may amend, alter or terminate the Plan, but no amendment,
alteration, or termination shall be made that would impair the rights of a
Participant under any award theretofore granted without such Participant's
consent. Unless the Board determines otherwise, the Board shall obtain approval
of the Company's shareholders for any amendment that would require such approval
in order to satisfy the requirements of sections 162(m) or 422 of the Code, any
rules of the share exchange on which the Shares are traded or other applicable
law. The Administrator may amend the terms of any award theretofore granted,
prospectively or retroactively, but, subject to Section 5 of Plan, no such
amendment shall impair the rights of any Participant without his or her consent.

          SECTION 14. UNFUNDED STATUS OF PLAN.

          The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.

          SECTION 15. WITHHOLDING TAXES.

          Whenever cash is to be paid pursuant to an award granted hereunder,
the Company shall have the right to deduct therefrom an amount sufficient to
satisfy any federal, state and local withholding tax requirements related
thereto. Whenever Shares are to be issued or become vested pursuant to an award,
the Company shall have the right to require the Participant to remit to the
Company in cash an amount sufficient to satisfy any federal, state and local
withholding tax requirements related thereto. With the approval of the
Administrator, in its sole discretion, the Participant may satisfy the foregoing
requirement by electing to have the Company repurchase Shares which the
Participant already owns and in such event the Company shall repurchase such
number of


                                      -20-



Shares having a value equal to the minimum amount of tax required to be
withheld. Such Shares shall be valued at their Fair Market Value on the date as
of which the amount of tax to be withheld is determined. Any fractional amounts
shall be settled in cash. Such an election may be made with respect to all or
any portion of the Shares to be delivered pursuant to an award.

          SECTION 16. GENERAL PROVISIONS.

                    (a) Shares shall not be issued pursuant to the exercise of
          any Option granted hereunder unless the exercise of such Option and
          the issuance and delivery of such Shares pursuant thereto shall comply
          with all relevant provisions of law, including, without limitation,
          Bermuda law, the Securities Act of 1933, as amended, the Exchange Act
          and the requirements of any share exchange upon which the Shares may
          then be listed, and shall be further subject to the approval of
          counsel for the Company with respect to such compliance.

                    (b) The Administrator may require each person acquiring
          Shares to represent to and agree with the Company in writing that such
          person is acquiring the Shares without a view to distribution thereof.
          The certificates for such Shares may include any legend that the
          Administrator deems appropriate to reflect any restrictions on
          transfer which the Administrator determines, in its sole discretion,
          arise under applicable securities laws or are otherwise applicable.

                    (c) All certificates for Shares delivered under the Plan
          shall be subject to such stop-transfer orders and other restrictions
          as the Administrator may deem advisable under the rules, regulations,
          and other requirements of the Securities and Exchange Commission, any
          share exchange upon which the Shares may then be listed, and Bermuda
          law any applicable federal or state securities law, and the
          Administrator may cause a legend or legends to be placed on any such
          certificates to make appropriate reference to such restrictions.

                    (d) The Administrator may require a Participant receiving
          Shares pursuant to the Plan, as a condition precedent to receipt of
          such Shares, to enter into a shareholder agreement or "lock-up"
          agreement in such form as the Committee shall determine is necessary
          or desirable to further the Company's interests.

                    (e) The adoption of the Plan shall not confer upon any
          Eligible Recipient any right to continued employment or service with
          the Company or any Subsidiary, as the case may be, nor shall it
          interfere in any way with the right of the Company or any Subsidiary
          to terminate the employment or service of any of its Eligible
          Recipients at any time.


                                      -21-



          SECTION 17. EFFECTIVE DATE.

     The Plan became effective upon adoption by the Board on January 17, 2006
(the "Effective Date"), subject to requisite approval of shareholders of the
Company and subject to permission being granted by the Bermuda Monetary
Authority pursuant to the Exchange Control Act 1972 (as amended) for the issue
of the Shares pursuant to the Plan.

          SECTION 18. TERM OF PLAN.

          No award shall be granted pursuant to the Plan on or after the tenth
anniversary of the Effective Date, but awards theretofore granted may extend
beyond that date.

          SECTION 19. GOVERNING LAW.

          The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the Bermuda.


                                      -22-



                           RESTRICTED SHARE AGREEMENT
                     UNDER THE AIRCASTLE INVESTMENT LIMITED
                         2005 EQUITY AND INCENTIVE PLAN

                          [PURCHASED RESTRICTED SHARES]

          This Award Agreement (this "Restricted Share Agreement"), dated as of
_______, 2006 (the "Date of Grant"), is made by and between Aircastle Investment
Limited, a Bermuda exempted company (the "Company") and [__________] (the
"Participant"). Capitalized terms not defined herein shall have the meaning
ascribed to them in the Aircastle Investment Limited 2005 Equity and Incentive
Plan (the "Plan"). Where the context permits, references to the Company shall
include any successor to the Company.

          1. Grant of Restricted Shares. The Company hereby grants to the
Participant [________] Shares (such shares, the "Purchased Restricted Shares")
in exchange for payment by the Participant to the Company of US$[________],
subject to all of the terms and conditions of this Restricted Share Agreement
and the Plan.

          2. Restrictions.

               (a) All Purchased Restricted Shares shall be fully vested and
credited as fully paid at the time of payment in full of the amount specified in
Section 1 hereof. There will be no restrictions on sale, assignment, mortgage,
hypothecation, transfer, charge, pledge, encumbrance, gift, transfer in trust
(voting or other) or other disposition of, or creation of a security interest in
or lien on, any of the Purchased Restricted Shares or any agreement or
commitment to do any of the foregoing (each a "Transfer") with respect to the
Purchased Restricted Shares, whether voluntary or involuntary, by operation of
law or otherwise, except as set forth specifically in this Restricted Share
Agreement, including (i) Section 2(b) hereof, which provides that, upon
termination of the Participant's employment, the Participant can be required to
sell the Purchased Restricted Shares to the Company, subject to certain terms
and conditions, (ii) Section 13 hereof, which provides that no Purchased
Restricted Shares shall be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of prior to the end of the Lock-Up Period except as otherwise
expressly permitted under this Restricted Share Agreement, (iii) Section 14(a)
hereof, which provides that Participant's right to participate in certain sales
is subject to specified requirements and limitations, and (iv) Section 14(b)
hereof, which provides that Participant can be compelled to participate in
certain sales.

               (b) Upon any termination of the Participant's employment with the
Company or any affiliate of the Company (unless, upon such termination,
Participant immediately becomes employed by the Company or another affiliate of
the Company) for any reason prior to the Public Offering Date (as defined in
Section 13(b) below) (a "Call Purchase Event"), subject to the provisions of
this Section 2(b), the Company may, at its option, exercisable by written notice
(a "Call Notice") delivered to the Participant (or in


                                       -1-



the case of a deceased Participant, the Participant's personal representative,
executor or administrator) within ninety (90) days after the applicable Call
Purchase Event (or, in the event the applicable Call Purchase Event is the death
of the Participant, within thirty (30) days after the appointment and
qualification of the deceased Participant's personal representative, if later),
elect to repurchase and, upon the giving of such notice, the Company shall be
obligated to repurchase and the Participant (and the related transferees, if
any, of the Participant or, in the case of a deceased Participant, his personal
representative, executor or administrator) (the "Seller") shall be obligated to
sell, all of the Restricted Purchased Shares held by the Seller at a per-Share
price equal to:

               (i)   if the Participant is terminated by the Company or an
                     affiliate for Cause, then the lower of (x) Fair Market
                     Value or (y) US$10;

               (ii)  if the Participant is terminated by the Company or an
                     affiliate without Cause, then Fair Market Value; or

               (iii) if Participant's employment with the Company or any
                     affiliate terminates for any other reason, then US$10.

"Fair Market Value" of the Shares, on a per-Share basis, shall be determined as
of the time of the Call Purchase Event by the Board in good faith and shall be
final, conclusive and binding on all persons, including the Company and the
Seller; provided, however, that such determination shall be based upon the
Company as a going concern and shall not discount the value of such shares
either because they are subject to the restrictions set forth in this Restricted
Share Agreement or because they constitute only a minority interest in the
Company.

          3. Adjustments. Pursuant to Section 5 of the Plan, in the event of a
change in capitalization as described therein, the Administrator shall make such
equitable changes or adjustments as it deems necessary or appropriate to the
number and kind of securities or other property (including cash) issued or
issuable in respect of outstanding Purchased Restricted Shares.

          4. Legend on Certificates. The Participant agrees that any certificate
issued for Purchased Restricted Shares (or, if applicable, any book entry
statement issued for Purchased Restricted Shares) prior to the lapse of any
outstanding restrictions relating thereto shall bear the following legend (in
addition to any other legend or legends required under applicable federal and
state securities laws):

     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
     RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE (THE "RESTRICTIONS") AS
     SET FORTH IN THE AIRCASTLE INVESTMENT LIMITED 2005 EQUITY AND INCENTIVE
     PLAN AND A RESTRICTED SHARE AGREEMENT ENTERED INTO BETWEEN THE REGISTERED
     OWNER AND AIRCASTLE INVESTMENT LIMITED, COPIES OF WHICH ARE ON FILE WITH
     THE SECRETARY OF THE COMPANY. ANY ATTEMPT TO DISPOSE OF THESE SHARES IN


                                       -2-



     CONTRAVENTION OF THE RESTRICTIONS, INCLUDING BY WAY OF SALE, ASSIGNMENT,
     TRANSFER, PLEDGE, HYPOTHECATION OR OTHERWISE, SHALL BE NULL AND VOID AND
     WITHOUT EFFECT AND SHALL RESULT IN THE FORFEITURE OF SUCH SHARES AS
     PROVIDED BY SUCH PLAN AND AGREEMENT.

          5. Certain Changes. The Administrator may adjust any of the terms of
the Purchased Restricted Shares; provided that, subject to Section 5 of the
Plan, no action under this Section shall adversely affect the Participant's
rights hereunder.

          6. Notices. All notices and other communications under this Restricted
Share Agreement shall be in writing and shall be given by facsimile or first
class mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given three days after mailing or 24 hours after
transmission by facsimile to the respective parties, as follows: (i) if to the
Company, c/o Aircastle Advisor LLC, 300 First Stamford Place, 5th Floor,
Stamford, CT 06902, Attn: General Counsel and (ii) if to the Participant, using
the contact information on file with the Company. Either party hereto may change
such party's address for notices by notice duly given pursuant hereto.

          7. Securities Laws Requirements. The Company shall not be obligated to
issue Shares to the Participant free of the restrictive legend described in
Section 4 hereof or of any other restrictive legend, if such transfer, in the
opinion of counsel for the Company, would violate the Securities Act of 1933, as
amended (the "Securities Act") (or any other federal or state statutes having
similar requirements as may be in effect at that time).

          8. No Obligation to Register. The Company shall be under no obligation
to register the Purchased Restricted Shares pursuant to the Securities Act or
any other federal or state securities laws.

          9. Protections Against Violations of Agreement. Any purported Transfer
of Purchased Restricted Shares or any economic benefit or interest therein in
violation of this Restricted Share Agreement shall be null and void ab initio,
and shall not create any obligation or liability of the Company, and any person
purportedly acquiring any Purchased Restricted Shares or any economic benefit or
interest therein transferred in violation of this Restricted Share Agreement
shall not be entitled to be recognized as a holder of such Shares.

          10. Taxes. The Participant understands that he or she (and not the
Company) shall be responsible for any tax liability that may arise as a result
of the transactions contemplated by this Restricted Share Agreement. The
Participant shall pay to the Company promptly upon request, and in any event at
the time the Participant recognizes taxable income in respect to the Purchased
Restricted Shares, an amount equal to the taxes the Company determines it is
required to withhold at the lowest applicable rate determined by the Company
under applicable tax laws with respect to the Purchased Restricted Shares. The
Participant may satisfy the foregoing requirement by making a payment to the
Company in cash or, with the approval of the Administrator, in its sole
discretion, by electing to have the Company repurchase Shares which the
Participant


                                       -3-



already owns and in such event the Company shall repurchase such number of
Shares having a value equal to the minimum amount of tax required to be
withheld. Such Shares shall be valued at their Fair Market Value on the date as
of which the amount of tax to be withheld is determined. Any fractional amounts
shall be settled in cash.

The Participant acknowledges that the tax laws and regulations applicable to the
Purchased Restricted Shares and the disposition of the Purchased Restricted
Shares following vesting are complex and subject to change, and it is the sole
responsibility of the Participant to obtain his or her own advice as to the tax
treatment of the terms of this Restricted Share Agreement.

     BY SIGNING THIS AGREEMENT, THE PARTICIPANT REPRESENTS THAT HE OR SHE HAS
     REVIEWED WITH HIS OR HER OWN TAX ADVISORS THE FEDERAL, STATE, LOCAL AND
     FOREIGN TAX CONSEQUENCES OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
     AND THAT HE OR SHE IS RELYING SOLELY ON SUCH ADVISORS AND NOT ON ANY
     STATEMENTS OR REPRESENTATIONS OF THE COMPANY OR ANY OF ITS AGENTS. THE
     PARTICIPANT UNDERSTANDS AND AGREES THAT HE OR SHE (AND NOT THE COMPANY)
     SHALL BE RESPONSIBLE FOR ANY TAX LIABILITY THAT MAY ARISE AS A RESULT OF
     THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

          11. Failure to Enforce Not a Waiver. The failure of the Company to
enforce at any time any provision of this Restricted Share Agreement shall in no
way be construed to be a waiver of such provision or of any other provision
hereof.

          12. Investment Representation. The Participant hereby represents and
warrants to the Company that the Participant, by reason of the Participant's
business or financial experience (or the business or financial experience of the
Participant's professional advisors who are unaffiliated with and who are not
compensated by the Company or any affiliate or selling agent of the Company,
directly or indirectly), (a) has the capacity to protect the Participant's own
interests in connection with the transactions contemplated under this Restricted
Share Agreement and (b) is capable of evaluating the merits and risks of the
purchase of the Purchased Restricted Shares. In addition, the Participant hereby
represents and warrants that (i) he or she has an individual net worth, or a
joint net worth with his or her spouse, as of the date hereof in excess of
US$1,000,000 and (ii) he or she had an individual income in excess of US$200,000
in each of the two most recent years or join income with his or her spouse in
excess of US$300,000 in each of those years and he or she has a reasonable
expectation of reaching the same income level in the current year.

          13. Lock-Up.

               (a) The Participant agrees that, during the period specified in
Section 13(b) (the "Lock-Up Period"), he or she will not offer, sell, contract
to sell, charge, pledge, grant any option to purchase, make any short sale or
otherwise dispose of any Purchased Restricted Shares (the "Locked-Up Shares"),
except as set forth in Section


                                       -4-



13(d) hereof or Section 14(a) or 14(b) hereof. The foregoing restriction is
expressly agreed to preclude the Participant from engaging in any hedging or
other transaction which is designed to or which reasonably could be expected to
lead to or result in a sale or disposition of the Locked-Up Shares even if such
Shares would be disposed of by someone other than the Participant. Such
prohibited hedging or other transactions would include without limitation any
short sale or any purchase, sale or grant of any right (including without
limitation any put or call option) with respect to any of the Locked-Up Shares
or with respect to any security that includes, relates to, or derives any
significant part of its value from such shares.

               (b) The initial Lock-Up Period will commence on the Date of Grant
and continue for 120 days after the initial Public Offering (as defined in
Section 14(a) hereof) date set forth on the final prospectus used to sell the
Shares (the "Public Offering Date"); provided, however, that if (i) during the
last 17 days of the initial Lock-Up Period, the Company releases earnings
results or announces material news or a material event or (ii) prior to the
expiration of the initial Lock-Up Period, the Company announces that it will
release earnings results during the 15-day period following the last day of the
initial Lock-Up Period, then in each case the Lock-Up Period will be
automatically extended until the expiration of the 18-day period beginning on
the date of release of the earnings results or the announcement of the material
news or material event, as applicable, unless the initial Public Offering
underwriters each waives, in writing, such extension.

               (c) The Participant further agrees that, prior to engaging in any
transaction or taking any other action that is subject to the terms of this
Restricted Share Agreement during the period from the Date of Grant to and
including the 34th day following the expiration of the initial Lock-Up Period
(except in accordance with Section 14(a) or 14(b) hereof), it will give notice
thereof to the Company and will not consummate such transaction or take any such
action unless it has received written confirmation from the Company that the
Lock-Up Period (as such may have been extended pursuant to the previous
paragraph) has expired.

               (d) Notwithstanding the foregoing, if the Purchased Restricted
Shares are otherwise vested and transferable pursuant to this Restricted Share
Agreement, then the Participant may transfer the Locked-Up Shares (i) as a bona
fide gift or gifts, provided that the donee or donees thereof agree to be bound
in writing by the restrictions set forth herein, (ii) to any trust for the
direct or indirect benefit of the Participant or the immediate family of the
Participant, provided that the trustee of the trust agrees to be bound in
writing by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value, or (iii) with the prior
written consent of the Company. For purposes of this Section 13, "immediate
family" shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin. The Participant also agrees and consents to the entry
of stop transfer instructions with the Company's transfer agent and registrar
against the transfer of the Locked-Up Shares except in compliance with the
foregoing restrictions or in accordance with Section 14(a) or 14(b) hereof.

               (e) The Participant understands that the Company is relying


                                       -5-



upon the Participant's agreement in this Section 13 in proceeding toward
consummation of the initial Public Offering. The Participant further understands
that Participant's agreement in this Section 13 is irrevocable and shall be
binding upon the Participant's heirs, legal representatives, successors, and
assigns.

          14. Tag Along and Drag Along Rights.

               (a) Tag Along Rights. Prior to the initial Public Offering by the
Company, in the event that the Fortress Shareholders (as defined in this
Section) shall propose to transfer, in one or more transactions, more than 50%
of the Shares they collectively own to a third party or third parties (other
than another Fortress Shareholder) (a "Proposed Purchaser"), the Participant
shall have the right and option (the "Tag Along Right"), but not the obligation,
to participate in such sale, at the same price (which shall take into account
all consideration proposed to be paid by the Proposed Purchaser to the Fortress
Shareholders in such sale) and on the same terms and subject to the same
conditions as the sale proposed by the Fortress Shareholders, by transferring up
to the same proportion of the Purchased Restricted Shares acquired by the
Participant pursuant to this Agreement as the proportion of Fortress
Shareholders' Shares that shall be transferred in such sale. Fortress
Shareholders shall notify the Company and the Participant in writing of any such
proposed sale at least thirty (30) days prior to the proposed effective date of
such proposed sale, which notice shall specify the name and address of the
Proposed Purchaser in such sale, (ii) the proposed purchase price to be paid by
the Proposed Purchaser in such sale, (iii) the other material terms and
conditions of such proposed sale, (iv) the proposed effective date of the
proposed sale and (vi) that the Proposed Purchaser has been informed of the Tag
Along Right and has agreed to purchase the Participant's Shares. The Participant
may exercise the Tag Along Right in respect of any such sale by notifying the
Company and the Fortress Shareholders in writing within ten (10) days following
notice from the Fortress Shareholders described in the preceding sentence, but
in any event no later than fifteen (15) days prior to the proposed effective
date of such proposed sale, and, thereafter, shall be irrevocably bound to
participate in such sale on such terms and shall execute and deliver any
purchase agreement or other certificate, instrument or other agreement required
by the Proposed Purchaser to consummate the proposed sale. For purposes of this
Agreement, (i) "Fortress Shareholder" shall have the same meaning as Permitted
Transferee, and shall include the FIG Funds, as each such term is defined in the
Plan, that currently own Shares; and (ii) "Public Offering" shall mean an
offering of equity securities of the Company pursuant to an effective
registration statement under the Securities Act, including an offering in which
the Fortress Stockholders are entitled to sell Shares.

               (b) Drag Along Rights. Prior to the initial Public Offering by
the Company, in the event that the Fortress Shareholders shall propose to
transfer, in one or more transactions, more than 50% of the Shares they
collectively own to a Proposed Purchaser, the Fortress Shareholders shall have
the right and option (the "Drag Along Right"), but not the obligation, to compel
the Participant to participate in such sale, at the same price (which shall take
into account all consideration proposed to be paid by the Proposed Purchaser to
the Fortress Shareholders in such sale) and on the same terms and subject to the
same conditions as the sale proposed by the Fortress Shareholders, by


                                       -6-



transferring up to the same proportion of the Purchased Restricted Shares
acquired by the Participant pursuant to this Agreement as the proportion of the
Fortress Shareholders' Shares that shall be transferred in such sale. Fortress
Shareholders may exercise the Drag Along Right in respect of any such sale by
notifying the Company and the Participants in writing no later than fifteen (15)
days prior to the proposed effective date of such proposed sale of (i) the
proposed purchase price to be paid by the Proposed Purchaser in such sale, (ii)
the other material terms and conditions of such proposed sale and (iii) the
proposed effective date of the proposed sale. Upon receipt of such notice, the
Participant shall execute and deliver any purchase agreement or other
certificate, instrument or other agreement required by the Proposed Purchaser to
consummate the proposed sale on or prior to the proposed effective date.

          15. Governing Law. This Restricted Share Agreement shall be governed
by and construed according to the laws of Bermuda.

          16. Incorporation of Plan. The Plan is hereby incorporated by
reference and made a part hereof, and the Purchased Restricted Shares and this
Restricted Share Agreement shall be subject to all terms and conditions of the
Plan and this Restricted Share Agreement.

          17. Amendments; Construction. The Administrator may amend the terms of
this Restricted Share Agreement prospectively or retroactively at any time, but
no such amendment shall impair the rights of the Participant hereunder without
his or her consent. To the extent the terms of Section 12 above conflict with
any prior agreement between the parties related to such subject matter, the
terms of Section 12 shall supersede such conflicting terms and control. Headings
to Sections of this Restricted Share Agreement are intended for convenience of
reference only, are not part of this Restricted Share Agreement and shall have
no affect on the interpretation hereof.

          18. Survival of Terms. This Restricted Share Agreement shall apply to
and bind the Participant and the Company and their respective permitted
assignees and transferees, heirs, legatees, executors, administrators and legal
successors.

          19. Rights as a Shareholder. During the period until the restrictions
on Transfer of the Restricted Share lapse as provided in Section 2(a) hereof,
the Participant shall have all the rights of a shareholder with respect to the
Purchased Restricted Shares save only the right to Transfer the Purchased
Restricted Shares. Accordingly, the Participant shall have the right to vote the
Purchased Restricted Shares and to receive any ordinary dividends paid to or
made with respect to the Purchased Restricted Shares.

          20. Agreement Not a Contract for Services. Neither the Plan, the
granting of the Purchased Restricted Shares, this Restricted Share Agreement nor
any other action taken pursuant to the Plan shall constitute or be evidence of
any agreement or understanding, express or implied, that the Participant has a
right to continue to provide services as an officer, director, employee,
consultant or advisor of the Company or any Subsidiary or Affiliate for any
period of time or at any specific rate of compensation.

          21. Authority of the Administrator; Disputes. The Administrator shall


                                       -7-



have full authority to interpret and construe the terms of the Plan and this
Restricted Share Agreement. The determination of the Administrator as to any
such matter of interpretation or construction shall be final, binding and
conclusive.

          22. Representations. The Participant has reviewed with the
Participant's own tax advisors the Federal, state, local and foreign tax
consequences of the transactions contemplated by this Restricted Share
Agreement. The Participant is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents. The
Participant understands that he or she (and not the Company) shall be
responsible for any tax liability that may arise as a result of the transactions
contemplated by this Restricted Share Agreement.

          23. Severability. Should any provision of this Restricted Share
Agreement be held by a court of competent jurisdiction to be unenforceable, or
enforceable only if modified, such holding shall not affect the validity of the
remainder of this Restricted Share Agreement, the balance of which shall
continue to be binding upon the parties hereto with any such modification (if
any) to become a part hereof and treated as though contained in this original
Restricted Share Agreement.

          24. Acceptance. The Participant hereby acknowledges receipt of a copy
of the Plan and this Restricted Share Agreement. The Participant has read and
understands the terms and provisions of the Plan and this Restricted Share
Agreement, and accepts the Purchased Restricted Shares subject to all the terms
and conditions of the Plan and this Restricted Share Agreement. The Participant
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions arising under this
Restricted Share Agreement.

          IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Restricted Share Agreement on the day and year first above written.

                                        AIRCASTLE INVESTMENT LIMITED


                                        By
                                           -------------------------------------
                                        Name
                                             -----------------------------------
                                        Title
                                              ----------------------------------

                                        [NAME]

                                        ----------------------------------------
                                        The Participant


                                       -8-



                           RESTRICTED SHARE AGREEMENT
                     UNDER THE AIRCASTLE INVESTMENT LIMITED
                         2005 EQUITY AND INCENTIVE PLAN

          This Award Agreement (this "Restricted Share Agreement"), dated as of
_______, 2006 (the "Date of Grant"), is made by and between Aircastle Investment
Limited, a Bermuda exempted Company (the "Company") and [__________] (the
"Participant"). Capitalized terms not defined herein shall have the meaning
ascribed to them in the Aircastle Investment Limited 2005 Equity and Incentive
Plan (the "Plan"). Where the context permits, references to the Company shall
include any successor to the Company.

          1. Grant of Restricted Shares. The Company hereby grants to the
Participant [________] Shares (such shares, the "Restricted Shares"), subject to
all of the terms and conditions of this Restricted Share Agreement and the Plan.

          2. Lapse of Restrictions.

               (a) Vesting.

               (i) General. Subject to the provisions set forth below, the
restrictions on Transfer (as defined in Section 9 hereof) set forth in Section
2(b) hereof shall lapse with respect to the number of Restricted Shares
specified for each Vesting Date as follows:



                      Number of
Vesting Date     Restricted Shares
--------------   -----------------
January 1, 200
January 1, 200
January 1, 200
January 1, 200
January 1, 200


subject in each case to the continued employment of the Participant by the
Company or one of its Subsidiaries or Affiliates from the date hereof through
the relevant Vesting Date, and provided that the Participant has not given
notice of resignation, as of each such Vesting Date, subject to paragraph (ii)
of this Section 2(a).

               (ii) Following Certain Terminations of Employment. Subject to the
next sentence, upon termination of the Participant's employment with the Company
and its Subsidiaries and Affiliates for any reason (including the death or
Disability of the Participant), any Restricted Shares in respect of which the
restrictions on Transfer described in this Section shall not already have lapsed
shall be immediately repurchased by the Company at a price equal to the par
value per Share and neither the Participant nor any of the Participant's
successors, heirs, assigns, or personal representatives shall


                                       -1-



thereafter have any further rights or interests in such Restricted Shares.
Notwithstanding the foregoing:

               (x) in the event that the Participant's employment with the
          Company or a Subsidiary or Affiliate is terminated without Cause, then
          the Restricted Shares (if any) which are due to vest at the next
          Vesting Date shall vest on the date of such termination of employment,
          and the restrictions on Transfer of such Restricted Shares set out in
          Section 2(b) shall lapse, subject to the Participant's execution of a
          separation agreement prepared by the Company (or any Subsidiary of
          Affiliate) which includes, inter alia, a general release of claims;
          and

               (y) in the event that the Participant's employment is terminated
          without Cause within 12 months following a Change of Control, then
          100% of the Restricted Shares that are not vested as of the date of
          such termination shall immediately vest.

               (b) Restrictions. Until the restrictions on Transfer of the
Restricted Shares lapse as provided in Section 2(a) hereof, or as otherwise
provided in the Plan, no Transfer of the Restricted Shares or any of the
Participant's rights with respect to the Restricted Shares, whether voluntary or
involuntary, by operation of law or otherwise, shall be permitted, except in
accordance with Section 14(b) hereof. Unless the Administrator determines
otherwise, upon any attempt to Transfer Restricted Shares or any rights in
respect of Restricted Shares, before the lapse of such restrictions (except in
accordance with Section 14(b) hereof), such Restricted Shares, and all of the
rights related thereto, shall be immediately repurchased by the Company at a
price equal to the par value per Share.

          3. Adjustments. Pursuant to Section 5 of the Plan, in the event of a
change in capitalization as described therein, the Administrator shall make such
equitable changes or adjustments as it deems necessary or appropriate to the
number and kind of securities or other property (including cash) issued or
issuable in respect of outstanding Restricted Shares.

          4. Legend on Certificates. The Participant agrees that any certificate
issued for Restricted Shares (or, if applicable, any book entry statement issued
for Restricted Shares) prior to the lapse of any outstanding restrictions
relating thereto shall bear the following legend (in addition to any other
legend or legends required under applicable federal and state securities laws):

     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
     RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE (THE "RESTRICTIONS") AS
     SET FORTH IN THE AIRCASTLE INVESTMENT LIMITED 2005 EQUITY AND INCENTIVE
     PLAN AND A RESTRICTED SHARE AGREEMENT ENTERED INTO


                                       -2-



     BETWEEN THE REGISTERED OWNER AND AIRCASTLE INVESTMENT LIMITED, COPIES OF
     WHICH ARE ON FILE WITH THE SECRETARY OF THE COMPANY. ANY ATTEMPT TO DISPOSE
     OF THESE SHARES IN CONTRAVENTION OF THE RESTRICTIONS, INCLUDING BY WAY OF
     SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR OTHERWISE, SHALL BE
     NULL AND VOID AND WITHOUT EFFECT AND SHALL RESULT IN THE FORFEITURE OF SUCH
     SHARES AS PROVIDED BY SUCH PLAN AND AGREEMENT.

          5. Certain Changes. The Administrator may accelerate the date on which
the restrictions on transfer set forth in Section 2(b) hereof shall lapse or
otherwise adjust any of the terms of the Restricted Shares; provided that,
subject to Section 5 of the Plan, no action under this Section shall adversely
affect the Participant's rights hereunder.

          6. Notices. All notices and other communications under this Restricted
Share Agreement shall be in writing and shall be given by facsimile or first
class mail, certified or registered with return receipt requested, and shall be
deemed to have been duly given three days after mailing or 24 hours after
transmission by facsimile to the respective parties, as follows: (i) if to the
Company, c/o Aircastle Advisor LLC, 300 First Stamford Place, 5th Floor,
Stamford, CT 06902, Attn: General Counsel and (ii) if to the Participant, using
the contact information on file with the Company. Either party hereto may change
such party's address for notices by notice duly given pursuant hereto.

          7. Securities Laws Requirements. The Company shall not be obligated to
issue Shares to the Participant free of the restrictive legend described in
Section 4 hereof or of any other restrictive legend, if such transfer, in the
opinion of counsel for the Company, would violate the Securities Act of 1933, as
amended (the "Securities Act") (or any other federal or state statutes having
similar requirements as may be in effect at that time).

          8. No Obligation to Register. The Company shall be under no obligation
to register the Restricted Shares pursuant to the Securities Act or any other
federal or state securities laws.

          9. Protections Against Violations of Agreement. Until such time as the
Restricted Shares are fully vested in accordance with Section 2(a) hereof, no
purported sale, assignment, mortgage, hypothecation, transfer, charge, pledge,
encumbrance, gift, transfer in trust (voting or other) or other disposition of,
or creation of a security interest in or lien on, any of the Restricted Shares
or any agreement or commitment to do any of the foregoing (each a "Transfer") by
any holder thereof in violation of the provisions of this Restricted Share
Agreement will be valid, except with the prior written consent of the Board of
Directors of the Company (such consent shall be granted or withheld in the sole
discretion of the Board of Directors) or except in accordance with Section 14(a)
or 14(b) hereof.

Any purported Transfer of Restricted Shares or any economic benefit or interest
therein in violation of this Restricted Share Agreement shall be null and void
ab initio, and shall not create any obligation or liability of the Company, and
any person purportedly acquiring


                                       -3-



any Restricted Shares or any economic benefit or interest therein transferred in
violation of this Restricted Share Agreement shall not be entitled to be
recognized as a holder of such Shares.

Without prejudice to the foregoing, in the event of a Transfer or an attempted
Transfer in violation of this Restricted Share Agreement, the Company shall have
the right (in its sole discretion) to require a repurchase from the Participant
of such Restricted Shares the subject of the Transfer or attempted Transfer at a
price per Share equal to the par value per Share.

          10. Taxes. The Participant understands that he or she (and not the
Company) shall be responsible for any tax liability that may arise as a result
of the transactions contemplated by this Restricted Share Agreement. The
Participant shall pay to the Company promptly upon request, and in any event at
the time the Participant recognizes taxable income in respect to the Restricted
Shares (or, if the Participant makes an election under Section 83(b) of the Code
in connection with such grant), an amount equal to the taxes the Company
determines it is required to withhold at the lowest applicable rate determined
by the Company under applicable tax laws with respect to the Restricted Shares.
The Participant may satisfy the foregoing requirement by making a payment to the
Company in cash or, with the approval of the Administrator, in its sole
discretion, by electing to have the Company repurchase Shares which the
Participant already owns and in such event the Company shall repurchase such
number of Shares having a value equal to the minimum amount of tax required to
be withheld. Such Shares shall be valued at their Fair Market Value on the date
as of which the amount of tax to be withheld is determined. Any fractional
amounts shall be settled in cash. The Participant shall promptly notify the
Company of any election made pursuant to Section 83(b) of the Code. A form of
such election is attached hereto as Exhibit A.

     THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE PARTICIPANT'S SOLE
     RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER
     SECTION 83(b) OF THE CODE, EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR
     ITS REPRESENTATIVE TO MAKE THIS FILING ON THE PARTICIPANT'S BEHALF.

The Participant acknowledges that the tax laws and regulations applicable to the
Restricted Shares and the disposition of the Restricted Shares following vesting
are complex and subject to change, and it is the sole responsibility of the
Participant to obtain his or her own advice as to the tax treatment of the terms
of this Restricted Share Agreement.

     BY SIGNING THIS AGREEMENT, THE PARTICIPANT REPRESENTS THAT HE OR SHE HAS
     REVIEWED WITH HIS OR HER OWN TAX ADVISORS THE FEDERAL, STATE, LOCAL AND
     FOREIGN TAX CONSEQUENCES OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
     AND THAT HE OR SHE IS RELYING SOLELY ON SUCH ADVISORS AND NOT ON ANY
     STATEMENTS OR REPRESENTATIONS OF THE COMPANY OR ANY OF ITS AGENTS. THE
     PARTICIPANT UNDERSTANDS AND AGREES


                                       -4-



     THAT HE OR SHE (AND NOT THE COMPANY) SHALL BE RESPONSIBLE FOR ANY TAX
     LIABILITY THAT MAY ARISE AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY
     THIS AGREEMENT.

          11. Failure to Enforce Not a Waiver. The failure of the Company to
enforce at any time any provision of this Restricted Share Agreement shall in no
way be construed to be a waiver of such provision or of any other provision
hereof.

          12. Confidentiality. The Participant acknowledges [and agrees to
comply with the confidentiality covenant in his employment letter dated
___________][that during the period of his employment with the Company or any
Subsidiary of Affiliate, he or she shall have access to the Company's
Confidential Information (as defined below). All books of account, records,
systems, correspondence, documents, and any and all other data, in whatever
form, concerning or containing any reference to the works and business of the
Company or its affiliated companies shall belong to the Company and shall be
given up to the Company whenever the Company requires the Participant to do so.
The Participant agrees that the Participant shall not at any time during the
term of the Participant's employment or thereafter, without the Company's prior
written consent, disclose to any person (individual or entity) any information
or any trade secrets, plans or other information or data, in whatever form,
(including, without limitation, (a) any financing strategies and practices,
pricing information and methods, training and operational procedures,
advertising, marketing, and sales information or methodologies or financial
information and (b) any Proprietary Information (as defined below)), concerning
the Company's or any of its affiliated companies' or customers' practices,
businesses, procedures, systems, plans or policies (collectively, "Confidential
Information"), nor shall the Participant utilize any such Confidential
Information in any way or communicate with or contact any such customer other
than in connection with the Participant's employment by the Company. The
Participant hereby confirms that all Confidential Information constitutes the
Company's exclusive property, and that all of the restrictions on the
Participant's activities contained in this Agreement and such other
nondisclosure policies of the Company are required for the Company's reasonable
protection. Confidential Information shall not include any information that has
otherwise been disclosed to the public not in violation of this Agreement. This
confidentiality provision shall survive the termination of this Restricted Share
Agreement and shall not be limited by any other confidentiality agreements
entered into with the Company or any of its affiliates.

With respect to any Confidential Information that constitutes a "trade secret"
pursuant to applicable law, the restrictions described above shall remain in
force for so long as the particular information remains a trade secret or for
the two year period immediately following termination of Participant's
employment for any reason, whichever is longer. With respect to any Confidential
Information that does not constitute a "trade secret" pursuant to applicable
law, the restrictions described above shall remain in force during Participant's
employment and for the two year period immediately following termination of
Participant's employment for any reason.


                                       -5-



The Participant agrees that the Participant shall promptly disclose to the
Company in writing all information and inventions generated, conceived or first
reduced to practice by him alone or in conjunction with others, during or after
working hours, while in the employ of the Company (all of which is collectively
referred to in this Agreement as "Proprietary Information"); provided, however,
that such Proprietary Information shall not include (a) any information that has
otherwise been disclosed to the public not in violation of this Agreement and
(b) general business knowledge and work skills of the Participant, even if
developed or improved by the Participant while in the employ of the Company. All
such Proprietary Information shall be the exclusive property of the Company and
is hereby assigned by the Participant to the Company. The Participant's
obligation relative to the disclosure to the Company of such Proprietary
Information anticipated in this Section shall continue beyond the Participant's
termination of employment and the Participant shall, at the Company's expense,
give the Company all assistance it reasonably requires to perfect, protect and
use its right to the Proprietary Information.

For purposes of this Section, the "Company" refers to the Company and any
incorporated or unincorporated affiliates of the Company, including any entity
which becomes the Participant's employer as a result of any reorganization or
restructuring of the Company for any reason. The Company shall be entitled, in
connection with its tax planning or other reasons, to terminate the
Participant's employment (which termination shall not be considered a
termination for any purposes of this Restricted Share Agreement, any employment
agreement or otherwise) in connection with an invitation from another affiliate
of the Company to accept employment with such affiliate in which case the terms
and conditions hereof shall apply to the Participant's employment relationship
with such entity mutatis mutandis.]

          13. Lock-Up.

               (a) The Participant agrees that, during the period specified in
Section 13(b) (the "Lock-Up Period"), he or she will not offer, sell, contract
to sell, charge, pledge, grant any option to purchase, make any short sale or
otherwise dispose of any Restricted Shares (including for all purposes of this
Section 13 Restricted Shares with respect to which all restrictions other than
those in this Section 13 have lapsed) (the "Locked-Up Shares"), except as set
forth in Section 13(d) hereof or Section 14(a) or 14(b) hereof. The foregoing
restriction is expressly agreed to preclude the Participant from engaging in any
hedging or other transaction which is designed to or which reasonably could be
expected to lead to or result in a sale or disposition of the Locked-Up Shares
even if such shares would be disposed of by someone other than the Participant.
Such prohibited hedging or other transactions would include without limitation
any short sale or any purchase, sale or grant of any right (including without
limitation any put or call option) with respect to any of the Locked-Up Shares
or with respect to any security that includes, relates to, or derives any
significant part of its value from such shares.

               (b) The initial Lock-Up Period will commence on the Date of Grant
and continue for 120 days after the initial Public Offering (as defined in
Section 14(a) hereof) date set forth on the final prospectus used to sell the
Shares (the "Public Offering Date"); provided, however, that if (i) during the
last 17 days of the initial Lock-


                                       -6-



Up Period, the Company releases earnings results or announces material news or a
material event or (ii) prior to the expiration of the initial Lock-Up Period,
the Company announces that it will release earnings results during the 15-day
period following the last day of the initial Lock-Up Period, then in each case
the Lock-Up Period will be automatically extended until the expiration of the
18-day period beginning on the date of release of the earnings results or the
announcement of the material news or material event, as applicable, unless the
initial Public Offering underwriters each waives, in writing, such extension.

               (c) The Participant further agrees that, prior to engaging in any
transaction or taking any other action that is subject to the terms of this
Restricted Share Agreement during the period from the Date of Grant to and
including the 34th day following the expiration of the initial Lock-Up Period
(except in accordance with Section 14(a) or 14(b) hereof), it will give notice
thereof to the Company and will not consummate such transaction or take any such
action unless it has received written confirmation from the Company that the
Lock-Up Period (as such may have been extended pursuant to the previous
paragraph) has expired.

               (d) Notwithstanding the foregoing, if the Restricted Shares are
otherwise vested and transferable pursuant to this Agreement, then the
Participant may transfer the Locked-Up Shares (i) as a bona fide gift or gifts,
provided that the donee or donees thereof agree to be bound in writing by the
restrictions set forth herein, (ii) to any trust for the direct or indirect
benefit of the Participant or the immediate family of the Participant, provided
that the trustee of the trust agrees to be bound in writing by the restrictions
set forth herein, and provided further that any such transfer shall not involve
a disposition for value, or (iii) with the prior written consent of the Company.
For purposes of this Section 13, "immediate family" shall mean any relationship
by blood, marriage or adoption, not more remote than first cousin. The
Participant also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent and registrar against the transfer of the
Locked-Up Shares except in compliance with the foregoing restrictions or in
accordance with Section 14(a) or 14(b) hereof.

               (e) The Participant understands that the Company is relying upon
the Participant's agreement in this Section 13 in proceeding toward consummation
of the initial Public Offering. The Participant further understands that
Participant's agreement in this Section 13 is irrevocable and shall be binding
upon the Participant's heirs, legal representatives, successors, and assigns.

          14. Tag Along and Drag Along Rights.

               (a) Tag Along Rights. Prior to the initial Public Offering by the
Company, in the event that the Fortress Shareholders (as defined in this
Section) shall propose to transfer, in one or more transactions, more than 50%
of the Shares they collectively own to a third party or third parties (other
than another Fortress Shareholder) (a "Proposed Purchaser"), the Participant
shall have the right and option (the "Tag Along Right"), but not the obligation,
to participate in such sale, at the same price (which shall take into account
all consideration proposed to be paid by the Proposed Purchaser to the


                                       -7-



Fortress Shareholders in such sale) and on the same terms and subject to the
same conditions as the sale proposed by the Fortress Shareholders, by
transferring up to the same proportion of the Restricted Shares held by the
Participant pursuant to this Agreement as to which restrictions on Transfer have
previously lapsed pursuant to Section 2(a) hereof as the proportion of Fortress
Shareholders' Shares that shall be transferred in such sale. Fortress
Shareholders shall notify the Company and the Participant in writing of any such
proposed sale at least thirty (30) days prior to the proposed effective date of
such proposed sale, which notice shall specify the name and address of the
Proposed Purchaser in such sale, (ii) the proposed purchase price to be paid by
the Proposed Purchaser in such sale, (iii) the other material terms and
conditions of such proposed sale, (iv) the proposed effective date of the
proposed sale and (vi) that the Proposed Purchaser has been informed of the Tag
Along Right and has agreed to purchase the Participant's Shares. The Participant
may exercise the Tag Along Right in respect of any such sale by notifying the
Company and the Fortress Shareholders in writing within ten (10) days following
notice from the Fortress Shareholders described in the preceding sentence, but
in any event no later than fifteen (15) days prior to the proposed effective
date of such proposed sale, and, thereafter, shall be irrevocably bound to
participate in such sale on such terms and shall execute and deliver any
purchase agreement or other certificate, instrument or other agreement required
by the Proposed Purchaser to consummate the proposed sale. For purposes of this
Agreement, (i) "Fortress Shareholder" shall have the same meaning as Permitted
Transferee, and shall include the FIG Funds, as each such term is defined in the
Plan, that currently own Shares; and (ii) "Public Offering" shall mean an
offering of equity securities of the Company pursuant to an effective
registration statement under the Securities Act, including an offering in which
the Fortress Stockholders are entitled to sell Shares.

               (b) Drag Along Rights. Prior to the initial Public Offering by
the Company, in the event that the Fortress Shareholders shall propose to
transfer, in one or more transactions, more than 50% of the Shares they
collectively own to a Proposed Purchaser, the Fortress Shareholders shall have
the right and option (the "Drag Along Right"), but not the obligation, to compel
the Participant to participate in such sale, at the same price (which shall take
into account all consideration proposed to be paid by the Proposed Purchaser to
the Fortress Shareholders in such sale) and on the same terms and subject to the
same conditions as the sale proposed by the Fortress Shareholders, by
transferring up to the same proportion of the Restricted Shares held by the
Participant pursuant to this Agreement (whether or not the restrictions on
Transfer have previously lapsed) as the proportion of the Fortress Shareholders'
Shares that shall be transferred in such sale. Notwithstanding any other
provision of this Agreement, any otherwise applicable restrictions on Transfer
shall not apply to a Transfer pursuant to this Section 14(b) and, after the
consummation of such Transfer, shall not apply to such formerly Restricted
Shares in the hands of the Proposed Purchaser or the Proposed Purchaser's
successors. Fortress Shareholders may exercise the Drag Along Right in respect
of any such sale by notifying the Company and the Participants in writing no
later than fifteen (15) days prior to the proposed effective date of such
proposed sale of (i) the proposed purchase price to be paid by the Proposed
Purchaser in such sale, (ii) the other material terms and conditions of such
proposed sale and (iii) the proposed effective date of the proposed sale. Upon
receipt of such notice, the Participant shall execute and deliver any


                                       -8-



purchase agreement or other certificate, instrument or other agreement required
by the Proposed Purchaser to consummate the proposed sale on or prior to the
proposed effective date.

          15. Governing Law. This Restricted Share Agreement shall be governed
by and construed according to the laws of Bermuda.

          16. Incorporation of Plan. The Plan is hereby incorporated by
reference and made a part hereof, and the Restricted Shares and this Restricted
Share Agreement shall be subject to all terms and conditions of the Plan and
this Restricted Share Agreement.

          17. Amendments; Construction. The Administrator may amend the terms of
this Restricted Share Agreement prospectively or retroactively at any time, but
no such amendment shall impair the rights of the Participant hereunder without
his or her consent. To the extent the terms of Section 12 above conflict with
any prior agreement between the parties related to such subject matter, the
terms of Section 12 shall supersede such conflicting terms and control. Headings
to Sections of this Restricted Share Agreement are intended for convenience of
reference only, are not part of this Restricted Share Agreement and shall have
no affect on the interpretation hereof.

          18. Survival of Terms. This Restricted Share Agreement shall apply to
and bind the Participant and the Company and their respective permitted
assignees and transferees, heirs, legatees, executors, administrators and legal
successors.

          19. Rights as a Shareholder. During the period until the restrictions
on Transfer of the Restricted Share lapse as provided in Section 2(a) hereof,
the Participant shall have all the rights of a shareholder with respect to the
Restricted Shares save only the right to Transfer the Restricted Shares.
Accordingly, the Participant shall have the right to vote the Restricted Shares
and to receive any ordinary dividends paid to or made with respect to the
Restricted Shares.

          20. Agreement Not a Contract for Services. Neither the Plan, the
granting of the Restricted Shares, this Restricted Share Agreement nor any other
action taken pursuant to the Plan shall constitute or be evidence of any
agreement or understanding, express or implied, that the Participant has a right
to continue to provide services as an officer, director, employee, consultant or
advisor of the Company or any Subsidiary or Affiliate for any period of time or
at any specific rate of compensation.

          21. Authority of the Administrator; Disputes. The Administrator shall
have full authority to interpret and construe the terms of the Plan and this
Restricted Share Agreement. The determination of the Administrator as to any
such matter of interpretation or construction shall be final, binding and
conclusive.

          22. Representations. The Participant has reviewed with the
Participant's own tax advisors the Federal, state, local and foreign tax
consequences of the transactions contemplated by this Restricted Share
Agreement. The Participant is relying solely on such advisors and not on any
statements or representations of the Company or


                                       -9-



any of its agents. The Participant understands that he or she (and not the
Company) shall be responsible for any tax liability that may arise as a result
of the transactions contemplated by this Restricted Share Agreement.

          23. Severability. Should any provision of this Restricted Share
Agreement be held by a court of competent jurisdiction to be unenforceable, or
enforceable only if modified, such holding shall not affect the validity of the
remainder of this Restricted Share Agreement, the balance of which shall
continue to be binding upon the parties hereto with any such modification (if
any) to become a part hereof and treated as though contained in this original
Restricted Share Agreement.

          24. Acceptance. The Participant hereby acknowledges receipt of a copy
of the Plan and this Restricted Share Agreement. The Participant has read and
understands the terms and provisions of the Plan and this Restricted Share
Agreement, and accepts the Restricted Shares subject to all the terms and
conditions of the Plan and this Restricted Share Agreement. The Participant
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions arising under this
Restricted Share Agreement.

          IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Restricted Share Agreement on the day and year first above written.

                                        AIRCASTLE INVESTMENT LIMITED


                                        By
                                           -------------------------------------
                                        Name
                                             -----------------------------------
                                        Title
                                              ----------------------------------

                                        [NAME]

                                        ----------------------------------------
                                        The Participant


                                      -10-



                                    EXHIBIT A
                          ELECTION UNDER SECTION 83(b)

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
for the current taxable year the amount of any compensation taxable to taxpayer
in connection with taxpayer's receipt of the property described below:

          1. The name address, taxpayer identification number and taxable year
of the undersigned are as follows:

     NAME OF TAXPAYER: _________________________________________________________

     NAME OF SPOUSE: ___________________________________________________________

     ADDRESS: __________________________________________________________________

     IDENTIFICATION NO. OF TAXPAYER: ___________________________________________

     IDENTIFICATION NUMBER OF SPOUSE: __________________________________________

     TAXABLE YEAR: _____________________________________________________________

          2. The property with respect to which the election is made is
described as follows: _______ shares of Common Stock, par value $0.01 per share,
of Aircastle Investment Limited ("Company").

          3. The date on which the property was transferred is:
________________, 20__.

          4. The property is subject to the following restrictions:

The property may not be transferred and are subject to forfeiture under the
terms of an agreement between the taxpayer and the Company. These restrictions
lapse upon the satisfaction of certain conditions in such agreement.

          5. The fair market value at the time of transfer, determined without
regard to any restriction other than a restriction which by its terms will never
lapse, of such property is: $ ________________.

          6. The amount (if any) paid for such property is: $ ______________.

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.

Dated: _______________, 200_            ________________________________________
                                        Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated: _______________, 200_            ________________________________________
                                        Spouse of Taxpayer


                                      -11-



                         RESTRICTED SHARE UNIT AGREEMENT
                     UNDER THE AIRCASTLE INVESTMENT LIMITED
                         2005 EQUITY AND INCENTIVE PLAN

                          [EMPLOYEE FORM-INTERNATIONAL]

          This Award Agreement (this "Restricted Share Unit Agreement"), dated
as of _______, 2006 (the "Date of Grant"), is made by and between Aircastle
Investment Limited, a Bermuda exempted company (the "Company") and [__________]
(the "Participant"). Capitalized terms not defined herein shall have the meaning
ascribed to them in the Aircastle Investment Limited 2005 Equity and Incentive
Plan (the "Plan"). Where the context permits, references to the Company shall
include any successor to the Company.

          1. Grant.

               (a) Restricted Share Units. The Company hereby grants to the
Participant [________] units, each unit representing one Share (such units, the
"Restricted Share Units"), subject to all of the terms and conditions of this
Restricted Share Unit Agreement and the Plan.

               (b) Other Stock-Based Award. The Company hereby grants to the
Participant dividend equivalent rights on a notional [__________] Shares (such
rights, the "DERs" and such number of Shares being the "number of DERs"),
subject to all of the terms and Conditions of this Restricted Share Unit
Agreement and the Plan.

          2. Restricted Share Unit Vesting and Issuance of Shares; DER Vesting
and Payment Terms.

               (a) Vesting of Restricted Share Units.

               (i) General. Subject to the provisions set forth below, the
percentage of Restricted Share Units specified for each Vesting Date shall vest
and Shares shall become deliverable to the Participant as follows:



                              Number of
  Vesting Date    Restricted Share Units / Shares
---------------   -------------------------------
[Date of Grant]                 [10]
 January 1, 200                 [15]
 January 1, 200                 [25]
 January 1, 200                 [25]
 January 1, 200                 [25]



                                       -1-



subject in each case to the continued employment of the Participant by the
Company or one of its Subsidiaries or Affiliates, and provided that the
Participant has not given notice of resignation, as of the relevant such Vesting
Date, subject to paragraph (ii) of this Section 2(a).

               (ii) Following Certain Terminations of Employment. Subject to the
next sentence, upon termination of the Participant's employment with the Company
and its Subsidiaries and Affiliates for any reason (including the death or
Disability of the Participant), any Restricted Share Units which have not
already vested shall immediately expire without consideration of any kind and
neither the Participant nor any of the Participant's successors, heirs, assigns,
or personal representatives shall thereafter have any further rights or
interests in such Restricted Share Units. Notwithstanding the foregoing:

               (x) in the event that the Participant's employment with the
          Company or a Subsidiary or Affiliate is terminated without Cause, then
          the Restricted Share Units (if any) which are due to vest at the next
          Vesting Date shall vest on the date of such termination of employment
          and Shares shall be issued to the Participant, subject to the
          Participant's execution of a separation agreement prepared by the
          Company (or any Subsidiary of Affiliate) which includes, inter alia, a
          general release of claims; and

               (y) in the event that the Participant's employment is terminated
          without Cause within 12 months following a Change of Control, then
          100% of the Restricted Share Units that are not vested as of the date
          of such termination shall immediately vest and Shares shall be issued
          to the Participant.

               (iii) Issuance of Shares. Upon vesting of any Restricted Share
Units under this Section 2(a) or Section 5 hereof, and provided that the Lock-Up
Period has expired, if Shares are then certificated by the Company, the Company
shall promptly issue to the Participant one or more share certificates in
respect of such Shares.

               (b) Restrictions. (i) Restricted Share Units. Until the
Restricted Share Units vest and Shares are delivered to the Participant in
respect of such Restricted Share Units as provided in Section 2(a) or Section 5
hereof, or as otherwise provided in the Plan, no transfer of the Restricted
Share Units or any of the Participant's rights with respect to the Restricted
Share Units, whether voluntary or involuntary, by operation of law or otherwise,
shall be permitted, except in accordance with Section 14(b) hereof. Unless the
Administrator determines otherwise, upon any attempt to transfer Restricted
Share Units or any rights in respect of Restricted Share Units before vesting
(except in accordance with Section 14(b) hereof), such Restricted Share Units,
and all of the rights related thereto, shall immediately expire.

               (ii) DERs. No transfer of the DERs or any of the Participant's
rights with respect to the DERs, whether voluntary or involuntary, by operation
of law or


                                        2



otherwise, shall be permitted. Unless the Administrator determines otherwise,
upon any attempt to transfer any DERs or any rights in respect of DERs shall
result in such DERs being immediately forfeited by the Participant without any
consideration of any kind being paid to the Participant in respect thereof, and
neither the Participant nor any of the Participant's successors, heirs, assigns,
or personal representatives shall thereafter have any further rights or
interests in such DERs.

               (c) DER Terms. (i) Vesting. All of the Participant's rights to
the DERs are fully vested on the Date of Grant and the Participant shall be
entitled to receive a cash payment equal to any ordinary dividends paid to
holders of Shares on the date that such dividend is paid to the holders of
Shares.

               (ii) Forfeiture. Upon vesting of any Restricted Shares as
provided in Section 2(a) or Section 5 hereof, or upon a transfer of Restricted
Share Units in accordance with Section 14(b) hereof, or as otherwise provided in
the Plan, the Participant shall forfeit to the Company DERs with respect to an
equivalent number of Shares, without any consideration of any kind being paid to
the Participant in respect thereof, and neither the Participant nor any of the
Participant's successors, heirs, assigns, or personal representatives shall
thereafter have any further rights or interests in such DERs or the notional
Shares on which they were granted. For DERs in respect of any Shares, the period
from the Date of Grant to the date of forfeiture pursuant to the preceding
sentence, the "DER Vested Period").

               (iii) Payment. If, during the DER Vested Period for any DERs, the
record date for any dividends payable in respect of the Shares occurs, then
promptly following the payment of such dividends to holders of such Shares, the
Company shall pay a bonus to the Participant in an amount equal to (x) the
per-share dividend so paid to such holders, multiplied by (y) the number of DERs
vested in the Participant on such record date.

          3. Adjustments. Pursuant to Section 5 of the Plan, in the event of a
change in capitalization as described therein, the Administrator shall make such
equitable changes or adjustments as it deems necessary or appropriate to the
number and kind of securities or other property (including cash) issued or
issuable in respect of outstanding Restricted Share Units and DERs.

          4. [Intentionally Omitted].

          5. Certain Changes. The Administrator may accelerate the Vesting Date
for, or otherwise adjust any of the terms of, the Restricted Share Units;
provided that, subject to Section 5 of the Plan, no action under this Section
shall adversely affect the Participant's rights hereunder.

          6. Notices. All notices and other communications under this Restricted
Share Unit Agreement shall be in writing and shall be given by facsimile or
first class mail, certified or registered with return receipt requested, and
shall be deemed to have been duly given three days after mailing or 24 hours
after transmission by facsimile


                                        3



to the respective parties, as follows: (i) if to the Company, c/o Aircastle
Advisor LLC, 300 First Stamford Place, 5th Floor, Stamford CT 06902, Attn:
General Counsel and (ii) if to the Participant, using the contact information on
file with the Company. Either party hereto may change such party's address for
notices by notice duly given pursuant hereto.

          7. Securities Laws Requirements. The Company shall not be obligated to
issue Shares to the Participant if such transfer, in the opinion of counsel for
the Company, would violate the Securities Act of 1933, as amended (the
"Securities Act") (or any other federal or state statutes having similar
requirements as may be in effect at that time).

          8. No Obligation to Register. The Company shall be under no obligation
to register the Shares pursuant to the Securities Act or any other federal or
state securities laws.

          9. Protections Against Violations of Agreement; Escrow. Except for
transfers of Restricted Share Units in accordance with Section 14(b) hereof, no
purported sale, assignment, mortgage, hypothecation, transfer, charge, pledge,
encumbrance, gift, transfer in trust (voting or other) or other disposition of,
or creation of a security interest in or lien on, any of the Restricted Share
Units or DERs by any holder thereof in violation of the provisions of this
Restricted Share Unit Agreement will be valid, and the Company will not transfer
any of said Restricted Share Units on its books, nor will any distributions be
paid thereon, unless and until there has been full compliance with said
provisions to the satisfaction of the Company. The foregoing restrictions are in
addition to and not in lieu of any other remedies, legal or equitable, available
to enforce said provisions.

          10. Taxes. The Participant understands that he or she (and not the
Company) shall be responsible for any tax liability that may arise as a result
of the transactions contemplated by this Restricted Share Unit Agreement. The
Participant shall pay to the Company promptly upon request, and in any event at
the time the Participant recognizes taxable income in respect of the grants
hereunder, or the Company or an affiliate may at its option deduct from the
Participant's next normal payroll, an amount equal to the taxes the Company
determines it is required to withhold at the lowest applicable rate determined
by the Company under applicable tax laws with respect to the grants hereunder.
The Participant may satisfy the foregoing requirement by making a payment to the
Company in cash or, with the approval of the Administrator, in its sole
discretion, by electing to have the Company repurchase Shares which the
Participant already owns and in such event the Company shall repurchase such
number of Shares having a value equal to the minimum amount of tax required to
be withheld. Such Shares shall be valued at their Fair Market Value on the date
as of which the amount of tax to be withheld is determined. Any fractional
amounts shall be settled in cash.

The Participant acknowledges that the tax laws and regulations applicable to the
Restricted Share Units and DERs and the disposition of the Shares the
Participant may receive following vesting of the Restricted Share Units are
complex and subject to change,


                                        4



and it is the sole responsibility of the Participant to obtain his or her own
advice as to the tax treatment of the terms of this Restricted Share Unit
Agreement.

     BY SIGNING THIS AGREEMENT, THE PARTICIPANT REPRESENTS THAT HE OR SHE HAS
     REVIEWED WITH HIS OR HER OWN TAX ADVISORS THE FEDERAL, STATE, LOCAL AND
     FOREIGN TAX CONSEQUENCES OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
     AND THAT HE OR SHE IS RELYING SOLELY ON SUCH ADVISORS AND NOT ON ANY
     STATEMENTS OR REPRESENTATIONS OF THE COMPANY OR ANY OF ITS AGENTS. THE
     PARTICIPANT UNDERSTANDS AND AGREES THAT HE OR SHE (AND NOT THE COMPANY)
     SHALL BE RESPONSIBLE FOR ANY TAX LIABILITY THAT MAY ARISE AS A RESULT OF
     THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT

          11. Failure to Enforce Not a Waiver. The failure of the Company to
enforce at any time any provision of this Restricted Share Unit Agreement shall
in no way be construed to be a waiver of such provision or of any other
provision hereof.

          12. Confidentiality. The Participant acknowledges [and agrees to
comply with the confidentiality covenant in his/her employment letter dated
____________][that during the period of his employment with the Company or any
Subsidiary of Affiliate, he or she shall have access to the Company's
Confidential Information (as defined below). All books of account, records,
systems, correspondence, documents, and any and all other data, in whatever
form, concerning or containing any reference to the works and business of the
Company or its affiliated companies shall belong to the Company and shall be
given up to the Company whenever the Company requires the Participant to do so.
The Participant agrees that the Participant shall not at any time during the
term of the Participant's employment or thereafter, without the Company's prior
written consent, disclose to any person (individual or entity) any information
or any trade secrets, plans or other information or data, in whatever form,
(including, without limitation, (a) any financing strategies and practices,
pricing information and methods, training and operational procedures,
advertising, marketing, and sales information or methodologies or financial
information and (b) any Proprietary Information (as defined below)), concerning
the Company's or any of its affiliated companies' or customers' practices,
businesses, procedures, systems, plans or policies (collectively, "Confidential
Information"), nor shall the Participant utilize any such Confidential
Information in any way or communicate with or contact any such customer other
than in connection with the Participant's employment by the Company. The
Participant hereby confirms that all Confidential Information constitutes the
Company's exclusive property, and that all of the restrictions on the
Participant's activities contained in this Agreement and such other
nondisclosure policies of the Company are required for the Company's reasonable
protection. Confidential Information shall not include any information that has
otherwise been disclosed to the public not in violation of this Agreement. This
confidentiality provision shall survive the termination of this Restricted Share
Unit Agreement and shall not be limited by any other confidentiality agreements
entered into with the Company or any of its affiliates.


                                        5



With respect to any Confidential Information that constitutes a "trade secret"
pursuant to applicable law, the restrictions described above shall remain in
force for so long as the particular information remains a trade secret or for
the two year period immediately following termination of Participant's
employment for any reason, whichever is longer. With respect to any Confidential
Information that does not constitute a "trade secret" pursuant to applicable
law, the restrictions described above shall remain in force during Participant's
employment and for the two year period immediately following termination of
Participant's employment for any reason.

The Participant agrees that the Participant shall promptly disclose to the
Company in writing all information and inventions generated, conceived or first
reduced to practice by him alone or in conjunction with others, during or after
working hours, while in the employ of the Company (all of which is collectively
referred to in this Agreement as "Proprietary Information"); provided, however,
that such Proprietary Information shall not include (a) any information that has
otherwise been disclosed to the public not in violation of this Agreement and
(b) general business knowledge and work skills of the Participant, even if
developed or improved by the Participant while in the employ of the Company. All
such Proprietary Information shall be the exclusive property of the Company and
is hereby assigned by the Participant to the Company. The Participant's
obligation relative to the disclosure to the Company of such Proprietary
Information anticipated in this Section shall continue beyond the Participant's
termination of employment and the Participant shall, at the Company's expense,
give the Company all assistance it reasonably requires to perfect, protect and
use its right to the Proprietary Information.

For purposes of this Section, the "Company" refers to the Company and any
incorporated or unincorporated affiliates of the Company, including any entity
which becomes the Participant's employer as a result of any reorganization or
restructuring of the Company for any reason. The Company shall be entitled, in
connection with its tax planning or other reasons, to terminate the
Participant's employment (which termination shall not be considered a
termination for any purposes of this Restricted Share Unit Agreement, any
employment agreement or otherwise) in connection with an invitation from another
affiliate of the Company to accept employment with such affiliate in which case
the terms and conditions hereof shall apply to the Participant's employment
relationship with such entity mutatis mutandis.]

          13. Lock-Up.

               (a) The Participant agrees that, during the period specified in
Section 13(b) (the "Lock-Up Period"), he or she will not offer, sell, contract
to sell, charge, pledge, grant any option to purchase, make any short sale or
otherwise dispose of any Restricted Share Units or any Shares to which the
Participant may become entitled through the vesting of Restricted Share Units
(including for all purposes of this Section 13 such Shares) (such Restricted
Share Units and Shares being sometimes referred to together as the "Locked-Up
Shares"), except as set forth in Section 13(d) hereof or Section 14(a) or 14(b)
hereof. The foregoing restriction is expressly agreed to preclude the
Participant


                                        6



from engaging in any hedging or other transaction which is designed to or which
reasonably could be expected to lead to or result in a sale or disposition of
the Locked-Up Shares even if such shares would be disposed of by someone other
than the Participant. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation any put or call option) with respect to any
of the Locked-Up Shares or with respect to any security that includes, relates
to, or derives any significant part of its value from such shares.

               (b) The initial Lock-Up Period will commence on the Date of Grant
and continue for 120 days after the initial Public Offering (as defined in
Section 14(a) hereof) date set forth on the final prospectus used to sell the
Shares (the "Public Offering Date"); provided, however, that if (i) during the
last 17 days of the initial Lock-Up Period, the Company releases earnings
results or announces material news or a material event or (ii) prior to the
expiration of the initial Lock-Up Period, the Company announces that it will
release earnings results during the 15-day period following the last day of the
initial Lock-Up Period, then in each case the Lock-Up Period will be
automatically extended until the expiration of the 18-day period beginning on
the date of release of the earnings results or the announcement of the material
news or material event, as applicable, unless the initial Public Offering
underwriters each waives, in writing, such extension.

               (c) The Participant further agrees that, prior to engaging in any
transaction or taking any other action that is subject to the terms of this
Restricted Share Unit Agreement during the period from the Date of Grant to and
including the 34th day following the expiration of the initial Lock-Up Period
(except in accordance with Section 14(a) or 14(b) hereof), it will give notice
thereof to the Company and will not consummate such transaction or take any such
action unless it has received written confirmation from the Company that the
Lock-Up Period (as such may have been extended pursuant to the previous
paragraph) has expired."

               (d) Notwithstanding the foregoing, if the Participant has become
entitled to Shares through the vesting of Restricted Share Units pursuant to
this Restricted Share Unit Agreement, then the Participant may transfer such
Shares during the Lock-Up Period (i) as a bona fide gift or gifts, provided that
the donee or donees thereof agree to be bound in writing by the restrictions set
forth herein, (ii) to any trust for the direct or indirect benefit of the
Participant or the immediate family of the Participant, provided that the
trustee of the trust agrees to be bound in writing by the restrictions set forth
herein, and provided further that any such transfer shall not involve a
disposition for value, or (iii) with the prior written consent of the Company.
For purposes of this Section 13, "immediate family" shall mean any relationship
by blood, marriage or adoption, not more remote than first cousin. The
Participant also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent and registrar against the transfer of the
Locked-Up Shares except in compliance with the foregoing restrictions.

               (e) The Participant understands that the Company is relying upon
the Participant's agreement in this Section 13 in proceeding toward consummation
of the initial Public Offering. The Participant further understands that
Participant's


                                        7



agreement in this Section 13 is irrevocable and shall be binding upon the
Participant's heirs, legal representatives, successors, and assigns.

          14. Tag Along and Drag Along Rights.

               (a) Tag Along Rights. Prior to the initial Public Offering by the
Company, in the event that the Fortress Shareholders (as defined in this
Section) shall propose to transfer, in one or more transactions, more than 50%
of the Shares they collectively own to a third party or third parties (other
than another Fortress Shareholder) (a "Proposed Purchaser"), the Participant
shall have the right and option (the "Tag Along Right"), but not the obligation,
to participate in such sale, at the same price (which shall take into account
all consideration proposed to be paid by the Proposed Purchaser to the Fortress
Shareholders in such sale) and on the same terms and subject to the same
conditions as the sale proposed by the Fortress Shareholders, by transferring up
to the same proportion of the Shares to which the Participant has become
entitled through the previous vesting of Restricted Share Units pursuant to this
Agreement as the proportion of Fortress Shareholders' Shares that shall be
transferred in such sale. Fortress Shareholders shall notify the Company and the
Participant in writing of any such proposed sale at least thirty (30) days prior
to the proposed effective date of such proposed sale, which notice shall specify
the name and address of the Proposed Purchaser in such sale, (ii) the proposed
purchase price to be paid by the Proposed Purchaser in such sale, (iii) the
other material terms and conditions of such proposed sale, (iv) the proposed
effective date of the proposed sale and (vi) that the Proposed Purchaser has
been informed of the Tag Along Right and has agreed to purchase the
Participant's Shares. The Participant may exercise the Tag Along Right in
respect of any such sale by notifying the Company and the Fortress Shareholders
in writing within ten (10) days following notice from the Fortress Shareholders
described in the preceding sentence, but in any event no later than fifteen (15)
days prior to the proposed effective date of such proposed sale, and,
thereafter, shall be irrevocably bound to participate in such sale on such terms
and shall execute and deliver any purchase agreement or other certificate,
instrument or other agreement required by the Proposed Purchaser to consummate
the proposed sale. For purposes of this Agreement, (i) "Fortress Shareholder"
shall have the same meaning as Permitted Transferee, and shall include the FIG
Funds, as each such term is defined in the Plan, that currently own Shares; and
(ii) "Public Offering" shall mean an offering of equity securities of the
Company pursuant to an effective registration statement under the Securities
Act, including an offering in which the Fortress Shareholders are entitled to
sell Shares.

               (b) Drag Along Rights. Prior to the initial Public Offering by
the Company, in the event that the Fortress Shareholders shall propose to
transfer, in one or more transactions, more than 50% of the Shares they
collectively own to a Proposed Purchaser, the Fortress Shareholders shall have
the right and option (the "Drag Along Right"), but not the obligation, to compel
the Participant to participate in such sale, at the same price per Share or
Restricted Share Unit (which price shall take into account all consideration
proposed to be paid by the Proposed Purchaser to the Fortress Shareholders in
such sale) and on the same terms and subject to the same conditions as the sale
proposed by the Fortress Shareholders, by transferring up to the same proportion
of the


                                        8



Restricted Share Units and Shares to which the Participant has become entitled
through the vesting of Restricted Share Units pursuant to this Agreement as the
proportion of the Fortress Shareholders' Shares that shall be transferred in
such sale. Notwithstanding any other provision of this Agreement, any otherwise
applicable restrictions on Transfer shall not apply to a Transfer pursuant to
this Section 14(b) and, after the consummation of such Transfer, shall not apply
to such Shares in the hands of the Proposed Purchaser or the Proposed
Purchaser's successors; provided, however that any Restricted Share Units shall
be cancelled upon consummation of the Transfer. Fortress Shareholders may
exercise the Drag Along Right in respect of any such sale by notifying the
Company and the Participants in writing no later than fifteen (15) days prior to
the proposed effective date of such proposed sale of (i) the proposed purchase
price to be paid by the Proposed Purchaser in such sale, (ii) the other material
terms and conditions of such proposed sale and (iii) the proposed effective date
of the proposed sale. Upon receipt of such notice, the Participant shall execute
and deliver any purchase agreement or other certificate, instrument or other
agreement required by the Proposed Purchaser to consummate the proposed sale on
or prior to the proposed effective date.

          15. Governing Law. This Restricted Share Unit Agreement shall be
governed by and construed according to the laws of Bermuda.

          16. Incorporation of Plan. The Plan is hereby incorporated by
reference and made a part hereof, and the Restricted Share Units and this
Restricted Share Unit Agreement shall be subject to all terms and conditions of
the Plan and this Restricted Share Unit Agreement.

          17. Amendments; Construction. The Administrator may amend the terms of
this Restricted Share Unit Agreement prospectively or retroactively at any time,
but no such amendment shall impair the rights of the Participant hereunder
without his or her consent. To the extent the terms of Section 12 above conflict
with any prior agreement between the parties related to such subject matter, the
terms of Section 12 shall supersede such conflicting terms and control. Headings
to Sections of this Restricted Share Unit Agreement are intended for convenience
of reference only, are not part of this Restricted Share Unit Agreement and
shall have no affect on the interpretation hereof.

          18. Survival of Terms. This Restricted Share Unit Agreement shall
apply to and bind the Participant and the Company and their respective permitted
assignees and transferees, heirs, legatees, executors, administrators and legal
successors.

          19. Rights as a Shareholder. Until Shares have been issued to the
Participant in accordance with Section 2(a), the Participant shall not have any
of the rights of a shareholder with respect to Restricted Share Units.
Accordingly, the Participant shall not have the right to vote the Restricted
Share Units. The grant of DERs with respect to a notional number of Common
Shares shall not confer on the Participant any rights whatsoever as a
shareholder of any such shares of Common Shares.

          20. Agreement Not a Contract for Services. Neither the Plan, the
granting of the Restricted Share Units, this Restricted Share Unit Agreement nor
any other


                                        9



action taken pursuant to the Plan shall constitute or be evidence of any
agreement or understanding, express or implied, that the Participant has a right
to continue to provide services as an officer, director, employee, consultant or
advisor of the Company or any Subsidiary or Affiliate for any period of time or
at any specific rate of compensation.

          21. Authority of the Administrator; Disputes. The Administrator shall
have full authority to interpret and construe the terms of the Plan and this
Restricted Share Unit Agreement. The determination of the Administrator as to
any such matter of interpretation or construction shall be final, binding and
conclusive.

          22. Representations. The Participant has reviewed with the
Participant's own tax advisors the Federal, state, local and foreign tax
consequences of the transactions contemplated by this Restricted Share Unit
Agreement. The Participant is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents. The
Participant understands that he or she (and not the Company) shall be
responsible for any tax liability that may arise as a result of the transactions
contemplated by this Restricted Share Unit Agreement.

          23. Severability. Should any provision of this Restricted Share Unit
Agreement be held by a court of competent jurisdiction to be unenforceable, or
enforceable only if modified, such holding shall not affect the validity of the
remainder of this Restricted Share Unit Agreement, the balance of which shall
continue to be binding upon the parties hereto with any such modification (if
any) to become a part hereof and treated as though contained in this original
Restricted Share Unit Agreement.

          24. Acceptance. The Participant hereby acknowledges receipt of a copy
of the Plan and this Restricted Share Unit Agreement. The Participant has read
and understands the terms and provisions of the Plan and this Restricted Share
Unit Agreement, and accepts the Restricted Share Units subject to all the terms
and conditions of the Plan and this Restricted Share Unit Agreement. The
Participant hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions arising
under this Restricted Share Unit Agreement.


                                       10



          IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Restricted Share Unit Agreement on the day and year first above written.

                                        AIRCASTLE INVESTMENT LIMITED


                                        By
                                           -------------------------------------
                                        Name
                                             -----------------------------------
                                        Title
                                              ----------------------------------

                                        [NAME]

                                        ----------------------------------------
                                        The Participant


                                       11



                       [Aircastle Advisors LLC letterhead]

May 2, 2005

Mr. Ron Wainshal
10 Reimer Road
Westport, CT 06880

Dear Ron:

     It is with great pleasure that we extend to you an offer to join Aircastle
Advisor LLC (together with its Affiliates (as defined below) and their
respective successors and assigns, the "Company" or "Aircastle") on the terms
and conditions set forth below.



Title:                     Chief Executive Officer of Aircastle Advisor LLC.
                           Aircastle Advisor LLC is a subsidiary of Aircastle
                           Investment Limited.

                           You will perform such duties as are required by the
                           Company from time to time and normally associated
                           with the Chief Executive Officer position, together
                           with such additional duties, commensurate with such
                           position, as may be assigned to you from time to time
                           by the Company's Board of Directors ("Board"),
                           consistent, in the case of the overall direction and
                           strategy of the Company, with the Board's directives
                           in respect thereof. You will report to the Board, and
                           not any other officer of the Company; officers of the
                           Company will report to you. You will have the
                           authority to cause the employment or appointment of
                           such employees and agents of the Company as the
                           proper conduct of operations may require (other than
                           such officers of the Company as, pursuant to the
                           Company's Bylaws, are to be appointed by the Board,
                           as to whom the Board will consult with you and take
                           into account your recommendations) and to remove or
                           suspend any such employee or agent who shall have
                           been employed or appointed under your authority or
                           under the authority of an officer subordinate to you,
                           and to suspend for cause, pending final action by the
                           Board, any officer subordinate to you.

Start Date:                On or about May 19, 2005 (the actual date on which
                           you commence employment, as shall be mutually agreed
                           by you and the Company, the "Start Date").

IPO:                       The Company acknowledges that it is the Company's
                           current intent to conduct an initial public offering
                           of shares of Aircastle Investment Limited within one
                           year of your Start Date.

Location:                  Initially at the US offices of Aircastle, currently
                           located at 1251 Avenue of the Americas, New York, NY.
                           The Company shall use reasonable



                           commercial efforts to relocate the offices of
                           Aircastle to the Stamford CT area no later than
                           October 1, 2005.

Base Salary:               Your base salary is $200,000, payable in regular
                           installments in accordance with the Company's normal
                           payroll practices. Your base salary will not be
                           reduced without your consent.

Guaranteed Bonus:          You shall receive in cash additional compensation
                           from the Company in respect of 2005 in the amount of
                           at least $400,000 (your "Guaranteed 2005 Bonus"). The
                           Guaranteed 2005 Bonus will be paid as soon as
                           practicable after performance results in respect of
                           2005 have been determined, but in no event later than
                           January 31, 2006.

Initial Grant              In connection with your joining the Company, you
                           shall be awarded a one- time grant (the "Grant") of
                           shares of restricted stock valued between $2.5
                           million and $3 million, with the first $2.5 million
                           to be granted as soon after the start date as is
                           practicable and any addition amounts to be awarded
                           pursuant to a determination of the Company's managing
                           member, in its sole discretion, prior to the earlier
                           of the end of this year (December 31, 2005) and an
                           initial public offering of Aircastle Investment
                           Limited. The number of shares of restricted stock
                           awarded to you will be calculated on the same basis
                           (i.e. amount divided by $10 = number of shares,
                           subject of course to adjustments for any stock splits
                           (or other similar changes) that occur between the
                           date hereof and the date of grant) as that used by
                           Fortress affiliated funds in connection with the
                           initial capitalization of Aircastle. The Grant shall
                           vest as follows: (i) 10% of the shares subject to the
                           Grant on the first anniversary of your Start Date,
                           (ii) 15% of the shares subject to the Grant on the
                           second anniversary of your Start Date, (iii) 25% of
                           the shares subject to the Grant on the third
                           anniversary of your Start Date; (iv) 25% of the
                           shares subject to the Grant on the fourth anniversary
                           of your Start Date and (v) the remaining 25% of the
                           shares subject to the Grant on the fifth anniversary
                           of your Start Date. You will receive payment of all
                           dividends declared on all shares of restricted stock
                           covered by the Grant, whether or not vested on the
                           same basis as other holders of shares of common
                           stock. The Grant will be made pursuant to a
                           restricted stock agreement in form and substance
                           customary under such circumstances, including
                           provisions providing that if the Company terminates
                           your employment with Cause (as hereinafter defined)
                           you shall forfeit all unvested shares of stock
                           subject to the Grant and:

                                (i)  If the Company (or a successor) terminates
                                     your employment without Cause or you
                                     terminate your employment with Good Reason
                                     at any time prior to the fifth anniversary
                                     of your Start Date, you shall immediately
                                     vest in 50% of the then unvested shares,
                                     and

                                (ii) You shall be vested in 100% of the shares
                                     subject to the Grant if both (x) a change
                                     of control (to be defined in the Company's
                                     incentive stock award plan) occurs and (y)
                                     either (i) the



                                        2





                                     Company (or its successor) terminates your
                                     employment without Cause or (ii) you
                                     terminate your employment with Good Reason,
                                     in each such event, within 12 months of
                                     such change of control.

Annual Discretionary       The Company may in its sole discretion decide to
Incentive Compensation:    grant you additional compensation or an additional
                           bonus for calendar year 2005 and subsequent years;
                           however this Letter Agreement does not entitle you to
                           such a payment (other than, as provided above, the
                           Guaranteed 2005 Bonus). Notwithstanding the
                           foregoing, your additional bonuses (if any) shall be
                           on terms and conditions no less favorable to you than
                           those applicable to similarly situated employees of
                           the Company (not including terms and conditions set
                           forth in employment agreements entered into at the
                           time of the hiring of an individual) and shall be
                           paid to you at the same time bonuses are paid to such
                           other employees, but in no event later than 90 days
                           following the end of the year following the year in
                           which such bonus was earned.

                           The following outlines what we anticipate will be the
                           Company's approach to incentive compensation, subject
                           to the foregoing paragraphs, although the Company
                           will be free to change its incentive compensation
                           methodology from time to time (so long as any such
                           change does not result in a material diminution in
                           the value of the Grant or any other awards granted to
                           you prior to the effective date thereof): you can
                           expect that a portion of each year's annual bonus
                           will be paid in cash (either at the end of the
                           applicable fiscal year or at the beginning of the
                           subsequent fiscal), and that the remaining portion of
                           the bonus will be paid as grant of restricted stock,
                           with the portion of the bonus to be paid in stock to
                           increase with levels of compensation. The number of
                           such shares of restricted stock to be granted will be
                           calculated by dividing the amount being paid in
                           shares of restricted stock by the Fair Market Value
                           of the stock on the date of grant. For purposes of
                           this Letter Agreement, the term "Fair Market Value"
                           shall have the meaning set forth in the Company's
                           incentive stock award plan under which the grant is
                           made.

                           Generally, restrictions on such shares of restricted
                           stock will lapse (i) 10% of the shares subject to the
                           applicable grant on the first anniversary of the
                           grant date, (ii) 15% of the shares subject to the
                           applicable grant on the second anniversary of the
                           applicable grant, (iii) 25% of the shares subject to
                           the applicable grant on the third anniversary of the
                           applicable grant; (iv) 25% of the shares subject to
                           the applicable grant on the fourth anniversary of the
                           applicable grant and (v) the remaining 25% of the
                           shares subject to the applicable grant on the fifth
                           anniversary of the applicable grant. You would
                           receive dividends on unvested shares.

                           Payment of additional compensation or a bonus in any
                           given fiscal or calendar year does not entitle you to
                           additional compensation or a bonus in any subsequent
                           year. You must be employed by the Company (or any
                           Affiliate of Aircastle for whom you may be employed
                           on a full-time basis at the time) at the time any
                           bonus, including the Guaranteed 2005 Bonus, or



                                       3





                           additional compensation is to be paid in order to be
                           eligible therefore.

                           In the event that the Company terminates your
                           employment (other than in the case where you are
                           offered employment by any Affiliate of or successor
                           to the Company) without Cause (as defined below) or
                           you terminate your employment for Good Reason (as
                           defined below), (i) if such termination occurs prior
                           to the date on which you have been paid your
                           Guaranteed 2005 Bonus, the Company shall pay you an
                           amount equal to the sum of (x) six months of your
                           base salary at the time of such termination plus (y)
                           your Guaranteed 2005 Bonus, and (ii) if such
                           termination occurs thereafter, then the Company shall
                           pay you an amount equal to the sum of (x) six months
                           of your base salary at the time of such termination
                           plus (y) $200,000 (or 50% of your Guaranteed 2005
                           Bonus"), such amount to be paid within thirty (30)
                           days of such date of termination, provided you sign a
                           general release of claims.

                           A termination of your employment in the event of your
                           death or disability shall not be deemed a termination
                           without Cause under this Agreement for any reason,
                           including the provisions relating to the vesting of
                           any shares of restricted stock; however,
                           notwithstanding the foregoing, you shall receive your
                           Guaranteed 2005 Bonus in the event of a termination
                           in the event of your death or disability that occurs
                           prior to the date on which you have been paid your
                           Guaranteed 2005 Bonus, within 30 days of such
                           termination.

Co-investment              You agree to invest between $50,000 and $100,000 in
                           common stock at the same price per share as was paid
                           by Fortress affiliated funds in connection with the
                           initial capitalization of Aircastle; such shares
                           shall not be subject to any vesting restrictions.

Expense Reimbursement:     The Company will reimburse business expenses incurred
                           in the ordinary course of business. The Company will
                           pay the cost of legal fees of Morrison Cohen LLP
                           incurred in connection with representing you in
                           relation to this Letter Agreement at our request.

Benefits:                  You (and your eligible dependents, if any) may at
                           your election be covered under such health insurance,
                           employee benefit, savings, pension, profit sharing,
                           life insurance and disability plans as cover other
                           senior executives of Aircastle from time to time,
                           subject to applicable exclusions and limitations. You
                           are eligible to participate in Aircastle's 401(k)
                           plan, if any, subject to the terms of the plan. You
                           are eligible to participate in all other perquisite
                           and benefit arrangements generally made available by
                           Aircastle to its senior executives, subject to the
                           terms of such plans or programs. Each such benefit is
                           subject to modification, including elimination, from
                           to time, at Aircastle's sole discretion. You shall be
                           entitled to vacation of 20 days per year, with a
                           maximum carry over to a subsequent year of 20 days to
                           the extent vacation days are unused, in accordance
                           with Aircastle's vacation policies.

"Cause;" "Good             For purposes of this Letter Agreement, "Cause" means
                           (i) your commission of



                                       4





Reason"                    an act of fraud or dishonesty in connection with your
                           employment; (ii) your indictment, conviction or
                           entering of a plea of nolo contendere for a crime
                           constituting a felony; (iii) your gross negligence or
                           willful misconduct in connection with your employment
                           that is materially detrimental to Aircastle; (iv)
                           the habitual use of drugs or habitual, excessive use
                           of alcohol to the extent that any of such uses in the
                           Board's good faith determination materially
                           interferes with the performance of your duties as
                           Chief Executive Officer of Aircastle; and (v) your
                           commission of any material breach of any of the
                           restrictive covenants set forth herein or material
                           breach of any reasonable and lawful directive of the
                           Board after written notice thereof from the Board is
                           given in writing and such breach is not cured to the
                           reasonable satisfaction of the Company within a
                           reasonable period of time (not greater than 30 days)
                           under the circumstances.

                           For the sake of clarity, if the definition of "Cause"
                           set forth above conflicts with such definition in any
                           stock incentive plan or agreement of the Company or
                           any of its Affiliates, including the Company's
                           incentive stock award plan or any other such plan or
                           agreement under which the Grant or any subsequent
                           grant of restricted stock shall be made, the
                           definition set forth herein shall control.

                           "Good Reason" means the occurrence, without your
                           express prior written consent, of any of the
                           following: (i) the failure by the Company to pay you
                           any portion of your base salary or declared bonus
                           within thirty (30) days of the date such compensation
                           is due, (ii) the relocation of the Company's US
                           headquarters to a location outside a twenty (20) mile
                           radius from Stamford Connecticut, (iii) any senior
                           officer of the Company (including, for the sake of
                           clarity, senior officer of Aircastle Investment
                           Limited or any Affiliate, whether located in the U.S.
                           or abroad) being instructed (other than by you) to
                           report directly to anyone other than you; or (iv)
                           Aircastle Investment Limited being no longer
                           primarily engaged in investing in airplanes and/or
                           airplane related assets, including airplane backed
                           debt instruments or (v) only following a change of
                           control (as defined in the Company's incentive stock
                           award plan), in the event that your total cash
                           compensation attributable to any calendar year that
                           ends following such change in control (i.e., without
                           regard to whether the bonus in respect of such year
                           is paid prior to the end of such year or at the
                           beginning of the following year), is less than
                           $500,000, and you resign because of and within 90
                           days of the last day of such calendar year.

Policies and Procedures:   You agree to comply in all material respects with all
                           of the Company's policies and procedures, as amended
                           from time to time except to the extent that a
                           particular policy or procedure conflicts with an
                           express provision of this Agreement, and for so long
                           as your place of work is co-located at Fortress
                           offices, all Fortress policies and procedures, as
                           amended from time to time.

Termination:               If your employment with the Company terminates for
                           any reason, you hereby



                                       5





                           agree that you shall immediately resign from all
                           positions (including, without limitation, any
                           management, officer or director position) that you
                           hold on the date of such termination with the
                           Company, or any of the their respective affiliates or
                           with any entity in which the Company or any of its
                           affiliates has made any investment. You hereby agree
                           to execute and deliver such documentation reasonably
                           required by the Company as may be necessary or
                           appropriate to enable the Company, any of the
                           Company's affiliates or any entity in which the
                           Company or any of its affiliates has made an
                           investment to effectuate such resignation, and in any
                           case, your execution of this Letter Agreement shall
                           be deemed the grant by you to the officers of the
                           Company of a limited power of attorney to sign in
                           your name and on your behalf such documentation
                           solely for the limited purposes of effectuating such
                           resignation.

Representation:            You represent that you are free to be employed
                           hereunder without any contractual restrictions,
                           express or implied, with respect to any of your prior
                           employers. You represent that you have not taken or
                           otherwise misappropriated and you do not have in your
                           possession or control any confidential and
                           proprietary information belonging to any of your
                           prior employers or connected with or derived from
                           your services to prior employers. You represent that
                           you have returned to all prior employers any and all
                           such confidential and proprietary information. You
                           further acknowledge that Aircastle and Fortress have
                           informed you that you are not to use or cause the use
                           of such confidential or proprietary information in
                           any manner whatsoever in connection with your
                           employment by Aircastle. You agree that you will not
                           use such information as described above.

                           You represent that you understand that this Letter
                           Agreement sets forth the terms and conditions of your
                           employment relationship with Aircastle and supercedes
                           any other agreement, written or oral, with respect
                           thereto. You further agree to keep the terms of this
                           Letter Agreement confidential and not to disclose any
                           of the terms or conditions hereof to any other
                           person, including any employee of Aircastle or
                           Fortress, except your attorney or accountant or, upon
                           the advice of counsel after notice to Aircastle, as
                           may be required by law or as may be required in order
                           to enforce or defend against the enforcement of this
                           Letter Agreement.

Restrictive Covenants:     You shall not, directly or indirectly, without prior
                           written consent of Aircastle, provide consultative
                           services to, own, manage, operate, join, control,
                           participate in, be engaged in, be employed by or be
                           connected with, any business, individual, partner,
                           firm, corporation or other entity, including without
                           limitation any business, individual, partner, firm,
                           corporation, or other entity that directly or
                           indirectly competes with (any such action,
                           individually, and in the aggregate, to "compete
                           with"), Aircastle at any time during your employment.



                                       6



                           In the event that the Company terminates your
                           employment with Cause or you terminate your
                           employment with the Company other than for Good
                           Reason, such restrictions shall apply for six (6)
                           months after the effective date of such termination
                           solely as to any aircraft leasing and/or aircraft
                           finance business engaged in by Aircastle Investment
                           Limited (or its successor in interest) and its
                           subsidiaries. Notwithstanding anything else herein,
                           the mere "beneficial ownership" by you, either
                           individually or as a member of a "group" (as such
                           terms are used in Rule 13(d) issued under the
                           Securities Exchange Act of 1934) of not more than 5%
                           of the voting stock of any public company shall not
                           be deemed in violation of this Letter Agreement.

                           The foregoing restrictions shall not apply:

                                (i)   Following the termination of your
                                      employment if the Company terminates your
                                      employment without Cause or you terminate
                                      your employment for Good Reason; or

                                (ii)  In the event that the Company fails to
                                      relocate its US headquarters from New York
                                      to a location within 20 miles of Stamford
                                      Connecticut by October 1, 2005 and you
                                      resign because of such failure within 30
                                      days of such date.

                                (iii) In the event that your total cash
                                      compensation attributable to any calendar
                                      year (i.e., without regard to whether the
                                      bonus in respect of such year is paid
                                      prior to the end of such year or at the
                                      beginning of the following year), and
                                      taking into account the amount of
                                      dividends paid on shares of stock that
                                      have been granted under restricted stock
                                      grants (including the initial Grant) then
                                      held by you (assuming, for such purpose,
                                      that you hold all shares that have ever
                                      been granted to you under restricted stock
                                      grants, and ignoring therefore
                                      dispositions of such shares, whether as
                                      gifts, for estate planning purposes, to
                                      third parties or otherwise), is less than
                                      $600,000, and you resign because of and
                                      within 90 days of the last day of such
                                      calendar year.

                           You shall keep secret and retain in strictest
                           confidence, and shall not use for your benefit or the
                           benefit of others, except in connection with the
                           business and affairs of the Company (which, for
                           purposes of and in each instance used in this
                           paragraph, shall include Fortress (including any fund
                           managed by Fortress or any of its affiliates during
                           or prior to the period of your employment with the
                           Company), all confidential information of and
                           confidential matters (whether made available in
                           written, electronic form or orally) relating to (x)
                           the Company's business and the Company (including,
                           without limitation, the actual investments of the
                           Company, the contemplated investments of the Company,
                           and the financial performance of Aircastle


                                       7



                           Investment Limited), (y) all corporations or other
                           business organizations in which the Company has or
                           has had an investment and (z) third parties, learned
                           by you heretofore or hereafter directly or indirectly
                           in connection with your employment or from the
                           Company (the "Confidential Company Information").

                           In consideration of, and as a condition to, continued
                           access to Confidential Company Information, and
                           without prejudice to or limitation on any other
                           confidentiality obligation imposed by agreement or
                           law, you hereby undertake to use and protect
                           Confidential Company Information in accordance with
                           restrictions placed on its use or disclosure. You
                           shall not disclose Confidential Company Information
                           to anyone outside of the Company except with the
                           Company's express written consent. The foregoing
                           restrictions shall not apply to Confidential Company
                           Information (A) that is or becomes a matter of public
                           information other than as a result of a breach of
                           this Letter Agreement by you; (B) is received by you
                           from a third party not under an obligation to any
                           person to keep such information confidential; or (C)
                           was (x) independently developed by you or on you
                           behalf without use of or access to Confidential
                           Information and (y) that does not relate to the
                           business or prospective businesses of the Company.
                           All memoranda, notes, lists, records, property and
                           any other tangible product and documents (and all
                           copies and excerpts thereof), whether visually
                           perceptible, machine-readable or otherwise, made,
                           produced or compiled by you or made available to you
                           concerning the business of the Company, (i) shall at
                           all times be the property of the Company and shall be
                           delivered to the Company at any time upon its
                           request, and (ii) upon your termination of
                           employment, shall be immediately returned to the
                           Company or, provided you certify to the Company to
                           such effect, destroyed. The foregoing shall not limit
                           any other confidentiality obligations imposed by
                           agreement or by law.

                           You shall not voluntarily publish or make any
                           statement (x) under circumstances reasonably likely
                           to become public that is critical of Aircastle or
                           Fortress Investment Group LLC or (y) which would in
                           any way adversely affect or otherwise malign in any
                           material respect the business or reputation of
                           Aircastle or Fortress, as the case may be. Neither
                           Joseph Adams nor Wesley Edens will voluntarily
                           publish or make any statement which would malign in
                           any material respect your reputation.

                           From the date hereof through the end of the one-year
                           period commencing with your termination of employment
                           with the Company, you shall not, without the
                           Company's prior written consent, directly or
                           indirectly, (i) solicit or encourage to leave the
                           employment or other service of the Company, Aircastle
                           Investment Limited or any of their


                                       8





                           respective subsidiaries any employee thereof or (ii)
                           hire (on behalf of yourself or any other person or
                           entity) any employee or independent contractor who
                           has left the employment or other service of the
                           Company, Aircastle Investment Limited or any of their
                           respective subsidiaries within the one-year period
                           which follows the termination of such employee's
                           employment with the Company, Aircastle Investment
                           Limited or any such subsidiary.

                           You acknowledge and agree that any breach by you of
                           the non-compete or non-solicit provisions set forth
                           in this Section "Restrictive Covenants," shall
                           entitle Aircastle to cease making any payments to you
                           under any agreement, including this Letter Agreement,
                           pursuant to which you are entitled to monies from
                           Aircastle. In addition, you acknowledge and agree
                           that any breach by you of any of the provision of
                           this Section "Restrictive Covenants" (the
                           "Restrictive Covenants") would result in irreparable
                           injury and damage for which money damages would not
                           provide an adequate remedy. Therefore, if you breach,
                           or threaten to commit a breach of, any of the
                           provisions of the Restricted Covenants, the Company
                           shall have the right to seek, in addition to, and not
                           in lieu of, any other rights and remedies available
                           to the Company under law or in equity (including,
                           without limitation, the recovery of damages), to have
                           the Restrictive Covenants specifically enforced
                           (without posting bond and without the need to prove
                           damages) by any court having equity jurisdiction,
                           including, without limitation, the right to an entry
                           against you of restraining orders and injunctions
                           (preliminary, mandatory, temporary and permanent)
                           against violations, threatened or actual, and whether
                           or not then continuing, of the Restrictive Covenants.
                           You acknowledge and agree that the Restrictive
                           Covenants are reasonable in geographical and temporal
                           scope and in all other respects. If it is determined
                           that any of the Restrictive Covenants, or any part
                           thereof, is invalid or unenforceable, the remainder
                           of the Restrictive Covenants shall not thereby be
                           affected and shall be given full effect, without
                           regard to the invalid portions. If any court or other
                           decision-maker of competent jurisdiction determines
                           that any provision of the Restrictive Covenants, or
                           any part thereof, is unenforceable because of the
                           duration or geographical scope of such provision,
                           then, after such determination has become final and
                           unappealable, the duration or scope of such
                           provision, as the case may be, shall be reduced so
                           that such provision becomes enforceable and, in its
                           reduced form, such provision shall then be
                           enforceable and shall be enforced.

                           Notwithstanding anything in this Letter Agreement to
                           the contrary, the provisions of this Section
                           "Restrictive Covenants" shall survive any termination
                           of this Letter Agreement and any termination of your
                           employment.

Employment Relationship:   You are an at-will employee. This letter is not a
                           contract of employment for any specific period of
                           time, and you and the Company may terminate your
                           employment at any time for any reason or no reason
                           whatsoever. Notwithstanding the foregoing, you agree
                           to provide the Company with at least 30 days advance
                           written notice of your termination. In each case
                           where the term "Company" is used in this Letter
                           Agreement it shall mean, in addition to the Company,
                           any Affiliate of Aircastle for whom you may be



                                        9





                           employed on a full-time basis at the applicable time.

                           The Company shall be entitled, in connection with its
                           investment structuring, tax planning, business
                           organization or other reasons, to terminate your
                           employment in connection with an invitation from
                           Aircastle Investment Limited (or its successor in
                           interest) or any of its subsidiaries (an
                           "Affiliate"), to accept employment with such
                           Affiliate in which case the terms and conditions
                           hereof shall apply to your employment relationship
                           with such entity mutatis mutandis and shall remain
                           enforceable by you against the Company and any such
                           successor in all respects. For the sake of clarity,
                           any termination of your employment under such
                           circumstances in which you are not offered employment
                           with another Affiliate of the Company shall be a
                           termination without Cause.

Entire Agreement:          This Letter Agreement contains the entire agreement
                           between the parties with respect to the subject
                           matter hereof and supersedes all prior agreements,
                           written or oral, with respect thereto and no terms,
                           including compensation terms, may be modified except
                           by a document signed by the parties and referring
                           explicitly hereto. Without limiting the foregoing,
                           any prior offer letter is hereby superceded in its
                           entirety. YOU AND THE COMPANY EACH REPRESENT THAT IN
                           EXECUTING THIS LETTER AGREEMENT YOU HAVE NOT RELIED
                           UPON ANY REPRESENTATION OR STATEMENT NOT SET FORTH
                           HEREIN. Without limiting the foregoing, you represent
                           that you understand that you shall not be entitled to
                           any equity interest, profits interest or other
                           interest in Aircastle except as set forth in a
                           writing signed by the Company. The Company's
                           affiliates are intended beneficiaries under this
                           Letter Agreement

                           No waiver by any person of any breach of any
                           condition or provision contained in this Letter
                           Agreement shall be deemed a waiver of any similar or
                           dissimilar condition or provision at the same or any
                           prior or subsequent time. To be effective, any waiver
                           must be set forth in a writing signed by the waiving

                           person and must specifically refer to the
                           condition(s) or provision(s) of this Letter Agreement
                           being waived. In the event of your death or judicial
                           determination of your incompetence, references in
                           this Letter Agreement to you shall be deemed, where
                           appropriate, to refer to your beneficiary, estate or


                           other legal representative.

                           In the event of any inconsistency between any
                           provision of this Letter Agreement and any provision
                           of any Company benefit plan or arrangement, the
                           provisions of this Letter Agreement shall control
                           unless you agree in a writing that expressly refers
                           to the provision of this Letter Agreement whose
                           control you are waiving.

Governing Law;             This Letter Agreement shall be governed by and
Jurisdiction:              construed in accordance with the laws of the State of
                           New York without regard to the principles of
                           conflicts of law thereof.



                                       10



                           THE PARTIES AGREE THAT EXCLUSIVE JURISDICTION WILL BE
                           IN A COURT OF COMPETENT JURISDICTION IN THE CITY OF
                           NEW YORK AND HEREBY WAIVE OBJECTION TO THE
                           JURISDICTION OR TO THE LAYING OF VENUE IN ANY SUCH
                           COURT.

                                     * * * *

We look forward to a successful employment relationship with you. If the
foregoing terms of employment are acceptable, please so indicate in the space
provided below.

Very truly yours,

Aircastle Investment Limited


By: /s/ Joseph P. Adams, Jr.
    ---------------------------------
Joseph P. Adams, Jr.

Accepted and agreed to:

/s/ Ron Wainshal
-------------------------------------
Ron Wainshal


                                       11



                    [Aircastle Investment Limited letterhead]

February 3, 2005

Mr. Mark Zeidman

Dear Mark:

     It is with great pleasure that we extend to you an offer to join Aircastle
Advisor LLC or an affiliate, (together, the "Company" or "Aircastle") on the
terms and conditions set forth below.



Title:                   Chief Financial Officer

Base Salary:             Your base salary is as set forth in Exhibit A (the
                         "Annual Salary").

Start Date:              On or about March 7, 2005 ("Start Date")

Location:                US offices of Aircastle, currently at 1251 Avenue of
                         the Americas, New York, NY

Aircastle Incentive      Subject to the terms of this Letter Agreement, you will
Compensation:            be paid an annual bonus equal to the percentage of the
                         Net Aircastle Operating Results (as defined on Exhibit
                         B hereto), if any, set forth as item 1 on Exhibit B
                         hereto (subject to adjustment for fiscal years
                         subsequent to 2006 as provided below), provided, that
                         in respect of the calendar years 2005 and 2006, you
                         shall be paid an annual bonus equal to the greater of
                         (i) the percentage of the Net Aircastle Operating
                         Results, and (ii) the Guaranteed Minimum Bonus. The
                         Guaranteed Minimum Bonus is $550,000 (pro rated in
                         respect of 2005 only in the event that your first date
                         of work is not actually on or before March 15, 2005).

                         For fiscal years subsequent to 2006, Fortress reserves
                         the right, in its sole and absolute discretion, to
                         raise or to lower your percentage interest in the Net
                         Aircastle Operating Results. Any such change shall be
                         set forth in a letter to you from Aircastle and will
                         supercede item 1 on Exhibit B hereto.

                         In addition, the Company may in its sole discretion
                         decide to grant you additional compensation or a bonus;
                         however this letter agreement does not entitle you to
                         such a payment (other than, as provided above, any
                         Guaranteed Minimum Bonus). Payment of additional
                         compensation or a bonus in any given fiscal or calendar
                         year does not entitle you to additional compensation or
                         a bonus in any subsequent year.You must be actively
                         employed by and not have given notice of your
                         termination of your employment with the Company (or any
                         affiliate of Aircastle for whom you may be employed on
                         a full-time



                         basis at the time) at the time such bonus or additional
                         compensation is to be paid in order to be eligible
                         therefore.

Equity Incentive Plan:   In addition, Exhibit B hereto sets forth your
                         co-investment rights and obligations with respect to
                         Aircastle.

Expense Reimbursement:   The Company will reimburse business expenses incurred
                         in the ordinary course of business. The Company will
                         also reimburse customary and reasonable moving and
                         relocation expenses (packing, storage, 1 flight for
                         family to make the move, etc. (i.e., no house purchase
                         or sale related costs)) in an amount not to exceed
                         $40,000, based on receipts provided therefore. You will
                         have use of one of the Company's apartments in New York
                         City for a period of up to two months.

Severance:               In the event that the Company terminates your
                         employment without cause (as defined below) prior to
                         December 31, 2006 you shall receive, within 30 days of
                         your termination, a single-sum payment equal to the
                         difference, if positive, between (i) the aggregate
                         amount that you would have been paid from the Start
                         Date on the basis of your base salary and Guaranteed
                         Minimum Bonus had your employment continued through
                         December 31, 2006 and (ii) the aggregate amount you
                         have been paid from the Start Date in salary and bonus
                         through the date of such termination, provided you sign
                         a separation agreement prepared by the Company which
                         includes a general release of claims and subject to
                         your compliance with the restrictive covenants set
                         forth herein. However, severance shall not be payable
                         (i) on account of termination by virtue of your death
                         or disability and (ii) if you are offered employment by
                         Aircastle or any of its or Fortress Investment Group
                         LLC's respective affiliates direct or indirect
                         subsidiaries or successors (or affiliate thereof
                         including any subsidiary of any private equity fund
                         managed by Fortress Investment Group LLC or any of its
                         investment and advisory affiliates) on terms
                         substantially comparable to the terms hereof (meaning
                         that without your consent, there will be no diminution
                         in the cash compensation terms of the employment
                         relationship).

Benefits:                You (and your eligible dependents, if any) may at your
                         election be covered under such health insurance plan as
                         covers Aircastle employees, subject to applicable
                         exclusions and limitations. You are eligible to
                         participate in Aircastle's 401(k) plan, if any, subject
                         to the terms of the plan. You are eligible to
                         participate in all other perquisite and benefit
                         arrangements generally made available by Aircastle to
                         its employees in general, subject to the terms of such
                         plans or programs. Each such benefit is subject to
                         modification, including elimination, from to time, at
                         Aircastle's sole discretion. You shall be entitled to
                         vacation of 20 days per year in accordance with
                         Aircastle's vacation policies.

"Cause"                  For purposes of this Letter Agreement, "cause" means
                         (i) your commission of an act of fraud or dishonesty in
                         the course of your service; (ii) your indictment or
                         entering of a plea of nolo contendere for a crime
                         constituting a felony or in



                                        2





                         respect of any act of fraud or dishonesty; (iii) your
                         commission of an act which would make you (or Aircastle
                         or Fortress Investment Group LLC or any of its
                         affiliates (collectively, "Fortress")) subject to being
                         enjoined, suspended, barred or otherwise disciplined
                         for violation of federal or state securities laws,
                         rules or regulations, including a statutory
                         disqualification; (iv) your gross negligence or willful
                         misconduct in connection with your employment by
                         Aircastle; (v) your commission or omission of any act
                         that would result in or might reasonably be a
                         substantial factor resulting in the termination of
                         Fortress or any of its affiliates, for cause under any
                         of Fortress's, or any of its affiliates', material
                         management, advisory or similar agreements; (vi) your
                         willful failure to comply with any material policies or
                         procedures of Aircastle (or, for so long as your place
                         of work is co-located at Fortress offices, Fortress) as
                         in effect from time to time provided that you shall
                         have been delivered a copy of such policies or notice
                         that they have been posted on an Aircastle (or
                         Fortress) website prior to such compliance failure, and
                         or (vii) your commission of any material breach of any
                         of the provisions or covenants set forth herein,
                         provided, however, that discharge pursuant to this
                         clause (vii) shall not constitute discharge for "Cause"
                         unless you shall have received written notice from
                         Aircastle stating the nature of such breach and
                         affording you an opportunity correct the act(s) or
                         omission(s) complained of within ten (10) days of your
                         receipt of such notice.

Policies and             You agree to comply fully with all of the Company's and
Procedures:              for so long as your place of work is co-located at
                         Fortress offices, all Fortress policies and procedures,
                         as amended from time to time.

Termination:             If your employment with the Company terminates for any
                         reason, you hereby agree that you shall immediately
                         resign from all positions (including, without
                         limitation, any management, officer or director
                         position) that you hold on the date of such termination
                         with the Company or Fortress, or any of the their
                         respective affiliates or with any entity in which the
                         Company or any of its affiliates has made any
                         investment. You hereby agree to execute and deliver
                         such documentation reasonably required by the Company
                         as may be necessary or appropriate to enable the
                         Company or Fortress, any of the Company's affiliates or
                         any entity in which the Company or any of its
                         affiliates has made an investment to effectuate such
                         resignation, and in any case, your execution of this
                         Letter Agreement shall be deemed the grant by you to
                         the officers of the Company of a limited power of
                         attorney to sign in your name and on your behalf such
                         documentation solely for the limited purposes of
                         effectuating such resignation.

Set-Off; Etc:            You hereby acknowledge and agree, without limiting the
                         rights of the Company otherwise available at law or in
                         equity, that, to the extent permitted by law, any or
                         all amounts or other consideration payable to you
                         hereunder or any other agreement with Aircastle or
                         Fortress (including any of its affiliates),



                                        3





                         may be set-off against any or all amounts or other
                         consideration payable by you to the Company under this
                         Letter Agreement or to the Company or any of its
                         affiliates under any other agreement between you and
                         the Aircastle Fortress or any of their respective
                         affiliates, including, without limitation, any
                         obligation resulting from your breach of the terms
                         hereof.

Representation:          You represent that you are free to be employed
                         hereunder without any contractual restrictions, express
                         or implied, with respect to any of your prior
                         employers. You represent that you have not taken or
                         otherwise misappropriated and you do not have in your
                         possession or control any confidential and proprietary
                         information belonging to any of your prior employers or
                         connected with or derived from your services to prior
                         employers. You represent that you have returned to all
                         prior employers any and all such confidential and
                         proprietary information. You further acknowledge that
                         Aircastle and Fortress have informed you that you are
                         not to use or cause the use of such confidential or
                         proprietary information in any manner whatsoever in
                         connection with your employment by Aircastle or any
                         affiliate. You agree that you will not use such
                         information.

                         You represent that you understand that this Letter
                         Agreement sets forth the terms and conditions of your
                         employment relationship with Aircastle or an affiliate
                         and as such, you have no express or implied right to be
                         treated the same as or more favorably than any other
                         employee of Aircastle or any of its affiliates with
                         respect to any matter set forth herein based on the
                         terms or conditions of such person's employment
                         relationship with Aircastle or any of its affiliates.
                         You further agree to keep the terms of this Letter
                         Agreement confidential and not to disclose any of the
                         terms or conditions hereof to any other person,
                         including any employee of Aircastle or Fortress, except
                         your attorney or accountant or, upon the advice of
                         counsel after notice to Aircastle, as may be required
                         by law or as may be required in order to enforce or
                         defend against the enforcement of this Letter
                         Agreement.

Restrictive Covenants:   You shall not, directly or indirectly, without prior
                         written consent of Aircastle, provide consultative
                         services to, own, manage, operate, join, control,
                         participate in, be engaged in, be employed by or be
                         connected with, any business, individual, partner,
                         firm, corporation or other entity, including without
                         limitation any business, individual, partner, firm,
                         corporation, or other entity that directly or
                         indirectly competes with (any such action,
                         individually, and in the aggregate, to "compete with"),
                         Aircastle or any of its affiliates, at any time during
                         your employment. In the case where your employment with
                         the Company is terminated by you for any reason or by
                         your employer for cause, such restrictions shall apply
                         for twelve (12) months after the effective date of such
                         termination solely as to any aircraft leasing and/or
                         aircraft finance business managed by Aircastle or
                         Fortress or any of their affiliates. Notwithstanding
                         anything else herein, the mere "beneficial ownership"
                         by you, either individually or as a member of a "group"
                         (as such



                                        4



                         terms are used in Rule 13(d) issued under the
                         Securities Exchange Act of 1934) of not more than 5% of
                         the voting stock of any public company shall not be
                         deemed in violation of this Letter Agreement. These
                         restrictions shall not apply following the termination
                         of your employment if, Fortress has lowered your
                         interest in the Net Aircastle Operating Results for any
                         calendar year below the percentage set forth as item 1
                         on Exhibit B as of the date hereof (or such lower
                         percentage as may at any time be set forth as item 1 on
                         Exhibit B from time to time in accordance with the
                         terms of this Letter Agreement) and you resign because
                         of and within ninety (90) days of this event; or (ii)
                         Fortress terminates your employment without cause.

                         You shall keep secret and retain in strictest
                         confidence, and shall not use for your benefit or the
                         benefit of others, except in connection with the
                         business and affairs of the Company (which, for
                         purposes of and in each instance used in this paragraph
                         and the next paragraph, shall include Fortress
                         (including (i) any fund managed by Fortress or any of
                         its affiliates during or prior to the period of your
                         employment with the Company and (ii) the Company's
                         other affiliates, including, without limitation,
                         portfolio investments of the private equity business of
                         Fortress)), all confidential information of and
                         confidential matters (whether made available in
                         written, electronic form or orally) relating to (x) the
                         Company's business and the Company (including, without
                         limitation, the actual investments of the Company, the
                         contemplated investments of the Company, the financial
                         performance of Aircastle or any fund managed by
                         Fortress or of any investment thereof, and the identity
                         of the equity investors in the Company or in any of the
                         funds or businesses Fortress or any of its affiliates
                         manages), (y) all corporations or other business
                         organizations in which the Company has or has had an
                         investment and (z) third parties, learned by you
                         heretofore or hereafter directly or indirectly in
                         connection with your employment or from the Company
                         (the "Confidential Company Information"). In
                         consideration of, and as a condition to, continued
                         access to Confidential Company Information, and without
                         prejudice to or limitation on any other confidentiality
                         obligation imposed by agreement or law, you hereby
                         undertake to use and protect Confidential Company
                         Information in accordance with restrictions placed on
                         its use or disclosure. Without limiting the foregoing,
                         you shall not disclose such Confidential Company
                         Information to any director, officer, partner, employee
                         or agent of the Company unless, in your reasonable good
                         faith judgment, such person has a need to know such
                         Confidential Company Information in furtherance of the
                         business of the Company and you shall not disclose
                         Confidential Company Information to anyone outside of
                         the Company except with the Company's express written
                         consent. The foregoing restrictions shall not apply to
                         Confidential Company Information which (i) is at the
                         time of receipt or thereafter becomes publicly known
                         other than a result of your having breached this Letter
                         Agreement or (ii) is received by you from a third party
                         not under an obligation to any person to keep such
                         information confidential, subject to your use of your
                         reasonable best efforts to obtain (and to cooperate


                                        5



                         with the Company's efforts to obtain) judicial approval
                         for such information to be disclosed under seal or
                         subject to other confidentiality orders. All memoranda,
                         notes, lists, records, property and any other tangible
                         product and documents (and all copies and excerpts
                         thereof), whether visually perceptible,
                         machine-readable or otherwise, made, produced or
                         compiled by you or made available to you concerning the
                         business of the Company, (i) shall at all times be the
                         property of the Company and shall be delivered to the
                         Company at any time upon its request, and (ii) upon
                         your termination of employment, shall be immediately
                         returned to the Company. The foregoing shall not limit
                         any other confidentiality obligations imposed by
                         agreement or by law.

                         From the date hereof through the end of the one-year
                         period commencing with your termination of employment
                         with the Company, you shall not, without the Company's
                         prior written consent, directly or indirectly, (i)
                         solicit or encourage to leave the employment or other
                         service of the Company or any of its affiliates any
                         employee or independent contractor thereof or (ii) hire
                         (on behalf of yourself or any other person or entity)
                         any employee or independent contractor who has left the
                         employment or other service of the Company or any of
                         its affiliates within the one-year period which follows
                         the termination of such employee's or independent
                         contractor's employment or other service with the
                         Company or any such affiliate.

                         From the date hereof through the end of the two-year
                         period commencing with your termination of employment
                         with the Company you shall not, whether for your own
                         account or for the account of any other person, firm,
                         corporation or other business organization,
                         intentionally interfere with Aircastle or Fortress's
                         relationship with, or endeavor to entice away from
                         Aircastle or Fortress or any fund, business or account
                         managed by Fortress, any investor in Aircastle Fortress
                         or any fund, business or account managed by Fortress.

                         Any breach by you of any of the provisions of the four
                         foregoing paragraphs (the "Restrictive Covenants")
                         shall entitle Aircastle (including each of its
                         affiliates) to cease making any payments to you under
                         any agreement, including this Letter Agreement,
                         pursuant to which you are entitled to monies from
                         Aircastle, or Fortress (or any such affiliate). In
                         addition, you acknowledge and agree that any breach by
                         you of the Restrictive Covenants would result in
                         irreparable injury and damage for which money damages
                         would not provide an adequate remedy. Therefore, if you
                         breach, or threaten to commit a breach of, any of the
                         provisions of the Restricted Covenants, the Company
                         shall have the right and remedy, in addition to, and
                         not in lieu of, any other rights and remedies available
                         to the Company under law or in equity (including,
                         without limitation, the recovery of damages), to have
                         the Restrictive Covenants specifically enforced
                         (without posting bond and without the need to prove
                         damages) by any court having equity jurisdiction,


                                        6





                         including, without limitation, the right to an entry
                         against you of restraining orders and injunctions
                         (preliminary, mandatory, temporary and permanent)
                         against violations, threatened or actual, and whether
                         or not then continuing, of the Restrictive Covenants.
                         You acknowledge and agree that the Restrictive
                         Covenants are reasonable in geographical and temporal
                         scope and in all other respects. If it is determined
                         that any of the Restrictive Covenants, or any part
                         thereof, is invalid or unenforceable, the remainder of
                         the Restrictive Covenants shall not thereby be affected
                         and shall be given full effect, without regard to the
                         invalid portions. If any court or other decision-maker
                         of competent jurisdiction determines that any provision
                         of the Restrictive Covenants, or any part thereof, is
                         unenforceable because of the duration or geographical
                         scope of such provision, then, after such determination
                         has become final and unappealable, the duration or
                         scope of such provision, as the case may be, shall be
                         reduced so that such provision becomes enforceable and,
                         in its reduced form, such provision shall then be
                         enforceable and shall be enforced.

                         Notwithstanding anything in this Letter Agreement to
                         the contrary, the provisions of this and the five
                         foregoing paragraphs shall survive any termination of
                         this Letter Agreement and any termination of your
                         employment.

Employment               You are an at-will employee. This letter is not a
Relationship:            contract of employment for any specific period of time,
                         and your employment may be terminated by you or by the
                         Company at any time for any reason or no reason
                         whatsoever. Notwithstanding the foregoing, you agree to
                         provide the Company with at least 30 days advance
                         written notice of your termination. In each case where
                         the term Company is used in this Letter Agreement it
                         shall mean, in addition to the Company, any affiliate
                         of Aircastle or Fortress for whom you may be employed
                         on a full-time basis at the applicable time.

                         The Company shall be entitled, in connection with its
                         investment structuring, tax planning, business
                         organization or other reasons, to terminate your
                         employment in connection with an invitation from
                         another affiliate of Aircastle or Fortress, including,
                         without limitation, a direct or indirect subsidiary of
                         any private equity fund managed by Fortress Investment
                         Group LLC or any of its investment advisory affiliates,
                         to accept employment with such affiliate in which case
                         the terms and conditions hereof shall apply to your
                         employment relationship with such entity mutatis
                         mutandis. For the sake of clarity, any termination of
                         your employment under such circumstances in which you
                         are not offered employment with another affiliate of
                         Fortress shall be a termination without Cause.

Entire Agreement:        This Letter Agreement contains the entire agreement
                         between the parties with respect to the subject matter
                         hereof and supersedes all prior agreements, written or
                         oral, with respect thereto. Without limiting the
                         foregoing, any prior offer letter is hereby superceded
                         in its entirety. YOU REPRESENT THAT IN EXECUTING THIS
                         LETTER AGREEMENT YOU HAVE NOT RELIED UPON ANY



                                        7





                         REPRESENTATION OR STATEMENT NOT SET FORTH HEREIN.
                         Without limiting the foregoing, you represent that you
                         understand that you shall not be entitled to any equity
                         interest, profits interest or other interest in the
                         Company (including any of its affiliates, including any
                         fund or other business managed by any of them) except
                         as set forth in a writing signed by the Company. The
                         Company's affiliates are intended beneficiaries under
                         this Letter Agreement

Governing Law;           This Letter Agreement shall be governed by and
Jurisdiction:            construed in accordance with the laws of the State of
                         New York without regard to the principles of conflicts
                         of law thereof.

                         THE PARTIES AGREE THAT EXCLUSIVE JURISDICTION WILL BE
                         IN A COURT OF COMPETENT JURISDICTION IN THE CITY OF NEW
                         YORK AND HEREBY WAIVE OBJECTION TO THE JURISDICTION OR
                         TO THE LAYING OF VENUE IN ANY SUCH COURT.


                                     * * * *

     We look forward to a successful employment relationship with you. If the
foregoing terms of employment are acceptable, please so indicate in the space
provided below.

Very truly yours,

Aircastle Investment Limited


By: /s/ Wesley R. Edens
    -------------------------
Wesley R. Edens


Accepted and agreed to:

/s/ Mark Zeidman
-----------------------------
Mark Zeidman


                                        8



                                    EXHIBIT A

     This is Exhibit A to the Letter Agreement between Mark Zeidman and
Aircastle Advisor LLC, dated as of February 3, 2005 (the "Letter Agreement").
When executed by both parties, the terms of this Exhibit A are intended to be
incorporated by reference into the Letter Agreement.

Annual Salary: $200,000 per annum

Aircastle Advisor LLC


By: /s/ Wesley R. Edens
    --------------------------
Wesley R. Edens

/s/ Mark Zeidman
-----------------------------
Mark Zeidman


                                        9



                                    EXHIBIT B

     This is Exhibit B to the Letter Agreement between Mark Zeidman and
Aircastle Advisor LLC dated as of February 3, 2005 (the "Letter Agreement").
When executed by both parties, the terms of this Exhibit B are intended to be
incorporated by reference into the Letter Agreement.

1. PERCENTAGE OF NET AIRCASTLE OPERATING RESULTS: 3.50% (subject to adjustment
                                                  for fiscal years subsequent to
                                                  2006).

Your percentage of the Net Aircastle Operating Results (as defined below) will
be paid to you as soon as practicable after results of Aircastle Investment
Limited ("Aircastle") for the applicable fiscal year have been determined, but
no later than 90 days after the end of such fiscal year (unless the audited
financials therefore have not yet then been completed, in which case at least
90% of the estimated amount shall be paid no later than such 90th day and the
remainder paid promptly upon completion of such audit). For fiscal years
subsequent to 2006, Fortress reserves the right, in its sole and absolute
discretion, to raise or to lower your percentage interest in the Net Aircastle
Operating Results.

In no event will you be entitled to receive any of the Net Aircastle Operating
Results described above if you are not actively employed by or have given notice
of your termination of your employment with the Company (or any affiliate of
Aircastle for whom you may be employed on a full-time basis at the time) at the
time such compensation is to be paid.

The "NET AIRCASTLE OPERATING RESULTS" equals (i) 1.5% of Aircastle Investment
Limited's average book equity for the current year ending December 31 of the
relevant year plus an incentive fee of approximately 25% of Aircastle's return
on equity in excess of a preferred return of 8% (net of rebates thereof with
respect to investments by Fortress affiliates or other investors entitled to
rebates) minus (ii) the sum of (x) (A) all compensation costs (including
discretionary bonuses that may be paid to employees of Aircastle and its
affiliates providing services for Aircastle), (B) rent and (C) other operating
expenses (including reserves), in each case which are incurred by or allocable
to [Aircastle Advisor LLC and applicable affiliates] and (y) any taxes payable
in respect of the amounts set forth in (i) above. Determinations of allocable
shares of each category of expense set forth in clause (ii)(x) above (which
allocations may vary by category) will be made by Fortress, in its sole and
absolute discretion.

2. AIRCASTLE OPTIONS. In connection with each Aircastle common stock equity
financing (for cash), you shall receive a number of options for shares of common
stock of Aircastle equal to (i) the aggregate number of shares of common stock
issued in such offering multiplied by (ii) (x) ten percent of (y) your
percentage at such time of the Net Aircastle Operating Results as set forth
above. Each option grant shall have a vesting schedule pursuant to which 25% of
the shares subject to such option will vest on the first, second, third and
fourth anniversaries of the date of grant, as well as such other terms and
conditions as Fortress has, as manager of other companies, imposed in respect
option grants.

3. AIRCASTLE EQUITY COMMITMENT. You agree to make an equity commitment in
Aircastle (the specific amount designated by you in accordance with the next
sentence, the "Aircastle Commitment") on terms substantially similar to other
investors in Aircastle in the amount of


                                       10



between $100,000 and $200,000; provided, however, that the form of such
investment may be restructured on mutually acceptable terms for tax structuring
or other reasons. You shall confirm the specific Aircastle Commitment you have
elected, by executing and delivering the Aircastle subscription agreement or
such other documentation deemed by Fortress or Aircastle to be necessary and
appropriate to evidence such commitment.

Aircastle Advisor LLC


By: /s/ Joseph P. Adams, Jr.
    -------------------------
Joseph P. Adams, Jr.

/s/ Mark Zeidman
-----------------------------
Mark Zeidman.


                                       11



                              Aircastle Advisor LLC
                       300 First Stamford Place, 5th Floor
                                Stamford CT 06902

March 8, 2006

Mark Zeidman
c/o Aircastle Advisor LLC
300 First Stamford Place, 5th Floor
Stamford CT  06902

Dear  Mark:

     Reference is made to that certain letter agreement, dated February 3, 2005
(the "Letter Agreement"), between you and Aircastle Investment Limited ("AIL").

1.   By signing this letter, Aircastle Advisor LLC ("AALLC") confirms that it
     has assumed any and all obligations of "Aircastle" or "Company" under the
     Letter Agreement, as amended hereby, and you confirm that Aircastle
     Investment Limited has no obligation or liability under the Letter
     Agreement.

2.   Guaranteed Minimum Bonus.

     The first two paragraphs of "Aircastle Incentive Compensation" in the
     Letter Agreement are hereby deleted and the following is substituted in
     lieu therefor:

     "Subject to the terms of this Letter Agreement, you will be paid a minimum
     annual bonus for the calendar year 2006, which shall be paid to you on or
     prior to January 31, 2007, in an amount not less than $550,000 (the
     "Guaranteed Minimum Bonus")."

3.   Initial Grant.

     On and as of the date hereof you have executed a Restricted Share Agreement
     in respect of certain shares of Aircastle Investment Limited. Accordingly,
     the following provisions are deleted from the Letter Agreement:

     (a)  the "Equity Incentive Plan" paragraph and Exhibit B to the Letter
          Agreement; and

     (b)  in the first paragraph of "Restrictive Covenants", (i) the words and
          figures "twelve (12) months" shall be amended to read "six (6) months"
          in the first sentence thereof and (ii) the words ", Fortress has
          lowered....; or (ii)" shall be deleted from the last sentence thereof.



4.   Miscellaneous.

     Except as expressly set forth herein, the Letter Agreement remains in full
     force and effect, unchanged.

AIRCASTLE ADVISOR LLC


By: /s/ David Walton
    ----------------------------

Accepted and agreed to, this 14th day of March, 2006:

/s/ Mark Zeidman
--------------------------------
Mark Zeidman


                                        2



                    [Aircastle Investment Limited letterhead]

February 3, 2005

Mr. David Walton
9249 NE 37th Place
Yarrow Point, WA 98004

Dear David:

     It is with great pleasure that we extend to you an offer to join Aircastle
Advisor LLC (together with its Affiliates (as defined below), the "Company" or
"Aircastle") on the terms and conditions set forth below.



Title:             General Counsel

Start Date:        On or about February  15, 2005 (the "Start Date")

Location:          US offices of Aircastle, currently at 1251 Avenue of the
                   Americas, New York, NY, provided, however, that you may be
                   requested to relocate to offices of Aircastle or one of its
                   foreign Affiliates (i) in Connecticut, (ii) in Dublin or,
                   (iii) as you and we may agree, such other location outside of
                   the U.S.

Base Salary:       Your base salary is $200,000.

Initial Payment:   To help defray certain expenses associated with your
                   relocation, you will receive a payment of $45,000, payable
                   together with your first paycheck; provided, however, that
                   you agree to repay to the Company the full amount of such
                   payment (without interest) in the event that for any reason
                   (other than a termination of your employment by the Company
                   without cause (as defined below)) you are not employed by the
                   Company on the six month anniversary of your Start Date.

Annual             The Company may in its sole discretion decide to grant you
Discretionary      additional compensation or a bonus; however this letter
Incentive          agreement does not entitle you to such a payment (other than,
Compensation:      as provided below, the Guaranteed 2005 Bonus).

                   You shall receive additional compensation from the Company in
                   respect of 2005 equal to $200,000 (your "Guaranteed 2005
                   Bonus"). The Guaranteed 2005 Bonus will be paid as soon as
                   practicable after performance results in respect of 2005 have
                   been determined, but in no event later than January 31, 2006.



                   Payment of additional compensation or a bonus in any given
                   fiscal or calendar year does not entitle you to additional
                   compensation or a bonus in any subsequent year. You must be
                   actively employed by and not have given notice of your
                   termination of your employment with the Company (or any
                   Affiliate of Aircastle for whom you may be employed on a
                   full-time basis at the time) at the time such bonus or
                   additional compensation is to be paid in order to be eligible
                   therefore. In the event that you are terminated by the
                   Company (other than in the case where you are offered
                   employment by any of Affiliate of or successor to the
                   Company) without cause (as defined below) (but not including
                   a termination in the event of your death or disability) the
                   Company shall pay you (i) if such termination occurs at any
                   time prior to December 31, 2007, an amount equal to your base
                   salary plus (ii) if such termination occurs at any time after
                   your Start Date and prior to the date on which you have been
                   paid your Guaranteed 2005 Bonus, an amount equal to your
                   Guaranteed 2005 Bonus, such amount(s) to be paid within
                   thirty (30) days of such date of termination, provided you
                   sign a separation agreement prepared by the Company which
                   includes a general release of claims.

                   The following outlines what we anticipate will be the
                   Company's approach to incentive compensation, subject to the
                   foregoing paragraphs, although the Company will be free to
                   change its incentive compensation methodology from time to
                   time: you can expect that a portion of each year's annual
                   bonus will be paid in cash (either at the end of the
                   applicable fiscal year or at the beginning of the subsequent
                   fiscal), and that the remaining portion of the bonus will be
                   paid as grant of restricted stock, with the portion of the
                   bonus to be paid in stock to increase with levels of
                   compensation. The number of such shares of restricted stock
                   to be granted will be calculated by dividing the amount being
                   paid in stock by the FMV of the stock on the date of grant.
                   Generally, restrictions on such shares of restricted stock
                   will lapse 1/3 on each of the 3rd, 4th and 5th anniversaries
                   of the date of grant. You would receive dividends on unvested
                   shares.

                   In connection with your joining the Company, you shall be
                   awarded a grant (the "Grant") of 50,000 shares of restricted
                   stock which shall vest one-third on each of the 3rd, 4th and
                   5th anniversaries of your Start Date. You would receive
                   dividends on unvested shares. The Grant will be made pursuant
                   to a restricted stock agreement in form and substance
                   customary under such circumstances, including provisions
                   which provide that (i) you shall be vested in one-third of
                   the Grant if your employment is terminated by the Company
                   without cause prior to the day on which such shares shall be
                   fully vested and (ii) you shall be vested in 100% of the
                   Grant if both (x) a change of control (to be defined in the
                   Company's incentive stock award plan) occurs and (ii) your
                   employment is terminated by the Company (or its successor)
                   without cause within 12 months of such change of control.

Expense            The Company will reimburse business expenses incurred in the
                   ordinary



                                       2





Reimbursement:     course of business, including reasonable moving expenses from
                   your home in the Seattle area to the New York metropolitan
                   area.

Benefits:          You (and your eligible dependents, if any) may at your
                   election be covered under such health insurance plan as
                   covers Aircastle employees, subject to applicable exclusions
                   and limitations. You are eligible to participate in
                   Aircastle's 401(k) plan, if any, subject to the terms of the
                   plan. You are eligible to participate in all other perquisite
                   and benefit arrangements generally made available by
                   Aircastle to its senior executives, subject to the terms of
                   such plans or programs. Each such benefit is subject to
                   modification, including elimination, from to time, at
                   Aircastle's sole discretion. You shall be entitled to
                   vacation of 20 days per year in accordance with Aircastle's
                   vacation policies.

"Cause"            For purposes of this Letter Agreement, "cause" means (i) your
                   commission of an act of fraud or dishonesty in the course of
                   your service; (ii) your indictment or entering of a plea of
                   nolo contendere for a crime constituting a felony or in
                   respect of any act of fraud or dishonesty; (iii) your
                   commission of an act which would make you (or Aircastle or
                   Fortress Investment Group LLC or any of its affiliates
                   (collectively, "Fortress")) subject to being enjoined,
                   suspended, barred or otherwise disciplined for violation of
                   federal or state securities laws, rules or regulations,
                   including a statutory disqualification; (iv) your gross
                   negligence or willful misconduct in connection with your
                   employment by Aircastle; (v) your commission or omission of
                   any act that would result in or might reasonably be a
                   substantial factor resulting in the termination of Fortress
                   or any of its affiliates, for cause under any of Fortress's,
                   or any of its affiliates', material management, advisory or
                   similar agreements; (vi) your willful failure to comply with
                   any material policies or procedures of Aircastle (or, for so
                   long as your place of work is co-located at Fortress offices,
                   Fortress) as in effect from time to time provided that you
                   shall have been delivered a copy of such policies or notice
                   that they have been posted on an Aircastle (or Fortress)
                   website prior to such compliance failure, and or (vii) your
                   commission of any material breach of any of the provisions or
                   covenants set forth herein, provided, however, that discharge
                   pursuant to this clause (vii) shall not constitute discharge
                   for "Cause" unless you shall have received written notice
                   from Aircastle stating the nature of such breach and
                   affording you an opportunity correct the act(s) or
                   omission(s) complained of within ten (10) days of your
                   receipt of such notice.

Policies and       You agree to comply fully with all of the Company's and for
Procedures:        so long as your place of work is co-located at Fortress
                   offices, all Fortress policies and procedures, as amended
                   from time to time.

Termination:       If your employment with the Company terminates for any
                   reason, you hereby agree that you shall immediately resign
                   from all positions (including, without limitation, any
                   management, officer or director position) that you hold on
                   the



                                       3





                   date of such termination with the Company, or any of the
                   their respective affiliates or with any entity in which the
                   Company or any of its affiliates has made any investment. You
                   hereby agree to execute and deliver such documentation
                   reasonably required by the Company as may be necessary or
                   appropriate to enable the Company, any of the Company's
                   affiliates or any entity in which the Company or any of its
                   affiliates has made an investment to effectuate such
                   resignation, and in any case, your execution of this Letter
                   Agreement shall be deemed the grant by you to the officers of
                   the Company of a limited power of attorney to sign in your
                   name and on your behalf such documentation solely for the
                   limited purposes of effectuating such resignation.

Set-Off; Etc:      You hereby acknowledge and agree, without limiting the rights
                   of the Company otherwise available at law or in equity, that,
                   to the extent permitted by law, any or all amounts or other
                   consideration payable to you hereunder or any other agreement
                   with the Company (including any of its affiliates), may be
                   set-off against any or all amounts or other consideration
                   payable by you to the Company under this Letter Agreement or
                   to the Company or any of its affiliates under any other
                   agreement between you and the Company or any of its
                   affiliates, including, without limitation, any obligation
                   resulting from your breach of the terms hereof.

Representation:    You represent that you are free to be employed hereunder
                   without any contractual restrictions, express or implied,
                   with respect to any of your prior employers. You represent
                   that you have not taken or otherwise misappropriated and you
                   do not have in your possession or control any confidential
                   and proprietary information belonging to any of your prior
                   employers or connected with or derived from your services to
                   prior employers. You represent that you have returned to all
                   prior employers any and all such confidential and proprietary
                   information. You further acknowledge that Aircastle and
                   Fortress have informed you that you are not to use or cause
                   the use of such confidential or proprietary information in
                   any manner whatsoever in connection with your employment by
                   Aircastle or any affiliate. You agree that you will not use
                   such information.

                   You represent that you understand that this Letter Agreement
                   sets forth the terms and conditions of your employment
                   relationship with Aircastle or an affiliate and as such, you
                   have no express or implied right to be treated the same as or
                   more favorably than any other employee of Aircastle or any of
                   its affiliates with respect to any matter set forth herein
                   based on the terms or conditions of such person's employment
                   relationship with Aircastle or any of its affiliates. You
                   further agree to keep the terms of this Letter Agreement
                   confidential and not to disclose any of the terms or
                   conditions hereof to any other person, including any employee
                   of Aircastle or Fortress, except your attorney or accountant
                   or, upon the advice of counsel after notice to Aircastle, as
                   may be required by law or as may be required in order to
                   enforce or defend



                                       4





                   against the enforcement of this Letter Agreement.

Restrictive        You shall not, directly or indirectly, without prior written
Covenants:         consent of Aircastle, provide consultative services to, own,
                   manage, operate, join, control, participate in, be engaged
                   in, be employed by or be connected with, any business,
                   individual, partner, firm, corporation or other entity,
                   including without limitation any business, individual,
                   partner, firm, corporation, or other entity that directly or
                   indirectly competes with (any such action, individually, and
                   in the aggregate, to "compete with"), Aircastle or any of its
                   affiliates, at any time during your employment. In the case
                   where your employment with the Company is terminated by you
                   for any reason or by your employer for cause, such
                   restrictions shall apply for three (3) months after the
                   effective date of such termination solely as to any aircraft
                   leasing and/or aircraft finance business managed by Aircastle
                   or Fortress or any of their affiliates. Notwithstanding
                   anything else herein, the mere "beneficial ownership" by you,
                   either individually or as a member of a "group" (as such
                   terms are used in Rule 13(d) issued under the Securities
                   Exchange Act of 1934) of not more than 5% of the voting stock
                   of any public company shall not be deemed in violation of
                   this Letter Agreement. These restrictions shall not apply
                   following the termination of your employment if (i) you did
                   not receive in respect of the most recent fiscal year prior
                   to the date of termination aggregate compensation of at least
                   $500,000 (valuing any restricted stock awarded to you based
                   on its value on the date of grant) or (ii) Fortress
                   terminates your employment without cause.

                   You shall keep secret and retain in strictest confidence, and
                   shall not use for your benefit or the benefit of others,
                   except in connection with the business and affairs of the
                   Company (which, for purposes of and in each instance used in
                   this paragraph and the next paragraph, shall include Fortress
                   (including (i) any fund managed by Fortress or any of its
                   affiliates during or prior to the period of your employment
                   with the Company and (ii) the Company's other affiliates,
                   including, without limitation, portfolio investments of the
                   private equity business of Fortress)), all confidential
                   information of and confidential matters (whether made
                   available in written, electronic form or orally) relating to
                   (x) the Company's business and the Company (including,
                   without limitation, the actual investments of the Company,
                   the contemplated investments of the Company, the financial
                   performance of Aircastle or any fund managed by Fortress or
                   of any investment thereof, and the identity of the equity
                   investors in the Company or in any of the funds or businesses
                   Fortress or any of its affiliates manages), (y) all
                   corporations or other business organizations in which the
                   Company has or has had an investment and (z) third parties,
                   learned by you heretofore or hereafter directly or indirectly
                   in connection with your employment or from the Company (the
                   "Confidential Company Information"). In consideration of, and
                   as a condition to, continued access to Confidential Company
                   Information, and without prejudice to or limitation on any
                   other confidentiality obligation imposed by agreement or



                                       5



                   law, you hereby undertake to use and protect Confidential
                   Company Information in accordance with restrictions placed on
                   its use or disclosure. Without limiting the foregoing, you
                   shall not disclose such Confidential Company Information to
                   any director, officer, partner, employee or agent of the
                   Company unless, in your reasonable good faith judgment, such
                   person has a need to know such Confidential Company
                   Information in furtherance of the business of the Company and
                   you shall not disclose Confidential Company Information to
                   anyone outside of the Company except with the Company's
                   express written consent. The foregoing restrictions shall not
                   apply to Confidential Company Information which (i) is at the
                   time of receipt or thereafter becomes publicly known other
                   than a result of your having breached this Letter Agreement
                   or (ii) is received by you from a third party not under an
                   obligation to any person to keep such information
                   confidential, subject to your use of your reasonable best
                   efforts to obtain (and to cooperate with the Company's
                   efforts to obtain) judicial approval for such information to
                   be disclosed under seal or subject to other confidentiality
                   orders. All memoranda, notes, lists, records, property and
                   any other tangible product and documents (and all copies and
                   excerpts thereof), whether visually perceptible,
                   machine-readable or otherwise, made, produced or compiled by
                   you or made available to you concerning the business of the
                   Company, (i) shall at all times be the property of the
                   Company and shall be delivered to the Company at any time
                   upon its request, and (ii) upon your termination of
                   employment, shall be immediately returned to the Company. The
                   foregoing shall not limit any other confidentiality
                   obligations imposed by agreement or by law.

                   From the date hereof through the end of the one-year period
                   commencing with your termination of employment with the
                   Company, you shall not, without the Company's prior written
                   consent, directly or indirectly, (i) solicit or encourage to
                   leave the employment or other service of the Company or any
                   of its affiliates any employee or independent contractor
                   thereof or (ii) hire (on behalf of yourself or any other
                   person or entity) any employee or independent contractor who
                   has left the employment or other service of the Company or
                   any of its affiliates within the one-year period which
                   follows the termination of such employee's or independent
                   contractor's employment or other service with the Company or
                   any such affiliate.

                   Any breach by you of any of the provisions of the three
                   foregoing paragraphs (the "Restrictive Covenants") shall
                   entitle Aircastle (including each of its affiliates) to cease
                   making any payments to you under any agreement, including
                   this Letter Agreement, pursuant to which you are entitled to
                   monies from Aircastle, or Fortress (or any such affiliate).
                   In addition, you acknowledge and agree that any breach by you
                   of the Restrictive Covenants would result in irreparable
                   injury and damage for which money damages would not provide
                   an adequate remedy. Therefore, if you breach, or threaten to
                   commit a breach of, any of the provisions of the Restricted
                   Covenants, the Company shall have the right and remedy, in
                   addition to, and not in lieu of, any other rights and
                   remedies available to the Company under law or in


                                       6





                   equity (including, without limitation, the recovery of
                   damages), to have the Restrictive Covenants specifically
                   enforced (without posting bond and without the need to prove
                   damages) by any court having equity jurisdiction, including,
                   without limitation, the right to an entry against you of
                   restraining orders and injunctions (preliminary, mandatory,
                   temporary and permanent) against violations, threatened or
                   actual, and whether or not then continuing, of the
                   Restrictive Covenants. You acknowledge and agree that the
                   Restrictive Covenants are reasonable in geographical and
                   temporal scope and in all other respects. If it is determined
                   that any of the Restrictive Covenants, or any part thereof,
                   is invalid or unenforceable, the remainder of the Restrictive
                   Covenants shall not thereby be affected and shall be given
                   full effect, without regard to the invalid portions. If any
                   court or other decision-maker of competent jurisdiction
                   determines that any provision of the Restrictive Covenants,
                   or any part thereof, is unenforceable because of the duration
                   or geographical scope of such provision, then, after such
                   determination has become final and unappealable, the duration
                   or scope of such provision, as the case may be, shall be
                   reduced so that such provision becomes enforceable and, in
                   its reduced form, such provision shall then be enforceable
                   and shall be enforced.

                   Notwithstanding anything in this Letter Agreement to the
                   contrary, the provisions of this and the five foregoing
                   paragraphs shall survive any termination of this Letter
                   Agreement and any termination of your employment.

Employment         You are an at-will employee. This letter is not a contract of
Relationship:      employment for any specific period of time, and your
                   employment may be terminated by you or by the Company at any
                   time for any reason or no reason whatsoever. Notwithstanding
                   the foregoing, you agree to provide the Company with at least
                   30 days advance written notice of your termination. In each
                   case where the term Company is used in this Letter Agreement
                   it shall mean, in addition to the Company, any Affiliate of
                   Aircastle or Fortress for whom you may be employed on a
                   full-time basis at the applicable time.

                   The Company shall be entitled, in connection with its
                   investment structuring, tax planning, business organization
                   or other reasons, to terminate your employment in connection
                   with an invitation from another affiliate of Aircastle (an
                   "Affiliate"), to accept employment with such Affiliate in
                   which case the terms and conditions hereof shall apply to
                   your employment relationship with such entity mutatis
                   mutandis. For the sake of clarity, any termination of your
                   employment under such circumstances in which you are not
                   offered employment with another Affiliate of the Company
                   shall be a termination without Cause.

Entire
Agreement:         This Letter Agreement contains the entire agreement between
                   the parties with respect to the subject matter hereof and
                   supersedes all prior agreements, written or oral, with
                   respect thereto. Without limiting the foregoing, any prior
                   offer letter is hereby superceded in its entirety. YOU
                   REPRESENT THAT IN



                                       7





                   EXECUTING THIS LETTER AGREEMENT YOU HAVE NOT RELIED UPON ANY
                   REPRESENTATION OR STATEMENT NOT SET FORTH HEREIN. Without
                   limiting the foregoing, you represent that you understand
                   that you shall not be entitled to any equity interest,
                   profits interest or other interest in the Company (including
                   any of its affiliates, including any fund or other business
                   managed by any of them) except as set forth in a writing
                   signed by the Company. The Company's affiliates are intended
                   beneficiaries under this Letter Agreement

Governing Law;     This Letter Agreement shall be governed by and construed in
Jurisdiction:      accordance with the laws of the State of New York without
                   regard to the principles of conflicts of law thereof.

                   THE PARTIES AGREE THAT EXCLUSIVE JURISDICTION WILL BE IN A
                   COURT OF COMPETENT JURISDICTION IN THE CITY OF NEW YORK AND
                   HEREBY WAIVE OBJECTION TO THE JURISDICTION OR TO THE LAYING
                   OF VENUE IN ANY SUCH COURT.


                                     * * * *

We look forward to a successful employment relationship with you. If the
foregoing terms of employment are acceptable, please so indicate in the space
provided below.

Very truly yours,

Aircastle Investment Limited


By: /s/ Wesley R. Edens
    ---------------------------------
    Wesley R. Edens

Accepted and agreed to:

/s/ David Walton
-------------------------------------
David Walton


                                       8



                              Aircastle Advisor LLC
                       300 First Stamford Place, 5th Floor
                                Stamford CT 06902

March 8, 2006

David Walton
384 Sound Beach Avenue
Old Greenwich CT 06870

Dear Dave:

     Reference is made to that certain letter agreement, dated February 3, 2005
(the "Letter Agreement"), between you and Aircastle Advisor LLC.

1.   Initial Grant.

     On and as of the date hereof you have executed a Restricted Share Agreement
     in respect of certain shares of Aircastle Investment Limited. Accordingly,
     the final two paragraphs under "Annual Discretionary Incentive
     Compensation" are deleted from the Letter Agreement.

2.   Miscellaneous.

     (a)  You confirm receipt of your "Guaranteed 2005 Bonus".

     (b)  Except as expressly set forth herein, the Letter Agreement remains in
          full force and effect, unchanged.

AIRCASTLE ADVISOR LLC


By:  /s/ Mark Zeidman
    ----------------------------

Accepted and agreed to, this 8th day of March, 2006:

/s/ David Walton
--------------------------------
David Walton



[FORTRESS INVESTMENT GROUP LLC LOGO]

                                                 1251 AVENUE OF THE AMERICAS
                                                          16TH FLOOR
                                                      NEW YORK, NY 10020
                                                       TEL 212 798-6100

July 15, 2004

Joseph Schreiner
5205 N. Marina Pacifica Drive, Suite 21
Long Beach, CA 90803

Dear Joseph:

     It is with great pleasure that we extend to you an offer to join Fortress
Investment Group LLC (including it affiliates, the "Company" or "Fortress") on
the terms and conditions set forth below.



Title:              Executive Vice President of [precise name to be determined:
                    Aircastle Lease Finance Ltd.] ("Aircastle").

Base Salary:        Your base salary is as set forth in Exhibit A
                    (the "Annual Salary").

Start Date:         On or about July 26, 2004

Location:           1251 Avenue of the Americas
                    New York, NY

Aircastle:          Fortress currently expects to capitalize Aircastle as a
                    non-U.S. domiciled, passive tax vehicle. Fortress currently
                    expects that Aircastle will be externally managed by
                    [precise name to be determined: Aircastle Advisers LLC]
                    (including its successor by assignment or otherwise,
                    "ManageCo"), an affiliate of Fortress, pursuant to a
                    management agreement that will be entered into between
                    Aircastle and ManageCo on such terms and conditions as
                    Fortress in its sole discretion determines (as amended from
                    time to time, the "Aircastle Management Agreement").
                    Fortress currently expects that ManageCo will earn from
                    Aircastle pursuant to the Aircastle Management Agreement a
                    management fee of 1.5% of equity under management and an
                    incentive fee of approximately 25% of the return on equity
                    in excess of a preferred return of 8%.

Aircastle           Subject to the terms of this Letter Agreement, you will be
Incentive           paid an annual bonus in respect of each fiscal year in an
Compensation:       amount equal to the greater of (i) the percentage of the Net
                    Aircastle Operating Results (as defined on Exhibit B
                    hereto), if any, set forth on Exhibit B hereto (subject to
                    adjustment for fiscal years subsequent to 2005 as provided
                    below and to pro rata dilution in the



                    case of awards of interests in the Net Aircastle Operating
                    Results to other individuals) and (ii) the Guaranteed
                    Minimum Bonus. The Guaranteed Minimum Bonus is $200,000 (pro
                    rated in respect of the first year hereunder based on the
                    period beginning on your Start Date and ending at the end of
                    such fiscal year). You must be actively employed by and not
                    have given notice of your termination of your employment
                    with the Company (or any affiliate of Fortress for whom you
                    may be employed on a full-time basis at the time) at the
                    time such bonus compensation is to be paid; provided,
                    however, that you shall be paid such bonus compensation in
                    respect of any fiscal year in the event that your employment
                    is terminated by the Company without cause following the end
                    of such fiscal year and prior to the date such bonus
                    compensation would otherwise have been paid.

                    For fiscal years subsequent to 2005, Fortress reserves the
                    right, in its sole and absolute discretion, to raise or to
                    lower your percentage interest in the Net Aircastle
                    Operating Results.

Equity              In addition, Exhibit B hereto sets forth your co-investment
Incentive           rights and obligations with respect to Aircastle.
Plan:

Expense             The Company will reimburse business expenses incurred in the
Reimbursement:      ordinary course of business.

Severance:          In the event that the Company terminates your employment
                    without cause (as defined below) prior to the eighteen (18)
                    month anniversary of your Start Date, you shall receive,
                    within 30 days of your termination, a single-sum payment
                    equal to the difference, if positive, between (i) the
                    aggregate amount that you would have been paid from the
                    Start Date on the basis of your base salary and Guaranteed
                    Minimum Bonus had your employment continued through such
                    eighteen (18) month anniversary (for purposes of this clause
                    (i) only, assuming that a pro rata portion of the Guaranteed
                    Minimum Bonus was payable on such eighteen (18) month
                    anniversary for the period beginning on the first day of the
                    fiscal year in which such termination occurs and ending on
                    such anniversary) and (ii) the aggregate amount you have
                    been paid from the Start Date in salary and bonus through
                    the date of such termination, provided you sign a separation
                    agreement prepared by the Company which includes a general
                    release of claims and subject to your compliance with the
                    restrictive covenants set forth herein. However, severance
                    shall not be payable (i) on account of termination by virtue
                    of your death or disability and (ii) if you are offered
                    employment by Fortress or any of its affiliates or a
                    successor to Fortress (or affiliate thereof) on terms
                    substantially comparable to the terms hereof (meaning that
                    without your consent, there will be no diminution in the
                    cash compensation terms of the employment relationship or in
                    the available medical health insurance benefits, location of
                    employment will be New York, Chicago or Los Angeles, and
                    that the other material terms and conditions of the
                    agreement will apply).



                                        2





Benefits:           You (and your eligible dependents, if any) may at your
                    election be covered under Fortress's health insurance plan,
                    subject to applicable exclusions and limitations. You are
                    eligible to participate in Fortress's 401 (k) plan, subject
                    to the terms of the plan. You are eligible to participate in
                    all other perquisite and benefit arrangements generally made
                    available by Fortress to its employees in general,
                    including, without limitation, any directors and officers
                    insurance and any benefits of indemnification or limitation
                    of liability which may be provided to Fortress employees
                    with respect to their service to Fortress or to another
                    entity at the request of or for the benefit of Fortress,
                    subject to the terms of such plans or programs. Each such
                    benefit is subject to modification, including elimination,
                    from to time, at Fortress sole discretion. You shall be
                    entitled to vacation of 20 days per year in accordance with
                    Fortress's vacation policies.

"Cause"             For purposes of this Letter Agreement, "cause" means (i)
                    your commission of an act of fraud or dishonesty in the
                    course of your employment; (ii) your indictment or entering
                    of a plea of nolo contendere for a crime constituting a
                    felony or in respect of any act of fraud or dishonesty;
                    (iii) your commission of an act which would make you or
                    Fortress (including any of its affiliates) subject to being
                    enjoined, suspended, barred or otherwise disciplined for
                    violation of federal or state securities laws, rules or
                    regulations, including a statutory disqualification; (iv)
                    your gross negligence or willful misconduct in connection
                    with your performance of your duties in connection with your
                    employment by Fortress (including any affiliate of Fortress
                    for whom you may be employed on a full-time basis at the
                    time) or your failure to comply with any of the restrictive
                    covenants set forth in this Letter Agreement; (v) your
                    commission of any act that would result or which might
                    reasonably be a substantial factor resulting in the
                    termination of Fortress (including any of its affiliates)
                    for cause under any of Fortress's or its affiliates'
                    management, advisory or similar agreements; (vi) your
                    willful failure to comply with any material policies or
                    procedures of Fortress as in effect from time to time
                    provided that you shall have been delivered a copy of such
                    policies or notice that they have been posted on a Fortress
                    website prior to such compliance failure, and (vii) your
                    failure to perform the material duties in connection with
                    your position, unless you remedy such failure no later than
                    30 days following delivery to you of a written notice from
                    Fortress describing such failure in reasonable detail
                    (provided that you shall not be given more than one
                    opportunity in the aggregate to remedy failures described in
                    this clause (vii)).

Policies and        You agree to comply fully with all of the Company's policies
Procedures:         and procedures, as amended from time to time.

Termination:        If your employment with the Company terminates for any
                    reason, you hereby agree that you shall immediately resign
                    from all positions (including, without limitation, any
                    management, officer or director position) that you hold on
                    the date of such termination with the Company, any of the
                    Company's affiliates or with any entity in which the Company
                    or any of its affiliates has made any investment. You hereby
                    agree to execute and deliver such documentation



                                       3





                    reasonably required by the Company as may be necessary or
                    appropriate to enable the Company, any of the Company's
                    affiliates or any entity in which the Company or any of its
                    affiliates has made an investment to effectuate such
                    resignation, and in any case, your execution of this Letter
                    Agreement shall be deemed the grant by you to the officers
                    of the Company of a limited power of attorney to sign in
                    your name and on your behalf such documentation solely for
                    the limited purposes of effectuating such resignation.

Set-Off; Etc:       You hereby acknowledge and agree, without limiting the
                    rights of the Company otherwise available at law or in
                    equity, that, to the extent permitted by law, any or all
                    amounts or other consideration payable to you hereunder or
                    any other agreement with Fortress (including any of its
                    affiliates), may be set-off against any or all amounts or
                    other consideration payable by you to the Company under this
                    Letter Agreement or to the Company or any of its affiliates
                    under any other agreement between you and Fortress or any of
                    its affiliates, including, without limitation, any
                    obligation resulting from your breach of the terms hereof.

Representation:     You represent that you are free to be employed hereunder
                    without any contractual restrictions, express or implied,
                    with respect to any of your prior employers. You represent
                    that you have not taken or otherwise misappropriated and you
                    do not have in your possession or control any confidential
                    and proprietary information belonging to any of your prior
                    employers or connected with or derived from your services to
                    prior employers. You represent that you have returned to all
                    prior employers any and all such confidential and
                    proprietary information. You further acknowledge that
                    Fortress has informed you that you are not to use or cause
                    the use of such confidential or proprietary information in
                    any manner whatsoever in connection with your employment by
                    Fortress. You agree that you will not use such information.

                    You represent that you understand that this Letter Agreement
                    sets forth the terms and conditions of your employment
                    relationship with Fortress and as such, you have no express
                    or implied right to be treated the same as or more favorably
                    than any other employee of Fortress or any of its affiliates
                    with respect to any matter set forth herein based on the
                    terms or conditions of such person's employment relationship
                    with Fortress or any of its affiliates. You further agree to
                    keep the terms of this Letter Agreement confidential and not
                    to disclose any of the terms or conditions hereof to any
                    other person, including any employee of Fortress, except
                    your attorney or accountant or, upon the advice of counsel
                    after notice to Fortress, as may be required by law or as
                    may be required in order to enforce or defend against the
                    enforcement of this Letter Agreement.

Restrictive         You shall not, directly or indirectly, without prior written
Covenants:          consent of Fortress, provide consultative services to, own,
                    manage, operate, join, control,



                                       4



                    participate in, be engaged in, be employed by or be
                    connected with, any business, individual, partner, firm,
                    corporation or other entity, including without limitation
                    any business, individual, partner, firm, corporation, or
                    other entity that directly or indirectly competes with (any
                    such action, individually, and in the aggregate, to "compete
                    with"), Fortress or any of its affiliates, including
                    Aircastle, at any time during your employment, except as
                    contemplate by Exhibit C to this Letter Agreement through
                    the Closing Date (as defined on Exhibit C). In the case
                    where your employment with the Company is terminated by you
                    for any reason or by your employer for cause, such
                    restrictions shall apply for twelve (12) months after the
                    effective date of such termination solely as to any aircraft
                    leasing and/or aircraft finance business managed by Fortress
                    or any of its affiliates. Notwithstanding anything else
                    herein, (i) the mere "beneficial ownership" by you, either
                    individually or as a member of a "group" (as such terms are
                    used in Rule 13(d) issued under the Securities Exchange Act
                    of 1934) of not more than 5% of the voting stock of any
                    public company and (ii) your ownership of a non-controlling
                    passive investment in Avsource, Inc., shall not be deemed in
                    violation of this Letter Agreement. These restrictions shall
                    not apply following the termination of your employment in
                    respect of Consulting Services (including where legally
                    permissible the provision of consulting services to the
                    companies listed on Exhibit D hereto) or if, (i) on or
                    before 18 months after your Start Date, Aircastle has not
                    purchased or entered into purchase agreements for the
                    purchase of aircraft in respect of which Aircastle earns
                    management fees with an aggregate purchase price of at least
                    $200 million and you resign because of and within ninety
                    (90) days of such 18th month anniversary, (ii) Fortress has
                    lowered your interest in the Net Aircastle Operating Results
                    for any calendar year below the percentage set forth on
                    Exhibit B as of the date hereof (or such lower percentage as
                    may at any time be set forth on Exhibit B from time to time
                    in accordance with the terms of this Letter Agreement)
                    (except as such percentage is reduced after the date hereof
                    as a result of pro rata dilution in connection with the
                    award to any other individuals of an interest in the Net
                    Aircastle Operating Results and you resign because of and
                    within ninety (90) days of this event; or (iii) Fortress
                    terminates your employment without cause.

                    You shall keep secret and retain in strictest confidence,
                    and shall not use for your benefit or the benefit of others,
                    except in connection with the business and affairs of the
                    Company (which, for purposes of and in each instance used in
                    this paragraph and the next paragraph, shall include
                    Fortress (including (i) Aircastle, (ii) any other fund
                    managed by Fortress or any of its affiliates during or prior
                    to the period of your employment with the Company and (iv)
                    the Company's other affiliates, including, without
                    limitation, portfolio investments of the private equity
                    business of Fortress)), all confidential information of and
                    confidential matters (whether made available in written,
                    electronic form or orally) relating to (x) the Company's
                    business and the Company (including, without limitation, the
                    actual investments of the


                                       5



                    Company, the contemplated investments of the Company, the
                    financial performance of any fund managed by Fortress or of
                    any investment thereof, and the identity of the equity
                    investors in the Company or in any of the funds it or any of
                    affiliates manages), (y) all corporations or other business
                    organizations in which the Company has or has had an
                    investment and (z) third parties, learned by you heretofore
                    or hereafter directly or indirectly in connection with your
                    employment or from the Company (the "Confidential Company
                    Information"). In consideration of, and as a condition to,
                    continued access to Confidential Company Information, and
                    without prejudice to or limitation on any other
                    confidentiality obligation imposed by agreement or law, you
                    hereby undertake to use and protect Confidential Company
                    Information in accordance with restrictions placed on its
                    use or disclosure. Without limiting the foregoing, you shall
                    not disclose such Confidential Company Information to any
                    director, officer, partner, employee or agent of the Company
                    unless, in your reasonable good faith judgment, such person
                    has a need to know such Confidential Company Information in
                    furtherance of the business of the Company and you shall not
                    disclose Confidential Company Information to anyone outside
                    of the Company except with the Company's express written
                    consent. The foregoing restrictions shall not apply to
                    Confidential Company Information which (i) is at the time of
                    receipt or thereafter becomes publicly known other than a
                    result of your having breached this Letter Agreement or (ii)
                    is received by you from a third party not under an
                    obligation to any person to keep such information
                    confidential or (iii) is required to be disclosed by you in
                    connection with you enforcement of this Letter Agreement (or
                    the defense against any enforcement of this Letter
                    Agreement), subject to your use of your reasonable best
                    efforts to obtain (and to cooperate with the Company's
                    efforts to obtain) judicial approval for such information to
                    be disclosed under seal or subject to other confidentiality
                    orders. All memoranda, notes, lists, records, property and
                    any other tangible product and documents (and all copies and
                    excerpts thereof), whether visually perceptible,
                    machine-readable or otherwise, made, produced or compiled by
                    you or made available to you concerning the business of the
                    Company, (i) shall at all times be the property of the
                    Company and shall be delivered to the Company at any time
                    upon its request, and (ii) upon your termination of
                    employment, shall be immediately returned to the Company.
                    The foregoing shall not limit any other confidentiality
                    obligations imposed by agreement or by law. You shall not
                    publish or make any statement (x) under circumstances
                    reasonably likely to become public that is critical of
                    Fortress (including any of its affiliates) or (y) which
                    would in any way adversely affect or otherwise malign the
                    business or reputation of Fortress (including any of its
                    affiliates); provided, that the foregoing shall not extend
                    to any testimony given in connection with any action brought
                    in connection with this Letter Agreement.

                    From the date hereof through the end of the one-year period
                    commencing with your termination of employment with the
                    Company, you shall not, without the Company's prior written
                    consent, directly or indirectly, (i) solicit


                                       6



                    or encourage to leave the employment or other service of the
                    Company or any of its affiliates any employee or independent
                    contractor thereof or (ii) hire (on behalf of yourself or
                    any other person or entity) any employee or independent
                    contractor who has left the employment or other service of
                    the Company or any of its affiliates within the one-year
                    period which follows the termination of such employee's or
                    independent contractor's employment or other service with
                    the Company or any such affiliate; provided, that the
                    foregoing shall not apply to employees providing Consulting
                    Services in the case where the Consulting Sub is transferred
                    to you as described below on Exhibit C hereof.

                    From the date hereof through the end of the two-year period
                    commencing with your termination of employment with the
                    Company you shall not, whether for your own account or for
                    the account of any other person, firm, corporation or other
                    business organization, intentionally interfere with
                    Fortress's relationship with, or endeavor to entice away
                    from Fortress or any fund, business or account managed by
                    Fortress, any investor in Fortress or any fund, business or
                    account managed by Fortress, including Aircastle.

                    Any breach by you of any of the provisions of the four
                    foregoing paragraphs (the "Restrictive Covenants") shall
                    entitle Fortress (including each of its affiliates) to cease
                    making any payments you under any agreement, including this
                    Letter Agreement, pursuant to which you are entitled to
                    monies from Fortress (or any such affiliate). In addition,
                    you acknowledge and agree that any breach by you of the
                    Restrictive Covenants would result in irreparable injury and
                    damage for which money damages would not provide an adequate
                    remedy. Therefore, if you breach, or threaten to commit a
                    breach of, any of the provisions of the Restricted
                    Covenants, the Company shall have the right and remedy, in
                    addition to, and not in lieu of, any other rights and
                    remedies available to the Company under law or in equity
                    (including, without limitation, the recovery of damages), to
                    have the Restrictive Covenants specifically enforced
                    (without posting bond and without the need to prove damages)
                    by any court having equity jurisdiction, including, without
                    limitation, the right to an entry against you of restraining
                    orders and injunctions (preliminary, mandatory, temporary
                    and permanent) against violations, threatened or actual, and
                    whether or not then continuing, of the Restrictive
                    Covenants. You acknowledge and agree that the Restrictive
                    Covenants are reasonable in geographical and temporal scope
                    and in all other respects. If it is determined that any of
                    the Restrictive Covenants, or any part thereof, is invalid
                    or unenforceable, the remainder of the Restrictive Covenants
                    shall not thereby be affected and shall be given full
                    effect, without regard to the invalid portions. If any court
                    or other decision-maker of competent jurisdiction determines
                    that any provision of the Restrictive Covenants, or any part
                    thereof, is unenforceable because of the duration or
                    geographical scope of such provision, then, after such
                    determination has become final and unappealable, the
                    duration or scope of such provision, as the case may be,
                    shall be reduced so that such provision becomes enforceable


                                       7





                    and, in its reduced form, such provision shall then be
                    enforceable and shall be enforced.

                    Notwithstanding anything in this Letter Agreement to the
                    contrary, the provisions of this and the five foregoing
                    paragraphs shall survive any termination of this Letter
                    Agreement and any termination of your employment.

Employment          You are an at-will employee. This letter is not a contract
Relationship:       of employment for any specific period of time, and your
                    employment may be terminated by you or by the Company at any
                    time for any reason or no reason whatsoever. Notwithstanding
                    the foregoing, (i) you agree to provide the Company with at
                    least 30 days advance written notice of your termination and
                    (ii) in the event that Fortress determines to liquidate or
                    no longer pursue the aircraft leasing and/or financing
                    business, the Company agrees to provide you with at least 60
                    days advance written notice of a termination relating to
                    such determination. In each case where the term Company is
                    used in this Letter Agreement it shall mean, in addition to
                    the Company, any affiliate of Fortress for whom you may be
                    employed on a full-time basis at the applicable time.

                    The Company shall be entitled, in connection with its
                    investment structuring, tax planning, business organization
                    or other reasons, to terminate your employment in connection
                    with an invitation from another affiliate of Fortress,
                    including, without limitation, a direct or indirect
                    subsidiary of any private equity fund managed by Fortress
                    Investment Group LLC or any of its investment advisory
                    affiliates, to accept employment with such affiliate in
                    which case the terms and conditions hereof shall apply to
                    your employment relationship with such entity mutatis
                    mutandis. For the sake of clarity, any termination of your
                    employment under such circumstances in which you are not
                    offered employment with another affiliate of Fortress shall
                    be a termination without Cause.

Entire              This Letter Agreement contains the entire agreement between
Agreement:          the parties with respect to the subject matter hereof and
                    supersedes all prior agreements, written or oral, with
                    respect thereto. Without limiting the foregoing, any prior
                    offer letter is hereby superceded in its entirety. YOU
                    REPRESENT THAT IN EXECUTING THIS LETTER AGREEMENT YOU HAVE
                    NOT RELIED UPON ANY REPRESENTATION OR STATEMENT NOT SET
                    FORTH HEREIN. Without limiting the foregoing, you represent
                    that you understand that you shall not be entitled to any
                    equity interest, profits interest or other interest in the
                    Company (including any of its affiliates, including any fund
                    or other business managed by any of them) except as set
                    forth in a writing signed by the Company. The Company's
                    affiliates are intended beneficiaries under this Letter
                    Agreement.

Governing Law;      This Letter Agreement shall be governed by and construed in
Jurisdiction:       accordance with the laws of the State of New York without
                    regard to the principles of conflicts of law thereof.



                                       8



          THE PARTIES AGREE THAT EXCLUSIVE JURISDICTION WILL BE IN A COURT OF
          COMPETENT JURISDICTION IN THE CITY OF NEW YORK AND HEREBY WAIVE
          OBJECTION TO THE JURISDICTION OR TO THE LAYING OF VENUE IN ANY SUCH
          COURT.

                                    * * * *

We look forward to continuing a successful employment relationship with you. If
the foregoing terms of employment are acceptable, please so indicate in the
space provided below.

Very truly yours,

Fortress Investment Group LLC


By: /s/ Alan Chesick
    ------------------------------
    Alan Chesick
    General Counsel

Accepted and agreed to:


/s/ Joseph Schreiner
----------------------------------
Joseph Schreiner


                                       9



                                    EXHIBIT A

     This is Exhibit A to the Letter Agreement between Joseph Schreiner and
Fortress Investment Group LLC, dated as of July 15, 2004 (the "Letter
Agreement"). When executed by both parties, the terms of this Exhibit A are
intended to be incorporated by reference into the Letter Agreement.

Annual Salary: $200,000 per annum

Fortress Investment Group LLC


By: /s/ Alan Chesick
    ------------------------------
    Alan Chesick
    General Counsel


/s/ Joseph Schreiner
----------------------------------
Joseph Schreiner


                                       10



                                    EXHIBIT B

     This is Exhibit B to the Letter Agreement between Joseph Schreiner and
Fortress Investment Group LLC, dated as of July 15, 2004 (the "Letter
Agreement"). When executed by both parties, the terms of this Exhibit B are
intended to be incorporated by reference into the Letter Agreement.

1. PERCENTAGE OF NET AIRCASTLE OPERATING RESULTS: six and two-thirds percent
                                                  (6 2/3%)(subject to pro-rata
                                                  dilution and for fiscal years
                                                  subsequent to 2005 other
                                                  adjustments).

Your percentage of the Net Aircastle Operating Results (as defined below) will
be paid to you as soon as practicable after results of [Aircastle Lease Finance
Ltd.] ("Aircastle") for the applicable fiscal year have been determined, but no
later than 90 days after the end of such fiscal year (unless the audited
financials therefore have not yet then been completed, in which case at elast
90% of the estimated amount shall be paid no later than such 90th day and the
remainder paid promptly upon completion of such audit), provided that ManageCo
has received and been paid all amounts due to it under the management agreement
(as amended from time to time, the "Aircastle Management Agreement") pursuant to
which ManageCo manages Aircastle. For fiscal years subsequent to 2005, Fortress
reserves the right, in its sole and absolute discretion, to raise or to lower
your percentage interest in the Net Aircastle Operating Results.

In no event will you be entitled to receive any of the Net Aircastle Operating
Results described above if you are not actively employed by or have given notice
of your termination of your employment with the Company (or any affiliate of
Fortress for whom you may be employed on a full-time basis at the time) at the
time such compensation is to be paid; provided, however, that you shall be paid
such bonus compensation in respect of any fiscal year in the event that your
employment is terminated by the Company without cause following the end of such
fiscal year and prior to the date such bonus compensation would otherwise have
been paid.

The "NET AIRCASTLE OPERATING RESULTS" equals (i) the amount of the net
management fees plus the amount of net incentive fees actually received by
ManageCo under the Aircastle Management Agreement (net of rebates thereof with
respect to investments by Fortress affiliates or other investors entitled to
rebates), plus (ii) the amount of any third party consulting fees earned by
ManageCo from parties other than Aircastle for the provision of aviation-related
consulting or technical advisory services of a type similar to those provided by
OneSky prior to the date hereof ("Consulting Services") minus (iii) the sum of
(x) Aircastle's allocable share of (A) payroll costs (including discretionary
bonuses that may be paid to employees of Fortress or its employees providing
services for Aircastle), (B) rent and (C) other operating expenses (including
reserves), in each case which are incurred by or allocable to ManageCo and (y)
any taxes payable by ManageCo or its affiliates in respect of the amounts set
forth in (i) above. Determinations of Aircastle's allocable shares of each
category of expense set forth in clause (ii)(x) above (which allocations may
vary by category) will be made by Fortress, in its sole and absolute discretion,
on a basis that is consistent with the nature of such determinations in respect
of Fortress's other applicable businesses. The Net Aircastle Operating Results
will not include any amounts paid to ManageCo in the event that Aircastle were
to terminate the Aircastle Management Agreement, including any amounts paid to
purchase the incentive fee thereunder.


                                       11



2. AIRCASTLE OPTIONS. In the event that Aircastle grants to ManageCo (or any
other affiliate of Fortress), in connection with Aircastle's initial public
offering or stock exchange listing, options for equity interests in Aircastle
(or other derivatives, such as SARs), you will be granted (directly by Aircastle
or indirectly by assignment from ManageCo (or an other affiliate of Fortress) a
percentage of the aggregate amount of options (or other interests) granted to
ManageCo (or such other affiliate of Fortress) equal to your percentage at such
time of the Net Aircastle Operating Results. Such interests as are granted to
you will be generally on the same terms as Fortress has, as manager of other
companies, assigned over options in the equity interests of such companies to
Fortress employees providing services to such companies.

3. AIRCASTIE EQUITY COMMITMENT. You agree to make an equity commitment in
Aircastle (the specific amount designated by you in accordance with the next
sentence, the "Aircastle Commitment") on terms substantially similar to other
investors in Aircastle in an amount which, as determined by the Company, is up
to 50% of the net after tax amount payable to you during your first 18 months of
work as Guaranteed Minimum Bonus (approximately $90,000); provided, however,
that the form of such investment may be restructured on mutually acceptable
terms for tax structuring or other reasons. You shall confirm the specific
Aircastle Commitment you have elected, by executing and delivering the Aircastle
subscription agreement or such other documentation deemed by Fortress or
ManageCo to be necessary and appropriate to evidence such commitment.

Fortress Investment Group LLC


By: /s/ Alan Chesick
    ------------------------------
    Alan Chesick
    General Counsel


/s/ Joseph Schreiner
----------------------------------
Joseph Schreiner


                                       12



                                    EXHIBIT C

     This is Exhibit C to the Letter Agreement between Joseph Schreiner and
Fortress Investment Group LLC, dated as of July 15, 2004 (the "Letter
Agreement"). When executed by both parties, the terms of this Exhibit C are
intended to be incorporated by reference into the Letter Agreement.

OneSky

     1.   Executive currently owns an entity name OneSky LLC ("Old OneSky")
          which engages in certain Consulting Services. For good and valid
          consideration, Executive grants Fortress, or its assignee (for these
          purposes, Fortress or its assignee are hereinafter referred to as the
          "Consulting Sub") the unconditional right to purchase for aggregate
          consideration of $10.00 (the "Option"): (i) all of the equity
          interests of Old OneSky or, at the election of Consulting Sub, (ii)
          all or substantially all of the assets of Old OneSky, including
          without limitation, (a) all right title and interest in and to the
          name "OneSky" (including, without limitation, the right to bring any
          claim of infringement against any person); (b) all right, title and
          interest to each Consulting Services agreement then in existence, (c)
          all accounts receivable in respect of each Consulting Services
          Agreement and (c) all cash or other assets of Old OneSky as of date on
          which the closing (the "Closing Date") of the purchase by Consulting
          Sub and the sale, transfer and assignment by Executive or Old OneSky,
          as the case may be, occurs. Executive agrees to use all reasonable
          efforts to obtain the consent of each third party to each Consulting
          Services agreement to which Old OneSky is a party to the assignment of
          such agreement from Old OneSky to Consulting Sub. The Option may be
          exercised by Consulting Sub in its sole discretion at any time prior
          to June 30, 2005 by delivery of a written notice to Executive
          specifying a Closing Date; provided, however, that the Option may not
          be exercised if Fortress has terminated the employment of Executive
          without cause prior to the date on which the Option is exercised.

     2.   From the Start Date until the Closing Date, Executive shall not and
          shall not permit Old OneSky to: (i) conduct the Consulting Services in
          any manner other than the ordinary course consistent with past
          practices; (ii) enter into any additional Consulting Services
          agreement, hire any employee or engage any independent contractor
          without the prior approval of Consulting Sub; (ii) issue, sell,
          transfer or otherwise assign any interest in Old OneSky or any of its
          material assets, make any extraordinary expenditures or incur any debt
          for borrowed money or (iii) make any distributions of cash or other
          assets other than (x) amounts representing all profits, if any, of Old
          OneSky through July 26, 2004, as such amount may be mutually agreed to
          by Fortress and Executive no later man August 31, 2004, and (y)
          without double-counting of monies distributed pursuant to clause (x)
          preceding, cash distributions necessary to pay Executive's income
          taxes in connection with the business of (and allocations of gain
          from) Old OneSky during the period ending on the Closing Date, based
          on the highest combined federal and state personal income tax rate for
          a resident of the State of California.

     3.   Following exercise of the Option, Fortress will offer employment to
          one of the individuals who is currently employed as a consultant to
          OneSky.


                                       13



     4.   In the event that the Option has been exercised and: (i) Fortress
          determines not to or is unable to capitalize Aircastle (either as a
          separate enterprise or as a portfolio company of a private equity fund
          managed by Fortress Investment Group LLC or any of its investment
          advisory affiliates), or (ii) having so capitalized Aircastle,
          Fortress determines to liquidate Aircastle and exit the aircraft
          financing and/or aircraft leasing business within 36 months of the
          Start Date, then, assuming that Executive's employment relationship
          with the Company is terminated in connection with such determination,
          Fortress agrees to negotiate with Executive in good faith to effect a
          transfer to Executive of the equity interests in Consulting Sub (or
          the assets and liabilities thereof) for nominal consideration assuming
          that (i) such transfer can be effected without anything other than
          insignificant transaction costs for the Aircastle, (ii) Aircastle is
          satisfied, in its sole discretion, that all contingent and other
          liabilities associated with Consulting Sub would be thereby
          effectively transferred and (iii) the profits arising out of
          Consulting Sub's business through the date of transfer, if any, inure
          to the benefit of Aircastle.

Fortress Investment Group LLC


By: /s/ Alan Chesick
    ------------------------------
    Alan Chesick
    General Counsel


/s/ Joseph Schreiner
----------------------------------
Joseph Schreiner


                                       14



                                   EXHIBIT D

1)  Bank of Tokyo (BTM)
2)  AAR Corp
3)  Q Aviation LP
4)  Credit Lyonnais/CALYON
5)  Societe Generale
6)  ICON Capital
7)  Boeing Capital
8)  Lehman Brothers
9)  Bluestar Aviation
10) Fleet Capital / Bank of America


                                       15



                                 ACKNOWLEDGMENT

I acknowledge that I have received a copy of Fortress' Sexual Harassment and
Harassment Policies. I will familiarize myself with these policies and I agree
to observe them in all respects.


/s/ Joseph Schreiner                          July 21, 2004
----------------------------------            -----------------
Employee's Signature                          Date


JOSEPH S. SCHREINER
----------------------------------
Print Employee's Name


                                       4



                              Aircastle Advisor LLC
                        300 First Stamford Place, 5th Fl.
                           Stamford, Connecticut 06902

February 24, 2006

Joseph Schreiner
5205 N. Marina Pacifica Drive, Suite 21
Long Beach, CA 90803

Dear Joe:

     It is with great pleasure that Aircastle Advisor LLC (the "Company" or
"Aircastle") agrees, effective on and as of the date hereof, to assume the
obligations of Fortress Investment Group LLC ("Fortress") under an employment
letter dated July 15, 2004 (the "Previous Employment Letter"), as amended and
restated in its entirety on the terms and conditions set forth below.



Title:              Executive Vice President.

Start Date:         The date your employment under the Previous Employment
                    Agreement commenced, July 26, 2004.

Location:           Stamford, CT, or a location within fifty miles thereof
                    specified by the Company.

                    For so long as you are employed with the Company, you will
                    be reimbursed, net of taxes, for your travel to Stamford
                    from your home in the Los Angeles area, in accordance with
                    the Company's travel policy. We agree to work with you in
                    good faith to determine whether a cost-effective workspace
                    for you near your home in the Los Angeles area can be
                    provided, at the Company's expense.

Compensation:       Your base salary shall be paid at the rate of US$200,000,
                    less statutory deductions, payable in accordance with the
                    regular payroll practices of the Company. In addition, you
                    are eligible to receive a discretionary annual bonus, but
                    nothing in this letter agreement will entitle you to a bonus
                    payment. Payment of a discretionary bonus in any given
                    fiscal or calendar year does not entitle you to additional
                    compensation or any such bonus in any subsequent year. In
                    order to be eligible for any bonus while employed by the
                    Company, you must be an active employee at, and not have
                    given or received notice of termination prior to, the time
                    of the bonus payment.

Benefits:           You (and your spouse, registered domestic partner and/or
                    eligible dependents, if any) may at your election be covered
                    under such health insurance plan as covers the Company's
                    employees, subject to applicable exclusions and limitations.
                    You are eligible to participate in all other perquisite and
                    benefit arrangements generally made available by the Company
                    to employees, subject to the terms of such plans or
                    programs. Each such benefit is subject to modification,
                    including elimination, from to time, at the Company's sole
                    discretion.

Vacation:           20 days per year in accordance with the Company's vacation
                    policy applicable to employees, as amended from time to
                    time. Upon any termination or resignation






Employment Offer Letter
Joseph Schreiner
Page 2


                    (other than termination for Cause) the Company will provide
                    payment for unused vacation days accrued during the year in
                    which such termination or resignation occurs.

Policies and        You agree to comply fully with all of the Company's policies
Procedures:         and procedures applicable to employees, as amended from time
                    to time, copies of which shall be provided to you or made
                    available to you by electronic means.

"Cause":            For purposes of this letter agreement, "Cause" means (i)
                    your commission of an act of fraud or dishonesty in the
                    course of your employment; (ii) your indictment or entering
                    of a plea of nolo contendere for a crime constituting a
                    felony or in respect of any act of fraud or dishonesty;
                    (iii) your commission of an act which would make you (or the
                    Company, or Fortress or any of their respective affiliates
                    (collectively, the "Aircastle Group")) subject to being
                    enjoined, suspended, barred or otherwise disciplined for
                    violation of federal or state securities laws, rules or
                    regulations, including a statutory disqualification; (iv)
                    your gross negligence or willful misconduct in connection
                    with your employment by the Company; (v) your commission or
                    omission of any act that would result in or might reasonably
                    be a substantial factor resulting in the termination of any
                    member of the Aircastle Group under any of material
                    management, advisory or similar agreements; (vi) your
                    willful failure to comply with any material policies or
                    procedures of the Company as in effect from time to time
                    provided that you shall have been delivered a copy of such
                    policies or notice that they have been posted on a Company
                    website prior to such compliance failure, and or (vii) your
                    commission of any material breach of any of the provisions
                    or covenants set forth herein, provided, however, that
                    discharge pursuant to this clause (vii) shall not constitute
                    discharge for "Cause" unless you shall have received written
                    notice from the Company stating the nature of such breach
                    and affording you an opportunity to correct the act(s) or
                    omission(s) complained of within 20 days of your receipt of
                    such notice.

"Good Reason":      Your resignation from the Company within 30 days following
                    notice from the Board of Directors or Chief Executive
                    Officer of the Company requiring you to report primarily to
                    a person other than the Chief Executive Officer, the
                    President or a Director of the Company.

Employment          You are an at-will employee. This letter agreement is not a
Relationship;       contract of employment for any specific period of time, and
Termination         your employment may be terminated by you or by the Company
                    at any time for any reason or no reason whatsoever.
                    Notwithstanding the foregoing, (1) the Company agrees to
                    provide you with at least 90 days advance written notice of
                    your termination without Cause (or, at the option of the
                    Company, payment in lieu of working during all or part of
                    such notice period) and (2) you agree to provide the Company
                    with at least 30 days advance written notice of your
                    termination (or, at the option of the Company, payment in
                    lieu of working during all or part of such notice period).

                    If your employment with the Company terminates for any
                    reason or for no reason, you hereby agree that you shall
                    immediately resign from all positions (including,






Employment Offer Letter
Joseph Schreiner
Page 3


                    without limitation, any management, officer or director
                    position) that you hold on the date of such termination with
                    the Company, or any of the their respective affiliates, or
                    with any entity in which the Company or any of its
                    affiliates has made any investment. You hereby agree to
                    execute and deliver such documentation reasonably required
                    by the Company as may be necessary or appropriate to enable
                    the Company, any of the Company's affiliates or any entity
                    in which the Company or any of its affiliates has made an
                    investment to effectuate such resignation, and in any case,
                    your execution of this letter agreement shall be deemed the
                    grant by you to the officers of the Company of a limited
                    power of attorney to sign in your name and on your behalf
                    such documentation solely for the limited purposes of
                    effectuating such resignation as a corporate matter (and not
                    for any other purpose).

Set-Off; Etc:       You hereby acknowledge and agree, without limiting the
                    rights of the Company otherwise available at law or in
                    equity, that, to the extent permitted by law, any or all
                    amounts or other consideration payable to you hereunder or
                    any other agreement with the Company (including any of its
                    affiliates), may be set-off against any or all amounts or
                    other consideration payable by you to the Company under this
                    letter agreement or to the Company or any of its affiliates
                    under any other agreement between you and the Company or any
                    of its affiliates, including, without limitation, any
                    obligation resulting from your breach of the terms hereof.

Your                You represent that:
Representations:
                         (i)   you are free to be employed hereunder without any
                               contractual restrictions, express or implied,
                               with respect to any of your prior employer(s).

                         (ii)  you have not taken or otherwise misappropriated
                               and you do not have in your possession or control
                               any confidential or proprietary information
                               belonging to any of your prior employer(s) or
                               connected with or derived from your services to
                               prior employer(s), and you have returned to all
                               prior employers any and all such confidential or
                               proprietary information.

                         (iii) the Company and the Aircastle Group have informed
                               you that you are not to use or cause the use of
                               such confidential or proprietary information in
                               any manner whatsoever in connection with your
                               employment by the Company or any affiliate, and
                               that you have agreed and hereby do agree that you
                               will not use any such confidential or proprietary
                               information.

                         (iv)  you understand that this letter agreement sets
                               forth the terms and conditions of your employment
                               relationship with the Company and as such, you
                               have no express or implied right to be treated
                               the same as or more favorably than any other
                               employee of the Aircastle Group based on the
                               terms or conditions of such person's employment
                               relationship with a member of the Aircastle
                               Group.

                         (v)   you have agreed and hereby do agree to keep the
                               terms of this letter






Employment Offer Letter
Joseph Schreiner
Page 4


                               agreement confidential and not to disclose any of
                               the terms or conditions hereof to any other
                               person, including any employee of the Company or
                               the Aircastle Group, except your attorney or
                               accountant or, upon the advice of counsel after
                               notice to the Company, as may be required by law
                               or as may be required in order to enforce or
                               defend against the enforcement of this letter
                               agreement.

Certain                  (i)   You shall not, directly or indirectly, without
Covenants:                     the prior written consent of the Company, provide
                               consultative services to, own, manage, operate,
                               join, control, participate in, be engaged in, be
                               employed by or be connected with, any business,
                               individual, partner, firm, corporation or other
                               entity, including without limitation any
                               business, individual, partner, firm, corporation,
                               or other entity that directly or indirectly
                               competes with (any such action, individually, and
                               in the aggregate, to "compete with"), the Company
                               or any member of the Aircastle Group, at any time
                               during your employment with the Company. In the
                               case where your employment with the Company is
                               terminated by you for any reason or by the
                               Company for Cause, such restrictions shall apply
                               for six months after the effective date of such
                               termination solely as to any aircraft leasing,
                               marketing, advisory and/or finance business
                               managed by the Company or any member of the
                               Aircastle Group. Notwithstanding anything else
                               herein, (A) the mere "beneficial ownership" by
                               you, either individually or as a member of a
                               "group" (as such terms are used in Rule 13(d)
                               issued under the Securities Exchange Act of 1934)
                               of not more than 5% of the voting stock of any
                               public company and/or (B) your noncontrolling,
                               passive ownership interest in Avsource, Inc., in
                               either case, shall not be deemed in violation of
                               this letter agreement. These restrictions shall
                               not apply following the termination of your
                               employment if the Company terminates your
                               employment without Cause.

                         (ii)  Any works of authorship, databases, discoveries,
                               developments, improvements, computer programs, or
                               other intellectual property, etc. ("Works") that
                               you make or conceive, or have made or conceived,
                               solely or jointly, during the period of your
                               employment with the Company, whether or not
                               patentable or registerable under copyright,
                               trademark or similar statutes, which either (i)
                               are related to or useful in the current or
                               anticipated business or activities of the Company
                               or any member of the Aircastle Group (which
                               includes any quantitative fund or portfolio or
                               global macro fund managed by any affiliate of the
                               Company); (ii) fall within your responsibilities
                               as employed by the Company; or (iii) are
                               otherwise developed by you through the use of the
                               Company's confidential information, equipment,
                               software, or other facilities or resources or at
                               times during which you are or have been an
                               employee constitute "work for hire" under the
                               United States Copyright Act, as




Employment Offer Letter
Joseph Schreiner
Page 5


                               amended. If for any reason any portion of the
                               Works shall be deemed not to be a "work for
                               hire", then you hereby assign to the Company all
                               rights, title and interest therein and shall
                               cooperate to establish the Company's ownership
                               rights, including the execution of all documents
                               necessary to establish the Company's exclusive
                               ownership rights.

                         (iii) From the date hereof through the end of the
                               one-year period commencing with the termination
                               of your employment with the Company, you shall
                               not, without the Company's prior written consent,
                               directly or indirectly, (a) solicit or encourage
                               to leave the employment or other service of the
                               Company or any of its affiliates any employee or
                               independent contractor thereof or (b) hire (on
                               behalf of yourself or any other person or entity)
                               any employee or independent contractor who has
                               left the employment or other service of the
                               Company or any of its affiliates within the
                               one-year period which follows the termination of
                               such employee's or independent contractor's
                               employment or other service with the Company or
                               any such affiliate.

                         (iv)  You acknowledge that as an employee of the
                               Company you are obligated to keep secret and
                               retain in strictest confidence, and shall not use
                               for your benefit or the benefit of others, except
                               in connection with the business and affairs of
                               the Company (which includes any quantitative fund
                               or portfolio or global macro fund managed by any
                               member of the Aircastle Group during or prior to
                               the period of your employ with the Company), all
                               confidential information of and confidential
                               matters (whether made available in written,
                               electronic form or orally) relating to (x) the
                               Company's business and to the Company (including,
                               without limitation, the strategies employed by
                               and the actual investments of any member of the
                               Aircastle Group, the contemplated investments of
                               any member of the Aircastle Group, the financial
                               performance of any fund managed by any member of
                               the Aircastle Group or of any investment thereof,
                               and the identity of the equity investors in the
                               Company or in any of the funds it or any of its
                               affiliates manages), (y) all corporations or
                               other business organizations in which Fortress
                               has or has had an investment and (z) third
                               parties, learned by you heretofore or hereafter
                               directly or indirectly in connection with your
                               employment or from Fortress (the "Confidential
                               Fortress Information"). In consideration of, and
                               as a condition to, continued access to
                               Confidential Fortress Information, and without
                               prejudice to or limitation on any other
                               confidentiality obligation imposed by agreement
                               or law, you hereby undertake to use and protect
                               Confidential Fortress Information in accordance
                               with restrictions placed on its use or
                               disclosure. Without limiting the foregoing, you
                               shall not disclose such Confidential Fortress
                               Information to any director, officer, partner,
                               employee or agent of the Company unless, in your
                               reasonable good faith judgment, such person has a
                               need to know such Confidential Fortress
                               Information in furtherance of Fortress's business
                               and you shall not disclose Confidential





Employment Offer Letter
Joseph Schreiner
Page 6


                               Fortress Information to anyone outside of
                               Fortress except with the Company's express
                               written consent. The foregoing restrictions shall
                               not apply to Confidential Fortress Information
                               which (i) is at the time of receipt or thereafter
                               becomes publicly known other than a result of
                               your having breached your obligations of
                               confidentiality or (ii) is received by you from a
                               third party not under an obligation to any person
                               to keep such information confidential.

                         (v)   Any breach by you of any of the provisions of the
                               foregoing covenants (which breach, if curable, is
                               not cured within five days following written
                               notice) shall entitle the Company (including each
                               of its affiliates) to cease making any payments
                               to you under any agreement, including this letter
                               agreement, pursuant to which you are entitled to
                               monies from the Company or any member of the
                               Aircastle Group. In addition, you acknowledge and
                               agree that any breach by you of such covenants
                               would result in irreparable injury and damage for
                               which money damages would not provide an adequate
                               remedy. Therefore, if you breach, or threaten to
                               commit a breach of, any of the provisions of such
                               covenants, the Company shall have the right and
                               remedy, in addition to, and not in lieu of, any
                               other rights and remedies available to the
                               Company under law or in equity (including,
                               without limitation, the recovery of damages), to
                               have such covenants specifically enforced
                               (without posting bond and without the need to
                               prove damages) by any court having equity
                               jurisdiction, including, without limitation, the
                               right to an entry against you of restraining
                               orders and injunctions (preliminary, mandatory,
                               temporary and permanent) against violations,
                               threatened or actual, and whether or not then
                               continuing, of such covenants. You acknowledge
                               and agree that such covenants are reasonable in
                               geographical and temporal scope and in all other
                               respects. If it is determined that any of such
                               covenants, or any part thereof, is invalid or
                               unenforceable, the remainder of such covenants
                               shall not thereby be affected and shall be given
                               full effect, without regard to the invalid
                               portions. If any court or other decision-maker of
                               competent jurisdiction determines that any
                               provision of such covenants, or any part thereof,
                               is unenforceable because of the duration or
                               geographical scope of such provision, then, after
                               such determination has become final and
                               unappealable, the duration or scope of such
                               provision, as the case may be, shall be reduced
                               so that such provision becomes enforceable and,
                               in its reduced form, such provision shall then be
                               enforceable and shall be enforced.

                    Notwithstanding anything in this letter agreement to the
                    contrary, the provisions of the foregoing clauses (i)
                    through (v), inclusive, shall survive any termination of
                    this letter agreement and any termination of your
                    employment.

Entire Agreement:   The Previous Employment Agreement shall be terminated and
                    none of its terms and conditions shall apply to your
                    employment by the Company, it being agreed that your
                    employment by the Company shall be governed by this letter
                    agreement.




Employment Offer Letter
Joseph Schreiner
Page 7


                    This agreement contains the entire understanding of the
                    parties and may be modified only in a document signed by the
                    parties and referring explicitly to this agreement. If any
                    provision of this agreement is determined to be
                    unenforceable, the remainder of this agreement shall not be
                    adversely affected thereby. In executing this agreement, you
                    represent that you have not relied on any representation or
                    statement not set forth herein, and you expressly disavow
                    any such representations or statements. In addition, you
                    represent and agree that you shall not be entitled to any
                    equity interest, profits interest or other interest in any
                    member of the Aircastle Group (including in any fund or
                    other business managed by it or any of its affiliates)
                    except as set forth in a writing signed by the Company. The
                    Company's affiliates are intended beneficiaries of your
                    agreement in this regard. YOU REPRESENT THAT IN EXECUTING
                    THIS LETTER AGREEMENT YOU HAVE NOT RELIED UPON ANY
                    REPRESENTATION OR STATEMENT NOT SET FORTH HEREIN.



Governing Law;      This letter agreement shall be governed by and construed in
Jurisdiction:       accordance with the laws of the State of New York without
                    regard to the principles of conflicts of law thereof. THE
                    PARTIES HEREBY AGREE THAT EXCLUSIVE JURISDICTION WILL BE IN
                    A COURT OF COMPETENT JURISDICTION IN THE CITY OF NEW YORK
                    AND HEREBY WAIVE OBJECTION TO THE JURISDICTION OR TO THE
                    LAYING OF VENUE IN ANY SUCH COURT.


                                     * * * *

We look forward to a successful employment relationship with you. If the
foregoing terms of employment are acceptable, please so indicate by signing in
the space provided below.

Very truly yours,

AIRCASTLE ADVISOR LLC


By: /s/ David Walton
    ----------------------------

Accepted and agreed to, this 4th day of March, 2006:

/s/ Joseph Schreiner
--------------------------------
Joseph Schreiner



Employment Offer Letter
Joseph Schreiner
Page 8


For the purpose of confirming that the foregoing agreement amends and restates
in its entirety the Previous Employment Agreement, the termination of the
Previous Employment Agreement, and release of Mr. Schreiner and Fortress
Investment Group form any further obligation or liability under the Previous
Employment Agreement:

FORTRESS INVESTMENT GROUP LLC


By: /s/ Joseph P. Adams, Jr.
    ----------------------------

/s/ Joseph Schreiner
--------------------------------
Joseph Schreiner



                              Aircastle Advisor LLC
                        c/o Fortress Investment Group LLC
                     1251 Avenue of the Americas, 16th Floor
                            New York, New York 10020

April 29, 2005

Jonathan M. Lang
17 Pequot Drive
Norwalk, Connecticut 06855

Dear Jonathan:

     It is with great pleasure that we extend to you an offer to join Aircastle
Advisor LLC (together with its affiliates, or branch offices thereof, the
"Company" or "Aircastle") on the terms and conditions set forth below.



Title:              Chief Technology Officer.

Start Date:         As soon as your current employment is terminated, but in no
                    event later than May 23, 2005.

Location:           New York, New York, Stamford, Connecticut or another
                    location specified by the Company.

Compensation:       Your base salary will be paid at the rate of $200,000 per
                    annum, less statutory deductions, payable in accordance with
                    the regular payroll practices of Aircastle. In addition, you
                    are eligible to receive a discretionary annual bonus, but
                    except as provided below in relation to the Guaranteed 2005
                    Bonus (as defined below) nothing in this letter agreement
                    will entitle you to a bonus payment. For the sake of
                    clarity, you are not entitled to any pro-rata portion of any
                    discretionary bonus if your employment terminates for any
                    reason prior to the payment of any such bonus. Payment of a
                    discretionary bonus in any given fiscal or calendar year
                    does not entitle you to additional compensation or any such
                    bonus in any subsequent year. In order to be eligible for
                    any bonus while employed at Fortress, you must be an active
                    employee at, and not have given or received notice of
                    termination prior to, the time of the bonus payment

                    Aircastle has agreed that you will receive a minimum cash
                    bonus from the Company in respect of the calendar year 2005
                    equal to US$120,000 (your "Guaranteed 2005 Bonus"), less
                    statutory deductions. Your Guaranteed 2005 Bonus will be
                    paid as soon as practicable after performance results in
                    respect of 2005 have been determined, but in no event later
                    than January 31, 2006.

                    In addition, you shall be awarded a grant (the "Grant") of
                    restricted stock in






Employment Offer Letter
Jonathan M. Lang
Page 2


                    Aircastle Investment Limited with a total cost of $150,000,
                    with a per-share cost determined on the same basis as that
                    of the Fortress-managed funds that invest in Aircastle. The
                    Grant shall vest 1/3 on each of the 3rd, 4th and 5th
                    anniversaries of your Start Date.

                    If dividends are paid on the class of restricted stock
                    granted to you, then you would receive dividends on any
                    unvested shares. The Grant will be made pursuant to a
                    restricted stock plan and/or agreement prepared by the
                    Company, which plan and/or agreement will supersede the
                    provisions of this letter which apply to such restricted
                    stock.

Benefits:           Effective your first day of employment you (and your
                    eligible dependents, if any) may at your election be covered
                    under such health insurance plan as covers the Company's
                    employees, subject to applicable exclusions and limitations.
                    You are eligible to participate in all other perquisite and
                    benefit arrangements made available by the Company to
                    employees generally, subject to the terms of such plans or
                    programs. Each such benefit is subject to modification,
                    including elimination, from to time, at the Company's sole
                    discretion.

                    You shall be entitled to vacation of 20 days per year
                    (prorated for 2005) in accordance with the Company's
                    vacation policies applicable to employees, as amended from
                    time to time.

Policies and        You agree to comply fully with all of the Company's policies
Procedures:         and procedures, as amended from time to time, copies of
                    which shall be provided to you or made available to you by
                    electronic means.

"Cause"             For purposes of this letter agreement, "Cause" means (i)
                    your commission of an act of fraud or dishonesty in the
                    course of your employment; (ii) your indictment or entering
                    of a plea of nolo contendere for a crime constituting a
                    felony or in respect of any act of fraud or dishonesty;
                    (iii) your commission of an act which would make you (or the
                    Company, or Fortress Investment Group LLC or any of its
                    affiliates (collectively, "Aircastle Group") subject to
                    being enjoined, suspended, barred or otherwise disciplined
                    for violation of federal or state securities laws, rules or
                    regulations, including a statutory disqualification; (iv)
                    your gross negligence or willful misconduct in connection
                    with your employment by the Company; (v) your commission or
                    omission of any act that would result in or might reasonably
                    be a substantial factor resulting in the termination of any
                    member of the Aircastle Group or any of its affiliates, for
                    cause under any of material management, advisory or similar
                    agreements; (vi) your willful failure to comply with any
                    material policies or procedures of the Company as in effect
                    from time to time provided






Employment Offer Letter
Jonathan M. Lang
Page 3


                    that you shall have been delivered a copy of such policies
                    or notice that they have been posted on a Company website
                    prior to such compliance failure, and or (vii) your
                    commission of any material breach of any of the provisions
                    or covenants set forth herein, provided, however, that
                    discharge pursuant to this clause (vii) shall not constitute
                    discharge for "Cause" unless you shall have received written
                    notice from the Company stating the nature of such breach
                    and affording you an opportunity to correct the act(s) or
                    omission(s) complained of within ten (10) days of your
                    receipt of such notice.

Employment          You are an at-will employee. This letter is not a contract
Relationship;       of employment for any specific period of time, and your
Termination;        employment may be terminated by you or by the Company at any
                    time for any reason or no reason whatsoever. Notwithstanding
                    the foregoing, you will give us not less than 30 days notice
                    of your termination of the employment relationship.

Termination         In the event that you are terminated by the Company, then:
Payments and
Vesting:

                         (i)  if you are terminated without Cause, then

                              (a)  any restricted stock granted to you that is
                                   due to vest at the next date on which any
                                   restricted stock would vest if you were still
                                   in the employ of Aircastle shall vest on the
                                   date of your termination, but any right or
                                   interest in any other unvested restricted
                                   stock shall be forfeit by you (e.g., if you
                                   are terminated without Cause prior to the
                                   third anniversary of your Start Date, then
                                   1/3 of the Grant shall vest upon your
                                   termination without Cause, but the remaining
                                   2/3 shall not vest and you shall have no
                                   further right or interest in such restricted
                                   stock), and

                              (b)  if such termination occurs at any time after
                                   your Start Date and prior to the date on
                                   which you have been paid your Guaranteed 2005
                                   Bonus, you shall be paid an amount equal to
                                   your Guaranteed 2005 Bonus, such amount to be
                                   paid within thirty (30) days of such
                                   termination,

                                   in each case, provided you sign a separation
                                   agreement prepared by the Company which
                                   includes a general release of claims (a
                                   "Separation Agreement"), but you will not be
                                   obliged to mitigate your losses in order to
                                   be eligible to receive such vesting or
                                   payment.

                         (ii) if you are terminated for Cause, you shall forfeit
                              and have no further right or interest in any
                              then-unvested restricted stock and






Employment Offer Letter
Jonathan M. Lang
Page 4


                              no termination payments shall be made by the
                              Company.

                    If you resign from the company or if you are terminated
                    following your death or disability, then the provisions of
                    clause (ii) above shall apply.

                    The Company shall be entitled, in connection with its
                    investment structuring, tax planning, business organization
                    or other reasons, to terminate your employment in connection
                    with an invitation from an affiliate of or branch office of
                    the Company to accept employment with such affiliate or
                    branch office, in which case the terms and conditions hereof
                    shall apply to your employment relationship with such
                    entity, mutatis mutandis, and in each case where the term
                    "Company" or "Aircastle" is used in this letter agreement it
                    shall include a reference to such affiliate or branch
                    office. For the sake of clarity, any termination of your
                    employment by the Company under circumstances in which you
                    are not offered employment with an affiliate or branch
                    office of the Company on the terms and conditions hereof as
                    described in the preceding sentence shall be a termination
                    without Cause.

                    If your employment with the Company terminates for any
                    reason or for no reason, you hereby agree that you shall
                    immediately resign from all positions (including, without
                    limitation, any management, officer or director position)
                    that you hold on the date of such termination with the
                    Company, or any of the their respective affiliates, or with
                    any entity in which the Company or any of its affiliates has
                    made any investment. You hereby agree to execute and deliver
                    such documentation reasonably required by the Company as may
                    be necessary or appropriate to enable the Company, any of
                    the Company's affiliates or any entity in which the Company
                    or any of its affiliates has made an investment to
                    effectuate such resignation, and in any case, your execution
                    of this letter agreement shall be deemed the grant by you to
                    the officers of the Company of a limited power of attorney
                    to sign in your name and on your behalf such documentation
                    solely for the limited purposes of effectuating such
                    resignation.

Set-Off; Etc:       You hereby acknowledge and agree, without limiting the
                    rights of the Company otherwise available at law or in
                    equity, that, to the extent permitted by law, any or all
                    amounts or other consideration payable to you hereunder or
                    any other agreement with the Company (including any of its
                    affiliates), may be set-off against any or all amounts or
                    other consideration payable by you to the Company under this
                    letter agreement or to the Company or any of its affiliates
                    under any other agreement between you and the Company or any
                    of its affiliates, including, without limitation, any
                    obligation resulting from your breach of the terms hereof.






Employment Offer Letter
Jonathan M. Lang
Page 5


Your
Representations:    You represent that:

                         (i)    on your first day of employment with Aircastle
                                you will be free to be employed hereunder
                                without any contractual restrictions, express or
                                implied, with respect to any of your prior
                                employer(s).

                         (ii)   you have not taken or otherwise misappropriated
                                and you do not have in your possession or
                                control any confidential or proprietary
                                information belonging to any of your prior
                                employer(s) or connected with or derived from
                                your services to prior employer(s), and you have
                                returned to all prior employers any and all such
                                confidential or proprietary information.

                         (iii)  the Company and the Aircastle Group have
                                informed you that you are not to use or cause
                                the use of such confidential or proprietary
                                information in any manner whatsoever in
                                connection with your employment by the Company
                                or any affiliate, and that you have agreed and
                                hereby do agree that you will not use any such
                                confidential or proprietary information.

                         (iv)   you have agreed and hereby do agree to keep the
                                terms of this letter agreement confidential and
                                not to disclose any of the terms or conditions
                                hereof to any other person, including any
                                employee of the Company or the Aircastle Group,
                                except your immediate family, attorney or
                                accountant or, upon the advice of counsel after
                                notice to the Company, as may be required by law
                                or as may be required in order to enforce or
                                defend against the enforcement of this letter
                                agreement.

Restrictive              (i)    You shall not, directly or indirectly, without
Covenants:                      the prior written consent of the Company,
                                provide consultative services to, own, manage,
                                operate, join, control, participate in, be
                                engaged in, be employed by or be connected with,
                                any business, individual, partner, firm,
                                corporation or other entity, including without
                                limitation any business, individual, partner,
                                firm, corporation, or other entity that directly
                                or indirectly competes with (any such action,
                                individually, and in the aggregate, to "compete
                                with"), the Company or any member of the
                                Aircastle Group, at any time during your
                                employment with the Company. In the case where
                                your employment with the Company is terminated
                                by you for any reason (other than following a
                                breach of this letter agreement by the Company)
                                or by the Company for Cause, such restrictions
                                shall apply for six (6) months after the
                                effective date of such




Employment Offer Letter
Jonathan M. Lang
Page 6


                                termination solely as to any aircraft leasing,
                                marketing, advisory and/or finance business
                                managed by the Company or any member of the
                                Aircastle Group. Notwithstanding anything else
                                herein, the mere "beneficial ownership" by you,
                                either individually or as a member of a "group"
                                (as such terms are used in Rule 13(d) issued
                                under the Securities Exchange Act of 1934) of
                                not more than 5% of the voting stock of any
                                public company shall not be deemed in violation
                                of this letter agreement. These restrictions
                                shall not apply following the termination of
                                your employment if the Company terminates your
                                employment without Cause.

                         (ii)   You shall keep secret and retain in strictest
                                confidence, and shall not use for your benefit
                                or the benefit of others, except in connection
                                with the business and affairs of the Company
                                (which, for purposes of and in each instance
                                used in this paragraph and the next paragraph,
                                shall include the Aircastle Group (including (i)
                                any fund managed by any member of the Aircastle
                                Group or any affiliate thereof during or prior
                                to the period of your employment with the
                                Company and (ii) the Company's other affiliates,
                                including, without limitation, portfolio
                                investments of the private equity business of
                                any member of the Aircastle Group)), all
                                confidential information of and confidential
                                matters (whether made available to you in
                                written, electronic form or orally) relating to
                                (a) the Company's business and the Company
                                (including, without limitation, the actual
                                investments of the Company, the contemplated
                                investments of the Company, the financial
                                performance of the Company or any fund managed
                                by a member of the Aircastle Group or of any
                                investment thereof, and the identity of the
                                equity investors in the Company or in any of the
                                funds or businesses of which any member of the
                                Aircastle Group manages), (b) all corporations
                                or other business organizations in which the
                                Company has or has had an investment and (c)
                                third parties, learned by you heretofore or
                                hereafter directly or indirectly in connection
                                with your employment (the "Confidential Company
                                Information"). In consideration of, and as a
                                condition to, continued access to Confidential
                                Company Information, and without prejudice to or
                                limitation on any other confidentiality
                                obligation imposed by agreement or law, you
                                hereby undertake to use and protect Confidential
                                Company Information in accordance with
                                restrictions placed on its use or disclosure.
                                Without limiting the foregoing, you shall not
                                disclose Confidential Company Information to
                                anyone outside of the Company except with the



Employment Offer Letter
Jonathan M. Lang
Page 7


                                Company's express written consent. The foregoing
                                restrictions shall not apply to Confidential
                                Company Information which (1) is at the time of
                                receipt or thereafter becomes publicly known
                                other than a result of your having breached this
                                letter agreement, (2) is received by you from a
                                third party not under an obligation to any
                                person to keep such information confidential or
                                (3) is required to be disclosed by law, rule,
                                regulation or order, subject to your use of your
                                reasonable best efforts to obtain (and to
                                cooperate with the Company's efforts to obtain)
                                judicial approval for such information to be
                                disclosed under seal or subject to other
                                confidentiality orders. All memoranda, notes,
                                lists, records, property and any other tangible
                                product and documents (and all copies and
                                excerpts thereof), whether visually perceptible,
                                machine-readable or otherwise, made, produced or
                                compiled by you or made available to you
                                concerning the business of the Company, (i)
                                shall at all times be the property of the
                                Company and shall be delivered to the Company at
                                any time upon its request, and (ii) upon your
                                termination of employment, shall be immediately
                                returned to the Company. The foregoing shall not
                                limit any other confidentiality obligations
                                imposed by agreement or by law.

                         (iii)  From the date hereof through the end of the
                                one-year period commencing with the termination
                                of your employment with the Company, you shall
                                not, without the Company's prior written
                                consent, directly or indirectly, (a) solicit or
                                encourage to leave the employment or other
                                service of the Company or any of its affiliates
                                any employee or independent contractor thereof
                                or (b) hire (on behalf of yourself or any other
                                person or entity) any employee or independent
                                contractor who has left the employment or other
                                service of the Company or any of its affiliates
                                within the one-year period which follows the
                                termination of such employee's or independent
                                contractor's employment or other service with
                                the Company or any such affiliate.

                         (iv)   Any works of authorship, databases, discoveries,
                                developments, improvements, computer programs,
                                or other intellectual property, etc. ("Works")
                                that you make or conceive, or have made or
                                conceived, solely or jointly, during the period
                                of your employment with the Company, whether or
                                not patentable or registerable under copyright,
                                trademark or similar statutes, which either (i)
                                are related to or useful in the current or
                                anticipated business or activities of the
                                Company or any member of the Aircastle Group
                                (which



Employment Offer Letter
Jonathan M. Lang
Page 8


                                includes any quantitative fund or portfolio or
                                global macro fund managed by any affiliate of
                                the Company); (ii) fall within your
                                responsibilities as employed by the Company; or
                                (iii) are otherwise developed by you through the
                                use of the Company's confidential information,
                                equipment, software, or other facilities or
                                resources or at times during which you are or
                                have been an employee constitute "work for hire"
                                under the United States Copyright Act, as
                                amended. If for any reason any portion of the
                                Works shall be deemed not to be a "work for
                                hire", then you hereby assign to the Company all
                                rights, title and interest therein and shall
                                cooperate to establish the Company's ownership
                                rights, including the execution of all documents
                                necessary to establish the Company's exclusive
                                ownership rights.

                         (v)    Any breach by you of any of the provisions of
                                the foregoing clauses (i), (ii), (iii) or (iv)
                                (the "Restrictive Covenants") shall entitle the
                                Company (including each of its affiliates) to
                                cease making any payments to you under any
                                agreement, including this letter agreement,
                                pursuant to which you are entitled to monies
                                from the Company or any member of the Aircastle
                                Group. In addition, you acknowledge and agree
                                that any breach by you of the Restrictive
                                Covenants would result in irreparable injury and
                                damage for which money damages would not provide
                                an adequate remedy. Therefore, if you breach, or
                                threaten to commit a breach of, any of the
                                provisions of the Restricted Covenants, the
                                Company shall have the right and remedy, in
                                addition to, and not in lieu of, any other
                                rights and remedies available to the Company
                                under law or in equity (including, without
                                limitation, the recovery of damages), to have
                                the Restrictive Covenants specifically enforced
                                (without posting bond and without the need to
                                prove damages) by any court having equity
                                jurisdiction, including, without limitation, the
                                right to an entry against you of restraining
                                orders and injunctions (preliminary, mandatory,
                                temporary and permanent) against violations,
                                threatened or actual, and whether or not then
                                continuing, of the Restrictive Covenants. You
                                acknowledge and agree that the Restrictive
                                Covenants are reasonable in geographical and
                                temporal scope and in all other respects. If it
                                is determined that any of the Restrictive
                                Covenants, or any part thereof, is invalid or
                                unenforceable, the remainder of the Restrictive
                                Covenants shall not thereby be affected and
                                shall be given full effect, without regard to
                                the invalid portions. If any court or other
                                decision-maker of competent jurisdiction
                                determines





Employment Offer Letter
Jonathan M. Lang
Page 9


                                that any provision of the Restrictive Covenants,
                                or any part thereof, is unenforceable because of
                                the duration or geographical scope of such
                                provision, then, after such determination has
                                become final and unappealable, the duration or
                                scope of such provision, as the case may be,
                                shall be reduced so that such provision becomes
                                enforceable and, in its reduced form, such
                                provision shall then be enforceable and shall be
                                enforced.

                    Notwithstanding anything in this letter agreement to the
                    contrary, the provisions of the foregoing clauses (i)
                    through (iv), inclusive, shall survive any termination of
                    this letter agreement and any termination of your
                    employment.

Entire              This letter agreement contains the entire agreement between
Agreement:          the parties with respect to the subject matter hereof and
                    supersedes all prior agreements, written or oral, with
                    respect thereto. Without limiting any of the foregoing, any
                    prior offer letter is hereby superseded in its entirety. YOU
                    REPRESENT THAT IN EXECUTING THIS LETTER AGREEMENT YOU HAVE
                    NOT RELIED UPON ANY REPRESENTATION OR STATEMENT NOT SET
                    FORTH HEREIN. Without limiting the foregoing, you represent
                    that you understand that you shall not be entitled to any
                    equity interest, profits interest or other interest in the
                    Company (including any of its affiliates, including any fund
                    or other business managed by any of them) except as set
                    forth in a writing signed by the Company. The Company's
                    affiliates are intended beneficiaries under this letter
                    agreement

Governing Law;      This letter agreement shall be governed by and construed in
Dispute             accordance with the laws of the State of New York without
Resolution;         regard to the principles of conflicts of law thereof.
Jurisdiction:
                    Without prejudice to our or your right to terminate your
                    employment relationship under "Employment Relationship"
                    above, if a dispute of whatever nature arises between us,
                    then notice thereof will be sent by one party to the other
                    and if the dispute cannot be settled through negotiation,
                    you and we mutually agree first to try in good faith to
                    settle the dispute by mediation administered by the American
                    Arbitration Association. If a mutually satisfactory
                    settlement is not reached within 45-days following notice of
                    the dispute, then such dispute shall be settled by binding
                    arbitration administered by the American Arbitration
                    Association under its National Rules for the Resolution of
                    Employment Disputes and judgment upon the award rendered by
                    the arbitrator shall be final and may be entered in any
                    court having jurisdiction thereof. Any demand for
                    arbitration shall be made within a reasonable time after the
                    matter in question has arisen but in no event




Employment Offer Letter
Jonathan M. Lang
Page 10


                    shall it be made after the date when institution of legal
                    proceedings based on such matter would be barred by any
                    statute of limitations. The prevailing party in any such
                    arbitration proceeding shall not be entitled to any award of
                    attorneys' fees or costs.

                    The foregoing mediation and arbitration provisions will not
                    cover workers' compensation or unemployment compensation
                    claims, claims involving Company-sponsored benefit plans
                    which provide their own claims procedures and claims for
                    injunctive or other equitable relief by the Company in
                    relation to the Restrictive Covenants. In any proceedings
                    involving such matters, no counter-claims shall be brought
                    for matters which would otherwise be covered by the above
                    mediation and arbitration provisions.

                    THE PARTIES AGREE THAT EXCLUSIVE JURISDICTION WILL BE IN A
                    COURT OF COMPETENT JURISDICTION IN THE CITY OF NEW YORK AND
                    HEREBY WAIVE OBJECTION TO THE JURISDICTION OR TO THE LAYING
                    OF VENUE IN ANY SUCH COURT.

                                     * * * *

We look forward to a successful employment relationship with you. If the
foregoing terms of employment are acceptable, please so indicate by signing in
the space provided below and returning to us an executed copy of this letter
agreement on or prior to May 4, 2005, the date on which the offer of employment
set out in this letter agreement shall expire if not so accepted by you.

Very truly yours,

AIRCASTLE ADVISOR LLC


By:
    ------------------

Accepted and agreed to, this ____ day of _______, 2005:


---------------------
Jonathan M. Lang



                              Aircastle Advisor LLC
                        c/o Fortress Investment Group LLC
                     1251 Avenue of the Americas, 16th Floor
                            New York, New York 10020

May 3, 2005

Jonathan M. Lang
17 Pequot Drive
Norwalk, Connecticut 06855

Dear Jonathan:

     It is with great pleasure that we extend to you an offer to join Aircastle
Advisor LLC (together with its affiliates, or branch offices thereof, the
"Company" or "Aircastle") on the terms and conditions set forth below.



Title:                 Chief Technology Officer.

Start Date:            As soon as your current employment is terminated, but in
                       no event later than May 23, 2005.

Location:              New York, New York, Stamford, Connecticut or another
                       location specified by the Company.

Compensation:          Your base salary will be paid at the rate of $200,000 per
                       annum, less statutory deductions, payable in accordance
                       with the regular payroll practices of Aircastle. In
                       addition, you are eligible to receive a discretionary
                       annual bonus, but except as provided below in relation to
                       the Guaranteed 2005 Bonus (as defined below) nothing in
                       this letter agreement will entitle you to a bonus
                       payment. For the sake of clarity, you are not entitled to
                       any pro-rata portion of any discretionary bonus if your
                       employment terminates for any reason prior to the payment
                       of any such bonus. Payment of a discretionary bonus in
                       any given fiscal or calendar year does not entitle you to
                       additional compensation or any such bonus in any
                       subsequent year. In order to be eligible for any bonus
                       while employed at Fortress, you must be an active
                       employee at, and not have given or received notice of
                       termination prior to, the time of the bonus payment

                       Aircastle has agreed that you will receive a minimum cash
                       bonus from the Company in respect of the calendar year
                       2005 equal to US$120,000 (your "Guaranteed 2005 Bonus"),
                       less statutory deductions. Your Guaranteed 2005 Bonus
                       will be paid as soon as practicable after performance
                       results in respect of 2005 have been determined, but in
                       no event later than January 31, 2006.

                       In addition, you shall be awarded a grant (the "Grant")
                       of restricted stock in






Employment Officer Letter
Jonathan M. Lang
Page 2


                       Aircastle Investment Limited with a total cost of
                       $150,000, with a per-share cost determined on the same
                       basis as that of the Fortress-managed funds that invest
                       in Aircastle. The Grant shall vest 1/3 on each of the
                       3rd, 4th and 5th anniversaries of your Start Date.

                       If dividends are paid on the class of restricted stock
                       granted to you, then you would receive dividends on any
                       unvested shares. The Grant will be made pursuant to a
                       restricted stock plan and/or agreement prepared by the
                       Company, which plan and/or agreement will supersede the
                       provisions of this letter which apply to such restricted
                       stock.

Benefits:              Effective your first day of employment you (and your
                       eligible dependents, if any) may at your election be
                       covered under such health insurance plan as covers the
                       Company's employees, subject to applicable exclusions and
                       limitations. You are eligible to participate in all other
                       perquisite and benefit arrangements made available by the
                       Company to employees generally, subject to the terms of
                       such plans or programs. Each such benefit is subject to
                       modification, including elimination, from to time, at the
                       Company's sole discretion.

                       You shall be entitled to vacation of 20 days per year
                       (prorated for 2005) in accordance with the Company's
                       vacation policies applicable to employees, as amended
                       from time to time.

Policies and           You agree to comply fully with all of the Company's
Procedures:            policies and procedures, as amended from time to time,
                       copies of which shall be provided to you or made
                       available to you by electronic means.

"Cause"                For purposes of this letter agreement, "Cause" means (i)
                       your commission of an act of fraud or dishonesty in the
                       course of your employment; (ii) your indictment or
                       entering of a plea of nolo contendere for a crime
                       constituting a felony or in respect of any act of fraud
                       or dishonesty; (iii) your commission of an act which
                       would make you (or the Company, or Fortress Investment
                       Group LLC or any of its affiliates (collectively,
                       "Aircastle Group") subject to being enjoined, suspended,
                       barred or otherwise disciplined for violation of federal
                       or state securities laws, rules or regulations, including
                       a statutory disqualification; (iv) your gross negligence
                       or willful misconduct in connection with your employment
                       by the Company; (v) your commission or omission of any
                       act that would result in or might reasonably be a
                       substantial factor resulting in the termination of any
                       member of the Aircastle Group or any of its affiliates,
                       for cause under any of material management, advisory or
                       similar agreements; (vi) your willful failure to comply
                       with any material policies or procedures of the Company
                       as in effect from time to time provided






Employment Officer Letter
Jonathan M. Lang
Page 3


                       that you shall have been delivered a copy of such
                       policies or notice that they have been posted on a
                       Company website prior to such compliance failure, and or
                       (vii) your commission of any material breach of any of
                       the provisions or covenants set forth herein, provided,
                       however, that discharge pursuant to this clause (vii)
                       shall not constitute discharge for "Cause" unless you
                       shall have received written notice from the Company
                       stating the nature of such breach and affording you an
                       opportunity to correct the act(s) or omission(s)
                       complained of within ten (10) days of your receipt of
                       such notice.

Employment             You are an at-will employee. This letter is not a
Relationship;          contract of employment for any specific period of time,
Termination;           and your employment may be terminated by you or by the
Termination Payments   Company at any time for any reason or no reason
and Vesting:           whatsoever. Notwithstanding the foregoing, you will give
                       us not less than 30 days notice of your termination of
                       the employment relationship.

                       In the event that you are terminated by the Company,
                       then:

                            (i)  if you are terminated without Cause, then

                                 (a)  any restricted stock granted to you that
                                      is due to vest at the next date on which
                                      any restricted stock would vest if you
                                      were still in the employ of Aircastle
                                      shall vest on the date of your
                                      termination, but any right or interest in
                                      any other unvested restricted stock shall
                                      be forfeit by you (e.g., if you are
                                      terminated without Cause prior to the
                                      third anniversary of your Start Date, then
                                      1/3 of the Grant shall vest upon your
                                      termination without Cause, but the
                                      remaining 2/3 shall not vest and you shall
                                      have no further right or interest in such
                                      restricted stock), and

                                 (b)  if such termination occurs at any time
                                      after your Start Date and prior to the
                                      date on which you have been paid your
                                      Guaranteed 2005 Bonus, you shall be paid
                                      an amount equal to your Guaranteed 2005
                                      Bonus, such amount to be paid within
                                      thirty (30) days of such termination,

                                      in each case, provided you sign a
                                      separation agreement prepared by the
                                      Company which includes a general release
                                      of claims (a "Separation Agreement"), but
                                      you will not be obliged to mitigate your
                                      losses in order to be eligible to receive
                                      such vesting or payment.

                            (ii) if you are terminated for Cause, you shall
                                 forfeit and have no further right or interest
                                 in any then-unvested restricted stock and






Employment Officer Letter
Jonathan M. Lang
Page 4


                                 no termination payments shall be made by the
                                 Company.

                       If you resign from the company or if you are terminated
                       following your death or disability, then the provisions
                       of clause (ii) above shall apply.

                       The Company shall be entitled, in connection with its
                       investment structuring, tax planning, business
                       organization or other reasons, to terminate your
                       employment in connection with an invitation from an
                       affiliate of or branch office of the Company to accept
                       employment with such affiliate or branch office, in which
                       case the terms and conditions hereof shall apply to your
                       employment relationship with such entity, mutatis
                       mutandis, and in each case where the term "Company" or
                       "Aircastle" is used in this letter agreement it shall
                       include a reference to such affiliate or branch office.
                       For the sake of clarity, any termination of your
                       employment by the Company under circumstances in which
                       you are not offered employment with an affiliate or
                       branch office of the Company on the terms and conditions
                       hereof as described in the preceding sentence shall be a
                       termination without Cause.

                       If your employment with the Company terminates for any
                       reason or for no reason, you hereby agree that you shall
                       immediately resign from all positions (including, without
                       limitation, any management, officer or director position)
                       that you hold on the date of such termination with the
                       Company, or any of the their respective affiliates, or
                       with any entity in which the Company or any of its
                       affiliates has made any investment. You hereby agree to
                       execute and deliver such documentation reasonably
                       required by the Company as may be necessary or
                       appropriate to enable the Company, any of the Company's
                       affiliates or any entity in which the Company or any of
                       its affiliates has made an investment to effectuate such
                       resignation, and in any case, your execution of this
                       letter agreement shall be deemed the grant by you to the
                       officers of the Company of a limited power of attorney to
                       sign in your name and on your behalf such documentation
                       solely for the limited purposes of effectuating such
                       resignation.

Set-Off; Etc:          You hereby acknowledge and agree, without limiting the
                       rights of the Company otherwise available at law or in
                       equity, that, to the extent permitted by law, any or all
                       amounts or other consideration payable to you hereunder
                       or any other agreement with the Company (including any of
                       its affiliates), may be set-off against any or all
                       amounts or other consideration payable by you to the
                       Company under this letter agreement or to the Company or
                       any of its affiliates under any other agreement between
                       you and the Company or any of its affiliates, including,
                       without limitation, any obligation resulting from your
                       breach of the terms hereof.






Employment Officer Letter
Jonathan M. Lang
Page 5


Your                   You represent that:
Representations:
                            (i)   on your first day of employment with Aircastle
                                  you will be free to be employed hereunder
                                  without any contractual restrictions, express
                                  or implied, with respect to any of your prior
                                  employer(s).

                            (ii)  you have not taken or otherwise
                                  misappropriated and you do not have in your
                                  possession or control any confidential or
                                  proprietary information belonging to any of
                                  your prior employer(s) or connected with or
                                  derived from your services to prior
                                  employer(s), and you have returned to all
                                  prior employers any and all such confidential
                                  or proprietary information.

                            (iii) the Company and the Aircastle Group have
                                  informed you that you are not to use or cause
                                  the use of such confidential or proprietary
                                  information in any manner whatsoever in
                                  connection with your employment by the Company
                                  or any affiliate, and that you have agreed and
                                  hereby do agree that you will not use any such
                                  confidential or proprietary information.

                            (iv)  you have agreed and hereby do agree to keep
                                  the terms of this letter agreement
                                  confidential and not to disclose any of the
                                  terms or conditions hereof to any other
                                  person, including any employee of the Company
                                  or the Aircastle Group, except your immediate
                                  family, attorney or accountant or, upon the
                                  advice of counsel after notice to the Company,
                                  as may be required by law or as may be
                                  required in order to enforce or defend against
                                  the enforcement of this letter agreement.

Restrictive                 (i)   You shall not, directly or indirectly, without
Covenants:                        the prior written consent of the Company,
                                  provide consultative services to, own, manage,
                                  operate, join, control, participate in, be
                                  engaged in, be employed by or be connected
                                  with, any business, individual, partner, firm,
                                  corporation or other entity, including without
                                  limitation any business, individual, partner,
                                  firm, corporation, or other entity that
                                  directly or indirectly competes with (any such
                                  action, individually, and in the aggregate, to
                                  "compete with"), the Company or any member of
                                  the Aircastle Group, at any time during your
                                  employment with the Company. In the case where
                                  your employment with the Company is terminated
                                  by you for any




Employment Officer Letter
Jonathan M. Lang
Page 6

                                  reason (other than following a breach of this
                                  letter agreement by the Company) or by the
                                  Company for Cause, such restrictions shall
                                  apply for six (6) months after the effective
                                  date of such termination solely as to any
                                  aircraft leasing, marketing, advisory and/or
                                  finance business managed by the Company or any
                                  member of the Aircastle Group. Notwithstanding
                                  anything else herein, the mere "beneficial
                                  ownership" by you, either individually or as a
                                  member of a "group" (as such terms are used in
                                  Rule 13(d) issued under the Securities
                                  Exchange Act of 1934) of not more than 5% of
                                  the voting stock of any public company shall
                                  not be deemed in violation of this letter
                                  agreement. These restrictions shall not apply
                                  following the termination of your employment
                                  if the Company terminates your employment
                                  without Cause.

                            (ii)  You shall keep secret and retain in strictest
                                  confidence, and shall not use for your benefit
                                  or the benefit of others, except in connection
                                  with the business and affairs of the Company
                                  (which, for purposes of and in each instance
                                  used in this paragraph and the next paragraph,
                                  shall include the Aircastle Group (including
                                  (i) any fund managed by any member of the
                                  Aircastle Group or any affiliate thereof
                                  during or prior to the period of your
                                  employment with the Company and (ii) the
                                  Company's other affiliates, including, without
                                  limitation, portfolio investments of the
                                  private equity business of any member of the
                                  Aircastle Group)), all confidential
                                  information of and confidential matters
                                  (whether made available to you in written,
                                  electronic form or orally) relating to (a) the
                                  Company's business and the Company (including,
                                  without limitation, the actual investments of
                                  the Company, the contemplated investments of
                                  the Company, the financial performance of the
                                  Company or any fund managed by a member of the
                                  Aircastle Group or of any investment thereof,
                                  and the identity of the equity investors in
                                  the Company or in any of the funds or
                                  businesses of which any member of the
                                  Aircastle Group manages), (b) all corporations
                                  or other business organizations in which the
                                  Company has or has had an investment and (c)
                                  third parties, learned by you heretofore or
                                  hereafter directly or indirectly in connection
                                  with your employment (the "Confidential
                                  Company Information"). In consideration of,
                                  and as a condition to, continued access to
                                  Confidential Company Information, and without
                                  prejudice to or limitation on any other
                                  confidentiality obligation imposed by
                                  agreement or law, you hereby undertake to use
                                  and protect Confidential Company Information
                                  in accordance



Employment Officer Letter
Jonathan M. Lang
Page 7

                                  with restrictions placed on its use or
                                  disclosure. Without limiting the foregoing,
                                  you shall not disclose Confidential Company
                                  Information to anyone outside of the Company
                                  except with the Company's express written
                                  consent. The foregoing restrictions shall not
                                  apply to Confidential Company Information
                                  which (1) is at the time of receipt or
                                  thereafter becomes publicly known other than a
                                  result of your having breached this letter
                                  agreement, (2) is received by you from a third
                                  party not under an obligation to any person to
                                  keep such information confidential or (3) is
                                  required to be disclosed by law, rule,
                                  regulation or order, subject to your use of
                                  your reasonable best efforts to obtain (and to
                                  cooperate with the Company's efforts to
                                  obtain) judicial approval for such information
                                  to be disclosed under seal or subject to other
                                  confidentiality orders. All memoranda, notes,
                                  lists, records, property and any other
                                  tangible product and documents (and all copies
                                  and excerpts thereof), whether visually
                                  perceptible, machine-readable or otherwise,
                                  made, produced or compiled by you or made
                                  available to you concerning the business of
                                  the Company, (i) shall at all times be the
                                  property of the Company and shall be delivered
                                  to the Company at any time upon its request,
                                  and (ii) upon your termination of employment,
                                  shall be immediately returned to the Company.
                                  The foregoing shall not limit any other
                                  confidentiality obligations imposed by
                                  agreement or by law.

                            (iii) From the date hereof through the end of the
                                  one-year period commencing with the
                                  termination of your employment with the
                                  Company, you shall not, without the Company's
                                  prior written consent, directly or indirectly,
                                  (a) solicit or encourage to leave the
                                  employment or other service of the Company or
                                  any of its affiliates any employee or
                                  independent contractor thereof or (b) hire (on
                                  behalf of yourself or any other person or
                                  entity) any employee or independent contractor
                                  who has left the employment or other service
                                  of the Company or any of its affiliates within
                                  the one-year period which follows the
                                  termination of such employee's or independent
                                  contractor's employment or other service with
                                  the Company or any such affiliate.

                            (iv)  Any works of authorship, databases,
                                  discoveries, developments, improvements,
                                  computer programs, or other intellectual
                                  property, etc. ("Works") that you make or
                                  conceive, or have made or conceived, solely or
                                  jointly, during the period of your employment
                                  with the Company, whether or not patentable or
                                  registerable under



Employment Officer Letter
Jonathan M. Lang
Page 8

                                  copyright, trademark or similar statutes,
                                  which either (i) are related to or useful in
                                  the current or anticipated business or
                                  activities of the Company or any member of the
                                  Aircastle Group (which includes any
                                  quantitative fund or portfolio or global macro
                                  fund managed by any affiliate of the Company);
                                  (ii) fall within your responsibilities as
                                  employed by the Company; or (iii) are
                                  otherwise developed by you through the use of
                                  the Company's confidential information,
                                  equipment, software, or other facilities or
                                  resources or at times during which you are or
                                  have been an employee constitute "work for
                                  hire" under the United States Copyright Act,
                                  as amended. If for any reason any portion of
                                  the Works shall be deemed not to be a "work
                                  for hire", then you hereby assign to the
                                  Company all rights, title and interest therein
                                  and shall cooperate to establish the Company's
                                  ownership rights, including the execution of
                                  all documents necessary to establish the
                                  Company's exclusive ownership rights.

                            (v)   Any breach by you of any of the provisions of
                                  the foregoing clauses (i), (ii), (iii) or (iv)
                                  (the "Restrictive Covenants") shall entitle
                                  the Company (including each of its affiliates)
                                  to cease making any payments to you under any
                                  agreement, including this letter agreement,
                                  pursuant to which you are entitled to monies
                                  from the Company or any member of the
                                  Aircastle Group. In addition, you acknowledge
                                  and agree that any breach by you of the
                                  Restrictive Covenants would result in
                                  irreparable injury and damage for which money
                                  damages would not provide an adequate remedy.
                                  Therefore, if you breach, or threaten to
                                  commit a breach of, any of the provisions of
                                  the Restricted Covenants, the Company shall
                                  have the right and remedy, in addition to, and
                                  not in lieu of, any other rights and remedies
                                  available to the Company under law or in
                                  equity (including, without limitation, the
                                  recovery of damages), to have the Restrictive
                                  Covenants specifically enforced (without
                                  posting bond and without the need to prove
                                  damages) by any court having equity
                                  jurisdiction, including, without limitation,
                                  the right to an entry against you of
                                  restraining orders and injunctions
                                  (preliminary, mandatory, temporary and
                                  permanent) against violations, threatened or
                                  actual, and whether or not then continuing, of
                                  the Restrictive Covenants. You acknowledge and
                                  agree that the Restrictive Covenants are
                                  reasonable in geographical and temporal scope
                                  and in all other respects. If it is determined
                                  that any of the Restrictive Covenants, or any
                                  part thereof, is invalid or unenforceable, the
                                  remainder of





Employment Officer Letter
Jonathan M. Lang
Page 9

                                  the Restrictive Covenants shall not thereby be
                                  affected and shall be given full effect,
                                  without regard to the invalid portions. If any
                                  court or other decision-maker of competent
                                  jurisdiction determines that any provision of
                                  the Restrictive Covenants, or any part
                                  thereof, is unenforceable because of the
                                  duration or geographical scope of such
                                  provision, then, after such determination has
                                  become final and unappealable, the duration or
                                  scope of such provision, as the case may be,
                                  shall be reduced so that such provision
                                  becomes enforceable and, in its reduced form,
                                  such provision shall then be enforceable and
                                  shall be enforced.

                       Notwithstanding anything in this letter agreement to the
                       contrary, the provisions of the foregoing clauses (i)
                       through (iv), inclusive, shall survive any termination of
                       this letter agreement and any termination of your
                       employment.

Entire Agreement:      This letter agreement contains the entire agreement
                       between the parties with respect to the subject matter
                       hereof and supersedes all prior agreements, written or
                       oral, with respect thereto. Without limiting any of the
                       foregoing, any prior offer letter is hereby superseded in
                       its entirety. YOU REPRESENT THAT IN EXECUTING THIS LETTER
                       AGREEMENT YOU HAVE NOT RELIED UPON ANY REPRESENTATION OR
                       STATEMENT NOT SET FORTH HEREIN. Without limiting the
                       foregoing, you represent that you understand that you
                       shall not be entitled to any equity interest, profits
                       interest or other interest in the Company (including any
                       of its affiliates, including any fund or other business
                       managed by any of them) except as set forth in a writing
                       signed by the Company. The Company's affiliates are
                       intended beneficiaries under this letter agreement

Governing Law;         This letter agreement shall be governed by and construed
Dispute Resolution;    in accordance with the laws of the State of New York
Jurisdiction:          without regard to the principles of conflicts of law
                       thereof.

                       Without prejudice to our or your right to terminate your
                       employment relationship under "Employment Relationship"
                       above, if a dispute of whatever nature arises between us,
                       then notice thereof will be sent by one party to the
                       other and if the dispute cannot be settled through
                       negotiation, you and we mutually agree first to try in
                       good faith to settle the dispute by mediation
                       administered by the American Arbitration Association. If
                       a mutually satisfactory settlement is not reached within
                       45-days following notice of the dispute, then such
                       dispute shall be settled by binding arbitration
                       administered by the American Arbitration Association
                       under its National Rules for the Resolution of Employment
                       Disputes and judgment upon the



Employment Officer Letter
Jonathan M. Lang
Page 10

                       award rendered by the arbitrator shall be final and may
                       be entered in any court having jurisdiction thereof. Any
                       demand for arbitration shall be made within a reasonable
                       time after the matter in question has arisen but in no
                       event shall it be made after the date when institution of
                       legal proceedings based on such matter would be barred by
                       any statute of limitations. The prevailing party in any
                       such arbitration proceeding shall not be entitled to any
                       award of attorneys' fees or costs.

                       The foregoing mediation and arbitration provisions will
                       not cover workers' compensation or unemployment
                       compensation claims, claims involving Company-sponsored
                       benefit plans which provide their own claims procedures
                       and claims for injunctive or other equitable relief by
                       the Company in relation to the Restrictive Covenants. In
                       any proceedings involving such matters, no counter-claims
                       shall be brought for matters which would otherwise be
                       covered by the above mediation and arbitration
                       provisions.

                       THE PARTIES AGREE THAT EXCLUSIVE JURISDICTION WILL BE IN
                       A COURT OF COMPETENT JURISDICTION IN THE CITY OF NEW YORK
                       AND HEREBY WAIVE OBJECTION TO THE JURISDICTION OR TO THE
                       LAYING OF VENUE IN ANY SUCH COURT.

                                     * * * *

We look forward to a successful employment relationship with you. If the
foregoing terms of employment are acceptable, please so indicate by signing in
the space provided below and returning to us an executed copy of this letter
agreement on or prior to May 4, 2005, the date on which the offer of employment
set out in this letter agreement shall expire if not so accepted by you.

Very truly yours,

AIRCASTLE ADVISOR LLC


By: /s/ Joseph P. Adams, Jr.
    ---------------------------------

Accepted and agreed to, this 6th day of May, 2005:

/s/ Jonathan M. Lang
-------------------------------------
Jonathan M. Lang



                              Aircastle Advisor LLC
                       300 First Stamford Place, 5th Floor
                                Stamford CT 06902

March 8, 2006

Jonathan M. Lang
17 Pequot Drive
Norwalk, Connecticut 06855

Dear Jonathan:

     Reference is made to that certain letter agreement, dated April 29, 2005
(the "Letter Agreement"), between you and Aircastle Advisor LLC.

1.   Initial Grant.

     On and as of the date hereof you have executed a Restricted Share Agreement
     in respect of certain shares of Aircastle Investment Limited. Accordingly,
     the following provisions are deleted from the Letter Agreement:

     (a)  the final two paragraphs under "Compensation"; and

     (b)  paragraph (i)(a) of "Employment Relationship; Termination; Termination
          Payments and Vesting".

2.   Miscellaneous.

     Except as expressly set forth herein, the Letter Agreement remains in full
     force and effect, unchanged.

AIRCASTLE ADVISOR LLC


By: /s/ David Walton
    ---------------------------------

Accepted and agreed to, this 16th day of March, 2006:

/s/ Jonathan M. Lang
-------------------------------------
Jonathan M. Lang



                                                                  EXECUTION COPY

                            CREDIT AGREEMENT (2006-A)

                                  by and among

                    AIRCASTLE INVESTMENT HOLDINGS 2 LIMITED,
                        AIRCASTLE IRELAND NO. 3 LIMITED,

                                       and

                  THE BORROWERS PARTY HERETO FROM TIME TO TIME,
                                  as Borrowers,

                           JPMORGAN CHASE BANK, N.A.,
                     BEAR STEARNS CORPORATE LENDING INC. and
                                 CITIBANK, N.A.,
                                   as Lenders

                                       and

                           JPMORGAN CHASE BANK, N.A.,
                                    as Agent

                                       and

                THE OTHER LENDERS PARTY HERETO FROM TIME TO TIME

                          Dated as of February 28, 2006



                                TABLE OF CONTENTS



                                                                                  PAGE
                                                                                  ----

                                    ARTICLE I
                              Definitions and Terms

1.1.     Definitions...........................................................     1
1.2.     Rules of Interpretation...............................................    26

                                   ARTICLE II
                          The Revolving Credit Facility

2.1.     Revolving Loans.......................................................    27
2.2.     Payment of Interest...................................................    29
2.3.     Payment of Principal..................................................    29
2.4.     Manner of Payment.....................................................    30
2.5.     Notes.................................................................    31
2.6.     Pro Rata Payments.....................................................    31
2.7.     Reductions............................................................    31
2.8.     Conversions and Elections of Subsequent Interest Periods..............    32
2.9.     Increase and Decrease in Amounts......................................    32
2.10.    Fees..................................................................    32
2.11.    Deficiency Advances...................................................    32
2.12.    Use of Proceeds.......................................................    33
2.13.    Designation of Borrowing Affiliate; Releases..........................    33
2.14.    Joint and Several Liability...........................................    34
2.15.    Eligible Lease Involving Eligible Intermediary........................    35

                                   ARTICLE III
                                    Security

3.1.     Security..............................................................    36
3.2.     Further Assurances....................................................    36
3.3.     Information Regarding Collateral......................................    36
3.4.     Quiet Enjoyment.......................................................    36

                                   ARTICLE IV
                             Change in Circumstances

4.1.     Requirements of Law...................................................    37
4.2.     Limitation on Types of Loans..........................................    38
4.3.     Illegality............................................................    38
4.4.     Treatment of Affected Loans...........................................    39
4.5.     Compensation..........................................................    39
4.6.     Taxes.................................................................    40

                                    ARTICLE V
                           Conditions to Making Loans

5.1.     Conditions of Closing.................................................    42
5.2.     Conditions of Revolving Loans.........................................    44



                                        i





5.3.     Conditions of Subsequent Advances Under Revolving Loans...............    47

                                   ARTICLE VI
                         Representations and Warranties

6.1.     Organization and Authority............................................    48
6.2.     Loan Documents........................................................    49
6.3.     Solvency..............................................................    49
6.4.     Subsidiaries and Stockholders.........................................    49
6.5.     Ownership Interests...................................................    50
6.6.     Liens.................................................................    50
6.7.     Title to Properties...................................................    50
6.8.     Taxes.................................................................    50
6.9.     Other Agreements......................................................    51
6.10.    Litigation............................................................    51
6.11.    Federal Regulations...................................................    51
6.12.    Investment Company....................................................    51
6.13.    Patents, Etc..........................................................    52
6.14.    No Untrue Statement...................................................    52
6.15.    No Consents, Etc......................................................    52
6.16.    Employee Benefit Plans................................................    53
6.17.    No Default............................................................    53
6.18.    Environmental Laws....................................................    53
6.19.    Employment Matters....................................................    54
6.20.    Taxes.................................................................    54
6.21.    Parent Guarantor Representations and Warranties.......................    54

                                   ARTICLE VII
                              Affirmative Covenants

7.1.     Financial Reports, Etc................................................    54
7.2.     Maintain Properties...................................................    54
7.3.     Existence, Qualification, Etc.........................................    55
7.4.     Regulations and Taxes.................................................    55
7.5.     Insurance.............................................................    55
7.6.     True Books............................................................    55
7.7.     Right of Inspection...................................................    55
7.8.     Observe all Laws......................................................    56
7.9.     Governmental Licenses.................................................    56
7.10.    Covenants Extending to Other Persons..................................    56
7.11.    Officer's Knowledge of Default........................................    56
7.12.    Suits or Other Proceedings............................................    56
7.13.    Notice of Environmental Complaint or Condition........................    56
7.14.    Environmental Compliance..............................................    56
7.15.    Indemnification.......................................................    57
7.16.    Further Assurances....................................................    57
7.17.    Hedging Agreements....................................................    57
7.18.    Continued Operations..................................................    57
7.19.    Maintenance of Eligible Assets; Other Covenants and Restrictions; Non-



                                       ii





            Discrimination.....................................................    58
7.20.    Re-registration of Eligible Assets....................................    58
7.21.    Employee Benefit Plans................................................    58
7.22.    Accounts..............................................................    58
7.23.    Eligible Lease; Lessee Notice.........................................    58

                                  ARTICLE VIII
                               Negative Covenants

8.1.     Acquisitions..........................................................    58
8.2.     Capital Expenditures..................................................    59
8.3.     Liens.................................................................    59
8.4.     Indebtedness..........................................................    60
8.5.     Transfer of Assets....................................................    61
8.6.     Subsidiaries; Investments.............................................    61
8.7.     Merger or Consolidation...............................................    61
8.8.     Transactions with Affiliates..........................................    61
8.9.     Employee Benefit Plans; ERISA Affiliates; Employees...................    61
8.10.    Fiscal Year...........................................................    62
8.11.    Dissolution, etc......................................................    62
8.12.    Change in Control.....................................................    62
8.13.    Negative Pledge Clauses...............................................    62
8.14.    Partnerships..........................................................    62
8.15.    Business and Operations...............................................    62
8.16.    Ownership, Operation and Leasing of Financed Eligible Assets..........    62
8.17.    Bank Accounts.........................................................    63
8.18.    Representations Regarding Agent and Lenders...........................    63
8.19.    Bermuda Holding 2 Ltd.; AI 3 Ltd......................................    63
8.20.    Organizational Documents..............................................    63
8.21.    Permanent Capital Markets Financing...................................    63
8.22.    Borrowing Base Covenant...............................................    64

                                   ARTICLE IX
                       Events of Default and Acceleration

9.1.     Events of Default.....................................................    64
9.2.     Agent to Act..........................................................    68
9.3.     Cumulative Rights.....................................................    68
9.4.     No Waiver.............................................................    68
9.5.     Allocation of Proceeds................................................    68
9.6.     Activities of Eligible Carriers.......................................    69

                                    ARTICLE X
                                    The Agent

10.1.    Appointment, Powers, and Immunities...................................    69
10.2.    Reliance by Agent.....................................................    71
10.3.    Defaults..............................................................    71
10.4.    Rights as Lender......................................................    71
10.5.    Indemnification.......................................................    71



                                       iii





10.6.    Non-Reliance on Agent and Other Lenders...............................    71
10.7.    Resignation of Agent..................................................    71
10.8.    Fees..................................................................    72

                                   ARTICLE XI
                                  Miscellaneous

11.1.    Assignments and Participations........................................    72
11.2.    Notices...............................................................    74
11.3.    Right of Set-off; Adjustments.........................................    76
11.4.    Survival..............................................................    77
11.5.    Expenses..............................................................    77
11.6.    Amendments and Waivers................................................    77
11.7.    Counterparts..........................................................    78
11.8.    Return of Funds.......................................................    78
11.9.    Indemnification; Limitation of Liability..............................    78
11.10.   Severability..........................................................    80
11.11.   Entire Agreement......................................................    80
11.12.   Payments..............................................................    80
11.13.   Confidentiality.......................................................    80
11.14.   Governing Law; Waiver of Jury Trial...................................    81
11.15.   Judgment Currency.....................................................    82
11.16.   USA PATRIOT Act.......................................................    82
11.17.   Post-Closing Matters..................................................    82



                                       iv



EXHIBITS

EXHIBIT A          Applicable Commitment Percentages
EXHIBIT B          Form of Assignment and Acceptance
EXHIBIT C          Notice of Appointment (or Revocation) of Authorized
                      Representative
EXHIBIT D          Form of Borrowing Notice
EXHIBIT E          Form of Interest Rate Selection Notice
EXHIBIT F          Form of Note
EXHIBIT G-1        Form of Domestic Counsel Opinion
EXHIBIT G-2        Form of FAA Counsel Opinion at Funding
EXHIBIT G-3        Form of Foreign Counsel Opinion as to Borrower
EXHIBIT G-4        Form of Foreign Counsel Opinion as to Lease and Lessee
EXHIBIT H          Compliance Certificate
EXHIBIT I-1        Form of Facility Guaranty
EXHIBIT I-2        Form of Parent Guarantor Guaranty
EXHIBIT J          Form of Security Agreement
EXHIBIT K          List of Approved Aircraft Models
EXHIBIT L          Required Insurance on Each Aircraft
EXHIBIT M          Form of Lessee Notice
EXHIBIT N          Form of Account Control Agreement
EXHIBIT O          Form of Lockbox Agreement
EXHIBIT P          Monthly Servicer and Covenant Compliance Report
EXHIBIT Q          Form of Assumption Letter
EXHIBIT R          Borrowing Base Certificate
EXHIBIT S-1        Form of Pledge and Security Agreement (for pledged beneficial
                      interest in Holdings Subsidiary Trust)
EXHIBIT S-2        Form of Pledge and Security Agreement (for pledged interest
                      in Holdings SPC, Beneficial Owner, Applicable Intermediary
                      or other Subsidiary)
EXHIBIT S-3        Form of Bermuda Pledge
EXHIBIT S-4        Form of Irish Pledge

SCHEDULES

Schedule 1.1       Certain Persons who are not Eligible Assignees
Schedule 3.3       Information Regarding Collateral
Schedule 6.7       Existing Liens
Schedule 6.8       Tax Matters
Schedule 6.10      Litigation
Schedule 6.21      Accounts
Schedule 7.19(a)   Maintenance, Return, Alteration, Replacement, Pooling and
                      Lease
Schedule 8.4       Indebtedness


                                        v



                                CREDIT AGREEMENT

          THIS CREDIT AGREEMENT (2006-A), dated as of February 28, 2006 (as may
be amended, supplemented or otherwise modified from time to time, the
"Agreement"), is made by and among, AIRCASTLE INVESTMENT HOLDINGS 2 LIMITED, an
exempted company organized and existing under the laws of Bermuda ("Bermuda
Holding 2 Ltd."), AIRCASTLE IRELAND NO. 3 LIMITED, a limited liability company
incorporated in Ireland ("AI 3 Ltd."), and certain Holdings Subsidiary Trusts
and Holdings SPCs (as defined below) designated as Borrowing Affiliates
hereunder (such Holdings Subsidiary Trusts and Holdings SPCs being referred to
individually as a "Borrower" or collectively as the "Borrowers"), JPMORGAN CHASE
BANK, N.A., a national banking association, in its capacity as a Lender
("JPMCB"), BEAR STEARNS CORPORATE LENDING INC., a national banking corporation,
CITIBANK, N.A., a national banking association, and each other financial
institution executing and delivering a signature page hereto and each other
financial institution which may hereafter execute and deliver an instrument of
assignment with respect to this Agreement pursuant to Section 11.1 (such
financial institutions hereinafter being referred to individually as a "Lender"
or collectively as the "Lenders"), and JPMORGAN CHASE BANK, N.A., in its
capacity as agent for the Lenders (in such capacity, and together with any
successor agent appointed in accordance with the terms of Section 10.7, the
"Agent");

                                   WITNESSETH:

          WHEREAS, the Borrowers have requested that the Lenders make available
to the Borrowers a revolving credit facility of up to $500,000,000, the proceeds
of which are to be used solely to provide interim financing for the purchase or
refinancing by the Borrowers of Eligible Assets; and

          WHEREAS, the Lenders are willing to make such revolving credit
facility available to the Borrowers upon the terms and conditions set forth
herein;

          NOW, THEREFORE, the Borrowers, the Lenders and the Agent hereby agree
as follows:

                                    ARTICLE I

                              DEFINITIONS AND TERMS

          1.1. Definitions. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:

          "$100,000,000 Capital Call" has the meaning given to such term in
     section 5.1(c).

          "AA LLC" means Aircastle Advisor LLC, a Delaware limited liability
     company and a direct wholly-owned subsidiary of the Parent.



          "AA Ireland Ltd." means Aircastle Advisor (Ireland) Limited, a limited
     company organized in Ireland and a direct wholly-owned subsidiary of the
     Parent.

          "ABS Ltd." means Aircastle Bermuda Securities Limited, an exempted
     company organized and existing under the laws of Bermuda.

          "Account" has the meaning given in the Lockbox Agreement.

          "Account Control Agreement" means an account control agreement in
     substantially the form of Exhibit N.

          "Acquisition" means the acquisition of any beneficial interest, equity
     interest or other ownership interest in another Person (including the
     purchase of an option, warrant or convertible or similar type security to
     acquire such interest at the time it becomes exercisable by the holder
     thereof), whether by purchase of such interest or upon exercise of an
     option or warrant for, or conversion of securities into, such interest.

          "Advance Rate" means at any time, the aggregate principal amount of
     the Loans outstanding hereunder, divided by the Borrowing Base.

          "Affiliate" means any Person (i) which directly or indirectly through
     one or more intermediaries controls, or is controlled by, or is under
     common control with any Guarantor or any Borrower; or (ii) which
     beneficially owns or holds 10% or more of any class of the outstanding
     voting stock (or in the case of a Person which is not a corporation, 10% or
     more of the equity interest or beneficial interest) of any Guarantor or any
     Borrower; or 10% or more of any class of the outstanding voting stock (or
     in the case of a Person which is not a corporation, 10% or more of the
     equity interest or beneficial interest) of which is beneficially owned or
     held by any Guarantor or any Borrower; provided, however, at the time any
     Guarantor registers any security issued by it pursuant to the Securities
     Act of 1933, as amended, the figure "10%" used in this definition shall
     automatically change to "5%" without further action; provided, further,
     that the term Affiliate, unless otherwise specified herein, shall only be
     deemed to refer to an "Affiliate" of any Parent Guarantor, as applicable,
     where such term is used in the Parent Guarantor Guaranty executed by the
     relevant Parent Guarantor, as applicable. The term "control" means the
     possession, directly or indirectly, of the power to direct or cause the
     direction of the management and policies of a Person, whether through
     ownership of voting stock, by contract or otherwise

          "AHC Ltd." means Aircastle Holding Corporation Limited, an exempted
     company organized and existing under the laws of Bermuda.

          "AI 2 Credit Agreement" means the 364-Day Senior Secured Credit
     Agreement, dated as of October 25, 2005 by and among: WELLS FARGO BANK
     NORTHWEST, NATIONAL ASSOCIATION, as trustee under each of trust agreement
     (MSN 333), trust Agreement (MSN 337) and trust Agreement (MSN 342) each
     dated as of October 19, 2005 with AI 2 Ltd. as trustor; AI 2 Ltd.,
     CITIBANK, N.A., a national banking


                                        2



     association, as a lender, the other lenders from time to time party thereto
     and CITIBANK, N.A., in its capacity as agent for the lenders thereunder.

          "AI 1 Ltd" means Aircastle Ireland No. 1 Limited, a limited liability
     company incorporated in Ireland and a wholly-owned subsidiary of Ireland
     Holding Ltd.

          "AI 2 Ltd" means Aircastle Ireland No. 2 Limited, a limited liability
     company incorporated in Ireland and a wholly-owned subsidiary of Ireland
     Holding Ltd.

          "AI 3 Ltd." has the meaning given such term in the preamble to this
     Agreement.

          "Aircraft" means any Stage III fixed wing airframe together with the
     jet Engines therefor (whether or not) affixed thereto.

          "Aircraft Portfolio" means the collective reference to all of the
     Eligible Assets owned by any Subsidiary of Bermuda Holding 2 Ltd. or AI 3
     Ltd. at any one time.

          "Applicable Borrower" means, with respect to any Financed Eligible
     Asset, the Borrower that has requested or received a Loan to enable such
     Borrower to purchase or refinance such Financed Eligible Asset.

          "Applicable Carrier" means, with respect to any Financed Eligible
     Asset, the Eligible Carrier that has leased such Financed Eligible Asset
     from the Applicable Borrower, or from the Applicable Intermediary in
     accordance with Section 2.15.

          "Applicable Commitment Percentage" means, with respect to each Lender
     at any time, a fraction, the numerator of which shall be such Lender's
     Revolving Credit Commitment and the denominator of which shall be the Total
     Revolving Credit Commitment, which Applicable Commitment Percentage for
     each Lender as of the Closing Date is as set forth in Exhibit A; provided
     that the Applicable Commitment Percentage of each Lender shall be increased
     or decreased to reflect any assignments to or by such Lender effected in
     accordance with Section 11.1.

          "Applicable Foreign Aviation Law" means, with respect to any Eligible
     Asset, any applicable law (other than the FAA Act) of any country or
     subdivision thereof, governing the registration, ownership, operation, or
     leasing of all or any part of such Eligible Asset, or the creation,
     recordation, maintenance, perfection or priority or Liens on all or any
     part of such Eligible Asset.

          "Applicable Foreign Jurisdiction" means, with respect to any Eligible
     Asset, any jurisdiction that administers an Applicable Foreign Aviation
     Law.

          "Applicable Intermediary" means, with respect to any Financed Eligible
     Asset, the Eligible Intermediary that has leased such Eligible Asset from
     the Applicable Borrower, and has leased such Eligible Asset to the
     Applicable Carrier, in each case in accordance with Section 2.15.

          "Applicable Lease Cure Period" has the meaning assigned thereto in
     Section 9.6.


                                        3



          "Applicable Lending Office" means, for each Lender and for each Type
     of Loan, the "Lending Office" for such Lender (or of an affiliate of such
     Lender) designated for such Type of Loan on the signature pages hereof or
     such other office of such Lender (or an affiliate of such Lender) as such
     Lender may from time to time specify to the Agent and the Borrowers by
     written notice in accordance with the terms hereof as the office by which
     its Loans are to be made and maintained.

          "Applicable Margin" means:

               (a)  with respect to the Eurodollar Rate, 1.25%; and

               (b)  with respect to the Base Rate, 0.25%.

          "Approved Improvements" means improvements made or added to an
     Eligible Asset acceptable to the Agent in its reasonable judgment.

          "Assignment and Acceptance" means an Assignment and Acceptance
     substantially in the form of Exhibit B (with blanks appropriately filled
     in) delivered to the Agent in connection with an assignment of a Lender's
     interest under this Agreement pursuant to Section 11.1.

          "Assumption Letter" means an Assumption Letter in substantially the
     form of Exhibit Q.

          "Authorized Representative" means any of the President, Chief
     Executive Officer, Chief Operating Officer, Chief Financial Officer or Vice
     President of the Parent, Bermuda Holding 2 Ltd. or AI 3 Ltd., as
     applicable, or any Beneficial Owner, in each case as authorized
     representative for each of the Borrowers, or any other Person expressly
     designated by the Board of Directors of each of the Borrowers (or the
     appropriate committee thereof) as an Authorized Representative of each of
     the Borrowers as set forth from time to time in a certificate in the form
     of Exhibit C.

          "Base Rate" means, for any day, the rate per annum equal to the sum of
     (a) the higher of (i) the Federal Funds Rate for such day plus one-half of
     one percent (0.5%) and (ii) the Prime Rate for such day, plus (b) the
     Applicable Margin. Any change in the Base Rate due to a change in the Prime
     Rate or the Federal Funds Rate shall be effective on the effective date of
     such change in the Prime Rate or Federal Funds Rate.

          "Base Rate Loan" means a Loan for which the rate of interest is
     determined by reference to the Base Rate.

          "Beneficial Owner" means, with respect to any Holdings Subsidiary
     Trust, either Aircastle Bermuda Holding 2 Ltd. or AI3 Ltd. or any Person
     who is a direct or indirect wholly-owned subsidiary of Bermuda Holding 2
     Ltd. or AI 3 Ltd., in any case holding a beneficial interest in such
     Holdings Subsidiary Trust.


                                        4



          "Bermuda Holding 1 Ltd." means Aircastle Investment Holdings Limited,
     an exempted company organized and existing under the laws of Bermuda and a
     direct wholly-owned subsidiary of AHC Ltd.

          "Bermuda Holding 1/AI 1 Credit Agreement" means that certain
     $600,000,000 third amended and restated credit agreement, dated as of
     October 24, 2005 (as may be further amended), made by and among Bermuda
     Holding 1 Ltd., AI 1 Ltd., ABH 12 Limited and certain other entities
     designated as borrowing affiliates thereunder, certain lenders and JPMorgan
     Chase Bank, N.A., as administrative agent.

          "Bermuda Holding 2 Ltd." has the meaning given to such term in the
     preamble to this Agreement.

          "Board" means the Board of Governors of the Federal Reserve System (or
     any successor body).

          "Borrower" has the meaning given to such term in the preamble to this
     Agreement.

          "Borrowing Affiliate" means any direct or indirect wholly-owned
     Subsidiary of Bermuda Holding 2 Ltd. or AI 3 Ltd. and any Holdings
     Subsidiary Trust or Holdings SPC that in either case is designated as a
     Borrowing Affiliate hereunder pursuant to Section 2.13 hereof.

          "Borrowing Base" means, as of any date of determination, the
     depreciated book value of all Eligible Assets owned by the Borrowers and
     their respective subsidiaries minus the sum of (i) the depreciated book
     value of any Unleasable Financed Eligible Asset and (ii) if a Borrowing
     Base Event occurs with respect to any Borrower or a Subsidiary thereof, the
     depreciated book value of each Financed Eligible Asset owned by such
     Borrower that suffered a Borrowing Base Event; provided, that on the date
     of the initial financing of the purchase of an Eligible Asset, the
     depreciated book value shall be deemed to equal the Purchase Price. Each
     calculation of the Borrowing Base shall apply the depreciated book value of
     the Eligible Asset as of the completed month end immediately prior to the
     date of determination.

          "Borrowing Base Certificate" means a certificate substantially in the
     form of Exhibit R.

          "Borrowing Base Covenant" has the meaning set forth with respect to
     such term in Section 8.22.

          "Borrowing Base Event" means, with respect to any Borrower, if (a) one
     or more judgments or orders where the amount not covered by insurance (or
     the amount as to which the insurer denies liability) is in excess of
     $250,000 is rendered against such Borrower or any Subsidiary thereof, or
     (b) there is any attachment, injunction or execution against any of such
     Borrower's or Subsidiaries' properties for any amount in excess of $250,000
     in the aggregate; and such judgment, attachment, injunction or


                                        5



     execution remains unpaid, unstayed, undischarged, unbonded or undismissed
     for a period of thirty (30) days.

          "Borrowing Notice" means the notice delivered by an Authorized
     Representative in connection with a Loan under the Revolving Credit
     Facility, in the form of Exhibit D.

          "Business Day" means, (i) with respect to any Base Rate Loan, any day
     which is not a Saturday, Sunday or a day on which banks in the State of New
     York are authorized or obligated by law, executive order or governmental
     decree to be closed and, (ii) with respect to any Eurodollar Rate Loan, any
     day which is a Business Day, as described above, and on which the relevant
     international financial markets are open for the transaction of business
     contemplated by this Agreement in London, England and New York, New York.

          "Calculation Date" mean the date three Business Days prior to each
     Payment Date.

          "Capital Expenditures" means, with respect to the Borrowers and their
     respective Subsidiaries, for any period the sum of (without duplication)
     (i) all expenditures (whether paid in cash or accrued as liabilities) by
     any Borrower or any Subsidiary during such period for items that would be
     classified as "property, plant or equipment" or comparable items on the
     consolidated balance sheet of such Borrower and its Subsidiaries, including
     without limitation all transactional costs incurred in connection with such
     expenditures provided the same have been capitalized, excluding, however,
     the amount of any Capital Expenditures paid for with proceeds of casualty
     insurance, as evidenced in writing and submitted to the Agent together with
     any compliance certificate delivered pursuant to Section 7.1(a) or (b), and
     (ii) with respect to any Capital Lease entered into by any Borrower or its
     Subsidiaries during such period, the present value of the lease payments
     due under such Capital Lease over the term of such Capital Lease applying a
     discount rate equal to the interest rate provided in such lease (or in the
     absence of a stated interest rate, that rate used in the preparation of the
     financial statements described in Section 7.1(a)), all the foregoing in
     accordance with GAAP.

          "Capital Leases" means all leases which have been or should be
     capitalized in accordance with GAAP as in effect from time to time
     including Statement No. 13 of the Financial Accounting Standards Board and
     any successor thereof.

          "Capital Stock" means, with respect to any Person, all of the shares,
     interests, rights, participations or other equivalents (however designated)
     of capital stock of (or other ownership or profit interests or units in)
     such Person and all of the warrants, options or other rights for the
     purchase, acquisition or exchange from such Person of any of the foregoing
     (including through convertible securities).

          "Cash Equivalents" means (i) securities issued or directly and fully
     guaranteed or insured by the United States Government, or any agency or
     instrumentality thereof, having maturities of not more than one year from
     the date of acquisition; (ii) marketable general obligations issued by any
     state of the United States of America or any political


                                        6



     subdivision of any such state or any public instrumentality thereof
     maturing within one year from the date of acquisition thereof and, at the
     time of acquisition thereof, having a credit rating of "A" or better from
     either Standard & Poor's Ratings Group or Moody's Investors Service, Inc.;
     (iii) certificates of deposit, time deposits, eurodollar time deposits,
     overnight bank deposits or bankers' acceptances having maturities of not
     more than one year from the date of acquisition thereof issued by any
     commercial bank the long-term debt of which is rated at the time of
     acquisition thereof at least "A" or the equivalent thereof by Standard &
     Poor's Rating Group, or "A" or the equivalent thereof by Moody's Investors
     Service, Inc., and having capital and surplus in excess of $500 million;
     (iv) repurchase obligations with a term of not more than seven days for
     underlying securities of the types described in clauses (i), (ii) and (iii)
     entered into with any bank meeting the qualifications specified in clause
     (iii) above; (v) commercial paper rated at the time of acquisition thereof
     at least "A-2" or the equivalent thereof by Standard & Poor's Rating Group
     or "P-2" or the equivalent thereof by Moody's Investors Service, Inc., or
     carrying an equivalent rating by a nationally recognized rating agency, if
     both of the two named rating agencies cease publishing ratings of
     investments, and in either case maturing within one year after the date of
     acquisition thereof; and (vi) interests in any investment company which
     invests solely in instruments of the type specified in clauses (i) through
     (v) above.

          "Change of Control" means, at any time, 100% of the beneficial
     ownership of (a) any Borrower or any Eligible Intermediary is not directly
     or indirectly owned by Bermuda Holding 2 Ltd. or AI 3 Ltd. or (b) Bermuda
     Holding 2 Ltd. or AI 3 Ltd. is not directly or indirectly owned by Parent.

          "Closing Date" means the date as of which this Agreement is executed
     by the Borrowers, the Lenders and the Agent and on which the conditions set
     forth in Section 5.1 have been satisfied.

          "Code" means the Internal Revenue Code of 1986, as amended, and any
     regulations promulgated thereunder.

          "Collateral" means, collectively, (i) all property of any Borrower,
     any Subsidiary, any Eligible Intermediary, Bermuda Holding 2 Ltd., AI 3
     Ltd. or any other Person in which the Agent or any Lender is granted a Lien
     as security for all or any portion of the Obligations under any Security
     Instrument including, without limitation, the Leases, the Pledged
     Interests, the Securitization Interests and the other collateral described
     in such Security Agreement, Pledge Agreement, Lockbox Agreement and other
     Security Instrument and (ii) the Parent Guarantor Collateral. For the
     avoidance of doubt, none of the Security Instruments shall provide for the
     grant of a perfected security interest in the Financed Eligible Assets.

          "Consolidated Net Income" means for any period, the consolidated net
     income (or loss) of the Parent and its Subsidiaries, determined on a
     consolidated basis in accordance with GAAP; provided that there shall be
     excluded (a) the income (or deficit) of any


                                        7



     Person accrued prior to the date it becomes a Subsidiary of the Parent or
     is merged into or consolidated with the Parent or any of its Subsidiaries,
     (b) the income (or deficit) of any Person (other than a Subsidiary of the
     Parent) in which the Parent or any of its Subsidiaries has an ownership
     interest, except to the extent that any such income is actually received by
     the Parent or such Subsidiary in the form of dividends or similar
     distributions, (c) the undistributed earnings of any Subsidiary of the
     Parent to the extent that the declaration or payment of dividends or
     similar distributions by such Subsidiary is not at the time permitted by
     the terms of any Contractual Obligation (other than under any Loan
     Document) or Requirement of Law applicable to such Subsidiary and (d) any
     gain realized upon the sale or other disposition of any property, plant or
     equipment of the Parent or its consolidated Subsidiaries involving aircraft
     financed pursuant to this Agreement or the Bermuda Holding 1/AI 1 Credit
     Agreement in a transaction in which the seller retains any residual or
     beneficial interest in the disposed asset.

          "Consolidated Net Worth" means at any date, all amounts that would, in
     conformity with GAAP, be included on a consolidated balance sheet of the
     Parent and its Subsidiaries under stockholders' equity at such date plus
     the uncalled portion of the $100,000,000 Capital Call.

          "Contingent Obligation" of any Person means all contingent liabilities
     required (or which, upon the creation or incurring thereof, would be
     required) to be included in the financial statements (including footnotes)
     of such Person in accordance with GAAP, including Statement No. 5 of the
     Financial Accounting Standards Board, all Rate Hedging Obligations and any
     obligation of such Person guaranteeing or in effect guaranteeing any
     Indebtedness, dividend or other obligation of any other Person (the
     "primary obligor") in any manner, whether directly or indirectly, including
     obligations of such Person however incurred:

               (1) to purchase such Indebtedness or other obligation or any
          property or assets constituting security therefor;

               (2) to advance or supply funds in any manner (i) for the purchase
          or payment of such Indebtedness or other obligation, or (ii) to
          maintain a minimum working capital, net worth or other balance sheet
          condition or any income statement condition of the primary obligor;

               (3) to grant or convey any lien, security interest, pledge,
          charge or other encumbrance on any property or assets of such Person
          to secure payment of such Indebtedness or other obligation;

               (4) to lease property or to purchase securities or other property
          or services primarily for the purpose of assuring the owner or holder
          of such Indebtedness or obligation of the ability of the primary
          obligor to make payment of such Indebtedness or other obligation; or

               (5) otherwise to assure the owner of the Indebtedness or such
          obligation of the primary obligor against loss in respect thereof.


                                        8



          "Continue", "Continuation", and "Continued" refers to the continuation
     pursuant to Section 2.8 hereof of a Eurodollar Rate Loan of one Type as a
     Eurodollar Rate Loan of the same Type from one Interest Period to the next
     Interest Period.

          "Convention" means the Convention on the International Recognition of
     Rights in Aircraft signed initially at Geneva in 1948, as the same may be
     amended, modified or supplemented from time to time.

          "Convert", "Conversion", and "Converted" refers to a conversion
     pursuant to Section 2.8 or Article IV of one Type of Loan into another Type
     of Loan.

          "Credit Agreement" has the meaning given to such term in the first
     recital to this Agreement.

          "Credit Party" means, collectively, each Borrower, each Eligible
     Intermediary, each Guarantor, and each other Person providing Collateral
     pursuant to any Security Instrument (other than the Parent Guarantors, none
     of which shall be deemed a Credit Party).

          "Default" means any event or condition which, with the giving or
     receipt of notice or lapse of time or both, would constitute an Event of
     Default hereunder, provided that if, pursuant to Section 9.6, such event or
     condition is not deemed to be a breach of the Credit Parties' obligations
     under this Agreement and the other Loan Documents, such event or condition
     shall not be deemed to be a "Default" except for the purposes of Section
     7.11, the first two sentences of Section 10.3, the Compliance Certificate
     in the form of Exhibit H, and Section 4 of the Borrowing Base Certificate
     in the form of Exhibit R.

          "Default Rate" means (i) with respect to each Eurodollar Rate Loan,
     until the end of the Interest Period applicable thereto, a rate of two
     percent (2%) above the Eurodollar Rate applicable to such Loan, and
     thereafter at a rate of interest per annum which shall be two percent (2%)
     above the Base Rate, (ii) with respect to Base Rate Loans, at a rate of
     interest per annum which shall be two percent (2%) above the Base Rate and
     (iii) in any case, the maximum rate permitted by applicable law, if lower.

          "Depositary Bank" means a bank, trust company or other Person,
     satisfactory to the Agent, that executes the Lockbox Agreement in the
     capacity of "Depositary Bank" thereunder.

          "Dollars" and the symbol "$" means dollars constituting legal tender
     for the payment of public and private debts in the United States of
     America.

          "Eligible Aircraft" means any Aircraft which satisfies each of the
     following requirements:

               (a) such Aircraft is a Stage III aircraft and is one of the
          models listed on Exhibit K attached hereto;


                                        9



               (b) such Aircraft is owned by the Applicable Borrower;

               (c) such Aircraft is covered by all of the insurance described on
          Exhibit L attached hereto and the Agent (for itself and on behalf of
          the Lenders) is named as loss payee or contract party on the hull
          insurance and is named as an additional insured or contract party on
          the liability insurance;

               (d) neither the Applicable Carrier (if any) nor the Applicable
          Intermediary (if any) is organized under the laws of, or domiciled in,
          any Prohibited Country; and

               (e) the age of such Aircraft is (i) in the case of a passenger
          aircraft, 19 years or less and (ii) in the case of a freighter
          aircraft, 25 years or less, in each case measured from the date of
          original manufacture as a passenger aircraft or a freighter aircraft,
          as the case may be, to the date of the original Loan made or to be
          made in respect of such Eligible Aircraft.

          "Eligible Asset" means an Eligible Aircraft or an Eligible Engine.

          "Eligible Assignee" means (i) a Lender, (ii) an affiliate of a Lender
     that is a "resident" (as that term is used in the Treaty) of the U.S. or a
     "qualified person" (as that term is used in the Treaty) and (iii) any other
     Person approved by the Agent (such consent not to be unreasonably withheld
     or delayed) that is either (A) a resident of the U.S., (B) a qualified
     person under the Treaty or (C) a "bank" (as that term is used in Article 23
     of the Treaty) that is a resident of Ireland or, if not such a resident, in
     whose hands the income from the Loans is attributable to a permanent
     establishment of such Persons in the U.S. or Ireland; provided, however,
     that (x) neither any Borrower nor an affiliate of any Borrower shall
     qualify as an Eligible Assignee and (y) unless a Default or Event of
     Default has occurred and is continuing, none of the Persons listed on
     Schedule 1.1 shall qualify as an Eligible Assignee unless the Parent shall
     have consented to such qualification, such consent not to be unreasonably
     withheld or delayed.

          "Eligible Carrier" means any air carrier duly licensed to carry
     passengers or cargo under applicable law, foreign or domestic.

          "Eligible Engine" means any Engine suitable for use on an Eligible
     Aircraft.

          "Eligible Intermediary" means, with respect to any Financed Eligible
     Asset, Bermuda Holding 2 Ltd. or AI 3 Ltd. or a Person that is a direct or
     indirect wholly-owned subsidiary of Bermuda Holding 2 Ltd. or AI 3 Ltd.

          "Eligible Lease" or "Eligible Leases" means a fully-executed Lease by
     a Borrower or Eligible Intermediary (as lessor) to an Eligible Carrier (as
     lessee) of an Eligible Asset, which Lease satisfies each of the following
     requirements:

               (a) such Lease is a "triple net lease" (subject to any
          arrangement whereby the Borrower and the Eligible Carrier agree to
          share certain expenses relating to aircraft or engine maintenance,
          directives, service bulletins or similar


                                       10



          items) and requires the lessee to maintain the insurance described in
          Exhibit L attached hereto with respect to such Eligible Asset, and to
          bear all risk of loss, damage or liability with respect to such
          Eligible Asset;

               (b) if the Eligible Carrier is domiciled in the United States,
          the lessor is entitled to the benefits of Section 1110 of the U.S.
          bankruptcy code with respect to the lessor's rights against such
          lessee, including without limitation the rights to require performance
          of such lessee's obligations under the Lease or return such Eligible
          Asset during such lessee's bankruptcy or insolvency;

               (c) such Lease requires the lessee to comply with covenants and
          restrictions regarding the maintenance, return, alteration,
          replacement, pooling and sublease of such Eligible Asset, which
          covenants and restrictions satisfy the requirements of Section 7.19(a)
          and Schedule 7.19(a) hereto;

               (d) if such Lease contains a purchase option, the expected
          exercise price is equal to or greater than the expected outstanding
          principal and accrued interest on all Loans relating to such Eligible
          Asset as of the date of exercise of such option;

               (e) such Lease prohibits the lessee from flying or locating such
          Eligible Asset in any country in violation of the applicable laws of
          any jurisdiction;

               (f) such Lease provides rent payments in US dollars and contains
          customary covenants and restrictions relating to re-registration of
          such Eligible Asset; which covenants and restrictions satisfy the
          requirements of the Security Agreement;

               (g) at the time of any Loan hereunder relating to such Eligible
          Asset or, if later, at the time of the entering into such Lease, no
          prepayment shall have been made under such Lease, and no Lease payment
          obligation shall have been accelerated, provided that it is understood
          that a scheduled rental payment to be paid in advance for a rental
          period in accordance with the Lease terms is not deemed to be a
          prepayment;

               (h) at the time of any Loan relating to such Eligible Asset or,
          if later, at the time of the delivery of such Eligible Asset under
          such Lease, the applicable lessor shall have delivered a Lessee Notice
          to the applicable lessee; and

               (i) either (i) such Lease is a "true lease" lease (and not a
          lease intended as security) under applicable commercial law and other
          applicable law relating to creditors' rights and bankruptcy; or (ii)
          such Lease grants to such Borrower, and such Borrower has at all times
          under the FAA Act (in the case of Eligible Assets registered in the
          United States), a perfected first priority mortgage Lien on such
          Eligible Asset (subject only to Permitted Liens), which Lien has been
          assigned to the Agent;


                                       11



provided, however, that in the circumstances described in Section 2.15,
"Eligible Lease" means, individually and collectively, (X) a fully-executed
Lease by a Borrower (as lessor) to the Applicable Intermediary (as lessee) of an
Eligible Asset, which Lease satisfies each of the requirements for an "Eligible
Lease" set forth in clauses (a) through (h) above except that the lessee is not
an Eligible Carrier, and (Y) a fully-executed sublease by such Applicable
Intermediary (as sublessor) to an Eligible Carrier (as sublessee) of such
Financed Eligible Asset, which Eligible Carrier is not a U.S. Carrier, and which
Lease is identical in all material respects (other than the Persons that are
lessor and lessee) to the Lease described in clause (X) above, and which Lease
satisfies all the requirements for an "Eligible Lease" set forth in clauses (a)
through (i) above, except that the lessor is not a Borrower.

          "Employee Benefit Plan" means, at a particular time, any employee
     benefit plan that is covered by ERISA and in respect of which any Guarantor
     or any Borrower or any of their respective ERISA Affiliates is (or, if such
     plan were terminated at such time, would under Section 4069 of ERISA be
     deemed to be) an "employer" as defined in Section 3(5) of ERISA.

          "Engine" means any aircraft jet engine.

          "Environmental Laws" means any federal, state or local statute, law,
     ordinance, code, rule, regulation, order, decree, permit or license
     regulating, relating to, or imposing liability or standards of conduct
     concerning, any environmental matters or conditions, environmental
     protection or conservation, including, without limitation, the
     Comprehensive Environmental Response, Compensation and Liability Act of
     1980, as amended; the Superfund Amendments and Reauthorization Act of 1986,
     as amended; the Resource Conservation and Recovery Act, as amended; the
     Toxic Substances Control Act, as amended; the Clean Air Act, as amended;
     the Clean Water Act, as amended; together with all regulations promulgated
     thereunder, and any other "Superfund" or "Superlien" law.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
     amended from time to time.

          "ERISA Affiliate" means an entity, whether or not incorporated, that
     is under common control with any Guarantor or any Borrower within the
     meaning of Section 4001 of ERISA or is part of a group that includes any
     Guarantor or any Borrower and that is treated as a single employer within
     the meaning of Section 414 of the Code.

          "Eurodollar Rate" means the interest rate per annum calculated
     according to the following formula:

     Eurodollar          Interbank Offered Rate          Applicable
                  ------------------------------------
     Rate       =        1- Reserve Requirement        + Margin

          "Eurodollar Rate Loan" means a Loan for which the rate of interest is
     determined by reference to the Eurodollar Rate.

          "Event of Default" means any of the occurrences set forth as such in
     Section 9.1.


                                       12



          "Exchange Act" means the Securities Exchange Act of 1934, as amended,
     and the regulations promulgated thereunder.

          "FAA" means the United States Federal Aviation Administration.

          "FAA Act" means 49 U.S.C. Subtitle VII, Sections 40101 et seq., as
     amended from time to time, any regulations promulgated thereunder and any
     successor provision.

          "FAA Counsel" means DeBee & Gilchrist, Daugherty, Fowler and Peregrin,
     Haught and Jenson, Crowe & Dunlevy, or any other law firm having nationally
     recognized expertise in FAA matters acceptable to the Agent.

          "FAA Recording Office" means the office of the FAA in Oklahoma City,
     Oklahoma, maintained as the office for the recordation of Liens on Eligible
     Assets and pursuant to the FAA Act, and any successor or additional office
     performing the same or a comparable function.

          "Facility Guaranty" means each Guaranty Agreement between one or more
     Guarantors and the Agent for the benefit of the Lenders (substantially in
     the form of Exhibit I-1 attached hereto), delivered as of the Closing Date
     and otherwise pursuant to Section 2.13, 5.1 or 5.2, as the same may be
     amended, modified or supplemented from time to time.

          "Federal Funds Rate" means, for any day, the rate per annum (rounded
     upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
     average of the rates on overnight Federal funds transactions with members
     of the Federal Reserve System arranged by Federal funds brokers on such
     day, as published by the Federal Reserve Bank of New York on the Business
     Day next succeeding such day; provided that (a) if such day is not a
     Business Day, the Federal Funds Rate for such day shall be such rate on
     such transactions on the next preceding Business Day as so published on the
     next succeeding Business Day, and (b) if no such rate is so published on
     such next succeeding Business Day, the Federal Funds Rate for such day
     shall be the average rate charged to the Agent (in its individual capacity)
     on such day on such transactions as determined by the Agent.

          "Fee Letter" means the Fee Letter dated February 28, 2006, by JPMorgan
     Chase Bank, N.A., J.P. Morgan Securities Inc., Bear Stearns & Co. Inc.,
     Bear Stearns Corporate Lending Inc., Citigroup Global Markets, Inc. and
     accepted and agreed to by the Parent.

          "Fee Payment Date" means, for any month in which a commitment fee is
     due, the twentieth (20th ) calendar day of each calendar month (or, if such
     day is not a Business Day, on the next succeeding Business Day).

          "Financed Aircraft" with respect to any Loan means, collectively, each
     Eligible Aircraft, the acquisition of which was or is to be financed or
     refinanced in whole or in part by such Loan.


                                       13



          "Financed Eligible Asset" with respect to any Loan means,
     collectively, each Eligible Aircraft or Eligible Engine, or part thereof,
     the acquisition of which was or is to be financed or refinanced in whole or
     in part by such Loan.

          "Fiscal Year" means the twelve-month fiscal period of the Parent and
     its Subsidiaries commencing on January 1 of each calendar year and ending
     on December 31 of each calendar year.

          "Foreign Benefit Law" means any applicable statute, law, ordinance,
     code, rule, regulation, order or decree of any foreign nation or any
     province, state, territory, protectorate or other political subdivision
     thereof regulating, relating to, or imposing liability or standards of
     conduct concerning, any Employee Benefit Plan.

          "GAAP" or "Generally Accepted Accounting Principles" means generally
     accepted accounting principles, being those principles of accounting set
     forth in pronouncements of the Financial Accounting Standards Board, the
     American Institute of Certified Public Accountants or which have other
     substantial authoritative support and are applicable in the circumstances
     as of the date of a report.

          "Governmental Authority" means any Federal, state, municipal, national
     or other government (whether foreign or domestic and including the European
     Union) or governmental department, commission, board, bureau, court, agency
     or instrumentality or political subdivision thereof or any entity or
     officer exercising executive, legislative, judicial, regulatory or
     administrative functions of or pertaining to any government or any court,
     in each case whether associated with a state or local government of the
     United States, the United States, or a foreign entity or foreign
     government.

          "Guarantors" means, at any date, the collective reference to Bermuda
     Holding 2 Ltd., AI 3 Ltd. and the Beneficial Owners, Eligible
     Intermediaries and Subsidiaries who are required to be parties to a
     Facility Guaranty at such date. For the avoidance of doubt, Guarantor shall
     not refer to any Person that is a Parent Guarantor.

          "Hazardous Material" means and includes any pollutant, contaminant, or
     hazardous, toxic or dangerous waste, substance or material (including
     without limitation petroleum products, asbestos-containing materials and
     lead), the generation, handling, storage, transportation, disposal,
     treatment, release, discharge or emission of which is subject to any
     Environmental Law.

          "Hedging Agreement" means one or more agreements between any Borrower
     or any Guarantor and any Lender or any Affiliate thereof, on terms mutually
     acceptable to such Borrower or any Guarantor and such Lender (or
     Affiliate), which agreements create Rate Hedging Obligations.

          "Holdings SPC" means a Subsidiary, 100% of the voting and equity
     interests in which are owned directly or indirectly by Bermuda Holding 2
     Ltd. or AI 3 Ltd..

          "Holdings Subsidiary Trust" means any trust (a) that is organized
     under the laws of a state of the United States, (b) whose trustee is a
     Qualified Trustee and (c) in which


                                       14



     100% of all beneficial interests are owned directly by Bermuda Holding 2
     Ltd. or AI 3 Ltd. or a direct or indirect wholly-owned Subsidiary of
     Bermuda Holding 2 Ltd. or AI 3 Ltd..

          "Indebtedness" means with respect to any Person, without duplication,
     all Indebtedness for Money Borrowed, all indebtedness of such Person for
     the acquisition of property or arising under Rate Hedging Obligations, all
     indebtedness secured by any Lien on the property of such Person whether or
     not such indebtedness is assumed, all liability of such Person by way of
     endorsements (other than for collection or deposit in the ordinary course
     of business), all Contingent Obligations, and other items which in
     accordance with GAAP is required to be classified as a liability on a
     balance sheet; but excluding all accounts payable in the ordinary course of
     business so long as payment therefor is due within one year; provided that
     in no event shall the term Indebtedness include surplus and retained
     earnings, lease obligations (other than pursuant to Capital Leases),
     reserves for deferred income taxes and investment credits, other deferred
     credits or reserves or deferred compensation obligations.

          "Indebtedness for Money Borrowed" means with respect to any Person,
     without duplication, all indebtedness in respect of money borrowed, as
     reflected on the balance sheet of such Person in accordance with GAAP,
     including without limitation all Capital Leases and the deferred purchase
     price of any property or asset, evidenced by a promissory note, bond,
     debenture or similar written obligation for the payment of money (including
     conditional sales or similar title retention agreements), other than trade
     payables incurred in the ordinary course of business.

          "Individual Eligible Asset Borrowing Base" with respect to any
     Eligible Asset as of any date means the depreciated book value or Purchase
     Price, as applicable, of such Eligible Asset as of such date.

          "Insolvency" means, with respect to any Multiemployer Plan, the
     condition that such Plan is insolvent within the meaning of Section 4245 of
     ERISA.

          "Insolvent" means to pertain to a condition of Insolvency.

          "Interbank Offered Rate" means, with respect to any Eurodollar Rate
     Loan for the Interest Period applicable thereto, the rate per annum
     (rounded upwards, if necessary), to the nearest 1/100 of 1%) appearing on
     Telerate Page 3750 (or any successor page) as the London interbank offered
     rate for deposits in Dollars at approximately 11:00 A.M. (London time) two
     Business Days prior to the first day of such Interest Period for a term
     comparable to such Interest Period (or, if no such comparable term is
     quoted, an interpolated rate as reasonably determined by the Agent). If for
     any reason such rate is not available, the term "Interbank Offered Rate"
     shall mean, with respect to any Eurodollar Rate Loan for the Interest
     Period applicable thereto, the rate per annum (rounded upwards, if
     necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
     Page as the London interbank offered rate for deposits in Dollars at
     approximately 11:00 A.M. (London time) two Business Days prior to the first
     day of such Interest Period for a term comparable to such Interest Period;
     provided, however, if more than


                                       15



     one rate is specified on Reuters Screen LIBO Page, the applicable rate
     shall be the arithmetic mean of all such rates (rounded upwards, if
     necessary, to the nearest 1/100 of 1%).

          "Interest Period" means, for each Eurodollar Rate Loan, a period
     commencing on the date such Eurodollar Rate Loan is made or Converted or on
     the last day of the preceding Interest Period, as the case may be, and
     ending on (x) the next occurring day that is the fifteenth day of a
     calendar month or (y) in the case of an Interest Period of one week, the
     last day of such week (provided, that Interest Periods of one week in
     duration may not be selected by a Borrower other than in anticipation of a
     prepayment of a Loan); provided, that,

               (a) if an Interest Period for a Eurodollar Rate Loan would end on
          a day which is not a Business Day, such Interest Period shall be
          extended to the next Business Day (unless such extension would cause
          the applicable Interest Period to end in the succeeding calendar
          month, in which case such Interest Period shall end on the next
          preceding Business Day); and

               (b) except in the case of a one-week Interest Period, any
          Interest Period which begins on the last Business Day of a calendar
          month (or on a day for which there is no numerically corresponding day
          in the calendar month at the end of such Interest Period) shall end on
          the last Business Day of a calendar month.

          "Interest Rate Selection Notice" means the written notice delivered by
     an Authorized Representative in connection with the election of a
     subsequent Interest Period for any Eurodollar Rate Loan or the Conversion
     of any Base Rate Loan into a Eurodollar Rate Loan, in the form of Exhibit
     E.

          "Investment" means with respect to any Person, all investments by such
     Person in other Persons (including Affiliates) in the form of any direct or
     indirect advance, loan (other than advances to customers in the ordinary
     course of business) or other extension of credit (including by way of
     Guarantee or similar arrangement, but excluding any debt or extension of
     credit represented by a bank deposit other than a time deposit) or capital
     contribution to (by means of any transfer of cash or other property to
     others or any payment for property or services for the account or use of
     others), or any purchase or acquisition of Capital Stock, Indebtedness or
     other similar instruments issued by, such Person and all other items that
     are or would be classified as investments on a balance sheet prepared in
     accordance with GAAP; provided that none of the following will be deemed to
     be an Investment: (a) Rate Hedging Obligations entered into in the ordinary
     course of business and in compliance with this Agreement; (b) endorsements
     of negotiable instruments and documents in the ordinary course of business;
     and (c) an acquisition of assets, Capital Stock or other securities by a
     Credit Party or a Subsidiary for consideration to the extent such
     consideration consists of common equity securities of a Credit Party.

          "Ireland Holding Ltd." means Aircastle Ireland Holding Limited, a
     limited company incorporated in Ireland.


                                       16



          "Joint Lead Arrangers" means J.P. Morgan Securities Inc., Bear Stearns
     & Co. Inc. and Citigroup Global Markets, Inc.

          "Lease Event of Default" means any event characterized as an "event of
     default" (or the equivalent) under any Lease of any Eligible Asset (or that
     would be so characterized assuming the sending of any required notice by
     the lessor in a timely manner).

          "Lender" has the meaning given to such term in the preamble to this
     Agreement.

          "Lessee Notice" means a certificate in form and substance reasonably
     acceptable to the Agent, duly completed and executed by an Applicable
     Borrower with respect to an Eligible Asset; and the Agent agrees that the
     form of Lessee Notice attached hereto as Exhibit M is acceptable.

          "Lien" means any interest in property securing any obligation owed to,
     or a claim by, a Person other than the owner of the property, whether such
     interest is based on the common law, statute or contract, and including but
     not limited to the lien or security interest arising from a mortgage,
     encumbrance, pledge, security agreement, conditional sale or trust receipt
     or a lease, consignment or bailment for security purposes. For the purposes
     of this Agreement, any Borrower and any Subsidiary shall be deemed to be
     the owner of any property which it has acquired or holds subject to a
     conditional sale agreement, financing lease, or other arrangement pursuant
     to which title to the property has been retained by or vested in some other
     Person for security purposes.

          "Loan" or "Loans" means any of the Revolving Loans.

          "Loan Documents" means this Agreement, the Notes (if any), the
     Security Instruments, the Parent Guarantor Guaranties, the Facility
     Guaranties, the Assumption Letters, the Fee Letters and all other
     instruments and documents heretofore or hereafter executed or delivered to
     or in favor of any Lender or the Agent in connection with the Loans made
     and transactions contemplated under this Agreement, as the same may be
     amended, supplemented or replaced from the time to time.

          "Lockbox Agreement" means a lockbox agreement between any Beneficial
     Owner (if applicable), any Borrower, the Depositary Bank and the Agent
     substantially the form of Exhibit O hereto, as supplemented from time to
     time in accordance with the terms thereof.

          "Manufacturer" means any manufacturer of any Financed Eligible Asset.

          "Manufacturer's Warranty" means any warranty made or offered by any
     Manufacturer with respect to any Financed Eligible Asset.

          "Material Adverse Effect" means a material adverse effect on (i) the
     ability of the Credit Parties and the Parent Guarantors, taken as a whole,
     to pay or perform their respective obligations, liabilities and
     indebtedness under the Loan Documents as such payment or performance
     becomes due in accordance with the terms thereof, or (ii) the


                                       17



     rights, powers and remedies of the Agent or any Lender under any Loan
     Document or the validity, legality or enforceability thereof.

          "Moody's" means Moody's Investors Service, Inc. and any successor
     thereto.

          "Monthly Servicer and Covenant Compliance Report" means the report
     substantially in the form of Exhibit P to be attached hereto and made part
     of this Agreement pursuant to Section 11.17.

          "Multiemployer Plan" means an Employee Benefit Plan that is a
     "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which any
     Borrower or any ERISA Affiliate is making, or is accruing an obligation to
     make, contributions or has made, or been obligated to make, contributions
     within the preceding six (6) Fiscal Years.

          "Non Recourse Indebtedness" Indebtedness (i) as to which no Parent
     Guarantor (a) provides any guarantee or credit support of any kind
     (including any undertaking, guarantee, indemnity, agreement or instrument
     that would constitute Indebtedness) or (b) is directly or indirectly liable
     as a guarantor or otherwise, other than, in the case of clauses (a) and (b)
     above, (1) any pledge of any ownership interest in a Subsidiary, not
     included in the Parent Guarantor Collateral, (2) any guarantee or other
     support in respect of obligations in connection with the purchase of any
     aircraft related assets or (3) in connection with the lease of any aircraft
     related asset pursuant to which a Subsidiary is the Lessor, and (ii) the
     terms of which provide that there is no recourse against any of the assets
     of (x) the Parent Guarantors (other than (1) ownership interests in
     Subsidiaries of any Parent Guarantor not included in the Parent Guarantor
     Collateral, (2) to the extent attributable to any guarantee or other
     support in respect of obligations in connection with the purchase of any
     aircraft related assets or (3) in connection with the lease of any aircraft
     related asset pursuant to which a Subsidiary is the Lessor), or (y) Bermuda
     Holding 1 Ltd., AI 1 Ltd., AI 2 Ltd. or AI 3 Ltd. or, in the case of the
     entities in this clause (y) only, any of their respective Subsidiaries.

          "Notes" means, collectively, the promissory notes (if any) of the
     Borrowers evidencing Revolving Loans executed and delivered to the Lenders
     as provided in Section 2.5 substantially in the form of Exhibit F, with
     appropriate insertions as to amounts, dates and names of Lenders.

          "Obligations" means the unpaid principal of and interest on
     (including, without limitation, interest accruing after the maturity of the
     Loans and interest accruing after the filing of any petition in bankruptcy,
     or the commencement of any insolvency, reorganization or like proceeding,
     relating to Bermuda Holding 2 Ltd., AI 3 Ltd., or any Borrower, whether or
     not a claim for post-filing or post-petition interest is allowed in such
     proceeding) the Loans and all other obligations and liabilities of Bermuda
     Holding 2 Ltd., AI 3 Ltd. or any Borrower to the Agent (acting in any
     capacity) or to any Lender (or, in the case of Rate Hedging Obligations,
     any affiliate of any Lender), whether direct or indirect, absolute or
     contingent, due or to become due, or now existing or hereafter incurred,
     which may arise under, out of, or in connection with, this Agreement, any
     other Loan Document, any Rate Hedging Obligation entered into with any
     Lender or any


                                       18



     affiliate of any Lender or any other document made, delivered or given in
     connection herewith or therewith, whether on account of principal,
     interest, reimbursement obligations, fees, indemnities, costs, expenses
     (including, without limitation, all fees, charges and disbursements of
     counsel to the Agent (acting in any capacity) or to any Lender that are
     required to be paid by Bermuda Holding 2 Ltd., AI 3 Ltd. or any Borrower
     pursuant thereto) or otherwise.

          "Operating Circular" means an operating circular issued by the Federal
     Reserve Bank.

          "Organizational Action" means with respect to any corporation, limited
     liability company, partnership, limited partnership, limited liability
     partnership, trust or other legally authorized incorporated or
     unincorporated entity, any corporate, organizational or partnership action
     (including any required shareholder, trustee, member or partner action), or
     other similar official action, as applicable, taken by such entity.

          "Organizational Documents" means with respect to any corporation,
     limited liability company, partnership, limited partnership, limited
     liability partnership, trust or other legally authorized incorporated or
     unincorporated entity, (i) the articles of incorporation, certificate of
     incorporation, articles of organization, certificate of limited
     partnership, trust agreement or other applicable organizational or charter
     documents relating to the creation of such entity which will, in each case,
     contain provisions reasonably satisfactory to the Lenders to ensure such
     entity's bankruptcy remoteness, including provisions relating to the
     appointment of a special member or independent director, the consent of
     which will be required to approve any decisions related to bankruptcy
     matters and (ii) the bylaws, operating agreement, partnership agreement,
     limited partnership agreement or other applicable documents relating to the
     operation, governance or management of such entity.

          "Parent" means Aircastle Investment Limited, an exempted company
     organized and existing under the laws of Bermuda.

          "Parent Guarantor Collateral" means, collectively, all property of the
     Parent or any other Parent Guarantor in which the Agent or any Lender is
     granted a Lien as security for all or any portion of the Obligations under
     any Security Instrument including, without limitation, the Pledged
     Interests described in the Parent and Parent Guarantor Pledge Agreements.

          "Parent Guarantor Guaranty" means each Guaranty Agreement between each
     Parent Guarantor and the Agent for the benefit of the Lenders
     (substantially in the form of Exhibit I-2 attached hereto), delivered as of
     the Closing Date, and otherwise pursuant to Section 7.16, as the same may
     be amended, modified or supplemented from time to time as the same may be
     amended, modified or supplemented from time to time.

          "Parent Guarantors" means the collective reference to the Parent, AA
     LLC, ABS Ltd., AHC Ltd., AA Ireland Ltd. and Ireland Holding Ltd.


                                       19



          "Parent IPO" means the issuance by the Parent or any direct or
     indirect parent of Parent of its Capital Stock in an underwritten primary
     public offering (other than a public offering pursuant to a registration
     statement on Form S-8) pursuant to an effective registration statement
     filed with the SEC in accordance with the Securities Act (whether alone or
     in connection with a secondary public offering).

          "Partnership Interests" has the meaning therefor provided in the
     Pledge Agreement.

          "Payment Date" means any date provided for herein on which the
     principal of, interest on or other amounts in respect of the Loans is due
     and payable.

          "PBGC" means the Pension Benefit Guaranty Corporation established
     pursuant to Subtitle A of Title IV of ERISA and any successor thereto.

          "Permanent Capital Markets Financing" means a securitization of any
     interests in or leases of Eligible Assets, enhanced equipment trust
     certificate or other permanent aircraft or engine-secured public or private
     capital markets transaction (which, in each case, does not constitute
     bridge or interim financing) for the benefit of any Parent Guarantor,
     Bermuda Holding 2 Ltd. or AI 3 Ltd. or a subsidiary of Bermuda Holding 2
     Ltd. or AI 3 Ltd., occurring after the date hereof.

          "Permitted Lien" means any Lien permitted by Section 8.3.

          "Person" means an individual, partnership, corporation, limited
     liability company, limited liability partnership, business trust, joint
     stock company, trust, unincorporated association, joint venture,
     Governmental Authority or other entity of whatever nature.

          "Pledge Agreement" means, collectively (or individually as the context
     may indicate), (i) those certain Pledge and Security Agreements or Share
     Charges dated as of the date hereof entered into by either AHC Ltd., AA
     Ireland Ltd., Ireland Holding Ltd. in favor of the Agent (for the benefit
     of the Agent and the Lenders), and (ii) any additional Pledge and Security
     Agreement or Share Charge (substantially in the form of Exhibit S-1, S-2,
     S-3 or S-4 attached hereto, as applicable), delivered to the Agent pursuant
     to Section 5.1, 5.2 or 2.13, as hereafter amended, supplemented or replaced
     from time to time.

          "Pledged Interests" means the interests so defined in the Pledge
     Agreement including, without limitation, all Capital Stock of AA LLC, ABS
     Ltd., AA Ireland Ltd., AHC Ltd., Ireland Holding Ltd., Bermuda Holding 2
     Ltd. and AI 3 Ltd. and all Securitization Interests.

          "Prime Rate" means the per annum rate of interest established from
     time to time by the Reference Bank as its prime or reference rate, which
     rate may not be the lowest rate of interest charged by the Reference Bank
     to its customers.

          "Principal Office" means the principal office of the Agent presently
     located at 270 Park Avenue, New York, New York 10017 or such other office
     and address as the Agent may from time to time designate. Payments shall be
     made to the account specified in the


                                       20



     Lockbox Agreement or to such other account as the Agent may from time to
     time specify in writing.

          "Prohibited Countries" means any country in which an Aircraft or
     Engine would not be covered by the insurance requirements of Section 3.7 of
     the Security Agreement (including, if required, political risk insurance),
     any country with which the United States does not maintain normal
     diplomatic relations and any country where or with nationals of which it is
     unlawful for Persons subject to the jurisdiction of the United States to
     conduct business without material restrictions or limitations.

          "Purchase Price" with respect to any Eligible Assets means the actual
     purchase price paid for such Eligible Assets by the Applicable Borrower,
     together with all other reasonable out of pocket expenses (including
     reasonable attorneys fees of each of the Borrower and the Agent) incurred
     or which is estimated by the Borrower to be incurred in respect of such
     Eligible Assets, in each case reasonably acceptable to the Agent.

          "Qualified Conversion" means the conversion of a Financed Aircraft
     from passenger configuration to a freighter configuration that meets the
     following conditions: (a) such conversion is performed by a conversion
     company that is well established with a program that has an FAA granted
     Supplemental Type Certificate to perform the intended work; (b) the
     conversion work is performed pursuant to a contract, assigned to the
     Lenders as collateral security, on terms and conditions that are reasonably
     acceptable to the Lenders; and (c)(i) the senior unsecured long-term debt
     rating of the conversion company is not less than BBB/Baa2 or (ii) the
     conversion company has caused a performance bond, letter of credit or other
     security naming the Agent as beneficiary, in an amount equal to 125% of the
     Loan of such Financed Aircraft, in each case in form and substance
     satisfactory to the Lenders to be issued by a surety or other Person
     customarily engaged in the performance bonding and surety business or
     issuing letters of credit reasonably acceptable to the Lenders.

          "Qualified Trustee" means (i) Wilmington Trust Company, Wells Fargo
     Bank Northwest, N.A., JPMorgan Chase Bank, N.A., or another bank or trust
     company having a combined capital and surplus of at least One Hundred
     Million Dollars ($100,000,000) or (ii) any other Person acceptable to the
     Agent.

          "Qualifying Lender" means a Lender, beneficially entitled to the
     interest payable to that Lender in respect of any Loan under this
     Agreement; (a) which is a bank carrying on a bona fide banking business in
     Ireland; (b) which is a person resident in a country with which Ireland has
     a double taxation treaty or resident in a member state of the European
     Communities (other than Ireland) provided the loan is not connected with an
     Irish branch or agency of such Lender; or (c) which is a corporation
     established under the laws of the USA which is subject to tax in the USA on
     its worldwide income and the Loan is not connected with an Irish branch or
     agency of such Lender.

          "Quarterly Period" means a fiscal quarter of the Borrowers and their
     Subsidiaries.


                                       21



          "Rate Hedging Obligations" means any and all obligations of Bermuda
     Holding 2 Ltd., AI 3 Ltd., any Borrower or any Subsidiary, whether absolute
     or contingent and howsoever and whensoever created, arising, evidenced or
     acquired (including all renewals, extensions and modifications thereof and
     substitutions therefor), under (i) any and all agreements, devices or
     arrangements designed to protect at least one of the parties thereto from
     the fluctuations of interest rates, exchange rates or forward rates
     applicable to such party's assets, liabilities or exchange transactions,
     including, but not limited to, Dollar-denominated or cross-currency
     interest rate exchange agreements, forward currency exchange agreements,
     interest rate cap or collar protection agreements, forward rate currency or
     interest rate options, puts, warrants and those commonly known as interest
     rate "swap" agreements; and (ii) any and all cancellations, buybacks,
     reversals, terminations or assignments of any of the foregoing.

          "Reference Bank" means JPMorgan Chase Bank, N.A.

          "Regulation A" means a Regulation A circular issued by such Federal
     Reserve Bank.

          "Regulation D" means Regulation D of the Board as the same may be
     amended or supplemented from time to time.

          "Regulatory Change" means any change effective after the Closing Date
     in United States federal or state laws or regulations (including Regulation
     D and capital adequacy regulations) or foreign laws or regulations or the
     adoption or making after such date of any interpretations, directives or
     requests applying to a class of banks, which includes any of the Lenders,
     under any United States federal or state or foreign laws or regulations
     (whether or not having the force of law) by any court or governmental or
     monetary authority charged with the interpretation or administration
     thereof or compliance by any Lender with any request or directive regarding
     capital adequacy, including those relating to "highly leveraged
     transactions," whether or not having the force of law, and whether or not
     failure to comply therewith would be unlawful and whether or not published
     or proposed prior to the date hereof.

          "Reorganization" means, with respect to any Multiemployer Plan, the
     condition that such plan is in reorganization within the meaning of Section
     4241 of ERISA.

          "Reportable Event" means any of the events set forth in Section
     4043(c) of ERISA, other than those events as to which the third day notice
     period is waived by the PBGC.

          "Required Lenders" means, as of any date, Lenders on such date having
     Credit Exposures (as defined below) aggregating more than 50% of the
     aggregate Credit Exposures of all the Lenders on such date. For purposes of
     the preceding sentence, the amount of the "Credit Exposure" of each Lender
     shall be equal at all times (a) other than following the occurrence and
     during the continuance of an Event of Default, to the amount of its
     Revolving Credit Commitment; and (b) following the occurrence and during
     the continuance of an Event of Default, to the aggregate principal amount
     of such


                                       22



     Lender's Applicable Commitment Percentage of Revolving Credit Outstandings;
     provided that, for the purpose of this definition only, if any Lender shall
     have failed to fund its Applicable Commitment Percentage of any Loan, the
     Revolving Credit Commitment of such Lender shall be deemed reduced by the
     amount it so failed to fund for so long as such failure shall continue and
     such Lender's Credit Exposure attributable to such failure shall be deemed
     held by any Lender making more than its Applicable Commitment Percentage of
     such Loan to the extent it covers such failure.

          "Requirement of Law" means as to any Person, the Certificate of
     Incorporation and By-Laws or other organizational or governing documents of
     such Person, and any law, treaty, rule or regulation or determination of an
     arbitrator or a court or other Governmental Authority, in each case
     applicable to or binding upon such Person or any of its property or to
     which such Person or any of its property is subject.

          "Reserve Requirement" means, at any time, the maximum rate at which
     reserves (including, without limitation, any marginal, special,
     supplemental, or emergency reserves) are required to be maintained under
     regulations issued from time to time by the Board of Governors of the
     Federal Reserve System (or any successor) by member banks of the Federal
     Reserve System against "Eurocurrency liabilities" (as such term is used in
     Regulation D). Without limiting the effect of the foregoing, the Reserve
     Requirement shall reflect any other reserves required to be maintained by
     such member banks with respect to (i) any category of liabilities which
     includes deposits by reference to which the Eurodollar Rate is to be
     determined, or (ii) any category of extensions of credit or other assets
     which include Eurodollar Rate Loans. The Eurodollar Rate shall be adjusted
     automatically on and as of the effective date of any change in the Reserve
     Requirement.

          "Revolving Credit Commitment" means, with respect to each Lender, the
     obligation of such Lender to make Revolving Loans to the Borrowers up to an
     aggregate principal amount at any one time outstanding equal to such
     Lender's Applicable Commitment Percentage of the Total Revolving Credit
     Commitment.

          "Revolving Credit Facility" means the facility described in Article II
     hereof providing for Loans to the Borrowers by the Lenders in the aggregate
     principal amount of the Total Revolving Credit Commitment.

          "Revolving Credit Outstandings" means, as of any date of
     determination, the aggregate principal amount of all Revolving Loans then
     outstanding.

          "Revolving Credit Termination Date" means the earliest of (i) the
     Stated Termination Date, (ii) the date of termination of Lenders'
     obligations pursuant to Section 9.1 upon the occurrence of an Event of
     Default, or (iii) such date as the Borrowers may voluntarily and
     permanently terminate the Revolving Credit Facility by payment in full of
     all Revolving Credit Outstandings, together with all accrued and unpaid
     interest thereon and reduce the Total Revolving Credit Commitment to zero
     pursuant to Section 2.7.

          "Revolving Loan" or "Revolving Loans" means any borrowing pursuant to
     a Loan under the Revolving Credit Facility in accordance with Article II.


                                       23



          "S&P" means Standard & Poor's Ratings Group, a division of The
     McGraw-Hill Companies, Inc., and any successor thereto.

          "Secured Party" has the meaning given in the Security Agreement.

          "Securitization Interest" means the equity or subordinated interests
     received by the Parent or any of its Subsidiaries pursuant to the sale,
     transfer, conveyance or other disposition of any Financed Eligible Asset or
     one or more aircraft financed under the Bermuda Holding I/AI 1 Credit
     Agreement or direct or indirect interest therein in connection with the
     securitization by the Parent, an Affiliate thereof, or any of its
     Subsidiaries, of such aircraft or interest therein.

          "Security Agreement" means, collectively (or individually as the
     context may indicate), any Security Agreement (substantially in the form of
     Exhibit J attached hereto) delivered to the Agent pursuant to Section 2.13,
     5.1, or 5.2, as hereafter modified, amended or supplemented from time to
     time.

          "Security Instruments" means, collectively, the Pledge Agreement,
     Security Agreement, the Lockbox Agreement, the Account Control Agreement
     and all other agreements, instruments and other documents, whether now
     existing or hereafter in effect, pursuant to which the any Parent
     Guarantor, any Guarantor, Borrower, any Beneficial Owner, any Subsidiary,
     any Intermediary or any other Person shall grant or convey to the Agent or
     the Lenders a Lien in property as security for all or any portion of the
     Obligations, as any of them may be amended, modified or supplemented from
     time to time.

          "Single Employer Plan" means any Employee Benefit Plan covered by
     Title IV of ERISA which is not a Multiemployer Plan.

          "Solvent" means, when used with respect to any Person, that at the
     time of determination:

               (i) the fair value of its assets (both at fair valuation and at
          present fair saleable value on an orderly basis) is in excess of the
          total amount of its liabilities, including Contingent Obligations; and

               (ii) it is then able and expects to be able to pay its debts as
          they mature;

               (iii) it has capital sufficient to carry on its business as
          conducted and as proposed to be conducted; and

               (iv) with respect to any Person incorporated in Ireland, such
          Person is "unable to pay its debts" as that phrase is defined under
          Irish law in Section 214 of the Companies Act 1963 and Section 2(3) of
          the Companies (Amendment) Act 1990.

          "Stated Termination Date" means August 28, 2007.


                                       24



          "Subsidiary" means any corporation or other entity in which more than
     50% of its outstanding voting stock or more than 50% of all equity
     interests is owned directly or indirectly by one or more Guarantors,
     Borrowers and/or by one or more of any Guarantor's Subsidiaries or any
     Borrower's Subsidiaries. With respect to any specified Guarantor or
     Borrower, the "Subsidiaries" of such Guarantor or Borrower shall mean (y)
     any Subsidiary owned directly or indirectly by such Guarantor or Borrower
     or by any of its Subsidiaries, or (z) any trust with respect to which such
     Guarantor or such Borrower or any of its Subsidiaries has a beneficial
     interest.

          "Taxes" means all present or future taxes, levies, imposts, duties,
     charges, fees, deductions or withholdings imposed, levied, collected,
     withheld or assessed by any Governmental Authority, including any interest,
     additions to tax or penalties applicable thereto.

          "Termination Event" means: (i) a "Reportable Event"; or (ii) the
     termination of a Single Employer Plan or the filing of a notice of intent
     to terminate a Single Employer Plan; or (iii) the institution of
     proceedings to terminate a Single Employer Plan by the PBGC; or (iv) the
     partial or complete withdrawal of any Borrower or any ERISA Affiliate from
     a Multiemployer Plan; or (v) the imposition of a Lien pursuant to Section
     412 of the Code or Section 302 of ERISA in favor of the PBGC or a Employee
     Benefit Plan; or (vi) any event or condition which results in the
     Reorganization or Insolvency of a Multiemployer Plan; or (vii) any event or
     condition which results in the termination of a Multiemployer Plan under
     Section 4041A of ERISA or the institution by the PBGC of proceedings to
     terminate a Multiemployer Plan under Section 4042 of ERISA.

          "Total Revolving Credit Commitment" means a principal amount equal to
     $500,000,000, as may be reduced from time to time in accordance with
     Section 2.7.

          "Treaty" means the "Convention Between the Government of the United
     States of America and the Government of Ireland for the Avoidance of Double
     Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on
     Income and Capital Gains" as amended and in effect on the date hereof.

          "Trust Agreement" means a trust agreement between a Beneficial Owner
     and a Qualified Trustee.

          "Trust Estate" means all estate, right, title and interest of each
     Trustee in and to each Eligible Asset, each lease and all related documents
     and all other property of the Trustee, including, without limitation, all
     amounts of rent, insurance proceeds (other than liability insurance
     proceeds payable to or for the benefit of any Borrower, any Beneficial
     Owner, any Lender or the Agent) and requisition, indemnity or other
     payments or any kind for or with respect to each Eligible Asset.

          "Trustee" means a Qualified Trustee, solely in its capacity as trustee
     under a Trust Agreement.

          "Type" means any type of Loan (i.e., a Base Rate Loan or a Eurodollar
     Rate Loan).


                                       25



          "Unleaseable" with respect to a Financed Eligible Asset means (a) such
     Financed Eligible Asset shall not be subject to an Eligible Lease for 120
     consecutive days (excluding the number of days such Eligible Asset shall be
     undergoing (i) maintenance or repairs in accordance with the provisions of
     the Loan Documents, (ii) Approved Improvements or (iii) a Qualified
     Conversion) and (b) after such 120 day period the Agent shall have
     reasonably determined that Bermuda Holding 2 Ltd. or AI 3 Ltd., as
     applicable, will be unable to lease such Financed Eligible Asset within 120
     days after the date of determination.

          "Voting Stock" means shares of capital stock issued by a corporation,
     or equivalent interests in any other Person, the holders of which are
     ordinarily, in the absence of contingencies, entitled to vote for the
     election of directors (or persons performing similar functions) of such
     Person, even if the right so to vote has been suspended by the happening of
     such a contingency.

          1.2. Rules of Interpretation.

          (a) All accounting terms not specifically defined herein shall have
     the meanings assigned to such terms and shall be interpreted in accordance
     with GAAP applied on a Consistent Basis.

          (b) The headings, subheadings and table of contents used herein or in
     any other Loan Document are solely for convenience of reference and shall
     not constitute a part of any such document or affect the meaning,
     construction or effect of any provision thereof.

          (c) Except as otherwise expressly provided, references herein to
     articles, sections, paragraphs, clauses, annexes, appendices, exhibits and
     schedules are references to articles, sections, paragraphs, clauses,
     annexes, appendices, exhibits and schedules in or to this Agreement.

          (d) All definitions set forth herein or in any other Loan Document
     shall apply to the singular as well as the plural form of such defined
     term, and all references to the masculine gender shall include reference to
     the feminine or neuter gender, and vice versa, as the context may require.

          (e) When used herein or in any other Loan Document, words such as
     "hereunder", "hereto", "hereof" and "herein" and other words of like import
     shall, unless the context clearly indicates to the contrary, refer to the
     whole of the applicable document and not to any particular article,
     section, subsection, paragraph or clause thereof.

          (f) References to "including" means including without limiting the
     generality of any description preceding such term, and for purposes hereof
     the rule of ejusdem generis shall not be applicable to limit a general
     statement, followed by or referable to an enumeration of specific matters,
     to matters similar to those specifically mentioned.

          (g) All dates and times of day specified herein shall refer to such
     dates and times in New York, New York.


                                       26



          (h) Each of the parties to the Loan Documents and their counsel have
     reviewed and revised, or requested (or had the opportunity to request)
     revisions to, the Loan Documents, and any rule of construction that
     ambiguities are to be resolved against the drafting party shall be
     inapplicable in the construing and interpretation of the Loan Documents and
     all exhibits, schedules and appendices thereto.

          (i) Any reference to an officer of any Borrower or any other Person by
     reference to the title of such officer shall be deemed to refer to each
     other officer of such Person, however titled, exercising the same or
     substantially similar functions.

          (j) All references to any agreement or document as amended, modified
     or supplemented, or words of similar effect, shall mean such document or
     agreement, as the case may be, as amended, modified or supplemented from
     time to time only as and to the extent permitted therein and in the Loan
     Documents.

                                   ARTICLE II

                          THE REVOLVING CREDIT FACILITY

          2.1. Revolving Loans.

          (a) Commitment. Subject to the terms and conditions of this Agreement,
     each Lender severally agrees to make Loans to any of the Borrowers under
     the Revolving Credit Facility from time to time from the Closing Date until
     the Revolving Credit Termination Date on a pro rata basis as to the total
     borrowing requested by the applicable Borrower on any day determined by
     such Lender's Applicable Commitment Percentage up to but not exceeding the
     Revolving Credit Commitment of such Lender, provided, however, that (A) the
     proceeds of such Loan shall be used by such Borrower to (i) finance or
     reimburse a Borrower for up to 85% of (x) the Purchase Price of an Eligible
     Asset and (y), without duplication of amounts included in clause (x), the
     costs incurred in connection with any Approved Improvements or any
     Qualified Conversion related to such Eligible Asset and (ii) subsequent to
     the initial purchase of such Eligible Asset, to finance up to 85% of the
     Individual Eligible Asset Borrowing Base for such Eligible Asset and (B)
     the amount of such Loan (together with any other Loans relating to such
     Eligible Asset) shall not exceed 85% of the Individual Eligible Asset
     Borrowing Base of such Eligible Asset; and provided, further, that the
     Lenders will not be required and shall have no obligation to make any such
     Loan (i) so long as a Default or an Event of Default has occurred and is
     continuing or (ii) if the Agent has accelerated the maturity of any of the
     Loans as a result of an Event of Default; and provided, further, that
     immediately after giving effect to each such Loan, (A) the Borrowers shall
     be in compliance with the Borrowing Base Covenant; and (B) the amount of
     Revolving Credit Outstandings shall not exceed the Total Revolving Credit
     Commitment. Within such limits, the Borrowers may borrow, repay and
     reborrow under the Revolving Credit Facility on a Business Day from the
     Closing Date until, but (as to borrowings and reborrowings) not including,
     the Revolving Credit Termination Date; provided, however, that (1) no
     Revolving Loan that is a Eurodollar Rate Loan shall be made which has an
     Interest Period that extends beyond the Stated Termination Date and (2)
     each Revolving Loan that is a Eurodollar Rate Loan


                                       27



     may, subject to the provisions of Section 2.7, be repaid only on the last
     day of the Interest Period with respect thereto unless such payment is
     accompanied by the additional payment, if any, required by Section 4.5.

          (b) Amounts. Each Revolving Loan hereunder and each Conversion under
     Section 2.8, shall be in an amount of at least $500,000 (other than
     Revolving Loans made in connection with an Approved Improvement or a
     Qualified Conversion).

          (c) Procedures. An Authorized Representative shall give the Agent (i)
     at least three (3) Business Days' irrevocable written notice of an Interest
     Rate Selection Notice with appropriate insertions, effective upon receipt,
     of each Revolving Loan that is to be Converted into a Eurodollar Rate Loan
     prior to 10:30 A.M. and (ii) at least one (1) Business Day's written
     notice, revocable only on or before noon the following Business Day of a
     Borrowing Notice with appropriate insertions, effective upon receipt, of
     each Revolving Loan (which shall be borrowed as a Base Rate Loan) prior to
     10:30 A.M. and (iii) at least one (1) Business Day's irrevocable written
     notice of an Interest Rate Selection Notice with appropriate insertions,
     effective upon receipt, of each Revolving Loan that is to be Converted into
     a Base Rate Loan prior to 10:30 A.M. Each such notice shall (A) specify the
     name of the respective Borrower, the amount of the borrowing, the date of
     borrowing or Conversion (as applicable), type of Revolving Loan (Base Rate
     or Eurodollar Rate), the date of borrowing and, if a Eurodollar Rate Loan,
     the Interest Period to be used in the computation of interest and (B)
     identify the Financed Eligible Asset the acquisition of which is to be
     financed with the proceeds of the borrowing. Notice of receipt of such
     Borrowing Notice or Interest Rate Selection Notice, as the case may be,
     together with the amount of each Lender's portion of a Loan requested
     thereunder, shall be provided by the Agent to each Lender by facsimile
     transmission with reasonable promptness, but (provided the Agent shall have
     received such notice by 10:30 A.M.) not later than 1:00 P.M. on the same
     day as the Agent's receipt of such notice.

               (i) Promptly (and, to the extent feasible, not later than 2:00
          P.M.) on the date specified for each borrowing under this Section 2.1,
          each Lender shall, pursuant to the terms and subject to the conditions
          of this Agreement, make the amount of the Loan or Loans to be made by
          it on such day available by wire transfer to the Agent in the amount
          of its pro rata share, determined according to such Lender's
          Applicable Commitment Percentage of the Revolving Loan or Revolving
          Loans to be made on such day. Such wire transfer shall be directed to
          the Agent at the Principal Office and shall be in the form of Dollars
          constituting immediately available funds. The amount so received by
          the Agent shall, subject to the terms and conditions of this
          Agreement, be made available to the Applicable Borrower by delivery of
          the proceeds thereof to the Borrowers' Account or otherwise as shall
          be directed in the applicable Borrowing Notice by an Authorized
          Representative and reasonably acceptable to the Agent.

               (ii) Each Loan will be made initially as a Base Rate Loan. The
          Borrowers shall have the option to elect the duration of the initial
          and any subsequent Interest Periods and to Convert the Revolving Loans
          in accordance with Section 2.8. Eurodollar Rate Loans and Base Rate
          Loans may be


                                       28



          outstanding at the same time, provided, however, there shall not be
          outstanding at any one time Eurodollar Rate Loans for any or any
          Borrower having more than two (2) different Interest Periods. If the
          Agent does not receive an Interest Rate Selection Notice giving notice
          of election of the duration of an Interest Period by the time
          prescribed by Section 2.8, the applicable Borrower shall be deemed to
          have elected for any Eurodollar Loan an Interest Period of the
          duration provided in clause (x) of the definition of Interest Period.

          2.2. Payment of Interest.

          (a) The Borrowers, jointly and severally, shall pay interest to the
     Agent for the account of each Lender on the outstanding and unpaid
     principal amount of each Loan made by such Lender for the period commencing
     on the date of such Loan until such Loan shall be due at the then
     applicable Base Rate for Base Rate Loans or applicable Eurodollar Rate for
     Eurodollar Rate Loans, as designated by the Authorized Representative
     pursuant to Section 2.1; provided, however, that if any Event of Default
     shall occur and be continuing, all amounts outstanding hereunder shall bear
     interest during such period at the Default Rate.

          (b) Interest on each Loan shall be computed on the basis of a year of
     360 days and calculated in each case for the actual number of days elapsed.
     Interest on each Loan shall be paid (x) monthly in arrears on the twentieth
     (20th) calendar day of each calendar month (or, if such day is not a
     Business Day, on the next succeeding Business Day), (y) upon payment or
     prepayment of the principal amount of any Loan or any portion thereof, on
     the amount so paid or prepaid and (z) at the Revolving Credit Termination
     Date.

          2.3. Payment of Principal.

          (a) Scheduled Repayment; Voluntary Prepayments. The principal amount
     of each Revolving Loan shall be due and payable to the Agent for the
     benefit of each Lender in full on the Stated Termination Date, or earlier
     as specifically provided herein. The Borrower may prepay the outstanding
     principal amount of any Eurodollar Loan, in whole or in part, upon two
     Business Days' notice to the Lenders and, in the case of Base Rate Loans,
     upon same day notice to the. All such prepayments must be accompanied by
     accrued interest up to, and including, the date of such prepayment and any
     compensation due under Section 4.5 hereof.

          (b) Mandatory Prepayments.

               (i) Upon the sale of any Financed Eligible Asset or other asset
          by any Borrower (including the sale or disposition of the equity
          interests in any such Borrower that holds a Financed Eligible Asset
          but excluding any transfer of an Eligible Asset to a direct or
          indirect Subsidiary of Bermuda Holding 2 Ltd. or AI 3 Ltd. who, in
          connection with such transfer will assume all of the transferor's
          obligations and shall satisfy all requirements under Section 5.2 to
          become a Borrower hereunder), or upon the refinancing of any
          Indebtedness of any Borrower arising from any Loan hereunder, the
          Borrowers, jointly and severally,


                                       29



          shall immediately pay to the Agent an amount equal to the greater of
          (A) the outstanding principal of and accrued interest on any Loans
          made to, or for the benefit of, such Borrower in connection with such
          Financed Eligible Asset and (B) an amount sufficient to bring the
          Borrowers into compliance with the Borrowing Base Covenant after
          giving effect to such sale, disposition or refinancing. If any net
          proceeds of such sale or refinancing remain after the repayments in
          full of all outstanding principal and accrued interest on the Loans
          attributable to the Financed Eligible Asset sold, such excess proceeds
          shall be applied first, to reduce the outstanding principal and
          accrued interest on Loans as directed by Bermuda Holding 2 Ltd. or AI
          3 Ltd. until the Borrowers are in compliance with the Borrowing Base
          Covenant and second, if no Default or Event of Default exists at the
          time, to the Applicable Borrower to be used or distributed by the
          Applicable Borrower in its sole discretion.

               (ii) If, as of any Calculation Date, the aggregate principal
          amount of the Loans shall be greater than 85% of the Borrowing Base on
          such day, the Borrowers shall, on the Payment Date immediately
          following such Calculation Date, prepay the Loans in an amount equal
          to the amount necessary to cause the aggregate outstanding principal
          amount of the Loans to be not greater than 85% of the Borrowing Base
          on such Payment Day.

               (iii) If the estimated amount of out of pocket costs incurred by
          an Applicable Borrower in connection with the acquisition of a
          Financed Eligible Asset exceeds the actual amount of such out of
          pocket costs included in the Purchase Price of such Financed Eligible
          Asset, the Borrowers shall prepay the Loan relating to such Financed
          Eligible Asset in an amount equal to 85% of such excess out of pocket
          costs within five Business Days after a Responsible Officer learns of
          such excess.

               (iv) The Borrowers, jointly and severally, shall prepay the Loans
          in respect of a Financed Eligible Asset upon the occurrence of an
          Event of Loss in respect of such Finance Eligible Asset and on the
          date required by Section 3.8(b) of the Security Agreement. If any net
          proceeds received in respect of such Event of Loss remain after the
          repayment in full of all outstanding principal and accrued interest on
          such Loans, if no Default or Event of Default exists at the time, such
          excess proceeds shall be paid to the Applicable Borrower and may be
          used by such Borrower in accordance with the terms of this Agreement
          and the other Loan Documents.

               (v) Upon any Permanent Capital Markets Financing, the Borrowers,
          jointly and severally, shall be required to prepay the Loans from the
          cash proceeds received with respect to any Financed Eligible Asset
          included in such Permanent Capital Markets Financing.

          2.4. Manner of Payment. Each payment of principal (including any
prepayment) and payment of interest and fees, and any other amount required to
be paid to the Lenders with respect to the Loans, shall be made to the Agent at
the Principal Office, for the


                                       30



account of each Lender, in Dollars and in immediately available funds without
setoff, deduction or counterclaim before 12:30 P.M. on the date such payment is
due.

          (a) The Agent shall deem any payment made by or on behalf of any
     Borrower hereunder that is not made both in Dollars and in immediately
     available funds and prior to 12:30 P.M. to be a non-conforming payment. Any
     such payment shall not be deemed to be received by the Agent until the time
     such funds become available funds. Any non-conforming payment may
     constitute or become a Default or Event of Default. Interest shall continue
     to accrue on any principal as to which a non-conforming payment is made
     until the later of (x) the date such funds become available funds or (y)
     the next Business Day at the Default Rate from the date such amount was due
     and payable.

          (b) In the event that any payment hereunder becomes due and payable on
     a day other than a Business Day, then such due date shall be extended to
     the next succeeding Business Day unless provided otherwise under clause
     (ii) of the definition of "Interest Period"; provided that interest shall
     continue to accrue during the period of any such extension and provided,
     further, that in no event shall any such due date be extended beyond the
     Revolving Credit Termination Date.

          (c) Any payment or prepayment of any principal or interest on any Loan
     hereunder shall be accompanied by a certificate signed by an Authorized
     Representative and delivered to the Agent, which certificate shall identify
     such Loan, the amount of principal and interest paid thereon, and the
     Borrower to whom, or for whose benefit, such Loan was originally advanced.

          2.5. Notes. At the request of any Lender, Revolving Loans made by such
Lender shall be evidenced by a Note payable to the order of such Lender in the
respective amount of its Applicable Commitment Percentage of the Revolving
Credit Commitment and shall be duly completed, executed and delivered by the
Borrowers.

          2.6. Pro Rata Payments. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Loans and the fees
described in Section 2.10 shall be made to the Agent for the account of the
Lenders pro rata based on their Applicable Commitment Percentages, (b) all
payments to be made by any Borrower for the account of each of the Lenders on
account of principal, interest and fees, shall be made without diminution,
setoff, recoupment or counterclaim, and (c) the Agent will promptly distribute
to the Lenders in immediately available funds payments received in fully
collected, immediately available funds from any Borrower.

          2.7. Reductions. The Borrowers shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month, upon not less than three (3) Business Days' written
notice to the Agent, effective upon receipt, to reduce the Total Revolving
Credit Commitment. The Agent shall give each Lender, within one (1) Business Day
of receipt of such notice, facsimile notice, or telephonic notice (confirmed in
writing), of such reduction. Each such reduction shall be in the aggregate
amount of $5,000,000 or such greater amount which is in an integral multiple of
$1,000,000, or the entire remaining Total Revolving Credit Commitment, and shall
permanently reduce the Total


                                       31



Revolving Credit Commitment. Each reduction of the Total Revolving Credit
Commitment shall be accompanied by payment of the Revolving Loans to the extent
that the principal amount of Revolving Credit Outstandings exceeds the Total
Revolving Credit Commitment after giving effect to such reduction, together with
accrued and unpaid interest on the amounts prepaid. No such reduction shall
result in the payment of any Eurodollar Rate Loan other than on the last day of
the Interest Period of such Eurodollar Rate Loan unless such prepayment is
accompanied by amounts due, if any, under Section 4.5.

          2.8. Conversions and Elections of Subsequent Interest Periods. Subject
to the limitations set forth below and in Article IV, the Borrowers may:

          (a) upon delivery, effective upon receipt, of a properly completed
     Interest Rate Selection Notice to the Agent on or before 10:30 A.M. on any
     Business Day, Convert all or a part of Eurodollar Rate Loans to Base Rate
     Loans on the last day of the Interest Period for such Eurodollar Rate
     Loans; and

          (b) provided that no Default or Event of Default shall have occurred
     and be continuing and upon delivery, effective upon receipt, of a properly
     completed Interest Rate Selection Notice to the Agent on or before 10:30
     A.M. three (3) Business Days' prior to the date of such election or
     Conversion:

               (i) elect a subsequent Interest Period for all or a portion of
          Eurodollar Rate Loans to begin on the last day of the then current
          Interest Period for such Eurodollar Rate Loans; and

               (ii) Convert Base Rate Loans to Eurodollar Rate Loans on any
          Business Day.

Each election and Conversion pursuant to this Section 2.8 shall be subject to
the limitations on Eurodollar Rate Loans set forth in the definition of
"Interest Period" herein and in Sections 2.1, 2.3 and Article IV. The Agent
shall give written notice to each Lender of such notice of election or
Conversion prior to 3:00 P.M. on the day such notice of election or Conversion
is received. All such Continuations or Conversions of Loans shall be effected
pro rata based on the Applicable Commitment Percentages of the Lenders.

          2.9. Increase and Decrease in Amounts. The amount of the Total
Revolving Credit Commitment that shall be available to the Borrowers as Loans
shall be reduced by the aggregate amount of Revolving Credit Outstandings.

          2.10. Fees. Borrower shall pay (i) the fees specified in the Fee
Letters on the dates specified therein and (ii) a commitment fee for the period
from and including the date hereof to the Revolving Credit Termination Date,
computed at a rate of 0.25% per annum on the average daily amount of the
available unused Revolving Credit Commitment of such Lender during the period
for which payment is made, payable monthly in arrears on each Fee Payment Date,
commencing on the first such date to occur after the date hereof.

          2.11. Deficiency Advances. No Lender shall be responsible for any
default of any other Lender in respect to such other Lender's obligation to make
any Loan hereunder nor


                                       32



shall the Revolving Credit Commitment of any Lender hereunder be increased as a
result of such default of any other Lender. Without limiting the generality of
the foregoing, in the event any Lender shall fail to advance funds to any
Borrower as herein provided, the Agent may in its discretion and in its capacity
as a Lender, but shall not be obligated to, advance all or any portion of such
amount or amounts (each, a "deficiency advance") and shall thereafter be
entitled to payments of principal of and interest on such deficiency advance in
the same manner and at the same interest rate or rates as if it had originally
made such Loan; provided that, (i) such defaulting Lender shall not be entitled
to receive payments of principal, interest or fees with respect to such
deficiency advance until such deficiency advance shall be paid by such Lender
and (ii) upon payment to the Agent from such other Lender of the entire
outstanding amount of each such deficiency advance, together with accrued and
unpaid interest thereon, from the most recent date or dates interest was paid to
the Agent by a Borrower on each Loan comprising the deficiency advance at the
interest rate per annum for overnight borrowing by the Agent from the Federal
Reserve Bank, then such payment shall be to the Agent as a Lender in full
payment of such deficiency advance and such Borrower shall be deemed to have
borrowed the amount of such deficiency advance from such other Lender as of the
most recent date or dates, as the case may be, upon which any payments of
interest were made by such Borrower thereon.

          2.12. Use of Proceeds. The proceeds of each Loan made pursuant to the
Revolving Credit Facility hereunder shall be used by the Applicable Borrower to
(a) finance or reimburse a Borrower for up to 85% of the Purchase Price of an
Eligible Asset and 85% of the costs incurred in connection with any Approved
Improvements or any Qualified Conversion or (b) subsequent to the initial
purchase of an Eligible Asset, finance up to 85% of the Individual Eligible
Asset Borrowing Base of such Eligible Asset.

          2.13. Designation of Borrowing Affiliate; Releases.

          (a) An Authorized Representative may from time to time designate any
     Holdings Subsidiary Trust or Holdings SPC which has not joined in the
     execution of this Agreement as a "Borrowing Affiliate" hereunder by causing
     such Holdings Subsidiary Trust or Holdings SPC to execute and deliver a
     duly completed Assumption Letter (in the form attached hereto as Exhibit Q)
     to the Agent with the written acknowledgment of the Borrowers and the Agent
     at the foot thereof, together with (a) Facility Guaranties executed by each
     Beneficial Owner of any such Holdings Subsidiary Trust, by each Subsidiary
     of any such Beneficial Owner (other than such Holdings Subsidiary Trust),
     by each Subsidiary of such Holdings Subsidiary Trust or of such Holdings
     SPC and by the Applicable Intermediary (if any), (b) Security Agreements
     signed by such Holdings Subsidiary Trust or Holdings SPC, by each
     Beneficial Owner of any such Holdings Subsidiary Trust, by each Subsidiary
     of any such Beneficial Owner, by each Subsidiary of such Holdings
     Subsidiary Trust or Holdings SPC and by the Applicable Intermediary (if
     any), (c) Pledge Agreements signed by the respective Beneficial Owners and
     other owners, granting a security interest in the Pledged Interests in such
     Holdings Subsidiary Trust or Holdings SPC in any Subsidiary thereof, in any
     Beneficial Owner and in any Subsidiary thereof, and in the Applicable
     Intermediary (if any), and (d) all additional documents required under such
     Assumption Letter. Upon such execution, delivery and consent, such Holdings
     Subsidiary Trust or Holdings SPC (as the case may be) shall for


                                       33



     all purposes be a party hereto as a Borrower as fully as if it had executed
     and delivered this Agreement.

          (b) So long as (w) all Loans made to or on behalf of any Borrower,
     together with all accrued interest on such Loans, have been paid in full,
     (x) all other outstanding Obligations of such Borrower (except Obligations
     to pay principal and interest on Loans other than those Loans described in
     clause (w)) have been paid in full, (y) no Default or Event of Default has
     occurred and will be continuing after giving effect to such termination,
     and (z) any prepayment required under Section 2.3(b) has been made, then
     such Borrower may, by not less than three (3) days prior notice to the
     Agent (which shall promptly notify the Lenders thereof), (i) terminate its
     status as a "Borrowing Affiliate" and "Borrower" hereunder and under the
     other Loan Documents, and (ii) (with respect to any Beneficial Owner of
     such Borrower) unless such Person also holds a beneficial interest in any
     other Borrower, terminate the status of such Person and any other
     Subsidiary of such Person as a "Guarantor" hereunder and under the other
     Loan Documents, and (iii) terminate the status of the Applicable
     Intermediary (if any) and any other Subsidiary of such Borrower as a
     "Guarantor" hereunder and under the other Loan Documents. Upon such
     terminations (provided the conditions to such terminations are satisfied),
     the Agent shall take all actions reasonably requested by such Borrower (A)
     to release the Liens of the Agent on all Collateral owned by such Borrower
     and its Subsidiaries (including the Applicable Intermediary, if any) and to
     release such Borrower and such Subsidiaries from all of their respective
     obligations under the Loan Documents (including without limitation a
     written release to such effect), (B) unless such Beneficial Owner also
     holds a beneficial interest in any other Borrower, to release the Liens of
     the Agent on all Collateral owned by such Beneficial Owner and its other
     Subsidiaries and to release such Beneficial Owner and such other
     Subsidiaries from all of their respective obligations under the Loan
     Documents (including without limitation a written release to such effect),
     (C) to release the Lien of the Agent with respect to any Pledged Interests
     in such Borrower, its Subsidiaries and the Applicable Intermediary, and (D)
     (unless such Beneficial Owner also holds a beneficial interest in any other
     Borrower) to release the Lien of the Agent with respect to any Pledged
     Interests in such Beneficial Owner. Any provision of this Section 2.13 or
     any other provision of any Loan Document notwithstanding, in no event shall
     Bermuda Holding 2 Ltd., or AI 3 Ltd. be released from its obligations to
     pay indemnification to, or reimburse any costs or expenses of, the Agent or
     any Lender (including without limitation the obligations under Article IV
     and Sections 4.6, 7.15, 11.5 and 11.9), which agreements and obligations
     shall survive any release or termination of any Credit Party (other than
     Bermuda Holding 2 Ltd., or AI 3 Ltd.) pursuant to this Section 2.12.

          2.14. Joint and Several Liability. Each Borrower (including without
limitation each Borrowing Affiliate) agrees and acknowledges that the
Obligations (subject to the proviso in the last sentence in the definition of
"Obligations" as such term is defined in Section 1.1 herein) constitute and will
constitute joint and several obligations and liabilities of the Borrowers;
provided, however, that anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of each Borrower with respect to
the joint and several liability under this Section 2.14 shall in no event exceed
the amount which can be guaranteed by such Borrower under applicable federal,
state and applicable foreign laws relating


                                       34



to the insolvency of debtors. Each Borrower further agrees and acknowledges that
all actions taken, elections made and notices and certificates furnished or
received by it under or pursuant to the Loan Documents shall constitute the
action, election, notice or certification of all of the Borrowers under the Loan
Documents, and that each Authorized Representative shall have full authority to
act for and on behalf of all of the Borrowers for all purposes of the Loan
Documents. Each Borrower agrees that the joint and several liability of the
Borrowers shall not be impaired or affected by any modification, supplement,
extension or amendment of any contract or agreement to which the parties thereto
may hereafter agree, nor by any modification, release or other alteration of any
of the rights of the Agent or any Lender with respect to the Collateral other
than as provided in Section 2.13(b) hereof, nor by any delay, extension of time,
renewal, compromise or other indulgence granted by the Agent, any Lender or any
other Person with respect to any of the Obligations, nor by any other agreements
or arrangements whatever with any other Borrower or with anyone else, each
Borrower hereby waiving all notice of any such delay, extension, release,
substitution, renewal, compromise or any such delay, extension, release,
substitution, renewal, compromise or other indulgence, and hereby consenting to
be bound thereby as fully and effectually as if it had expressly agreed thereto
in advance. The liability of each Borrower hereunder is direct and unconditional
as to all of the Obligations hereunder, and may be enforced without requiring
the Agent, any Lender or any other Person first to resort to any other right,
remedy or security; no Borrower shall have any right of subrogation,
reimbursement or indemnity whatsoever, nor any right of recourse to security for
indemnity whatsoever, nor any right of recourse to security for any of the
Obligations hereunder, unless and until all of said Obligations have been paid
in full; except as provided in Section 2.13(b) hereof and subject to the proviso
to the first sentence of this Section 2.14, nothing shall discharge or satisfy
the liability of any Borrower hereunder except the full payment and performance
of all of the Obligations; any and all present and future debts and obligations
of each Borrower to the other Borrowers are hereby waived and postponed in favor
of and subordinated to the full payment and performance of all present and
future Obligations of the Borrowers to the Agent, the Lenders and any other
Person.

          2.15. Eligible Lease Involving Eligible Intermediary. In lieu of
leasing a Financed Eligible Asset directly to an Eligible Carrier, a Borrower
may lease such Financed Eligible Asset directly to an Eligible Intermediary
pursuant to an Eligible Lease described in clause (X) of the proviso to the
definition of "Eligible Lease"; provided that

          (a) such Eligible Intermediary simultaneously subleases such Eligible
     Asset to an Eligible Carrier pursuant to an Eligible Lease described in
     clause (Y) of the proviso to the definition of "Eligible Lease" and such
     sublease is pledged as collateral security for the obligations of the
     Eligible Intermediary under the head lease;

          (b) in the case of any Loan with respect to such Eligible Asset, all
     Loan conditions that pertain to any Eligible Lease or other Lease by a
     Borrower of such Eligible Asset (including without limitation requirements
     concerning the perfection of Liens on Collateral, and delivery of copies of
     the Leases and Lessee Notices) shall be satisfied with respect to each such
     Lease to or by the Applicable Intermediary;


                                       35



          (c) all provisions of any Loan Document that pertain to any Eligible
     Lease or other Lease by a Borrower of such Eligible Asset shall apply to
     each such Lease to or by the Applicable Intermediary; and

          (d) the lease/sublease structure shall not result in adverse tax or
     other consequences to the Agent or any Lender which have not been
     indemnified or otherwise addressed to the reasonable satisfaction of the
     Agent.

                                  ARTICLE III

                                    SECURITY

          3.1. Security. As security for the full and timely payment and
performance of all Obligations, each Borrower will, or will cause the Credit
Parties and the Parent Guarantors to, on or before the date of the initial Loan
do or cause to be done all things necessary in the reasonable opinion of the
Agent and its counsel to grant to the Agent for the benefit of the Lenders a
duly perfected first priority security interest under all applicable laws in all
Collateral subject to no prior Lien or other encumbrance (that, in each case,
has not previously been satisfied in full) or restriction on transfer (other
than Permitted Liens).

          3.2. Further Assurances. At the request of the Agent, each Borrower
will, or will cause the Parent Guarantors and other Credit Parties (as the case
may be), to, execute, by its duly authorized officers, alone or with the Agent,
any certificate, instrument, statement or document, or to procure any such
certificate, instrument, statement or document, or to take such other action
(and pay all connected costs) which the Agent reasonably deems necessary from
time to time to create, continue or preserve the liens and security interests in
Collateral (and the perfection and priority thereof) of the Agent contemplated
hereby and by the other Loan Documents and specifically including all Collateral
acquired by the Parent Guarantor, any Borrower, or any Guarantor or any other
Credit Party after the Closing Date.

          3.3. Information Regarding Collateral. Bermuda Holding 2, AI 3 Ltd.,
and each Borrower represents, warrants and covenants that (i) the chief
executive office of the each Parent Guarantor and each Credit Party providing
Collateral pursuant to a Security Instrument (each, a "Grantor") at the Closing
Date is located at the address or addresses specified on Schedule 3.3, and (ii)
Schedule 3.3 contains a true and complete list of (a) the name and address of
each Grantor, (b) each location of the chief executive office and principal
place of business of each Grantor and (c) the country of registration (if
applicable) of each Eligible Asset. No Borrower shall change, or permit any
other Grantor to change, the location of its chief executive office or principal
place of business, or use or permit any other Grantor to use, any additional
trade style, except upon giving not less than thirty (30) days' prior written
notice to the Agent and taking or causing to be taken all such action at the
Borrowers' or such other Grantor's expense as may be reasonably requested by the
Agent to perfect or maintain the perfection of the Lien of the Agent in
Collateral.

          3.4. Quiet Enjoyment. The Agent and each Lender hereby agree that, so
long as no Lease Event of Default shall have occurred and be continuing under an
Eligible Lease, it will not interfere with the quiet enjoyment of the possession
and use of the Eligible Asset by the


                                       36



Applicable Carrier during the term of such Eligible Lease and it will (subject
to any requirements or restrictions imposed by applicable law) dispose of its
interest in the Eligible Asset leased under such Eligible Lease expressly
subject to such Eligible Lease and on terms such that the purchaser provides a
similar right of quiet enjoyment to such Applicable Carrier. Upon the request of
any Borrower, the Agent (on behalf of itself and the Lenders) will confirm the
immediately preceding sentence in writing to any Applicable Carrier.

                                   ARTICLE IV

                             CHANGE IN CIRCUMSTANCES

          4.1. Requirements of Law.

          (a) If the adoption of or any change in any Requirement of Law or in
     the interpretation or application thereof or compliance by any Lender with
     any request or directive (whether or not having the force of law) from any
     central bank or other Governmental Authority made subsequent to the date
     hereof:

               (i) shall impose, modify or hold applicable any reserve, special
          deposit, compulsory loan or similar requirement against assets held
          by, deposits or other liabilities in or for the account of, advances,
          loans or other extensions of credit by, or any other acquisition of
          funds by, any office of such Lender that is not otherwise included in
          the determination of the Eurodollar Rate; or

               (ii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost (other than a
Tax) to such Lender, by an amount that such Lender deems to be material, of
making, converting into, continuing or maintaining Eurodollar Rate Loans or to
reduce any amount receivable hereunder in respect thereof (other than by reason
of any Tax), then, in any such case, the Borrowers shall promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender (on an after-tax basis) for such increased cost or reduced amount
receivable. If any Lender becomes entitled to claim any additional amounts
pursuant to this paragraph, it shall promptly notify the Borrowers (with a copy
to the Agent) of the event by reason of which it has become so entitled.

          (b) If any Lender shall have determined that the adoption of or any
     change in any Requirement of Law regarding capital adequacy or in the
     interpretation or application thereof or compliance by such Lender or any
     corporation controlling such Lender with any request or directive regarding
     capital adequacy (whether or not having the force of law) from any
     Governmental Authority made subsequent to the date hereof shall have the
     effect of reducing the rate of return on such Lender's or such
     corporation's capital as a consequence of its obligations hereunder to a
     level below that which such Lender or such corporation could have achieved
     but for such adoption, change or compliance (taking into consideration such
     Lender's or such corporation's policies with respect to capital adequacy)
     by an amount deemed by such Lender to be material, then from time to time,
     after submission by such Lender to the Borrowers (with a copy to the Agent)
     of a written


                                       37



     request therefor, the Borrowers shall pay to such Lender such additional
     amount or amounts as will compensate such Lender or such corporation (on an
     after-tax basis) for such reduction.

          (c) Each Lender shall promptly notify Bermuda Holding 2 Ltd., AI 3
     Ltd., the Parent and the Agent of any event of which it has knowledge
     occurring after the date hereof, which will entitle a Lender to
     compensation pursuant to this Section 4.1, and such Lender shall, upon
     written request by Bermuda Holding 2 Ltd., AI 3 Ltd., the Parent or any
     Borrower, designate a different Applicable Lending Office if such
     designation will avoid the need for, or reduce the amount of, such
     compensation and will not, in the judgment of such Lender, be otherwise
     disadvantageous to it. A certificate as to any additional amounts payable
     pursuant to this Section submitted by any Lender to the Borrowers (with a
     copy to the Agent) shall be conclusive in the absence of manifest error.
     Notwithstanding anything to the contrary in this Section, the Borrowers
     shall not be required to compensate a Lender pursuant to this Section for
     any amounts incurred more than three months prior to the date that such
     Lender notifies the Borrowers of such Lender's intention to claim
     compensation therefor; provided that, if the circumstances giving rise to
     such claim have a retroactive effect, then such three-month period shall be
     extended to include the period of such retroactive effect. The obligations
     of the Borrowers pursuant to this Section shall survive the termination of
     this Agreement and the payment of the Loans and all other amounts payable
     hereunder.

          4.2. Limitation on Types of Loans. If on or prior to the first day of
any Interest Period for any Eurodollar Rate Loan:

          (a) the Agent determines (which determination shall be conclusive)
     that by reason of circumstances affecting the relevant market, adequate and
     reasonable means do not exist for ascertaining the Eurodollar Rate for such
     Interest Period; or

          (b) the Required Lenders determine (which determination shall be
     conclusive) and notify the Agent that the Eurodollar Rate will not
     adequately and fairly reflect the cost to the Lenders of funding Eurodollar
     Rate Loans for such Interest Period;

then the Agent shall give the Borrowers prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type or to Convert Loans
of any other Type into Loans of such Type, and the Borrowers shall, jointly and
severally, on the last day(s) of the then current Interest Period(s) for the
outstanding Loans of the affected Type, either prepay such Loans or Convert such
Loans into Base Rate Loans in accordance with the terms of this Agreement.

          4.3. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Rate Loans
hereunder, then such Lender shall promptly notify the Borrowers thereof and such
Lender's obligation to make or Continue Eurodollar Rate Loans and to Convert
other Types of Loans into Eurodollar Rate Loans shall be suspended until such
time


                                       38



as such Lender may again make, maintain, and fund Eurodollar Rate Loans (in
which case the provisions of Section 4.4 shall be applicable).

          4.4. Treatment of Affected Loans. If the obligation of any Lender to
make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other
Type into, Loans of a particular Type shall be suspended pursuant to Section 4.1
or 4.3 hereof (Loans of such Type being herein called "Affected Loans" and such
Type being herein called the "Affected Type"), such Lender's Affected Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for Affected Loans (or, in the case of a
Conversion required by Section 4.3 hereof, on such earlier date as such Lender
may specify to the Borrowers with a copy to the Agent) and, unless and until
such Lender gives notice as provided below that the circumstances specified in
Section 4.1 or 4.3 hereof that gave rise to such Conversion no longer exist:

          (a) to the extent that such Lender's Affected Loans have been so
     Converted, all payments and prepayments of principal that would otherwise
     be applied to such Lender's Affected Loans shall be applied instead to its
     Base Rate Loans; and

          (b) all Loans that would otherwise be made or Continued by such Lender
     as Loans of the Affected Type shall be made or Continued instead as Base
     Rate Loans, and all Loans of such Lender that would otherwise be Converted
     into Loans of the Affected Type shall be Converted instead into (or shall
     remain as) Base Rate Loans.

If such Lender gives notice to the Borrowers (with a copy to the Agent) that the
circumstances specified in Section 4.1 or 4.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 4.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Revolving
Credit Commitments.

          4.5. Compensation. Upon the request of any Lender, Bermuda Holding 2
Ltd., AI 3 Ltd. and the Borrowers, jointly and severally, shall pay to such
Lender such amount or amounts as shall be sufficient (in the reasonable opinion
of such Lender) to compensate it for any loss, cost, or expense incurred by it
as a result of:

          (a) any payment, prepayment, or Conversion of a Eurodollar Rate Loan
     for any reason (including, without limitation, the acceleration of the
     Loans pursuant to Section 9.1) on a date other than the last day of the
     Interest Period for such Loan; or

          (b) any failure by any Borrower for any reason (including, without
     limitation, the failure of any condition precedent specified in Article V
     to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Rate
     Loan on the date for such borrowing,


                                       39



     Conversion, Continuation, or prepayment specified in the relevant notice of
     borrowing, prepayment, Continuation, or Conversion under this Agreement.

          4.6. Taxes.

          (a) Any and all payments by any Borrower to or for the account of any
     Lender or the Agent hereunder or under any other Loan Document shall be
     made free and clear of and without deduction or withholding for any and all
     Taxes, and all liabilities with respect thereto, now or hereafter imposed,
     levied, collected, withheld or assessed by any Governmental Authority,
     excluding, in the case of each Lender and the Agent, Taxes imposed on its
     income, receipts, capital, net worth or items of tax preference and
     franchise, doing business and similar Taxes (imposed on it in lieu of net
     income taxes), imposed on such Lender or Agent as a result of a present or
     former connection between the Agent or such Lender and the jurisdiction of
     the Governmental Authority imposing such tax or any political subdivision
     or taxing authority thereof or therein (other than any such connection
     arising solely from the Agent or such Lender having executed, delivered or
     performed its obligations or received a payment under, or enforced, this
     Agreement or any other Loan Document). If any such non-excluded Taxes ("
     Indemnified Taxes") or Other Taxes (as defined below) are required to be
     withheld after the date hereof from or in respect of any sum payable under
     this Agreement or any other Loan Document to any Lender or the Agent, (i)
     the sum payable shall be increased as necessary so that after making all
     required deductions (including deductions applicable to additional sums
     payable under this Section 4.6) such Lender or the Agent receives an amount
     equal to the sum it would have received had no such deductions been made,
     (ii) such Borrower shall make such deductions, (iii) such Borrower shall
     timely pay the full amount deducted to the relevant taxation authority or
     other authority in accordance with applicable law, and (iv) such Borrower
     shall furnish to the Agent, at its address referred to in Section 11.2, the
     original or a certified copy of a receipt evidencing payment thereof or
     other evidence of payment reasonably acceptable to such Lender or the
     Agent; provided however, that the Borrowers shall not be required to
     increase such amounts payable to any Lender with respect to any Taxes (i)
     that are attributable to such Lender's failure to comply with the
     requirements of paragraph (d) or (e) of this Section or (ii) that are
     United States or Irish withholding taxes imposed on amounts payable to such
     Lender at the time such Lender becomes a party to this Agreement, except to
     the extent that such Lender's assignor (if any) was entitled, at the time
     of assignment, to receive additional amounts from the Borrowers with
     respect to such Taxes pursuant to this paragraph.

          (b) In addition, Bermuda Holding 2 Ltd., AI 3 Ltd. and the Borrowers
     agree, jointly and severally, to timely pay any and all present or future
     stamp or documentary taxes which arise from the execution or delivery of
     this Agreement or any other Loan Document or the provision of the security
     interest in any Collateral required hereunder (hereinafter referred to as
     "Other Taxes").

          (c) Bermuda Holding 2 Ltd., AI 3 Ltd. and the Borrowers agree, jointly
     and severally, to indemnify each Lender and the Agent for the full amount
     of Indemnified Taxes and Other Taxes (including, without limitation, any
     Indemnified Taxes or Other Taxes imposed or asserted by any jurisdiction on
     amounts payable under this Section 4.6)


                                       40



     paid by such Lender or the Agent (as the case may be) and any liability
     (including penalties, interest, and expenses) arising therefrom or with
     respect thereto.

          (d) Each Lender, on or prior to the date of its execution and delivery
     of this Agreement in the case of each Lender listed on the signature pages
     hereof and on or prior to the date on which it becomes a Lender in the case
     of each other Lender, and from time to time thereafter if requested in
     writing by any Borrower or the Agent (unless such failure is due to a
     change in treaty, law or regulation occurring subsequent to the date on
     which a form originally was required to be provided), shall provide the
     Borrowers and the Agent with (i) a complete and properly executed Internal
     Revenue Service Form W-8BEN, W-8ECI or W-8IMY (including all required
     accompanying information), as appropriate, or any successor form prescribed
     by the Internal Revenue Service (including a United States taxpayer
     identification number), certifying that such Lender is entitled to benefits
     under an income tax treaty to which the United States is a party which
     reduces the rate of withholding tax on payments of interest, certifying
     that the Lender is eligible for the "portfolio interest exemption" or
     certifying that the income receivable pursuant to this Agreement is
     effectively connected with the conduct of a trade or business in the United
     States or (ii) Internal Revenue Service Form W-9 or any successor form
     prescribed by the Internal Revenue Service. In addition, each Lender and
     the Agent agrees that it will (i) take all actions reasonably requested by
     Bermuda Holding 2 Ltd., AI 3 Ltd. or a Borrower in writing that are
     consistent with applicable legal and regulatory restrictions to claim any
     available reductions or exemptions from Indemnified Taxes or Other Taxes
     and (ii) otherwise cooperate with Bermuda Holding 2 Ltd., AI 3 Ltd. and the
     Borrowers to minimize any amounts payable by Bermuda Holding 2 Ltd., AI 3
     Ltd. or the Borrowers under this Section 4.6; provided, however, that in
     each case, any out-of-pocket cost relating to such action or cooperation
     requested by Bermuda Holding 2 Ltd., AI 3 Ltd. or a Borrower shall be borne
     by Bermuda Holding 2 Ltd., AI 3 Ltd. or such Borrower and no Lender shall
     be required to take any action that it determines in its sole good faith
     discretion, may be adverse in any non de minimis respect to it and not
     indemnified to its satisfaction. Each Lender listed on the signature page
     hereto represents that it is a Qualifying Lender as of the Closing Date and
     each assignee represents that it is a Qualifying Lender as of the date such
     party becomes an assignee.

          (e) A Lender that is entitled to an exemption from or reduction of
     non-U.S. withholding tax under the law of the jurisdiction in which a
     Borrower is located, or any treaty to which such jurisdiction is a party,
     with respect to payments under this Agreement shall deliver to such
     Borrower (with a copy to the Agent), at the time or times prescribed by
     applicable law or reasonably requested by such Borrower, such properly
     completed and executed documentation prescribed by applicable law as will
     permit such payments to be made without withholding or at a reduced rate,
     provided that such Lender is legally entitled to complete, execute and
     deliver such documentation and in such Lender's judgment such completion,
     execution or submission would not materially prejudice the legal position
     of such Lender.

          (f) If Bermuda Holding 2 Ltd., AI 3 Ltd. or any Borrower is required
     to pay additional amounts to or for the account of any Lender pursuant to
     this Section 4.6, then such Lender will agree to use reasonable efforts to
     change the jurisdiction of its


                                       41



     Applicable Lending Office so as to eliminate or reduce any such additional
     payment which may thereafter accrue if such change, in the sole judgment of
     such Lender, is not otherwise disadvantageous to such Lender.

          (g) Within thirty (30) days after the date of any payment of Taxes,
     Bermuda Holding 2 Ltd., AI 3 Ltd. or the applicable Borrower shall furnish
     to the Agent the original or a certified copy of a receipt evidencing such
     payment or otherwise evidence of such payment as is reasonably acceptable
     to the Agent.

          (h) If the Agent or any Lender receives a refund of any Taxes or Other
     Taxes as to which it has been indemnified by Bermuda Holding 2 Ltd., AI3
     Ltd. or a Borrower or with respect to which Bermuda Holding 2 Ltd., AI3
     Ltd. or a Borrower has paid additional amounts pursuant to this Section
     4.6, it shall pay over such refund to Bermuda Holding 2 Ltd., AI3 Ltd. or
     such Borrower (but only to the extent of indemnity payments made, or
     additional amounts paid, by Bermuda Holding 2 Ltd., AI3 Ltd. or a Borrower
     under this Section 4.6 with respect to the Taxes or Other Taxes giving rise
     to such refund), net of all out-of-pocket expenses (including any net
     increase in Taxes imposed on such Person by reason of such refund and the
     payment by such Person pursuant to this sentence) of the Agent or such
     Lender and without interest (other than any interest paid by the relevant
     Governmental Authority with respect to such refund); provided, that Bermuda
     Holding 2 Ltd., AI3 Ltd. or the Borrower, upon the request of the Agent or
     such Lender, agrees to repay the amount paid over to Bermuda Holding 2
     Ltd., AI3 Ltd. or such Borrower (plus any penalties, interest or other
     charges imposed by the relevant Governmental Authority) to the Agent or
     such Lender in the event the Agent or such Lender is required to repay such
     refund to such Governmental Authority. This paragraph shall not be
     construed to require the Agent or any Lender to make available its tax
     returns (or any other information relating to its taxes which it deems
     confidential) to Bermuda Holding 2 Ltd., AI3 Ltd. or any Borrower or any
     other Person.

          (i) Without prejudice to the survival of any other agreement of
     Bermuda Holding 2 Ltd., AI 3 Ltd. or any Borrower hereunder, the agreements
     and obligations of Bermuda Holding 2 Ltd., AI 3 Ltd. and each Borrower
     contained in this Section 4.6 shall survive the termination of the
     Revolving Credit Commitments and the payment in full of the Loans.

                                   ARTICLE V

                           CONDITIONS TO MAKING LOANS

          5.1. Conditions of Closing. The effectiveness of this Agreement is
subject to the conditions precedent that:

          (a) the Agent shall have received, in form and substance satisfactory
     to the Agent and Lenders, the following:

               (i) executed originals of each of this Agreement, the Notes (if
          applicable), the initial Facility Guaranties, the initial Parent
          Guarantor Guaranties,


                                       42



          the initial Security Agreements and the other initial Loan Documents,
          together with all schedules and exhibits thereto;

               (ii) the favorable written opinion or opinions with respect to
          the Loan Documents and the transactions contemplated thereby of
          special counsel to the Credit Parties dated the Closing Date
          (including opinions of New York, Bermuda and Irish counsel), addressed
          to the Agent (on behalf of itself and the Lenders), substantially in
          the form of Exhibit G-1 and Exhibit G-3 or otherwise reasonably
          satisfactory to special counsel to the Agent;

               (iii) resolutions of the boards of directors or other appropriate
          governing body (or of the appropriate committee thereof) of each
          Parent Guarantor and Credit Party (except in the case of a Credit
          Party that is a trust), certified by its secretary or assistant
          secretary as of the Closing Date, approving and adopting the Loan
          Documents to be executed by such Person, and authorizing the execution
          and delivery thereof;

               (iv) specimen signatures of officers of each Parent Guarantor and
          the Credit Parties executing the Loan Documents on behalf of such
          party, certified by the secretary or assistant secretary of such
          party;

               (v) the Organizational Documents of each Parent Guarantor, each
          Credit Party and each of the trustees for each Holdings Subsidiary
          Trust certified as of a recent date by the Secretary of State or
          comparable official of its jurisdiction of organization (provided that
          the Trust Agreement of a Holdings Subsidiary Trust may be certified by
          the secretary or assistant secretary of its Beneficial Owner);

               (vi) certificates issued as of a recent date by the Secretaries
          of State or comparable officials of the respective jurisdictions of
          formation of each of the Credit Parties (excluding Holdings Subsidiary
          Trusts) as to the due existence and good standing of such Person;

               (vii) notice of appointment of the initial Authorized
          Representative(s);

               (viii) Uniform Commercial Code financing statements appropriate
          for filing in all places required by applicable law to perfect the
          Liens of the Agent under the Security Instruments as a first priority
          Lien as to items of Collateral in which a security interest may be
          perfected by the filing of financing statements, and such other
          documents and/or evidence of other actions as may be necessary under
          applicable law to perfect the Liens of the Agent under the Security
          Instruments as a first priority Lien in and to such other Collateral
          as the Agent may require;

               (ix) the delivery by the Parent, AA Ireland Ltd., AHC Ltd.,
          Bermuda Holding 2 Ltd., AI 3 Ltd. and the Borrowers of all stock
          certificates and other certificates, if any, evidencing ownership of
          any Pledged Interests, accompanied


                                       43



          in each case by duly executed stock or transfer powers (or other
          appropriate transfer documents) in blank affixed thereto; and

               (x) the delivery by the Parent of an Account Control Agreement
          with respect to each Account listed on Schedule 6.21 and the delivery
          by Bermuda Holding 2 Ltd., AI 3 Ltd., and the Borrowers of "control
          agreements" that have been executed by the respective issuers (and
          consented to by the respective Credit Parties) with respect to any
          uncertificated Pledged Interests; and

               (xi) evidence that any fees payable by any Parent Guarantor or
          any Credit Party on the Closing Date to the Agent and the Lenders have
          been paid in full; and

          (b) In the good faith judgment of the Agent and the Lenders:

               (i) no litigation, action, suit, investigation or other arbitral,
          administrative or judicial proceeding shall be pending or threatened
          which could reasonably be likely to result in a Material Adverse
          Effect; and

               (ii) the Parent Guarantors and the Credit Parties shall have
          received all approvals, consents and waivers, and shall have made or
          given all necessary filings and notices as shall be required to
          consummate the transactions contemplated hereby without the occurrence
          of any default under, conflict with or violation of (A) any applicable
          law, rule, regulation, order or decree of any Governmental Authority
          or arbitral authority or (B) any agreement, document or instrument to
          which any of the Credit Parties is a party or by which any of them or
          their properties is bound.

          (c) Evidence that the Parent has received not less than $400,000,000
     of cash capital contributions from its investors and has the right, without
     restriction, limitation or the requirement to satisfy any condition that
     has not yet been met or waived, to require its shareholders to purchase
     additional shares of the Parent for an aggregate purchase price of
     $100,000,000 (the "$100,000,000 Capital Call").

          5.2. Conditions of Revolving Loans. The obligation of the Lenders to
make Revolving Loans hereunder on or subsequent to the Closing Date (other than
additional loans to a Borrower in connection with Approved Improvements, or a
Qualified Conversion) is subject to the conditions precedent that:

          (a) each of the conditions to making the Revolving Credit Facility
     available to the Borrowers, as set forth in Section 5.1, shall have been
     satisfied on or prior to the date of the initial Loan after the Closing
     Date;

          (b) the representations and warranties of the Credit Parties set forth
     in Article VI and in each of the other Loan Documents shall be true and
     correct in all material respects on and as of the date of such Loan, with
     the same effect as though such representations and warranties had been made
     on and as of such date, except to the extent that such representations and
     warranties expressly relate to an earlier date;


                                       44



          (c) the Borrowing Affiliate with respect to such Loan shall have
     executed and delivered to the Agent an Assumption Letter, and each Borrower
     and the Agent shall have executed such Assumption Letter and the Borrowing
     Affiliate shall have delivered to the Agent all other agreements,
     instruments and documents required by such Assumption Letter;

          (d) the Borrowing Affiliate with respect to such Loan shall have
     delivered to the Agent (i) Facility Guaranties fully executed by any
     Beneficial Owner of such Borrowing Affiliate, by each Subsidiary of any
     such Beneficial Owner (other than such Borrowing Affiliate), by each
     Subsidiary of such Borrowing Affiliate and by the Applicable Intermediary
     (if any); (ii) Pledge Agreements fully executed by the appropriate
     pledgors, granting a security interest in all Pledged Interests with
     respect to each such Beneficial Owner, such Borrowing Affiliate, each
     Subsidiary of any Beneficial Owner, each Subsidiary of such Borrowing
     Affiliate, and the Applicable Intermediary (if any); (iii) Security
     Agreements fully executed by such Borrowing Affiliate, any Beneficial Owner
     of such Borrowing Affiliate, each Subsidiary of any Beneficial Owner, each
     Subsidiary of such Borrowing Affiliate, and the Applicable Intermediary (if
     any); and ((iv) Lockbox Agreements executed by each Borrower;

          (e) the Agent shall have received the latest drafts of the following
     within 5 Business Days prior to the date of the Loan, an organized
     pre-closing of the required documentation shall have occurred at least one
     Business Day prior to the date of the Loan, and the Agent shall have
     received final versions of the following, in form and substance
     satisfactory to the Agent and the Lenders, on or prior to the date of the
     Loan:

               (i) each of the documents and instruments (including without
          limitation the opinions of counsel, the resolutions of boards of
          directors or other appropriate governing bodies or committees, the
          specimen signatures, officer's certificates, Organizational Documents
          and governmental certificates (if any) of existence, qualification,
          good standing and assumed name) required by Section 5.1 as if such
          Borrowing Affiliate had been a Borrowing Affiliate (and its Beneficial
          Owner, their respective Subsidiaries and the Applicable Intermediary
          (if any) had been in such positions) on the Closing Date;

               (ii) with respect to each Financed Eligible Asset registered in
          the United States, the favorable written opinion with respect to the
          Loan Documents and the transactions contemplated thereby of FAA
          Counsel dated the date of such Loan, addressed to the Agent (on behalf
          of itself and the Lenders), substantially in the form of Exhibit G-2
          or otherwise reasonably satisfactory to special counsel to the Agent;

               (iii) with respect to every other Financed Eligible Asset, the
          favorable written opinion with respect to the Loan Documents and the
          transactions contemplated thereby of local counsel in each Applicable
          Foreign Jurisdiction dated the date of such Loan, addressed to the
          Agent (on behalf of itself and the Lenders), substantially in the
          forms of Exhibit G-3 and Exhibit G-4 or otherwise reasonably
          satisfactory to special counsel to the Agent;


                                       45



               (iv) certificates of insurance from qualified brokers of aircraft
          insurance or other evidence satisfactory to the Agent, evidencing all
          insurance required by the Loan Documents (including without limitation
          all insurance required by Exhibit L with respect to each Eligible
          Asset that is to be a Financed Eligible Asset);

               (v) a Borrowing Notice;

               (vi) a certificate of an Authorized Representative substantially
          in the form of Exhibit R containing computations of the Borrowing Base
          and providing information about the Financed Eligible Asset, in each
          case after giving effect to such Loan and any related Financed
          Eligible Asset;

               (vii) Uniform Commercial Code financing statements appropriate
          for filing in all places required by applicable law to perfect the
          Liens of the Agent under the Security Instruments as a first priority
          Lien as to items of Collateral in which a security interest may be
          perfected by the filing of financing statements, and such other
          documents and/or evidence of other actions as may be necessary under
          applicable law to perfect the Liens of the Agent under the Security
          Instruments as a first priority Lien in and to such other Collateral
          as the Agent may require, including without limitation:

                         (1) the delivery by the Borrowers of all stock
                    certificates and other certificates, if any, evidencing
                    ownership of any Pledged Interests, accompanied in each case
                    by duly executed stock or transfer powers (or other
                    appropriate transfer documents) in blank affixed thereto;
                    and

                         (2) the delivery by the Borrowers of "control
                    agreements" that have been executed by the respective
                    issuers (and consented to by the respective Credit Parties)
                    with respect to any uncertificated Pledged Interests;

                         (3) with respect to each Financed Eligible Asset
                    registered in the United States, evidence of the filing with
                    the FAA Recording Office all documents required by the FAA
                    in order to protect the Applicable Borrower's right, title
                    and interest in such Financed Eligible Asset;

                         (4) with respect to each Financed Eligible Asset not
                    registered in the United States, evidence of the filing with
                    each applicable recording office in each Applicable Foreign
                    Jurisdiction of all documents required by such office or any
                    Applicable Foreign Aviation Law in order to protect the
                    Applicable Borrower's right, title and interest in such
                    Financed Eligible Asset in such Applicable Foreign
                    Jurisdiction;


                                       46



                         (5) a copy of the executed purchase agreement and
                    executed bill of sale evidencing the purchase by the
                    Applicable Borrower of each Financed Eligible Asset;

                         (6) copies of the certificates of aircraft registration
                    issued by the FAA and certificates of airworthiness issued
                    by the FAA, in each case with respect to each Aircraft
                    registered in the United States; and

                         (7) evidence of registration and other applicable
                    qualification issued by any Applicable Foreign Jurisdiction
                    to the extent such registration or qualification is required
                    by an Applicable Foreign Aviation Law, in each case with
                    respect to each Eligible Asset not registered in the United
                    States;

               (viii) results of a search of Liens filed with the FAA or any
          Applicable Foreign Jurisdiction with respect to any Eligible Asset
          that is or is to be a Financed Eligible Asset;

               (ix) for each Financed Eligible Asset that will be subject to an
          Eligible Lease on the date of the initial Loan, copies of each such
          Eligible Lease; and

               (x) for each Financed Eligible Asset that will be subject to an
          Eligible Lease on the date of the initial Loan for such Financed
          Eligible Asset, a Lessee Notice and evidence (which may be in the form
          of a legal opinion) that the Agent shall have the right, under the
          laws of the Applicable Foreign Jurisdiction, to enforce directly the
          Eligible Lease against the Lessee, including without limitation, the
          obligation of the Lessee to make payments under the Eligible Lease to
          the applicable Account.

          (f) at the time of (and after giving effect to) the initial Loan, no
     Default or Event of Default specified in Article IX shall have occurred and
     be continuing;

          (g) immediately after giving effect to the initial Loan;

               (i) the aggregate principal balance of all outstanding Revolving
          Loans for each Lender shall not exceed such Lender's Revolving Credit
          Commitment; and

               (ii) the Revolving Credit Outstandings shall not exceed the
          lesser of the Borrowing Base or the Total Revolving Credit Commitment.

          5.3. Conditions of Subsequent Advances Under Revolving Loans. The
obligation of the Lenders to make an additional loan to a Borrower in connection
with Approved Improvements or a Qualified Conversion is subject to the
conditions precedent that:


                                       47



          (a) the representations and warranties of the Credit Parties set forth
     in Article VI and in each of the other Loan Documents shall be true and
     correct in all material respects on and as of the date of such Loan, with
     the same effect as though such representations and warranties had been made
     on and as of such date, except to the extent that such representations and
     warranties expressly relate to an earlier date;

          (b) the Agent shall have received final versions of the following at
     least one Business Day prior to the date of the Loan:

               (i) a Borrowing Notice; and

               (ii) a certificate of an Authorized Representative substantially
          in the form of Exhibit R containing computations of the Borrowing Base
          and providing information about the Financed Eligible Asset, in each
          case after giving effect to such Loan and any related Financed
          Eligible Asset;

          (c) at the time of (and after giving effect to) the initial Loan, no
     Default or Event of Default specified in Article IX shall have occurred and
     be continuing; and

          (d) immediately after giving effect to the initial Loan;

               (i) the aggregate principal balance of all outstanding Revolving
          Loans for each Lender shall not exceed such Lender's Revolving Credit
          Commitment;

               (ii) the Revolving Credit Outstandings shall not exceed the
          lesser of the Borrowing Base or the Total Revolving Credit Commitment.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

          Bermuda Holding 2 Ltd., AI 3 Ltd., each other Guarantor and each
Borrower represents and warrants with respect to itself, its Subsidiaries (if
any) and each other Credit Party (which representations and warranties shall
survive the delivery of the documents mentioned herein and the making of Loans),
that:

          6.1. Organization and Authority.

          (a) Each Borrower, each Subsidiary and each other Credit Party is a
     trust, corporation, partnership or limited liability company duly organized
     and validly existing under the laws of the jurisdiction of its formation;

          (b) Each Borrower, each Subsidiary and each other Credit Party (x) has
     the requisite power and authority to own its properties and assets and to
     carry on its business as now being conducted and as contemplated in the
     Loan Documents, and (y) is qualified to do business in every jurisdiction
     in which failure so to qualify would have a Material Adverse Effect;


                                       48



          (c) Each Borrower has the power and authority to execute, deliver and
     perform this Agreement and the Notes (if applicable), and to borrow
     hereunder, and to execute, deliver and perform each of the other Loan
     Documents to which it is a party;

          (d) Each Credit Party (other than the Borrowers) has the power and
     authority to execute, deliver and perform each of the Loan Documents to
     which it is a party; and

          (e) When executed and delivered, each of the Loan Documents to which
     any Credit Party is a party will be the legal, valid and binding obligation
     or agreement, as the case may be, of such Credit Party (as the case may
     be), enforceable against such Credit Party (as the case may be) in
     accordance with its terms, subject to the effect of any applicable
     bankruptcy, moratorium, insolvency, reorganization or other similar law
     affecting the enforceability of creditors' rights generally and to the
     effect of general principles of equity (whether considered in a proceeding
     at law or in equity);

          6.2. Loan Documents. The execution, delivery and performance by each
Credit Party of each of the Loan Documents to which it is a party:

          (a) have been duly authorized by all requisite Organizational Action
     of such Credit Party (as the case may be) required for the lawful
     execution, delivery and performance thereof;

          (b) do not violate any provisions of (i) applicable law, rule or
     regulation, (ii) any judgment, writ, order, determination, decree or
     arbitral award of any Governmental Authority or arbitral authority binding
     on such Credit Party or their respective properties, or (iii) the
     Organizational Documents of such Credit Party;

          (c) does not and will not be in conflict with, result in a breach of
     or constitute an event of default, or an event which, with notice or lapse
     of time or both, would constitute an event of default, under any contract,
     indenture, agreement or other instrument or document to which such Credit
     Party is a party, or by which the properties or assets of such Credit Party
     are bound; and

          (d) does not and will not result in the creation or imposition of any
     Lien upon any of the properties or assets of such Credit Party or any
     Subsidiary except any Liens in favor of the Agent and the Lenders created
     by the Security Instruments;

          6.3. Solvency. At the time of each Loan to a Borrower, such Borrower
and each Beneficial Owner of such Borrower and each Eligible Intermediary, if
any, is Solvent after giving effect to the transactions contemplated by the Loan
Documents;

          6.4. Subsidiaries and Stockholders. No Borrower or Guarantor (other
than Bermuda Holding 2 Ltd., and AI 3 Ltd.) has any Subsidiaries, except that a
Guarantor may have a beneficial interest in a Borrower, a Borrower may own an
Eligible Intermediary and a Borrower may be a Subsidiary of a Guarantor;


                                       49



          6.5. Ownership Interests.

          (a) No Borrower or Guarantor owns any interest in any Person, except
     that a Guarantor may have a beneficial interest in a Borrower, and a
     Borrower may own an Eligible Intermediary; and

          (b) Bermuda Holding 2 Ltd. or AI 3 Ltd. owns, directly or indirectly,
     all of the Capital Stock of each Borrower, except for directors' qualifying
     shares, if any.

          6.6. Liens. The Agent (for itself and on behalf of the Lenders) has a
first priority perfected Lien (subject to Permitted Liens) on all Collateral
under the Security Instruments;

          6.7. Title to Properties. Each Borrower and each of its Subsidiaries,
each Guarantor and each other Credit Party has good and marketable title to all
its real and personal properties, subject to no transfer restrictions or Liens
of any kind except as provided in the Security Instruments and the Leases; and

          6.8. Taxes. Except as set forth in Schedule 6.8, each Borrower, each
of its Subsidiaries, each Guarantor and each other Credit Party has filed or
caused to be filed all federal, state, local and foreign Tax returns in each
case that are required to be filed by it and that, the failure to file, would
have a Material Adverse Effect (individually or in the aggregate) and, except
for Taxes and assessments being contested in good faith by appropriate
proceedings diligently conducted and against which reserves in accordance with
GAAP reflected in the financial statements most recently delivered pursuant to
Section 7.1(a) and satisfactory to the Borrowers' independent certified public
accountants have been established, have paid or caused to be paid all Taxes as
shown on said returns or on any assessment received by it, to the extent that
such Taxes have become due;

          6.9. Other Agreements. No Guarantor, other Credit Party nor any
Subsidiary of Bermuda Holding 1 Ltd or of AI 3 Ltd:

               (i) is a party to or subject to any judgment, order, decree,
          agreement, lease or instrument, or subject to other restrictions,
          which individually or in the aggregate could reasonably be expected to
          have a Material Adverse Effect;

               (ii) is in default in the performance, observance or fulfillment
          of any of the obligations, covenants or conditions contained in any
          agreement or instrument to which such Guarantor, other Credit Party or
          such Subsidiary is a party, which default has, or if not remedied
          within any applicable grace period could reasonably be likely to have,
          a Material Adverse Effect; or

               (iii) shall have, prior to its execution of the Assumption
          Letter, conducted business other than related to the acquisition,
          leasing, maintenances, financing (solely under the Loan Documents),
          ownership and disposition of Eligible Assets or have incurred any
          liabilities except to the extent related to such business, including,
          without limitation, under the Eligible Lease to which it is a party,
          an aircraft acquisition, sale, maintenance or overhaul agreement and
          the


                                       50



          Loan Documents, none of which liabilities (except (a) the purchase
          price in respect of an Eligible Asset, (b) liabilities in respect of
          Approved Improvements and (c) those arising under the Loan Documents
          and the Eligible Leases) are material to the Borrowers taken as a
          whole.

          6.10. Litigation. Except as set forth in Schedule 6.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of any Borrower, threatened by or against any Guarantor, any Borrower
or any Subsidiary of Bermuda Holding 1 Ltd or of AI 3 Ltd or any other Credit
Party or affecting any such Person or any properties or rights of any such
Person, which could reasonably be likely to have a Material Adverse Effect;

          6.11. Federal Regulations. No part of the proceeds of any Loans, and
no other extensions of credit hereunder, will be used (a) for "buying" or
"carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U as now and from time to time hereafter in effect
for any purpose that violates the provisions of the Regulations of the Board or
(b) for any purpose that violates the provisions of the Regulations of the
Board. If requested by any Lender or the Agent, the Borrowers will furnish to
the Agent and each Lender a statement to the foregoing effect in conformity with
the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in
Regulation U.

          6.12. Investment Company. No Credit Party is an "investment company,"
or "promoter" or "principal underwriter" for, an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended (15 U.S.C.
Section 80a-1, et seq.). The application of the proceeds of the Loans and
repayment thereof by each Borrower and the performance by each Borrower and the
other Credit Parties of the transactions contemplated by the Loan Documents will
not violate any provision of said Act, or any rule, regulation or order issued
by the Securities and Exchange Commission thereunder, in each case as in effect
on the date hereof;

          6.13. Patents, Etc. Each Borrower, each Guarantor and each other
Credit Party owns or has the right to use, under valid license agreements or
otherwise, all material patents, licenses, franchises, trademarks, trademark
rights, trade names, trade name rights, trade secrets and copyrights necessary
to or used in the conduct of its businesses as now conducted and as contemplated
by the Loan Documents, without known conflict with any patent, license,
franchise, trademark, trade secret, trade name, copyright, other proprietary
right of any other Person;

          6.14. No Untrue Statement. Neither (a) this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on behalf
of any Parent Guarantor, any Borrower or any other Credit Party in accordance
with or pursuant to any Loan Document nor (b) any written statement,
representation, or warranty provided to the Agent in connection with the
negotiation or preparation of the Loan Documents contains any misrepresentation
or untrue statement of material fact or omits to state a material fact
necessary, in light of the circumstance under which it was made, in order to
make any such warranty, representation or statement contained therein not
misleading;


                                       51



          6.15. No Consents, Etc. Neither the respective businesses or
properties of the Credit Parties or any Subsidiary, nor any relationship among
the Credit Parties or any Subsidiary and any other Person, nor any circumstance
in connection with the execution, delivery and performance of the Loan Documents
and the transactions contemplated thereby, is such as to require a consent,
approval or authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person on the part of any Credit Party as a
condition to the execution, delivery and performance of, or consummation of the
transactions contemplated by the Loan Documents, which, if not obtained or
effected, would be reasonably likely to have a Material Adverse Effect, or if
so, such consent, approval, authorization, filing, registration or qualification
has been duly obtained or effected, as the case may be;

          6.16. Employee Benefit Plans.

          (a) Neither any Guarantor nor any Borrower or any of their respective
     Subsidiaries has or has ever sponsored any Employee Benefit Plan, any
     Single Employer Plan or any Multiemployer Plan, or had any obligation to
     fund any such plan;

          (b) Neither any Borrower nor any ERISA Affiliate has incurred any
     "accumulated funding deficiency" within the meaning of Section 412 of the
     Code or Section 302 of ERISA with respect to any Single Employer Plan,
     whether or not waived, during the six-year period prior to the date on
     which this representation is made or deemed made or any other liability to
     the PBGC which remains outstanding, in each case, in an amount that would
     be reasonably likely to have a Material Adverse Effect;

          (c) No Termination Event has occurred during the six-year period prior
     to the date on which this representation is made or deemed made or is
     reasonably expected to occur with respect to any Single Employer Plan or
     Multiemployer Plan, neither any Borrower nor any ERISA Affiliate has
     incurred any unpaid withdrawal liability with respect to any Multiemployer
     Plan that, in each case, could be reasonably expected to have a Material
     Adverse Effect; and

          (d) The present value of all accrued benefits under each Single
     Employer Plan (based on those assumptions used to fund such Single Employer
     Plan) did not, as of the last annual valuation date prior to the date on
     which this representation is made or deemed made for each such plan, exceed
     the then current value of the assets of such Single Employer Plan allocable
     to such benefits by a material amount;

          6.17. No Default. As of the date hereof, there does not exist any
Default or Event of Default hereunder;

          6.18. Environmental Laws. Except as listed on Schedule 6.18, each
Borrower, each Guarantor and each Subsidiary of Bermuda Holding 1 Ltd or of AI 3
Ltd is in compliance with all applicable Environmental Laws and has been issued
and currently maintains all required federal, state and local permits, licenses,
certificates and approvals. Except as listed on Schedule 6.18, neither any
Borrower, any Guarantor nor any Subsidiary of Bermuda Holding 1 Ltd or of AI 3
Ltd has been notified of any pending or threatened action, suit, proceeding or
investigation, and neither any Borrower, any Guarantor nor any Subsidiary of
Bermuda Holding 1 Ltd or of AI


                                       52



3 Ltd is aware of any facts, which (a) calls into question, or could reasonably
be expected to call into question, compliance by any Borrower, any Guarantor or
any Subsidiary of Bermuda Holding 1 Ltd or of AI 3 Ltd with any Environmental
Laws, (b) seeks, or could reasonably be expected to form the basis of a
meritorious proceeding, to suspend, revoke or terminate any license, permit or
approval necessary for the operation of any Borrower's, any Guarantor's or any
of Bermuda Holding 1 Ltd's or of AI 3 Ltd's Subsidiary's business or facilities
or for the generation, handling, storage, treatment or disposal of any Hazardous
Materials, or (c) seeks to cause, or could reasonably be expected to form the
basis of a meritorious proceeding to cause, any property of any Borrower, any
Guarantor or any Subsidiary of Bermuda Holding 1 Ltd or of AI 3 Ltd or other
Credit Party to be subject to any restrictions on ownership, use, occupancy or
transferability under any Environmental Law;

          6.19. Employment Matters. No Borrower, Guarantor or Credit Party has
or has ever had any employee other than officers thereof;

          6.20. Taxes. AI3 Ltd. is eligible for the benefits of the Income Tax
Treaty between the United States of America and Ireland. No Borrower, to its
knowledge, as of the date of this Agreement, is required to withhold or deduct
any Taxes imposed by any non-U.S. Governmental Authority, in an amount or to an
extent that would be reasonably expected to have a Material Adverse Effect; and

          6.21. Parent Guarantor Representations and Warranties. On the Closing
Date the Representations and Warranties of each Parent Guarantor contained in
their respective Parent Guarantor Guaranty are true, correct and complete in all
material respects when made or deemed made.

                                  ARTICLE VII

                              AFFIRMATIVE COVENANTS

          Unless the Required Lenders shall otherwise consent in writing,
Bermuda Holding 2 Ltd., AI 3 Ltd. and each Borrower will, and where applicable
will cause each Parent Guarantor, each other Guarantor and each Subsidiary (if
any) to:

          7.1. Financial Reports, Etc.

          (a) As soon as practical and in any event within 90 days after the end
     of each Fiscal Year, deliver or cause to be delivered to the Agent and each
     Lender audited consolidated balance sheets of Parent and its Subsidiaries
     as at the end of such Fiscal Year, and the notes thereto (if any), and the
     relating audited consolidated statements of income, changes in
     stockholders' (or members') equity and cash flows, and the respective notes
     thereto (if any), for such Fiscal Year, setting forth comparative financial
     statements for the preceding year (if applicable), reported on by Ernst &
     Young LLP or other independent certified public accountants of nationally
     recognized standing all prepared in accordance with GAAP and accompanied by
     a certificate of an Authorized Representative, which certificate shall be
     in the form of Exhibit H;


                                       53



          (b) as soon as practical and in any event within 60 days after the end
     of each fiscal quarter (except the last fiscal quarter of the Fiscal Year),
     deliver to the Agent and each Lender consolidated income statements of
     Parent and its Subsidiaries prepared in accordance with GAAP and
     accompanied by a certificate of an Authorized Representative to the effect
     that such financial statements present fairly, in all material respects,
     the financial position of Parent and its Subsidiaries and of each of the
     Borrowers and their respective Subsidiaries as of the end of such fiscal
     period and the results of their operations for such fiscal period;

          (c) at any time after March 31, 2006, as soon as practical and in any
     event within 10 days after the end of each calendar month with respect to a
     draft (for the Agent) and within 30 days after the end of each calendar
     month with respect to a final report (for the Agent and each Lender),
     deliver or cause to be delivered as set forth above a Monthly Servicer and
     Covenant Compliance Report, providing information about the Financed
     Eligible Asset, and stating that each Borrower is in compliance with the
     covenants and terms hereof and that no Default or Event of Default has
     occurred and is continuing, in each case as of the end of such month, which
     certificate shall be in the form of Exhibit P;

          (d) promptly upon their becoming available to Bermuda Holding 2 Ltd.,
     AI 3 Ltd. or any Borrower, such Person shall deliver to the Agent and each
     Lender a copy of (i) all regular or special reports or effective
     registration statements which Bermuda Holding 2 Ltd., AI 3 Ltd., any
     Borrower, any Guarantor or any Subsidiary shall file with the Securities
     and Exchange Commission (or any successor thereto) or any securities
     exchange, (ii) any proxy statement distributed by Bermuda Holding 2 Ltd.,
     AI 3 Ltd., any Borrower, any Guarantor or any Subsidiary to its
     shareholders, bondholders or the financial community in general, and (iii)
     any management letter or other report submitted to any Borrower, any
     Guarantor or any Subsidiary by independent accountants in connection with
     any annual, interim or special audit of any Borrower or any Subsidiary; and

          (e) promptly, from time to time, deliver or cause to be delivered to
     the Agent and each Lender such other information regarding Bermuda Holding
     2 Ltd.'s, AI 3 Ltd.'s, any Borrower's, any Guarantor's and any Subsidiary's
     operations, business affairs and financial condition as the Agent or such
     Lender may reasonably request.

Subject to Section 11.15, the Agent and the Lenders are hereby authorized to
deliver a copy of any such financial or other information delivered hereunder to
the Lenders (or any affiliate of any Lender) or to the Agent, to any
Governmental Authority having jurisdiction over the Agent or any of the Lenders
pursuant to any written request therefor or in the ordinary course of
examination of loan files, or to any other Person who shall acquire or consider
the assignment of, or acquisition of any participation interest in, any
Obligation permitted by this Agreement;

          7.2. Maintain Properties. If a Financed Eligible Asset is not subject
to an Eligible Lease, maintain and make repairs to such Financed Eligible Asset
in compliance with the requirements set forth in Section 3.4 of the Security
Agreement; and each Borrower, Guarantor and Subsidiary shall maintain all other
properties necessary to its operations in good working order and condition, make
all needed repairs, replacements and renewals to such other


                                       54



properties, and maintain free from Liens all trademarks, trade names, patents,
copyrights, trade secrets, know-how, and other intellectual property and
proprietary information (or adequate licenses thereto), in each case as are
reasonably necessary to conduct its business as currently conducted or as
contemplated hereby, all in accordance with customary and prudent business
practices;

          7.3. Existence, Qualification, Etc. Except as otherwise expressly
permitted under Section 8.7, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary;

          7.4. Regulations and Taxes. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and timely pay
all Taxes, assessments, governmental charges, claims for labor, supplies, rent
and any other obligation which, if unpaid, would become a Lien other than a
Permitted Lien against any of its properties;

          7.5. Insurance. Maintain or cause to be maintained with respect to
each Financed Eligible Asset and all other Collateral the insurance described on
Exhibit L and cause the Agent for itself and on behalf of the Lenders to be
named additional insureds (in the case of any liability insurance) and loss
payee or contract party (in the case of any hull insurance) on such insurance
and on any and all other insurance maintained by any Credit Party with respect
to such Financed Aircraft or provided by or on behalf of a lessee or other
Person pursuant to the terms of any Lease;

          7.6. True Books. Keep true books of record and account in which full,
true and correct entries will be made of all of its dealings and transactions,
and set up on its books such reserves as may be required by GAAP with respect to
doubtful accounts and all taxes, assessments, charges, levies and claims and
with respect to its business in general, and include such reserves in interim as
well as year-end financial statements;

          7.7. Right of Inspection. Permit any Person designated by any Lender
or the Agent to visit and inspect any Financed Eligible Asset, or any other
property, corporate book or financial report of any Borrower or any Subsidiary
and to discuss its affairs, finances and accounts with its principal officers
and independent certified public accountants; and cause each Eligible Carrier to
permit any Person designated by any Lender or any Agent to inspect any Financed
Eligible Asset, all at reasonable times, at reasonable intervals and with
reasonable prior notice, subject to any restriction on inspection contained in
an Eligible Lease with respect to such Financed Eligible Asset, provided that
notwithstanding any such Lease, (a) any Person designated by a Lender or the
Agent may inspect such Financed Eligible Asset at any reasonable time upon an
event of default under such Lease, and (b) upon any Event of Default, the
Applicable Borrower will use its best efforts to cause the Applicable Carrier
(and any other Person) to permit any Person designated by a Lender or the Agent
to inspect such Financed Eligible Asset at any time;


                                       55



          7.8. Observe all Laws. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business;

          7.9. Governmental Licenses. Obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted and as
contemplated by the Loan Documents;

          7.10. Covenants Extending to Other Persons. Cause each Guarantor and
each of their respective Subsidiaries (if any) to do with respect to itself, its
business and its assets, each of the things required of any Borrower in Sections
7.2 through 7.9, and 7.18 inclusive;

          7.11. Officer's Knowledge of Default. Upon any officer of any
Guarantor or any Borrower obtaining knowledge of any Default or Event of Default
hereunder or under any other obligation of any Borrower or any Subsidiary or
other Credit Party to any Lender, or any event, development or occurrence which
could reasonably be expected to have a Material Adverse Effect, cause such
officer or an Authorized Representative to promptly notify the Agent of the
nature thereof, the period of existence thereof, and what action such Borrower
or such Subsidiary or other Credit Party proposes to take with respect thereto;

          7.12. Suits or Other Proceedings. Upon any officer of any Guarantor or
any Borrower obtaining knowledge of any action, suit, litigation, investigation,
or other proceeding being instituted or threatened against any Borrower or any
Subsidiary or other Credit Party, in any court or before any Governmental
Authority, or any attachment, levy, execution or other process being instituted
against any assets of any Borrower or any Subsidiary or other Credit Party,
making a claim or claims in an aggregate amount greater than $250,000, exclusive
of punitive damages, not otherwise covered by insurance or that would otherwise
be reasonably expected to have a Material Adverse Effect, promptly deliver to
the Agent written notice thereof stating the nature and status of such action,
suit, litigation, investigation, dispute, proceeding, levy, execution or other
process;

          7.13. Notice of Environmental Complaint or Condition. Promptly provide
to the Agent true, accurate and complete copies of any and all notices,
complaints, orders, directives, claims or citations received by any Borrower,
any Guarantor or any Subsidiary relating to any (a) violation or alleged
violation by any Borrower, any Guarantor or any Subsidiary of any applicable
Environmental Law; (b) release or threatened release by any Borrower, any
Guarantor or any Subsidiary, or by any Person handling, transporting or
disposing of any Hazardous Material on behalf of any Borrower, any Guarantor or
any Subsidiary, or at any facility or property owned or leased or operated by
any Borrower, any Guarantor or any Subsidiary, of any Hazardous Material, except
where occurring legally pursuant to a permit or license; or (c) liability or
alleged liability of any Borrower, any Guarantor or any Subsidiary for the costs
of cleaning up, removing, remediating or responding to a release of Hazardous
Materials;

          7.14. Environmental Compliance. If any Borrower, any Guarantor or any
Subsidiary shall receive any letter, notice, complaint, order, directive, claim
or citation alleging that any Borrower, any Guarantor or any Subsidiary has
violated any Environmental Law, has


                                       56



released any Hazardous Material, or is liable for the costs of cleaning up,
removing, remediating or responding to a release of Hazardous Materials, any
Borrower, any Guarantor and any Subsidiary shall, within the time period
permitted and to the extent required by the applicable Environmental Law or the
Governmental Authority responsible for enforcing such Environmental Law, remove
or remedy, or cause the applicable Subsidiary to remove or remedy, such
violation or release or satisfy such liability;

          7.15. Indemnification. Without limiting the generality of Section
11.9, Bermuda Holding 2 Ltd., AI 3 Ltd. and each Borrower hereby agrees jointly
and severally to indemnify and hold the Agent and the Lenders, and their
respective officers, directors, employees and agents, harmless from and against
any and all claims, losses, penalties, liabilities, damages and expenses
(including assessment and cleanup costs and reasonable attorneys', consultants'
or other expert fees, expenses and disbursements) arising directly or indirectly
from, out of or by reason of (a) the violation of any Environmental Law by any
Borrower or any Subsidiary or with respect to any property owned, operated or
leased by any Borrower or any Subsidiary or (b) the handling, storage,
transportation, treatment, emission, release, discharge or disposal of any
Hazardous Materials by or on behalf of any Borrower or any Subsidiary, or on or
with respect to property owned or leased or operated by any Borrower or any
Subsidiary. The provisions of this Section 7.15 shall survive repayment of the
Obligations and expiration or termination of this Agreement;

          7.16. Further Assurances. At the Borrowers' cost and expense, upon
request of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents (including any
additional Facility Guaranties or Parent Guarantor Guaranties in connection with
new Guarantors and Parent Guarantors), certificates, financing and continuation
statements, and do and cause to be done such further acts that may be reasonably
necessary or advisable in the reasonable opinion of the Agent to carry out more
effectively the provisions and purposes of this Agreement, the Security
Instruments and the other Loan Documents;

          7.17. Hedging Agreements. Subject to Section 8.4, each Borrower or any
Guarantor may, in its sole discretion, maintain Hedging Agreements with a Lender
or a Lender Affiliate in an aggregate notional amount for the Borrowers and
Guarantors not greater than the Total Revolving Credit Agreement;

          7.18. Continued Operations. Subject to Section 8.15, continue at all
times to conduct its business and engage principally in the same line or lines
of business substantially as heretofore conducted;

          7.19. Maintenance of Eligible Assets; Other Covenants and
Restrictions; Non-Discrimination.

          (a) Ensure that any Lease with respect to any Financed Eligible Asset
     contains covenants and restrictions regarding the maintenance, alteration,
     replacement, pooling, sublease and (in the case of a Lease) return of such
     Eligible Asset by the Applicable Carrier, which covenants and restrictions
     satisfy the requirements of Schedule 7.19(a) hereto;


                                       57



          (b) Promptly and diligently take or cause to be taken all steps which
     a prudent international aircraft lessor or financier would reasonably take
     in light of all of the relevant circumstances to compel the relevant
     Eligible Carrier to comply with the terms of any Lease, or, if applicable
     and the Applicable Borrower is entitled to do so, to repossess the
     applicable Financed Eligible Asset (and, if a prudent international
     aircraft lessor or financier would determine it necessary or desirable, to
     de-register and export the same to a safe location) if any failure to
     comply with such Lease is not promptly remedied;

          7.20. Re-registration of Eligible Assets. Ensure that any Lease with
respect to any Eligible Asset contain covenants and restrictions regarding
re-registration of such Eligible Asset, which covenants and restrictions satisfy
the requirements of the Security Agreement;

          7.21. Employee Benefit Plans. Without limiting the generality of
Section 8.9, with reasonable promptness, and in any event within thirty (30)
days after any Borrower knows or has reason to know thereof, give notice to the
Agent of (a) the establishment of any Single Employer Plan (which notice shall
include a copy of such plan), (b) the failure of any Borrower or any ERISA
Affiliate to make a required installment or payment under Section 302 of ERISA
or Section 412 of the Code by the due date; (c) the occurrence of a Termination
Event with respect to any Single Employer Plan or Multiemployer Plan; and (d)
the institution of proceedings or the taking of any other action by the PBGC or
any Borrower or any ERISA Affiliate or any Multiemployer Plan with respect to
the withdrawal from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan;

          7.22. Accounts. Bermuda Holding 2 Ltd., AI 3 Ltd., the Guarantors and
the Borrowers shall establish the Accounts as provided in the Lockbox Agreement
and shall deposit all proceeds (including without limitation rent) from any
Lease of any Financed Eligible Asset to the Accounts designated under the
Lockbox Agreement;

          7.23. Eligible Lease; Lessee Notice. Deliver to the Agent promptly
upon execution, any Lease entered into by any Borrower, together with a Lessee
Notice in connection with such Lease, the opinion referred to in Section
5.2(e)(iii) and the evidence referred to in Section 5.2(e)(x); and

                                  ARTICLE VIII

                               NEGATIVE COVENANTS

          Unless the Required Lenders shall otherwise consent in writing,
Bermuda Holding 2 Ltd., AI 3 Ltd. and each Borrower will not, and will cause
each Guarantor and each Subsidiary thereof (if any) not to:

          8.1. Acquisitions. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, except for the Acquisition of a Subsidiary as
permitted by Section 8.6;


                                       58



          8.2. Capital Expenditures. Make or become committed to make any
Capital Expenditures, except for Capital Expenditures to maintain or purchase
Eligible Assets or in connection with Approved Improvements and Qualified
Conversions;

          8.3. Liens. Incur, create or permit to exist any Lien, charge or other
encumbrance of any nature whatsoever with respect to (a) any property or assets
now owned or hereafter acquired by any Borrower, any Guarantor or any Subsidiary
or (b) any Financed Eligible Asset, except the following (the "Permitted
Liens"):

               (i) Liens created under the Security Instruments in favor of the
          Agent and the Lenders; and Liens arising under the Eligible Leases in
          favor of the Applicable Intermediary (as lessor) or the Applicable
          Borrower which Liens in each case have been assigned to the Agent;

               (ii) Liens set forth in Schedule 6.7;

               (iii) Liens imposed by law for Taxes (A) not yet due or (B) which
          are being contested in good faith by appropriate proceedings
          diligently conducted, each of which Liens in clause (B) above shall be
          fully bonded over, to the reasonable satisfaction of the Agent;

               (iv) statutory Liens of landlords and Liens of mechanics,
          materialmen and other Liens imposed by law or created in the ordinary
          course of business and (i) in existence less than 90 days from the
          date of creation thereof for amounts not yet due or (ii) which are
          being contested in good faith by appropriate proceedings diligently
          conducted, which are inferior in respect of the Collateral to the
          Liens conferred under the Security Instruments or have been fully
          bonded over to the reasonable satisfaction of the Agent, and with
          respect to which adequate reserves or other appropriate provisions are
          being maintained in accordance with GAAP;

               (v) Liens arising out of any judgment or award with respect to
          which an appeal or proceeding for review is being prosecuted in good
          faith by appropriate proceedings diligently conducted, and with
          respect to which a stay of execution is in effect;

               (vi) Liens created by the Applicable Carrier under an Eligible
          Lease that are not subject to clause (vii) below, which Liens are
          created without the knowledge of the Applicable Borrower and are
          released or fully bonded over to the reasonable satisfaction of the
          Agent within 30 days after the Applicable Borrower has notice or
          knowledge of any such Lien;

               (vii) with respect to any Lease and the related Eligible Asset,
          (i) any "Permitted Liens" (as defined in or the equivalent term in
          such Lease Agreement and as agreed to by the Agent) (except a
          Permitted Lien that is a Lessor Lien (as defined in or the equivalent
          term in such Lease Agreement)), and (ii) any other Lien created by a
          Lessee, a sublessee of a Lessee or any Person claiming by or through a
          Lessee or sublessee, in each case in this clause (ii) as agreed to by
          the Agent; provided, that with respect to Liens of the type listed in
          clause (ii), such


                                       59



          Lien is being contested in good faith by appropriate proceedings or,
          upon the Applicable Borrower receiving notice or knowledge of such
          Lien, such Applicable Borrower is diligently and promptly enforcing
          the lessor's rights against the Lessee;

               (viii) any head lease in respect of any Eligible Asset;

               (ix) any Lien from air navigation authority, airport tending,
          gate or handling (or similar) charges or levies (A) not yet overdue or
          (B) which are being contested in good faith by appropriate
          proceedings, each of which Liens in clause (B) above shall be fully
          bonded over, to the reasonable satisfaction of the Agent;

               (x) Liens securing Indebtedness described in Section 8.4(b);

               (xi) Liens securing Indebtedness described in Section 8.4(f);

               (xii) Liens granted by a Borrower, Guarantor or any Subsidiary
          thereof in favor of a Lender or an Affiliate of a Lender in an
          aggregate amount not to exceed $10,000,000 in connection with
          Indebtedness permitted under Section 8.4(c).

          8.4. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness of Bermuda Holdings 2 Ltd., AI 3 Ltd., any Guarantor or any
Subsidiary thereof, howsoever evidenced, except:

          (a) Indebtedness owing to (including guaranties in favor of) the Agent
     or any Lender in connection with this Agreement, any Note or other Loan
     Document;

          (b) the endorsement of negotiable instruments for deposit or
     collection or similar transactions in the ordinary course of business;

          (c) Indebtedness arising from Hedging Agreements permitted under
     Section 7.17; provided that the aggregate notional amount of Hedging
     Agreements shall not exceed the Total Revolving Credit Commitment;

          (d) unsecured intercompany Indebtedness for loans and advances made by
     Bermuda Holding 2 Ltd., AI 3 Ltd. or any Beneficial Owner to a Borrower or
     a Guarantor, provided that such intercompany Indebtedness is evidenced by a
     promissory note or similar written instrument acceptable to the Agent which
     provides that such Indebtedness is subordinated to obligations, liabilities
     and undertakings of the holder or owner thereof under the Loan Documents on
     terms acceptable to the Agent;

          (e) Contingent Obligations of Bermuda Holding 2 Ltd., AI 3 Ltd. or any
     other Credit Party in support of the obligations of any Credit Party.

          (f) Contingent Obligations of any Credit Party in support of any
     Subsidiary in connection with the purchase of an Eligible Asset or with an
     Eligible Lease pursuant to which such Subsidiary is the lessor; and


                                       60



          (g) Indebtedness existing on the date hereof and listed on Schedule
     8.4 hereof.

          8.5. Transfer of Assets. Sell, lease, transfer or otherwise dispose of
any assets other than (a) leases by Borrowers and Applicable Intermediaries of
Eligible Assets under Eligible Leases, (b) sales by Borrowers and Applicable
Intermediaries of Eligible Assets or all of the beneficial interest or ownership
of a Beneficial Owner or a Borrower, provided that (i) the purchaser of such
Eligible Asset or beneficial interest from a Borrower or Applicable Intermediary
shall have acknowledged receipt of the Applicable Borrower's irrevocable
instruction to pay the sales price for such Eligible Asset or beneficial
interest directly to the Collection Account identified in the Lockbox Agreement
to which the Applicable Borrower is a party, (ii) the net proceeds of such sales
are promptly applied in accordance with Section 2.3(b), and (iii) at the time of
any such sale the requirements of Section 2.13 for release of the respective
Borrower or Guarantor have been satisfied, or (c) Engine swaps, interchange or
pooling arrangements to the extent permitted under any Eligible Lease;

          8.6. Subsidiaries; Investments. Own, create or permit to exist any
Subsidiary of Bermuda Holdings 2 Ltd., AI 3 Ltd., any Borrower or any Guarantor
(except that a Guarantor may own beneficial interests in, or (subject to Section
8.4(d)) make advances to, a Borrower or another Guarantor and any Credit Party
may own an Applicable Intermediary), or otherwise purchase, own, invest in or
otherwise acquire, directly or indirectly, any stock or other securities, or
make or permit to exist any interest whatsoever in any other Person or permit to
exist any loans or advances to any Person, other than loans referred to in
Section 8.4(d);

          8.7. Merger or Consolidation.

          . (a) Consolidate with or merge into any other Person, or (b) permit
any other Person to merge into it, or (c) liquidate, wind-up or dissolve or
sell, transfer or lease or otherwise dispose of all or a substantial part of its
assets without the consent of the Agent, except as permitted by Section 8.5 and
except in the case of a Borrower or Guarantor that simultaneously terminates its
status as a Borrower or Guarantor hereunder in accordance with Section 2.13;

          8.8. Transactions with Affiliates. Other than transactions permitted
under Section 8.7, enter into any transaction after the Closing Date, including,
without limitation, the purchase, sale, lease or exchange of property, real or
personal, or the rendering of any service, with any Affiliate of such Person,
except (a) that such Persons may render services to any Parent Guarantor or any
Subsidiary of any Parent Guarantor for compensation at the same rates generally
paid by Persons engaged in the same or similar businesses for the same or
similar services, (b) that any Parent Guarantor or any Subsidiary thereof may
render services to such Persons for compensation at the same rates generally
charged by the Parent Guarantor or such Subsidiary, and (c) in either case in
the ordinary course of business and pursuant to the reasonable requirements of
such Person's business consistent with past practice of such Person and upon
fair and reasonable terms no less favorable to such Person than would be
obtained in a comparable arm's-length transaction with a Person not an
Affiliate;

          8.9. Employee Benefit Plans; ERISA Affiliates; Employees. Sponsor any
Employee Benefit Plan or any Multiemployer Plan or agree to have any obligation
to fund any such plan, or hire or retain any employee other than officers
thereof;


                                       61



          8.10. Fiscal Year. Change its Fiscal Year, or have any fiscal year
other than the Fiscal Year;

          8.11. Dissolution, etc. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a transaction
permitted pursuant to Section 8.7;

          8.12. Change in Control. Cause, suffer or permit to exist or occur any
Change of Control;

          8.13. Negative Pledge Clauses. Bermuda Holdings 2 Ltd, AI 3 Ltd, each
Borrower, and each Eligible Intermediary shall not enter into or cause, suffer
or permit to exist any agreement with any Person other than the Agent and the
Lenders pursuant to this Agreement or any other Loan Documents which prohibits
or limits the ability of such Credit Party to create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired; provided that any Eligible Lease may contain such a
prohibition or limitation so long as the prohibition or limitation does not
apply to any Lien granted in favor of the Agent or any Lender pursuant to the
Loan Documents;

          8.14. Partnerships. Become a general partner in any general or limited
partnership;

          8.15. Business and Operations. Engage in any (i) business or
operations other than the ownership, financing, leasing and sale of Eligible
Aircraft and Eligible Engines or the ownership of a Borrower, a Guarantor or
Eligible Intermediary engaged in such business or operations, or matters
reasonably incidental thereto, or the performance of the Loan Documents,
provided, however, that, except as otherwise provided in Section 2.1(a), no
Borrower that owns or is the Applicable Borrower with respect to any Aircraft or
Engine may own or be the Applicable Borrower with respect to any other Aircraft
or Engine and (ii) business in Bermuda or Ireland other than the performance of
its obligations under the Loan Documents; and

          8.16. Ownership, Operation and Leasing of Financed Eligible Assets.

          (a) Permit any Person other than a Borrower (or a Beneficial Owner
     solely by virtue of its beneficial interest in the respective Borrower) to
     own beneficially or of record any Financed Eligible Asset;

          (b) Permit any Financed Eligible Asset to be leased, subleased or
     chartered to any Person other than the Applicable Carrier or the Applicable
     Intermediary, or to be operated by any Person other than the Applicable
     Borrower or the Applicable Carrier, except as permitted in the Security
     Agreement or any Lease;

          (c) Permit any Financed Eligible Asset to be leased to an Eligible
     Carrier except under the terms of an Eligible Lease;

          (d) Permit any Financed Eligible Asset to be flown into or located in
     any country (or part thereof) if as a result thereof such Financed Eligible
     Asset would not be covered by insurance;


                                       62



          8.17. Bank Accounts. Permit any Parent Guarantor, Borrower or other
Credit Party to open or allow to exist any bank accounts for which the aggregate
average daily balance, together with any bank accounts of the other Parent
Guarantors, Borrowers and other Credit Parties, will be in excess of $500,000
unless the Agent is granted a Security Interest in such account by subjecting
such account to a Lockbox Agreement or an Account Control Agreement; provided
that this provision shall not apply to any bank account maintained by any
Subsidiary of the Guarantor on which a Lien is granted to secure Non Recourse
Indebtedness pursuant to the terms of Section 10(b)5 of the Parent Guarantor
Guarantees, so long as such Subsidiary is the obligor of such Indebtedness.

          8.18. Representations Regarding Agent and Lenders. Represent or hold
out, or permit any Parent Guarantor, Credit Party or Applicable Carrier to
represent or hold out, the Agent or any Lender as (a) the owner of any Financed
Eligible Asset, (b) carrying goods or passengers on any Financed Aircraft, or
(c) being in any way responsible for any operation of carriage (whether for hire
or reward or gratuitously) which may be undertaken by any Borrower, Guarantor,
Parent Guarantor, Subsidiary or Applicable Carrier; or

          8.19. Bermuda Holding 2 Ltd.; AI 3 Ltd. In the case of Bermuda Holding
2 Ltd. and AI 3 Ltd., conduct, transact or otherwise engage in any business or
operations other than those incidental to its voting, equity, beneficial or any
other ownership interests of each Borrower and the performance of the Loan
Documents; or

          8.20. Organizational Documents. Amend its Organizational Documents
without the consent of the Lenders and the Collateral Agent (as defined in the
Security Agreement for such Credit Party); or

          8.21. Permanent Capital Markets Financing. Enter into a Permanent
Capital Markets Financing that results in the issuance of or transfer to a
Parent Guarantor of Securitization Interests arising out of aircraft financed
pursuant to this Agreement or the Bermuda Holding 1/AI 1 Credit Agreement, nor
permit any Parent Guarantor to enter into such Permanent Capital Markets
Financing unless, with respect to such Securitization Interests, the following
is true:

          (a) the Parent or any of its Subsidiaries is permitted to and shall
     pledge the Securitization Interests as Collateral hereunder;

          (b) the Securitization Interests impose no funding obligations on the
     holder thereof;

          (c) the Securitization Interests are to be held by a Parent Guarantor
     free and clear of all liens, encumbrances, rights or claims of any other
     Person; and

          (d) the Securitization Interests are not subject to any agreement
     (other than the underlying documentation governing the Securitization
     Interests) in favor of any Person limiting or restricting the payment of
     dividends and other distributions to the holder; or


                                       63



          8.22. Borrowing Base Covenant. Permit the aggregate principal amount
of Loans outstanding hereunder to exceed 85% of the Borrowing Base (the
"Borrowing Base Covenant").

                                   ARTICLE IX

                       EVENTS OF DEFAULT AND ACCELERATION

          9.1. Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:

          (a) if default shall be made in the due and punctual payment of the
     principal of any Loan or other Obligation, when and as the same shall be
     due and payable whether pursuant to any provision of Article II, at
     maturity, by acceleration or otherwise; or

          (b) if default shall be made in the due and punctual payment of any
     amount of interest on any Loan or other Obligation or of any fees or other
     amounts payable to any of the Lenders or the Agent within three (3)
     Business Days after the date on which the same shall be due and payable; or

          (c) if default shall be made in the performance or observance of any
     covenant set forth in Section 7.5, 7.11, 7.12, 7.23 or Article VIII
     hereunder or set forth in Sections 9(h) or (i) or Section 10 of any Parent
     Guarantor Guaranty; or

          (d) if a default shall be made in the performance or observance of, or
     shall occur under, any covenant, agreement or provision contained in this
     Agreement (other than as described in clauses (a), (b) or (c) above), or if
     a default shall be made in the performance or observance of, or shall occur
     under, any covenant, agreement or provision contained in any of the other
     Loan Documents (beyond any applicable grace period, if any, contained
     therein) or in any instrument or document evidencing or creating any
     obligation, guaranty, or Lien in favor of the Agent (acting in any
     capacity) or any of the Lenders or delivered to the Agent (acting in any
     capacity) or any of the Lenders in connection with or pursuant to this
     Agreement or any of the Obligations, and such default shall continue for 30
     or more days after the earlier of receipt of notice of such default to an
     Authorized Representative from the Agent (acting in any capacity) or an
     officer of any Borrower becomes aware of such default, or if any Loan
     Document ceases to be in full force and effect (other than by reason of any
     action by the Agent (acting in any capacity)), or if without the written
     consent of the Lenders, this Agreement or any other Loan Document shall be
     disaffirmed or shall terminate, be terminable or be terminated or become
     void or unenforceable for any reason whatsoever (other than in accordance
     with its terms in the absence of default or by reason of any action by the
     Lenders or the Agent (acting in any capacity)); or


                                       64



          (e) if there shall occur (i) a default, which is not waived, in the
     payment of any principal, interest, premium or other amount with respect to
     any Indebtedness or Rate Hedging Obligation (other than the Loans and other
     Obligations) of Bermuda Holding 2 Ltd., AI 3 Ltd., any Borrower or any of
     its Subsidiaries, or (ii) a default, which is not waived, in the
     performance, observance or fulfillment of any term or covenant contained in
     any agreement or instrument under or pursuant to which any such
     Indebtedness or Rate Hedging Obligation may have been issued, created,
     assumed, guaranteed or secured by Bermuda Holding 2 Ltd., AI 3 Ltd., any
     Borrower or any of its Subsidiaries, or (iii) any other event of default as
     specified in any agreement or instrument under or pursuant to which any
     such Indebtedness or Rate Hedging Obligation may have been issued, created,
     assumed, guaranteed or secured by Bermuda Holding 2 Ltd., AI 3 Ltd., any
     Borrower or any of its Subsidiaries, and such default or event of default
     under clause (i), (ii) or (iii) above shall continue for more than the
     period of grace, if any, therein specified, or such default or event of
     default under clause (i), (ii) or (iii) above shall permit the holder of
     any such Indebtedness (or any agent or trustee acting on behalf of one or
     more holders) to accelerate the maturity thereof; or

          (f) if there shall occur (i) a default, which is not waived, in the
     payment of any principal, interest, premium or other amount with respect to
     any Indebtedness or Rate Hedging Obligation of the Parent or any Parent
     Guarantor, or (ii) a default, which is not waived, in the performance,
     observance or fulfillment of any term or covenant contained in any
     agreement or instrument under or pursuant to which any such Indebtedness or
     Rate Hedging Obligation may have been issued, created, assumed, guaranteed
     or secured by the Parent or any Parent Guarantor, or (iii) any other event
     of default as specified in any agreement or instrument under or pursuant to
     which any such Indebtedness or Rate Hedging Obligation may have been
     issued, created, assumed, guaranteed or secured by the Parent or any Parent
     Guarantor, and such default or event of default under clause (i), (ii) or
     (iii) above shall continue for more than the period of grace, if any,
     therein specified, or such default or event of default under clause (i),
     (ii) or (iii) above shall permit the holder of any such Indebtedness (or
     any agent or trustee acting on behalf of one or more holders) to accelerate
     the maturity thereof, in each case with respect to (A) Indebtedness the
     outstanding principal, interest, premium or other amount of which exceeds
     in the aggregate $2,500,000 or (B) Rate Hedging Obligations, termination or
     liquidation payments aggregating $2,500,000 are due; or

          (g) if any representation, warranty or other statement of fact
     contained in any Loan Document or in any writing, certificate, report or
     statement at any time furnished to the Agent (acting in any capacity) or
     any Lender by or on behalf of any Borrower, any Parent Guarantor or any
     other Credit Party pursuant to or in connection with any Loan Document, or
     otherwise, shall be false or misleading in any material respect when given;
     or

          (h) if any of the Parent Guarantors, Bermuda Holding 2 Ltd., AI 3
     Ltd., the Borrowers, the Subsidiaries and the other Credit Parties shall be
     unable to pay its debts generally as they become due; or any of the Parent
     Guarantors, Bermuda Holding 2 Ltd., AI 3 Ltd., the Borrowers, the
     Subsidiaries and the other Credit Parties shall file a petition to take
     advantage of any insolvency statute; make an assignment for the benefit of
     its


                                       65



     creditors; commence a proceeding for the appointment of a receiver,
     trustee, examiner, liquidator or conservator of itself or of the whole or
     any substantial part of its property; file a petition or answer seeking
     liquidation, reorganization, examination or arrangement or similar relief
     under the federal bankruptcy laws or any other applicable law or statute;
     or

          (i) if a court of competent jurisdiction shall enter an order,
     judgment or decree appointing a custodian, receiver, trustee, examiner,
     liquidator or conservator of any of the Parent Guarantors, Bermuda Holding
     2 Ltd., AI 3 Ltd., the Borrowers, the Subsidiaries and the other Credit
     Parties or of the whole or any substantial part of any such Person's
     properties and such order, judgment or decree continues unstayed and in
     effect for a period of sixty (60) days, or approve a petition filed against
     any of the Parent Guarantors, Bermuda Holding 2 Ltd., AI 3 Ltd., the
     Borrowers, the Subsidiaries and the other Credit Parties seeking
     liquidation, reorganization, examination or arrangement or similar relief
     under the federal bankruptcy laws or any other applicable law or statute of
     the United States of America or any state, which petition is not dismissed
     within sixty (60) days; or if, under the provisions of any other law for
     the relief or aid of debtors, a court of competent jurisdiction shall
     assume custody or control of any of the Parent Guarantors, Bermuda Holding
     2 Ltd., AI 3 Ltd., the Borrowers, the Subsidiaries and the other Credit
     Parties or of the whole or any substantial part of any such Person's
     properties, which control is not relinquished within sixty (60) days; or if
     there is commenced against the any of the Parent Guarantors, Bermuda
     Holding 2 Ltd., AI 3 Ltd., the Borrowers, the Subsidiaries and the other
     Credit Parties any proceeding or petition seeking reorganization,
     arrangement or similar relief under the federal bankruptcy laws or any
     other applicable law or statute of the United States of America or any
     state which proceeding or petition remains undismissed for a period of
     sixty (60) days; or if the any of the Parent Guarantors, Bermuda Holding 2
     Ltd., AI 3 Ltd., the Borrowers, the Subsidiaries and the other Credit
     Parties takes any action to indicate its consent to or approval of any such
     proceeding or petition; or

          (j) if any Borrower, any of its Subsidiaries or any Parent Guarantor
     shall, other than in the ordinary course of business, suspend all or any
     part of its operations material to the conduct of its business of the
     Parent and its Subsidiaries taken as a whole for a period of more than 60
     day; or

          (k) if this Agreement or any other Loan Document shall for any reason
     not be, or be asserted by any Parent Guarantor, any Borrower or any other
     Credit Party or Subsidiary not to be, a legal, valid and binding obligation
     of any Parent Guarantor, any Borrower or any Credit Party (as the case may
     be) enforceable in accordance with its terms; or

          (l) if any Lien of the Agent pursuant to any Loan Document shall for
     any reason not be, or be asserted by any Parent Guarantor, any Borrower or
     any other Credit Party or Subsidiary not to be a valid, first priority
     perfected Lien on the Collateral identified therein (except to the extent
     that such Lien is not required hereunder or under the Security Agreement to
     be a valid, first priority perfected Lien on such Collateral), subject to
     no other Liens except Permitted Liens; or


                                       66



          (m) (i) any Person shall engage in any "prohibited transaction" (as
     defined in Section 406 of ERISA or Section 4975 of the Code) involving any
     Employee Benefit Plan, (ii) any "accumulated funding deficiency" (as
     defined in Section 302 of ERISA), whether or not waived, shall exist with
     respect to any Single Employer Plan or any Lien in favor of the PBGC or a
     Single Employer Plan shall arise on the assets of any Borrower or any ERISA
     Affiliate, (iii) a Reportable Event shall occur with respect to, or
     proceedings shall commence to have a trustee appointed, or a trustee shall
     be appointed, to administer or to terminate, any Single Employer Plan,
     which Reportable Event or commencement of proceedings or appointment of a
     trustee is likely to result in the termination of such Single Employer Plan
     for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
     terminate for purposes of Title IV of ERISA, (v) any Borrower or any ERISA
     Affiliate shall, or in the reasonable opinion of the Required Lenders is
     likely to, incur any liability in connection with a withdrawal from, or the
     Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other
     event or condition shall occur or exist with respect to a Employee Benefit
     Plan; and in each case in clauses (i) through (vi) above, such event or
     condition, together with all other such events or conditions, if any, could
     reasonably be expected to have a Material Adverse Effect;

then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall continue to exist and not have been cured or
waived,

               (A) either or both of the following actions may be taken: (i) the
          Agent, with the consent of the Required Lenders, may, and at the
          direction of the Required Lenders shall, declare any obligation of the
          Lenders to make further Loans terminated, whereupon the obligation of
          each Lender to make further Loans hereunder shall terminate
          immediately, and (ii) the Agent shall at the direction of the Required
          Lenders, at their option, declare by notice to the Borrowers any or
          all of the Obligations to be immediately due and payable, and the
          same, including all interest accrued thereon and all other obligations
          of any Borrower to the Agent and the Lenders, shall forthwith become
          immediately due and payable without presentment, demand, protest,
          notice or other formality of any kind, all of which are hereby
          expressly waived, anything contained herein or in any instrument
          evidencing the Obligations to the contrary notwithstanding; provided,
          however, that notwithstanding the above, if there shall occur an Event
          of Default under clause (g) or (h) above, then the obligation of the
          Lenders to make Loans hereunder shall automatically terminate and any
          and all of the Obligations shall be immediately due and payable
          without the necessity of any action by the Agent or the Required
          Lenders or notice to the Agent or the Lenders;

               (B) each Borrower shall, upon demand of the Agent or the Required
          Lenders, promptly cause to be performed at Borrowers' expense by
          independent certified public accountants acceptable to the Agent an
          audit of all Financed Eligible Asset; and


                                       67



               (C) the Agent and each of the Lenders shall have all of the
          rights and remedies available under the Loan Documents or under any
          applicable law, including without limitation all of the rights and
          remedies of a secured party under any applicable Uniform Commercial
          Code, the FAA Act, the Convention or any other applicable law.

          9.2. Agent to Act. In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce their rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.

          9.3. Cumulative Rights. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.

          9.4. No Waiver. No course of dealing between any Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.

          9.5. Allocation of Proceeds. If an Event of Default has occurred and
not been waived, and the maturity of the Loans has been accelerated pursuant to
Article IX hereof, all payments received by the Agent hereunder, in respect of
any principal of or interest on the Obligations or any other amounts payable by
any Borrower hereunder, shall be applied by the Agent in the following order (or
in such manner as the Required Lenders may determine):

          (a)  amounts due to the Lenders pursuant to Sections 2.10 and 11.5;

          (b)  amounts due to the Agent pursuant to Section 10.8;

          (c)  payments of interest on Loans, to be applied for the ratable
     benefit of the Lenders and amounts due to any of the Lenders in respect of
     Obligations consisting of liabilities under any Hedging Agreement with any
     of the Lenders on a pro rata basis according to the amounts owed;

          (d)  payments of principal of Loans, to be applied for the ratable
     benefit of the Lenders;

          (e)  amounts due to the Lenders pursuant to Sections 7.15 and 11.9;

          (f)  payments of all other amounts due under any of the Loan
     Documents, if any, to be applied for the ratable benefit of the Lenders;
     and


                                       68



          (g)  any surplus remaining after application as provided for herein,
     to any Borrower or otherwise as may be required by applicable law.

          9.6. Activities of Eligible Carriers. Notwithstanding anything
contained in this Agreement or any other Loan Document, the Credit Parties shall
not be deemed to be in breach of their respective obligations hereunder or
thereunder with respect to the care, maintenance, alteration, possession,
return, replacement, pooling, subleasing, use or operation of any Financed
Eligible Asset or any part thereof subject to an Eligible Lease by virtue of a
default by the Applicable Carrier under such Eligible Lease so long as each of
the following conditions is satisfied:

          (a)  such default by the Applicable Carrier is not within the control
     of any Credit Party;

          (b)  the Credit Parties are in compliance with Section 7.19; and

          (c)  such default does not relate to any use or location of an
     Eligible Asset in any jurisdiction that constitutes an Event of Default
     hereunder, any failure to make any payment required by this Agreement or
     any other Loan Document when due hereunder or thereunder, or any failure to
     maintain any insurance required under this Agreement or any other Loan
     Document, any failure to maintain perfection of the Agent's Lien on any
     Collateral.

                                    ARTICLE X

                                    THE AGENT

          10.1. Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents, as "Mortgagee" under each Security
Agreement and as "Security Agent" under each Lockbox Agreement (references in
this Article X to the term "Agent" being deemed to include as well such other
capacities), with such powers and discretion as are specifically delegated to
the Agent by the terms of this Agreement and the other Loan Documents, together
with such other powers as are reasonably incidental thereto. The Agent (which
term as used in this sentence and in Section 10.5 and the first sentence of
Section 10.6 hereof shall include its affiliates and its own and its affiliates'
officers, directors, employees, and agents):

          (a)  shall not have any duties or responsibilities except those
     expressly set forth in the Loan Documents and shall not be a trustee or
     fiduciary for any Lender;

          (b)  shall not be responsible to the Lenders for any recital,
     statement, representation, or warranty (whether written or oral) made in or
     in connection with any Loan Document or any certificate or other document
     referred to or provided for in, or received by any of them under, any Loan
     Document, or for the value, validity, effectiveness, genuineness,
     enforceability, or sufficiency of any Loan Document, or any other document
     referred to or provided for therein or for any failure by any Credit Party
     or any other Person to perform any of its obligations thereunder;


                                       69



          (c)  shall not be responsible for or have any duty to ascertain,
     inquire into, or verify the performance or observance of any covenants or
     agreements by any Credit Party or the satisfaction of any condition or to
     inspect the property (including the books and records) of any Credit Party
     or any of its Subsidiaries or affiliates;

          (d)  shall not be required to initiate or conduct any litigation or
     collection proceedings under any Loan Document; and

          (e)  shall not be responsible for any action taken or omitted to be
     taken by it under or in connection with any Loan Document, except for its
     own gross negligence or willful misconduct.

The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.

          10.2. Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or facsimile) believed by it to be
genuine and correct and to have been signed, sent or made by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel
(including counsel for any Credit Party), independent accountants, and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the holder thereof for all purposes hereof unless and until the Agent
receives and accepts an Assignment and Acceptance executed in accordance with
Section 11.1 hereof. As to any matters not expressly provided for by the Loan
Documents, the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding on all of the
Lenders; provided, however, that the Agent shall not be required to take any
action that exposes the Agent to personal liability or that is contrary to any
Loan Document or applicable law or unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking any such action.

          10.3. Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a Lender or a Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default". In the
event that the Agent receives such a notice of the occurrence of a Default or
Event of Default, the Agent shall give prompt notice thereof to the Lenders. The
Agent shall (subject to Section 10.2 hereof) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the Required
Lenders, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.

          10.4. Rights as Lender. With respect to its Revolving Credit
Commitment and the Loans made by it, JPMCB (and any successor acting as Agent)
in its capacity as a Lender hereunder shall have the same rights and powers
hereunder as any other Lender and may


                                       70



exercise the same as though it were not acting as the Agent, and the term
"Lender" or "Lenders" shall, unless the context otherwise indicates, include the
Agent in its individual capacity. The Agent and its affiliates may (without
having to account therefor to any Lender) accept deposits from, lend money to,
make investments in, provide services to, and generally engage in any kind of
lending, trust, or other business with any Credit Party or any of its
Subsidiaries or affiliates as if it were not acting as Agent, and JPMCB (and any
successor acting as Agent) and its affiliates may accept fees and other
consideration from any Credit Party or any of its Subsidiaries or affiliates for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.

          10.5. Indemnification. The Lenders agree to indemnify the Agent (to
the extent not reimbursed under Section 11.9 hereof, but without limiting the
obligations of any Borrower under such Section) ratably in accordance with their
respective Revolving Credit Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including reasonable attorneys' fees), or disbursements of any kind
and nature whatsoever that may be imposed on, incurred by or asserted against
the Agent (including by any Lender) in any way relating to or arising out of any
Loan Document or the transactions contemplated thereby or any action taken or
omitted by the Agent under any Loan Document; provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any costs or expenses payable by any
Borrower under Section 11.5, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by any Borrower. The agreements contained
in this Section 10.5 shall survive payment in full of the Loans and all other
amounts payable under this Agreement.

          10.6. Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Credit Parties and their Subsidiaries and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under the Loan Documents. Except for
notices, reports, and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, or business of any
Credit Party or any of its Subsidiaries or affiliates that may come into the
possession of the Agent or any of its affiliates.

          10.7. Resignation of Agent. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrowers. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent, subject (so
long as no Default or Event of Default has occurred and is continuing) to the
written consent of an Authorized Representative, which consent shall not be
unreasonably withheld. If no successor Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within thirty (30)
days after the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent which
shall be a commercial bank organized


                                       71



under the laws of the United States of America having combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article X shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.

          10.8. Fees. The Borrowers agree, jointly and severally, to pay to the
Agent, for its individual account, an Agent's fee as from time to time agreed to
by any Borrower and the Agent in writing.

                                   ARTICLE XI

                                  MISCELLANEOUS

          11.1. Assignments and Participations. (a) Each Lender may assign to
one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Loans, its Note, and its Revolving Credit Commitment); provided, however, that

               (i)  each such assignment shall be to an Eligible Assignee;

               (ii) except in the case of an assignment to another Lender or an
          assignment of all of a Lender's rights and obligations under this
          Agreement, any such partial assignment shall be in an amount at least
          equal to $5,000,000 or an integral multiple of $1,000,000 in excess
          thereof;

               (iii) each such assignment by a Lender shall be of a constant,
          and not varying, percentage of all of its rights and obligations under
          this Agreement; and

               (iv) the parties to such assignment shall execute and deliver to
          the Agent for its acceptance an Assignment and Acceptance in the form
          of Exhibit B hereto, together with any Note subject to such assignment
          and a processing fee of $3,500 (which amount shall not be payable by
          any Borrower);

               (v)  except in the case of an assignment to another Lender, any
          assignment of all or any portion of the Revolving Credit Commitment
          shall require the consent of the Agent and, unless a Default or Event
          of Default has occurred and is continuing, an Authorized
          Representative, such consent in each case not to be unreasonably
          withheld;

               (vi) neither any Borrower nor Bermuda Holding 2 Ltd. nor AI 3
          Ltd. shall incur any greater expense or liabilities (including,
          without limitation, indemnities and increased costs (other than with
          respect to taxes, which shall be governed by the provisions of Section
          4.6 hereof)) than it would have incurred had such assignment not taken
          place; and


                                       72



               (vii) none of the Joint Lead Arrangers shall assign any portion
          of its Loans or Revolving Credit Commitment or sell any participation
          therein unless, if after giving effect to such assignment or sale of a
          participation and until the earlier of (A) a Default or Event of
          Default shall have occurred and be continuing and (B) April 28. 2006,
          the Loans held by, and the percentage of Revolving Credit Commitments
          of, such Joint Lead Arrangers, shall be less than $85,000,000, such
          Joint Lead Arranger (the "Initiating JLA") (x) shall have delivered
          five Business Days' prior written notice of such assignment or
          participation to the other Joint Lead Arrangers (the "Participating
          JLAs") and (y) if, and to the extent, requested by either of the
          Participating JLAs after receipt of such notice, shall have made
          arrangements with the proposed transferee to permit such Participating
          JLA to participate in such assignment or participation on the same
          terms as the Initiating JLA up to an amount equal to:

                    (A)  if immediately prior to such assignment or
               participation, the Loans held by and the Total Revolving
               Commitment of the Initiating JLA is equal to or less than
               $85,000,000, the amount of the Loans held by, and the Total
               Revolving Commitment of, the Initiating JLA that the Initiating
               JLA then intends to assign or participate to the transferee
               divided by three; or

                    (B) if immediately prior to such assignment or participation
               the Loans held by, and the Total Revolving Commitment of, the
               Initiating JLA is greater than $85,000,000, the amount of the
               Loans held by, and the Total Revolving Commitment of, the
               Initiating JLA that the Initiating JLA then intends to assign or
               participate to the transferee (less the portion thereof equal to
               the amount by which the Loans held by and the Total Revolving
               Commitment of the Initiating JLA exceeds $85,000,000) divided by
               three.

Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the Agent
and the Borrowers shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is a Non-U.S.
Lender, it shall deliver to the Borrowers and the Agent certification as to
exemption from deduction or withholding of Taxes in accordance with Section 4.6.

          (b) The Agent shall maintain at its address referred to in Section
     11.2 a copy of each Assignment and Acceptance delivered to and accepted by
     it and a register for the recordation of the names and addresses of the
     Lenders and the Revolving Credit Commitment of, and principal amount of the
     Loans owing to, each Lender from time to time (the "Register"). The entries
     in the Register shall be conclusive and binding for all purposes, absent
     manifest error, and the Borrowers, the Agent and the Lenders may treat each
     Person whose name is recorded in the Register as a Lender hereunder for all


                                       73



     purposes of this Agreement. The Register shall be available for inspection
     by any Borrower or any Lender at any reasonable time and from time to time
     upon reasonable prior notice.

          (c) Upon its receipt of an Assignment and Acceptance executed by the
     parties thereto, together with any Note subject to such assignment and
     payment of the processing fee, the Agent shall, if such Assignment and
     Acceptance has been completed and is in substantially the form of Exhibit B
     hereto, (i) accept such Assignment and Acceptance, (ii) record the
     information contained therein in the Register and (iii) give prompt notice
     thereof to the parties thereto.

          (d) Each Lender may sell participations to one or more Persons in all
     or a portion of its rights, obligations or rights and obligations under
     this Agreement (including all or a portion of its Revolving Credit
     Commitment or its Loans); provided, however, that (i) such Lender s
     obligations under this Agreement shall remain unchanged, (ii) such Lender
     shall remain solely responsible to the other parties hereto for the
     performance of such obligations, (iii) the participant shall be entitled to
     the benefit of the yield protection provisions contained in Article IV and
     the right of set-off contained in Section 11.3, (iv) neither any Borrower
     nor Bermuda Holding 2 Ltd. nor AI 3 Ltd. shall have any greater obligation
     to a participant than it would have had to such Lender in the absence of
     the existence of such participant and (v) each Borrower shall continue to
     deal solely and directly with such Lender in connection with such Lender's
     rights and obligations under this Agreement, and such Lender shall retain
     the sole right to enforce the obligations of any Borrower relating to its
     Loans and to approve any amendment, modification, or waiver of any
     provision of this Agreement (other than amendments, modifications, or
     waivers decreasing the amount of principal of or the rate at which interest
     or fees are payable on such Loans, extending any scheduled principal
     payment date or date fixed for the payment of interest on such Loans,
     releasing all or substantially all of the Collateral (except for a release
     of Collateral in accordance with Section 2.13), releasing any Guarantor
     (except for a release of a Guarantor in accordance with Section 2.13), or
     extending or increasing its Revolving Credit Commitment).

          (e) Notwithstanding any other provision set forth in this Agreement,
     any Lender may at any time assign and pledge all or any portion of its
     Loans to any Federal Reserve Bank as collateral security pursuant to
     Regulation A and any Operating Circular issued by such Federal Reserve
     Bank. No such assignment shall release the assigning Lender from its
     obligations hereunder.

          (f) Any Lender may furnish any information concerning any Borrower or
     any of its Subsidiaries in the possession of such Lender from time to time
     to assignees and participants (including prospective assignees and
     participants), subject, however, to the provisions of Section 11.15.

          11.2. Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile), 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 by certified or registered


                                       74



mail, return receipt requested, or, in the case of telecopy notice, when
received, addressed as follows in the case of Bermuda Holding 2 Ltd., AI 3 Ltd.,
the Borrowers and the Agent, and as set forth in an administrative questionnaire
delivered to the Agent in the case of the Lenders, or to such other address as
may be hereafter notified by the respective parties hereto

          (a) if to Bermuda Holding 2 Ltd. or any Borrower (or, in connection
     with notice of service of process with respect to any Credit Party):

               to Holdings or such Borrower (or such Credit Party, as
               applicable)
               c/o Aircastle Advisor LLC 300
               First Stamford Place - Fifth Floor
               Stamford, CT  06902
               Attn: Lease Management
               E-Mail: leasemanagement@aircastleinv.com
               Facsimile Number: (917) 591-9106
               Confirmation Number: (203) 504-1020

          (b) if to AI 3 Ltd. or any Borrower organized under the laws of
     Ireland:

               c/o Aircastle Advisor (Ireland) Limited
               Bracetown Business Park
               Clonee, Co. Meath, Ireland
               Telephone: 011-353-1-877-2740
               Facsimile: 011-353-1-877-2750

               with a copy to:
               Aircastle Advisor LLC
               300 First Stamford Place - Fifth Floor
               Stamford, CT  06902
               Attn: Lease Management
               E-Mail: leasemanagement@aircastleinv.com
               Facsimile Number: (917) 591-9106
               Confirmation Number: (203) 504-1020

          (c) if to the Agent:

               JPMorgan Chase Bank, N.A.
               1111 Fannin Street, 10th Floor
               Houston, TX  77002
               Attention: Michael Chau
               Telephone: (713) 750-7913
               Facsimile: (713) 750-2938
               Electronic Mail: Michael.v.chau@jpmchase.com

               with a copy to:


                                       75



               JPMorgan Chase Bank, N.A
               270 Park Avenue, 15th Floor
               New York, New York 10017
               Attention: Vilma Francis
               Telephone: (212) 270-5484
               Facsimile: (212) 270-4016
               Electronic Mail: Vilma.francis@jpmorgan.com

          (d) if to any other Credit Party, at the address set forth on the
     signature page of the Facility Guaranty or Security Instrument executed by
     such Credit Party, as the case may be.

          11.3. Right of Set-off; Adjustments.

          (a) Upon the occurrence and during the continuance of any Event of
     Default, each Lender (and each of its affiliates) is hereby authorized at
     any time and from time to time, 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 indebtedness at any time
     owing by such Lender (or any of its affiliates) to or for the credit or the
     account of any Borrower against any and all of the obligations of any
     Borrower now or hereafter existing under this Agreement and the Note held
     by such Lender, irrespective of whether such Lender shall have made any
     demand under this Agreement or such Note and although such obligations may
     be unmatured. Each Lender agrees promptly to notify the applicable Borrower
     after any such set-off and application made by such Lender; provided,
     however, that the failure to give such notice shall not affect the validity
     of such set-off and application. The rights of each Lender under this
     Section 11.3 are in addition to other rights and remedies (including,
     without limitation, other rights of set-off) that such Lender may have.

          (b) If any Lender (a "benefitted Lender") shall at any time receive
     any payment of all or part of the Loans owing to it, or interest thereon,
     or receive any collateral in respect thereof (whether voluntarily or
     involuntarily, by set-off, or otherwise), in a greater proportion than any
     such payment to or collateral received by any other Lender, if any, in
     respect of such other Lender's Loans owing to it, or interest thereon, such
     benefitted Lender shall purchase for cash from the other Lenders a
     participating interest in such portion of each such other Lender's Loans
     owing to it, or shall provide such other Lenders with the benefits of any
     such collateral, or the proceeds thereof, as shall be necessary to cause
     such benefitted Lender to share the excess payment or benefits of such
     collateral or proceeds ratably with each of the Lenders; provided, however,
     that if all or any portion of such excess payment or benefits is thereafter
     recovered from such benefitted Lender, such purchase shall be rescinded,
     and the purchase price and benefits returned, to the extent of such
     recovery, but without interest. Each Borrower agrees that any Lender so
     purchasing a participation from a Lender pursuant to this Section 11.3 may,
     to the fullest extent permitted by law, exercise all of its rights of
     payment (including the right of set-off) with respect to such participation
     as fully as if such Person were the direct creditor of the Borrowers in the
     amount of such participation.


                                       76



          11.4. Survival. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the execution and delivery to the Lenders of this Agreement and any Notes and
shall continue in full force and effect so long as any of Obligations remain
outstanding or any Lender has any Loan hereunder or any Borrower has continuing
obligations hereunder unless otherwise provided herein. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and permitted assigns of such party and all
covenants, provisions and agreements by or on behalf of any Borrower which are
contained in the Loan Documents shall inure to the benefit of the successors and
permitted assigns of the Lenders or any of them.

          11.5. Expenses. Bermuda Holding 2 Ltd., AI 3 Ltd. and each Borrower
agree, jointly and severally, to pay on demand (subject, in the case of
preparation, execution, delivery and administration costs, to the Fee Letter),
all reasonable costs and expenses of the Agent in connection with the
preparation, execution, delivery, administration, modification, and amendment of
this Agreement, the other Loan Documents, subject to any cap that may have
otherwise been agreed, and the other documents to be delivered hereunder,
including, without limitation, the reasonable fees and expenses of counsel for
the Agent (excluding the cost of internal counsel) with respect thereto and with
respect to advising the Agent as to its rights and responsibilities under the
Loan Documents. Bermuda Holding 2 Ltd., AI 3 Ltd. and each Borrower further
agree, jointly and severally, to pay on demand all costs and expenses of the
Agent and the Lenders, if any (including, without limitation, reasonable
external attorneys' fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings, or otherwise) of the Loan
Documents and the other documents to be delivered hereunder.

          11.6. Amendments and Waivers. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 11.6. The
Required Lenders and each Credit Party or Parent Guarantor party to the relevant
Loan Document may, or, with the written consent of the Required Lenders, the
Agent and each Credit Party or Parent Guarantor party to the relevant Loan
Document may, from time to time, (a) enter into written amendments, supplements
or modifications hereto and to the other Loan Documents for the purpose of
adding any provisions to this Agreement or the other Loan Documents or changing
in any manner the rights of the Lenders or of the Loan Parties or Parent
Guarantors hereunder or thereunder or (b) waive, on such terms and conditions as
the Required Lenders or the Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (i) forgive the principal amount or extend the final scheduled date of
maturity of any Loan, reduce the stated rate of any interest or fee payable
hereunder (except that any amendment or modification of defined terms used in
the financial covenants in this Agreement shall not constitute a reduction in
the rate of interest or fees for purposes of this clause (i)) or extend the
scheduled date of any payment thereof, or increase the amount or extend the
expiration date of any Lender's Revolving Credit Commitment, in each case
without the written consent of each Lender directly affected thereby; (ii)
eliminate or reduce the voting rights of any Lender under this Section 11.6
without the written consent of such Lender; (iii) reduce any percentage
specified in the definition of Required Lenders, consent to the assignment or
transfer by Bermuda Holding 2 Ltd., AI 3 Ltd. or


                                       77



any Borrower of any of their respective rights and obligations under this
Agreement and the other Loan Documents, release all or substantially all of the
Collateral or release all or substantially all of the Parent Guarantors or
Guarantors from their obligations under the Parent Guarantor Guarantee or
various Facility Guarantees, in the case of clauses (i) through (iii) without
the written consent of all Lenders; or (iv) amend, modify or waive any provision
of Article X without the written consent of the Agent. Any such waiver and any
such amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon the Credit Parties, the Parent Guarantors, the
Lenders, the Agent and all future holders of the Loans. In the case of any
waiver, the Credit Parties, the Parent Guarantors, the Lenders and the Agent
shall be restored to their former position and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon;

          No notice to or demand on any Borrower in any case shall entitle such
Borrower or any other Borrower to any other or further notice or demand in
similar or other circumstances, except as otherwise expressly provided herein.
No delay or omission on any Lender's or the Agent's part in exercising any
right, remedy or option shall operate as a waiver of such or any other right,
remedy or option or of any Default or Event of Default.

          11.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.

          11.8. Return of Funds. If after receipt of any payment of all or any
part of the Obligations, any Lender is for any reason compelled to surrender
such payment to any Person because such payment is determined to be void or
voidable as a preference, impermissible setoff, a diversion of trust funds or
for any other reason, this Agreement shall continue in full force and each
Borrower, jointly and severally, shall be liable to, and shall indemnify and
hold the Agent or such Lender harmless for, the amount of such payment
surrendered until the Agent or such Lender shall have been finally and
irrevocably paid in full. The provisions of the foregoing sentence shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Agent or the Lenders in reliance upon such payment, and any such contrary
action so taken shall be without prejudice to the Agent or the Lenders' rights
under this Agreement and shall be deemed to have been conditioned upon such
payment having become final and irrevocable.

          11.9. Indemnification; Limitation of Liability.

          (a) Bermuda Holding 2 Ltd., AI 3 Ltd. and each Borrower, jointly and
     severally, agree to indemnify and hold harmless the Agent (which term for
     purposes of this Section 11.9 includes the "Mortgagee" under each Security
     Agreement and the "Security Agent" under each Lockbox Agreement) and each
     Lender and each of their affiliates and their respective officers,
     directors, employees, agents, and advisors (each, an "Indemnified Party")
     from and against any and all claims, damages, losses, liabilities, costs,
     and expenses (including, without limitation, reasonable external attorneys'
     fees, but


                                       78



     excluding principal and accrued interest on any Loan) that may be incurred
     by or asserted or awarded against any Indemnified Party, in each case
     arising out of or in connection with or by reason of (including, without
     limitation, in connection with any investigation, litigation, or proceeding
     or preparation of defense in connection therewith) the Loan Documents, any
     of the transactions contemplated herein, any Aircraft, Engine or other
     Collateral, any possession, performance, transportation, management, sale,
     ownership, registration, mortgage, charging, control, maintenance, service,
     repair, design, testing, defect, overhaul, purchase, bearing, use or
     operation of any Aircraft, Engine or other Collateral, or the actual or
     proposed use of the proceeds of the Loans, except to the extent such claim,
     damage, loss, liability, cost, or expense is found in a final,
     non-appealable judgment by a court of competent jurisdiction to have
     resulted from such Indemnified Party's gross negligence or willful
     misconduct. In the case of an investigation, litigation or other proceeding
     to which the indemnity in this Section 11.9 applies, such indemnity shall
     be effective whether or not such investigation, litigation or proceeding is
     brought by Bermuda Holding 2 Ltd., AI 3 Ltd., any Borrower, its directors,
     shareholders or creditors or an Indemnified Party or any other Person or
     any Indemnified Party is otherwise a party thereto and whether or not the
     transactions contemplated hereby are consummated. Bermuda Holding 2 Ltd.,
     AI 3 Ltd. and each Borrower agree that no Indemnified Party shall have any
     liability (whether direct or indirect, in contract or tort or otherwise) to
     it, any of its Subsidiaries, any Guarantor or any security holders or
     creditors thereof arising out of, related to or in connection with the
     transactions contemplated in any Loan Document, except to the extent that
     such liability directly results from such Indemnified Party's gross
     negligence or willful misconduct. Bermuda Holding 2 Ltd., AI 3 Ltd. and
     each Borrower agree not to assert any claim against the Agent, any Lender,
     any of their affiliates, or any of their respective directors, officers,
     employees, attorneys, agents, and advisers, on any theory of liability, for
     special, indirect, consequential, or punitive damages arising out of or
     otherwise relating to the Loan Documents, any of the transactions
     contemplated herein or the actual or proposed use of the proceeds of the
     Loans.

          (b) Without prejudice to the survival of any other agreement of
     Bermuda Holding 2 Ltd., AI 3 Ltd. or any Borrower hereunder, the agreements
     and obligations of Bermuda Holding 2 Ltd., AI 3 Ltd. and each Borrower
     contained in this Section 11.9 shall survive the payment in full of the
     Loans and all other amounts payable under this Agreement.

          (c) Except as expressly provided herein, each Lender, each Borrower
     and the Agent agree that this Agreement and each other Loan Document
     entered into by a Holdings Subsidiary Trust is executed by a Qualified
     Trustee, not individually but solely as Trustee under a Trust Agreement in
     the exercise of the power and authority conferred and vested in it as such
     Trustee, that each and all of the representations, undertakings and
     agreements by a Qualified Trustee, or for the purpose or with the intention
     of binding a Qualified Trustee, are made and intended for the purpose of
     binding only the Trust Estates (and, to the extent any Lender, Borrower or
     Agent has an interest therein, any liability insurance proceeds), and that
     in no case whatsoever shall any Qualified Trustee be personally liable for
     any loss in respect of such representations, undertakings and agreements,
     that nothing herein contained shall be construed as creating any liability
     on any Qualified Trustee individually or personally, to perform any
     covenant, either express


                                       79



     or implied, herein, all such liability, if any, being expressly waived by
     each Lender, each Borrower and the Agent and by each and every Person now
     or hereafter claiming by, through or under such Persons except with respect
     to the gross negligence or willful misconduct of such Qualified Trustee or
     for any Liens on the Collateral arising from, through or under such
     Qualified Trustee in its individual capacity, and that so far as any
     Qualified Trustee, individually or personally is concerned, each Lender,
     each Borrower and the Agent and any Person claiming by, through or under
     such Persons shall look solely, except as provided above, to the Trust
     Estates (and, to the extent any Lender, Borrower or Agent has an interest
     therein, any liability insurance proceeds), for the performance of any
     obligation under this Credit Agreement and the other Loan Documents. The
     term "Trustee" as used in this Section 11.9(c) shall include any Qualified
     Trustee succeeding a Qualified Trustee, as trustee under a Trust Agreement.
     Any obligation of any Holdings Subsidiary Trust hereunder or under the
     other Loan Documents may be performed by a Beneficial Owner, and any such
     performance shall not be construed as revocation of the trust created by
     any Trust Agreement.

          11.10. Severability. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.

          11.11. Entire Agreement. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, and other communications between or among the parties, both
oral and written, with respect thereto.

          11.12. Payments. All principal, interest, and other amounts to be paid
by any Borrower under this Agreement and the other Loan Documents shall be paid
to the Agent at the Principal Office in Dollars and in immediately available
funds, without setoff, deduction or counterclaim. Subject to the definition of
"Interest Period" herein, whenever any payment under this Agreement or any other
Loan Document shall be stated to be due on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day, and such extension
of time in such case shall be included in the computation of interest and fees,
as applicable, and as the case may be.

          11.13. Confidentiality. The Agent and each Lender (each, a "Lending
Party") agrees to keep confidential any information furnished or made available
to it by the Parent Guarantors, Bermuda Holding 2 Ltd., AI 3 Ltd. any other
Credit Party or any Affiliate thereof, pursuant to or in connection with this
Agreement or the other Loan Documents; provided that nothing herein shall
prevent any Lending Party from disclosing such information (a) to any other
Lending Party or any affiliate of any Lending Party, or any officer, director,
employee, agent, or advisor of any Lending Party or affiliate or any Lending
Party, (b) to any other Person if reasonably incidental to the administration of
the credit facility provided herein, (c) as required by any law, rule, or
regulation, (d) upon the order of any court or administrative agency, (e) upon
the request or demand of any regulatory agency or authority, (f) that is or
becomes available to the public or that is or becomes available to any Lending
Party other than as a result of a


                                       80



disclosure by any Lending Party prohibited by this Agreement, (g) in connection
with any litigation to which such Lending Party or any of its affiliates may be
a party, (h) to the extent necessary in connection with the exercise of any
remedy under this Agreement or any other Loan Document, and (i) subject to
provisions substantially similar to those contained in this Section, to any
actual or proposed participant or assignee.

          11.14. Governing Law; Waiver of Jury Trial.

          (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

          (b) BERMUDA HOLDING 2 LTD., AI 3 LTD. AND EACH BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS THAT ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN
THE COUNTY OF NEW YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, BERMUDA HOLDING 2 LTD. AND EACH
BORROWER EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY
BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND BERMUDA HOLDING 2
LTD. AND EACH BORROWER HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY
TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.

          (c) BERMUDA HOLDING 2 LTD., AI 3 LTD. AND EACH BORROWER AGREES THAT
SERVICE OF PROCESS MAY BE MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND
COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY
REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS PROVIDED IN
SECTION 11.2(A), OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE
APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW YORK.

          (d) NOTHING CONTAINED IN SUBSECTIONS (A) OR (B) HEREOF SHALL PRECLUDE
THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY OTHER JURISDICTION. TO
THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, BERMUDA
HOLDING 2 LTD., AI 3 LTD. AND EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH
SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT
AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE
AVAILABLE UNDER APPLICABLE LAW.


                                       81



          (e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION THEREWITH, BERMUDA HOLDING 2 LTD., AI 3 LTD., THE BORROWERS, THE
AGENT AND THE LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR
PROCEEDING.

          11.15. Judgment Currency.

               (a) To the extent permitted by applicable law, if for the
          purposes of obtaining judgment in any court it is necessary to convert
          a sum due hereunder in United States Dollars into another currency,
          the parties hereto agree, to the fullest extent that they may
          effectively do so, that the rate of exchange used shall be determined
          in accordance with Section 1.3 of this Agreement on the Business Day
          preceding that on which final judgment is given.

          To the extent permitted by applicable law, the obligation of each
Credit Party in respect of any sum due in United States Dollars from it to any
Lender or the Agent hereunder shall, notwithstanding any judgment in a currency
other than United States Dollars, be discharged only to the extent that on the
Business Day following receipt by such Lender or the Agent (as the case may be)
of any sum adjudged to be so due in such other currency, such Lender or the
Agent (as the case may be) may in accordance with normal banking procedures
purchase United States Dollars with such other currency; if the United States
Dollars so purchased are less than such sum due to such Lender or the Agent (as
the case may be) in United States Dollars, each Credit Party agrees, to the
extent permitted by applicable law, as a separate obligation and notwithstanding
any such judgment, to indemnify such Lender or the Agent (as the case may be)
against such loss, and if the United States Dollars so purchased exceed such sum
due to any Lender or the Agent (as the case may be) in United States Dollars,
such Lender or the Agent (as the case may be) agrees to remit to each such
Credit Party such excess.

          11.16. USA PATRIOT Act. Each Lender hereby notifies Bermuda Holding 2
Ltd., AI 3 Ltd. and each Borrower that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the "Act"), it is required to obtain, verify and record information that
identifies each Borrower, which information includes the name and address of
such Borrower and other information that will allow such Lender to identify each
Borrower in accordance with the Act.

          11.17. Post-Closing Matters. Notwithstanding the provisions of
Sections 5.1 and 7.16, the Credit Parties need not complete the actions or
deliver the documents described in Sections 5.1(a)(x) with respect to accounts
held at Bank of America or finalize Exhibit P until no later than March 31,
2006, and the Effective Date will occur upon satisfaction of the other
conditions in Section 5.1.


                                       82



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

                                         AIRCASTLE INVESTMENT HOLDINGS 2 LIMITED

                                         By: /s/ Mark Zeidman
                                             -----------------------------------
                                             Name: Mark Zeidman
                                                   -----------------------------
                                             Title: CFO
                                                    ----------------------------

                                         AIRCASTLE IRELAND NO. 3 LIMITED

                                         By: /s/ Ron Wainshal
                                             -----------------------------------
                                             Name: Ron Wainshal
                                                   -----------------------------
                                             Title: Director
                                                    ----------------------------

               Signature Page to the Aircastle 2 Credit Agreement



                                         JPMORGAN CHASE BANK, N.A., as Agent and
                                            as a Lender


                                         By: /s/ Matthew H. Massie
                                             -----------------------------------
                                             Name: Matthew H. Massie
                                                   -----------------------------
                                             Title: Managing Director
                                                    ----------------------------

               Signature Page to the Aircastle 2 Credit Agreement



                                         BEAR STEARNS CORPORATE LENDING INC.,
                                         as a Lender


                                         By: /s/ Victor Bulzacchelli
                                             -----------------------------------
                                             Name: Victor Bulzacchelli
                                                   -----------------------------
                                             Title: Vice President
                                                    ----------------------------

               Signature Page to the Aircastle 2 Credit Agreement



                                         CITIBANK, N.A.,
                                         as a Lender


                                         By: /s/ Gaylord C. Holmes
                                             -----------------------------------
                                             Name: Gaylord C. Holmes
                                                   -----------------------------
                                             Title: Director
                                                    ----------------------------

               Signature Page to the Aircastle 2 Credit Agreement




                       PARENT GUARANTOR GUARANTY AGREEMENT

          THIS PARENT GUARANTOR GUARANTY AGREEMENT (this "Guaranty Agreement" or
this "Guaranty"), dated as of February 28, 2006 is made by AIRCASTLE INVESTMENT
LIMITED (the "Guarantor") to JPMORGAN CHASE BANK, N.A., as Agent (the "Agent")
for each of the lenders from time to time parties to the Credit Agreement (the
"Lenders" and collectively with the Agent and each other holder of an Obligation
(as hereinafter defined) the "Guaranteed Parties"). All capitalized terms used
but not otherwise defined herein shall have the meaning ascribed to such terms
in the Credit Agreement (as defined below).

                                   WITNESSETH:

          WHEREAS, the Agent and the Lenders have agreed to provide a revolving
credit facility to certain Holdings Subsidiary Trusts and Holdings SPCs
designated as Borrowing Affiliates (such Borrowing Affiliates are referred to
hereinafter individually as a "Borrower" and collectively as the "Borrowers")
pursuant to that certain Credit Agreement dated as of February, 2006 among the
Borrowers, the Agent and the Lenders (as from time to time amended, revised,
modified, supplemented or amended and restated, the "Credit Agreement"); and

          WHEREAS, each Borrower is a trust or corporation that holds title to
Aircraft; and

          WHEREAS, the Guarantor is the indirect owner of the stock of a
Borrower; and

          WHEREAS, the Guarantor will materially benefit from the Loans to be
made under the Credit Agreement and the Guarantor is willing to enter into this
Guaranty to provide an inducement for the Lenders to make loans and advances
under the Credit Agreement; and

          WHEREAS, a material part of the consideration given in connection with
and as an inducement to the execution and delivery of the Credit Agreement by
the Agent and the Lenders was the obligation of each Parent Guarantor to
guarantee the Obligations of the Borrowers under the Credit Agreement; and

          WHEREAS, as a condition to making and continuing to make Loans under
the Credit Agreement, the Guarantor is required to guarantee to the Guaranteed
Parties payment of the Obligations in accordance with the terms of this
Agreement; and

          NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Guarantor hereby agrees as follows:



          1. GUARANTY. The Guarantor hereby unconditionally, absolutely,
directly, primarily and irrevocably guarantees to the Guaranteed Parties the
timely and complete payment and performance in full of the Obligations (as
defined below). For all purposes of this Agreement, "Obligations" means the
unpaid principal of and interest on (including, without limitation, interest
accruing after the maturity of the Loans and interest accruing after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to Bermuda Holding 2 Ltd., AI 3 Ltd.
or any Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and all other obligations and
liabilities of Bermuda Holding 2 Ltd., AI 3 Ltd. or any Borrower to the Agent or
to any Lender (or in the case of Rate Hedging Obligations, any affiliate of any
Lender), whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement (after giving effect to the provisions of
Section 4.6 thereof as applicable to the Borrowers), any other Loan Document,
any Rate Hedging Obligation entered into with any Lender or any affiliate of any
Lender or any other document made, delivered or given in connection therewith,
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including, without limitation, all fees, charges
and disbursements of counsel to the Agent (acting in any capacity) or to any
Lender that are required to be paid by Bermuda Holding 2 Ltd., AI 3 Ltd. or any
Borrower pursuant thereto) or otherwise. Anything herein or in any other Loan
Document to the contrary notwithstanding, the maximum liability of the Guarantor
hereunder and under the other Loan Documents shall in no event exceed the amount
which can be guaranteed by the Guarantor under applicable federal and state laws
relating to the insolvency of debtors. The Guarantor agrees that the Obligations
may at any time and from time to time exceed the amount of the liability of the
Guarantor hereunder without impairing this Guaranty or affecting the rights and
remedies of the Guaranteed Parties hereunder.

          2. UNCONDITIONAL OBLIGATIONS. This is a guaranty of payment and not of
collection. The Guarantor's obligations under this Guaranty Agreement shall be
absolute and unconditional irrespective of the validity, legality or
enforceability of the Credit Agreement or any other Loan Document or any other
guaranty of the Obligations, and shall not be affected by any action taken under
the Credit Agreement or any other Loan Document, any other guaranty of the
Obligations, or any other agreement between the Guaranteed Parties and any
Borrower or any other Person, in the exercise of any right or power therein
conferred, or by any failure or omission to enforce any right conferred thereby,
or by any waiver of any covenant or condition therein provided, or by any
acceleration of the maturity of any of the Obligations, or by the release or
other disposal of any security for any of the Obligations, or by the dissolution
of any Borrower or the combination or consolidation of any Borrower into or with
another entity or any transfer or disposition of any assets of any Borrower or
by any extension or renewal of the Credit Agreement or any other Loan Document,
in whole or in part, or by any modification, alteration, amendment or addition
of or to the Credit Agreement or any other Loan Document, any other guaranty of
the Obligations, or any other agreement between the Secured Parties and any
Credit Borrower or any other Person, or by any other circumstance whatsoever
(with or without notice to or knowledge of any Guarantor) which may or might in
any manner or to any extent vary the risks of the Guarantor, or might otherwise
constitute a legal or equitable discharge of a surety or a guarantor; it being
the purpose and intent of the parties hereto that this Guaranty Agreement and
the Guarantor's obligations hereunder shall be absolute and unconditional under
any and all circumstances and shall not be discharged except by payment as
herein provided.


                                       2



          3. CURRENCY AND FUNDS OF PAYMENT; WITHHOLDING. The Guarantor hereby
guarantees that the Obligations will be paid in lawful currency of the United
States of America and in immediately available funds, regardless of any law,
regulation or decree now or hereafter in effect that might in any manner affect
the Obligations including, without limitation: (A) the application of any such
law, regulation, decree or order, including any prior approval, which would
prevent the exchange of a Non-USD Currency (as hereinafter defined) for U.S.
Dollars or the remittance of funds outside of such jurisdiction or the
unavailability of U.S. Dollars in any legal exchange market in such jurisdiction
in accordance with normal commercial practice; or (B) a declaration of banking
moratorium or any suspension of payments by banks in such jurisdiction or the
imposition by such jurisdiction or any governmental authority thereof of any
moratorium on, the required rescheduling or restructuring of, or required
approval of payments on, any indebtedness in such jurisdiction; or (C) any
expropriation, confiscation, nationalization or requisition by such country or
any Governmental Authority that directly or indirectly deprives any Borrower of
any assets or their use or of the ability to operate its business or a material
part thereof; or (D) any war (whether or not declared), insurrection,
revolution, hostile act, civil strife or similar events occurring in such
jurisdiction which has the same effect as the events described in clause (A),
(B) or (C) above (in each of the cases contemplated in clauses (A) through (D)
above, to the extent occurring or existing on or at any time after the date of
this Guaranty), or the rights of the Guaranteed Parties with respect thereto as
against any Borrower, or cause or permit to be invoked any alteration in the
time, amount or manner of payment by any Borrower of any or all of the
Obligations. The Guarantor shall make all payments at the Agent's address for
payment set forth in the Credit Agreement or such other address as the Agent
shall give notice of to the Guarantor. All payments made or to be made by the
Guarantor under this Guaranty shall be made free and clear of, and without
deduction for, any present or future withholdings in respect of Taxes save for
such withholdings in respect of Taxes as may be required to be made from such
payments by any law, regulation or practice. If any such withholding is required
to be made, the Guarantor shall (i) pay the full amount required to be withheld
to the relevant taxation or other Governmental Authority within the time allowed
for such payment under applicable law, and then deliver to the other party
hereto within 30 days after it has made such payment an original receipt (or
certified copy thereof) issued by such Governmental Authority evidencing payment
thereof (or other evidence of payment reasonably satisfactory to such other
party) and (ii) increase the amount to be paid to the other party hereto to
ensure that such other party receives and retains a sum equal to the sum which
it would have received and so retained, had no such withholding been made or
required to be made.

          4. SUITS. At the election of the Guaranteed Parties, one or more and
successive or concurrent suits may be brought hereon against the Guarantor by
any of the Guaranteed Parties, whether or not suit has been commenced against
any Borrower, any other guarantor of the Obligations, or any other Person and
whether or not the Guaranteed Parties have taken or failed to take any other
action to collect all or any portion of the Obligations or have taken or failed
to take any actions against any collateral securing payment or performance of
all or any portion of the Obligations.

          5. SET-OFF AND WAIVER. The Guarantor waives any right to assert
against the Secured Parties as a defense, counterclaim, set-off or cross claim,
any defense (legal or equitable) or other claim which the Guarantor may now or
at any time hereafter have against any Borrower or any Credit Party or any
Guaranteed Party, including but not limited to any change in


                                       3



the corporate existence, structure or ownership of any Borrower, or any
insolvency, bankruptcy, reorganization or other similar proceeding affecting any
Borrower or its assets or any resulting release or discharge of any Obligation,
without waiving any additional defenses, set-offs, counterclaims or other claims
otherwise available to the Guarantor. If at any time hereafter any Guaranteed
Party employs counsel for advice or other representation to enforce the
Guarantor's Obligations that arise out of an Event of Default, then, in any of
the foregoing events, all of the reasonable attorneys' fees arising from such
services and all expenses, costs and charges in any way or respect arising in
connection therewith or relating thereto shall be paid by the Guarantor to the
Agent, for the benefit of the Guaranteed Parties, on demand.

          6. WAIVER; SUBROGATION.

     (a) The Guarantor hereby waives notice of the following events or
occurrences: (i) acceptance of this Guaranty Agreement; (ii) the Lenders'
heretofore, now or from time to time hereafter making Loans and otherwise
loaning monies or giving or extending credit to or for the benefit of any
Borrower, whether pursuant to the Credit Agreement or any other Loan Document or
any amendments, modifications, or supplements thereto, or replacements or
extensions thereof; (iii) the Guaranteed Parties or any Borrower heretofore, now
or at any time hereafter, obtaining, amending, substituting for, releasing,
waiving or modifying the Credit Agreement or any other Loan Documents; (iv)
presentment, demand, default, non-payment, partial payment, protest, promptness
and diligence; (v) any Guaranteed Party heretofore, now or at any time hereafter
granting to any Borrower (or any other party liable to the Lenders on account of
the Obligations) or to any other guarantor any indulgence or extensions of time
of payment of the Obligations; and (vi) any Guaranteed Party heretofore, now or
at any time hereafter accepting from any Borrower, any other guarantor of the
Obligations or any other Person, any partial payment or payments on account of
the Obligations or any collateral securing the payment thereof or the Agent
settling, subordinating, compromising, discharging or releasing the same. The
Guarantor agrees that each Guaranteed Party may heretofore, now or at any time
hereafter do any or all of the foregoing in such manner, upon such terms and at
such times as each Guaranteed Party, in its sole and absolute discretion, deems
advisable, without in any way or respect impairing, affecting, reducing or
releasing the Guarantor from its obligations hereunder, and the Guarantor hereby
consents to each and all of the foregoing events or occurrences.

     (b) The Guarantor hereby expressly waives any right it may have to require
any Guaranteed Party, to (i) prosecute collection or seek to enforce or resort
to any remedies against any Borrower or any other guarantor of the Obligations,
or (ii) seek to enforce or resort to any remedies with respect to any security
interests, Liens or encumbrances granted to the Agent by any Borrower, or any
other Person on account of the Obligations, or any guaranty thereof. Neither the
Agent nor any other Guaranteed Party shall have any obligation to protect,
secure or insure any of the foregoing security interests, Liens or encumbrances
on the properties or interests in properties subject thereto. The Guarantor's
obligations hereunder shall in no way be impaired, affected, reduced, or
released by reason of any Guaranteed Party's failure or delay to do or take any
of the acts, actions or things described in this Guaranty including, without
limiting the generality of the foregoing, those acts, actions and things
described in this Section 7.


                                       4



     (c) The Guarantor further agrees with respect to this Guaranty that the
Guarantor shall have no right of subrogation, reimbursement or indemnity, nor
any right of recourse to security for the Obligations until the Stated
Termination Date and payment in full of the Obligations.

          7. EFFECTIVENESS; ENFORCEABILITY. This Guaranty Agreement shall be
effective as of the date hereof and shall continue in full force and effect
until the Stated Termination Date and payment in full of the Obligations. This
Guaranty Agreement shall be binding upon and inure to the benefit of the
Guarantor, the Guaranteed Parties and their respective successors and assigns.
Notwithstanding the foregoing, the Guarantor may not, without the prior written
consent of the Agent, assign any rights, powers, duties or obligations
hereunder. Any claim or claims that the Secured Parties may at any time
hereafter have against the Guarantor under this Guaranty Agreement may be
asserted by any Secured Party by written notice directed to the Guarantor.

          8. REPRESENTATIONS AND WARRANTIES. The Guarantor warrants and
represents to the Agent for the benefit of the Guaranteed Parties that:

     (a) Organization and Authority.

          1. The Guarantor is a corporation, partnership or limited liability
     company duly organized and validly existing under the laws of the
     jurisdiction of its formation;

          2. The Guarantor (x) has the requisite power and authority to own its
     properties and assets and to carry on its business as now being conducted
     and as contemplated in the Loan Documents, and (y) is qualified to do
     business in every jurisdiction in which failure so to qualify would have a
     Material Adverse Effect;

          3. The Guarantor has the power and authority to execute, deliver and
     perform this Agreement and to execute, deliver and perform each of the
     other Loan Documents to which it is a party; and

          4. When executed and delivered, each of the Loan Documents to which
     the Guarantor is a party will be the legal, valid and binding obligation or
     agreement, as the case may be, of the Guarantor, enforceable against the
     Guarantor in accordance with its terms, subject to the effect of any
     applicable bankruptcy, moratorium, insolvency, reorganization or other
     similar law affecting the enforceability of creditors' rights generally and
     to the effect of general principles of equity (whether considered in a
     proceeding at law or in equity);

     (b) Loan Documents. The execution, delivery and performance by the
Guarantor of the Loan Documents to which it is a party:

          1. have been duly authorized by all requisite Organizational Action of
     the Guarantor required for the lawful execution, delivery and performance
     thereof;

          2. do not violate any provisions of (i) applicable law, rule or
     regulation, (ii) any judgment, writ, order, determination, decree or
     arbitral award of any Governmental


                                       5



     Authority or arbitral authority binding on the Guarantor or its respective
     properties, or (iii) the Organizational Documents of the Guarantor;

          3. does not and will not be in conflict with, result in a breach of or
     constitute an event of default, or an event which, with notice or lapse of
     time or both, would constitute an event of default, under any contract,
     indenture, agreement or other instrument or document to which the Guarantor
     is a party, or by which the properties or assets of the Guarantor are
     bound; and

          4. does not and will not result in the creation or imposition of any
     Lien upon any of the properties or assets of the Guarantor except any Liens
     in favor of the Agent and the Lenders created by the Security Instruments;

     (d) Solvency. At the time of each Loan to a Borrower, the Guarantor is
Solvent after giving effect to the transactions contemplated by the Loan
Documents;

     (e) Subsidiaries and Stockholders. The Guarantor (i) owns 100% of the
beneficial interest of each of its direct Subsidiaries and (ii) does not have
any direct Subsidiaries other than those included in the Pledged Interests and
listed on Schedule 8(e), as such schedule shall be updated from time to time and
delivered to the Agent, including upon the creation of a new direct Subsidiary
of the Parent pursuant to Section 7.16 of the Credit Agreement;

     (f) Liens. The Agent (for itself and on behalf of the Lenders) has a first
priority perfected Lien (subject to Permitted Liens (as defined below)) on all
Parent Guarantor Collateral pledged by the Parent Guarantors under the Security
Instruments;

     (g) Taxes. Except as set forth in Schedule 8(g), the Guarantor has filed or
caused to be filed all federal, state, local and foreign Tax returns in each
case that are required to be filed by it and that, the failure to file, would
have a Material Adverse Effect (individually or in the aggregate) and, except
for Taxes and assessments being contested in good faith by appropriate
proceedings diligently conducted and against which reserves in accordance with
GAAP reflected in the financial statements most recently delivered pursuant to
Section 7.1 of the Credit Agreement and satisfactory to the Guarantor's
independent certified public accountants have been established, have paid or
caused to be paid all Taxes as shown on said returns or on any assessment
received by it, to the extent that such Taxes have become due;

     (i) Litigation. Except as set forth in Schedule 8(i), there is no action,
suit, investigation or proceeding at law or in equity or by or before any
governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of the Guarantor, threatened by or against the Guarantor or affecting
the Guarantor or any properties or rights of the Guarantor, which (i) is not
covered by insurance and (ii) could reasonably be likely to have a Material
Adverse Effect;

     (j) Investment Company. The Guarantor is not an "investment company," or
"promoter" or "principal underwriter" for, an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended (15 U.S.C.
Section 80a-1, et seq.). The performance by the Guarantor of the transactions
contemplated by the Loan Documents will not violate any provision of said Act,
or any rule, regulation or order issued by the Securities and Exchange
Commission thereunder, in each case as in effect on the date hereof;


                                       6



     (k) No Consents, Etc. Neither the respective businesses or properties of
the Guarantor, nor any relationship among the Guarantor and the other Person,
nor any circumstance in connection with the execution, delivery and performance
of the Loan Documents and the transactions contemplated thereby, is such as to
require a consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority or any other Person on the part
of the Guarantor as a condition to the execution, delivery and performance of,
or consummation of the transactions contemplated by the Loan Documents, which,
if not obtained or effected, would be reasonably likely to have a Material
Adverse Effect, or if so, such consent, approval, authorization, filing,
registration or qualification has been duly obtained or effected, as the case
may be;

     (l) Employee Benefit Plans.

          1. The Guarantor has not, nor has any of its Subsidiaries ever
     sponsored any Single Employer Plan or any Multiemployer Plan, or had any
     obligation to fund any such plan;

          2. Neither the Guarantor nor any ERISA Affiliate has incurred any
     "accumulated funding deficiency" within the meaning of Section 412 of the
     Code or Section 302 of ERISA with respect to any Single Employer Plan,
     whether or not waived, during the six-year period prior to the date on
     which this representation is made or deemed made or any other liability to
     the PBGC which remains outstanding, in each case, in an amount that would
     be reasonably likely to have a Material Adverse Effect;

          3. No Termination Event has occurred during the six-year period prior
     to the date on which this representation is made or deemed made or is
     reasonably expected to occur with respect to any Single Employer Plan or
     Multiemployer Plan, neither the Guarantor nor any ERISA Affiliate has
     incurred any unpaid withdrawal liability with respect to any Multiemployer
     Plan that, in each case, could be reasonably expected to have a Material
     Adverse Effect; and

          4. The present value of all accrued benefits under each Single
     Employer Plan (based on those assumptions used to fund such Single Employer
     Plan) did not, as of the last annual valuation date prior to the date on
     which this representation is made or deemed made for each such plan, exceed
     the then current value of the assets of such Single Employer Plan allocable
     to such benefits by a material amount;

     (k) Financial Condition. The audited consolidated financial statements of
the Parent and its Subsidiaries dated December 31, 2004 and the unaudited
consolidated financial statements of the Parent and its Subsidiaries dated
September 30, 2005, copies of each of which have been furnished to each Lender
on or before the Closing Date, have been prepared using accounting methods,
procedures and policies which are in accordance with GAAP and present fairly in
all material respects the financial position of the Parent and its Subsidiaries
on a consolidated basis, in each case, as at the dates thereof, and the results
of operations and statements of cash flows for the periods then ended (as to any
unaudited interim financial statements, subject to normal year-end audit
adjustments and the absence of footnotes). Neither the Parent nor any of its
Subsidiaries had, to the knowledge of the Guarantor, as at the date of the most
recent balance


                                       7



sheet referred to above, any material Contingent Obligation, contingent
liability or liability for taxes, or any long term lease or unusual forward or
long term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which is not reflected in the
foregoing statements or in the notes thereto and which, to the knowledge of the
Guarantor, has any reasonable likelihood of resulting in a material cost or
loss. Since September 30, 2005 there has been no development or event which has
had a Material Adverse Effect.

     The Guarantor agrees that the foregoing representations and warranties
shall be (a) true, correct and complete in all material respects when made or
deemed to have been made and (b) made or deemed made by the Guarantor on the
date of each borrowing by the Borrower under the Credit Agreement on and as of
such date of borrowing as though made hereunder on and as of such date (unless
such representation and warranties refers to a different date, in which case
such representation and warranties shall be made on and/or as of such different
date).

          9. AFFIRMATIVE COVENANTS. Unless the Required Lenders shall otherwise
consent in writing, the Parent will, and will cause each Parent Guarantor to:

          (a) Existence, Qualification, Etc. Except as otherwise expressly
     permitted under Section 10(e), do or cause to be done all things necessary
     to preserve and keep in full force and effect its existence and all
     material rights and franchises, and maintain its license or qualification
     to do business as a foreign corporation and good standing in each
     jurisdiction in which failure to so maintain would have a Material Adverse
     Effect;

          (b) Regulations and Taxes. Comply with or contest in good faith all
     statutes and governmental regulations and timely pay all Taxes,
     assessments, governmental charges, claims for labor, supplies, rent and any
     other obligation which, if unpaid, would become a Lien other than a
     Permitted Lien against any of its properties, unless such Lien could not
     reasonably be expected to have a Material Adverse Effect;

          (c) True Books. Keep true books of record and account in which full,
     true and correct entries will be made of all of its dealings and
     transactions, and set up on its books such reserves as may be required by
     GAAP with respect to doubtful accounts and all taxes, assessments, charges,
     levies and claims and with respect to its business in general, and include
     such reserves in interim as well as year-end financial statements;

          (d) Right of Inspection. Permit any Person designated by any Lender or
     the Agent to visit and inspect any corporate book or financial report of
     the Guarantor and to discuss its affairs, finances and accounts with its
     principal officers and independent certified public accountants; all at
     reasonable times, at reasonable intervals and with reasonable prior notice;
     provided that upon an Event of Default such access shall be at any time;

          (e) Observe all Laws. Conform to and duly observe all laws, rules and
     regulations and all other valid requirements of any Governmental Authority
     with respect to the conduct of its business unless the failure to so
     conform or observe would not have a Material Adverse Effect;


                                       8



          (f) Governmental Licenses. Obtain and maintain all licenses, permits,
     certifications and approvals of all applicable Governmental Authorities of
     which the failure to so obtain and maintain would have a Material Adverse
     Effect and as contemplated by the Loan Documents;

          (g) Cash Distributions by Subsidiaries. The Parent shall cause each of
     its Subsidiaries to transfer any cash held in a lockbox account to secure
     such Subsidiary's obligations (other than Obligations) to an account of the
     Parent or any Subsidiary that is subject to an Account Control Agreement
     within 10 days after such Subsidiary is otherwise permitted to do so under
     the terms of the agreements governing such obligations.

          (h) Officer's Knowledge of Default. Upon any officer of the Guarantor
     obtaining knowledge of any Default or Event of Default under the Credit
     Agreement or any other obligation of any Parent Guarantor, Borrower or any
     Subsidiary or other Credit Party to any Lender, or any event, development
     or occurrence which could reasonably be expected to have a Material Adverse
     Effect, cause such officer or an Authorized Representative to promptly
     notify the Agent of the nature thereof, the period of existence thereof,
     and what action such Parent Guarantor, Borrower or such Subsidiary or other
     Credit Party proposes to take with respect thereto;

          (i) Suits or Other Proceedings. Upon any officer of the Guarantor or
     any other Parent Guarantor or Borrower obtaining knowledge of any action,
     suit, litigation, investigation, or other proceeding being instituted or
     threatened against any Parent Guarantor, Borrower or any Subsidiary or
     other Credit Party, in any court or before any Governmental Authority, or
     any attachment, levy, execution or other process being instituted against
     any assets of any Parent Guarantor, Borrower or any Subsidiary or other
     Credit Party, making a claim or claims in an aggregate amount greater than
     $5,000,000 exclusive of punitive damages, not otherwise covered by
     insurance or that would be reasonably expected to have a Material Adverse
     Effect, promptly deliver to the Agent written notice thereof stating the
     nature and status of such action, suit, litigation, investigation, dispute,
     proceeding, levy, execution or other process; and

          (j) Employee Benefit Plans. Without limiting the generality of Section
     10(g) with reasonable promptness, and in any event within thirty (30) days
     after the Guarantor knows or has reason to know thereof, give notice to the
     Agent of (a) the establishment of any Single Employer Plan (which notice
     shall include a copy of such plan), (b) the failure of the Guarantor or any
     ERISA Affiliate to make a required installment or payment under Section 302
     of ERISA or Section 412 of the Code by the due date; (c) the occurrence of
     a Termination Event with respect to any Single Employer Plan or
     Multiemployer Plan; and (d) the institution of proceedings or the taking of
     any other action by the PBGC or the Guarantor or any ERISA Affiliate or any
     Multiemployer Plan with respect to the withdrawal from, or the termination,
     Reorganization or Insolvency of, any Multiemployer Plan.

          10. NEGATIVE COVENANTS. Unless the Required Lenders shall otherwise
consent in writing:


                                       9



          (a) Liens. The Parent will not, and will not permit any Subsidiary to
incur, create or permit to exist any Lien, charge or other encumbrance of any
nature whatsoever with respect to any property or assets now owned or hereafter
acquired by the Guarantor except the following ("Permitted Liens"):

          1. Liens created under the Security Instruments in favor of the Agent
     and the Lenders;

          2. Liens set forth in Schedule 10(a);

          3. Liens imposed by law for Taxes (A) not yet due or (B) which are
     being contested in good faith by appropriate proceedings diligently
     conducted, if, with respect to each Lien described in this clause (B)
     unless such Lien could not reasonably be expected to have a Material
     Adverse Effect, adequate reserves with respect thereto are maintained on
     the books of the Parent and/or its Subsidiaries in accordance with GAAP;

          4. Liens arising out of any judgment or award with respect to which an
     appeal or proceeding for review is being prosecuted in good faith by
     appropriate proceedings diligently conducted, and with respect to which a
     stay of execution is in effect;

          5. statutory Liens of landlords and Liens of mechanics, materialmen
     and other Liens imposed by law or created in the ordinary course of
     business and (i) in existence less than 90 days from the date of creation
     thereof for amounts not yet due or (ii) which are being contested in good
     faith by appropriate proceedings diligently conducted, which are inferior
     in respect of the Collateral to the Liens conferred under the Security
     Instruments or with respect to which adequate reserves or other appropriate
     provisions are being maintained in accordance with GAAP;

          6. Liens securing Indebtedness described in Section 8.4(b) of the
     Credit Agreement;

          7. Liens securing Indebtedness described in Section 10(b)5 so long as
     such Liens are limited to the assets and property of, and the ownership
     interests in, the Subsidiaries of the Parent Guarantor referred to therein;
     and

          8. "Permitted Liens" as defined in the Credit Agreement and as defined
     in each of the AI 2 Credit Agreement and the Bermuda Holding 1/AI 1 Credit
     Agreement or substantially similar Liens permitted under the terms of any
     agreement pursuant to which a Subsidiary incurs Non-Recourse Indebtedness
     described in Section 10(b)5, so long as such Liens are limited to the
     assets and property of a Subsidiary of a Parent Guarantor financed by such
     Non-Recourse Indebtedness;

          9. cash deposits to secure the performance of bids, trade contracts,
     leases, statutory obligations, surety and appeal bonds, performance bonds
     and other obligations of a like nature incurred in the ordinary course of
     business;


                                       10



          10. easements, rights-of-way, restrictions and other similar
     encumbrances incurred in the ordinary course of business;

          11. liens in respect of repurchase obligations entered into in the
     ordinary course of business;

          12. additional Liens securing Indebtedness in an aggregate amount not
     exceeding $1,000,000; and

          13. liens in respect of any interest or title of a lessor under any
     real estate lease entered into by the Parent or any of its Subsidiaries in
     the ordinary course of its business and covering any furniture, fixtures or
     other personal property located at the property so leased and any cash
     deposit which may be required to be provided to the landlord

     (b) Indebtedness. The Parent will not, and will not permit any Subsidiary
     to incur, create, assume or permit to exist any Indebtedness, howsoever
     evidenced, except:

          1. Indebtedness owing to (including guaranties in favor of) the Agent
     or any Lender in connection with this Agreement, the Credit Agreement, any
     Note or other Loan Document;

          2. the endorsement of negotiable instruments for deposit or collection
     or similar transactions in the ordinary course of business;

          3. Indebtedness arising from swap, hedge or other derivative
     arrangements entered into in the ordinary course of business;

          4. Contingent Obligations of any Parent Guarantor in support of (a)
     any Subsidiary in connection with the lease of any aircraft-related asset
     pursuant to which such Subsidiary is the lessor, (b) any Subsidiary in
     connection with any purchase of any aircraft-related asset pursuant to
     which such Subsidiary is the seller or purchaser, (c) any obligations of
     any Borrower, any "Guarantor" (as defined in the Credit Agreement) or
     Parent Guarantor or (d) any Indebtedness described in Sections 10(b)3 or
     10(b)6;

          5. Non-Recourse Indebtedness incurred by any Subsidiary of a Parent
     Guarantor (that is not itself a Parent Guarantor) to finance or refinance
     the acquisition of, or improvement to, or conversion of, any
     aircraft-related assets in an aggregate principal amount outstanding at any
     time not greater than 100% of the depreciated book value of such
     aircraft-related assets (including, without limitation, any improvement
     thereto and expenses related thereto);

          6. Repurchase obligations entered into in the ordinary course of
     business;

          7. Indebtedness under or in respect of the AI 2 Credit Agreement, the
     Bermuda Holding I/AI 1 Credit Agreement or any Indebtedness set forth on
     Schedule 10(b)7;


                                       11



          8. Indebtedness of any Borrower, any "Guarantor" (as defined in the
     Credit Agreement) or any Parent Guarantor to any Borrower, any such
     "Guarantor" or any Parent Guarantor;

          9. Indebtedness of a Subsidiary incurred in the ordinary course of
     business under any lease of any Aircraft or Engine pursuant to which such
     Subsidiary is the lessor;

          10. Contingent Obligation of a Subsidiary that is not a Parent
     Guarantor in support of Indebtedness described in Section 10(b)5 of any of
     the Subsidiaries of the Parent Guarantor referred to therein; and

          11. additional Indebtedness of the Parent and its Subsidiaries up to
     but not exceeding $1,000,000 at any one time outstanding.

          (c) Transfer of Assets. The Parent will not, and will not permit any
     other Parent Guarantor to sell, lease, transfer or otherwise dispose of any
     Securitization Interest or other Parent Guarantor Collateral pledged by it
     to any Person which is not a Guarantor, a Parent Guarantor or a Borrower,
     unless such sale, lease, transfer or disposition is for cash or Cash
     Equivalents and upon fair and reasonable terms no less favorable to the
     Parent or the Parent Guarantor, as applicable, than would be obtained in a
     comparable arm's-length transaction with a Person not an Affiliate;

          (d) Subsidiaries; Investments. The Guarantor will not, and will not
     permit any Subsidiary to make any Investments in any Person that is an
     Affiliate of the Parent but is not a Subsidiary of the Parent (a
     "Restricted Investment");

          (e) Merger or Consolidation. The Guarantor will not, and will not
     permit any other Parent Guarantor to (i) Consolidate with or merge into any
     other Person, (ii) permit any other Person to merge into it, or (iii) in
     the case of the Parent only, liquidate, wind-up or dissolve; unless, in the
     case of clauses (i) and (ii), the surviving entity, by a written
     instrument, assumes the obligations of the applicable Parent Guarantor;

          (f) Transactions with Affiliates. The Guarantor will not, and will not
     permit any Subsidiary to enter into any transaction, including, without
     limitation, the purchase, sale, lease or exchange of property, real or
     personal, or the rendering of any service, with any Affiliate of such
     Person which is not a Borrower, a Guarantor (as defined in the Credit
     Agreement) or a Parent Guarantor, except (a) that such Affiliate may render
     services to any Borrower, any Guarantor (as defined in the Credit
     Agreement) or any Parent Guarantor for compensation at the same rates
     generally paid by Persons engaged in the same or similar businesses for the
     same or similar services, (b) that any Borrower, any Guarantor (as defined
     in the Credit Agreement) or any other Parent Guarantor may render services
     to such Affiliate for compensation at the same rates generally charged by
     such Person, (c) in either case in the ordinary course of business and
     pursuant to the reasonable requirements of such Person's business
     consistent with past practice of such Person and upon fair and reasonable
     terms no less favorable to such Person than would be obtained in a
     comparable arm's-length transaction with a Person not an Affiliate;


                                       12



          (g) Employee Benefit Plans; ERISA Affiliates; Employees. The Guarantor
     will not, and will not permit any Subsidiary to sponsor any Employee
     Benefit Plan or any Multiemployer Plan or agree to have any obligation to
     fund any such plan, or hire or retain any employee other than officers
     thereof;

          (h) Fiscal Year. The Guarantor will not, and will not permit any other
     Parent Guarantor to change its Fiscal Year, or have any fiscal year other
     than the Fiscal Year;

          (i) Negative Pledge Clauses. The Guarantor will not, and will not
     permit any Parent Guarantor to enter into or cause, suffer or permit to
     exist any agreement with any Person other than the Agent and the Lenders
     pursuant to this Agreement, the Credit Agreement or any other Loan
     Documents which prohibits or limits the ability of the Guarantor or such
     other Parent Guarantor to create, incur, assume or suffer to exist any Lien
     of any Security Instruments;

          (j) Partnerships. The Guarantor will not, and will not permit any
     Parent Guarantor to become a general partner in any general or limited
     partnership;

          (k) Bank Accounts. The Guarantor will not, and will not permit any
     Subsidiary to open or allow to exist any bank accounts for which the
     aggregate average daily balance during any calendar month, together with
     any bank accounts of the Guarantor and the other Parent Guarantors not
     subject to a Security Interest as provided below, will be in excess of
     $500,000 unless the Agent is granted a Security Interest in such account by
     subjecting such account to an Account Control Agreement (subject to Section
     11.17 of the Credit Agreement); provided that this provision shall not
     apply to any bank account maintained by any Subsidiary of the Guarantor on
     which a Lien is granted to secure Indebtedness permitted by Section 10(b)5,
     so long as such Subsidiary is the obligor of such Indebtedness.

          (l) Capital Call. The Guarantor will not, and will not permit any
     Subsidiary to reduce or otherwise alter the $100,000,000 Capital Call,
     other than to reduce such the amount of stock available to be purchased by
     amounts previously purchased thereunder; provided that the Parent may
     completely or partially release the $100,000,000 Capital Call
     simultaneously with the closing of any equity issuance by the Parent in an
     amount equal to the net proceeds of such equity issuance; or

          (m) Restricted Payments. The Guarantor will not, and will not permit
     any Subsidiary to declare or pay any dividend (other than dividends payable
     solely in common stock of the Person making such dividend) on, or make any
     payment on account of, or set apart assets for a sinking or other analogous
     fund for, the purchase, redemption, defeasance, retirement or other
     acquisition of, any Capital Stock of any Parent Guarantor, whether now or
     hereafter outstanding, or make any other distribution in respect thereof or
     make any Restricted Investment, either directly or indirectly, whether in
     cash or property or in obligations of any Subsidiary (collectively,
     "Restricted Payments"), except that:

          (i) any Subsidiary may make Restricted Payments to the Parent or any
     other Parent Guarantor; and


                                       13



          (ii) so long as no Default or Event of Default shall have occurred and
     be continuing or shall occur after giving effect thereto, the Parent may
     make Restricted Payments as follows:

               (A) at any time prior to the consummation of a Parent IPO, in an
          amount in the aggregate from and after December 31, 2005 not to exceed
          Consolidated Net Income from and after December 31, 2005 plus
          $25,000,000; provided that at the time of and after giving effect to
          such Restricted Payment, Consolidated Net Worth is at least
          $470,000,000; and

               (B) at any time after the consummation of a Parent IPO, in an
          amount to be determined by the Parent.

          (n) Clauses Restricting Restricted Payments. The Guarantor will not,
     and will not permit any other Parent Guarantor to enter into or suffer to
     exist or become effective any consensual encumbrance or restriction on its
     ability to (a) make Restricted Payments in respect of any Capital Stock of
     such Subsidiary held by, or pay any Indebtedness owed to, the Parent or any
     other Parent Guarantor or (b) make loans or advances to, or other
     Investments in, a Subsidiary that is a Parent Guarantor, except for such
     encumbrances or restrictions existing under or by reason of any
     restrictions existing under the Loan Documents

          (o) Consolidated Net Worth. The Parent will not permit Consolidated
     Net Worth at any time after the completion of a Parent IPO to be less than
     $500,000,000.

          11. EXPENSES. The Guarantor agrees to be liable for the payment of all
reasonable fees and expenses, including attorney's fees, incurred by the Agent
or any Guaranteed Party in connection with the enforcement of this Guaranty
Agreement.

          12. REINSTATEMENT. The Guarantor agrees that this Guaranty Agreement
shall continue to be effective or be reinstated, as the case may be, at any time
payment received by the Agent under the Credit Agreement or this Guaranty
Agreement is rescinded or must be restored for any reason.

          13. ATTORNEY-IN-FACT. The Guarantor hereby appoints the Agent as the
Guarantor's attorney-in-fact for the purposes of carrying out the provisions of
this Agreement and taking any action and executing any instrument which the
Agent may deem necessary or advisable to accomplish the purposes hereof, which
appointment is coupled with an interest and is irrevocable; provided, that the
Agent shall have and may exercise rights under this power of attorney only upon
the occurrence and during the continuance of an Event of Default.

          14. ABSOLUTE RIGHTS AND OBLIGATIONS. All rights of the Guaranteed
Parties, and all obligations of the Guarantor hereunder, shall be absolute and
unconditional irrespective of:

          1. any lack of validity or enforceability of the Credit Agreement, any
     other Loan Document or any other agreement or instrument relating to any of
     the Obligations;


                                       14



          2. any change in the time, manner or place of payment of, or in any
     other term of, all or any of the Obligations, or any other amendment or
     waiver of or any consent to any departure from the Credit Agreement, any
     other Loan Document or any other agreement or instrument relating to any of
     the Obligations;

          3. any exchange, release or non-perfection of any other collateral, or
     any release or amendment or waiver of or consent to departure from any
     guaranty, for all or any of the Obligations; or

          4. any other circumstances which might otherwise constitute a defense
     available to, or a discharge of, any Guarantor in respect of the
     Obligations or of this Agreement.

          15. RELIANCE. The Guarantor represents and warrants to the Agent, for
the benefit of the Guaranteed Parties, that: (a) the Guarantor has adequate
means to obtain from each Borrower, on a continuing basis, information
concerning such Borrower and such Borrower's financial condition and affairs and
has full and complete access to each Borrower's books and records; (b) the
Guarantor is not relying on any Guaranteed Party, its or their employees, agents
or other representatives, to provide such information, now or in the future; (c)
the Guarantor is executing this Guaranty Agreement freely and deliberately, and
understands the obligations and financial risk undertaken by providing this
Guaranty; (d) the Guarantor has relied solely on the Guarantor's own independent
investigation, appraisal and analysis of each Borrower and each Borrower's
financial condition and affairs in deciding to provide this Guaranty and is
fully aware of the same; and (e) the Guarantor has not depended or relied on any
Guaranteed Party, its or their employees, agents or representatives, for any
information whatsoever concerning any Borrower or any Borrower's financial
condition and affairs or other matters material to the Guarantor's decision to
provide this Guaranty or for any counseling, guidance, or special consideration
or any promise therefor with respect to such decision. The Guarantor agrees that
neither the Agent nor any Lender has any duty or responsibility whatsoever, now
or in the future, to provide to the Guarantor any information concerning any
Borrower or any Borrower's financial condition and affairs, other than as
expressly provided herein, and that, if the Guarantor receives any such
information from the Agent or any Lender, its or their employees, agents or
other representatives, the Guarantor will independently verify the information
and will not rely on the Agent or any Lender, its or their employees, agents or
other representatives, with respect to such information.

          16. DEFINITIONS. All terms used but not defined herein shall have the
meaning set forth in the Credit Agreement.

          17. ENTIRE AGREEMENT. This Guaranty Agreement, together with the
Credit Agreement and the other Loan Documents, constitutes and expresses the
entire understanding between the parties hereto with respect to the subject
matter hereof, and supersedes all prior agreements and understandings,
inducements, commitments or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof. Neither this Guaranty Agreement nor any portion or provision hereof may
be changed, altered, modified, supplemented, discharged, canceled, terminated,
or amended orally or in any manner other than by an agreement, in writing signed
by the parties hereto.


                                       15



          18. BINDING AGREEMENT; ASSIGNMENT. This Guaranty Agreement, and the
terms, covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto, and to their respective successors and assigns,
except that the Guarantor shall not be permitted to assign this Agreement or any
interest herein. All references herein to the Agent shall include any successor
thereof, each Lender and any other obliges from time to time of the Obligations.

          19. HEDGING AREEMENTS. All obligations of any Borrower under Hedging
Agreements to any Lender or any affiliate of a Lender shall be deemed to be
Obligations secured hereby (in each case unless otherwise agreed in writing by
such Lender or affiliate of such Lender), and each Lender or affiliate of a
Lender party to any such Hedging Agreement shall be deemed to be a Guaranteed
Party hereunder.

          20. SEVERABILITY. In case any Lien, security interest or other right
of any Guaranteed Party or any provision hereof shall be held to be invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability shall
not affect any other Lien, security interest or other right granted hereby or
provision hereof.

          21. COUNTERPARTS. This Guaranty Agreement may be executed in any
number of counterparts and all the counterparts taken together shall be deemed
to constitute one and the same instrument.

          22. INDEMNIFICATION. Without limitation of Section 11.9 of the Credit
Agreement or any other indemnification provision in any Loan Document, the
Guarantor hereby covenants and agrees to pay, indemnify, and hold the Guaranteed
Parties harmless from and against any and all other out-of-pocket liabilities,
costs, expenses or disbursements of any kind or nature whatsoever arising in
connection with any claim or litigation by any Person resulting from the
execution, delivery, enforcement, performance and administration of this
Guaranty Agreement or the Loan Documents, or the transactions contemplated
hereby or thereby, or in any respect relating to the Collateral or any
transaction pursuant to which the Guarantor has incurred any Obligations (all
the foregoing, collectively, the "indemnified liabilities"); provided, however,
that the Guarantor shall have no obligation hereunder with respect to
indemnified liabilities directly or primarily arising from the willful
misconduct or gross negligence of the Agent or any Guaranteed Party. The
agreements in this subsection shall survive repayment of all Obligations,
termination or expiration of this Guaranty Agreement and occurrence of the
Stated Termination Date.

          23. TERMINATION. This Guaranty Agreement shall terminate on the Stated
Termination Date, provided that the Loans and all other Obligations shall have
been paid in full.

          24. REMEDIES CUMULATIVE. All remedies hereunder are cumulative and are
not exclusive of any other rights and remedies of the Agent provided by law or
under the Credit Agreement, the other Loan Documents, or other applicable
agreements or instruments. The making of the Loans to the Borrowers pursuant to
the Credit Agreement and the extension of the Revolving Credit Facility to the
Borrowers pursuant to the Credit Agreement shall be conclusively presumed to
have been made or extended, respectively, in reliance upon the Guarantor's
guaranty of the Guarantor's obligations pursuant to the terms hereof. No failure
or


                                       16



delay by the Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power.

          25. NOTICES. Any notice required or permitted hereunder shall be
given, (a) with respect to the Guarantor, at the address of the Borrowers
indicated in Section 11.2 of the Credit Agreement and (b) with respect to the
Agent or a Lender, at the Agent's address indicated in Section 11.2 of the
Credit Agreement. All such notices shall be given and shall be effective as
provided in Section 11.2 of the Credit Agreement.

          26. GOVERNING LAW.

     (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.

     (b) THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS THAT
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY STATE OR FEDERAL
COURT SITTING IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, UNITED STATES OF
AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY WAIVES
ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE OR TO
THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND IRREVOCABLY SUBMITS
GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH
SUIT, ACTION OR PROCEEDING.

     (c) THE GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL
SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN ANY
SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE
PREPAID) TO THE GUARANTOR AT THE ADDRESS SET FORTH BELOW, OR BY ANY OTHER METHOD
OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW
YORK.

               TO GUARANTOR
               C/O AIRCASTLE ADVISOR LLC
               300 FIRST STAMFORD PLACE - FIFTH FLOOR
               STAMFORD, CT 06902
               ATTN: LEASE MANAGEMENT
               E-MAIL: LEASEMANAGEMENT@AIRCASTLEINV.COM
               FACSIMILE NUMBER: (917) 591-9106
               CONFIRMATION NUMBER: (203) 504-1020


                                       17



     (d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL PRECLUDE THE
AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS IN THE COURTS OF ANY
OTHER JURISDICTION. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH
JURISDICTION, THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR
HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE
AVAILABLE TO IT.

     (e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES
UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH
THE FOREGOING, THE GUARANTOR HEREBY AGREES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY AND THE GUARANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR PROCEEDING
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

                            [SIGNATURE PAGE FOLLOWS.]


                                       18



          IN WITNESS WHEREOF, the parties have duly executed this Guaranty
Agreement on the day and year first written above.

                                      PARENT GUARANTOR:

                                      AIRCASTLE INVESTMENT LIMITED, as Guarantor


                                      By: /s/ Mark Zeidman
                                          ------------------------------------
                                      Name: Mark Zeidman
                                            ----------------------------------
                                      Title: CFO
                                             ---------------------------------


                                       19



                                      AGENT:

                                      JPMORGAN CHASE BANK, N.A.,
                                      as Agent for the Lenders


                                      By: /s/ Matthew H. Massie
                                          ------------------------------------
                                      Name: Matthew H. Massie
                                            ----------------------------------
                                      Title: Managing Director
                                             ---------------------------------


                                       20



                                                                  EXECUTION COPY

                     364-DAY SENIOR SECURED CREDIT AGREEMENT

                                  by and among

                        AIRCASTLE IRELAND NO. 2 LIMITED,

                           THE BORROWERS PARTY HERETO,
                                  as Borrowers,

                                 CITIBANK, N.A.,
                                   as Lender,

                                 CITIBANK, N.A.,
                                    as Agent,

                                       and

                THE OTHER LENDERS PARTY HERETO FROM TIME TO TIME

                          Dated as of October 25, 2005



                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

                                    ARTICLE I
                              Definitions and Terms

1.1.     Definitions.....................................................     2
1.2.     Rules of Interpretation.........................................    20
1.3.     Currency Equivalents Generally..................................    21

                                   ARTICLE II
                             The TERM LOAN Facility

2.1.     Term Loans......................................................    21
2.2.     Payment of Interest.............................................    23
2.3.     Payment of Principal............................................    23
2.4.     Manner of Payment...............................................    25
2.5.     Notes...........................................................    25
2.6.     Pro Rata Payments...............................................    25
2.7.     [Intentionally Omitted].........................................    25
2.8.     Conversions and Elections of Subsequent Interest Periods........    25
2.9.     Fees............................................................    26
2.10.    Use of Proceeds.................................................    26
2.11.    Releases........................................................    26
2.12.    Eligible Lease Involving Eligible Intermediary..................    27

                                   ARTICLE III
                                    Security

3.1.     Security........................................................    27
3.2.     Further Assurances..............................................    28
3.3.     Information Regarding Collateral................................    28
3.4.     Quiet Enjoyment.................................................    28

                                   ARTICLE IV
                             Change in Circumstances

4.1.     Requirements of Law.............................................    28
4.2.     Limitation on Types of Loans....................................    30
4.3.     Illegality......................................................    30
4.4.     Treatment of Affected Loans.....................................    30
4.5.     Compensation....................................................    31
4.6.     Taxes...........................................................    31

                                    ARTICLE V
                           Conditions to Making Loans

5.1.     Conditions of Closing...........................................    34
5.2.     Conditions of Term Loans........................................    36

                                   ARTICLE VI


                                        i



                         Representations and Warranties

6.1.     Organization and Authority......................................    38
6.2.     Loan Documents..................................................    39
6.3.     Solvency........................................................    39
6.4.     Subsidiaries and Stockholders...................................    40
6.5.     Ownership Interests.............................................    40
6.6.     Liens...........................................................    40
6.7.     Title to Properties.............................................    40
6.8.     Taxes...........................................................    40
6.9.     Other Agreements................................................    40
6.10.    Litigation......................................................    40
6.11.    Federal Regulations.............................................    41
6.12.    Investment Company..............................................    41
6.13.    Patents, Etc....................................................    41
6.14.    No Untrue Statement.............................................    41
6.15.    No Consents, Etc................................................    41
6.16.    Employee Benefit Plans..........................................    42
6.17.    No Default......................................................    43
6.18.    Environmental Laws..............................................    43
6.19.    Employment Matters..............................................    43
6.20.    Withholding Taxes...............................................    43
6.21.    No Immunity.....................................................    43

                                   ARTICLE VII
                              Affirmative Covenants

7.1.     Financial Reports, Etc..........................................    43
7.2.     Maintain Properties.............................................    45
7.3.     Existence, Qualification, Etc...................................    45
7.4.     Regulations and Taxes...........................................    45
7.5.     Insurance.......................................................    45
7.6.     True Books......................................................    45
7.7.     Right of Inspection.............................................    45
7.8.     Observe all Laws................................................    46
7.9.     Governmental Licenses...........................................    46
7.10.    Certificates of Aircraft Registration...........................    46
7.11.    Officer's Knowledge of Default..................................    46
7.12.    Suits or Other Proceedings......................................    46
7.13.    Notice of Environmental Complaint or Condition..................    46
7.14.    Environmental Compliance........................................    46
7.15.    Indemnification of Environmental Liabilities....................    47
7.16.    Further Assurances..............................................    47
7.17.    Swap Agreements.................................................    47
7.18.    Continued Operations............................................    47
7.19.    Maintenance of Aircraft; Other Covenants and Restrictions;
            Non-Discrimination...........................................    47
7.20.    Re-registration of Aircraft.....................................    48


                                       ii



7.21.    Servicer........................................................    48
7.22.    Employee Benefit Plans..........................................    48
7.23.    Accounts........................................................    48
7.24.    Eligible Lease; Lessee Notice...................................    48

                                  ARTICLE VIII
                               Negative Covenants

8.1.     Acquisitions....................................................    49
8.2.     Capital Expenditures............................................    49
8.3.     Liens...........................................................    49
8.4.     Indebtedness....................................................    50
8.5.     Transfer of Assets..............................................    50
8.6.     Subsidiaries; Investments.......................................    51
8.7.     Merger or Consolidation.........................................    51
8.8.     Transactions with Affiliates....................................    51
8.9.     Employee Benefit Plans; ERISA Affiliates; Employees.............    51
8.10.    Fiscal Year.....................................................    51
8.11.    Dissolution, etc................................................    51
8.12.    Change in Control...............................................    51
8.13.    Negative Pledge Clauses.........................................    51
8.14.    Partnerships....................................................    52
8.15.    Business and Operations.........................................    52
8.16.    Ownership, Operation and Leasing of Financed Aircraft...........    52
8.17.    Servicing Agreement.............................................    53
8.18.    Representations regarding Agent and Lenders.....................    53
8.19.    Beneficial Owner................................................    53
8.20.    Organizational Documents........................................    53

                                   ARTICLE IX
                       Events of Default and Acceleration

9.1.     Events of Default...............................................    54
9.2.     Agent to Act....................................................    57
9.3.     Cumulative Rights...............................................    57
9.4.     No Waiver.......................................................    57
9.5.     Allocation of Proceeds..........................................    57
9.6.     Activities of Eligible Carriers.................................    58

                                    ARTICLE X
                                    The Agent

10.1.    Appointment, Powers, and Immunities.............................    58
10.2.    Reliance by Agent...............................................    59
10.3.    Defaults........................................................    59
10.4.    Rights as Lender................................................    60
10.5.    Indemnification.................................................    60
10.6.    Non-Reliance on Agent and Other Lenders.........................    60
10.7.    Resignation of Agent............................................    60
10.8.    Fees............................................................    61


                                       iii



                                   ARTICLE XI
                                  Miscellaneous

11.1.    Assignments and Participations..................................    61
11.2.    Notices.........................................................    63
11.3.    Right of Set-off; Adjustments...................................    64
11.4.    Survival........................................................    65
11.5.    Expenses........................................................    65
11.6.    Amendments and Waivers..........................................    65
11.7.    Counterparts....................................................    66
11.8.    Return of Funds.................................................    66
11.9.    Indemnification; Limitation of Liability........................    67
11.10.   Severability....................................................    68
11.11.   Entire Agreement................................................    68
11.12.   Payments........................................................    68
11.13.   Confidentiality.................................................    69
11.14.   Governing Law; Waiver of Jury Trial.............................    69
11.15.   Waiver of Immunity..............................................    70
11.16.   Judgment Currency...............................................    70
11.17.   USA PATRIOT Act.................................................    71


                                       iv



EXHIBITS

EXHIBIT A          Applicable Commitment Percentages
EXHIBIT B          Form of Assignment and Acceptance
EXHIBIT C          Notice of Appointment (or Revocation) of Authorized
                   Representative
EXHIBIT D          Form of Borrowing Notice
EXHIBIT E          Form of Interest Rate Selection Notice
EXHIBIT F          Form of Note
EXHIBIT G-1        Form of Opinion of Milbank, Tweed, Hadley & McCloy LLP,
                   counsel to the Credit Parties (at Closing)
EXHIBIT G-2        Form of Opinion of Ray, Quinney & Nebeker, counsel to the
                   Qualified Trustee
EXHIBIT G-3        Form of Opinion of Conyers Dill & Pearman, Bermuda counsel to
                   the Parent
EXHIBIT G-4        Form of Opinion of A&L Goodbody, Irish counsel to the
                   Beneficial Owner
EXHIBIT G-5        Form of Opinion of FAA Counsel
EXHIBIT G-6        Form of Opinion of counsel to the lessee under an Eligible
                   Lease
EXHIBIT G-7        Form of Opinion of internal counsel to the lessee under an
                   Eligible Lease
EXHIBIT G-8        Form of Opinion of counsel to the Borrowers (at Borrowing)
EXHIBIT H          Compliance Certificate
EXHIBIT I          Form of Facility Guaranty
EXHIBIT J          Form of Security Agreement
EXHIBIT K          List of Eligible Aircraft
EXHIBIT L          Required Insurance on Each Aircraft
EXHIBIT M          Form of Lessee Notice
EXHIBIT N          Form of Parent Support Agreement
EXHIBIT O          Form of Lockbox Agreement
EXHIBIT P          Form of Servicing Agreement
EXHIBIT Q          Form of Lease
EXHIBIT R-1        Form of Pledge and Security Agreement
EXHIBIT R-2        Form of Irish Pledge

SCHEDULES

Schedule 3.3       Information Regarding Collateral
Schedule 6.8       Tax Matters
Schedule 6.10      Litigation
Schedule 6.18      Environmental Laws
Schedule 7.19(a)   Maintenance, Return, Alteration, Replacement, Pooling and
                   Lease


                                        v



                     364-DAY SENIOR SECURED CREDIT AGREEMENT

          THIS 364-DAY SENIOR SECURED CREDIT AGREEMENT, dated as of October 25,
2005 (as may be amended, supplemented or otherwise modified from time to time,
the "AGREEMENT"), is made by and among:

          (a) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, as Trustee (as
     defined herein) under the Trust Agreement (MSN 333), dated as of October
     19, 2005 ("BORROWER 333"), with the Beneficial Owner (as defined below), as
     trustor;

          (b) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, as Trustee
     under the Trust Agreement (MSN 337), dated as of October 19, 2005
     ("BORROWER 337"), with the Beneficial Owner as trustor;

          (c) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, as Trustee
     under the Trust Agreement (MSN 342), dated as of October 19, 2005
     ("BORROWER 342" and, together with Borrower 333 and Borrower 337, the
     "BORROWERS"), with the Beneficial Owner, as trustor;

          (d) AIRCASTLE IRELAND NO. 2 LIMITED, an Irish private limited
     liability company, as trustor and sole beneficiary of each of the Trusts
     (as defined herein) (in such capacity, the "BENEFICIAL OWNER");

          (e) CITIBANK, N.A., a national banking association, in its capacity as
     a Lender ("CITIBANK"), and each other financial institution which may
     hereafter execute and deliver an instrument of assignment with respect to
     this Agreement pursuant to Section 11.1 (such financial institutions
     hereinafter being referred to individually as a "LENDER" or collectively as
     the "LENDERS"); and

          (f) CITIBANK, N.A., in its capacity as agent for the Lenders (in such
     capacity, and together with any successor agent appointed in accordance
     with the terms of Section 10.7, the "AGENT").

                                   WITNESSETH:

          WHEREAS, the Borrowers have requested that the Lenders make available
to the Borrowers a term loan facility of up to $110,248,500, the proceeds of
which are to be used solely to provide financing for a portion of the Purchase
Price to be paid by the Borrowers for the purchase of Eligible Aircraft;

          WHEREAS, the Lenders are willing to make such term loan facility
available to the Borrowers upon the terms and conditions set forth herein;

          NOW, THEREFORE, the Borrowers, the Lenders and the Agent hereby agree
as follows:



                                    ARTICLE I

                              DEFINITIONS AND TERMS

          1.1. Definitions. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:

          "ACCOUNT" has the meaning given in the Lockbox Agreement.

          "ACQUISITION" means the acquisition of any beneficial interest, equity
     interest or other ownership interest in another Person (including the
     purchase of an option, warrant or convertible or similar type security to
     acquire such interest at the time it becomes exercisable by the holder
     thereof), whether by purchase of such interest or upon exercise of an
     option or warrant for, or conversion of securities into, such interest.

          "AFFILIATE" means any Person (i) which directly or indirectly through
     one or more intermediaries controls, or is controlled by, or is under
     common control with any Guarantor or any Borrower; or (ii) which
     beneficially owns or holds 10% or more of any class of the outstanding
     voting stock (or in the case of a Person which is not a corporation, 10% or
     more of the equity interest or beneficial interest) of any Guarantor or any
     Borrower; or 10% or more of any class of the outstanding voting stock (or
     in the case of a Person which is not a corporation, 10% or more of the
     equity interest or beneficial interest) of which is beneficially owned or
     held by any Guarantor or any Borrower; provided, however, at the time any
     Guarantor registers any security issued by it pursuant to the Securities
     Act of 1933, as amended, the figure "10%" used in this definition shall
     automatically change to "5%" without further action. The term "control"
     means the possession, directly or indirectly, of the power to direct or
     cause the direction of the management and policies of a Person, whether
     through ownership of voting stock, by contract or otherwise.

          "AGREEMENT" has the meaning given to such term in the first recital to
     this Agreement.

          "AIRCLAIMS" means Airclaims Inc.

          "AIRCRAFT" means any Stage III fixed wing airframe together with the
     jet Engines therefor whether or not affixed thereto.

          "APPLICABLE AIRCRAFT ADVANCE RATE" with respect to any Eligible
     Aircraft means 67% of the Applicable Aircraft Borrowing Base.

          "APPLICABLE AIRCRAFT BORROWING BASE" with respect to any Eligible
     Aircraft means the product of (a) the lesser of (i) the Purchase Price of
     such Eligible Aircraft, and (ii) the current market value of such Eligible
     Aircraft based upon an appraisal by Airclaims dated not more than 25 days
     prior to the date of funding of the Loan to be


                                        2



     made hereunder with respect to such Eligible Aircraft, and (b) the
     Applicable Aircraft Advance Rate.

          "APPLICABLE BORROWER" means, with respect to any Financed Aircraft,
     the Borrower that has requested or received a Loan to enable such Borrower
     to purchase such Financed Aircraft.

          "APPLICABLE CARRIER" means, with respect to any Financed Aircraft, the
     Eligible Carrier that has leased such Financed Aircraft from the Applicable
     Borrower, or from the Applicable Intermediary in accordance with Section
     2.12.

          "APPLICABLE COMMITMENT PERCENTAGE" means, with respect to each Lender
     at any time, a fraction, the numerator of which shall be such Lender's Term
     Loan Commitment and the denominator of which shall be the Total Term Loan
     Commitment, which Applicable Commitment Percentage for each Lender as of
     the Closing Date is as set forth in Exhibit A; provided that the Applicable
     Commitment Percentage of each Lender shall be increased or decreased to
     reflect any assignments to or by such Lender effected in accordance with
     Section 11.1.

          "APPLICABLE FOREIGN AVIATION LAW" means, with respect to any Aircraft,
     any applicable law (other than the FAA Act) of any country or subdivision
     thereof, governing the registration, ownership, operation, or leasing of
     all or any part of such Aircraft, or the creation, recordation,
     maintenance, perfection or priority or Liens on all or any part of such
     Aircraft.

          "APPLICABLE FOREIGN JURISDICTION" means, with respect to any Aircraft,
     any jurisdiction that administers an Applicable Foreign Aviation Law.

          "APPLICABLE INTERMEDIARY" means, with respect to any Financed
     Aircraft, the Eligible Intermediary that has leased such Aircraft from the
     Applicable Borrower, and has leased such Aircraft to the Applicable
     Carrier, in each case in accordance with Section 2.12.

          "APPLICABLE LENDING OFFICE" means, for each Lender and for each Type
     of Loan, the "Lending Office" for such Lender designated for such Type of
     Loan on the signature pages hereof or such other office of such Lender as
     such Lender may from time to time specify to the Agent and the Borrowers by
     written notice in accordance with the terms hereof as the office by which
     its Loans are to be made and maintained; provided that, if such Lender is
     not a "resident" (as that term is used in the Treaty) of the U.S., a
     "qualified person" (as that term is used in the Treaty) or a "bank" (as
     that term is used in Article 23 of the Treaty) that is a resident of
     Ireland, the "Applicable Lending Office" must be located in the U.S. or
     Ireland.

          "APPLICABLE MARGIN" means:

               (a) with respect to the Eurodollar Rate, 1.50%; and

               (b) with respect to the Base Rate, 0.50%.


                                        3



          "APPRAISED VALUE" means, with respect to any Aircraft as of any date,
     an appraisal of the current market value of such Aircraft by Airclaims
     dated not more than 10 days prior to such date.

          "ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance
     substantially in the form of Exhibit B (with blanks appropriately filled
     in) delivered to the Agent in connection with an assignment of a Lender's
     interest under this Agreement pursuant to Section 11.1.

          "AUTHORIZED REPRESENTATIVE" means any of the President, Chief
     Executive Officer, Chief Operating Officer, Chief Financial Officer or Vice
     President of the Parent, or the Beneficial Owner, in each case as
     authorized representative for each of the Borrowers, or any other Person
     expressly designated by the Board of Directors of each of the Borrowers (or
     the appropriate committee thereof) as an Authorized Representative of each
     of the Borrowers as set forth from time to time in a certificate in the
     form of Exhibit C.

          "BASE RATE" means a fluctuating interest rate per annum in effect from
     time to time, which rate per annum shall at all times be equal to the
     higher of:

               (a) the rate of interest announced publicly by Citibank in New
          York, New York, from time to time, as Citibank's base rate; and

               (b) 1/2 of one percent per annum above the Federal Funds Rate.

          "BASE RATE LOAN" means a Loan for which the rate of interest is
     determined by reference to the Base Rate.

          "BENEFICIAL OWNER" has the meaning given to such term in the preamble
     to this Agreement.

          "BOARD" means the Board of Governors of the Federal Reserve System (or
     any successor body).

          "BORROWER" has the meaning given to such term in the preamble to this
     Agreement.

          "BORROWING NOTICE" means the notice delivered by an Authorized
     Representative in connection with a Loan under the Term Loan Facility, in
     the form of Exhibit D.

          "BUSINESS DAY" means, (i) with respect to any Base Rate Loan, any day
     which is not a Saturday, Sunday or a day on which banks in the State of New
     York are authorized or obligated by law, executive order or governmental
     decree to be closed, and (ii) with respect to any Eurodollar Rate Loan, any
     day which is a Business Day, as described above, and on which the relevant
     international financial markets are open for the transaction of business
     contemplated by this Agreement in London, England and New York, New York.


                                        4



          "CAPITAL EXPENDITURES" means (i) all expenditures (whether paid in
     cash or accrued as liabilities) by any Credit Party or any Subsidiary that
     would be classified as "property, plant or equipment" or comparable items
     on the consolidated balance sheet of such Person, including without
     limitation all transactional costs incurred in connection with such
     expenditures provided the same have been capitalized, excluding, however,
     the amount of any Capital Expenditures paid for with proceeds of casualty
     insurance as evidenced in writing and submitted to the Agent together with
     any compliance certificate delivered pursuant to Section 7.1(a) or (b), and
     (ii) any Capital Lease entered into by any Credit Party or any Subsidiary,
     in each case in accordance with GAAP.

          "CAPITAL LEASES" means all leases which have been or should be
     capitalized in accordance with GAAP as in effect from time to time
     including Statement No. 13 of the Financial Accounting Standards Board and
     any successor thereof.

          "CHANGE OF CONTROL" means, at any time, that 100% of the beneficial
     ownership of any Credit Party is not owned, directly or indirectly, by the
     Parent.

          "CLOSING DATE" means the date as of which this Agreement is executed
     by the Borrowers, the Beneficial Owner, the Lenders and the Agent and on
     which the conditions set forth in Section 5.1 have been satisfied.

          "CODE" means the Internal Revenue Code of 1986, as amended, and any
     regulations promulgated thereunder.

          "COLLATERAL" means, collectively, all property of any Credit Party or
     any other Person in which the Agent or any Lender is granted a Lien as
     security for all or any portion of the Obligations under any Security
     Instrument including, without limitation the Leases, the Pledged Interests
     and the other collateral described in the Security Agreement, Pledge
     Agreement, Lockbox Agreement and other Security Instruments. For the
     avoidance of doubt, none of the Security Instruments shall provide for the
     grant of a perfected security interest on the Financed Aircraft.

          "CONTINGENT OBLIGATION" of any Person means all contingent liabilities
     required (or which, upon the creation or incurring thereof, would be
     required) to be included in the financial statements (including footnotes)
     of such Person in accordance with GAAP, including Statement No. 5 of the
     Financial Accounting Standards Board, all Rate Hedging Obligations and any
     obligation of such Person guaranteeing or in effect guaranteeing any
     Indebtedness, dividend or other obligation of any other Person (the
     "primary obligor") in any manner, whether directly or indirectly, including
     obligations of such Person however incurred:

               (1) to purchase such Indebtedness or other obligation or any
          property or assets constituting security therefor;

               (2) to advance or supply funds in any manner (i) for the purchase
          or payment of such Indebtedness or other obligation, or (ii) to
          maintain a minimum working capital, net worth or other balance sheet
          condition or any income statement condition of the primary obligor;


                                        5



               (3) to grant or convey any lien, security interest, pledge,
          charge or other encumbrance on any property or assets of such Person
          to secure payment of such Indebtedness or other obligation;

               (4) to lease property or to purchase securities or other property
          or services primarily for the purpose of assuring the owner or holder
          of such Indebtedness or obligation of the ability of the primary
          obligor to make payment of such Indebtedness or other obligation; or

               (5) otherwise to assure the owner of the Indebtedness or such
          obligation of the primary obligor against loss in respect thereof.

          "CONTINUE", "CONTINUATION", and "CONTINUED" refers to the continuation
     pursuant to Section 2.8 hereof of a Eurodollar Rate Loan of one Type as a
     Eurodollar Rate Loan of the same Type from one Interest Period to the next
     Interest Period.

          "CONVENTION" means the Convention on the International Recognition of
     Rights in Aircraft signed initially at Geneva in 1948, as the same may be
     amended, modified or supplemented from time to time.

          "CONVERT", "CONVERSION", and "CONVERTED" refers to a conversion
     pursuant to Section 2.8 or Article IV of one Type of Loan into another Type
     of Loan.

          "CREDIT PARTY" means, collectively, each Borrower, each Guarantor and
     each other Person (if any) providing Collateral pursuant to any Security
     Instrument; provided that, notwithstanding anything to the contrary in any
     Loan Document, Holdings shall not be a "Credit Party".

          "DEFAULT" means any event or condition which, with the giving or
     receipt of notice or lapse of time or both, would constitute an Event of
     Default hereunder, provided that if, pursuant to Section 9.6, such event or
     condition is not deemed to be a breach of the Credit Parties' obligations
     under this Agreement and the other Loan Documents, such event or condition
     shall not be deemed to be a "Default" except for the purposes of Section
     7.11, the first two sentences of Section 10.3, the Compliance Certificate
     in the form of Exhibit H.

          "DEFAULT RATE" means (i) with respect to each Eurodollar Rate Loan,
     until the end of the Interest Period applicable thereto, a rate of two
     percent (2%) above the Eurodollar Rate applicable to such Loan plus the
     Applicable Margin, and thereafter a rate of interest per annum which shall
     be two percent (2%) above the Base Rate plus the Applicable Margin, (ii)
     with respect to Base Rate Loans and any other amounts owing under the Loan
     Documents, at a rate of interest per annum which shall be two percent (2%)
     above the Base Rate plus the Applicable Margin and (iii) in any case, the
     maximum rate permitted by applicable law, if lower.

          "DEPOSITARY BANK" means a bank, trust company or other Person,
     satisfactory to the Agent, that executes the Lockbox Agreement in the
     capacity of "Depositary Bank" thereunder.


                                        6



          "DOLLARS" and the symbol "$" means dollars constituting legal tender
     for the payment of public and private debts in the United States of
     America.

          "ELIGIBLE AIRCRAFT" means the Aircraft described on Exhibit K attached
     hereto.

          "ELIGIBLE ASSIGNEE" means (i) Citibank, N.A., (ii) an affiliate of
     Citibank, N.A. that is "resident" (as that term is used in the Treaty) of
     the U.S. or a "qualified person" (as that terms is used in the Treaty) and
     (iii) any other Person approved by the Agent that is either (A) a resident
     of the U.S., (B) a qualified person under the Treaty or (C) a "bank" (as
     that term is used in Article 23 of the Treaty) that is a resident of
     Ireland or, if not such a resident, in whose hands the income from the
     Loans is attributable to a permanent establishment of such Person in the
     U.S. or Ireland; provided, however, that neither any Borrower nor an
     affiliate of any Borrower shall qualify as an Eligible Assignee.

          "ELIGIBLE CARRIER" means any air carrier duly licensed to carry
     passengers or cargo under applicable law, foreign or domestic; provided
     that on the date of funding of any Loans hereunder with respect to any
     Eligible Aircraft, the only Eligible Carrier shall be US Airways, Inc., a
     Delaware Corporation.

          "ELIGIBLE INTERMEDIARY" means, with respect to any Financed Aircraft,
     a Person that is a direct or indirect, wholly-owned special purpose,
     bankruptcy-remote subsidiary of the Beneficial Owner or the Applicable
     Borrower.

          "ELIGIBLE LEASE" or "ELIGIBLE LEASES" means a fully-executed Lease by
     a Borrower or Eligible Intermediary (as lessor) to an Eligible Carrier (as
     lessee) of an Eligible Aircraft, which Lease satisfies each of the
     following requirements (it being agreed that the form of Lease attached
     hereto as Exhibit Q satisfies the requirements of clauses (a) through (f)
     below, and provided that on the date of funding of any Loans hereunder with
     respect to any Eligible Aircraft, only a Lease in the form of (and having
     economic and other terms as set forth in) Exhibit Q entered into with US
     Airways, Inc., a Delaware Corporation, as lessee, shall be an Eligible
     Lease):

               (a) such Lease is a "triple net lease" (subject to any
          arrangement whereby the Borrower or Eligible Intermediary, as lessor,
          and the Eligible Carrier agree to share certain expenses relating to
          aircraft or engine maintenance, directives, service bulletins or
          similar items) and requires the lessee to maintain the insurance
          described in Exhibit L attached hereto with respect to such Aircraft,
          and to bear all risk of loss, damage or liability with respect to such
          Aircraft;

               (b) if the Eligible Carrier is domiciled in the United States,
          the lessor is entitled to the benefits of Section 1110 of the U.S.
          bankruptcy code with respect to the lessor's rights against such
          lessee, including without limitation the rights to require performance
          of such lessee's obligations under the Lease or return such Aircraft
          during such lessee's bankruptcy or insolvency;

               (c) such Lease requires the lessee to comply with covenants and
          restrictions regarding the maintenance, return, alteration,
          replacement, pooling


                                        7



          and sublease of such Aircraft, which covenants and restrictions
          satisfy the requirements of Section 7.19(a) and Schedule 7.19(a)
          hereto;

               (d) if such Lease contains a purchase option, the expected
          exercise price is equal to or greater than the expected outstanding
          principal and accrued interest on all Loans relating to such Aircraft
          as of the date of exercise of such option;

               (e) such Lease prohibits the lessee from flying or locating such
          Aircraft in any country in violation of the applicable laws of any
          jurisdiction;

               (f) such Lease provides rent payments in US dollars and contains
          customary covenants and restrictions relating to re-registration of
          such Aircraft; which covenants and restrictions satisfy the
          requirements of the Security Agreement;

               (g) at the time of any Loan hereunder relating to such Aircraft
          or, if later, at the time of the entering into such Lease, no
          prepayment shall have been made under such Lease, and no Lease payment
          obligation shall have been accelerated; provided that it is understood
          that a scheduled rental payment to be paid in advance for a rental
          period in accordance with the Lease terms is not deemed to be a
          prepayment;

               (h) at the time of any Loan relating to such Aircraft or, if
          later, at the time of the delivery of such Aircraft under such Lease,
          the applicable lessor shall have delivered a Lessee Notice to the
          applicable lessee; and

               (i) either (i) such Lease is a "true lease" lease (and not a
          lease intended as security) under applicable commercial law and other
          applicable law relating to creditors' rights and bankruptcy; or (ii)
          such Lease grants to such Borrower, and such Borrower has at all times
          under the FAA Act (in the case of Aircraft registered in the United
          States), a perfected first priority mortgage Lien on such Aircraft
          (subject only to Permitted Liens), which Lien has been assigned to the
          Agent;

     provided, however, that in the circumstances described in Section 2.12,
     "Eligible Lease" means, individually and collectively, (X) a fully-executed
     Lease by a Borrower (as lessor) to the Applicable Intermediary (as lessee)
     of an Eligible Aircraft, which Lease satisfies each of the requirements for
     an "Eligible Lease" set forth in clauses (a) through (i) above except that
     the lessee is not an Eligible Carrier, and (Y) a fully-executed sublease by
     such Applicable Intermediary (as sublessor) to an Eligible Carrier (as
     sublessee) of such Financed Aircraft, which Eligible Carrier is not a U.S.
     Carrier, and which Lease is identical in all material respects (other than
     the Persons that are lessor and lessee) to the Lease described in clause
     (X) above, and which Lease satisfies all the requirements for an "Eligible
     Lease" set forth in clauses (a) through (i) above, except that the lessor
     is not a Borrower.


                                        8



          "EMPLOYEE BENEFIT PLAN" means, at a particular time, any employee
     benefit plan that is covered by ERISA and in respect of which any Guarantor
     or any Borrower or any of their respective ERISA Affiliates is (or, if such
     plan were terminated at such time, would under Section 4069 of ERISA be
     deemed to be) an "employer" as defined in Section 3(5) of ERISA.

          "ENGINE" means any aircraft jet engine.

          "ENVIRONMENTAL LAWS" means any federal, state or local statute, law,
     ordinance, code, rule, regulation, order, decree, permit or license
     regulating, relating to, or imposing liability or standards of conduct
     concerning, any environmental matters or conditions, environmental
     protection or conservation, including, without limitation, the
     Comprehensive Environmental Response, Compensation and Liability Act of
     1980, as amended; the Superfund Amendments and Reauthorization Act of 1986,
     as amended; the Resource Conservation and Recovery Act, as amended; the
     Toxic Substances Control Act, as amended; the Clean Air Act, as amended;
     and the Clean Water Act, as amended; in each case together with all
     regulations promulgated thereunder, and any other "Superfund" or
     "Superlien" law.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
     amended from time to time and any regulations issued thereunder.

          "ERISA AFFILIATE" means an entity, whether or not incorporated, that
     is under common control with any Guarantor or any Borrower within the
     meaning of Section 4001 of ERISA or is part of a group that includes any
     Guarantor or any Borrower and that is treated as a single employer within
     the meaning of Section 414 of the Code.

          "EURODOLLAR RATE" means, for any Interest Period for any Eurodollar
     Rate Loan, an interest rate per annum equal to the rate per annum obtained
     by dividing (a) the Interbank Offered Rate for such Interest Period by (b)
     a percentage equal to 100% minus the Reserve Requirement for such Interest
     Period.

          "EURODOLLAR RATE LOAN" means a Loan for which the rate of interest is
     determined by reference to the Eurodollar Rate.

          "EVENT OF DEFAULT" means any of the occurrences set forth as such in
     Section 9.1.

          "EVENT OF LOSS" has the meaning assigned to such term in the Eligible
     Leases.

          "FAA" means the United States Federal Aviation Administration.

          "FAA ACT" means 49 U.S.C. Subtitle VII, Sections 40101 et seq., as
     amended from time to time, any regulations promulgated thereunder and any
     successor provision.

          "FAA COUNSEL" means DeBee & Gilchrist, Daugherty, Fowler and Peregrin
     & Haught, Crowe & Dunlevy, or any other law firm having nationally
     recognized expertise in FAA matters acceptable to the Agent.


                                        9



          "FAA RECORDING OFFICE" means the office of the FAA in Oklahoma City,
     Oklahoma, maintained as the office for the recordation of Liens on Aircraft
     and pursuant to the FAA Act, and any successor or additional office
     performing the same or a comparable function.

          "FACILITY GUARANTY" means a Guaranty Agreement from each of the
     Guarantors for the benefit of the Agent and the Lenders (substantially in
     the form of Exhibit I attached hereto), as the same may be amended,
     modified or supplemented from time to time.

          "FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
     upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
     average of the rates on overnight Federal funds transactions with members
     of the Federal Reserve System arranged by Federal funds brokers on such
     day, as published by the Federal Reserve Bank of New York on the Business
     Day next succeeding such day; provided that (a) if such day is not a
     Business Day, the Federal Funds Rate for such day shall be such rate on
     such transactions on the next preceding Business Day as so published on the
     next succeeding Business Day, and (b) if no such rate is so published on
     such next succeeding Business Day, the Federal Funds Rate for such day
     shall be the average rate charged to the Agent (in its individual capacity)
     on such day on such transactions as determined by the Agent.

          "FEE LETTER" means the Fee Letter dated October 25, 2005, between the
     Beneficial Owner and Citigroup Global Markets Inc.

          "FINANCED AIRCRAFT" with respect to any Loan means the Eligible
     Aircraft, the acquisition of which was or is to be financed in whole or in
     part by such Loan.

          "FISCAL YEAR" means the twelve-month fiscal period of the Parent, the
     Borrowers and their Subsidiaries commencing on January 1 of each calendar
     year and ending on December 31 of each calendar year.

          "FOREIGN GOVERNMENT SCHEME OR ARRANGEMENT" has the meaning given in
     Section 6.16(e).

          "FOREIGN PLAN" has the meaning given in Section 6.16(e).

          "GAAP" or "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means generally
     accepted accounting principles, being those principles of accounting set
     forth in pronouncements of the Financial Accounting Standards Board, the
     American Institute of Certified Public Accountants or which have other
     substantial authoritative support and are applicable in the circumstances
     as of the date of a report.

          "GOVERNMENTAL AUTHORITY" means any Federal, state, municipal, national
     or other government (whether foreign or domestic and including the European
     Union) or governmental department, commission, board, bureau, court, agency
     or instrumentality or political subdivision thereof or any entity or
     officer exercising executive, legislative, judicial, regulatory or
     administrative functions of or pertaining to any government or any


                                       10



     court, in each case whether associated with a state or local government of
     the United States, the United States, or a foreign entity or foreign
     government.

          "GUARANTIES" means the Facility Guaranties and all other obligations
     of any Borrower or any other Person directly guaranteeing any Indebtedness
     or other obligation of any other Person.

          "GUARANTORS" means the Beneficial Owner, any Applicable Intermediary
     and, in the case of each Borrower, the other Borrowers.

          "HAZARDOUS MATERIAL" means and includes any pollutant, contaminant, or
     hazardous, toxic or dangerous waste, substance or material (including
     without limitation petroleum products, asbestos-containing materials, mold
     and lead), the generation, handling, storage, transportation, disposal,
     treatment, release, discharge or emission of which could result in injury
     to human health or the environment, or is subject to any Environmental Law.

          "HOLDINGS" means Aircastle Ireland Holding Limited, a limited
     liability company organized under the laws of Ireland.

          "INDEBTEDNESS" means with respect to any Person, without duplication,
     all Indebtedness for Money Borrowed, all indebtedness of such Person for
     the acquisition of property or arising under Rate Hedging Obligations, all
     indebtedness secured by any Lien on the property of such Person whether or
     not such indebtedness is assumed, all liability of such Person by way of
     endorsements (other than for collection or deposit in the ordinary course
     of business), all Contingent Obligations, and other items which in
     accordance with GAAP is required to be classified as a liability on a
     balance sheet; but excluding all accounts payable in the ordinary course of
     business so long as payment therefor is due within one year; provided that
     in no event shall the term Indebtedness include surplus and retained
     earnings, lease obligations (other than pursuant to Capital Leases),
     reserves for deferred income taxes and investment credits, other deferred
     credits or reserves or deferred compensation obligations.

          "INDEBTEDNESS FOR MONEY BORROWED" means with respect to any Person,
     without duplication, all indebtedness in respect of money borrowed, as
     reflected on the balance sheet of such Person in accordance with GAAP,
     including without limitation all Capital Leases and the deferred purchase
     price of any property or asset, evidenced by a promissory note, bond,
     debenture or similar written obligation for the payment of money (including
     conditional sales or similar title retention agreements), other than trade
     payables incurred in the ordinary course of business.

          "INSOLVENCY" means, with respect to any Multiemployer Plan, the
     condition that such Plan is insolvent within the meaning of Section 4245 of
     ERISA.

          "INTERBANK OFFERED RATE" means, with respect to any Eurodollar Rate
     Loan for the Interest Period applicable thereto, the rate per annum
     (rounded upwards, if necessary), to the nearest 1/100 of 1%) appearing on
     Telerate Page 3750 (or any successor page) as the London interbank offered
     rate for deposits in Dollars at


                                       11



     approximately 11:00 A.M. (London time) two Business Days prior to the first
     day of such Interest Period for a term comparable to such Interest Period
     (or, if no such comparable term is quoted, an interpolated rate as
     reasonably determined by the Agent or, in the case of an Interest Period of
     approximately one month, the rate for a term of approximately one month as
     determined by the Agent). If for any reason such rate is not available, the
     term "Interbank Offered Rate" shall mean, with respect to any Eurodollar
     Rate Loan for the Interest Period applicable thereto, the rate per annum
     (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
     Reuters Screen LIBO Page as the London interbank offered rate for deposits
     in Dollars at approximately 11:00 A.M. (London time) two Business Days
     prior to the first day of such Interest Period for a term comparable to
     such Interest Period; provided, however, if more than one rate is specified
     on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic
     mean of all such rates (rounded upwards, if necessary, to the nearest 1/100
     of 1%).

          "INTEREST PERIOD" means, for each Eurodollar Rate Loan, a period
     commencing on the date such Eurodollar Rate Loan is made or Converted or on
     the last day of the preceding Interest Period, as the case may be, and
     ending on the next day thereafter that is the 10th day of a calendar month;
     provided, however, that:

               (a) if an Interest Period for a Eurodollar Rate Loan would end on
          a day which is not a Business Day, such Interest Period shall be
          extended to the next Business Day (unless such extension would cause
          the applicable Interest Period to end in the succeeding calendar
          month, in which case such Interest Period shall end on the next
          preceding Business Day);

               (b) any Interest Period which begins on the last Business Day of
          a calendar month (or on a day for which there is no numerically
          corresponding day in the calendar month at the end of such Interest
          Period) shall end on the last Business Day of a calendar month;

               (c) no Interest Period shall extend past the Stated Termination
          Date; and

               (d) except for the first Interest Period for any Loan or any
          Interest Period ending on the Stated Termination Date, no Interest
          Period shall be less than one month (without giving effect to any
          extension pursuant to clause (a) of this definition).

          "INTEREST RATE SELECTION NOTICE" means the written notice delivered by
     an Authorized Representative in connection with the election of a
     subsequent Interest Period for any Eurodollar Rate Loan or the Conversion
     of any Base Rate Loan into a Eurodollar Rate Loan, in the form of Exhibit
     E.

          "IRISH PLEDGE" means that certain Equitable Charge dated as of the
     date hereof, substantially in the form of Exhibit R-2 hereto, between
     Holdings and the Agent (for the benefit of the Agent and the Lenders).

          "LEASES" has the meaning given in the Security Agreement.


                                       12



          "LEASE EVENT OF DEFAULT" means any event characterized as an "event of
     default" (or the equivalent) under any Lease of any Aircraft (or that would
     be so characterized assuming the sending of any required notice by the
     lessor in a timely manner).

          "LENDER" has the meaning given to such term in the preamble to this
     Agreement.

          "LESSEE NOTICE" means a certificate in form and substance reasonably
     acceptable to the Agent, duly completed and executed by an Applicable
     Borrower with respect to an Aircraft; and the Agent agrees that the form of
     Lessee Notice attached hereto as Exhibit M is acceptable.

          "LIEN" means any interest in property securing any obligation owed to,
     or a claim by, a Person other than the owner of the property, whether such
     interest is based on the common law, statute or contract, and including but
     not limited to the lien or security interest arising from a mortgage,
     encumbrance, pledge, security agreement, conditional sale or trust receipt
     or a lease, consignment or bailment for security purposes. For the purposes
     of this Agreement, any Credit Party and any Subsidiary shall be deemed to
     be the owner of any property which it has acquired or holds subject to a
     conditional sale agreement, financing lease, or other arrangement pursuant
     to which title to the property has been retained by or vested in some other
     Person for security purposes.

          "LOAN" or "LOANS" means any of the Term Loans.

          "LOAN AMOUNT" means, with respect to any Eligible Aircraft, the
     Applicable Aircraft Advance Rate of such Aircraft.

          "LOAN DOCUMENTS" means this Agreement, the Notes (if any), the
     Security Instruments, the Facility Guaranties, the Parent Support Agreement
     and all other instruments and documents heretofore or hereafter executed or
     delivered to or in favor of any Lender or the Agent in connection with the
     Loans made and transactions contemplated under this Agreement, as the same
     may be amended, supplemented or replaced from the time to time.

          "LOAN TO VALUE RATIO" means, as of any time of determination, the
     percentage obtained by dividing (i) the aggregate unpaid principal amount
     of all Loans outstanding hereunder, by (ii) the sum of the Appraised Values
     of all Financed Aircraft owned by the Borrowers.

          "LOCKBOX AGREEMENT" means a lockbox agreement between each Borrower,
     the Depositary Bank and the Agent substantially the form of Exhibit O
     hereto, as supplemented from time to time in accordance with the terms
     thereof.

          "MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
     ability of the Credit Parties, taken as a whole, to pay or perform their
     respective obligations, liabilities and indebtedness under the Loan
     Documents as such payment or performance becomes due in accordance with the
     terms thereof, or (ii) the rights, powers and remedies of the Agent or any
     Lender under any Loan Document or the validity, legality or enforceability
     thereof.


                                       13



          "MULTIEMPLOYER PLAN" means an Employee Benefit Plan that is a
     "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which any
     Credit Party or any ERISA Affiliate is making, or is accruing an obligation
     to make, contributions or has made, or been obligated to make,
     contributions within the preceding six (6) Fiscal Years.

          "NOTES" means, collectively, the promissory notes (if any) of the
     Borrowers evidencing Term Loans executed and delivered to the Lenders as
     provided in Section 2.5 substantially in the form of Exhibit F, with
     appropriate insertions as to amounts, dates and names of Lenders.

          "OBLIGATIONS" means the unpaid principal of and interest on
     (including, without limitation, interest accruing after the maturity of the
     Loans and interest accruing after the filing of any petition in bankruptcy,
     or the commencement of any insolvency, reorganization or like proceeding,
     relating to any Credit Party, whether or not a claim for post-filing or
     post-petition interest is allowed in such proceeding) the Loans and all
     other obligations and liabilities of any Credit Party to the Agent (acting
     in any capacity) or to any Lender (or, in the case of Rate Hedging
     Obligations, any affiliate of any Lender), whether direct or indirect,
     absolute or contingent, due or to become due, or now existing or hereafter
     incurred, which may arise under, out of, or in connection with, this
     Agreement, any other Loan Document, any Rate Hedging Obligation entered
     into with any Lender or an affiliate of any Lender or any other document
     made, delivered or given in connection herewith or therewith, whether on
     account of principal, interest, reimbursement obligations, fees,
     indemnities, costs, expenses (including, without limitation, all fees,
     charges and disbursements of counsel to the Agent (acting in any capacity)
     or to any Lender that are required to be paid by any Credit Party pursuant
     thereto) or otherwise.

          "OPERATING CIRCULAR" means an operating circular issued by the Federal
     Reserve Bank.

          "ORGANIZATIONAL ACTION" means with respect to any corporation, limited
     liability company, partnership, limited partnership, limited liability
     partnership, trust or other legally authorized incorporated or
     unincorporated entity, any corporate, organizational or partnership action
     (including any required shareholder, trustee, member or partner action), or
     other similar official action, as applicable, taken by such entity.

          "ORGANIZATIONAL DOCUMENTS" means with respect to any corporation,
     limited liability company, partnership, limited partnership, limited
     liability partnership, trust or other legally authorized incorporated or
     unincorporated entity, (i) the articles of incorporation, certificate of
     incorporation, articles of organization, certificate of limited
     partnership, trust agreement or other applicable organizational or charter
     documents relating to the creation of such entity which will, in each case,
     contain provisions reasonably satisfactory to the Lenders to ensure such
     entity's bankruptcy remoteness, including provisions relating to the
     appointment of a special member or independent director, the consent of
     which will be required to approve any decisions related to bankruptcy
     matters and (ii) the bylaws, operating agreement, partnership agreement,


                                       14



     limited partnership agreement or other applicable documents relating to the
     operation, governance or management of such entity.

          "ORIGINAL LEASE" has the meaning given in the Security Agreement.

          "PARENT" means Aircastle Investment Limited, an exempted company
     organized and existing under the laws of Bermuda.

          "PARENT SUPPORT AGREEMENT" means the Support Agreement executed by the
     Parent substantially in the form of Exhibit N.

          "PBGC" means the Pension Benefit Guaranty Corporation established
     pursuant to Subtitle A of Title IV of ERISA and any successor thereto.

          "PERMITTED LIEN" means any Lien permitted by Section 8.3.

          "PERSON" means an individual, partnership, corporation, limited
     liability company, limited liability partnership, trust, unincorporated
     organization, association, joint venture or a government or agency or
     political subdivision thereof.

          "PLEDGE AGREEMENT" means that certain Pledge and Security Agreement
     dated as of the date hereof, substantially in the form of Exhibit R-1
     hereto, between the Beneficial Owner and the Agent (for the benefit of the
     Agent and the Lenders).

          "PLEDGED INTERESTS" means (i) the "Pledged Interests" as defined in
     the Pledge Agreement and (ii) the "Charged Shares" as defined in the Irish
     Pledge.

          "PRINCIPAL OFFICE" means the office of the Agent located at 388
     Greenwich Street, 23rd Fl., New York, NY 10023 or such other office and
     address as the Agent may from time to time designate. Payments shall be
     made to the account specified in the Lockbox Agreement or to such other
     account as the Agent may from time to time specify in writing.

          "PURCHASE PRICE" with respect to any Aircraft means the actual
     purchase price paid for such Aircraft by the Applicable Borrower, together
     with all costs and expenses (including, without limitation, appraisal and
     inspection costs, upfront financing fees and attorneys fees of each of the
     Borrower and the Agent) incurred or which is reasonably estimated by the
     Borrower to be incurred in respect of such Aircraft. For purposes of
     computing the Applicable Aircraft Borrowing Base, the Purchase Price for
     each Eligible Aircraft shall not exceed the respective amount set forth on
     Exhibit K.

          "QUALIFIED TRUSTEE" means (i) Wells Fargo Bank Northwest, National
     Association or another bank or trust company having a combined capital and
     surplus of at least One Hundred Million Dollars ($100,000,000) or (ii) any
     other Person acceptable to the Agent.

          "RATE HEDGING OBLIGATIONS" means any and all obligations of any Credit
     Party, whether absolute or contingent and howsoever and whensoever created,
     arising, evidenced or acquired (including all renewals, extensions and
     modifications thereof and


                                       15



     substitutions therefor), under (i) any and all agreements, devices or
     arrangements designed to protect at least one of the parties thereto from
     the fluctuations of interest rates, exchange rates or forward rates
     applicable to such party's assets, liabilities or exchange transactions,
     including, but not limited to, Dollar-denominated or cross-currency
     interest rate exchange agreements, forward currency exchange agreements,
     interest rate cap or collar protection agreements, forward rate currency or
     interest rate options, puts, warrants and those commonly known as interest
     rate "swap" agreements; and (ii) any and all cancellations, buybacks,
     reversals, terminations or assignments of any of the foregoing.

          "REGULATION A" means a Regulation A circular issued by such Federal
     Reserve Bank.

          "REGULATION D" means Regulation D of the Board as the same may be
     amended or supplemented from time to time.

          "REGULATORY CHANGE" means any change effective after the Closing Date
     in United States federal or state laws or regulations (including Regulation
     D and capital adequacy regulations) or foreign laws or regulations or the
     adoption or making after such date of any interpretations, directives or
     requests applying to a class of banks, which includes any of the Lenders,
     under any United States federal or state or foreign laws or regulations
     (whether or not having the force of law) by any court or governmental or
     monetary authority charged with the interpretation or administration
     thereof or compliance by any Lender with any request or directive regarding
     capital adequacy, including those relating to "highly leveraged
     transactions," whether or not having the force of law, and whether or not
     failure to comply therewith would be unlawful and whether or not published
     or proposed prior to the date hereof.

          "REORGANIZATION" means, with respect to any Multiemployer Plan, the
     condition that such plan is in reorganization within the meaning of Section
     4241 of ERISA.

          "REPORTABLE EVENT" means any of the events set forth in Section
     4043(b) of ERISA, other than those events as to which the thirty day notice
     period is waived by the PBGC.

          "REQUIRED LENDERS" means, as of any date, Lenders on such date having
     Credit Exposures (as defined below) aggregating more than 50% of the
     aggregate Credit Exposures of all the Lenders on such date. For purposes of
     the preceding sentence, the amount of the "CREDIT EXPOSURE" of each Lender
     shall be equal at all times to (a) prior to the funding of the first Term
     Loan hereunder, the amount of its Term Loan Commitment; and (b) following
     the funding of the first Term Loan hereunder, the aggregate principal
     amount of such Lender's Term Loan Outstandings.

          "REQUIREMENT OF LAW" means as to any Person, the Certificate of
     Incorporation and By-Laws or other organizational or governing documents of
     such Person, and any law, treaty, rule or regulation or determination of an
     arbitrator or a court or other


                                       16



     Governmental Authority, in each case applicable to or binding upon such
     Person or any of its property or to which such Person or any of its
     property is subject.

          "RESERVE REQUIREMENT" means, at any time, the maximum rate at which
     reserves (including, without limitation, any marginal, special,
     supplemental, or emergency reserves) are required to be maintained under
     regulations issued from time to time by the Board of Governors of the
     Federal Reserve System (or any successor) by member banks of the Federal
     Reserve System against "Eurocurrency liabilities" (as such term is used in
     Regulation D). Without limiting the effect of the foregoing, the Reserve
     Requirement shall reflect any other reserves required to be maintained by
     such member banks with respect to (i) any category of liabilities which
     includes deposits by reference to which the Eurodollar Rate is to be
     determined, or (ii) any category of extensions of credit or other assets
     which include Eurodollar Rate Loans. The Eurodollar Rate shall be adjusted
     automatically on and as of the effective date of any change in the Reserve
     Requirement.

          "S&P" means Standard & Poor's Ratings Group, a division of The
     McGraw-Hill Companies, Inc., and any successor thereto.

          "SECURITY AGREEMENT" means, collectively (or individually as the
     context may indicate), any Security Agreement (substantially in the form of
     Exhibit J attached hereto) delivered to the Agent hereunder, as hereafter
     modified, amended or supplemented from time to time.

          "SECURITY INSTRUMENTS" means, collectively, the Pledge Agreement, the
     Irish Pledge, the Security Agreement, the Lockbox Agreement and all other
     agreements, instruments and other documents, whether now existing or
     hereafter in effect, pursuant to which any Borrower, the Beneficial Owner
     or any other Person shall grant or convey to the Agent or the Lenders a
     Lien in property as security for all or any portion of the Obligations, as
     any of them may be amended, modified or supplemented from time to time.

          "SERVICING AGREEMENT" means the Servicing Agreement of even date
     herewith between the Servicer and the Agent, in substantially the form of
     Exhibit P attached.

          "SERVICER" means Aircastle Advisor (Ireland) Limited, a wholly-owned
     Subsidiary of the Parent.

          "SINGLE EMPLOYER PLAN" means any Employee Benefit Plan covered by
     Title IV of ERISA which is not a Multiemployer Plan.

          "SOLVENT" means, when used with respect to any Person, that at the
     time of determination:

               (i) the fair value of its assets (both at fair valuation and at
          present fair saleable value on an orderly basis) is in excess of the
          total amount of its liabilities, including Contingent Obligations;


                                       17



               (ii) it is then able and expects to be able to pay its debts as
          they mature;

               (iii) it has capital sufficient to carry on its business as
          conducted and as proposed to be conducted; and

               (iv) with respect to any Person incorporated in Ireland, such
          Person is not "unable to pay its debts" as that phrase is defined
          under Irish law in Section 214 of the Companies Act 1963 and Section
          2(3) of the Companies (Amendment) Act 1990.

          "STATED TERMINATION DATE" means October 24, 2006.

          "SUBSIDIARY" means any corporation or other entity in which more than
     50% of its outstanding voting stock or more than 50% of all equity
     interests is owned directly or indirectly by one or more Guarantors,
     Borrowers and/or one or more of any Guarantor's Subsidiaries or any
     Borrower's Subsidiaries. With respect to any specified Guarantor or
     Borrower, the "Subsidiaries" of such Guarantor or Borrower shall mean (y)
     any Subsidiary owned directly or indirectly by such Guarantor or Borrower
     or by any of its Subsidiaries, or (z) any trust with respect to which such
     Guarantor or such Borrower or any of its Subsidiaries has a beneficial
     interest.

          "SWAP AGREEMENT" means one or more agreements between any Credit Party
     and any Lender (or an Affiliate of any Lender) on terms mutually acceptable
     to such Credit Party and such Lender (or such Affiliate), which agreements
     create Rate Hedging Obligations.

          "TAXES" means all present of future taxes, levies, imposts, duties,
     charges, fees, deductions or withholdings imposed, levied, collected,
     withheld or assessed by any Governmental Authority, including any interest,
     additions to tax or penalties applicable thereto.

          "TERM LOAN COMMITMENT" means, with respect to each Lender, the
     obligation of such Lender to make Term Loans to the Borrowers up to an
     aggregate principal amount equal to such Lender's Applicable Commitment
     Percentage of the Total Term Loan Commitment.

          "TERM LOAN FACILITY" means the facility described in Article II hereof
     providing for Loans to the Borrowers by the Lenders in the aggregate
     principal amount of the Total Term Loan Commitment.

          "TERM LOAN OUTSTANDINGS" means, as of any date of determination, the
     aggregate principal amount of all Term Loans then outstanding.

          "TERM LOAN TERMINATION DATE" means the earliest of (i) the Stated
     Termination Date, (ii) the date of termination of Lenders' obligations
     pursuant to Section 9.1 upon the occurrence of an Event of Default, or
     (iii) such date after October 31, 2005 as the Borrowers may voluntarily and
     permanently terminate the Term Loan Facility by


                                       18



     payment in full of all Term Loan Outstandings, together with all accrued
     and unpaid interest thereon and all other amounts owing to the Agent and
     the Lenders under the Loan Documents.

          "TERM LOAN" or "TERM LOANS" means any borrowing pursuant to a Loan
     under the Term Loan Facility in accordance with Article II.

          "TERMINATION EVENT" means: (i) a "Reportable Event"; or (ii) the
     termination of a Single Employer Plan or the filing of a notice of intent
     to terminate a Single Employer Plan; or (iii) the institution of
     proceedings to terminate a Single Employer Plan by the PBGC; or (iv) the
     partial or complete withdrawal of any Borrower or any ERISA Affiliate from
     a Multiemployer Plan; or (v) the conditions for the imposition of a Lien
     pursuant to Section 412 of the Code or Section 302 of ERISA in favor of the
     PBGC or a Employee Benefit Plan have been met; or (vi) any event or
     condition which results in the Reorganization or Insolvency of a
     Multiemployer Plan; or (vii) any event or condition which results in the
     termination of a Multiemployer Plan under Section 4041A of ERISA or the
     institution by the PBGC of proceedings to terminate a Multiemployer Plan
     under Section 4042 of ERISA or the occurrence of any event or condition
     described in Section 4042 of ERISA that constitutes grounds for the
     termination of, or the appointment of a trustee to administer, such
     Multiemployer Plan; or (viii) the cessation of operations at a facility of
     any Borrower, Guarantor or any ERISA Affiliate in the circumstances
     described in Section 4062(e) of ERISA; or (ix) the withdrawal by any
     Borrower, Guarantor or any ERISA Affiliate from a multiple employer plan
     during a plan year for which it was a substantial employer, as defined in
     Section 4001(a)(2) of ERISA; or (x) the adoption of an amendment to an
     Employee Benefit Plan requiring the provision of security to such Employee
     Benefit Plan pursuant to Section 307 of ERISA.

          "TOTAL TERM LOAN COMMITMENT" means a principal amount equal to
     $110,248,500.

          "TREATY" means the "Convention Between the Government of the United
     States of America and the Government of Ireland for the Avoidance of Double
     Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on
     Income and Capital Gains" as amended and in effect on the date hereof.

          "TRUST AGREEMENT" means each of the trust agreements between the
     Beneficial Owner and a Qualified Trustee.

          "TRUST ESTATE" means all estate, right, title and interest of each
     Trustee in and to each Aircraft, each lease and all related documents and
     all other property of the Trustee, including, without limitation, all
     amounts of rent, insurance proceeds (other than liability insurance
     proceeds payable to or for the benefit of any Borrower, any Beneficial
     Owner, any Lender or the Agent) and requisition, indemnity or other
     payments or any kind for or with respect to each Aircraft.

          "TYPE" means any type of Loan (i.e., a Base Rate Loan or a Eurodollar
     Rate Loan).


                                       19



          "UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code as in
     effect from time to time in a jurisdiction, for purposes of the Loan
     Documents, relating to perfection, effect of perfection or non-perfection
     or priority of any security interest in any Collateral.

          "U.S." means the United States of America.

          "U.S. PERSON" means a "United States person" as defined in Section
     7701(a)(30) of the Code.

          1.2. Rules of Interpretation.

          (a) All accounting terms not specifically defined herein shall have
     the meanings assigned to such terms and shall be interpreted in accordance
     with GAAP applied on a consistent basis.

          (b) The headings, subheadings and table of contents used herein or in
     any other Loan Document are solely for convenience of reference and shall
     not constitute a part of any such document or affect the meaning,
     construction or effect of any provision thereof.

          (c) Except as otherwise expressly provided, references herein to
     articles, sections, paragraphs, clauses, annexes, appendices, exhibits and
     schedules are references to articles, sections, paragraphs, clauses,
     annexes, appendices, exhibits and schedules in or to this Agreement.

          (d) All definitions set forth herein or in any other Loan Document
     shall apply to the singular as well as the plural form of such defined
     term, and all references to the masculine gender shall include reference to
     the feminine or neuter gender, and vice versa, as the context may require.

          (e) When used herein or in any other Loan Document, words such as
     "hereunder", "hereto", "hereof" and "herein" and other words of like import
     shall, unless the context clearly indicates to the contrary, refer to the
     whole of the applicable document and not to any particular article,
     section, subsection, paragraph or clause thereof.

          (f) References to "including" means including without limiting the
     generality of any description preceding such term, and for purposes hereof
     the rule of ejusdem generis shall not be applicable to limit a general
     statement, followed by or referable to an enumeration of specific matters,
     to matters similar to those specifically mentioned.

          (g) All dates and times of day specified herein shall refer to such
     dates and times in New York, New York.

          (h) Each of the parties to the Loan Documents and their counsel have
     reviewed and revised, or requested (or had the opportunity to request)
     revisions to, the Loan Documents, and any rule of construction that
     ambiguities are to be resolved against


                                       20



     the drafting party shall be inapplicable in the construing and
     interpretation of the Loan Documents and all exhibits, schedules and
     appendices thereto.

               (i) Any reference to an officer of any Borrower or any other
          Person by reference to the title of such officer shall be deemed to
          refer to each other officer of such Person, however titled, exercising
          the same or substantially similar functions.

               (j) All references to any agreement or document as amended,
          modified or supplemented, or words of similar effect, shall mean such
          document or agreement, as the case may be, as amended, modified or
          supplemented from time to time only as and to the extent permitted
          therein and in the Loan Documents.

          1.3. Currency Equivalents Generally. Any amount specified in this
Agreement (other than in Articles II, X and XI) or any of the other Loan
Documents to be in United States Dollars shall also include the equivalent of
such amount in any currency other than United States Dollars, such equivalent
amount to be determined at the rate of exchange quoted by Citibank in New York,
New York at the close of business on the Business Day immediately preceding any
date of determination thereof, to prime banks in New York, New York for the spot
purchase in the New York foreign exchange market of such amount in United States
Dollars with such other currency.

                                   ARTICLE II

                             THE TERM LOAN FACILITY

          2.1. Term Loans.

          (a) Commitment. Subject to the terms and conditions of this Agreement,
     each Lender severally agrees to make a single Loan to each Borrower, during
     the period from the Closing Date until October 31, 2005, on a pro rata
     basis as to the total borrowing requested by the Applicable Borrower on any
     day determined by such Lender's Applicable Commitment Percentage up to but
     not exceeding the Term Loan Commitment of such Lender; provided, however,
     that (A) the proceeds of such Loan shall be used by such Borrower to
     finance the Purchase Price of an Eligible Aircraft, and (B) the amount of
     such Loan shall not exceed the applicable Loan Amount of such Aircraft; and
     provided, further, that the Lenders will not be required and shall have no
     obligation to make any such Loan (i) so long as a Default or an Event of
     Default has occurred and is continuing or (ii) if the Agent has accelerated
     the maturity of any of the Loans as a result of an Event of Default; and
     provided, further, that immediately after giving effect to each such Loan,
     the amount of Term Loan Outstandings shall not exceed the Total Term Loan
     Commitment. Anything contained herein to the contrary notwithstanding, (1)
     no Term Loan that is a Eurodollar Rate Loan shall be made which has an
     Interest Period that extends beyond the Stated Termination Date and (2)
     each Term Loan that is a Eurodollar Rate Loan may be repaid only on the
     last day of the Interest Period with respect thereto unless such payment is
     accompanied by the additional payment, if any, required by Section 4.5.


                                       21



          (b) Amounts. Each Term Loan hereunder and each Conversion under
     Section 2.8, shall be in an amount of at least $5,000,000.

          (c) Procedures. An Authorized Representative shall give the Agent (i)
     at least three (3) Business Days' irrevocable written notice of an Interest
     Rate Selection Notice with appropriate insertions, effective upon receipt,
     of each Term Loan that is to be Converted into a Eurodollar Rate Loan prior
     to 10:30 A.M. (New York City time), (ii) in respect of a Base Rate Loan, at
     least one (1) Business Day's irrevocable written notice of a Borrowing
     Notice with appropriate insertions, effective upon receipt, of each Base
     Rate Loan prior to 10:30 A.M. (New York City time), (iii) in respect of a
     Eurodollar Rate Loan, at least three (3) Business Days' irrevocable written
     notice of a Borrowing Notice with appropriate insertions, effective upon
     receipt, of each Eurodollar Rate Loan prior to 10:30 A.M. (New York City
     time), and (iv) at least one (1) Business Day's irrevocable written notice
     of an Interest Rate Selection Notice with appropriate insertions, effective
     upon receipt, of each Term Loan that is to be Converted into a Base Rate
     Loan prior to 10:30 A.M. (New York City time). Each such notice shall (A)
     specify the name of the respective Borrower, the amount of the borrowing,
     the date of borrowing or Conversion (as applicable), type of Term Loan
     (Base Rate or Eurodollar Rate), the date of borrowing and, if a Eurodollar
     Rate Loan, the Interest Period to be used in the computation of interest
     and (B) identify the Financed Aircraft the acquisition of which is to be
     financed with the proceeds of the borrowing. Notice of receipt of such
     Borrowing Notice or Interest Rate Selection Notice, as the case may be,
     together with the amount of each Lender's portion of a Loan requested
     thereunder, shall be provided by the Agent to each Lender by facsimile
     transmission with reasonable promptness, but (provided the Agent shall have
     received such notice by 10:30 A.M. (New York City time)) not later than
     1:00 P.M. (New York City time) on the same day as the Agent's receipt of
     such notice.

               (i) Promptly (and, to the extent feasible, not later than 2:00
          P.M. (New York City time)) on the date specified for each borrowing
          under this Section 2.1, each Lender shall, pursuant to the terms and
          subject to the conditions of this Agreement, make the amount of the
          Loan or Loans to be made by it on such day available by wire transfer
          to the Agent in the amount of its pro rata share, determined according
          to such Lender's Applicable Commitment Percentage, of the Term Loan or
          Term Loans to be made on such day. Such wire transfer shall be
          directed to the Agent at the Principal Office and shall be in the form
          of Dollars constituting immediately available funds. The amount so
          received by the Agent shall, subject to the terms and conditions of
          this Agreement, be made available to the Applicable Borrower by
          delivery of the proceeds thereof to the seller of the Financed
          Aircraft as directed in the applicable Borrowing Notice by an
          Authorized Representative and reasonably acceptable to the Agent.

               (ii) The Borrowers shall have the option to Convert the Term
          Loans in accordance with Section 2.8. Eurodollar Rate Loans and Base
          Rate Loans may be outstanding at the same time. If the Agent does not
          receive an Interest Rate Selection Notice giving notice of election of
          the duration of an Interest Period by


                                       22



          the time prescribed by Section 2.8, the applicable Borrower shall be
          deemed to have elected for any Eurodollar Loan an Interest Period of
          one month.

          2.2. Payment of Interest.

          (a) Each Borrower shall pay interest to the Agent for the account of
     each Lender on the outstanding and unpaid principal amount of each Loan
     made by such Lender to such Borrower for the period commencing on the date
     of such Loan until such Loan shall be paid in full at the then applicable
     Base Rate plus the Applicable Margin for Base Rate Loans or applicable
     Eurodollar Rate plus the Applicable Margin for Eurodollar Rate Loans;
     provided, however, that if any Event of Default shall occur and be
     continuing, all amounts outstanding hereunder shall bear interest during
     such period at the Default Rate.

          (b) Interest on (i) each Base Rate Loan shall be computed on the basis
     of a year of 365/366 days and (ii) each Eurodollar Rate Loan shall be
     computed on the basis of a year of 360 days, calculated in each case for
     the actual number of days elapsed. Accrued interest on each Loan shall be
     paid (A) in the case of Base Rate Loans, on the 10th day of each calendar
     month (or, if such day is not a Business Day, on the next succeeding
     Business Day provided such succeeding Business Day falls within the same
     calendar month, otherwise, on the next preceding Business Day), and in the
     case of Eurodollar Rate Loans, on the last day of each Interest Period, (B)
     upon payment or prepayment of the principal amount of any Loan or any
     portion thereof, on the amount so paid or prepaid and (C) at the Term Loan
     Termination Date.

          2.3. Payment of Principal.

          (a) Scheduled Repayments; Voluntary Prepayments. The principal amount
     of each Term Loan shall be due and payable to the Agent for the benefit of
     each Lender in full on the Stated Termination Date, or earlier as
     specifically provided herein. The Borrower may prepay the outstanding
     principal amount of any Loan, in whole or in part, (i) in the case of Base
     Rate Loans, upon notice given to the Agent not later than 1:00 P.M. (New
     York City time) on the date of payment and (ii) in the case of Eurodollar
     Rate Loans, upon two Business Days' notice to the Agent. All such
     prepayments must be accompanied by accrued interest up to, and including,
     the date of such prepayment and any compensation due under Section 4.5
     hereof. Once repaid, Term Loans may not be reborrowed.

          (b) Mandatory Prepayments.

               (i) Upon the sale of any Financed Aircraft by any Borrower, such
          Borrower shall immediately pay to the Agent an amount equal to the
          Loan Amount for such Aircraft, together with all interest accrued on
          such Borrower's Loans, which amounts shall be applied by the Agent to
          reduce the outstanding principal and accrued interest on any Loans in
          respect of such Aircraft made to, or for the benefit of, such
          Borrower. If any net proceeds of such sale remain after the repayment
          in full of all outstanding principal and accrued interest on such


                                       23



          Loans, such excess proceeds shall be (A) if the Loan to Value Ratio is
          greater than 67% (calculated after giving effect to such sale),
          applied by the Agent to reduce outstanding principal on any Loans made
          to the other Borrowers in such amounts so as to reduce the Loan to
          Value Ratio (calculated after giving effect to such sale) to 67%, with
          the remainder paid to such Borrower and used by such Borrower in its
          sole discretion or (B) if the Loan to Value Ratio is less than or
          equal to 67% (calculated after giving effect to such sale), paid to
          the Applicable Borrower and used by such Borrower in its sole
          discretion.

               (ii) Upon the sale of all of the beneficial interest or ownership
          of a Borrower by the Beneficial Owner, such Borrower shall immediately
          pay to the Agent an amount equal to the Loan Amount for the Financed
          Aircraft, together with all interest accrued on such Borrower's Loans,
          which amounts shall be applied by the Agent to reduce the outstanding
          principal and accrued interest on any Loans in respect of such
          Aircraft made to, or for the benefit of, such Borrower. If any net
          proceeds of such sale remain after the repayment in full of all
          outstanding principal and accrued interest on such Loans, such excess
          proceeds shall be (A) if the Loan to Value Ratio is greater than 67%
          (calculated after giving effect to such sale), applied by the Agent to
          reduce outstanding principal on any Loans made to the other Borrowers
          in such amounts so as to reduce the Loan to Value Ratio (calculated
          after giving effect to such sale) to 67%, with the remainder paid to
          the Beneficial Owner and used by the Beneficial Owner in its sole
          discretion or (B) if the Loan to Value Ratio is less than or equal to
          67% (calculated after giving effect to such sale), paid to the
          Beneficial Owner and used by the Beneficial Owner in its sole
          discretion.

               (iii) If an Event of Loss in respect of a Financed Aircraft has
          occurred, the Applicable Borrower shall on the date stated in Section
          3.8(b) of the Security Agreement pay to the Agent an amount equal to
          the Loan Amount for such Financed Aircraft, together with all interest
          accrued on such Borrower's Loans, which amounts shall be applied by
          the Agent to reduce the outstanding principal and accrued interest on
          any Loans in respect of such Aircraft made to, or for the benefit of,
          such Borrower. If any net proceeds of such Event of Loss remain after
          the repayment in full of all outstanding principal and accrued
          interest on such Loans, such excess proceeds shall be (A) if the Loan
          to Value Ratio is greater than 67% (calculated after giving effect to
          such Event of Loss), applied by the Agent to reduce outstanding
          principal on any Loans made to the other Borrowers in such amounts so
          as to reduce the Loan to Value Ratio (calculated after giving effect
          to such Event of Loss) to 67%, with the remainder paid to such
          Borrower and used by such Borrower in its sole discretion or (B) if
          the Loan to Value Ratio is less than or equal to 67% (calculated after
          giving effect to such Event of Loss), paid to the Applicable Borrower
          and used by such Borrower in its sole discretion.

               (iv) The Borrowers, jointly and severally, shall be required to
          prepay the Loans in the amount distributed for that purpose under
          Section 5.1 of the Lockbox Agreement.


                                       24



          2.4. Manner of Payment. Each payment of principal (including any
prepayment) and payment of interest and fees, and any other amount required to
be paid to the Lenders with respect to the Loans, shall be made to the Agent at
the Principal Office, for the account of each Lender, in Dollars and in
immediately available funds without setoff, deduction or counterclaim before
12:30 P.M. (New York City time) on the date such payment is due.

          (a) The Agent shall deem any payment made by or on behalf of any
     Borrower hereunder that is not made both in Dollars and in immediately
     available funds and prior to 12:30 P.M. (New York City time) to be a
     non-conforming payment. Any such payment shall not be deemed to be received
     by the Agent until the time such funds become available funds. Any
     non-conforming payment may constitute or become a Default or Event of
     Default. Interest shall continue to accrue on any principal as to which a
     non-conforming payment is made until the later of (x) the date such funds
     become available funds or (y) the next Business Day at the Default Rate
     from the date such amount was due and payable.

          (b) In the event that any payment hereunder becomes due and payable on
     a day other than a Business Day, then such due date shall be extended to
     the next succeeding Business Day unless provided otherwise under clause (a)
     of the definition of "Interest Period"; provided that interest shall
     continue to accrue during the period of any such extension and provided,
     further, that in no event shall any such due date be extended beyond the
     Term Loan Termination Date.

          (c) Any payment or prepayment of any principal or interest on any Loan
     hereunder shall be accompanied by a certificate signed by an Authorized
     Representative and delivered to the Agent, which certificate shall identify
     such Loan, the amount of principal and interest paid thereon, and the
     Borrower to whom, or for whose benefit, such Loan was originally advanced.

     2.5. Notes. At the request of any Lender, Term Loans made by such Lender to
any Borrower shall be evidenced by a Note payable to the order of such Lender in
the respective amount of its Applicable Commitment Percentage of the applicable
Loan Amount and shall be duly completed, executed and delivered by such
Borrower.

     2.6. Pro Rata Payments. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Loans and the fees
described in Section 2.9 shall be made to the Agent for the account of the
Lenders pro rata based on their Applicable Commitment Percentages, (b) all
payments to be made by any Borrower for the account of each of the Lenders on
account of principal, interest and fees, shall be made without diminution,
setoff, recoupment or counterclaim, and (c) the Agent will promptly distribute
to the Lenders in immediately available funds payments received in fully
collected, immediately available funds from any Borrower.

     2.7. [Intentionally Omitted].

     2.8. Conversions and Elections of Subsequent Interest Periods. Subject to
the limitations set forth below and in Article IV, the Borrowers may:


                                       25



          (a) upon delivery, effective upon receipt, of a properly completed
     Interest Rate Selection Notice to the Agent on or before 10:30 A.M. (New
     York City time) on any Business Day, Convert all or a part of Eurodollar
     Rate Loans to Base Rate Loans on the last day of the Interest Period for
     such Eurodollar Rate Loans; and

          (b) provided that no Default or Event of Default shall have occurred
     and be continuing and upon delivery, effective upon receipt, of a properly
     completed Interest Rate Selection Notice to the Agent on or before 10:30
     A.M. (New York City time) three (3) Business Days' prior to the date of
     such election or Conversion:

               (i) elect a subsequent Interest Period for all or a portion of
          Eurodollar Rate Loans to begin on the last day of the then current
          Interest Period for such Eurodollar Rate Loans; and

               (ii) Convert Base Rate Loans to Eurodollar Rate Loans on any
          Business Day.

          Each election and Conversion pursuant to this Section 2.8 shall be
subject to the limitations on Eurodollar Rate Loans set forth in the definition
of "Interest Period" herein and in Sections 2.1, 2.3 and Article IV. The Agent
shall give written notice to each Lender of such notice of election or
Conversion prior to 3:00 P.M. (New York City time) on the day such notice of
election or Conversion is received. All such Continuations or Conversions of
Loans shall be effected pro rata based on the Applicable Commitment Percentages
of the Lenders.

     2.9. Fees. The Borrowers shall pay the fees specified in the Fee Letter on
the dates specified therein.

     2.10. Use of Proceeds. The proceeds of each Loan made pursuant to the Term
Loan Facility hereunder shall be used by the Applicable Borrower to finance a
portion of the Purchase Price of an Eligible Aircraft.

     2.11. Releases. So long as (a) all Loans made to or on behalf of any
Borrower, together with all accrued interest on such Loans, have been paid in
full, (b) all other outstanding Obligations of such Borrower (except Obligations
in respect of its guarantee of Loans to other Borrowers) have been paid in full,
(c) no Default or Event of Default has occurred and is continuing or, after
giving effect to such termination, will occur, (d) the Loan to Value Ratio is
not greater than 67% (calculated after giving effect to such termination) and
(e) any prepayment required under Section 2.3(b) has been made, then such
Borrower may, by not less than three (3) days prior notice to the Agent (which
shall promptly notify the Lenders thereof), (i) terminate its status as a
"Borrower" and "Guarantor" hereunder and under the other Loan Documents, and
(ii) terminate the status of the Applicable Intermediary (if any) of such
Borrower as a "Guarantor" hereunder and under the other Loan Documents. Upon
such terminations and provided that the conditions to such terminations are
satisfied, the Agent shall take all actions reasonably requested by such
Borrower (A) to release the Liens of the Agent on all Collateral owned by such
Borrower (and the Applicable Intermediary, if any) and to release such Borrower
and such Applicable Intermediary from all of their respective Obligations under
the Loan Documents (including, without limitation, a written release to such
effect), and (B) to release the Lien of the


                                       26



Agent with respect to any Pledged Interests in such Borrower and such Applicable
Intermediary. Any provision of this Section 2.11 or any other provision of any
Loan Document notwithstanding, in no event shall the Beneficial Owner be
released from its Obligations to pay indemnification to, or reimburse any costs
or expenses of, the Agent or any Lender (including, without limitation, the
Obligations under Article IV and Sections 7.15, 11.5 and 11.9), which agreements
and obligations shall survive any release or termination of any Credit Party
pursuant to this Section 2.11.

     2.12. Eligible Lease Involving Eligible Intermediary. In lieu of leasing a
Financed Aircraft directly to an Eligible Carrier, a Borrower may lease such
Financed Aircraft directly to an Eligible Intermediary pursuant to an Eligible
Lease described in clause (X) of the proviso to the definition of "Eligible
Lease"; provided that

          (a) such Eligible Intermediary simultaneously subleases such Aircraft
     to an Eligible Carrier pursuant to an Eligible Lease described in clause
     (Y) of the proviso to the definition of "Eligible Lease" and such sublease
     is pledged as collateral security for the obligations of the Eligible
     Intermediary under the head lease;

          (b) in the case of any Loan with respect to such Aircraft, all Loan
     conditions that pertain to any Eligible Lease or other Lease by a Borrower
     of such Aircraft (including without limitation requirements concerning the
     perfection of Liens on Collateral, and delivery of copies of the Leases and
     Lessee Notices) shall be satisfied with respect to each such Lease to or by
     the Applicable Intermediary;

          (c) all provisions of any Loan Document that pertain to any Eligible
     Lease or other Lease by a Borrower of such Aircraft shall apply to each
     such Lease to or by the Applicable Intermediary;

          (d) the lease/sublease structure shall not result in adverse tax or
     other consequences to the Agent or any Lender which have not been
     indemnified or otherwise addressed to the reasonable satisfaction of the
     Agent;

          (e) such Eligible Intermediary shall execute and deliver to the Agent
     a Facility Guaranty, a Security Agreement and such other instruments,
     documents and agreements as the Agent may reasonably require in connection
     therewith; and

          (f) all equity and ownership interests directly or indirectly held by
     any Credit Party in and to such Eligible Intermediary shall be pledged to
     the Agent on terms and conditions required by the Agent.

                                   ARTICLE III

                                    SECURITY

     3.1. Security. As security for the full and timely payment and performance
of all Obligations, the Credit Parties shall on or before the date of the
initial Loan do or cause to be done all things necessary in the reasonable
opinion of the Agent and its counsel to grant to the Agent for the benefit of
the Lenders a duly perfected first priority security interest under all


                                       27



applicable laws in all Collateral subject to no prior Lien or other encumbrance
(that, in each case, has not previously been satisfied in full) or restriction
on transfer (other than Permitted Liens).

     3.2. Further Assurances. At the request of the Agent, each Borrower will,
or will cause other Credit Parties (as the case may be) to, execute, by its duly
authorized officers, alone or with the Agent, any certificate, instrument,
statement or document, or to procure any such certificate, instrument, statement
or document, or to take such other action (and pay all connected costs) which
the Agent reasonably deems necessary from time to time to create, continue or
preserve the liens and security interests in Collateral (and the perfection and
priority thereof) of the Agent contemplated hereby and by the other Loan
Documents and specifically including all Collateral acquired by any Borrower or
any Guarantor or any other Credit Party after the Closing Date.

     3.3. Information Regarding Collateral. Each Borrower represents, warrants
and covenants that (i) the chief executive office of each Borrower and each
other Person providing Collateral pursuant to a Security Instrument (each, a
"GRANTOR") at the Closing Date is located at the address or addresses specified
on Schedule 3.3, and (ii) Schedule 3.3 contains a true and complete list of (a)
the name and address of each Grantor, (b) each location of the chief executive
office and principal place of business of each Grantor and (c) the country of
registration (if applicable) of each Aircraft. No Borrower shall change, or
permit any other Grantor to change, the location of its chief executive office
or principal place of business, or use or permit any other Grantor to use, any
additional trade style, except upon giving not less than thirty (30) days' prior
written notice to the Agent and taking or causing to be taken all such action at
the Borrowers' or such other Grantor's expense as may be reasonably requested by
the Agent to perfect or maintain the perfection of the Lien of the Agent in
Collateral.

     3.4. Quiet Enjoyment. The Agent and each Lender hereby agree that, so long
as no Lease Event of Default shall have occurred and be continuing under an
Eligible Lease, it will not interfere with the quiet enjoyment of the possession
and use of the Aircraft by the Applicable Carrier during the term of such
Eligible Lease and it will (subject to any requirements or restrictions imposed
by applicable law) dispose of its interest in the Eligible Aircraft leased under
such Eligible Lease expressly subject to such Eligible Lease and on terms such
that the purchaser provides a similar right of quiet enjoyment to such
Applicable Carrier. Upon the request of any Borrower, the Agent (on behalf of
itself and the Lenders) will confirm the immediately preceding sentence in
writing to any Applicable Carrier.

                                   ARTICLE IV

                             CHANGE IN CIRCUMSTANCES

     4.1. Requirements of Law.

          (a) If the adoption of or any change in any Requirement of Law or in
     the interpretation or application thereof, or any Regulatory Change, or
     compliance by any Lender with any request or directive (whether or not
     having the force of law) from any central bank or other Governmental
     Authority made subsequent to the date hereof:


                                       28



               (i) shall impose, modify or hold applicable any reserve, special
          deposit, compulsory loan or similar requirement against assets held
          by, deposits or other liabilities in or for the account of, advances,
          loans or other extensions of credit by, or any other acquisition of
          funds by, any office of such Lender that is not otherwise included in
          the determination of the Eurodollar Rate; or

               (ii) shall impose on such Lender any other condition;

     and the result of any of the foregoing is to increase the cost (other than
     a Tax) to such Lender, by an amount that such Lender deems to be material,
     of making, converting into, continuing or maintaining Eurodollar Rate Loans
     to any Borrower or to reduce any amount receivable hereunder in respect
     thereof (other than by reason of any Tax), then, in any such case, such
     Borrower shall promptly pay such Lender (on an after-tax basis), upon its
     demand, any additional amounts necessary to compensate such Lender for such
     increased cost or reduced amount receivable. Changes in law related to
     Taxes are covered in Section 4.6. If any Lender becomes entitled to claim
     any additional amounts pursuant to this paragraph, it shall promptly notify
     the Borrowers (with a copy to the Agent) of the event by reason of which it
     has become so entitled.

          (b) If any Lender shall have determined that the adoption of or any
     change in any Requirement of Law or any Regulatory Change regarding capital
     adequacy or in the interpretation or application thereof or compliance by
     such Lender or any corporation controlling such Lender with any request or
     directive regarding capital adequacy (whether or not having the force of
     law) from any Governmental Authority made subsequent to the date hereof
     shall have the effect of reducing the rate of return on such Lender's or
     such corporation's capital as a consequence of its obligations hereunder to
     a level below that which such Lender or such corporation could have
     achieved but for such adoption, change or compliance (taking into
     consideration such Lender's or such corporation's policies with respect to
     capital adequacy) by an amount deemed by such Lender to be material, then
     from time to time, after submission by such Lender to the Borrowers (with a
     copy to the Agent) of a written request therefor, the Borrowers shall pay
     to such Lender such additional amount or amounts as will compensate such
     Lender or such corporation (on an after-tax basis) for such reduction.

          (c) Each Lender shall promptly notify the Beneficial Owner, the
     Borrowers and the Agent of any event of which it has knowledge occurring
     after the date hereof, which will entitle a Lender to compensation pursuant
     to this Section 4.1, and such Lender shall, upon written request by the
     Beneficial Owner or any Borrower, designate a different Applicable Lending
     Office if such designation will avoid the need for, or reduce the amount
     of, such compensation and will not, in the judgment of such Lender, be
     otherwise disadvantageous to it. A certificate as to any additional amounts
     payable pursuant to this Section submitted by any Lender to the Borrowers
     (with a copy to the Agent) shall be conclusive in the absence of manifest
     error. Notwithstanding anything to the contrary in this Section, the
     Borrowers shall not be required to compensate a Lender pursuant to this
     Section for any amounts incurred more than three months prior to the date
     that such Lender notifies the Borrowers of such Lender's intention to claim
     compensation therefor; provided that, if the circumstances giving rise to
     such claim have


                                       29



     a retroactive effect, then such three-month period shall be extended to
     include the period of such retroactive effect. The obligations of the
     Borrowers pursuant to this Section shall survive the termination of this
     Agreement and the payment of the Loans and all other amounts payable
     hereunder.

     4.2. Limitation on Types of Loans. If on or prior to the first day of any
Interest Period for any Eurodollar Rate Loan:

          (a) the Agent determines (which determination shall be conclusive)
     that by reason of circumstances affecting the relevant market, adequate and
     reasonable means do not exist for ascertaining the Eurodollar Rate for such
     Interest Period; or

          (b) the Required Lenders determine (which determination shall be
     conclusive) and notify the Agent that the Eurodollar Rate will not
     adequately and fairly reflect the cost to the Lenders of funding Eurodollar
     Rate Loans for such Interest Period;

then the Agent shall give the Borrowers prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type or Convert Loans of
any other Type into Loans of such Type, and each Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such Loans into Base Rate
Loans in accordance with the terms of this Agreement.

     4.3. Illegality. Notwithstanding any other provision of this Agreement, in
the event that it becomes unlawful for any Lender or its Applicable Lending
Office to make, maintain, or fund Eurodollar Rate Loans hereunder, then such
Lender shall promptly notify the Borrowers thereof and such Lender's obligation
to make or Continue Eurodollar Rate Loans and to Convert other Types of Loans
into Eurodollar Rate Loans shall be suspended until such time as such Lender may
again make, maintain, and fund Eurodollar Rate Loans (in which case the
provisions of Section 4.4 shall be applicable).

     4.4. Treatment of Affected Loans. If the obligation of any Lender to make a
Eurodollar Rate Loan or to Continue, or to Convert Loans of any other Type into,
Loans of a particular Type shall be suspended pursuant to Section 4.2 or 4.3
hereof (Loans of such Type being herein called "AFFECTED LOANS" and such Type
being herein called the "AFFECTED TYPE"), such Lender's Affected Loans shall be
automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for Affected Loans (or, in the case of a Conversion
required by Section 4.3 hereof, on such earlier date as such Lender may specify
to the Borrowers with a copy to the Agent) and, unless and until such Lender
gives notice as provided below that the circumstances specified in Section 4.2
or 4.3 hereof that gave rise to such Conversion no longer exist:

          (a) to the extent that such Lender's Affected Loans have been so
     Converted, all payments and prepayments of principal that would otherwise
     be applied to such Lender's Affected Loans shall be applied instead to its
     Base Rate Loans; and


                                       30



          (b) all Loans that would otherwise be made or Continued by such Lender
     as Loans of the Affected Type shall be made or Continued instead as Base
     Rate Loans, and all Loans of such Lender that would otherwise be Converted
     into Loans of the Affected Type shall be Converted instead into (or shall
     remain as) Base Rate Loans.

If such Lender (or, in the case of Section 4.3, the Required Lenders) shall give
notice to the Borrowers (with a copy to the Agent) that the circumstances
specified in Section 4.2 or 4.3 hereof that gave rise to the Conversion of such
Lender's (or the Required Lenders) Affected Loans no longer exist (which such
Lender (or, if the applicable, the Required Lenders) agrees to do promptly upon
such circumstances ceasing to exist) at a time when Loans of the Affected Type
made by other Lenders are outstanding, such Lender's Base Rate Loans shall be
automatically Converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Loans of the Affected Type, to the extent
necessary so that, after giving effect thereto, all Loans held by the Lenders
holding Loans of the Affected Type and by such Lender are held pro rata (as to
principal amounts, Types, and Interest Periods) in accordance with their
respective Term Loan Commitments.

     4.5. Compensation. Upon the request of any Lender, each Borrower shall pay
to such Lender such amount or amounts as shall be sufficient (in the reasonable
opinion of such Lender) to compensate it for any loss, cost, or expense incurred
by it as a result of:

          (a) any payment, prepayment, or Conversion of a Eurodollar Rate Loan
     made to such Borrower for any reason (including, without limitation, the
     acceleration of the Loans pursuant to Section 9.1) on a date other than the
     last day of the Interest Period for such Loan; or

          (b) any failure by such Borrower for any reason (including, without
     limitation, the failure of any condition precedent specified in Article V
     to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Rate
     Loan on the date for such borrowing, Conversion, Continuation, or
     prepayment specified in the relevant notice of borrowing, prepayment,
     Continuation, or Conversion under this Agreement.

     4.6. Taxes.

          (a) Any and all payments by any Borrower to or for the account of any
     Lender or the Agent hereunder or under any other Loan Document shall be
     made free and clear of and without deduction or withholding for any and all
     Taxes, and all liabilities with respect thereto, now or hereafter imposed,
     levied, collected, withheld or assessed by any Governmental Authority,
     excluding, in the case of each Lender and the Agent, Taxes imposed on its
     income, receipts, capital, net worth or items of tax preference and
     franchise, doing business and similar Taxes (imposed on it in lieu of net
     income taxes), imposed on such Lender or Agent as a result of a present or
     former connection between the Agent or such Lender and the jurisdiction of
     the Governmental Authority imposing such tax or any political subdivision
     or taxing authority thereof or therein (other than any such connection
     arising solely from the Agent or such Lender having executed, delivered or
     performed its obligations or received a payment under, or enforced, this
     Agreement or any other Loan Document). If any such non-excluded Taxes
     ("Indemnified Taxes") or


                                       31



     Other Taxes (as defined below) are required to be withheld after the date
     hereof from or in respect of any sum payable under this Agreement or any
     other Loan Document to any Lender or the Agent, (i) the sum payable shall
     be increased as necessary so that after making all required deductions
     (including deductions applicable to additional sums payable under this
     Section 4.6) such Lender or the Agent receives an amount equal to the sum
     it would have received had no such deductions been made, (ii) such Borrower
     shall make such deductions, (iii) such Borrower shall timely pay the full
     amount deducted to the relevant taxation authority or other authority in
     accordance with applicable law, and (iv) such Borrower shall furnish to the
     Agent, at its address referred to in Section 11.2, the original or a
     certified copy of a receipt evidencing payment thereof or other evidence of
     payment reasonably acceptable to such Lender or the Agent; provided,
     however, that the Borrowers shall not be required to increase such amounts
     payable to any Lender with respect to any Taxes (i) that are attributable
     to such Lender's failure to comply with the requirements of paragraph (d)
     or (e) of this Section or (ii) that are United States withholding taxes
     imposed on amounts payable to such Lender at the time such Lender becomes a
     party to this Agreement, except to the extent that such Lender's assignor
     (if any) was entitled, at the time of assignment, to receive additional
     amounts from the Borrowers with respect to such Taxes pursuant to this
     paragraph.

          (b) In addition, the Borrowers agree, jointly and severally, to timely
     pay any and all present or future stamp or documentary taxes which arise
     from the execution or delivery of this Agreement or any other Loan Document
     or the provision of the security interest in any Collateral required
     hereunder (hereinafter referred to as "Other Taxes").

          (c) The Borrowers agree, jointly and severally, to indemnify each
     Lender and the Agent for the full amount of Indemnified Taxes and Other
     Taxes (including, without limitation, any Indemnified Taxes or Other Taxes
     imposed or asserted by any jurisdiction on amounts payable under this
     Section 4.6) paid by such Lender or the Agent (as the case may be) and any
     liability (including penalties, interest, and expenses) arising therefrom
     or with respect thereto.

          (d) Each Lender, on or prior to the date of its execution and delivery
     of this Agreement in the case of each Lender listed on the signature pages
     hereof and on or prior to the date on which it becomes a Lender in the case
     of each other Lender, and from time to time thereafter if requested in
     writing by any Borrower or the Agent (unless such failure is due to a
     change in treaty, law or regulation occurring subsequent to the date on
     which a form originally was required to be provided), shall provide the
     Borrowers and the Agent with (i) a complete and properly executed Internal
     Revenue Service Form W-8BEN, W-8ECI or W-8IMY (including all required
     accompanying information), as appropriate, or any successor form prescribed
     by the Internal Revenue Service (including a United States taxpayer
     identification number), certifying that such Lender is entitled to benefits
     under an income tax treaty to which the United States is a party which
     reduces the rate of withholding tax on payments of interest, certifying
     that the Lender is eligible for the "portfolio interest exemption" or
     certifying that the income receivable pursuant to this Agreement is
     effectively connected with the conduct of a trade or business in the United
     States or (ii) Internal Revenue Service Form W-9 or any successor form
     prescribed by the Internal Revenue Service. In addition, each Lender and
     the Agent


                                       32



     agrees that it will (i) take all actions reasonably requested by the
     Beneficial Owner or a Borrower in writing that are consistent with
     applicable legal and regulatory restrictions to claim any available
     reductions or exemptions from Indemnified Taxes or Other Taxes and (ii)
     otherwise cooperate with the Beneficial Owner and the Borrowers to minimize
     any amounts payable by the Borrowers under this Section 4.6; provided,
     however, that in each case, any out-of-pocket cost relating to such action
     or cooperation requested by the Beneficial Owner or a Borrower shall be
     borne by the Beneficial Owner or such Borrower and no Lender shall be
     required to take any action that it determines in its sole good faith
     discretion, may be adverse in any non de minimis respect to it and not
     indemnified to its satisfaction.

          (e) A Lender that is entitled to an exemption from or reduction of
     non-U.S. withholding tax under the law of the jurisdiction in which a
     Borrower is located, or any treaty to which such jurisdiction is a party,
     with respect to payments under this Agreement shall deliver to such
     Borrower (with a copy to the Agent), at the time or times prescribed by
     applicable law or reasonably requested by such Borrower, such properly
     completed and executed documentation prescribed by applicable law as will
     permit such payments to be made without withholding or at a reduced rate,
     provided that such Lender is legally entitled to complete, execute and
     deliver such documentation and in such Lender's judgment such completion,
     execution or submission would not materially prejudice the legal position
     of such Lender.

          (f) If any Borrower is required to pay additional amounts to or for
     the account of any Lender pursuant to this Section 4.6, then such Lender
     will agree to use reasonable efforts to change the jurisdiction of its
     Applicable Lending Office so as to eliminate or reduce any such additional
     payment which may thereafter accrue if such change, in the sole judgment of
     such Lender, is not otherwise disadvantageous to such Lender.

          (g) Within thirty (30) days after the date of any payment of Taxes,
     the applicable Borrower shall furnish to the Agent the original or a
     certified copy of a receipt evidencing such payment or otherwise evidence
     of such payment as is reasonably acceptable to the Agent.

          (h) If the Agent or any Lender receives a refund of any Taxes or Other
     Taxes as to which it has been indemnified by a Borrower or with respect to
     which a Borrower has paid additional amounts pursuant to this Section 4.6,
     it shall pay over such refund to such Borrower (but only to the extent of
     indemnity payments made, or additional amounts paid, by a Borrower under
     this Section 4.6 with respect to the Taxes or Other Taxes giving rise to
     such refund), net of all out-of-pocket expenses (including any net increase
     in Taxes imposed on such Person by reason of such refund and the payment by
     such Person pursuant to this sentence) of the Agent or such Lender and
     without interest (other than any interest paid by the relevant Governmental
     Authority with respect to such refund); provided that the Borrower, upon
     the request of the Agent or such Lender, agrees to repay the amount paid
     over to a Borrower (plus any penalties, interest or other charges imposed
     by the relevant Governmental Authority) to the Agent or such Lender in the
     event the Agent or such Lender is required to repay such refund to such
     Governmental Authority. This paragraph shall not be construed to require
     the Agent or any Lender to


                                       33



     make available its tax returns (or any other information relating to its
     taxes which it deems confidential) to any Borrower or any other Person.

          (i) Without prejudice to the survival of any other agreement of any
     Borrower hereunder, the agreements and obligations of each Borrower
     contained in this Section 4.6 shall survive the termination of the Term
     Loan Commitments and the payment in full of the Loans.

                                    ARTICLE V

                           CONDITIONS TO MAKING LOANS

     5.1. Conditions of Closing. The obligation of the Lenders to make Term
Loans under the Term Loan Facility to any Borrower is subject to the conditions
precedent that:

          (a) the Agent shall have received, in form and substance satisfactory
     to the Agent and Lenders, the following:

               (i) executed originals of each of this Agreement, the Notes (if
          applicable), the Facility Guaranty executed by the Guarantors, the
          Pledge Agreement executed by the Beneficial Owner, the Parent Support
          Agreement and the Lockbox Agreement, together with all schedules and
          exhibits thereto (including, in the case of the Pledge Agreement,
          executed originals of the "Acknowledgement, Consent and Control
          Agreement" in the form of Exhibit A thereto;

               (ii) executed originals of the Irish Pledge, together with (A)
          share certificates relating to all the shares of ownership in the
          Beneficial Owner pledged by Holdings, (B) executed, but undated, stock
          transfer forms, (C) executed, but undated, letters of resignation of
          directors and (D) powers of attorney; in each case, all as set forth
          in the schedules to the Irish Pledge, together with all schedules and
          exhibits thereto;

               (iii) (A) the favorable written opinion of Milbank, Tweed, Hadley
          & McCloy LLP, counsel to the Credit Parties and the Parent with
          respect to the Loan Documents (including the Parent Support Agreement)
          and the transactions contemplated thereby, (B) the favorable written
          opinion of Ray, Quinney & Nebeker, counsel to Wells Fargo Bank
          Northwest, National Association, the trustee under each of the Trust
          Agreements with respect to the Trust Agreements and the transactions
          contemplated thereby, (C) the favorable written opinion of Conyers
          Dill & Pearman, Bermuda counsel to the Parent and (D) the favorable
          opinion of A&L Goodbody, Irish counsel to the Beneficial Owner; each
          such opinion dated the Closing Date and addressed to the Agent (on
          behalf of itself and the Lenders), substantially in the forms of
          Exhibit G-1, G-2, G-3 and G-4 respectively;


                                       34



               (iv) resolutions of the boards of directors or other appropriate
          governing body (or of the appropriate committee thereof) of each
          Credit Party, Holdings and the Parent (or, in the case of a Credit
          Party that is a trust, resolutions of the appropriate board or
          committee of each trustee thereof) certified by its secretary or
          assistant secretary as of the Closing Date, approving and adopting the
          Loan Documents to be executed by such Person, and authorizing the
          execution and delivery thereof;

               (v) a notice of appointment of Authorized Representatives
          substantially in the form of Exhibit C hereto;

               (vi) the Organizational Documents of each Credit Party, Holdings
          and the Parent certified by the secretary or assistant secretary of
          such Credit Party, Holdings or the Parent that such Organizational
          Documents, as delivered to the Agent on the Closing Date, have not in
          any way been amended or modified and remain in full force and effect
          as of the Closing Date;

               (vii) if applicable, a certificate issued as of a recent date by
          the Secretary of State or comparable official of the jurisdiction of
          formation of each Credit Party, Holdings and the Parent as to the
          formation, due existence and good standing of such Credit Party,
          Holdings and the Parent;

               (viii) Uniform Commercial Code financing statements appropriate
          for filing in all places required by applicable law to perfect the
          Liens of the Agent under the Pledge Agreement as first priority Liens
          as to items of Collateral in which a security interest may be
          perfected by the filing of financing statements, and such other
          documents and/or evidence of other actions as may be necessary under
          applicable law to perfect the Liens of the Agent under such Pledge
          Agreement as a first priority Lien in and to such other Collateral as
          the Agent may require; and

               (ix) evidence that all fees and expenses (including the fees and
          expenses of counsel to the Lenders invoiced at least two (2) Business
          Days prior to the Closing Date) payable by the Parent or any other
          Credit Party on the Closing Date to the Agent and the Lenders have
          been paid in full; and

          (b) In the good faith judgment of the Agent and the Lenders:

               (i) no litigation, action, suit, investigation or other arbitral,
          administrative or judicial proceeding shall be pending or threatened
          which could reasonably be likely to result in a Material Adverse
          Effect; and

               (ii) the Credit Parties and Holdings shall have received all
          approvals, consents and waivers, and shall have made or given all
          necessary filings and notices as shall be required to consummate the
          transactions contemplated hereby without the occurrence of any default
          under, conflict with or violation of (A) any applicable law, rule,
          regulation, order or decree of any Governmental Authority or arbitral
          authority or (B) any agreement (including, without limitation,
          servicing


                                       35



          agreements), document or instrument to which any of the Credit Parties
          is a party or by which any of them or their properties is bound.

     5.2. Conditions of Term Loans. The obligation of the Lenders to make Term
Loans hereunder to any Borrower on or subsequent to the Closing Date is also
subject to the conditions precedent that:

          (a) the Agent shall have received, in form and substance satisfactory
     to the Agent and Lenders, the following:

               (i) executed originals of the Security Agreement by the
          Applicable Borrower, together with all schedules and exhibits thereto;

               (ii) Uniform Commercial Code financing statements appropriate for
          filing in all places required by applicable law to perfect the Liens
          of the Agent under the Security Agreement as first priority Liens as
          to items of Collateral in which a security interest may be perfected
          by the filing of financing statements, and such other documents and/or
          evidence of other actions as may be necessary under applicable law to
          perfect the Liens of the Agent under such Security Agreement as a
          first priority Lien in and to such other Collateral as the Agent may
          require;

               (iii) executed originals of the "Acknowledgement, Consent and
          Control Agreement" in the form of Exhibit A to the Pledge Agreement by
          each issuer with respect to any Pledged Interests;

               (iv) the executed chattel paper original of the Original Lease;
          and

               (v) in connection with the Original Lease, an executed copy of
          the Guaranty by US Airways Group, Inc. for the benefit of the
          Beneficial Owner and the Applicable Borrower in connection with the
          Participation Agreement dated as of October 24, 2005, among US
          Airways, Inc., Aircastle Ireland No. 2 Limited and Wells Fargo Bank
          Northwest, National Association;

          (b) each of the conditions set forth in Section 5.1 shall have been
     satisfied on or prior to the date of such Loans;

          (c) the representations and warranties of the Credit Parties and
     Holdings set forth in Article VI and in each of the other Loan Documents
     shall be true and correct in all material respects on and as of the date of
     such Loans, with the same effect as though such representations and
     warranties had been made on and as of such date, except to the extent that
     such representations and warranties expressly relate to an earlier date;

          (d) the Agent shall have received the latest drafts of the following
     within 5 Business Days prior to the date of the Loan, an organized
     pre-closing of the required documentation shall have occurred at least one
     Business Day prior to the date of the Loan, and the Agent shall have
     received final versions of the following, in form and substance
     satisfactory to the Agent and the Lenders, on or prior to the date of the
     Loan:


                                       36



               (i) (A) with respect to the Financed Aircraft which is the
          subject of such Loan, the favorable written opinion of FAA Counsel
          with respect to the Loan Documents and the transactions contemplated
          thereby dated the date of such Loan, addressed to the Agent (on behalf
          of itself and the Lenders), substantially in the form of Exhibit G-5
          or otherwise reasonably satisfactory to counsel to the Agent, (B) the
          favorable written opinion of counsel to the lessee under an Eligible
          Lease with respect to such Eligible Lease and the transactions
          contemplated thereby, addressed to the Agent (on behalf of itself and
          the Lenders), substantially in the form of Exhibit G-6, (C) the
          favorable written opinion of internal counsel to the lessee under an
          Eligible Lease with respect to such Eligible Lease and the
          transactions contemplated thereby, addressed to the Agent (on behalf
          of itself and the Lenders), substantially in the form of Exhibit G-7
          and (D) the favorable written opinion of counsel to the Applicable
          Borrower with respect to the Security Agreement and the transactions
          contemplated thereby, addressed to the Agent (on behalf of itself and
          the Lenders), substantially in the form of Exhibit G-8;

               (ii) certificates of insurance from qualified brokers of aircraft
          insurance or other evidence satisfactory to the Agent, evidencing all
          insurance required by the Loan Documents (including, without
          limitation, all insurance required by Exhibit L with respect to the
          applicable Financed Aircraft and the insurance required to be
          maintained by Holdings) and all insurance required to be maintained by
          the terms of the Original Lease and, in each case, naming the Agent on
          behalf of itself and on behalf of the Lenders as additional insured
          (in the case of any liability insurance) and loss payee (in the case
          of any hull insurance) as reasonably required by the Agent;

               (iii) a Borrowing Notice on behalf of the Applicable Borrower;

               (iv) such other documents and/or evidence of other actions as may
          be necessary under applicable law to perfect the Liens of the Agent
          under the Security Instruments as a first priority Lien, and/or as may
          be requested by the Agent with respect to the Financed Aircraft and
          the Lease with respect thereto, including without limitation:

                    (1) with respect to each Financed Aircraft, evidence of the
               filing with the FAA Recording Office of all documents (including
               the Original Lease and the Security Agreement) required by the
               FAA in order to protect the Applicable Borrower's right, title
               and interest in such Financed Aircraft;

                    (2) a copy of the executed purchase agreement and executed
               bill of sale evidencing the purchase by the Applicable Borrower
               of each Financed Aircraft;

                    (3) a copy of the "Aircraft Registration Application" filed
               with the FAA with respect to the Financed Aircraft; and


                                       37



                    (4) a copy of the current certificate of airworthiness
               issued by the FAA with respect to the Financed Aircraft;

          provided, however, it being understood that there shall be no mortgage
          on any Aircraft in favor of any Lender;

               (v) results of a search of Liens filed with the FAA or any
          Applicable Foreign Jurisdiction with respect to any Aircraft that is
          or is to be a Financed Aircraft;

               (vi) for the applicable Financed Aircraft, an appraisal by
          Airclaims;

               (vii) copies of the Eligible Lease and the Lessee Notice for the
          applicable Financed Aircraft; and

               (viii) a fully-executed copy of the Servicing Agreement certified
          by a Secretary or Assistant Secretary of Servicer, and certification
          of the amount of fees to be payable to Servicer in connection with
          such Servicing Agreement, which agreement and fees shall be acceptable
          to the Agent in its sole reasonable discretion;

          (e) at the time of (and after giving effect to) the Loan, no Default
     or Event of Default specified in Article IX shall have occurred and be
     continuing; and

          (f) the Agent shall have been paid the "upfront fee" payable in
     connection with such Loan under the terms of the Fee Letter.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

          Each Credit Party represents and warrants with respect to itself and
its Subsidiaries and, where expressly referenced below, to each other Credit
Party (which representations and warranties shall survive the delivery of the
documents mentioned herein and the making of Loans), that:

     6.1. Organization and Authority.

          (a) Each Credit Party is a trust, corporation, partnership or limited
     liability company duly organized and validly existing under the laws of the
     jurisdiction of its formation;

          (b) Each Credit Party (x) has the requisite power and authority to own
     its properties and assets and to carry on its business as now being
     conducted and as contemplated in the Loan Documents, and (y) is qualified
     to do business in every jurisdiction in which failure so to qualify would
     have a Material Adverse Effect;


                                       38



          (c) Each Borrower has the power and authority to execute, deliver and
     perform this Agreement and the Notes (if applicable), and to borrow
     hereunder, and to execute, deliver and perform each of the other Loan
     Documents to which it is a party;

          (d) The Beneficial Owner has the power and authority to execute,
     deliver and perform each of the Loan Documents to which it is a party;

          (e) When executed and delivered, each of the Loan Documents to which
     any Credit Party is a party will be the legal, valid and binding obligation
     or agreement, as the case may be, of such Credit Party (as the case may
     be), enforceable against such Credit Party (as the case may be) in
     accordance with its terms, subject to the effect of any applicable
     bankruptcy, moratorium, insolvency, reorganization or other similar law
     affecting the enforceability of creditors' rights generally and to the
     effect of general principles of equity (whether considered in a proceeding
     at law or in equity); and

          (f) Unless such Credit Party is a Trust, all shares of such Credit
     Party are validly issued and outstanding, fully paid and nonassessable and
     constitute all authorized, issued and outstanding shares of common stock,
     partnership interests or other indicia of ownership of such Credit Party;
     such Credit Party shall not cause to issue or create any capital stock,
     partnership interests or other certificated ownership interests, or
     securities convertible into, or exercisable or exchangeable for, capital
     stock, partnership interests or other certificated ownership interests at
     any time during the term of this Agreement.

     6.2. Loan Documents. The execution, delivery and performance by each Credit
Party of each of the Loan Documents to which it is a party:

          (a) has been duly authorized by all requisite Organizational Action of
     such Credit Party (as the case may be) required for the lawful execution,
     delivery and performance thereof;

          (b) does not violate any provisions of (i) applicable law, rule or
     regulation, (ii) any judgment, writ, order, determination, decree or
     arbitral award of any Governmental Authority or arbitral authority binding
     on such Credit Party or their respective properties, or (iii) the
     Organizational Documents of such Credit Party (as the case may be);

          (c) does not and will not be in conflict with, result in a breach of
     or constitute an event of default, or an event which, with notice or lapse
     of time or both, would constitute an event of default, under any contract,
     indenture, agreement or other instrument or document to which such Credit
     Party or any Subsidiary is a party, or by which the properties or assets of
     such Credit Party or any Subsidiary are bound; and

          (d) does not and will not result in the creation or imposition of any
     Lien upon any of the properties or assets of such Credit Party or any
     Subsidiary except any Liens in favor of the Agent and the Lenders created
     by the Security Instruments;

     6.3. Solvency. At the time of each Loan to a Borrower, such Borrower and
the Beneficial Owner of such Borrower and each Eligible Intermediary, if any, is
Solvent after giving effect to the transactions contemplated by the Loan
Documents;


                                       39



     6.4. Subsidiaries and Stockholders. No Credit Party has any Subsidiaries,
other than (A) in the case of the Beneficial Owner, the Borrowers, and (B) any
Eligible Intermediaries;

     6.5. Ownership Interests. No Credit Party owns any interest in any Person,
except that the Beneficial Owner owns all of the beneficial interest in each of
the Borrowers, and the Beneficial Owner or a Borrower may own an Eligible
Intermediary.

     6.6. Liens. The Agent (for itself and on behalf of the Lenders) has a first
priority perfected Lien (subject to Permitted Liens) on all Collateral under the
Security Instruments;

     6.7. Title to Properties. Each Credit Party has good and marketable title
to all its real and personal properties, subject to no transfer restrictions or
Liens of any kind except as provided in the Security Instruments and the Leases;

     6.8. Taxes. Except as set forth in Schedule 6.8, each Credit Party has
filed or caused to be filed all federal, state, local and foreign Tax returns in
each case that are required to be filed by it and that, the failure to file,
would have a Material Adverse Effect (individually or in the aggregate) and,
except for Taxes and assessments being contested in good faith by appropriate
proceedings diligently conducted and against which reserves in accordance with
GAAP reflected in the financial statements most recently delivered pursuant to
Section 7.1(a) and satisfactory to the Borrowers' independent certified public
accountants have been established, have paid or caused to be paid all Taxes as
shown on said returns or on any assessment received by it, to the extent that
such Taxes have become due;

     6.9. Other Agreements. No Credit Party:

               (i) is a party to or subject to any judgment, order, decree,
          agreement, lease or instrument, or subject to other restrictions,
          which individually or in the aggregate could reasonably be expected to
          have a Material Adverse Effect;

               (ii) is in default in the performance, observance or fulfillment
          of any of the obligations, covenants or conditions contained in any
          agreement or instrument to which such Credit Party is a party, which
          default has, or if not remedied within any applicable grace period
          could reasonably be likely to have, a Material Adverse Effect; or

               (iii) shall have, prior to the Closing Date, conducted business
          other than related to the acquisition, leasing, maintenances,
          financing (solely under the Loan Documents), ownership and disposition
          of an Eligible Aircraft or have incurred any liabilities except to the
          extent related to such business, including, without limitation, under
          any Eligible Lease to which it is a party, an aircraft acquisition,
          sale, maintenance or overhaul agreement and the Loan Documents, none
          of which liabilities (except (a) the purchase price in respect of an
          Aircraft, and (b) those arising under the Loan Documents and the
          Eligible Leases) are material to the Borrowers taken as a whole.

     6.10. Litigation. Except as set forth in Schedule 6.10, there is no action,
suit, investigation or proceeding at law or in equity or by or before any
governmental instrumentality


                                       40



or agency or arbitral body pending, or, to the knowledge of any Borrower,
threatened by or against any Credit Party or affecting any Credit Party or any
properties or rights of any Credit Party, which could reasonably be likely to
have a Material Adverse Effect;

     6.11. Federal Regulations. No part of the proceeds of any Loans, and no
other extensions of credit hereunder, will be used (a) for "buying" or
"carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U as now and from time to time hereafter in effect
for any purpose that violates the provisions of the Regulations of the Board or
(b) for any purpose that violates the provisions of the Regulations of the
Board. If requested by any Lender or the Agent, the Borrowers will furnish to
the Agent and each Lender a statement to the foregoing effect in conformity with
the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in
Regulation U.

     6.12. Investment Company. No Credit Party is an "investment company," or
"promoter" or "principal underwriter" for, an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended (15 U.S.C.
Section 80a-1, et seq.). The application of the proceeds of the Loans and
repayment thereof by each Borrower and the performance by each Borrower and the
other Credit Parties of the transactions contemplated by the Loan Documents will
not violate any provision of said Act, or any rule, regulation or order issued
by the Securities and Exchange Commission thereunder, in each case as in effect
on the date hereof;

     6.13. Patents, Etc. Each Credit Party owns or has the right to use, under
valid license agreements or otherwise, all material patents, licenses,
franchises, trademarks, trademark rights, trade names, trade name rights, trade
secrets and copyrights necessary to or used in the conduct of its businesses as
now conducted and as contemplated by the Loan Documents, without known conflict
with any patent, license, franchise, trademark, trade secret, trade name,
copyright, other proprietary right of any other Person;

     6.14. No Untrue Statement. Neither (a) this Agreement nor any other Loan
Document or certificate or document executed and delivered by or on behalf of
any Credit Party in accordance with or pursuant to any Loan Document nor (b) any
written statement, representation, or warranty provided to the Agent in
connection with the negotiation or preparation of the Loan Documents contains
any misrepresentation or untrue statement of material fact or omits to state a
material fact necessary, in light of the circumstance under which it was made,
in order to make any such warranty, representation or statement contained
therein not misleading;

     6.15. No Consents, Etc. Neither the respective businesses or properties of
the Credit Parties, nor any relationship among the Credit Parties and any other
Person, nor any circumstance in connection with the execution, delivery and
performance of the Loan Documents and the transactions contemplated thereby, is
such as to require a consent, approval or authorization of, or filing,
registration or qualification with, any Governmental Authority or any other
Person on the part of any Credit Party as a condition to the execution, delivery
and performance of, or consummation of the transactions contemplated by the Loan
Documents, which, if not obtained or effected, would be reasonably likely to
have a Material Adverse Effect,


                                       41



or if so, such consent, approval, authorization, filing, registration or
qualification has been duly obtained or effected, as the case may be;

     6.16. Employee Benefit Plans.

          (a) Neither any Guarantor nor any Borrower has or has ever sponsored
     any Employee Benefit Plan, any Single Employer Plan or any Multiemployer
     Plan, or had any obligation to fund any such plan;

          (b) Neither any Borrower nor any ERISA Affiliate has incurred any
     "accumulated funding deficiency" within the meaning of Section 412 of the
     Code or Section 302 of ERISA with respect to any Single Employer Plan,
     whether or not waived, during the six-year period to the date on which this
     representation is made or deemed made or any other liability to the PBGC
     which remains outstanding, in each case, in an amount that would be
     reasonably likely to have a Material Adverse Effect;

          (c) No Termination Event has occurred during the six-year period prior
     to the date on which this representation is made or deemed made or is
     reasonably expected to occur with respect to any Single Employer Plan or
     Multiemployer Plan, neither any Borrower nor any ERISA Affiliate has
     incurred or is reasonably expected to incur any unpaid withdrawal liability
     with respect to any Multiemployer Plan that, in each case, could be
     reasonably expected to have a Material Adverse Effect; and

          (d) The present value of all accrued benefits under each Single
     Employer Plan (based on those assumptions used to fund such Single Employer
     Plans) did not, as of the last annual valuation date prior to the date on
     which this representation is made or deemed made for each such plan, exceed
     the then current value of the assets of such Single Employer Plan allocable
     to such benefits by a material amount;

          (e) With respect to each scheme or arrangement mandated by a
     government other than the United States (a "FOREIGN GOVERNMENT SCHEME OR
     ARRANGEMENT") and with respect to each employee benefit plan maintained or
     contributed to by any Guarantor or ERISA Affiliate that is not subject to
     United States law (a "FOREIGN PLAN"):

               (i) Any employer and employee contributions required by law or by
          the terms of any Foreign Government Scheme or Arrangement or any
          Foreign Plan have been made, or, if applicable, accrued, in accordance
          with normal accounting practices;

               (ii) The fair market value of the assets of each funded Foreign
          Plan, the liability of each insurer for any Foreign Plan funded
          through insurance or the book reserve established for any Foreign
          Plan, together with any accrued contributions, is sufficient to
          procure or provide for the accrued benefit obligations with respect to
          all current and former participants in such Foreign Plan according to
          the actuarial assumptions and valuations most recently used to account
          for such obligations in accordance with applicable generally accepted
          accounting principles; and


                                       42



               (iii) Each Foreign Plan required to be registered has been
          registered and has been maintained in good standing with applicable
          regulatory authorities;

     in the case of each of clauses (i), (ii) and (iii) above, in an amount or
     to an extent that would be reasonably expected to have a Material Adverse
     Effect.

     6.17. No Default. As of the date hereof, there does not exist any Default
or Event of Default hereunder;

     6.18. Environmental Laws. Except as listed on Schedule 6.18, each Credit
Party is in compliance with all applicable Environmental Laws and has been
issued and currently maintains all required federal, state and local permits,
licenses, certificates and approvals. Except as listed on Schedule 6.18, no
Credit Party has been notified of any pending or threatened action, suit,
proceeding or investigation, and no Credit Party is aware of any facts, which
(a) calls into question, or could reasonably be expected to call into question,
compliance by any Credit Party with any Environmental Laws, (b) seeks, or could
reasonably be expected to form the basis of a meritorious proceeding, to
suspend, revoke or terminate any license, permit or approval necessary for the
operation of any Credit Party's business or facilities or for the generation,
handling, storage, treatment or disposal of any Hazardous Materials, or (c)
seeks to cause, or could reasonably be expected to form the basis of a
meritorious proceeding to cause, any property of any Credit Party to be subject
to any restrictions on ownership, use, occupancy or transferability under any
Environmental Law; and

     6.19. Employment Matters. No Credit Party has or has ever had any employee
other than officers thereof.

     6.20. Withholding Taxes. The Beneficial Owner is eligible for the benefits
of the Income Tax Treaty between the United States of America and Ireland. No
Borrower, to its knowledge, as of the date of this Agreement, is required to
withhold or deduct any Taxes imposed by any non-U.S. Governmental Authority, in
an amount or to an extent that would be reasonably expected to have a Material
Adverse Effect.

     6.21. No Immunity. No Credit Party nor any of its assets is entitled to
immunity from suit, execution, attachment or other legal process. Each Credit
Party's execution and delivery of this Agreement and the other Loan Documents to
which it is a party constitute, and the exercise of its rights and performance
of and compliance with its obligations under such Loan Documents will
constitute, private and commercial acts done and performed for private and
commercial purposes.

                                  ARTICLE VII

                              AFFIRMATIVE COVENANTS

          Unless the Required Lenders shall otherwise consent in writing, each
Credit Party agrees that it will, agrees that it will cause each Credit Party
which is a Subsidiary to:

     7.1. Financial Reports, Etc.


                                       43



          (a) As soon as practical and in any event within 90 days after the end
     of each Fiscal Year, deliver or cause to be delivered to the Agent and each
     Lender audited consolidated balance sheets of the Parent and its
     Subsidiaries as at the end of such Fiscal Year, and the notes thereto (if
     any), and the relating audited consolidated statements of income, changes
     in stockholders' (or members') equity and cash flows, and the respective
     notes thereto (if any), for such Fiscal Year, setting forth comparative
     financial statements for the preceding year (if applicable), reported on by
     Ernst & Young LLP or other independent certified public accountants of
     nationally recognized standing all prepared in accordance with GAAP and
     accompanied by a certificate of an Authorized Representative, which
     certificate shall be in the form of Exhibit H;

          (b) as soon as practical and in any event within 60 days after the end
     of each fiscal quarter (except the last fiscal quarter of the Fiscal Year),
     deliver to the Agent and each Lender consolidated income statements of the
     Parent and its Subsidiaries prepared in accordance with GAAP and
     accompanied by a certificate of an Authorized Representative to the effect
     that such financial statements present fairly, in all material respects,
     the financial position of the Parent and its Subsidiaries and of each of
     the Borrowers as of the end of such fiscal period and the results of their
     operations for such fiscal period;

          (c) as soon as practical and in any event within 30 days after the end
     of each calendar month, deliver or cause to be delivered to the Agent and
     each Lender a certificate of an Authorized Representative containing
     information about the Financed Aircraft, and stating that each Credit Party
     is in compliance with the covenants and terms hereof and that no Default or
     Event of Default has occurred and is continuing, in each case as of the end
     of such month, which certificate shall be in the form of Exhibit R;

          (d) promptly upon their becoming available to any Credit Party,
     deliver to the Agent and each Lender a copy of (i) all regular or special
     reports or effective registration statements which any Credit Party shall
     file with the Securities and Exchange Commission (or any successor thereto)
     or any securities exchange, (ii) any proxy statement distributed by any
     Credit Party to its shareholders, bondholders or the financial community in
     general, and (iii) any management letter or other report submitted to any
     Credit Party by independent accountants in connection with any annual,
     interim or special audit of any Credit Party; and

          (e) promptly, from time to time, deliver or cause to be delivered to
     the Agent and each Lender such other information regarding any Credit
     Party's operations, business affairs and financial condition as the Agent
     or such Lender may reasonably request.

Subject to Section 11.15, the Agent and the Lenders are hereby authorized to
deliver a copy of any such financial or other information delivered hereunder to
the Lenders (or any affiliate of any Lender) or to the Agent, to any
Governmental Authority having jurisdiction over the Agent or any of the Lenders
pursuant to any written request therefor or in the ordinary course of
examination of loan files, or to any other Person who shall acquire or consider
the assignment of, or acquisition of any participation interest in, any
Obligation permitted by this Agreement;


                                       44



     7.2. Maintain Properties. In the case of the Applicable Borrower, if a
Financed Aircraft is not subject to an Eligible Lease, maintain and make repairs
to such Financed Aircraft in compliance with the requirements set forth in
Section 3.4 of the Security Agreement; and maintain all other properties
necessary to its operations in good working order and condition, make all needed
repairs, replacements and renewals to such other properties, and maintain free
from Liens all trademarks, trade names, patents, copyrights, trade secrets,
know-how, and other intellectual property and proprietary information (or
adequate licenses thereto), in each case as are reasonably necessary to conduct
its business as currently conducted or as contemplated hereby, all in accordance
with customary and prudent business practices;

     7.3. Existence, Qualification, Etc. Except as otherwise expressly permitted
under Section 8.7, do or cause to be done all things necessary to preserve and
keep in full force and effect its existence and all material rights and
franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary;

     7.4. Regulations and Taxes. Comply in all material respects with or contest
in good faith all statutes and governmental regulations and timely pay all
Taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien other than a
Permitted Lien against any of its properties;

     7.5. Insurance. Maintain or cause to be maintained with respect to each
Financed Aircraft and all other Collateral the insurance described on Exhibit L,
and cause the Agent for itself and on behalf of the Lenders to be named
additional insured (in the case of any liability insurance) and loss payee (in
the case of any hull insurance) on such insurance and on any and all other
insurance maintained by any Credit Party with respect to such Financed Aircraft
or provided by or on behalf of a lessee or other Person pursuant to the terms of
any Lease, in each case as the Agent may reasonably require;

     7.6. True Books. Keep true books of record and account in which full, true
and correct entries will be made of all of its dealings and transactions, and
set up on its books such reserves as may be required by GAAP with respect to
doubtful accounts and all taxes, assessments, charges, levies and claims and
with respect to its business in general, and include such reserves in interim as
well as year-end financial statements;

     7.7. Right of Inspection. Permit any Person designated by any Lender or the
Agent to visit and inspect any Financed Aircraft, or any other property,
corporate book or financial report of any Credit Party and to discuss its
affairs, finances and accounts with its principal officers and independent
certified public accountants; and cause each Eligible Carrier to permit any
Person designated by any Lender or any Agent to inspect any Financed Aircraft,
all at reasonable times, at reasonable intervals and with reasonable prior
notice, subject to any restriction on inspection contained in an Eligible Lease
with respect to such Financed Aircraft; provided that notwithstanding any such
Lease, (a) any Person designated by a Lender or the Agent may inspect such
Financed Aircraft at any reasonable time upon an event of default under such
Lease, and (b) upon and during the continuance of any Event of Default, each
Credit Party (i) hereby authorizes the Agent to designate an "authorized
representative" of such Credit Party for purposes of


                                       45



inspection under any Lease and (ii) shall use its best efforts to cause the
Applicable Carrier (and any other Person) to permit any Person so designated by
the Agent and any other Person designated by any Lender or the Agent to inspect
such Financed Aircraft at any time;

     7.8. Observe all Laws. Conform to and duly observe in all material respects
all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business;

     7.9. Governmental Licenses. Obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted and as
contemplated by the Loan Documents;

     7.10. Certificates of Aircraft Registration. Deliver to the Agent promptly
after receipt thereof (but in any case not later than 7 days after such
receipt), certificates of aircraft registration issued by the FAA with respect
to each Financed Aircraft;

     7.11. Officer's Knowledge of Default. Upon any officer of any Credit Party
obtaining knowledge of any Default or Event of Default hereunder or under any
other obligation of any Credit Party to any Lender, or any event, development or
occurrence which could reasonably be expected to have a Material Adverse Effect,
cause such officer or an Authorized Representative to promptly notify the Agent
of the nature thereof, the period of existence thereof, and what action such
Credit Party proposes to take with respect thereto;

     7.12. Suits or Other Proceedings. Upon any officer of any Credit Party
obtaining knowledge of any action, suit, litigation, investigation, or other
proceeding being instituted or threatened against any Credit Party, in any court
or before any Governmental Authority, or any attachment, levy, execution or
other process being instituted against any assets of any Credit Party, making a
claim or claims in an aggregate amount greater than $250,000, exclusive of
punitive damages, not otherwise covered by insurance or that would otherwise be
reasonably expected to have a Material Adverse Effect, promptly deliver to the
Agent written notice thereof stating the nature and status of such action, suit,
litigation, investigation, dispute, proceeding, levy, execution or other
process;

     7.13. Notice of Environmental Complaint or Condition. Promptly provide to
the Agent true, accurate and complete copies of any and all notices, complaints,
orders, directives, claims or citations received by any Credit Party relating to
any (a) violation or alleged violation by any Credit Party of any applicable
Environmental Law; (b) release or threatened release by any Credit Party, or by
any Person handling, transporting or disposing of any Hazardous Material on
behalf of any Credit Party, or at any facility or property currently or formerly
owned or leased or operated by any Credit Party, of any Hazardous Material,
except where occurring legally pursuant to a permit or license; or (c) liability
or alleged liability of any Credit Party for the costs of investigating,
cleaning up, removing, remediating or responding to a release or threatened
release of Hazardous Materials;

     7.14. Environmental Compliance. If any Credit Party shall receive any
letter, notice, complaint, order, directive, claim or citation alleging the
violation of any Environmental Law, the release of any Hazardous Material, or
potential liability for the costs of investigating,


                                       46



cleaning up, removing, remediating or responding to a release of Hazardous
Materials, within the time period permitted and to the extent required by the
applicable Environmental Law or the Governmental Authority responsible for
enforcing such Environmental Law, such Credit Party shall remove or remedy, or
cause the applicable Credit Party to remove or remedy, such violation or release
or satisfy such liability;

     7.15. Indemnification of Environmental Liabilities. Without limiting the
generality of Section 11.9, each Borrower hereby agrees jointly and severally to
indemnify and hold the Agent and the Lenders, and their respective officers,
directors, employees and agents, harmless from and against any and all claims,
losses, penalties, liabilities, damages and expenses (including assessment and
cleanup costs and reasonable attorneys', consultants' or other expert fees,
expenses and disbursements) arising directly or indirectly from, out of or by
reason of (a) the actual or alleged violation of any Environmental Law by any
Credit Party or with respect to any property owned, operated or leased by any
Credit Party or (b) the handling, storage, transportation, treatment, emission,
release, discharge or disposal of any Hazardous Materials by or on behalf of any
Credit Party, or on or with respect to property owned or leased or operated by
any Credit Party. The provisions of this Section 7.15 shall survive repayment of
the Obligations and expiration or termination of this Agreement;

     7.16. Further Assurances. At the Borrowers' cost and expense, upon request
of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the reasonable opinion of
the Agent to carry out more effectively the provisions and purposes of this
Agreement, the Security Instruments and the other Loan Documents;

     7.17. Swap Agreements. Subject to Section 8.4, each Credit Party may
maintain Swap Agreements; provided that the aggregate of the notional amounts of
all such Swap Agreements at any time shall not exceed the aggregate principal
amount of the Loans outstanding at such time. At the time of any payment or
prepayment of any Loan hereunder, each Credit Party agrees to take such actions
as may be necessary (including, without limitation, the termination or amendment
of one or more Swap Agreements) to comply with this Section 7.17 If the
termination date of any Swap Agreement falls after the Stated Termination Date,
then such Swap Agreement shall provide for the settlement of such Swap Agreement
on such date.

     7.18. Continued Operations. Subject to Section 8.15, continue at all times
to conduct its business and engage principally in the same line or lines of
business substantially as heretofore conducted;

     7.19. Maintenance of Aircraft; Other Covenants and Restrictions;
Non-Discrimination. In the case of each Borrower:

          (a) Ensure that any Lease with respect to any Financed Aircraft
     contains covenants and restrictions regarding the maintenance, alteration,
     replacement, pooling, sublease and return of such Aircraft by the
     Applicable Carrier, which covenants and restrictions satisfy the
     requirements of Schedule 7.19(a) hereto;


                                       47



          (b) Promptly and diligently take or cause to be taken all steps which
     a prudent international aircraft lessor or financier would reasonably take
     in light of all of the relevant circumstances to compel the relevant
     Eligible Carrier to comply with the terms of any Lease, or, if applicable
     and the Applicable Borrower is entitled to do so, to repossess the
     applicable Financed Aircraft (and, if a prudent international aircraft
     lessor or financier would determine it necessary or desirable, to
     de-register and export the same to a safe location) if any failure to
     comply with such Lease is not promptly remedied;

     7.20. Re-registration of Aircraft. In the case of each Borrower, ensure
that any Lease with respect to any Aircraft contain covenants and restrictions
regarding re-registration of such Aircraft, which covenants and restrictions
satisfy the requirements of the Security Agreement;

     7.21. Servicer. In the case of each Borrower, ensure that the Servicer
continues to serve in compliance with the Servicing Agreement;

     7.22. Employee Benefit Plans. Without limiting the generality of Section
8.9(a), with reasonable promptness, and in any event within thirty (30) days
after any Guarantor or ERISA Affiliate knows or has reason to know thereof, give
notice to the Agent of (a) the establishment or termination of any Single
Employer Plan (which notice shall include a copy of such plan), (b) the failure
of any Credit Party or any ERISA Affiliate to make a required installment or
payment under Section 302 of ERISA or Section 412 of the Code by the due date;
(c) the occurrence of a Termination Event with respect to any Single Employer
Plan or Multiemployer Plan; (d) the institution of proceedings or the taking of
any other action by the PBGC or any Credit Party or any ERISA Affiliate or any
Multiemployer Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan; and (e) any notice
received by any Guarantor or ERISA Affiliate from the PBCG stating its intent to
terminate an Employee Benefit Plan or to have a trustee appointed to administer
an Employee Benefit Plan.

     7.23. Accounts. In the case of each Borrower, establish the Accounts as
provided in the Lockbox Agreement and deposit all proceeds (including without
limitation rent) from any Lease of any Financed Aircraft to the Accounts
designated under the Lockbox Agreement;

     7.24. Eligible Lease; Lessee Notice. In the case of each Borrower, deliver
to the Agent promptly upon execution, any Lease entered into by any Borrower,
together with a Lessee Notice in connection with such Lease, the opinions
referred to in Section 5.2(d)(i) and the evidence referred to in Section
5.2(d)(iv); and

                                  ARTICLE VIII

                               NEGATIVE COVENANTS

          Until the Obligations have been paid and satisfied in full and this
Agreement has been terminated in accordance with the terms hereof, unless the
Required Lenders shall otherwise consent in writing, no Credit Party will, nor
will it permit any of its Subsidiaries (if any) to:


                                       48



     8.1. Acquisitions. Enter into any agreement, contract, binding commitment
or other arrangement providing for any Acquisition, or take any action to
solicit the tender of securities or proxies in respect thereof in order to
effect any Acquisition, except for Acquisition of a Subsidiary as permitted by
Section 8.6;

     8.2. Capital Expenditures. Make or become committed to make any Capital
Expenditures, except for Capital Expenditures to maintain or purchase Eligible
Aircraft;

     8.3. Liens. Incur, create or permit to exist any Lien, charge or other
encumbrance of any nature whatsoever with respect to (a) any property or assets
now owned or hereafter acquired by any Credit Party or (b) any Financed
Aircraft, except the following (the "Permitted Liens"):

               (i) Liens created under the Security Instruments in favor of the
          Agent and the Lenders; and Liens arising under the Eligible Leases in
          favor of the Applicable Intermediary (as lessor) or the Applicable
          Borrower which Liens in each case have been assigned to the Agent;

               (ii) Liens imposed by law for Taxes (A) not yet due or (B) which
          are being contested in good faith by appropriate proceedings
          diligently conducted, each of which Liens in clause (B) above shall be
          fully bonded over (including for any relevant penalties or interest),
          to the reasonable satisfaction of the Agent;

               (iii) statutory Liens of landlords and Liens of mechanics,
          materialmen and other Liens imposed by law or created in the ordinary
          course of business and (i) in existence less than 90 days from the
          date of creation thereof for amounts not yet due or (ii) which are
          being contested in good faith by appropriate proceedings diligently
          conducted, which are inferior in respect of the Collateral to the
          Liens conferred under the Security Instruments or have been fully
          bonded over to the reasonable satisfaction of the Agent, and with
          respect to which adequate reserves or other appropriate provisions are
          being maintained in accordance with GAAP;

               (iv) Liens arising out of any judgment or award with respect to
          which an appeal or proceeding for review is being prosecuted in good
          faith by appropriate proceedings diligently conducted, and with
          respect to which a stay of execution is in effect, each of which Liens
          shall be fully bonded over (including for any relevant penalties or
          interest), to the reasonable satisfaction of the Agent;

               (v) Liens created by the Applicable Carrier under an Eligible
          Lease that are not subject to clause (vii) below, which Liens are
          created without the knowledge of the Applicable Borrower and are
          released or fully bonded over to the reasonable satisfaction of the
          Agent within 30 days after the Applicable Borrower has notice or
          knowledge of any such Lien;

               (vi) with respect to any Lease and the related Aircraft, (i) any
          "Permitted Liens" (as defined in or the equivalent term in such Lease
          Agreement and as agreed to by the Agent) (except a Permitted Lien that
          is a Lessor Lien (as defined in or the equivalent term in such Lease
          Agreement)), and (ii) any other Lien created by a Lessee, a sublessee
          of a Lessee or any Person claiming by or


                                       49



          through a Lessee or sublessee, in each case in this clause (ii) as
          agreed to by the Agent; provided, that with respect to Liens of the
          type listed in clause (ii), such Lien is being contested in good faith
          by appropriate proceedings or, upon the Applicable Borrower receiving
          notice or knowledge of such Lien, such Applicable Borrower is
          diligently and promptly enforcing the lessor's rights against the
          Lessee;

               (vii) any Lien from air navigation authority, airport tending,
          gate or handling (or similar) charges or levies (A) not yet overdue or
          (B) which are being contested in good faith by appropriate
          proceedings, each of which Liens in clause (B) above shall be fully
          bonded over, to the reasonable satisfaction of the Agent;

               (viii) Liens securing Indebtedness described in Section 8.4(b);
          and

               (ix) any head lease in respect of any Aircraft; provided that,
          the lessor and lessee thereunder are Borrowers or Guarantors.

     8.4. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness of any Credit Party, howsoever evidenced, except:

          (a) Indebtedness owing to (including guaranties in favor of) the Agent
     or any Lender in connection with this Agreement, any Note or other Loan
     Document;

          (b) The endorsement of negotiable instruments for deposit or
     collection or similar transactions in the ordinary course of business;

          (c) Indebtedness arising from Swap Agreements permitted under Section
     7.17; provided that the aggregate notional amount of Swap Agreements shall
     not exceed at any time the aggregate principal amount of the Loans
     outstanding at such time;

          (d) Unsecured intercompany Indebtedness for loans and advances made by
     the Beneficial Owner to a Borrower; provided that such intercompany
     Indebtedness is evidenced by a promissory note or similar written
     instrument acceptable to the Agent which provides that such Indebtedness is
     subordinated to obligations, liabilities and undertakings of the holder or
     owner thereof under the Loan Documents on terms acceptable to the Agent;
     and

          (e) Contingent Obligations of the Beneficial Owner in support of
     obligations of a Borrower.

     8.5. Transfer of Assets. Sell, lease, transfer or otherwise dispose of any
assets of any Credit Party other than (a) leases of Aircraft under Eligible
Leases, (b) sales of Aircraft, (c) sales of all of the beneficial interest or
ownership of a Borrower, or (d) Engine swaps, interchange or pooling
arrangements to the extent permitted under any Eligible Lease; provided in each
case that (i) the purchaser of such Aircraft or beneficial interest shall have
acknowledged receipt of the Applicable Borrower's irrevocable instruction to pay
the sales price for such Aircraft or beneficial interest directly to the
Collection Account identified in the Lockbox Agreement to


                                       50



which the Applicable Borrower is a party and (ii) the net proceeds of such sales
are promptly applied in accordance with Section 2.3(b);

     8.6. Subsidiaries; Investments. Own, create or permit to exist any
Subsidiary (except that the Beneficial Owner may own beneficial interests in, or
(subject to Section 8.4(d)) make advances to, a Borrower, and the Beneficial
Owner or a Borrower may own an Applicable Intermediary), or otherwise purchase,
own, invest in or otherwise acquire, directly or indirectly, any stock or other
securities, or make or permit to exist any interest whatsoever in any other
Person or permit to exist any loans or advances to any Person, other than loans
referred to in Section 8.4(d);

     8.7. Merger or Consolidation. (a) Consolidate with or merge into any other
Person, or (b) permit any other Person to merge into it, or (c) liquidate,
wind-up or dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets without the consent of the Agent, except as
permitted by Section 8.5 and except in the case of a Borrower or Guarantor that
simultaneously terminates its status as a Borrower or Guarantor hereunder in
accordance with Section 2.11;

     8.8. Transactions with Affiliates. Enter into any transaction after the
Closing Date, including, without limitation, the purchase, sale, lease or
exchange of property, real or personal, or the rendering of any service, with
any Affiliate of any Borrower or of any Guarantor, except (a) that such Persons
may render services to a Borrower, a Guarantor or their Subsidiaries for
compensation at the same rates generally paid by Persons engaged in the same or
similar businesses for the same or similar services, (b) that a Credit Party may
render services to such Persons for compensation at the same rates generally
charged by such Credit Party, (c) in either case in the ordinary course of
business and pursuant to the reasonable requirements of a Credit Party's
business consistent with past practice of such Credit Party and upon fair and
reasonable terms no less favorable to such Credit Party than would be obtained
in a comparable arm's-length transaction with a Person not an Affiliate, and (d)
subject to Section 8.18, the Servicer may render the services described in the
Servicing Agreement for the fees set forth therein;

     8.9. Employee Benefit Plans; ERISA Affiliates; Employees. Sponsor any
Employee Benefit Plan or any Multiemployer Plan or agree to have any obligation
to fund any such plan, or hire or retain any employee other than officers
thereof;

     8.10. Fiscal Year. Change its Fiscal Year, or have any fiscal year other
than the Fiscal Year;

     8.11. Dissolution, etc. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution;

     8.12. Change in Control. Cause, suffer or permit to exist or occur any
Change of Control;

     8.13. Negative Pledge Clauses. Enter into or cause, suffer or permit to
exist any agreement with any Person other than the Agent and the Lenders
pursuant to this Agreement or any other Loan Documents which prohibits or limits
the ability of any Credit Party to create,


                                       51



incur, assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired; provided that any Eligible
Lease may contain such a prohibition or limitation so long as the prohibition or
limitation does not apply to any Lien granted in favor of the Agent or any
Lender pursuant to the Loan Documents;

     8.14. Partnerships. Become a general partner in any general or limited
partnership;

     8.15. Business and Operations.

          (a) Engage, in the case of any Borrower, in any business or operations
     other than the ownership, financing, leasing and sale of a Financed
     Aircraft or in the ownership of an Applicable Intermediary or, in the case
     of the Beneficial Owner, in the ownership of a Borrower engaged in such
     business or operations, or matters reasonably incidental thereto, or the
     performance of the Loan Documents; provided, however, that, except as
     otherwise provided in Section 2.1(a), no Borrower that owns or is the
     Applicable Borrower with respect to any Aircraft may own or be the
     Applicable Borrower with respect to any other Aircraft;

          (b) Factor or dispose of any of its debts or discount any bill of
     exchange other than with the Lenders;

          (c) Open or allow to exist any bank accounts other than (i) the
     accounts that are subject to the Lockbox Agreement; (ii) accounts that are
     used solely to fund the portion of the Purchase Price of each Aircraft to
     the extent not paid with the proceeds of the Loans hereunder; provided that
     the accounts referenced in (ii) hereof are not used for any other purpose
     and are closed within 20 days after the Closing Date; and (iii) an account
     opened by the Beneficial Owner with the Depositary Bank solely to receive
     and disburse funds payable to the Borrowers in accordance with paragraph
     fifth of Section 5.1 of the Lockbox Agreement.

          (d) Guarantee or otherwise obligate itself with respect to the debts
     of any other Person, or hold out its credit as being available to satisfy
     the obligations of any other Person, except as expressly contemplated or
     permitted by the Loan Documents; or

          (e) Act as an agent of any other entity or Person;

     8.16. Ownership, Operation and Leasing of Financed Aircraft.

          (a) Permit any Person other than a Borrower (or the Beneficial Owner
     solely by virtue of its beneficial interest in the respective Borrower) to
     own, beneficially or of record, any Financed Aircraft;

          (b) Permit any Financed Aircraft to be leased, subleased or chartered
     to any Person other than the Applicable Carrier or the Applicable
     Intermediary, or to be operated by any Person other than the Applicable
     Borrower, the Applicable Intermediary or the Applicable Carrier, except as
     permitted in the Security Agreement or any Lease;


                                       52



          (c) Permit any Financed Aircraft to be leased to an Eligible Carrier
     except under the terms of an Eligible Lease;

          (d) Permit any Financed Aircraft to be flown into or located in any
     country (or part thereof) if as a result thereof such Financed Aircraft
     would not be covered by insurance;

     8.17. Servicing Agreement.

          (a) Amend, modify or supplement the Servicing Agreement in any
     material respect without the consent of the Agent;

          (b) Pay any management or other fee to the Parent or any Affiliate
     other than payment of servicing fees under the Servicing Agreement to the
     extent permitted in the Lockbox Agreement; or

          (c) Commit or permit any material breach of the Servicing Agreement;

     8.18. Representations regarding Agent and Lenders. Represent or hold out,
or permit any Applicable Carrier to represent or hold out, the Agent or any
Lender as (a) the owner of any Financed Aircraft, (b) carrying goods or
passengers on any such Financed Aircraft, or (c) being in any way responsible
for any operation of carriage (whether for hire or reward or gratuitously) which
may be undertaken by any Credit Party or Applicable Carrier;

     8.19. Beneficial Owner. In the case of the Beneficial Owner:

          (a) conduct, transact or otherwise engage in any business or
     operations other than those incidental to its voting, equity, beneficial or
     any other ownership interests of each Borrower or any Applicable
     Intermediary, and the performance of the Loan Documents;

          (b) own any assets other than its beneficial interest in the Borrowers
     and its interest in any Applicable Intermediary, and its interest in the
     accounts opened pursuant to the Lockbox Agreement and the other accounts
     permitted by Section 8.15(c);

          (c) commingle its funds or assets with those of any other Person;

          (d) appoint any additional directors or change the directors on its
     board of directors and, in particular but without prejudice to the
     generality of the foregoing, not remove or permit the removal of the
     independent director (as may be required under the Beneficial Owner's
     organizational documents); or

     8.20. Organizational Documents.

          (a) Amend its Organizational Documents without the consent of the
     Lenders and the Collateral Agent (as defined in the Security Agreement for
     such Credit Party); or

          (b) Alter its share capital or issue any additional shares in its
     capital.


                                       53



                                   ARTICLE IX

                       EVENTS OF DEFAULT AND ACCELERATION

     9.1. Events of Default. If any one or more of the following events (herein
called "EVENTS OF DEFAULT") shall occur for any reason whatsoever (and whether
such occurrence shall be voluntary or involuntary or come about or be effected
by operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any Governmental
Authority), that is to say:

          (a) if default shall be made in the due and punctual payment of the
     principal of any Loan or other Obligation, when and as the same shall be
     due and payable whether pursuant to any provision of Article II, at
     maturity, by acceleration or otherwise; or

          (b) if default shall be made in the due and punctual payment of any
     amount of interest on any Loan or other Obligation or of any fees or other
     amounts payable to any of the Lenders or the Agent within three (3)
     Business Days after the date on which the same shall be due and payable; or

          (c) if default shall be made in the performance or observance of any
     covenant set forth in Section 7.5, 7.11, 7.12, 7.24 or Article VIII; or

          (d) if a default shall be made in the performance or observance of, or
     shall occur under, any covenant, agreement or provision contained in this
     Agreement (other than as described in clauses (a), (b) or (c) above), or if
     a default shall be made in the performance or observance of, or shall occur
     under, any covenant, agreement or provision contained in any of the other
     Loan Documents (beyond any applicable grace period, if any, contained
     therein) or in any instrument or document evidencing or creating any
     obligation, guaranty, or Lien in favor of the Agent (acting in any
     capacity) or any of the Lenders or delivered to the Agent (acting in any
     capacity) or any of the Lenders in connection with or pursuant to this
     Agreement or any of the Obligations, and such default shall continue for 30
     or more days after the earlier of receipt of notice of such default to an
     Authorized Representative from the Agent (acting in any capacity) or an
     officer of any Credit Party or the Parent becomes aware of such default, or
     if any Loan Document ceases to be in full force and effect (other than by
     reason of any action by the Agent (acting in any capacity)), or if without
     the written consent of the Lenders, this Agreement or any other Loan
     Document shall be disaffirmed or shall terminate, be terminable or be
     terminated or become void or unenforceable for any reason whatsoever (other
     than in accordance with its terms in the absence of default or by reason of
     any action by the Lenders or the Agent (acting in any capacity)); or

          (e) if there shall occur (i) a default, which is not waived, in the
     payment of any principal, interest, premium or other amount with respect to
     any Indebtedness or Rate Hedging Obligation (other than the Loans and other
     Obligations) of any Credit Party, or (ii) a default, which is not waived,
     in the performance, observance or fulfillment of any term or covenant
     contained in any agreement or instrument under or pursuant to which any
     such Indebtedness or Rate Hedging Obligation may have been issued, created,


                                       54



     assumed, guaranteed or secured by any Credit Party, or (iii) any other
     event of default as specified in any agreement or instrument under or
     pursuant to which any such Indebtedness or Rate Hedging Obligation may have
     been issued, created, assumed, guaranteed or secured by Credit Party, and
     such default or event of default under clause (i), (ii) or (iii) above
     shall continue for more than the period of grace, if any, therein
     specified, or such default or event of default under clause (i), (ii) or
     (iii) above shall permit the holder of any such Indebtedness (or any agent
     or trustee acting on behalf of one or more holders) to accelerate the
     maturity thereof; or

          (f) if any representation, warranty or other statement of fact
     contained in any Loan Document or in any writing, certificate, report or
     statement at any time furnished to the Agent (acting in any capacity) or
     any Lender by or on behalf of any Borrower or any other Credit Party
     pursuant to or in connection with any Loan Document, or otherwise, shall be
     false or misleading in any material respect when given; or

          (g) any Credit Party shall be unable to pay their debts generally as
     they become due; or any Credit Party shall file a petition to take
     advantage of any insolvency statute; make an assignment for the benefit of
     its creditors; commence a proceeding for the appointment of a receiver,
     trustee, examiner, liquidator or conservator of itself or of the whole or
     any substantial part of its property; file a petition or answer seeking
     liquidation, reorganization, examination or arrangement or similar relief
     under the federal bankruptcy laws or any other applicable law or statute;
     or

          (h) if a court of competent jurisdiction shall enter an order,
     judgment or decree appointing a custodian, receiver, trustee, examiner,
     liquidator or conservator of any Credit Party or of the whole or any
     substantial part of its properties and such order, judgment or decree
     continues unstayed and in effect for a period of sixty (60) days, or
     approve a petition filed against any Credit Party seeking liquidation,
     reorganization, examination or arrangement or similar relief under the
     federal bankruptcy laws or any other applicable law or statute of the
     United States of America or any state, which petition is not dismissed
     within sixty (60) days; or if, under the provisions of any other law for
     the relief or aid of debtors, a court of competent jurisdiction shall
     assume custody or control of any Credit Party or of the whole or any
     substantial part of its properties, which control is not relinquished
     within sixty (60) days; or if there is commenced against any Credit Party
     any proceeding or petition seeking reorganization, arrangement or similar
     relief under the federal bankruptcy laws or any other applicable law or
     statute of the United States of America or any state which proceeding or
     petition remains undismissed for a period of sixty (60) days; or if any
     Credit Party takes any action to indicate its consent to or approval of any
     such proceeding or petition; or

          (i) if any Credit Party shall, other than in the ordinary course of
     business (as determined by past practices), suspend all or any part of its
     operations material to the conduct of the business of any Credit Party for
     a period of more than 60 days; or

          (j) if this Agreement or any other Loan Document shall for any reason
     not be, or be asserted by any Credit Party not to be, a legal, valid and
     binding obligation of any Credit Party (as the case may be) enforceable in
     accordance with its terms; or


                                       55



          (k) if any Lien of the Agent pursuant to any Loan Document shall for
     any reason not be, or be asserted by any Credit Party not to be, a valid,
     first priority perfected Lien on the Collateral identified therein (except
     to the extent that such Lien is not required hereunder or under the
     Security Agreement to be a valid, first priority perfected Lien on such
     Collateral), subject to no other Liens except Permitted Liens; or

          (l) (i) any Person shall engage in any "prohibited transaction" (as
     defined in Section 406 of ERISA or Section 4975 of the Code) involving any
     Employee Benefit Plan, (ii) any "accumulated funding deficiency" (as
     defined in Section 302 of ERISA), whether or not waived, shall exist with
     respect to any Single Employer Plan or any Lien in favor of the PBGC or a
     Single Employer Plan shall arise on the assets of any Credit Party, (iii) a
     Reportable Event shall occur with respect to, or proceedings shall commence
     to have a trustee appointed, or a trustee shall be appointed, to administer
     or to terminate, any Single Employer Plan, which Reportable Event or
     commencement of proceedings or appointment of a trustee is likely to result
     in the termination of such Single Employer Plan for purposes of Title IV of
     ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title
     IV of ERISA, (v) any Credit Party or any ERISA Affiliate shall, or in the
     reasonable opinion of the Required Lenders is likely to, incur any
     liability in connection with a withdrawal from, or the Insolvency or
     Reorganization of, a Multiemployer Plan or (vi) any other event or
     condition shall occur or exist with respect to a Employee Benefit Plan or
     Foreign Government Scheme or Arrangement; and in each case in clauses (i)
     through (vi) above, such event or condition, together with all other such
     events or conditions, if any, could reasonably be expected to have a
     Material Adverse Effect;

then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall continue to exist and not have been cured or
waived,

               (A) either or both of the following actions may be taken: (i) the
          Agent, with the consent of the Required Lenders, may, and at the
          direction of the Required Lenders shall, declare any obligation of the
          Lenders to make further Loans terminated, whereupon the obligation of
          each Lender to make further Loans hereunder shall terminate
          immediately, and (ii) the Agent shall at the direction of the Required
          Lenders, at their option, declare by notice to the Borrowers any or
          all of the Obligations to be immediately due and payable, and the
          same, including all interest accrued thereon and all other obligations
          of any Borrower to the Agent and the Lenders, shall forthwith become
          immediately due and payable without presentment, demand, protest,
          notice or other formality of any kind, all of which are hereby
          expressly waived, anything contained herein or in any instrument
          evidencing the Obligations to the contrary notwithstanding; provided,
          however, that notwithstanding the above, if there shall occur an Event
          of Default under clause (g) or (h) above, then the obligation of the
          Lenders to make Loans hereunder shall automatically terminate and any
          and all of the Obligations shall be immediately due and payable
          without the necessity of any action by the Agent or the Required
          Lenders or notice to the Agent or the Lenders;


                                       56



               (B) each Borrower shall, upon demand of the Agent or the Required
          Lenders, promptly cause to be performed at Borrowers' expense by
          independent certified public accountants acceptable to the Agent an
          audit of all Financed Aircraft; and

               (C) the Agent and each of the Lenders shall have all of the
          rights and remedies available under the Loan Documents or under any
          applicable law, including without limitation all of the rights and
          remedies of a secured party under any applicable Uniform Commercial
          Code, the FAA Act, the Convention or any other applicable law.

     9.2. Agent to Act. In case any one or more Events of Default shall occur
and not have been waived, the Agent may, and at the direction of the Required
Lenders shall, proceed to protect and enforce their rights or remedies either by
suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.

     9.3. Cumulative Rights. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.

     9.4. No Waiver. No course of dealing between any Credit Party or the Agent
or any failure or delay on the part of any Lender or the Agent in exercising any
rights or remedies under any Loan Document or otherwise available to it shall
operate as a waiver of any rights or remedies and no single or partial exercise
of any rights or remedies shall operate as a waiver or preclude the exercise of
any other rights or remedies hereunder or of the same right or remedy on a
future occasion.

     9.5. Allocation of Proceeds. If an Event of Default has occurred and not
been waived, and the maturity of the Loans has been accelerated pursuant to
Article IX hereof, all payments received by the Agent hereunder, in respect of
any principal of or interest on the Obligations or any other amounts payable by
any Borrower hereunder, shall be applied by the Agent in the following order (or
in such manner as the Required Lenders may determine):

          (a) amounts due to the Lenders pursuant to Sections 2.9 and 11.5;

          (b) amounts due to the Agent pursuant to Section 10.8;

          (c) payments of interest on Loans, to be applied for the ratable
     benefit of the Lenders and amounts due to any of the Lenders (or Affiliates
     of any Lender) in respect of Obligations consisting of liabilities under
     any Swap Agreement with any of the Lenders (or any Affiliate thereof) on a
     pro rata basis according to the amounts owed;

          (d) payments of principal of Loans, to be applied for the ratable
     benefit of the Lenders;


                                       57



          (e) amounts due to the Lenders pursuant to Sections 7.15 and 11.9;

          (f) payments of all other amounts due under any of the Loan Documents,
     if any, to be applied for the ratable benefit of the Lenders; and

          (g) any surplus remaining after application as provided for herein, to
     any Borrower or otherwise as may be required by applicable law.

     9.6. Activities of Eligible Carriers. Notwithstanding anything contained in
this Agreement or any other Loan Document, the Credit Parties shall not be
deemed to be in breach of their respective obligations hereunder or thereunder
with respect to the care, maintenance, alteration, possession, return,
replacement, pooling, subleasing, use or operation of any Financed Aircraft or
any part thereof subject to an Eligible Lease by virtue of a default by the
Applicable Carrier under such Eligible Lease so long as each of the following
conditions is satisfied:

          (a) such default by the Applicable Carrier is not within the control
     of any Credit Party;

          (b) the Credit Parties are in compliance with Section 7.19; and

          (c) such default does not relate to any use or location of an Aircraft
     in any jurisdiction that constitutes an Event of Default hereunder, any
     failure to make any payment required by this Agreement or any other Loan
     Document when due hereunder or thereunder, or any failure to maintain any
     insurance required under this Agreement or any other Loan Document, any
     failure to maintain perfection of the Agent's Lien on any Collateral.

                                    ARTICLE X

                                    THE AGENT

     10.1. Appointment, Powers, and Immunities. Each Lender hereby irrevocably
appoints and authorizes the Agent to act as its agent under this Agreement and
the other Loan Documents, as "Mortgagee" under each Security Agreement and as
"Security Agent" under each Lockbox Agreement (references in this Article X to
the term "Agent" being deemed to include as well such other capacities), with
such powers and discretion as are specifically delegated to the Agent by the
terms of this Agreement and the other Loan Documents, together with such other
powers as are reasonably incidental thereto. The Agent (which term as used in
this sentence and in Section 10.5 and the first sentence of Section 10.6 hereof
shall include its affiliates and its own and its affiliates' officers,
directors, employees, and agents):

          (a) shall not have any duties or responsibilities except those
     expressly set forth in the Loan Documents and shall not be a trustee or
     fiduciary for any Lender;

          (b) shall not be responsible to the Lenders for any recital,
     statement, representation, or warranty (whether written or oral) made in or
     in connection with any Loan Document or any certificate or other document
     referred to or provided for in, or received by any of them under, any Loan
     Document, or for the value, validity,


                                       58



     effectiveness, genuineness, enforceability, or sufficiency of any Loan
     Document, or any other document referred to or provided for therein or for
     any failure by any Credit Party or any other Person to perform any of its
     obligations thereunder;

          (c) shall not be responsible for or have any duty to ascertain,
     inquire into, or verify the performance or observance of any covenants or
     agreements by any Credit Party or the satisfaction of any condition or to
     inspect the property (including the books and records) of any Credit Party
     or any of its Subsidiaries or affiliates;

          (d) shall not be required to initiate or conduct any litigation or
     collection proceedings under any Loan Document; and

          (e) shall not be responsible for any action taken or omitted to be
     taken by it under or in connection with any Loan Document, except for its
     own gross negligence or willful misconduct.

The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.

     10.2. Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or facsimile) believed by it to be
genuine and correct and to have been signed, sent or made by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel
(including counsel for any Credit Party), independent accountants, and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the holder thereof for all purposes hereof unless and until the Agent
receives and accepts an Assignment and Acceptance executed in accordance with
Section 11.1 hereof. As to any matters not expressly provided for by the Loan
Documents, the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding on all of the
Lenders; provided, however, that the Agent shall not be required to take any
action that exposes the Agent to personal liability or that is contrary to any
Loan Document or applicable law or unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking any such action.

     10.3. Defaults. The Agent shall not be deemed to have knowledge or notice
of the occurrence of a Default or Event of Default unless the Agent has received
written notice from a Lender or a Borrower specifying such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event that
the Agent receives such a notice of the occurrence of a Default or Event of
Default, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall (subject to Section 10.2 hereof) take such action with respect to such
Default or Event of Default as shall reasonably be directed by the Required
Lenders; provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.


                                       59



     10.4. Rights as Lender. With respect to its Term Loan Commitment and the
Loans made by it, Citibank (and any successor acting as Agent) in its capacity
as a Lender hereunder shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not acting as the
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent and its
affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with any
Credit Party or any of its Subsidiaries or affiliates as if it were not acting
as Agent, and Citibank (and any successor acting as Agent) and its affiliates
may accept fees and other consideration from any Credit Party or any of its
Subsidiaries or affiliates for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders.

     10.5. Indemnification. The Lenders agree to indemnify the Agent (to the
extent not reimbursed under Section 11.9 hereof, but without limiting the
obligations of any Borrower under such Section) ratably in accordance with their
respective Term Loan Commitments, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including reasonable attorneys' fees), or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against the Agent
(including by any Lender) in any way relating to or arising out of any Loan
Document or the transactions contemplated thereby or any action taken or omitted
by the Agent under any Loan Document; provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Person to be indemnified. Without limitation of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its ratable share of any costs or expenses payable by any Borrower under Section
11.5, to the extent that the Agent is not promptly reimbursed for such costs and
expenses by any Borrower. The agreements contained in this Section 10.5 shall
survive payment in full of the Loans and all other amounts payable under this
Agreement.

     10.6. Non-Reliance on Agent and Other Lenders. Each Lender agrees that it
has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Credit Parties and their Subsidiaries and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under the Loan Documents. Except for
notices, reports, and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, or business of any
Credit Party or any of its Affiliates that may come into the possession of the
Agent or any of its affiliates.

     10.7. Resignation of Agent. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrowers. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent, subject (so
long as no Default or Event of Default has occurred and is continuing) to the
written consent of an Authorized Representative, which consent shall not be
unreasonably withheld. If no successor Agent shall have been so appointed


                                       60



by the Required Lenders and shall have accepted such appointment within thirty
(30) days after the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent which
shall be a commercial bank organized under the laws of the United States of
America having combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor, such successor
shall thereupon succeed to and become vested with all the rights, powers,
discretion, privileges, and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Article
X shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.

     10.8. Fees. The Borrowers agree, jointly and severally, to pay to the
Agent, for its individual account, an Agent's fee as from time to time agreed to
by any Borrower and the Agent in writing.

                                   ARTICLE XI

                                  MISCELLANEOUS

     11.1. Assignments and Participations. (a) No Lender may assign, sell or
transfer all or any portion of its rights under this Agreement, its Loans or its
Notes without the consent of the Beneficial Owner, except that a Lender may
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Loans, its Notes, and its Term Loan Commitment) without the
consent of the Beneficial Owner; provided, however, that

          (i) each such assignment shall be to an Eligible Assignee;

          (ii) except in the case of an assignment to another Lender or an
     assignment of all of a Lender's rights and obligations under this
     Agreement, any such partial assignment shall be in an amount at least equal
     to $5,000,000 or an integral multiple of $1,000,000 in excess thereof;

          (iii) each such assignment by a Lender shall be of a constant, and not
     varying, percentage of all of its rights and obligations under this
     Agreement; and

          (iv) the parties to such assignment shall execute and deliver to the
     Agent for its acceptance an Assignment and Acceptance in the form of
     Exhibit B hereto, together with any Note subject to such assignment and a
     processing fee of $3,500 (which amount shall not be payable by any
     Borrower);

          (v) except in the case of an assignment to another Lender or an
     Affiliate of a Lender, any assignment of all or any portion of the Term
     Loan Commitment shall require the consent of the Agent and, unless a
     Default or Event of Default has occurred and is continuing, an Authorized
     Representative, such consent in each case not to be unreasonably withheld;
     and


                                       61



          (vi) neither any Borrower nor the Beneficial Owner shall incur any
     greater expense or liabilities (including, without limitation, indemnities
     and increased costs) than it would have incurred had such assignment not
     taken place.

Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the Agent
and the Borrowers shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. The assignee shall deliver to
the Borrowers and the Agent certification as to exemption from deduction or
withholding of Taxes in accordance with Section 4.6.

          (b) The Agent shall maintain at its address referred to in Section
     11.2 a copy of each Assignment and Acceptance delivered to and accepted by
     it and a register for the recordation of the names and addresses of the
     Lenders and the Term Loan Commitment of, and principal amount of the Loans
     owing to, each Lender from time to time (the "Register"). The entries in
     the Register shall be conclusive and binding for all purposes, absent
     manifest error, and the Borrowers, the Agent and the Lenders may treat each
     Person whose name is recorded in the Register as a Lender hereunder for all
     purposes of this Agreement. The Register shall be available for inspection
     by any Borrower or any Lender at any reasonable time and from time to time
     upon reasonable prior notice.

          (c) Upon its receipt of an Assignment and Acceptance executed by the
     parties thereto, together with any Note subject to such assignment and
     payment of the processing fee, the Agent shall, if such Assignment and
     Acceptance has been completed and is in substantially the form of Exhibit B
     hereto, (i) accept such Assignment and Acceptance, (ii) record the
     information contained therein in the Register, (iii) give prompt notice
     thereof to the parties thereto and (iv) provide each Borrower and the
     Beneficial Owner a copy of the Assignment and Acceptance.

          (d) Each Lender may sell participations to one or more Persons in all
     or a portion of its rights, obligations or rights and obligations under
     this Agreement (including all or a portion of its Term Loan Commitment or
     its Loans); provided, however, that (i) such Lender's obligations under
     this Agreement shall remain unchanged, (ii) such Lender shall remain solely
     responsible to the other parties hereto for the performance of such
     obligations, (iii) the participant shall be entitled to the benefit of the
     yield protection provisions contained in Article IV and the right of
     set-off contained in Section 11.3, (iv) no Borrower shall have any greater
     obligation to a participant than it would have had to such Lender in the
     absence of the existence of such participant, (v) the participant otherwise
     qualifies as an Eligible Assignee, (vi) such Lender shall disclose in
     advance to the Beneficial Owner the identity of the participant and provide
     to each Borrower and the Beneficial Owner a duly executed representation or
     acknowledgment from the participant in the form of clause 3(vii) of Exhibit
     B hereto, (vii) the participant agrees that it will not further assign,
     transfer or participate any of its rights hereunder and (viii) each
     Borrower shall continue to deal solely and directly with such Lender in
     connection with such


                                       62



     Lender's rights and obligations under this Agreement, and such Lender shall
     retain the sole right to enforce the obligations of any Borrower relating
     to its Loans and to approve any amendment, modification, or waiver of any
     provision of this Agreement (other than amendments, modifications, or
     waivers decreasing the amount of principal of or the rate at which interest
     or fees are payable on such Loans, extending the Stated Termination Date or
     any date fixed for the payment of interest on such Loans, releasing all or
     substantially all of the Collateral (except for a release of Collateral in
     accordance with Section 2.11), releasing any Guarantor (except for a
     release of a Guarantor in accordance with Section 2.11), or extending or
     increasing its Term Loan Commitment).

          (e) Notwithstanding any other provision set forth in this Agreement,
     any Lender may at any time assign and pledge all or any portion of its
     Loans to any Federal Reserve Bank as collateral security pursuant to
     Regulation A and any Operating Circular issued by such Federal Reserve
     Bank. No such assignment shall release the assigning Lender from its
     obligations hereunder.

          (f) Any Lender may furnish any information concerning any Borrower or
     any of its Subsidiaries in the possession of such Lender from time to time
     to assignees and participants (including prospective assignees and
     participants), subject, however, to the provisions of Section 11.15.

     11.2. Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile),
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 by certified or registered mail, return receipt
requested, or, in the case of telecopy notice, when received, addressed as
follows in the case of the Beneficial Owner, the Borrowers and the Agent, and as
set forth in an administrative questionnaire delivered to the Agent in the case
of the Lenders, or to such other address as may be hereafter notified by the
respective parties hereto

          (a)  if to the Beneficial Owner or any Borrower:
               to the Beneficial Owner or such Borrower
               c/o Aircastle Advisor (Ireland) Limited
               Bracetown Business Park
               Clonee, Co. Meath, Ireland

               Attn: Chief Financial Officer
                     General Counsel
               Telephone: 011-353-1-877-2740
               Facsimile: 011-353-1-877-2750

               with a copy to:
               Aircastle Advisor LLC
               300 First Stamford Place-Fifth Floor
               Stamford, CT 06902
               Attn: Lease Management
               Facsimile: 917-591-9106


                                       63



          (b)  if to the Agent:

               Citibank, N.A.
               388 Greenwich Street, 23rd Fl.
               New York, NY 10023

               Attn: Thomas Hollahan
               Telephone: 1-212-816-5143
               Facsimile: 1-212-816-5705

          (c) if to any other Credit Party, at the address set forth on the
     signature page of the Facility Guaranty or Security Instrument executed by
     such Credit Party, as the case may be.

     11.3. Right of Set-off; Adjustments.

          (a) Upon the occurrence and during the continuance of any Event of
     Default, each Lender (and each of its affiliates) is hereby authorized at
     any time and from time to time, 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 indebtedness at any time
     owing by such Lender (or any of its affiliates) to or for the credit or the
     account of any Borrower against any and all of the obligations of any
     Borrower now or hereafter existing under this Agreement and the Note held
     by such Lender, irrespective of whether such Lender shall have made any
     demand under this Agreement or such Note and although such obligations may
     be unmatured. Each Lender agrees promptly to notify the applicable Borrower
     after any such set-off and application made by such Lender; provided,
     however, that the failure to give such notice shall not affect the validity
     of such set-off and application. The rights of each Lender under this
     Section 11.3 are in addition to other rights and remedies (including,
     without limitation, other rights of set-off) that such Lender may have.

          (b) If any Lender (a "BENEFITED LENDER") shall at any time receive any
     payment of all or part of the Loans owing to it, or interest thereon, or
     receive any collateral in respect thereof (whether voluntarily or
     involuntarily, by set-off, or otherwise), in a greater proportion than any
     such payment to or collateral received by any other Lender, if any, in
     respect of such other Lender's Loans owing to it, or interest thereon, such
     benefited Lender shall purchase for cash from the other Lenders a
     participating interest in such portion of each such other Lender's Loans
     owing to it, or shall provide such other Lenders with the benefits of any
     such collateral, or the proceeds thereof, as shall be necessary to cause
     such benefited Lender to share the excess payment or benefits of such
     collateral or proceeds ratably with each of the Lenders; provided, however,
     that if all or any portion of such excess payment or benefits is thereafter
     recovered from such benefited Lender, such purchase shall be rescinded, and
     the purchase price and benefits returned, to the extent of such recovery,
     but without interest. Each Borrower agrees that any Lender so purchasing a
     participation from a Lender pursuant to this Section 11.3 may, to the
     fullest extent permitted by law, exercise all of its


                                       64



     rights of payment (including the right of set-off) with respect to such
     participation as fully as if such Person were the direct creditor of the
     Borrowers in the amount of such participation.

     11.4. Survival. All covenants, agreements, representations and warranties
made herein shall survive the making by the Lenders of the Loans and the
execution and delivery to the Lenders of this Agreement and any Notes and shall
continue in full force and effect so long as any of Obligations remain
outstanding or any Lender has any Loan hereunder or any Borrower has continuing
obligations hereunder unless otherwise provided herein. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and permitted assigns of such party and all
covenants, provisions and agreements by or on behalf of any Borrower which are
contained in the Loan Documents shall inure to the benefit of the successors and
permitted assigns of the Lenders or any of them.

     11.5. Expenses

          (a) The Beneficial Owner and each Borrower agrees, jointly and
     severally, to pay on demand (subject, in the case of preparation,
     execution, delivery and administration costs, to the Fee Letter), all
     reasonable costs and expenses of the Agent in connection with the
     preparation, execution, delivery, administration, modification, and
     amendment of this Agreement, the other Loan Documents and the other
     documents to be delivered hereunder, including, without limitation, the
     reasonable fees and expenses of counsel for the Agent (excluding the cost
     of internal counsel) with respect thereto and with respect to advising the
     Agent as to its rights and responsibilities under the Loan Documents. The
     Beneficial Owner and each Borrower further agrees, jointly and severally,
     to pay on demand all costs and expenses of the Agent and the Lenders, if
     any (including, without limitation, reasonable external attorneys' fees and
     expenses), in connection with the enforcement (whether through
     negotiations, legal proceedings, or otherwise) of the Loan Documents and
     the other documents to be delivered hereunder.

          (b) The obligations of Aircastle Advisor LLC under the expense letter
     dated September 27, 2005 from Citigroup Global Markets Inc. to Aircastle
     Advisor LLC, insofar as such obligations relate to the financings provided
     or to be provided under the terms of this Agreement, are hereby terminated.

     11.6. Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or the Notes, nor consent to any departure by any Credit Party
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that (a) no amendment, waiver or consent shall, unless
in writing and signed by all of the Lenders, do any of the following at any
time:

          (i) change the number of Lenders or the percentage of (A) the Term
     Loan Commitments, or (B) the aggregate unpaid principal amount of the Term
     Loans that, in each case, shall be required for the Lenders or any of them
     to take any action hereunder,


                                       65



          (ii) unless as otherwise contemplated hereunder, release one or more
     Guarantors (or otherwise limit such Guarantors' liability with respect to
     the Obligations owing to the Agent and the Lenders under the Guaranties) if
     such release or limitation is in respect of a material portion of the value
     of the Guaranties to the Lenders,

          (iii) unless as otherwise contemplated hereunder, release any material
     portion of the Collateral in any transaction or series of related
     transactions, or

          (iv) amend this Section 11.6,

and (b) no amendment, waiver or consent shall, unless in writing and signed by
each Lender specified below for such amendment, waiver or consent:

          (i) increase the Commitments of a Lender without the consent of such
     Lender;

          (ii) reduce the principal of, or stated rate of interest on, the Term
     Loans owed to a Lender or any fees or other amounts stated to be payable
     hereunder or under the other Loan Documents to such Lender without the
     consent of such Lender; or

          (iii) postpone the Stated Termination Date or any date scheduled for
     any payment of interest on the Term Loans pursuant to Section 2.2 or any
     date fixed for any payment of fees hereunder in each case payable to a
     Lender without the consent of such Lender;

provided further that no amendment, waiver or consent shall, unless in writing
and signed by the Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Agent under this Agreement or the
other Loan Documents.

          No notice to or demand on any Borrower in any case shall entitle such
Borrower or any other Borrower to any other or further notice or demand in
similar or other circumstances, except as otherwise expressly provided herein.
No delay or omission on any Lender's or the Agent's part in exercising any
right, remedy or option shall operate as a waiver of such or any other right,
remedy or option or of any Default or Event of Default.

     11.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.

     11.8. Return of Funds. If after receipt of any payment of all or any part
of the Obligations, any Lender is for any reason compelled to surrender such
payment to any Person because such payment is determined to be void or voidable
as a preference, impermissible setoff, a diversion of trust funds or for any
other reason, this Agreement shall continue in full force and each Borrower,
jointly and severally, shall be liable to, and shall indemnify and hold the
Agent or such Lender harmless for, the amount of such payment surrendered until
the Agent or such Lender shall have been finally and irrevocably paid in full.
The provisions of the foregoing sentence shall be and remain effective
notwithstanding any contrary action which may have been


                                       66



taken by the Agent or the Lenders in reliance upon such payment, and any such
contrary action so taken shall be without prejudice to the Agent or the Lenders'
rights under this Agreement and shall be deemed to have been conditioned upon
such payment having become final and irrevocable.

     11.9. Indemnification; Limitation of Liability.

          (a) Each of the Beneficial Owner and each Borrower, jointly and
     severally, agrees to indemnify and hold harmless the Agent (which term for
     purposes of this Section 11.9 includes the "Secured Party" under each
     Security Agreement, the "Agent" under the Pledge Agreement, the "Secured
     Party" under the Irish Pledge, and the "Collateral Agent" and the
     "Depositary Bank" under the Lockbox Agreement) and each Lender and each of
     their affiliates and their respective officers, directors, employees,
     agents, and advisors (each, an "INDEMNIFIED PARTY") from and against any
     and all claims, damages, losses, liabilities, costs, and expenses
     (including, without limitation, reasonable external attorneys' fees, but
     excluding principal and accrued interest on any Loan) that may be incurred
     by or asserted or awarded against any Indemnified Party, in each case
     arising out of or in connection with or by reason of (including, without
     limitation, in connection with any investigation, litigation, or proceeding
     or preparation of defense in connection therewith) the Loan Documents, any
     of the transactions contemplated herein, any Aircraft or Collateral, any
     possession, performance, transportation, management, sale, ownership,
     registration, mortgage, charging, control, maintenance, service, repair,
     design, testing, defect, overhaul, purchase, bearing, use or operation of
     any Aircraft or Collateral, or the actual or proposed use of the proceeds
     of the Loans, except to the extent such claim, damage, loss, liability,
     cost, or expense is found in a final, non-appealable judgment by a court of
     competent jurisdiction to have resulted from such Indemnified Party's gross
     negligence or willful misconduct. In the case of an investigation,
     litigation or other proceeding to which the indemnity in this Section 11.9
     applies, such indemnity shall be effective whether or not such
     investigation, litigation or proceeding is brought by the Beneficial Owner,
     any Borrower, its directors, shareholders or creditors or an Indemnified
     Party or any other Person or any Indemnified Party is otherwise a party
     thereto and whether or not the transactions contemplated hereby are
     consummated. The Beneficial Owner and each Borrower agrees that no
     Indemnified Party shall have any liability (whether direct or indirect, in
     contract or tort or otherwise) to it, any of its Subsidiaries, any
     Guarantor or any security holders or creditors thereof arising out of,
     related to or in connection with the transactions contemplated in any Loan
     Document, except to the extent that such liability directly results from
     such Indemnified Party's gross negligence or willful misconduct. Each of
     the Beneficial Owner and each Borrower agrees not to assert any claim
     against the Agent, any Lender, any of their affiliates, or any of their
     respective directors, officers, employees, attorneys, agents, and advisers,
     on any theory of liability, for special, indirect, consequential, or
     punitive damages arising out of or otherwise relating to the Loan
     Documents, any of the transactions contemplated herein or the actual or
     proposed use of the proceeds of the Loans.

          (b) Without prejudice to the survival of any other agreement of the
     Beneficial Owner or any Borrower hereunder, the agreements and obligations
     of the Beneficial


                                       67



     Owner and each Borrower contained in this Section 11.9 shall survive the
     payment in full of the Loans and all other amounts payable under this
     Agreement.

          (c) Except as expressly provided herein, each Lender, each Borrower
     and the Agent agree that this Agreement and each other Loan Document that
     is entered into by a Qualified Trustee on behalf of the Borrower is entered
     into not individually but solely as Trustee under a Trust Agreement in the
     exercise of the power and authority conferred and vested in it as such
     Trustee, that each and all of the representations, undertakings and
     agreements by a Qualified Trustee, or for the purpose or with the intention
     of binding a Qualified Trustee, are made and intended for the purpose of
     binding only the Trust Estates (and, to the extent any Lender, Borrower or
     Agent has an interest therein, any liability insurance proceeds), and that
     in no case whatsoever shall any Qualified Trustee be personally liable for
     any loss in respect of such representations, undertakings and agreements,
     that nothing herein contained shall be construed as creating any liability
     on any Qualified Trustee individually or personally, to perform any
     covenant, either express or implied, herein, all such liability, if any,
     being expressly waived by each Lender, each Borrower and the Agent and by
     each and every Person now or hereafter claiming by, through or under such
     Persons except with respect to the gross negligence or willful misconduct
     of such Qualified Trustee or for any Liens on the Collateral arising from,
     through or under such Qualified Trustee in its individual capacity, and
     that so far as any Qualified Trustee, individually or personally is
     concerned, each Lender, each Borrower and the Agent and any Person claiming
     by, through or under such Persons shall look solely, except as provided
     above, to the Trust Estates (and, to the extent any Lender, Borrower or
     Agent has an interest therein, any liability insurance proceeds), for the
     performance of any obligation under this Credit Agreement and the other
     Loan Documents. The term "Trustee" as used in this Section 11.9(c) shall
     include any Qualified Trustee succeeding a Qualified Trustee, as trustee
     under a Trust Agreement. Any obligation of any Borrower hereunder or under
     the other Loan Documents may be performed by the Beneficial Owner, and any
     such performance shall not be construed as revocation of the trust created
     by any Trust Agreement.

     11.10. Severability. If any provision of this Agreement or the other Loan
Documents shall be determined to be illegal or invalid as to one or more of the
parties hereto, then such provision shall remain in effect with respect to all
parties, if any, as to whom such provision is neither illegal nor invalid, and
in any event all other provisions hereof shall remain effective and binding on
the parties hereto.

     11.11. Entire Agreement. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, and other communications between or among the parties, both
oral and written, with respect thereto.

     11.12. Payments. All principal, interest, and other amounts to be paid by
any Borrower under this Agreement and the other Loan Documents shall be paid to
the Agent at the Principal Office in Dollars and in immediately available funds,
without setoff, deduction or counterclaim. Subject to the definition of
"Interest Period" herein, whenever any payment under this Agreement or any other
Loan Document shall be stated to be due on a day that is not a Business


                                       68



Day, such payment may be made on the next succeeding Business Day, and such
extension of time in such case shall be included in the computation of interest
and fees, as applicable, and as the case may be.

     11.13. Confidentiality. The Agent and each Lender (each, a "LENDING PARTY")
agrees to keep confidential any information furnished or made available to it by
any Credit Party (or the Parent) or any Affiliate thereof pursuant to or in
connection with this Agreement or the other Loan Documents; provided that
nothing herein shall prevent any Lending Party from disclosing such information
(a) to any other Lending Party or any affiliate of any Lending Party, or any
officer, director, employee, agent, or advisor of any Lending Party or affiliate
or any Lending Party, (b) to any other Person if reasonably incidental to the
administration of the credit facility provided herein, (c) as required by any
law, rule, or regulation, (d) upon the order of any court or administrative
agency, (e) upon the request or demand of any regulatory agency or authority,
(f) that is or becomes available to the public or that is or becomes available
to any Lending Party other than as a result of a disclosure by any Lending Party
prohibited by this Agreement, (g) in connection with any litigation to which
such Lending Party or any of its affiliates may be a party, (h) to the extent
necessary in connection with the exercise of any remedy under this Agreement or
any other Loan Document, and (i) subject to provisions substantially similar to
those contained in this Section, to any actual or proposed participant or
assignee.

     11.14. Governing Law; Waiver of Jury Trial.

          (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

          (b) EACH CREDIT PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY
STATE OR FEDERAL COURT SITTING IN THE COUNTY OF NEW YORK, STATE OF NEW YORK,
UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH CREDIT PARTY EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND
ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND EACH
CREDIT PARTY HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.

          (c) EACH CREDIT PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS
IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL
(POSTAGE PREPAID) TO THE ADDRESS OF SUCH CREDIT PARTY PROVIDED IN SECTION 11.2,
OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN
EFFECT IN THE STATE OF NEW YORK.


                                       69



          (d) NOTHING CONTAINED IN SUBSECTIONS (B) OR (C) HEREOF SHALL PRECLUDE
THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY OTHER JURISDICTION. TO
THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH
CREDIT PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT
AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH
OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE
LAW.

          (e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION THEREWITH, EACH CREDIT PARTY, THE AGENT AND THE LENDERS HEREBY AGREE,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY
WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE
TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.

     11.15. Waiver of Immunity. To the extent that any Credit Party may be or
become entitled, in any jurisdiction in which judicial proceedings may at any
time be commenced with respect to this Agreement or the other Loan Documents, to
claim for itself or its properties or revenues any immunity from suit, court
jurisdiction, attachment prior to judgment, attachment in aid of execution of a
judgment, execution of a judgment or from any other legal process relating to
this Agreement or the other Loan Documents, and to the extent that in any such
jurisdiction there may be attributed such an immunity (whether or not claimed),
such Credit Party hereby irrevocably waives and agrees not to claim such
immunity.

     11.16. Judgment Currency.

          (a) To the extent permitted by applicable law, if for the purposes of
     obtaining judgment in any court it is necessary to convert a sum due
     hereunder in United States Dollars into another currency, the parties
     hereto agree, to the fullest extent that they may effectively do so, that
     the rate of exchange used shall be determined in accordance with Section
     1.3 of this Agreement on the Business Day preceding that on which final
     judgment is given.

          (b) To the extent permitted by applicable law, the obligation of each
     Borrower in respect of any sum due in United States Dollars from it to any
     Lender or the Agent hereunder shall, notwithstanding any judgment in a
     currency other than United States Dollars, be discharged only to the extent
     that on the Business Day following receipt by such Lender or the Agent (as
     the case may be) of any sum adjudged to be so due in such other currency,
     such Lender or the Agent (as the case may be) may in accordance with normal
     banking procedures purchase United States Dollars with such other currency;
     if


                                       70



     the United States Dollars so purchased are less than such sum due to such
     Lender or the Agent (as the case may be) in United States Dollars, each
     Borrower agrees, to the extent permitted by applicable law, as a separate
     obligation and notwithstanding any such judgment, to indemnify such Lender
     or the Agent (as the case may be) against such loss, and if the United
     States Dollars so purchased exceed such sum due to any Lender or the Agent
     (as the case may be) in United States Dollars, such Lender or the Agent (as
     the case may be) agrees to remit to each such Borrower such excess.

     11.17. USA PATRIOT Act. Each Lender hereby notifies each Borrower that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the "PATRIOT ACT"), it is required to
obtain, verify and record information that identifies each Borrower, which
information includes the name and address of such Borrower and other information
that will allow such Lender to identify each Borrower in accordance with the
Patriot Act.


                                       71



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

                                        AIRCASTLE IRELAND NO. 2 LIMITED,
                                        as Beneficial Owner


                                        By: /s/ Tony Traynor
                                            ------------------------------------
                                            Name: Tony Traynor
                                                  ------------------------------
                                            Title: Director
                                                   -----------------------------

                Signature Page to the Aircastle Credit Agreement



                                        BORROWERS:

                                        WELLS FARGO BANK NORTHWEST,
                                        NATIONAL ASSOCIATION,
                                        not in its individual capacity but
                                        solely as Owner Trustee under the Trust
                                        Agreement (MSN 333), dated as of October
                                        19, 2005, to which it is a party


                                        By: /s/ C. Scott Nielson
                                            ------------------------------------
                                            Name: C. Scott Nielson
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------


                                        WELLS FARGO BANK NORTHWEST,
                                        NATIONAL ASSOCIATION,
                                        not in its individual capacity but
                                        solely as Owner Trustee under the Trust
                                        Agreement (MSN 337), dated as of October
                                        19, 2005, to which it is a party


                                        By: /s/ C. Scott Nielson
                                            ------------------------------------
                                            Name: C. Scott Nielson
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------


                                        WELLS FARGO BANK NORTHWEST,
                                        NATIONAL ASSOCIATION,
                                        not in its individual capacity but
                                        solely as Owner Trustee under the Trust
                                        Agreement (MSN 342), dated as of October
                                        19, 2005, to which it is a party


                                        By: /s/ C. Scott Nielson
                                            ------------------------------------
                                            Name: C. Scott Nielson
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------

                Signature Page to the Aircastle Credit Agreement



                                        CITIBANK, N.A.,
                                        as Agent and as a Lender


                                        By: /s/ Thomas J. Hollahan
                                            ------------------------------------
                                            Name: Thomas J. Hollahan
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------

                Signature Page to the Aircastle Credit Agreement




                          AIRCASTLE INVESTMENT LIMITED

                             SUBSCRIPTION AGREEMENT

          This Subscription Agreement (this "Subscription Agreement"), dated as
of April 28, 2006, is made by and between Aircastle Investment Limited, a
Bermuda exempted company (the "Company") and Ueberroth Family Trust (the
"Subscriber"). Where the context permits, references to the Company shall
include any successor to the Company.

          1. Subscription for Shares. The Subscriber has agreed to subscribe for
two hundred thousand (200,000) common shares, par value US$0.01 each in the
capital of the Company (such shares, the "Shares") for an aggregate subscription
price of US$1,000,000, subject to all of the terms and conditions of this
Subscription Agreement. The Subscriber agrees to take the Shares subject to the
Company's Memorandum of Association and the Bye-laws.

          2. Restrictions. All Shares shall be credited as fully paid at the
time of payment in full of the amount specified in Section 1 hereof. There will
be no restrictions on sale, assignment, mortgage, hypothecation, transfer,
charge, pledge, encumbrance, gift, transfer in trust (voting or other) or other
disposition of, or creation of a security interest in or lien on, any of the
Shares or any agreement or commitment to do any of the foregoing (each a
"Transfer") with respect to the Shares, whether voluntary or involuntary, by
operation of law or otherwise, except as set forth specifically in this
Subscription Agreement, including Section 13 hereof, which provides that no
shares of Shares shall be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of prior to the end of the Lock-Up Period except as otherwise
expressly permitted under this Subscription Agreement.

          3. Adjustments. In the event of a "Change in Capitalization" of the
Company, the Company shall make such equitable changes or adjustments as it
deems necessary or appropriate to the number and kind of securities or other
property (including cash) issued or issuable in respect of the Shares. For
purposes of this Share Agreement, "Change in Capitalization" means any (i)
merger, amalgamation, consolidation, reclassification, recapitalization,
spin-off, spin-out, repurchase or other reorganization or corporate transaction
or event, (ii) dividend (whether in the form of cash, shares or other property),
share split or reverse share split, consolidation or subdivision, (iii)
combination or exchange of shares, (iv) other change in corporate structure or
(v) declaration of a special dividend (including a cash dividend) or other
distribution.

          4. Legend on Certificates. The Subscriber agrees that any certificate
issued for Shares (or, if applicable, any book entry statement issued for
Shares) prior to the lapse of any outstanding restrictions relating thereto
shall bear the following legend (in addition to any other legend or legends
required under applicable federal and state


                                       -1-



securities laws):

     THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
     RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE (THE "RESTRICTIONS") AS
     SET FORTH IN A SUBSCRIPTION AGREEMENT ENTERED INTO BETWEEN THE REGISTERED
     OWNER AND AIRCASTLE INVESTMENT LIMITED, A COPY OF WHICH IS ON FILE WITH THE
     SECRETARY OF THE COMPANY. ANY ATTEMPT TO DISPOSE OF THESE SHARES IN
     CONTRAVENTION OF THE RESTRICTIONS, INCLUDING BY WAY OF SALE, ASSIGNMENT,
     TRANSFER, PLEDGE, HYPOTHECATION OR OTHERWISE, SHALL BE NULL AND VOID AND
     WITHOUT EFFECT.

          5. Certain Changes. The Company may adjust any of the terms of the
Shares; provided that no action under this Section shall adversely affect the
Subscriber's rights hereunder.

          6. Notices. All notices and other communications under this
Subscription Agreement shall be in writing and shall be given by facsimile or
first class mail, certified or registered with return receipt requested, and
shall be deemed to have been duly given three days after mailing or 24 hours
after transmission by facsimile to the respective parties, as follows: (i) if to
the Company, c/o Aircastle Advisor LLC, 300 First Stamford Place, 5th Floor,
Stamford, CT 06902, Attn: General Counsel and (ii) if to the Subscriber, using
the contact information on file with the Company. Either party hereto may change
such party's address for notices by notice duly given pursuant hereto.

          7. Securities Laws Requirements. The Company shall not be obligated to
issue any shares in the capital of the Company to the Subscriber free of the
restrictive legend described in Section 4 hereof or of any other restrictive
legend, if such transfer, in the opinion of counsel for the Company, would
violate the Securities Act of 1933, as amended (the "Securities Act") (or any
other federal or state statutes having similar requirements which may be in
effect at that time).

          8. No Obligation to Register. The Company shall be under no obligation
to register the Shares pursuant to the Securities Act or any other federal or
state securities laws.

          9. Protections Against Violations of Agreement. No purported Transfer
of any Shares by any holder thereof in violation of the provisions of this
Subscription Agreement will be valid, except with the prior written consent of
the Board (such consent shall be granted or withheld in the sole discretion of
the Board). Any purported Transfer of Shares or any economic benefit or interest
therein in violation of this Subscription Agreement shall be null and void ab
initio, and shall not create any obligation or liability of the Company, and any
person purportedly acquiring any Shares or any economic benefit or interest
therein transferred in violation of this Subscription Agreement shall not be
entitled to be recognized as a holder of such Shares.

          10. Taxes. The Subscriber acknowledges that the tax laws and


                                       -2-



regulations applicable to the Shares and the disposition of the Shares are
complex and subject to change, and it is the sole responsibility of the
Subscriber to obtain the Subscriber's own advice as to the tax treatment of the
terms of this Share Agreement.

     BY SIGNING THIS AGREEMENT, THE SUBSCRIBER REPRESENTS THAT SUBSCRIBER HAS
     REVIEWED WITH THE SUBSCRIBER'S OWN TAX ADVISORS THE FEDERAL, STATE, LOCAL
     AND FOREIGN TAX CONSEQUENCES OF THE TRANSACTIONS CONTEMPLATED BY THIS
     AGREEMENT AND THAT THE SUBSCRIBER IS RELYING SOLELY ON SUCH ADVISORS AND
     NOT ON ANY STATEMENTS OR REPRESENTATIONS OF THE COMPANY OR ANY OF ITS
     AGENTS. THE SUBSCRIBER UNDERSTANDS AND AGREES THAT THE SUBSCRIBER (AND NOT
     THE COMPANY) SHALL BE RESPONSIBLE FOR ANY TAX LIABILITY THAT MAY ARISE AS A
     RESULT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

          11. Failure to Enforce Not a Waiver. The failure of the Company to
enforce at any time any provision of this Share Agreement shall in no way be
construed to be a waiver of such provision or of any other provision hereof.

          12. Investment Representations and Warranties.

               (a) The Subscriber understands that the Shares have not been, and
will not upon issuance be, registered under the Securities Act, and that the
certificates evidencing the Shares shall bear a legend to that effect.

               (b) The Subscriber is acquiring the Shares for its own account
for investment and not with a view toward distribution in a manner which would
violate the Securities Act.

               (c) By reason of the business and financial experience of its
trustees, the Subscriber has the capacity to protect its own interests in
connection with the transactions contemplated by this Subscription Agreement.
The Subscriber is able to bear the economic risk of an investment in the Shares,
and has an adequate income independent of any income produced from an investment
in the Shares and has sufficient net worth to sustain a loss of all of its
investment in the Shares without economic hardship if such a loss should occur.

               (d) The Subscriber is an "accredited investor" as that term is
defined in Regulation D promulgated under the Securities Act.

               (e) The Subscriber has been given access to all Company
documents, records, and other information, has received physical delivery of all
such documents, records and information which the Subscriber has requested, and
has had adequate opportunity to ask questions of, and receive answers from, the
Company's officers, employees, agents, accountants, and representatives
concerning the Company's business, operations, financial condition, assets,
liabilities, and all other matters relevant to its investment in the Shares. The
foregoing, however, does not limit or modify the


                                       -3-



representations or warranties of the Company in this Subscription Agreement or
the right of such Subscriber to rely upon such representations or warranties.

          13. Lock-Up.

               (a) The Subscriber agrees that, during the period specified in
Section 13(b) (the "Lock-Up Period"), the Subscriber will not offer, sell,
contract to sell, charge, pledge, grant any option to purchase, make any short
sale or otherwise dispose of any Shares (the "Locked-Up Shares"), except as set
forth in Section 13(d) hereof. The foregoing restriction is expressly agreed to
preclude the Subscriber from engaging in any hedging or other transaction which
is designed to or which reasonably could be expected to lead to or result in a
sale or disposition of the Locked-Up Shares even if such shares would be
disposed of by someone other than the Subscriber. Such prohibited hedging or
other transactions would include without limitation any short sale or any
purchase, sale or grant of any right (including without limitation any put or
call option) with respect to any of the Locked-Up Shares or with respect to any
security that includes, relates to, or derives any significant part of its value
from such shares.

               (b) The initial Lock-Up Period will commence on the date of
purchase of the Shares and continue for 120 days after the date set forth on the
final prospectus (the "Public Offering Date") in the initial offering of equity
securities of the Company pursuant to an effective registration statement under
the Securities Act (the "Initial Public Offering"); provided, however, that if
(i) during the last 17 days of the initial Lock-Up Period, the Company releases
earnings results or announces material news or a material event or (ii) prior to
the expiration of the initial Lock-Up Period, the Company announces that it will
release earnings results during the 15-day period following the last day of the
initial Lock-Up Period, then in each case the Lock-Up Period will be
automatically extended until the expiration of the 18-day period beginning on
the date of release of the earnings results or the announcement of the material
news or material event, as applicable, unless the Initial Public Offering
underwriters each waives, in writing, such extension.

               (c) The Subscriber further agrees that, prior to engaging in any
transaction or taking any other action that is subject to the terms of this
Subscription Agreement during the period from the date hereof to and including
the 34th day following the expiration of the initial Lock-Up Period, it will
give notice thereof to the Company and will not consummate such transaction or
take any such action unless it has received written confirmation from the
Company that the Lock-Up Period (as such may have been extended pursuant to the
previous paragraph) has expired.

               (d) Notwithstanding the foregoing, the Subscriber may transfer
the Locked-Up Shares with the prior written consent of the Company. The
Subscriber also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent and registrar against the transfer of the
Locked-Up Shares except in compliance with the foregoing restrictions.

               (e) The Subscriber understands that the Company is relying upon
the Subscriber's agreement in this Section 13 in proceeding toward consummation
of


                                       -4-



the Initial Public Offering. The Subscriber further understands that
Subscriber's agreement in this Section 13 is irrevocable and shall be binding
upon the Subscriber's trustees, beneficiaries, successors, and assigns.

          14. Governing Law. This Share Agreement shall be governed by and
construed according to the laws of the State of New York, without reference to
any rules governing conflicts of laws.

          15. Amendments; Construction. The Company may amend the terms of this
Subscription Agreement prospectively or retroactively at any time, but no such
amendment shall impair the rights of the Subscriber hereunder without the
Subscriber's consent. To the extent the terms of Section 13 above conflict with
any prior agreement between the parties related to such subject matter, the
terms of Section 13 shall supersede such conflicting terms and control. Headings
to Sections of this Subscription Agreement are intended for convenience of
reference only, are not part of this Subscription Agreement and shall have no
effect on the interpretation hereof.

          16. Survival of Terms. This Subscription Agreement shall apply to and
bind the Subscriber and the Company and their respective legal representatives,
trustees, permitted assignees and transferees, beneficiaries and legal
successors.

          17. Rights as a Shareholder. During the period until the restrictions
on Transfer of the Shares lapse as provided in Section 2(a) hereof, the
Subscriber shall have all the rights of a shareholder with respect to the Shares
save only the right to Transfer the Shares. Accordingly, the Subscriber shall
have the right to vote the Shares and to receive any ordinary dividends paid to
or made with respect to the Shares in accordance with the Bye-laws of the
Company.

          18. Severability. Should any provision of this Subscription Agreement
be held by a court of competent jurisdiction to be unenforceable, or enforceable
only if modified, such holding shall not affect the validity of the remainder of
this Subscription Agreement, the balance of which shall continue to be binding
upon the parties hereto with any such modification (if any) to become a part
hereof and treated as though contained in this original Subscription Agreement.

          19. Bye-laws. In the event of any ambiguity or conflict arising
between the terms of this Agreement and those of the Company's Memorandum of
Association and Bye-laws, the terms of this Subscription Agreement shall
prevail.

          20. Counterparts. This Subscription Agreement may be executed in one
or more counterparts but taken together all such counterparts shall constitute
one and the same instrument.

          21. Due authority. Each party hereto warrants and represents to the
other that it has the full authority, power and capacity to enter into this
Subscription Agreement and that all necessary actions have been taken to enable
it lawfully to enter into this Subscription Agreement


                                       -5-



          22. Acceptance. The Subscriber hereby acknowledges receipt of a copy
of this Subscription Agreement. The Subscriber has read and understands the
terms and provisions of this Subscription Agreement, and accepts the Shares
subject to all the terms and conditions of this Subscription Agreement.

          IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Subscription Agreement on the day and year first above written.

                                        AIRCASTLE INVESTMENT LIMITED


                                        By
                                           -------------------------------------
                                        Name
                                             -----------------------------------
                                        Title
                                              ----------------------------------


                                        SIGNED ON BEHALF OF THE UEBERROTH FAMILY
                                        TRUST ACTING BY:

                                        ----------------------------------------
                                           Trustee

                                        ----------------------------------------
                                           Trustee


                                       -6-



As of January 1, 2006

FIT Aero Investments Limited
c/o Fortress Investment Group LLC
1345 Avenue of the Americas
New York, NY 10105

Re: Remarketing, Administrative and Technical Services

Gentlemen and Ladies,

Aircastle Advisor LLC ("Aircastle" or "Servicer") is pleased to present to FIT
Aero Investments Limited ("Client"), this offer to act as Client's remarketing
representative, administrative agent and technical advisor in connection with
the aircraft described in Annex 1 hereto.

This letter will set forth our understanding of your remarketing, administrative
and technical requirements and the terms upon which we would be willing to
provide services to you, and will supersede any prior communications with
respect to such matters, and upon your acceptance as provided below, will become
an agreement binding upon Aircastle and Client:



Owner:                           For each Aircraft, the entity identified as
                                 such in Annex 1 hereto.

Services:                        The Remarketing Services, Administrative
                                 Services and Technical Advisory Services.

Remarketing Services:            During the Service Period, we shall serve as
                                 the representative of Owner for the remarketing
                                 of the Aircraft and shall have the right to
                                 remarket the Aircraft in accordance with the
                                 terms of this letter agreement, and we shall
                                 remarket the Aircraft for lease only in
                                 accordance with our customary business
                                 practices. From time to time during the Service
                                 Period and upon your request we shall consult
                                 with you with respect to potential lease terms.

Administrative Services:         During the Service Period, with respect to the
                                 Aircraft:

                                 (1) if required by the relevant lease, invoice
                                 the Lessee for payments of rent, security
                                 deposits, maintenance reserves and/or other
                                 periodic payments due from the relevant lessee;




Aircastle Advisor LLC
Remarketing, Administrative
and Technical Advisory
Agreement
Page 2




                                 (2) use reasonable endeavors to collect from
                                 the relevant lessee all monthly utilization
                                 reports for the purpose of calculating
                                 maintenance reserve payments;

                                 (3) subject to the Transaction Approval
                                 Requirements, take reasonable steps to enforce
                                 payment of amounts due under each lease in the
                                 event of a nonpayment by the relevant due date;

                                 (4) review from time to time, as deemed
                                 necessary by Servicer, variable rent
                                 calculations or maintenance reserves and other
                                 similar amounts which are required to be
                                 adjusted under a Lease and notify the relevant
                                 lessee, or if appropriate propose to the
                                 relevant lessee, such adjustments as are
                                 required;

                                 (5) subject to Client providing access to the
                                 relevant bank accounts, check for receipt of
                                 periodic payments due from each lessee;

                                 (6) arrange for the safekeeping of any letters
                                 of credit, guarantees or other credit support
                                 (other than cash and cash equivalents) in
                                 connection with any leases and the timely
                                 renewal or drawing thereof as provided under
                                 the applicable Lease or otherwise in accordance
                                 with the Transaction Approval Requirements;

                                 (7) perform periodic credit reviews of each
                                 lessee, and in connection with a new lease for
                                 any Aircraft the relevant new lessee; and

                                 (8) engaging the services of an insurance
                                 broker to place contingent liability insurance
                                 in relation to the Aircraft on terms generally
                                 consistent with the terms applicable to
                                 Servicer's own fleet.

Technical Advisory Services:     During the Service Period, we will manage the
                                 following technical advisory services with
                                 respect to the Aircraft, as required:

                                 (1) Arrange for the performance of periodic
                                 inspections of the Aircraft to determine its
                                 current condition and to assess its current
                                 specification and configuration;

                                 (2) If required in connection with a return of
                                 any Aircraft:

                                 (a) endeavoring to physically locate and
                                 recover the records for the Aircraft, and
                                 conducting an inventory of such records;




Aircastle Advisor LLC
Remarketing, Administrative
and Technical Advisory
Agreement
Page 3


                                 (b) identifying and liaising with an
                                 appropriate storage facility for the Aircraft
                                 and developing an appropriate storage
                                 maintenance program for the Aircraft;

                                 (d) sourcing ferry pilots to reposition the
                                 Aircraft and the inventoried records to a
                                 storage facility, and presenting to Client a
                                 ferry flight agreement to retain such pilots,
                                 organizing flight planning, refueling and
                                 ground handling at the relevant airports for
                                 the repositioning flight;

                                 (d) liaising with Client and its insurance
                                 broker concerning insurance cover for the
                                 Aircraft, or at the request of Client engaging
                                 a broker to place primary hull, hull war and
                                 third-party liability insurance under our own
                                 policies of insurance in respect of the
                                 Aircraft (it being agreed that in the case of
                                 clause (ii) Client shall be responsible for
                                 determining for itself whether the terms,
                                 conditions and scope of such policies of
                                 insurance are satisfactory);

                                 (e) if necessary in connection with the
                                 repositioning flight, liaise with Client and
                                 its legal counsel to re-register the Aircraft
                                 and obtain appropriate authority to operate the
                                 Aircraft on the repositioning flight;

                                 (f) arranging an inspection of the Aircraft
                                 (including a borescope inspection of each
                                 engine and each APU) and assisting in the
                                 preparation of an aircraft status report for
                                 the Aircraft, and working with an existing
                                 lessee to determine return condition compliance
                                 (and recommend to Client any necessary
                                 compromises or waivers, or payment in lieu of
                                 performance, of any thereof).

                                 (3) If required in connection with the
                                 marketing of any Aircraft (for lease only):

                                 (a) preparing Aircraft specification
                                 information to support remarketing efforts;

                                 (b) developing proposed 'delivery condition'
                                 information to enable Servicer to offer the
                                 Aircraft, on behalf of Client, to target
                                 operators for lease only; and

                                 (c) advising on the likely modification
                                 workscope or maintenance workscope for the
                                 Aircraft in preparation for delivery to a new
                                 operator (for lease only).

                                 (4) If required in connection with maintenance
                                 or modification of any Aircraft:



Aircastle Advisor LLC
Remarketing, Administrative
and Technical Advisory
Agreement
Page 4




                                 (a) soliciting and evaluating bids from
                                 maintenance providers for any proposed
                                 modification or maintenance to the Aircraft,
                                 and liaising with the winning bidder in the
                                 performance of the work; and

                                 (b) liaising with next lease operator to
                                 facilitate delivery process.

                                 Many of these services would be physically
                                 performed by third party contractors arranged
                                 by Aircastle, and the cost and expense of each
                                 such third party contractor (including travel
                                 expenses) will be for the account of Client.

Service Period:                  From the date of execution of this agreement
                                 for a period of 24 months; terminable
                                 thereafter by either Aircastle or Client on 30
                                 days advance written notice.

Standard of Care:                The Servicer shall use such reasonable care and
                                 diligence at all times in the performances of
                                 the Services, as is customary in the
                                 international aircraft operating leasing
                                 industry but in no event shall it use less
                                 reasonable care and diligence as it would use
                                 if the Servicer were the owner of the aircraft.

Transaction Approval
Requirements:                    Servicer shall not, under any circumstances,
                                 offer any Aircraft for sale or other similar
                                 disposition.

                                 Servicer shall not do any of the following
                                 without the prior direction by or on behalf of
                                 Owner:

                                 (1) lease, or enter into any binding commitment
                                 or agreement to lease, any Aircraft, except any
                                 renewal or extension in accordance the renewal
                                 or extension provisions set out in any existing
                                 lease;

                                 (2) take any steps to exercise remedies or
                                 enforce the rights of the lessor under any
                                 Lease Related Document, including drawing any
                                 letter of credit or exercising any right to
                                 terminate the leasing of any Aircraft under any
                                 Lease Related Document; provided, that Owner's
                                 written direction shall not be required in
                                 order to send past-due notices, default notices
                                 or the like;

                                 (3) enter into any contract for the
                                 modification, overhaul or maintenance of any
                                 Aircraft, or make any commitment to reimburse
                                 any Lessee for any maintenance or modification
                                 of an Aircraft; or




Aircastle Advisor LLC
Remarketing, Administrative
and Technical Advisory
Agreement
Page 5




                                 (4) waive any 'event of default' or
                                 'termination event' or agree to any amendment,
                                 modification or restructuring of a Lease.

Fees:                            The relevant Owner shall pay a fee in respect
                                 of any lease of each Aircraft (including the
                                 existing leases and any renewal or
                                 replacement/re-lease) equal to 3.0% of the
                                 collected rentals thereunder.

                                 Such fees shall be payable on a monthly basis
                                 in arrears.

Expenses:                        The relevant Owner shall reimburse Aircastle
                                 for all reasonable out-of-pocket expenses
                                 (including all travel and accommodation
                                 expenses, and insurance premia and related
                                 expenses) incurred during the Service Period by
                                 Aircastle in providing the Services, including
                                 the reasonable fees and out-of-pocket expenses
                                 (including travel and accommodation expenses)
                                 of all third-party contractors and service
                                 providers in connection with the Services.

                                 Aircastle shall invoice Client monthly. With
                                 each invoice, Aircastle will provide reasonable
                                 detail for such Expenses.

                                 All payments of Fees and other amounts due
                                 hereunder to Aircastle shall be made by wire
                                 transfer of immediately available U.S. Dollars
                                 to the account specified from time to time by
                                 written notice from Aircastle, without
                                 deduction.

Non-Discrimination:              In providing the Remarketing Services, we shall
                                 not discriminate against the Aircraft in favor
                                 of any other aircraft owned, managed or
                                 remarketed by us and we shall not be required
                                 to give the Aircraft marketing priority over
                                 such other aircraft.

Cooperation:                     Client shall cooperate with us in the
                                 performance of the Services and Client will be
                                 responsible for ensuring that all
                                 authorizations, consents, approvals and the
                                 like are obtained in order to permit us to
                                 carry out the Services.

Not an Agent:                    We are not acting as Client's legal agent and
                                 shall have no authority to bind Client to any
                                 contract or commitment.

Indemnity and Release:           Each Owner shall indemnify and hold harmless
                                 Aircastle and its affiliates and their
                                 respective directors, officers, servants,
                                 agents and employees and their respective
                                 successors (together, the "Aircastle Parties"),
                                 from and against, and Client hereby releases
                                 each Aircastle Party for




Aircastle Advisor LLC
Remarketing, Administrative
and Technical Advisory
Agreement
Page 6




                                 liabilities arising out of, all claims, losses,
                                 liabilities, and damages of any kind whatsoever
                                 which may result from or arise in any manner
                                 out of or in relation to (1) the Aircraft or
                                 (2) the Services, or any act or omission in
                                 connection therewith or related thereto unless,
                                 in the case of any Aircastle Party, the same
                                 arises solely out of the gross negligence,
                                 default or willful misconduct of such Aircastle
                                 Party.

No Consequential
Damages:                         No Aircastle Party shall have any obligation or
                                 liability for consequential damages including
                                 loss of profits.

Confidentiality:                 If the disclosure of any information requested
                                 by Client from Aircastle may, in the opinion of
                                 Aircastle's counsel, breach any obligation of
                                 confidentiality owed by Aircastle to any
                                 person, Aircastle shall not be obliged to
                                 disclose such information.

Governing Law:                   New York.

Termination:                     This letter agreement shall be valid for the
                                 duration of the Service Period unless
                                 terminated by either party for material breach
                                 of any provision by the other party. Expiry of
                                 this Agreement at the end of the Service
                                 Period, or any termination of this letter
                                 agreement pursuant to the preceding sentence,
                                 shall not affect any rights and obligations
                                 already accrued at the time of termination.


If you are in agreement with the foregoing please so indicate by signing and
returning a copy of this letter to Aircastle.

Very truly yours,

AIRCASTLE ADVISOR LLC


By:
    -------------------------------
Title:

Accepted and Agreed :

-----------------------------------
For and on behalf of FIT Aero Investments Limited





                                                                         Annex 1

                                    Aircraft

 MSN       TYPE          CURRENT OPERATOR                OWNER
-----   ---------   --------------------------   ---------------------
23527    737-300    GOL Transportes Aereos S/A   Aircraft 23527, LLC
24452    737-300    GOL Transportes Aereos S/A   Aircraft 24452, LLC
24453    737-300    GOL Transportes Aereos S/A   Aircraft 24453, LLC
23765   767-300ER   Air Atlanta Icelandic        FIT Aero Iceland Ltd.



As of January 1, 2006

FIT Aero Investments Limited
c/o Fortress Investment Group LLC
1345 Avenue of the Americas

New York, NY 10105

Re: Remarketing, Administrative and Technical Services

Gentlemen and Ladies,

Aircastle Advisor (Ireland) Limited ("Aircastle" or "Servicer") is pleased to
present to FIT Aero Investments Limited ( "Client"), this offer to act as
Client's remarketing representative, administrative agent and technical advisor
in connection with the aircraft described in Annex 1 hereto.

This letter will set forth our understanding of your remarketing, administrative
and technical requirements and the terms upon which we would be willing to
provide services to you, and will supersede any prior communications with
respect to such matters, and upon your acceptance as provided below, will become
an agreement binding upon Aircastle and Client:



Owner:                           For each Aircraft, the entity identified as
                                 such in Annex 1 hereto.

Services:                        The Remarketing Services and Technical Advisory
                                 Services.

Remarketing Services:            During the Service Period, we shall serve as
                                 the representative of Owner for the remarketing
                                 of the Aircraft and shall have the right to
                                 remarket the Aircraft in accordance with the
                                 terms of this letter agreement, and we shall
                                 remarket the Aircraft for sale or lease in
                                 accordance with our customary business
                                 practices. From time to time during the Service
                                 Period and upon your request we shall consult
                                 with you with respect to potential sale and/or
                                 lease terms.

Technical Advisory Services:     During the Service Period, we will manage the
                                 following technical advisory services with
                                 respect to the Aircraft, as required:

                                 (1) If required in connection with the

                                 marketing of any Aircraft:





Aircastle Advisor (Ireland)
Limited Remarketing and
Technical Advisory Agreement
Page 2


                                 (a) preparing Aircraft specification
                                 information to support remarketing efforts;

                                 (b) developing proposed 'delivery condition'
                                 information to enable Servicer to offer the
                                 Aircraft, on behalf of Client, to target
                                 customers; and

                                 (c) advising on the likely modification
                                 workscope or maintenance workscope for the
                                 Aircraft in preparation for delivery to a new
                                 customer.

                                 (2) If required in connection with maintenance
                                 or modification of any Aircraft:

                                 (a) soliciting and evaluating bids from
                                 maintenance providers for any proposed
                                 modification or maintenance to the Aircraft,
                                 and liaising with the winning bidder in the
                                 performance of the work; and

                                 (b) liaising with next customer to facilitate
                                 delivery process.

                                 Many of these services would be physically
                                 performed by third party contractors arranged
                                 by Aircastle, and the cost and expense of each
                                 such third party contractor (including travel
                                 expenses) will be for the account of Client.

Service Period:                  From the date of execution of this agreement
                                 for a period of 24 months; terminable
                                 thereafter by either Aircastle or Client on 30
                                 days advance written notice.

Standard of Care:                The Servicer shall use such reasonable care and
                                 diligence at all times in the performances of
                                 the Services, as is customary in the
                                 international aircraft operating leasing
                                 industry but in no event shall it use less
                                 reasonable care and diligence as it would use
                                 if the Servicer were the owner of the aircraft.

Transaction Approval             Servicer shall not do any of the following
Requirements:                    without the prior direction by or on behalf of
                                 Owner:

                                 (1) sell or otherwise similarly dispose of, or
                                 enter into any binding commitment or agreement
                                 to sell or otherwise similarly dispose of, any
                                 Aircraft;

                                 (2) lease or otherwise similarly dispose of, or
                                 enter into any binding commitment or agreement
                                 to lease or






Aircastle Advisor (Ireland)
Limited Remarketing and
Technical Advisory Agreement
Page 3


                                 otherwise similarly dispose of, any Aircraft,
                                 except any renewal or extension in accordance
                                 the renewal or extension provisions set out in
                                 any existing lease; or

                                 (3) enter into any contract for the
                                 modification, overhaul or maintenance of any
                                 Aircraft, or make any commitment to reimburse
                                 any Lessee for any maintenance or modification
                                 of an Aircraft.

Fees:                            The relevant Owner shall pay a fee for the
                                 outright sale or similar disposition of any
                                 Aircraft in an amount equal to 2.5% of the
                                 gross sales proceeds (but not including a
                                 transfer of the Aircraft to an affiliate or for
                                 financing purposes).

                                 Such fees in respect of an Aircraft shall be
                                 payable upon closing of the sale or similar
                                 disposition of such Aircraft.

Expenses:                        The relevant Owner shall reimburse Aircastle
                                 for all reasonable out-of-pocket expenses
                                 (including all travel and accommodation
                                 expenses) incurred during the Service Period by
                                 Aircastle in providing the Services, including
                                 the reasonable fees and out-of-pocket expenses
                                 (including travel and accommodation expenses)
                                 of all third-party contractors and service
                                 providers in connection with the Services.

                                 Aircastle shall invoice Client monthly. With
                                 each invoice, Aircastle will provide reasonable
                                 detail for such Expenses.

                                 All payments of Fees and other amounts due
                                 hereunder to Aircastle shall be made by wire
                                 transfer of immediately available U.S. Dollars
                                 to the account specified from time to time by
                                 written notice from Aircastle, without
                                 deduction.

Non-Discrimination:              In providing the Remarketing Services, we shall
                                 not discriminate against the Aircraft in favor
                                 of any other aircraft owned, managed or
                                 remarketed by us and we shall not be required
                                 to give the Aircraft marketing priority over
                                 such other aircraft.

Cooperation:                     Client shall cooperate with us in the
                                 performance of the Services and Client will be
                                 responsible for ensuring that all
                                 authorizations, consents, approvals and the
                                 like are obtained in order to permit us to
                                 carry out the Services.

Not an Agent:                    We are not acting as Client's legal agent and
                                 shall have no authority to bind Client to any
                                 contract or commitment.






Aircastle Advisor (Ireland)
Limited Remarketing and
Technical Advisory Agreement
Page 4


Indemnity and Release:           Each Owner shall indemnify and hold harmless
                                 Aircastle and its affiliates and their
                                 respective directors, officers, servants,
                                 agents and employees and their respective
                                 successors (together, the "Aircastle Parties"),
                                 from and against, and Client hereby releases
                                 each Aircastle Party for liabilities arising
                                 out of, all claims, losses, liabilities, and
                                 damages of any kind whatsoever which may result
                                 from or arise in any manner out of or in
                                 relation to (1) the Aircraft or (2) the
                                 Services, or any act or omission in connection
                                 therewith or related thereto unless, in the
                                 case of any Aircastle Party, the same arises
                                 solely out of the gross negligence, default or
                                 willful misconduct of such Aircastle Party.

No Consequential Damages:        No Aircastle Party shall have any obligation or
                                 liability for consequential damages including
                                 loss of profits.

Confidentiality:                 If the disclosure of any information requested
                                 by Client from Aircastle may, in the opinion of
                                 Aircastle's counsel, breach any obligation of
                                 confidentiality owed by Aircastle to any
                                 person, Aircastle shall not be obliged to
                                 disclose such information.

Governing Law:                   New York.

Termination:                     This letter agreement shall be valid for the
                                 duration of the Service Period unless
                                 terminated by either party for material breach
                                 of any provision by the other party. Expiry of
                                 this Agreement at the end of the Service
                                 Period, or any termination of this letter
                                 agreement pursuant to the preceding sentence,
                                 shall not affect any rights and obligations
                                 already accrued at the time of termination.


If you are in agreement with the foregoing please so indicate by signing and
returning a copy of this letter to Aircastle.

Very truly yours,

AIRCASTLE ADVISOR (IRELAND) LIMITED


By:
    -------------------------------
Title:

Accepted and Agreed :





Aircastle Advisor (Ireland)
Limited Remarketing and
Technical Advisory Agreement
Page 5

-----------------------------------
For and on behalf of FIT Aero Investments Limited



                                                                         Annex 1

                                    Aircraft

 MSN      TYPE           CURRENT OPERATOR                OWNER
-----   ---------   --------------------------   ---------------------
23527    737-300    GOL Transportes Aereos S/A   Aircraft 23527, LLC
24452    737-300    GOL Transportes Aereos S/A   Aircraft 24452, LLC
24453    737-300    GOL Transportes Aereos S/A   Aircraft 24453, LLC
23765   767-300ER   Air Atlanta Icelandic        FIT Aero Iceland Ltd.



                                                                  EXECUTION COPY

                   THIRD AMENDED AND RESTATED CREDIT AGREEMENT

                                  by and among

                     AIRCASTLE INVESTMENT HOLDINGS LIMITED,

                        AIRCASTLE IRELAND NO. 1 LIMITED,

                                 ABH 12 LIMITED

                                       and

                  THE BORROWERS PARTY HERETO FROM TIME TO TIME,
                                  as Borrowers,

                          JPMORGAN CHASE BANK, N.A. and
                      BEAR STEARNS CORPORATE LENDING INC.,
                                   as Lenders

                                       and

                           JPMORGAN CHASE BANK, N.A.,
                                    as Agent

                                       and

                THE OTHER LENDERS PARTY HERETO FROM TIME TO TIME

                          Dated as of October 24, 2005



                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

                                    ARTICLE I
                              Definitions and Terms

1.1.   Definitions.......................................................     1
1.2.   Rules of Interpretation...........................................    23

                                   ARTICLE II
                          The Revolving Credit Facility

2.1.   Revolving Loans...................................................    25
2.2.   Payment of Interest...............................................    27
2.3.   Payment of Principal..............................................    27
2.4.   Manner of Payment.................................................    28
2.5.   Notes.............................................................    29

2.6.   Pro Rata Payments.................................................    29
2.7.   Reductions........................................................    29
2.8.   Conversions and Elections of Subsequent Interest Periods..........    30
2.9.   Increase and Decrease in Amounts..................................    30
2.10.  Fees..............................................................    30

2.11.  Deficiency Advances...............................................    30
2.12.  Use of Proceeds...................................................    31
2.13.  Designation of Borrowing Affiliate; Releases......................    31
2.14.  Joint and Several Liability.......................................    32
2.15.  Eligible Lease Involving Eligible Intermediary....................    33

                                   ARTICLE III
                                    Security

3.1.   Security..........................................................    34
3.2.   Further Assurances................................................    34
3.3.   Information Regarding Collateral..................................    34
3.4.   Quiet Enjoyment...................................................    35

                                   ARTICLE IV
                             Change in Circumstances

4.1.   Requirements of Law...............................................    35
4.2.   Limitation on Types of Loans......................................    36
4.3.   Illegality........................................................    36
4.4.   Treatment of Affected Loans.......................................    37
4.5.   Compensation......................................................    37
4.6.   Taxes.............................................................    38

                                    ARTICLE V
                           Conditions to Making Loans

5.1.   Conditions of Closing.............................................    40


                                        i



5.2.   Conditions of Closing of Second Amended and Restated Credit
          Agreement......................................................    42
5.3.   Conditions of Revolving Loans.....................................    44
5.4.   Conditions of Subsequent Advances Under Revolving Loans...........    47

                                   ARTICLE VI
                         Representations and Warranties

6.1.   Organization and Authority........................................    48
6.2.   Loan Documents....................................................    48
6.3.   Solvency..........................................................    49
6.4.   Subsidiaries and Stockholders.....................................    49
6.5.   Ownership Interests...............................................    49
6.6.   Liens.............................................................    49

6.7.   Title to Properties...............................................    49
6.8.   Taxes.............................................................    49
6.9.   Other Agreements..................................................    50
6.10.  Litigation........................................................    50
6.11.  Federal Regulations...............................................    50
6.12.  Investment Company................................................    50
6.13.  Patents, Etc......................................................    51
6.14.  No Untrue Statement...............................................    51
6.15.  No Consents, Etc..................................................    51
6.16.  Employee Benefit Plans............................................    51
6.17.  No Default........................................................    52
6.18.  Environmental Laws................................................    52
6.19.  Employment Matters................................................    52

                                   ARTICLE VII
                              Affirmative Covenants

7.1.   Financial Reports, Etc............................................    52
7.2.   Maintain Properties...............................................    54
7.3.   Existence, Qualification, Etc.....................................    54
7.4.   Regulations and Taxes.............................................    54
7.5.   Insurance.........................................................    54
7.6.   True Books........................................................    54
7.7.   Right of Inspection...............................................    54
7.8.   Observe all Laws..................................................    54
7.9.   Governmental Licenses.............................................    55
7.10.  Covenants Extending to Other Persons..............................    55
7.11.  Officer's Knowledge of Default....................................    55
7.12.  Suits or Other Proceedings........................................    55
7.13.  Notice of Environmental Complaint or Condition....................    55
7.14.  Environmental Compliance..........................................    55
7.15.  Indemnification...................................................    56
7.16.  Further Assurances................................................    56
7.17.  Swap Agreements...................................................    56
7.18.  Continued Operations..............................................    56
7.19.  Maintenance of Aircraft; Other Covenants and Restrictions; Non-


                                       ii



          Discrimination.................................................    56
7.20.  Re-registration of Aircraft.......................................    57
7.21.  Servicer..........................................................    57
7.22.  Employee Benefit Plans............................................    57
7.23.  Accounts..........................................................    57
7.24.  Eligible Lease; Lessee Notice.....................................    57
7.25.  Conditions Subsequent to Closing..................................    57

                                  ARTICLE VIII
                               Negative Covenants

8.1.   Acquisitions......................................................    58
8.2.   Capital Expenditures..............................................    58
8.3.   Liens.............................................................    58

8.4.   Indebtedness......................................................    59
8.5.   Transfer of Assets................................................    60
8.6.   Subsidiaries; Investments.........................................    60
8.7.   Merger or Consolidation...........................................    61
8.8.   Transactions with Affiliates......................................    61
8.9.   Employee Benefit Plans; ERISA Affiliates; Employees...............    61
8.10.  Fiscal Year.......................................................    61
8.11.  Dissolution, etc..................................................    61
8.12.  Change in Control.................................................    61
8.13.  Negative Pledge Clauses...........................................    61
8.14.  Partnerships......................................................    62
8.15.  Business and Operations...........................................    62
8.16.  Ownership, Operation and Leasing of Financed Aircraft.............    62
8.17.  Servicing Agreements..............................................    62
8.18.  Representations Regarding Agent and Lenders.......................    62
8.19.  Holdings; Irish Holdings..........................................    63
8.20.  Organizational Documents..........................................    63

                                   ARTICLE IX
                       Events of Default and Acceleration

9.1.   Events of Default.................................................    63
9.2.   Agent to Act......................................................    66
9.3.   Cumulative Rights.................................................    66
9.4.   No Waiver.........................................................    66
9.5.   Allocation of Proceeds............................................    67
9.6.   Activities of Eligible Carriers...................................    67

                                    ARTICLE X
                                    The Agent

10.1.  Appointment, Powers, and Immunities...............................    68
10.2.  Reliance by Agent.................................................    68
10.3.  Defaults..........................................................    69
10.4.  Rights as Lender..................................................    69
10.5.  Indemnification...................................................    69


                                       iii



10.6.  Non-Reliance on Agent and Other Lenders...........................    70
10.7.  Resignation of Agent..............................................    70
10.8.  Fees..............................................................    70

                                   ARTICLE XI
                                  Miscellaneous

11.1.  Assignments and Participations....................................    70
11.2.  Notices...........................................................    72
11.3.  Right of Set-off; Adjustments.....................................    74
11.4.  Survival..........................................................    74
11.5.  Expenses..........................................................    75
11.6.  Amendments and Waivers............................................    75
11.7.  Counterparts......................................................    75
11.8.  Return of Funds...................................................    75
11.9.  Indemnification; Limitation of Liability..........................    76
11.10. Severability......................................................    77
11.11. Entire Agreement..................................................    77
11.12. Payments..........................................................    77
11.13. Confidentiality...................................................    77
11.14. Governing Law; Waiver of Jury Trial...............................    78
11.15. USA PATRIOT Act...................................................    79


                                       iv



EXHIBITS

EXHIBIT A          Applicable Commitment Percentages
EXHIBIT B          Form of Assignment and Acceptance
EXHIBIT C          Notice of Appointment (or Revocation) of Authorized
                      Representative
EXHIBIT D          Form of Borrowing Notice
EXHIBIT E          Form of Interest Rate Selection Notice
EXHIBIT F          Form of Note
EXHIBIT G-1        Form of Domestic Counsel Opinion
EXHIBIT G-2        Form of FAA Counsel Opinion at Funding
EXHIBIT G-3        Form of Foreign Counsel Opinion as to Borrower
EXHIBIT G-4        Form of Foreign Counsel Opinion as to Lease and Lessee
EXHIBIT H          Compliance Certificate
EXHIBIT I          Form of Facility Guaranty
EXHIBIT J          Form of Security Agreement
EXHIBIT K          List of Approved Aircraft Models
EXHIBIT L          Required Insurance on Each Aircraft
EXHIBIT M          Form of Lessee Notice
EXHIBIT N          Form of Parent Support Agreement
EXHIBIT O          Form of Lockbox Agreement
EXHIBIT P          Form of Servicing Agreement
EXHIBIT Q          Form of Assumption Letter
EXHIBIT R          Borrowing Base Certificate
EXHIBIT S-1        Form of Pledge and Security Agreement (for pledged beneficial
                      interest in Holdings Subsidiary Trust)
EXHIBIT S-2        Form of Pledge and Security Agreement (for pledged interest
                      in Holdings SPC, Beneficial Owner, Applicable Intermediary
                      or other Subsidiary)
EXHIBIT S-3        Form of Bermuda Pledge
EXHIBIT T          Form of Contribution Agreement
EXHIBIT U          Form of Contribution Agreement Guaranty

SCHEDULES

Schedule 3.3       Information Regarding Collateral
Schedule 6.7       Existing Liens
Schedule 6.8       Tax Matters
Schedule 6.10      Litigation
Schedule 7.19(a)   Maintenance, Return, Alteration, Replacement, Pooling and
                      Lease


                                        v



                   THIRD AMENDED AND RESTATED CREDIT AGREEMENT

          THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October
24, 2005 (as may be amended, supplemented or otherwise modified from time to
time, the "Agreement"), is made by and among Aircastle Investment Holdings
Limited ("Holdings"), an exempted company organized and existing under the laws
of Bermuda, AIRCASTLE IRELAND NO. 1 LIMITED, a limited liability company
incorporated in Ireland and an indirect subsidiary of the Parent ("Irish
Holdings"), and certain Holdings Subsidiary Trusts and Holdings SPCs (as defined
below) designated as Borrowing Affiliates hereunder (such Holdings Subsidiary
Trusts and Holdings SPCs being referred to individually as a "Borrower" or
collectively as the "Borrowers"), ABH 12 Limited, an exempted company organized
and existing under the laws of Bermuda, as a Guarantors (as defined below) and
not a Borrower, JPMORGAN CHASE BANK, N.A., a national banking association, in
its capacity as a Lender ("JPMCB"), BEAR STEARNS CORPORATE LENDING INC., a
national banking corporation and each other financial institution executing and
delivering a signature page hereto and each other financial institution which
may hereafter execute and deliver an instrument of assignment with respect to
this Agreement pursuant to Section 11.1 (such financial institutions hereinafter
being referred to individually as a "Lender" or collectively as the "Lenders"),
and JPMORGAN CHASE BANK, N.A., in its capacity as agent for the Lenders (in such
capacity, and together with any successor agent appointed in accordance with the
terms of Section 10.7, the "Agent");

                                   WITNESSETH:

          WHEREAS, the Borrowers, the Lenders and the Agent are parties to the
Credit Agreement dated as of February 25, 2005 which was amended and restated
pursuant to the Amended and Restated Credit Agreement dated as of March 4, 2005
as further amended by the Second Amended and Restated Credit Agreement dated as
of August 3, 2005 (the "Amended and Restated Credit Agreement");

          WHEREAS, the Borrowers have requested that certain amendments to be
made to the Amended and Restated Credit Agreement and to permit certain Irish
entities to become borrowers and guarantors hereunder; and

          WHEREAS, the Lenders are willing to make such amendments to the
Amended and Restated Credit Agreement upon the terms and conditions set forth
herein;

          NOW, THEREFORE, the Borrowers, the Lenders and the Agent hereby agree
as follows:

                                    ARTICLE I

                              DEFINITIONS AND TERMS

          1.1. Definitions. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:



          "ABH 12" means ABH 12 Limited, a wholly-owned subsidiary of Holdings.

          "ABH 12 Security Agreement" means the Security Agreement dated as of
     August 3, 2005, as amended and restated as of the date hereof, made by ABH
     12 in favor of the Agent.

          "ABH 12-JPM Swap Agreement" means the Confirmation and the ISDA Master
     Agreement (including all related schedules and credit support annexes),
     each dated as of March 2, 2005, between Holdings and JPMorgan Chase Bank,
     N.A., as novated pursuant to the Novation Agreement, dated as of August 3,
     2005, among JPMorgan Chase Bank, N.A., Holdings, as transferor, and ABH 12,
     as transferee, together with the ISDA Master Agreement (including all
     related schedules and credit support annexes) dated as of August 3, 2005,
     as may be further novated, amended, supplemented or otherwise modified from
     time to time.

          "Account" has the meaning given in the Lockbox Agreement.

          "Acquisition" means the acquisition of any beneficial interest, equity
     interest or other ownership interest in another Person (including the
     purchase of an option, warrant or convertible or similar type security to
     acquire such interest at the time it becomes exercisable by the holder
     thereof), whether by purchase of such interest or upon exercise of an
     option or warrant for, or conversion of securities into, such interest.

          "Additional Facility Documents" has the meaning given such term in
     Section 5.1(a)(i).

          "Additional Credit Party" means Irish Holdings and each of its
     Subsidiaries.

          "Affiliate" means any Person (i) which directly or indirectly through
     one or more intermediaries controls, or is controlled by, or is under
     common control with any Guarantor or any Borrower; or (ii) which
     beneficially owns or holds 10% or more of any class of the outstanding
     voting stock (or in the case of a Person which is not a corporation, 10% or
     more of the equity interest or beneficial interest) of any Guarantor or any
     Borrower; or 10% or more of any class of the outstanding voting stock (or
     in the case of a Person which is not a corporation, 10% or more of the
     equity interest or beneficial interest) of which is beneficially owned or
     held by any Guarantor or any Borrower; provided, however, at the time any
     Guarantor registers any security issued by it pursuant to the Securities
     Act of 1933, as amended, the figure "10%" used in this definition shall
     automatically change to "5%" without further action. The term "control"
     means the possession, directly or indirectly, of the power to direct or
     cause the direction of the management and policies of a Person, whether
     through ownership of voting stock, by contract or otherwise.

          "Aircraft" means any Stage III fixed wing airframe together with the
     jet Engines therefor (whether or not) affixed thereto.

          "Aircraft Portfolio" means the collective reference to all of the
     Aircraft owned by any Subsidiary of Holdings or Irish Holdings at any one
     time.


                                        2



          "Amended and Restated Credit Agreement" has the meaning given to such
     term in the first recital to this Agreement.

          "Applicable Aircraft Advance Rate" with respect to any Eligible
     Aircraft means:

          (a) if the number of Eligible Aircraft in the Aircraft Portfolio is
     less than or equal to 14, 40%;

          (b) if the number of Eligible Aircraft in the Aircraft Portfolio is
     greater than 14 and less than or equal to 24, 50%; or

          (c) if the number of Eligible Aircraft in the Aircraft Portfolio is
     greater than 24 and (i) such Eligible Aircraft is a category A Aircraft as
     listed on Exhibit K, 60% or (ii) such Eligible Aircraft is a category B
     Aircraft as listed on Exhibit K, 50%.

          "Applicable Aircraft Borrowing Base" with respect to any Eligible
     Aircraft means the product of (a) the sum of (i) the Purchase Price of such
     Eligible Aircraft, (ii) the cost of any Approved Improvements in respect of
     such Eligible Aircraft and (iii) the cost of any Qualified Conversion in
     respect of such Eligible Aircraft and (b) the Applicable Aircraft Advance
     Rate.

          "Applicable Borrower" means, with respect to any Financed Aircraft,
     the Borrower that has requested or received a Loan to enable such Borrower
     to purchase or refinance such Financed Aircraft.

          "Applicable Carrier" means, with respect to any Financed Aircraft, the
     Eligible Carrier that has leased such Financed Aircraft from the Applicable
     Borrower, or from the Applicable Intermediary in accordance with Section
     2.15.

          "Applicable Commitment Percentage" means, with respect to each Lender
     at any time, a fraction, the numerator of which shall be such Lender's
     Revolving Credit Commitment and the denominator of which shall be the Total
     Revolving Credit Commitment, which Applicable Commitment Percentage for
     each Lender as of the Closing Date is as set forth in Exhibit A; provided
     that the Applicable Commitment Percentage of each Lender shall be increased
     or decreased to reflect any assignments to or by such Lender effected in
     accordance with Section 11.1.

          "Applicable Foreign Aviation Law" means, with respect to any Aircraft,
     any applicable law (other than the FAA Act) of any country or subdivision
     thereof, governing the registration, ownership, operation, or leasing of
     all or any part of such Aircraft, or the creation, recordation,
     maintenance, perfection or priority or Liens on all or any part of such
     Aircraft.

          "Applicable Foreign Jurisdiction" means, with respect to any Aircraft,
     any jurisdiction that administers an Applicable Foreign Aviation Law.

          "Applicable Intermediary" means, with respect to any Financed
     Aircraft, the Eligible Intermediary that has leased such Aircraft from the
     Applicable Borrower, and


                                        3



     has leased such Aircraft to the Applicable Carrier, in each case in
     accordance with Section 2.15.

          "Applicable Lease Cure Period" has the meaning assigned thereto in
     Section 9.6.

          "Applicable Lending Office" means, for each Lender and for each Type
     of Loan, the "Lending Office" for such Lender (or of an affiliate of such
     Lender) designated for such Type of Loan on the signature pages hereof or
     such other office of such Lender (or an affiliate of such Lender) as such
     Lender may from time to time specify to the Agent and the Borrowers by
     written notice in accordance with the terms hereof as the office by which
     its Loans are to be made and maintained.

          "Applicable Margin" means:

               (a) with respect to the Eurodollar Rate, 1.50%, provided that
          during the Term Out Period, the Applicable Margin with respect to the
          Eurodollar Rate shall be 2.00%; and

               (b) with respect to the Base Rate, one half of one percent
          (.50%), provided that during the Term Out Period, the Applicable
          Margin with respect to the Base Rate shall be one percent (1.00%).

          "Approved Improvements" means improvements made or added to an
     Eligible Aircraft acceptable to the Agent in its reasonable judgment.

          "Assignment and Acceptance" means an Assignment and Acceptance
     substantially in the form of Exhibit B (with blanks appropriately filled
     in) delivered to the Agent in connection with an assignment of a Lender's
     interest under this Agreement pursuant to Section 11.1.

          "Assumption Letter" means an Assumption Letter in substantially the
     form of Exhibit Q.

          "Authorized Representative" means any of the President, Chief
     Executive Officer, Chief Operating Officer, Chief Financial Officer or Vice
     President of Holdings or Irish Holdings, as applicable, or any Beneficial
     Owner, in each case as authorized representative for each of the Borrowers,
     or any other Person expressly designated by the Board of Directors of each
     of the Borrowers (or the appropriate committee thereof) as an Authorized
     Representative of each of the Borrowers as set forth from time to time in a
     certificate in the form of Exhibit C.

          "Base Rate" means, for any day, the rate per annum equal to the sum of
     (a) the higher of (i) the Federal Funds Rate for such day plus one-half of
     one percent (0.5%) and (ii) the Prime Rate for such day, plus (b) the
     Applicable Margin. Any change in the Base Rate due to a change in the Prime
     Rate or the Federal Funds Rate shall be effective on the effective date of
     such change in the Prime Rate or Federal Funds Rate.


                                        4



          "Base Rate Loan" means a Loan for which the rate of interest is
     determined by reference to the Base Rate.

          "Beneficial Owner" means, with respect to any Holdings Subsidiary
     Trust, any Person who is a direct or indirect wholly-owned subsidiary of
     Holdings or Irish Holdings holding a beneficial interest in such Holdings
     Subsidiary Trust.

          "Board" means the Board of Governors of the Federal Reserve System (or
     any successor body).

          "Borrower" has the meaning given to such term in the preamble to this
     Agreement.

          "Borrowing Affiliate" means any direct or indirect wholly-owned
     Subsidiary of Holdings or Irish Holdings and any Holdings Subsidiary Trust
     or Holdings SPC that in either case is designated as a Borrowing Affiliate
     hereunder pursuant to Section 2.13 hereof.

          "Borrowing Base" means, as of any date of determination, the aggregate
     of the Applicable Aircraft Borrowing Bases for all Eligible Aircraft.
     However, (a) the Applicable Aircraft Advance Rate and the Applicable
     Aircraft Borrowing Base for any Unleasable Financed Aircraft shall be zero
     and (b) if a Borrowing Base Event occurs with respect to any Borrower or a
     Subsidiary thereof then the Applicable Aircraft Advance Rate and the
     Applicable Aircraft Borrowing Base for each Financed Aircraft owned by such
     Borrower shall be zero.

          (a) "Borrowing Base Event" means, with respect to any Borrower, if (i)
     one or more judgments or orders where the amount not covered by insurance
     (or the amount as to which the insurer denies liability) is in excess of
     $250,000 is rendered against such Borrower or any Subsidiary thereof, or
     (ii) there is any attachment, injunction or execution against any of such
     Borrower's or Subsidiaries' properties for any amount in excess of $250,000
     in the aggregate; and such judgment, attachment, injunction or execution
     remains unpaid, unstayed, undischarged, unbonded or undismissed for a
     period of thirty (30) days.

          "Borrowing Notice" means the notice delivered by an Authorized
     Representative in connection with a Loan under the Revolving Credit
     Facility, in the form of Exhibit D.

          "Business Day" means, (i) with respect to any Base Rate Loan, any day
     which is not a Saturday, Sunday or a day on which banks in the State of New
     York are authorized or obligated by law, executive order or governmental
     decree to be closed and, (ii) with respect to any Eurodollar Rate Loan, any
     day which is a Business Day, as described above, and on which the relevant
     international financial markets are open for the transaction of business
     contemplated by this Agreement in London, England and New York, New York.

          "Capital Expenditures" means, with respect to the Borrowers and their
     respective Subsidiaries, for any period the sum of (without duplication)
     (i) all expenditures (whether


                                        5



     paid in cash or accrued as liabilities) by any Borrower or any Subsidiary
     during such period for items that would be classified as "property, plant
     or equipment" or comparable items on the consolidated balance sheet of any
     Borrowers and its respective Subsidiaries, including without limitation all
     transactional costs incurred in connection with such expenditures provided
     the same have been capitalized, excluding, however, the amount of any
     Capital Expenditures paid for with proceeds of casualty insurance as
     evidenced in writing and submitted to the Agent together with any
     compliance certificate delivered pursuant to Section 7.1(a) or (b), and
     (ii) with respect to any Capital Lease entered into by any Borrower or its
     Subsidiaries during such period, the present value of the lease payments
     due under such Capital Lease over the term of such Capital Lease applying a
     discount rate equal to the interest rate provided in such lease (or in the
     absence of a stated interest rate, that rate used in the preparation of the
     financial statements described in Section 7.1(a)), all the foregoing in
     accordance with GAAP.

          "Capital Leases" means all leases which have been or should be
     capitalized in accordance with GAAP as in effect from time to time
     including Statement No. 13 of the Financial Accounting Standards Board and
     any successor thereof.

          "Capital Stock" means any and all shares, interests, participations or
     other equivalents (however designated) of capital stock of a corporation,
     any and all equivalent ownership interests in a Person (other than a
     corporation) and any and all warrants, rights or options to purchase any of
     the foregoing.

          "Change of Control" means, at any time, 100% of the beneficial
     ownership of any Guarantor or any Borrower or any Eligible Intermediary if
     not owned, directly or indirectly, by Holdings or Irish Holdings or 100% of
     the beneficial ownership of Holdings or Irish Holdings if not owned,
     directly or indirectly, by Parent.

          "Closing Date" means the date as of which this Agreement is executed
     by the Borrowers, the Lenders and the Agent and on which the conditions set
     forth in Section 5.1 have been satisfied.

          "Code" means the Internal Revenue Code of 1986, as amended, and any
     regulations promulgated thereunder.

          "Collateral" means, collectively, all property of any Borrower, any
     Subsidiary, any Eligible Intermediary or any other Person (including
     Holdings and Irish Holdings) in which the Agent or any Lender is granted a
     Lien as security for all or any portion of the Obligations, other than
     Obligations of ABH 12 created or incurred in connection with the ABH 12-JPM
     Swap Agreement, under any Security Instrument including, without
     limitation, the Leases, the Pledged Interests and the other collateral
     described in such Security Agreement, Pledge Agreement, Lockbox Agreement
     and other Security Instrument. For the avoidance of doubt, none of the
     Security Instruments shall provide for the grant of a perfected security
     interest on the Financed Aircraft.

          "Contingent Obligation" of any Person means all contingent liabilities
     required (or which, upon the creation or incurring thereof, would be
     required) to be included in the


                                        6



     financial statements (including footnotes) of such Person in accordance
     with GAAP, including Statement No. 5 of the Financial Accounting Standards
     Board, all Rate Hedging Obligations and any obligation of such Person
     guaranteeing or in effect guaranteeing any Indebtedness, dividend or other
     obligation of any other Person (the "primary obligor") in any manner,
     whether directly or indirectly, including obligations of such Person
     however incurred:

               (1) to purchase such Indebtedness or other obligation or any
          property or assets constituting security therefor;

               (2) to advance or supply funds in any manner (i) for the purchase
          or payment of such Indebtedness or other obligation, or (ii) to
          maintain a minimum working capital, net worth or other balance sheet
          condition or any income statement condition of the primary obligor;

               (3) to grant or convey any lien, security interest, pledge,
          charge or other encumbrance on any property or assets of such Person
          to secure payment of such Indebtedness or other obligation;

               (4) to lease property or to purchase securities or other property
          or services primarily for the purpose of assuring the owner or holder
          of such Indebtedness or obligation of the ability of the primary
          obligor to make payment of such Indebtedness or other obligation; or

               (5) otherwise to assure the owner of the Indebtedness or such
          obligation of the primary obligor against loss in respect thereof.

          "Continue", "Continuation", and "Continued" refers to the continuation
     pursuant to Section 2.8 hereof of a Eurodollar Rate Loan of one Type as a
     Eurodollar Rate Loan of the same Type from one Interest Period to the next
     Interest Period.

          "Contribution Agreement" means the Amended and Restated Contribution
     Agreement dated the Closing Date, entered into by and between ABH 12 and
     Holdings, substantially in the form of Exhibit T.

          "Contribution Agreement Guarantor" means the Guarantor as defined in
     the Contribution Guaranty Agreement.

          "Contribution Agreement Guaranty" means that certain Guaranty
     Agreement dated the Closing Date, entered into by and among Irish Holdings
     and each Borrower for the benefit of ABH 12 to guaranty the obligations of
     Holdings under the Contribution Agreement, substantially in the form of
     Exhibit U.

          "Contribution Agreement Letter Agreements" means the collective
     reference to Contribution Letter Agreement No. 1 and to Contribution Letter
     Agreement No. 2.


                                        7



          "Contribution Agreement Letter Agreement No. 1" means that certain
     letter agreement dated the Closing Date, by and among Irish Holdings, each
     Borrower and JPMorgan Chase Bank, N.A.

          "Contribution Agreement Letter Agreement No. 2" means that certain
     letter agreement dated the Closing Date, by and among each Contribution
     Agreement Guarantor, ABH 12 and JPMorgan Chase Bank, N.A.

          "Convention" means the Convention on the International Recognition of
     Rights in Aircraft signed initially at Geneva in 1948, as the same may be
     amended, modified or supplemented from time to time. "Convert",
     "Conversion", and "Converted" refers to a conversion pursuant to Section
     2.8 or Article IV of one Type of Loan into another Type of Loan.

          "Credit Party" means, collectively, each Borrower, each Eligible
     Intermediary, each Guarantor, and each other Person (if any) providing
     Collateral pursuant to any Security Instrument.

          "Default" means any event or condition which, with the giving or
     receipt of notice or lapse of time or both, would constitute an Event of
     Default hereunder, provided that if, pursuant to Section 9.6, such event or
     condition is not deemed to be a breach of the Credit Parties' obligations
     under this Agreement and the other Loan Documents, such event or condition
     shall not be deemed to be a "Default" except for the purposes of Section
     7.11, the first two sentences of Section 10.3, the Compliance Certificate
     in the form of Exhibit H, and Section 4 of the Borrowing Base Certificate
     in the form of Exhibit R.

          "Default Rate" means (i) with respect to each Eurodollar Rate Loan,
     until the end of the Interest Period applicable thereto, a rate of two
     percent (2%) above the Eurodollar Rate applicable to such Loan, and
     thereafter at a rate of interest per annum which shall be two percent (2%)
     above the Base Rate, (ii) with respect to Base Rate Loans, at a rate of
     interest per annum which shall be two percent (2%) above the Base Rate and
     (iii) in any case, the maximum rate permitted by applicable law, if lower.

          "Depositary Bank" means a bank, trust company or other Person,
     satisfactory to the Agent, that executes the Lockbox Agreement in the
     capacity of "Depositary Bank" thereunder.

          "Dollars" and the symbol "$" means dollars constituting legal tender
     for the payment of public and private debts in the United States of
     America.

          "Eligible Aircraft" means any Aircraft which satisfies each of the
     following requirements:

               (a) such Aircraft is a Stage III aircraft and is one of the
          models listed on Exhibit K attached hereto;


                                        8



               (b) such Aircraft is owned by the Applicable Borrower;

               (c) such Aircraft is covered by all of the insurance described on
          Exhibit L attached hereto and the Agent (for itself and on behalf of
          the Lenders) is named as loss payee or contract party on the hull
          insurance and is named as an additional insured or contract party on
          the liability insurance;

               (d) neither the Applicable Carrier (if any) nor the Applicable
          Intermediary (if any) is organized under the laws of, or domiciled in,
          any Prohibited Country; and

               (e) the age of such Aircraft is (i) in the case of a passenger
          aircraft, 19 years or less and (ii) in the case of a freighter
          aircraft, 25 years or less, in each case measured from the date of
          original manufacture as a passenger aircraft or a freighter aircraft,
          as the case may be, to the date of the original Loan made or to be
          made in respect of such Eligible Aircraft.

          "Eligible Assignee" means (i) a Lender, (ii) an affiliate of a Lender,
     and (iii) any other financial institution approved by the Agent; provided,
     however, that neither any Borrower nor an affiliate of any Borrower shall
     qualify as an Eligible Assignee.

          "Eligible Carrier" means any air carrier duly licensed to carry
     passengers or cargo under applicable law, foreign or domestic.

          "Eligible Intermediary" means, with respect to any Financed Aircraft,
     a Person that is a direct, wholly-owned subsidiary of the Applicable
     Borrower or, in the case with the Eligible Aircraft with manufacturer's
     serial number 967, Sierra Leasing Limited.

          "Eligible Lease" or "Eligible Leases" means a fully-executed Lease by
     a Borrower or Eligible Intermediary (as lessor) to an Eligible Carrier (as
     lessee) of an Eligible Aircraft, which Lease satisfies each of the
     following requirements:

               (a) such Lease is a "triple net lease" (subject to any
          arrangement whereby the Borrower and the Eligible Carrier agree to
          share certain expenses relating to aircraft or engine maintenance,
          directives, service bulletins or similar items) and requires the
          lessee to maintain the insurance described in Exhibit L attached
          hereto with respect to such Aircraft, and to bear all risk of loss,
          damage or liability with respect to such Aircraft;

               (b) if the Eligible Carrier is domiciled in the United States,
          the lessor is entitled to the benefits of Section 1110 of the U.S.
          bankruptcy code with respect to the lessor's rights against such
          lessee, including without limitation the rights to require performance
          of such lessee's obligations under the Lease or return such Aircraft
          during such lessee's bankruptcy or insolvency;

               (c) such Lease requires the lessee to comply with covenants and
          restrictions regarding the maintenance, return, alteration,
          replacement, pooling


                                        9



          and sublease of such Aircraft, which covenants and restrictions
          satisfy the requirements of Section 7.19(a) and Schedule 7.19(a)
          hereto;

               (d) if such Lease contains a purchase option, the expected
          exercise price is equal to or greater than the expected outstanding
          principal and accrued interest on all Loans relating to such Aircraft
          as of the date of exercise of such option;

               (e) such Lease prohibits the lessee from flying or locating such
          Aircraft in any country in violation of the applicable laws of any
          jurisdiction;

               (f) such Lease provides rent payments in US dollars and contains
          customary covenants and restrictions relating to re-registration of
          such Aircraft; which covenants and restrictions satisfy the
          requirements of the Security Agreement;

               (g) at the time of any Loan hereunder relating to such Aircraft
          or, if later, at the time of the entering into such Lease, no
          prepayment shall have been made under such Lease, and no Lease payment
          obligation shall have been accelerated, provided that it is understood
          that a scheduled rental payment to be paid in advance for a rental
          period in accordance with the Lease terms is not deemed to be a
          prepayment;

               (h) at the time of any Loan relating to such Aircraft or, if
          later, at the time of the delivery of such Aircraft under such Lease,
          the applicable lessor shall have delivered a Lessee Notice to the
          applicable lessee; and

               (i) either (i) such Lease is a "true lease" lease (and not a
          lease intended as security) under applicable commercial law and other
          applicable law relating to creditors' rights and bankruptcy; or (ii)
          such Lease grants to such Borrower, and such Borrower has at all times
          under the FAA Act (in the case of Aircraft registered in the United
          States), a perfected first priority mortgage Lien on such Aircraft
          (subject only to Permitted Liens), which Lien has been assigned to the
          Agent;

provided, however, that in the circumstances described in Section 2.15,
"Eligible Lease" means, individually and collectively, (X) a fully-executed
Lease by a Borrower (as lessor) to the Applicable Intermediary (as lessee) of an
Eligible Aircraft, which Lease satisfies each of the requirements for an
"Eligible Lease" set forth in clauses (a) through (h) above except that the
lessee is not an Eligible Carrier, and (Y) a fully-executed sublease by such
Applicable Intermediary (as sublessor) to an Eligible Carrier (as sublessee) of
such Financed Aircraft, which Eligible Carrier is not a U.S. Carrier, and which
Lease is identical in all material respects (other than the Persons that are
lessor and lessee) to the Lease described in clause (X) above, and which Lease
satisfies all the requirements for an "Eligible Lease" set forth in clauses (a)
through (i) above, except that the lessor is not a Borrower.

          "Employee Benefit Plan" means, at a particular time, any employee
     benefit plan that is covered by ERISA and in respect of which any Guarantor
     or any Borrower or any


                                       10



     of their respective ERISA Affiliates is (or, if such plan were terminated
     at such time, would under Section 4069 of ERISA be deemed to be) an
     "employer" as defined in Section 3(5) of ERISA.

          "Engine" means any aircraft jet engine.

          "Environmental Laws" means any federal, state or local statute, law,
     ordinance, code, rule, regulation, order, decree, permit or license
     regulating, relating to, or imposing liability or standards of conduct
     concerning, any environmental matters or conditions, environmental
     protection or conservation, including, without limitation, the
     Comprehensive Environmental Response, Compensation and Liability Act of
     1980, as amended; the Superfund Amendments and Reauthorization Act of 1986,
     as amended; the Resource Conservation and Recovery Act, as amended; the
     Toxic Substances Control Act, as amended; the Clean Air Act, as amended;
     the Clean Water Act, as amended; together with all regulations promulgated
     thereunder, and any other "Superfund" or "Superlien" law.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
     amended from time to time.

          "ERISA Affiliate" means an entity, whether or not incorporated, that
     is under common control with any Guarantor or any Borrower within the
     meaning of Section 4001 of ERISA or is part of a group that includes any
     Guarantor or any Borrower and that is treated as a single employer within
     the meaning of Section 414 of the Code.

          "Eurodollar Rate" means the interest rate per annum calculated
     according to the following formula:

          Eurodollar     Interbank Offered Rate     Applicable
                         ----------------------
          Rate        =  1- Reserve Requirement  +  Margin

          "Eurodollar Rate Loan" means a Loan for which the rate of interest is
     determined by reference to the Eurodollar Rate.

          "Event of Default" means any of the occurrences set forth as such in
     Section 9.1.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended,
     and the regulations promulgated thereunder.

          "FAA" means the United States Federal Aviation Administration.

          "FAA Act" means 49 U.S.C. Subtitle VII, Sections 40101 et seq., as
     amended from time to time, any regulations promulgated thereunder and any
     successor provision.

          "FAA Counsel" means DeBee & Gilchrist, Daugherty, Fowler and Peregrin,
     Haught and Jenson, Crowe & Dunlevy, or any other law firm having nationally
     recognized expertise in FAA matters acceptable to the Agent.


                                       11



          "FAA Recording Office" means the office of the FAA in Oklahoma City,
     Oklahoma, maintained as the office for the recordation of Liens on Aircraft
     and pursuant to the FAA Act, and any successor or additional office
     performing the same or a comparable function.

          "Facility Guaranty" means each Guaranty Agreement between one or more
     Guarantors and the Agent for the benefit of the Lenders (substantially in
     the form of Exhibit I attached hereto), delivered as of the Initial Closing
     Date and otherwise pursuant to Section 2.13, 5.1 or 5.3, as the same may be
     amended, modified or supplemented from time to time.

          "Federal Funds Rate" means, for any day, the rate per annum (rounded
     upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
     average of the rates on overnight Federal funds transactions with members
     of the Federal Reserve System arranged by Federal funds brokers on such
     day, as published by the Federal Reserve Bank of New York on the Business
     Day next succeeding such day; provided that (a) if such day is not a
     Business Day, the Federal Funds Rate for such day shall be such rate on
     such transactions on the next preceding Business Day as so published on the
     next succeeding Business Day, and (b) if no such rate is so published on
     such next succeeding Business Day, the Federal Funds Rate for such day
     shall be the average rate charged to the Agent (in its individual capacity)
     on such day on such transactions as determined by the Agent.

          "Fee Letter" means the Fee Letter dated January 24, 2005, as amended
     and restated August 3, 2005, by JPMorgan Chase Bank, N.A., J.P. Morgan
     Securities Inc., Bear Stearns & Co. Inc. and Bear Stearns Corporate Lending
     Inc. and accepted and agreed to by the Parent.

          "Fee Payment Date" means, for any month in which a commitment fee is
     due, the twentieth (20th ) calendar day of each calendar month (or, if such
     day is not a Business Day, on the next succeeding Business Day).

          "Financed Aircraft" with respect to any Loan means, collectively, each
     Aircraft, or part thereof, the acquisition of which was or is to be
     financed or refinanced in whole or in part by such Loan.

          "Fiscal Year" means the twelve-month fiscal period of Holdings, Irish
     Holdings, the Borrowers and their Subsidiaries commencing on January 1 of
     each calendar year and ending on December 31 of each calendar year.

          "Foreign Benefit Law" means any applicable statute, law, ordinance,
     code, rule, regulation, order or decree of any foreign nation or any
     province, state, territory, protectorate or other political subdivision
     thereof regulating, relating to, or imposing liability or standards of
     conduct concerning, any Employee Benefit Plan.

          "GAAP" or "Generally Accepted Accounting Principles" means generally
     accepted accounting principles, being those principles of accounting set
     forth in pronouncements of the Financial Accounting Standards Board, the
     American Institute of


                                       12



     Certified Public Accountants or which have other substantial authoritative
     support and are applicable in the circumstances as of the date of a report.

          "Governmental Authority" means any Federal, state, municipal, national
     or other governmental department, commission, board, bureau, court, agency
     or instrumentality or political subdivision thereof or any entity or
     officer exercising executive, legislative, judicial, regulatory or
     administrative functions of or pertaining to any government or any court,
     in each case whether associated with a state of the United States, the
     United States, or a foreign entity or government.

          "Guaranties" means the Facility Guaranties, the Contribution Agreement
     Guaranty and all other obligations of any Borrower or any other Person
     directly guaranteeing any Indebtedness or other obligation of any other
     Person.

          "Guarantors" means, at any date, Holdings, Irish Holdings, ABH 12 and
     the Beneficial Owners, Eligible Intermediaries and Subsidiaries who are
     required to be parties to a Facility Guaranty at such date.

          "Hazardous Material" means and includes any pollutant, contaminant, or
     hazardous, toxic or dangerous waste, substance or material (including
     without limitation petroleum products, asbestos-containing materials and
     lead), the generation, handling, storage, transportation, disposal,
     treatment, release, discharge or emission of which is subject to any
     Environmental Law.

          "Holdings SPC" means a Subsidiary, 100% of the voting and equity
     interests in which are owned directly or indirectly by Holdings or Irish
     Holdings.

          "Holdings" has the meaning given to such term in the preamble to this
     Agreement.

          "Holdings Subsidiary Trust" means any trust (a) that is organized
     under the laws of a state of the United States, (b) whose trustee is a
     Qualified Trustee and (c) in which 100% of all beneficial interests are
     owned directly by a direct or indirect wholly-owned Subsidiary of Holdings
     or Irish Holdings.

          "Indebtedness" means with respect to any Person, without duplication,
     all Indebtedness for Money Borrowed, all indebtedness of such Person for
     the acquisition of property or arising under Rate Hedging Obligations, all
     indebtedness secured by any Lien on the property of such Person whether or
     not such indebtedness is assumed, all liability of such Person by way of
     endorsements (other than for collection or deposit in the ordinary course
     of business), all Contingent Obligations, and other items which in
     accordance with GAAP is required to be classified as a liability on a
     balance sheet; but excluding all accounts payable in the ordinary course of
     business so long as payment therefor is due within one year; provided that
     in no event shall the term Indebtedness include surplus and retained
     earnings, lease obligations (other than pursuant to Capital Leases),
     reserves for deferred income taxes and investment credits, other deferred
     credits or reserves or deferred compensation obligations.


                                       13



          "Indebtedness for Money Borrowed" means with respect to any Person,
     without duplication, all indebtedness in respect of money borrowed, as
     reflected on the balance sheet of such Person in accordance with GAAP,
     including without limitation all Capital Leases and the deferred purchase
     price of any property or asset, evidenced by a promissory note, bond,
     debenture or similar written obligation for the payment of money (including
     conditional sales or similar title retention agreements), other than trade
     payables incurred in the ordinary course of business.

          "Initial Closing Date" means February 28, 2005.

          "Insolvency" means, with respect to any Multiemployer Plan, the
     condition that such Plan is insolvent within the meaning of Section 4245 of
     ERISA.

          "Insolvent" means to pertain to a condition of Insolvency.

          "Interbank Offered Rate" means, with respect to any Eurodollar Rate
     Loan for the Interest Period applicable thereto, the rate per annum
     (rounded upwards, if necessary), to the nearest 1/100 of 1%) appearing on
     Telerate Page 3750 (or any successor page) as the London interbank offered
     rate for deposits in Dollars at approximately 11:00 A.M. (London time) two
     Business Days prior to the first day of such Interest Period for a term
     comparable to such Interest Period (or, if no such comparable term is
     quoted, an interpolated rate as reasonably determined by the Agent). If for
     any reason such rate is not available, the term "Interbank Offered Rate"
     shall mean, with respect to any Eurodollar Rate Loan for the Interest
     Period applicable thereto, the rate per annum (rounded upwards, if
     necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
     Page as the London interbank offered rate for deposits in Dollars at
     approximately 11:00 A.M. (London time) two Business Days prior to the first
     day of such Interest Period for a term comparable to such Interest Period;
     provided, however, if more than one rate is specified on Reuters Screen
     LIBO Page, the applicable rate shall be the arithmetic mean of all such
     rates (rounded upwards, if necessary, to the nearest 1/100 of 1%).

          "Interest Period" means, for each Eurodollar Rate Loan, a period
     commencing on the date such Eurodollar Rate Loan is made or Converted or on
     the last day of the preceding Interest Period, as the case may be, and
     ending on (x) the next occurring day that is the fifteenth day of a
     calendar month or (y) in the case of an Interest Period of one week, the
     last day of such week (provided, that Interest Periods of one week in
     duration may not be selected by a Borrower other than in anticipation of a
     prepayment of a Loan); provided, that,

               (a) if an Interest Period for a Eurodollar Rate Loan would end on
          a day which is not a Business Day, such Interest Period shall be
          extended to the next Business Day (unless such extension would cause
          the applicable Interest Period to end in the succeeding calendar
          month, in which case such Interest Period shall end on the next
          preceding Business Day);


                                       14



               (b) except in the case of a one-week Interest Period, any
          Interest Period which begins on the last Business Day of a calendar
          month (or on a day for which there is no numerically corresponding day
          in the calendar month at the end of such Interest Period) shall end on
          the last Business Day of a calendar month; and

               (c) no Interest Period shall extend past the first anniversary of
          the Stated Termination Date for Revolving Loans.

          "Interest Rate Selection Notice" means the written notice delivered by
     an Authorized Representative in connection with the election of a
     subsequent Interest Period for any Eurodollar Rate Loan or the Conversion
     of any Base Rate Loan into a Eurodollar Rate Loan, in the form of Exhibit
     E.

          "Irish Holdings" has the meaning given such term in the preamble to
     this Agreement.

          "Lease" has the meaning given in the Security Agreement.

          "Lease Event of Default" means any event characterized as an "event of
     default" (or the equivalent) under any Lease of any Aircraft (or that would
     be so characterized assuming the sending of any required notice by the
     lessor in a timely manner).

          "Lender" has the meaning given to such term in the preamble to this
     Agreement.

          "Lessee Notice" means a certificate in form and substance reasonably
     acceptable to the Agent, duly completed and executed by an Applicable
     Borrower with respect to an Aircraft; and the Agent agrees that the form of
     Lessee Notice attached hereto as Exhibit M is acceptable.

          "Lien" means any interest in property securing any obligation owed to,
     or a claim by, a Person other than the owner of the property, whether such
     interest is based on the common law, statute or contract, and including but
     not limited to the lien or security interest arising from a mortgage,
     encumbrance, pledge, security agreement, conditional sale or trust receipt
     or a lease, consignment or bailment for security purposes. For the purposes
     of this Agreement, any Borrower and any Subsidiary shall be deemed to be
     the owner of any property which it has acquired or holds subject to a
     conditional sale agreement, financing lease, or other arrangement pursuant
     to which title to the property has been retained by or vested in some other
     Person for security purposes.

          "Loan" or "Loans" means any of the Revolving Loans.

          "Loan Documents" means this Agreement, the Notes (if any), the
     Contribution Agreement, the Contribution Agreement Letter Agreements, the
     Security Instruments, the Facility Guaranties, the Contribution Agreement
     Guaranty, the Parent Support Agreement, the Assumption Letters, the Omnibus
     Amendment, the Second Omnibus Amendment and all other instruments and
     documents heretofore or hereafter executed or delivered to or in favor of
     any Lender or the Agent in connection with the Loans made


                                       15



     and transactions contemplated under this Agreement, as the same may be
     amended, supplemented or replaced from the time to time.

          "Lockbox Agreement" means a lockbox agreement between each Borrower,
     the Depositary Bank and the Agent substantially the form of Exhibit O
     hereto, as supplemented from time to time in accordance with the terms
     thereof.

          "Manufacturer" means any manufacturer of any Financed Aircraft.

          "Manufacturer's Warranty" means any warranty made or offered by any
     Manufacturer with respect to any Financed Aircraft.

          "Material Adverse Effect" means a material adverse effect on (i) the
     ability of the Credit Parties, taken as a whole, to pay or perform its
     respective obligations, liabilities and indebtedness under the Loan
     Documents as such payment or performance becomes due in accordance with the
     terms thereof, or (ii) the rights, powers and remedies of the Agent or any
     Lender under any Loan Document or the validity, legality or enforceability
     thereof.

          "Moody's" means Moody's Investors Service, Inc. and any successor
     thereto.

          "Multiemployer Plan" means an Employee Benefit Plan that is a
     "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which any
     Borrower or any ERISA Affiliate is making, or is accruing an obligation to
     make, contributions or has made, or been obligated to make, contributions
     within the preceding six (6) Fiscal Years.

          "Notes" means, collectively, the promissory notes (if any) of the
     Borrowers evidencing Revolving Loans executed and delivered to the Lenders
     as provided in Section 2.5 substantially in the form of Exhibit F, with
     appropriate insertions as to amounts, dates and names of Lenders.

          "Obligations" means the unpaid principal of and interest on
     (including, without limitation, interest accruing after the maturity of the
     Loans and interest accruing after the filing of any petition in bankruptcy,
     or the commencement of any insolvency, reorganization or like proceeding,
     relating to Holdings, Irish Holdings, ABH 12 or any Borrower, whether or
     not a claim for post-filing or post-petition interest is allowed in such
     proceeding) the Loans and all other obligations and liabilities of
     Holdings, Irish Holdings, ABH 12 or any Borrower to the Agent (acting in
     any capacity) or to any Lender (or, in the case of Rate Hedging
     Obligations, any affiliate of any Lender), whether direct or indirect,
     absolute or contingent, due or to become due, or now existing or hereafter
     incurred, which may arise under, out of, or in connection with, this
     Agreement, any other Loan Document, any Rate Hedging Obligation entered
     into with any Lender or any affiliate of any Lender or any other document
     made, delivered or given in connection herewith or therewith, whether on
     account of principal, interest, reimbursement obligations, fees,
     indemnities, costs, expenses (including, without limitation, all fees,
     charges and disbursements of counsel to the Agent (acting in any capacity)
     or to any Lender that are required to be paid by Holdings, Irish Holdings,
     ABH 12 or any Borrower pursuant thereto) or otherwise; provided that,
     notwithstanding any provision of any


                                       16



     Facility Guaranty, the Contribution Agreement Guaranty or any other Loan
     Document to the contrary, Obligations of any Credit Party other than ABH 12
     shall not include any Rate Hedging Obligations of ABH 12 created by or
     incurred in connection with the ABH 12-JPM Swap Agreement.

          "Omnibus Amendment" means the Omnibus Amendment and Reaffirmation of
     Guaranties, dated as of the date August 3, 2005, executed by each Credit
     Party party to any Facility Guaranty, Security Agreement, Pledge Agreement
     or Lockbox Agreement existing as of such date.

          "Operating Circular" means an operating circular issued by the Federal
     Reserve Bank.

          "Organizational Action" means with respect to any corporation, limited
     liability company, partnership, limited partnership, limited liability
     partnership, trust or other legally authorized incorporated or
     unincorporated entity, any corporate, organizational or partnership action
     (including any required shareholder, trustee, member or partner action), or
     other similar official action, as applicable, taken by such entity.

          "Organizational Documents" means with respect to any corporation,
     limited liability company, partnership, limited partnership, limited
     liability partnership, trust or other legally authorized incorporated or
     unincorporated entity, (i) the articles of incorporation, certificate of
     incorporation, articles of organization, certificate of limited
     partnership, trust agreement or other applicable organizational or charter
     documents relating to the creation of such entity which will, in each case,
     contain provisions reasonably satisfactory to the Lenders to ensure such
     entity's bankruptcy remoteness, including provisions relating to the
     appointment of a special member or independent director, the consent of
     which will be required to approve any decisions related to bankruptcy
     matters and (ii) the bylaws, operating agreement, partnership agreement,
     limited partnership agreement or other applicable documents relating to the
     operation, governance or management of such entity.

          "Parent" means Aircastle Investment Limited, an exempted company
     organized and existing under the laws of Bermuda.

          "Parent Support Agreement" means the Second Amended and Restated
     Support Agreement executed by Parent substantially in the form of Exhibit
     N.

          "Partnership Interests" has the meaning therefor provided in the
     Pledge Agreement.

          "Payment Date" means any date provided for herein on which the
     principal of, interest on or other amounts in respect of the Loans is due
     and payable.

          "PBGC" means the Pension Benefit Guaranty Corporation established
     pursuant to Subtitle A of Title IV of ERISA and any successor thereto.


                                       17



          "Permanent Capital Markets Financing" means an aircraft lease
     securitization, enhanced equipment trust certificate or other permanent
     aircraft-secured public or private capital markets transaction (which, in
     each case, does not constitute bridge or interim financing) for the benefit
     of Parent, Holdings or Irish Holdings or a subsidiary of Holdings or Irish
     Holdings, occurring after the date hereof.

          "Permitted Lien" means any Lien permitted by Section 8.3.

          "Person" means an individual, partnership, corporation, limited
     liability company, limited liability partnership, trust, unincorporated
     organization, association, joint venture or a government or agency or
     political subdivision thereof.

          "Pledge Agreement" means, collectively (or individually as the context
     may indicate), (i) that certain Pledge and Security Agreement dated as of
     February 25, 2005 between Holdings and the Agent (for the benefit of the
     Agent and the Lenders), (ii) that certain Pledge and Security Agreement
     dated as of the date hereof between Irish Holdings and the Agent (for the
     benefit of the Agent and the Lenders), and (iii) any additional Pledge and
     Security Agreement or Share Charge (substantially in the form of Exhibit
     S-1, S-2 or S-3 attached hereto, as applicable), delivered to the Agent
     pursuant to Section 5.1, 5.2, 5.3 or 2.13, as hereafter amended,
     supplemented or replaced from time to time. For the avoidance of doubt, the
     Parent shall not be a party to any Pledge Agreement.

          "Pledged Interests" has the meaning given to such term in the Pledge
     Agreement.

          "Prime Rate" means the per annum rate of interest established from
     time to time by the Reference Bank as its prime or reference rate, which
     rate may not be the lowest rate of interest charged by the Reference Bank
     to its customers.

          "Principal Office" means the principal office of the Agent presently
     located at 270 Park Avenue, New York, New York 10017 or such other office
     and address as the Agent may from time to time designate. Payments shall be
     made to the account specified in the Lockbox Agreement or to such other
     account as the Agent may from time to time specify in writing.

          "Prohibited Countries" means any country in which an Aircraft would
     not be covered by the insurance requirements of Section 3.7 of the Security
     Agreement (including, if required, political risk insurance), any country
     with which the United States does not maintain normal diplomatic relations
     and any country where or with nationals of which it is unlawful for Persons
     subject to the jurisdiction of the United States to conduct business
     without material restrictions or limitations.

          "Purchase Price" with respect to any Aircraft means the actual
     purchase price paid for such Aircraft by the Applicable Borrower, together
     with all other reasonable out of pocket expenses (including reasonable
     attorneys fees of each of the Borrower and the Agent) incurred or which is
     estimated by the Borrower to be incurred in respect of such Aircraft, in
     each case reasonably acceptable to the Agent.


                                       18



          "Qualified Conversion" means the conversion of a Financed Aircraft
     from passenger configuration to a freighter configuration that meets the
     following conditions: (a) such conversion is performed by a conversion
     company that is well established with a program that has an FAA granted
     Supplemental Type Certificate to perform the intended work; (b) the
     conversion work is performed pursuant to a contract, assigned to the
     Lenders as collateral security, on terms and conditions that are reasonably
     acceptable to the Lenders; and (c)(i) the senior unsecured long-term debt
     rating of the conversion company is not less than BBB/Baa2 or (ii) the
     conversion company has caused a performance bond, letter of credit or other
     security naming the Agent as beneficiary, in an amount equal to 125% of the
     Loan of such Financed Aircraft, in each case in form and substance
     satisfactory to the Lenders to be issued by a surety or other Person
     customarily engaged in the performance bonding and surety business or
     issuing letters of credit reasonably acceptable to the Lenders.

          "Qualified Trustee" means (i) Wilmington Trust Company, Wells Fargo
     Bank Northwest, N.A., JPMorgan Chase Bank, N.A., or another bank or trust
     company having a combined capital and surplus of at least One Hundred
     Million Dollars ($100,000,000) or (ii) any other Person acceptable to the
     Agent.

          "Quarterly Period" means a fiscal quarter of the Borrowers and their
     Subsidiaries.

          "Rate Hedging Obligations" means any and all obligations of Holdings,
     Irish Holdings, ABH 12, any Borrower or any Subsidiary, whether absolute or
     contingent and howsoever and whensoever created, arising, evidenced or
     acquired (including all renewals, extensions and modifications thereof and
     substitutions therefor), under (i) any and all agreements, devices or
     arrangements designed to protect at least one of the parties thereto from
     the fluctuations of interest rates, exchange rates or forward rates
     applicable to such party's assets, liabilities or exchange transactions,
     including, but not limited to, Dollar-denominated or cross-currency
     interest rate exchange agreements, forward currency exchange agreements,
     interest rate cap or collar protection agreements, forward rate currency or
     interest rate options, puts, warrants and those commonly known as interest
     rate "swap" agreements; and (ii) any and all cancellations, buybacks,
     reversals, terminations or assignments of any of the foregoing.

          "Reference Bank" means JPMorgan Chase Bank, N.A.

          "Regulation A" means a Regulation A circular issued by such Federal
     Reserve Bank.

          "Regulation D" means Regulation D of the Board as the same may be
     amended or supplemented from time to time.

          "Regulatory Change" means any change effective after the Initial
     Closing Date in United States federal or state laws or regulations
     (including Regulation D and capital adequacy regulations) or foreign laws
     or regulations or the adoption or making after such date of any
     interpretations, directives or requests applying to a class of banks, which
     includes any of the Lenders, under any United States federal or state or
     foreign laws or


                                       19



     regulations (whether or not having the force of law) by any court or
     governmental or monetary authority charged with the interpretation or
     administration thereof or compliance by any Lender with any request or
     directive regarding capital adequacy, including those relating to "highly
     leveraged transactions," whether or not having the force of law, and
     whether or not failure to comply therewith would be unlawful and whether or
     not published or proposed prior to the date hereof.

          "Reorganization" means, with respect to any Multiemployer Plan, the
     condition that such plan is in reorganization within the meaning of Section
     4241 of ERISA.

          "Reportable Event" means any of the events set forth in Section
     4043(b) of ERISA, other than those events as to which the third day notice
     period is waived by the PBGC.

          "Required Lenders" means, as of any date, Lenders on such date having
     Credit Exposures (as defined below) aggregating more than 50% of the
     aggregate Credit Exposures of all the Lenders on such date. For purposes of
     the preceding sentence, the amount of the "Credit Exposure" of each Lender
     shall be equal at all times (a) other than following the occurrence and
     during the continuance of an Event of Default, to the amount of its
     Revolving Credit Commitment; and (b) following the occurrence and during
     the continuance of an Event of Default, to the aggregate principal amount
     of such Lender's Applicable Commitment Percentage of Revolving Credit
     Outstandings; provided that, for the purpose of this definition only, if
     any Lender shall have failed to fund its Applicable Commitment Percentage
     of any Loan, the Revolving Credit Commitment of such Lender shall be deemed
     reduced by the amount it so failed to fund for so long as such failure
     shall continue and such Lender's Credit Exposure attributable to such
     failure shall be deemed held by any Lender making more than its Applicable
     Commitment Percentage of such Loan to the extent it covers such failure.

          "Requirement of Law" means as to any Person, the Certificate of
     Incorporation and By-Laws or other organizational or governing documents of
     such Person, and any law, treaty, rule or regulation or determination of an
     arbitrator or a court or other Governmental Authority, in each case
     applicable to or binding upon such Person or any of its property or to
     which such Person or any of its property is subject.

          "Reserve Requirement" means, at any time, the maximum rate at which
     reserves (including, without limitation, any marginal, special,
     supplemental, or emergency reserves) are required to be maintained under
     regulations issued from time to time by the Board of Governors of the
     Federal Reserve System (or any successor) by member banks of the Federal
     Reserve System against "Eurocurrency liabilities" (as such term is used in
     Regulation D). Without limiting the effect of the foregoing, the Reserve
     Requirement shall reflect any other reserves required to be maintained by
     such member banks with respect to (i) any category of liabilities which
     includes deposits by reference to which the Eurodollar Rate is to be
     determined, or (ii) any category of extensions of credit or other assets
     which include Eurodollar Rate Loans. The Eurodollar Rate shall be adjusted
     automatically on and as of the effective date of any change in the Reserve
     Requirement.


                                       20



          "Revolving Credit Commitment" means, with respect to each Lender, the
     obligation of such Lender to make Revolving Loans to the Borrowers up to an
     aggregate principal amount at any one time outstanding equal to such
     Lender's Applicable Commitment Percentage of the Total Revolving Credit
     Commitment.

          "Revolving Credit Facility" means the facility described in Article II
     hereof providing for Loans to the Borrowers by the Lenders in the aggregate
     principal amount of the Total Revolving Credit Commitment.

          "Revolving Credit Outstandings" means, as of any date of
     determination, the aggregate principal amount of all Revolving Loans then
     outstanding.

          "Revolving Credit Termination Date" means the earliest of (i) the
     Stated Termination Date, (ii) the date of termination of Lenders'
     obligations pursuant to Section 9.1 upon the occurrence of an Event of
     Default, or (iii) such date as the Borrowers may voluntarily and
     permanently terminate the Revolving Credit Facility by payment in full of
     all Revolving Credit Outstandings, together with all accrued and unpaid
     interest thereon and reduce the Total Revolving Credit Commitment to zero
     pursuant to Section 2.7.

          "Revolving Loan" or "Revolving Loans" means any borrowing pursuant to
     a Loan under the Revolving Credit Facility in accordance with Article II.

          "S&P" means Standard & Poor's Ratings Group, a division of The
     McGraw-Hill Companies, Inc., and any successor thereto.

          "Second Omnibus Amendment" means the Second Omnibus Amendment and
     Reaffirmation of Guaranties, dated as of the date hereof, executed by each
     Credit Party party to any Security Instrument existing as of the date
     hereof.

          "Secured Party" has the meaning given in the Security Agreement.

          "Security Agreement" means, collectively (or individually as the
     context may indicate), any Security Agreement (substantially in the form of
     Exhibit J attached hereto) delivered to the Agent pursuant to Section 2.13,
     5.1, 5.2 or 5.3, as hereafter modified, amended or supplemented from time
     to time.

          "Security Instruments" means, collectively, the Pledge Agreement,
     Security Agreement, the Lockbox Agreement, ABH 12 Security Agreement and
     all other agreements, instruments and other documents, whether now existing
     or hereafter in effect, pursuant to which any Borrower, any Beneficial
     Owner, any Subsidiary, any Intermediary or any other Person shall grant or
     convey to the Agent or the Lenders a Lien in property as security for all
     or any portion of the Obligations, as any of them may be amended, modified
     or supplemented from time to time.

          "Servicing Agreement" means either (i) the Servicing Agreement, dated
     as of March 4, 2005, between Aircastle Advisor LLC and the Agent or (ii)
     the Servicing Agreement, dated as of the date hereof, between Aircastle
     Advisor (Ireland) Limited and the Agent, as the context may require, in
     substantially the form of Exhibit P attached.


                                       21



          "Servicer" means either Aircastle Advisor LLC or Aircastle Advisor
     (Ireland) Limited, in each case, a wholly-owned Subsidiary of Aircastle
     Investment Limited.

          "Single Employer Plan" means any Employee Benefit Plan covered by
     Title IV of ERISA which is not a Multiemployer Plan.

          "Solvent" means, when used with respect to any Person, that at the
     time of determination:

               (i) the fair value of its assets (both at fair valuation and at
          present fair saleable value on an orderly basis) is in excess of the
          total amount of its liabilities, including Contingent Obligations; and

               (ii) it is then able and expects to be able to pay its debts as
          they mature;

               (iii) it has capital sufficient to carry on its business as
          conducted and as proposed to be conducted; and

               (iv) with respect to any Person incorporated in Ireland, such
          Person is "unable to pay its debts" as that phrase is defined under
          Irish law in Section 214 of the Companies Act 1963 and Section 2(3) of
          the Companies (Amendment) Act 1990.

          "Stated Termination Date" means February 24, 2006.

          "Subsidiary" means any corporation or other entity in which more than
     50% of its outstanding voting stock or more than 50% of all equity
     interests is owned directly or indirectly by one or more Guarantors,
     Borrowers and/or by one or more of any Guarantor's Subsidiaries or any
     Borrower's Subsidiaries. With respect to any specified Guarantor or
     Borrower, the "Subsidiaries" of such Guarantor or Borrower shall mean (y)
     any Subsidiary owned directly or indirectly by such Guarantor or Borrower
     or by any of its Subsidiaries, or (z) any trust with respect to which such
     Guarantor or such Borrower or any of its Subsidiaries has a beneficial
     interest.

          "Swap Agreement" means one or more agreements between any Borrower and
     any Lender, on terms similar in all material respects to the ABH 12-JPM
     Swap Agreement and mutually acceptable to such Borrower and such Lender,
     which agreements create Rate Hedging Obligations.

          "Taxes" means taxes, levies, imposts, duties, charges, fees,
     deductions or withholdings imposed, levied, collected, withheld or assessed
     by any Governmental Authority.

          "Term Out Period" means the period from but excluding the Stated
     Termination Date through and including the first anniversary of the Stated
     Termination Date.


                                       22



          "Termination Event" means: (i) a "Reportable Event"; or (ii) the
     termination of a Single Employer Plan or the filing of a notice of intent
     to terminate a Single Employer Plan; or (iii) the institution of
     proceedings to terminate a Single Employer Plan by the PBGC; or (iv) the
     partial or complete withdrawal of any Borrower or any ERISA Affiliate from
     a Multiemployer Plan; or (v) the imposition of a Lien pursuant to Section
     412 of the Code or Section 302 of ERISA in favor of the PBGC or a Employee
     Benefit Plan; or (vi) any event or condition which results in the
     Reorganization or Insolvency of a Multiemployer Plan; or (vii) any event or
     condition which results in the termination of a Multiemployer Plan under
     Section 4041A of ERISA or the institution by the PBGC of proceedings to
     terminate a Multiemployer Plan under Section 4042 of ERISA.

          "Total Revolving Credit Commitment" means a principal amount equal to
     $600,000,000, as may be reduced from time to time in accordance with
     Section 2.7.

          "Trust Agreement" means each of the Trust Agreements between a
     Beneficial Owner and a Qualified Trustee.

          "Trust Estate" means all estate, right, title and interest of each
     Trustee in and to each Aircraft, each lease and all related documents and
     all other property of the Trustee, including, without limitation, all
     amounts of rent, insurance proceeds (other than liability insurance
     proceeds payable to or for the benefit of any Borrower, any Beneficial
     Owner, any Lender or the Agent) and requisition, indemnity or other
     payments or any kind for or with respect to each Aircraft.

          "Trustee" means a Qualified Trustee, solely in its capacity as trustee
     under a Trust Agreement.

          "Type" means any type of Loan (i.e., a Base Rate Loan or a Eurodollar
     Rate Loan).

          "Unleaseable" with respect to a Financed Aircraft means (a) such
     Financed Aircraft shall not be subject to an Eligible Lease for 120
     consecutive days (excluding the number of days such Aircraft shall be
     undergoing (i) maintenance or repairs in accordance with the provisions of
     the Loan Documents, (ii) Approved Improvements or (iii) a Qualified
     Conversion) and (b) after such 120 day period the Agent shall have
     reasonably determined that the Servicer will be unable to lease such
     Financed Aircraft within 120 days after the date of determination.

          "Voting Stock" means shares of capital stock issued by a corporation,
     or equivalent interests in any other Person, the holders of which are
     ordinarily, in the absence of contingencies, entitled to vote for the
     election of directors (or persons performing similar functions) of such
     Person, even if the right so to vote has been suspended by the happening of
     such a contingency.

          1.2. Rules of Interpretation.


                                       23



          (a) All accounting terms not specifically defined herein shall have
     the meanings assigned to such terms and shall be interpreted in accordance
     with GAAP applied on a Consistent Basis.

          (b) Code shall have the meaning given therein unless otherwise defined
     herein, except to the extent that the Uniform Commercial Code of another
     jurisdiction is controlling, in which case such terms shall have the
     meaning given in the Uniform Commercial Code of the applicable
     jurisdiction.

          (c) The headings, subheadings and table of contents used herein or in
     any other Loan Document are solely for convenience of reference and shall
     not constitute a part of any such document or affect the meaning,
     construction or effect of any provision thereof.

          (d) Except as otherwise expressly provided, references herein to
     articles, sections, paragraphs, clauses, annexes, appendices, exhibits and
     schedules are references to articles, sections, paragraphs, clauses,
     annexes, appendices, exhibits and schedules in or to this Agreement.

          (e) All definitions set forth herein or in any other Loan Document
     shall apply to the singular as well as the plural form of such defined
     term, and all references to the masculine gender shall include reference to
     the feminine or neuter gender, and vice versa, as the context may require.

          (f) When used herein or in any other Loan Document, words such as
     "hereunder", "hereto", "hereof" and "herein" and other words of like import
     shall, unless the context clearly indicates to the contrary, refer to the
     whole of the applicable document and not to any particular article,
     section, subsection, paragraph or clause thereof.

          (g) References to "including" means including without limiting the
     generality of any description preceding such term, and for purposes hereof
     the rule of ejusdem generis shall not be applicable to limit a general
     statement, followed by or referable to an enumeration of specific matters,
     to matters similar to those specifically mentioned.

          (h) All dates and times of day specified herein shall refer to such
     dates and times in New York, New York.

          (i) Each of the parties to the Loan Documents and their counsel have
     reviewed and revised, or requested (or had the opportunity to request)
     revisions to, the Loan Documents, and any rule of construction that
     ambiguities are to be resolved against the drafting party shall be
     inapplicable in the construing and interpretation of the Loan Documents and
     all exhibits, schedules and appendices thereto.

          (j) Any reference to an officer of any Borrower or any other Person by
     reference to the title of such officer shall be deemed to refer to each
     other officer of such Person, however titled, exercising the same or
     substantially similar functions.

          (k) All references to any agreement or document as amended, modified
     or supplemented, or words of similar effect, shall mean such document or
     agreement, as the


                                       24



     case may be, as amended, modified or supplemented from time to time only as
     and to the extent permitted therein and in the Loan Documents.

                                   ARTICLE II

                          THE REVOLVING CREDIT FACILITY

          2.1. Revolving Loans.

          (a) Commitment. Subject to the terms and conditions of this Agreement,
     each Lender severally agrees to make Loans to any of the Borrowers under
     the Revolving Credit Facility from time to time from the Closing Date until
     the Revolving Credit Termination Date on a pro rata basis as to the total
     borrowing requested by the applicable Borrower on any day determined by
     such Lender's Applicable Commitment Percentage up to but not exceeding the
     Revolving Credit Commitment of such Lender, provided, however, that (A) the
     proceeds of such Loan shall be used by such Borrower to (i) finance or
     refinance, or reimburse a Borrower for, the Purchase Price of an Eligible
     Aircraft (including additional loans to a Borrower (x) in connection with
     an increase in the Applicable Aircraft Advance Rate as provided in the
     definition thereof or (y) in connection with the acquisition of additional
     Eligible Aircraft, provided that such Aircraft is not subject to a Lease)
     or (ii) reimburse a Borrower for required upfront maintenance, a Qualified
     Conversion and any Approved Improvements, and (B) the amount of such Loan
     (together with any other Loans relating to such Aircraft or additional
     Loans pursuant to clause (A)(y) above) shall not exceed the Applicable
     Aircraft Borrowing Base of such Aircraft; and provided, further, that the
     Lenders will not be required and shall have no obligation to make any such
     Loan (i) so long as a Default or an Event of Default has occurred and is
     continuing or (ii) if the Agent has accelerated the maturity of any of the
     Loans as a result of an Event of Default; and provided, further, that
     immediately after giving effect to each such Loan, the amount of Revolving
     Credit Outstandings shall not exceed the lesser of the Borrowing Base or
     the Total Revolving Credit Commitment. Within such limits, the Borrowers
     may borrow, repay and reborrow under the Revolving Credit Facility on a
     Business Day from the Closing Date until, but (as to borrowings and
     reborrowings) not including, the Revolving Credit Termination Date;
     provided, however, that (1) no Revolving Loan that is a Eurodollar Rate
     Loan shall be made which has an Interest Period that extends beyond the
     first anniversary of the Stated Termination Date and (2) each Revolving
     Loan that is a Eurodollar Rate Loan may, subject to the provisions of
     Section 2.7, be repaid only on the last day of the Interest Period with
     respect thereto unless such payment is accompanied by the additional
     payment, if any, required by Section 4.5. For the avoidance of doubt, if
     the Applicable Aircraft Advance Rate in respect of an Eligible Aircraft
     shall increase after a Loan is made in respect of such Eligible Aircraft,
     then the Applicable Borrower shall be permitted to borrow additional Loans
     in the manner provided above so long as the aggregate Loans in respect of
     such Eligible Aircraft shall not exceed the Applicable Aircraft Borrowing
     Base of such Eligible Aircraft.

          (b) Amounts. Each Revolving Loan hereunder and each Conversion under
     Section 2.8, shall be in an amount of at least $500,000 (other than
     Revolving Loans made


                                       25



     in connection with (i) an increase in the Applicable Aircraft Advance Rate
     as provided in the definition thereof, (ii) an Approved Improvement or
     (iii) a Qualified Conversions).

          (c) Procedures. An Authorized Representative shall give the Agent (i)
     at least three (3) Business Days' irrevocable written notice of an Interest
     Rate Selection Notice with appropriate insertions, effective upon receipt,
     of each Revolving Loan that is to be Converted into a Eurodollar Rate Loan
     prior to 10:30 A.M. and (ii) at least one (1) Business Day's written
     notice, revocable only on or before noon the following Business Day of a
     Borrowing Notice with appropriate insertions, effective upon receipt, of
     each Revolving Loan (which shall be borrowed as a Base Rate Loan) prior to
     10:30 A.M. and (iii) at least one (1) Business Day's irrevocable written
     notice of an Interest Rate Selection Notice with appropriate insertions,
     effective upon receipt, of each Revolving Loan that is to be Converted into
     a Base Rate Loan prior to 10:30 A.M. Each such notice shall (A) specify the
     name of the respective Borrower, the amount of the borrowing, the date of
     borrowing or Conversion (as applicable), type of Revolving Loan (Base Rate
     or Eurodollar Rate), the date of borrowing and, if a Eurodollar Rate Loan,
     the Interest Period to be used in the computation of interest and (B)
     identify the Financed Aircraft the acquisition of which is to be financed
     with the proceeds of the borrowing. Notice of receipt of such Borrowing
     Notice or Interest Rate Selection Notice, as the case may be, together with
     the amount of each Lender's portion of a Loan requested thereunder, shall
     be provided by the Agent to each Lender by facsimile transmission with
     reasonable promptness, but (provided the Agent shall have received such
     notice by 10:30 A.M.) not later than 1:00 P.M. on the same day as the
     Agent's receipt of such notice.

               (i) Promptly (and, to the extent feasible, not later than 2:00
          P.M.) on the date specified for each borrowing under this Section 2.1,
          each Lender shall, pursuant to the terms and subject to the conditions
          of this Agreement, make the amount of the Loan or Loans to be made by
          it on such day available by wire transfer to the Agent in the amount
          of its pro rata share, determined according to such Lender's
          Applicable Commitment Percentage of the Revolving Loan or Revolving
          Loans to be made on such day. Such wire transfer shall be directed to
          the Agent at the Principal Office and shall be in the form of Dollars
          constituting immediately available funds. The amount so received by
          the Agent shall, subject to the terms and conditions of this
          Agreement, be made available to the Applicable Borrower by delivery of
          the proceeds thereof to the Borrowers' Account or otherwise as shall
          be directed in the applicable Borrowing Notice by an Authorized
          Representative and reasonably acceptable to the Agent.

               (ii) Each Loan will be made initially as a Base Rate Loan. The
          Borrowers shall have the option to elect the duration of the initial
          and any subsequent Interest Periods and to Convert the Revolving Loans
          in accordance with Section 2.8. Eurodollar Rate Loans and Base Rate
          Loans may be outstanding at the same time, provided, however, there
          shall not be outstanding at any one time Eurodollar Rate Loans for any
          or any Borrower having more than two (2) different Interest Periods.
          If the Agent does not receive an Interest Rate Selection Notice giving
          notice of election of the duration of an Interest Period by the time
          prescribed by Section 2.8, the applicable Borrower shall be deemed to


                                       26



          have elected for any Eurodollar Loan an Interest Period of the
          duration provided in clause (x) of the definition of Interest Period.

          2.2. Payment of Interest.

          (a) The Borrowers, jointly and severally, shall pay interest to the
     Agent for the account of each Lender on the outstanding and unpaid
     principal amount of each Loan made by such Lender for the period commencing
     on the date of such Loan until such Loan shall be due at the then
     applicable Base Rate for Base Rate Loans or applicable Eurodollar Rate for
     Eurodollar Rate Loans, as designated by the Authorized Representative
     pursuant to Section 2.1; provided, however, that if any Event of Default
     shall occur and be continuing, all amounts outstanding hereunder shall bear
     interest during such period at the Default Rate.

          (b) Interest on each Loan shall be computed on the basis of a year of
     360 days and calculated in each case for the actual number of days elapsed.
     Interest on each Loan shall be paid (x) monthly in arrears on the fifteenth
     (15th) calendar day of each calendar month (or, if such day is not a
     Business Day, on the next succeeding Business Day), (y) upon payment or
     prepayment of the principal amount of any Loan or any portion thereof, on
     the amount so paid or prepaid and (z) at the Revolving Credit Termination
     Date.

          2.3. Payment of Principal.

          (a) Scheduled Repayments; Voluntary Prepayments. The principal amount
     of each Revolving Loan shall be due and payable to the Agent for the
     benefit of each Lender in full on the first anniversary of the Stated
     Termination Date, or earlier as specifically provided herein. The Borrower
     may prepay the outstanding principal amount of any Loan, in whole or in
     part, upon one Business Day's notice to the Lender. All such prepayments
     must be accompanied by accrued interest up to, and including, the date of
     such prepayment and any compensation due under Section 4.5 hereof.

          (b) Mandatory Prepayments.

               (i) Upon the sale of any Aircraft or other asset by any Borrower,
          or upon the refinancing of any Indebtedness of any Borrower arising
          from any Loan hereunder, the Borrowers, jointly and severally, shall
          immediately pay to the Agent an amount equal to the net proceeds of
          such sale or refinancing, which amount shall be applied by the Agent
          to reduce outstanding principal and accrued interest on any Loans made
          to, or for the benefit of, such Borrower. If any net proceeds of such
          sale or refinancing remain after the repayment in full of all
          outstanding principal and accrued interest on such Loans, if no
          Default or Event of Default exists at the time, such excess proceeds
          shall be paid to the Applicable Borrower and may be used by such
          Borrower subject to compliance with the terms of this Agreement and
          the other Loan Documents.

               (ii) The Borrowers, jointly and severally, shall be required to
          prepay the Loans, upon five Business Days' prior notice, in an amount
          equal to any amount by which the aggregate outstanding principal
          amount of the Loans


                                       27



          exceeds the Borrowing Base. Alternatively, a Borrower may pledge
          additional Collateral (valued in a manner reasonably acceptable to the
          Agent) to increase the Borrowing Base and avoid such mandatory
          prepayment.

               (iii) The Borrowers, jointly and severally, shall be required to
          prepay the Loan relating to a Financed Aircraft, upon five Business
          Days' prior notice, in an amount equal to the product of (x) any
          amount by which the estimated out-of-pocket costs incurred by the
          Applicable Borrower in acquiring such Financed Aircraft that were
          included in the Purchase Price exceed the actual amount of such
          expenses and (y) the Applicable Aircraft Advance Rate.

               (iv) The Borrowers, jointly and severally, shall be required to
          prepay the Loans in respect of a Financed Aircraft upon the occurrence
          of an Event of Loss in respect of such Finance Aircraft and on the
          date required by Section 3.8(b) of the Security Agreement. If any net
          proceeds received in respect of such Event of Loss remain after the
          repayment in full of all outstanding principal and accrued interest on
          such Loans, if no Default or Event of Default exists at the time, such
          excess proceeds shall be paid to the Applicable Borrower and may be
          used by such Borrower in its discretion.

               (v) The Borrowers, jointly and severally, shall be required to
          prepay the Loans in the amount distributed for that purpose under
          Section 5.1 of the Lockbox Agreement.

               (vi) Upon any Permanent Capital Markets Financing, the Borrowers,
          jointly and severally, shall be required to prepay the Loans with
          respect to any Aircraft included in such Permanent Capital Markets
          Financing and if such Permanent Capital Markets Financing is competed
          on or after the Stated Termination Date and the net proceeds thereof
          are insufficient to prepay the Loans in full, either (a) the Borrowers
          shall pledge their interest in the trust relating to such Permanent
          Capital Markets Financing or (b) Holding shall continue to pledge its
          right, title and interest in and to the Borrowers, to secure for the
          Loans that thereafter remain outstanding until such Loans shall have
          been paid in full.

          2.4. Manner of Payment. Each payment of principal (including any
prepayment) and payment of interest and fees, and any other amount required to
be paid to the Lenders with respect to the Loans, shall be made to the Agent at
the Principal Office, for the account of each Lender, in Dollars and in
immediately available funds without setoff, deduction or counterclaim before
12:30 P.M. on the date such payment is due.

          (a) The Agent shall deem any payment made by or on behalf of any
     Borrower hereunder that is not made both in Dollars and in immediately
     available funds and prior to 12:30 P.M. to be a non-conforming payment. Any
     such payment shall not be deemed to be received by the Agent until the time
     such funds become available funds. Any non-conforming payment may
     constitute or become a Default or Event of Default. Interest shall continue
     to accrue on any principal as to which a non-conforming payment is made


                                       28



     until the later of (x) the date such funds become available funds or (y)
     the next Business Day at the Default Rate from the date such amount was due
     and payable.

          (b) In the event that any payment hereunder becomes due and payable on
     a day other than a Business Day, then such due date shall be extended to
     the next succeeding Business Day unless provided otherwise under clause
     (ii) of the definition of "Interest Period"; provided that interest shall
     continue to accrue during the period of any such extension and provided,
     further, that in no event shall any such due date be extended beyond the
     Revolving Credit Termination Date.

          (c) Any payment or prepayment of any principal or interest on any Loan
     hereunder shall be accompanied by a certificate signed by an Authorized
     Representative and delivered to the Agent, which certificate shall identify
     such Loan, the amount of principal and interest paid thereon, and the
     Borrower to whom, or for whose benefit, such Loan was originally advanced.

          2.5. Notes. At the request of any Lender, Revolving Loans made by such
Lender shall be evidenced by a Note payable to the order of such Lender in the
respective amount of its Applicable Commitment Percentage of the Revolving
Credit Commitment and shall be duly completed, executed and delivered by the
Borrowers.

          2.6. Pro Rata Payments. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Loans and the fees
described in Section 2.10 shall be made to the Agent for the account of the
Lenders pro rata based on their Applicable Commitment Percentages, (b) all
payments to be made by any Borrower for the account of each of the Lenders on
account of principal, interest and fees, shall be made without diminution,
setoff, recoupment or counterclaim, and (c) the Agent will promptly distribute
to the Lenders in immediately available funds payments received in fully
collected, immediately available funds from any Borrower.

          2.7. Reductions. The Borrowers shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month, upon not less than three (3) Business Days' written
notice to the Agent, effective upon receipt, to reduce the Total Revolving
Credit Commitment. The Agent shall give each Lender, within one (1) Business Day
of receipt of such notice, facsimile notice, or telephonic notice (confirmed in
writing), of such reduction. Each such reduction shall be in the aggregate
amount of $5,000,000 or such greater amount which is in an integral multiple of
$1,000,000, or the entire remaining Total Revolving Credit Commitment, and shall
permanently reduce the Total Revolving Credit Commitment. Each reduction of the
Total Revolving Credit Commitment shall be accompanied by payment of the
Revolving Loans to the extent that the principal amount of Revolving Credit
Outstandings exceeds the Total Revolving Credit Commitment after giving effect
to such reduction, together with accrued and unpaid interest on the amounts
prepaid. No such reduction shall result in the payment of any Eurodollar Rate
Loan other than on the last day of the Interest Period of such Eurodollar Rate
Loan unless such prepayment is accompanied by amounts due, if any, under Section
4.5.


                                       29



          2.8. Conversions and Elections of Subsequent Interest Periods. Subject
to the limitations set forth below and in Article IV, the Borrowers may:

          (a) upon delivery, effective upon receipt, of a properly completed
     Interest Rate Selection Notice to the Agent on or before 10:30 A.M. on any
     Business Day, Convert all or a part of Eurodollar Rate Loans to Base Rate
     Loans on the last day of the Interest Period for such Eurodollar Rate
     Loans; and

          (b) provided that no Default or Event of Default shall have occurred
     and be continuing and upon delivery, effective upon receipt, of a properly
     completed Interest Rate Selection Notice to the Agent on or before 10:30
     A.M. three (3) Business Days' prior to the date of such election or
     Conversion:

               (i) elect a subsequent Interest Period for all or a portion of
          Eurodollar Rate Loans to begin on the last day of the then current
          Interest Period for such Eurodollar Rate Loans; and

               (ii) Convert Base Rate Loans to Eurodollar Rate Loans on any
          Business Day.

          Each election and Conversion pursuant to this Section 2.8 shall be
subject to the limitations on Eurodollar Rate Loans set forth in the definition
of "Interest Period" herein and in Sections 2.1, 2.3 and Article IV. The Agent
shall give written notice to each Lender of such notice of election or
Conversion prior to 3:00 P.M. on the day such notice of election or Conversion
is received. All such Continuations or Conversions of Loans shall be effected
pro rata based on the Applicable Commitment Percentages of the Lenders.

          2.9. Increase and Decrease in Amounts. The amount of the Total
Revolving Credit Commitment that shall be available to the Borrowers as Loans
shall be reduced by the aggregate amount of Revolving Credit Outstandings.

          2.10. Fees. Borrower shall pay (i) the fees specified in the Fee
Letter on the dates specified therein and (ii) a commitment fee for the period
from and including the date hereof to the Revolving Credit Termination Date,
computed at a rate of 0.25% per annum on the average daily amount of the
available Revolving Credit Commitment of such Lender during the period for which
payment is made, payable monthly in arrears on each Fee Payment Date, commencing
on the first such date to occur after the date hereof.

          2.11. Deficiency Advances. No Lender shall be responsible for any
default of any other Lender in respect to such other Lender's obligation to make
any Loan hereunder nor shall the Revolving Credit Commitment of any Lender
hereunder be increased as a result of such default of any other Lender. Without
limiting the generality of the foregoing, in the event any Lender shall fail to
advance funds to any Borrower as herein provided, the Agent may in its
discretion and in its capacity as a Lender, but shall not be obligated to,
advance all or any portion of such amount or amounts (each, a "deficiency
advance") and shall thereafter be entitled to payments of principal of and
interest on such deficiency advance in the same manner and at the same interest
rate or rates as if it had originally made such Loan; provided that, (i) such
defaulting Lender shall not be entitled to receive payments of principal,
interest or fees with


                                       30



respect to such deficiency advance until such deficiency advance shall be paid
by such Lender and (ii) upon payment to the Agent from such other Lender of the
entire outstanding amount of each such deficiency advance, together with accrued
and unpaid interest thereon, from the most recent date or dates interest was
paid to the Agent by a Borrower on each Loan comprising the deficiency advance
at the interest rate per annum for overnight borrowing by the Agent from the
Federal Reserve Bank, then such payment shall be to the Agent as a Lender in
full payment of such deficiency advance and such Borrower shall be deemed to
have borrowed the amount of such deficiency advance from such other Lender as of
the most recent date or dates, as the case may be, upon which any payments of
interest were made by such Borrower thereon.

          2.12. Use of Proceeds. The proceeds of each Loan made pursuant to the
Revolving Credit Facility hereunder shall be used by the Applicable Borrower to
finance or refinance, or reimburse a Borrower for the Purchase Price of an
Eligible Aircraft and costs incurred in connection with any Approved
Improvements or any Qualified Conversion.

          2.13. Designation of Borrowing Affiliate; Releases.

          (a) An Authorized Representative may from time to time designate any
     Holdings Subsidiary Trust or Holdings SPC which has not joined in the
     execution of this Agreement as a "Borrowing Affiliate" hereunder by causing
     such Holdings Subsidiary Trust or Holdings SPC to execute and deliver a
     duly completed Assumption Letter (in the form attached hereto as Exhibit Q)
     to the Agent with the written acknowledgment of the Borrowers and the Agent
     at the foot thereof, together with (a) Facility Guaranties executed by each
     Beneficial Owner of any such Holdings Subsidiary Trust, by each Subsidiary
     of any such Beneficial Owner (other than such Holdings Subsidiary Trust),
     by each Subsidiary of such Holdings Subsidiary Trust or of such Holdings
     SPC and by the Applicable Intermediary (if any), (b) Security Agreements
     signed by such Holdings Subsidiary Trust or Holdings SPC, by each
     Beneficial Owner of any such Holdings Subsidiary Trust, by each Subsidiary
     of any such Beneficial Owner, by each Subsidiary of such Holdings
     Subsidiary Trust or Holdings SPC and by the Applicable Intermediary (if
     any), (c) Pledge Agreements signed by the respective Beneficial Owners and
     other owners, granting a security interest in the Pledged Interests in such
     Holdings Subsidiary Trust or Holdings SPC in any Subsidiary thereof, in any
     Beneficial Owner and in any Subsidiary thereof, and in the Applicable
     Intermediary (if any), and (d) all additional documents required under such
     Assumption Letter. Upon such execution, delivery and consent, such Holdings
     Subsidiary Trust or Holdings SPC (as the case may be) shall for all
     purposes be a party hereto as a Borrower as fully as if it had executed and
     delivered this Agreement.

          (b) So long as (w) all Loans made to or on behalf of any Borrower,
     together with all accrued interest on such Loans, have been paid in full,
     (x) all other outstanding Obligations of such Borrower (except Obligations
     to pay principal and interest on Loans other than those Loans described in
     clause (w)) have been paid in full, (y) no Default or Event of Default has
     occurred and will be continuing after giving effect to such termination,
     and (z) any prepayment required under Section 2.3(b) has been made, then
     such Borrower may, by not less than three (3) days prior notice to the
     Agent (which shall promptly notify the Lenders thereof), (i) terminate its
     status as a "Borrowing Affiliate"


                                       31



     and "Borrower" hereunder and under the other Loan Documents, and (ii) (with
     respect to any Beneficial Owner of such Borrower) unless such Person also
     holds a beneficial interest in any other Borrower, terminate the status of
     such Person and any other Subsidiary of such Person as a "Guarantor"
     hereunder and under the other Loan Documents, and (iii) terminate the
     status of the Applicable Intermediary (if any) and any other Subsidiary of
     such Borrower as a "Guarantor" hereunder and under the other Loan
     Documents. Upon such terminations (provided the conditions to such
     terminations are satisfied), the Agent shall take all actions reasonably
     requested by such Borrower (A) to release the Liens of the Agent on all
     Collateral owned by such Borrower and its Subsidiaries (including the
     Applicable Intermediary, if any) and to release such Borrower and such
     Subsidiaries from all of their respective obligations under the Loan
     Documents (including without limitation a written release to such effect),
     (B) unless such Beneficial Owner also holds a beneficial interest in any
     other Borrower, to release the Liens of the Agent on all Collateral owned
     by such Beneficial Owner and its other Subsidiaries and to release such
     Beneficial Owner and such other Subsidiaries from all of their respective
     obligations under the Loan Documents (including without limitation a
     written release to such effect), (C) to release the Lien of the Agent with
     respect to any Pledged Interests in such Borrower, its Subsidiaries and the
     Applicable Intermediary, and (D) (unless such Beneficial Owner also holds a
     beneficial interest in any other Borrower) to release the Lien of the Agent
     with respect to any Pledged Interests in such Beneficial Owner. Any
     provision of this Section 2.13 or any other provision of any Loan Document
     notwithstanding, in no event shall Holdings or Irish Holdings be released
     from its obligations to pay indemnification to, or reimburse any costs or
     expenses of, the Agent or any Lender (including without limitation the
     obligations under Article IV and Sections 4.6, 7.15, 11.5 and 11.9), which
     agreements and obligations shall survive any release or termination of any
     Credit Party (other than Holdings or Irish Holdings) pursuant to this
     Section 2.12.

          (c) So long as (x) all obligations of ABH 12 under the ABH 12-JPM Swap
     Agreement have been paid in full, (y) no Default or Event of Default has
     occurred and will be continuing after giving effect to such termination,
     and (z) any prepayment of interest on the Loans and other Obligations
     required under the ABH 12-JPM Swap Agreement to be made from the proceeds
     of such ABH 12-JPM Swap Agreement has been made, then ABH 12 may, by not
     less than three (3) days prior notice to the Agent (which shall promptly
     notify the Lenders thereof), unless ABH 12 holds a beneficial interest in
     any Borrower, terminate its status as a "Guarantor" hereunder and under the
     other Loan Documents. Upon such termination (provided the conditions to
     such terminations are satisfied), unless ABH 12 becomes a party to this
     Agreement as a "Borrower" or a "Borrowing Affiliate" or holds beneficial
     interest in any Borrower, the Agent shall take all actions reasonably
     requested by ABH 12 to release the Liens of the Agent on all Collateral
     owned by ABH 12 and to release ABH 12 from all of its obligations under the
     Loan Documents (including without limitation a written release to such
     effect).

          2.14. Joint and Several Liability. Each Borrower (including without
limitation each Borrowing Affiliate) agrees and acknowledges that the
Obligations (subject to the proviso in the last sentence in the definition of
"Obligations" as such term is defined in Section 1.1


                                       32



herein) constitute and will constitute joint and several obligations and
liabilities of the Borrowers; provided, however, that anything herein or in any
other Loan Document to the contrary notwithstanding, the maximum liability of
each Borrower with respect to the joint and several liability under this Section
2.14 shall in no event exceed the amount which can be guaranteed by such
Borrower under applicable federal, state and applicable foreign laws relating to
the insolvency of debtors. Each Borrower further agrees and acknowledges that
all actions taken, elections made and notices and certificates furnished or
received by it under or pursuant to the Loan Documents shall constitute the
action, election, notice or certification of all of the Borrowers under the Loan
Documents, and that each Authorized Representative shall have full authority to
act for and on behalf of all of the Borrowers for all purposes of the Loan
Documents. Each Borrower agrees that the joint and several liability of the
Borrowers shall not be impaired or affected by any modification, supplement,
extension or amendment of any contract or agreement to which the parties thereto
may hereafter agree, nor by any modification, release or other alteration of any
of the rights of the Agent or any Lender with respect to the Collateral other
than as provided in Section 2.13(b) hereof, nor by any delay, extension of time,
renewal, compromise or other indulgence granted by the Agent, any Lender or any
other Person with respect to any of the Obligations, nor by any other agreements
or arrangements whatever with any other Borrower or with anyone else, each
Borrower hereby waiving all notice of any such delay, extension, release,
substitution, renewal, compromise or any such delay, extension, release,
substitution, renewal, compromise or other indulgence, and hereby consenting to
be bound thereby as fully and effectually as if it had expressly agreed thereto
in advance. The liability of each Borrower hereunder is direct and unconditional
as to all of the Obligations hereunder, and may be enforced without requiring
the Agent, any Lender or any other Person first to resort to any other right,
remedy or security; no Borrower shall have any right of subrogation,
reimbursement or indemnity whatsoever, nor any right of recourse to security for
indemnity whatsoever, nor any right of recourse to security for any of the
Obligations hereunder, unless and until all of said Obligations have been paid
in full; except as provided in Section 2.13(b) hereof and subject to the proviso
to the first sentence of this Section 2.14, nothing shall discharge or satisfy
the liability of any Borrower hereunder except the full payment and performance
of all of the Obligations; any and all present and future debts and obligations
of each Borrower to the other Borrowers are hereby waived and postponed in favor
of and subordinated to the full payment and performance of all present and
future Obligations of the Borrowers to the Agent, the Lenders and any other
Person.

          2.15. Eligible Lease Involving Eligible Intermediary. In lieu of
leasing a Financed Aircraft directly to an Eligible Carrier, a Borrower may
lease such Financed Aircraft directly to an Eligible Intermediary pursuant to an
Eligible Lease described in clause (X) of the proviso to the definition of
"Eligible Lease"; provided that

          (a) such Eligible Intermediary simultaneously subleases such Aircraft
     to an Eligible Carrier pursuant to an Eligible Lease described in clause
     (Y) of the proviso to the definition of "Eligible Lease" and such sublease
     is pledged as collateral security for the obligations of the Eligible
     Intermediary under the head lease;

          (b) in the case of any Loan with respect to such Aircraft, all Loan
     conditions that pertain to any Eligible Lease or other Lease by a Borrower
     of such Aircraft (including without limitation requirements concerning the
     perfection of Liens on Collateral, and


                                       33



     delivery of copies of the Leases and Lessee Notices) shall be satisfied
     with respect to each such Lease to or by the Applicable Intermediary;

          (c) all provisions of any Loan Document that pertain to any Eligible
     Lease or other Lease by a Borrower of such Aircraft shall apply to each
     such Lease to or by the Applicable Intermediary; and

          (d) the lease/sublease structure shall not result in adverse tax or
     other consequences to the Agent or any Lender which have not been
     indemnified or otherwise addressed to the reasonable satisfaction of the
     Agent.

                                   ARTICLE III

                                    SECURITY

          3.1. Security. As security for the full and timely payment and
performance of all Obligations, the Credit Parties shall on or before the date
of the initial Loan do or cause to be done all things necessary in the
reasonable opinion of the Agent and its counsel to grant to the Agent for the
benefit of the Lenders a duly perfected first priority security interest under
all applicable laws in all Collateral subject to no prior Lien or other
encumbrance (that, in each case, has not previously been satisfied in full) or
restriction on transfer (other than Permitted Liens).

          3.2. Further Assurances. At the request of the Agent, each Borrower
will, or will cause other Credit Parties (as the case may be), to, execute, by
its duly authorized officers, alone or with the Agent, any certificate,
instrument, statement or document, or to procure any such certificate,
instrument, statement or document, or to take such other action (and pay all
connected costs) which the Agent reasonably deems necessary from time to time to
create, continue or preserve the liens and security interests in Collateral (and
the perfection and priority thereof) of the Agent contemplated hereby and by the
other Loan Documents and specifically including all Collateral acquired by any
Borrower or any Guarantor or any other Credit Party after the Closing Date.

          3.3. Information Regarding Collateral. ABH 12 and each Borrower
represents, warrants and covenants that (i) the chief executive office of each
Borrower and each other Person (including ABH 12) providing Collateral pursuant
to a Security Instrument (each, a "Grantor") at the Closing Date is located at
the address or addresses specified on Schedule 3.3, and (ii) Schedule 3.3
contains a true and complete list of (a) the name and address of each Grantor,
(b) each location of the chief executive office and principal place of business
of each Grantor and (c) the country of registration (if applicable) of each
Aircraft. Neither ABH 12, nor any Borrower shall change, or permit any other
Grantor to change, the location of its chief executive office or principal place
of business, or use or permit any other Grantor to use, any additional trade
style, except upon giving not less than thirty (30) days' prior written notice
to the Agent and taking or causing to be taken all such action at the Borrowers'
or such other Grantor's expense as may be reasonably requested by the Agent to
perfect or maintain the perfection of the Lien of the Agent in Collateral.


                                       34



          3.4. Quiet Enjoyment. The Agent and each Lender hereby agree that, so
long as no Lease Event of Default shall have occurred and be continuing under an
Eligible Lease, it will not interfere with the quiet enjoyment of the possession
and use of the Aircraft by the Applicable Carrier during the term of such
Eligible Lease and it will (subject to any requirements or restrictions imposed
by applicable law) dispose of its interest in the Eligible Aircraft leased under
such Eligible Lease expressly subject to such Eligible Lease and on terms such
that the purchaser provides a similar right of quiet enjoyment to such
Applicable Carrier. Upon the request of any Borrower, the Agent (on behalf of
itself and the Lenders) will confirm the immediately preceding sentence in
writing to any Applicable Carrier.

                                   ARTICLE IV

                             CHANGE IN CIRCUMSTANCES

          4.1. Requirements of Law.

          (a) If the adoption of or any change in any Requirement of Law or in
     the interpretation or application thereof or compliance by any Lender with
     any request or directive (whether or not having the force of law) from any
     central bank or other Governmental Authority made subsequent to the date
     hereof:

               (i) shall impose, modify or hold applicable any reserve, special
          deposit, compulsory loan or similar requirement against assets held
          by, deposits or other liabilities in or for the account of, advances,
          loans or other extensions of credit by, or any other acquisition of
          funds by, any office of such Lender that is not otherwise included in
          the determination of the Eurodollar Rate; or

               (ii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost (other than a
Tax) to such Lender, by an amount that such Lender deems to be material, of
making, converting into, continuing or maintaining Eurodollar Rate Loans or to
reduce any amount receivable hereunder in respect thereof (other than by reason
of any Tax), then, in any such case, the Borrowers shall promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for such increased cost or reduced amount receivable. If any Lender
becomes entitled to claim any additional amounts pursuant to this paragraph, it
shall promptly notify the Borrowers (with a copy to the Agent) of the event by
reason of which it has become so entitled.

          (b) If any Lender shall have determined that the adoption of or any
     change in any Requirement of Law regarding capital adequacy or in the
     interpretation or application thereof or compliance by such Lender or any
     corporation controlling such Lender with any request or directive regarding
     capital adequacy (whether or not having the force of law) from any
     Governmental Authority made subsequent to the date hereof shall have the
     effect of reducing the rate of return on such Lender's or such
     corporation's capital as a consequence of its obligations hereunder to a
     level below that which such Lender or such corporation could have achieved
     but for such adoption, change or compliance (taking into consideration such
     Lender's or such corporation's policies with respect to capital


                                       35



     adequacy) by an amount deemed by such Lender to be material, then from time
     to time, after submission by such Lender to the Borrowers (with a copy to
     the Agent) of a written request therefor, the Borrowers shall pay to such
     Lender such additional amount or amounts as will compensate such Lender or
     such corporation for such reduction.

          (c) Each Lender shall promptly notify Holdings, Irish Holdings, the
     Borrowers and the Agent of any event of which it has knowledge occurring
     after the date hereof, which will entitle a Lender to compensation pursuant
     to this Section 4.1, and such Lender shall, upon written request by
     Holdings, Irish Holdings or any Borrower, designate a different Applicable
     Lending Office if such designation will avoid the need for, or reduce the
     amount of, such compensation and will not, in the judgment of such Lender,
     be otherwise disadvantageous to it. A certificate as to any additional
     amounts payable pursuant to this Section submitted by any Lender to the
     Borrowers (with a copy to the Agent) shall be conclusive in the absence of
     manifest error. Notwithstanding anything to the contrary in this Section,
     the Borrowers shall not be required to compensate a Lender pursuant to this
     Section for any amounts incurred more than three months prior to the date
     that such Lender notifies the Borrowers of such Lender's intention to claim
     compensation therefor; provided that, if the circumstances giving rise to
     such claim have a retroactive effect, then such three-month period shall be
     extended to include the period of such retroactive effect. The obligations
     of the Borrowers pursuant to this Section shall survive the termination of
     this Agreement and the payment of the Loans and all other amounts payable
     hereunder.

          4.2. Limitation on Types of Loans. If on or prior to the first day of
any Interest Period for any Eurodollar Rate Loan:

          (a) the Agent determines (which determination shall be conclusive)
     that by reason of circumstances affecting the relevant market, adequate and
     reasonable means do not exist for ascertaining the Eurodollar Rate for such
     Interest Period; or

          (b) the Required Lenders determine (which determination shall be
     conclusive) and notify the Agent that the Eurodollar Rate will not
     adequately and fairly reflect the cost to the Lenders of funding Eurodollar
     Rate Loans for such Interest Period;

then the Agent shall give the Borrowers prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type or to Convert Loans
of any other Type into Loans of such Type, and the Borrowers shall, jointly and
severally, on the last day(s) of the then current Interest Period(s) for the
outstanding Loans of the affected Type, either prepay such Loans or Convert such
Loans into Base Rate Loans in accordance with the terms of this Agreement.

          4.3. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Rate Loans
hereunder, then such Lender shall promptly notify the Borrowers thereof and such
Lender's obligation to make or Continue Eurodollar Rate Loans and to Convert
other Types of Loans into Eurodollar Rate Loans shall be suspended until such
time


                                       36



as such Lender may again make, maintain, and fund Eurodollar Rate Loans (in
which case the provisions of Section 4.4 shall be applicable).

          4.4. Treatment of Affected Loans. If the obligation of any Lender to
make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other
Type into, Loans of a particular Type shall be suspended pursuant to Section 4.1
or 4.3 hereof (Loans of such Type being herein called "Affected Loans" and such
Type being herein called the "Affected Type"), such Lender's Affected Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for Affected Loans (or, in the case of a
Conversion required by Section 4.3 hereof, on such earlier date as such Lender
may specify to the Borrowers with a copy to the Agent) and, unless and until
such Lender gives notice as provided below that the circumstances specified in
Section 4.1 or 4.3 hereof that gave rise to such Conversion no longer exist:

          (a) to the extent that such Lender's Affected Loans have been so
     Converted, all payments and prepayments of principal that would otherwise
     be applied to such Lender's Affected Loans shall be applied instead to its
     Base Rate Loans; and

          (b) all Loans that would otherwise be made or Continued by such Lender
     as Loans of the Affected Type shall be made or Continued instead as Base
     Rate Loans, and all Loans of such Lender that would otherwise be Converted
     into Loans of the Affected Type shall be Converted instead into (or shall
     remain as) Base Rate Loans.

If such Lender gives notice to the Borrowers (with a copy to the Agent) that the
circumstances specified in Section 4.1 or 4.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 4.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Revolving
Credit Commitments.

          4.5. Compensation. Upon the request of any Lender, Holdings, Irish
Holdings and the Borrowers, jointly and severally, shall pay to such Lender such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost, or expense incurred by it as a
result of:

          (a) any payment, prepayment, or Conversion of a Eurodollar Rate Loan
     for any reason (including, without limitation, the acceleration of the
     Loans pursuant to Section 9.1) on a date other than the last day of the
     Interest Period for such Loan; or

          (b) any failure by any Borrower for any reason (including, without
     limitation, the failure of any condition precedent specified in Article V
     to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Rate
     Loan on the date for such borrowing,


                                       37



     Conversion, Continuation, or prepayment specified in the relevant notice of
     borrowing, prepayment, Continuation, or Conversion under this Agreement.

          4.6. Taxes.

          (a) Any and all payments by any Borrower to or for the account of any
     Lender or the Agent hereunder or under any other Loan Document shall be
     made free and clear of and without deduction or withholding for any and all
     Taxes, and all liabilities with respect thereto, now or hereafter imposed,
     levied, collected, withheld or assessed by any Governmental Authority,
     excluding, in the case of each Lender and the Agent, Taxes imposed on its
     income, receipts, capital, net worth or items of tax preference and
     franchise, doing business and similar Taxes (imposed on it in lieu of net
     income taxes), imposed on such Lender or Agent as a result of a present or
     former connection between the Agent or such Lender and the jurisdiction of
     the Governmental Authority imposing such tax or any political subdivision
     or taxing authority thereof or therein (other than any such connection
     arising solely from the Agent or such Lender having executed, delivered or
     performed its obligations or received a payment under, or enforced, this
     Agreement or any other Loan Document). If any such non-excluded Taxes ("
     Indemnified Taxes") or Other Taxes are required to be withheld after the
     date hereof from or in respect of any sum payable under this Agreement or
     any other Loan Document to any Lender or the Agent, (i) the sum payable
     shall be increased as necessary so that after making all required
     deductions (including deductions applicable to additional sums payable
     under this Section 4.6) such Lender or the Agent receives an amount equal
     to the sum it would have received had no such deductions been made, (ii)
     such Borrower shall make such deductions, (iii) such Borrower shall pay the
     full amount deducted to the relevant taxation authority or other authority
     in accordance with applicable law, and (iv) such Borrower shall furnish to
     the Agent, at its address referred to in Section 11.2, the original or a
     certified copy of a receipt evidencing payment thereof or other evidence of
     payment reasonably acceptable to such Lender or the Agent; provided
     however, that the Borrowers shall not be required to increase such amounts
     payable to any Lender with respect to any Taxes (i) that are attributable
     to such Lender's failure to comply with the requirements of paragraph (d)
     or (e) of this Section or (ii) that are United States withholding taxes
     imposed on amounts payable to such Lender at the time such Lender becomes a
     party to this Agreement, except to the extent that such Lender's assignor
     (if any) was entitled, at the time of assignment, to receive additional
     amounts from the Borrowers with respect to such Taxes pursuant to this
     paragraph.

          (b) In addition, Holdings, Irish Holdings and the Borrowers agree,
     jointly and severally, to pay any and all present or future stamp or
     documentary taxes which arise from the execution or delivery of this
     Agreement or any other Loan Document or the provision of the security
     interest in any Collateral required hereunder (hereinafter referred to as
     "Other Taxes").

          (c) Holdings, Irish Holdings and the Borrowers agree, jointly and
     severally, to indemnify each Lender and the Agent for the full amount of
     Indemnified Taxes and Other Taxes (including, without limitation, any
     Indemnified Taxes or Other Taxes imposed or asserted by any jurisdiction on
     amounts payable under this Section 4.6) paid by such


                                       38



     Lender or the Agent (as the case may be) and any liability (including
     penalties, interest, and expenses) arising therefrom or with respect
     thereto.

          (d) Each Lender, on or prior to the date of its execution and delivery
     of this Agreement in the case of each Lender listed on the signature pages
     hereof and on or prior to the date on which it becomes a Lender in the case
     of each other Lender, and from time to time thereafter if requested in
     writing by any Borrower or the Agent (unless such failure is due to a
     change in treaty, law or regulation occurring subsequent to the date on
     which a form originally was required to be provided), shall provide the
     Borrowers and the Agent with (i) Internal Revenue Service Form W-8BEN,
     W-8ECI or W-8IMY (including all required accompanying information), as
     appropriate, or any successor form prescribed by the Internal Revenue
     Service (including a United States taxpayer identification number),
     certifying that such Lender is entitled to benefits under an income tax
     treaty to which the United States is a party which reduces the rate of
     withholding tax on payments of interest or certifying that the income
     receivable pursuant to this Agreement is effectively connected with the
     conduct of a trade or business in the United States or (ii) Internal
     Revenue Service Form W-9 or any successor form prescribed by the Internal
     Revenue Service. In addition, each Lender and the Agent agrees that it will
     (i) take all actions reasonably requested by Holdings, Irish Holdings or a
     Borrower in writing that are consistent with applicable legal and
     regulatory restrictions to claim any available reductions or exemptions
     from Indemnified Taxes or Other Taxes and (ii) otherwise cooperate with
     Holdings, Irish Holdings and the Borrowers to minimize any amounts payable
     by Holdings, Irish Holdings or the Borrowers under this Section 4.6;
     provided, however, that in each case, any out-of-pocket cost relating to
     such action or cooperation requested by Holdings, Irish Holdings or a
     Borrower shall be borne by Holdings, Irish Holdings or such Borrower and no
     Lender shall be required to take any action that it determines in its sole
     good faith discretion, may be adverse in any non de minimis respect to it
     and not indemnified to its satisfaction.

          (e) A Lender that is entitled to an exemption from or reduction of
     non-U.S. withholding tax under the law of the jurisdiction in which a
     Borrower is located, or any treaty to which such jurisdiction is a party,
     with respect to payments under this Agreement shall deliver to such
     Borrower (with a copy to the Agent), at the time or times prescribed by
     applicable law or reasonably requested by such Borrower, such properly
     completed and executed documentation prescribed by applicable law as will
     permit such payments to be made without withholding or at a reduced rate,
     provided that such Lender is legally entitled to complete, execute and
     deliver such documentation and in such Lender's judgment such completion,
     execution or submission would not materially prejudice the legal position
     of such Lender.

          (f) If Holdings, Irish Holdings or any Borrower is required to pay
     additional amounts to or for the account of any Lender pursuant to this
     Section 4.6, then such Lender will agree to use reasonable efforts to
     change the jurisdiction of its Applicable Lending Office so as to eliminate
     or reduce any such additional payment which may thereafter accrue if such
     change, in the sole judgment of such Lender, is not otherwise
     disadvantageous to such Lender.


                                       39



          (g) Within thirty (30) days after the date of any payment of Taxes,
     Holdings, Irish Holdings or the applicable Borrower shall furnish to the
     Agent the original or a certified copy of a receipt evidencing such payment
     or otherwise evidence of such payment as is reasonably acceptable to the
     Agent.

          (h) If the Agent or any Lender receives a refund of any Taxes or Other
     Taxes as to which it has been indemnified by a Borrower or with respect to
     which a Borrower has paid additional amounts pursuant to this Section 4,6,
     it shall pay over such refund to such Borrower (but only to the extent of
     indemnity payments made, or additional amounts paid, by a Borrower under
     this Section 4.6 with respect to the Taxes or Other Taxes giving rise to
     such refund), net of all out-of-pocket expenses of the Agent or such Lender
     and without interest (other than any interest paid by the relevant
     Governmental Authority with respect to such refund); provided, that the
     Borrower, upon the request of the Agent or such Lender, agrees to repay the
     amount paid over to a Borrower (plus any penalties, interest or other
     charges imposed by the relevant Governmental Authority) to the Agent or
     such Lender in the event the Agent or such Lender is required to repay such
     refund to such Governmental Authority. This paragraph shall not be
     construed to require the Agent or any Lender to make available its tax
     returns (or any other information relating to its taxes which it deems
     confidential) to any Borrower or any other Person.

          (i) Without prejudice to the survival of any other agreement of
     Holdings, Irish Holdings or any Borrower hereunder, the agreements and
     obligations of Holdings, Irish Holdings and each Borrower contained in this
     Section 4.6 shall survive the termination of the Revolving Credit
     Commitments and the payment in full of the Loans.

                                   ARTICLE V

                           CONDITIONS TO MAKING LOANS

          5.1. Conditions of Closing. The effectiveness of this Agreement is
subject to the conditions precedent that:

          (a) the Agent shall have received, in form and substance satisfactory
     to the Agent and Lenders, the following:

               (i) executed originals of each of this Agreement, the Notes (if
          applicable), the Contribution Agreement, the Contribution Agreement
          Guaranty, the Contribution Agreement Letter Agreements, the Parent
          Support Agreement, the Servicing Agreement, the ABH 12 Security
          Agreement, the Second Omnibus Amendment and the Share Charge (relating
          to the shares in Irish Holdings and each new Borrower that is a
          Subsidiary of Irish Holdings), together with all schedules and
          exhibits thereto (collectively, the "Additional Facility Documents");

               (ii) the favorable written opinion or opinions with respect to
          the Additional Facility Documents and the transactions contemplated
          thereby of special counsel to the Credit Parties dated the Closing
          Date (including an opinion


                                       40



          of Irish counsel), addressed to the Agent (on behalf of itself and the
          Lenders), substantially in the form of Exhibit G-1 and Exhibit G-3 or
          otherwise reasonably satisfactory to special counsel to the Agent;

               (iii) resolutions of the boards of directors or other appropriate
          governing body (or of the appropriate committee thereof) of Irish
          Holdings and each Subsidiary thereof, certified by its secretary or
          assistant secretary as of the Closing Date, approving and adopting the
          Additional Facility Documents to be executed by such Person, and
          authorizing the execution and delivery thereof;

               (iv) specimen signatures of officers of each Additional Credit
          Party, certified by the secretary or assistant secretary of each such
          Additional Credit Party;

               (v) the Organizational Documents of each Additional Credit Party
          certified as of a recent date by the Secretary of State or comparable
          official of its jurisdiction of organization;

               (vi) certificate issued as of a recent date by the Secretary of
          State or comparable official of the jurisdiction of formation of each
          Additional Credit Party as to the due existence and good standing of
          each such Additional Credit Party;

               (vii) certificate of the secretary or assistant secretary of each
          Credit Party party to any Additional Facility Document (other than the
          Additional Credit Parties) certifying that (i) the officers set forth
          in any certificate delivered to the Agent on or after the Initial
          Closing Date remain as officers of such Credit Party and authorized to
          execute the Additional Facility Documents and (ii) the Organizational
          Documents of such Credit Party as delivered to the Agent on or after
          the Initial Closing Date have not in any way been amended or modified
          and remain in full force and effect as of the Closing Date.

               (viii) reaffirmation by each Borrower of the appointment of the
          Authorized Representative(s) pursuant to the notice dated March 4,
          2005;

               (ix) a Uniform Commercial Code financing statement appropriate
          for filing in all places required by applicable law to perfect the
          Lien of the Agent under the Security Agreement executed by each
          Additional Credit Party as a first priority Lien as to items of
          Collateral in which a security interest may be perfected by the filing
          of financing statements, and such other documents and/or evidence of
          other actions as may be necessary under applicable law to perfect the
          Lien of the Agent under such Security Agreement as a first priority
          Lien in and to such other Collateral as the Agent may require;

               (x) evidence that any fees payable by the Parent or any Credit
          Party on the Closing Date to the Agent and the Lenders have been paid
          in full; and

          (b) In the good faith judgment of the Agent and the Lenders:


                                       41



               (i) no litigation, action, suit, investigation or other arbitral,
          administrative or judicial proceeding shall be pending or threatened
          which could reasonably be likely to result in a Material Adverse
          Effect; and

               (ii) the Credit Parties shall have received all approvals,
          consents and waivers, and shall have made or given all necessary
          filings and notices as shall be required to consummate the
          transactions contemplated hereby without the occurrence of any default
          under, conflict with or violation of (A) any applicable law, rule,
          regulation, order or decree of any Governmental Authority or arbitral
          authority or (B) any agreement, document or instrument to which any of
          the Credit Parties is a party or by which any of them or their
          properties is bound.

          5.2. Conditions of Closing of Second Amended and Restated Credit
Agreement. The effectiveness of the Second Amended and Restated Credit Agreement
was subject to the prior or concurrent satisfaction or waiver of each of the
conditions precedent set forth in this Section 5.2, other than those documents
subject to Section 7.25. For the limited purpose of this Section 5.2, the
phrases "shall have received", "shall have approved", "shall have demonstrated",
"shall have delivered" and similar phrases contemplating that future
performances were required shall be construed as being performed or waived as of
the Closing Date:

          (a) the Agent shall have received, in form and substance satisfactory
     to the Agent and Lenders, the following:

               (i) executed originals of each of this Agreement, the Notes (if
          applicable), a Facility Guaranty and the ABH 12 Security Agreement,
          the amended Parent Support Agreement, the Omnibus Amendment and the
          Share Charge (relating to the shares in ABH 12) executed by Holdings,
          together with all schedules and exhibits thereto (collectively, the
          "Additional Facility Documents");

               (ii) the favorable written opinion or opinions with respect to
          the Additional Facility Documents and the transactions contemplated
          thereby of special counsel to the Credit Parties dated the Closing
          Date (other than opinions of Irish and French counsel), addressed to
          the Agent (on behalf of itself and the Lenders), substantially in the
          form of Exhibit G-1 or otherwise reasonably satisfactory to special
          counsel to the Agent;

               (iii) resolutions of the boards of directors or other appropriate
          governing body (or of the appropriate committee thereof) of each
          Credit Party other than Constellation Aircraft Leasing (France) Sarl
          and Constitution Aircraft Leasing (Ireland) Limited (or, in the case
          of a Credit Party that is a trust, resolutions of the appropriate
          board or committee of each trustee thereof) certified by its secretary
          or assistant secretary as of the Closing Date, approving and adopting
          the Additional Facility Documents to be executed by such Person, and
          authorizing the execution and delivery thereof;


                                       42



               (iv) specimen signatures of officers of ABH 12, certified by the
          secretary or assistant secretary of ABH 12;

               (v) the Organizational Documents of ABH 12 certified as of a
          recent date by the Secretary of State or comparable official of its
          jurisdiction of organization;

               (vi) certificate issued as of a recent date by the Secretary of
          State or comparable official of the jurisdiction of formation of ABH
          12 as to the due existence and good standing of ABH 12;

               (vii) certificate of the secretary or assistant secretary of each
          Credit Party party to any Additional Facility Document (other than ABH
          12) certifying that (i) the officers set forth in any certificate
          delivered to the Agent on or after the Initial Closing Date remain as
          officers of such Credit Party and authorized to execute the Additional
          Facility Documents and (ii) the Organizational Documents of such
          Credit Party as delivered to the Agent on or after the Initial Closing
          Date have not in any way been amended or modified and remain in full
          force and effect as of the Closing Date.

               (viii) reaffirmation by each Borrower of the appointment of the
          Authorized Representative(s) pursuant to the notice dated March 4,
          2005;

               (ix) a Uniform Commercial Code financing statement appropriate
          for filing in all places required by applicable law to perfect the
          Lien of the Agent under the Security Agreement executed by ABH 12 as a
          first priority Lien as to items of Collateral in which a security
          interest may be perfected by the filing of financing statements, and
          such other documents and/or evidence of other actions as may be
          necessary under applicable law to perfect the Lien of the Agent under
          such Security Agreement as a first priority Lien in and to such other
          Collateral as the Agent may require;

               (x) evidence that all fees payable by the Parent or any Credit
          Party on the Closing Date to the Agent and the Lenders have been paid
          in full; and

          (b) In the good faith judgment of the Agent and the Lenders:

               (i) no litigation, action, suit, investigation or other arbitral,
          administrative or judicial proceeding shall be pending or threatened
          which could reasonably be likely to result in a Material Adverse
          Effect; and

               (ii) the Credit Parties shall have received all approvals,
          consents and waivers, and shall have made or given all necessary
          filings and notices as shall be required to consummate the
          transactions contemplated hereby without the occurrence of any default
          under, conflict with or violation of (A) any applicable law, rule,
          regulation, order or decree of any Governmental Authority or arbitral
          authority or (B) any agreement, document or instrument to which any of
          the Credit Parties is a party or by which any of them or their
          properties is bound.


                                       43



          5.3. Conditions of Revolving Loans. The obligation of the Lenders to
make Revolving Loans hereunder on or subsequent to the Initial Closing Date
(other than additional loans to a Borrower in connection with (i) an increase in
the Applicable Aircraft Advance Rate as provided in the definition thereof, (ii)
Approved Improvements, or (iii) a Qualified Conversion) is subject to the
conditions precedent that:

          (a) each of the conditions to making the Revolving Credit Facility
     available to the Borrowers, as set forth in Section 5.1, shall have been
     satisfied on or prior to the date of the initial Loan after the Closing
     Date;

          (b) the representations and warranties of the Credit Parties set forth
     in Article VI and in each of the other Loan Documents shall be true and
     correct in all material respects on and as of the date of such Loan, with
     the same effect as though such representations and warranties had been made
     on and as of such date, except to the extent that such representations and
     warranties expressly relate to an earlier date;

          (c) the Borrowing Affiliate with respect to such Loan shall have
     executed and delivered to the Agent an Assumption Letter, and each Borrower
     and the Agent shall have executed such Assumption Letter and the Borrowing
     Affiliate shall have delivered to the Agent all other agreements,
     instruments and documents required by such Assumption Letter;

          (d) the Borrowing Affiliate with respect to such Loan shall have
     delivered to the Agent (i) Facility Guaranties fully executed by Holdings,
     Irish Holdings and any Beneficial Owner of such Borrowing Affiliate, by
     each Subsidiary of any such Beneficial Owner (other than such Borrowing
     Affiliate), by each Subsidiary of such Borrowing Affiliate and by the
     Applicable Intermediary (if any); (ii) Pledge Agreements fully executed by
     the appropriate pledgors, granting a security interest in all Pledged
     Interests with respect to each such Beneficial Owner, such Borrowing
     Affiliate, each Subsidiary of any Beneficial Owner, each Subsidiary of such
     Borrowing Affiliate, and the Applicable Intermediary (if any); (iii)
     Security Agreements fully executed by such Borrowing Affiliate, any
     Beneficial Owner of such Borrowing Affiliate, each Subsidiary of any
     Beneficial Owner, each Subsidiary of such Borrowing Affiliate, and the
     Applicable Intermediary (if any); and ((iv) Lockbox Agreements executed by
     each Borrower;

          (e) the Agent shall have received the latest drafts of the following
     within 5 Business Days prior to the date of the Loan, an organized
     pre-closing of the required documentation shall have occurred at least one
     Business Day prior to the date of the Loan, and the Agent shall have
     received final versions of the following, in form and substance
     satisfactory to the Agent and the Lenders, on or prior to the date of the
     Loan:

               (i) each of the documents and instruments (including without
          limitation the opinions of counsel, the resolutions of boards of
          directors or other appropriate governing bodies or committees, the
          specimen signatures, officer's certificates, Organizational Documents
          and governmental certificates of existence, qualification, good
          standing and assumed name) required by Section 5.1 as if such
          Borrowing Affiliate had been a Borrowing Affiliate (and its


                                       44



          Beneficial Owner, their respective Subsidiaries and the Applicable
          Intermediary (if any) had been in such positions) on the Initial
          Closing Date;

               (ii) with respect to each Financed Aircraft registered in the
          United States, the favorable written opinion with respect to the Loan
          Documents and the transactions contemplated thereby of FAA Counsel
          dated the date of such Loan, addressed to the Agent (on behalf of
          itself and the Lenders), substantially in the form of Exhibit G-2 or
          otherwise reasonably satisfactory to special counsel to the Agent;

               (iii) with respect to every other Financed Aircraft, the
          favorable written opinion with respect to the Loan Documents and the
          transactions contemplated thereby of local counsel in each Applicable
          Foreign Jurisdiction dated the date of such Loan, addressed to the
          Agent (on behalf of itself and the Lenders), substantially in the
          forms of Exhibit G-3 and Exhibit G-4 or otherwise reasonably
          satisfactory to special counsel to the Agent;

               (iv) certificates of insurance from qualified brokers of aircraft
          insurance or other evidence satisfactory to the Agent, evidencing all
          insurance required by the Loan Documents (including without limitation
          all insurance required by Exhibit L with respect to each Aircraft that
          is to be a Financed Aircraft);

               (v) a Borrowing Notice;

               (vi) a certificate of an Authorized Representative substantially
          in the form of Exhibit R containing computations of the Borrowing Base
          and providing information about the Financed Aircraft, in each case
          after giving effect to such Loan and any related Financed Aircraft;

               (vii) Uniform Commercial Code financing statements appropriate
          for filing in all places required by applicable law to perfect the
          Liens of the Agent under the Security Instruments as a first priority
          Lien as to items of Collateral in which a security interest may be
          perfected by the filing of financing statements, and such other
          documents and/or evidence of other actions as may be necessary under
          applicable law to perfect the Liens of the Agent under the Security
          Instruments as a first priority Lien in and to such other Collateral
          as the Agent may require, including without limitation:

                         (1) the delivery by the Borrowers of all stock
                    certificates and other certificates, if any, evidencing
                    ownership of any Pledged Interests, accompanied in each case
                    by duly executed stock or transfer powers (or other
                    appropriate transfer documents) in blank affixed thereto;
                    and

                         (2) the delivery by the Borrowers of "control
                    agreements" that have been executed by the respective
                    issuers (and


                                       45



                    consented to by the respective Credit Parties) with respect
                    to any uncertificated Pledged Interests;

                         (3) with respect to each Financed Aircraft registered
                    in the United States, evidence of the filing with the FAA
                    Recording Office all documents required by the FAA in order
                    to protect the Applicable Borrower's right, title and
                    interest in such Financed Aircraft;

                         (4) with respect to each Financed Aircraft not
                    registered in the United States, evidence of the filing with
                    each applicable recording office in each Applicable Foreign
                    Jurisdiction of all documents required by such office or any
                    Applicable Foreign Aviation Law in order to protect the
                    Applicable Borrower's right, title and interest in such
                    Financed Aircraft in such Applicable Foreign Jurisdiction;

                         (5) a copy of the executed purchase agreement and
                    executed bill of sale evidencing the purchase by the
                    Applicable Borrower of each Financed Aircraft;

                         (6) copies of the certificates of aircraft registration
                    issued by the FAA and certificates of airworthiness issued
                    by the FAA, in each case with respect to each Aircraft
                    registered in the United States; and

                         (7) evidence of registration and other applicable
                    qualification issued by any Applicable Foreign Jurisdiction
                    to the extent such registration or qualification is required
                    by an Applicable Foreign Aviation Law, in each case with
                    respect to each Aircraft not registered in the United
                    States;

               (viii) results of a search of Liens filed with the FAA or any
          Applicable Foreign Jurisdiction with respect to any Aircraft that is
          or is to be a Financed Aircraft;

               (ix) for each Financed Aircraft that will be subject to an
          Eligible Lease on the date of the initial Loan, copies of each such
          Eligible Lease;

               (x) for each Financed Aircraft that will be subject to an
          Eligible Lease on the date of the initial Loan for such Financed
          Aircraft, a Lessee Notice and evidence (which may be in the form of a
          legal opinion) that the Agent shall have the right, under the laws of
          the Applicable Foreign Jurisdiction, to enforce directly the Eligible
          Lease against the Lessee, including without limitation, the obligation
          of the Lessee to make payments under the Eligible Lease to the
          applicable Account; and


                                       46



               (xi) a fully-executed copy of the Servicing Agreement certified
          by a Secretary or Assistant Secretary of Servicer, and certification
          of the amount of fees to be payable to Servicer in connection with
          such Servicing Agreement, which agreement and fees shall be acceptable
          to the Agent in its sole reasonable discretion;

          (f) at the time of (and after giving effect to) the initial Loan, no
     Default or Event of Default specified in Article IX shall have occurred and
     be continuing;

          (g) immediately after giving effect to the initial Loan;

               (i) the aggregate principal balance of all outstanding Revolving
          Loans for each Lender shall not exceed such Lender's Revolving Credit
          Commitment; and

               (ii) the Revolving Credit Outstandings shall not exceed the
          lesser of the Borrowing Base or the Total Revolving Credit Commitment.

          5.4. Conditions of Subsequent Advances Under Revolving Loans. The
obligation of the Lenders to make an additional loan to a Borrower in connection
with (i) an increase in the Applicable Aircraft Advance Rate as provided in the
definition thereof, (ii) Approved Improvements, or (iii) a Qualified Conversion
is subject to the conditions precedent that:

          (a) the representations and warranties of the Credit Parties set forth
     in Article VI and in each of the other Loan Documents shall be true and
     correct in all material respects on and as of the date of such Loan, with
     the same effect as though such representations and warranties had been made
     on and as of such date, except to the extent that such representations and
     warranties expressly relate to an earlier date;

          (b) the Agent shall have received final versions of the following at
     least one Business Day prior to the date of the Loan:

               (i) a Borrowing Notice; and

               (ii) a certificate of an Authorized Representative substantially
          in the form of Exhibit R containing computations of the Borrowing Base
          and providing information about the Financed Aircraft, in each case
          after giving effect to such Loan and any related Financed Aircraft;

          (c) at the time of (and after giving effect to) the initial Loan, no
     Default or Event of Default specified in Article IX shall have occurred and
     be continuing; and

          (d) immediately after giving effect to the initial Loan;

               (i) the aggregate principal balance of all outstanding Revolving
          Loans for each Lender shall not exceed such Lender's Revolving Credit
          Commitment;


                                       47



               (ii) the Revolving Credit Outstandings shall not exceed the
          lesser of the Borrowing Base or the Total Revolving Credit Commitment.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

          Holdings, Irish Holdings, ABH 12 and each Borrower represents and
warrants with respect to itself, its Subsidiaries (if any) and each other Credit
Party (which representations and warranties shall survive the delivery of the
documents mentioned herein and the making of Loans), that:

          6.1. Organization and Authority.

          (a) Each Borrower, each Subsidiary and each other Credit Party is a
     trust, corporation, partnership or limited liability company duly organized
     and validly existing under the laws of the jurisdiction of its formation;

          (b) Each Borrower, each Subsidiary and each other Credit Party (x) has
     the requisite power and authority to own its properties and assets and to
     carry on its business as now being conducted and as contemplated in the
     Loan Documents, and (y) is qualified to do business in every jurisdiction
     in which failure so to qualify would have a Material Adverse Effect;

          (c) Each Borrower has the power and authority to execute, deliver and
     perform this Agreement and the Notes (if applicable), and to borrow
     hereunder, and to execute, deliver and perform each of the other Loan
     Documents to which it is a party;

          (d) Each Credit Party (other than the Borrowers) has the power and
     authority to execute, deliver and perform each of the Loan Documents to
     which it is a party; and

          (e) When executed and delivered, each of the Loan Documents to which
     any Credit Party is a party will be the legal, valid and binding obligation
     or agreement, as the case may be, of such Credit Party (as the case may
     be), enforceable against such Credit Party (as the case may be) in
     accordance with its terms, subject to the effect of any applicable
     bankruptcy, moratorium, insolvency, reorganization or other similar law
     affecting the enforceability of creditors' rights generally and to the
     effect of general principles of equity (whether considered in a proceeding
     at law or in equity);

          6.2. Loan Documents. The execution, delivery and performance by each
Credit Party of each of the Loan Documents to which it is a party:

          (a) have been duly authorized by all requisite Organizational Action
     of such Credit Party (as the case may be) required for the lawful
     execution, delivery and performance thereof;

          (b) do not violate any provisions of (i) applicable law, rule or
     regulation, (ii) any judgment, writ, order, determination, decree or
     arbitral award of any Governmental


                                       48



     Authority or arbitral authority binding on such Credit Party or their
     respective properties, or (iii) the Organizational Documents of such Credit
     Party;

          (c) does not and will not be in conflict with, result in a breach of
     or constitute an event of default, or an event which, with notice or lapse
     of time or both, would constitute an event of default, under any contract,
     indenture, agreement or other instrument or document to which such Credit
     Party is a party, or by which the properties or assets of such Credit Party
     are bound; and

          (d) does not and will not result in the creation or imposition of any
     Lien upon any of the properties or assets of such Credit Party or any
     Subsidiary except any Liens in favor of the Agent and the Lenders created
     by the Security Instruments;

          6.3. Solvency. At the time of each Loan to a Borrower, such Borrower
and each Beneficial Owner of such Borrower and each Eligible Intermediary, if
any, is Solvent after giving effect to the transactions contemplated by the Loan
Documents;

          6.4. Subsidiaries and Stockholders. No Borrower or Guarantor (other
than Holdings and Irish Holdings) has any Subsidiaries, except that a Guarantor
may have a beneficial interest in a Borrower, a Borrower may own an Eligible
Intermediary and a Borrower may be a Subsidiary of a Guarantor;

          6.5. Ownership Interests.

          (a) No Borrower or Guarantor owns any interest in any Person, except
     that a Guarantor may have a beneficial interest in a Borrower, and a
     Borrower may own an Eligible Intermediary; and

          (b) Holdings or Irish Holdings owns, directly or indirectly, all of
     the Capital Stock of each Borrower, except for directors' qualifying
     shares, if any.

          6.6. Liens. The Agent (for itself and on behalf of the Lenders) has a
first priority perfected Lien (subject to Permitted Liens) on all Collateral
under the Security Instruments;

          6.7. Title to Properties. Each Borrower and each of its Subsidiaries
and each other Credit Party has good and marketable title to all its real and
personal properties, subject to no transfer restrictions or Liens of any kind
except as provided in the Security Instruments and the Leases; and

          6.8. Taxes. Except as set forth in Schedule 6.8, each Borrower, each
of its Subsidiaries and each Credit Party has filed or caused to be filed all
federal, state and local tax returns in each case that are required to be filed
by it and that, the failure to file, would have a Material Adverse Effect and,
except for taxes and assessments being contested in good faith by appropriate
proceedings diligently conducted and against which reserves reflected in the
financial statements most recently delivered pursuant to Section 7.1(a) and
satisfactory to the Borrowers' independent certified public accountants have
been established, have paid or caused


                                       49



to be paid all taxes as shown on said returns or on any assessment received by
it, to the extent that such taxes have become due;

          6.9. Other Agreements. No Credit Party nor any Subsidiary

               (i) is a party to or subject to any judgment, order, decree,
          agreement, lease or instrument, or subject to other restrictions,
          which individually or in the aggregate could reasonably be expected to
          have a Material Adverse Effect;

               (ii) is in default in the performance, observance or fulfillment
          of any of the obligations, covenants or conditions contained in any
          agreement or instrument to which such Credit Party or any Subsidiary
          is a party, which default has, or if not remedied within any
          applicable grace period could reasonably be likely to have, a Material
          Adverse Effect; or

               (iii) shall have, prior to its execution of the Assumption
          Letter, conducted business other than related to the acquisition,
          leasing, maintenances, financing (solely under the Loan Documents),
          ownership and disposition of Eligible Aircraft or have incurred any
          liabilities except to the extent related to such business, including,
          without limitation, under the Eligible Lease to which it is a party,
          an aircraft acquisition, sale, maintenance or overhaul agreement and
          the Loan Documents, none of which liabilities (except (a) the purchase
          price in respect of an Aircraft, (b) liabilities in respect of
          Approved Improvements and (c) those arising under the Loan Documents
          and the Eligible Leases) are material to the Borrowers taken as a
          whole.

          6.10. Litigation. Except as set forth in Schedule 6.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of any Borrower, threatened by or against any Borrower or any
Subsidiary or other Credit Party or affecting any Borrower or any Subsidiary or
other Credit Party or any properties or rights of any Borrower or any Subsidiary
or other Credit Party, which could reasonably be likely to have a Material
Adverse Effect;

          6.11. Federal Regulations. No part of the proceeds of any Loans, and
no other extensions of credit hereunder, will be used (a) for "buying" or
"carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U as now and from time to time hereafter in effect
for any purpose that violates the provisions of the Regulations of the Board or
(b) for any purpose that violates the provisions of the Regulations of the
Board. If requested by any Lender or the Agent, the Borrowers will furnish to
the Agent and each Lender a statement to the foregoing effect in conformity with
the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in
Regulation U.

          6.12. Investment Company. No Credit Party is an "investment company,"
or "promoter" or "principal underwriter" for, an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended (15 U.S.C.
Section 80a-1, et seq.). The application of the proceeds of the Loans and
repayment thereof by each Borrower and the performance by each Borrower and the
other Credit Parties of the transactions contemplated by


                                       50



the Loan Documents will not violate any provision of said Act, or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder,
in each case as in effect on the date hereof;

          6.13. Patents, Etc. Each Borrower and each other Credit Party owns or
has the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets and copyrights necessary to or used in the conduct of
its businesses as now conducted and as contemplated by the Loan Documents,
without known conflict with any patent, license, franchise, trademark, trade
secret, trade name, copyright, other proprietary right of any other Person;

          6.14. No Untrue Statement. Neither (a) this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on behalf
of any Borrower or any other Credit Party in accordance with or pursuant to any
Loan Document nor (b) any written statement, representation, or warranty
provided to the Agent in connection with the negotiation or preparation of the
Loan Documents contains any misrepresentation or untrue statement of material
fact or omits to state a material fact necessary, in light of the circumstance
under which it was made, in order to make any such warranty, representation or
statement contained therein not misleading;

          6.15. No Consents, Etc. Neither the respective businesses or
properties of the Credit Parties or any Subsidiary, nor any relationship among
the Credit Parties or any Subsidiary and any other Person, nor any circumstance
in connection with the execution, delivery and performance of the Loan Documents
and the transactions contemplated thereby, is such as to require a consent,
approval or authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person on the part of any Credit Party as a
condition to the execution, delivery and performance of, or consummation of the
transactions contemplated by the Loan Documents, which, if not obtained or
effected, would be reasonably likely to have a Material Adverse Effect, or if
so, such consent, approval, authorization, filing, registration or qualification
has been duly obtained or effected, as the case may be;

          6.16. Employee Benefit Plans.

          (a) Neither any Guarantor nor any Borrower or any of their respective
     Subsidiaries has or has ever sponsored any Employee Benefit Plan, any
     Single Employer Plan or any Multiemployer Plan, or had any obligation to
     fund any such plan;

          (b) Neither any Borrower nor any ERISA Affiliate has incurred any
     "accumulated funding deficiency" within the meaning of Section 412 of the
     Code or Section 302 of ERISA with respect to any Single Employer Plan,
     whether or not waived, during the six-year period to the date on which this
     representation is made or deemed made or any other liability to the PBGC
     which remains outstanding, in each case, in an amount that would be
     reasonably likely to have a Material Adverse Effect;

          (c) No Termination Event has occurred during the six-year period prior
     to the date on which this representation is made or deemed made or is
     reasonably expected to


                                       51



     occur with respect to any Single Employer Plan or Multiemployer Plan,
     neither any Borrower nor any ERISA Affiliate has incurred any unpaid
     withdrawal liability with respect to any Multiemployer Plan that, in each
     case, could be reasonably expected to have a Material Adverse Effect; and

          (d) The present value of all accrued benefits under each Single
     Employer Plan (based on those assumptions used to fund such Single Employer
     Plans) did not, as of the last annual valuation date prior to the date on
     which this representation is made or deemed made for each such plan, exceed
     the then current value of the assets of such Single Employer Plan allocable
     to such benefits by a material amount;

          6.17. No Default. As of the date hereof, there does not exist any
Default or Event of Default hereunder;

          6.18. Environmental Laws. Except as listed on Schedule 6.18, each
Borrower, each Guarantor and each Subsidiary is in compliance with all
applicable Environmental Laws and has been issued and currently maintains all
required federal, state and local permits, licenses, certificates and approvals.
Except as listed on Schedule 6.18, neither any Borrower, any Guarantor nor any
Subsidiary has been notified of any pending or threatened action, suit,
proceeding or investigation, and neither any Borrower, any Guarantor nor any
Subsidiary is aware of any facts, which (a) calls into question, or could
reasonably be expected to call into question, compliance by any Borrower, any
Guarantor or any Subsidiary with any Environmental Laws, (b) seeks, or could
reasonably be expected to form the basis of a meritorious proceeding, to
suspend, revoke or terminate any license, permit or approval necessary for the
operation of any Borrower's, any Guarantor's or any Subsidiary's business or
facilities or for the generation, handling, storage, treatment or disposal of
any Hazardous Materials, or (c) seeks to cause, or could reasonably be expected
to form the basis of a meritorious proceeding to cause, any property of any
Borrower, any Guarantor or any Subsidiary or other Credit Party to be subject to
any restrictions on ownership, use, occupancy or transferability under any
Environmental Law; and

          6.19. Employment Matters. No Borrower or Guarantor has or has ever had
any employee other than officers thereof.

                                  ARTICLE VII

                              AFFIRMATIVE COVENANTS

          Unless the Required Lenders shall otherwise consent in writing,
Holdings, Irish Holdings and each Borrower will, and where applicable will cause
each Guarantor and each Subsidiary (if any) to:

          7.1. Financial Reports, Etc.

          (a) As soon as practical and in any event within 90 days after the end
     of each Fiscal Year, deliver or cause to be delivered to the Agent and each
     Lender audited consolidated balance sheets of Parent and its Subsidiaries
     as at the end of such Fiscal


                                       52



     Year, and the notes thereto (if any), and the relating audited consolidated
     statements of income, changes in stockholders' (or members') equity and
     cash flows, and the respective notes thereto (if any), for such Fiscal
     Year, setting forth comparative financial statements for the preceding year
     (if applicable), reported on by Ernst & Young LLP or other independent
     certified public accountants of nationally recognized standing all prepared
     in accordance with GAAP and accompanied by a certificate of an Authorized
     Representative, which certificate shall be in the form of Exhibit H;

          (b) as soon as practical and in any event within 60 days after the end
     of each fiscal quarter (except the last fiscal quarter of the Fiscal Year),
     deliver to the Agent and each Lender consolidated income statements of
     Parent and its Subsidiaries prepared in accordance with GAAP and
     accompanied by a certificate of an Authorized Representative to the effect
     that such financial statements present fairly, in all material respects,
     the financial position of Parent and its Subsidiaries and of each of the
     Borrowers and their respective Subsidiaries as of the end of such fiscal
     period and the results of their operations for such fiscal period;

          (c) as soon as practical and in any event within 30 days after the end
     of each calendar month, deliver or cause to be delivered to the Agent and
     each Lender a certificate of an Authorized Representative containing
     computations of the Borrowing Base, providing information about the
     Financed Aircraft, and stating that each Borrower is in compliance with the
     covenants and terms hereof and that no Default or Event of Default has
     occurred and is continuing, in each case as of the end of such month, which
     certificate shall be in the form of Exhibit R;

          (d) promptly upon their becoming available to Holdings, Irish Holdings
     or any Borrower, such Person shall deliver to the Agent and each Lender a
     copy of (i) all regular or special reports or effective registration
     statements which Holdings, Irish Holdings, any Borrower, any Guarantor or
     any Subsidiary shall file with the Securities and Exchange Commission (or
     any successor thereto) or any securities exchange, (ii) any proxy statement
     distributed by Holdings, Irish Holdings, any Borrower, any Guarantor or any
     Subsidiary to its shareholders, bondholders or the financial community in
     general, and (iii) any management letter or other report submitted to any
     Borrower, any Guarantor or any Subsidiary by independent accountants in
     connection with any annual, interim or special audit of any Borrower or any
     Subsidiary; and

          (e) promptly, from time to time, deliver or cause to be delivered to
     the Agent and each Lender such other information regarding Holdings', Irish
     Holdings', any Borrower's, any Guarantor's and any Subsidiary's operations,
     business affairs and financial condition as the Agent or such Lender may
     reasonably request.

Subject to Section 11.15, the Agent and the Lenders are hereby authorized to
deliver a copy of any such financial or other information delivered hereunder to
the Lenders (or any affiliate of any Lender) or to the Agent, to any
Governmental Authority having jurisdiction over the Agent or any of the Lenders
pursuant to any written request therefor or in the ordinary course of
examination of loan files, or to any other Person who shall acquire or consider
the assignment of, or acquisition of any participation interest in, any
Obligation permitted by this Agreement;


                                       53



          7.2. Maintain Properties. If a Financed Aircraft is not subject to an
Eligible Lease, maintain and make repairs to such Financed Aircraft in
compliance with the requirements set forth in Section 3.4 of the Security
Agreement; and each Borrower, Guarantor and Subsidiary shall maintain all other
properties necessary to its operations in good working order and condition, make
all needed repairs, replacements and renewals to such other properties, and
maintain free from Liens all trademarks, trade names, patents, copyrights, trade
secrets, know-how, and other intellectual property and proprietary information
(or adequate licenses thereto), in each case as are reasonably necessary to
conduct its business as currently conducted or as contemplated hereby, all in
accordance with customary and prudent business practices;

          7.3. Existence, Qualification, Etc. Except as otherwise expressly
permitted under Section 8.7, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary;

          7.4. Regulations and Taxes. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien other than a
Permitted Lien against any of its properties;

          7.5. Insurance. Maintain or cause to be maintained with respect to
each Financed Aircraft and all other Collateral the insurance described on
Exhibit L;

          7.6. True Books. Keep true books of record and account in which full,
true and correct entries will be made of all of its dealings and transactions,
and set up on its books such reserves as may be required by GAAP with respect to
doubtful accounts and all taxes, assessments, charges, levies and claims and
with respect to its business in general, and include such reserves in interim as
well as year-end financial statements;

          7.7. Right of Inspection. Permit any Person designated by any Lender
or the Agent to visit and inspect any Aircraft, or any other property, corporate
book or financial report of any Borrower or any Subsidiary and to discuss its
affairs, finances and accounts with its principal officers and independent
certified public accountants; and cause each Eligible Carrier to permit any
Person designated by any Lender or any Agent to inspect any Financed Aircraft,
all at reasonable times, at reasonable intervals and with reasonable prior
notice, subject to any restriction on inspection contained in an Eligible Lease
with respect to such Financed Aircraft, provided that notwithstanding any such
Lease, (a) any Person designated by a Lender or the Agent may inspect such
Financed Aircraft at any reasonable time upon an event of default under such
Lease, and (b) upon any Event of Default, the Applicable Borrower will use its
best efforts to cause the Applicable Carrier (and any other Person) to permit
any Person designated by a Lender or the Agent to inspect such Financed Aircraft
at any time;

          7.8. Observe all Laws. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business;


                                       54



          7.9. Governmental Licenses. Obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted and as
contemplated by the Loan Documents;

          7.10. Covenants Extending to Other Persons. Cause each Guarantor and
each of their respective Subsidiaries (if any) to do with respect to itself, its
business and its assets, each of the things required of any Borrower in Sections
7.2 through 7.9, and 7.18 inclusive;

          7.11. Officer's Knowledge of Default. Upon any officer of any
Guarantor or any Borrower obtaining knowledge of any Default or Event of Default
hereunder or under any other obligation of any Borrower or any Subsidiary or
other Credit Party to any Lender, or any event, development or occurrence which
could reasonably be expected to have a Material Adverse Effect, cause such
officer or an Authorized Representative to promptly notify the Agent of the
nature thereof, the period of existence thereof, and what action such Borrower
or such Subsidiary or other Credit Party proposes to take with respect thereto;

          7.12. Suits or Other Proceedings. Upon any officer of any Guarantor or
any Borrower obtaining knowledge of any action, suit, litigation, investigation,
or other proceeding being instituted or threatened against any Borrower or any
Subsidiary or other Credit Party, in any court or before any Governmental
Authority, or any attachment, levy, execution or other process being instituted
against any assets of any Borrower or any Subsidiary or other Credit Party,
making a claim or claims in an aggregate amount greater than $250,000, exclusive
of punitive damages, not otherwise covered by insurance or that would otherwise
be reasonably expected to have a Material Adverse Effect, promptly deliver to
the Agent written notice thereof stating the nature and status of such action,
suit, litigation, investigation, dispute, proceeding, levy, execution or other
process;

          7.13. Notice of Environmental Complaint or Condition. Promptly provide
to the Agent true, accurate and complete copies of any and all notices,
complaints, orders, directives, claims or citations received by any Borrower,
any Guarantor or any Subsidiary relating to any (a) violation or alleged
violation by any Borrower, any Guarantor or any Subsidiary of any applicable
Environmental Law; (b) release or threatened release by any Borrower, any
Guarantor or any Subsidiary, or by any Person handling, transporting or
disposing of any Hazardous Material on behalf of any Borrower, any Guarantor or
any Subsidiary, or at any facility or property owned or leased or operated by
any Borrower, any Guarantor or any Subsidiary, of any Hazardous Material, except
where occurring legally pursuant to a permit or license; or (c) liability or
alleged liability of any Borrower, any Guarantor or any Subsidiary for the costs
of cleaning up, removing, remediating or responding to a release of Hazardous
Materials;

          7.14. Environmental Compliance. If any Borrower, any Guarantor or any
Subsidiary shall receive any letter, notice, complaint, order, directive, claim
or citation alleging that any Borrower, any Guarantor or any Subsidiary has
violated any Environmental Law, has released any Hazardous Material, or is
liable for the costs of cleaning up, removing, remediating or responding to a
release of Hazardous Materials, any Borrower, any Guarantor and any Subsidiary
shall, within the time period permitted and to the extent required by the
applicable Environmental Law or the Governmental Authority responsible for
enforcing such


                                       55



Environmental Law, remove or remedy, or cause the applicable Subsidiary to
remove or remedy, such violation or release or satisfy such liability;

          7.15. Indemnification. Without limiting the generality of Section
11.9, Holdings, Irish Holdings and each Borrower hereby agrees jointly and
severally to indemnify and hold the Agent and the Lenders, and their respective
officers, directors, employees and agents, harmless from and against any and all
claims, losses, penalties, liabilities, damages and expenses (including
assessment and cleanup costs and reasonable attorneys', consultants' or other
expert fees, expenses and disbursements) arising directly or indirectly from,
out of or by reason of (a) the violation of any Environmental Law by any
Borrower or any Subsidiary or with respect to any property owned, operated or
leased by any Borrower or any Subsidiary or (b) the handling, storage,
transportation, treatment, emission, release, discharge or disposal of any
Hazardous Materials by or on behalf of any Borrower or any Subsidiary, or on or
with respect to property owned or leased or operated by any Borrower or any
Subsidiary. The provisions of this Section 7.15 shall survive repayment of the
Obligations and expiration or termination of this Agreement;

          7.16. Further Assurances. At the Borrowers' cost and expense, upon
request of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the reasonable opinion of
the Agent to carry out more effectively the provisions and purposes of this
Agreement, the Security Instruments and the other Loan Documents;

          7.17. Swap Agreements. Subject to Section 8.4, each Borrower may, in
its sole discretion, maintain Swap Agreements in a notional amount not greater
than Loans made to such Borrower and for a tenor not longer than the Eligible
Lease to which such Borrower's Aircraft is subject. If the termination date of
any Swap Agreement falls after the first anniversary of the Stated Termination
Date, then such Swap Agreement shall provide for the settlement of such Swap
Agreement on such first anniversary unless such Borrower and the counterparty to
such Swap Agreement shall agree to the assignment and assumption of all of the
rights and obligations of the Borrower under such Swap Agreement by the issuer
of the securities issued in a Permanent Capital Markets Financing the proceeds
of which are applied to repay the related Loans;

          7.18. Continued Operations. Subject to Section 8.15, continue at all
times to conduct its business and engage principally in the same line or lines
of business substantially as heretofore conducted;

          7.19. Maintenance of Aircraft; Other Covenants and Restrictions;
Non-Discrimination.

          (a) Ensure that any Lease with respect to any Financed Aircraft
     contains covenants and restrictions regarding the maintenance, alteration,
     replacement, pooling, sublease and (in the case of a Lease) return of such
     Aircraft by the Applicable Carrier, which covenants and restrictions
     satisfy the requirements of Schedule 7.19(a) hereto;


                                       56



          (b) Promptly and diligently take or cause to be taken all steps which
     a prudent international aircraft lessor or financier would reasonably take
     in light of all of the relevant circumstances to compel the relevant
     Eligible Carrier to comply with the terms of any Lease, or, if applicable
     and the Applicable Borrower is entitled to do so, to repossess the
     applicable Financed Aircraft (and, if a prudent international aircraft
     lessor or financier would determine it necessary or desirable, to
     de-register and export the same to a safe location) if any failure to
     comply with such Lease is not promptly remedied;

          7.20. Re-registration of Aircraft. Ensure that any Lease with respect
to any Aircraft contain covenants and restrictions regarding re-registration of
such Aircraft, which covenants and restrictions satisfy the requirements of the
Security Agreement;

          7.21. Servicer. Ensure that each Servicer continues to serve in
compliance with the Servicing Agreement to which it is a party;

          7.22. Employee Benefit Plans. Without limiting the generality of
Section 8.9(a)) with reasonable promptness, and in any event within thirty (30)
days after any Borrower knows or has reason to know thereof, give notice to the
Agent of (a) the establishment of any Single Employer Plan (which notice shall
include a copy of such plan), (b) the failure of any Borrower or any ERISA
Affiliate to make a required installment or payment under Section 302 of ERISA
or Section 412 of the Code by the due date; (c) the occurrence of a Termination
Event with respect to any Single Employer Plan or Multiemployer Plan; and (d)
the institution of proceedings or the taking of any other action by the PBGC or
any Borrower or any ERISA Affiliate or any Multiemployer Plan with respect to
the withdrawal from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan;

          7.23. Accounts. Holdings, Irish Holdings, the Guarantors and the
Borrowers shall establish the Accounts as provided in the Lockbox Agreement and
shall deposit all proceeds (including without limitation rent) from any Lease of
any Financed Aircraft to the Accounts designated under the Lockbox Agreement;

          7.24. Eligible Lease; Lessee Notice. Deliver to the Agent promptly
upon execution, any Lease entered into by any Borrower, together with a Lessee
Notice in connection with such Lease, the opinion referred to in Section
5.3(e)(iii) and the evidence referred to in Section 5.3(e)(x); and

          7.25. Conditions Subsequent to Closing. Deliver to the Agent on the
borrowing date immediately following the Closing Date but in no event later than
[October 31, 2005], (i) the favorable written opinion or opinions with respect
to those additional required Security Instruments governed under Bermuda, Irish
or French law, addressed to the Agent (on behalf of itself and the Lenders),
substantially in the form of Exhibit G-1 or otherwise reasonably satisfactory to
special counsel to the Agent and (ii) any related resolutions of the boards of
directors or other appropriate governing body (or of the appropriate committee
thereof) required in connection with clause (i) above.


                                       57



                                  ARTICLE VIII

                               NEGATIVE COVENANTS

          Until the Obligations have been paid and satisfied in full and this
Agreement has been terminated in accordance with the terms hereof, unless the
Required Lenders shall otherwise consent in writing, none of Holdings, Irish
Holdings or any Borrower will, nor will any such Person permit any Guarantor or
any Subsidiary (if any) to:

          8.1. Acquisitions. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, except for Acquisition of a Subsidiary as
permitted by Section 8.6;

          8.2. Capital Expenditures. Make or become committed to make any
Capital Expenditures, except for Capital Expenditures to maintain or purchase
Eligible Aircraft or in connection with Approved Improvements and Qualified
Conversions;

          8.3. Liens. Incur, create or permit to exist any Lien, charge or other
encumbrance of any nature whatsoever with respect to (a) any property or assets
now owned or hereafter acquired by any Borrower, any Guarantor or any Subsidiary
or (b) any Financed Aircraft, except the following (the "Permitted Liens"):

               (i) Liens created under the Security Instruments in favor of the
          Agent and the Lenders; and Liens arising under the Eligible Leases in
          favor of the Applicable Intermediary (as lessor) or the Applicable
          Borrower which Liens in each case have been assigned to the Agent;

               (ii) Liens set forth in Schedule 6.7;

               (iii) Liens imposed by law for Taxes (A) not yet due or (B) which
          are being contested in good faith by appropriate proceedings
          diligently conducted, each of which Liens in clause (B) above shall be
          fully bonded over, to the reasonable satisfaction of the Agent;

               (iv) statutory Liens of landlords and Liens of mechanics,
          materialmen and other Liens imposed by law or created in the ordinary
          course of business and (i) in existence less than 90 days from the
          date of creation thereof for amounts not yet due or (ii) which are
          being contested in good faith by appropriate proceedings diligently
          conducted, which are inferior in respect of the Collateral to the
          Liens conferred under the Security Instruments or have been fully
          bonded over to the reasonable satisfaction of the Agent, and with
          respect to which adequate reserves or other appropriate provisions are
          being maintained in accordance with GAAP;

               (v) Liens arising out of any judgment or award with respect to
          which an appeal or proceeding for review is being prosecuted in good
          faith by appropriate proceedings diligently conducted, and with
          respect to which a stay of execution is in effect;


                                       58



               (vi) Liens created by the Applicable Carrier under an Eligible
          Lease that are not subject to clause (vii) below, which Liens are
          created without the knowledge of the Applicable Borrower and are
          released or fully bonded over to the reasonable satisfaction of the
          Agent within 30 days after the Applicable Borrower has notice or
          knowledge of any such Lien;

               (vii) with respect to any Lease and the related Aircraft, (i) any
          "Permitted Liens" (as defined in or the equivalent term in such Lease
          Agreement and as agreed to by the Agent) (except a Permitted Lien that
          is a Lessor Lien (as defined in or the equivalent term in such Lease
          Agreement)), and (ii) any other Lien created by a Lessee, a sublessee
          of a Lessee or any Person claiming by or through a Lessee or
          sublessee, in each case in this clause (ii) as agreed to by the Agent;
          provided, that with respect to Liens of the type listed in clause
          (ii), such Lien is being contested in good faith by appropriate
          proceedings or, upon the Applicable Borrower receiving notice or
          knowledge of such Lien, such Applicable Borrower is diligently and
          promptly enforcing the lessor's rights against the Lessee;

               (viii) any head lease in respect of any Aircraft; provided that,
          except in the case of the head lease in respect of the Financed
          Aircraft with manufacturer's serial number 967, the lessor and lessee
          thereunder are Borrowing Affiliates or Guarantors;

               (ix) any Lien from air navigation authority, airport tending,
          gate or handling (or similar) charges or levies (A) not yet overdue or
          (B) which are being contested in good faith by appropriate
          proceedings, each of which Liens in clause (B) above shall be fully
          bonded over, to the reasonable satisfaction of the Agent;

               (x) Liens securing Indebtedness described in Section 8.4(b);

               (xi) Liens securing Indebtedness described in Section 8.4(f); and

               (xii) Liens granted by a Credit Party in favor of a Lender or an
          Affiliate of a Lender securing the Rate Hedging Obligations of such
          Credit Party to such Lender or Affiliate.

          8.4. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness of Holdings, Irish Holdings, any Borrower, any Guarantor or any
Subsidiary, howsoever evidenced, except:

          (a) Indebtedness owing to (including guaranties in favor of) the Agent
     or any Lender in connection with this Agreement, any Note or other Loan
     Document or, in the case of ABH 12, the ABH 12-JPM Swap Agreement in an
     aggregate notional amount not to exceed $400,000,000;

          (b) In the case of each such Person other than ABH 12, the endorsement
     of negotiable instruments for deposit or collection or similar transactions
     in the ordinary course of business;


                                       59



          (c) In the case of each such Person other than ABH 12, Indebtedness
     arising from Swap Agreements permitted under Section 7.17; provided that
     the aggregate notional amount of Swap Agreements, including the ABH 12-JPM
     Swap Agreement, shall not exceed $400,000,000;

          (d) In the case of each such Person other than Holdings and Irish
     Holdings, unsecured intercompany Indebtedness for loans and advances made
     by Holdings, Irish Holdings or any Beneficial Owner to a Borrower or a
     Guarantor, provided that such intercompany Indebtedness is evidenced by a
     promissory note or similar written instrument acceptable to the Agent which
     provides that such Indebtedness is subordinated to obligations, liabilities
     and undertakings of the holder or owner thereof under the Loan Documents on
     terms acceptable to the Agent;

          (e) In the case of each such Person other than Holdings and Irish
     Holdings, Contingent Obligations of any Borrower in support of any
     Subsidiary;

          (f) Contingent Obligations of Holdings, Irish Holdings or any Borrower
     in support of Indebtedness incurred in connection with the Contribution
     Agreement Guaranty;

          (g) In the case of Holdings, Irish Holdings and any Borrower,
     Contingent Obligations in support of any Subsidiary in connection with an
     Eligible Lease pursuant to which such Subsidiary is the lessor; and

          (h) Indebtedness incurred by Holdings pursuant to the Contribution
     Agreement; provided however, that none of Holdings, Irish Holdings or any
     Borrower shall make any payment under the Contribution Agreement to ABH 12
     unless the Agent shall be satisfied that the proceeds of each payment under
     the Contribution Agreement will be applied by ABH 12 to satisfy its
     obligations under the ABH 12-JPM Swap Agreement.

          8.5. Transfer of Assets. Sell, lease, transfer or otherwise dispose of
any assets of any Borrower, any Guarantor or any Subsidiary other than (a)
leases of Aircraft under Eligible Leases, (b) sales of Aircraft, or sales of all
of the beneficial interest or ownership of a Beneficial Owner or a Borrower or
(c) Engine swaps, interchange or pooling arrangements to the extent permitted
under any Eligible Lease, provided in each case that (i) the purchaser of such
Aircraft or beneficial interest shall have acknowledged receipt of the
Applicable Borrower's irrevocable instruction to pay the sales price for such
Aircraft or beneficial interest directly to the Collection Account identified in
the Lockbox Agreement to which the Applicable Borrower is a party, (ii) the net
proceeds of such sales are promptly applied in accordance with Section 2.3(b),
and (iii) at the time of any such sale the requirements of Section 2.13 for
release of the respective Borrower or Guarantor have been satisfied;

          8.6. Subsidiaries; Investments. Own, create or permit to exist any
Subsidiary (except that a Guarantor may own beneficial interests in, or (subject
to Section 8.4(d)) make advances to, a Borrower or another Guarantor and a
Borrower may own the Applicable Intermediary), or otherwise purchase, own,
invest in or otherwise acquire, directly or indirectly, any stock or other
securities, or make or permit to exist any interest whatsoever in any other


                                       60



Person or permit to exist any loans or advances to any Person, other than loans
referred to in Section 8.4(d);

          8.7. Merger or Consolidation. (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it, or (c) liquidate,
wind-up or dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets without the consent of the Agent, except as
permitted by Section 8.5 and except in the case of a Borrower or Guarantor that
simultaneously terminates its status as a Borrower or Guarantor hereunder in
accordance with Section 2.13;

          8.8. Transactions with Affiliates. Other than transactions permitted
under Section 8.7, enter into any transaction after the Initial Closing Date,
including, without limitation, the purchase, sale, lease or exchange of
property, real or personal, or the rendering of any service, with any Affiliate
of any Borrower or of any Guarantor, except (a) that such Persons may render
services to a Borrower, a Guarantor or their Subsidiaries for compensation at
the same rates generally paid by Persons engaged in the same or similar
businesses for the same or similar services, (b) that a Borrower, a Guarantor or
any Subsidiary may render services to such Persons for compensation at the same
rates generally charged by such Borrower, such Guarantor or such Subsidiary, (c)
in either case in the ordinary course of business and pursuant to the reasonable
requirements of a Borrower's (or a Guarantor's or any Subsidiary's) business
consistent with past practice of such Borrower or such Guarantor and its
Subsidiaries and upon fair and reasonable terms no less favorable to such
Borrower (or such Guarantor or any Subsidiary) than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate, and (d)
subject to Section 8.18, the Servicer may render the services described in the
Servicing Agreement for the fees set forth therein;

          8.9. Employee Benefit Plans; ERISA Affiliates; Employees. Sponsor any
Employee Benefit Plan or any Multiemployer Plan or agree to have any obligation
to fund any such plan, or hire or retain any employee other than officers
thereof;

          8.10. Fiscal Year. Change its Fiscal Year, or have any fiscal year
other than the Fiscal Year;

          8.11. Dissolution, etc. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a transaction
permitted pursuant to Section 8.7;

          8.12. Change in Control. Cause, suffer or permit to exist or occur any
Change of Control;

          8.13. Negative Pledge Clauses. Enter into or cause, suffer or permit
to exist any agreement with any Person other than the Agent and the Lenders
pursuant to this Agreement or any other Loan Documents which prohibits or limits
the ability of any Borrower or any Subsidiary to create, incur, assume or suffer
to exist any Lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired; provided that any Eligible Lease may contain such a
prohibition or limitation so long as the prohibition or limitation does not
apply to any Lien granted in favor of the Agent or any Lender pursuant to the
Loan Documents;


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          8.14. Partnerships. Become a general partner in any general or limited
partnership;

          8.15. Business and Operations. Engage in any (i) business or
operations other than the ownership, financing, leasing and sale of Aircraft or
the ownership of a Borrower, a Guarantor or Applicable Intermediary engaged in
such business or operations, or matters reasonably incidental thereto, or the
performance of the Loan Documents, provided, however, that, except as otherwise
provided in Section 2.1(a), no Borrower that owns or is the Applicable Borrower
with respect to any Aircraft may own or be the Applicable Borrower with respect
to any other Aircraft and (ii) business in Bermuda or Ireland other than the
performance of its obligations under the Loan Documents;

          8.16. Ownership, Operation and Leasing of Financed Aircraft.

          (a) Permit any Person other than a Borrower (or a Beneficial Owner
     solely by virtue of its beneficial interest in the respective Borrower) to
     own beneficially or of record any Financed Aircraft;

          (b) Permit any Financed Aircraft to be leased, subleased or chartered
     to any Person other than the Applicable Carrier or the Applicable
     Intermediary, or to be operated by any Person other than the Applicable
     Borrower or the Applicable Carrier, except as permitted in the Security
     Agreement or any Lease;

          (c) Permit any Financed Aircraft to be leased to an Eligible Carrier
     except under the terms of an Eligible Lease;

          (d) Permit any Financed Aircraft to be flown into or located in any
     country (or part thereof) if as a result thereof such Financed Aircraft
     would not be covered by insurance;

          8.17. Servicing Agreements.

          (a) Amend, modify or supplement either Servicing Agreement in any
     material respect without the consent of the Agent;

          (b) Except as otherwise agreed by the Agent, pay any management or
     other fee to Holdings, Irish Holdings or any Affiliate other than payment
     of servicing fees under either Servicing Agreement to the extent permitted
     in the Lockbox Agreement; or

          (c) Commit or permit any material breach of either Servicing
     Agreement; or

          8.18. Representations Regarding Agent and Lenders. Represent or hold
out, or permit any Applicable Carrier to represent or hold out, the Agent or any
Lender as (a) the owner of any Financed Aircraft, (b) carrying goods or
passengers on any such Financed Aircraft, or (c) being in any way responsible
for any operation of carriage (whether for hire or reward or gratuitously) which
may be undertaken by any Borrower, Guarantor, Subsidiary or Applicable Carrier;
or


                                       62



          8.19. Holdings; Irish Holdings. In the case of Holdings and Irish
Holdings, conduct, transact or otherwise engage in any business or operations
other than those incidental to its voting, equity, beneficial or any other
ownership interests of each Borrower and the performance of the Loan Documents;
or

          8.20. Organizational Documents. No Credit Party shall amend its
Organizational Documents without the consent of the Lenders and the Collateral
Agent (as defined in the Security Agreement for such Credit Party).

                                   ARTICLE IX

                       EVENTS OF DEFAULT AND ACCELERATION

          9.1. Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:

          (a) if default shall be made in the due and punctual payment of the
     principal of any Loan or other Obligation, when and as the same shall be
     due and payable whether pursuant to any provision of Article II, at
     maturity, by acceleration or otherwise; or

          (b) if default shall be made in the due and punctual payment of any
     amount of interest on any Loan or other Obligation or of any fees or other
     amounts payable to any of the Lenders or the Agent within three (3)
     Business Days after the date on which the same shall be due and payable; or

          (c) if default shall be made in the performance or observance of any
     covenant set forth in Section 7.5, 7.11, 7.12, 7.24 or Article VIII; or

          (d) if a default shall be made in the performance or observance of, or
     shall occur under, any covenant, agreement or provision contained in this
     Agreement (other than as described in clauses (a), (b) or (c) above), or if
     a default shall be made in the performance or observance of, or shall occur
     under, any covenant, agreement or provision contained in any of the other
     Loan Documents (beyond any applicable grace period, if any, contained
     therein) or in any instrument or document evidencing or creating any
     obligation, guaranty, or Lien in favor of the Agent (acting in any
     capacity) or any of the Lenders or delivered to the Agent (acting in any
     capacity) or any of the Lenders in connection with or pursuant to this
     Agreement or any of the Obligations, and such default shall continue for 30
     or more days after the earlier of receipt of notice of such default to an
     Authorized Representative from the Agent (acting in any capacity) or an
     officer of any Borrower becomes aware of such default, or if any Loan
     Document ceases to be in full force and effect (other than by reason of any
     action by the Agent (acting in any capacity)), or if without the written
     consent of the Lenders, this Agreement or any other Loan Document shall be
     disaffirmed or shall terminate, be terminable or be terminated or become
     void or unenforceable for any reason whatsoever (other than in accordance
     with its terms in the


                                       63



     absence of default or by reason of any action by the Lenders or the Agent
     (acting in any capacity)); or

          (e) if there shall occur (i) a default, which is not waived, in the
     payment of any principal, interest, premium or other amount with respect to
     any Indebtedness or Rate Hedging Obligation (other than the Loans and other
     Obligations) of Holdings, Irish Holdings, ABH 12 or any Borrower or any
     Subsidiary, or (ii) a default, which is not waived, in the performance,
     observance or fulfillment of any term or covenant contained in any
     agreement or instrument under or pursuant to which any such Indebtedness or
     Rate Hedging Obligation may have been issued, created, assumed, guaranteed
     or secured by any Borrower or any Subsidiary, or (iii) any other event of
     default as specified in any agreement or instrument under or pursuant to
     which any such Indebtedness or Rate Hedging Obligation may have been
     issued, created, assumed, guaranteed or secured by Holdings, Irish
     Holdings, ABH 12 or any Borrower or any Subsidiary, and such default or
     event of default under clause (i), (ii) or (iii) above shall continue for
     more than the period of grace, if any, therein specified, or such default
     or event of default under clause (i), (ii) or (iii) above shall permit the
     holder of any such Indebtedness (or any agent or trustee acting on behalf
     of one or more holders) to accelerate the maturity thereof; or

          (f) if any representation, warranty or other statement of fact
     contained in any Loan Document or in any writing, certificate, report or
     statement at any time furnished to the Agent (acting in any capacity) or
     any Lender by or on behalf of any Borrower or any other Credit Party
     pursuant to or in connection with any Loan Document, or otherwise, shall be
     false or misleading in any material respect when given; or

          (g) if, taken as a whole, Holdings, Irish Holdings, the Borrowers, the
     Subsidiaries and the other Credit Parties shall be unable to pay their
     debts generally as they become due; or Holdings, Irish Holdings, any
     Borrower, any Subsidiary or other Credit Party shall file a petition to
     take advantage of any insolvency statute; make an assignment for the
     benefit of its creditors; commence a proceeding for the appointment of a
     receiver, trustee, examiner, liquidator or conservator of itself or of the
     whole or any substantial part of its property; file a petition or answer
     seeking liquidation, reorganization, examination or arrangement or similar
     relief under the federal bankruptcy laws or any other applicable law or
     statute; or

          (h) if a court of competent jurisdiction shall enter an order,
     judgment or decree appointing a custodian, receiver, trustee, examiner,
     liquidator or conservator of any Borrower, any Subsidiary or other Credit
     Party or of the whole or any substantial part of its properties and such
     order, judgment or decree continues unstayed and in effect for a period of
     sixty (60) days, or approve a petition filed against any Borrower, any
     Subsidiary or other Credit Party seeking liquidation, reorganization,
     examination or arrangement or similar relief under the federal bankruptcy
     laws or any other applicable law or statute of the United States of America
     or any state, which petition is not dismissed within sixty (60) days; or
     if, under the provisions of any other law for the relief or aid of debtors,
     a court of competent jurisdiction shall assume custody or control of any
     Borrower, any Subsidiary or other Credit Party or of the whole or any
     substantial part of its properties, which control is not relinquished
     within sixty (60) days; or if there is


                                       64



     commenced against any Borrower, any Subsidiary or other Credit Party any
     proceeding or petition seeking reorganization, arrangement or similar
     relief under the federal bankruptcy laws or any other applicable law or
     statute of the United States of America or any state which proceeding or
     petition remains undismissed for a period of sixty (60) days; or if any
     Borrower, any Subsidiary or other Credit Party takes any action to indicate
     its consent to or approval of any such proceeding or petition; or

          (i) if any Borrower or any Subsidiary shall, other than in the
     ordinary course of business (as determined by past practices), suspend all
     or any part of its operations material to the conduct of the business of
     any Borrower or such Subsidiary for a period of more than 60 days; or

          (j) if this Agreement or any other Loan Document shall for any reason
     not be, or be asserted by any Borrower or any other Credit Party or
     Subsidiary not to be, a legal, valid and binding obligation of any Borrower
     or any Credit Party (as the case may be) enforceable in accordance with its
     terms; or

          (k) (i) if any Lien of the Agent pursuant to any Loan Document shall
     for any reason not be, or be asserted by any Borrower or any other Credit
     Party or Subsidiary not to be a valid, first priority perfected Lien on the
     Collateral identified therein (except to the extent that such Lien is not
     required hereunder or under the Security Agreement to be a valid, first
     priority perfected Lien on such Collateral), subject to no other Liens
     except Permitted Liens; or (ii) the Contribution Agreement shall for any
     reason not be, or be asserted by the Parent, Holdings or any other Credit
     Party not to be valid, binding and enforceable against Holdings or any
     other Credit Party; or

          (l) (i) any Person shall engage in any "prohibited transaction" (as
     defined in Section 406 of ERISA or Section 4975 of the Code) involving any
     Employee Benefit Plan, (ii) any "accumulated funding deficiency" (as
     defined in Section 302 of ERISA), whether or not waived, shall exist with
     respect to any Single Employer Plan or any Lien in favor of the PBGC or a
     Single Employer Plan shall arise on the assets of any Borrower, (iii) a
     Reportable Event shall occur with respect to, or proceedings shall commence
     to have a trustee appointed, or a trustee shall be appointed, to administer
     or to terminate, any Single Employer Plan, which Reportable Event or
     commencement of proceedings or appointment of a trustee is likely to result
     in the termination of such Single Employer Plan for purposes of Title IV of
     ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title
     IV of ERISA, (v) any Borrower or any ERISA Affiliate shall, or in the
     reasonable opinion of the Required Lenders is likely to, incur any
     liability in connection with a withdrawal from, or the Insolvency or
     Reorganization of, a Multemployer Plan or (vi) any other event or condition
     shall occur or exist with respect to a Employee Benefit Plan; and in each
     case in clauses (i) through (vi) above, such event or condition, together
     with all other such events or conditions, if any, could reasonably be
     expected to have a Material Adverse Effect;

then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall continue to exist and not have been cured or
waived,


                                       65



               (A) either or both of the following actions may be taken: (i) the
          Agent, with the consent of the Required Lenders, may, and at the
          direction of the Required Lenders shall, declare any obligation of the
          Lenders to make further Loans terminated, whereupon the obligation of
          each Lender to make further Loans hereunder shall terminate
          immediately, and (ii) the Agent shall at the direction of the Required
          Lenders, at their option, declare by notice to the Borrowers any or
          all of the Obligations to be immediately due and payable, and the
          same, including all interest accrued thereon and all other obligations
          of any Borrower to the Agent and the Lenders, shall forthwith become
          immediately due and payable without presentment, demand, protest,
          notice or other formality of any kind, all of which are hereby
          expressly waived, anything contained herein or in any instrument
          evidencing the Obligations to the contrary notwithstanding; provided,
          however, that notwithstanding the above, if there shall occur an Event
          of Default under clause (g) or (h) above, then the obligation of the
          Lenders to make Loans hereunder shall automatically terminate and any
          and all of the Obligations shall be immediately due and payable
          without the necessity of any action by the Agent or the Required
          Lenders or notice to the Agent or the Lenders;

               (B) each Borrower shall, upon demand of the Agent or the Required
          Lenders, promptly cause to be performed at Borrowers' expense by
          independent certified public accountants acceptable to the Agent an
          audit of all Financed Aircraft; and

               (C) the Agent and each of the Lenders shall have all of the
          rights and remedies available under the Loan Documents or under any
          applicable law, including without limitation all of the rights and
          remedies of a secured party under any applicable Uniform Commercial
          Code, the FAA Act, the Convention or any other applicable law.

          9.2. Agent to Act. In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce their rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.

          9.3. Cumulative Rights. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.

          9.4. No Waiver. No course of dealing between any Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall


                                       66



operate as a waiver or preclude the exercise of any other rights or remedies
hereunder or of the same right or remedy on a future occasion.

          9.5. Allocation of Proceeds. If an Event of Default has occurred and
not been waived, and the maturity of the Loans has been accelerated pursuant to
Article IX hereof, all payments received by the Agent hereunder, in respect of
any principal of or interest on the Obligations or any other amounts payable by
any Borrower hereunder, shall be applied by the Agent in the following order (or
in such manner as the Required Lenders may determine):

          (a) amounts due to the Lenders pursuant to Sections 2.10 and 11.5;

          (b) amounts due to the Agent pursuant to Section 10.8;

          (c) payments of interest on Loans, to be applied for the ratable
     benefit of the Lenders and amounts due to any of the Lenders in respect of
     Obligations consisting of liabilities under the ABH 12-JPM Swap Agreement
     and paid from contributions to ABH 12 pursuant to the Contribution
     Agreement and the Contribution Agreement Guaranty or any Swap Agreement
     with any of the Lenders on a pro rata basis according to the amounts owed;

          (d) payments of principal of Loans, to be applied for the ratable
     benefit of the Lenders;

          (e) amounts due to the Lenders pursuant to Sections 7.15 and 11.9;

          (f) payments of all other amounts due under any of the Loan Documents,
     if any, to be applied for the ratable benefit of the Lenders; and

          (g) any surplus remaining after application as provided for herein, to
     any Borrower or otherwise as may be required by applicable law.

          9.6. Activities of Eligible Carriers. Notwithstanding anything
contained in this Agreement or any other Loan Document, the Credit Parties shall
not be deemed to be in breach of their respective obligations hereunder or
thereunder with respect to the care, maintenance, alteration, possession,
return, replacement, pooling, subleasing, use or operation of any Financed
Aircraft or any part thereof subject to an Eligible Lease by virtue of a default
by the Applicable Carrier under such Eligible Lease so long as each of the
following conditions is satisfied:

          (a) such default by the Applicable Carrier is not within the control
     of any Credit Party;

          (b) the Credit Parties are in compliance with Section 7.19; and

          (c) such default does not relate to any use or location of an Aircraft
     in any jurisdiction that constitutes an Event of Default hereunder, any
     failure to make any payment required by this Agreement or any other Loan
     Document when due hereunder or thereunder, or any failure to maintain any
     insurance required under this Agreement or any


                                       67



     other Loan Document, any failure to maintain perfection of the Agent's Lien
     on any Collateral.

                                   ARTICLE X

                                    THE AGENT

          10.1. Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents, as "Mortgagee" under each Security
Agreement and as "Security Agent" under each Lockbox Agreement (references in
this Article X to the term "Agent" being deemed to include as well such other
capacities), with such powers and discretion as are specifically delegated to
the Agent by the terms of this Agreement and the other Loan Documents, together
with such other powers as are reasonably incidental thereto. The Agent (which
term as used in this sentence and in Section 10.5 and the first sentence of
Section 10.6 hereof shall include its affiliates and its own and its affiliates'
officers, directors, employees, and agents):

          (a) shall not have any duties or responsibilities except those
     expressly set forth in the Loan Documents and shall not be a trustee or
     fiduciary for any Lender;

          (b) shall not be responsible to the Lenders for any recital,
     statement, representation, or warranty (whether written or oral) made in or
     in connection with any Loan Document or any certificate or other document
     referred to or provided for in, or received by any of them under, any Loan
     Document, or for the value, validity, effectiveness, genuineness,
     enforceability, or sufficiency of any Loan Document, or any other document
     referred to or provided for therein or for any failure by any Credit Party
     or any other Person to perform any of its obligations thereunder;

          (c) shall not be responsible for or have any duty to ascertain,
     inquire into, or verify the performance or observance of any covenants or
     agreements by any Credit Party or the satisfaction of any condition or to
     inspect the property (including the books and records) of any Credit Party
     or any of its Subsidiaries or affiliates;

          (d) shall not be required to initiate or conduct any litigation or
     collection proceedings under any Loan Document; and

          (e) shall not be responsible for any action taken or omitted to be
     taken by it under or in connection with any Loan Document, except for its
     own gross negligence or willful misconduct.

The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.

          10.2. Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or facsimile) believed by it to be
genuine and correct and to have been signed, sent or made by or on behalf of the
proper Person or Persons, and upon advice and


                                       68



statements of legal counsel (including counsel for any Credit Party),
independent accountants, and other experts selected by the Agent. The Agent may
deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until the Agent receives and accepts an Assignment and
Acceptance executed in accordance with Section 11.1 hereof. As to any matters
not expressly provided for by the Loan Documents, the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding on all of the Lenders; provided, however, that the
Agent shall not be required to take any action that exposes the Agent to
personal liability or that is contrary to any Loan Document or applicable law or
unless it shall first be indemnified to its satisfaction by the Lenders against
any and all liability and expense which may be incurred by it by reason of
taking any such action.

          10.3. Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a Lender or a Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default". In the
event that the Agent receives such a notice of the occurrence of a Default or
Event of Default, the Agent shall give prompt notice thereof to the Lenders. The
Agent shall (subject to Section 10.2 hereof) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the Required
Lenders, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.

          10.4. Rights as Lender. With respect to its Revolving Credit
Commitment and the Loans made by it, JPMCB (and any successor acting as Agent)
in its capacity as a Lender hereunder shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as the Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Agent in its individual capacity. The
Agent and its affiliates may (without having to account therefor to any Lender)
accept deposits from, lend money to, make investments in, provide services to,
and generally engage in any kind of lending, trust, or other business with any
Credit Party or any of its Subsidiaries or affiliates as if it were not acting
as Agent, and JPMCB (and any successor acting as Agent) and its affiliates may
accept fees and other consideration from any Credit Party or any of its
Subsidiaries or affiliates for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders.

          10.5. Indemnification. The Lenders agree to indemnify the Agent (to
the extent not reimbursed under Section 11.9 hereof, but without limiting the
obligations of any Borrower under such Section) ratably in accordance with their
respective Revolving Credit Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including reasonable attorneys' fees), or disbursements of any kind
and nature whatsoever that may be imposed on, incurred by or asserted against
the Agent (including by any Lender) in any way relating to or arising out of any
Loan Document or the transactions contemplated thereby or any action taken or
omitted by the Agent under any Loan Document; provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of


                                       69



the foregoing, each Lender agrees to reimburse the Agent promptly upon demand
for its ratable share of any costs or expenses payable by any Borrower under
Section 11.5, to the extent that the Agent is not promptly reimbursed for such
costs and expenses by any Borrower. The agreements contained in this Section
10.5 shall survive payment in full of the Loans and all other amounts payable
under this Agreement.

          10.6. Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Credit Parties and their Subsidiaries and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under the Loan Documents. Except for
notices, reports, and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, or business of any
Credit Party or any of its Subsidiaries or affiliates that may come into the
possession of the Agent or any of its affiliates.

          10.7. Resignation of Agent. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrowers. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent, subject (so
long as no Default or Event of Default has occurred and is continuing) to the
written consent of an Authorized Representative, which consent shall not be
unreasonably withheld. If no successor Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within thirty (30)
days after the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent which
shall be a commercial bank organized under the laws of the United States of
America having combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor, such successor
shall thereupon succeed to and become vested with all the rights, powers,
discretion, privileges, and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Article
X shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.

          10.8. Fees. The Borrowers agree, jointly and severally, to pay to the
Agent, for its individual account, an Agent's fee as from time to time agreed to
by any Borrower and the Agent in writing.

                                   ARTICLE XI

                                  MISCELLANEOUS

          11.1. Assignments and Participations. (a) Each Lender may assign to
one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Loans, its Note, and its Revolving Credit Commitment); provided, however, that


                                       70



               (i) each such assignment shall be to an Eligible Assignee;

               (ii) except in the case of an assignment to another Lender or an
          assignment of all of a Lender's rights and obligations under this
          Agreement, any such partial assignment shall be in an amount at least
          equal to $5,000,000 or an integral multiple of $1,000,000 in excess
          thereof;

               (iii) each such assignment by a Lender shall be of a constant,
          and not varying, percentage of all of its rights and obligations under
          this Agreement; and

               (iv) the parties to such assignment shall execute and deliver to
          the Agent for its acceptance an Assignment and Acceptance in the form
          of Exhibit B hereto, together with any Note subject to such assignment
          and a processing fee of $3,500 (which amount shall not be payable by
          any Borrower);

               (v) except in the case of an assignment to another Lender, any
          assignment of all or any portion of the Revolving Credit Commitment
          shall require the consent of the Agent and, unless a Default or Event
          of Default has occurred and is continuing, an Authorized
          Representative, such consent in each case not to be unreasonably
          withheld; and

               (vi) neither any Borrower nor Holdings nor Irish Holdings shall
          incur any greater expense or liabilities (including, without
          limitation, indemnities and increased costs) than it would have
          incurred had such assignment not taken place.

Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the Agent
and the Borrowers shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is a Non-U.S.
Lender, it shall deliver to the Borrowers and the Agent certification as to
exemption from deduction or withholding of Taxes in accordance with Section 4.6.

          (b) The Agent shall maintain at its address referred to in Section
     11.2 a copy of each Assignment and Acceptance delivered to and accepted by
     it and a register for the recordation of the names and addresses of the
     Lenders and the Revolving Credit Commitment of, and principal amount of the
     Loans owing to, each Lender from time to time (the "Register"). The entries
     in the Register shall be conclusive and binding for all purposes, absent
     manifest error, and the Borrowers, the Agent and the Lenders may treat each
     Person whose name is recorded in the Register as a Lender hereunder for all
     purposes of this Agreement. The Register shall be available for inspection
     by any Borrower or any Lender at any reasonable time and from time to time
     upon reasonable prior notice.

          (c) Upon its receipt of an Assignment and Acceptance executed by the
     parties thereto, together with any Note subject to such assignment and
     payment of the processing


                                       71



     fee, the Agent shall, if such Assignment and Acceptance has been completed
     and is in substantially the form of Exhibit B hereto, (i) accept such
     Assignment and Acceptance, (ii) record the information contained therein in
     the Register and (iii) give prompt notice thereof to the parties thereto.

          (d) Each Lender may sell participations to one or more Persons in all
     or a portion of its rights, obligations or rights and obligations under
     this Agreement (including all or a portion of its Revolving Credit
     Commitment or its Loans); provided, however, that (i) such Lender s
     obligations under this Agreement shall remain unchanged, (ii) such Lender
     shall remain solely responsible to the other parties hereto for the
     performance of such obligations, (iii) the participant shall be entitled to
     the benefit of the yield protection provisions contained in Article IV and
     the right of set-off contained in Section 11.3, (iv) no Borrower shall have
     any greater obligation to a participant than it would have had to such
     Lender in the absence of the existence of such participant and (v) each
     Borrower shall continue to deal solely and directly with such Lender in
     connection with such Lender's rights and obligations under this Agreement,
     and such Lender shall retain the sole right to enforce the obligations of
     any Borrower relating to its Loans and to approve any amendment,
     modification, or waiver of any provision of this Agreement (other than
     amendments, modifications, or waivers decreasing the amount of principal of
     or the rate at which interest or fees are payable on such Loans, extending
     any scheduled principal payment date or date fixed for the payment of
     interest on such Loans, releasing all or substantially all of the
     Collateral (except for a release of Collateral in accordance with Section
     2.13), releasing any Guarantor (except for a release of a Guarantor in
     accordance with Section 2.13), or extending or increasing its Revolving
     Credit Commitment).

          (e) Notwithstanding any other provision set forth in this Agreement,
     any Lender may at any time assign and pledge all or any portion of its
     Loans to any Federal Reserve Bank as collateral security pursuant to
     Regulation A and any Operating Circular issued by such Federal Reserve
     Bank. No such assignment shall release the assigning Lender from its
     obligations hereunder.

          (f) Any Lender may furnish any information concerning any Borrower or
     any of its Subsidiaries in the possession of such Lender from time to time
     to assignees and participants (including prospective assignees and
     participants), subject, however, to the provisions of Section 11.15.

          11.2. Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile), 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 by certified or registered mail, return
receipt requested, or, in the case of telecopy notice, when received, addressed
as follows in the case of Holdings, Irish Holdings, the Borrowers and the Agent,
and as set forth in an administrative questionnaire delivered to the Agent in
the case of the Lenders, or to such other address as may be hereafter notified
by the respective parties hereto

          (a) if to Holdings or any Borrower:

               to Holdings or such Borrower


                                       72



               c/o Aircastle Advisor LLC
               300 First Stamford Place - Fifth Floor
               Stamford, CT 06902
               Attn: Lease Management
               E-Mail: leasemanagement@aircastleinv.com
               Facsimile Number: (917) 591-9106
               Confirmation Number: (203) 504-1020

          (b) if to Irish Holdings or any Borrower organized under the laws of
     Ireland:

               c/o Aircastle Advisor (Ireland) Limited
               Bracetown Business Park
               Clonee, Co. Meath, Ireland
               Telephone: 011-353-1-877-2740
               Facsimile: 011-353-1-877-2750

               with a copy to:
               Aircastle Advisor LLC
               300 First Stamford Place - Fifth Floor
               Stamford, CT 06902
               Attn: Lease Management
               E-Mail: leasemanagement@aircastleinv.com
               Facsimile Number: (917) 591-9106
               Confirmation Number: (203) 504-1020

          (c) if to the Agent:

               JPMorgan Chase Bank, N.A.
               1111 Fannin Street, 10th Floor
               Houston, TX 77002
               Attention: Michael Chau
               Telephone: (713) 750-7913
               Facsimile: (713) 750-2938
               Electronic Mail: Michael.v.chau@jpmchase.com

               with a copy to:

               JPMorgan Chase Bank, N.A
               270 Park Avenue, 15th Floor
               New York, New York 10017
               Attention: Vilma Francis
               Telephone: (212) 270-5484
               Facsimile: (212) 270-4016
               Electronic Mail: Vilma.francis@jpmorgan.com


                                       73



          (d) if to any other Credit Party, at the address set forth on the
     signature page of the Facility Guaranty or Security Instrument executed by
     such Credit Party, as the case may be.

          11.3. Right of Set-off; Adjustments.

          (a) Upon the occurrence and during the continuance of any Event of
     Default, each Lender (and each of its affiliates) is hereby authorized at
     any time and from time to time, 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 indebtedness at any time
     owing by such Lender (or any of its affiliates) to or for the credit or the
     account of any Borrower against any and all of the obligations of any
     Borrower now or hereafter existing under this Agreement and the Note held
     by such Lender, irrespective of whether such Lender shall have made any
     demand under this Agreement or such Note and although such obligations may
     be unmatured. Each Lender agrees promptly to notify the applicable Borrower
     after any such set-off and application made by such Lender; provided,
     however, that the failure to give such notice shall not affect the validity
     of such set-off and application. The rights of each Lender under this
     Section 11.3 are in addition to other rights and remedies (including,
     without limitation, other rights of set-off) that such Lender may have.

          (b) If any Lender (a "benefitted Lender") shall at any time receive
     any payment of all or part of the Loans owing to it, or interest thereon,
     or receive any collateral in respect thereof (whether voluntarily or
     involuntarily, by set-off, or otherwise), in a greater proportion than any
     such payment to or collateral received by any other Lender, if any, in
     respect of such other Lender's Loans owing to it, or interest thereon, such
     benefitted Lender shall purchase for cash from the other Lenders a
     participating interest in such portion of each such other Lender's Loans
     owing to it, or shall provide such other Lenders with the benefits of any
     such collateral, or the proceeds thereof, as shall be necessary to cause
     such benefitted Lender to share the excess payment or benefits of such
     collateral or proceeds ratably with each of the Lenders; provided, however,
     that if all or any portion of such excess payment or benefits is thereafter
     recovered from such benefitted Lender, such purchase shall be rescinded,
     and the purchase price and benefits returned, to the extent of such
     recovery, but without interest. Each Borrower agrees that any Lender so
     purchasing a participation from a Lender pursuant to this Section 11.3 may,
     to the fullest extent permitted by law, exercise all of its rights of
     payment (including the right of set-off) with respect to such participation
     as fully as if such Person were the direct creditor of the Borrowers in the
     amount of such participation.

          11.4. Survival. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the execution and delivery to the Lenders of this Agreement and any Notes and
shall continue in full force and effect so long as any of Obligations remain
outstanding or any Lender has any Loan hereunder or any Borrower has continuing
obligations hereunder unless otherwise provided herein. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and permitted assigns of such party and all
covenants, provisions and agreements


                                       74



by or on behalf of any Borrower which are contained in the Loan Documents shall
inure to the benefit of the successors and permitted assigns of the Lenders or
any of them.

          11.5. Expenses. Holdings, Irish Holdings and each Borrower agree,
jointly and severally, to pay on demand (subject, in the case of preparation,
execution, delivery and administration costs, to the Fee Letter), all reasonable
costs and expenses of the Agent in connection with the preparation, execution,
delivery, administration, modification, and amendment of this Agreement, the
other Loan Documents, subject to any cap that may have otherwise been agreed,
and the other documents to be delivered hereunder, including, without
limitation, the reasonable fees and expenses of counsel for the Agent (excluding
the cost of internal counsel) with respect thereto and with respect to advising
the Agent as to its rights and responsibilities under the Loan Documents.
Holdings, Irish Holdings and each Borrower further agree, jointly and severally,
to pay on demand all costs and expenses of the Agent and the Lenders, if any
(including, without limitation, reasonable external attorneys' fees and
expenses), in connection with the enforcement (whether through negotiations,
legal proceedings, or otherwise) of the Loan Documents and the other documents
to be delivered hereunder.

          11.6. Amendments and Waivers. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrowers and each Lender (and, if
Article X or the rights or duties of the Agent are affected thereby, by the
Agent);

          No notice to or demand on any Borrower in any case shall entitle such
Borrower or any other Borrower to any other or further notice or demand in
similar or other circumstances, except as otherwise expressly provided herein.
No delay or omission on any Lender's or the Agent's part in exercising any
right, remedy or option shall operate as a waiver of such or any other right,
remedy or option or of any Default or Event of Default.

          11.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.

          11.8. Return of Funds. If after receipt of any payment of all or any
part of the Obligations, any Lender is for any reason compelled to surrender
such payment to any Person because such payment is determined to be void or
voidable as a preference, impermissible setoff, a diversion of trust funds or
for any other reason, this Agreement shall continue in full force and each
Borrower, jointly and severally, shall be liable to, and shall indemnify and
hold the Agent or such Lender harmless for, the amount of such payment
surrendered until the Agent or such Lender shall have been finally and
irrevocably paid in full. The provisions of the foregoing sentence shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Agent or the Lenders in reliance upon such payment, and any such contrary
action so taken shall be without prejudice to the Agent or the Lenders' rights
under this Agreement and shall be deemed to have been conditioned upon such
payment having become final and irrevocable.


                                       75



          11.9. Indemnification; Limitation of Liability.

          (a) Holdings, Irish Holdings and each Borrower, jointly and severally,
     agree to indemnify and hold harmless the Agent (which term for purposes of
     this Section 11.9 includes the "Mortgagee" under each Security Agreement
     and the "Security Agent" under each Lockbox Agreement) and each Lender and
     each of their affiliates and their respective officers, directors,
     employees, agents, and advisors (each, an "Indemnified Party") from and
     against any and all claims, damages, losses, liabilities, costs, and
     expenses (including, without limitation, reasonable external attorneys'
     fees, but excluding principal and accrued interest on any Loan) that may be
     incurred by or asserted or awarded against any Indemnified Party, in each
     case arising out of or in connection with or by reason of (including,
     without limitation, in connection with any investigation, litigation, or
     proceeding or preparation of defense in connection therewith) the Loan
     Documents, any of the transactions contemplated herein, any Aircraft or
     other Collateral, any possession, performance, transportation, management,
     sale, ownership, registration, mortgage, charging, control, maintenance,
     service, repair, design, testing, defect, overhaul, purchase, bearing, use
     or operation of any Aircraft or other Collateral, or the actual or proposed
     use of the proceeds of the Loans, except to the extent such claim, damage,
     loss, liability, cost, or expense is found in a final, non-appealable
     judgment by a court of competent jurisdiction to have resulted from such
     Indemnified Party's gross negligence or willful misconduct. In the case of
     an investigation, litigation or other proceeding to which the indemnity in
     this Section 11.9 applies, such indemnity shall be effective whether or not
     such investigation, litigation or proceeding is brought by Holdings, Irish
     Holdings, any Borrower, its directors, shareholders or creditors or an
     Indemnified Party or any other Person or any Indemnified Party is otherwise
     a party thereto and whether or not the transactions contemplated hereby are
     consummated. Holdings, Irish Holdings and each Borrower agree that no
     Indemnified Party shall have any liability (whether direct or indirect, in
     contract or tort or otherwise) to it, any of its Subsidiaries, any
     Guarantor or any security holders or creditors thereof arising out of,
     related to or in connection with the transactions contemplated in any Loan
     Document, except to the extent that such liability directly results from
     such Indemnified Party's gross negligence or willful misconduct. Holding,
     Irish Holdings and each Borrower agree not to assert any claim against the
     Agent, any Lender, any of their affiliates, or any of their respective
     directors, officers, employees, attorneys, agents, and advisers, on any
     theory of liability, for special, indirect, consequential, or punitive
     damages arising out of or otherwise relating to the Loan Documents, any of
     the transactions contemplated herein or the actual or proposed use of the
     proceeds of the Loans.

          (b) Without prejudice to the survival of any other agreement of
     Holdings, Irish Holdings or any Borrower hereunder, the agreements and
     obligations of Holdings, Irish Holdings and each Borrower contained in this
     Section 11.9 shall survive the payment in full of the Loans and all other
     amounts payable under this Agreement.

          (c) Except as expressly provided herein, each Lender, each Borrower
     and the Agent agree that this Agreement and each other Loan Document
     entered into by a Holdings Subsidiary Trust is executed by a Qualified
     Trustee, not individually but solely as Trustee under a Trust Agreement in
     the exercise of the power and authority conferred


                                       76



     and vested in it as such Trustee, that each and all of the representations,
     undertakings and agreements by a Qualified Trustee, or for the purpose or
     with the intention of binding a Qualified Trustee, are made and intended
     for the purpose of binding only the Trust Estates (and, to the extent any
     Lender, Borrower or Agent has an interest therein, any liability insurance
     proceeds), and that in no case whatsoever shall any Qualified Trustee be
     personally liable for any loss in respect of such representations,
     undertakings and agreements, that nothing herein contained shall be
     construed as creating any liability on any Qualified Trustee individually
     or personally, to perform any covenant, either express or implied, herein,
     all such liability, if any, being expressly waived by each Lender, each
     Borrower and the Agent and by each and every Person now or hereafter
     claiming by, through or under such Persons except with respect to the gross
     negligence or willful misconduct of such Qualified Trustee or for any Liens
     on the Collateral arising from, through or under such Qualified Trustee in
     its individual capacity, and that so far as any Qualified Trustee,
     individually or personally is concerned, each Lender, each Borrower and the
     Agent and any Person claiming by, through or under such Persons shall look
     solely, except as provided above, to the Trust Estates (and, to the extent
     any Lender, Borrower or Agent has an interest therein, any liability
     insurance proceeds), for the performance of any obligation under this
     Credit Agreement and the other Loan Documents. The term "Trustee" as used
     in this Section 11.9(c) shall include any Qualified Trustee succeeding a
     Qualified Trustee, as trustee under a Trust Agreement. Any obligation of
     any Holdings Subsidiary Trust hereunder or under the other Loan Documents
     may be performed by a Beneficial Owner, and any such performance shall not
     be construed as revocation of the trust created by any Trust Agreement.

          11.10. Severability. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.

          11.11. Entire Agreement. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, and other communications between or among the parties, both
oral and written, with respect thereto.

          11.12. Payments. All principal, interest, and other amounts to be paid
by any Borrower under this Agreement and the other Loan Documents shall be paid
to the Agent at the Principal Office in Dollars and in immediately available
funds, without setoff, deduction or counterclaim. Subject to the definition of
"Interest Period" herein, whenever any payment under this Agreement or any other
Loan Document shall be stated to be due on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day, and such extension
of time in such case shall be included in the computation of interest and fees,
as applicable, and as the case may be.

          11.13. Confidentiality. The Agent and each Lender (each, a "Lending
Party") agrees to keep confidential any information furnished or made available
to it by Holdings, Irish Holdings or any Affiliate of Holdings or Irish Holdings
pursuant to or in connection with this


                                       77



Agreement or the other Loan Documents; provided that nothing herein shall
prevent any Lending Party from disclosing such information (a) to any other
Lending Party or any affiliate of any Lending Party, or any officer, director,
employee, agent, or advisor of any Lending Party or affiliate or any Lending
Party, (b) to any other Person if reasonably incidental to the administration of
the credit facility provided herein, (c) as required by any law, rule, or
regulation, (d) upon the order of any court or administrative agency, (e) upon
the request or demand of any regulatory agency or authority, (f) that is or
becomes available to the public or that is or becomes available to any Lending
Party other than as a result of a disclosure by any Lending Party prohibited by
this Agreement, (g) in connection with any litigation to which such Lending
Party or any of its affiliates may be a party, (h) to the extent necessary in
connection with the exercise of any remedy under this Agreement or any other
Loan Document, and (i) subject to provisions substantially similar to those
contained in this Section, to any actual or proposed participant or assignee.

          11.14. Governing Law; Waiver of Jury Trial.

          (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

          (b) HOLDINGS, IRISH HOLDINGS AND EACH BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY AGREES AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE
INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF NEW YORK,
STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY
OF THIS AGREEMENT, HOLDINGS AND EACH BORROWER EXPRESSLY WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE
OF JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING, AND HOLDINGS AND EACH BORROWER HEREBY IRREVOCABLY SUBMITS
GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH
SUIT, ACTION OR PROCEEDING.

          (c) HOLDINGS, IRISH HOLDINGS AND EACH BORROWER AGREES THAT SERVICE OF
PROCESS MAY BE MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT
OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED
OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF HOLDINGS OR SUCH BORROWER
PROVIDED IN SECTION 11.2, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER
THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW YORK.

          (d) NOTHING CONTAINED IN SUBSECTIONS (A) OR (B) HEREOF SHALL PRECLUDE
THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY OTHER JURISDICTION. TO
THE EXTENT


                                       78



PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, HOLDINGS, IRISH
HOLDINGS AND EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY
BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER
APPLICABLE LAW.

          (e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION THEREWITH, HOLDINGS, IRISH HOLDINGS, THE BORROWERS, THE AGENT AND THE
LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND
HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.

          11.15. USA PATRIOT Act. Each Lender hereby notifies Holdings, Irish
Holdings and each Borrower that pursuant to the requirements of the USA Patriot
Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the
"Act"), it is required to obtain, verify and record information that identifies
each Borrower, which information includes the name and address of such Borrower
and other information that will allow such Lender to identify each Borrower in
accordance with the Act.


                                       79



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

                             AIRCASTLE INVESTMENT HOLDINGS LIMITED

                             AIRCASTLE IRELAND NO. 1 LIMITED

                             ABH 12 LIMITED

                             AIRCASTLE BERMUDA HOLDING II LIMITED

                             AIRCASTLE BERMUDA HOLDING III LIMITED

                             AIRCASTLE BERMUDA HOLDING VII LIMITED

                             AIRCASTLE BERMUDA HOLDING VIII LIMITED


                             By: /s/ David R. Walton
                                 -----------------------------------------------
                                 Name: David R. Walton
                                       -----------------------------------------
                                 Title: General Counsel and Assistant Secretary
                                        ----------------------------------------

   Signature Page to the Aircastle Third Amended and Restated Credit Agreement



                                        CONSTELLATION AIRCRAFT LEASING (FRANCE)
                                        SARL


                                        By: /s/ David R. Walton
                                            ------------------------------------
                                            Name: David R. Walton
                                                  ------------------------------
                                            Title: Attorney in Fact
                                                   -----------------------------

   Signature Page to the Aircastle Third Amended and Restated Credit Agreement



                                        INTREPID AIRCRAFT LEASING (FRANCE) SARL


                                        By: /s/ David R. Walton
                                            ------------------------------------
                                            Name: David R. Walton
                                                  ------------------------------
                                            Title: Attorney in Fact
                                                   -----------------------------

  Signature Page to the Aircastle Third Amended and Restated Credit Agreement



                                        CONSTITUTION AIRCRAFT LEASING (IRELAND)
                                        LIMITED


                                        By: /s/ Ron Wainshal
                                            ------------------------------------
                                            Name: Ron Wainshal
                                                  ------------------------------
                                            Title:
                                                   -----------------------------

   Signature Page to the Aircastle Third Amended and Restated Credit Agreement



                                        WELLS FARGO BANK NORTHWEST, NATIONAL
                                        ASSOCIATION, not in its individual
                                        capacity but solely as Owner Trustee
                                        under the Trust Agreements to which it
                                        is a party


                                        By: /s/ Val T. Orton
                                            ------------------------------------
                                            Name: Val T. Orton
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------

   Signature Page to the Aircastle Third Amended and Restated Credit Agreement



                                        WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                        not in its individual capacity but
                                        solely as Owner Trustee under the Trust
                                        Agreements to which it is a party


                                        By: /s/ Val T. Orton
                                            ------------------------------------
                                            Name: Val T. Orton
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------

   Signature Page to the Aircastle Third Amended and Restated Credit Agreement



                                        JPMORGAN CHASE BANK, N.A., as Agent and
                                        as a Lender


                                        By: /s/ Matthew H. Massie
                                            ------------------------------------
                                            Name: Matthew H. Massie
                                                  ------------------------------
                                            Title: Managing Director
                                                   -----------------------------

   Signature Page to the Aircastle Third Amended and Restated Credit Agreement



                                        BEAR STEARNS CORPORATE LENDING INC.,
                                        as a Lender


                                        By: /s/ Victor Bulzacchelli
                                            ------------------------------------
                                            Name: Victor Bulzacchelli
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------

   Signature Page to the Aircastle Third Amended and Restated Credit Agreement




                                    EXHIBIT N

                        Form of Parent Support Agreement

              SECOND AMENDED AND RESTATED PARENT SUPPORT AGREEMENT

                                                                October 24, 2005

TO:  JPMORGAN CHASE BANK, N.A. in its capacity as agent for the Lenders under
     the Credit Agreement referred to herein (in such capacity, and together
     with any successor agent appointed in accordance with the terms of such
     Credit Agreement, the "Agent").

Ladies and Gentlemen:

          (a) In order to induce the Agent and the Lenders to enter into the
Third Amended and Restated Credit Agreement, dated as of October 24, 2005 (as
may be further amended, modified or restated from time to time, the "Credit
Agreement") among certain Holdings Subsidiary Trusts and Holdings SPCs
designated as Borrowers thereunder, the Lenders and the Agent, Aircastle
Investment Limited, an exempted company organized and existing under the laws of
Bermuda ("Parent"), hereby agrees (i) not to commence any "case" (as defined in
Title 11 of the United States Code) against any Credit Party and also agrees not
to cause or permit a Credit Party to commence any such "case", (ii) to cause
each Credit Party to comply with the provisions of Section 2.3(b)(i) and Article
VIII of the Credit Agreement and (iii) in connection with the ABH 12 Swap
Agreement to cause ABH 12 to deliver to the counterparty thereto any collateral
required thereunder.

          This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original and all of which shall constitute one and the same
instrument.

          This Agreement shall be binding upon the successors and assigns of the
Parent and shall be governed, construed, applied and enforced in accordance with
the internal laws of the State of New York, and no defense given or allowed by
the laws of any other state or country shall be interposed in any action hereon
unless such defense is given or allowed by the laws of the State of New York.

                            [SIGNATURE PAGE FOLLOWS]



          IN WITNESS WHEREOF, Aircastle Investment Limited has executed and
delivered this letter as of the day and year first above written.

                                        AIRCASTLE INVESTMENT LIMITED


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                                                                  EXECUTION COPY

          FIRST AMENDMENT, dated as of November 7, 2005 (this "Amendment") to
the Third Amended and Restated Credit Agreement, dated as of October 24, 2005,
by and among AIRCASTLE INVESTMENT HOLDINGS LIMITED ("Holdings"), an exempted
company organized and existing under the laws of Bermuda, AIRCASTLE IRELAND NO.
1 LIMITED ("Irish Holdings"), a limited liability company incorporated in
Ireland and an indirect subsidiary of the Parent, and certain Holdings
Subsidiary Trusts and Holdings SPCs designated as Borrowing Affiliates (such
Holdings Subsidiary Trusts and Holdings SPCs being referred to individually as a
"Borrower" or collectively as the "Borrowers"), ABH 12 LIMITED ("ABH 12"), an
exempted company organized and existing under the laws of Bermuda, as a
Guarantor and not a Borrower, JPMORGAN CHASE BANK, N.A., as administrative agent
(the "Administrative Agent") and certain lenders from time to time parties
thereto (the Credit Agreement"). Capitalized terms used but not otherwise
defined in this Amendment shall have the meanings set forth in the Credit
Agreement and the rules of interpretation set forth therein shall apply to this
Amendment.

                                   WITNESSETH:

     WHEREAS, Holdings, Irish Holdings, the Borrowers, ABH 12, the Lenders and
the Administrative Agent are parties to the Credit Agreement;

     WHEREAS, the Borrowers have requested that the Lenders amend the Credit
Agreement, as more fully described herein; and

     WHEREAS, the Lenders are willing to agree to such amendment, but only upon
the terms and subject to the conditions set forth herein;

     NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:

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

          1. Amendment to Section 8.4.

          (a) Clause (a) of Section 8.4 of the Credit Agreement is hereby
deleted in its entirety and replaced with the following:

          "(a) Indebtedness owing to (including guaranties in favor of) the
Agent or any Lender in connection with this Agreement, any Note or other Loan
Document or, in the case of ABH 12, the ABH 12-JPM Swap Agreement in an
aggregate notional amount not to exceed $700,000,000;"

          (b) Clause (c) of Section 8.4 of the Credit Agreement is hereby
deleted in its entirety and replacedwith the following:

         Amendment No. 1 to Third Amended and Restated Credit Agreement



                                                                               2


          "(c) In the case of each such Person other than ABH 12, Indebtedness
arising from Swap Agreements permitted under Section 7.17; provided that the
aggregate notional amount of Swap Agreements, including the ABH 12-JPM Swap
Agreement, shall not exceed $700,000,000;"

          2. Conditions to Effectiveness of this Amendment. This Amendment shall
become effective upon the date (the "Effective Date") when the following
conditions are satisfied:

          (a) Amendment to Credit Agreement. The Administrative Agent shall have
received counterparts of this Amendment, duly executed and delivered by
Holdings, Irish Holdings, the Borrowers, ABH 12 and the Lenders;

          (b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the transactions
contemplated herein; and

          (c) Representations and Warranties. Each of the representations and
warranties made by the Credit Parties in or pursuant to the Loan Documents shall
be true and correct in all material respects on and as of the date hereof,
before and after giving effect to the effectiveness of this Amendment, as if
made on and as of the date hereof, except to the extent such representations and
warranties expressly relate to a specific earlier date, in which case such
representations and warranties were true and correct as of such earlier date.

          3. Continuing Effect of the Credit Agreement. This Amendment shall not
constitute an amendment or waiver of any provision of the Credit Agreement not
expressly referred to herein and shall not be construed as an amendment, waiver
or consent to any further or future action on the part of the Credit Parties
that would require an amendment, waiver or consent of the Lenders or
Administrative Agent. Except as expressly amended hereby, the provisions of the
Credit Agreement are and shall remain in full force and effect.

          4. Counterparts. This Amendment may be executed by one or more of the
parties hereto on any number of separate counterparts (including by facsimile),
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.

          5. Severability. Any provision of this Amendment which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          6. Integration. This Amendment and the other Loan Documents represent
the agreement of the Credit Parties, the Administrative Agent and the Lenders
with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to the subject matter hereof not expressly set forth or referred
to herein or in the other Loan Documents.

         Amendment No. 1 to Third Amended and Restated Credit Agreement



                                                                               3


          7. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

         Amendment No. 1 to Third Amended and Restated Credit Agreement



                                                                  EXECUTION COPY

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

                                        AIRCASTLE INVESTMENT HOLDINGS LIMITED

                                        AIRCASTLE IRELAND NO. 1 LIMITED

                                        ABH 12 LIMITED

                                        AIRCASTLE BERMUDA HOLDING II LIMITED

                                        AIRCASTLE BERMUDA HOLDING III LIMITED

                                        AIRCASTLE BERMUDA HOLDING VII LIMITED

                                        AIRCASTLE BERMUDA HOLDING VIII LIMITED


                                        By: /s/ David R. Walton
                                            ------------------------------------
                                            Name: David R. Walton
                                                  ------------------------------
                                            Title: General Counsel and
                                                   Assistant Secretary
                                                   -----------------------------

         Amendment No. 1 to Third Amended and Restated Credit Agreement



                                                                               2


                                        CONSTELLATION AIRCRAFT LEASING (FRANCE)
                                        SARL


                                        By: /s/ David R. Walton
                                            ------------------------------------
                                            Name: David R. Walton
                                                  ------------------------------
                                            Title: Attorney in Fact
                                                   -----------------------------

         Amendment No. 1 to Third Amended and Restated Credit Agreement



                                                                               3


                                        INTREPID AIRCRAFT LEASING (FRANCE) SARL


                                        By: /s/ David R. Walton
                                            ------------------------------------
                                            Name: David R. Walton
                                                  ------------------------------
                                            Title: Attorney in Fact
                                                   -----------------------------

         Amendment No. 1 to Third Amended and Restated Credit Agreement



                                                                               4


                                        CONSTITUTION AIRCRAFT LEASING (IRELAND)
                                        LIMITED


                                        By: /s/ Ron Wainshal
                                            ------------------------------------
                                            Name: Ron Wainshal
                                                  ------------------------------
                                            Title:
                                                   -----------------------------

         Amendment No. 1 to Third Amended and Restated Credit Agreement



                                                                               5


                                        WELLS FARGO BANK NORTHWEST,
                                           NATIONAL ASSOCIATION, not in its
                                           individual capacity but solely as
                                           Owner Trustee under the Trust
                                           Agreements to which it is a party


                                        By: /s/ Val T. Orton
                                            ------------------------------------
                                            Name: Val T. Orton
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------

         Amendment No. 1 to Third Amended and Restated Credit Agreement



                                                                               6


                                        WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                           not in its individual capacity but
                                           solely as Owner Trustee under the
                                           Trust Agreements to which it is a
                                           party


                                        By: /s/ Val T. Orton
                                            ------------------------------------
                                            Name: Val T. Orton
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------

         Amendment No. 1 to Third Amended and Restated Credit Agreement



                                                                               7


                                        JPMORGAN CHASE BANK, N.A., as Agent and
                                           as a Lender


                                        By: /s/ Matthew H. Massie
                                            ------------------------------------
                                            Name: Matthew H. Massie
                                                  ------------------------------
                                            Title: Managing Director
                                                   -----------------------------

         Amendment No. 1 to Third Amended and Restated Credit Agreement



                                                                               8


                                        BEAR STEARNS CORPORATE LENDING INC., as
                                           a Lender


                                        By: /s/ Victor Bulzacchelli
                                            ------------------------------------
                                            Name: Victor Bulzacchelli
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------

         Amendment No. 1 to Third Amended and Restated Credit Agreement



                                                                  EXECUTION COPY

          SECOND AMENDMENT, dated as of February 24, 2006 (this "Amendment") to
the Third Amended and Restated Credit Agreement, dated as of October 24, 2005,
as amended by the First Amendment thereto dated as of November 7, 2005 by and
among AIRCASTLE INVESTMENT HOLDINGS LIMITED ("Holdings"), an exempted company
organized and existing under the laws of Bermuda, AIRCASTLE IRELAND NO. 1
LIMITED ("Irish Holdings"), a limited liability company incorporated in Ireland
and an indirect subsidiary of the Parent, and certain Holdings Subsidiary Trusts
and Holdings SPCs designated as Borrowing Affiliates (such Holdings Subsidiary
Trusts and Holdings SPCs being referred to individually as a "Borrower" or
collectively as the "Borrowers"), ABH 12 LIMITED ("ABH 12"), an exempted company
organized and existing under the laws of Bermuda, as a Guarantor and not a
Borrower, JPMORGAN CHASE BANK, N.A., as administrative agent (the
"Administrative Agent") and certain lenders from time to time parties thereto
(the Credit Agreement"). Capitalized terms used but not otherwise defined in
this Amendment shall have the meanings set forth in the Credit Agreement and the
rules of interpretation set forth therein shall apply to this Amendment.

                                   WITNESSETH:

     WHEREAS, Holdings, Irish Holdings, the Borrowers, ABH 12, the Lenders and
the Administrative Agent are parties to the Credit Agreement;

     WHEREAS, the Borrowers have requested that the Lenders amend the Credit
Agreement, as more fully described herein; and

     WHEREAS, the Lenders are willing to agree to such amendment, but only upon
the terms and subject to the conditions set forth herein;

     NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:

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

          1. Amendment to Section 1.1.

          (a) Subsection 1.1 of the Credit Agreement is hereby amended by
inserting, in proper alphabetical order, the following substitute defined terms
and related definitions:

               (i) "Stated Termination Date" means April 28, 2006.

               (ii) "Total Revolving Credit Commitment" means a principal amount
     equal to $525,000,000, as may be reduced from time to time in accordance
     with Section 2.7.

          2. Conditions to Effectiveness of this Amendment. This Amendment shall
become effective upon the date (the "Effective Date") when the following
conditions are satisfied:

         Amendment No. 2 to Third Amended and Restated Credit Agreement



                                                                               2


          (a) Amendment to Credit Agreement. The Administrative Agent shall have
received counterparts of this Amendment, duly executed and delivered by
Holdings, Irish Holdings, the Borrowers, ABH 12 and the Lenders;

          (b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the transactions
contemplated herein; and

          (c) Representations and Warranties. Each of the representations and
warranties made by the Credit Parties in or pursuant to the Loan Documents shall
be true and correct in all material respects on and as of the date hereof,
before and after giving effect to the effectiveness of this Amendment, as if
made on and as of the date hereof, except to the extent such representations and
warranties expressly relate to a specific earlier date, in which case such
representations and warranties were true and correct as of such earlier date.

          3. Continuing Effect of the Credit Agreement. This Amendment shall not
constitute an amendment or waiver of any provision of the Credit Agreement not
expressly referred to herein and shall not be construed as an amendment, waiver
or consent to any further or future action on the part of the Credit Parties
that would require an amendment, waiver or consent of the Lenders or
Administrative Agent. Except as expressly amended hereby, the provisions of the
Credit Agreement are and shall remain in full force and effect.

          4. Counterparts. This Amendment may be executed by one or more of the
parties hereto on any number of separate counterparts (including by facsimile),
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.

          5. Severability. Any provision of this Amendment which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          6. Integration. This Amendment and the other Loan Documents represent
the agreement of the Credit Parties, the Administrative Agent and the Lenders
with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to the subject matter hereof not expressly set forth or referred
to herein or in the other Loan Documents.

          7. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

         Amendment No. 2 to Third Amended and Restated Credit Agreement



                                                                  EXECUTION COPY

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

                                        AIRCASTLE INVESTMENT HOLDINGS LIMITED

                                        AIRCASTLE IRELAND NO. 1 LIMITED

                                        ABH 12 LIMITED

                                        AIRCASTLE BERMUDA HOLDING II LIMITED

                                        AIRCASTLE BERMUDA HOLDING III LIMITED

                                        AIRCASTLE BERMUDA HOLDING VII LIMITED

                                        AIRCASTLE BERMUDA HOLDING VIII LIMITED


                                        By:      /s/ David R. Walton
                                            ------------------------------------
                                            Name:    David R. Walton
                                                  ------------------------------
                                            Title:   General Counsel and
                                                     Assistant Secretary
                                                   -----------------------------

         Amendment No. 2 to Third Amended and Restated Credit Agreement



                                                                               2


                                        CONSTELLATION AIRCRAFT LEASING (FRANCE)
                                        SARL

                                        INTREPID AIRCRAFT LEASING (FRANCE) SARL

                                        ENTERPRISE AIRCRAFT LEASING (FRANCE)
                                        SARL


                                        By:      /s/ David R. Walton
                                            ------------------------------------
                                            Name:    David R. Walton
                                                  ------------------------------
                                            Title:   Attorney in Fact
                                                   -----------------------------

         Amendment No. 2 to Third Amended and Restated Credit Agreement



                                                                               3


                                        CONSTITUTION AIRCRAFT LEASING (IRELAND)
                                        LIMITED


                                        By:      /s/ Ron Wainshal
                                            ------------------------------------
                                            Name:    Ron Wainshal
                                                  ------------------------------
                                            Title:
                                                   -----------------------------

         Amendment No. 2 to Third Amended and Restated Credit Agreement



                                                                               4


                                        WELLS FARGO BANK NORTHWEST, NATIONAL
                                           ASSOCIATION, not in its individual
                                           capacity but solely as Owner Trustee
                                           under the Trust Agreements to which
                                           it is a party


                                        By:      /s/ Val T. Orton
                                            ------------------------------------
                                            Name:    Val T. Orton
                                                  ------------------------------
                                            Title:   Vice President
                                                   -----------------------------

         Amendment No. 2 to Third Amended and Restated Credit Agreement



                                                                               5


                                        WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                           not in its individual capacity but
                                           solely as Owner Trustee under the
                                           Trust Agreements to which it is a
                                           party


                                        By:      /s/ Val T. Orton
                                            ------------------------------------
                                            Name:    Val T. Orton
                                                  ------------------------------
                                            Title:   Vice President
                                                   -----------------------------

         Amendment No. 2 to Third Amended and Restated Credit Agreement



                                                                               6


                                        JPMORGAN CHASE BANK, N.A., as Agent and
                                           as a Lender


                                        By:      /s/ Matthew H. Massie
                                            ------------------------------------
                                            Name:    Matthew H. Massie
                                                  ------------------------------
                                            Title:   Managing Director
                                                   -----------------------------

         Amendment No. 2 to Third Amended and Restated Credit Agreement



                                                                               7


                                        BEAR STEARNS CORPORATE LENDING INC., as
                                           a Lender


                                        By:      /s/ Victor Bulzacchelli
                                            ------------------------------------
                                            Name:    Victor Bulzacchelli
                                                  ------------------------------
                                            Title:   Vice President
                                                   -----------------------------

         Amendment No. 2 to Third Amended and Restated Credit Agreement



                                                                  EXECUTION COPY

          THIRD AMENDMENT, dated as of April 28, 2006 (this "Amendment") to the
Third Amended and Restated Credit Agreement, dated as of October 24, 2005, as
amended by the First Amendment thereto dated as of November 7, 2005 and the
Second Amendment thereto dated as of February 24, 2006, in each case by and
among AIRCASTLE INVESTMENT HOLDINGS LIMITED ("Holdings"), an exempted company
organized and existing under the laws of Bermuda, AIRCASTLE IRELAND NO. 1
LIMITED ("Irish Holdings"), a limited liability company incorporated in Ireland
and an indirect subsidiary of the Parent, and certain Holdings Subsidiary Trusts
and Holdings SPCs designated as Borrowing Affiliates (such Holdings Subsidiary
Trusts and Holdings SPCs being referred to individually as a "Borrower" or
collectively as the "Borrowers"), ABH 12 LIMITED ("ABH 12"), an exempted company
organized and existing under the laws of Bermuda, as a Guarantor and not a
Borrower, JPMORGAN CHASE BANK, N.A., as administrative agent (the
"Administrative Agent") and certain lenders from time to time parties thereto
(the Credit Agreement"). Capitalized terms used but not otherwise defined in
this Amendment shall have the meanings set forth in the Credit Agreement and the
rules of interpretation set forth therein shall apply to this Amendment.

                                   WITNESSETH:

     WHEREAS, Holdings, Irish Holdings, the Borrowers, ABH 12, the Lenders and
the Administrative Agent are parties to the Credit Agreement;

     WHEREAS, the Borrowers have requested that the Lenders amend the Credit
Agreement, as more fully described herein; and

     WHEREAS, the Lenders are willing to agree to such amendment, but only upon
the terms and subject to the conditions set forth herein;

     NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:

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

          1. Amendment to Section 1.1.

          (a) Subsection 1.1 of the Credit Agreement is hereby amended by
inserting, in proper alphabetical order, the following substitute defined terms
and related definitions:

               (i) "Stated Termination Date" means May 31, 2006.

               (ii) "Term Out Period" means the period from but excluding the
     Stated Termination Date through and including February 24, 2007.

         Amendment No. 3 to Third Amended and Restated Credit Agreement



                                                                               2


          2. Conditions to Effectiveness of this Amendment. This Amendment shall
become effective upon the date (the "Effective Date") when the following
conditions are satisfied:

          (a) Amendment to Credit Agreement. The Administrative Agent shall have
received counterparts of this Amendment, duly executed and delivered by
Holdings, Irish Holdings, the Borrowers, ABH 12 and the Lenders;

          (b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the transactions
contemplated herein; and

          (c) Representations and Warranties. Each of the representations and
warranties made by the Credit Parties in or pursuant to the Loan Documents shall
be true and correct in all material respects on and as of the date hereof,
before and after giving effect to the effectiveness of this Amendment, as if
made on and as of the date hereof, except to the extent such representations and
warranties expressly relate to a specific earlier date, in which case such
representations and warranties were true and correct as of such earlier date.

          3. Continuing Effect of the Credit Agreement. This Amendment shall not
constitute an amendment or waiver of any provision of the Credit Agreement not
expressly referred to herein and shall not be construed as an amendment, waiver
or consent to any further or future action on the part of the Credit Parties
that would require an amendment, waiver or consent of the Lenders or
Administrative Agent. Except as expressly amended hereby, the provisions of the
Credit Agreement are and shall remain in full force and effect.

          4. Counterparts. This Amendment may be executed by one or more of the
parties hereto on any number of separate counterparts (including by facsimile),
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.

          5. Severability. Any provision of this Amendment which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          6. Integration. This Amendment and the other Loan Documents represent
the agreement of the Credit Parties, the Administrative Agent and the Lenders
with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to the subject matter hereof not expressly set forth or referred
to herein or in the other Loan Documents.

          7. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

         Amendment No. 3 to Third Amended and Restated Credit Agreement



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

                              AIRCASTLE INVESTMENT HOLDINGS LIMITED

                              AIRCASTLE IRELAND NO. 1 LIMITED

                              ABH 12 LIMITED

                              AIRCASTLE BERMUDA HOLDING II LIMITED

                              AIRCASTLE BERMUDA HOLDING III LIMITED

                              AIRCASTLE BERMUDA HOLDING VII LIMITED

                              AIRCASTLE BERMUDA HOLDING VIII LIMITED


                              By: /s/ David R. Walton
                                  ----------------------------------------------
                                  Name: David R. Walton
                                        ----------------------------------------
                                  Title: General Counsel and Assistant Secretary
                                         ---------------------------------------

         Amendment No. 3 to Third Amended and Restated Credit Agreement



                                                                               2


                                        CONSTELLATION AIRCRAFT LEASING (FRANCE)
                                        SARL

                                        INTREPID AIRCRAFT LEASING (FRANCE) SARL

                                        ENTERPRISE AIRCRAFT LEASING (FRANCE)
                                        SARL


                                        By: /s/ David R. Walton
                                            ------------------------------------
                                            Name: David R. Walton
                                                  ------------------------------
                                            Title: Attorney in Fact
                                                   -----------------------------

         Amendment No. 3 to Third Amended and Restated Credit Agreement



                                                                               3


                                        CONSTITUTION AIRCRAFT LEASING (IRELAND)
                                           LIMITED


                                        By: /s/ Ron Wainshal
                                            ------------------------------------
                                            Name: Ron Wainshal
                                                  ------------------------------
                                            Title:
                                                   -----------------------------

         Amendment No. 3 to Third Amended and Restated Credit Agreement



                                                                               4


                                        WELLS FARGO BANK NORTHWEST, NATIONAL
                                           ASSOCIATION, not in its individual
                                           capacity but solely as Owner Trustee
                                           under the Trust Agreements to which
                                           it is a party


                                        By: /s/ Val T. Orton
                                            ------------------------------------
                                            Name: Val T. Orton
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------

         Amendment No. 3 to Third Amended and Restated Credit Agreement



                                                                               5


                                        WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                           not in its individual capacity but
                                           solely as Owner Trustee under the
                                           Trust Agreements to which it is a
                                           party


                                        By: /s/ Val T. Orton
                                            ------------------------------------
                                            Name: Val T. Orton
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------

         Amendment No. 3 to Third Amended and Restated Credit Agreement



                                                                               6


                                        JPMORGAN CHASE BANK, N.A., as Agent and
                                           as a Lender


                                        By: /s/ Matthew H. Massie
                                            ------------------------------------
                                            Name: Matthew H. Massie
                                                  ------------------------------
                                            Title: Managing Director
                                                   -----------------------------

         Amendment No. 3 to Third Amended and Restated Credit Agreement



                                                                               7


                                        BEAR STEARNS CORPORATE LENDING INC., as
                                           a Lender


                                        By: /s/ Victor Buhacchelli
                                            ------------------------------------
                                            Name: Victor Buhacchelli
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------

         Amendment No. 3 to Third Amended and Restated Credit Agreement

Table of Contents

Exhibit 21.1

List of Subsidiaries


NO.		AIRCASTLE ENTITY	Jurisdiction of Incorporation	Other Names
	1	ABH 10 Limited	Bermuda	Aircastle Bermuda Holding X Limited
	2	ABH 11 Limited	Bermuda	Aircastle Bermuda Holding XI Limited
	3	ABH 12 Limited	Bermuda	Aircastle Bermuda Holding XII Limited
	4	ACS Aircraft Finance Bermuda Limited	Bermuda
	5	ACS Aircraft Finance Ireland PLC	Ireland
	6	ACS Aircraft Leasing (Ireland) Limited	Ireland
	7	Aircastle Advisor (International) Limited	Bermuda
	8	Aircastle Advisor (Ireland) Limited	Ireland
	9	Aircastle Advisor LLC	Delaware
	10	Aircastle Bermuda Holding II Limited	Bermuda
	11	Aircastle Bermuda Holding III Limited	Bermuda
	12	Aircastle Bermuda Holding IV Limited	Bermuda
	13	Aircastle Bermuda Holding IX Limited	Bermuda
	14	Aircastle Bermuda Holding Limited	Bermuda
	15	Aircastle Bermuda Holding V Limited	Bermuda
	16	Aircastle Bermuda Holding VI Limited	Bermuda
	17	Aircastle Bermuda Securities Limited	Bermuda
	18	Aircastle Holding Corporation Limited	Bermuda
	19	Aircastle Investment Holdings Limited	Bermuda
	20	Aircastle Investment Holdings 2 Limited	Bermuda
	21	Aircastle Ireland Holding Limited	Ireland
	22	Aircastle Ireland No. 1 Limited	Ireland
	23	Aircastle Ireland No. 2 Limited	Ireland
	24	Aircastle Ireland No. 3 Limited	Ireland
	26	Constellation Aircraft Leasing (France) SARL	France
	27	Constitution Aircraft Leasing (Ireland) Limited	Ireland
	28	Constitution Aircraft Leasing 2 (Ireland) Limited	Ireland
	29	Endeavor Aircraft Leasing (Sweden) AB	Sweden
	30	Enterprise Aircraft Leasing (France) SARL	France
	31	Intrepid Aircraft Leasing (France) SARL	France




                                                                    Exhibit 23.1




            Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 31, 2006 in the Registration Statement (Form S-1)
and the related Prospectus of Aircastle Limited for the registration of its
common shares.

                                                    /s/ Ernst & Young LLP


New York, New York
May 30, 2006