Document:

Exhibit 10.39

 

EXECUTION

 

AMENDED AND RESTATED

CREDIT AGREEMENT*

 

dated as of June 29, 2004

among

 

WILLIS LEASE FINANCE CORPORATION,

as Borrower

 

and

 

CERTAIN BANKING INSTITUTIONS NAMED HEREIN

 

with

 

NATIONAL CITY BANK,

as Administrative Agent,

 

FORTIS BANK (NEDERLAND) N.V.,

as Structuring Agent

 

and

 

FORTIS BANK (NEDERLAND) N.V.,

as Security Agent

 

*                                         Portions
of the material in this Exhibit have been redacted pursuant to a request for
confidential treatment, and the redacted material has been filed separately
with the Securities and Exchange Commission (the “Commission”).  An asterisk has been placed in the precise
places in this Agreement where we have redacted information, and the asterisk
is keyed to a legend which states that the material has been omitted pursuant
to a request for confidential treatment.

 

 

	
  SECTION 1.

  	
  CERTAIN DEFINITIONS

  	
   

  
	
  1.1

  	
  Definitions

  	
   

  
	
  1.2

  	
  Accounting Terms

  	
   

  
	
  1.3

  	
  Construction

  	
   

  
	
  SECTION 2.

  	
  THE CREDIT

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  The Revolving Loans

  	
   

  
	
   

  	
  (a)

  	
  Revolving Loans; Revolving Loan Commitment

  	
   

  
	
   

  	
  (b)

  	
  Interest Rate Options

  	
   

  
	
   

  	
  (c)

  	
  Maximum Loans Outstanding

  	
   

  
	
   

  	
  (d)

  	
  Minimum
  Loan Amount

  	
   

  
	
   

  	
  (e)

  	
  Prepayment and Reborrowing

  	
   

  
	
   

  	
  (f)

  	
  Revolving Loan Commitment Percentages

  	
   

  
	
   

  	
  (g)

  	
  Several Obligations

  	
   

  
	
  2.2

  	
  The Revolving Credit Notes

  	
   

  
	
  2.3

  	
  [Reserved]

  	
   

  
	
  2.4

  	
  Funding Procedures

  	
   

  
	
   

  	
  (a)

  	
  Request for Advance

  	
   

  
	
   

  	
  (b)

  	
  Actions by the Administrative Agent

  	
   

  
	
   

  	
  (c)

  	
  Availability of Funds

  	
   

  
	
   

  	
  (d)

  	
  Funding Assumptions

  	
   

  
	
   

  	
  (e)

  	
  Proceeds of Loan Being Repaid

  	
   

  
	
  2.5

  	
  Closing
  Fee

  	
   

  
	
  2.6

  	
  Reduction or Termination of Revolving Loan
  Commitments

  	
   

  
	
   

  	
  (a)

  	
  Voluntary

  	
   

  
	
   

  	
  (b)

  	
  Revolving Loan Commitment Termination

  	
   

  
	
  2.7

  	
  Mandatory Prepayments

  	
   

  
	
  2.8

  	
  Term
  Loans

  	
   

  
	
   

  	
  (a)

  	
  Conversion on Revolving Loan Termination
  Date

  	
   

  
	
   

  	
  (b)

  	
  Interest
  Rate Options

  	
   

  
	
   

  	
  (c)

  	
  The Term Notes

  	
   

  
	
  2.9

  	
  Payment of Additional Amount

  	
   

  
	
  2.10

  	
  Interest

  	
   

  
	
   

  	
  (a)

  	
  Base
  Rate Loans

  	
   

  
	
   

  	
  (b)

  	
  LIBO
  Rate Loans

  	
   

  
	
   

  	
  (c)

  	
  Conversion to Base Rate

  	
   

  
	
   

  	
  (d)

  	
  Renewals and Conversions

  	
   

  
	
   

  	
  (e)

  	
  Interim Payments At Base Rate

  	
   

  
	
   

  	
  (f)

  	
  Reinstatements

  	
   

  
	
  2.11

  	
  Voluntary Prepayments

  	
   

  
	
   

  	
  (a)

  	
  Base Rate Loans

  	
   

  
	
   

  	
  (b)

  	
  LIBO Rate Loans

  	
   

  
	
  2.12

  	
  Payments

  	
   

  
	
   

  	
  (a)

  	
  Accrued
  Interest

  	
   

  

 

i

 

	
   

  	
  (b)

  	
  Form
  of Payments, Application of Payments, Payment Administration, Etc.

  	
   

  
	
   

  	
  (c)

  	
  Demand Deposit Account

  	
   

  
	
   

  	
  (d)

  	
  Net
  Payments

  	
   

  
	
   

  	
  (e)

  	
  Commitment
  Fee

  	
   

  
	
  2.13

  	
  Change in Circumstances, Yield Protection

  	
   

  
	
   

  	
  (a)

  	
  Certain Regulatory Changes

  	
   

  
	
   

  	
  (b)

  	
  Capital
  Adequacy

  	
   

  
	
   

  	
  (c)

  	
  Ability to Determine LIBO Rate

  	
   

  
	
   

  	
  (d)

  	
  Yield
  Protection

  	
   

  
	
   

  	
  (e)

  	
  [Reserved]

  	
   

  
	
   

  	
  (f)

  	
  Notice
  of Events

  	
   

  
	
  2.14

  	
  Illegality

  	
   

  
	
  2.15

  	
  Discretion of each Bank as to Manner of
  Funding

  	
   

  
	
  2.16

  	
  Appraisals

  	
   

  
	
  2.17

  	
  Tax
  Matters

  	
   

  
	
   

  	
  (a)

  	
  Tax
  Gross-Up

  	
   

  
	
   

  	
  (b)

  	
  Tax
  Indemnity

  	
   

  
	
   

  	
  (c)

  	
  Other Related Tax Matters

  	
   

  
	
   

  	
  (d)

  	
  Status
  of Banks

  	
   

  
	
   

  	
  (e)

  	
  Certain Definitions

  	
   

  
	
  SECTION 3.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Organization,
  Standing

  	
   

  
	
  3.2

  	
  Corporate Authority, Validity, Etc

  	
   

  
	
  3.3

  	
  Validity of Loan Documents

  	
   

  
	
  3.4

  	
  Litigation

  	
   

  
	
  3.5

  	
  ERISA

  	
   

  
	
  3.6

  	
  Financial Statements

  	
   

  
	
  3.7

  	
  No Material Adverse Change

  	
   

  
	
  3.8

  	
  Not in Default, Judgments, Etc

  	
   

  
	
  3.9

  	
  Taxes

  	
   

  
	
  3.10

  	
  Permits,
  Licenses, Etc

  	
   

  
	
  3.11

  	
  No Materially Adverse Contracts, Etc

  	
   

  
	
  3.12

  	
  Compliance with Laws, Etc

  	
   

  
	
   

  	
  (a)

  	
  Compliance Generally

  	
   

  
	
   

  	
  (b)

  	
  Hazardous Wastes, Substances and Petroleum Products

  	
   

  
	
  3.13

  	
  Solvency

  	
   

  
	
  3.14

  	
  Subsidiaries,
  Etc

  	
   

  
	
  3.15

  	
  Title to Properties, Leases

  	
   

  
	
  3.16

  	
  Public Utility Holding Company; Investment
  Company

  	
   

  
	
  3.17

  	
  Margin
  Stock

  	
   

  
	
  3.18

  	
  Use of Proceeds

  	
   

  

 

ii

 

	
  3.19

  	
  Depreciation Policies

  	
   

  
	
  3.20

  	
  Disclosure Generally

  	
   

  
	
  SECTION 4.

  	
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  All Revolving Loans

  	
   

  
	
   

  	
  (a)

  	
  Request For Advance

  	
   

  
	
   

  	
  (b)

  	
  Asset Base Certificate

  	
   

  
	
   

  	
  (c)

  	
  Guaranty

  	
   

  
	
   

  	
  (d)

  	
  Additional Documents

  	
   

  
	
   

  	
  (e)

  	
  Covenants; Representations

  	
   

  
	
   

  	
  (f)

  	
  Defaults

  	
   

  
	
   

  	
  (g)

  	
  Material Adverse Change

  	
   

  
	
   

  	
  (h)

  	
  Owner Trustee Documents

  	
   

  
	
  4.2

  	
  Conditions to Effectiveness of the
  Agreement

  	
   

  
	
   

  	
  (a)

  	
  Articles,
  Bylaws

  	
   

  
	
   

  	
  (b)

  	
  Evidence of Authorization

  	
   

  
	
   

  	
  (c)

  	
  Legal Opinions

  	
   

  
	
   

  	
  (d)

  	
  Incumbency

  	
   

  
	
   

  	
  (e)

  	
  Notes

  	
   

  
	
   

  	
  (f)

  	
  Documents

  	
   

  
	
   

  	
  (g)

  	
  Consents

  	
   

  
	
   

  	
  (h)

  	
  Other Agreements

  	
   

  
	
   

  	
  (i)

  	
  Security Interest

  	
   

  
	
   

  	
  (j)

  	
  Appraisals

  	
   

  
	
   

  	
  (k)

  	
  Financial Statements

  	
   

  
	
   

  	
  (l)

  	
  Litigation

  	
   

  
	
   

  	
  (m)

  	
  [Reserved]

  	
   

  
	
   

  	
  (n)

  	
  Fees

  	
   

  
	
   

  	
  (o)

  	
  Fees, Expenses

  	
   

  
	
   

  	
  (p)

  	
  Lien
  Searches

  	
   

  
	
   

  	
  (q)

  	
  Other Documents and Information

  	
   

  
	
   

  	
  (r)

  	
  Existing Facility

  	
   

  
	
   

  	
  (s)

  	
  Final Date for Effectiveness

  	
   

  
	
  SECTION 5.

  	
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Financial Statements and Reports

  	
   

  
	
   

  	
  (a)

  	
  Annual Statements

  	
   

  
	
   

  	
  (b)

  	
  Quarterly Statements

  	
   

  
	
   

  	
  (c)

  	
  No
  Default

  	
   

  
	
   

  	
  (d)

  	
  ERISA

  	
   

  
	
   

  	
  (e)

  	
  Material Changes

  	
   

  
	
   

  	
  (f)

  	
  Other Information

  	
   

  
	
   

  	
  (g)

  	
  Asset Base Certificates; Monthly Lease Report

  	
   

  
	
   

  	
  (h)

  	
  Monthly Lease Portfolio and Receivables
  Report

  	
   

  

 

iii

 

	
   

  	
  (i)

  	
  Maintenance of Current Depreciation
  Policies

  	
   

  
	
  5.2

  	
  Corporate Existence

  	
   

  
	
  5.3

  	
  ERISA

  	
   

  
	
  5.4

  	
  Compliance with Regulations

  	
   

  
	
  5.5

  	
  Conduct of Business; Permits and Approvals, Compliance with Laws

  	
   

  
	
  5.6

  	
  Maintenance of Properties

  	
   

  
	
  5.7

  	
  Maintenance of Insurance

  	
   

  
	
  5.8

  	
  Payment of Taxes, Etc

  	
   

  
	
  5.9

  	
  Notice of Events

  	
   

  
	
  5.10

  	
  Inspection Rights

  	
   

  
	
  5.11

  	
  Generally Accepted Accounting Principles

  	
   

  
	
  5.12

  	
  Compliance with Material Contracts

  	
   

  
	
  5.13

  	
  Use of Proceeds

  	
   

  
	
  5.14

  	
  Further Assurances

  	
   

  
	
  5.15

  	
  Restricted Subsidiaries

  	
   

  
	
  5.16

  	
  Placards

  	
   

  
	
  5.17

  	
  Certain Subsidiaries

  	
   

  
	
  SECTION 6.

  	
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Consolidation and Merger

  	
   

  
	
  6.2

  	
  Liens

  	
   

  
	
  6.3

  	
  Guarantees

  	
   

  
	
  6.4

  	
  Margin
  Stock

  	
   

  
	
  6.5

  	
  Acquisitions and Investments

  	
   

  
	
  6.6

  	
  Transfer of Assets; Nature of Business

  	
   

  
	
  6.7

  	
  Accounting Change

  	
   

  
	
  6.8

  	
  Transactions with Affiliates of the
  Borrower

  	
   

  
	
  6.9

  	
  Indebtedness

  	
   

  
	
  6.10

  	
  Restricted Payments

  	
   

  
	
  6.11

  	
  Restriction on Amendment of this Agreement

  	
   

  
	
  6.12

  	
  Investments in Unrestricted Subsidiaries

  	
   

  
	
  6.13

  	
  No Adverse Selection

  	
   

  
	
  6.14

  	
  Change of Incorporation

  	
   

  
	
  SECTION 7.

  	
  FINANCIAL COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  No
  Losses

  	
   

  
	
  7.2

  	
  Minimum Tangible Net Worth

  	
   

  
	
  7.3

  	
  Leverage Ratio

  	
   

  
	
  7.4

  	
  Adjusted Total Debt to Adjusted Tangible
  Net Worth

  	
   

  
	
  7.5

  	
  Minimum
  Interest Coverage Ratio

  	
   

  
	
  7.6

  	
  Asset Base

  	
   

  
	
  SECTION 8.

  	
  DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Events
  of Default

  	
   

  

 

iv

 

	
   

  	
  (a)

  	
  Payments

  	
   

  
	
   

  	
  (b)

  	
  Covenants

  	
   

  
	
   

  	
  (c)

  	
  Representations, Warranties

  	
   

  
	
   

  	
  (d)

  	
  Bankruptcy

  	
   

  
	
   

  	
  (e)

  	
  Certain Other Defaults

  	
   

  
	
   

  	
  (f)

  	
  Judgments

  	
   

  
	
   

  	
  (g)

  	
  Attachments

  	
   

  
	
   

  	
  (h)

  	
  Change
  in Control of the Borrower

  	
   

  
	
   

  	
  (i)

  	
  Security
  Interests

  	
   

  
	
   

  	
  (j)

  	
  WEF Funding Facility

  	
   

  
	
  SECTION 9.

  	
  COLLATERAL

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Collateral

  	
   

  
	
  9.2

  	
  Security Documents

  	
   

  
	
  9.3

  	
  Release of Collateral

  	
   

  
	
  SECTION 10.

  	
  THE AGENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Appointment
  and Authorization

  	
   

  
	
  10.2

  	
  Duties
  and Obligations

  	
   

  
	
  10.3

  	
  The Agents as Banks

  	
   

  
	
  10.4

  	
  Independent Credit Decisions

  	
   

  
	
  10.5

  	
  Indemnification

  	
   

  
	
  10.6

  	
  Successor Agents

  	
   

  
	
  10.7

  	
  Allocations
  Made By the Administrative Agent

  	
   

  
	
  SECTION 11.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Waiver

  	
   

  
	
  11.2

  	
  Amendments

  	
   

  
	
  11.3

  	
  GOVERNING
  LAW

  	
   

  
	
  11.4

  	
  Participations and Assignments

  	
   

  
	
  11.5

  	
  Captions

  	
   

  
	
  11.6

  	
  Notices

  	
   

  
	
  11.7

  	
  Sharing of Collections, Proceeds and Set-Offs: Application of
  Payments

  	
   

  
	
  11.8

  	
  Expenses;
  Indemnification

  	
   

  
	
  11.9

  	
  Survival of Warranties and Certain
  Agreements

  	
   

  
	
  11.10

  	
  Severability

  	
   

  
	
  11.11

  	
  Banks’
  Obligations Several; Independent Nature of Banks’ Rights

  	
   

  
	
  11.12

  	
  No Fiduciary Relationship

  	
   

  
	
  11.13

  	
  CONSENT TO JURISDICTION AND SERVICE OF
  PROCESS

  	
   

  
	
  11.14

  	
  WAIVER OF JURY TRIAL

  	
   

  
	
  11.15

  	
  Counterparts; Effectiveness

  	
   

  
	
  11.16

  	
  Use of Defined Terms

  	
   

  
	
  11.17

  	
  Offsets

  	
   

  
	
  11.18

  	
  Entire Agreement

  	
   

  

 

v

 

	
  11.19

  	
  Confidentiality

  	
   

  
	
  11.20

  	
  Custody Agreement

  	
   

  
	
  11.21

  	
  Agreements with the Banks

  	
   

  

 

	
  Exhibit A

  	
  -

  	
  Revolving
  Loan Commitments

  
	
  Exhibit B

  	
  -

  	
  Applicable
  Margin; Commitment Fee

  
	
  Exhibit C

  	
  -

  	
  Form of
  Revolving Credit Note

  
	
  Exhibit D

  	
  -

  	
  Form of
  Mortgage

  
	
  Exhibit E

  	
  -

  	
  Form of
  Asset Base Certificate

  
	
  Exhibit F

  	
  -

  	
  Form of
  Security Agreement

  
	
  Exhibit G

  	
  -

  	
  Form of
  Compliance Certificate

  
	
  Exhibit H

  	
  -

  	
  Depreciation
  Policies

  
	
  Exhibit I

  	
  -

  	
  Form of
  Owner Trustee Mortgage

  
	
  Exhibit J

  	
  -

  	
  Form of
  Subsidiary Guaranty

  
	
  Exhibit K

  	
  -

  	
  Form of
  Trust Agreement

  
	
  Exhibit L

  	
  -

  	
  Form of
  Beneficial Interest Pledge Agreement

  
	
  Exhibit M

  	
  -

  	
  Form of
  Owner Trustee Guarantee

  
	
  Exhibit N

  	
  -

  	
  Form of
  Share Pledge Agreement

  
	
  Exhibit O

  	
  -

  	
  Form of WLFC
  (Ireland) Security Agreement

  
	
  Exhibit P

  	
  -

  	
  [Reserved]

  
	
  Exhibit Q

  	
  -

  	
  Form of
  First Amendment to Security Agreement

  
	
  Exhibit R

  	
  -

  	
  Form of
  Omnibus Amendment to Trust Agreement

  
	
  Exhibit S

  	
  -

  	
  Form of Term
  Note

  
	
  Exhibit T

  	
  -

  	
  Form of
  First Amendment to Share Pledge Agreement

  
	
  Exhibit U

  	
  -

  	
  Form of
  Omnibus Amendment to Owner Trustee Mortgage

  
	
  Exhibit V

  	
  -

  	
  Form of
  First Amendment to Mortgage and Security Agreement

  
	
  Exhibit W

  	
  -

  	
  Form of
  First Amendment to WLFC Lease Security Assignment

  
	
  Exhibit X

  	
  -

  	
  Form of
  Custodial Agreement

  
	
   

  	
   

  	
   

  
	
  Schedule 1

  	
  -

  	
  Disclosure
  Schedule

  
	
  Schedule 2

  	
  -

  	
  Excepted
  Collateral

  
	
  Schedule 3

  	
  -

  	
  Existing
  Leases in Foreign Jurisdictions

  
	
  Schedule 4

  	
  -

  	
  List of
  Permissible Airlines of Foreign Jurisdictions

  
	
  Schedule 5

  	
  -

  	
  Geographic
  Limitations

  
	
  Schedule 6

  	
  -

  	
  Existing
  Engines, Equipment and Leases

  

 

vi

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
June 29, 2004 (this “Agreement”
or “Credit Agreement”), is entered
into by and among WILLIS LEASE FINANCE
CORPORATION, a Delaware corporation (“Willis” or the “Borrower”),
the banking institutions signatories hereto and named in Exhibit A attached
hereto and such other institutions that hereafter become a “Bank” pursuant to
Section 11.4 hereof (collectively the “Banks”
and individually a “Bank”), NATIONAL CITY BANK, as Administrative Agent
for the Banks under this Agreement (“Administrative
Agent,” which shall mean in its capacity as administrative agent
unless specifically stated otherwise), FORTIS
BANK (NEDERLAND) N.V. (“Fortis”),
as Structuring Agent (the “Structuring Agent”),
and FORTIS BANK (NEDERLAND) N.V.,
as Security Agent (the “Security Agent”).  The Administrative Agent, the Structuring
Agent and the Security Agent are sometimes hereinafter referred to collectively
as the “Agents”, and individually
as an “Agent.”

 

PRELIMINARY STATEMENT

 

WHEREAS,
the Borrower, the Banks, the Administrative Agent, the Structuring Agent and
the Security Agent are parties to that certain Credit Agreement dated as of May
1, 2001, as amended by Amendment No. 1 to Credit Agreement dated as of
July 5, 2001, Amendment No. 2 to Credit Agreement dated as of
November 12, 2002 and Amendment No. 3 to Credit Agreement dated as of May
26, 2004 (collectively, the “Original Credit
Agreement”);

 

WHEREAS,
the purpose of the Original Credit Agreement was to make available to the
Borrower a revolving credit facility (the “Credit
Facility”) to be used for the purchase or refinance of Engines and
Equipment (defined below), the majority of which were to be held for sale or
for lease to unaffiliated persons, and for working capital and general
corporate purposes; and

 

WHEREAS,
the Borrower, the Banks, the Administrative Agent, the Structuring Agent and
the Security Agent now wish to amend and restate the Original Credit Agreement.

 

NOW,
THEREFORE, in consideration of the premises and
promises hereinafter set forth and intending to be legally bound hereby, the
parties hereto agree to amend and restate the Original Credit Agreement in its
entirety as follows:

 

SECTION 1.

CERTAIN DEFINITIONS

 

1.1                                 Definitions.

 

“Acceptable Manufacturer” shall mean CFM
International, General Electric, Pratt & Whitney, Rolls Royce, and
International Aero Engines.

 

“Adjusted Tangible Net Worth” shall mean
Tangible Net Worth of the Willis Companies, less any stockholder’s equity in
any Unrestricted Subsidiaries where the Debt of such Unrestricted Subsidiary is
wholly nonrecourse to the Borrower.

 

 

“Adjusted Total Debt” shall mean all
Debt of the Willis Companies, less any Debt to the extent such Debt is
nonrecourse to the Borrower.

 

“Administrative Agent” shall have the
meaning set forth in the Preamble to this Agreement, and shall also mean and include
any successor Administrative Agent appointed pursuant to Section 10.6
hereto.

 

“Affiliate” shall mean, with respect to
any Person, any other Person:  (i) which
directly or indirectly controls, or is controlled by, or is under common
control with such Person; (ii) which directly or indirectly beneficially owns
or holds ten percent (10%) or more of any class of voting stock of such Person;
or (iii) ten percent (10%) or more of whose voting stock is directly or
indirectly beneficially owned or held by such Person.  The term “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.

 

“Aggregate Revolving Loan Commitment”
shall have the meaning set forth in Section 2.1(a).

 

“Agreement” shall mean this Amended and
Restated Credit Agreement, as amended, supplemented, modified, replaced,
substituted for or restated from time to time and all exhibits and schedules
attached hereto.

 

“Applicable Margin.”  With respect to Base Rate Loans and LIBO
Rate Loans, the term “Applicable Margin”
shall have the meaning set forth on Exhibit B hereto.

 

“Asset Base” shall mean the amount equal
to the sum of:

 

(a)                                      %
of the Net Book Value of Eligible Engines which are not Off-Lease for a period
of more than 180 consecutive days; plus*

 

(b)                                     %
of the Net Book Value of all the Eligible Engines which are Off-Lease for a
period of more than 180 consecutive days; plus*

 

(c)                                      %
of the Net Book Value of the Eligible Equipment which is not Off-Lease for a
period of more than 180 consecutive days; plus*

 

(d)                                     %
of the Net Book Value of the Eligible Equipment which is Off-Lease for a period
of more than 180 but less than 365 consecutive days but only to the extent the
Eligible Equipment consists of (i) Stage II jet engines outfitted with
hushkits, (ii) turboprop engines and (iii) Parts Packages.*

 

*                                         This
redacted material has been omitted pursuant to a request for confidential
treatment, and the material has been filed separately with the Commission.

 

2

 

If an Eligible
Engine or an item of Eligible Equipment is subject to a Lease, the Eligible
Engine or item of Eligible Equipment will be included in the Asset Base only if
such Lease is an Eligible Lease.  The
Asset Base shall also be subject to the following concentration limits:

 

(i)                                     No
more than      % of the Asset Base shall consist of
Eligible Engines and Eligible Equipment subject to Leases which mature within
any 12-month period (determined on a rolling 12-month basis);*

 

(ii)                                  No
more than      % of the Asset Base shall consist of
Eligible Engines and Eligible Equipment which are Off-Lease;*

 

(iii)                               No
more than      % of the Asset Base shall consist of
Eligible Engines and Eligible Equipment subject to Leases to a single lessee;*

 

(iv)                              No
more than      % of the Asset Base shall consist of
Eligible Engines and Eligible Equipment subject to Leases to the Three Primary
Lessees;*

 

(v)                                 No
more than      % of the Asset Base shall consist of
Eligible Engines and Eligible Equipment (other than Parts Packages)
manufactured by the same Acceptable Manufacturer and of the same make and
model;*

 

(vi)                              [Reserved;]

 

(vii)                           No
more than      % of the Asset Base shall consist of
Eligible Equipment constituting Stage II engines outfitted with hushkits and
turboprop engines;*

 

(viii)                        No
more than      % of the Asset Base shall consist of
Eligible Engines and Eligible Equipment used on a single make and model of
narrow-body aircraft;*

 

(ix)                                No
more than      % of the Asset Base shall consist of
Eligible Engines and Eligible Equipment used on a single make and model of
wide-body aircraft;*

 

(x)                                   No
more than      % of the Asset Base shall consist of
Eligible Engines and Eligible Equipment used on wide-body aircraft;*

 

(xi)                                No
more than      % of the Net Book Value of the Eligible
Engines and Eligible Equipment included in the Asset Base shall consist of
existing Eligible Parts Packages (notwithstanding the foregoing, no additional
Eligible Parts Packages may be added to the Asset Base); and*

 

*                                         This
redacted material has been omitted pursuant to a request for confidential
treatment, and the material has been filed separately with the Commission.

 

3

 

(xii)                             No
more than      % of the Asset Base shall consist of
Eligible Engines and Eligible Equipment subject to Leases with lessees
domiciled or principally located in Foreign Jurisdictions, provided, however,
that any concentration in excess of      % solely due
to the Leases set forth in Schedule 3 hereto or due to the removal by the
Majority Banks of a lessee (or in the case of a Lease to WLFC (Ireland) Limited,
a sublessee) listed in Schedule 4 hereto shall be included in the Asset
Base but, in no event, shall the Borrower be entitled to include in the Asset
Base additional Leases with Lessees domiciled or principally located in Foreign
Jurisdictions during any period in which this proviso shall be applicable; and*

 

(xiii)                          No
more than the percentage of the Net Book Value of the Eligible Engines and
Eligible Equipment subject to Leases included in the Asset Base set forth in
Schedule 5 attached hereto for a particular country or geographic region
shall in the aggregate be with lessees domiciled or principally located in such
countries or geographic regions.

 

Notwithstanding
the foregoing,

 

(A)                              If
(a) any Engine, any item of Equipment or any Lease of any Engine or any item of
Equipment shall fail to constitute an “Eligible Engine” or item of “Eligible
Equipment” or “Eligible Lease,” as the case may be, or (b) the Security Agent
shall not receive a perfected, first priority security interest in an Engine or
an item of Equipment (as and to the extent contemplated in Section 9.1)
subject to Permitted Liens, the Security Agent, in its sole discretion, may
nevertheless include such Engine, such item of Equipment or Lease in the Asset
Base, provided that at no time will the aggregate amount of the Asset Base be
comprised of such non-eligible Engines, non-eligible items of Equipment,
non-eligible Leases and such Engines or Equipment regarding which the security
interest is not fully perfected exceed
$               .  Promptly following a determination by the
Security Agent to include in the Asset Base such non-eligible Engines,
non-eligible items of Equipment, non-eligible Leases, or such Engines or
Equipment regarding which the security interest is not fully perfected (which
determination may be made prospectively), the Security Agent will notify the
Banks of its decision and the basis therefor and request that the Banks either
confirm or reject such determination. 
If the Required Banks confirm such determination in writing within ten
days from delivery of the notice, such Engine, item of Equipment or Lease shall
be deemed to be an “Eligible Engine,” an item of “Eligible Equipment” or an
“Eligible Lease”, as the case may be, and will no longer count towards the
$               
limit for non-eligible Engines, items of non-eligible Equipment, non-eligible
Leases and Engines and non-eligible Equipment regarding which the security
interest is not fully perfected.  If
Banks sufficient to constitute the Required Banks fail to confirm such
determination in writing within ten days from delivery of the notice, such
determination by the Security Agent will be deemed not approved by the
Required Banks, unless or until otherwise approved by the Required Banks in
writing and such Engine, item of Equipment or Lease shall

 

*                                         This
redacted material has been omitted pursuant to a request for confidential
treatment, and the material has been filed separately with the Commission.

 

4

 

continue to
count towards the
$               
limit and shall continue to be included in the Asset Base.*

 

(B)                                If
more than      % (determined in the aggregate) of (a)
the Engines and Equipment included in the Asset Base, and (b) the engines and
equipment subject to the WEF Funding Facility is Off-Lease, then Stage III
Engines which have been Off-Lease for more than 12 consecutive months shall not
constitute “Eligible Engines;” and*

 

(C)                                All
of the Engines, Equipment and Leases listed on Schedule 6 shall be deemed
to constitute Eligible Engines, Eligible Equipment or Eligible Leases and shall
be deemed to meet the Eligibility Criteria.

 

“Asset Base Certificate” shall mean a
certificate in substantially the form attached hereto as Exhibit E hereto which
shall be signed by the chief financial officer, chief administrative officer or
chief executive officer of the Borrower.

 

“Base Rate” shall mean the higher of (x)
the Prime Rate, and (y) the Federal Funds Rate plus
     % per annum. 
Any change in such interest rate shall be effective on the date of such
change.*

 

“Base Rate Loan” shall mean a Loan, or
any portion thereof, made at the Base Rate plus the Applicable Margin pursuant
to a Request for Advance made under Section 2.4 herein or as otherwise
provided in Section 2.10 or in any other provision hereof or in any other
Loan Document.

 

“Beneficial Interest” shall mean a
beneficial interest in a trust which owns one or more Engines or items of
Equipment.

 

“Beneficial Interest Pledge Agreement”
shall mean a Beneficial Interest Pledge and Security Agreement substantially in
the form and substance attached hereto as Exhibit L, as amended and
supplemented from time to time.

 

“Business Day” shall mean any day other
than a Saturday, Sunday, or other day on which commercial banks in Rotterdam,
The Netherlands, San Francisco, California, U.S.A. or Cleveland, Ohio, U.S.A.
are authorized or required to close under the laws of either The Netherlands,
the State of California, or the State of Ohio and, if the applicable day
relates to a LIBO Rate Loan, or notice with respect to a LIBO Rate Loan, a day
on which dealings in Dollar deposits are also carried on in the London
interbank market and banks are open for business in London (“London Business Day”).

 

“Capitalized Lease” shall mean all lease
obligations of any Person for any property (whether real, personal or mixed)
which have been or should be capitalized on the books of the lessee in
accordance with Generally Accepted Accounting Principles.

 

*                                         This
redacted material has been omitted pursuant to a request for confidential
treatment, and the material has been filed separately with the Commission.

 

5

 

“Capitalized Lease Obligations” with
respect to any Person, shall mean the aggregate amount which, in accordance
with GAAP, is required to be reported as a liability on the balance sheet of
such Person at such time in respect of such Person’s interest as lessee under a
Capitalized Lease.

 

“Change of Control” shall mean, with
respect to the Borrower, any action occurring or set of circumstances existing
that would result in any Person or group (other than Charles F. Willis IV, his
trusts, family limited partnerships or heirs) beneficially owning (as defined
in Rule 13(d)-3 promulgated under the Securities Exchange Act of 1934, as
amended), directly or indirectly, an amount of the outstanding capital stock of
the Borrower entitling such Person or group to 30% or more of the voting power
of all the outstanding capital stock of the Borrower.  The percentage of voting power shall be determined based on the
number of votes a holder of capital stock can cast in the election of
directors, compared to the total number of votes that all shareholders can cast
in such election.

 

“Closing Date” shall mean the date on
which the Credit Agreement shall become effective as determined in accordance
with Section 4.2.

 

“Closing Fee” shall mean the closing fee
payable by the Borrower pursuant to Section 2.5.

 

“Code” shall mean the Internal Revenue
Code of 1986, as amended from time to time, and all rules and regulations with
respect thereto in effect from time to time.

 

“Collateral” shall mean, collectively,
the “Collateral” (as such term is
defined in the Security Agreement), the “Collateral”
(as such term is defined in the Beneficial Interest Pledge Agreements executed,
delivered and outstanding from time to time), “Collateral” (as such term is defined in the Mortgage), “Collateral” (as such term is defined in the
Owner Trustee Mortgages executed, delivered and outstanding from time to time),
the “Pledged Collateral” (as such
term is defined in the Share Pledge Agreement), and the “Assigned Property” (as such term is defined
in the WLFC (Ireland) Limited Lease Security Assignments).

 

“Commitment Fee” shall mean the
commitment fee payable by the Borrower pursuant to Section 2.12(e).

 

“Compliance Certificate” shall mean a
certificate in substantially the form attached hereto as Exhibit G which shall
be signed by the chief financial officer, chief operating officer or chief
executive officer of Borrower.

 

“Contribution Agreement” shall have the
meaning ascribed thereto in the definition of “WEF Funding Facility”, as
amended, waived, restated and supplemented from time to time.

 

“Conversion Date” shall mean, with
respect to any Term Loan, the date on which it was converted from a Revolving
Loan to a Term Loan, which date may not be later than the Revolving Loan
Termination Date.

 

6

 

“Custodial Agreement” shall mean the
Custodial Agreement by and among BNY Midwest Trust Company, Borrower and
Security Agent substantially in form and substance attached hereto as Exhibit
X.

 

“Debt” shall mean, as to any Person at
any time (without duplication) and, for the Borrower, determined on a
consolidated basis:  (i) all obligations
of such Person for borrowed money; (ii) all obligations of such Person
evidenced by bonds, notes, debentures, or other similar instruments; (iii) all
obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable of such Person arising in the ordinary
course of business; (iv) all Capitalized Lease Obligations of such Person; (v)
all obligations of such Person under guaranties, letters of credit,
endorsements (other than for collection or deposit in the ordinary course of
business), assumptions or other contingent obligations, in respect of, or to
purchase or otherwise acquire, any obligation or indebtedness of any other
Person, or any other obligation, contingent or otherwise, of such Person directly
or indirectly protecting the holder of any obligation or indebtedness of any
other Person, contingent or otherwise, against loss (whether by partnership
arrangements, agreements to keep-well, to purchase assets, goods, securities,
or services, to take-or-pay or otherwise); (vi) all obligations of any other
Person secured by a Lien existing on property owned by such Person, whether or
not the obligations secured thereby have been assumed by such Person or are
non-recourse to the credit of such Person; (vii) all reimbursement obligations
of such Person (whether contingent or otherwise) in respect of letters of
credit, bankers’ acceptances, surety or other bonds and similar instruments;
(viii) the net present value of the non-cancelable payments owed under
Operating Leases for engines, aircraft and parts packages, using a 10% discount
rate; and (ix) all obligations with respect to deposits or maintenance reserves
to the extent not supported by cash reserved specifically therefor.

 

“Default Rate” on any Loan shall mean
two percent (2.0%) per annum above the interest rate then applicable to each
Loan or portion thereof.

 

“Dollars” shall mean the lawful currency
of the United States of America.

 

“EBIT” shall mean the sum of (i) Net
Income less any extraordinary gain or loss included in the calculation thereof,
plus (ii) amounts deducted for interest expense and income taxes.

 

“Eligibility Criteria” shall mean the
applicable criteria set forth below to be used to determine whether Engines,
Equipment and Leases are eligible for inclusion in the Asset Base.

 

The
Eligibility Criteria for Engines are as follows:  (i) the Engines must be
                              ,
(ii) the Engines must be manufactured by
                              
and (iii) the Engines must have been paid for in full by the Borrower or the
Owner Trustee, as applicable, and not be subject to any financing relating to
the purchase thereof.*

 

*                                         This
redacted material has been omitted pursuant to a request for confidential
treatment, and the material has been filed separately with the Commission.

 

7

 

The
Eligibility Criteria for Equipment (other than Parts Packages) are as follows:  (i)
the Equipment must be
                              ,
(ii) the Equipment must be manufactured by
                              and
(iii) the Equipment must have been paid for in full by the Borrower or the
Owner Trustee, as applicable, and not be subject to any financing relating to
the purchase thereof.*

 

The Eligibility Criteria for Parts Packages are as follows:  (i) the Parts Packages must be for
                              
and (ii) the Parts Packages must have been paid for in full by the Borrower or
the Owner Trustee, as applicable, and not be subject to any financing relating
to the purchase thereof.*

 

The
Eligibility Criteria for Leases are as follows:  (i) the Lease requires the lessee or the lessor to provide
liability insurance, all risk ground and flight engine coverage for damage/loss
of engine, and war risk.  Based upon the
credit quality of the relevant lessee, the Security Agent may request
confiscation and expropriation insurance for Engines or Equipment operated (x)
on routes with respect to which it is customary for air carriers flying
comparable routes to carry such insurance or (y) in any area designated by
companies providing such coverage as a recognized or threatened war zone or
area of hostilities.  All insurance
maintained pursuant hereto shall                               
name the Agents as additional insureds and the Security Agent as loss payee;
(ii) the lessee or lessor under the Lease (or, in the case of a Lease to WLFC
(Ireland) Limited, the sublessee) must comply with all maintenance, return,
alteration, replacement, pooling and sublease conditions as typically found in
financings and leases for similar types of engines or equipment and as
necessary to maintain at all times the Engine’s or the Equipment’s
airworthiness certification pursuant to all applicable governmental and regulatory
requirements; (iii) the lessee is not based in, and the Lease requires that the
Engines or Equipment not be operated in,
                              ;
(iv) if the Lease contains a
                              ;
(v)
                              
other than
                              
for under such Lease; and (vi) except for                               ,
all Leases must be
                              . 
                              .*

 

“Eligible Engines” shall mean Engines
which meet all of the Eligibility Criteria for Engines.

 

“Eligible Equipment” shall mean
Equipment which meets all of the Eligibility Criteria applicable thereto.

 

“Eligible Lease” shall mean a Lease of
an Engine or an item of Equipment which meets all of the Eligibility Criteria
for Leases and in which (i) the lessee is a
                              ;
(ii)                               
is the sole lessor; (iii) the Lease arose in the ordinary course of business of
the Borrower (except for Leases to
                              ;
(iv) the Engine or Equipment has been delivered to the lessee and is currently
subject to the Lease; (v) neither the Lease nor the Engine nor the Equipment is
                              
(vi) the Lease payments are
                              

 

*                                         This
redacted material has been omitted pursuant to a request for confidential
treatment, and the material has been filed separately with the Commission.

 

8

 

                              ;
(vii)                               ;
(viii) in the case of a Lease of any Engine or any item of Equipment to WLFC
(Ireland) Limited, (a)
                              ,
(b)                               ,
(c)
                              
(in each case, as reasonably determined by the Security Agent), and (d) the
Security Agent shall have received opinions of legal counsel
                              ,
such opinions to be in form and substance reasonably satisfactory to the
Security Agent in connection with such Lease or sublease, and (ix) if the
lessee (other than WLFC (Ireland) Limited) of such Engine or item of Equipment
                              ,
(a) such Engine or item of Equipment shall be
                              ,
(b)
                              ,
(c)
                              ,
and (d) the Borrower shall have executed and delivered to the Security Agent
the Beneficial Interest Pledge Agreement covering, among other things, the
Borrower’s Beneficial Interest in the owner trust which owns such Engine or
item of Equipment, provided that this clause (ix) shall not apply to
                              .*

 

“Eligible Parts Packages” shall mean
Parts Packages which meet all of the Eligibility Criteria for Parts Packages.

 

“Engine” shall mean any Stage III engine
owned by Borrower or an Owner Trustee (acting pursuant to a Trust Agreement)
designed or suitable for use to propel an aircraft, whether or not subject to a
Lease.

 

“Environmental Control Statutes” shall
mean each and every applicable federal, state, county or municipal
environmental statute, ordinance, rule, regulation, order, directive or
requirement, together with all successor statutes, ordinances, rules,
regulations, orders, directives or requirements, of any Governmental Authority,
including without limitation laws in any way related to Hazardous Substances.

 

“Equipment” shall mean all Stage II
engines (whether or not outfitted with hushkits), turboprop engines, and Parts
Packages owned by Borrower or an Owner Trustee (acting pursuant to a Trust
Agreement), whether or not such items are subject to a Lease.

 

“ERISA” shall mean the Employee
Retirement Income Security Act of 1974, as it may be amended from time to time.

 

“ERISA Affiliate” shall mean any
corporation which is a member of the same controlled group of corporations as
the Borrower within the meaning of Section 414(b) of the Code, or any
trade or business which is under common control with the Borrower within the
meaning of Section 414(c) of the Code.

 

“Event of Default” shall have the
meaning set forth in Section 8.1.

 

“Excepted Collateral” shall have the
meaning set forth in Section 8.1(j).

 

*                                         This
redacted material has been omitted pursuant to a request for confidential
treatment, and the material has been filed separately with the Commission.

 

9

 

“Existing Debt” shall mean the existing
Debt (excluding guarantees) of the Borrower or any of its Restricted
Subsidiaries to certain Persons described on Schedule 1 to this Agreement.

 

“Existing Lease Transactions” shall mean
those Leases of any Engine or any item of Equipment, which Leases shall, as of
the Closing Date, be included in the Asset Base.

 

“Facility
Termination Date” shall mean (i) the date upon
which the Borrower has repaid all principal, interest, fees and other expenses
related to all Revolving Loans and all, if any, Term Loans, and all other
Obligations have been satisfied in full, or (ii) such earlier date as
determined in accordance with Section 8.1 hereof.

 

“Fair Market Value” shall mean with
respect to an Engine or item of Equipment, an amount as determined by an
appraiser to be the amount that would be obtained in an arm’s-length cash
transaction between willing, able and knowledgeable parties, acting prudently,
with an absence of duress and with a reasonable time period available for
marketing, adjusted to account for the maintenance status of such Engine or
item of Equipment (which shall reflect any existing maintenance reserves).  In determining such value, it will be
assumed that (i) no value will be attributed to lease payments made under the
related Lease and (ii) no value shall be attributed to any security deposit
under the related Lease.  The appraiser
shall be retained by the Security Agent and shall be reasonably acceptable to
the Borrower (with reasonable appraisal fees to be paid by the Borrower).

 

“FAR” means the Federal Aviation
Regulations issued by the Federal Aviation Administration as in effect from
time to time.

 

“Federal Funds Rate” shall mean the daily
rate of interest announced from time to time by the Board of Governors of the
Federal Reserve System in publication H.15 as the “Federal Funds Rate,” or if
such publication is unavailable, such rate as is available to the
Administrative Agent on such day.

 

“First
Amendment to Mortgage and Security Agreement” shall
mean the First Amendment to Mortgage and Security Agreement in the form and
substance attached hereto as Exhibit V.

 

“First
Amendment to Security Agreement” shall mean the
First Amendment to Security Agreement in the form and substance attached hereto
as Exhibit Q.

 

“First
Amendment to Share Pledge Agreement” shall mean
the First Amendment to Share Pledge Agreement in the form and substance
attached hereto as Exhibit T.

 

“First
Amendment to WLFC Lease Security Assignment” shall
mean the First Amendment to WLFC Lease Security Assignment in the form and
substance attached hereto as Exhibit W.

 

“Fiscal Quarter” shall mean a fiscal
quarter of the Borrower, which shall be any quarterly period ending on
March 31, June 30, September 30 or December 31 of any year.

 

10

 

“Fiscal Year” shall mean a fiscal year
of the Borrower, which shall end on the last day of December.

 

“Foreign Jurisdictions” shall mean, in
connection with each Lease involving a lessee (or, in the case of a Lease to
WLFC (Ireland) Limited, involving a sublessee) domiciled or principally located
in a non-U.S. jurisdiction, unless (a) the Borrower shall have obtained a legal
opinion in form and substance reasonably satisfactory to the Security Agent
from local counsel in such jurisdiction (a copy of which shall have been
provided to the Security Agent) to the effect that under and in accordance with
applicable local law, an aircraft engine, upon its installation on an aircraft,
should remain the property of the Owner Trustee and not become an accession to
such aircraft (thereby vesting a superior right to title in the owner of such
aircraft) or (b) the Borrower or the applicable Owner Trustee shall have become
a party to or otherwise obtained the benefit of recognition of rights
arrangements sufficient to protect its interests as reasonably determined by
the Security Agent or (c) the lessee (or, in the case of a Lease to WLFC
(Ireland) Limited, the sublessee) under such Lease (or sublease) is a lessee
(or in the case of a Lease to WLFC (Ireland) Limited, a sublessee) listed in
Schedule 4 hereto; provided, however, that a lessee (or in the case of a
Lease to WLFC (Ireland) Limited, a sublessee) may be added or removed from
Schedule 4 upon the determination of the Majority Banks (such
determination to be made in their sole discretion), with such addition or
removal to become effective for all purposes of this agreement upon written
notice to the Borrower.  Upon the
removal of a lessee (or in the case of a Lease to WLFC (Ireland) Limited, a
sublessee) from Schedule 4 hereto, any existing Lease (or sublease) with
such lessee (or in the case of a Lease to WLFC (Ireland) Limited, a sublessee)
shall be applied to paragraph (xii) of the definition of Asset Base.

 

“Generally Accepted Accounting Principles”
or “GAAP” shall mean
generally accepted accounting principles as in effect from time to time in the
United States of America, consistently applied.

 

“Governmental Authority” shall mean, in
any jurisdiction, any federal, state, county or municipal government, or any
department, agency, bureau or other similar type body obtaining authority
therefrom or created pursuant to any laws, including, without limitation,
Environmental Control Statutes.

 

“Guarantors” shall mean all present and
future Restricted Subsidiaries.

 

“Guaranty” shall mean (i) the Subsidiary
Guaranty dated as of May 31, 2001 executed by each Guarantor in favor of the
Security Agent, as amended and supplemented from time to time and (ii) any
Subsidiary Guaranty in the form and substance attached hereto as Exhibit J to
be executed by a Guarantor.

 

“Hazardous Substances” shall mean
without limitation, any regulated substance, toxic substance, hazardous
substance, hazardous waste, pollution, pollutant or contaminant, as defined or
referred to in the Resource Conservation and Recovery Act, as amended, 15
U.S.C., § 2601 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act, 33 U.S.C. § 1251 et seq.; the
federal underground storage tank law, Subtitle I of the Resource Conservation
and Recovery Act, as amended, P.L. 98-616, 42 U.S.C. § 6901 et seq.;
together with any

 

11

 

amendments
thereto, regulations promulgated thereunder and all substitutions thereof, as
well as words of similar purport or meaning referred to in any other federal,
state, county or municipal environmental statute, ordinance, rule or
regulation.

 

“Indebtedness for Borrowed Money” shall
mean (i) all indebtedness, liabilities, and obligations, now existing or
hereafter arising, for money borrowed by the Borrower or its Restricted
Subsidiaries, whether or not evidenced by any note, indenture, or agreement
(including, without limitation, the Notes and any indebtedness for money
borrowed from an Affiliate of the Borrower) and (ii) all indebtedness of others
for money borrowed (including indebtedness of an Affiliate of the Borrower)
with respect to which the Borrower or its Restricted Subsidiaries have become
liable by way of a guarantee or indemnity.

 

“Intangible Assets” shall mean all
assets which would be classified as intangible assets under GAAP consistently
applied, including, without limitation, goodwill (whether representing the
excess of cost over book value of assets acquired or otherwise), patents,
trademarks, trade names, copyrights, franchises, and deferred charges
(including, without limitation, unamortized debt discount and expense,
organization costs, and research and development costs).  For purposes of this definition, prepayments
of taxes, license fees and other expenses shall not be deemed Intangible
Assets.

 

“Interest Coverage Ratio” shall mean the
ratio of EBIT of the Willis Companies plus rent expenses of the Willis
Companies to interest expense of the Willis Companies plus rent expenses of the
Willis Companies.

 

“Interest Period” shall mean a period
commencing on the date of a LIBO Rate Loan or with respect to a LIBO Rate Loan
being renewed, the last day of the preceding Interest Period and ending one,
two, three or six months thereafter, as requested by the Borrower at the time
of its Request for Advance; provided also that (i) an Interest Period which
would otherwise expire on a day which is not a London Business Day shall be
extended to the next succeeding London Business Day unless such London Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding London Business Day, (ii) any Interest Period which
begins on the last London Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall, subject to the next succeeding clause, end
on the last London Business Day of a calendar month; and (iii) no Interest
Period shall end later than the Revolving Loan Termination Date, provided,
however, that (a) to the extent Term Loans are then in existence, the Interest
Period with respect to any Term Loan shall end no later than the Term Loan
Maturity Date; and (b) to the extent Revolving Loans are being converted into
Term Loans on the Revolving Loan Termination Date, any Term Loans so created
may, at the Borrowers’ option, continue to utilize the existing Interest Period
of the Revolving Loan so converted.

 

“Investment” in any Person shall mean,
without duplication, (i) the acquisition (whether for cash, property, services
or securities or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities of such Person;
(ii) any deposit with, or advance, loan or other extension of credit to, such
Person (other than any such deposit, advance, loan or extension of credit
having a term not exceeding 90 days representing the purchase price of
inventory or supplies purchased in the ordinary course of business) or

 

12

 

guarantee or
assumption of, or other contingent obligation with respect to, Indebtedness for
Borrowed Money or other liability of such Person (other than unsecured (except
for a pledge of Shares (as defined in the Share Pledge Agreement) and records
related to such Shares of any Unrestricted Subsidiary) guaranties of the
obligations of Restricted or Unrestricted Subsidiaries); (iii) any transfer or
contribution of assets to an Unrestricted Subsidiary to the extent that the net
book value of such assets is not paid in full at the time of transfer; and (iv)
any amount that may, pursuant to the terms of such investment, be required to
be paid, deposited, advanced, lent or extended to or guaranteed (other than the
guaranties described above) or assumed on behalf of such Person.

 

“Lease” shall mean a written operating
lease agreement assigned to or entered into between Borrower or an Owner
Trustee (acting pursuant to a Trust Agreement), as lessor, and a third party
(including WLFC (Ireland) Limited) as lessee, pursuant to which Borrower or
such Owner Trustee, as applicable, leases to the third party for a fixed period
of time one or more Engines or items of Equipment.

 

“Leverage Ratio” shall mean the ratio of
all Debt of the Willis Companies to their Tangible Net Worth calculated based
on the most recent financial statements furnished to the Banks in accordance
herewith.

 

“LIBO Rate” shall mean the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary to
the next 1/100 of 1%) at which the Administrative Agent, individually, is
offered deposits of United States Dollars by leading banks in the interbank
eurodollar or eurocurrency market on or about eleven o’clock (11:00) a.m.,
London time, two London Business Days prior to the commencement of the
requested Interest Period in an amount substantially equal to the outstanding
principal amount of the LIBO Rate Loan requested for a maturity of comparable
duration to the Interest Period; provided, however that if for any such period
or comparable period, the Administrative Agent is not offered deposits of
United States Dollars by leading banks as described above, the LIBO Rate in
respect of any Interest Period shall mean the rate per annum (rounded upwards,
if necessary to the next 1/100 of 1%) for deposits in United States Dollars for
a period equal or comparable to such Interest Period which appears on Page 3750
on the Dow Jones Telerate Service (the “Telerate Page 3750”) (or such other
page as may replace such Telerate Page 3750 for the purpose of displaying
London interbank offered rates for United States Dollar deposits), on or about
eleven o’clock (11:00) a.m., London time, two (2) London Business Days prior to
the commencement of the requested Interest Period in an amount substantially
equal to the outstanding principal amount of the LIBO Rate Loan requested for a
maturity of comparable duration to the Interest Period; provided, that if for
any such period or comparable period no such rate appears on the Telerate Page
3750 (or such other page as may replace such Telerate Page 3750 for the purpose
of displaying London interbank offered rates for United States Dollar
deposits), the LIBO Rate in respect of such period shall be the arithmetic
mean, as determined by the Administrative Agent, of the rates per annum
(rounded upwards, if necessary to the next 1/100 of 1%) appearing on the
Reuters Screen “LIBO” page in respect of amounts denominated in Dollars, on or
about eleven o’clock (11:00) a.m., London time, two (2) London Business Days
prior to the commencement of the requested Interest Period in an amount
substantially equal to the outstanding principal amount of the LIBO Rate Loan
requested for a maturity of comparable duration to the Interest Period.

 

13

 

“LIBO Rate Loan” shall mean a Loan
bearing interest at the LIBO Rate plus the Applicable Margin.

 

“Lien” shall mean any lien, mortgage,
security interest, chattel mortgage, pledge or other encumbrance (statutory or
otherwise) of any kind securing satisfaction of an obligation, including any
agreement to give any of the foregoing, any conditional sales or other title
retention agreement, any lease in the nature thereof.

 

“Loan” or “Loans” shall mean the Revolving Loan or Revolving Loans or
Term Loan or Term Loans.

 

“Loan
Documents” shall mean this Agreement, the Notes,
the Mortgage, the Security Agreement, each Guaranty, each Owner Trustee
Mortgage, each Owner Trustee Guarantee, each Beneficial Interest Pledge
Agreement, the Share Pledge Agreement, the Custodial Agreement, each WLFC
(Ireland) Document and all other documents directly related or incidental to
said documents, the Loans or the Collateral.

 

“Majority Banks” shall mean the Banks
holding Loans and Revolving Loan Commitments representing more than 50% of the
aggregate amount of Loans and Revolving Loan Commitments under this Agreement.

 

“Material Adverse Change” shall mean any
event or condition which, in the reasonable determination of the Majority
Banks, would result in a material adverse change in the financial condition,
business, properties or profits of the Borrower or which gives reasonable
grounds to conclude that the Borrower would likely not be able to perform or
observe (in the normal course) its obligations under the Loan Documents to
which it is a party, including but not limited to the Notes.

 

“Material Adverse Effect” shall mean a
material adverse effect on (i) the financial condition, business, properties,
or profits of the Borrower, (ii) the ability of the Borrower to perform its
obligations under this Agreement, the Notes and the other Loan Documents, or
(iii) the legality, validity or enforceability of this Agreement or the Notes
or the rights and remedies of the holders of the Loans.

 

“Monthly Lease Portfolio and Receivables Report”
shall mean a monthly report in summary form of the status of accounts
receivable in respect of all Leases which are part of the Collateral in form
and substance reasonably satisfactory to the Administrative Agent.

 

“Mortgage” shall mean the Mortgage and
Security Agreement made by the Borrower in favor of the Security Agent dated as
of May 31, 2001 in the form of Exhibit D hereof, as amended by the First
Amendment to Mortgage and Security Agreement, and as further amended and
supplemented from time to time.

 

“Multiemployer Plan” shall mean a
multiemployer plan as defined in ERISA Section 4001(a)(3), which covers
employees of the Borrower or any ERISA Affiliate.

 

“Net Book Value” of an Engine or an item
of Equipment shall be calculated as the lesser of:  (i) the cost to Borrower of such Engine or item of Equipment or
(ii) such Engine’s or item of

 

14

 

Equipment’s
Fair Market Value.  In any event, the
Net Book Value will be reduced utilizing depreciation methods consistent with
current practice and Generally Accepted Accounting Principles.

 

“Net Income” shall mean net income of
the Willis Companies after taxes, determined in accordance with GAAP.

 

“Net Worth” shall mean, at any
particular time, all amounts, in conformity with GAAP, that would be included
as stockholder’s equity on a consolidated balance sheet of the Willis Companies
excluding other comprehensive income or loss resulting from the implementation
of SFAS 133.

 

“Note” or “Notes” shall mean the Revolving Credit Note or Notes or
Term Note or Notes.

 

“Obligations” shall mean all now
existing or hereafter arising debts, obligations, covenants, and duties of
payment or performance of every kind, matured or unmatured, direct or
contingent, owing, arising, due, or payable to the Banks or the Administrative
Agent or the Security Agent by the Borrower or any Owner Trustee arising out of
this Agreement or any other Loan Document, including, without limitation, all
obligations to repay principal of and interest on the Loans and all obligations
related to any interest rate swap agreement, interest rate cap agreement,
interest collar agreement, interest rate hedging agreement, interest rate floor
agreement or other similar agreement or arrangement with any Bank related to
the foregoing, and to pay interest, fees, costs, charges, expenses, reasonable
professional fees, and all sums chargeable to the Borrower or any Owner Trustee
or for which the Borrower or any Owner Trustee is liable as indemnitor under
the Loan Documents, whether or not evidenced by any note or other instrument.

 

“Off-Lease” shall mean, at the time of
determination, not subject to a Lease.

 

“Omnibus
Amendment to Owner Trustee Mortgage” shall mean
the Omnibus Amendment to Owner Trustee Mortgage and Security Agreement in the
form and substance attached hereto as Exhibit U.

 

“Omnibus
Amendment to Trust Agreement” shall mean the
Omnibus Amendment to Trust Agreement in the form and substance attached hereto
as Exhibit R.

 

“Operating Lease” shall mean a lease
which is qualified as an operating lease in accordance with GAAP.

 

“Original Credit Agreement” shall have
the meaning set forth in the Preamble to this Agreement.

 

“Other Indebtedness” shall mean Debt
(excluding guarantees) of the Borrower, or any of its Restricted Subsidiaries
for the financing or refinancing of assets owned, on the Closing Date, by the
Borrower, any of its Restricted Subsidiaries or an Owner Trust of which the
Borrower or any of its Restricted Subsidiaries is the beneficiary, and which do
not constitute part of the Asset Base. 
Such debt and the related assets are listed on Schedule 1 to this
Agreement.

 

15

 

“Owner Trustee” shall mean Wells Fargo
Bank Northwest, National Association (formerly known as First Security Bank,
National Association) or another bank or trust company reasonably satisfactory
to the Security Agent acting as trustee under a Trust Agreement.

 

“Owner Trustee Guarantee” shall mean an
Owner Trustee Guaranty in the form and substance attached hereto as Exhibit M,
as amended and supplemented from time to time.

 

“Owner Trustee Mortgage” shall mean (i)
each Owner Trustee Mortgage executed by Owner Trustee in favor of the Security
Agent, as amended by the Omnibus Amendment to Owner Trustee Mortgage and (ii) a
Owner Trustee Mortgage in the form and substance of attached hereto as Exhibit
I, as amended and supplemented from time to time.

 

“Parts” shall mean components of an
aircraft or an Engine or any systems within an aircraft or an Engine that have
either been removed from an aircraft or an Engine or have not yet been incorporated
into an aircraft or an Engine.

 

“Parts Packages” shall mean a grouping
of Parts owned by Borrower or an Owner Trustee (acting pursuant to a Trust
Agreement) which are to be sold or leased by Borrower or such Owner Trustee
(acting pursuant to a Trust Agreement) to a third party.

 

“PBGC” shall mean the Pension Benefit
Guaranty Corporation and any successor thereto.

 

“Pension Plan” shall mean, at any time,
any Plan (including a Multiemployer Plan), the funding requirements of which
(under Section 302 of ERISA or Section 412 of the Code) are, or at
any time within the six years immediately preceding the time in question, were
in whole or in part, the responsibility of the Borrower or any ERISA Affiliate
of the Borrower.

 

“Permitted Liens” shall mean (i) any
Liens for current taxes, assessments and other governmental charges not yet due
and payable or being contested in good faith by the Borrower (or by a lessee)
by appropriate proceedings and for which adequate reserves have been
established by the Borrower in accordance with GAAP, as reflected in the
Borrower’s financial statements (or by the lessee as reflected in such lessee’s
financial statements); (ii) any mechanic’s, materialman’s, carrier’s,
warehousemen’s or similar Liens for sums not yet due or being contested in good
faith by the Borrower (or by a lessee) by appropriate proceedings and for which
adequate reserves have been established by the Borrower in accordance with
GAAP, as reflected in the Borrower’s financial statements (or by the lessee as
reflected in such lessee’s financial statements); (iii) easements,
rights-of-way, restrictions and other similar encumbrances on the real property
or fixtures of the Borrower incurred in the ordinary course of business which
individually or in the aggregate do not in any case materially detract from the
value or marketability of the property subject thereto or interfere with the
ordinary conduct of the business of the Borrower; (iv) Liens (other than Liens
imposed on any property of the Borrower pursuant to ERISA or Section 412
of the Code) incurred or deposits made in the ordinary course of business,
including Liens in connection with workers’ compensation, unemployment
insurance and other types of social security and Liens to secure performance of
tenders, statutory obligations, surety and appeal bonds (in the case of appeal
bonds such Lien shall not secure any reimbursement or indemnity obligation in
an amount greater than $2,500,000), bids, leases that

 

16

 

are not
Capitalized Leases, performance bonds, sales contracts and other similar
obligations, in each case, not incurred in connection with the obtaining of
credit or the payment of a deferred purchase price, and which do not, in the
aggregate, result in a Material Adverse Effect; (v) Liens, if any, existing on
the Closing Date and listed in Schedule 1 hereto; (vi) Liens in favor of
Fortis, as Security Agent, in the Collateral as contemplated by this Agreement
and the other Loan Documents; (vii) the rights of a lessee or sublessee to
utilize the Collateral pursuant to the terms of a Lease; (viii) Liens securing
Other Indebtedness (but such Liens shall be limited to the assets of the
Borrower being financed with the proceeds of such Other Indebtedness); (ix)
purchase money Liens securing Debt not to exceed $25,000,000 in the aggregate,
as permitted under Section 6.9(c) hereof; (x) Liens against the Shares (as
defined in the Security Agreement) and records relating to such Shares of
Unrestricted Subsidiaries as contemplated by Section 6.9(i) hereof; (xi)
Liens consisting solely of U.C.C. financing statements that reflect the sale of
accounts and chattel paper by the Borrower to an Unrestricted Subsidiary; (xii)
Liens arising from the following types of liabilities of a lessee or any other
operator of an Engine or item of Equipment, so long as such liabilities are
either not yet due or are being contested in good faith through appropriate
proceedings that do not give rise to any reasonable likelihood of the sale,
forfeiture or other loss of such Engine or item of Equipment, title thereto or
the Security Agent’s security interest therein or of criminal or unindemnified
civil liability on the part of Borrower, any Bank or any Agent and with respect
to which the lessee maintains adequate reserves (in the reasonable judgment of
Borrower):  (A) fees or charges of any
airport or air navigation authority, (B) judgments, or (C) salvage or other
rights of insurers; (xiii) Liens permitted in accordance with
Section 8.1(j) hereof; (xiv) Liens on “Contributed Assets” as defined in
the Contribution Agreement; and (xv) Liens evidenced by UCC financing
statements which are expressly permitted under the terms of this Credit
Agreement and the other Loan Documents.

 

“Person” shall mean any individual,
corporation, partnership, joint venture, association, company, business trust
or entity, or other entity of whatever nature.

 

“Plan” shall mean an employee benefit
plan as defined in Section 3(3) of ERISA, other than a Multiemployer Plan,
whether formal or informal and whether legally binding or not.

 

“Potential Default” shall mean an event,
condition or circumstance that with the giving of notice or lapse of time or
both would become an Event of Default.

 

“Prime Rate” shall mean, for any day,
the prime commercial lending rate of the Administrative Agent, as established
from time to time at its head office. 
The “Prime Rate” is a reference rate and is not necessarily the best
rate offered by the Administrative Agent to any one of its customers.

 

“Prohibited Transaction” shall mean a
transaction that is prohibited under Section 4975 of the Code or
Section 406 of ERISA and not exempt under Section 4975 of the Code or
Section 4.08 of ERISA.

 

“Regulation” shall mean any treaty,
statute, law, ordinance, regulation, order or rule of any United States of
America or foreign, federal, state, local or other government or governmental
body, including, without limitation, those covering or related to banking,
financial transactions, securities, public utilities, environmental control,
energy, safety, health,

 

17

 

transportation,
bribery, record keeping, zoning, antidiscrimination, antitrust, wages and
hours, employee benefits, and price and wage control matters.

 

“Regulation D” shall mean Regulation D
of the Board of Governors of the Federal Reserve System, as it may be amended
from time to time.

 

“Regulatory
Change” shall mean any change after the date of
this Agreement in any Regulation (including Regulation D) or the adoption or
making after such date of any interpretations, directives or requests of or
under any Regulation (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or administration
thereof applying to a class of banks including any one of the Banks but
excluding any foreign office of any Bank (for purposes of this definition, a
“foreign office” means an office in any country other than the country where
the Bank is domiciled).

 

“Release” shall mean without limitation,
the presence, leaking, leaching, pouring, emptying, discharging, spilling,
using, generating, manufacturing, refining, transporting, treating, or storing
of Hazardous Substances at, into, onto, from or about the property or the
threat thereof, regardless of whether the result of an intentional or
unintentional action or omission, and which is in violation of applicable law.

 

“Reportable Event” shall mean, with
respect to a Pension Plan:  (i) Any of
the events set forth in Sections 4043(b) of ERISA (other than a reportable
event as to which the provision of 30 days’ notice to the PBGC is waived under
applicable regulations) or 4063(a) of ERISA or the regulations thereunder, (ii)
an event requiring the Borrower or any ERISA Affiliate to provide security to a
Pension Plan under Section 401(a)(29) of the Code and (iii) any failure by
the Borrower or any ERISA Affiliate to make payments required by
Section 412(m) of the Code.

 

“Request for Advance” shall have the
meaning set forth in Section 2.4.

 

“Required Banks” shall mean the
Administrative Agent and the Banks holding Loans and Revolving Loan Commitments
representing at least two-thirds (2/3) of the aggregate amount of Loans and
Revolving Loan Commitments under this Agreement.

 

“Restricted Subsidiary” shall mean any
Subsidiary, direct or indirect, of the Borrower that is not an Unrestricted
Subsidiary.

 

“Revolving Loan” shall have the meaning
set forth in Section 2.1.

 

“Revolving Loan Commitment” shall have
the meaning set forth in Section 2.1.

 

“Revolving Loan Commitment Percentage”
shall mean with respect to each Bank the percentage set forth in column (2)
opposite its name in Exhibit A hereto.

 

“Revolving Loan Termination Date” shall
have the meaning set forth in Section 2.1.

 

“Revolving Credit Note” or “Revolving Credit Notes” shall have the
meaning set forth in Section 2.2.

 

18

 

“Security Agent” shall have the meaning
set forth in the Preamble to this Agreement, and shall also mean and include
any successor Security Agent appointed pursuant to Section 10.6 hereto.

 

“Security Agreement” shall mean that
certain Security Agreement between the Borrower and the Security Agent dated as
of May 31, 2001 in the form of Exhibit F hereto, as amended by the First
Amendment to Security Agreement, and as further amended and supplemented from
time to time.

 

“Share Pledge Agreement” shall mean that
certain Master Share Pledge Agreement dated as of May 31, 2001in the form of
Exhibit N hereto, as amended by the First Amendment to Share Pledge Agreement,
and as further amended and supplemented from time to time.

 

“Solvent” shall mean, with respect to
any Person, that the aggregate present fair saleable value of such Person’s
assets is in excess of the total amount of its probable liabilities on its
existing debts as they become absolute and matured, such Person has not
incurred debts beyond its foreseeable ability to pay such debts as they mature,
and such Person has capital adequate to conduct the business in which it is
presently engaged or in which is about to engage.

 

“Stage II” as it relates to any aircraft
or engine, shall mean any aircraft or engine which, at the time of its
manufacture, was noncompliant with the noise regulations set forth in FAR Part
36.

 

“Stage III” as it relates to any
aircraft or engine, shall mean any aircraft or engine which, at the time of its
manufacture, was compliant with the noise regulations set forth in FAR Part 36.

 

“Structuring Agent” shall have the meaning
set forth in the Preamble to this Agreement, and shall also mean and include
any successor Structuring Agent appointed pursuant to Section 10.6 hereto.

 

“Subsidiary” shall mean a corporation or
other entity the shares of stock or other equity interests of which having
ordinary voting power (other than stock or other equity interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation are at the time owned,
or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries or both, by the Borrower.

 

“Tangible Net Worth” shall mean Net
Worth minus Intangible Assets.

 

“Termination Event” shall mean, with
respect to a Pension Plan:  (i) a
Reportable Event, (ii) the termination of a Pension Plan, or the filing of a
notice of intent to terminate a Pension Plan, or the treatment of a Pension
Plan amendment as a termination under Section 4041(c) of ERISA, (iii) the
institution of proceedings to terminate a Pension Plan under Section 4042
of ERISA or (iv) the appointment of a trustee to administer any Pension Plan
under Section 4042 of ERISA.

 

“Term Loan” or “Term Loans” shall have the meaning set
forth in Section 2.8.

 

19

 

“Term Loan Maturity Date” shall mean,
with respect to any Term Loan, one year after the Revolving Loan Termination
Date.

 

“Term Note” or “Term Notes” shall have the meaning set
forth in Section 2.8.

 

“Three Primary Lessees” shall mean the
three lessees under Leases which, at the time of determination, have leased
(whether under one or more Leases) the highest percentages, based on Net Book
Value, of all Eligible Engines and Eligible Equipment.

 

“Trust Agreement” shall mean (i) each
Trust Agreement executed by each Owner Trustee having the Borrower as the sole
Beneficiary, as amended by the Omnibus Amendment to Trust Agreement and (ii) a
Trust Agreement in the form and substance attached hereto as Exhibit K, to be
executed by each Owner Trustee having the Borrower as the sole beneficiary.

 

“Unfunded Pension Liabilities” shall
mean, with respect to any Pension Plan at any time, the amount determined by
taking the accumulated benefit obligation, as disclosed in accordance with
Statement of Accounting Standards No. 87, over the fair market value of Pension
Plan assets.

 

“Unrecognized Retiree Welfare Liability”
shall mean, with respect to any Plan that provides post-retirement benefits
other than pension benefits, the amount of the accumulated post-retirement
benefit obligation, as determined in accordance with Statement of Financial
Accounting Standards No. 106, as of the most recent valuation date.  Prior to the date such statement is
applicable to the Borrower, such amount of the obligation shall be based on an
estimate made in good faith.

 

“Unrestricted Subsidiary” shall mean
each subsidiary listed on Schedule 1 hereto or any other Subsidiary of
Borrower established to facilitate securitizations and any Subsidiary of the
Borrower designated as an unrestricted subsidiary by the Borrower.  In no event shall WLFC (Ireland) Limited be
designated as an Unrestricted Subsidiary.

 

“WEF Funding Facility” shall mean the
transactions contemplated by (i) that certain Indenture dated as of
September 12, 2002 between Willis Engine Funding LLC and the Bank of New
York, as indenture trustee (the “Indenture”),
as supplemented by (ii) that certain 2002-1 Supplement dated as of
September 12, 2002, that certain First Supplemental Indenture dated as of
October 10, 2003 and that certain First Amendment to Series Supplement
dated as of October 10, 2003 (collectively, the “Supplement”), (iii) that certain Class A
Note Purchase Agreement dated as of September 12, 2002 by and among Willis
Engine Funding LLC, Borrower, Sheffield Receivables Corporation and Barclays
Bank PLC and that certain Class B Note Purchase Agreement dated as of
September 12, 2002 by and among Willis Engine Funding LLC, Borrower,
Fortis Bank (Nederland) N.V. and Barclays Bank PLC (collectively, the “Note Purchase Agreements”), as amended by
that certain Amendment No. 1 to Note Purchase Agreements dated as of
October 10, 2003, (iv) that certain Contribution and Sale Agreement
between Willis Engine Funding LLC and Borrower dated as of September 12,
2002 (the “Contribution Agreement”),
(v) that certain Servicing Agreement between Borrower and Willis Engine Funding
LLC dated as of September 12, 2002 (the “Servicing
Agreement”), (vi) that certain Guaranty dated as of September 12,
2002 (the “WEF Guaranty”) made by

 

20

 

Borrower in
favor of Barclays Bank PLC and (vii) certain other documents and agreements
ancillary thereto; in each of cases (i), (ii), (iii), (iv), (v), (vi), and (vii),
as amended, waived, restated and supplemented from time to time (including
without limitation any such amendments, waivers, restatements and supplements
effective on or prior to the date hereof).

 

“WEF Guaranty” shall have the meaning
ascribed thereto in the definition of “WEF Funding Facility”, as amended,
waived, restated and supplemented from time to time.

 

“Willis Companies” shall mean the
Borrower and its consolidated Subsidiaries.

 

“WLFC (Ireland) Documents” shall mean
each Lease, sublease and all other documents directly related or incidental to
the Loans or the Collateral entered into by WLFC (Ireland) Limited, as each may
be amended and supplemented from time to time.

 

“WLFC (Ireland) Limited Security Assignments”
shall mean those certain Lease Security Assignments between WLFC (Ireland)
Limited, as Assignor, and Fortis Bank (Nederland) N.V., as Security Agent, as
amended by the First Amendment to Lease Security Assignment, as may be further
amended and supplemented from time to time.

 

1.2                                 Accounting
Terms.  All accounting terms
not specifically defined herein shall be construed in accordance with Generally
Accepted Accounting Principles consistent with those applied in the preparation
of the financial statements referred to in Section 3.6, and all financial
data submitted pursuant to this Agreement shall be prepared in accordance with
such principles.

 

1.3                                 Construction.  Words and defined terms importing the plural
include the singular and visa versa.

 

SECTION 2.

THE CREDIT

 

2.1                                 The
Revolving Loans.

 

(a)                                  Revolving
Loans; Revolving Loan Commitment.  Subject to the terms and conditions herein set forth and in
reliance upon the representations, warranties and covenants contained herein,
each Bank agrees, severally and not jointly, to make revolving credit loans
(collectively, the “Revolving Loans”
and, individually, a “Revolving Loan”)
to the Borrower during the period beginning on the Closing Date and ending on
the Business Day immediately preceding May 31, 2006 or on the earlier date of
termination in full, pursuant to Section 2.6, Section 2.7 or
Section 8.1 hereof, of the obligations of such Bank under this
Section 2.1 (such Business Day or such earlier date of termination being
herein called the “Revolving Loan Termination
Date”) in amounts not to exceed at any time outstanding, in the
aggregate, the commitment amount set forth in column (1) opposite the name of
such Bank on Exhibit A hereto (each such amount, as the same may be reduced
pursuant to Section 2.6 hereof or increased pursuant to the last sentence
of this Section 2.1(a) being hereinafter called such Bank’s “Revolving Loan Commitment”).  Subsequent to the execution of this
Agreement and prior to the Closing Date, a Bank may increase its Revolving Loan
Commitment.  Any such increase shall be
noted in column (1) opposite the name of the relevant Bank on Exhibit A hereto
and the

 

21

 

Banks’
Revolving Loan Commitment Percentages shall be adjusted to reflect such
increased Revolving Loan Commitment. 
The Banks’ collective commitment to make Revolving Loans under this
Agreement shall be the “Aggregate Revolving
Loan Commitment”.  All
Revolving Loans shall be made by the Banks simultaneously and pro rata
in accordance with their respective Revolving Loan Commitments.  All Revolving Loans shall be made to the
Borrower at the office of the Administrative Agent in Cleveland, Ohio located
at 1900 East Ninth Street.   Notwithstanding
the foregoing, the Aggregate Revolving Loan Commitment may be increased to not
more than one hundred seventy five million Dollars ($175,000,000) within 90
days after the Closing Date through the acceptance of (x) new Revolving Loan
Commitments from financial institutions which are not “Banks” on the Closing
Date and are acceptable to both the Borrower and the Structuring Agent and/or
(y) an increased Revolving Loan Commitment from any Bank(s) (and, in such
event, Exhibit A hereto shall be amended accordingly).

 

(b)                                 Interest
Rate Options.  Revolving
Loans shall bear interest at (i) the Base Rate plus the Applicable Margin for
Revolving Loans, or (ii) the LIBO Rate plus the Applicable Margin, provided
that, in the case of LIBO Rate Loans (a) not more than five such Loans may be
outstanding at any one time, and (b) no LIBO Rate Loan may have an Interest
Period extending beyond the Revolving Loan Termination Date unless it is
converted to a Term Loan pursuant to Section 2.8 hereof.

 

(c)                                  Maximum Loans
Outstanding.  The Borrower
shall not be entitled to any new Revolving Loan if, after giving effect to such
Loan, the unpaid amount of the then- outstanding Loans would exceed the lesser
of (i) the then-current Aggregate Revolving Loan Commitment or (ii) the
then-current Asset Base as stated in the most recent Asset Base Certificate
furnished to the Banks as provided herein.

 

(d)                                 Minimum
Loan Amount.  Except
for Revolving Loans which exhaust the full remaining amount of the Aggregate
Revolving Loan Commitment and conversions which result in the conversion of all
Loans subject to a particular interest rate option, each of which may be in
lesser amounts, (i) each LIBO Rate Loan when made (and each conversion of Base
Rate Loans into LIBO Rate Loans) shall be in an amount at least equal to
$3,000,000 or, if greater, then in such minimum amount plus $100,000 multiples,
and (ii) each Base Rate Loan when made (and each conversion of LIBO Rate Loans
into Base Rate Loans) shall be in an amount at least equal to $150,000.

 

(e)                                  Prepayment
and Reborrowing. 
Prior to the Revolving Loan Termination Date and within the limits of
the Aggregate Revolving Loan Commitment and the Asset Base, the Borrower may
borrow, prepay and reborrow Revolving Loans. 
All Revolving Loans shall be converted to Term Loans in accordance with
Section 2.8 hereof on the Revolving Loan Termination Date.

 

(f)                                    Revolving Loan
Commitment Percentages.  The
obligation of each Bank to make a Revolving Loan to the Borrower at any time
shall be limited to its percentage (the “Revolving
Loan Commitment Percentage”) as set forth in column (2) opposite its
name on Exhibit A hereto multiplied by the aggregate principal amount of the
Revolving Loan requested.  The principal
amounts of the respective Revolving Loans made by the Banks on the occasion of
each borrowing shall be pro rata in accordance with their respective Revolving
Loan

 

22

 

Commitment
Percentages.  No Bank shall be required
to make any Loan if, immediately after giving effect to such Loan, and the
application of the proceeds of a Loan to the extent applied to the repayment of
the Loans, the sum of such Bank’s Loans outstanding would exceed such Bank’s
Revolving Loan Commitment.

 

(g)                                 Several
Obligations.  The failure of
any one or more Banks to make Revolving Loans in accordance with its or their
obligations shall not relieve the other Banks of their several obligations
hereunder, but in no event shall the aggregate amount at any one time
outstanding which any Bank shall be required to lend hereunder exceed its
Revolving Loan Commitment.

 

2.2                                 The Revolving
Credit Notes.  The Revolving
Loans made by each Bank shall be evidenced by a single promissory note of the
Borrower (each such promissory note as it may be amended, extended, modified or
renewed, a “Revolving Credit Note”
and, together, the “Revolving Credit Notes”)
in principal face amount equal to such Bank’s Revolving Loan Commitment,
payable to the order of such Bank and otherwise in the form attached hereto as
Exhibit C.  The Revolving Credit Notes
shall be dated the Closing Date, shall bear interest at the rate per annum and
be payable as to principal and interest in accordance with the terms
hereof.  Each outstanding Revolving Loan
shall be due and payable as set forth in Section 2.1 hereof unless the
maturity of said Loans is accelerated as provided in Section 2.6 or
Section 8.1 hereof or converted as provided in Section 2.8
hereof.  Notwithstanding the stated
amount of any Revolving Credit Note, the liability of the Borrower under each
Revolving Credit Note shall be limited at all times to the outstanding
principal amount of the Revolving Loans by each Bank evidenced thereby, plus
all interest accrued thereon and the amount of all costs and expenses then
payable hereunder, as established by each such Bank’s books and records, which books
and records shall be conclusive absent manifest error.

 

2.3                                 [Reserved].

 

2.4                                 Funding
Procedures.

 

(a)                                  Request
for Advance.  Each request for a
Revolving Loan or the conversion or renewal of an interest rate with respect to
a Loan shall be made not later than 2:00 p.m. Eastern prevailing time on a
Business Day by delivery to the Administrative Agent of a written request
signed by the Borrower or, in the alternative, a telephone request followed
promptly by written confirmation of the request (a “Request for Advance”), specifying the date and amount of the
Loan to be made, converted or renewed, selecting the interest rate option
applicable thereto, and in the case of LIBO Rate Loans, specifying the Interest
Period applicable to such Loans.  The
form of request to be used in connection with the making, conversion or renewal
of Loans shall be that form provided to the Borrower by the Administrative
Agent.  Each request shall be received
not less than one Business Day prior to the date of the proposed borrowing,
conversion or renewal in the case of Base Rate Loans and three London Business
Days prior to the date of the proposed borrowing, conversion or renewal in the
case of LIBO Rate Loans.  No request
shall be effective until actually received in writing by the Administrative
Agent.  The Borrower may not request
more than three advances per week.  Each
Request for Advance shall be for a Revolving Loan at a single interest rate
option.

 

23

 

(b)                                 Actions by the Administrative
Agent.  Upon receipt of a
Request for Advance and if the conditions precedent provided herein shall be
satisfied at the time of such request, the Administrative Agent promptly shall
notify each Bank of such request and of such Bank’s ratable share of such
Revolving Loan.  Upon receipt by the
Administrative Agent of a Request for Advance, the request shall not be
revocable by the Borrower.

 

(c)                                  Availability
of Funds.  Not later than
1:00 p.m. Eastern prevailing time on the date of each Revolving Loan, each Bank
shall make available (except as provided in clause (d) below) its ratable share
of such Revolving Loan, in immediately available Dollars, to the Administrative
Agent at the address set forth opposite its name on the signature page hereof or
at such account in London as the Administrative Agent shall specify to the
Borrower and the Banks.  Unless the
Administrative Agent knows that any applicable condition specified herein has
not been satisfied, it will make the funds so received from the Banks
immediately available to the Borrower on the date of each Revolving Loan by a
credit to the account of the Borrower at the Administrative Agent’s aforesaid
address.

 

(d)                                 Funding
Assumptions.  Unless the
Administrative Agent shall have been notified by any Bank at least one Business
Day prior to the date of the making, conversion or renewal of any LIBO Rate
Loan, or by 3:00 p.m. Eastern prevailing time on the date a Base Rate Loan is
requested, that such Bank does not intend to make available to the Administrative
Agent, such Bank’s portion of the total amount of the Loan to be made,
converted or renewed on such date, the Administrative Agent may assume that
such Bank has made such amount available to the Administrative Agent on the
date of the Loan and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount.  If and to the extent such Bank shall not
have so made such funds available to the Administrative Agent, such Bank agrees
to repay the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent, at the Federal Funds Rate plus 50 basis points for three
Business Days, and thereafter at the Base Rate.  If such Bank shall repay to the Administrative Agent such
corresponding amount, such amounts so repaid shall constitute such Bank’s Loan
for purposes of this Agreement.  If such
Bank does not repay such corresponding amount forthwith upon the Administrative
Agent’s demand therefor, the Administrative Agent shall promptly notify the
Borrower, and the Borrower shall immediately pay such corresponding amount to
the Administrative Agent, without any prepayment penalty or premium, but with
interest on the amount repaid, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent, at the rate of interest applicable at the time to such
Loan.  Nothing herein shall be deemed to
relieve any Bank of its obligation to fulfill its Revolving Loan Commitment
hereunder or to prejudice any rights which the Borrower may have against any
Bank as a result of any default by such Bank hereunder.

 

(e)                                  Proceeds of Loan
Being Repaid.  If the Banks
make a Loan on a day on which all or any part of an outstanding Loan from the
Banks is to be repaid, each Bank shall apply the proceeds of its new Loan
towards Borrower’s obligations to make such Bank’s proportionate share of such
repayment and only an amount equal to the difference (if any) between the
amount being borrowed and the amount being repaid shall be made available by
such Bank to the Administrative Agent as provided in clause (c).

 

24

 

2.5                                 Closing
Fee.  The Borrower agrees to
pay to the Administrative Agent the Closing Fee in the amount and as described
on Exhibit A.

 

2.6                                 Reduction or
Termination of Revolving Loan Commitments.

 

(a)                                  Voluntary.  The Borrower may at any time, on not less
than one Business Day’s written notice to the Administrative Agent, terminate
or permanently reduce the Aggregate Revolving Loan Commitment pro rata among
the Banks, provided that any reduction shall be in the minimum amount of
$1,000,000 or a multiple thereof and that no such reduction shall cause the
principal amount of Loans outstanding to exceed the reduced Aggregate Revolving
Loan Commitment or the Asset Base, whichever is less.

 

(b)                                 Revolving Loan
Commitment Termination.  In
the event the Aggregate Revolving Loan Commitment is terminated, the Revolving
Loan Termination Date shall be accelerated to the date of such termination and
Borrower shall, simultaneously with such termination, repay the Revolving Loans
in accordance with Section 2.12.

 

2.7                                 Mandatory
Prepayments.  Subject to the
terms set out in Section 7.6 hereof, if the aggregate principal amount of
Loans outstanding under this Agreement at any time exceed the total Asset Base,
the Borrower shall (i) make immediate prepayments to reduce such outstanding
Loans to an amount not to exceed the Asset Base or (ii) increase the Asset Base
as set forth herein.

 

2.8                                 Term
Loans.

 

(a)                                  Conversion on
Revolving Loan Termination Date.  On the Revolving Loan Termination Date, all of the Revolving
Loans then outstanding shall be converted to term loans in accordance with the
provisions of this Section 2.8 (individually, a “Term Loan” and collectively, the “Term Loans”).  All Term Loans so created shall mature on the Term Loan Maturity
Date.

 

(b)                                 Interest
Rate Options.  Term
Loans shall bear interest at (i) the Base Rate plus the Applicable Margin, or
(ii) the Adjusted LIBO Rate plus the Applicable Margin, provided that in the
case of LIBO Rate Term Loans (a) not more than five such Loans may be
outstanding at any one time, (b) any Term Loan may, at the Borrowers’ option,
continue the Interest Period assigned to the Revolving Loan from which it was
converted, if such Interest Period would expire after the Conversion Date, and
(c) no Term Loan which is also a LIBO Rate Loan may have an Interest Period
extending beyond the Term Loan Maturity Date.

 

(c)                                  The
Term Notes.  Each Term Loan
created on the Conversion Date shall be evidenced by a separate promissory note
of the Borrower substantially in the form of Exhibit S hereto (each such
promissory note as it may be amended, extended, modified or renewed a “Term Note” and together the “Term Notes”).

 

2.9                                 Payment of
Additional Amount.  If any
principal of a LIBO Rate Loan shall be repaid (whether upon mandatory or
voluntary prepayment, reduction of the Aggregate Revolving Loan Commitment
after acceleration or for any other reason) or converted to a Base Rate Loan
prior to the last day of the Interest Period applicable to such LIBO Rate Loan
or if the Borrower

 

25

 

fails for any
reason to borrow a LIBO Rate Loan after giving irrevocable notice pursuant to
Section 2.4, it shall pay to each Bank, in addition to the principal and
interest then to be paid, such additional amounts as may be necessary to
compensate each Bank for all direct and indirect costs and losses (including
losses resulting from redeployment of prepaid or unborrowed funds at rates
lower than the cost of such funds to such Bank, and including lost profits
incurred or sustained by such Bank) as a result of such repayment or failure to
borrow (the “Additional Amount”).  The Additional Amount (which each Bank shall
take reasonable measures to minimize) shall be specified in a written notice or
certificate delivered to the Borrower by the Administrative Agent in the form
provided by each Bank sustaining such costs or losses.  Such notice or certificate shall contain a
calculation in reasonable detail of the Additional Amount to be compensated and
shall be conclusive as to the facts and the amounts stated therein, absent
manifest error.

 

2.10                           Interest.

 

(a)                                  Base Rate Loans. 
Each Base Rate Loan shall bear interest on the unpaid principal balance
thereof from day to day at a rate per annum which at all times shall be equal
to the Base Rate plus the Applicable Margin. 
Interest on Base Rate Loans shall be computed on the basis of a year of
360 days, for the actual days elapsed.

 

(b)                                 LIBO Rate Loans. 
Each LIBO Rate Loan shall bear interest on the unpaid principal amount
thereof at the LIBO Rate plus the Applicable Margin.  Interest on LIBO Rate Loans shall be computed on the basis of a
year of 360 days, for the actual days elapsed.

 

(c)                                  Conversion to Base Rate.  Unless the Borrower shall have elected in
accordance with the provisions of Section 2.4 or this Section 2.10
that LIBO Rate apply to the one, two, three or six-month period immediately
succeeding a particular Interest Period, upon the termination of such Interest
Period the applicable Loan shall bear interest at the Base Rate plus the
Applicable Margin until such time as the Borrower elects to request a new LIBO
Rate Loan for a subsequent Interest Period.

 

(d)                                 Renewals and Conversions.  The Borrower shall have the right to convert
Base Rate Loans into LIBO Rate Loans, and vice versa, and to renew LIBO Rate
Loans from time to time, provided that: 
(i) the Borrower shall give the Administrative Agent notice of each
permitted conversion or renewal; (ii) LIBO Rate Loans may be converted or
renewed only as of the last day of the applicable Interest Period for such
Loans; (iii) without the consent of the Majority Banks, no Base Rate Loan may
be converted into a LIBO Rate Loan, and no Interest Period may be renewed if on
the proposed date of conversion an Event of Default or Potential Default exists
or would thereby occur.  The
Administrative Agent shall use its best efforts to notify the Borrower and the
Banks of the effectiveness of such conversion or renewal, and the new interest
rate to which the converted or renewed Loan is subject, as soon as practicable
after the conversion; provided, however, that any failure to give such notice
shall not affect the Borrower’s obligations or the Banks’ rights and remedies
hereunder in any way whatsoever.

 

(e)                                  Interim Payments At Base Rate.  If at any time the Borrower requests that
the LIBO Rate plus the Applicable Margin be applicable to a Loan for a
particular Interest Period and a payment of principal is due within such period
(other than on the last day of such Interest

 

26

 

Period), only
that portion of that Loan equal to the outstanding principal amount of the Loan
less the principal installment due during such period shall bear interest at
the LIBO Rate plus the Applicable Margin for such Interest Period.  The portion of that Loan equal to the
principal installment due during such period shall bear interest at the Base
Rate plus the Applicable Margin.

 

(f)                                    Reinstatements. 
The liability of the Borrower under this Section 2.10 shall
continue to be effective or be automatically reinstated, as the case may be, if
at any time payment, in whole or in part, of any of the payments to the Banks
is rescinded or must otherwise be restored or returned upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
other Person, or upon or as a result of the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to the
Borrower or any other Person or any substantial part of its property, or
otherwise, all as though such payment had not been made.

 

2.11                           Voluntary Prepayments.

 

(a)                                  Base Rate Loans. 
On one Business Day’s notice to the Administrative Agent, the Borrower may,
without penalty, at its option, prepay any Base Rate Loan in whole at any time
or in part from time to time, provided that each partial prepayment
shall be in the minimum principal amount of $150,000 or, if greater, then in
multiples thereof and, if less than $150,000 shall be outstanding, in principal
amount equal to amount remaining outstanding. 
Notwithstanding the foregoing, prepayments may be made in connection
with the release of Collateral as provided in Section 9.3, which
prepayments shall not be subject to the proviso contained in the previous
sentence.

 

(b)                                 LIBO Rate Loans. 
On one London Business Day’s notice to the Administrative Agent, the
Borrower may, without penalty, at its option, prepay any LIBO Rate Loan in
whole at any time or in part from time to time, provided that each partial
prepayment shall be in the minimum principal amount of $1,000,000 or, if
greater, then in multiples of $100,000 and, if less than $1,000,000 shall be
outstanding, in principal amount equal to the amount remaining outstanding (not
withstanding the foregoing, prepayments may be made in connection with the
release of Collateral as provided in Section 9.3, which prepayments shall
not be subject to the foregoing proviso), provided that if it shall
prepay a LIBO Rate Loan prior to the last day of the applicable Interest
Period, or shall fail to borrow any LIBO Rate Loan on the date such Loan is to
be made, it shall pay to each Bank, in addition to the principal and interest
then to be paid in the case of a prepayment, on such date of prepayment, the
Additional Amount incurred or sustained by such Bank as a result of such
prepayment or failure to borrow as provided in Section 2.9.

 

2.12                           Payments.

 

(a)                                  Accrued Interest.  Accrued interest on all Base Rate Loans shall be due and payable
in arrears on the last Business Day of each calendar month.  Interest on LIBO Rate Loans shall be payable
in arrears on the last day of the applicable Interest Period, provided
that if an Interest Period in respect of a LIBO Rate Loan exceeds three months,
accrued interest shall be

 

27

 

payable on the
three-month anniversary of such LIBO Rate Loan.  Each Revolving Loan shall mature as provided in
Section 2.1.  Each Term Loan shall
mature as provided in Section 2.8.

 

(b)                                 Form of Payments, Application of Payments,
Payment Administration, Etc. 
Subject to the provisions of Section 11.7(b) hereto, all payments
of principal, interest, fees, or other amounts payable by the Borrower
hereunder shall be applied to the Loans in such order and to such extent as
shall be specified by the Borrower by written notice to the Administrative
Agent at the time of such payment or prepayment.  Such payments shall be remitted in Dollars to the Administrative
Agent on behalf of the Banks at the address set forth opposite its name on the
signature page hereof or at such office or account as the Administrative Agent
shall specify to the Borrower, in immediately available funds not later than
2:00 p.m. Eastern prevailing time on the day when due.  Whenever any payment is stated as due on a
day which is not a Business Day, the maturity of such payment shall, except as
otherwise provided in the definition of “Interest Period,” be extended to the
next succeeding Business Day and interest and commitment fees shall continue to
accrue during such extension.  The
Borrower authorizes the Administrative Agent to deduct from any account of the
Borrower maintained at the Administrative Agent or over which the
Administrative Agent has control any amount payable under this Agreement, the
Notes or any other Loan Document which is not paid in a timely manner.  The Administrative Agent’s failure to
deliver any bill, statement or invoice with respect to amounts due under this
Section or under any Loan Document shall not affect the Borrower’s
obligation to pay any installment of principal, interest or any other amount
under this Agreement when due and payable.

 

(c)                                  Demand Deposit Account.  The Borrower shall maintain at least one
demand deposit account with the Administrative Agent for purposes of this
Agreement.  The Borrower authorizes the
Administrative Agent to deposit into said account all amounts to be advanced to
the Borrower hereunder.  Further, the
Borrower authorizes the Administrative Agent (but the Administrative Agent
shall not be obligated) to deduct from said account, or any other account
maintained by the Borrower at the Administrative Agent, any amount payable
hereunder on or after the date upon which it is due and payable.  Such authorization shall include but not be
limited to amounts payable with respect to principal, interest, fees and
expenses.

 

(d)                                 Net Payments. 
All payments made to the Banks by the Borrower hereunder, under any Note
or under any other Loan Document will be made without set-off, counterclaim or
other defense and will be made without deduction or withholding for or on
account of any taxes as provided in Section 2.17.

 

(e)                                  Commitment Fee. 
Borrower agrees to pay to the Administrative Agent for the account of each
Bank as compensation for the Aggregate Revolving Loan Commitment a fee based on
the average daily unused committed amount of the Credit Facility (the “Commitment Fee”) computed as indicated on
the chart set forth on Exhibit B hereto, based on the then applicable Leverage
Ratio of the Borrower.  The Commitment
Fee shall be payable quarterly in arrears on the first day of each January,
April, July and October, commencing October 1, 2004 (for the three
month period or portion thereof ended on the preceding day), and on the
Revolving Loan Termination Date.  The
Commitment Fee shall be calculated on the basis of the actual number of days
elapsed in a 360-day year.  The
Administrative Agent shall promptly distribute to the Banks their respective
portions of the Commitment Fee.

 

28

 

2.13                           Change in Circumstances,
Yield Protection.

 

(a)                                  Certain Regulatory Changes.  If any Regulatory Change or compliance by
any Bank with any request made after the date of this Agreement by the Board of
Governors of the Federal Reserve System or by any Federal Reserve Bank or other
central bank or fiscal, monetary or similar authority (in each case whether or
not having the force of law) shall (i) impose, modify or make applicable any reserve,
special deposit, Federal Deposit Insurance Corporation premium or similar
requirement or imposition against assets held by, or deposits in or for the
account of, or loans made by, or any other acquisition of funds for loans or
advances by, any Bank; (ii) impose on any Bank any other condition regarding
the Notes; (iii) subject any Bank to, or cause the withdrawal or termination of
any previously granted exemption with respect to, any tax (including any
withholding tax but not including any income tax not currently causing any Bank
to be subject to withholding) or any other levy, impost, duty, charge, fee or
deduction on or from any payments due from the Borrower; or (iv) change the
basis of taxation of payments from the Borrower to any Bank (other than by
reason of a change in the method of taxation of any Bank’s net income); and the
result of any of the foregoing events is to increase the cost to any Bank of
making or maintaining any Loan or to reduce the amount of principal, interest
or fees to be received by any Bank hereunder in respect of any Loan, the
Administrative Agent will immediately so notify the Borrower.  If any Bank determines in good faith that
the effects of the change resulting in such increased cost or reduced amount
cannot reasonably be avoided or the cost thereof mitigated, then upon notice by
the Administrative Agent to the Borrower, the Borrower shall pay to such Bank
on each interest payment date of the Loans, such additional amount as shall be
necessary to compensate that Bank for such increased cost or reduced amount.

 

(b)                                 Capital Adequacy.  If any Bank shall determine that any Regulatory Change regarding
capital adequacy which is applicable to banks (or their holding companies)
generally and not such Bank (or its holding company) specifically has the
effect of reducing the rate of return on such Bank’s capital as a consequence
of its obligations hereunder to a level below that which such Bank could have
achieved but for such adoption, change or compliance (taking into consideration
such Bank’s policies with respect to capital adequacy) by an amount deemed by
such Bank to be material, the Borrower shall promptly pay to the Administrative
Agent for the account of such Bank, upon the demand of such Bank, such
additional amount or amounts as will compensate such Bank for such reduction.

 

(c)                                  Ability to Determine LIBO Rate.  If the Administrative Agent shall determine
(which determination will be made after consultation with any Bank requesting
same and shall be, in the absence of fraud or manifest error, conclusive and
binding upon all parties hereto) that by reason of abnormal circumstances
affecting the interbank eurodollar or applicable eurocurrency market adequate
and reasonable means do not exist for ascertaining the LIBO Rate to be
applicable to the requested LIBO Rate Loan or that eurodollar or eurocurrency
funds in amounts sufficient to fund all the LIBO Rate Loans are not obtainable
on reasonable terms, the Administrative Agent shall give notice of such
inability or determination by telephone to the Borrower and to each Bank at
least two Business Days prior to the date of the proposed Loan and thereupon
the obligations of the Banks to make, convert other Loans to, or renew such
LIBO Rate Loan shall be excused, subject, however, to the right of the Borrower
at any time thereafter to submit another request.

 

29

 

(d)                                 Yield Protection.  Determination by a Bank for purposes hereof of the effect of any
Regulatory Change or other change or circumstance referred to in this
Section 2.13 on its costs of making or maintaining Loans or on amounts
receivable by it in respect of the Loans and of the additional amounts required
to compensate such Bank in respect of any additional costs, shall be made in
good faith and shall be evidenced by a certificate, signed by an officer of
such Bank and delivered to the Borrower, as to the fact and amount of the
increased cost incurred by or the reduced amount accruing to such Bank owing to
such event or events.  Such certificate
shall be prepared in reasonable detail and shall be conclusive as to the facts
and amounts stated therein, absent manifest error.  The Borrower shall pay such Bank the amount shown as due at the
times required herein.

 

(e)                                  [Reserved].

 

(f)                                    Notice of Events.  The affected Bank will notify the Borrower of any event occurring
after the date of this Agreement that will entitle such Bank to compensation
pursuant to this Section 2.13 as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation.  Said notice shall be in writing, shall
specify the applicable Section or Sections of this Agreement to which it
relates and shall set forth the amount or amounts then payable pursuant to this
Section and the calculation thereof in sufficient detail to permit the
Borrower to verify such calculation.  No
Bank shall request such compensation for any period ended prior to the date six
(6) months before the date of such notice.

 

2.14                           Illegality.  Notwithstanding any other provision in this
Agreement, if the adoption of any applicable Regulation, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the interpretation
or administration thereof, or compliance by any Bank with any request or
directive (whether or not having the force of law) of any such authority,
central bank, or comparable agency shall make it unlawful or impossible for any
Bank to (a) maintain its Revolving Loan Commitment, then upon notice to the
Borrower by the Administrative Agent, its Revolving Loan Commitment shall
terminate; or (b) maintain or fund its LIBO Rate Loans, then upon notice to the
Borrower of such event, the Borrower’s outstanding LIBO Rate Loans shall be
converted into Base Rate Loans.

 

2.15                           Discretion of each Bank
as to Manner of Funding. 
Notwithstanding any provision of this Agreement to the contrary, each
Bank shall be entitled to fund and maintain its funding of all or any part of
its Loans in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if
each Bank had actually funded and maintained each LIBO Rate Loan during each
Interest Period for such Loan through the purchase of deposits in the relevant
interbank market having a maturity corresponding to such Interest Period and
bearing an interest rate equal to the LIBO Rate for such Interest Period;
provided, however, that Borrower shall not be required to compensate such Bank
for any Additional Amount (as described in Section 2.9) unless such Bank
actually incurs or sustains or suffers the loss of such amount (provided
further, however, that nothing contained in this Section 2.15 shall be
deemed to limit or otherwise affect Borrower’s obligations under
Section 2.9).

 

30

 

2.16                           Appraisals.  Within 20 days following the receipt by the
Banks of the Asset Base Certificate covering the last month of a Fiscal
Quarter, the Majority Banks may request that an appraisal be conducted with
respect to Eligible Engines or Eligible Equipment (other than Parts Packages)
added to the Asset Base during the Fiscal Quarter just ended.  In addition, not more than once per each
Fiscal Year, (i) the Majority Banks may request that an appraisal be conducted
with respect to all Eligible Engines and Eligible Equipment (other than Parts
Packages) included in the Asset Base, and (ii) the Banks may request that an
appraisal be conducted with respect to any Engine or item of Equipment
Off-Lease for more than 365 consecutive days. 
Each such appraisal shall be a “desktop appraisal” (unless a Potential
Default or an Event of Default then exists) and shall be conducted by an
appraiser retained by the Security Agent on behalf of the Banks, and the cost
of each such appraisal will be paid by the Borrower.

 

2.17                           Tax
Matters.

 

(a)                                  Tax Gross-Up. 
Notwithstanding any provision in this Agreement to the contrary, all
payments made to any Bank by the Borrower hereunder, under any Note or under
any Loan Document shall be made without deduction or withholding for or on
account of any present or future taxes, except as required by applicable
law.  If such payments are or become
subject to any Indemnified Tax imposed by way of withholding or deduction under
the applicable law of any jurisdiction, Borrower shall indemnify and hold
harmless such Bank against such taxes and shall pay an additional amount to the
Administrative Agent for the account of such Bank so that the net amount to be
received by such Bank, after reduction by any such deduction or withholding
including any reduction for taxes applicable to additional sums payable under
this Section 2.17, shall be equal to the full amount that such Bank would
have otherwise received absent such withholding or deduction.  Whenever any withholding taxes are paid by
the Borrower, the Borrower shall promptly forward to such Bank an official
receipt (or certified copy thereof) or other documentation reasonably
acceptable to such Bank evidencing such payment to the relevant taxing
authority.

 

(b)                                 Tax Indemnity. 
Except as provided below, the Borrower shall indemnify any Bank against
any loss or liability which the Bank suffers (directly or indirectly) for or on
account of any Indemnified Tax in relation to a payment received or receivable
(or any payment deemed to be received or receivable) under this Agreement.

 

(c)                                  Other Related Tax Matters.  If the Borrower is required to pay any
amount to any Bank pursuant to this Section 2.17, then such Bank shall use
reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its lending office so as to eliminate any such
additional payment by the Borrower which may thereafter accrue, if such change
in the reasonable judgment of such Bank is not otherwise disadvantageous to
such Bank.  Any Bank that is entitled to
an exemption from or reduction of tax, with respect to payments under this
Agreement shall, upon the written request of the Borrower, deliver to the
Borrower with a copy to the Administrative Agent, at such times as reasonably
requested by the Borrower in writing, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate. 
If a Bank shall become aware that it is entitled to receive a refund in
respect of amounts paid by the Borrower pursuant to this Section 2.17,
which refund in the good faith judgment of such Bank is allocable

 

31

 

to such
payment, it shall promptly notify the Borrower of the availability of such
refund and shall, within thirty (30) days after the receipt of a request by the
Borrower, apply for such refund.  If any
Bank receives a refund in respect of any amounts paid by the Borrower pursuant
to this Section 2.17, which refund in the good faith judgment of such Bank
is allocable to such payment, it shall promptly notify the Borrower of such
refund and shall, within thirty (30) days after receipt, and provided no
Potential Default or Event of Default shall have occurred and be continuing,
repay such refund to the Borrower net of all out-of-pocket expenses of such
Bank; provided, however, that the Borrower, upon the request of such Bank,
agrees to repay the amount paid over to the Borrower to such Bank in the event
such Bank is required to repay such refund.

 

(d)                                 Status of Banks. 
Any Foreign Bank that is entitled to an exemption from or reduction of
withholding tax under the law of the United States of America or any State
thereof or the District of Columbia, or any treaty to which the United States
of America is a party, with respect to payments hereunder shall, upon the
written request of the Borrower or the Administrative Agent, deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times
reasonably requested by the Borrower or the Administrative Agent, such properly
completed and executed documentation prescribed by applicable law as will
permit such payments to be made without such withholding or at a reduced rate
of such withholding.  In addition, any
Bank, if requested in writing by the Borrower or the Administrative Agent,
shall deliver such other documentation as prescribed by applicable law or
reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent to determine whether or not such Bank
is subject to backup withholding or information reporting requirements.  Without limiting the generality of the
foregoing, any Foreign Bank shall deliver to Borrower and the Administrative
Agent (in such number of copies as shall be requested by the recipient) on or
prior to the date on which such Foreign Bank becomes a Bank under this
Agreement (and from time to time thereafter upon the written request of the
Borrower or the Administrative Agent, but only if such Foreign Bank is legally
entitled to do so), whichever of the following is applicable:

 

(i)                                     duly
completed copies of Internal Revenue Service Form W-8BEN claiming eligibility
for benefits of an income tax treaty to which the United States is a party;

 

(ii)                                  duly
completed copies of Internal Revenue Service Form W-8ECI;

 

(iii)                               in
the case of a Foreign Bank claiming the benefits of the exemption for portfolio
interest under section 881(c) of the Code, (x) a certificate to the effect
that such Foreign Bank is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the
applicable Borrower within the meaning of section 881(c)(3)(B) of the
Code, or (C), a “controlled foreign corporation” described in
section 881(c)(3)(C) of the Code and (y) duly completed copies of Internal
Revenue Service Form W-8BEN; or

 

(iv)                              any
other form prescribed by applicable law as a basis for claiming exemption from
or a reduction in United States Federal withholding tax duly completed together
with such supplementary documentation as may be prescribed by applicable law to
permit the Borrower to determine the withholding or deduction required to be
made.

 

32

 

Without
limiting the obligations of the Banks set forth above regarding delivery of
certain forms and documents to establish each Bank’s status for U.S.
withholding tax purposes, each Bank agrees promptly to deliver to the
Administrative Agent or the Borrower, as the Administrative Agent or the
Borrower shall reasonably request, on or prior to the Closing Date, and in a
timely fashion thereafter, such other documents and forms required by any
relevant taxing authorities under the Laws of any other jurisdiction, duly
executed and completed by such Bank, as are required under such Laws to confirm
such Bank’s entitlement to any available exemption from, or reduction of,
applicable withholding taxes in respect of all payments to be made to such Bank
outside of the U.S. by the Borrowers pursuant to this Agreement or otherwise to
establish such Bank’s status for withholding tax purposes in such other jurisdiction.  Each Bank shall promptly (i) notify the
Administrative Agent of any change in circumstances which would modify or
render invalid any such claimed exemption or reduction, and (ii) take such
steps as shall not be materially disadvantageous to it, in the reasonable
judgment of such Bank, and as may be reasonably necessary (including the
re-designation of its lending office) to avoid any requirement of applicable
laws of any such jurisdiction that any Borrower make any deduction or
withholding for taxes from amounts payable to such Bank.

 

(e)                                  Certain Definitions.  For purposes of this Section 2.17:

 

(i)                                     “Excluded
Taxes”  means, with respect to the
Administrative Agent, the Structuring Agent, the Security Agent or any Bank or
any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) taxes imposed on or measured by its
overall net income (however denominated), and franchise taxes imposed on it (in
lieu of net income taxes), by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Bank, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States or any State thereof or the District of Columbia, and (c) any
withholding tax that is imposed by the United States of America on amounts
payable to a Foreign Bank at the time such Foreign Bank becomes a party hereto
or is imposed as a result of such Foreign Banks’ failure or inability to comply
with its obligations under Section 2.17(d) (other than as a result of a
Regulatory Change or the failure of the Borrower or the Administrative Agent to
comply with its obligations under Section 2.17(d)).

 

(ii)                                  “Foreign
Bank” means any Bank that is organized under the laws of a jurisdiction
other than the United States of America, any State thereof or the District of
Columbia.

 

(iii)                               “Indemnified
Taxes” means Taxes other than Excluded Taxes.

 

(iv)                              “Taxes”
means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any governmental
authority, including any interest, additions to tax or penalties applicable
thereto.

 

33

 

SECTION 3.

REPRESENTATIONS AND WARRANTIES

 

The Borrower
represents and warrants to the Banks that:

 

3.1                                 Organization,
Standing.  It (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (b) has the corporate power and authority
necessary to own its assets, carry on its business and enter into and perform
its obligations hereunder, and under each Loan Document to which it is a party,
and (c) is qualified to do business and is in good standing in each
jurisdiction where the nature of its business or the ownership of its
properties requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect.

 

3.2                                 Corporate
Authority, Validity, Etc. 
The making and performance of the Loan Documents to which it is a party
are within its power and authority and have been duly authorized by all
necessary corporate action.  The making
and performance of the Loan Documents do not and under present law will not
require any consent or approval not obtained of any of its shareholders, or any
other Person (including, without limitation, any Governmental Authority), do
not and under present law will not violate any law, rule, regulation order,
writ, judgment, injunction, decree, determination or award, do not violate any
provision of its charter or by-laws, do not and will not result in any breach
of any material agreement, lease or instrument to which it is a party, by which
it is bound or to which any of its assets are or may be subject, and do not and
will not give rise to any Lien upon any of its assets except the Lien in favor
of the Security Agent contemplated hereby. 
The number of shares and classes of the capital stock of the Borrower
and the ownership thereof are accurately set forth on Schedule 1 attached
hereto; all such shares are validly issued, fully paid and non-assessable, and
the issuance and sale thereof are in compliance with all applicable federal and
state securities and other applicable laws. 
Further, the Borrower is not in default under any such agreement, lease
or instrument except to the extent such default reasonably could not have a
Material Adverse Effect.  No
authorizations, approvals or consents of, and no filings or registrations with,
any Governmental Authority are necessary for the execution, delivery or
performance by the Borrower of any Loan Document to which it is a party or for
the validity or enforceability thereof, except any filings or registrations
expressly contemplated by the Loan Documents.

 

3.3                                 Validity of Loan
Documents.  The Loan
Documents to which Borrower is a party, when executed and delivered by
Borrower, will have been duly executed and delivered by the Borrower and
constitute legal, valid, and binding obligations of the Borrower, enforceable
in accordance with their respective terms.

 

3.4                                 Litigation.  Except as disclosed on Schedule 1,
there are no actions, suits or proceedings pending or, to the Borrower’s
knowledge, threatened against or affecting the Borrower or any of its assets
before any court, government agency, or other tribunal which if adversely
determined reasonably could have a Material Adverse Effect.  If there is any disclosure on Schedule 1,
the status (including the tribunal, the nature of the claim and the amount in
controversy) of each such litigation matter as of the date of this Agreement is
set forth in Schedule 1.

 

34

 

3.5                                 ERISA.  (a) The Borrower and each ERISA Affiliate is
in compliance in all material respects with all applicable provisions of ERISA
and the regulations promulgated thereunder; and, neither Borrower, nor any
ERISA Affiliate maintains or contributes to or has maintained or contributed to
any multiemployer plan (as defined in Section 4001 of ERISA) under which
the Borrower or any ERISA Affiliate could have any withdrawal liability; (b)
neither the Borrower nor any ERISA Affiliate, sponsors or maintains any Plan
under which there is an accumulated funding deficiency within the meaning of
Section 412 of the Code, whether or not waived; (c) the aggregate
liability for accrued benefits and other ancillary benefits under each Plan
that is or will be sponsored or maintained by the Borrower or any ERISA Affiliate
(determined on the basis of the actuarial assumptions prescribed for valuing
benefits under terminating single-employer defined benefit plans under Title IV
of ERISA) does not exceed the aggregate fair market value of the assets under
each such defined benefit pension Plan; (d) the aggregate liability of the
Borrower and each ERISA Affiliate arising out of or relating to a failure of
any Plan to comply with the provisions of ERISA or the Code, will not have a
Material Adverse Effect; and (e) there does not exist any unfunded liability
(determined on the basis of actuarial assumptions utilized by the actuary for
the plan in preparing the most recent Annual Report) of the Borrower or any
ERISA Affiliate under any plan, program or arrangement providing post-retirement
life or health benefits.

 

3.6                                 Financial
Statements.  The consolidated
financial statements of Borrower as of and for the Fiscal Year ending
December 31, 2003, consisting of a balance sheet, a statement of
operations, a statement of shareholders’ equity, a statement of cash flows and
accompanying footnotes furnished to the Banks in connection herewith, present
fairly, in all material respects, the financial position, results of operations
and operating statistics of the Borrower as of the dates and for the periods
referred to, in conformity with GAAP. 
Except as set forth on Schedule 1 hereto, there are no material
liabilities, fixed or contingent, which are not reflected in such financial
statements, the accompanying footnotes, or the Borrower’s Form 10K filed for
the period ending December 31, 2003, other than liabilities which are not
required to be reflected in such financial statements.

 

3.7                                 No Material Adverse
Change.  Since
December 31, 2003, there has been no Material Adverse Change.

 

3.8                                 Not
in Default, Judgments, Etc. 
No Event of Default or Potential Default under any Loan Document has
occurred and is continuing.  The
Borrower has satisfied all judgments (other than judgments which do not constitute
an Event of Default under Section 8.1(f)), and is not in default under any
order, writ, injunction, or decree of any court, arbitrator, or federal, state,
municipal, or other governmental authority, commission, board bureau, agency,
or instrumentality, domestic or foreign.

 

3.9                                 Taxes.  The Borrower has filed all federal, state,
local and foreign tax returns and reports which it is required by law to file
and as to which its failure to file would have a Material Adverse Effect, and
has paid all taxes, including wage taxes, assessments, withholdings and other
governmental charges which are presently due and payable, other than those
being contested in good faith by appropriate proceedings, if any, and disclosed
on Schedule 1.  The tax charges,
accruals and reserves on the books of the Borrower are adequate to pay all such
taxes that have accrued but are not presently due and payable.

 

35

 

3.10                           Permits,
Licenses, Etc.  The Borrower
possesses all permits, licenses, franchises, trademarks, trade names, copyrights
and patents necessary to the conduct of its business as presently conducted or
as presently proposed to be conducted, except where the failure to possess the
same would not have a Material Adverse Effect.

 

3.11                           No Materially Adverse
Contracts, Etc.  To
the best of its knowledge, the Borrower is not subject to any charter,
corporate or other legal restriction, or any judgment, decree, order, rule or
regulation which in the judgment of its directors or officers has or is
expected in the future to have a Material Adverse Effect.  The Borrower is not a party to any contract
or agreement which in the judgment of its directors or officers has or is
expected to have any Material Adverse Effect, except as otherwise reflected in
adequate reserves.

 

3.12                           Compliance with Laws,
Etc.

 

(a)                                  Compliance
Generally.  The Borrower is
in compliance in all material respects with all Regulations applicable to its
business (including obtaining all authorizations, consents, approvals, orders,
licenses, exemptions from, and making all filings or registrations or
qualifications with, any court or governmental department, public body or
authority, commission, board, bureau, agency, or instrumentality), the
noncompliance with which reasonably would likely have a Material Adverse Effect.

 

(b)                                 Hazardous
Wastes, Substances and Petroleum Products.  The Borrower received all permits and filed
all notifications necessary to carry on its business; and is in compliance in
all material respects with all Environmental Control Statutes.  The Borrower has not given any written or
oral notice, nor has it failed to give required notice, to the Environmental
Protection Agency (“EPA”) or any
state or local agency with regard to any actual or imminently threatened
Release of Hazardous Substances on properties owned, leased or operated by it
or used in connection with the conduct of its business and operations.  The Borrower has not received notice that it
is potentially responsible for costs of clean-up or remediation of any actual
or imminently threatened Release of Hazardous Substances pursuant to any
Environmental Control Statute.  To the
best of the Borrower’s knowledge, no real property owned or leased by it is in
violation of any Environmental Laws and no Hazardous Substances are present on
said real property in violation of applicable law.  The Borrower has not received any notice to the effect that it
has been identified in any litigation, administrative proceedings or
investigation as a potentially responsible party for any liability under any
Environmental Laws.  In the event that
the Borrower becomes aware of any information indicating that either (i) any
real property owned or leased by the Borrower is in violation of any
Environmental Laws or any Hazardous Substances are present on said real
property in violation of applicable law, or (ii) the Borrower has been
identified in any litigation, administrative proceedings or investigation as a
potentially responsible party for liability under any Environmental Laws, then
the Borrower shall update its representations, in accordance with the
requirements of Section 3.20, and the Banks shall not be required to make
further Loans under this Agreement until the Borrower establishes adequate
reserves (in the reasonable judgment of the Majority Banks) for any liability
(including cleanup costs) and deliver revised financial statements to the Banks
showing such reserves; provided, however, that no reserve shall be
required for any such liabilities to the extent that they aggregate to less
than $1,000,000.

 

36

 

3.13                           Solvency.  The Borrower is, and after giving effect to
the transactions contemplated hereby, will be, Solvent.

 

3.14                           Subsidiaries,
Etc.  The Borrower does not have any
Subsidiaries, except as set forth in Schedule 1 hereto and except for
Subsidiaries established to facilitate securitizations.  Set forth in Schedule 1 hereto is a
complete and correct list, as of the date of this Agreement, of all Investments
held by the Borrower in any joint venture or other Person except Investments
expressly permitted hereby.  With
respect to Subsidiaries established after the Closing Date to facilitate
securitizations, the Borrower shall not be obligated to update Schedule 1
to reflect such Subsidiary, but shall notify the Banks pursuant to
Section 5.17 of the establishment of such Subsidiary.

 

3.15                           Title
to Properties, Leases. 
The Borrower has good and marketable title to all assets and properties
reflected as being owned by it in its financial statements as well as to all
assets and properties acquired since said date (except property disposed of
since said date in the ordinary course of business).  Except for the Liens existing on the Closing Date as set forth in
Schedule 1 hereto and any other Permitted Liens, there are no Liens on any
of such assets or properties.  It has
the right to, and does, enjoy peaceful and undisturbed possession under all
material leases under which it is leasing property as a lessee.  All such leases are valid, subsisting and in
full force and effect, and none of such leases is in default, except where such
default, either individually or in the aggregate, could not have a Material
Adverse Effect.

 

3.16                           Public Utility Holding
Company; Investment Company. 
The Borrower is not a “public utility company” or a “holding company,”
or a “subsidiary company” of a “holding company,” or an “affiliate” of a
“holding company” or of a “subsidiary company” of a “holding company,” as such
terms are defined in the Public Utility Holding Company Act of 1935, as
amended; or a “public utility” within the meaning of the Federal Power Act, as
amended.  Further, the Borrower is not
an “investment company” or an “affiliated person” of an “investment company” or
a company “controlled” by an “investment company” as such terms are defined in
the Investment Company Act of 1940, as amended.

 

3.17                           Margin
Stock.  The Borrower is not
and will not be engaged principally or as one of its important activities in
the business of extending credit for the purpose of purchasing or carrying or
trading in any margin stocks or margin securities (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System as amended
from time to time).  It will not use or
permit any proceeds of the Loans to be used, either directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
margin stocks or margin securities.

 

3.18                           Use
of Proceeds.  The Borrower
will use the proceeds of any Loan to be made pursuant hereto for the purchase,
financing and refinancing of Engines and Equipment as contemplated herein, as
well as for working capital and general corporate purposes.

 

3.19                           Depreciation Policies.  The Borrower’s depreciation policies with
respect to the Engines and the Equipment are as set forth on Exhibit H.  These policies have been in effect
substantially without change since January 1, 1997.

 

37

 

3.20                           Disclosure Generally.  The representations and statements made by
the Borrower or on its behalf in connection with this Agreement and the Loans,
including representations and statements in each of the Loan Documents, do not
and will not contain any untrue statement of a material fact or omit to state a
material fact or any fact necessary to make the representations made not
materially misleading.  No written
information, exhibit, report, brochure or financial statement furnished by the
Borrower to the Banks in connection with this Agreement, the Loans, or any Loan
Document contains or will contain any material misstatement of fact or omit to
state a material fact or any fact necessary to make the statements contained
therein not misleading.  Notwithstanding
anything to the contrary in this Agreement, the Disclosure
Schedule (Schedule 1) to this Agreement shall be promptly updated by
the Borrower whenever necessary to reflect events that have occurred which
would make the latest Disclosure Schedule delivered by the Borrower to the
Banks inaccurate or misleading; provided, however, that no updating of
the Disclosure Schedule shall operate to: 
(i) cure a breach of a representation or warranty previously made by the
Borrower or any Guarantor; (ii) modify any of the covenants or obligations of
the Borrower or any Guarantor under this Agreement or any other Loan Document
(including any affirmative covenants, negative covenants or financial
covenants); (iii) prevent the occurrence of the disclosed event from
constituting a Potential Default or Event of Default if the occurrence of such
event otherwise constitutes a Potential Default or Event of Default under this
Agreement or any other Loan Document; or (iv) expand the definitions of
“Existing Debt” or “Permitted Liens” allowed under this Agreement.

 

SECTION 4.

CONDITIONS PRECEDENT

 

4.1                                 All
Revolving Loans.  The
obligation of each Bank to make any Revolving Loan is conditioned upon the
following:

 

(a)                                  Request
For Advance.  The Borrower
shall have delivered and the Administrative Agent shall have received a Request
for Advance, in such form as the Administrative Agent may request from time to
time.

 

(b)                                 Asset
Base Certificate.  The
Borrower shall have delivered and the Banks shall have received an Asset Base
Certificate dated the date of the Revolving Loan requested under this
Agreement.

 

(c)                                  Guaranty.  Each Restricted Subsidiary shall have duly
authorized, executed and delivered a Guaranty in the form of Exhibit J hereto,
and such Guaranty shall be in full force and effect.

 

(d)                                 Additional
Documents.  With respect to
each Lease (other than an Existing Lease Transaction or a Lease to WLFC
(Ireland) Limited) to a lessee domiciled or principally located in a non-U.S.
jurisdiction which is to be included in the Asset Base, the Security Agent
shall have received (x) the documentation (including, without limitation, the
Owner Trustee Guarantees, Owner Trustee Mortgages, Trust Agreements and
Beneficial Interest Pledge Agreements) set forth in the definition of “Eligible
Lease,” and (y) if the Lease is to proceed on the basis that the limitation
expressed in subclause (xii) of the definition of “Asset Base” is

 

38

 

inapplicable
because the lessee’s domicile or principal location is excluded from the
definition of Nonrecognition of Rights Jurisdiction, evidence in each instance
in form and substance reasonably satisfactory to the Security Agent of the
basis upon which such domicile or principal location is to be excluded from the
definition of “Foreign Jurisdictions”. 
With respect to each Lease (other than an Existing Lease Transaction) to
WLFC (Ireland) Limited in which the sublessee is domiciled or principally
located in a non-U.S. jurisdiction, and which is to be included in the Asset
Base, the Security Agent shall have received, if the sublease is to proceed on
the basis that the limitation expressed in subclause (xii) of the definition of
“Asset Base” is inapplicable because the lessee’s domicile or principal
location is excluded from the definition of Nonrecognition of Rights
Jurisdiction, evidence in each instance in form and substance reasonably
satisfactory to the Security Agent of the basis upon which such domicile or
principal location is to be excluded from the definition of “Foreign
Jurisdictions”.

 

(e)                                  Covenants;
Representations.  The
Borrower, the Guarantors and each Owner Trustee shall be in compliance with all
covenants, agreements and conditions in each Loan Document and each
representation and warranty contained in each Loan Document and made by the
Borrower, a Guarantor or an Owner Trustee shall be true with the same effect as
if such representation or warranty had been made on the date such Revolving
Loan is made or issued, except to the extent such representation or warranty
relates to a specific prior date.

 

(f)                                    Defaults.  Immediately prior to and after giving effect
to such transaction, no Event of Default or Potential Default shall exist.

 

(g)                                 Material Adverse
Change.  Since
December 31, 2003, there shall not have been any Material Adverse Change.

 

(h)                                 Owner Trustee
Documents.  The Administrative
Agent shall have received (i) a copy of the resolutions of the Board of
Directors of the Owner Trustee, in its individual capacity, certified by the
Secretary or an Assistant Secretary of the Owner Trustee, duly authorizing the
execution, delivery and performance by the Owner Trustee of each of the Loan
Documents to which the Owner Trustee is or will be a party and (ii) an
incumbency certificate of Owner Trustee, as to the persons authorized to
execute and deliver the Loan Documents to which it is or will be a party and
the signatures of such person or persons.

 

4.2                                 Conditions to
Effectiveness of the Agreement. 
The effectiveness of this Agreement as to each Bank is conditioned upon
the following:

 

(a)                                  Articles,
Bylaws.  The Administrative Agent
shall have received copies of the Articles or Certificate of Incorporation and
Bylaws of the Borrower certified by its Corporate Secretary or Secretary;
together with Certificate of Good Standing from any jurisdiction where the
nature of its business or the ownership of its properties requires such
qualification except where the failure to be so qualified would not have a
Material Adverse Effect.

 

(b)                                 Evidence of
Authorization.  The
Administrative Agent shall have received copies certified by the Secretary or Assistant
Secretary of the Borrower or any other appropriate official (in the case of a
Person other than the Borrower) of all corporate or other action taken by each
Person other than the Banks who is a party to any Loan Document to authorize
its execution

 

39

 

and delivery
and performance of the Loan Documents and to authorize the Loans, together with
such other related papers as the Administrative Agent shall reasonably require.

 

(c)                                  Legal
Opinions.  The Administrative
Agent shall have received a favorable written legal opinion (i) from counsel to
the Borrower dated the Closing Date in form and substance satisfactory, and
from counsel reasonably acceptable, to the Banks which shall be addressed to
the Banks and (ii) from counsel to the Owner Trustee dated the Closing Date in
form and substance satisfactory, and from counsel reasonably acceptable, to the
Banks which shall be addressed to the Banks with respect to due authorization,
execution and delivery by the Owner Trustee of the Loan Documents to which it
is a party; provided, however that if another bank or trust company serves as
Owner Trustee (other than as the result of a succession by merger) under the
Loan Documents it shall be required to provide such an opinion prior to serving
as Owner Trustee.

 

(d)                                 Incumbency.  The Administrative Agent shall have received
a certificate signed by the secretary or assistant secretary of the Borrower,
together with the true signature of the officer or officers authorized to
execute and deliver the Loan Documents and certificates thereunder, upon which
the Banks shall be entitled to rely conclusively until they shall have received
a further certificate of the secretary or assistant secretary of the Borrower
amending the prior certificate and submitting the signature of the officer or
officers named in the new certificate as being authorized to execute and
deliver Loan Documents and certificates thereunder.

 

(e)                                  Notes.  Each Bank shall have received its Revolving
Credit Note dated the Closing Date duly executed, completed and issued in
accordance herewith.

 

(f)                                    Documents.  The Administrative Agent and the Security
Agent, as the case may be, shall have received all certificates, instruments
and other documents then required to be delivered to the Administrative Agent
or the Security Agent pursuant to any Loan Documents, in each instance in form
and substance reasonably satisfactory to it.

 

(g)                                 Consents.  The Borrower shall have provided to each
Bank evidence satisfactory to the Banks that all governmental, shareholder and
third party consents and approvals necessary in connection with the
transactions contemplated hereby have been obtained and remain in effect.

 

(h)                                 Other
Agreements.  The Borrower,
WLFC (Ireland) Limited, and each Owner Trustee as applicable shall have
executed and delivered each other Loan Document required hereunder including,
without limitation, the Security Agreement, the Share Pledge Agreement, the
Mortgage, the Owner Trustee Mortgage(s), the Beneficial Interest Pledge
Agreements and the WLFC (Ireland) Limited Security Assignments.

 

(i)                                     Security
Interest.  The Borrower shall
furnish evidence satisfactory to the Banks that the Security Agent holds a
perfected, first-priority lien against all Collateral subject to the provisos
set forth in Section 9.1 and the exceptions contained in
Section 8.1(i) or in any other Loan Document.  Without limiting the generality of the foregoing, all filings
with the United States Patent and Trademark Office necessary or desirable to
perfect the Security Agent’s Lien

 

40

 

on all patents
and trademarks of the Borrower shall have been completed (and the Security
Agent shall have received evidence satisfactory to it of such completion).

 

(j)                                     Appraisals.  The Security Agent shall have received asset
appraisals regarding the Engine and Equipment portfolio, in form and substance
reasonably satisfactory to the Security Agent.

 

(k)                                  Financial
Statements.  The Agents shall
have received the consolidated financial statements of the Willis Companies for
the Fiscal Year ended December 31, 2003, including balance sheets, income
and cash-flow statements, audited by independent public accountants of
recognized national standing, and prepared in conformity with GAAP.

 

(l)                                     Litigation.  There shall be no actions, suits,
investigations or proceedings pending or threatened in any court or before any
arbitrator or Governmental Authority that could have a Material Adverse Effect.

 

(m)                               [Reserved].

 

(n)                                 Fees.  The Borrower shall have paid to the
Administrative Agent the applicable Closing Fee.  Promptly after receipt of the Closing Fee, the Administrative
Agent shall distribute to the Banks their respective portions of the Closing
Fee (in each case in the amounts described on Exhibit A).

 

(o)                                 Fees,
Expenses.  The Borrower shall
simultaneously pay or shall have paid all fees (in addition to those described
in Section 4.2(n)) and expenses, if any, due hereunder or under any other
Loan Document.

 

(p)                                 Lien
Searches.  The Borrower shall
have provided or caused to be provided to the Administrative Agent a certified
lien search for the State of Delaware and the State of California, and the
counties of Marin and San Diego therein, indicating that there are no Liens
(other than Permitted Liens) on any property or assets of the Borrower or on
any income or profits therefrom.

 

(q)                                 Other Documents and
Information.  The Agents and
the Banks shall have received copies of all other documents and information as
they shall have reasonably requested, each in form and substance satisfactory
to the Agents and the Banks.

 

(r)                                    Existing
Facility.  The Obligations
under the Original Credit Agreement, other than Obligations in the nature of
indemnity payments not yet due and owing, shall have been paid in full (or
shall be paid simultaneously with the making of the first Loan hereunder), and
the Security Agent shall have received evidence reasonably satisfactory to it
of such payment.

 

(s)                                  Final Date for
Effectiveness.  The parties
hereto agree that if the Closing Date has not occurred on or prior to
June 30, 2004, this Agreement shall thereafter be deemed null and void and
without effect and the Banks shall be under no obligation whatsoever to advance
any portion of their respective Revolving Loan Commitments, provided, however,
that

 

41

 

the Borrower’s
obligations under Section 11.8 shall survive after such date as shall
those of the parties under Section 11.19.

 

The parties
hereto acknowledge that the Closing Date may occur subsequent to the date of
this Agreement.  Without limiting the
provisions of Section 3.20 or Section 4.1(g), the Security Agent and
the Administration Agent may, in their discretion, permit the Borrower to
update Schedule 1, Schedule 6 or both of them prior to the Closing
Date.

 

SECTION 5.

AFFIRMATIVE COVENANTS

 

The Borrower
will, and with respect to Sections 5.2 through 5.8 and Section 5.12, will
cause each Restricted Subsidiary to, without the prior written consent of Majority
Banks, from and after the date hereof and so long as the Revolving Loan
Commitments or any Term Loans are in effect or outstanding or any other
Obligation remains unpaid or outstanding:

 

5.1                                 Financial
Statements and Reports. 
Furnish to the Banks the following financial information:

 

(a)                                  Annual
Statements.  No later than
ninety (90) days after the end of each Fiscal Year, the consolidated and
consolidating balance sheet of the Willis Companies as of the end of such year
and the prior year in comparative form, and related statements of operations,
shareholders’ equity, and cash flows for such Fiscal Year and the prior Fiscal
Year in comparative form.  The financial
statements shall be in reasonable detail with appropriate notes, and shall be
prepared in accordance with GAAP.  The
consolidated annual financial statements shall be certified (without any
qualification or exception) by KPMG LLP or other independent public accountants
reasonably acceptable to the Majority Banks. 
Such financial statements shall be accompanied by a report of such
independent certified public accountants stating that, in the opinion of such
accountants, such financial statements present fairly, in all material
respects, the financial position, and the results of operations and the cash
flows of the Willis Companies for the period then ended in conformity with
GAAP, except for inconsistencies resulting from changes in accounting
principles and methods agreed to by such accountants and specified in such
report, and that, in the case of such financial statements, the examination by
such accountants of such financial statements has been made in accordance with
generally accepted auditing standards and accordingly included examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and assessing the accounting principles used and significant
estimates made, as well as evaluating the overall financial statement
presentation.  Each financial statement provided
under this subsection (a) shall be accompanied by a certificate signed by
such accountants either stating that during the course of their examination
nothing came to their attention which would cause them to believe that any
event has occurred and is continuing which constitutes an Event of Default or
Potential Default, or describing each such event.  Such annual financial statements shall be accompanied by a
Compliance Certificate in the form attached hereto as Exhibit G or such other
form as the Administrative Agent shall reasonably request.  In addition to the annual financial
statements, the Borrower shall, promptly upon receipt thereof, furnish to the
Banks a copy of the portion of each other report or management letter submitted
to its board of directors by its independent accountants in

 

42

 

connection
with any annual, interim or special audit made by them of the financial records
of the Borrower in which the Borrower’s accountants give any comment critical
of the valuation of, or controls or procedures related to, the Collateral.

 

(b)                                 Quarterly
Statements.  No later than
forty-five (45) calendar days after the end of each of the first three Fiscal
Quarters of each Fiscal Year, the consolidated and consolidating balance sheet
and related statements of operations, shareholders’ equity and cash flows of
the Willis Companies for such quarterly period and for the period from the
beginning of such fiscal year to the end of such Fiscal Quarter and a
corresponding financial statement for the same periods in the preceding Fiscal
Year certified by the chief financial officer, chief administrative officer
or  chief executive officer of the
Willis Companies as having been prepared in accordance with GAAP (subject to
changes resulting from audits, year-end adjustments, and the absence of
footnotes).  Such quarterly statement
shall be accompanied by a Compliance Certificate in the form attached hereto as
Exhibit G or such other form as the Administrative Agent shall reasonably
request.

 

(c)                                  No
Default.  Within forty-five
(45) calendar days after the end of each of the first three Fiscal Quarters of
each Fiscal Year and within ninety (90) calendar days after the end of each
Fiscal Year, a certificate signed by the chief financial officer, chief
administrative officer or chief executive officer of the Willis Companies
certifying that, to the best of such officer’s knowledge, after due inquiry,
(i) the Borrower has complied with all covenants, agreements and conditions in
each Loan Document and that each representation and warranty contained in each
Loan Document is true and correct with the same effect as though each such
representation and warranty had been made on the date of such certificate
(except (A) to the extent such representation or warranty relates to a specific
prior date, in which case the representation shall be updated by the Borrower
to reflect any changes occurring since that prior date, or (B) to the extent
that any events have occurred that require a change to the Disclosure Schedule,
in which case an updated Disclosure Schedule will be delivered by the
Borrower in accordance with the requirements of Section 3.20 hereof), and
(ii) no event has occurred and is continuing which constitutes an Event of
Default or Potential Default, or describing each such event and the remedial
steps being taken by the Borrower, as applicable.

 

(d)                                 ERISA.  All reports and forms filed with respect to
all Plans, except as filed in the normal course of business and that would not
result in an adverse action to be taken under ERISA, and details of related
information of a Reportable Event, promptly following each filing.

 

(e)                                  Material
Changes.  Notification to the
Administrative Agent and each other Bank of any litigation, administrative
proceeding, investigation, business development, or change in financial
condition which could reasonably have a Material Adverse Effect, promptly
following its discovery.

 

(f)                                    Other
Information.  Promptly, upon
request by the Security Agent, the Administrative Agent or any of the Banks,
from time to time (which may be on a monthly or other basis), the Borrower
shall provide such other information and reports regarding its operations,
business affairs, prospects and financial condition as the Security Agent, the
Administrative Agent or any Bank may reasonably request.

 

43

 

(g)                                 Asset Base
Certificates; Monthly Lease Report.  In the event the Borrower shall not have delivered an Asset Base
Certificate to the Banks during any calendar month, it will deliver to the
Banks, no later than 15 days after the end of such calendar month as of the
last day of such calendar month, an Asset Base Certificate.  As part of the Asset Base Certificate, the
Borrower shall deliver to the Banks a report setting forth the Eligible Engines
and Eligible Equipment that are subject to an Eligible Lease.  The Asset Base Certificate shall also
include a list of all Engines and Equipment acquired by the Borrower since the
date of the last Asset Base Certificate delivered to the Banks.  The Asset Base Certificate shall also
include any changes to the information contained in Section 1 of
Schedule 1 to the Security Agreement.

 

(h)                                 Monthly Lease
Portfolio and Receivables Report. 
As soon as practicable and in any event within 15 days after the end of
each calendar month, the Borrower shall deliver to the Banks a Lease portfolio
listing and Lease receivables aging report (in form and substance reasonably
satisfactory to the Administrative Agent).

 

(i)                                     Maintenance of
Current Depreciation Policies. 
The Borrower shall maintain its method of depreciating its assets
substantially consistent with past practices as set forth in Exhibit H and will
promptly notify the Banks of any deviation from such practices.

 

5.2                                 Corporate
Existence.  Preserve its
corporate existence and all material franchises, licenses, patents, copyrights,
trademarks and trade names consistent with good business practice; and
maintain, keep, and preserve all of its properties (tangible and intangible)
necessary or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.

 

5.3                                 ERISA.  Comply in all material respects with the
provisions of ERISA to the extent applicable to any Plan maintained for the
employees of the Borrower or any ERISA Affiliate; do or cause to be done all
such acts and things that are required to maintain the qualified status of each
Plan and tax exempt status of each trust forming part of such Plan; not incur
any material accumulated funding deficiency (within the meaning of ERISA and
the regulations promulgated thereunder), or any material liability to the PBGC
(as established by ERISA); not permit any event to occur as described in
Section 4042 of ERISA or which may result in the imposition of a lien on
its properties or assets; notify the Banks in writing promptly after it has
come to the attention of senior management of the Borrower of the assertion or
threat of any Reportable Event or other event described in Section 4042 of
ERISA (relating to the soundness of a Plan) or the PBGC’s ability to assert a
material liability against the Borrower or impose a lien on its, or any ERISA
Affiliates’, properties or assets; and refrain from engaging in any Prohibited
Transactions or actions causing possible liability under Section 5.02 of
ERISA.

 

5.4                                 Compliance with
Regulations.  Comply in all
material respects with all Regulations applicable to its business, the
noncompliance with which reasonably could have a Material Adverse Effect.

 

5.5                                 Conduct
of Business; Permits and Approvals, Compliance with Laws.  Continue to engage in an efficient and
economical manner in a business of the same general type as conducted by it on
the date of this Agreement; maintain in full force and effect, its franchises,

 

44

 

and all
licenses, patents, trademarks, trade names, contracts, permits, approvals and
other rights necessary to the profitable conduct of its business.

 

5.6                                 Maintenance of
Properties.  The Borrower
will maintain or cause to be maintained in good repair, working order and
condition all properties used or useful in its business and make all reasonable
and necessary renewals, replacements, additions, betterments and improvements
thereof and thereto, so that the business carried on in connection therewith
may be conducted in the ordinary course at all times.

 

5.7                                 Maintenance of
Insurance.  Maintain
insurance with financially sound and reputable insurance companies or
associations in such amounts and covering such risks as are usually carried by
companies engaged in the same or a similar business and similarly situated,
which insurance may provide for reasonable deductibility from coverage thereof.

 

5.8                                 Payment
of Taxes, Etc. 
Promptly pay and discharge (a) all taxes, assessments, and governmental
charges or levies imposed upon it or upon its income and profits, upon any of
its property, real, personal or mixed, or upon any part thereof, before the
same shall become in default; and (b) all lawful claims for labor, materials
and supplies or otherwise, which, if unpaid, might become a lien or charge upon
such property or any part thereof; provided, however, that so long as
the Borrower first notifies the Administrative Agent of its intention to do so,
it shall not be required to pay and discharge any such tax, assessment, charge,
levy or claim so long as the failure to so pay or discharge does not constitute
or result in an Event of Default or a Potential Default hereunder and so long
as no foreclosure or other similar proceedings shall have been commenced
against such property or any part thereof and so long as the validity thereof
shall be contested in good faith by appropriate proceedings diligently pursued
and it shall have set aside on its books adequate reserves with respect
thereto.

 

5.9                                 Notice
of Events.  Promptly upon
discovery of any of the following events, the Borrower shall provide telephone
notice to the Security Agent and the Administrative Agent (confirmed within
three (3) calendar days by written notice from the Borrower to each Bank)
describing the event and all action the Borrower proposes to take with respect
thereto:

 

(a)                                  an
Event of Default or Potential Default under this Agreement or any other Loan
Document;

 

(b)                                 any
default or event of default under a contract or contracts and the default or
event of default involves payments by the Borrower in an aggregate amount equal
to or in excess of $2,500,000;

 

(c)                                  a
default or event of default under or as defined in any evidence of or
agreements for Indebtedness for Borrowed Money under which the Borrower’s
liability is equal to or in excess of $2,500,000, singularly or in the
aggregate, whether or not an event of default thereunder has been declared by
any party to such agreement or any event which, upon the lapse of time or the
giving of notice or both, would become an event of default under any such
agreement or instrument or would permit any party to any such instrument or
agreement to terminate or suspend any commitment to lend to the Borrower or to
declare or to cause any such indebtedness to be accelerated or payable before
it would otherwise be due;

 

45

 

(d)                                 the
institution of, any material adverse determination in, or the entry of any
default judgment or order or stipulated judgment or order in, any suit, action,
arbitration, administrative proceeding, criminal prosecution or governmental
investigation against the Borrower in which the amount in controversy is in
excess of $2,500,000, singularly or in the aggregate;

 

(e)                                  any
change in any Regulation, including, without limitation, changes in tax laws
and regulations, which would have a Material Adverse Effect; or

 

(f)                                    any
“Event of Default” or “Servicer Event of Default” (in each case as defined in
the WEF Funding Facility) under the WEF Funding Facility.

 

5.10                           Inspection
Rights.  At any time during
regular business hours and upon reasonable notice, Borrower shall permit the
Security Agent or any authorized officer, employee, agent, or representative of
the Security Agent to examine and make abstracts from the records and books of
account of the Borrower, wherever located, and to visit the properties of the
Borrower; and to discuss the affairs, finances, and accounts of the Borrower
with its Chairman, President, any executive vice president, its chief financial
officer, treasurer, controller or independent accountants.  In conducting each such examination, visit
or discussion (each an “inspection”),
the Security Agent and each of its officers, employees, agents and
representatives shall take all reasonable action to minimize any disruption to
the normal operations of the Borrower. 
If no Event of Default or Potential Default shall be in existence, the
Security Agent shall limit such inspection of each of the foregoing to once
each calendar year.  If an inspection
shall be made during the continuance of a Potential Default or an Event of
Default, the Borrower shall reimburse the Security Agent for its reasonable
out-of-pocket expense of such inspection. 
If an inspection shall be made when no Event of Default or Potential
Default shall be in existence, the Borrower shall reimburse the Security Agent
for its reasonable out-of-pocket expense of such inspection up to $20,000 in
the aggregate, any such expenses in excess of that amount shall be chargeable
pro rata to each Bank, in accordance with its 
respective Revolving Loan Commitment. 
At all times, it is understood and agreed by the Borrower that all
expenses in connection with any such inspection which may be incurred by the
Borrower, any officers and employees thereof and the attorneys and independent
certified public accountants therefor shall be expenses payable by the Borrower
and shall not be expenses of the Banks or any of them.

 

5.11                           Generally Accepted
Accounting Principles. 
Maintain books and records at all times in accordance with Generally
Accepted Accounting Principles.

 

5.12                           Compliance with Material
Contracts.  The Borrower will
comply in all material respects with all obligations, terms, conditions and covenants,
as applicable, in all instruments and agreements to which it is a party or by
which it is bound or any of its properties is affected and in respect of which
the failure to comply reasonably could have a Material Adverse Effect.

 

5.13                           Use
of Proceeds.  The Borrower
will use the proceeds of any Loan to be made pursuant hereto for the purchase
or refinancing of Engines and Equipment as contemplated herein, as well as for
working capital and general corporate purposes.

 

46

 

5.14                           Further
Assurances.  Do such further
acts and things and execute and deliver to the Banks such additional
assignments, agreements, powers and instruments, as any Bank may reasonably
require or reasonably deem advisable to carry into effect the purposes of this
Agreement or to better assure and confirm unto each Bank its rights, powers and
remedies hereunder.

 

5.15                           Restricted Subsidiaries.  Upon the creation of any Restricted
Subsidiary, or the redesignation of any Unrestricted Subsidiary as a Restricted
Subsidiary, such Restricted Subsidiary shall duly authorize, execute and
deliver a Guaranty in the form of Exhibit J hereto.

 

5.16                           Placards.  The Borrower shall use its best efforts to
cause each lessee under a Lease relating to each Eligible Engine or item of
Eligible Equipment (other than Parts Packages and turboprop engines), to affix
to and maintain on the Eligible Engine or item of Eligible Equipment (other
than Parts Packages and turboprop engines) subject to such Lease a placard
satisfactory to the Security Agent bearing an inscription substantially in the
form of “THIS ENGINE IS OWNED BY WILLIS LEASE FINANCE CORPORATION, OR AN
AFFILIATE, AND IS SUBJECT TO A FIRST PRIORITY SECURITY INTEREST IN FAVOR OF ONE
OR MORE FINANCIAL INSTITUTIONS” or such other inscription as the Security Agent
from time to time may reasonably request. 
The Borrower shall, on a quarterly basis, provide to the Security Agent
a list of those Eligible Engines or items of Equipment (other than Parts
Packages and turboprop engines) subject to a Lease on which no such placard is
affixed.

 

5.17                           Certain Subsidiaries.  Within five days after the establishment of
a Subsidiary to facilitate securitizations, the Borrower shall notify the Banks
(which notice shall be in writing and specify the name and jurisdiction of
organization of such Subsidiary) of such establishment.

 

SECTION 6.

NEGATIVE COVENANTS

 

The Borrower
will not, and with respect to Sections 6.1 through 6.3 and Sections 6.6, 6.8
and 6.9, will not cause or permit any Restricted Subsidiary to, without the
prior written consent of the Majority Banks, from and after the date hereof and
so long as any Revolving Loan Commitments or Term Loans are in effect or any
Obligation remains unpaid or outstanding:

 

6.1                                 Consolidation and
Merger.  Merge or consolidate
with or into any corporation except, if (a) no Potential Default or Event of
Default shall have occurred and be continuing either immediately prior to or
upon the consummation of such transaction, (b) the Borrower is the surviving
entity and, (c) the aggregate consideration paid or to be paid (whether cash,
notes, stock, or assumption of debt or otherwise) by Borrower and/or its
Subsidiaries in any one such transaction does not exceed $25,000,000, and (d)
such aggregate consideration with respect to all such transactions shall not
exceed $50,000,000 in any fiscal year. 
Without limitation, no such transaction shall result in a violation of
the terms of Section 5.5.  The
Borrower will promptly notify the Banks of any merger or consolidation
involving the Borrower.

 

6.2                                 Liens.  Create, assume or permit to exist any Lien
on any of its property or assets (including, without limitation, the
Collateral), whether now owned or hereafter acquired, or upon

 

47

 

any income or
profits therefrom, except Permitted Liens, or allow or permit to exist any Lien
(other than Permitted Liens) on any Collateral owned by an Owner Trustee.  Without limiting the foregoing, the
Borrower, at the Borrower’s expense, shall, or shall cause the relevant Owner
Trustee to, promptly discharge any such Lien, except Permitted Liens.

 

6.3                                 Guarantees.  Guarantee or otherwise in any way become or
be responsible for indebtedness or obligations (including working capital
maintenance, take-or-pay contracts) of any unconsolidated Person, contingently
or otherwise. Notwithstanding the preceding sentence, the Borrower may
guarantee indebtedness or obligations of unconsolidated Affiliates of the
Borrower in amounts not to exceed $15,000,000 in the aggregate in the ordinary
course of business with the prior written consent of the Majority Banks, such
consent not to be unreasonably withheld provided, however, that if at any time
Willis Engine Funding LLC becomes an unconsolidated Affiliate of the Borrower,
the WEF Guaranty (as defined in connection with the definition of WEF Funding
Facility above) shall not be deemed to violate the provisions of this
Section 6.3.

 

6.4                                 Margin
Stock.  Use or permit any
proceeds of the Loans to be used, either directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of buying or carrying
margin stock within the meaning of Regulation U of The Board of Governors of
the Federal Reserve System, as amended from time to time.

 

6.5                                 Acquisitions and
Investments.  If an Event of
Default or a Potential Default exists or would exist immediately thereafter:
purchase or otherwise acquire (including, without limitation, by way of share
exchange) any part or amount of the capital stock or assets of, or make any
Investments in any other Person; or create any Subsidiary, except (a) it may
acquire and hold stock, obligations or securities received in settlement of
debts owing to it created in the ordinary course of business, and (b) it may
make and own (i) investments in certificates of deposit or time deposits having
maturities in each case not exceeding one year from the date of issuance
thereof and issued by any Bank, or any FDIC-insured commercial bank
incorporated in the United States or any state thereof having a combined
capital and surplus of not less than $150,000,000, (ii) investments in
marketable direct obligations issued or unconditionally guaranteed by the
United States of America, any agency thereof, or backed by the full faith and
credit of the United States of America, in each case maturing within one year
from the date of issuance or acquisition thereof, (iii) investments in
commercial paper issued by a corporation incorporated in the United States or
any State thereof maturing no more than one year from the date of issuance
thereof and, at the time of acquisition, having a rating of A-1 (or better) by
Standard & Poor’s Corporation or P-1 (or better) by Moody’s Investors
Service, Inc., and (iv) investments in money market mutual funds all of the
assets of which are invested in cash or investments described in the
immediately preceding clauses (i), (ii) and (iii).  In no event and at no time while any of the Obligations remain outstanding,
shall Borrower or any Subsidiary engage in a line of business that is different
from the same general type as Borrower’s present business.

 

6.6                                 Transfer of Assets;
Nature of Business.  The
Borrower and its Restricted Subsidiaries may not sell, transfer, lease or
dispose of assets constituting in the aggregate more than twenty percent (20%)
of the net book value of their combined assets during any twelve- month period
without the prior written consent of the Majority Banks, such consent not to be

 

48

 

unreasonably
withheld.  Notwithstanding the above,
but in accordance with the provisions of Section 5(a) of the Security
Agreement:  (a) the Borrower may, or may
cause an Owner Trustee to, lease Engines and Equipment in the ordinary course
of business, (b) the Borrower may or may cause an Owner Trustee to sell,
transfer or otherwise dispose of Engines and Equipment subject to a Lease
(including, without limitation, related assets such as security deposits and
maintenance reserves, as applicable), or assign a Beneficial Interest, in the
ordinary course of business, for its then fair market value; (c) the Borrower
may, or may cause an Owner Trustee to, sell, transfer or otherwise dispose of
Engines and Equipment that are declared a total loss or destroyed or that
suffer damage that is not economically repairable (or assign any Beneficial
Interest relating to any such Engine or item of Equipment), for their then fair
market value; (d) the Borrower may or may cause an Owner Trustee to sell,
transfer, assign, lease, re-lease or otherwise dispose of any Engine or
Equipment with respect to which the relevant Lease has expired or is expiring
(or assign any Beneficial Interest relating to any such Engine or item of
Equipment) if such sale or disposition is in the ordinary course of its
business, for its then fair market value; (e) the Borrower may or may cause an
Owner Trustee to transfer Contributed Assets (as such term is defined in the
Contribution Agreement) or similar assets to Willis Engine Funding LLC or to
any other Subsidiary of the Borrower (in each case as such term is defined in
any other contribution or similar agreement entered into in connection with a
similar securitization transaction); (f) the Borrower may or may cause an Owner
Trustee to transfer Engines or Equipment in connection with nonrecourse or
partial recourse financing otherwise permitted hereunder (including, without
limitation, Section 6.9) of Leases and related Engines and Equipment; (g)
the Borrower may or may cause an Owner Trustee to sell Parts to non-Affiliates
of the Borrower in the ordinary course of business; and (h) the Borrower may or
may cause an Owner Trustee to sell Engines, Equipment, Leases or related assets
(or assign any Beneficial Interest relating thereto) to a Restricted Subsidiary
for not less than their net book value at the time of transfer.  The Borrower may not discontinue, liquidate
or change in any material respect any substantial part of its operations or
business.

 

6.7                                 Accounting
Change.  Without the prior
written approval of the Majority Banks, make or permit any material change in
financial accounting policies or financial reporting practices, except as
required by Generally Accepted Accounting Principles or regulations of the
Securities and Exchange Commission, if applicable.  Notwithstanding the foregoing, without the prior written approval
of all of the Banks, the Borrower shall not make or permit any material change
in financial accounting policies or financial reporting practices as they
relate to, or in connection with, any current or future securitizations, except
as required by GAAP or regulations of the Securities and Exchange Commission,
if applicable (and in such case, the Borrower shall promptly notify the
Administrative Agent of the need for such change).

 

6.8                                 Transactions with
Affiliates of the Borrower. 
Enter into any material transaction (including, without limitation, the
purchase, sale or exchange of property, the rendering of any services or the
payment of management fees) with any Affiliate of the Borrower, except
transactions in the ordinary course of, and pursuant to the reasonable
requirements of, its business, and in good faith and upon commercially
reasonable terms and except for securitization transactions contemplated by the
WEF Funding Facility and any similar securitization transactions entered into
from time to time by Subsidiaries of the Borrower.

 

49

 

6.9                                 Indebtedness.  Unless approved in writing by the Majority
Banks, the Borrower shall not, and shall not permit its Restricted Subsidiaries
to, create, enter into, or allow to exist any Debt other than (a) obligations
incurred under this Agreement; (b) Other Indebtedness, not to exceed in the
aggregate $60,000,000, provided that there shall be no extensions, renewals or
further advances under any Other Indebtedness unless with covenants and
conditions (other than interest rate) no more restrictive than those in this
Agreement; (c) Debt, not to exceed $25,000,000 in the aggregate; provided that,
except for Debt incurred in connection with the purchase of aviation assets
which do not constitute part of the Asset Base and secured solely by such
asset, the following limitations apply (i) the Borrower shall not incur any
Debt relating to the financing or refinancing of Eligible Engines except for
Eligible Engines which Borrower is unable to finance under this Agreement
(subject to Section 6.13), (ii) covenants and conditions shall be no more
restrictive than those in this Agreement and initial advance rates on the
assets shall be no less than those under this Credit Facility, (iii) final
maturity shall be no less than the final maturity of this Credit Facility and
average life shall be no less than the remaining average life of this Credit
Facility; (d) unsecured Debt, not to exceed $5,000,000 in the aggregate; (e)
guarantees permitted under Section 6.3; (f) unsecured (except for a pledge
of Shares (as defined in the Security Agreement) and records related to such
Shares of any Unrestricted Subsidiary) guaranties of the obligations of
Restricted and Unrestricted Subsidiaries (including, without limitation, the
WEF Guaranty); and (g) the WEF Guaranty (or similar guaranty issued by Borrower
in connection with a similar securitization vehicle).

 

6.10                           Restricted Payments.

 

(a)                                  Make
or pay any redemptions, repurchases, dividends or distributions of any kind
with respect to its capital stock.

 

(b)                                 Redeem
or prepay any Debt other than under this Agreement provided, however,
that the Borrower shall be permitted to redeem, prepay, or refinance existing
Debt if such redemption, prepayment, or refinancing (i) is in the ordinary
course of the Borrower’s business, and (ii) no Potential Default or Event of
Default exists prior to or after such refinancing.

 

6.11                           Restriction on Amendment
of this Agreement.  Other
than as contemplated by the WEF Funding Facility, enter into or otherwise
become subject to or suffer to exist any agreement which would require it to
obtain the consent of any other Person as a condition to the ability of the
Banks and the Borrower to amend or otherwise modify this Agreement.

 

6.12                           Investments in
Unrestricted Subsidiaries. 
Except for Borrower’s investment in Willis Engine Funding LLC or any
other Subsidiary of Borrower established to facilitate securitizations, make or
maintain any Investments in Unrestricted Subsidiaries which exceed in the
aggregate 15% of Net Worth of the Borrower.

 

6.13                           No Adverse Selection.  No adverse selection procedures shall be
used by Borrower as between the credit facility established by this Agreement
and any other credit facility to which Borrower is a party (including, without
limitation, the WEF Funding Facility) in selecting any Engine or item of
Equipment for inclusion in the Asset Base.

 

50

 

6.14                           Change of Incorporation.  Reincorporate (or otherwise reorganize)
under the laws of a jurisdiction other than that in which it is incorporated on
the Closing Date.

 

SECTION 7.

FINANCIAL COVENANTS

 

The Borrower
covenants and agrees that, without the prior written consent of the Majority
Banks, from and after the date hereof and so long as any Revolving Loan
Commitments or Term Loans are in effect or any Obligation remains unpaid or
outstanding:

 

7.1                                 No
Losses.  From and after the
Closing Date, the Willis Companies shall not at any time suffer a net loss for
the then two (2) most recently ended consecutive Fiscal Quarters.

 

7.2                                 Minimum Tangible
Net Worth.  Tangible Net
Worth of the Willis Companies will not at any time be less than the sum
of:  (i) $90,000,000, plus (ii) if
positive, 75% of the cumulative Net Income of the Willis Companies for each
fiscal quarter earned from and after the Closing Date (without any deduction
for net losses for any fiscal quarter); plus (iii) 100% of the net proceeds
received by Borrower from the issuance of common stock or preferred stock of
Borrower after January 1, 2004.

 

7.3                                 Leverage
Ratio.  From and after the
Closing Date, the Leverage Ratio will not exceed 4.50:1 as of the end of any
Fiscal Quarter.

 

7.4                                 Adjusted Total Debt
to Adjusted Tangible Net Worth. 
From and after the Closing Date, the ratio of Adjusted Total Debt to
Adjusted Tangible Net Worth will not exceed 3.50:1, as of the end of any Fiscal
Quarter.

 

7.5                                 Minimum
Interest Coverage Ratio. 
From and after the Closing Date, the Interest Coverage Ratio of the
Willis Companies (measured at the end of each Fiscal Quarter on a rolling
four-quarter basis) will not be less than 1.20:1.

 

7.6                                 Asset
Base.  The aggregate
principal amount of Loans outstanding shall not at any time exceed the Asset
Base or the Aggregate Revolving Loan Commitment, whichever is less; provided,
however, that this covenant shall not be deemed breached if, at the time such
aggregate amount exceeds said level, within four Business Days after the
earlier of the date the Borrower first has knowledge of such excess or the date
of the next Asset Base Certificate disclosing the existence of such excess, a
prepayment of Loans shall be made.  The
Borrower shall not be entitled to utilize this mechanism to avoid a breach of
this covenant more than two (2) times during any twelve-month period.

 

SECTION 8.

DEFAULT

 

8.1                                 Events
of Default.  The
Borrower shall be in default if any one or more of the following events (each
an “Event of Default”) occurs:

 

51

 

(a)                                  Payments.  The Borrower fails to pay the principal due
on any Note when due and payable (whether at maturity, by notice of intention
to prepay, or otherwise); or fails to pay interest or any other amount payable
hereunder or under any other Loan Document within three Business Days after the
date such interest or other amount is due and payable.

 

(b)                                 Covenants.  The Borrower, any of the Guarantors or any
Owner Trustee, as applicable, fails to observe or perform:  (i) any term, condition or covenant set
forth in Sections 5.1(a), 5.1(b), 5.1(c) or 5.1(g), Section 5.2,
Section 5.7, Section 5.9, Section 5.10, Section 5.14,
Sections 6.1 through 6.14 or Sections 7.1 through 7.6 herein, as and when
required; or (ii) any term, condition or covenant contained in this Agreement
or any other Loan Document, other than any Event of Default set forth in any
other subsection of this Section 8.1, and other than as set forth in
(i) above, as and when required and such failure shall continue unremedied for
a period of 10 Business Days after the earlier of (1) actual knowledge of any
executive officer of the Borrower or (2) written notice thereof from the
Administrative Agent or the Security Agent to the Borrower.

 

(c)                                  Representations,
Warranties.  Any representation or
warranty made or deemed to be made by the Borrower, any of the Guarantors or
any Owner Trustee, as applicable, herein or in any Loan Document or in any
exhibit, schedule, report or certificate delivered pursuant hereto or thereto
shall prove to have been false, misleading or incorrect in any material respect
when made or deemed to have been made.

 

(d)                                 Bankruptcy.  The Borrower or any of the Guarantors
(except T-10 Inc., in the case of dissolution or liquidation and other than
WLFC (Ireland) Limited) is dissolved or liquidated, makes an assignment for the
benefit of creditors, files a petition in bankruptcy, is adjudicated insolvent
or bankrupt, petitions or applies to any tribunal for any receiver or trustee,
commences any proceeding relating to itself under any bankruptcy,
reorganization, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction, has commenced against it any such proceeding which remains
undismissed for a period of sixty (60) days, or indicates its consent to,
approval of or acquiescence in any such proceeding, or any receiver of or
trustee for the Borrower or any substantial part of its property is appointed,
or if any such receivership or trusteeship to continues undischarged for a
period of sixty (60) days.

 

(e)                                  Certain
Other Defaults.  The Borrower
or any Restricted Subsidiary shall fail to pay when due any Indebtedness for
Borrowed Money which singularly or in the aggregate exceeds $2,500,000, and
such failure shall continue beyond any applicable cure period, or the Borrower
or a Restricted Subsidiary shall suffer to exist any default or event of
default in the performance or observance, subject to any applicable grace
period, of any agreement, term, condition or covenant with respect to any
agreement or document relating to Indebtedness for Borrowed Money if the effect
of such default is to permit, with the giving of notice or passage of time or
both, the holders thereof, or any trustee or agent for said holders, to
terminate or suspend any commitment (which is equal to or in excess of
$2,500,000) to lend money or to cause or declare any portion of any borrowings
thereunder to become due and payable prior to the date on which it would
otherwise be due and payable, provided that during any applicable cure
period the Bank’s obligations hereunder to make further Loans shall be
suspended.

 

52

 

(f)                                    Judgments.  Any judgments against the Borrower or any of
the Guarantors or against the assets of the Borrower or any of the Guarantors
or property for amounts in excess of $2,500,000 in the aggregate remain unpaid,
unstayed on appeal, undischarged, unbonded and undismissed for a period of
thirty (30) days.

 

(g)                                 Attachments.  Any assets of the Borrower or of any of the
Guarantors shall be subject to attachments, levies or garnishments for amounts
in excess of $2,500,000 in the aggregate which have not been dissolved or
satisfied within twenty (20) days after service of notice thereof to the
Borrower or the Guarantors.

 

(h)                                 Change
in Control of the Borrower. 
Any Change of Control of the Borrower should occur.

 

(i)                                     Security
Interests.  Except for
security interests (a) in Collateral listed on Schedule 2 hereto; (b) in
Engines and Equipment which the Security Agent determines to include in the
Asset Base as part of the
$               
basket for unperfected Collateral or which is specifically approved in writing
by the Required Banks notwithstanding that the Security Agent will not receive
a perfected first priority security interest therein; (c) in Collateral as to
which the Security Agent fails to file a UCC continuation statement; and (d) in
Collateral other than Engines and Equipment as to which perfection is effected
by any means other than by filing a UCC-1 financing statement (the Collateral
described in (a), (b), and (d) above is hereinafter referred to as the “Excepted Collateral”), any security
interest created pursuant to any Loan Document shall cease to be in full force
and effect or shall cease in any material respect to give the Security Agent
the Liens, rights, powers and privileges purported to be created thereby
(including, without limitation, a perfected security interest in, and Lien on,
all of the Collateral but subject, in the case of any Lease to a lessee
domiciled or principally located in a non-U.S. jurisdiction, to the provisos
set forth in Section 9.1), superior to and prior to the rights of all
third Persons, and subject to no other Liens (except as permitted by
Section 6.2 and, insofar as the issue of accession may be deemed to affect
such rights or to create any such Lien, except to the extent that the lessee
(or, in the case of a Lease to WLFC (Ireland) Limited, the sublessee) of the
Collateral is domiciled or principally located in a jurisdiction that satisfies
one of the criteria for exclusion from the definition of “Foreign
Jurisdictions” and except to the extent that the Collateral is included in the
Asset Base pursuant to clause (xii) of the definition thereof).*

 

(j)                                     WEF
Funding Facility.  A
“Servicer Event of Default” (as defined in the WEF Funding Facility) (other
than a Servicer Event of Default specified in Section 7.01(xv) of the
Servicing Agreement) shall have occurred under the WEF Funding Facility.

 

THEN
and in every such event other than that specified in Section 8.1(d), the
Administrative Agent may, or at the written request of the Majority Banks
shall, immediately terminate the Aggregate Revolving Loan Commitment by notice
in writing to the Borrower and immediately declare any and all Notes, including
without limitation accrued interest, to be, and

 

*                                         This
redacted material has been omitted pursuant to a request for confidential
treatment, and the material has been filed separately with the Commission.

 

53

 

they shall
thereupon forthwith become due and payable without presentment, demand, or
notice of any kind, all of which are hereby expressly waived by the Borrower.  Upon the occurrence of any event specified
in Section 8.1(d), the Aggregate Revolving Loan Commitment shall
automatically terminate and the Notes, including without limitation accrued
interest, shall immediately be due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived
by the Borrower.  Any date on which the
Notes and such other Obligations are declared due and payable pursuant to this
Section 8.1 shall be the Facility Termination Date for purposes of this
Agreement.  From and after the date an
Event of Default shall have occurred and for so long as an Event of Default
shall be continuing, the Loans shall bear interest at the Default Rate.

 

SECTION 9.

COLLATERAL

 

9.1                                 Collateral.  Except as otherwise specifically set forth
herein (including but not limited to the exceptions contained in
Section 8.1(i)) or in any other Loan Document, the Borrower covenants and
agrees that any Obligations made and outstanding and their repayment at all
times shall be secured by a first priority perfected security interest in all
of the Collateral, provided that in the case of any Owner Trustee which shall
have executed an Owner Trustee Guarantee, Borrower shall not be required to
take any additional steps to create or perfect any security interest in the
related Lease, Engines or Equipment under the laws of the jurisdiction where
the lessee under such Lease is domiciled or principally located, and provided
further that with respect to any Existing Lease Transaction involving a lessee
(or, in the case of a Lease to WLFC (Ireland) Limited, involving a sublessee)
domiciled or principally located in a non-U.S. jurisdiction, Borrower’s
obligations hereunder shall be limited to those filings, recordings and/or other
actions taken and documentation delivered (or contemplated to be taken or
delivered in the future including, without limitation, as a result of any
change in law) in connection with such Existing Lease Transaction on or prior
to the Closing Date.

 

9.2                                 Security
Documents.  As security for
the punctual payment in full of all Notes (including all payments of principal,
and interest and other costs contemplated hereby) the Borrower shall execute
and deliver to the Security Agent the Security Agreement, the Mortgage, the
Share Pledge Agreement and such other documents as may be necessary to
constitute and evidence and perfect a security interest in the Collateral
(other than the Excepted Collateral); provided, however, that if a
Potential Default or Event of Default exists, the Security Agent may require
the Borrower to take all action possible to further legally perfect the
security interest in the Collateral except as otherwise provided in the
provisos to Section 9.1 of this Agreement or elsewhere in the Loan Documents
but including Excepted Collateral.

 

9.3                                 Release of
Collateral.  The Borrower
shall be entitled to remove and request the Security Agent to release certain
items of Collateral in accordance with the provisions of Section 5(a) of
the Security Agreement, Section 6.09 of the Mortgage, Section 22 of
the applicable Beneficial Pledge Agreement, Section 6.09 of the applicable
Owner Trustee Mortgage and Section 3.3 of the WLFC (Ireland) Limited
Security Assignments.  The Security
Agent will cooperate with the Borrower in effecting any such release.

 

54

 

SECTION 10.

THE AGENTS

 

10.1                           Appointment
and Authorization. 
Each Bank hereby irrevocably appoints and authorizes National City Bank
as the Administrative Agent, Fortis as the Structuring Agent and Fortis as the
Security Agent to take such action on each Bank’s behalf and to exercise such
powers under this Agreement and the Loan Documents as are specifically
delegated to the Agents by the terms hereof or thereof, together with such
other powers as are reasonably incidental thereto.  No other agents or co-agents of the Banks under this Agreement
may be appointed without the prior written consent of the Borrower and each Person
then serving as an Agent.  The relationship
between each Agent and each Bank has no fiduciary aspects, and each Agent’s
duties hereunder are acknowledged to be only ministerial and not involving the
exercise of discretion on its part. 
Nothing in this Agreement or any Loan Document shall be construed to
impose on any Agent any duties or responsibilities other than those for which
express provision is made herein or therein. 
In performing their duties and functions under this Article 10, the
Agents do not assume and shall not be deemed to have assumed, and hereby
expressly disclaim, any obligation with or for the Borrower.  As to matters not expressly provided for in
this Agreement or any Loan Document, the Agents shall not be required to
exercise any discretion or to take any action or communicate any notice, but
shall be fully protected in so acting or refraining from acting upon the
instructions of the Majority Banks and their respective successors and assigns;
provided, however, that in no event shall any Agent be required to take
any action which exposes it to personal liability or which is contrary to this
Agreement, any Loan Document or applicable law, and each Agent shall be fully
justified in failing or refusing to take any action hereunder unless it shall
first be specifically indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by reason of taking
or omitting to take any such action.  If
an indemnity furnished to any Agent for any purpose shall, in its reasonable
opinion, be insufficient or become impaired, such Agent may call for additional
indemnity from the Banks and not commence or cease to do the acts for which
such indemnity is requested until such additional indemnity is furnished.

 

10.2                           Duties
and Obligations.  In
performing its functions and duties hereunder on behalf of the Banks, each
Agent shall exercise the same care and skill as it would exercise in dealing
with loans for its own account.  No
Agent, nor any of any Agent’s directors, officers, employees or other agents
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or any Loan Document except for its or
their own gross negligence or willful misconduct.  Without limiting the generality of the foregoing, each Agent (a)
may consult with legal counsel and other experts selected by it and shall not
be liable for any action taken or omitted to be taken by it in good faith and
in accordance with the advice of such experts; (b) makes no representation or warranty
to any Bank as to, and shall not be responsible to any Bank for, any recital,
statement, representation or warranty made in or in connection with this
Agreement, any Loan Document or in any written or oral statement (including a
financial or other such statement), instrument or other document delivered in
connection herewith or therewith or furnished to any Bank by or on behalf of
the Borrower; (c) shall have no duty to ascertain or inquire into the
Borrower’s performance or observance of any of the covenants or conditions
contained herein or to inspect any of the property (including the books and
records) of the Borrower or inquire into the use of the proceeds of the
Revolving

 

55

 

Loans or Term
Loans or to inquire into the existence or possible existence of any Event of
Default or Potential Default; (d) shall not be responsible to any Bank for the
due execution, legality, validity, enforceability, effectiveness, genuineness,
sufficiency, collectibility or value of this Agreement or any other Loan
Document or any instrument or document executed or issued pursuant hereto or in
connection herewith, except to the extent that such may be dependent on the due
authorization and execution by the Agent itself; (e) except as expressly
provided herein in respect of information and data furnished to any Agent for
distribution to the Banks, shall have no duty or responsibility, either
initially or on a continuing basis, to provide to any Bank any credit or other
information with respect to the Borrower, whether coming into its possession
before the making of the Loans or at any time or times thereafter; and (f)
shall incur no liability under or in respect of this Agreement or any other
Loan Document for, and shall be entitled to rely and act upon, any notice,
consent, certificate or other instrument or writing (which may be by facsimile
(telecopier), telegram, cable, or other electronic means) believed by it to be
genuine and correct and to have been signed or sent by the proper party or
parties.

 

10.3                           The
Agents as Banks.  With
respect to its Revolving Loan Commitment and the Loans made and to be made by
it, each Agent shall have the same rights and powers under this Agreement and
all other Loan Documents as the other Banks and may exercise the same as if it
were not an Agent.  The terms “Bank” and
“Banks” as used herein shall, unless otherwise expressly indicated, include
National City Bank and Fortis in their individual capacity.  National City Bank and any successor
Administrative Agent, and Fortis and any successor Security Agent or
Structuring Agent, which is a commercial bank, and their respective Affiliates,
may accept deposits from, lend money to, act as trustee under indentures of and
generally engage in any kind of business with, the Borrower and its Affiliates
from time to time, all as if such entity were not the Administrative Agent,
Structuring Agent or Security Agent hereunder and without any duty to account
therefor to any Bank.

 

10.4                           Independent Credit Decisions.  Each Bank acknowledges to the Agents that it
has, independently and without reliance upon the Agents or any other Bank, and
based upon such documents and information as it has deemed appropriate, made
its own independent credit analysis and decision to enter into this
Agreement.  Each Bank also acknowledges
that it will, independently or through other advisers and representatives but
without reliance upon the Agents or any other Bank, and based upon such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or refraining from taking any action under this
Agreement or any Loan Document.

 

10.5                           Indemnification.  The Banks agree to indemnify each Agent (to
the extent not previously reimbursed by the Borrower), ratably in proportion to
each Bank’s Revolving Loan Commitment Percentage, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against National City Bank (and its
successors) in its capacity as Administrative Agent, or against Fortis (and its
successors) in its capacity as Security Agent or Structuring Agent, in any way
relating to or arising out of this Agreement or any Loan Document or any action
taken or omitted to be taken by National City Bank (and its successors) in its
capacity as Administrative Agent, or Fortis (and its successors) in its
capacity as Security Agent or Structuring Agent, hereunder or under any Loan
Document; provided that none of the Banks shall be liable to an Agent
for any portion of such liabilities,

 

56

 

obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Agent’s gross negligence or willful
misconduct.  Without limiting the
generality of the foregoing, each Bank agrees to reimburse the Agents, promptly
on demand, for such Bank’s ratable share (based upon the aforesaid
apportionment) of any out-of-pocket expenses (including counsel fees and
disbursements) incurred by such Agent in connection with the preparation,
execution, administration or enforcement of, or the preservation of any rights
under, this Agreement and the Loan Documents to the extent that such Agent is
not reimbursed for such expenses by the Borrower.

 

10.6                           Successor
Agents.  Any Agent may resign
at any time by giving 30 days’ written notice of such resignation to the Banks
and the Borrower, such resignation to be effective only upon the appointment of
a successor Agent as hereinafter provided. 
Upon any such notice of resignation, the Banks shall jointly appoint a
successor Agent upon written notice to the Borrower and the withdrawing Agent,
and provided that no Potential Default or Event of Default exists, the Borrower
shall have the right to consent to such appointment (which consent shall not be
unreasonably withheld or delayed).  If
no successor Agent shall have been jointly appointed by such Banks (and, if
required, consented to by the Borrower) and shall have accepted such
appointment within thirty (30) days after the withdrawing Agent shall have
given notice of resignation, the Administrative Agent (unless it is the
withdrawing Agent, in which event the Bank or Banks having the largest
Revolving Loan Commitment Percentage) may, upon notice to the Borrower and the
Banks, appoint a successor Agent.  Upon
its acceptance of any appointment as Agent hereunder, the successor Agent shall
succeed to and become vested with all the rights, powers, privileges and duties
of its predecessor, and the withdrawing Agent shall be discharged from its
duties and obligations as Agent under this Agreement and the Loan Documents.  After an Agent’s resignation hereunder, the
provisions hereof shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was the Agent under this Agreement and the Loan
Documents.

 

10.7                           Allocations
Made By the Administrative Agent.  As between the Administrative Agent and the Banks, unless a Bank
objecting to a determination or allocation made by the Administrative Agent
pursuant to this Agreement delivers to the Administrative Agent written notice
of such objection within one hundred twenty (120) days after the date any
distribution was made by the Administrative Agent, such determination or
allocation shall be conclusive on such one hundred twentieth day and only those
items expressly objected to in such notice shall be deemed disputed by such
Bank.  The Administrative Agent shall
not have any duty to inquire as to the application by the Banks of any amounts
distributed to them.

 

SECTION 11.

 

MISCELLANEOUS

 

11.1                           Waiver.  No failure or delay on the part of any Agent
or any Bank or any holder of any Note in exercising any right, power or remedy
under any Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
under any Loan Document.  The remedies
provided under the Loan Documents are cumulative and not exclusive of any
remedies provided by law.

 

57

 

11.2                           Amendments.  No amendment, modification, termination,
renewal or waiver of any Loan Document or any provision thereof nor any consent
to any departure by the Borrower therefrom shall be effective unless the same
shall have been approved by the Majority Banks, be in writing and be signed by
National City Bank, as Administrative Agent on behalf of the Banks, and then
any such waiver or consent shall be effective only in the instance and for the
specific purpose for which given, provided, however, that unanimous
written consent of all of the Banks shall be required for:  (a) subject to Section 2.1(a), any
increase in the amount of the Aggregate Revolving Loan Commitment; (b) any
reduction in principal, interest, or fees payable by the Borrower under this
Agreement; (c) any extension of the Revolving Loan Termination Date or the
maturity dates of any Term Loans; (d) any extension of the due date for payment
of any principal, interest or fees to be collected on behalf of the Banks; (e)
any release of all or substantially all of the Collateral  (provided, however, that the Security
Agent, acting alone, shall be entitled to release less than all or
substantially all of the Collateral pursuant to Section 9.3); (f) the
release of any Guarantor; (g) any amendment to any section of this
Agreement or any other Loan Document which would have the effect of decreasing
the Borrower’s obligations with respect to indemnification of any of the Banks
or the Agents; (h) any amendment to Section 11.7 or (i) changes to the
definitions of “Majority Banks” and “Required Banks.”  In addition to the foregoing, no modification to the definition
of “Asset Base” shall be made without the written consent of  the Required Banks and none of the voting
rights established under this Section 11.2 shall be modified without the
written consent of that number of Banks which would have been required to take
the action to which such voting rights apply. 
No notice to or demand on the Borrower shall entitle the Borrower to any
other or further notice or demand in similar or other circumstances.  No amendment or modification affecting the
role of any Agent or Agents shall be effective unless it has been approved in
writing by such Agent or Agents, as applicable.  In the event there exists one (1) dissenting Bank in any vote
that would require unanimity (the “Dissenting
Bank”), the Borrower shall have the right to prepay the outstanding
principal, interest then due and owing and Additional Amount (as set forth in
Section 2.9) calculated with respect to the Revolving Loan made by the
Dissenting Bank.  At such time as the
prepayment is made the Dissenting Bank shall cease to be a Bank for purposes of
this Agreement and the Aggregate Revolving Loan Commitment shall be adjusted
accordingly to reflect (i) the removal of the Dissenting Bank’s Revolving Loan
Commitment and, if applicable, (ii) the increase by a Bank or Banks of their
Revolving Loan Commitments or the addition of a new bank as a Bank under the
this Agreement, and (iii) the Borrower’s indemnification obligation with
respect to such removed Dissenting Bank shall continue.

 

11.3                           GOVERNING
LAW.  THE LOAN
DOCUMENTS AND ALL RIGHTS AND OBLIGATIONS OF THE PARTIES THEREUNDER SHALL BE
GOVERNED BY AND BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA WITHOUT REGARD TO CALIFORNIA OR FEDERAL PRINCIPLES OF
CONFLICT OF LAWS.

 

11.4                           Participations and
Assignments.  The Borrower
hereby acknowledges and agrees that so long as a Bank is not in default of its
obligations under this Agreement, such Bank may at any time, with the consent
(which consent shall not be unreasonably withheld) of the Borrower and the
Structuring Agent:  (a) grant
participations in all or any portion of its Revolving Loan Commitment or any portion
of its Note(s) or of its right, title and interest therein or in or to this
Agreement (collectively, “Participations”)
to any other lending office of such Bank or to any

 

58

 

other bank,
lending institution or other entity which has the requisite sophistication to
evaluate the merits and risks of investments in Participations (“Participants”); provided, however,
that:  (i) all amounts payable by the
Borrower hereunder shall be determined as if such Bank had not granted such
Participation; (ii) such Bank shall act as agent for all Participants; and
(iii) any agreement pursuant to which such Bank may grant a Participation:  (x) shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provisions of this Agreement; (y) such
participation agreement may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement without the consent of the
Participant if such modification, amendment or waiver would reduce the
principal of or rate of interest on any Loan or postpone the date fixed for any
payment of principal of or interest on any Loan or release (in whole or in
part) any Guarantor or all or substantially all of the Collateral; and (z)
shall not relieve such Bank from its obligations, which shall remain absolute,
to make Loans hereunder; and (b) assign any of its Loans and its Revolving Loan
Commitment. Upon execution and delivery by the assignee to the Borrower of an
instrument in writing pursuant to which such assignee agrees to become a “Bank”
hereunder having the Revolving Loan Commitment and Loans specified in such
instrument, and upon consent thereto by the Borrower and the Structuring Agent,
to the extent required above, the assignee shall have, to the extent of such
assignment (unless otherwise provided in such assignment with the consent of
the Borrower), the obligations, rights and benefits of a Bank hereunder holding
the Revolving Loan Commitment and Loans (or portions thereof) assigned to it,
and such Bank shall, to the extent of such assignment, be released from the
Revolving Loan Commitment (or portion(s) thereof) so assigned.  An assignment fee of $5,000 shall be paid by
the assigning Bank to the Administrative Agent upon consummation of any
assignment, including an assignment from one Bank to another Bank.  No assignments will be permitted by a Bank
at a time when such Bank is in default of its obligations under this
Agreement.  Notwithstanding anything to
the contrary in this Section 11.4, the Borrower shall not have the right
to approve any assignment or Participation by a Bank if a Potential Default or
an Event of Default then exists.

 

11.5                           Captions.  Captions in the Loan Documents are included
for convenience of reference only and shall not constitute a part of any Loan
Document for any other purpose.

 

11.6                           Notices.  All notices, requests, demands, directions,
declarations and other communications between the Banks and the Borrower
provided for in any Loan Document shall, except as otherwise expressly
provided, be mailed by registered or certified mail, return receipt requested,
or telegraphed, or faxed, or delivered in hand or by a recognized overnight
courier to the applicable party at its address indicated opposite its name on
the signature pages hereto.  The
foregoing shall be effective and deemed received three days after being
deposited in the mails, postage prepaid, addressed as aforesaid and shall
whenever sent by telegram, telegraph or facsimile (provided the transmitting
facsimile machine provides written confirmation that the transmission was
successfully completed) or delivered in hand or by a nationally recognized
overnight courier be effective when received. 
Any party may change its address by a communication in accordance
herewith.

 

11.7                           Sharing of Collections,
Proceeds and Set-Offs: Application of Payments.

 

59

 

(a)                                  If
any Bank, by exercising any right of set-off, counterclaim or foreclosure,
receives payment of principal or interest or other amount due on any Note which
is greater than the percentage share of such Bank (determined as set forth
below), the Bank receiving such proportionately greater payment shall purchase
such participations in the Loans held by the other Banks, and such other
adjustments shall be made as may be required, so that all such payments shall
be shared by the Banks on the basis of their percentage shares; provided
that if all or any portion of such proportionately greater payment of such
indebtedness is thereafter recovered from, or must otherwise be restored by,
such purchasing Bank, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest being paid by
such purchasing Bank.  The percentage
share of each Bank shall be based on the portion of the outstanding Loans of
such Bank (prior to receiving any payment for which an adjustment must be made
under this Section) in relation to the aggregate outstanding Loans of all the
Banks.  The Borrower agrees, to the
fullest extent it may effectively do so under applicable law, that any holder
of a participation in a Loan or reimbursement obligation, whether or not
acquired pursuant to the foregoing arrangements, may exercise rights of set-off
or counterclaim and other rights with respect to such participation as fully as
if such holder of a participation were a direct creditor of the Borrower in the
amount of such participation.  If under
any applicable bankruptcy, insolvency or other similar law, any Bank receives a
secured claim in lieu of a set-off to which this Section would apply, such
Bank shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Banks entitled
under this Section to share in the benefits of any recovery on such
secured claim.

 

(b)                                 If
an Event of Default or Potential Default shall have occurred and be continuing the
Agents, each Bank and the Borrower agree that all payments on account of the
Obligations shall be applied by the Administrative Agent and the Banks as
follows:

 

First, to any Agent, for any fees then due and
payable to it under this Agreement or any other Loan Document until such fees
are paid in full;

 

Second, to any Agent, for any fees, costs or
expenses (including expenses described in Section 11.8) incurred by such
Agent under any of the Loan Documents, then due and payable and not reimbursed
by the Borrower or the Banks until such fees, costs and expenses are paid in
full;

 

Third, to the Banks for their respective
shares of all costs, expenses and fees then due and payable from the Borrower
until such costs, expenses and fees are paid in full;

 

Fourth, to the Banks for their percentage
shares of all interest then due and payable from the Borrower until such
interest is paid in full, which percentage shares shall be calculated by
determining each Bank’s percentage share of the amounts allocated in (a) above
determined as set forth in said clause (a);

 

Fifth, to the Banks for their percentage
shares of the principal amount of the Obligations then due and payable from the
Borrower until such principal is paid in full, which percentage shares shall be
calculated by determining each

 

60

 

Bank’s
percentage share of the amounts allocated in (a) above determined as set forth
in said clause (a); and

 

Sixth, if any amounts remain after satisfying
the amounts specified in clauses First through Fifth above, the
balance, if any, shall be remitted to the Borrower.

 

11.8                           Expenses;
Indemnification.  The Borrower will
from time to time reimburse the Agents promptly following demand for all
reasonable out-of-pocket expenses (including the reasonable fees and expenses
of their legal counsel) in connection with (a) the preparation of the Loan
Documents, (b) the making of any Loans, and (c) the administration of the Loan
Documents.  The Borrower also will from
to time reimburse the Agents and each Bank for all out-of-pocket expenses
(including reasonable fees and expenses of their legal counsel) in connection
with the enforcement of the Loan Documents. 
In addition to the payment of the foregoing expenses, the Borrower
hereby agree to indemnify, defend, protect and hold National City Bank, as
Administrative Agent, Fortis, as Security Agent, and Fortis, as Structuring
Agent, each Bank and any holder of any Note and the officers, directors,
employees, agents, Affiliates and attorneys of the Agents, each Bank and such
holder (collectively, the “Indemnitees”)
harmless from and against any and all liabilities, obligations, losses,
damages, claims, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature, including reasonable fees and expenses of
legal counsel, which may be imposed on, incurred by, or asserted against such
Indemnitee by the Borrower or other third parties and arise out of or relate to
this Agreement or the other Loan Documents or any other matter whatsoever
related to the transactions contemplated by or referred to in this Agreement or
the other Loan Documents (including, without limitation, any Loan, any
Revolving Loan Commitment or the Borrower’s use of the proceeds of any Loan); provided,
however, that the Borrower shall have no obligation to an Indemnitee hereunder
to the extent that the liability incurred by such Indemnitee has been
determined by a court of competent jurisdiction to be the result of gross
negligence or willful misconduct of such Indemnitee.

 

11.9                           Survival of Warranties
and Certain Agreements.  All
agreements, representations and warranties expressly made herein shall survive
the execution and delivery of this Agreement, the making of the Loans hereunder
and the execution and delivery of the Notes. 
Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of the Borrower set forth in Section 11.8 shall
survive the payment of the Loans and the termination of this Agreement and
continue for the benefit of the Indemnitees, notwithstanding the failure of the
transactions contemplated hereby to be consummated.  This Agreement shall remain in full force and effect until the
repayment in full of all amounts owed by the Borrower under the Notes or any
other Loan Document.

 

11.10                     Severability.  The invalidity, illegality or
unenforceability in any jurisdiction of any provision in or obligation under
this Agreement, any Note or other Loan Document shall not affect or impair the
validity, legality or enforceability of the remaining provisions or obligations
under this Agreement, the Notes or other Loan Documents or of such provision or
obligation in any other jurisdiction.

 

61

 

11.11                     Banks’
Obligations Several; Independent Nature of Banks’ Rights.  The obligation of each Bank hereunder is
several and not joint and no Bank shall be the agent of any other (except to
the extent any Agent is authorized to act as such hereunder).  No Bank shall be responsible for the
obligation or commitment of any other Bank hereunder.  In the event that any Bank at any time should fail to make a Loan
as herein provided, the other Banks, or any of them as may then be agreed upon,
at their sole option, may make the Loan that was to have been made by the Bank
so failing to make such Loan.  Nothing
contained in any Loan Document and no action taken by any Agent or any Bank
pursuant hereto or thereto shall be deemed to constitute the Banks to be a
partnership, an association, a joint venture or any other kind of entity.  The amounts payable at any time hereunder to
each Bank shall be a separate and independent debt, and, subject to the terms
of this Agreement, each Bank shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any
other Bank to be joined as an additional party in any proceeding for such
purpose.

 

11.12                     No
Fiduciary Relationship. 
No provision in this Agreement or in any of the other Loan Documents and
no course of dealing between the parties shall be deemed to create any
fiduciary duty by any Bank to the Borrower.

 

11.13                     CONSENT TO JURISDICTION AND SERVICE
OF PROCESS.  EACH OF THE BORROWER,
THE AGENTS, AND THE BANKS HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE CITY OF SAN FRANCISCO, CALIFORNIA AND
IRREVOCABLY AGREES THAT, ANY ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING
TO THE NOTES, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY BE LITIGATED IN
SUCH COURTS.  EACH PARTY TO THIS
AGREEMENT ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, ANY NOTE, OR
SUCH OTHER LOAN DOCUMENT.

 

11.14                     WAIVER
OF JURY TRIAL.  THE
BORROWER, THE AGENTS, AND THE BANKS EACH HEREBY WAIVES ITS RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT AND THE LENDER/BORROWER RELATIONSHIP
ESTABLISHED HEREBY.  THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  THE BORROWER, THE AGENTS, AND THE BANKS EACH
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE TRANSACTION, THAT
EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.  THE BORROWER, THE AGENTS, AND THE BANKS EACH
FURTHER WARRANTS AND REPRESENTS THAT

 

62

 

EACH HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, MODIFICATIONS,
REPLACEMENTS OR RESTATEMENTS TO THIS AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

11.15                     Counterparts;
Effectiveness.  This Agreement and
any amendment hereto or waiver hereof 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 Agreement and any amendments hereto or
waivers hereof shall become effective when the Administrative Agent shall have
received signed counterparts or notice by fax of the signature page that the
counterpart has been signed and is being delivered to it or facsimile that such
counterparts have been signed by all the parties hereto or thereto.

 

11.16                     Use
of Defined Terms.  All
words used herein in the singular or plural shall be deemed to have been used
in the plural or singular where the context or construction so requires.  Any defined term used in the singular preceded
by “any” shall be taken to indicate any number of the members of the relevant
class.

 

11.17                     Offsets.  Nothing in this Agreement shall be deemed a
waiver or prohibition of any Bank’s right of banker’s lien or offset.

 

11.18                     Entire
Agreement.  This Agreement,
the Notes issued hereunder and the other Loan Documents constitute the entire
understanding of the parties hereto as of the date hereof with respect to the
subject matter hereof and thereof and supersede any prior agreements, written
or oral, with respect hereto or thereto.

 

11.19                     Confidentiality.  In handling any written information
specifically marked “confidential” prior to its delivery to any Bank by the
Borrower, each of the Agents and the Banks shall exercise the same degree of
care that it exercises with respect to its own proprietary information of the
same type to maintain the confidentiality of any non-public information thereby
received or received pursuant to this Agreement or any other Loan Documents
except that disclosure of such information may be made (a) to the agents,
employees, subsidiaries or Affiliates of such Person in connection with this
Agreement or any other Loan Document, (b) to prospective participants or
assignees of the Loans, provided that they have agreed to be bound by
the provisions of this Section 11.19, (c) as required by law, regulation,
rule or order, subpoena, judicial order or similar order, and (d) as may be
required in connection with the examination, audit or similar investigation of
such Person.  Confidential information
shall not include information that either (x) is in the public domain, or
becomes a part of the public domain after disclosure to such Person through no
fault of such Person or (y) is disclosed to such Person by a third party,
provided such Person does not have knowledge that such third party is
prohibited from disclosing such information.

 

63

 

11.20                     Custody
Agreement.  The Security
Agent may enter into one or more agreements with third parties pursuant to
which agreements such third parties will hold custody to any or all of the
Collateral.  Without limiting the
foregoing, the Administrative Agent, the Structuring Agent and each of the
other Banks hereto acknowledge and agree (i) to the terms and conditions of the
Custodial Agreement; (ii) that the third party custodian thereto may hold each
of the documents and instruments to be delivered therein, including without
limitation, the “chattel paper” original of each Lease, for the benefit of the
Security Agent; and (iii) that the Security Agent shall not be liable in the
event of any damage, loss or destruction of any of the documents or instruments
to be delivered therein, including without limitation, the “chattel paper”
originals of each Lease, by such third party custodian.

 

11.21                     Agreements with the Banks.  The Agents and the Banks agree, represent
and warrant that they shall not, with respect to Willis Engine Funding LLC or
any Subsidiary of Willis Engine Funding LLC, or any other bankruptcy remote
entity set up for the purpose of securitization by the Borrower, institute or
join any other Person in instituting any bankruptcy, reorganization,
arrangement, receivership, insolvency or liquidation proceeding, or other
similar proceeding under any federal or state bankruptcy or similar law, so
long as there shall not have lapsed one year and one day since the date on
which (A) all obligations of the Borrower, Willis Engine Funding LLC or any
Subsidiary of Willis Engine Funding LLC or any other bankruptcy remote entity
set up for the purpose of securitization by the Borrower under the WEF Funding
Facility, and (B) the latest maturing commercial paper note issued in
connection with the WEF Funding Facility, shall have been paid in full.

 

*      *     *

 

64

 

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

 

 

	
   

  	
  WILLIS LEASE FINANCE

  CORPORATION

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By 

  	
  /s/ MONICA J. BURKE

  	
   

  
	
   

  	
   

  	
  Name: Monica J. Burke

  	 

	
   

  	
   

  	
  Title:  Executive Vice
  President,

  Chief Financial Officer

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
  Notices To:

  	
   

  	 

	
   

  	
   

  	 

	
  2320
  Marinship Way

  	
   

  	 

	
  Suite 300

  	
   

  	 

	
  Sausalito,
  CA  94965

  	
   

  	 

	
  Fax No.
  (415) 331-5167

  	
   

  	 

	
  Attention:  General Counsel

  	
   

  	 

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

SCHEDULE 6

 

1

 

	
   

  	
  FORTIS BANK (NEDERLAND) N.V.,

  
	
   

  	
  as
  Structuring Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ M.P.A.
  ZONDAG

  	
   

  
	
   

  	
   

  	
  /s/ P.R.G.
  ZAMAN

  	
   

  
	
   

  	
   

  	
  Name:  M.P.A. Zondag

  
	
   

  	
   

  	
  Name:  P.R.G. Zaman

  
	
   

  	
   

  
	
  Notices To:

  	
   

  
	
   

  	
   

  
	
  Fortis Bank
  (Nederland) N.V.

  	
   

  
	
  Coolsingel
  93

  	
   

  
	
  3012 AE
  Rotterdam

  	
   

  
	
  The
  Netherlands

  	
   

  
	
  Attention:  Maarten H. Schipper

  	
   

  
	
  Telephone:  31 10 401 9522

  	
   

  
	
  Facsimile:  31 10 401 9529

  	
   

  
	
   

  	
   

  
	
  With a copy
  to:

  	
   

  
	
   

  	
   

  
	
  Vedder,
  Price, Kaufman & Kammholz

  	
   

  
	
  Attention:  Lynne A. Gochanour

  	
   

  
	
  222 North
  LaSalle Street

  	
   

  
	
  Suite 2600

  	
   

  
	
  Chicago,
  Illinois  60601

  	
   

  
	
  Telephone:  312-609-7500

  	
   

  
	
  Facsimile:  312-609-5005

  	
   

  

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

2

 

	
   

  	
  FORTIS BANK (NEDERLAND) N.V.,

  
	
   

  	
  as Security
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ M.P.A.
  ZONDAG

  	
   

  
	
   

  	
   

  	
  /s/ P.R.G.
  ZAMAN

  	
   

  
	
   

  	
   

  	
  Name:  M.P.A. Zondag

  
	
   

  	
   

  	
  Name:  P.R.G. Zaman

  
	
   

  	
   

  
	
  Notices To:

  	
   

  
	
   

  	
   

  
	
  Fortis Bank
  (Nederland) N.V.

  	
   

  
	
  Coolsingel
  93

  	
   

  
	
  3012 AE
  Rotterdam

  	
   

  
	
  The
  Netherlands

  	
   

  
	
  Attention:  Maarten H. Schipper

  	
   

  
	
  Telephone:  31 10 401 9522

  	
   

  
	
  Facsimile:  31 10 401 9529

  	
   

  
	
   

  	
   

  
	
  With a copy
  to:

  	
   

  
	
   

  	
   

  
	
  Vedder,
  Price, Kaufman & Kammholz

  	
   

  
	
  Attention:  Lynne A. Gochanour

  	
   

  
	
  222 North
  LaSalle Street

  	
   

  
	
  Suite 2600

  	
   

  
	
  Chicago,
  Illinois 60601

  	
   

  
	
  Telephone:  312-609-7500

  	
   

  
	
  Facsimile:  312-609-5005

  	
   

  

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

3

 

	
   

  	
  FORTIS BANK (NEDERLAND) N.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ M.P.A.
  ZONDAG

  	
   

  
	
   

  	
   

  	
  /s/ P.R.G.
  ZAMAN

  	
   

  
	
   

  	
   

  	
  Name:  M.P.A. Zondag

  
	
   

  	
   

  	
  Name:  P.R.G. Zaman

  
	
   

  	
   

  
	
  Notices To:

  	
   

  
	
   

  	
   

  
	
  Fortis Bank
  (Nederland) N.V.

  	
   

  
	
  Coolsingel
  93

  	
   

  
	
  3012 AE
  Rotterdam

  	
   

  
	
  The
  Netherlands

  	
   

  
	
  Attention:  Maarten H. Schipper

  	
   

  
	
  Telephone:  31 10 401 9522

  	
   

  
	
  Facsimile:  31 10 401 9529

  	
   

  
	
   

  	
   

  
	
  With a copy
  to:

  	
   

  
	
   

  	
   

  
	
  Vedder,
  Price, Kaufman & Kammholz

  	
   

  
	
  Attention:  Lynne A. Gochanour

  	
   

  
	
  222 North
  LaSalle Street

  	
   

  
	
  Suite 2600

  	
   

  
	
  Chicago,
  Illinois 60601

  	
   

  
	
  Telephone:  312-609-7500

  	
   

  
	
  Facsimile:  312-609-5005

  	
   

  

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

4

 

	
   

  	
  NATIONAL CITY BANK,

  
	
   

  	
  as
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ CHRISTOS
  KYTZIDIS

  	
   

  
	
   

  	
   

  	
  Name:  Christos Kytzidis

  
	
   

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  
	
  Notices To:

  	
   

  
	
   

  	
   

  
	
  National
  City Bank

  	
   

  
	
  1900 East
  Ninth Street

  	
   

  
	
  Cleveland,
  OH 44114

  	
   

  
	
   

  	
   

  
	
  With a copy
  to:

  	
   

  
	
   

  	
   

  
	
  National
  City Bank

  	
   

  
	
  Attention:  Christos Kytzidis, Vice President

  	
   

  
	
  Specialized
  Banking Group

  	
   

  
	
  One South
  Broad

  	
   

  
	
  14th Floor,
  Locator 01-5997

  	
   

  
	
  Philadelphia,
  PA 19107

  	
   

  
	
  Telephone:  267-256-4092

  	
   

  
	
  Facsimile:  267-256-4001

  	
   

  

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

5

 

	
   

  	
  NATIONAL CITY BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ CHRISTOS
  KYTZIDIS

  	
   

  
	
   

  	
   

  	
  Name:  Christos Kytzidis

  
	
   

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  
	
  Notices To:

  	
   

  
	
   

  	
   

  
	
  National
  City Bank

  	
   

  
	
  1900 East
  Ninth Street

  	
   

  
	
  Cleveland,
  OH 44114

  	
   

  
	
   

  	
   

  
	
  With a copy
  to:

  	
   

  
	
   

  	
   

  
	
  National
  City Bank

  	
   

  
	
  Attention:  Christos Kytzidis, Vice President

  	
   

  
	
  Specialized
  Banking Group

  	
   

  
	
  One South
  Broad

  	
   

  
	
  14th Floor,
  Locator 01-5997

  	
   

  
	
  Philadelphia,
  PA 19107

  	
   

  
	
  Telephone:  267-256-4092

  	
   

  
	
  Facsimile:  267-256-4001

  	
   

  

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

6

 

	
   

  	
  CALIFORNIA BANK AND TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ J.
  MICHAEL SULLIVAN

  	
   

  
	
   

  	
   

  	
  Name:  J. Michael Sullivan

  
	
   

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  
	
  Notices To:

  	
   

  
	
   

  	
   

  
	
  J. Michael
  Sullivan

  	
   

  
	
  Vice
  President

  	
   

  
	
  California
  Bank & Trust

  	
   

  
	
  South Bay
  Corporate Banking Office

  	
   

  
	
  1690 South
  El Camino Real

  	
   

  
	
  San Mateo,
  CA  94402

  	
   

  
	
  Telephone:  650-294-2026

  	
   

  
	
  Facsimile:  650-294-2029

  	
   

  
	
  Email:
  sullivanm@calbt.com

  	
   

  
	
   

  	
   

  
	
  With a copy
  to:

  	
   

  
	
   

  	
   

  
	
  Loan
  Administrator

  	
   

  
	
  California
  Bank & Trust

  	
   

  
	
  San
  Francisco Corporate Banking Office

  	
   

  
	
  465
  California Street, 1st Floor

  	
   

  
	
  San
  Francisco, CA  94104

  	
   

  
	
  Telephone:  415-875-1441

  	
   

  
	
  Facsimile:  415-875-1457

  	
   

  

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

7

 

	
   

  	
  CITY NATIONAL BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ NANCI
  BRUSATI DIAS

  	
   

  
	
   

  	
   

  	
  Name:  Nanci Brusati Dias

  
	
   

  	
   

  	
  Title:  Senior Vice President

  
	
   

  	
   

  
	
  Notices To:

  	
   

  
	
   

  	
   

  
	
  Nanci
  Brusati-Dias, Senior Vice President

  	
   

  
	
  City
  National Bank - San Francisco CBC

  	
   

  
	
  150 California
  Street, 12th Floor

  	
   

  
	
  San
  Francisco, CA  94111

  	
   

  
	
  Telephone:  415-576-2801

  	
   

  
	
  Facsimile:  415-576-3961

  	
   

  
	
  Email:
  nanci.dias@cnb.com

  	
   

  

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

8

 

	
   

  	
  WELLS FARGO BANK, NATIONAL

  
	
   

  	
  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ PETER R.
  HSU

  	
   

  
	
   

  	
   

  	
  Name:  Peter R. Hsu

  
	
   

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  
	
  Notices To:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Wells Fargo
  Bank, National Association

  	
   

  
	
  200 B
  Street, Suite 300

  	
   

  
	
  Santa Rosa,
  CA  95401

  	
   

  
	
  Telephone:  707-584-3142

  	
   

  
	
  Facsimile:  707-584-3235

  	
   

  
	
  Email:  peter.r.hsu@wellsfargo.com

  	
   

  

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

9

 

	
   

  	
  HSH NORDBANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ MATHIS
  SHINNICK

  	
   

  
	
   

  	
   

  	
  Name:  Mathis Shinnick

  
	
   

  	
   

  	
  Title:  Senior Vice President,

  
	
   

  	
   

  	
   

  	
  Head of
  Transportation Americas

  
	
   

  	
   

  	
   

  	
  HSH
  Nordbank, New York Branch

  
	
   

  	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ HARI
  RAGHAVAN

  	
   

  
	
   

  	
   

  	
  Name:  Hari Raghavan

  
	
   

  	
   

  	
  Title:  Vice President, Transportation

  
	
   

  	
   

  	
   

  	
  HSH
  Nordbank, New York Branch

  
	
   

  	
   

  
	
  Notices To:

  	
   

  
	
   

  	
   

  
	
  HSH Nordbank

  	
   

  
	
  590 Madison
  Avenue

  	
   

  
	
  New York,
  NY  10022-2540

  	
   

  
	
  Telephone:  212-407-6000

  	
   

  
	
  Facsimile:  212-407-6033

  	
   

  
	
  Email:   hari.raghavan@hsh-nordbank.com

  	
   

  
	
  and
  eric.dollman@hsh-nordbank.com

  	
   

  
					

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

10

 

	
   

  	
  STATE BANK OF INDIA (AGENCY)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ CHUNDURU
  PADMAJA

  	
   

  
	
   

  	
   

  	
  Name:  Chunduru Padmaja

  
	
   

  	
   

  	
  Title: Vice
  President (Credit & Operations)

  
	
   

  	
   

  
	
  Notices To:

  	
   

  
	
   

  	
   

  
	
  State Bank
  of India

  	
   

  
	
  Los Angeles
  Agency

  	
   

  
	
  707 Wilshire
  Boulevard, Suite 1995

  	
   

  
	
  Los Angeles,
  California  90017

  	
   

  
	
  Telephone:  213-623-7250

  	
   

  
	
  Facsimile:  213-622-2069

  	
   

  
	
  Email:  dlorimer@sbical.com

  	
   

  

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

11

 

	
   

  	
  STATE BANK OF INDIA

  (CALIFORNIA)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ DEL
  LORIMER

  	
   

  
	
   

  	
   

  	
  Name:  Del Lorimer

  
	
   

  	
   

  	
  Title:  Sr. Vice President

  
	
   

  	
   

  
	
  Notices To:

  	
   

  
	
   

  	
   

  
	
  State Bank
  of India (California)

  	
   

  
	
  707 Wilshire
  Boulevard, Suite 1995

  	
   

  
	
  Los Angeles,
  California 90017

  	
   

  
	
  Telephone:  213-623-7250

  	
   

  
	
  Facsimile:   213-622-2069

  	
   

  
	
  Email:  dlorimer@sbical.com

  	
   

  

 

12Exhibit
10(a)

 

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT

 

THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(the “Amendment”), dated as of May 27, 2004, is among HAGGAR
CLOTHING CO. (“Company”), HAGGAR CORP. (“Haggar”), the Banks
which are party hereto and JPMORGAN CHASE BANK, (formerly The Chase Manhattan
Bank) individually as a Bank and as Agent for itself and the other Banks (in
such capacity as Agent, together with its successors in such capacity, “Agent”).

 

RECITALS:

 

A.                                   Pursuant
to that certain Second Amended and Restated Credit Agreement dated
June 13, 2002 among Company, Haggar, each of the banks which are parties
thereto (individually a “Bank” and collectively, the “Banks”) and
the Agent (as the same has been amended by that certain First Amendment to
Second Amended and Restated Credit Agreement dated December 11, 2002, that
certain Second Amendment to Second Amended and Restated Credit Agreement dated
June 6, 2003, and as the same may be further amended, restated or otherwise
modified from time to time, the “Agreement”), the banks party thereto
agreed to make Loans to Company as set forth therein.

 

B.                                     Company
formed two new Domestic Subsidiaries, Phlox Acquisitions LLC, a Delaware
limited liability company, and Phlox Acquisitions Trust, a Delaware statutory
trust, which have joined the Subsidiary Guaranty as Guarantors.

 

C.                                     Company
and Haggar have requested that the Banks agree to modify the Agreement as
herein set forth.  The Banks party hereto
are willing to do so upon the terms and provisions of this Amendment.

 

NOW, THEREFORE, in consideration of the premises herein contained and
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.  Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.

 

ARTICLE
2.

Amendment

 

2.1.                              Additions
to Section 1.1.  The following
definitions are added to Section 1.1 of the Agreement in proper
alphabetical order.

 

“Aircraft Indebtedness” means purchase money Indebtedness (including
any Indebtedness refinancing an Advance) in a principal amount not to exceed
$4,150,000 which is: (a) incurred in connection with Company’s acquisition
of the aircraft it leases as of May 27, 2004 upon the termination of the
lease thereof and (b) is secured only by a Lien on such aircraft.

 

“Base Margin” shall have the meaning set forth in Section 2.7(c).

 

1

 

“Commitment Fee Rate” shall have the meaning set forth in
Section 2.7(c).

 

“Life Insurance Indebtedness” means any Indebtedness (including any
Indebtedness refinancing an Advance) that is secured only by the cash value of
the key man life insurance policies which are owned by Company and issued by
National Life of Vermont; provided that the aggregate principal amount of such
Indebtedness does not exceed the lesser of: 
(i) $9,100,000 or (ii) the aggregate amount of such cash
value.

 

2.2.                              Amendment
to Section 1.1.  The following
definitions contained in Section 1.1 of the Agreement are amended
in their respective entireties to read as follows:

 

“CD Margin” shall be determined in accordance with the terms of
Section 2.7(c).

 

“Eurodollar Margin” shall be determined in accordance with the terms of
Section 2.7(c).

 

“Funded Debt” means, for Company Group on a consolidated basis for any
date, all amounts advanced and outstanding with respect to any Indebtedness of
any member of Company Group, including, without limitation, the Obligations but
specifically excluding: 
(a) obligations under any Guarantee; (b) obligations under any
Swap Agreement; (c) Aircraft Indebtedness, and (d) Life Insurance
Indebtedness.

 

“Termination Date” means June 30, 2007, unless the Commitments are
terminated prior to such date pursuant to Sections 2.4 or 9.1.

 

2.3.                              Amendment
to “Permitted Indebtedness”.  The
definition of “Permitted Indebtedness” contained in Section 1.1 of
the Agreement is amended to: 
(a) delete the “and” at the end of clause (j) thereto;
(b) replace the “.” at the end of clause (k) with “; and” and
(c) add the following clause (l) to the end of such definition.

 

(l) the Aircraft Indebtedness, the Life Insurance Indebtedness and
any extensions, renewals and replacements thereof.

 

2.4.                              Amendment
to “Permitted Liens”.  The definition
of “Permitted Liens” contained in Section 1.1 of the Agreement is
amended to:  (a) delete the “and” at
the end of clause (f) thereto; (b) replace the “.” at the end of
clause (g) with “, and” and (c) add the following clause (h) to
the end of such definition.

 

(h) Liens securing the Aircraft Indebtedness encumbering only the
aircraft financed thereby and Liens securing the Life Insurance Indebtedness
encumbering only the cash value of the key man life insurance policies which
are owned by Company and issued by National Life of Vermont.

 

2.5.                              Amendment
to Section 2.5.  Clause (a)
of Section 2.5 of the Agreement is amended and restated in its
entirety to read as follows:

 

(a)                                  On
the date three Business Days following each Payment Date and on the Termination
Date, a commitment fee equal to the Commitment Fee Rate times
the average daily amount of the Total Commitments minus
the sum of (i) the outstanding principal amount of all Advances and
(ii) the Letter of Credit Exposure during the quarter ending on and
including such Payment Date, or such shorter period ending on and including the
Termination Date, as the case may be.

 

2

 

2.6.                              Amendment
to Section 2.7(a).  The third
sentence of clause (a) of Section 2.7 of the Agreement
is amended in its entirety to read as follows:

 

Floating Rate
Advances shall bear interest at a rate equal to the sum of the Alternate Base
Rate plus the Base Margin, and the interest rate on any Floating Rate Advances
shall change when and as the Alternate Base Rate changes; provided that in no
event shall the sum of the foregoing exceed the Highest Lawful Rate.

 

2.7.                              Addition
of Section 2.7(c).  The following clause (c)
is added to Section 2.7 immediately following clause (b)
thereto:

 

(c)                                  Determinations
of Margins and Fees.  The Base
Margin, CD Margin and Eurodollar Margin and the fees payable under
Section 2.5(a) shall be defined and determined as follows:

 

“Base Margin” shall mean (i) during the period commencing
on May 27, 2004 and ending on but not including the first Adjustment Date
(as defined below), zero percent (0%) per annum and (ii) during each
period, from and including one Adjustment Date to but excluding the next
Adjustment Date (herein a “Calculation Period”), the percent per annum
set forth in the table below under the heading “Base Margin” and
opposite the Funded Debt Ratio which corresponds to the Funded Debt Ratio set
forth in, and as calculated in accordance with, the applicable Compliance
Certificate.

 

“CD Margin” shall mean (i) during the period commencing on
May 27, 2004 and ending on but not including the first Adjustment Date,
one and one-quarter percent (1.25%) per annum and (ii) during each
Calculation Period, the percent per annum set forth in the table below under
the heading “CD Margin” and opposite the Funded Debt Ratio which
corresponds to the Funded Debt Ratio set forth in, and as calculated in
accordance with, the applicable Compliance Certificate.

 

“Commitment Fee Rate” shall mean (i) during the period
commencing on May 27, 2004 and ending on but not including the first
Adjustment Date, one-quarter of one percent (0.25%) per annum and
(ii) during each Calculation Period, the percent per annum set forth in
the table below under the heading “Commitment Fee” and opposite the
Funded Debt Ratio which corresponds to the Funded Debt Ratio set forth in, and
as calculated in accordance with, the applicable Compliance Certificate.

 

“Eurodollar Margin” shall mean (i) during the period
commencing on May 27, 2004 and ending on but not including the first
Adjustment Date, one and one-eighth percent (1.125%) per annum and
(ii) during each Calculation Period, the percent per annum set forth in
the table below under the heading “Eurodollar Margin” and opposite the
Funded Debt Ratio which corresponds to the Funded Debt Ratio set forth in, and
as calculated in accordance with, the applicable Compliance Certificate.

 

3

 

	
  Tier

  	
   

  	
  Funded Debt

  Ratio

  	
   

  	
  Commitment

  Fee

  	
   

  	
  Base

  Margin

  	
   

  	
  CD

  Margin

  	
   

  	
  Eurodollar

  Margin

  	
   

  
	
  Tier V

  	
   

  	
  < 1.00 to 1.00

  	
   

  	
  0.25

  	
  %

  	
  0.00

  	
  %

  	
  1.25

  	
  %

  	
  1.125

  	
  %

  
	
  Tier IV

  	
   

  	
  > 1.00 to 1.00

  but

  < 1.50 to 1.00

  	
   

  	
  .30

  	
  %

  	
  0.00

  	
  %

  	
  1.375

  	
  %

  	
  1.25

  	
  %

  
	
  Tier III

  	
   

  	
  > 1.50 to 1.00

  but

  < 2.00 to 1.00

  	
   

  	
  0.375

  	
  %

  	
  0.00

  	
  %

  	
  1.625

  	
  %

  	
  1.50

  	
  %

  
	
  Tier II

  	
   

  	
  > 2.00 to 1.00

  but

  < 2.50 to 1.00

  	
   

  	
  0.375

  	
  %

  	
  0.00

  	
  %

  	
  1.75

  	
  %

  	
  1.625

  	
  %

  
	
  Tier I

  	
   

  	
  > 2.50 to 1.00

  	
   

  	
  0.50

  	
  %

  	
  0.00

  	
  %

  	
  1.875

  	
  %

  	
  1.75

  	
  %

  

 

Upon delivery of the Compliance
Certificate pursuant to Section 6.1(c) in connection with the financial
statements required to be delivered pursuant to Sections 6.1(a) and (b)
commencing with such Compliance Certificate delivered at the end of the fiscal
quarter ending on June 30, 2004, the Base Margin, Eurodollar Margin, CD
Margin and Commitment Fee Rate shall automatically be adjusted in accordance
with the Funded Debt Ratio set forth therein and the table set forth above,
such automatic adjustment to take effect as of the date five (5) Business Days
after the receipt by the Agent of the related Compliance Certificate pursuant
to Section 6.1(c) (each such Business Day when such margins or fees change
pursuant to this sentence or the next following sentence, herein an “Adjustment
Date”).  If Haggar and the Company
fail to deliver such Compliance Certificate which so sets forth the Funded Debt
Ratio within the period of time required by Section 6.1(c), or if an Event
of Default exists and the Agent provides notice to Haggar, the margin and fees
provided for hereunder shall automatically be adjusted to the margin and fees
set forth in the line in the table above labeled Tier I, such automatic
adjustments to take effect as of the first Business Day after the last day on
which Haggar and the Company were required to deliver the applicable Compliance
Certificate in accordance with Section 6.1(c) hereof or, in the case of an
Event of Default, on the date the written notice is given to Haggar and to
remain in effect until subsequently adjusted in accordance herewith upon the
delivery of such Compliance Certificate or, in the case of an Event of Default,
when such Event of Default has been cured to the satisfaction of the Agent or
waived in accordance with this Agreement.

 

2.8.                              Amendment
to Section 7.8.  Section 7.8
of the Agreement is amended in its entirety to read as follows:

 

7.8.                              Net
Worth.  Permit the Net Worth of
Company Group to be or become less than an amount equal to the sum of:  (1) $133,100,000, plus (2) fifty
percent (50%) of the cumulative net income of Company Group, on a consolidated
basis, for each of the fiscal quarters to have completely elapsed since
December 31, 2003, as of the date of determination, plus (3) in the
event Haggar or Company shall make a registered public offering of its capital
stock after the Effective Date, 66 2/3% of that portion of the net proceeds
from such offering attributable to the primary issuance of new shares (but not
the secondary issuance of existing shares). 
Notwithstanding the foregoing, in the event that Net Worth is less than
the amount required hereby, Company shall have a period of ten (10) days from
the earlier of the date on which Net Worth is disclosed to the Agent or is to
be disclosed to the Agent under Section 6.1 in which to cause Net Worth to
be in compliance with the terms hereof. 
Cumulative net income shall be determined by reference to the statements
of income described in Section 6.1(a) and shall not be decreased by any
losses occurring during any fiscal quarter.

 

4

 

2.9.                              Amendment
to Schedule 4; Pro Rata Adjustment. 
Schedule 4 to the Agreement is amended in its entirety to
read as Schedule 4 attached hereto. 
On the effective date of this Amendment, the Commitment of certain Banks
are being modified.  As a result, if any
Loans are outstanding under the Agreement on the effective date, such Loans
will not be held by the Banks in accordance with each Bank’s Ratable Share as
determined after giving effect to this Amendment.  To remedy the foregoing, if any Loans are
outstanding on the effective date of this Amendment, the Banks shall make
advances among themselves (either directly or through the Agent) so that after
giving effect thereto the Loans will be held by the Banks in accordance with
each Bank’s Ratable Share determined after giving effect to this
Amendment.  The advances made on the
effective date by each Bank whose Ratable Share has increased shall be deemed
to be a purchase of a corresponding amount of the Loans of the Bank or Banks
whose Ratable Share has decreased.

 

2.10.                        Amendment
to Exhibit A (Borrowing Base Certificate) and Exhibit C (Compliance
Certificate).  Exhibits A
and C to the Agreement are amended in their respective entireties to
read as Exhibits A and C attached hereto.

 

ARTICLE
3.

Conditions

 

3.1.                              Conditions.  The effectiveness of Article 2 of this
Amendment subject to the satisfaction of the following conditions precedent on
or before May 31, 2004:

 

(a)                                  Agent
shall have received all of the following, each dated (unless otherwise
indicated) a current date, in form and substance satisfactory to the Agent:

 

(i)                                     Amendment.  This Amendment fully executed by Haggar and
the Company and the attached Consent of Domestic Subsidiaries executed by the
Domestic Subsidiaries of the Company;

 

(ii)                                  Notes.  Amended and restated promissory notes
executed by the Company;

 

(iii)                               Authorization.  Such evidence of Haggar’s, the Company’s and
each Guarantor’s authority to enter into this Amendment as the Agent may
request;

 

(iv)                              Governmental
Certificates.  Certificates of the
appropriate government officials of the state of incorporation (or the other
appropriate governmental officials of its jurisdiction of organization) of
Haggar, the Company and each Guarantor as to its existence and good standing;
and

 

(v)                                 Additional
Information.  The Agent shall have
received such additional documentation and information as the Agent or its
legal counsel, Jenkens & Gilchrist, a Professional Corporation, may
request; and

 

(b)                                 The
representations and warranties contained herein and in all other Loan
Documents, as amended hereby, shall be true and correct in all material
respects as of the date hereof as if made on the date hereof, except for such
representations and warranties limited by their terms to a specific date;

 

(c)                                  No
Default shall exist; and

 

5

 

(d)                                 All
proceedings taken in connection with the transactions contemplated by this
Amendment and all documentation and other legal matters incident thereto shall
be satisfactory to the Agent and its legal counsel, Jenkens & Gilchrist, a
Professional Corporation.

 

ARTICLE
4.

Miscellaneous

 

4.1.                              Ratifications.  The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and effect.
Company, Haggar, the Agent and Banks party hereto agree that the Agreement as
amended hereby and the other Loan Documents shall continue to be legal, valid,
binding and enforceable in accordance with their respective terms. For all
matters arising prior to the effective date of this Amendment, the Agreement
(as unmodified by this Amendment) shall control.

 

4.2.                              Representations
and Warranties.  Company and Haggar
hereby represent and warrant to Agent and the Banks as follows:  (a) no Default exists, (b) the
representations and warranties set forth in the Loan Documents are true and
correct in all material respects on and as of the date hereof with the same
effect as though made on and as of such date except with respect to any
representations and warranties limited by their terms to a specific date, and
(c) the articles of incorporation, certificates of limited partnership
(other than the certificate of limited partnership of Haggar Women’s Wear, Ltd.
(formerly Jerell Ltd.), articles of organization, regulations, operating
agreements, partnership agreements, bylaws, consents and resolutions of
Company, Haggar and each Guarantor attached to the respective Certificates of
Secretary of Company, Haggar and the Guarantors most recently delivered to the
Agent have not been modified or rescinded and remain in full force and effect
and that officers identified in such Certificates of Secretary continue to hold
the office or offices reflected therein. 
IN ADDITION, TO INDUCE THE AGENT AND THE BANKS TO AGREE TO THE TERMS OF
THIS AMENDMENT, THE COMPANY, HAGGAR AND EACH GUARANTOR (BY ITS EXECUTION BELOW)
REPRESENTS AND WARRANTS THAT AS OF THE DATE OF ITS EXECUTION OF THIS AMENDMENT
THERE ARE NO CLAIMS OR OFFSETS AGAINST OR RIGHTS OF RECOUPMENT WITH RESPECT TO
OR DEFENSES OR COUNTERCLAIMS TO ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS AND IN
ACCORDANCE THEREWITH IT:

 

(A)                              WAIVER.  WAIVES ANY AND ALL SUCH CLAIMS, OFFSETS,
RIGHTS OF RECOUPMENT, DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN,
ARISING PRIOR TO THE DATE OF ITS EXECUTION OF THIS AMENDMENT AND

 

(B)                                RELEASE.  RELEASES AND DISCHARGES THE AGENT AND THE
BANKS, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
SHAREHOLDERS, AFFILIATES AND ATTORNEYS (COLLECTIVELY THE “RELEASED PARTIES”)
FROM ANY AND ALL OBLIGATIONS, INDEBTEDNESS, LIABILITIES, CLAIMS, RIGHTS, CAUSES
OF ACTION OR DEMANDS WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR
UNSUSPECTED, IN LAW OR EQUITY, WHICH COMPANY, HAGGAR OR ANY GUARANTOR EVER HAD,
NOW HAS, CLAIMS TO HAVE OR MAY HAVE AGAINST ANY RELEASED PARTY ARISING PRIOR TO
THE DATE HEREOF AND FROM OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY.

 

6

 

4.3.                              Survival
of Representations and Warranties. 
All representations and warranties made in this Amendment shall survive
the execution and delivery of this Amendment, and no investigation by Agent or
any Bank or any closing shall affect the representations and warranties or the
right of Agent or any Bank to rely upon them.

 

4.4.                              Reference
to Agreement.  Each of the Loan
Documents, including the Agreement, are hereby amended so that any reference in
such Loan Documents to the Agreement shall mean a reference to the Agreement as
amended hereby.

 

4.5.                              Expenses
of Agent.  As provided in the
Agreement, Company agrees to pay on demand all costs and expenses incurred by
Agent or any Bank in connection with the preparation, negotiation, and
execution of this Amendment, including without limitation, the costs and fees
of Agent’s and each Bank’s legal counsel.

 

4.6.                              Severability.  Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

 

4.7.                              Applicable
Law.  This Amendment and all other
Loan Documents shall be governed by and construed in accordance with the laws
of the State of Texas and the applicable laws of the United States of America.

 

4.8.                              Successors
and Assigns.  This Amendment is
binding upon and shall inure to the benefit of Agent, each Bank, Company and
Haggar and their respective successors and assigns, except that neither Company
or Haggar may assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Banks.

 

4.9.                              Counterparts.  This Amendment may be executed in one or more
counterparts and on telecopy counterparts, each of which when so executed shall
be deemed to be an original, but all of which when taken together shall
constitute one and the same agreement.

 

4.10.                        Effect
of Waiver.  No consent or waiver,
express or implied, by Agent or any Bank to or for any breach of or deviation
from any covenant, condition or duty by Haggar, the Company or any Guarantor
shall be deemed a consent or waiver to or of any other breach of the same or
any other covenant, condition or duty.

 

4.11.                        Headings.  The headings, captions, and arrangements used
in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.

 

4.12.                        ENTIRE
AGREEMENT.  THIS AMENDMENT EMBODIES
THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS
AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO.  THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO.

 

7

 

EXECUTED as of the date first written above.

 

	
   

  	
  Company and Haggar:

  
	
   

  	
   

  	
   

  
	
   

  	
  HAGGAR CLOTHING CO., a
  Nevada corporation

  
	
   

  	
  HAGGAR CORP., a Nevada
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. M Haggar, III

  
	
   

  	
   

  	
  J. M Haggar, III

  
	
   

  	
   

  	
  Chief Executive Officer
  for both

  
	
   

  	
   

  	
   

  
	
   

  	
  Agent:

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK
  (formerly The Chase Manhattan Bank who was successor in interest by merger to
  Chase Bank of Texas, National Association who was formerly Texas Commerce
  Bank National Association), Individually and as Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ D. Scott Harvey

  
	
   

  	
   

  	
  Name:

  	
  D. Scott Harvey

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Banks:

  
	
   

  	
   

  	
   

  
	
   

  	
  GUARANTY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert S. Hays

  
	
   

  	
   

  	
  Name:

  	
  Robert S. Hays

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  COMERICA BANK,
  successor in interest by merger to

  Comerica Bank - Texas

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Margareth Fanini

  
	
   

  	
   

  	
  Name:

  	
  Margareth K. Fanini

  
	
   

  	
   

  	
  Title:

  	
  Vice President - Tax
  Division

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas J. Bolt

  
	
   

  	
   

  	
  Name:

  	
  Douglas J. Bolt

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

8

 

	
   

  	
  SOUTHWEST BANK OF
  TEXAS, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Melinda Jackson

  
	
   

  	
   

  	
  Name:

  	
  Melinda N. Jackson

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Holland

  
	
   

  	
   

  	
  Name:

  	
  John Holland

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NOVA SCOTIA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William E. Zarrett

  
	
   

  	
   

  	
  Name:

  	
  William E. Zarrett

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  

 

9

 

CONSENT OF DOMESTIC SUBSIDIARIES

 

Each of the undersigned Subsidiaries hereby (a) agrees that the
Subsidiary Guaranty to which it is a signatory is and shall remain in full
force and effect; (b) ratifies and confirms all terms and provisions of
the Subsidiary Guaranty to which it is a signatory, (c) acknowledges its
consent and agreement to the Amendment including, without limitation Section
4.2 thereof, (d) reaffirms all agreements and obligations under the
Subsidiary Guaranty to which it is a signatory, with respect to the Loans, the
Notes, the Agreement and all other documents, instruments or agreements
governing, securing or pertaining to the Loans, and (f) represents and
warrants that all requisite corporate action necessary for it to execute this
Consent of Domestic Subsidiaries has been taken.

 

	
   

  	
  BOWIE MANUFACTURING
  COMPANY, a Nevada corporation

  
	
   

  	
  CORSICANA COMPANY, a
  Nevada corporation

  
	
   

  	
  DALLAS PANT
  MANUFACTURING COMPANY, a Nevada corporation

  
	
   

  	
  GREENVILLE PANT
  MANUFACTURING COMPANY, a Nevada corporation

  
	
   

  	
  MCKINNEY PANT
  MANUFACTURING COMPANY, a Nevada corporation

  
	
   

  	
  OLNEY MANUFACTURING
  COMPANY, a Nevada corporation

  
	
   

  	
  WAXAHACHIE GARMENT
  COMPANY, a Nevada corporation

  
	
   

  	
  LA ROMANA MANUFACTURING
  CORPORATION, a Nevada corporation

  
	
   

  	
  HAGGAR SERVICES, INC.,
  a Texas corporation

  
	
   

  	
  DUNCAN MANUFACTURING
  COMPANY, an Oklahoma corporation

  
	
   

  	
  WESLACO CUTTING, INC.,
  a Nevada corporation

  
	
   

  	
  WESLACO SEWING, INC., a
  Nevada corporation

  
	
   

  	
  HAGGAR DIRECT, INC., a
  Nevada corporation

  
	
   

  	
  SAN GABRIEL ENTERPRISES,
  INC., a Texas corporation

  
	
   

  	
  MULTIPLES, U.S.A.,
  INC., a Texas corporation

  
	
   

  	
  EDINBURG DIRECT GARMENT
  COMPANY, INC., a Texas corporation

  
	
   

  	
  WESLACO DIRECT CUTTING
  COMPANY, INC., a Texas corporation

  
	
   

  	
  HAGGAR.COM, INC., a
  Texas corporation

  
	
   

  	
  JERELL CLOTHING
  MANAGEMENT, INC., a Texas corporation

  
	
   

  	
  HAGGAR WOMEN’S WEAR,
  LTD. (formerly Jerell, Ltd.), a Texas limited
  partnership

  
	
   

  	
  HAGGAR CANADA, INC, a
  Nevada corporation

  
	
   

  	
  PHLOX ACQUISITIONS LLC,
  a Delaware limited liability company

  
	
   

  	
  PHLOX ACQUISITIONS
  TRUST, a Delaware statutory trust

  
	
   

  	
   

  	
  By: Phlox Acquisitions LLC, its sole trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. M. Haggar, III

  
	
   

  	
   

  	
  J. M. Haggar, III

  
	
   

  	
   

  	
  Chairman/Chief
  Executive Officer of each Subsidiary

  
				

 

10

 

SCHEDULE 4

to

HAGGAR CORP.

 

THIRD AMENDMENT TO SECOND
AMENDED AND RESTATED CREDIT AGREEMENT

 

COMMITMENTS

 

	
  Bank

  	
   

  	
  Commitment

  	
   

  
	
  JPMorgan Chase Bank

  	
   

  	
  $

  	
  17,000,000.00

  	
   

  
	
  Comerica Bank

  	
   

  	
  $

  	
  17,000,000.00

  	
   

  
	
  Guaranty Bank

  	
   

  	
  $

  	
  17,000,000.00

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
  Southwest Bank of Texas, N.A.

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
  U.S. Bank National Association

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
  The Bank of Nova Scotia

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
   

  	
   

  	
  $

  	
  111,000,000.00

  	
   

  

 

 

EXHIBIT A

to

HAGGAR CORP.

 

SECOND AMENDED AND
RESTATED CREDIT AGREEMENT

 

BORROWING BASE
CERTIFICATE

 

 

BORROWING BASE
CERTIFICATE

 

(for the month ending
                      
or as of
                      )

 

HAGGAR CLOTHING CO.

 

TO:                            JPMORGAN
CHASE BANK

2200 Ross Avenue

Third Floor

Dallas, Texas
75266

Attention:  Scott Harvey

 

DATE:                        ,
200  

 

RE:                              Second
Amended and Restated Credit Agreement dated as of June 13, 2002 (as amended,
the “Agreement”), by and among Haggar Clothing Co., Haggar Corp., JPMorgan
Chase Bank and the Banks listed in the Agreement.

 

	
  1.

  	
  Receivables

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Total Receivables

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Less:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  affiliate and employee
  Receivables

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  Receivables unpaid
  after 90 days after date of invoice (or the effective date of Dated Invoices)

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  Receivables subject to
  Lien

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)

  	
  Receivables with
  respect to which goods are placed on consignment, guaranteed sale or other
  terms by reason of which the payment obligation of the account debtor may be
  conditional, but only to the extent that such Receivables equal or exceed
  $500,000 in the aggregate.

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (v)

  	
  all uncollectible
  Receivables

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vi)

  	
  reserve for “discounts”

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vii)

  	
  reserve for “build-ups”

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (viii)

  	
  reserve for
  “deductions”

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ix)

  	
  other reserves

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
											

 

1

 

	
   

  	
  C.

  	
  Preliminary Total of
  Eligible Receivables

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  D.

  	
  5% of line C

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  E.

  	
  Total Dated Invoices
  included in line C.

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  F.

  	
  If line E greater than
  line D, Line E minus line D =

  	
   

  	
   

  	
   

  	
  $

  	
  (             

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  G.

  	
  Total of Eligible
  Receivables (line C minus line F)

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  H.

  	
  80% of Total Eligible
  Receivables (i.e., line G)

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Total Inventory per
  attached summary schedule

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Less: ineligible
  Inventory (i.e., subject to Liens)

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Total Eligible
  Inventory

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  D.

  	
  50% of Eligible
  Inventory

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Borrowing Base

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  (i)

  	
  80% of Eligible
  Receivables (from line H)

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  50% of Eligible
  Inventory (from line D)

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Borrowing Base Formula
  Sum

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Less: amount by which
  (A)(ii) is greater than 60% of the Total Commitments (i.e., $66,600,000)

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  D.

  	
  Borrowing Base

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Borrowing Base
  Availability

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Borrowing Base

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Less:                    Principal
  amount outstanding under the Agreement

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Borrowing Base
  Availability

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Available Commitment

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Total Commitments

  	
   

  	
   

  	
   

  	
  $

  	
  111,000,000

  	
   

  

 

2

 

	
   

  	
  B.

  	
  Less:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Principal amount
  outstanding under the Agreement

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  aggregate amount of all
  issued and outstanding Letters of Credit

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Available Commitment

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Availability

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Borrowing Base
  Availability

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Available Commitment

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Lesser of A or B

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  

 

I hereby certify
that, to the best of my knowledge after appropriate inquiry, the foregoing is
true and correct as of the last day of the month indicated.

 

	
   

  	
  HAGGAR CLOTHING CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

3

 

EXHIBIT C

to

HAGGAR CORP.

 

SECOND AMENDED AND
RESTATED CREDIT AGREEMENT

 

COMPLIANCE CERTIFICATE

 

 

COMPLIANCE CERTIFICATE

 

As of the date indicated below, the undersigned hereby certifies that
(i) no Default or Unmatured Default (as defined in the Credit Agreement)
has occurred and is continuing under that certain Second Amended and Restated
Credit Agreement (as amended, the “Credit Agreement”) among Haggar Clothing
Co., Haggar Corp., JPMorgan Chase Bank and the Banks listed therein,
(ii) the value of all Inventory (as defined in the Credit Agreement) as
reflected in the Company’s financial statements does not exceed its net
realizable value and (iii) the information contained on the Annexes hereto
is true, correct and complete.

 

	
   

  	
  HAGGAR CLOTHING CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Dated:

  	
   

  

 

 

ANNEX A TO COMPLIANCE CERTIFICATE

 

Summary

 

	
  Requirement

  	
   

  	
  Required Level

  	
   

  	
  Current Status

  	
   

  	
  Compliance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (I)

  	
  Fixed Charge

  	
   

  	
  1.25 to 1.00

  	
   

  	
  to 1.00

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
  (detail on Annex B)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (II)

  	
  Funded Debt Ratio

  	
   

  	
  3.00 to 1.00

  	
   

  	
  to 1.00

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
  (detail on Annex C)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (III)

  	
  Net Worth Company Group:

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10% of the Net
  Worth of the Company Group

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Net Worth
  attributable to non–guarantor subsidiaries (not to exceed 10% of the Net
  Worth of the Company Group)

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)     $133,100,000;

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)    Plus 50% of the cumulative net income of the Company
  Group, on a consolidated basis for each fiscal quarter to have completely
  elapsed since December 31, 2003 (with no reduction for negative quarters);
  and

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)     Plus (66–2/3%) of the net proceeds from any
  registered public offering of the capital stock of Haggar or the Company (if
  any).

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)    Required Net Worth of the Company Group (sum of
  (a),(b) and (c)):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Is line (III) greater than line (d)?

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (IV)

  	
  Inventory Turns

  	
   

  	
  2.0

  	
   

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
  (detail on Annex D)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (V)

  	
  Actual Capital
  Expenditures for current fiscal year

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

1

 

	
   

  	
  (a)     less any expenditures for repair or replacement
  of property made with insurance proceeds (to the extent such expenditures do
  not exceed the net cash amount of such insurance proceeds)

  	
   

  	
  $

  	
  (                  

  	
  )

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)    less any expenditures for purchase of the
  Company’s headquarters at 11511 Luna Road (to the extent such expenditures do
  not exceed proceeds from the sale of the prior headquarters at 6113 Lemmon
  Avenue)

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)     SUBTOTAL

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Does 10% of the
  Net Worth of the Company Group as set forth above exceed line (c)?

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Yes    No

  	
   

  
											

 

2

 

ANNEX B TO COMPLIANCE CERTIFICATE

 

HAGGAR CORP.

FIXED CHARGE RATIO

12 MONTHS ENDED
            ,
200  

($000’S)

 

	
   

  	
   

  	
  Qtr.

  	
   

  	
  Qtr.

  	
   

  	
  Qtr.

  	
   

  	
  Qtr.

  	
   

  	
  12 Months Ended

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net Income

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  - Gains + Losses Cap assets Extr Event

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  + Depreciation and Amortization

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  + Interest Expense

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  + Taxes (exclusive of the tax effects relating to
  the closing of the Edinburg facility, the operations in Japan, and the
  Weslaco facility)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  + Japan, Edinburg and Weslaco Charges (not to exceed
  $14,915,000 after tax or $21,800,000 before tax) or minus the reversal
  thereof

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total = Operating Cash Flow

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  - Taxes (exclusive of the tax effects relating to
  the closing of the Edinburg facility, the operations in Japan and the Weslaco
  facility)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Operating Cash Flow minus tax

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest Expense

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Req. Principal Payments

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cash Dividends

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintenance
  Capital Expenditure ($2,000,000)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Fixed Charges

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fixed Charge Ratio

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fixed Charges/Cash Flow

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  to 1.0

  	
   

  

 

 

ANNEX C TO COMPLIANCE CERTIFICATE

 

HAGGAR CORP.

FUNDED DEBT RATIO

12 MONTHS ENDED
                        

($000’S)

 

	
  Funded Debt

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Revolver

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  Industrial Revenue Bonds +

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  other notes

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  other long term indebtedness

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  indebtedness secured by Liens

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  Capital Lease Obligations

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  less: obligations under any
  Guarantee

  	
   

  	
  $

  	
  (                  

  	
  )

  	
   

  	
   

  
	
  less: obligations under any
  Swap Agreement

  	
   

  	
  $

  	
  (                  

  	
  )

  	
   

  	
   

  
	
  less: Aircraft Indebtedness

  	
   

  	
  $

  	
  (                  

  	
  )

  	
   

  	
   

  
	
  less: Life Insurance
  Indebtedness

  	
   

  	
  $

  	
  (                  

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Funded Indebtedness

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operating Cash Flow

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  (detail on Annex B)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Funded Debt/Operating Cash Flow

  	
   

  	
   

  	
   

  	
  to 1.00

  	
   

  

 

 

ANNEX D TO COMPLIANCE CERTIFICATE

 

HAGGAR CORP.

INVENTORY TURNS ANALYSIS

($000’S)

 

	
  PRIOR 12 MONTHS’ COST OF SALES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3rd  Prior Quarter

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2nd Prior Quarter

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Prior Quarter

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Current Quarter

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total 12 Months

  	
   

  	
  $

  	
   

  	
   

  
	
  Cost of Sales

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Current Cost of
  Inventory,
                   ,

  200  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total 12 Months
  Cost of Sales/

  Current Inventory Level

  	
   

  	
  to 1.0

  	
   

  

 

 

ANNEX E TO COMPLIANCE CERTIFICATE

 

STANDBY

LETTERS OF CREDIT OUTSTANDING

           ,
200  

 

	
  ISSUER

  	
   

  	
  LC#

  	
   

  	
  Maturity

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Total

  	
   

  	
  $

  	
   

  	
   

  

 

 

ANNEX F TO COMPLIANCE CERTIFICATE

 

PERMITTED INDEBTEDNESS

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Compliance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
  Commercial Letters of
  Credit ($75,000,000 permitted)

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
  Standby Letters of
  Credit (other than those issued by the Agent) ($2,000,000 permitted)

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
  Share Repurchase
  Obligations Severance ($2,500,000 permitted) $10,000,000 total permitted

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
  Other Indebtedness
  (permitted:  $20,000,000)

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
  Intercompany
  Indebtedness (no limit on amount)

  	
   

  	
  $

  	
   

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (f)

  	
  Accounts payable to
  officers, directors (no limit on amount)

  	
   

  	
  $

  	
   

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (g)

  	
  Guarantees (no limit on
  amount)

  	
   

  	
  $

  	
   

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (h)

  	
  Guarantees (Haggar
  Direct less than one years rental) (no limit on amount)

  	
   

  	
  $

  	
   

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i)

  	
  Guarantees (Haggar
  Direct exceeding one years rental) not to exceed $6,000,000 in the aggregate

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (j)

  	
  Additional senior
  unsecured promissory notes with maturities after the Termination Date
  ($35,000,000 permitted)

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (k)

  	
  Aircraft Indebtedness
  (not to exceed $4,150,000)

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (l)

  	
  Life Insurance Indebtedness
  (not to exceed the lesser of (a) $9,100,000 or (b) cash value of insurance
  policies)

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}]]