1. American Bar Association Aircraft Financing Subcommittee Grand Hyatt New York August 8-9, 2008

2. IRAB Update Cape Town Convention Presented by: James D. Tussing William B. Piels

3. IRAB UPDATE Preview of Presentation (1) Security Assignments/Discharge (2) Special Purpose Entity/Controlled Entity (3) Working in New “Contract States”

4. Security Assignments/Discharge (1) Current Rule: No distinction between Security and Outright Assignment Assignee may discharge an assignment; but only assignor (original holder of international interest) may discharge the international interest

5. Security Assignments/Discharge Example A: On termination of a Lease, if assigned as security, Secured Party may discharge the Lease international interest security assignment registration, and then the Lessor may discharge the Lease international interest. Example B: On sale of Aircraft and assignment and assumption of the lessor’s interest by buyer, buyer/new lessor may discharge the Lease international interest assignment registration, and then seller/original lessor may discharge the Lease international interest.

6. Security Assignments/Discharge (2)New Rule: Parties to an assignment of an International Interest registration are entitled to allocate the right to discharge the assignment and the underlying International Interest. The election may be made at time of registration and may be amended. The failure to make any election results in the right to discharge being held jointly. Parties may wish to cover the allocation of the discharge right explicitly in transaction documentation.

7. Special Purpose Entities Existing Rule Widely used: 10% of all entities on the IR are SPEs Current definition is narrow: “limited purpose is to enter into a transaction to which such registrations relate” Concern: entities that have been qualified as SPEs may not fit the definition; query the effect (if any) on validity of registrations

8. Special Purpose Entities New Rule “Controlled Entity” definition replaces SPE; “limited purpose” qualification is removed As in SPE definition, Controlled Entity definition requires a qualified transacting user entity to “electronically assert that it controls, manages or administers” the Controlled Entity Transition: Provision to convert qualification status from “SPE” to “Controlled Entity” when existing SPE qualification period expires Additional fees required

9. New Contract States 23 Contracting States; Six for which entry into force occurred in 2008 New country diligence: –Review declarations/implementing legislation –Local counsel assistance on practices (if any) Example: UAE –Portal issue –Consistency with local laws –Declarations