-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LzHuPUxwRrKsKfSE2rHKAn8u3XIp2vbNNHn4tWrQkYe4CK61WZ9g52bugPdxIDR2 Uqpqu1beQpo0n/y2iaIwaA== 0000950136-07-006997.txt : 20071012 0000950136-07-006997.hdr.sgml : 20071012 20071012105920 ACCESSION NUMBER: 0000950136-07-006997 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20071012 DATE AS OF CHANGE: 20071012 GROUP MEMBERS: BABCOCK & BROWN GLOBAL PARTNERS GROUP MEMBERS: BBGP MANAGING GENERAL PARTNER LTD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Babcock & Brown Air LTD CENTRAL INDEX KEY: 0001407298 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS EQUIPMENT RENTAL & LEASING [7350] IRS NUMBER: 980536376 STATE OF INCORPORATION: D0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-83186 FILM NUMBER: 071168619 BUSINESS ADDRESS: STREET 1: WEST PIER STREET 2: DUN LAOGHAIRE CITY: COUNTY DUBLIN STATE: L2 ZIP: 00000 BUSINESS PHONE: 353 1 231-1900 MAIL ADDRESS: STREET 1: WEST PIER STREET 2: DUN LAOGHAIRE CITY: COUNTY DUBLIN STATE: L2 ZIP: 00000 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BBGP Aircraft Holdings Ltd. CENTRAL INDEX KEY: 0001414862 IRS NUMBER: 000000000 STATE OF INCORPORATION: E9 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O MAPLES FINANCE LIMITED STREET 2: PO BOX 1093GT, BOUNDARY HALL, CRICKET SQ CITY: GRAND CAYMAN STATE: E9 ZIP: 00000 BUSINESS PHONE: 345 949-8066 MAIL ADDRESS: STREET 1: C/O MAPLES FINANCE LIMITED STREET 2: PO BOX 1093GT, BOUNDARY HALL, CRICKET SQ CITY: GRAND CAYMAN STATE: E9 ZIP: 00000 SC 13D 1 file1.htm SC 13D

UNITED STATES

SECURITIES AND EXCHANGE

COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. )*

Babcock & Brown Air Limited

(Name of Issuer)

American Depositary Receipts representing Common Shares

(Title of Class of Securities)

05614P 101

(CUSIP Number)

Mina Kim, Esq. Babcock & Brown Limited 2 Harrison Street, 6th Floor San Francisco, California 94105 (415) 512-1515	Boris Dolgonos, Esq. Weil, Gotshal & Manges LLP 767 5th Avenue New York, New York 10153 (212) 310-8000
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

October 2, 2007

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note : Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 05614P 101

	1.	Name of Reporting Person. BBGP Aircraft Holdings Limited

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)				(a) o (b) x
	3.	SEC Use Only

	4.	Source of Funds (See Instructions) OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)				o

	6.	Citizenship or Place of Organization Cayman Islands

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 0

			8.	Shared Voting Power 4,558,216

			9.	Sole Dispositive Power 0

			10.	Shared Dispositive Power 4,558,216

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person Common Stock: 4,558,216

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)			o

	13.	Percent of Class Represented by Amount in Row (11) Common Stock: 13.6%

	14.	Type of Reporting Person (See Instructions) CO

CUSIP No. 05614P 101

	1.	Name of Reporting Person. Babcock & Brown Global Partners

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)				(a) o (b) x
	3.	SEC Use Only

	4.	Source of Funds (See Instructions) OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)				o

	6.	Citizenship or Place of Organization United Kingdom

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 0

			8.	Shared Voting Power 4,558,216

			9.	Sole Dispositive Power 0

			10.	Shared Dispositive Power 4,558,216

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person Common Stock: 4,558,216

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)			o

	13.	Percent of Class Represented by Amount in Row (11) Common Stock: 13.6%

	14.	Type of Reporting Person (See Instructions) PN

CUSIP No. 05614P 101

	1.	Name of Reporting Person. BBGP Managing General Partner Ltd

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)				(a) o (b) x
	3.	SEC Use Only

	4.	Source of Funds (See Instructions) OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)				o

	6.	Citizenship or Place of Organization Cayman Islands

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 0

			8.	Shared Voting Power 4,558,216

			9.	Sole Dispositive Power 0

			10.	Shared Dispositive Power 4,558,216

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person Common Stock: 4,558,216

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)			o

	13.	Percent of Class Represented by Amount in Row (11) Common Stock: 13.6%

	14.	Type of Reporting Person (See Instructions) CO

Item 1.

Security and Issuer

This statement on Schedule 13D (this “Statement”) relates to the American Depositary Shares (“ADSs”) representing common shares, each par value $0.001 per share, of Babcock & Brown Air Limited, a Bermuda Corporation (“B&B Air”). The principal executive office of B&B Air is located at West Pier, Dun Laoghaire, County Dublin, Ireland.

Item 2.

Identity and Background

This statement is filed by BBGP Aircraft Holdings Ltd (“BBGP”), for and on behalf of itself, Babcock & Brown Global Partners (“Global Partners”) and BBGP Managing General Partner Ltd (“General Partner” and, collectively with BBGP and Global Partners, the “Reporting Persons”). BBGP is a subsidiary of Global Partners and General Partner is the general partner to Global Partners.

BBGP is a Cayman Islands company and its business address is c/o Maples Finance Limited, P.O. Box 1093GT, Boundary Hall, Cricket Square, Grand Cayman, Cayman Islands. The principal business activity of BBGP is warehousing aircraft and other aviation assets.

Global Partners is an English limited partnership and its business address is c/o Maples Finance Limited, P.O. Box 1093GT, Boundary Hall, Cricket Square, Grand Cayman, Cayman Islands. The principal business of Global Partners is investing in and restructuring capital assets and capital-based businesses.

General Partner is a Cayman Islands company and its business address is c/o Maples Finance Limited, P.O. Box 1093GT, Boundary Hall, Cricket Square, Grand Cayman, Cayman Islands. The principal business of General Partner is acting as the sole general partner to Global Partners.

(a), (b), (c) and (f) For information with respect to the identity and background of each executive officer and director of each Reporting Person, please see Schedules I, II and III attached hereto, respectively.

(d) and (e) During the last five years, none of the Reporting Persons or, to the best of their knowledge, any person identified in Schedules I through III has been (i) convicted of any criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to federal or state securities laws or finding any violation with respect to such laws.

This Statement is being filed while the Reporting Persons are in the process of verifying information required herein from their respective directors and executive officers. If the Reporting Persons obtain information concerning such individuals which would cause a material change in the disclosure contained herein, an amendment to this Statement will be filed disclosing such change.

Item 3.

Source and Amount of Funds or Other Consideration

A promissory note for $106,288,054.12 was delivered by BBGP to B&B Air in consideration for the issue and delivery of the 4,558,216 ADSs and the arrangement of transactions occurring in connection with B&B Air’s initial public offering. The promissory note will become due 210 days after the completion B&B Air’s initial public offering and must be prepaid with any proceeds received by BBGP from distributions made to it by JET-i Holdings LLC (“JET-i Holdings”) from proceeds of sales of aircraft by a subsidiary of JET-i Holdings to B&B Air. The promissory note bears interest at a rate equal to 4% and is secured by BBGP’s membership interest in JET-i Holdings and the 4,558,216 ADSs that it owns.

Item 4.

Purpose of Transaction

BBGP acquired its ADSs in a private placement in connection with a group of transactions, including the initial public offering of B&B Air, pursuant to which B&B Air agreed to acquire a portfolio of aircraft from a subsidiary of JET-i Holdings. The proceeds of the private placement will be applied by B&B Air toward the payment of the purchase price for the acquisition of such aircraft.

(a) In connection with B&B Air’s initial public offering, BBGP has granted the underwriters an option to purchase up to 1,522,149 of the ADSs it purchased in the private placement to cover over-allotments. On October 10, BBGP received from the underwriters a notice of exercise of the over-allotment option in full. The sale of the ADSs pursuant to the option is expected to be completed on October 15, 2007.

(b)-(j) Not applicable.

Item 5.

Interest in Securities of the Issuer

(a) The response of the Reporting Persons to rows (11) through (13) of the cover pages of this Statement are incorporated herein by reference. The Reporting Persons are the beneficial owners of 4,558,216 ADSs. Such ADSs represent approximately 13.6% of B&B Air’s outstanding ADSs, based on the number of ADSs outstanding following the consummation of B&B Air’s initial public offering on October 2, 2007.

(b) The Reporting Persons have the shared power to direct the vote and the disposition of the 4,558,216 ADSs held by BBGP.

(c) Other than the acquisition of the 4,558,216 ADSs consummated on October 2, 2007 and the grant to the underwriters of a 30-day option to purchase up to 1,522,149 of these ADSs, no Reporting Person has effected any other transactions in B&B Air’s ADSs during the past 60 days.

(d) - (e) Not applicable.

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

As described in Item 3 of this Statement, BBGP delivered a promissory note to B&B Air in consideration for the issue and delivery of the ADSs. BBGP and B&B Air entered into a pledge and security agreement at the time of delivery of the promissory note. Pursuant to the pledge and security agreement, B&B Air was granted a security interest in the ADSs issued and delivered to BBGP and BBGP’s membership interest in JET-i Holdings.

In connection with the acquisition of the ADSs, on July 19, 2007, BBGP and B&B Air entered into a private placement agreement and, on October 2, 2007, BBGP and B&B Air entered into a registration rights agreement. BBGP has agreed with B&B Air in the private placement agreement not to, without the prior consent of B&B Air, offer, sell, contract to sell, pledge, dispose of or hedge directly or indirectly the ADSs for a period of 360 days from September 26, 2007, other than (i) transfers to affiliates of BBGP, provided that such affiliate agrees to be bound by the same such restrictions for the remaining portion of such period, (ii) pledges of the ADSs to a financial institution that extends a “margin” loan to finance BBGP ‘s acquisition of its ADSs, provided that the pledge agrees to be bound by the terms of such restrictions for the remaining portion of such period and (iii) sales of ADSs by BBGP in B&B Air’s initial public offering pursuant the underwriters’ exercise of their option to purchase additional ADSs to cover over-allotments as described in Item 4(a).

The registration rights agreement provides that, upon the request of BBGP at any time beginning 180 days but prior to 360 days after September 26, 2007, B&B Air will file one registration statement, and, at any time after 360 days after September 26, 2007, B&B Air will file one or more registration statements to register the ADSs held by BBGP under the Securities Act of 1933 for resale at any time and from time to time by BBGP. In the registration rights agreement B&B Air has agreed to pay expenses in connection with such registration and resale (excluding underwriters’ discounts and commissions) and have indemnified BBGP for material misstatements or omissions in the registration statement.

In connection with B&B Air’s initial public offering, BBGP entered into an underwriting agreement on September 26, 2007 pursuant to which it granted the underwriters a 30-day option to purchase up to 1,522,149 of the ADSs BBGP purchased in the private placement. On October 10, BBGP received from the underwriters a notice of exercise of the over-allotment option in full. The sale of the ADSs pursuant to the option is expected to be completed on October 15, 2007.

Item 7.

Material to Be Filed as Exhibits

1. Promissory Note dated as of October 2, 2007 from BBGP Aircraft Holdings Ltd for the benefit of Babcock & Brown Air Limited.

2. Pledge and Security Agreement dated as of October 2, 2007, between Babcock & Brown Air Limited and BBGP Aircraft Holdings Ltd.

3. Private Placement Agreement dated as of July 19, 2007, by and among Babcock & Brown Air Limited and the private investors listed therein.

4. Registration Rights Agreement dated as of October 2, 2007 by and among Babcock & Brown Air Limited and shareholders listed therein.

5. Underwriting Agreement dated as of September 26, 2007 by and among Babcock & Brown Air Limited, Morgan Stanley & Co. Incorporated, Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit Suisse Securities (USA) LLC and the selling shareholders listed therein.

SIGNATURES

After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned hereby certify as of October 12, 2007 that the information set forth in this statement is true, complete and correct.

BBGP Aircraft Holdings Ltd

By:	/s/ Mina Kim
	Name:	Mina Kim
	Title:	Attorney-In-Fact

Babcock & Brown Global Partners
By:	BBGP Managing General Partner Ltd, its general partner

By:	/s/ Mina Kim
	Name:	Mina Kim
	Title:	Attorney-In-Fact

BBGP Managing General Partner Ltd

By:	/s/ Mina Kim
	Name:	Mina Kim
	Title:	Attorney-In-Fact

SCHEDULE I

BBGP AIRCRAFT HOLDINGS LTD DIRECTORS

Name	Present Principal Occupation	Present Business Address	Citizenship
Dwight Dubé	Senior Vice President-Investment Funds Fiduciary, Maples Finance Limited	Maples Finance Limited Boundary Hall, Cricket Square George Town, Grand Cayman Cayman Islands	Canadian
Carlos Farjallah	Trust Company Official, Maples Finance Limited	Maples Finance Limited Boundary Hall, Cricket Square George Town, Grand Cayman Cayman Islands	New Zealand/ United Kingdom
Edward Hanson	Director, BBGP Managing General Partner Ltd	Babcock & Brown Limited 1 Fleet Place London EC4M 7NR, UK	New Zealand/ United Kingdom

SCHEDULE II

BABCOCK & BROWN GLOBAL PARTNERS DIRECTORS

Name		Present Principal Occupation		Present Business Address		Citizenship
See Schedule III

SCHEDULE III

BBGP MANAGING GENERAL PARTNER LTD DIRECTORS

Name	Present Principal Occupation	Present Business Address	Citizenship
Dwight Dubé	Senior Vice President-Investment Funds Fiduciary, Maples Finance Limited	Maples Finance Limited Boundary Hall, Cricket Square George Town, Grand Cayman Cayman Islands	Canada
Carlos Farjallah	Trust Company Official, Maples Finance Limited	Maples Finance Limited Boundary Hall, Cricket Square George Town, Grand Cayman Cayman Islands	New Zealand/ United Kingdom
Edward Hanson	Director, BBGP Managing General Partner Ltd	Babcock & Brown Limited 1 Fleet Place London EC4M 7NR, UK	New Zealand/ United Kingdom

EX-99.1 2 file2.htm PROMISSORY NOTE

Exhibit 1

PROMISSORY NOTE

$106,288,054.12

October 2, 2007

Section 1. Definitions. As used herein, the following terms shall have the following meanings:

“Borrower” shall mean BBGP Aircraft Holdings Limited a Cayman Island Corporation.

“Business Day” shall mean any day on which commercial banks are not authorized or required to close in New York, New York and in Dublin, Ireland.

“Default Rate” shall mean, in respect of any principal of the Loan or any other amount payable by the Borrower under this Note which is not paid when due (whether at stated maturity, by acceleration or otherwise), a rate per annum during the period commencing on the due date until such amount is paid in full equal to 1% above the Interest Rate.

“Dollars”, “$” and “Cents” shall mean lawful money of the United States.

“Interest Rate” shall mean four percent (4.0%).

“Lender” shall mean Babcock & Brown Air Limited, a Bermuda exempted company.

“Loan” shall mean the loan made by the Lender to the Borrower on the date hereof evidenced by this Note.

“Maturity Date” shall mean the date that is 210 days from the date hereof.

“Note” shall mean this Promissory Note, as amended and otherwise modified and in effect from time to time.

Section 2. Principal. The Borrower hereby promises to pay to the order of the Lender, on the Maturity Date, the principal sum of One Hundred Six Million Two Hundred Eighty-Eight Thousand Fifty-Four Dollars and Twelve Cents ($106,288,054.12) (or such lesser amount as shall equal the unpaid principal amount of the Loan outstanding on that date) and any interest accrued and unpaid as of that date. At the request of the Borrower, the Lender shall issue one or more replacement notes with an aggregate principal amount equal to the principal amount of this Note.

Section 3. Interest. The Borrower hereby promises to pay to the Lender interest on the unpaid principal amount of the Loan, for the period from and including the date hereof to but excluding the date the Loan is paid in full, at the Interest Rate. Accrued interest on the Loan shall be paid on the Maturity Date. Notwithstanding the foregoing, the Borrower will pay to the Lender interest at the Default Rate on any principal of the Loan and (to the fullest extent permitted by law) on any other amount payable by the Borrower under this Note to or for the account of the Lender, which is not paid in full when due (whether at stated maturity, by acceleration or otherwise), for the period commencing on the Maturity Date of the Loan or such amount until the same is paid in full.

Section 4. Computations. Interest on the Loan shall be computed on the basis of a year of 360 days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable.

Section 5. Payments. All payments of principal and interest under Sections 2 and 3 hereof shall be made, in Dollars and in immediately available funds, to the Lender at such address as it shall specify separately. All payments made by the Borrower hereunder shall be made without deduction, set-off or counterclaim and free and clear of all taxes and other charges.

Section 6. Optional Prepayments. The Borrower may, on any Business Day, prepay the outstanding principal amount of this Note, with accrued interest, in full or in part without penalty or premium.

Section 7. Mandatory Prepayments. The Borrower shall apply all net proceeds of any sale of American Depositary Shares, representing common shares, par value $0.001 per share, of the Lender, toward the prepayment, on the day of such sale, to prepay the outstanding principal amount of this Note. The Borrower also shall apply any distributions received by it from JET-i Holdings LLC toward the prepayment, on the day of the receipt of such distribution, to prepay the outstanding principal amount of this Note.

Section 8. Security. Payments of principal and interest with respect to this Note are secured pursuant to the terms of the Security Agreement, dated the date hereof, between the Borrower and the Lender.

Section 9. Events of Default. The occurrence of any of the following events shall constitute an event of default under this Note: (a) the failure by the Borrower to pay any amount under this Note when due, or (b) the termination, liquidation, dissolution, insolvency, appointment of a receiver for any part of the property or assignment for the benefit of creditors by, or the commencement of any proceeding under any bankruptcy or insolvency laws of, or against the Borrower.

Section 10. Remedies. Upon the occurrence of any event of default and at any time thereafter, the Lender (a) may accelerate the maturity of the obligations of the Borrower under this Note and (b) shall have all of the rights and remedies of a secured party under the Uniform Commercial Code as then in effect in the State of New York.

Section 11. No Waiver. No failure on the part of the Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Note shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Note preclude any other of further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

Section 12. Notices. All notices and other communications with respect to this Note shall be given or made by telex, telecopy, telegraph, facsimile, cable or otherwise in writing and telexed, telecopied, telegraphed, cabled, facsimiled, mailed or delivered to the intended recipient at the address specified below (or at such other address as shall be designated in a notice to the other party):

(a) if to the Borrower:

BBGP Aircraft Holdings Limited

c/o Maples Finance Limited

Queensgate House,

PO Box 1093GT

South Church Street

Grand Cayman, Cayman Islands

Tel.: +1 345 814 5808

Fax: + 1 345 945 7100

Attn: Dwight Dube

(b) if to the Lender:

Babcock & Brown Air Limited

West Pier

Dun Laoghaire

County Dublin, Ireland

Facsimile: +353 1 231-1901

Attention: Chief Executive Officer

Section 13. Amendments. This Note may be amended or otherwise modified only by an instrument in writing signed by the Lender (or its successors and assigns) and the Borrower (or its successors and assigns).

Section 14. Successors and Assigns. This Note shall be binding upon and inure to the benefit of each of the Borrower and the Lender and their respective heirs, successors and assigns.

Section 15. Assignments. The Borrower shall not assign any of its obligations under this Note without the Lender’s written consent. The Lender may assign to one or more assignees, and such assignees may further assign to one or more assignees, its rights under this Note and the Loan without the prior written consent of the Borrower.

Section 16. Waiver. The Borrower waives diligence, demand, presentment, notice of nonpayment, protest, and notice of protest all in the sole discretion of the Lender and without notice and without affecting in any manner the liability of the Borrower.

Section 17. Governing Law. This Note shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.

[Signature Page to Follow]

IN WITNESS WHEREOF, the Borrower has caused this Note to be executed on the date first above-written.

				BBGP AIRCRAFT HOLDINGS LIMITED
				By:	/s/ Dwight Dubé
				Name:	Dwight Dubé
				Title:	Director

EX-99.2 3 file3.htm PLEDGE AND SECURITY AGREEMENT

Exhibit 2

PLEDGE AND SECURITY AGREEMENT

Dated as of October 2, 2007

between

BBGP AIRCRAFT HOLDINGS LIMITED

as Borrower

and

BABCOCK & BROWN AIR LIMITED

as Lender

PLEDGE AND SECURITY AGREEMENT, dated as of October 2, 2007, by BBGP AIRCRAFT HOLDINGS LIMITED (the “Borrower”), in favor of BABCOCK & BROWN AIR LIMITED (the “Lender”).

W I T N E S S E T H:

WHEREAS, the Borrower is a member of JET-i Holdings LLC, a Delaware limited liability company (“JET-i Holdings”);

WHEREAS, the Lender and the Borrower intend to enter into a Private Placement Agreement dated the date hereof (the “Private Placement Agreement”) whereby, inter alia, the Lender intends to offer American Depository Shares in an initial public offering of the Lender;

WHEREAS, the Borrower intends on the date hereof to execute a promissory note (the “Note”) for the benefit of the Lender to evidence a loan (the “Loan”) made by the Lender to the Borrower on the date hereof in an aggregate principal amount issued of $106,288,054.12; and

WHEREAS, the Lender has required the Borrower to execute this Agreement and grant to the Lender a security interest over certain Pledged Collateral (as defined herein) as a condition to making the Loan to the Borrower.

NOW, THEREFORE, in consideration of the premises and to induce the Lender to make the Loan to the Borrower, the Borrower hereby agrees with the Lender as follows:

ARTICLE I DEFINED TERMS

Section 1.1 Definitions

(a) Unless otherwise defined herein, terms defined in the Note and used herein have the meanings given to them in the Note.

(b) Terms used herein that are defined in the UCC have the meanings given to them in the UCC, including the following terms (which are capitalized herein):

“Cash Equivalents”

“Certificated Security”

“Instruments”

“Payment Intangibles”

“Person”

“Proceeds”

“Security Entitlement”

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling or that is controlled by or is under common control with such Person, each officer, director, general partner or joint-venturer of such Person, and each Person that is the beneficial owner of 5% or more of any class of Voting Stock of such Person. For the purposes of this definition, “control” means the possession of the power to direct or cause the direction of the

SECURITY AGREEMENT

management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” means this Pledge and Security Agreement.

“Collateral” has the meaning specified in Section 2.1 (Collateral).

“Event of Default” means (i) any default in payment of any amount due under the Note and/or (ii) the termination, liquidation, dissolution, insolvency, appointment of a receiver for any part of the property or assignment for the benefit of creditors by, or the commencement of any proceeding under any bankruptcy or insolvency laws of, or against the Borrower and/or (iii) if for any reason this Agreement ceases to create a valid and perfected first priority security interest in the Pledged Collateral in favor of the Lender and/or (iv) the Lender shall not be possessed of such legal right and authority as it may possess, pursuant to the terms in this Agreement, to exercise and control corporate authority of the Borrower.

“Governmental Authority” means any nation, sovereign or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any central bank.

“LLC Agreement” means the operating agreement of JET-i Holdings as amended, restated, supplemented or otherwise modified from time to time.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended to assure payment of any indebtedness or the performance of any other obligation, including any conditional sale or other title retention agreement, the interest of a lessor under a capital lease and any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the UCC or comparable law of any jurisdiction naming the owner of the asset to which such Lien relates as debtor.

“Loan” has the meaning specified in the recitals to this Agreement.

“Note” has the meaning specified in the recitals to this Agreement.

“Pledged Certificated Stock” means all Certificated Securities and any other Stock and Stock Equivalent of a Person evidenced by a certificate, Instrument or other equivalent document, in each case owned by the Borrower, listed on Schedule 1 (Pledged Collateral).

“Pledged Collateral” means, collectively the Pledged Stock, all certificates or other instruments representing any of the foregoing and all Security Entitlements of the Borrower in respect of any of the foregoing.

“Pledged Stock” means all Pledged Certificated Stock and all Pledged Uncertificated Stock.

“Pledged Uncertificated Stock” means any Stock or Stock Equivalent of any Person that is not a Pledged Certificated Stock listed on Schedule 1 (Pledged Collateral) including b) all right, title, privileges and interest of the Borrower as a member of JET-i Holdings

SECURITY AGREEMENT

and all right, title and interest of the Borrower in, to and under the LLC Agreement to which it is a party.

“Requirement of Law” means, with respect to any Person, the common law and all federal, state, local and foreign laws, rules and regulations, orders, judgments, decrees and other determinations of any Governmental Authority or arbitrator, applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Stock” means shares of capital stock (whether denominated as common stock or preferred stock), beneficial, partnership or membership interests, participations or other equivalents (regardless of how designated) of or in a corporation, limited company, partnership, limited liability company or equivalent entity whether voting or non-voting.

“Stock Equivalent” means all securities convertible into or exchangeable for Stock and all warrants, options or other rights to purchase or subscribe for any Stock, whether or not presently convertible, exchangeable or exercisable.

“UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York; provided, however, that, in the event that, by reason of mandatory provisions of law, any of the attachment, perfection or priority of the Lender’s security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions.

“Voting Stock” means Stock of any Person having ordinary power to vote in the election of members of the board of directors, managers, trustees or other controlling Persons, of such Person (irrespective of whether, at the time, Stock of any other class or classes of such entity shall have or might have voting power by reason of the happening of any contingency).

Section 1.2 Certain Other Terms

(a) In this Agreement, in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including.”

(b) The terms “herein,” “hereof,” “hereto” and “hereunder” and similar terms refer to this Agreement as a whole and not to any particular Article, Section, subsection or clause in this Agreement.

(c) References herein to any Schedule, Article, Section, subsection or clause refer to the appropriate Schedule to, or Article, Section, subsection or clause in this Agreement.

(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

(e) The term “including” means “including without limitation” except when used in the computation of time periods.

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(f) The term “Lender” includes its successors and assigns.

(g) References in this Agreement to any statute shall be to such statute as amended or modified and in effect from time to time.

ARTICLE II GRANT OF SECURITY INTEREST

Section 2.1 Collateral

For the purposes of this Agreement, all property now owned or at any time hereafter acquired by the Borrower or in which the Borrower now has or at any time in the future may acquire any right, title or interest (the “Collateral”), including the following:

(a) all Pledged Collateral;

(b) to the extent not otherwise included, all Proceeds of the foregoing,

Section 2.2 Grant of Security Interest in Collateral

The Borrower, as collateral security for the full, prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of all of the Borrower’s obligations under the Note and this Agreement, hereby collaterally assigns, mortgages, pledges and hypothecates to the Lender, and grants to the Lender a first priority Lien on and security interest in, all of its right, title and interest in, to and under the Collateral. The grant in this Section 2.2 shall include the right to receive any payment of money (including Payment Intangibles) from, and any Proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions and replacements of, any such Collateral.

ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS

To induce the Lender, to make the Loan to the Borrower, the Borrower hereby represents and warrants each of the following to the Lender:

Section 3.1 Title; No Other Liens

Except for the Lien granted to the Lender pursuant to this Agreement, the Borrower (a) is the record, legal and beneficial owner of the Pledged Collateral pledged by it hereunder and (b) has rights in or the power to transfer each other item of Collateral in which a Lien is granted by it hereunder, free and clear of any other Lien.

Section 3.2 Perfection and Priority

The security interest granted pursuant to this Agreement shall constitute a valid and continuing perfected first priority security interest in favor of the Lender in the Collateral for which perfection is governed by the UCC upon (i) in the case of all Collateral in which a security interest may be perfected by filing a financing statement under the UCC, the completion of the filings and other actions specified on Schedule 2 (Filings) (which, in the case of all filings and other documents referred to on such schedule, have been delivered to the Lender in completed form) and (ii) the delivery to the Lender of all Collateral consisting of Certificated Securities, in each case properly endorsed for transfer to the Lender or in blank. Such security interest shall be

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prior to all other Liens on the Collateral except for Liens having priority over the Lender’s Lien by operation of law.

Section 3.3 Jurisdiction of Organization; Chief Executive Office

The Borrower’s jurisdiction of organization, legal name, organizational identification number, if any, and the location of the Borrower’chief executive office or sole place of business, in each case as of the date hereof, is specified on Schedule 3 (Jurisdiction of Organization and Chief Executive Office) and such Schedule 3 (Jurisdiction of Organization and Chief Executive Office) also lists all jurisdictions of incorporation, legal names and locations of the Borrower’s chief executive office or sole place of business for the five years preceding the date hereof.

Section 3.4 Pledged Collateral

(a) The Pledged Stock pledged hereunder by the Borrower is listed on Schedule 1 (Pledged Collateral) and constitutes that percentage of the issued and outstanding equity of all classes of each issuer thereof as set forth on Schedule 1 (Pledged Collateral).

(b) All of the Pledged Stock consisting of Certificated Securities has been duly authorized, validly issued and is fully paid and nonassessable.

(c) All Pledged Collateral consisting of Certificated Securities has been delivered to the Lender in accordance with Section 4.4(a) (Pledged Collateral).

ARTICLE IV COVENANTS

The Borrower agrees with the Lender to the following, as long as any obligation of the Borrower under this Agreement or the Note remains outstanding and, in each case, unless the Lender otherwise consents in writing:

Section 4.1 Generally

The Borrower shall (a) except for the security interest created by this Agreement, not create or suffer to exist any Lien upon or with respect to any Collateral, except Liens permitted under Section 3.2, (b) not use or permit any Collateral to be used unlawfully or in violation of any provision of this Agreement or the Note, any related document, any Requirement of Law or any policy of insurance covering the Collateral, (c) not sell, transfer or assign (by operation of law or otherwise) any Collateral except as permitted under this Agreement or the Note and (d) not enter into any agreement or undertaking restricting the right or ability of the Borrower or Lender to sell, assign or transfer any Collateral.

Section 4.2 Maintenance of Perfected Security Interest; Further Documentation

(a) The Borrower shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority described in Section 3.2 and Section 2.2 and shall defend such security interest and such priority against the claims and demands of all Persons.

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(b) The Borrower shall furnish to the Lender from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Lender may reasonably request, all in reasonable detail and in form and substance satisfactory to the Lender.

(c) At any time and from time to time, upon the written request of the Lender, and at the sole expense of the Borrower, the Borrower shall promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further action as the Lender may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including the filing of any financing or continuation statement under the UCC (or other similar laws) in effect in any jurisdiction with respect to the security interest created hereby.

Section 4.3 Changes in Locations, Name, Etc.

(a) Except upon 15 days’ prior written notice to the Lender and delivery to the Lender of (i) all additional financing statements and other documents reasonably requested by the Lender to maintain the validity, perfection and priority of the security interests provided for herein and (ii) if applicable, a written supplement to Schedule 3 (Jurisdiction of Organization and Chief Executive Office), the Borrower shall not do any of the following:

(i) change its jurisdiction of organization or its location, in each case from that referred to in Section 3.3 (Jurisdiction of Organization; Chief Executive Office); or

(ii) change its legal name or any trade name used to identify it in the conduct of its business or ownership of its properties or organizational identification number, if any, or corporation, limited liability company or other organizational structure to such an extent that any financing statement filed in connection with this Agreement would become misleading.

(b) The Borrower shall keep and maintain at its own cost and expense satisfactory and complete records of the Collateral, including a record of all payments received and all credits granted with respect to the Collateral and all other dealings with the Collateral.

Section 4.4 Pledged Collateral

(a) The Borrower shall deliver to the Lender, all certificates representing or evidencing any Pledged Collateral whether now existing or hereafter acquired, in suitable form for transfer by delivery or, as applicable, accompanied by the Borrower’s endorsement, where necessary, or duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Lender. The Lender shall have the right, at any time in its discretion and without notice to the Borrower, to transfer to or to register in its name or in the name of its nominees any Pledged Collateral. The Lender shall have the right at any time to exchange any certificate or instrument representing or evidencing any Pledged Collateral for certificates or instruments of smaller or larger denominations.

(b) Except as provided in this Agreement, the Borrower shall be entitled to receive all cash dividends paid in respect of the Pledged Collateral (other than liquidating or distributing dividends) with respect to the Pledged Collateral. Any sums paid upon or in respect of any Pledged Collateral upon the liquidation or dissolution of any issuer of any Pledged

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Collateral, any distribution of capital made on or in respect of any Pledged Collateral or any property distributed upon or with respect to any Pledged Collateral pursuant to the recapitalization or reclassification of the capital of any issuer of Pledged Collateral or pursuant to the reorganization thereof shall, unless otherwise subject to a perfected security interest in favor of the Lender, be delivered to the Lender to be held by it hereunder as additional collateral security for the Borrower’s obligations under this Agreement and the Note. If any sum of money or property so paid or distributed in respect of any Pledged Collateral shall be received by the Borrower, the Borrower shall, until such money or property is paid or delivered to the Lender, hold such money or property in trust for the Lender, segregated from other funds of the Borrower, as additional security for the Borrower’s obligations under this Agreement and the Note.

(c) Except as provided in this Agreement, the Borrower shall be entitled to exercise all voting, consent and corporate, limited liability company and similar rights with respect to the Pledged Collateral; provided, however, that no vote shall be cast, consent given or right exercised or other action taken by the Borrower that would impair the Collateral, be inconsistent with or result in any violation of any provision of the Note, this Agreement, the Private Placement Agreement or any other related document or, without prior notice to the Lender, enable or permit any issuer of Pledged Collateral to issue any Stock or other equity Securities of any nature or to issue any other securities convertible into or granting the right to purchase or exchange for any Stock or other equity Securities of any nature of any issuer of Pledged Collateral.

(d) In the case of the Borrower that is a holder of any Stock or Stock Equivalent in any Person that is an issuer of Pledged Collateral, the Borrower consents to (i) the exercise of the rights granted to the Lender hereunder (including those described in Section 5.3 (Pledged Collateral)), and (ii) the pledge by each other Grantor, pursuant to the terms hereof, of the Pledged Stock in such Person and to the transfer of such Pledged Stock to the Lender or its nominee and to the substitution of the Lender or its nominee as a holder of such Pledged Stock with all the rights, powers and duties of other holders of Pledged Stock of the same class and, if the Borrower having pledged such Pledged Stock hereunder had any right, power or duty at the time of such pledge or at the time of such substitution beyond that of such other holders, with all such additional rights, powers and duties. The Borrower agrees to execute and deliver to the Lender such certificates, agreements and other documents as may be necessary to evidence, formalize or otherwise give effect to the consents given in this clause (d).

(e) The Borrower shall not, without the consent of the Lender, agree to any amendment of any constituent documents that in any way adversely affects the perfection of the security interest of the Lender in the Pledged Collateral pledged by the Borrower hereunder, including any amendment electing to treat any limited company or membership interest that is part of the Pledged Collateral as a “security” under Section 8-103 of the UCC, or any election to turn any previously uncertificated Stock that is part of the Pledged Collateral into certificated Stock.

ARTICLE V REMEDIAL PROVISIONS

Section 5.1 Code and Other Remedies

During the continuance of any Event of Default, the Lender may exercise, in addition to all other rights and remedies granted to it in this Agreement and in any other

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instrument or agreement securing, evidencing or relating to the obligations under the Note, all rights and remedies of a secured party under the UCC or any other applicable law. Without limiting the generality of the foregoing, the Lender, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon the Borrower or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon any Collateral, and may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver any Collateral (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Lender shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption of the Borrower, which right or equity is hereby waived and released. The Borrower further agrees, at the Lender’s request, to assemble the Collateral and make it available to the Lender at places that the Lender shall reasonably select, whether at the Borrower’s premises or elsewhere. The Lender shall apply the net proceeds of any action taken by it pursuant to this Section 5.1, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any Collateral or in any way relating to the Collateral or the rights of the Lender hereunder, including reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Borrower’s obligations under the Note, and the Lender does not need to account for the surplus (if any) to the Borrower until after such application and after the payment by the Lender of any other amount required by any provision of law. To the extent permitted by applicable law, the Borrower waives all claims, damages and demands it may acquire against the Lender arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition.

Section 5.2 Deficiency

The Borrower shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay any outstanding amounts under the Note and the fees and disbursements of any attorney employed by the Lender to collect such deficiency.

Section 5.3 Pledged Collateral

(a) During the continuance of any Event of Default, upon notice by the Lender to the Borrower, (i) the Lender shall have the right to receive any Proceeds of the Pledged Collateral and make application thereof to the Borrower’s obligations as set forth in this Agreement and (ii) the Lender or its nominee may exercise (A) any voting, consent, corporate and other right pertaining to the Pledged Collateral at any meeting of shareholders, partners or members, as the case may be, of the relevant issuer or issuers of Pledged Collateral or otherwise and (B) any right of conversion, exchange and subscription and any other right, privilege or option pertaining to the Pledged Collateral as if it were the absolute owner thereof (including the right to exchange at its discretion any of the Pledged Collateral upon the merger, amalgamation, consolidation, reorganization, recapitalization or other fundamental change in the corporate or equivalent structure of any issuer of Pledged Stock, the right to deposit and deliver any Pledged

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Collateral with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Lender may determine), all without liability except to account for property actually received by it; provided, however, that the Lender shall have no duty to the Borrower to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing.

(b) In order to permit the Lender to exercise the voting and other consensual rights that it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions that it may be entitled to receive hereunder, (i) the Borrower shall promptly execute and deliver (or cause to be executed and delivered) to the Lender all such proxies, dividend payment orders and other instruments as the Lender may from time to time reasonably request and (ii) without limiting the effect of clause (i) above, the Borrower hereby grants to the Lender an irrevocable proxy to vote all or any part of the Pledged Collateral and to exercise all other rights, powers, privileges and remedies to which a holder of the Pledged Collateral would be entitled (including giving or withholding written consents of shareholders, partners or members, as the case may be, calling special meetings of shareholders, partners or members, as the case may be, and voting at such meetings), which proxy shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Collateral on the record books of the issuer thereof) by any other person (including the issuer of such Pledged Collateral or any officer or agent thereof) during the continuance of an Event of Default and which proxy shall only terminate upon the payment in full of the Borrower’s obligations under this Agreement and the Note.

(c) The Borrower hereby expressly authorizes and instructs each issuer of any Pledged Collateral pledged hereunder by the Borrower to (i) comply with any instruction received by it from the Lender in writing that (A) states that an Event of Default has occurred and is continuing and (B) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from the Borrower, and the Borrower agrees that such issuer shall be fully protected in so complying and (ii) unless otherwise expressly permitted hereby, pay any dividend or other payment with respect to the Pledged Collateral directly to the Lender.

Section 5.4 Proceeds to be Turned Over To Lender

Unless otherwise expressly provided in the Note, all Proceeds received by the Lender hereunder in cash or Cash Equivalents shall be held by the Lender in a Cash Collateral Account. All Proceeds while held by the Lender in a Cash Collateral Account (or by the Borrower in trust for the Lender) shall continue to be held as collateral security for the Borrower’s obligations under this Agreement and the Note and shall not constitute payment thereof until applied.

Section 5.5 Deficiency

The Borrower shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Borrower’s obligations under this Agreement and the Note and the fees and disbursements of any attorney employed by the Lender to collect such deficiency.

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ARTICLE VI THE LENDER

Section 6.1 Lender’s Appointment as Attorney-in-Fact

(a) The Borrower hereby irrevocably constitutes and appoints the Lender and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Borrower and in the name of the Borrower or in its own name, for the purpose of carrying out the terms of this Agreement, to take any appropriate action and to execute any document or instrument that may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, the Borrower hereby gives the Lender the power and right, on behalf of the Borrower, without notice to or assent by the Borrower, to do any of the following:

(i) in the name of the Borrower or its own name, or otherwise, take possession of and indorse and collect any check, draft, note, acceptance or other instrument for the payment of moneys due with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Lender for the purpose of collecting any such moneys due with respect to any other Collateral whenever payable;

(ii) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repair or pay any insurance called for by the terms of this Agreement (including all or any part of the premiums therefor and the costs thereof);

(iii) execute, in connection with any sale provided for in Section 5.1 (Code and Other Remedies), any endorsement, assignment, bill of sale or other instrument of conveyance or transfer with respect to the Collateral; or

(iv) (A) direct any party liable for any payment under any Collateral to make payment of any moneys due or to become due thereunder directly to the Lender or as the Lender shall direct, (B) ask or demand for, collect, and receive payment of and receipt for, any moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral, (C) sign and indorse any invoice, freight or express bill, bill of lading, storage or warehouse receipt, draft against debtors, assignment, verification, notice and other document in connection with any Collateral, (D) commence and prosecute any suit, action or proceeding at law or in equity in any court of competent jurisdiction to collect any Collateral and to enforce any other right in respect of any Collateral, (E) defend any suit, action or proceeding brought against the Borrower with respect to any Collateral, (F) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Lender may deem appropriate, (G) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any Collateral as fully and completely as though the Lender were the absolute owner thereof for all purposes, and do, at the Lender’s option and the Borrower’s expense, at any time, or from time to time, all acts and things that the Lender deems necessary to protect, preserve or realize upon the Collateral and the Lender’s security interests therein and to effect the intent of this Agreement, all as fully and effectively as the Borrower might do.

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Anything in this clause (a) to the contrary notwithstanding, the Lender agrees that it shall not exercise any right under the power of attorney provided for in this clause (a) unless an Event of Default shall be continuing.

(b) If the Borrower fails to perform or comply with any of its agreements contained herein, the Lender, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement.

(c) The expenses of the Lender incurred in connection with actions undertaken as provided in this Section 6.1, together with interest thereon at a rate per annum equal to the highest rate per annum at which interest would then be payable on past due amounts of the Loan under the Note, from the date of payment by the Lender to the date reimbursed by the Borrower, shall be payable by the Borrower to the Lender on demand.

(d) The Borrower hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.

Section 6.2 Duty of Lender

The Lender’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession shall be to deal with it in the same manner as the Lender deals with similar property for its own account. Neither the Lender nor any of its officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Borrower or any other Person or to take any other action whatsoever with regard to any Collateral. The powers conferred on the Lender hereunder are solely to protect the Lender’s interest in the Collateral and shall not impose any duty upon the Lender to exercise any such powers. The Lender shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither the Lender nor any of its officers, directors, employees or agents shall be responsible to the Borrower for any act or failure to act hereunder, except for their own gross negligence or willful misconduct.

Section 6.3 Execution of Financing Statements

The Borrower authorizes the Lender and its Affiliates, counsel and other representatives, at any time and from time to time, to file or record financing statements, amendments to financing statements, and other filing or recording documents or instruments with respect to the Collateral in such form and in such offices as the Lender reasonably determines appropriate to perfect the security interests of the Lender under this Agreement, and such financing statements and amendments may describe the Collateral covered thereby as “all assets of the debtor”, “all personal property of the debtor” or words of similar effect, as applicable. The Borrower hereby also authorizes the Lender and its Affiliates, counsel and other representatives, at any time and from time to time, to file continuation statements with respect to previously filed financing statements. A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction.

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ARTICLE VII MISCELLANEOUS

Section 7.1 Amendments

None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified unless in writing signed by the Lender and the Borrower; provided, however, that Schedules hereto may be supplemented (but no substantive provision may be otherwise modified and no Collateral may be released) through the delivery of supplements, as required to make the information provided therein true and correct as of the any date prior to the termination of this Agreement.

Section 7.2 Notices

(a) All notices, demands, requests, consents and other communications provided for in this Agreement shall be given in writing, or by any telecommunication device capable of creating a written record (including electronic mail), and addressed to the party to be notified as follows:

(i)

if to the Borrower:

BBGP Aircraft Holdings Limited

c/o Maples Finance Limited

Queensgate House,

PO Box 1093GT

South Church Street

Grand Cayman, Cayman Islands

Tel.: +1 345 814 5808

Fax: + 1 345 945 7100

Attn: Dwight Dube

(ii)

if to the Lender:

Babcock & Brown Air Limited

West Pier

Dun Laoghaire

County Dublin, Ireland

Facsimile: +353 1 231-1901

Attention: Chief Executive Officer

Section 7.3 No Waiver by Course of Conduct; Cumulative Remedies

The Lender shall not by any act (except by a written instrument pursuant to Section 7.1 (Amendments)), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Lender, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Lender of any right or remedy hereunder on any

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one occasion shall not be construed as a bar to any right or remedy that the Lender would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

Section 7.4 Successors and Assigns

This Agreement shall be binding upon the successors and assigns of the Borrower and shall inure to the benefit of the Lender and its successors and assigns; provided, however, that the Borrower may not assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Lender.

Section 7.5 Counterparts

This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple counterparts and attached to a single counterpart so that all signature pages are attached to the same document. Delivery of an executed counterpart by telecopy shall be effective as delivery of a manually executed counterpart.

Section 7.6 Severability

Any provision of this Agreement that 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.

Section 7.7 Section Headings

The Article and Section titles contained in this Agreement are, and shall be, without substantive meaning or content of any kind whatsoever and are not part of the agreement of the parties hereto.

Section 7.8 Entire Agreement

This Agreement together with the Note represents the entire agreement of the parties and supersedes all prior agreements and understandings relating to the subject matter hereof.

Section 7.9 Governing Law

This Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.

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Section 7.10 Reinstatement

The Borrower further agrees that, if any payment made by the Borrower or any other Person and applied to the Loan is at any time annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of Collateral are required to be returned by the Lender to the Borrower or other Person or its estate, trustee, receiver or any other party, including the Borrower, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, any Lien or other Collateral securing such liability shall be and remain in full force and effect, as fully as if such payment had never been made or, if prior thereto the Lien granted hereby or other Collateral securing such liability hereunder shall have been released or terminated by virtue of such cancellation or surrender), such Lien or other Collateral shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect any Lien or other Collateral securing the obligations of the Borrower in respect of the amount of such payment.

IN WITNESS WHEREOF, each of the undersigned has caused this Pledge and Security Agreement to be duly executed and delivered as of the date first above written.

BBGP AIRCRAFT HOLDINGS LIMITED, as Borrower
By:	/s/ Dwight Dubé
	Name:	Dwight Dubé
	Title:	Director

ACCEPTED AND AGREED as of the date first above written:

BABCOCK & BROWN AIR LIMITED, as Lender
By:	/s/ Colm Barrington
	Name:	Colm Barrington
	Title:	Chief Executive Officer

Schedule 1

Pledged Collateral

Issuer	Type of Equity Pledged¹	Certificate Number (as applicable)	Number of Units (as applicable)
Babcock & Brown Air Limited	American Depository Shares representing Common Shares	DBDR-0024	4,558,216

JET-i Holdings LLC	Membership Interests	N/A	N/A

______________

¹ Both uncertificated and certificated shares.

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Schedule 2

Filings

Borrower		Filing Office
BBGP Aircraft Holdings Limited		District of Columbia Recorder of Deeds

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Schedule 3

Borrower’s Jurisdiction of Organization

and Chief Executive Office

Borrower		Jurisdiction of Organization		Mailing Address/Chief Executive Office
BBGP Aircraft Holdings Limited		Cayman Islands		c/o Maples Finance Limited Queensgate House, PO Box 1093GT South Church Street Grand Cayman, Cayman Islands

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EX-99.3 4 file4.htm PRIVATE PLACEMENT AGREEMENT

Exhibit 3

PRIVATE PLACEMENT AGREEMENT

PRIVATE PLACEMENT AGREEMENT dated as of July 19, 2007, by and among Babcock & Brown Air Limited, a Bermuda exempted company (the “Company”), and each of the persons named in the signature pages hereof (each, a “Principal Investor”).

WHEREAS, the Company intends to offer American Depositary Shares (“ADSs”) representing its common shares, par value $0.001 per share (“Common Shares”), in an initial public offering of the Company (the “IPO”); and

WHEREAS, the Company proposes to issue and sell to the Principal Investors an aggregate of 13,855,839 ADSs (the “Shares”) at a price per Share equal to the price per ADS to be paid by public investors in the IPO (the “IPO Price”), and the each of the Principal Investors desires, subject to the terms and conditions set forth herein, to subscribe for the Shares at a price per Share equal to the IPO Price;

WHEREAS, the Company proposes to agree to provide each of the Principal Investors and certain other investors with registration rights as set forth in the form of registration rights agreement attached hereto as Exhibit A (the “Registration Rights Agreement”); and

WHEREAS, the Principal Investors propose to agree to be bound by lock-up restrictions as set forth herein with respect to the Shares to be purchased by them hereby, together with any securities issued with respect to such Shares by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed:

ARTICLE 1

ISSUANCE, SALE AND PURCHASE OF SHARES

SECTION 1.01. Issuance, Sale and Purchase of Shares. On the basis of the representations, warranties and covenants contained in this Private Placement Agreement, and subject to the terms and conditions contained herein, the Company agrees to issue and sell to the several Principal Investors, and each Principal Investor, severally and not jointly, agrees to subscribe for, the respective number of Shares set forth in Schedule I hereto opposite its name at a price per Share equal to the IPO Price.

Each of the Principal Investors and transferees of the Shares and certain other investors shall have the registration rights set forth in the Registration Rights Agreement to be executed on and dated as of the Closing (as defined below).

SECTION 1.02. Closing. Subject to the terms and conditions contained in this Private Placement Agreement, the closing of the subscription for the Shares (the “Closing”) shall take

place at the time and on the date that the IPO is consummated. Delivery of the Shares shall be made to each of the several Principal Investors against (i) payment to the Company by wire transfer of immediately available funds of the aggregate subscription price for the Shares to be subscribed for by such Principal Investor, or (ii) a combination of (A) payment to the Company by wire transfer of immediately available funds in an amount no less than the aggregate par value of the Shares to be subscribed for by such Principal Investor and (B) delivery to the Company of a note in the form of Exhibit B with a principal amount equal to the aggregate subscription price for the Shares to be subscribed for by such Principal Investor (plus, in the case of BBGP Aircraft Holdings Limited (“BBGP”), BBAM Co-Investor Limited (“BBAM Co-Investor”), Babcock & Brown Aircraft Lessor No. 1 Ltd. (“BBALN1”), Direct Investment Fund Equity Trust (“DIF Equity”) or Direct Investment Fund Mezzanine Debt Trust (“DIF Mezzanine Debt”), the additional payment to be made by such Principal Investor to the Company pursuant to Section 1.03), less the amount of immediately available funds paid by such Principal Investor pursuant to clause (ii)(A), together with legal opinions satisfactory to the Company with respect to the due authorization and enforceability of any such note, the enforceability of the security agreement referred to in Section 8 of such note and the creation and perfection of the security interest in the collateral securing such note.

SECTION 1.03. Additional Payment Obligation. In consideration of the arrangement of the transactions occurring in connection with the IPO, BBGP agrees to pay to the Company $1,449,086.12, BBAM Co-Investor agrees to pay to the Company $217,376.30, BBALN1 agrees to pay the Company $501,637.62, DIF Equity agrees to pay to the Company $334,425.08, and DIF Mezzanine Debt agrees to pay to the Company $167,212.54, in each case upon the Closing by (i) wire transfer of immediately available funds, (ii) adding such amount to the principal of any note delivered by such Principal Investor pursuant to clause (ii)(B) of Section 1.02, or (iii) a combination of wire transfer of immediately available funds and the addition of the balance of such amount to the principal of the applicable note delivered by such Principal Investor pursuant to clause (ii)(B) of Section 1.02.

SECTION 1.03. Conditions. The obligations of the Principal Investors to subscribe for the Shares and to pay the subscription price at the Closing shall be subject to the satisfaction of each of the following conditions as of the Closing:

a)	the representations and warranties contained in Section 2 hereof being true and correct at and as of the Closing as though then made, and the Company having performed all of the covenants to be performed by it hereunder prior to the Closing;

b)	the Company having executed the Registration Rights Agreement and the Principal Investors having received an original copy thereof, duly executed by the Company; and

c)	the closing of the IPO occurring simultaneously with the Closing.

ARTICLE 2

REPRESENTATIONS BY THE COMPANY

The Company represents and warrants to, and agrees with, each of the Principal Investors as follows:

SECTION 2.01. Corporate Existence and Power. The Company has been duly incorporated and is an exempted company in good standing under the laws of Bermuda with full corporate power and authority to own or lease, as the case may be, and to operate its properties and conduct is business.

SECTION 2.02. Authority, Approval and Enforceability. This Private Placement Agreement has been duly authorized, executed and delivered by the Company and constitutes its valid and binding agreement, enforceable against it in accordance with its terms. The Common Shares represented by the Shares have been duly and validly authorized for issue.

ARTICLE 3

REPRESENTATIONS OF THE PRINCIPAL INVESTORS

Each Principal Investor, severally and not jointly, represents and warrants to, and agrees with, the Company as follows:

SECTION 3.01. Corporate Power. Such Principal Investor has the corporate power and authority to enter into this Private Placement Agreement.

SECTION 3.02. Authority, Approval and Enforceability. This Private Placement Agreement has been duly authorized, executed and delivered by such Principal Investor and constitutes its valid and binding agreement, enforceable against it in accordance with its terms.

SECTION 3.03. Private Placement.

a)	Such Principal Investor understands that the offering and sale of the Shares to it as contemplated hereby are intended to be exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”), pursuant to Section 4(2) thereunder.

The Shares to be acquired by such Principal Investor pursuant to this Private Placement Agreement are being acquired for its own account for investment and without a view to the public distribution of such Shares or any interest therein; provided that nothing contained herein shall prevent such Principal Investor and subsequent holders of the Restricted Securities, as defined in Section 4.06 below, from transferring such securities in compliance with the provisions of Article 4 hereof.

Such Principal Investor has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Shares, and such Principal Investor is capable of bearing the economic risks of such investment, including a complete loss of its investment in the Shares.

Such Principal Investor has been given the opportunity to ask questions of and receive answers from the Company concerning the Company, the Shares and other related matters. Such Principal Investor further represents and warrants to the Company that it has been furnished with all information it deems necessary or desirable to evaluate the merits and risks of the acquisition of the Shares and that the Company has made available to such Principal Investor or its agents all documents and information relating to an investment in the Shares requested by or on behalf of such Principal Investor. In evaluating the suitability of an investment in the Shares, such Principal Investor has not relied upon any other representations or other information (other than as contemplated by the preceding sentences), whether oral or written, made by or on behalf of the Company.

e)	Such Principal Investor is an “Accredited Investor” as such term is defined in Regulation D under the 1933 Act.

ARTICLE 4

LOCK-UP PERIOD; TRANSFER OF RESTRICTED SECURITIES

SECTION 4.01. Lock-Up Period. If the IPO closes, each of the Principal Investors will not, without the prior consent of the Company, offer, sell, contract to sell, pledge, or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by such Principal Investor or any affiliate of such Principal Investor or any person in privity with such Principal Investor or any affiliate of such Principal Investor), directly, or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder, with respect to, the Shares to be purchased by such Principal Investor or any securities convertible into, or exercisable or exchangeable for, such Shares, for a period of 360 days (in the case of Babcock & Brown JET-i Co., Ltd.) or 180 days (in the case of all other Principal Investors) after the date of the final prospectus for the IPO, other than (i) transfers to affiliates of such Principal Investor, provided that the affiliate transferee agrees to be bound by the terms of the restrictions contained in this Section 4.01 for the remaining portion of such period, (ii) pledges of Shares to a financial institution that extends a “margin” loan to finance any Principal Investor’s acquisition of its Shares, provided that the pledgee agrees to be bound by the terms of the restrictions contained in this Section 4.01 for the remaining portion of such period, or (iii) sales of Shares by any Principal Investor in the IPO pursuant to the underwriting agreement with the underwriters for the IPO.

SECTION 4.02. General Provisions. Restricted Securities are transferable only pursuant to (i) public offerings registered under the 1933 Act, (ii) Rule 144 under the 1933 Act (or any similar rule or rules then in force) if such rule is available, or (iii) subject to the conditions specified in Section 4.02 below, any other applicable exemption from registration legally available under the 1933 Act; and only to the extent set forth in this Article 4.

SECTION 4.03. Opinion Delivery. In connection with the transfer of any Restricted Securities pursuant to Section 4.02(iii), the holder thereof shall deliver written notice to the Company describing in reasonable detail the transfer or proposed transfer, together with an opinion of Weil, Gotshal & Manges LLP or other counsel that, to the Company’s reasonable satisfaction, is knowledgeable in securities law matters to the effect that such transfer of Restricted Securities may be effected without registration of such Restricted Securities under the 1933 Act.

In addition, if the holder of the Restricted Securities delivers to the Company an opinion of Weil, Gotshal & Manges LLP or other counsel that no subsequent transfer of such Restricted Securities shall require registration under the 1933 Act, the Company shall, promptly upon such contemplated transfer, deliver new certificates for such Restricted Securities that do not bear the 1933 Act legend set forth below in Section 4.04. If the Company is not required to deliver new certificates for such Restricted Securities bearing such legend, the holder thereof shall not transfer the same until the prospective transferee has confirmed to the Company in writing its agreement to be bound by the conditions contained in this Section 4.03. Notwithstanding anything to the contrary herein, transfers to or among affiliates of any Principal Investor shall not require delivery of the opinion required in this Section 4.03.

SECTION 4.04. Legend. Each certificate or instrument representing Restricted Securities shall be imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), THE SECURITIES LAWS OF ANY STATE OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, BY ANY STATE SECURITIES COMMISSION OR BY ANY OTHER REGULATORY AUTHORITY OF ANY OTHER JURISDICTION. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.”

SECTION 4.05. Legend Removal. If any Restricted Securities become eligible for sale pursuant to Rule 144(k), the Company shall, upon the request of the holder of such Restricted Securities, remove the legend set forth in Section 4.04 from the certificates for such Restricted Securities.

SECTION 4.06. Definition of Restricted Securities. For the purposes of this Private Placement Agreement, “Restricted Securities” means (i) the Shares issued hereunder and (ii) any securities issued with respect to the Shares by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any particular Restricted Securities, such securities shall cease to be Restricted Securities when they have (a) been effectively registered for sale under the 1933 Act

and disposed of in accordance with the registration statement covering them, (b) been distributed to the public through a broker, dealer or market maker pursuant to Rule 144 (or any similar provision then in force) under the 1933 Act or become eligible for sale pursuant to Rule 144(k) (or any similar provision then in force) under the 1933 Act or (c) been otherwise transferred and new stock certificates not bearing the 1933 Act legend set forth in Section 4.04 have been delivered by the Company in accordance with Section 4.03. Whenever any particular securities cease to be Restricted Securities, the holder thereof shall be entitled to receive from the Company, without expense, new certificates representing securities of like tenor not bearing a 1933 Act legend of the character set forth in Section 4.04.

ARTICLE 5

MISCELLANEOUS

SECTION 5.01. Notices. All notices and other communications required or permitted under this Private Placement Agreement shall be deemed to have been duly given and made if in writing and if served by personal delivery to the party for whom intended, by facsimile transmission, by telegram or telex or by registered or certified mail (postage prepaid, return receipt requested), sent to the following addresses (or such other address for a party as shall be specified by like notice):

If to the Company:

Babcock & Brown Air Limited

West Pier

Dun Laoghaire

County Dublin, Ireland

Facsimile: +353 1 231-1900

Attention: Chief Executive Officer

with a copy to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

Facsimile: +1 (212) 310-8007

Attention: Boris Dolgonos, Esq.

If to any of the Principal Investors:

c/o Babcock & Brown Aircraft Management LLC

2 Harrison Street

6th Floor

San Francisco CA 94105

Facsimile: +1 (415) 267-1500

Attention: Greg Azzara

and, in the case of DIF Equity and DIF Mezzanine Debt, as provided on Schedule II.

SECTION 5.02. Amendments and Waivers. Any provision of this Private Placement Agreement may be amended, modified, supplemented or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Private Placement Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective.

SECTION 5.03. Successors and Assigns. The provisions of this Private Placement Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Private Placement Agreement without the consent of each other party hereto, and provided further that, notwithstanding the foregoing, each Principal Investor may assign, delegate or otherwise transfer any of its rights or obligations under this Private Placement Agreement to any of its affiliates (as such term is defined in Rule 144 under the 1933 Act). Notwithstanding the foregoing, it is understood that subsequent transferees of Shares shall be entitled to the registration rights set forth in the Registration Rights Agreement.

SECTION 5.04. Severability. Any provision of this Private Placement Agreement 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 of this Private Placement Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

SECTION 5.05. Counterparts; Effectiveness; Third-Party Beneficiaries. This Private Placement Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Private Placement Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto. No provision of this Private Placement Agreement is intended to confer upon any person other than the parties hereto any rights or remedies hereunder.

SECTION 5.06. Entire Agreement. This Private Placement Agreement constitutes the entire agreement among the parties with respect to the subject matter of this Private Placement Agreement and supersedes and preempts all prior agreements and understandings, both oral and written, among the parties with respect to the subject matter of this Private Placement Agreement in any way.

SECTION 5.07. Captions. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.

SECTION 5.08. Governing Law. This Private Placement Agreement shall be governed by and construed in accordance with laws of the State of New York.

SECTION 5.09. Provisions Relating to DIF Mezzanine Debt and DIF Equity. The provisions of Schedule II hereto are incorporated herein by reference and constitute a part of this Private Placement Agreement.

[Signature Pages Follow]

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

			BABCOCK & BROWN AIR LIMITED
			By:	/s/ Colm Barrington
			Name:	Colm Barrington
			Title:	Chief Executive Officer

			BABCOCK & BROWN JET-I CO., LTD
			By:	/s/ Robert S. Tomczak
			Name:	Robert S. Tomczak
			Title:	Director

			BBGP AIRCRAFT HOLDINGS LIMITED
			By:	/s/ Dwight Dubé
			Name:	Dwight Dubé
			Title:	Director

			BBAM CO-INVESTOR LIMITED
			By:	/s/ Dwight Dubé
			Name:	Dwight Dubé
			Title:	Director

			NOMURA BABCOCK & BROWN CO., LTD
			By:	/s/ Yoshifumi Kawabata
			Name:	Yoshifumi Kawabata
			Title:	President and Representative Executive Officer

Signed for Babcock & Brown Direct Investment Fund Limited as responsible entity for the Direct Investment Fund Equity Trust (ARSN 103 310 407) by its attorney in the presence of:

/s/ Theodore W. Dow		/s/ Fergus J. Neilson
Witness Signature		Attorney Signature

Theodore W. Dow		Fergus J. Neilson
Print Name		Print Name

Signed for Babcock & Brown Direct Investment Fund Limited as responsible entity for the Direct Investment Fund Mezzanine Debt Trust (ARSN 103 309 780) by its attorney in the presence of:

/s/ Theodore W. Dow		/s/ Fergus J. Neilson
Witness Signature		Attorney Signature

Theodore W. Dow		Fergus J. Neilson
Print Name		Print Name

			BABCOCK & BROWN AIRCRAFT LESSOR NO. 1 LTD.
			By:	/s/ Richard Umbrecht
			Name:	Richard Umbrecht
			Title:	Director

SCHEDULE I

Name of Principal Investor		Number of Shares
Babcock & Brown JET-I Co. Ltd.		4,422,529
BBGP Aircraft Holdings Limited		4,558,216
BBAM Co-Investor Limited		683,774
J.P. Morgan Nominees Australia Limited as nominee for JPMorgan Chase Bank, N.A. (ACN 074 112 011) as custodian for the Direct Investment Fund Equity Trust		1,051,961
J.P. Morgan Nominees Australia Limited as nominee for JPMorgan Chase Bank, N.A. (ACN 074 112 011) as custodian for the Direct Investment Fund Mezzanine Debt Trust		525,980
Nomura Babcock & Brown Co., Ltd		1,035,438
Babcock & Brown Aircraft Lessor No. 1 Ltd.		1,577,941
Total		13,855,839

SCHEDULE II

Provisions relating to DIF Mezzanine Debt:

References to DIF Mezzanine Debt are to BABCOCK & BROWN DIRECT INVESTMENT FUND LIMITED, a company incorporated under the laws of Australia having its registered office at Level 37, The Chifley Tower, 2 Chifley Square, Sydney (ABN 15 101 611 438) as responsible entity and trustee of the Direct Investment Fund Mezzanine Debt Trust (ARSN 103 309 780).

(a) Where this Agreement confers any right on Babcock & Brown Direct Investment Fund Limited (“DIF”) in its capacity as responsible entity of the Direct Investment Fund Mezzanine Debt Trust (ARSN 103 309 780) (the “DIF Trust”), this Agreement is to be read as conferring those rights upon J.P. Morgan Nominees Australia Limited as nominee for JPMorgan Chase Bank, N.A. (ACN 074 112 011) as custodian for the DIF Trust, to be exercised on behalf of, and at the direction of, the DIF Trust.

(b) DIF enters into this Agreement only in its capacity as responsible entity of the DIF Trust and in no other capacity.

(c) Except to the extent expressly provided by clause (e) below: (i) a liability or obligation of DIF arising under or in connection with this Agreement is limited to and can be enforced against DIF only to the extent to which it can be satisfied out of assets of the DIF Trust out of which DIF is actually indemnified for the liability; (ii) DIF will have no personal liability to any other party to this Agreement and the other parties waive their rights and release DIF from any personal liability; and (iii) this limitation of DIF’s liability applies despite any other provision of this Agreement and extends to all liabilities and obligations of, undertaken or incurred by, or devolving on, DIF arising from, or in any way connected with, any conduct, omission, representation, warranty, agreement, transaction or other matter or thing under or related to this Agreement.

(d) The parties other than DIF may not: (i) sue DIF in any capacity other than as responsible entity of the DIF Trust, including seeking the appointment of a receiver, or a liquidator, an administrator or any similar person to DIF; or (ii) prove in any liquidation, administration or arrangements of or affecting DIF.

(e) The provisions of clause (c) will not apply to any liability or obligation of DIF to the extent that it is not satisfied because under this Agreement, the constitution of the DIF Trust or by operation of law there is a reduction in the extent of DIF’s indemnification out of the assets of the DIF Trust, as a result of DIF’s fraud, negligence or breach of trust.

Provisions Relating to DIF Equity:

References to DIF Equity are to BABCOCK & BROWN DIRECT INVESTMENT FUND LIMITED, a company incorporated under the laws of Australia having its registered office at Level 37, The Chifley Tower, 2 Chifley Square, Sydney (ABN 15 101 611 438) as responsible entity and trustee of the Direct Investment Fund Equity Trust (ARSN 103 310 407).

(a) Where this Agreement confers any right on Babcock & Brown Direct Investment Fund Limited (“DIF”) in its capacity as responsible entity of the Direct Investment Fund Equity Trust (ARSN 103 310 407) (the “DIF Trust”), this Agreement is to be read as conferring those rights upon J.P. Morgan Nominees Australia Limited as nominee for JPMorgan Chase Bank, N.A. (ACN 074 112 011) as custodian for the DIF Trust, to be exercised on behalf of, and at the direction of, the DIF Trust.

(b) DIF enters into this Agreement only in its capacity as responsible entity of the DIF Trust and in no other capacity.

Notices for DIF Equity and DIF Mezzanine Debt shall be sent to:

Babcock & Brown Direct Investment Fund Limited

Level 32

The Chifley Tower

2 Chifley Square

Sydney NSW 2000

Tel: +61 2 9229 1800

Fax: +61 2 9235 3496

Attn: Chief Investment Officer

EXHIBIT A

Form of Registration Rights Agreement

EXHIBIT B

Form of Note

EX-99.4 5 file5.htm REGISTRATION RIGHTS AGREEMENT

Exhibit 4

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of October 2, 2007, is entered into by and among Babcock & Brown Air Limited, a Bermuda exempted company (including its successors, the “Company”), and each of the shareholders of the Company that is listed in the signature pages hereof (each, a “Principal Investor”).

RECITALS

WHEREAS, the Company has filed a Registration Statement (File No. 333-145994) with the Securities and Exchange Commission on Form F-1 (the “IPO Registration Statement”) in connection with the initial public offering (the “IPO”) of American Depositary Shares (“ADSs”) representing its common shares (“Common Shares”);

WHEREAS, the Company and the Principal Investors have entered into Private Placement Agreements, dated as of July 19, 2007, and September 10, 2007 in the case of Everest Babcock & Brown Opportunities Fund, (the “Private Placement Agreements”);

WHEREAS, pursuant to the Private Placement Agreements, upon the closing of the transactions contemplated by the Private Placement Agreements, each Principal Investor will subscribe for Common Shares in the form of ADSs (the “Shares”) at a price per Share equal to the public offering price in the IPO;

WHEREAS, the Company has agreed to provide the Principal Investors with the registration rights specified in this Agreement with respect to the Shares held by them or any of their permitted transferees, on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

1.1 Definitions. The following terms shall have the meanings set forth in this Section 1.1:

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations promulgated by the SEC thereunder.

“Excluded Registration” means a registration under the Securities Act of (i) securities pursuant to one or more Demand Registrations pursuant to Section 2 hereof,

(ii) securities registered on Form S-8 or any similar successor form, and (iii) securities registered to effect the acquisition of, or combination with, another Person.

“Holder” means (i) each Principal Investor and (ii) any direct or indirect transferee of any Principal Investor who shall become a party to this Agreement in accordance with Section 2.9 and has agreed in writing to be bound by the terms of this Agreement.

“Person” or “person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof.

“register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

“Registrable Shares” means the Shares owned by Holders, together with any securities owned by Holders issued with respect to such Shares by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, amalgamation or other reorganization; provided, however, that Shares that, pursuant to Section 3.1, no longer have registration rights hereunder shall not be considered Registrable Shares.

“Requesting Holders” shall mean any Holder(s) requesting to have its (their) Registrable Shares included in any Demand Registration or Shelf Registration.

“SEC” means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations promulgated by the SEC thereunder.

1.2 Other Terms. For purposes of this Agreement, the following terms have the meanings set forth in the section or agreement indicated.

Term		Section
ADSs		Recitals
Adverse Effect		Section 2.1.5
Advice		Section 2.6
Agreement		Introductory Paragraph
Common Shares		Recitals
Company		Introductory Paragraph
Demand Registration		Section 2.1.1(a)
Demanding Shareholders		Section 2.1.1(a)
Demand Request		Section 2.1.1(a)
Inspectors		Section 2.5(xiii)
IPO		Recitals

IPO Registration Statement		Recitals
NASD		Section 2.7
Piggyback Registration		Section 2.2.1
Principal Investors		Introductory Paragraph
Private Placement Agreements		Recitals
Records		Section 2.5(xiii)
Registration Statement		Recitals
Required Filing Date		Section 2.1.1(b)
Seller Affiliates		Section 2.8.1
Shares		Recitals
Shelf Registration		Section 2.1.2
Suspension Notice		Section 2.6

1.3 Rules of Construction. Unless the context otherwise requires

(1) a term has the meaning assigned to it;

(2) “or” is not exclusive;

(3) words in the singular include the plural, and words in the plural include the singular;

(4) provisions apply to successive events and transactions; and

(5) “herein,” “hereof” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.

ARTICLE 2

REGISTRATION RIGHTS

2.1 Demand Registration.

2.1.1 Request for Registration.

(a) Commencing on the date hereof, any Holder or Holders of Registrable Shares shall have the right to require the Company to file a registration statement on Form F-1 or F-3 or any similar or successor to such forms under the Securities Act for a public offering of all (but not part) of its or their Registrable Shares (a “Demand Registration”), by delivering to the Company written notice stating that such right is being exercised, naming, if applicable, the Holders whose Registrable Shares are to be included in such registration (collectively, the “Demanding Shareholders”), specifying the number of each such Demanding Shareholder’s Registrable Shares to be included in such registration and, subject to Section 2.1.3 hereof, describing the intended method of distribution thereof (a “Demand Request”). The IPO Registration Statement shall not constitute a Demand Registration for any purpose under this Agreement.

(b) Subject to Section 2.1.6, the Company shall file the registration statement in respect of a Demand Registration as soon as practicable following the expiration of the period within which Holders electing to include their Registrable Shares in such Demand Registration are required to provide notice to such effect pursuant to Section 2.1.4 (the date on which it first becomes so practicable make such filing following the expiration of such period, the “Required Filing Date”) and shall use reasonable best efforts to cause the same to be declared effective by the SEC as promptly as practicable after such filing; provided, however, that the Company shall not be obligated to file a registration statement in respect of a Demand Registration pursuant to Section 2.1.1(a) unless the Registrable Shares subject to such Demand Request, plus any Registrable Shares elected by Holders to be included in such Demand Registration pursuant to Section 2.1.4, have an aggregate market value that is equal to at least $50 million as of the date of the expiration of the period within which Holders are required to elect to include their Registrable Shares in such Demand Registration pursuant to Section 2.1.4. The Company shall have the right to include Shares to be offered and sold by it in a primary offering in any Demand Registration.

2.1.2 Shelf Registration. With respect to any Demand Registration, the Requesting Holders may request the Company to effect a registration of the Registrable Shares under a registration statement pursuant to Rule 415 under the Securities Act (or any successor rule) (a “Shelf Registration”).

2.1.3 Selection of Underwriters. At the request of a majority of the Requesting Holders, the offering of Registrable Shares pursuant to a Demand Registration shall be in the form of an underwritten offering. The Company shall select the investment banking firm or firms to manage the underwritten offering. No Holder may participate in any registration pursuant to Section 2.1.1 unless such Holder (x) agrees to sell such Holder’s Registrable Shares on the basis provided in any underwriting arrangements described above and (y) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; provided, however, that no such Holder shall be required to make any representations or warranties in connection with any such registration other than representations and warranties as to (i) such Holder’s ownership of his or its Registrable Shares to be transferred free and clear of all liens, claims, and encumbrances, (ii) such Holder’s power and authority to effect such transfer, and (iii) such matters pertaining to compliance with securities laws as may be reasonably requested; provided, further, however, that the obligation of such Holder to indemnify pursuant to any such underwriting arrangements shall be several, not joint and several, among such Holders selling Registrable Shares, and the liability of each such Holder will be in proportion thereto, and provided, further, that such liability will be limited to the net amount received by such Holder from the sale of his or its Registrable Shares pursuant to such registration.

2.1.4 Rights of Nonrequesting Holders. Upon receipt of any Demand Request, the Company shall promptly (but in any event within ten (10) days) give written notice of such proposed Demand Registration to all other Holders, who shall have the right, exercisable by written notice to the Company within twenty (20) days of their

receipt of the Company’s notice, to elect to include their Registrable Shares in such Demand Registration. All Holders requesting to have their Registrable Shares included in a Demand Registration in accordance with the preceding sentence shall be deemed to be “Requesting Holders” for purposes of this Section 2.1.

2.1.5 Priority on Demand Registrations. No securities to be sold for the account of any Person other than a Requesting Holder or the Company shall be included in a Demand Registration unless the managing underwriter or underwriters shall advise the Requesting Holders and the Company in writing that the inclusion of such securities will not adversely affect the price, timing or distribution of the offering or otherwise adversely affect its success (an “Adverse Effect”). Furthermore, if the managing underwriter or underwriters shall advise the Requesting Holders and the Company that, even after exclusion of all securities of other Persons pursuant to the immediately preceding sentence, the amount of Registrable Shares proposed to be included in such Demand Registration by Requesting Holders and any securities to be included by the Company is sufficiently large to cause an Adverse Effect, the Company shall include in such registration statement (i) first, the securities the Company proposes to sell, and (ii) second, the Registrable Shares of the Requesting Holders requested to be included in such Demand Registration, equal the number of shares which the Requesting Holders and the Company are so advised can be sold in such offering without an Adverse Effect and such shares shall be allocated pro rata among the Requesting Holders on the basis of the number of Registrable Shares requested to be included in such registration by each such Requesting Holder.

2.1.6 Deferral of Filing. The Company may defer the filing (but not the preparation) of a registration statement required by Section 2.1 until a date not later than ninety (90) days after the Required Filing Date if (i) at the time the Company receives the Demand Request, the Company is engaged in confidential negotiations or other confidential business activities, disclosure of which would be required in such registration statement (but would not be required if such registration statement were not filed), and the Board of Directors of the Company or a committee of the Board of Directors of the Company determines in good faith that such disclosure would be materially detrimental to the Company and its shareholders, or (ii) prior to receiving the Demand Request, the Company had determined to effect a registered underwritten public offering of the Company’s securities for the Company’s account and the Company had taken substantial steps (including, but not limited to, selecting a managing underwriter for such offering) and is proceeding with reasonable diligence to effect such offering. A deferral of the filing of a registration statement pursuant to this Section 2.1.6 shall be lifted, and the requested registration statement shall be filed forthwith, if, in the case of a deferral pursuant to clause (i) of the preceding sentence, the negotiations or other activities are disclosed or terminated, or, in the case of a deferral pursuant to clause (ii) of the preceding sentence, the proposed registration for the Company’s account is abandoned. In order to defer the filing of a registration statement pursuant to this Section 2.1.6, the Company shall promptly (but in any event within ten (10) days), upon determining to seek such deferral, deliver to each Requesting Holder a certificate signed by an executive officer of the Company stating that the Company is deferring such filing pursuant to this Section 2.1.6 and a general statement of the reason for such deferral and

an approximation of the anticipated delay. Within twenty (20) days after receiving such certificate, the holders of a majority of the Registrable Shares held by the Requesting Holders and for which registration was previously requested may withdraw such Demand Request by giving notice to the Company; if withdrawn, the Demand Request shall be deemed not to have been made for all purposes of this Agreement.

2.1.7 Limitation on Demand Registrations. The Company shall not be obligated (i) to file a registration statement in respect of a Demand Registration pursuant to Section 2.1.1(a) within one hundred and eighty (180) days after the effective date of the IPO Registration Statement or (ii) to effect more than one Demand Registration in the period commencing one hundred and eighty (180) days after the effective date of the IPO Registration Statement and ending three hundred and sixty (360) days after the effective date of the IPO Registration Statement. Following three hundred and sixty (360) days after the effective date of the IPO Registration Statement, each Holder will be entitled to initiate no more than one Demand Registration, and the Company shall not be obligated to effect more than one Demand Registration, provided that a request for registration will not count for the purposes of this limitation if (i) all Requesting Holders determine in good faith to withdraw (prior to the initial filing of the Registration Statement relating to such request) the proposed registration due to marketing or regulatory reasons, (ii) the Registration Statement relating to such request is not declared effective within 180 days of the date such Registration Statement is first filed with the SEC (other than solely by reason of the requesting Holder having refused to proceed) and such Requesting Holder withdraws its Demand Request prior to such Registration Statement being declared effective, (iii) prior to the sale of at least 90% of the Registrable Shares included in the applicable registration relating to such request, such registration is adversely affected by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court for any reason and the Company fails to have such stop order, injunction or other order or requirement removed, withdrawn or resolved to the Requesting Holder’s reasonable satisfaction within 30 days of the date of such order, (iv) any of the Registrable Shares requested by the Holder to be included in the registration are not so included pursuant to Section 2.1.5 and such Holder does not make another request for registration for at least six months following such initial request, (v) the Company is not obligated to file a registration statement pursuant to Section 2.1.1(a) as a result of such request because the Registrable Shares to be included in the registration statement do not have a market value of at least $50 million as required by the proviso to Section 2.1.1(b), or (v) the conditions to closing specified in the underwriting agreement or purchase agreement entered into in connection with the registration relating to such request are not satisfied (other than as a result of a material default or breach thereunder by any member of the requesting Holders). Notwithstanding the foregoing, the Company will pay all registration expenses in connection with any request for registration pursuant to Section 2.1.1 regardless of whether or not such request counts toward the limitation set forth above.

2.2 Piggyback Registrations.

2.2.1 Right to Piggyback. Each time the Company proposes to register any of its equity securities (other than pursuant to an Excluded Registration) under the

Securities Act for sale to the public (whether for the account of the Company or the account of any securityholder of the Company) (a “Piggyback Registration”), the Company shall give prompt written notice to each Holder of Registrable Shares (which notice shall be given not less than twenty (20) days prior to the anticipated filing date of the Company’s registration statement), which notice shall offer each such Holder the opportunity to include any or all of its Registrable Shares in such registration statement, subject to the limitations contained in Section 2.2.2 hereof. Each Holder that desires to have its Registrable Shares included in such registration statement shall so advise the Company in writing (stating the number of shares desired to be registered) within ten (10) days after the date of such notice from the Company. Any Holder shall have the right to withdraw such Holder’s request for inclusion of such Holder’s Registrable Shares in any registration statement pursuant to this Section 2.2.1 by giving written notice to the Company of such withdrawal prior to the date of filing of the registration statement. Subject to Section 2.2.2 below, the Company shall include in such registration statement all such Registrable Shares so requested to be included therein; provided, however, that the Company may at any time withdraw or cease proceeding with any such registration if it shall at the same time withdraw or cease proceeding with the registration of all other equity securities originally proposed to be registered.

2.2.2 Priority on Piggyback Registrations.

(a) If a Piggyback Registration is an underwritten offering and was initiated by the Company, and if the managing underwriter advises the Company that the inclusion of Registrable Shares requested to be included in the Registration Statement would cause an Adverse Effect, the Company shall include in such registration statement (i) first, the securities the Company proposes to sell, (ii) second, the Registrable Shares requested to be included in such registration, pro rata among the Holders of such Registrable Shares on the basis of the number of Registrable Shares owned by each such Holder, and (iii) third, any other securities requested to be included in such registration. If as a result of the provisions of this Section 2.2.2(a) any Holder shall not be entitled to include all Registrable Shares in a registration that such Holder has requested to be so included, such Holder may withdraw such Holder’s request to include Registrable Shares in such registration statement.

(b) If a Piggyback Registration is an underwritten offering and was initiated by a security holder of the Company, and if the managing underwriter advises the Company that the inclusion of Registrable Shares requested to be included in the Registration Statement would cause an Adverse Effect, the Company shall include in such registration statement (i) first, the securities requested to be included therein by the security holders requesting such registration and the Registrable Shares requested to be included in such registration, pro rata among the holders of such securities on the basis of the number of securities owned by each such holder, and (ii) second, any other securities requested to be included in such registration (including securities to be sold for the account of the Company). If as a result of the provisions of this Section 2.2.2(b) any Holder shall not be entitled to include all Registrable Shares in a registration that such Holder has requested to be so included, such Holder may withdraw such Holder’s request to include Registrable Shares in such registration statement.

(c) No Holder may participate in any registration statement in respect of a Piggyback Registration hereunder unless such Holder (x) agrees to sell such Holder’s Registrable Shares on the basis provided in any underwriting arrangements approved by the Company and (y) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents, each in customary form, reasonably required under the terms of such underwriting arrangements; provided, however, that no such Holder shall be required to make any representations or warranties in connection with any such registration other than representations and warranties as to (i) such Holder’s ownership of his or its Registrable Shares to be sold or transferred free and clear of all liens, claims, and encumbrances, (ii) such Holder’s power and authority to effect such transfer, and (iii) such matters pertaining to compliance with securities laws as may be reasonably requested; provided, further, however, that the obligation of such Holder to indemnify pursuant to any such underwriting arrangements shall be several, not joint and several, among such Holders selling Registrable Shares, and the liability of each such Holder will be in proportion to, and provided, further, that such liability will be limited to, the net amount received by such Holder from the sale of his or its Registrable Shares pursuant to such registration.

2.3 SEC Form F-3. The Company shall use its reasonable best efforts to cause Demand Registrations to be registered on Form F-3 (or any successor form) once the Company becomes eligible to use Form F-3, and if the Company is not then eligible under the Securities Act to use Form F-3, Demand Registrations shall be registered on the form for which the Company then qualifies. The Company shall use its reasonable best efforts to become eligible to use Form F-3 and, after becoming eligible to use Form F-3, shall use its reasonable best efforts to remain so eligible.

2.4 Holdback Agreements.

(a) The Company shall not effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the seven (7) days prior to and during the ninety (90)-day period beginning on the effective date of any registration statement in connection with a Demand Registration (other than a Shelf Registration) or a Piggyback Registration, except pursuant to registrations on Form F-4 or Form S-8 or any successor form or unless the underwriters managing any such public offering otherwise agree.

(b) If any Holders of Registrable Shares notify the Company in writing that they intend to effect an underwritten sale of Shares registered pursuant to a Shelf Registration pursuant to Article 2 hereof, the Company shall not effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for its equity securities, during the ninety (90)-day period beginning on the date such notice is received, except pursuant to registrations on Form F-4 or Form S-8 or any successor form or unless the underwriters managing any such public offering otherwise agree.

(c) Each Holder agrees, in the event of an underwritten offering by the Company (whether for the account of the Company or otherwise), not to offer, sell,

contract to sell or otherwise dispose of any Registrable Shares, or any securities convertible into or exchangeable or exercisable for such securities, including any sale pursuant to Rule 144 under the Securities Act (except as part of such underwritten offering), during the ninety (90)-day period (or such lesser period as the lead or managing underwriters may require) beginning on, the effective date of the registration statement for such underwritten offering (or, in the case of an offering pursuant to an effective shelf registration statement pursuant to Rule 415, the pricing date for such underwritten offering).

2.5 Registration Procedures. Whenever any Holder has requested that any Registrable Shares be registered pursuant to this Agreement, the Company will use its reasonable best efforts to effect the registration and the sale of such Registrable Shares in accordance with the intended method of disposition thereof as promptly as is practicable, and pursuant thereto the Company will as expeditiously as possible:

(i) prepare and file with the SEC, pursuant to Section 2.1.1(b) with respect to any Demand Registration, a registration statement on any appropriate form under the Securities Act with respect to such Registrable Shares and use its reasonable best efforts to cause such registration statement to become effective, provided that as far in advance as practicable before filing such registration statement or any amendment thereto, the Company will furnish to the selling Holders copies of reasonably complete drafts of all such documents prepared to be filed (including exhibits), and any such Holder shall have the opportunity to object to any information contained therein and the Company will make corrections reasonably requested by such Holder with respect to such information prior to filing any such registration statement or amendment;

(ii) except in the case of a Shelf Registration, prepare and file with the SEC such amendments, post-effective amendments, and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than one hundred eighty (180) days (or such lesser period as is necessary for the underwriters in an underwritten offering to sell unsold allotments) and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement;

(iii) in the case of a Shelf Registration, prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Shares subject thereto for a period ending on the earlier of (x) twenty four (24) months after the effective date of such registration statement and (y) the

date on which all the Registrable Shares subject thereto have been sold pursuant to such registration statement;

(iv) furnish to each seller of Registrable Shares and the underwriters of the securities being registered such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus), any documents incorporated by reference therein and such other documents as such seller or underwriters may reasonably request in order to facilitate the disposition of the Registrable Shares owned by such seller or the sale of such securities by such underwriters (it being understood that, subject to Section 2.6 and the requirements of the Securities Act and applicable state securities laws, the Company consents to the use of the prospectus and any amendment or supplement thereto by each seller and the underwriters in connection with the offering and sale of the Registrable Shares covered by the registration statement of which such prospectus, amendment or supplement is a part);

(v) use its reasonable best efforts to register or qualify such Registrable Shares under such other securities or blue sky laws of such jurisdictions as the managing underwriter reasonably requests (or, in the event the registration statement does not relate to an underwritten offering, as the holders of a majority of such Registrable Shares may reasonably request); use its reasonable best efforts to keep each such registration or qualification (or exemption therefrom) effective during the period in which such registration statement is required to be kept effective; and do any and all other acts and things which may be reasonably necessary or advisable to enable each seller to consummate the disposition of the Registrable Shares owned by such seller in such jurisdictions (provided, however, that the Company will not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph or (B) consent to general service of process in any such jurisdiction);

(vi) promptly notify each seller and each underwriter and (if requested by any such Person) confirm such notice in writing (A) when a prospectus or any prospectus supplement or post-effective amendment has been filed and, with respect to a registration statement or any post-effective amendment, when the same has become effective, (B) of the issuance by any state securities or other regulatory authority of any order suspending the qualification or exemption from qualification of any of the Registrable Shares under state securities or “blue sky” laws or the initiation of any proceedings for that purpose, and (C) of the happening of any event which makes any statement made in a registration statement or related prospectus untrue or which requires the making of any changes in such registration statement, prospectus or documents so that they will not contain any untrue statement of a material fact or omit to state any

material fact required to be stated therein or necessary to make the statements therein not misleading, and, as promptly as practicable thereafter, prepare and file with the SEC and furnish a supplement or amendment to such prospectus so that, as thereafter deliverable to the purchasers of such Registrable Shares, such prospectus will not contain any untrue statement of a material fact or omit a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(vii) make reasonably available members of management of the Company, as selected by the Holders of a majority of the Registrable Shares included in such registration, for assistance in the selling effort relating to the Registrable Shares covered by such registration, including, but not limited to, the participation of such members of the Company’s management in road show presentations;

(viii) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, including the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder, and make generally available to the Company’s securityholders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act no later than thirty (30) days after the end of the twelve (12) month period beginning with the first day of the Company’s first fiscal quarter commencing after the effective date of a registration statement, which earnings statement shall cover said twelve (12) month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 20-F and 6-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act;

(ix) if requested by the managing underwriter or any seller promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or any seller reasonably requests to be included therein, including, without limitation, with respect to the Registrable Shares being sold by such seller, the purchase price being paid therefor by the underwriters and with respect to any other terms of the underwritten offering of the Registrable Shares to be sold in such offering, and promptly make all required filings of such prospectus supplement or post-effective amendment;

(x) cooperate with the sellers and the managing underwriter to facilitate the timely preparation and delivery of certificates (which shall not bear any restrictive legends unless required under applicable law) representing securities sold under any registration statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter or such sellers may request and keep

available and make available to the Company’s transfer agent prior to the effectiveness of such registration statement a supply of such certificates;

(xi) promptly make available for inspection by any seller, any underwriter participating in any disposition pursuant to any registration statement, and any attorney, accountant or other agent or representative retained by any such seller or underwriter (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information requested by any such Inspector in connection with such registration statement; provided, however, that, unless the disclosure of such Records is necessary to avoid or correct a misstatement or omission in the registration statement or the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, the Company shall not be required to provide any information under this subparagraph (x) if (A) the Company believes, after consultation with counsel for the Company, that to do so would cause the Company to forfeit an attorney-client privilege that was applicable to such information or (B) if either (1) the Company has requested and been granted from the SEC confidential treatment of such information contained in any filing with the SEC or documents provided supplementally or otherwise or (2) the Company reasonably determines in good faith that such Records are confidential and so notifies the Inspectors in writing, unless prior to furnishing any such information with respect to clause (B) such Holder of Registrable Shares requesting such information agrees to enter into a confidentiality agreement in customary form and subject to customary exceptions; and provided, further, that each Holder of Registrable Shares agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at its expense, to undertake appropriate action and to prevent disclosure of the Records deemed confidential;

(xii) furnish to each seller and underwriter a signed counterpart of (A) an opinion or opinions of counsel to the Company, and (B) a comfort letter or comfort letters from the Company’s independent public accountants, each in customary form and covering such matters of the type customarily covered by opinions or comfort letters, as the case may be, as the sellers or managing underwriter reasonably requests;

(xiii) cause the Registrable Shares included in any registration statement to be (A) listed on each securities exchange, if any, on which similar securities issued by the Company are then listed, or (B) quoted on the National Association of Securities Dealers, Inc. Automated Quotation System or the Nasdaq National Market if similar securities issued by the Company are quoted thereon;

(xiv) provide a transfer agent and registrar for all Registrable Shares registered hereunder;

(xv) cooperate with each seller and each underwriter participating in the disposition of such Registrable Shares and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc.;

(xvi) during the period when the prospectus is required to be delivered under the Securities Act, promptly file all documents required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act;

(xvii) notify each seller of Registrable Shares promptly of any request by the SEC for the amending or supplementing of such registration statement or prospectus or for additional information;

(xviii) enter into such agreements (including underwriting agreements in the managing underwriter’s customary form) as are customary in connection with an underwritten registration; and

(xix) advise each seller of such Registrable Shares, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the SEC suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued.

2.6 Suspension of Dispositions. Each Holder agrees by acquisition of any Registrable Shares that, upon receipt of any notice (a “Suspension Notice”) from the Company of the happening of any event of the kind described in Section 2.5(vi)(C) such Holder will forthwith discontinue disposition of Registrable Shares until such Holder’s receipt of the copies of the supplemented or amended prospectus, or until it is advised in writing (the “Advice”) by the Company that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the prospectus, and, if so directed by the Company, such Holder will deliver to the Company all copies, other than permanent file copies then in such Holder’s possession, of the prospectus covering such Registrable Shares current at the time of receipt of such notice. In the event the Company shall give any such notice, the time period regarding the effectiveness of registration statements set forth in Sections 2.5(ii) and 2.5(iii) hereof shall be extended by the number of days during the period from and including the date of the giving of the Suspension Notice to and including the date when each seller of Registrable Shares covered by such registration statement shall have received the copies of the supplemented or amended prospectus or the Advice. The Company shall use its reasonable best efforts and take such actions as are reasonably necessary to render the Advice as promptly as practicable.

2.7 Registration Expenses. All fees and expenses incident to any registration including, without limitation, the Company’s performance of or compliance with this Article 2, all registration and filing fees, all fees and expenses associated with filings required to be made with the National Association of Securities Dealers, Inc. (“NASD”) (including, if applicable, the reasonable fees and expenses of any “qualified independent underwriter” as such term is defined in Schedule E of the By-Laws of the NASD, and of its counsel), as may be required by the rules and regulations of the NASD, fees and expenses of compliance with securities or “blue sky” laws (including reasonable fees and disbursements of counsel in connection with “blue sky” qualifications of the Registrable Shares), rating agency fees, printing expenses (including expenses of printing certificates for the Registrable Shares in a form eligible for deposit with Depository Trust Company and of printing prospectuses), messenger and delivery expenses, the fees and expenses incurred in connection with any listing or quotation of the Registrable Shares, fees and expenses of counsel for the Company and its independent certified public accountants (including the expenses of any special audit or “cold comfort” letters required by or incident to such performance), the fees and expenses of any special experts retained by the Company in connection with such registration, and the fees and expenses of other persons retained by the Company, will be borne by the Company (unless paid by a security holder that is not a Holder for whose account the registration is being effected) whether or not any registration statement becomes effective; provided, however, that any underwriting discounts, commissions, or fees attributable to the sale of the Registrable Shares will be borne by the Holders pro rata on the basis of the number of shares so registered and the fees and expenses of any counsel, accountants, or other persons retained or employed by any Holder will be borne by such Holder.

2.8 Indemnification.

2.8.1 The Company agrees to indemnify and reimburse, to the fullest extent permitted by law, each seller of Registrable Shares, and each of its employees, advisors, agents, representatives, partners, officers, and directors and each Person who controls such seller (within the meaning of the Securities Act or the Exchange Act) and any agent or investment advisor thereof (collectively, the “Seller Affiliates”) (A) against any and all losses, claims, damages, liabilities, and expenses, joint or several (including, without limitation, attorneys’ fees and disbursements except as limited by Section 2.8.3) based upon, arising out of, related to or resulting from (i) any untrue or alleged untrue statement of a material fact contained in any registration statement, prospectus, preliminary prospectus, issuer free writing prospectus (as such term is defined in Rule 433 of the Securities Act) or any amendment thereof or supplement thereto, or any blue sky application or other document or any amendment or supplement thereto prepared by or executed by the Company (or based upon written information furnished by or on behalf of the Company expressly for use in such blue sky application or other document or amendment or supplement) filed in any jurisdiction specifically for the purpose of qualifying any or all of the Registrable Shares under the securities law of any state or other jurisdiction, or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, (B) against any and all loss, liability, claim, damage, and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation or investigation or

proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon, arising out of, related to or resulting from any such untrue statement or omission or alleged untrue statement or omission, and (C) against any and all costs and expenses (including reasonable fees and disbursements of counsel) as may be reasonably incurred in investigating, preparing, or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon, arising out of, related to or resulting from any such untrue statement or omission or alleged untrue statement or omission, or such violation of the Securities Act or Exchange Act, to the extent that any such expense or cost is not paid under subparagraph (A) or (B) above; except insofar as any such statements are made in reliance upon and in strict conformity with information furnished in writing to the Company by such seller or any Seller Affiliate for use therein or arise from such seller’s or any Seller Affiliate’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such seller or Seller Affiliate with a sufficient number of copies of the same. The reimbursements required by this Section 2.8.1 will be made by periodic payments during the course of the investigation or defense, as and when bills are received or expenses incurred.

2.8.2 In connection with any registration statement in which a seller of Registrable Shares is participating, each such seller will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the fullest extent permitted by law, each such seller will indemnify the Company and each of its employees, advisors, agents, representatives, partners, officers and directors and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) and any agent or investment advisor thereof against any and all losses, claims, damages, liabilities, and expenses (including, without limitation, reasonable attorneys’ fees and disbursements except as limited by Section 2.8.3) resulting from any untrue statement or alleged untrue statement of a material fact contained in the registration statement, prospectus, or any preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission is contained in any information or affidavit so furnished in writing by such seller or any of its Seller Affiliates specifically for inclusion in the registration statement; provided that the obligation to indemnify will be several, not joint and several, among such sellers of Registrable Shares, and the liability of each such seller of Registrable Shares will be in proportion to, and will be limited to, the net amount received by such seller from the sale of Registrable Shares pursuant to such registration statement; provided, however, that such seller of Registrable Shares shall not be liable in any such case to the extent that prior to the filing of any such registration statement or prospectus or amendment thereof or supplement thereto, such seller has furnished in writing to the Company information expressly for use in such registration statement or prospectus or any amendment thereof or supplement thereto which corrected or made not misleading information previously furnished to the Company.

2.8.3 Any Person entitled to indemnification hereunder will (A) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give such notice shall not limit the rights of such Person) and (B) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (X) the indemnifying party has agreed to pay such fees or expenses, or (Y) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person. If such defense is not assumed by the indemnifying party as permitted hereunder, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). If such defense is assumed by the indemnifying party pursuant to the provisions hereof, such indemnifying party shall not settle or otherwise compromise the applicable claim unless (1) such settlement or compromise contains a full and unconditional release of the indemnified party or (2) the indemnified party otherwise consents in writing. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party, a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the reasonable fees and disbursements of such additional counsel or counsels.

2.8.4 Each party hereto agrees that, if for any reason the indemnification provisions contemplated by Section 2.8.1 or Section 2.8.2 are unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities, or expenses (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, liabilities, or expenses (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the actions which resulted in the losses, claims, damages, liabilities or expenses as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 2.8.4 were determined by pro rata allocation (even if the Holders or any underwriters or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 2.8.4. The

amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities, or expenses (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or, except as provided in Section 2.8.3, defending any such action or claim. Notwithstanding the provisions of this Section 2.8.4, no Holder shall be required to contribute an amount greater than the dollar amount by which the net proceeds received by such Holder with respect to the sale of any Registrable Shares exceeds the amount of damages which such Holder has otherwise been required to pay by reason of any and all untrue or alleged untrue statements of material fact or omissions or alleged omissions of material fact made in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto related to such sale of Registrable Shares. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders’ obligations in this Section 2.8.4 to contribute shall be several in proportion to the amount of Registrable Shares registered by them and not joint.

If indemnification is available under this Section 2.8, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Section 2.8.1 and Section 2.8.2 without regard to the relative fault of said indemnifying party or indemnified party or any other equitable consideration provided for in this Section 2.8.4 subject, in the case of the Holders, to the limited dollar amounts set forth in Section 2.8.2.

2.8.5 The indemnification and contribution provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, or controlling Person of such indemnified party and will survive the transfer of securities.

2.9 Transfer of Registration Rights. The rights of each Holder under this Agreement may be assigned to any direct or indirect transferee of a Holder who agrees in writing to be subject to and bound by all the terms and conditions of this Agreement.

2.10 Rule 144. The Company will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, will, upon the request of the Holders, make publicly available other information) and will take such further action as the Holders may reasonably request, all to the extent required from time to time to enable the Holders to sell Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the reasonable request of any Holder, the Company will deliver to such parties a written statement as to whether it has complied with such requirements and will, at its expense, forthwith upon the request of any such Holder, deliver to such Holder a certificate, signed by the Company’s principal financial officer, stating (a) the Company’s name, address and telephone number (including area code), (b) the Company’s Internal Revenue Service identification number, (c) the Company’s SEC

file number, (d) the number of shares of each class of capital stock outstanding as shown by the most recent report or statement published by the Company, and (e) whether the Company has filed the reports required to be filed under the Exchange Act for a period of at least ninety (90) days prior to the date of such certificate and in addition has filed the most recent annual report required to be filed thereunder.

2.11 Preservation of Rights. The Company will not (i) grant any registration rights to third parties which are more favorable than or inconsistent with the rights granted hereunder or (ii) enter into any agreement, take any action, or permit any change to occur, with respect to its securities that violates or subordinates the rights expressly granted to the Holders in this Agreement.

ARTICLE 3

TERMINATION

3.1 Termination. The Holders may exercise the registration rights granted hereunder in such manner and proportions as they shall agree among themselves. The registration rights hereunder shall cease to apply to any particular Registrable Share when: (a) a registration statement with respect to the sale of such Shares (or other securities) shall have become effective under the Securities Act and such Shares shall have been disposed of in accordance with such registration statement; (b) such Shares (or other securities) shall have been sold to the public pursuant to Rule 144 under the Securities Act (or any successor provision); (c) such Shares (or other securities) shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration or qualification of them under the Securities Act or any similar state law then in force; (d) such Shares (or other securities) shall have ceased to be outstanding or (e) the Holder of such Shares holds less than three percent (3%) of the then outstanding Registrable Shares and such Registrable Shares are eligible for sale pursuant to Rule 144(k) under the Securities Act (or any successor provision). The Company shall promptly upon the request of any Holder furnish to such Holder evidence of the number of Registrable Shares then outstanding.

ARTICLE 4

MISCELLANEOUS

4.1 Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 4.1):

If to the Company:

Babcock & Brown Air Limited

West Pier

Dun Laoghaire

County Dublin, Ireland

Facsimile: +353 1 231-1901

Attention: Chief Executive Officer

with a copy to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

Facsimile: +1 (212) 310-8007

Attention: Boris Dolgonos, Esq.

If to any of the Principal Investors:

c/o Babcock & Brown Aircraft Management LLC

2 Harrison Street

6th Floor

San Francisco CA 94105

Facsimile: +1 (415) 267-1500

Attention: Greg Azzara

and where the Principal Investor is the Everest Babcock & Brown Opportunities Fund, with a copy to,

c/o Everest Capital Limited

Level 35, 50 Bridge Street

Sydney NSW 2000 Australia

Facsimile: +612-8001-9200

Attention: Will Peterson

If to any other Holder, the address indicated for such Holder in the Company’s stock transfer records with copies, so long as Principal Investor owns any Registrable Shares, to the Principal Investors as provided above.

Any notice or communication hereunder shall be deemed to have been given or made as of the date so delivered if personally delivered; when answered back, if telexed; when receipt is acknowledged, if telecopied; and five (5) calendar days after mailing if sent by registered or certified mail (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee).

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

4.2 Authority. Each of the parties hereto represents to the other that (i) it has the corporate power and authority to execute, deliver and perform this Agreement, (ii) the execution, delivery and performance of this Agreement by it has been duly authorized by all necessary corporate action and no such further action is required, (iii) it has duly and validly executed and delivered this Agreement, and (iv) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

4.3 Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York irrespective of the choice of laws principles of the State of New York other than Section 5-1401 of the General Obligations Law of the State of New York.

4.4 Successors and Assigns. Except as otherwise expressly provided herein, this Agreement shall be binding upon and benefit the Company, each Holder, and their respective successors and assigns.

4.5 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or as a matter of public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties to this Agreement shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the greatest extent possible.

4.6 Waivers. The observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) by the party entitled to enforce such term, but such waiver shall be effective only if it is in a writing signed by the party against whom the existence of such waiver is asserted. Unless otherwise expressly provided in this Agreement, no delay or omission on the part of any party in exercising any right or privilege under this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right or privilege under this Agreement operate as a waiver of any other right or privilege under this Agreement nor shall any single or partial exercise of any right or privilege preclude any other or further exercise thereof or the exercise of any other right or privilege under this Agreement. No failure by either party to take any action or assert any right or privilege hereunder shall be deemed to be a waiver of such right or privilege in the event of the continuation or repetition of the circumstances giving rise to such right unless expressly waived in writing by the party against whom the existence of such waiver is asserted.

4.7 Amendment. This Agreement may not be amended or modified in any respect except by a written agreement signed by the Company and the Holders of a majority of the then outstanding Registrable Shares.

4.8 Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties to each such agreement in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile shall be as effective as delivery of a manually executed counterpart of any such Agreement.

4.9 Limitation of Liability of Everest Capital. The parties hereto agree that

a)	Everest Capital Limited (“Everest Capital”) has entered into this agreement in its capacity as the trustee of the Everest Babcock & Brown Opportunities Fund for which it acts as trustee (such Principal Investor, the “Fund”).

Any liability arising under or in connection with this agreement may be enforced against the Fund only to the extent to which it can be satisfied out of the property of the Fund. Except as expressly provided by this clause, this limitation of liability applies despite any other provision of this agreement and extends to all liabilities and obligations of the Fund in any way connected with any representation, warranty, conduct, omission, agreement or transaction related to this agreement.

No party to this agreement or any other document connected with the transaction contemplated by this agreement (nor any of their affiliates, directors, officers, employees) may take any action to seek recourse to any assets held by Everest Capital in any capacity other than as trustee of the Fund, including seeking the appointment of a receiver (except in relation to the property of the Fund), a liquidator, an administrator or any similar person to Everest Capital or prove in any liquidation, administration or arrangement of or affecting Everest Capital (except in relation to property of the Fund).

d)	Everest Capital is not obliged to enter into any commitment or obligation under this agreement unless its liability is limited in the same manner as in this clause.

e)	The provisions of this clause do not apply to any obligation or liability of Everest Capital to the extent that it is not satisfied because:

under the trust deed of the Fund or by operation of law there is a reduction in the extent of Everest Capital’s indemnification out of the assets of the Fund as a result of Everest Capital’s wilful default, fraud, negligence or breach of trust; or

Everest Capital failed to exercise any right of indemnity it has under the trust deed of the Fund in respect of that obligation or liability.

No act or omission of Everest Capital (including any related failure to satisfy its obligations under this agreement) will be considered wilful default, fraud, negligence or breach of trust of Everest Capital to the extent to which the act or omission was caused or materially contributed to by any failure by any other person.

4.10 Provisions Relating to DIF Equity and DIF Mezzanine Debt. The provisions of Schedule I hereto are incorporated herein by reference and constitute a part of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above.

		BABCOCK & BROWN AIR LIMITED
		By:	/s/ Colm Barrington
		Name:	Colm Barrington
		Title:	Chief Executive Officer