Document:

Exhibit 10.16

 

CONFIDENTIAL TREATMENT REQUESTED

 

 

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

BETWEEN

 

WILLIS LEASE FINANCE CORPORATION,
 as Borrower

 

UNION BANK, N.A.,
 as Administrative Agent, Joint Lead Arranger and Joint Bookrunner

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,
 as Co-Syndication Agent

 

WELLS FARGO SECURITIES, LLC,
 as Joint Lead Arranger and Joint Bookrunner

 

BANK OF AMERICA N.A.,
 as Co-Syndication Agent

 

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
 as Joint Lead Arranger and Joint Bookrunner

 

U.S. BANK NATIONAL ASSOCIATION,
 as Documentation Agent, Joint Lead Arranger and Joint Bookrunner

 

and

 

DEUTSCHE BANK AG, NEW YORK BRANCH
 as Senior Managing Agent

 

June 4, 2014

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
DEFINITIONS AND ACCOUNTING TERMS
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.1
    	
Defined Terms
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.2
    	
Accounting Terms
    	
33
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.3
    	
UCC
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.4
    	
Construction
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.5
    	
USA Patriot Act Notice
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
REVOLVING COMMITMENT
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.1
    	
Revolving Loans
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.2
    	
Swing Line Loans
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.3
    	
[Reserved]
    	
37
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.4
    	
Payment of Interest; Interest Rate
    	
38
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.5
    	
Maximum Rate of Interest
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.6
    	
Fees
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.7
    	
Late Payments
    	
40
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.8
    	
Repayment and Prepayment
    	
40
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.9
    	
Term
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.10
    	
Early Termination
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.11
    	
Note and Accounting
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.12
    	
Manner of Payment
    	
42
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.13
    	
Application of Payments
    	
42
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.14
    	
Use of Proceeds
    	
43
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.15
    	
All Obligations to Constitute One Obligation
    	
43
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.16
    	
Authorization to Make Loans
    	
43
    

 

i

 

	
 
    	
2.17
    	
Authorization to Debit Accounts
    	
43
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.18
    	
Administrative Agent’s Right to Assume Funds Available for   Revolving Loans
    	
43
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
SECURITY
    	
44
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
CONDITIONS PRECEDENT
    	
44
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.1
    	
Conditions Precedent to Closing
    	
44
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.2
    	
Conditions to All Loans
    	
47
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.3
    	
Conditions to Borrowing Base Inclusion
    	
47
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
REPRESENTATIONS AND WARRANTIES
    	
50
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.1
    	
Corporate Existence; Compliance with Law
    	
50
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.2
    	
Executive Offices; Corporate or Other Names; Conduct of   Business
    	
50
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.3
    	
Authority; Compliance with Other Agreements and Instruments   and Government Regulations
    	
50
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.4
    	
No Governmental Approvals Required
    	
51
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.5
    	
Subsidiaries
    	
51
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.6
    	
Financial Statements
    	
52
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.7
    	
No Material Adverse Effect
    	
52
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.8
    	
Title To and Location of Property
    	
52
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.9
    	
Intellectual Property
    	
52
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.10
    	
Litigation
    	
52
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.11
    	
Binding Obligations
    	
53
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.12
    	
No Default
    	
53
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.13
    	
ERISA
    	
53
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.14
    	
Regulation U; Investment Company Act
    	
53
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.15
    	
Disclosure
    	
53
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.16
    	
Tax Liability
    	
53
    

 

ii

 

	
 
    	
5.17
    	
Hazardous Materials
    	
54
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.18
    	
Security Interests
    	
54
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.19
    	
Leases, Engines and Equipment
    	
54
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.20
    	
Cape Town Convention
    	
54
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.21
    	
Depreciation Policies
    	
55
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.22
    	
[Reserved]
    	
55
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.23
    	
Eligible Engines and Equipment
    	
55
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.24
    	
Preservation of International Interests
    	
55
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.25
    	
Collateral Documents
    	
55
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND REPORTING   REQUIREMENTS)
    	
55
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.1
    	
Payment of Taxes and Other Potential Liens
    	
55
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.2
    	
Preservation of Existence
    	
56
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.3
    	
Maintenance of Property
    	
56
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.4
    	
Maintenance of Insurance
    	
56
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.5
    	
Compliance with Applicable Laws
    	
57
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.6
    	
Inspection Rights
    	
57
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.7
    	
Keeping of Records and Books of Account
    	
57
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.8
    	
Compliance with Agreements
    	
57
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.9
    	
Use of Proceeds
    	
57
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.10
    	
Hazardous Materials Laws
    	
57
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.11
    	
Future Subsidiaries
    	
58
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.12
    	
Conduct of Business
    	
58
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.13
    	
Further Assurances; Schedule Supplements
    	
58
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.14
    	
Financial Covenants
    	
58
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.15
    	
Subordination of Third Party Fees
    	
58
    

 

iii

 

	
 
    	
6.16
    	
Maintenance of Borrowing Base
    	
58
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.17
    	
Placards
    	
59
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.18
    	
Maintenance of Current Depreciation Policies
    	
59
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.19
    	
Preservation of International Interests
    	
59
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.20
    	
Maintenance of WEST Management Agreement and Servicing   Agreement
    	
59
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
NEGATIVE COVENANTS
    	
59
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.1
    	
Modification of Formation Documents
    	
59
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.2
    	
Modification of Debt
    	
59
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.3
    	
[Reserved]
    	
59
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.4
    	
Payment of Subordinated Obligations
    	
60
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.5
    	
Mergers
    	
60
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.6
    	
Hostile Acquisitions
    	
60
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.7
    	
ERISA
    	
60
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.8
    	
Change in Nature of Business
    	
60
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.9
    	
Liens and Negative Pledges
    	
60
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.10
    	
Indebtedness and Guaranteed Indebtedness
    	
61
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.11
    	
Transactions with Affiliates
    	
62
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.12
    	
Amendments to Subordinated Obligations
    	
62
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.13
    	
[Reserved]
    	
62
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.14
    	
Distributions
    	
62
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.15
    	
Investments
    	
62
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.16
    	
[Reserved]
    	
63
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.17
    	
No Adverse Selection
    	
63
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.18
    	
Negative Pledge/WEST
    	
63
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.19
    	
Subsidiary Operations
    	
64
    

 

iv

 

	
8.
    	
INFORMATION AND REPORTING REQUIREMENTS
    	
64
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.1
    	
Reports and Notices
    	
64
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.2
    	
Other Reports
    	
66
    
	
 
    	
 
    	
 
    	
 
    
	
9.
    	
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
    	
66
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.1
    	
Events of Default
    	
66
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.2
    	
Remedies
    	
69
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.3
    	
Waivers by Borrower
    	
69
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.4
    	
Proceeds
    	
69
    
	
 
    	
 
    	
 
    	
 
    
	
10.
    	
SUCCESSORS AND ASSIGNS
    	
69
    
	
 
    	
 
    	
 
    	
 
    
	
11.
    	
[Reserved.]
    	
70
    
	
 
    	
 
    	
 
    	
 
    
	
12.
    	
MISCELLANEOUS
    	
70
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.1
    	
Complete Agreement; Modification of Agreement
    	
70
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.2
    	
Reimbursement and Expenses
    	
70
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.3
    	
Indemnity
    	
70
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.4
    	
No Waiver
    	
71
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.5
    	
Severability; Drafting
    	
71
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.6
    	
Conflict of Terms
    	
72
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.7
    	
Notices
    	
72
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.8
    	
Binding Effect; Assignment
    	
73
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.9
    	
Right of Setoff
    	
75
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.10
    	
Sharing of Setoffs
    	
75
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.11
    	
Section Titles
    	
76
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.12
    	
Counterparts
    	
76
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.13
    	
Time of the Essence
    	
76
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.14
    	
GOVERNING LAW; VENUE
    	
76
    

 

v

 

	
 
    	
12.15
    	
WAIVER OF JURY TRIAL
    	
77
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.16
    	
Amendments; Consents
    	
77
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.17
    	
Foreign Lenders and Participants
    	
78
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.18
    	
Custodial Agreement
    	
79
    
	
 
    	
 
    	
 
    	
 
    
	
13.
    	
ADMINISTRATIVE AGENT
    	
79
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
13.1
    	
Appointment and Authorization
    	
79
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
13.2
    	
Administrative Agent and Affiliates
    	
80
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
13.3
    	
Lenders’ Credit Decisions
    	
80
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
13.4
    	
Action by Administrative Agent
    	
80
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
13.5
    	
Liability of Administrative Agent
    	
81
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
13.6
    	
Indemnification
    	
82
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
13.7
    	
Successor Administrative Agent
    	
82
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
13.8
    	
No Obligations of Borrower
    	
83
    
	
 
    	
 
    	
 
    	
 
    
	
14.
    	
SECURITY AGENT
    	
83
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
14.1
    	
Appointment and Authorization
    	
83
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
14.2
    	
Security Agent and Affiliates
    	
84
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
14.3
    	
Proportionate Interest in any Collateral
    	
84
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
14.4
    	
Lenders’ Credit Decisions
    	
84
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
14.5
    	
Action by Security Agent
    	
84
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
14.6
    	
Liability of Security Agent
    	
85
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
14.7
    	
Indemnification
    	
86
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
14.8
    	
Successor Security Agent
    	
86
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
14.9
    	
No Obligations of Borrower
    	
87
    
	
 
    	
 
    	
 
    	
 
    
	
15.
    	
COMMITMENT COSTS AND RELATED MATTERS
    	
87
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
15.1
    	
Eurodollar Costs and Related Matters
    	
87
    

 

vi

 

	
 
    	
15.2
    	
Capital Adequacy
    	
89
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
15.3
    	
Federal Reserve System/Wire Transfers
    	
90
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
15.4
    	
Assignment of Commitments Under Certain Circumstances; Duty   to Mitigate
    	
90
    

 

	
INDEX OF EXHIBITS AND SCHEDULES
    
	
 
    	
 
    	
 
    	
 
    
	
Exhibit A
    	
 
    	
Form of   Borrowing Base Certificate
    	
 
    
	
Exhibit B
    	
 
    	
Form of   Borrowing Notice
    	
 
    
	
Exhibit C
    	
 
    	
Form of   Commitment Assignment and Acceptance
    	
 
    
	
Exhibit D
    	
 
    	
Form of   Compliance Certificate
    	
 
    
	
Exhibit E
    	
 
    	
[Reserved]
    	
 
    
	
Exhibit F
    	
 
    	
Form of   Beneficial Interest Pledge Agreement
    	
 
    
	
Exhibit G
    	
 
    	
Form of Owner Trustee Mortgage and   Security Agreement
    	
 
    
	
Exhibit H
    	
 
    	
Form of Owner Trustee Guaranty
    	
 
    
	
Exhibit I
    	
 
    	
Form of Leasing Subsidiary Security   Assignment
    	
 
    
	
Exhibit J
    	
 
    	
Form of   Subsidiary Guaranty
    	
 
    
	
Exhibit K
    	
 
    	
Form of   Trust Agreement
    	
 
    
	
Exhibit L
    	
 
    	
Form of   Placard
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Schedule   1.1d
    	
 
    	
Liens   of Record
    	
 
    
	
Schedule   1.1e
    	
 
    	
Schedule   of Documents
    	
 
    
	
Schedule   2.1
    	
 
    	
Revolving   Commitment — Pro Rata Share
    	
 
    
	
Schedule   5.2
    	
 
    	
Executive   Offices; Corporate or Other Names; Conduct of Business
    	
 
    
	
Schedule   5.5
    	
 
    	
Subsidiaries
    	
 
    
	
Schedule   5.7
    	
 
    	
No   Other Liabilities; No Material Adverse Changes
    	
 
    
	
Schedule   5.9
    	
 
    	
Trade   Names
    	
 
    
	
Schedule   5.10
    	
 
    	
Litigation
    	
 
    
	
Schedule   5.17
    	
 
    	
Hazardous   Materials
    	
 
    
	
Schedule   5.21
    	
 
    	
Depreciation   Policies
    	
 
    
	
Schedule   5.23
    	
 
    	
Eligible   Leases and Equipment as of the Closing Date
    	
 
    
	
Schedule   7.10
    	
 
    	
Indebtedness   and Guaranteed Indebtedness existing on the Closing Date
    	
 
    
	
Schedule   7.15
    	
 
    	
Investments   Existing as of the Closing Date
    	
 
    

 

vii

 

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”), is entered into as of June 4, 2014, between WILLIS LEASE FINANCE CORPORATION, a Delaware corporation (“Borrower”), UNION BANK, N.A., together with any other Lender hereunder from time to time (collectively, the “Lenders” and individually, a “Lender”) and UNION BANK, N.A., as administrative agent (in such capacity, “Administrative Agent”), as the Swing Line Lender (in such capacity, “Swing Line Lender”), Security Agent (in such capacity, “Security Agent”), and Joint Lead Arranger and Joint Bookrunner, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Co-Syndication Agent (in such capacity, collectively with each other Co-Syndication Agent, “Syndication Agent”), WELLS FARGO SECURITIES, LLC, as Joint Lead Arranger and Joint Bookrunner, BANK OF AMERICA N.A., as Co-Syndication Agent (in such capacity, collectively with each other Co-Syndication Agent, “Syndication Agent”), MERRILL LYNCH, PIERCE, FENNER AND SMITH INCORPORATED, as Joint Lead Arranger and Joint Bookrunner, U.S. BANK NATIONAL ASSOCIATION, as Documentation Agent (in such capacity, “Documentation Agent”), Joint Lead Arranger and Joint Bookrunner and DEUTSCHE BANK AG, NEW YORK BRANCH, as Senior Managing Agent, effective as of the Closing Date, with reference to the following facts:

 

RECITALS

 

A.                                    Borrower, each of the financial institutions as a lender party thereto (collectively, the “Original Lenders”), Union Bank, as administrative agent, joint lead arranger and sole bookrunner for the Original Lenders, Wells Fargo Bank, National Association, as syndication agent, Wells Fargo Securities, LLC, as joint lead arranger and U.S. Bank National Association, as documentation agent and joint lead arranger (collectively, the foregoing parties are referred to herein as the “Original Parties”) are parties to that certain Amended and Restated Credit Agreement dated as of November 18, 2011, as amended by that certain Amendment No. 1, Limited Waiver and Consent to Amended and Restated Credit Agreement and Amendment No. 1 to Security Agreement dated as of September 13, 2012, as amended by that certain Amendment No. 2 to Amended and Restated Credit Agreement dated as of June 18, 2013, and as amended by that certain Amendment No. 3 to Amended and Restated Credit Agreement dated as of August 21, 2013 (as amended, supplemented, or otherwise modified from time to time, the “Original Credit Agreement”).  Pursuant to the Original Credit Agreement, Original Lenders made a revolving credit facility available to the Borrower to be used for the purchase or refinance of certain engines and equipment and for working capital and general corporate purposes.

 

B.                                    Borrower is in the business of purchasing and leasing aircraft and airplane engines and equipment, and has requested that Lenders and Swing Line Lender (collectively, the “Credit Facility Lenders”) provide Borrower with a revolving line of credit in an amount equal to the Revolving Commitment to be used by Borrower for among other things, refinancing the loans outstanding under the Original Credit Agreement and for its general corporate purposes, including financing aircraft and airplane engines and equipment owned and held for lease or sale.

 

C.                                    Credit Facility Lenders are willing to extend such a revolving line of credit to Borrower, subject to the terms and conditions set forth herein.

 

1

 

D.                                    Borrower has requested and the parties hereto agree that the Original Credit Agreement shall be amended and restated in its entirety as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 

1.                                      DEFINITIONS AND ACCOUNTING TERMS

 

1.1                               Defined Terms.  As used in this Agreement, the following terms shall have the respective meanings set forth below:

 

“Acceptable Manufacturer” means any of General Electric Company, Snecma, CFM International, Pratt & Whitney, Rolls-Royce, International Aero Engines and any other aircraft engine manufacturer approved by Administrative Agent in the exercise of its reasonable discretion.

 

“Account Debtor” means any Person who is obligated under an Account.

 

“Accounts” means all “accounts,” as such term is defined in the UCC, now owned or hereafter acquired by Borrower, including (a) all accounts receivable, payments and pre-payments under Leases, other receivables, book debts and other forms of obligations (other than forms of obligations evidenced by chattel paper, documents or instruments), whether arising out of goods sold or services rendered by it or from any other transaction (including any such obligations that may be characterized as an account or contract right under the UCC), (b) all purchase orders or receipts for goods or services, (c) all rights to any goods represented by any of the foregoing (including unpaid sellers’ rights of rescission, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), (d) all monies due or to become due to Borrower under all purchase orders and contracts for the sale of goods or the performance of services or both by Borrower or in connection with any other transaction (whether or not yet earned by performance on the part of Borrower) now or hereafter in existence, including the right to receive the proceeds of said purchase orders and contracts, and (e) all collateral security and guaranties of any kind, now or hereafter in existence, given by any Person with respect to any of the foregoing.

 

“Acquisition” means any transaction, or any series of related transactions, consummated after the Closing Date, by which Borrower and/or any of its Subsidiaries directly or indirectly (a) acquires any ongoing business or all or substantially all of the assets of any Person engaged in any ongoing business, whether through purchase of assets, merger or otherwise, (b) acquires control of securities of a Person engaged in an ongoing business representing more than 50% of the ordinary voting power for the election of directors or other governing position if the business affairs of such Person are managed by a board of directors or other governing body or (c) acquires control of more than 50% of the ownership interest in any partnership, joint venture, limited liability company, business trust or other Person engaged in an ongoing business that is not managed by a board of directors or other governing body.

 

“Adjusted Base Value” means, with respect to an Engine, such Engine’s Base Value, adjusted for the actual maintenance status of such Engine, but without regard to any Lease, Maintenance Reserve Payments, Security Deposits or other related assets.

 

2

 

“Administrative Agent” means that party mentioned in the introductory paragraph hereof, when such party is acting in its capacity as Administrative Agent under any of the Loan Documents, or any successor Administrative Agent.

 

“Affiliate” means, with respect to any Person, another Person that, directly or indirectly, Controls, or is Controlled by or is under common Control with such other Person.  For the purpose of this definition, “Control” or “Controlled” means the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise.  Notwithstanding the foregoing, “Affiliate” shall not include Willis Mitsui & Co Engine Support Limited or the Permitted JV.

 

“Agent” means Administrative Agent and/or Security Agent, as applicable, and “Agents” means, collectively, Administrative Agent and Security Agent.

 

“Agreement” means this Credit Agreement, as the same may, from time to time, be amended, supplemented, modified or restated.

 

“Aircraft” means each aircraft (as defined in the Federal Aviation Act, 49 U.S.C. Section 40102(a)(6)), in each case available for operation mechanically and legally, together with any and all Parts and Engines which are either incorporated or installed in or attached to such aircraft’s Airframe, and all documentation in respect thereof.

 

“Airframe” means the remaining parts of an aircraft, less its Engines.

 

“Applicable Base Rate” means the percentage as calculated in Section 2.4.1(a).

 

“Applicable Base Rate Margin” means the percentage determined by reference to Table 1 in Section 2.4.1(c) of this Agreement.

 

“Applicable Law” means, in respect of any Person, all provisions of constitutions, statutes, rules, regulations and orders of governmental bodies or regulatory agencies applicable to such Person, and all orders and decrees of all courts and arbitrators in proceedings or actions to which the Person in question is a party or by which it or its properties are bound.

 

“Applicable LIBOR Margin” means the percentage determined by reference to Table 1 in Section 2.4.1(c) of this Agreement.

 

“Applicable LIBOR Rate” means the percentage as calculated in Section 2.4.1(b).

 

“Applicable Unused Line Fee Percentage” means the percentage determined by reference to Table 1 in Section 2.4.1(c) of this Agreement.

 

“Appraisal” means a “desktop appraisal” (i.e., an appraisal of the value of a particular engine or equipment type, which is rendered without a physical inspection of such Engine or Equipment and its related records), or, if a Default or Event of Default exists and is continuing, such other type of appraisal as shall be required by Security Agent, including an “extended desktop appraisal” (i.e., an appraisal of the Engine or Equipment considering its

 

3

 

maintenance status, but which is rendered without any visual inspection of such Engine or Equipment) or a “full appraisal” (which does include a visual inspection)), of an Engine or Equipment to determine the Appraised Value of such Engine or Equipment, performed by an Appraiser retained by Security Agent on behalf of the Lenders.

 

“Appraisal Deficiency” means the excess, if any, of (i) the aggregate Net Book Value of all Eligible Engines, Eligible Equipment and Eligible Saleable Assets included in the Borrowing Base over (ii) the most recent Appraised Value of the foregoing (calculated in the case of both (i) and (ii) by multiplying such values times the applicable advance percentage specified in clauses (a) through (d) of the definition of Borrowing Base).

 

“Appraised Value” means, with respect to an Engine, the Adjusted Base Value of such Engine, and, with respect to Equipment, the Equipment Market Value or Parts Market Value, as the case may be, of such Equipment, in each case as determined in an Appraisal.

 

“Appraiser” means IBA Group Ltd., or any other an independent appraiser that is a member of the International Society of Transport Aircraft Trading (“ISTAT”) or, if ISTAT ceases to exist, any similar professional aircraft appraiser organization and that in each case (other than with respect to IBA Group Ltd.) is acceptable to Administrative Agent.

 

“APU” means an auxiliary power unit, capable of being installed on an aircraft, to start the main engines, usually with compressed air, and to provide electrical power and air conditioning while the aircraft is on the ground and, in certain cases, in the air.

 

“Authorized Party” means each Person identified in Section 2.16.

 

“Authorized Signatory” means (a) the chairman of the board and chief executive officer, (b) the president, (c) the senior vice president and chief financial officer and (d) any executive or senior vice president, in each case of Borrower, and solely with respect to (i) Borrowing Notices, (ii) Borrowing Base Certificates and (iii) Compliance Certificates, each person listed above (a) - (d) and the treasurer of Borrower.

 

“Aviation Authority” means the FAA, the EASA and/or any other Governmental Authority which, from time to time, has control or supervision of civil aviation or has jurisdiction over the airworthiness, operation and/or maintenance of Eligible Equipment, Eligible Engines or Eligible Saleable Assets.

 

“Bankruptcy Code” means the Bankruptcy Code (11 U.S.C. Sections 101 et seq.).

 

“Base Rate” shall have the meaning ascribed thereto in Section 2.4.1(a).

 

“Base Rate Loans” means a Revolving Loan or Swing Line Loan which Borrower requests to be made as a Base Rate Loan or a Revolving Loan which is reborrowed as, or converted to, a Base Rate Loan, in accordance with the provisions of Sections 2.1.2 and 2.1.3(c).

 

“Base Value” means, with respect to an Engine, an Appraiser’s opinion of the underlying economic value of an Engine in an open, unrestricted, stable market environment with a reasonable balance of supply and demand, and assumes full consideration of its “highest

 

4

 

and best use.” An Engine’s Base Value is founded in the historical trend of values and in the projection of value trends and presumes an arm’s-length, cash transaction between willing and knowledgeable parties, acting prudently, with an absence of duress and with a reasonable period of time for marketing.  Base Value typically assumes that an engine’s physical condition is average for an engine of its type and age, and its maintenance time status is at mid-life, mid-time (or benefiting from an above-average maintenance status if new).

 

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

 

“Beneficial Interest Pledge Agreements” means, collectively, those certain Beneficial Interest Pledge Agreements, in the form attached hereto as Exhibit F, as each may be amended, modified or supplemented from time to time, entered into by Borrower (or its Wholly-Owned Subsidiary, if applicable), the applicable Owner Trustee, and Security Agent, whereby Borrower (or its Wholly-Owned Subsidiary, if applicable) pledges to Security Agent all of its right, title and interest in the Beneficial Interest under each applicable Trust Agreement.

 

“Books and Records” means all books, records, board minutes, contracts, licenses, insurance policies, environmental audits, business plans, files, accounting books and records, financial statements (actual and pro forma), and filings with Governmental Authorities.

 

“Borrower” means Willis Lease Finance Corporation, a Delaware corporation.

 

“Borrowing Availability” means, at any time, the lesser of (a) the Maximum Amount, or (b) the Borrowing Base.

 

“Borrowing Base” means, at any time, an amount equal to the sum of the following (without duplication), as shall be determined by Administrative Agent based on the Borrowing Base Certificate most recently delivered by Borrower to Administrative Agent and on other information available to Administrative Agent:

 

(a)                                 *** percent (*** %) of the Net Book Value of Eligible Engines that have not been Off-Lease for a period of greater than 180 days as of the date of determination; plus

 

(b)                                 *** percent (*** %) of the Net Book Value of all other Eligible Engines; plus

 

(c)                                  *** percent (*** %) of the Net Book Value of Eligible Equipment that has not been Off-Lease for a period of greater than 180 days as of the date of determination; plus

 

(d)                                 *** percent (*** %) of the Net Book Value of all other Eligible Equipment; plus

 

(e)                                  *** percent (*** %) of the Net Book Value of Eligible Saleable Assets;

 

provided that all of the following conditions shall apply to the Borrowing Base:

 

*** Confidential information omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.

 

5

 

(x)                                 Annual Appraisal.  The Net Book Value of all assets included in the Borrowing Base shall be adjusted annually based on an Appraisal of such assets by an Appraiser, as set forth in Section 8.1.6, and Borrower will be required, as set forth in Section 2.8.3, to pay down the Loans by the amount of any Appraisal Deficiency; and

 

(y)                                 Additional Conditions.  The aggregate Net Book Value of Eligible Engines and Eligible Equipment included in the Borrowing Base (subject to the conditions and restrictions set forth in the definition of “Borrowing Base”) shall, collectively, comply with the following additional conditions:

 

(i)                                     Eligible Lease Limitation.  If an Eligible Engine or an item of Eligible Equipment is subject to a Lease and to be included in the Borrowing Base under clauses (a) or (c) above, the Eligible Engine or item of Eligible Equipment will be included in the Borrowing Base only if the applicable Lease is an Eligible Lease; and

 

(ii)                                  Concentration Limitations.  The following concentration limitations shall apply to the determination of the Borrowing Base:

 

(A)                               the aggregate contribution to the Borrowing Base of the Net Book Values of Eligible Saleable Assets shall not exceed ***% of the Borrowing Base;

 

(B)                               the aggregate contribution to the Borrowing Base of the Net Book Values of Eligible Engines and Eligible Equipment used on a single make and model of narrow-body aircraft shall not exceed ***% of the Borrowing Base; provided, the foregoing limitation shall not apply to the 737-600, -700, -800 and -900 model aircraft;

 

(C)                               the aggregate contribution to the Borrowing Base of the Net Book Values of Eligible Engines which are Turboprop Engines shall not exceed ***% of the Borrowing Base;

 

(D)                               the aggregate contribution to the Borrowing Base of the Net Book Values of Eligible Engines and Eligible Equipment used on wide-body aircraft shall not exceed ***% of the Borrowing Base;

 

(E)                                the aggregate contribution to the Borrowing Base of the Net Book Values of Eligible Engines and Eligible Equipment subject to Leases to the Three Primary Lessees shall not exceed ***% of the Borrowing Base;

 

(F)                                 the aggregate contribution to the Borrowing Base of the Net Book Values of Eligible Engines and Eligible Equipment subject to Leases to a single Lessee shall not exceed ***% of the Borrowing Base; and

 

*** Confidential information omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.

 

6

 

(G)                               the aggregate contribution to the Borrowing Base of the Net Book Values of Eligible Engines and Eligible Equipment which are Off-Lease shall not exceed ***% of the Borrowing Base.

 

“Borrowing Base Certificate” means a certificate in the form attached hereto as Exhibit A.

 

“Borrowing Base Deficiency” means, at any time, the amount, if any, by which the aggregate amount of any Loans then outstanding exceeds the Borrowing Base.

 

“Borrowing Notice” means a written request for a Loan substantially in the form of Exhibit B signed by an Authorized Signatory of Borrower and properly completed to provide all information required to be included therein.

 

“Business Day” means (i) any day that is not a Saturday, Sunday, or other day on which banks in the State of California or the State of New York are authorized or required to close, and (ii) in reference to LIBOR Loans means a Business Day that is also a day on which banks in the city of London are open for interbank or foreign exchange transactions.

 

“Cape Town Convention” means the official English language texts of the “Convention on International Interests in Mobile Equipment” and the “Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment”, both of which were signed in Cape Town, South Africa on November 16, 2001, and including the Regulations for the International Registry and the Procedures for the International Registry, as promulgated thereunder.

 

“Cape Town Eligible Lease” means those certain Leases which constitute International Interests under the Cape Town Convention.

 

“Capital Lease Obligations” means all monetary obligations of a Person under any leasing or similar arrangement which, in accordance with GAAP, is classified as a capital lease.

 

“Cash” means, when used in connection with any Person, all monetary and non-monetary items owned by that Person that are treated as cash in accordance with GAAP, consistently applied, including, but not limited to, cash held in ordinary demand deposit accounts.

 

“Cash Equivalents” means, when used in connection with any Person, that Person’s Investments in:

 

(a)                                 Government Securities due within one year after the date of the making of the Investment;

 

(b)                                 readily marketable direct obligations of any State of the United States of America or any political subdivision of any such State or any public agency or instrumentality thereof given on the date of such Investment a credit rating of at least AA by Moody’s Investors Service, Inc. or AA by Standard & Poor’s Rating Group (a division of McGraw Hill, Inc.), in each case due within one year from the making of the Investment;

 

*** Confidential information omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.

 

7

 

(c)                                  certificates of deposit issued by, bank deposits in, Eurodollar deposits through, bankers’ acceptances of, and repurchase agreements covering Government Securities executed by Lender or any bank incorporated under the Applicable Laws of the United States of America, any State thereof or the District of Columbia and having on the date of such Investment combined capital, surplus and undivided profits of at least $250,000,000, or total assets of at least $5,000,000,000, in each case due within one year after the date of the making of the Investment;

 

(d)                                 certificates of deposit issued by, bank deposits in, Eurodollar deposits through, bankers’ acceptances of, and repurchase agreements covering Government Securities executed by Lender or any branch or office located in the United States of America of a bank incorporated under the Applicable Laws of any jurisdiction outside the United States of America having on the date of such Investment combined capital, surplus and undivided profits of at least $500,000,000, or total assets of at least $15,000,000,000, in each case due within one year after the date of the making of the Investment;

 

(e)                                  repurchase agreements covering Government Securities executed by a broker or dealer registered under Section 15(b) of the Securities Exchange Act of 1934, as amended, having on the date of the Investment capital of at least $50,000,000, due within ninety (90) days after the date of the making of the Investment; provided that the maker of the Investment receives written confirmation of the transfer to it of record ownership of the Government Securities on the books of a “primary dealer” in such Government Securities or on the books of such registered broker or dealer, as soon as practicable after the making of the Investment;

 

(f)                                   readily marketable commercial paper or other debt securities issued by corporations doing business in and incorporated under the Applicable Laws of the United States of America or any State thereof or of any corporation that is the holding company for a bank described in clause (c) or (d) above given on the date of such Investment a credit rating of at least P 1 by Moody’s Investors Service, Inc. or A 1 by Standard & Poor’s Rating Group (a division of McGraw Hill, Inc.), in each case due within one year after the date of the making of the Investment;

 

(g)                                  “money market preferred stock” issued by a corporation incorporated under the Applicable Laws of the United States of America or any State thereof (i) given on the date of such Investment a credit rating of at least AA by Moody’s Investors Service, Inc. and AA by Standard & Poor’s Rating Group (a division of McGraw Hill, Inc.), in each case having an investment period not exceeding fifty (50) days or (ii) to the extent that investors therein have the benefit of a standby letter of credit issued by Lender or a bank described in clauses (c) or (d) above; provided that (y) the amount of all such Investments issued by the same issuer does not exceed $5,000,000 and (z) the aggregate amount of all such Investments does not exceed $15,000,000;

 

(h)                                 a readily redeemable “money market mutual fund” sponsored by a bank described in clause (c) or (d) hereof, or a registered broker or dealer described in clause (e) hereof, that has and maintains an investment policy limiting its investments

 

8

 

primarily to instruments of the types described in clauses (a) through (g) hereof and given on the date of such Investment a credit rating of at least AA by Moody’s Investors Service, Inc. and AA by Standard & Poor’s Rating Group (a division of McGraw Hill, Inc.); and

 

(i)                                     corporate notes or bonds having an original term to maturity of not more than one year issued by a corporation incorporated under the Applicable Laws of the United States of America, or a participation interest therein; provided that (i) commercial paper issued by such corporation is given on the date of such Investment a credit rating of at least AA by Moody’s Investors Service, Inc. and AA by Standard & Poor’s Rating Group (a division of McGraw Hill, Inc.), (ii) the amount of all such Investments issued by the same issuer does not exceed $5,000,000 and (iii) the aggregate amount of all such Investments does not exceed $15,000,000.

 

“Change in Control” means (i) (a) any transaction or series of related transactions in which any Unrelated Person or two or more Unrelated Persons acting in concert acquire beneficial ownership (within the meaning of Rule 13d 3(a)(1) under the Securities Exchange Act of 1934, as amended), directly or indirectly, of more than 50% of the voting power of all of the outstanding capital stock of Borrower and (b) at any time during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of Borrower (together with any new directors whose elections by the shareholders of Borrower was approved by a vote of 66-2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of Borrower then in office; or (ii) Borrower consolidates with or merges into another Person or conveys, transfers or leases all or substantially all of its assets to any Person or any Person consolidates with or merges into Borrower, in either event pursuant to a transaction in which the ownership interests in Borrower are changed into or exchanged for cash, securities or other property, with the effect that any Unrelated Person acquires beneficial ownership, directly or indirectly, of more than 50% of the voting power of all the outstanding capital stock of Borrower or that the Persons who were the holders of the voting power of all the outstanding capital stock of Borrower immediately prior to the transaction hold less than 50% of the interests of the surviving entity after the transaction.  For purposes of the foregoing, the term “Unrelated Person” means any Person other than (i) an Affiliate or Subsidiary of Borrower, (ii) an employee stock ownership plan or other employee benefit plan covering the employees of Borrower and its Subsidiaries, or (iii) each of Charles F. Willis IV and Austin Willis, any member of each of their respective immediate families, and each of their Affiliates, respective trusts, family limited partnerships or heirs).

 

“Charges” means all Federal, state, county, city, municipal, local, foreign or other governmental taxes (including taxes owed to PBGC at the time due and payable), levies, assessments, charges, liens, and all additional charges, interest, penalties, expenses, claims or encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll, income or gross receipts of Borrower, (d) the ownership or use of any assets by Borrower, or (e) any other aspect of Borrower’s business.

 

9

 

“Chattel Paper” means all “chattel paper,” as such term is defined in the UCC, now owned or hereafter acquired by any Person, wherever located, but excluding Leases.

 

“Claim” means any and all suits, actions, or proceedings in any court or forum, at law, in equity or otherwise; costs, fines, deficiencies, or penalties; asserted claims or demands by any Person; arbitration demands, proceedings or awards; damages, losses, liabilities and expenses (including reasonable attorneys’ fees and disbursements and other costs of collection, defense or appeal); enforcement of rights and remedies; or criminal, civil or regulatory investigations.

 

“Closing Date” means the time and Business Day on which the conditions set forth in Section 4.1 are satisfied or waived.

 

“Collateral” means all right, title and interest of the Borrower and its Subsidiaries (other than the Excluded Subsidiaries) in and to all of its assets and properties, whether now existing or owned or hereafter acquired, in each case, as more specifically defined as “Collateral” in each of the Collateral Documents, and shall include ***% of residual cash distributions from WEST), but shall exclude (i) Borrower’s beneficial interest in any Special Purpose Financing Vehicle; (ii) the WEST Servicing Agreement; (iii) (a) one Canadair Ltd. Model CL-600 2412 (Challenger 601-1A) aircraft bearing MSN ***, (b) the two General Electric Model CF-34-3A aircraft engines bearing MSNs *** and ***, (c) one Bombardier Model BD-700-1A10 (Global Express) aircraft, and (d) any other corporate use Aircraft purchased from time to time and not included in the Borrowing Base; and (iv) (x) One CFM56-7B aircraft engine bearing MSN ***, (y) One CFM56-7B aircraft engine bearing MSN ***, and (z) One V2500-A aircraft engine bearing MSN ***.

 

“Collateral Documents” means, collectively, that certain Security Agreement, the Mortgage and Security Agreement, the Custodial Agreement, the Stock Pledge Agreement, each Owner Trustee Mortgage and Security Agreement, each Beneficial Interest Pledge Agreement, each Subsidiary Guaranty, each Owner Trustee Guaranty, each Leasing Subsidiary Security Assignment, UCC financing statements, and such other agreements, and all amendments thereto, instruments and documents as Security Agent may reasonably require pursuant to this Agreement.

 

“Commitment Assignment and Acceptance” means a commitment assignment and acceptance substantially in the form of Exhibit C.

 

“Compliance Certificate” means a Compliance Certificate in the form attached hereto as Exhibit D signed by an Authorized Signatory.

 

“Consolidated Interest” means with respect to Borrower and its Subsidiaries as of the last day of any fiscal period, the sum of all interest, fees, charges and related expenses (in each case as such expenses are calculated according to GAAP) paid or payable (without duplication) for that fiscal period to a lender in connection with borrowed money (including net payment obligations pursuant to Interest Rate Protection Agreements and any obligations for fees, charges and related expenses payable to the issuer of any letter of credit) or the deferred

 

*** Confidential information omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.

 

10

 

purchase price of assets that are considered “interest expense” under GAAP; provided that “Consolidated Interest” shall not include any gains or losses resulting from changes in the fair market value of derivative instruments (within the meaning of SFAS 133).

 

“Contract” means, individually and collectively, all contracts, leases, undertakings, and agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) in or under which any Person may now or hereafter have any right, title or interest, including any agreement relating to the terms of payment or the terms of performance of any Account.

 

“Contracting State” shall have the meaning given to such term under Article 4 of the Cape Town Convention.

 

“Contractual Obligation” means, as to any Person, any provision of any outstanding security issued by that Person or of any material agreement, instrument or undertaking to which that Person is a party or by which it or any of its property is bound.

 

“Credit Facility” means the Revolving Commitment and Swing Line Commitment.

 

“Credit Facility Lenders” means, collectively, the Lenders and the Swing Line Lender.

 

“Custodial Agreement” means the Custodial Agreement, dated as of June 29, 2004, by and among The Bank of New York, as custodian, the Borrower and Fortis Bank (Nederland) NV, as amended from time to time, or any other custodial agreement, if any, as may be approved by the Security Agent.

 

“Custodian” means the Security Agent, McAfee and Taft as counsel for the Security Agent or the custodian under the Custodial Agreement, if any.

 

“Default” means any event which, with the passage of time or notice or both, would, unless cured or waived, become an Event of Default.

 

“Default Rate” means (i) for all Base Rate Loans and LIBOR Loans converted into Base Rate Loans, a per annum default rate equal to the Applicable Base Rate plus two percent (2.0%), and (ii) for all then outstanding LIBOR Loans, a per annum default rate equal to the Applicable LIBOR Rate plus two percent (2.0%), which Default Rate with respect to any LIBOR Loans shall be in effect until the earlier to occur of (x) the cure of the applicable “Event of Default” and (y) the end of the LIBOR Loan Period, at which time (provided an Event of Default is then continuing) any such LIBOR Loan(s) shall automatically convert to Base Rate Loan(s) and accrue interest at the Default Rate set forth herein for Base Rate Loans.

 

“Defaulting Lender” means a Lender which fails to fund any amounts due from such Lender to any Agent, Lender or the Borrower under this Agreement within one (1) Business Day following written notice by the Administrative Agent of such failure to fund. A Lender shall cease to be a “Defaulting Lender” immediately upon the cure of such failure to fund.

 

11

 

“Demand Deposit Account” means account number *** in the name of Borrower maintained at the Administrative Agent, or such other demand deposit account as may be established by Borrower and maintained at the Administrative Agent from time to time.

 

“Designated Eurodollar Market” shall have the meaning set forth in Section 2.8.5 hereof.

 

“Distribution” shall have the meaning set forth in Section 7.14 hereof.

 

“Documents” means all “documents,” as such term is defined in the UCC, now owned or hereafter acquired by any Person, wherever located, including all bills of lading, dock warrants, dock receipts, warehouse receipts, and other documents of title, whether negotiable or non-negotiable.

 

“Documentation Agent” means that party mentioned in the introductory paragraph hereof, when such party is acting in its capacity as Documentation Agent under any of the Loan Documents, or any successor Documentation Agent.

 

“Dollars” means lawful currency of the United States.

 

“EASA” means the European Aviation Safety Agency.  For purposes of any Loan Document, any reference therein to the “JAA” or the “Joint Airworthiness Authorities of the European Union” shall be deemed to mean EASA, as the successor in interest to the JAA.

 

“EBITDA” means, with respect to any fiscal period, the sum of (a) Net Income for that period, plus (b) any extraordinary loss reflected in such Net Income, minus (c) any extraordinary gain reflected in such Net Income, plus (d) interest expense of Borrower and its Subsidiaries for that period, including net payment obligations pursuant to Interest Rate Protection Agreements plus (e) the aggregate amount of federal and state taxes on or measured by income of Borrower and its Subsidiaries for that period (whether or not payable during that period), minus (f) the aggregate amount of federal and state credits against taxes on or measured by income of such Borrower and its Subsidiaries for that period (whether or not usable during that period), plus (g) depreciation, amortization and Engine or Equipment write-downs of Borrower and its Subsidiaries for that period, in each case as determined in accordance with GAAP, consistently applied, plus (h) any non-recurring expenses, charges, accruals, reserves, transaction costs, fees, losses, expenses (including expenses for third party professional advisors) and intangibles (including those with respect to any amendment or waiver of loan documents governing Permitted Indebtedness or Indebtedness of any Excluded Subsidiary) payable in connection with a Permitted Change in Control; provided that “EBITDA” shall not include any gains or losses resulting from changes in the fair market value of derivative instruments (within the meaning of SFAS 133).

 

“Eligible Asset” means, at any time, an Engine or item of Equipment that meets all of the following criteria:

 

(a)                                 the purchase price of which has been paid in full and it is not subject to any other financing;

 

*** Confidential information omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.

 

12

 

(b)                                 as to which an Engine Owner (in the case of an Engine) or Equipment Owner (in the case of items of Equipment) has good and marketable title, on which Security Agent has a fully perfected first priority Lien, and which is not subject to any other Lien other than Permitted Liens;

 

(c)                                  as to which, if owned by an Owner Trustee, (i) the Borrower (or its Wholly-Owned Subsidiary, if applicable) shall have executed and delivered to Security Agent a Beneficial Interest Pledge Agreement covering, among other things, its Beneficial Interest in the owner trust which owns such Engine(s) or item(s) of Equipment, and (ii) the Owner Trustee shall have executed and delivered to Security Agent an (x) Owner Trustee Mortgage and Security Agreement covering, among other things, such Engine or items of Equipment, (y) a Trust Agreement and (z) an Owner Trustee Guaranty;

 

(d)                                 as to which the Engine Owner (in the case of an Engine) or Equipment Owner (in the case of items of Equipment which are Registerable Assets) shall have executed and delivered to Security Agent and/or filed (x) a Mortgage and Security Agreement covering, among other things, such Engine(s), items of Equipment and/or Lease, and (y) the other documentation required in respect of Engines as set forth in Section 4.3, or with respect to other Equipment, as to which Security Agent has a valid and perfected lien under the Security Agreement; and

 

(e)                                  as to which, in the case of Engines or items of Equipment, it has not suffered an Event of Loss, it is being used solely for lawful purposes and in the ordinary course of business of the Engine Owner or Equipment Owner and, in the case of Engines and Equipment subject to Lease, the Lessee, and it is insured against loss by either the Engine Owner, Equipment Owner or the Lessee in accordance with this Agreement and industry practice.

 

“Eligible Assignee” means (a) another Lender, (b) with respect to any Lender, any Affiliate of that Lender, and (c) any commercial bank having total assets of $1,000,000,000 or more, which, in each case (A) has total assets of $1,000,000,000 or more, (B) is engaged in the business of lending money and extending credit under credit facilities substantially similar to those extended under this Agreement and (C) is operationally and procedurally able to meet the obligations of a Lender hereunder to the same degree as a commercial bank; provided that each Eligible Assignee must either (aa) be organized under the laws of the United States of America, any State thereof or the District of Columbia or (bb) be organized under the laws of the Cayman Islands or any country which is a member of the Organization for Economic Cooperation and Development (“OECD”), or a political subdivision of such a country, and (i) act hereunder through a branch, agency or funding office located in the United States of America or in a country which is a member of the OECD and (ii) be exempt from withholding of tax on interest and deliver the documents related thereto pursuant to Section 12.17.

 

“Eligible Engine” means an Engine that is an Eligible Asset and is not either (a) an Engine that is installed on an Aircraft that has been included in the Borrowing Base as Eligible Equipment or (b) an Engine that has been included in the Borrowing Base as an Eligible Saleable Asset.

 

13

 

“Eligible Equipment” means Equipment that satisfies each of the following requirements:

 

(a)                                 it is an Aircraft or Airframe held for lease, or Parts;

 

(b)                                 it is an Eligible Asset; and

 

(c)                                  in the case of Parts, it satisfies the requirements of Eligible Parts;

 

provided that all of the Equipment listed on Schedule 5.23 shall constitute Eligible Equipment.

 

“Eligible Lease” means a Lease that satisfies each of the following requirements (provided that in respect of a Leasing Subsidiary, the requirements below (except where otherwise indicated) shall apply both to the Head Lease in respect of which the Borrower is Lessor and to the sublease and sublessee in respect of which a Leasing Subsidiary is sublessor):

 

(a)                                 it is with a Lessee for the Lease of Eligible Engines and/or Eligible Equipment;

 

(b)                                 it is freely assignable and transferable for security purposes, assuming satisfaction of any notice or consent conditions and, except for a Head Lease of any Engine or item of Equipment to a Leasing Subsidiary, prohibits assignment in whole or in part by the Lessee thereof, provided that such Lease may permit a Lessee to assign such Lease to a related entity in connection with a business merger or reorganization, subject to such Lessee’s satisfaction of requirements related to the preservation of the Lessor’s and the Security Agent’s rights in connection with such Engine or item of Equipment and its related Lease;

 

(c)                                  it provides that the Lessee’s obligations thereunder are absolute and unconditional and which obligations are not, either pursuant to the terms of such Lease or otherwise, subject to contingencies, defense, deduction, set-off, reduction, claim or counterclaim of any kind whatsoever and as to which no defenses, deductions, set-offs, reductions, claims or counterclaims exist or have been asserted by the Lessee or anyone on its behalf and the Borrower has no material obligations thereunder, including without limitation, any service or maintenance of the related Equipment (excluding agreements to share in the costs of applicable airworthiness directives), other than the obligation to sell, lease or finance the Equipment and grant a covenant of quiet enjoyment to such lessee, whereby Lessor covenants not to repossess or to disturb the lessee’s possession or use of a leased asset so long as the lessee is in compliance with its obligations under the lease;

 

(d)                                 it is a triple net contract and with respect to which the Lessee thereunder is responsible for all payments in connection therewith, including payment of all taxes (including sales and use taxes), insurance and maintenance expenses (or payment of maintenance reserves in lieu thereof) and all other expenses pertaining to the assets subject thereto;

 

(e)                                  with respect to which the Borrower’s books and records are accurate, complete and genuine;

 

14

 

(f)                                   the rent is payable in Dollars or in Euros by periodic, fixed Lease payments; provided that the Borrower will maintain Foreign Exchange Contracts covering all Leases payable in Euros in the event the aggregate amount included in the Borrowing Base in respect of Engines and/or Equipment subject to such Leases at any time exceeds five percent (5%) of the Borrowing Base;

 

(g)                                  it is the valid and binding obligation of the parties thereto, is in full force and effect and each Engine and/or item of Equipment leased thereunder has been delivered to and accepted by the Lessee;

 

(h)                                 other than a Leasing Subsidiary (with respect to a Head Lease), the Lessee under which is not a Subsidiary, employee, agent or other Affiliate of the Borrower;

 

(i)                                     it requires the Lessee to comply with all maintenance, return, alteration, replacement, pooling and sublease conditions as typically found in leases for similar types of engines or equipment and as necessary to maintain at all times the airworthiness certification and serviceability status of the related Engine or Equipment pursuant to all applicable governmental and regulatory requirements;

 

(j)                                    it requires the Lessee to provide liability insurance, all risk ground and flight engine coverage for damage or loss of the related Engine, and war risk insurance (if applicable), and with respect to which Agents are named as additional insureds on liability insurance and Security Agent is named as a loss payee on hull insurance as set forth in Section 6.4 of this Agreement;

 

(k)                                 Unless Security Agent or Requisite Lenders have confirmed to the Borrower that, based on the credit quality of the Lessee, such insurance is not necessary, it requires the Lessee to provide confiscation and expropriation insurance, with deductibles that are acceptable to Agents, 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 or an area where there is a substantial risk of confiscation or expropriation;

 

(l)                                     the Lessee is not based in, and the Lease requires that the related Engine or Equipment not be operated in (i) unless appropriate insurance as determined by Security Agent is obtained, any country or any jurisdiction that would not be covered by or would void any insurance coverage required hereunder, or (ii) any country which is subject to any United States, European Union or United Nations sanctions or the lease to which would violate United States law, rule or regulation or other restrictions;

 

(m)                             the designated “Chattel Paper” original of which is in the possession of the Custodian or, with respect to chattel paper, if there shall be more than one original, then the sole counterpart which shall constitute “chattel paper” for purposes of perfection by possession under the UCC shall be in the possession of the Custodian.

 

(n)                                 for which, in the case of any Head Lease under which a Leasing Subsidiary is the Lessee, (i) the Lease and Head Lease have been assigned to Security

 

15

 

Agent pursuant to a Leasing Subsidiary Security Agreement; (ii) a charge over the Lease and Head Lease, or other similar security filing or registration, has been filed or made in the appropriate office in the jurisdiction in which the Leasing Subsidiary is registered or domiciled together with such other filings or recordings as are deemed reasonably necessary in such jurisdiction to protect the interests of Security Agent; and (iii) the sublessee thereunder is not domiciled or whose chief executive office is not located in a non-U.S. jurisdiction in which the ability of Security Agent to foreclose upon and receive possession or sell any related Engine or item of Equipment is unsatisfactory (in each case, as reasonably determined by Security Agent); and

 

(o)                                 that, if the Lessee (other than a Leasing Subsidiary under a Head Lease) of the related Engine(s) and/or item(s) of Equipment is domiciled or whose chief executive office is located in a Non-U.S. jurisdiction, (a) such Engine(s) and item(s) of Equipment shall be owned by and leased from an Owner Trustee (acting under a Trust Agreement), (b) such Owner Trustee shall have executed and delivered to Security Agent the Owner Trustee Guaranty, (c) such Owner Trustee shall have executed and delivered to Security Agent an Owner Trustee Mortgage and Security Agreement covering, among other things, such Engine(s), such item(s) of Equipment and such Lease, and (d) the Borrower shall have executed and delivered to Security Agent the Beneficial Interest Pledge Agreement covering, among other things, the Borrower’s Beneficial Interest in the owner trust which owns such Engine(s) or item(s) of Equipment.

 

“Eligible Parts” means Parts that in each case (a) are for, or ancillary to the service of, an Eligible Engine, an aircraft supported by an Eligible Engine, or an Aircraft that is Eligible Equipment, (b) are not unmerchantable or obsolete, (c) are physically tagged or identifiable by part or serial numbers, (d) are not subject to a consignment or held on the premises of an air carrier certificated under 49 U.S.C. 44705, and (e) comply with all applicable Aviation Authority requirements.

 

“Eligible Saleable Assets” means an Engine or any Equipment that (a) is an Eligible Asset, (b) is held for sale, consignment or in inventory and is not subject to a Lease, (c) is not unmerchantable or obsolete, (d) is physically tagged or identifiable by part or serial numbers and (e) complies with all applicable Aviation Authority requirements.

 

“Engine” means any Stage III compliant jet propulsion engine manufactured by an Acceptable Manufacturer, APU or Turboprop Engine, in each case owned by an Engine Owner and designed or suitable for use to propel an aircraft, whether or not subject to a Lease.

 

“Engine Owner” means the Borrower or any Owner Trustee.

 

“Environmental Liabilities and Costs” means all liabilities, obligations, responsibilities, remedial actions, removal costs, losses, damages, costs and expenses that relate to any health or safety condition regulated under any Environmental Law or in connection with any other environmental matter or Release, threatened Release, or the presence of any Hazardous Material.

 

16

 

“Equipment” means all Aircraft, Airframes and Parts owned by the Equipment Owner, whether or not such items are subject to a Lease.

 

“Equipment Market Value” means, with respect to an item of Equipment other than Parts, an amount as determined by the 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 item of Equipment, but without taking into account any existing maintenance reserves, any value attributed to Lease payments or any security deposits under the related Lease.

 

“Equipment Owner” means the Borrower or any Owner Trustee.

 

“ERISA” means the Employee Retirement Income Security Act of 1974 and the regulations thereunder.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) which is a member of a “controlled group of corporations,” a group of trades or businesses under “common control,” or an “affiliated service group,” which includes Borrower within the meaning of Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986.

 

“Euro” means the single official currency of the participating member states of the European Monetary Union.

 

“Event of Default” means any of the events specified in Section 9.1.

 

“Event of Loss” means (i) if an Engine or item of Equipment is not subject to a Lease, any of the following events: (x) the actual or constructive total loss of such Engine or item of Equipment or the agreed or compromised total loss of such Engine or item of Equipment; (y) its destruction, damage beyond economic repair or being rendered permanently unfit for normal use for any reason whatsoever and (z) any capture, condemnation, confiscation, requisition, purchase, seizure or forfeiture of, or any taking for use or of title to, such Engine or item of Equipment, in each case, that shall have resulted in the loss of possession or title of such Engine or item of Equipment by the Lessor (other than a requisition for use for not more than one hundred eighty (180) days by the United States Government) and (ii) in addition, if an Engine or item of Equipment is subject to a Lease, any events defined as an “Event of Loss,” “Casualty Occurrence” or similar term in such Lease.  An Event of Loss shall be deemed to have occurred on the earlier to occur of (a) the Borrower’s or Administrative Agent’s (as applicable) receipt of insurance proceeds in respect of such Engine or Equipment and (b) the date that is forty-five (45) days after the date of such loss, damage or destruction.

 

“Excluded Subsidiary” means, collectively and each individually, (i) each of WEST, the WEST Subsidiaries and any other Special Purpose Financing Vehicle, (ii) WLFC Funding (Ireland) Limited, (iii) Willis Lease France, (iv) Willis Aviation Finance Limited, (v) Willis Lease (China) Limited, and any other Wholly-Owned Subsidiary of the Borrower formed solely for the purpose of owning the equity of Willis Lease (China) Limited, (v) any Wholly-Owned Subsidiary of the Borrower formed for the purpose of owning or leasing any aircraft listed in clause (iii) of the exclusions to the definition of “Collateral”, (vi) the Permitted JV, and

 

17

 

(vii) each of the WOLF Subsidiaries, provided that such WOLF Subsidiaries shall cease to be “Excluded Subsidiaries” hereunder upon the refinancing of the Indebtedness of such WOLF Subsidiaries with Loans made under this Agreement, in which case the Borrower and such WOLF Subsidiaries shall comply with the provisions of Section 7.15.5 of this Agreement.

 

“FAA” means the Federal Aviation Administration or any Governmental Authority succeeding to the functions thereof.

 

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

 

“Federal Funds Rate” means, as of any date of determination, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, “H.15(519)”) for such date opposite the caption “Federal Funds (Effective)”.  If for any relevant date such rate is not yet published in H.15(519), the rate for such date will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the “Composite 3:30 p.m. Quotation”) for such date under the caption “Federal Funds Effective Rate”.  If on any relevant date the appropriate rate for such date is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such date will be the arithmetic mean of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that date by each of three leading brokers of Federal funds transactions in New York City selected by Administrative Agent.  For purposes of this Agreement, any change in the Base Rate due to a change in the Federal Funds Rate shall be effective as of the opening of business on the effective date of such change.

 

“Financial Statements” means the income statement, balance sheet and statement of cash flows of Borrower and its Subsidiaries, internally prepared for each Fiscal Quarter, and audited for each Fiscal Year, in each case prepared in accordance with GAAP including the notes and schedules thereto.

 

“Fiscal Quarter” means any of the quarterly accounting periods of Borrower, specifically ending March 31, June 30, September 30, and December 31 of each year.

 

“Fiscal Year” means the twelve month fiscal period of Borrower ending December 31 of each year.  Subsequent changes of the Fiscal Year of Borrower shall not change the term “Fiscal Year” unless Administrative Agent shall consent in writing to such change.

 

“Foreign Exchange Contract” means any foreign exchange contract, currency exchange contract or other contractual arrangement protecting a Person against fluctuations in the exchange rate of different currencies.

 

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States, consistently applied, subject to Section 1.2 below.

 

“Governmental Authority” means (a) any international, foreign, federal, state, county or municipal government, or political subdivision thereof, (b) any governmental or quasi-

 

18

 

governmental agency, authority, board, bureau, commission, department, instrumentality or public body or (c) any court or administrative tribunal of competent jurisdiction.

 

“Government Securities” means readily marketable direct full faith and credit obligations of the United States of America or obligations guaranteed by the full faith and credit of the United States of America.

 

“Guaranteed Indebtedness” means, with respect to any Person, any obligation of such Person guaranteeing any indebtedness, lease, dividend, or other obligation (“primary obligations”) of any other Person (the “primary obligor”) in any manner, including any obligation or arrangement of such Person (a) to purchase or repurchase any such primary obligation, (b) to advance or supply funds (1) for the purchase or payment of any such primary obligation, or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) to indemnify the owner of such primary obligation against loss in respect thereof (other than ordinary course indemnities or guaranties included in leases, purchase and sale agreements, repair and maintenance agreements, servicing and other consulting agreements, or ordinary course trade payables or liabilities).  The amount of any “Guaranteed Indebtedness” at any time shall be deemed to be an amount equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation in respect of which such Guaranteed Indebtedness is made, and (y) the maximum amount for which such Person may be liable pursuant to the terms of the instrument embodying such Guaranteed Indebtedness; or, if not stated or determinable, the maximum reasonably anticipated liability (assuming full performance) in respect thereof.

 

“Hazardous Material” means any substance, material or waste, the generation, handling, storage, treatment or disposal of which is regulated by any Governmental Authority, or forms the bases of liability now or hereafter under, any Environmental Law in any jurisdiction in which Borrower has owned, leased, or operated real property or disposed of hazardous materials other than cleaning, maintenance or office supplies used in the ordinary course of business and in compliance with Environmental Laws.

 

“Head Lease” means a lease between an Engine Owner or Equipment Owner and a Leasing Subsidiary substantially in the form of the sublease between the Leasing Subsidiary and the operator.

 

“Indebtedness” means as to any Person at any time (without duplication) and, for the Borrower, determined on a consolidated basis: (a) all indebtedness for borrowed money or for the deferred purchase price of property or services (including reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers’ acceptances, whether or not matured); (b) all obligations evidenced by notes, bonds, debentures or similar instruments; (c) all indebtedness created or arising under any conditional sale or other title retention agreements with respect to property acquired by Borrower (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (d) all Capital Lease Obligations; (e) all Guaranteed Indebtedness; (f) all

 

19

 

Indebtedness referred to in clauses (a), (b), (c), (d) or (e) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness; (g) with respect to Borrower, the Obligations; (h) all liabilities under Title IV of ERISA; and (i) the net present value of the non-cancelable payments owed under any Lease which is qualified as an operating lease in accordance with GAAP for engines, aircraft and aircraft and engine parts, using a 10% discount rate; provided, however, that the term Indebtedness shall not include ordinary course trade accounts payable or any Permitted Preferred Stock.

 

“Indemnified Person” means Administrative Agent, Security Agent, Swing Line Lender, and each Lender and each of the foregoing parties’ respective Affiliates, employees, attorneys and agents.

 

“Instruments” means all “instruments,” as such term is defined in the UCC, now owned or hereafter acquired by Borrower, wherever located, including all certificated securities and all notes and other evidences of indebtedness, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper.

 

“Intellectual Property” means all of the following now owned or hereafter acquired by Borrower:  (a) patents, trademarks, trade dress, trade names, service marks, copyrights, trade secrets and all other intellectual property or Licenses thereof; and (b) all Proceeds of the foregoing.

 

“Interest Rate Protection Agreement” means a written agreement providing for “swap”, “cap”, “collar” or other interest rate protection with respect to any Indebtedness.

 

“International Interest” shall have the meaning given to such term in the Cape Town Convention.

 

“International Registry” shall have the meaning given to such term in the Cape Town Convention.

 

“Investment” means, when used in connection with any Person, any investment by or of that Person, whether by means of purchase or other acquisition of stock or other securities of any other Person or by means of a loan, advance creating a debt, capital contribution, guaranty or other debt or equity participation or interest in any other Person, including any partnership and joint venture interests of such Person.  The amount of any Investment shall be the amount actually invested (minus any return of capital with respect to such Investment which has actually been received in Cash or has been converted into Cash), without adjustment for subsequent increases or decreases in the value of such Investment.  Notwithstanding the foregoing, neither Borrower’s acquisition of securities in WOLF A340 LLC pursuant to that certain Securities Purchase Agreement dated as of June 28, 2013 by and between Borrower and Waha Capital PJSC, a United Arab Emirates company, nor the loans from HSH Nordbank AG, New York Branch, to WOLF A340 LLC as of June 28, 2013 (or any refinancing thereof) shall be considered an Investment hereunder.

 

“Joint Lead Arranger” means a Lender in charge of arranging the Credit Facility.

 

20

 

“Lease” means, with respect to an Engine or an item of Equipment, any written lease agreement, general terms agreement or other similar arrangement, as may be in effect with respect to such Engine or item of Equipment between a Lessor, including an Engine Owner, an Equipment Owner or a Leasing Subsidiary, and a Lessee, as such agreement or arrangement may be amended, modified, extended, supplemented, assigned or novated from time to time in accordance with the terms thereof and the Loan Documents.

 

“Leasing Subsidiary” means each of Willis Lease (Ireland) Limited, WLFC (Ireland) Limited and, subject to satisfaction of the conditions for a Subsidiary set forth in Section 7.15.5, any other Subsidiary of Borrower to which an Engine Owner or Equipment Owner may lease one or more Engines or items of Equipment pursuant to a Head Lease and which are Lessors under Leases of such Engines or Equipment to Lessees.

 

“Leasing Subsidiary Security Assignment” means, collectively, those certain Leasing Subsidiary Security Assignments substantially in the form attached hereto as Exhibit I, each as amended, modified or supplemented from time to time, made by each Leasing Subsidiary in favor of Security Agent, whereby each Leasing Subsidiary assigns to Security Agent all of such Leasing Subsidiary’s rights under subleases of Engines and Equipment.

 

“Lender” means each Lender named in Schedule 2.1 and each other party that may be named a “Lender” under this Agreement.

 

“Lessee” means the lessee of Engines or Equipment subject to a Lease (including a Leasing Subsidiary in its capacity as lessee under a Head Lease).

 

“Lessor” means (i) any Engine Owner or Equipment Owner party to a Lease as lessor and (ii) a Leasing Subsidiary as sublessor under a Lease.

 

“Leverage Ratio” means the ratio set forth in Section 6.14.2.

 

“LIBOR” means, for any LIBOR Loan Period, the rate determined by Administrative Agent to be the per annum rate (rounded upward to the nearest one-hundredth of one percent (1/100%)) at which deposits in immediately available funds and in lawful money of the United States would be offered to Administrative Agent by reference to the British Bankers’ Association Interest Settlement Rates (or a successor rate thereof) for deposits in dollars (as set forth by any service selected by Administrative Agent that has been nominated by the British Banker’s Association (or a successor thereof) as an authorized information vendor for the purpose of displaying such rates) at approximately 11:00 a.m. (London time) two (2) Business Days before the first day of such LIBOR Loan Period, in an amount equal to the principal amount of, and for a length of time equal to the LIBOR Loan Period for, the LIBOR Loan sought by Borrower.

 

“LIBOR Basis” means a per annum interest rate equal to the quotient of (a) LIBOR divided by (b) one minus the LIBOR Reserve Percentage, stated as a decimal.  The LIBOR Basis shall be rounded upward to the nearest one thirty second of one percent (1/32%) and, once determined, shall remain unchanged during the applicable LIBOR Loan Period, except for changes to reflect adjustments in the LIBOR Reserve Percentage.

 

21

 

“LIBOR Loan” means a Revolving Loan that Borrower requests to be made as a LIBOR Loan or that is reborrowed as, or converted to, a LIBOR Loan, in each case in accordance with the provisions of Section 2.1.3.

 

“LIBOR Loan Period” means, for each LIBOR Loan, each one (1), two (2), three (3) or six (6) month period (or such other longer or shorter period as approved by Lenders), as selected by Borrower pursuant to Section 2.1.3, during which LIBOR applicable to such LIBOR Loan shall remain unchanged; provided that (a) any applicable LIBOR Loan Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day, unless such Business Day falls in another calendar month, in which case such LIBOR Loan Period shall end on the immediately preceding Business Day, (b) any applicable LIBOR Loan Period which begins on a day for which there is no numerically corresponding day in the calendar month during which such LIBOR Loan Period is to end shall (subject to clause (a) above) end on the last day of such calendar month, and (c) no LIBOR Loan Period shall extend beyond the Maturity Date.

 

“LIBOR Reserve Percentage” means the percentage in effect from time to time under Regulation D of the Board of Governors of the Federal Reserve System as the maximum reserve requirement applicable with respect to Eurocurrency Liabilities (as that term is defined in Regulation D), whether or not any Lender has any Eurocurrency Liabilities subject to such reserve requirement at that time.  The LIBOR Basis for any LIBOR Loan shall be adjusted as of the effective date of any change in the LIBOR Reserve Percentage.

 

“License” means any license under any written agreement now owned or hereafter acquired by Borrower granting the right to use any Intellectual Property or other license of rights or interests now held or hereafter acquired by Borrower.

 

“Lien” means, with respect to any property, any security deed, mortgage, deed to secure debt, deed of trust, lien, pledge, assignment, charge, security interest, title retention agreement, negative pledge, levy, execution, seizure, attachment, garnishment, or other encumbrance of any kind in respect of such property, whether or not perfected.

 

“Loan Documents” means collectively, this Agreement, the Notes, the Collateral Documents, and any and all other agreements, documents, or instruments (including financing statements) entered into in connection with the transactions contemplated by this Agreement, together with all alterations, amendments, changes, extensions, modifications, refinancings, refundings, renewals, replacements, restatements, or supplements, of or to any of the foregoing.

 

“Loans” means all loans and advances made by Lenders to or for the benefit of Borrower under this Agreement or under any of the Loan Documents, including the Revolving Loans extended to Borrower under the Revolving Commitment and any Swing Line Loan(s).

 

“Maintenance Reserve Payments” means any payment (including any use fee or utilization payment) that is based on the usage of an Engine or which is based on, or in respect of which, the Lessor under a Lease may be obligated to reimburse the Lessee under such Lease for specified maintenance activities with respect to the Engine subject to such Lease.

 

22

 

“Material Adverse Effect” means a material adverse effect on (a) the business, property, assets, operations or condition (financial or otherwise) of Borrower, (b) the ability of Borrower to pay or perform in accordance with the terms of any of the Loan Documents taken as a whole, or (c) the rights and remedies of any Credit Facility Lender under any of the Loan Documents.

 

“Maturity Date” means the earliest of (a) five years after the Closing Date (June 4, 2019), (b) the date Credit Facility Lenders’ obligation to make Loans is terminated and the Obligations are declared to be due and payable pursuant to Section 9.2, or (c) the date of prepayment in full by Borrower of the Obligations in accordance with the provisions of Section 2.10.

 

“Maximum Amount” means $700,000,000.00, or such other decreased amount as provided for under Section 2.10 of this Agreement.

 

“Mortgage and Security Agreement” means that certain Mortgage and Security Agreement dated as of November 18, 2009, as amended, modified or supplemented from time to time, or each such other security instrument required by Applicable Law, made by Borrower in favor of Security Agent, whereby Borrower granted to Security Agent a security interest in the “Collateral” as defined therein.

 

“Negative Pledge” means a Contractual Obligation which contains a covenant binding on Borrower or any of its Subsidiaries that prohibits Liens on any of its Property, other than (a) any such covenant contained in a Contractual Obligation granting or relating to a particular Lien which affects only the Property that is the subject of such Lien; (b) any such covenant that does not apply to Liens securing the Obligations; and (c) permitted junior Liens under Section 7.9.

 

“Net Book Value” of an Engine or an item of Equipment shall be calculated as the lesser of: (i) the book value of such Engine or item of Equipment determined in accordance with GAAP as set forth on Borrower and its Subsidiaries financial statements or (ii) such Engine’s Adjusted Base Value or item of Equipment’s Equipment Market Value or Parts Market Value, as the case may be, in each case reduced utilizing depreciation methods consistent with current practice and GAAP.

 

“Net Income” means, with respect to any fiscal period, the consolidated net income (or loss) of Borrower and its Subsidiaries attributable to common shareholders for that period (after taxes), determined in accordance with GAAP, consistently applied, provided that “Net Income” shall not take into account gains or losses resulting from changes in the fair market value of derivative instruments (within the meaning of Statement of Financial Accounting Standards No. 133).

 

“Non-Defaulting Lender” means any Lender which is not a Defaulting Lender.

 

“Non-Recourse Debt” shall mean Indebtedness for which the remedy for nonpayment or non-performance of any obligation or any default (other than for breach of standard representations and warranties or misapplication of funds) in respect thereof is limited to (i) specified collateral securing such indebtedness or (ii) to the Special Purpose Financing

 

23

 

Vehicle obligated thereunder or (iii) both (i) and (ii) and in respect of which the Borrower is not subject to any personal liability.

 

“Note” means any note, including any Revolving Note or Swing Line Note, executed and delivered by Borrower to any Credit Facility Lender under this Agreement, and “Notes” means collectively all such notes executed and delivered by Borrower to each Lender under this Agreement.

 

“Obligations” means all loans, advances, debts, expenses reimbursements, fees, liabilities and obligations, for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or amounts are liquidated or determinable) owing by Borrower to any Lender or Swing Line Lender of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument, arising under this Agreement or in connection with any of the other Loan Documents (including an Interest Rate Protection Agreement entered into in connection with this Agreement and Foreign Exchange Contracts), and all covenants and duties regarding such amounts.  This term includes all principal, interest (including interest which accrues after the commencement of any case or proceeding in bankruptcy, or for the reorganization of Borrower), fees, Charges, expenses, reasonable attorneys’ fees and any other sum chargeable to Borrower under this Agreement or any of the other Loan Documents or any Interest Rate Protection Agreement entered into in connection with this Agreement or Foreign Exchange Contract, and all principal and interest due in respect of the Loans.

 

“Off-Lease” means, with respect to an Engine or item of Equipment, at the time of determination or for any specified period, not subject to a Lease (or, in respect of an Engine or item of Equipment subject to a Head Lease, not subject to a Lease with a sublessee).

 

“Overadvance” means the amount by which the aggregate amount of all Loans then outstanding exceeds the Maximum Amount.

 

“Owner Trust” means an owner trust created under a Trust Agreement.

 

“Owner Trustee” means Wells Fargo Bank Northwest, National Association or another bank or trust company reasonably satisfactory to the Administrative Agent and the Security Agent acting as trustee under a Trust Agreement.

 

“Owner Trustee Guaranty” means each and collectively those certain Owner Trustee Guaranties, in the form attached hereto as Exhibit H, as amended, modified or supplemented from time to time, made by Owner Trustee in favor of Security Agent, whereby Owner Trustee guaranties performance of the Obligations under the Loan Documents.

 

“Owner Trustee Mortgage and Security Agreement” means, each and collectively, those certain Owner Trustee Mortgage and Security Agreements, in the form attached hereto as Exhibit G, as amended, modified or supplemented from time to time, made by Borrower in favor of Security Agent, whereby Owner Trustee grants to Security Agent a first priority security interest in that certain Equipment or other collateral as defined therein.

 

24

 

“Partial Recourse Debt” shall mean Indebtedness of any Person a portion of which (but in no event less than eighty-five (85%) percent of the principal amount thereof) shall constitute Non-Recourse Debt.

 

“Parts” means components of an Aircraft or an Engine, 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 and any other fixed assets ancillary to the service of an Aircraft or Engine.

 

“Parts Market Value” means, with respect to any Parts, the “current market value” (as such term is defined by the International Society of Transport Aircraft Trading (ISTAT)) as determined by the Appraiser.  The current market value shall take into consideration of, maintenance status of such assets, current trading history and other methodologies as are consistent with the methodologies utilized in current industry practices, but without taking into account any existing maintenance reserves.

 

“Payment Date” means the last day of each LIBOR Loan Period for a LIBOR Loan.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

 

“Permitted Change in Control” means any transaction which, but for the involvement of a Permitted Holder or an Affiliate of a Permitted Holder, would otherwise be a Change in Control.

 

“Permitted Holder” means each of Charles F. Willis IV and Austin Willis, any member of each of their respective immediate families, and each of their respective trusts, family limited partnerships or heirs.

 

“Permitted Indebtedness” means, as applied to Borrower, (i) all Indebtedness in existence on the Closing Date, (ii) all Indebtedness other than the Obligations hereunder, whether such other Indebtedness is secured or unsecured, in an aggregate amount of up to (x) $300,000,000.00 incurred after the Closing Date, provided such $300,000,000.00 maximum shall exclude any Indebtedness of any Excluded Subsidiary, and (iii) all Guaranteed Indebtedness of the Borrower in respect of (x) the Willis Aviation Finance Limited Financing Facility and (y) the Willis Lease (China) Limited Financing Facility.

 

“Permitted JV” means an Investment by Borrower or any Wholly-Owned Subsidiary of Borrower, in any Person engaged in the aeronautics industry in China; provided that any Indebtedness of such Permitted JV shall be Non-Recourse Debt.

 

“Permitted Liens” means, as applied to any Property:  (a) Liens securing taxes, assessments, and other governmental charges or levies (excluding any Lien imposed pursuant to any of the provisions of ERISA that would result in an Material Adverse Effect) or the claims of materialmen, mechanics, carriers, repairmen, warehousemen, or landlords or other like Liens, but which (1) are for amounts not yet due, or (2) which are being contested in good faith by appropriate proceedings and for which Borrower shall have set aside on its books adequate

 

25

 

reserves with respect thereto in accordance with GAAP, provided that such contested claims shall not exceed an aggregate amount of $5,000,000.00; (b) Liens consisting of deposits or pledges made in the ordinary course of business in connection with, or to secure payment of, obligations under worker’s compensation, unemployment insurance, or similar legislation; (c) Liens constituting encumbrances in the nature of zoning restrictions, easements, and rights of way or restrictions of record on use of real property which do not materially detract from the value of such property or impair the use thereof in the business of Borrower; (d) Liens of record set forth in Schedule 1.1d; (e) Liens created under the Loan Documents; (f) the rights of any Lessee or sublessee under any Lease to utilize any Collateral pursuant to the terms of a Lease; (g) Liens arising in connection with legal or equitable proceedings against Borrower, which Borrower is contesting with diligence and good faith and which Liens do not have a Material Adverse Effect; (h) liens in respect of personal property leases that do not affect any assets included in the Borrowing Base, which, in the aggregate, are not substantial in amount and do not materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of the Borrower so as to cause a Material Adverse Effect; (i) any Lien on any asset not included in the Borrowing Base to secure Indebtedness permitted hereunder; (j) Liens securing Indebtedness that has since been repaid in full, which filings Borrower cannot independently terminate; (k) Liens arising out of judgments that do not constitute an Event of Default under this Agreement; (l) any Lien arising by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution in the ordinary course of business; (m) Liens securing Capital Lease Obligations on assets subject to such leases provided that such capitalized leases are otherwise permitted under this Agreement; (n) 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 Security Agent’s security interest therein or of criminal or unindemnified civil liability on the part of the Borrower, any Bank or any Agent and with respect to which the lessee maintains adequate reserves (in the reasonable judgment of the Borrower):  (A) fees or charges of any airport or air navigation authority, (B) judgments that do not constitute an Event of Default under this Agreement, or (C) salvage or other rights of insurers; (o) Liens on assets not included in the Borrowing Base evidenced by UCC financing statements which are expressly permitted under the terms of the Loan Documents; and (p) Liens on assets which are not Collateral securing Permitted Indebtedness after the date hereof in an amount not in excess of the sum of Indebtedness existing as of the Closing Date and $300,000,000.00.

 

“Permitted Preferred Stock” means up to $100,000,000.00 of preferred Stock of Borrower issued at any time or from time to time during the term of this Agreement which shall not be mandatorily redeemable earlier than two (2) years after the Maturity Date.

 

“Person” means any individual or entity, including a trustee, sole proprietorship, partnership, limited partnership, limited liability partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, public benefit corporation, entity or government (whether Federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).

 

26

 

“Plan” means, with respect to Borrower or any of its Affiliates, at any time, an employee benefit plan, as defined in Section 3(3) of ERISA, which Borrower or any of its Affiliates maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them.

 

“Pro Rata Share” means, with respect to each Lender, the percentage of the Revolving Commitment set forth opposite the name of that Lender on Schedule 2.1, as such percentage may be increased or decreased pursuant to a Commitment Assignment and Acceptance executed in accordance with Section 12.8.

 

“Proceeds” means “proceeds,” as such term is defined in the UCC and, in any event, shall include:  (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to Borrower from time to time with respect to any Collateral; (b) any and all payments (in any form whatsoever) made or due and payable to Borrower from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of any Collateral by any governmental body, authority, bureau or agency (or any person acting under color of Governmental Authority); (c) any claim of Borrower against third parties for past, present or future infringement or dilution of any Intellectual Property or for injury to the goodwill associated with any Intellectual Property; (d) any recoveries by Borrower against third parties with respect to any litigation or dispute concerning any Collateral; and (e) any and all other amounts from time to time paid or payable under or in connection with any Collateral, upon disposition or otherwise.

 

“Property” means any real property, personal property, or Intellectual Property owned, leased or operated by the Borrower, any Owner Trustee, or any Subsidiary of the Borrower.

 

“Prospective International Interest” shall have the meaning given to such term in the Cape Town Convention.

 

“Reference Rate” means the variable per annum rate of interest most recently announced by Administrative Agent at its corporate headquarters as the “Union Bank, N.A. Reference Rate,” with the understanding that the “Union Bank, N.A. Reference Rate” is one of Administrative Agent’s index rates and merely serves as a basis upon which effective rates of interest are calculated for loans making reference thereto and may not be the lowest or best rate at which Administrative Agent calculates interest or extends credit.  The Reference Rate shall be adjusted on the last Business Day of the calendar month of any change in the “Union Bank, N.A. Reference Rate.”  The Reference Rate, as adjusted, shall constitute the Reference Rate on the date when such adjustment is made and shall continue as the applicable Reference Rate until further adjustment.

 

“Registerable Asset” means any Eligible Engine or Eligible Equipment with respect to which ownership thereof, a contract of sale in respect of, a lease of, and/or a security interest therein may be filed with the FAA or registered on the International Registry.

 

“Release” means, as to Borrower, any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous

 

27

 

Materials in the indoor or outdoor environment by Borrower, including the movement of Hazardous Materials through or in the air, soil, surface water, ground water or property.

 

“Reportable Event” has the meaning set forth in Title IV of ERISA.

 

“Requisite Lenders” means (a) all Non-Defaulting Lenders, with respect to those decisions requiring unanimous consent of all Lenders as set forth in Section 12.16 and (b) those Non-Defaulting Lenders holding Notes evidencing in the aggregate 50.1% or more of the aggregate Indebtedness then evidenced by the Notes held by Non-Defaulting Lenders, with respect to all other decisions required of the Lenders hereunder; provided that any Defaulting Lender or Indebtedness under Notes held by such Defaulting Lender shall not be included under the foregoing items (a) and (b) or have voting, waiver or consent rights with respect to any decision.

 

“Revolving Commitment” means, subject to Section 2.10, $700,000,000.00.  The respective Pro Rata Shares of the Lenders with respect to the Revolving Commitment are set forth in Schedule 2.1.

 

“Revolving Loan” means a loan(s) made by the Lenders to Borrower pursuant to Section 2.1.

 

“Revolving Note” means each revolving note executed and delivered by Borrower to each Lender in accordance with its Pro Rata Share of the Revolving Commitment, dated as of the Closing Date, in the original aggregate principal amount of the Revolving Commitment, together with any other notes executed and delivered by Borrower to any Lender evidencing at any time any portion of the Loans.

 

“Schedule of Documents” means the schedule, including all appendices, exhibits or schedules thereto, listing certain documents and information to be delivered in connection with this Agreement and the other Loan Documents and the transactions contemplated hereunder and thereunder, substantially in the form of Schedule 1.1e.

 

“Security Agent” means that party mentioned in the introductory paragraph hereof, when such party is acting in its capacity as Security Agent under any of the Loan Documents, or any successor Security Agent.

 

“Security Agreement” means that certain Security Agreement dated as of November 18, 2009, as amended, modified or supplemented from time to time, made by Borrower in favor of Security Agent.

 

“Security Deposit” means any cash deposits and other collateral provided by, or on behalf of, a Lessee to secure the obligations of such Lessee under a Lease.

 

“SEC” means the United States Securities Exchange Commission.

 

“Special Eurodollar Circumstance” means the application or adoption after the Closing Date of any Law or interpretation, or any change therein or thereof, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or

 

28

 

comparable authority charged with the interpretation or administration thereof, or compliance by Lender or its LIBOR lending office with any request or directive (whether or not having the force of Law) of any such Governmental Authority, central bank or comparable authority.

 

“Special Purpose Financing Vehicle” means a bankruptcy remote Subsidiary or Affiliate (including without limitation, any Subsidiary of such Person, WEST and the WEST Subsidiaries) of Borrower or other Person owned by or at the request of Borrower (excluding any Owner Trustee which shall have executed and delivered an Owner Trustee Mortgage and Security Agreement) for the sole purpose of holding and/or assigning Engines or Equipment received directly or indirectly from Borrower or any of its Subsidiaries and issuing notes or other Indebtedness which are secured by such Engines or Equipment or other securities representing interests in such Engines or Equipment, and which Subsidiary or Affiliate or other Person is prohibited by its articles of incorporation or (if it is not a corporation) other organizational documents from engaging in any other business; provided that any Indebtedness of such Special Purpose Financing Vehicle shall be Non-Recourse Debt.

 

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

 

“Stock” means all certificated and uncertificated shares, options, warrants, general or limited partnership interests, participation or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including common stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934).

 

“Stock Pledge Agreement” means collectively, and each individually, (i) that certain Stock Pledge Agreement dated as of November 18, 2009, as amended, modified or supplemented from time to time, made by Borrower in favor of Security Agent, whereby Borrower pledged to Security Agent sixty-five percent (65%) of the issued and outstanding shares of capital stock of WLFC (Ireland) Limited, (ii) that certain Share Mortgage and Security Agreement dated as of June 28, 2011, as amended, modified or supplemented from time to time, made by Borrower in favor of Security Agent, whereby Borrower pledged to Security Agent fifty percent (50%) of the issued and outstanding shares of share capital of Willis Mitsui & Co Engine Support Limited, (iii) the Membership Interest Pledge Agreement dated as of September 28, 2012, as amended, modified or supplemented from time to time, made by Borrower in favor of Security Agent, whereby Borrower pledged to Security Agent all of its membership interests in WEST Engine Funding LLC and (iv) the Stock Pledge Agreement dated as of November 5, 2013, as amended, modified or supplemented from time to time, made by Borrower in favor of Security Agent, whereby Borrower pledged to Security Agent all of the outstanding shares of share capital of Willis Aeronautical Services, Inc.

 

“Stock Power” means collectively, and each individually, those certain Stock Powers executed by Borrower in favor of Security Agent in connection with each Stock Pledge Agreement.

 

29

 

“Subordinated Obligation” means any Indebtedness of Borrower that (a) does not have any scheduled principal payment, mandatory principal prepayment or sinking fund payment due prior to the date that is one year after the Maturity Date, (b) is not secured by any Lien on any Property of Borrower or any of its Subsidiaries, (c) is not guaranteed by any Subsidiary of Borrower, (d) is subordinated by its terms in right of payment to the Obligations pursuant to provisions acceptable to Agents and the Requisite Lenders, (e) is subject to such financial and other covenants and events of defaults as may be acceptable to Agents and the Requisite Lenders, and (f) is subject to customary interest blockage and delayed acceleration provisions as may be acceptable to Agents and Credit Facility Lenders.

 

“Subsidiary” means, as of any date of determination and with respect to any Person, any corporation, limited liability company or partnership (whether or not, in any case, characterized as such or as a “joint venture”), trust or other legal entity, whether now existing or hereafter organized or acquired:  (a) in the case of a corporation or limited liability company, of which a majority of the securities having ordinary voting power for the election of directors or other governing body (other than securities having such power only by reason of the happening of a contingency) are at the time beneficially owned by such Person and/or one or more Subsidiaries of such Person, or (b) in the case of a partnership or other ownership interests, of which (i) a majority of the partnership or other ownership interests are at the time beneficially owned by such Person and/or one or more of its Subsidiaries or (ii) a Subsidiary is the general partner.  Notwithstanding the foregoing, the Excluded Subsidiaries shall only be considered Subsidiaries hereunder with respect to Section 6.14 and the definitions related thereto; provided, however, none of the WOLF Subsidiaries shall be considered a Subsidiary in any respect hereunder so long as all Indebtedness of such WOLF Subsidiaries (i) remains non-recourse to Borrower and (ii) is not Guaranteed Indebtedness of Borrower.

 

“Subsidiary Guaranty” means, collectively and each individually, those certain Subsidiary Guaranties dated as of November 18, 2009 or thereafter, as amended, modified or supplemented from time to time, made by each Subsidiary (but excluding the Excluded Subsidiaries) in favor of Security Agent, whereby such Subsidiary guaranties performance of the Obligations under the Loan Documents.

 

“Swing Line Commitment” means the commitment of the Swing Line Lender to make Swing Line Loans in an aggregate maximum principal amount at any one time outstanding of Fifteen Million Dollars ($15,000,000.00) or such lesser amount as shall be agreed to by the Swing Line Lender and Borrower pursuant to Section 2.2 of this Agreement.

 

“Swing Line Lender” means that party mentioned in the introductory paragraph hereof or any successor Swing Line Lender.

 

“Swing Line Loans” means loans made by the Swing Line Lender to Borrower pursuant to Section 2.2.

 

“Swing Line Note” means the swing line note executed and delivered by Borrower to Swing Line Lender, dated as of the Closing Date, in the original aggregate principal amount of the Swing Line Commitment, together with any other notes executed and delivered by Borrower to any Lender evidencing at any time any portion of the Swing Line Loans.

 

30

 

“Syndication Agent” means that party mentioned in the introductory paragraph hereof, when such party is acting in its capacity as Syndication Agent under any of the Loan Documents, or any successor Syndication Agent.

 

“Tangible Net Worth” means on any date of determination, the following with respect to Borrower and its Subsidiaries on a consolidated basis:  (a) the sum of the total assets less the total liabilities minus (b) intangibles (excluding (i) gains and losses from fair value of derivatives charges whether or not included in other comprehensive income or net income on such date, all as determined in accordance with GAAP, consistently applied and (ii) any intangibles arising under clause (h) of the definition of EBITDA).  Notwithstanding the foregoing, to the extent constituting a liability on Borrower’s balance sheet as determined in accordance with GAAP, consistently applied, the Permitted Preferred Stock shall be excluded as a liability in the calculation of Tangible Net Worth.

 

“Termination Date” means the date on which the Loans and all other Obligations under this Agreement and the other Loan Documents are indefeasibly paid in full, in cash, and Borrower shall have no further right to borrow any moneys or obtain other credit extensions or financial accommodations under this Agreement.

 

“Three Primary Lessees” means the three Lessees under Leases which, at the time of determination, have leased (whether under one or more Leases) the highest percentages of the Engines and Equipment described in clause (y)(ii)(C) of the definition of Borrowing Base, based on Net Book Value, of all Eligible Engines and Eligible Equipment.

 

“Total Debt” means all Indebtedness of Borrower and its consolidated Subsidiaries, including, without limitation, Non-Recourse Debt (other than Non-Recourse Debt incurred in connection with an investment in the Permitted JV), Partial Recourse Debt and Subordinated Obligations.

 

“Transactional User Entity” is defined in the Regulations for the International Registry.

 

“Trust Agreement” means, each and collectively, those certain Trust Agreements entered into prior to the date hereof and any Trust Agreements entered into after the date hereof, each of which Trust Agreements shall be substantially in the form attached hereto as Exhibit K, by and between Owner Trustee, as owner trustee, and Borrower or a Wholly-Owned Subsidiary, as the sole beneficiary, as each such Trust Agreement is amended, supplemented or otherwise modified from time to time, whereby the parties agreed, among other things, that Owner Trustee shall act as trustee with respect to the “Equipment” and “Lease Agreement” as defined therein and by and between Owner Trustee, as owner trustee, and Borrower or a Wholly-Owned Subsidiary, as the sole beneficiary, as each Trust Agreement is amended, supplemented or otherwise modified from time to time, whereby the parties agreed, among other things, that Owner Trustee shall act as trustee with respect to the “Equipment” and “Lease Agreement” as defined therein.

 

“Turboprop Engine” means a gas turbine engine used in aircraft with at least 550 rated shaft horsepower.

 

31

 

“UCC” means the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of Delaware; provided that in the event by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of Security Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of Delaware, the term “UCC” means the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions.

 

“Unused Line Fee” means that fee set forth in Section 2.6.1.

 

“WEST” means (i) WEST II, or (ii) WEST III, in each case in its capacity as the issuer of the indebtedness referenced under either clause (i) or clause (ii) of the definition of “WEST Funding Facility”.

 

“WEST II” means Willis Engine Securitization Trust II, a Delaware statutory trust which is a Wholly-Owned Subsidiary of Borrower.

 

“WEST III” means, if and when formed, Willis Engine Securitization Trust III, a Delaware statutory trust which is a Wholly-Owned Subsidiary of Borrower.

 

“WEST Administrative Agency Agreement” means (i) that certain Administrative Agency Agreement dated September 17, 2012 among WEST II, Borrower, Deutsche Bank Trust Company Americas and the entities listed on Appendix A thereto, or (ii) that certain Administrative Agency Agreement among WEST III, Borrower, the indenture trustee and the entities listed on Appendix A thereto to be entered into in connection with a refinancing permitted pursuant to clause (ii) of the definition of WEST Funding Facility, as amended, waived, restated, supplemented or otherwise modified from time to time.

 

“WEST Funding Facility” means (i) the transactions contemplated by that certain Indenture dated as of September 14, 2012, by and between WEST II and Deutsche Bank Trust Company Americas, as indenture trustee, as amended, waived, restated, supplemented, or otherwise modified from time to time, or (ii) any refinancing, decrease or increase of the indebtedness referenced in (i) above pursuant to an indenture dated as of the WEST Refinancing Closing Date by and between WEST III and the indenture trustee, as amended, waived, restated, supplemented or otherwise modified from time to time in an amount not to exceed $600,000,000.00 and with a weighted average interest rate not to exceed seven percent (7%).

 

“WEST Owner Trusts” means the owner trusts in which WEST or a WEST Subsidiary holds 100% of the beneficial interest.

 

“WEST Refinancing Closing Date” means the date on which the indenture referred to in subclause (i) of the definition of WEST Funding Facility is terminated and all notes issued thereunder have been paid in full.

 

“WEST Servicing Agreement” means (i) that certain Servicing Agreement dated as of September 17, 2012, among Borrower, as servicer and administrative agent, WEST II, and the entities listed on Appendix A to the Servicing Agreement, as amended, waived, restated,

 

32

 

supplemented, or otherwise modified from time to time, or (ii) that certain Servicing Agreement among Borrower, as servicer and administrative agent, WEST III, and the entities listed on Appendix A to the Servicing Agreement, to be entered into in connection with a refinancing permitted pursuant to clause (ii) of the definition of WEST Funding Facility, as amended, waived, restated, supplemented, or otherwise modified from time to time.

 

“WEST Subsidiaries” means:

 

i.                                          with respect to WEST II, (A) Willis Engine Securitization (Ireland) Limited, a limited liability company existing under the laws of Ireland and a wholly-owned Subsidiary of WEST II, (B) Facility Engine Acquisition LLC, a Delaware limited liability company and a wholly-owned Subsidiary of WEST II, (C) WEST Engine Acquisition LLC, a Delaware limited liability company and a wholly-owned Subsidiary of WEST II, and (D) each other legal entity owned by WEST II or in respect of which WEST II or a Subsidiary of WEST II holds 100% of the beneficial interest, including the WEST Owner Trusts beneficially owned by WEST II or a Subsidiary of WEST II; and

 

ii.                                       with respect to WEST III, the subsidiaries designated by Borrower in a notice to the Administrative Agent prior to the WEST Refinancing Closing Date and each other legal entity owned by WEST III or in respect of which WEST III or a Subsidiary of WEST III holds 100% of the beneficial interest, including the WEST Owner Trusts beneficially owned by WEST III or a Subsidiary of WEST III.

 

“Wholly-Owned Subsidiary” means a Subsidiary of Borrower, 100% of the capital stock or other equity interest of which is owned, directly or indirectly, by Borrower, except for director’s qualifying shares required by Applicable Laws.

 

“Willis Aviation Finance Limited Financing Facility” means one or more financing arrangements entered into by WLFC (Ireland) Limited in an amount not to exceed Two Hundred Million and 00/100 Dollars ($200,000,000.00) for general corporate purposes, including financing spare aircraft engines and equipment.

 

“Willis Lease (China) Limited Financing Facility” means one or more financing arrangements entered into by Willis Lease (China) Limited in an amount not to exceed Two Hundred Million and 00/100 Dollars ($200,000,000.00) for general corporate purposes, including financing spare aircraft engines and equipment.

 

“WOLF Subsidiaries” shall mean, collectively and each individually, WOLF A340 LLC and each of its Wholly-Owned Subsidiaries and any Owner Trusts of which WOLF A340 LLC or any of its Wholly-Owned Subsidiaries holds the beneficial interest therein.

 

1.2                               Accounting Terms.  All accounting terms used, but not specifically defined, in this Agreement shall be construed and defined in accordance with GAAP, provided that if GAAP shall change from the basis used in preparing the Financial Statements delivered to the Administrative Agent on or before the date of this Agreement, the Compliance Certificates delivered pursuant to this Agreement demonstrating compliance with the covenants contained in Section 6.14 shall include calculations setting forth the adjustments necessary to demonstrate

 

33

 

how the Borrower is in compliance with the financial covenants based upon GAAP as in effect on the date of this Agreement.

 

1.3                               UCC.  Any terms that are defined in the UCC and used, but not specifically defined, in this Agreement shall be construed and defined in accordance with the UCC.

 

1.4                               Construction.  For purposes of this Agreement and the other Loan Documents, the following rules of construction shall apply, unless specifically indicated to the contrary:  (a) wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter; (b) the term “or” is not exclusive; (c) the term “including” (or any form thereof) shall not be limiting or exclusive; (d) all references to statutes and related regulations shall include any amendments thereof and any successor statutes and regulations; (e) the words “herein,” “hereof” and “hereunder” or other words of similar import refer to this Agreement as a whole, including the exhibits and schedules hereto, as the same may from time to time be amended, modified or supplemented, and not to any particular section, subsection or clause contained in this Agreement; (f) all references in this Agreement or in the schedules to this Agreement to sections, schedules, disclosure schedules, exhibits, and attachments shall refer to the corresponding sections, schedules, disclosure schedules, exhibits, and attachments of or to this Agreement; and (g) all references to any instruments or agreements, including references to any of the Loan Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof.

 

1.5                               USA Patriot Act Notice.  Each Lender is subject to the USA Patriot Act and hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (as amended and supplemented from time to time, the “Patriot Act”), each Lender is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow each Lender to identify Borrower in accordance with the Patriot Act.

 

2.                                      REVOLVING COMMITMENT

 

2.1                               Revolving Loans.  Subject to the terms and conditions of this Agreement, Lenders severally shall, pro rata according to that Lender’s Pro Rata Share of the Revolving Commitment, extend Revolving Loans to Borrower from time to time until the Maturity Date.  Subject to Section 2.8.2, the aggregate amount of Loans outstanding shall not exceed at any time the Borrowing Availability.  Prior to the Maturity Date, Borrower may repay at any time any outstanding Loans and any amounts so repaid may be reborrowed, up to Borrowing Availability.  Loans shall be evidenced by and repayable in accordance with the terms of the Revolving Note and this Agreement.

 

2.1.1                                             Choice of Interest Rate.  Any Revolving Loan shall, at the option of Borrower, be made either as a Base Rate Loan or as a LIBOR Loan; provided that if a Default or Event of Default has occurred and is continuing, all Loans shall be made as Base Rate Loans.  If Borrower fails to give notice to Administrative Agent specifying whether any LIBOR Loan is to be repaid or reborrowed on a Payment Date, such LIBOR Loan shall be repaid and then reborrowed as a Base Rate Loan on the Payment Date.  Each request for a Revolving Loan shall,

 

34

 

among other things, specify (1) the date of the proposed Revolving Loan, which shall be a Business Day, (2) the amount of the Revolving Loan, (3) whether it is to be a Base Rate Loan or a LIBOR Loan, and (4) the LIBOR Loan Period, if applicable.

 

2.1.2                                             Request for Base Rate Loans.  Except as otherwise specified herein, Borrower shall give to Administrative Agent, irrevocable notice of a request for each Loan by telephone or facsimile transmission not later than 11:00 a.m. (California time) at least one (1) Business Day prior to the proposed Base Rate Loan.  Any notice in connection with a requested Revolving Loan under this Agreement that is received by Administrative Agent after 11:00 a.m. (California time) on any Business Day, or at any time on a day that is not a Business Day, shall be deemed received by Administrative Agent on the next Business Day.

 

2.1.3                                             Request for LIBOR Loans.

 

(a)                                 Borrower shall give to Administrative Agent irrevocable notice of a request for a LIBOR Loan by telephone or facsimile transmission not later than three (3) Business Days prior to the date of the proposed LIBOR Loan.  Administrative Agent shall determine the applicable LIBOR Basis as of the Business Day prior to the date of the requested LIBOR Loan.  Each determination by Administrative Agent of a LIBOR Basis shall, absent manifest error, be deemed final, binding and conclusive upon Borrower.  The LIBOR Loan Period for each LIBOR Loan shall be fixed at one (1), two (2), three (3) or six (6) months.

 

(b)                                 (i) Each LIBOR Loan shall be in a principal amount of not less than Five Million and 0/100 Dollars ($5,000,000.00) and in an integral multiple of $100,000, (ii) at no time shall there be more than ten (10) tranches of LIBOR Loans outstanding, and (iii) subject to Section 2.8.2, the total aggregate principal amount of all LIBOR Loans outstanding at any one time shall not exceed Borrowing Availability.

 

(c)                                  At least three (3) Business Days prior to each Payment Date for a LIBOR Loan, Borrower shall give irrevocable written notice to Lender specifying whether all or a portion of such LIBOR Loan outstanding on the Payment Date (i) is to be repaid and then reborrowed in whole or in part as a new LIBOR Loan, in which case such notice shall also specify the LIBOR Loan Period that Borrower shall have selected for such new LIBOR Loan; (provided that in the case of any such reborrowing as a new LIBOR Loan, if a Default or Event of Default has occurred and is continuing, Borrower shall not have the option to repay and then reborrow such LIBOR Loan as a new LIBOR Loan, but instead shall only be able to convert such LIBOR Loan to a Base Rate Loan), (ii) is to be repaid and then reborrowed in whole or in part as a Base Rate Loan, or (iii) is to be repaid and not reborrowed; provided that any such reborrowings described in clauses (i) and (ii) above shall be in a principal amount of not less than $5,000,000.00 and in an integral multiple of $100,000.  Upon such Payment Date such LIBOR Loan will, subject to the provisions of this Agreement, be so repaid and, as applicable, reborrowed.

 

2.1.4                                             Request and Disbursement.  Administrative Agent shall, upon the reasonable request of Borrower from time to time, provide to Borrower such information with regard to the LIBOR Basis as Borrower may request.  Promptly following receipt of a request for a Loan, Administrative Agent shall notify each Lender by telephone or telecopier or electronic

 

35

 

mail (and if by telephone, promptly confirmed by telecopier or electronic mail) of the date and type of Loan, the applicable LIBOR Loan Period, and that Lender’s Pro Rata Share of the Loan.  Not later than 10:00 a.m., California time, on the date specified for any Loan (which must be a Business Day), each Lender shall make its Pro Rata Share of the Loan in immediately available funds available to Administrative Agent at Administrative Agent’s office.  Prior to 11:00 a.m. (California time) on the date of a Revolving Loan, Administrative Agent shall, subject to the satisfaction of the conditions set forth in Section 2.2, disburse the amount of the requested Revolving Loan by deposit into the Demand Deposit Account or by wire transfer pursuant to Borrower’s written instructions.

 

2.2                               Swing Line Loans.

 

2.2.1                                             Swing Line Commitment.  The Swing Line Lender shall from time to time from the Closing Date through the day prior to the Maturity Date make loans to Borrower in such amounts as Borrower may request, up to an aggregate maximum amount of $15,000,000.00 (each, a “Swing Line Loan”), provided that (a) if after giving effect to such Swing Line Loan, the sum of the aggregate principal amount of all then outstanding Loans does not exceed the Borrowing Availability at such time; and (b) without the consent of all of the Lenders, no Swing Line Loan may be made during the continuation of an Event of Default, provided written notice of such Event of Default shall have been provided to Swing Line Lender by Administrative Agent or a Lender sufficiently in advance of the making of such Swing Line Loan.

 

2.2.2                                             Request for Swing Line Loan.  Borrower may borrow, repay and reborrow under the Swing Line Commitment, subject to the remaining availability under the Swing Line Commitment and subject to availability under the Revolving Commitment, upon telephonic request by an Authorized Signatory of Borrower made to Administrative Agent not later than 2:00 p.m., California time, on the Business Day of the requested borrowing (which telephonic request shall be promptly confirmed in writing by telecopier or electronic mail).  Promptly after receipt of such a request for borrowing, Administrative Agent shall provide telephonic verification to the Swing Line Lender that, after giving effect to such request, availability under the Swing Line Commitment and the Revolving Commitment will exist (and such verification shall be promptly confirmed in writing by telecopier or electronic mail).  Borrower shall notify the Swing Line Lender of its intention to make a repayment of a Swing Line Loan not later than 1:00 p.m. California time on the date of repayment.  If Borrower instructs the Swing Line Lender to debit its Demand Deposit Account in the amount of any payment with respect to a Swing Line Loan, or the Swing Line Lender otherwise receives repayment, after 3:00 p.m., California time, on a Business Day, such payment shall be deemed received on the next Business Day.  The Swing Line Lender shall promptly notify Administrative Agent of the Swing Line Loan outstanding each time there is a change therein.

 

2.2.3                                             Swing Line Interest Rate.  Swing Line Loans shall bear interest at a fluctuating all-in rate (commensurate with a market rate of interest at the time of funding) per annum as quoted by Swing Line Lender to Borrower at the time a Swing Line Loan is requested by Borrower.  Interest shall be payable monthly on such dates as may be specified by the Swing Line Lender and in any event on the Maturity Date.  The Swing Line Lender shall be responsible for invoicing Borrower for such interest.  The interest payable on Swing Line Loans is solely for the account of the Swing Line Lender (subject to Section 2.2.5 below).

 

36

 

2.2.4                                             Swing Line Maturity Date.  Subject to Section 2.2.6 below, the principal amount of all Swing Line Loans shall be due and payable on the earlier of (i) the maturity date agreed to by the Swing Line Lender and Borrower with respect to such loan or (ii) the Maturity Date.

 

2.2.5                                             Swing Line Participation.  Upon the making of a Swing Line Loan, each Lender shall be deemed to have purchased from the Swing Line Lender a participation therein in an amount equal to that Lender’s Pro Rata Share times the amount of the Swing Line Loan.  Upon demand made by the Swing Line Lender, which shall occur not more than once per week, each Lender shall, according to its Pro Rata Share, promptly provide to the Swing Line Lender its purchase price therefor in an amount equal to its participation therein.  The obligation of each Lender to so provide its purchase price to the Swing Line Lender shall be absolute and unconditional (except for modifications or demand made by the Swing Line Lender) and shall not be affected by the existence of an uncured Event of Default; provided that no Lender shall be obligated to purchase its Pro Rata Share of (i) the Swing Line Loans to the extent that, after giving effect to such Swing Line Loan, advances under the Revolving Commitment exceed the Borrowing Availability, (ii) Swing Line Loans to the extent that, after giving effect to such Swing Line Loan, the aggregate amount of Swing Line Loans outstanding exceed $15,000,000.00, or (iii) any Swing Line Loan made (absent the consent of all of the Lenders) during the continuation of an Event of Default if written notice of such Event of Default shall have been provided to Swing Line Lender by Administrative Agent or a Lender sufficiently in advance of the making of such Swing Line Loan.  Each Lender that has provided to the Swing Line Lender the purchase price due for its participation in Swing Line Loans shall thereupon acquire a pro rata participation, to the extent of such payment, in the claim of the Swing Line Lender against Borrower for principal and interest and shall share, in accordance with that pro rata participation, in any principal payment made by Borrower with respect to such claim and in any interest payment made by Borrower (but only with respect to periods subsequent to the date such Lender paid the Swing Line Lender its purchase price) with respect to such claim.

 

2.2.6                                             Swing Line Repayment; Revolving Loans.  The Swing Line Lender may, at any time, in its sole discretion, by not less than two Business Days’ prior written notice to Borrower and Lenders, demand payment of the Swing Line Loans by way of a Revolving Loan in the full amount or any portion of the outstanding amount of Swing Line Loans.  In each case, Administrative Agent shall automatically provide the advances made by each Lender to the Swing Line Lender (which the Swing Line Lender shall then apply to the outstanding amount of the Swing Line Loans).  In the event that Borrower fails to request a Revolving Loan within the time specified by this Section 2.2.6 on any such date, Administrative Agent may, but is not required to, without notice to or the consent of Borrower, cause Base Rate Loans to be made by the Lenders under the Revolving Commitment in amounts which are sufficient to reduce the outstanding amount of the Swing Line Loans as required above.  The proceeds of such advances shall be paid directly to the Swing Line Lender for application to the outstanding amount of the Swing Line Loans.

 

2.3                               [Reserved].

 

37

 

2.4                               Payment of Interest; Interest Rate.

 

2.4.1                                             Loans.  Interest on Revolving Loans and Swing Line Loans shall be payable as follows:

 

(a)                                 Base Rate Loans.  Interest on each outstanding Base Rate Loan shall be computed for the actual number of days elapsed on the basis of a year of 360 days and shall be payable to Administrative Agent for the ratable benefit of Lenders, in arrears (i) on the first Business Day of each month, (ii) on the Maturity Date, and (iii) if any interest accrues or remains payable after the Maturity Date or during the continuance of an Event of Default, upon demand by Administrative Agent.  Interest shall accrue and be payable on each Base Rate Loan at a per annum interest rate equal to the Base Rate plus the Applicable Base Rate Margin (“Applicable Base Rate”).  The Base Rate shall be equal to the highest of (i) the rate of interest most recently announced by Administrative Agent as to its U.S. dollar “Reference Rate”, (ii) the Federal Funds Rate plus one-half of one percent (0.50%) or (iii) one month LIBOR plus one and one half percent (1.50%).

 

(b)                                 LIBOR Loans.  Interest on each outstanding LIBOR Loan shall be computed for the actual number of days elapsed on the basis of a year of 360 days and shall be payable to Administrative Agent, for the ratable benefit of Lenders, in arrears (i) on the last day of the applicable LIBOR Loan Period in the case of any LIBOR Loan with a LIBOR Loan Period of one, two or three months, (ii) on the 90th day and the last day of the applicable LIBOR Loan Period in the case of any LIBOR Loan with a LIBOR Loan Period greater than three months, (iii) on the Maturity Date, and (iv) if any interest accrues or remains payable after the Maturity Date or during the continuance of an Event of Default, upon demand by Administrative Agent.  Interest shall accrue and be payable on each LIBOR Loan at a per annum interest rate equal to the LIBOR Basis applicable to such LIBOR Loan plus the Applicable LIBOR Margin (“Applicable LIBOR Rate”).

 

(c)                                  Applicable Margins and Fees.  The Applicable Base Rate Margin, the Applicable LIBOR Margin, and Applicable Unused Line Fee Percentage shall be determined based on the Leverage Ratio as reported in the most recent Compliance Certificate (delivered to Administrative Agent pursuant to Section 8) by reference to Table 1 below:

 

Table 1

 

	
Level
    	
 
    	
Leverage Ratio
    	
 
    	
Applicable Base
   Rate Margin
    	
 
    	
Applicable
   LIBOR
   Margin
    	
 
    	
Applicable
   Unused
   Line Fee
   Percentage
    	
 
    
	
I
    	
 
    	
<3.0
    	
 
    	
0.00
    	
%
    	
1.50
    	
%
    	
0.250
    	
%
    
	
II
    	
 
    	
>3.0 but less than 3.5
    	
 
    	
0.75
    	
%
    	
2.00
    	
%
    	
0.375
    	
%
    
	
III
    	
 
    	
>3.5 but less than 4.0
    	
 
    	
1.25
    	
%
    	
2.50
    	
%
    	
0.500
    	
%
    
	
IV
    	
 
    	
>4.0 but less than 4.5
    	
 
    	
1.75
    	
%
    	
2.75
    	
%
    	
0.625
    	
%
    
	
V
    	
 
    	
>4.5
    	
 
    	
2.25
    	
%
    	
3.50
    	
%
    	
0.750
    	
%
    

 

38

 

Notwithstanding the foregoing, Level III rates shall apply for all Loans made from the Closing Date until Administrative Agent has received a Compliance Certificate, satisfactory in form and substance to Administrative Agent, for Borrower’s Fiscal Quarter ending June 30, 2014.

 

2.4.2                                             Default Rate.  Upon the occurrence and during the continuance of an Event of Default, interest on all outstanding Obligations shall, upon the election of Administrative Agent (acting at the direction of the Requisite Lenders), confirmed by written notice from Administrative Agent to Borrower, accrue and be payable at the Default Rate.  Interest accruing at the Default Rate shall be payable to Administrative Agent, for the ratable benefit of Lenders, on demand and in any event on the Maturity Date.  Administrative Agent shall not be required to (1) accelerate the maturity of the Loans or (2) exercise any other rights or remedies under the Loan Documents, in order to charge the Default Rate.  Upon the occurrence and during the continuance of an Event of Default specified in Sections 9.1.5, 9.1.6, or 9.1.7, the interest rate shall be increased automatically to the Default Rate without the necessity of any action by Administrative Agent.

 

2.5                               Maximum Rate of Interest.  In no event shall the aggregate of all interest on the Obligations charged or collected pursuant to the terms of this Agreement or pursuant to the Notes exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable.  In the event that such a court determines that a Lender has charged or received interest under this Agreement or the Notes in excess of the highest applicable rate, the rate in effect under this Agreement and the Notes shall automatically be reduced to the maximum rate permitted by Applicable Law and Lender shall promptly apply such excess to reduce the principal balance of the Obligations, or if the principal balance of the Obligations owing have been paid in full, Lender shall promptly apply such excess to reduce any other Obligations, and if all Obligations have been paid in full, then Lender shall refund to Borrower any interest received by Lender in excess of the maximum lawful rate; provided that if at any time thereafter the rate of interest payable hereunder is less than the highest applicable rate, Borrower shall continue to pay interest hereunder at the highest applicable rate, until such time as the total interest received by Lender from the making of Loans hereunder is equal to the total interest that Lender would have received had the interest rate payable hereunder been (but for the operation of this Section 2.5) the interest rate payable since the Closing Date as otherwise provided in this Agreement.  It is the intent of this Agreement that Borrower not pay or contract to pay, and that Lender not receive or contract to receive, directly or indirectly, interest in excess of that which may be paid by Borrower under Applicable Law.

 

2.6                               Fees.  Borrower shall pay to Administrative Agent:

 

2.6.1                                             Unused Line Fee.  The Unused Line Fee for the ratable benefit of Lenders commencing as of the Closing Date, payable quarterly in arrears, commencing on the first Business Day of the Fiscal Quarter beginning July 1, 2014, and ending on the Maturity Date.  The Unused Line Fee shall be, for each day after the Closing Date through the Maturity Date, an amount equal to (a) the difference between (1) the Maximum Amount, and (2) the closing balance of the Loans for such day, multiplied by (b) the Applicable Unused Line Fee Percentage, the product of which is then divided by (c) 360.  Notwithstanding the foregoing, no Unused Line Fee shall be paid by Borrower for the benefit of any Defaulting Lender for each day that such Lender remains a Defaulting Lender; provided that an Unused Line Fee shall continue

 

39

 

to accrue for the ratable benefit of all Non-Defaulting Lenders for such time period and an Unused Line Fee shall accrue as to the previously Defaulting Lender upon the date that such Lender becomes a Non-Defaulting Lender.

 

2.6.2                                             [Reserved].

 

2.6.3                                             Fees to Administrative Agent.  On the Closing Date and on each other date upon which a fee is payable, Borrower shall pay to Administrative Agent such fees as heretofore agreed upon by letter agreement dated as of March 31, 2014, between Borrower and Union Bank, N.A., as Administrative Agent, which fees shall be solely for its own account and are nonrefundable.

 

2.7                               Late Payments.  If any installment of principal or interest or any fee or cost or other amount payable under any Loan Document to any Lender, or Swing Line Lender is not paid when due, it shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate, to the fullest extent permitted by Applicable Laws.

 

2.8                               Repayment and Prepayment.

 

2.8.1                                             Repayment and Voluntary Prepayment.  Borrower shall pay the principal balance of the Loans and all other Obligations in full on the Maturity Date.  The principal amount of any Base Rate Loan may be prepaid prior to the Maturity Date at any time; provided, that any such prepayments shall be in minimum amounts to be agreed upon by Administrative Agent and Borrower.  The principal amount of any LIBOR Loan together with all accrued and unpaid interest thereon may be prepaid prior to the applicable Payment Date, together with any breakage fees as set forth in Section 2.8.5, upon three (3) Business Days’ prior notice to Lender.  Each notice of prepayment shall be irrevocable.

 

2.8.2                                             Overadvances.  Borrower shall immediately repay to Administrative Agent, for the ratable benefit of Lenders, any Overadvance.  Overadvances constitute Obligations that are evidenced by the Revolving Note, secured by the Collateral, and entitled to all of the benefits of the Loan Documents.

 

2.8.3                                             Mandatory Prepayment.  Within three (3) Business Days of receiving written notice from Administrative Agent of the occurrence of any Borrowing Base Deficiency or Appraisal Deficiency, Borrower shall repay all or such portion of the Loans in an amount equal to such deficiency, together with any breakage fees as set forth in Section 2.8.5; provided that with respect to an Appraisal Deficiency which is the result of a new or updated appraisal, the foregoing cure period shall be extended to be sixty (60) days.

 

2.8.4                                             Mandatory Repayment.  Upon the occurrence of a Change in Control, the Revolving Commitment shall be terminated, and all outstanding Loans shall be repaid in full, together with any breakage fees as set forth in Section 2.8.5 and for the avoidance of doubt a Permitted Change in Control shall not constitute a Change in Control.

 

2.8.5                                             Breakage Fees.  Upon payment or prepayment of any LIBOR Loan (other than as the result of a conversion required under Section 15.1.3) on a day other than the last day in the applicable LIBOR Loan Period (whether voluntarily, involuntarily, by reason of

 

40

 

acceleration, or otherwise), or upon the failure of Borrower (for a reason other than the breach by a Lender of its obligation to make a LIBOR Loan pursuant to this Agreement) to borrow on the date or in the amount specified for a LIBOR Loan in any Notice of Borrowing, Borrower shall pay to Lender within five (5) Business Days after demand a prepayment fee or failure to borrow fee, as the case may be (determined based on 100% of the LIBOR Loan actually funded in the London Eurodollar Market (the “Designated Eurodollar Market”)) equal to the sum of:

 

(a)                                 $250; plus

 

(b)                                 the amount, if any, by which (i) the additional interest would have accrued on the amount prepaid or not borrowed at the LIBOR Basis exceeds (ii) the interest Lenders could recover by placing such amount on deposit in the Designated Eurodollar Market for a period beginning on the date of the prepayment or failure to borrow and ending on the last day of the applicable LIBOR Loan Period (or, if no deposit rate quotation is available for such period, for the most comparable period for which a deposit rate quotation may be obtained); plus

 

(c)                                  all out-of-pocket expenses incurred by Lenders directly attributable to such payment, prepayment or failure to borrow.

 

Each Lender making a claim under this Section shall submit to the Borrower an itemized and substantiated statement setting forth such Lender’s accounting of the amount of any prepayment fee payable under this Section, which calculation shall, absent manifest error, be deemed final, binding and conclusive upon Borrower, unless Borrower, within thirty (30) days after the date any such accounting is rendered, provides such Lender with written notice of any objection which Borrower may have to such accounting.

 

2.9                               Term.  The Credit Facilities shall be in effect until the Maturity Date.  The Credit Facilities and all other Obligations related thereto shall be automatically due and payable in full on the Maturity Date, unless earlier due and payable or terminated as provided in this Agreement.

 

2.10                        Early Termination.  The Credit Facilities may be terminated, in whole or in increments of $10,000,000.00, by Borrower prior to the Maturity Date upon five (5) Business Days’ prior written notice to Administrative Agent; provided that at such time Borrower shall (a) prepay all amounts outstanding under the Credit Facilities which exceed the reduced Revolving Commitment amount elected by Borrower, (b) pay all accrued interest thereon and fees and charges incurred in connection therewith, and (c) reimburse Lenders for those costs and expenses incurred by Lenders in connection with such prepayment and termination, as set forth in Section 2.8.5.

 

2.11                        Note and Accounting.  Administrative Agent shall provide a quarterly accounting to Borrower of the Loans and other transactions under this Agreement, including Administrative Agent’s calculation of principal and interest.  Each and every such accounting shall, absent manifest error, be deemed final, binding and conclusive upon Borrower, unless Borrower, within thirty (30) days after the date any such accounting is rendered, provides Administrative Agent with written notice of any objection which Borrower may have to any item in such accounting, describing the basis for such objection with specificity.  In that event, only those items expressly

 

41

 

objected to in such notice shall be deemed to be disputed by Borrower, and in the event the parties cannot resolve their dispute, such dispute shall be resolved in accordance with the terms and conditions set forth in Sections 12.14 and 12.15 of this Agreement.

 

2.12                        Manner of Payment.

 

2.12.1                                      When Payments Due.

 

(a)                                 Except as expressly set forth in this Agreement, each payment (including any prepayment) by Borrower on account of the principal of or interest on the Loans and any other amount owed to Lenders on account of the Obligations shall be made not later than 11:00 a.m. (California time) on the date specified for payment under this Agreement to Administrative Agent in lawful money of the United States and in immediately available funds.  Any payment received by Administrative Agent on a day that is not a Business Day or after 11:00 a.m. (California time) on a Business Day, shall be deemed received on the next Business Day.  The amount of all payments received by Administrative Agent for the account of each Lender shall be immediately paid by Administrative Agent to the applicable Non-Defaulting Lender in immediately available funds and, if such payment was received by Administrative Agent by 11:00 a.m., California time, on a Business Day and not so made available to the account of a Lender on that Business Day, Administrative Agent shall reimburse that Lender for the cost to such Lender of funding the amount of such payment at the Federal Funds Rate.  The amount of all payments received by the Administrative Agent for the account of any Defaulting Lender shall be held in trust by the Administrative Agent for the benefit of such Defaulting Lender until such time as such Defaulting Lender shall cease to be a Defaulting Lender under this Agreement, at which time, the Administrative Agent shall pay over such amounts (without interest) to such Lender.  All payments shall be made in lawful money of the United States of America.

 

(b)                                 If any payment on any Obligation is specified to be made upon a day that is not a Business Day, it shall (subject to the provisions of the LIBOR Loan Period which may require payment by one (1) earlier Business Day) be deemed to be specified to be made on the next succeeding day that is a Business Day, and such extension of time shall in such case be included in computing interest and fees, if any, in connection with such payment.

 

2.12.2                                      No Deductions.  Subject to Section 2.12.1(a) above, Borrower shall pay principal, interest, fees, and all other amounts due on the Obligations without set-off or counterclaim or any deduction whatsoever.

 

2.12.3                                      Inadequate Payments.  If, on the date on which any amount (including any payment of principal, interest or other costs and expenses) shall be due and payable by Borrower to Credit Facility Lenders, the amount received by any such Lenders from Borrower shall not be adequate to pay the entire amount then due and payable, then Administrative Agent shall be authorized, but shall not be obligated, to make a Base Rate Loan to Borrower in the amount of the deficiency.

 

2.13                        Application of Payments.  Borrower irrevocably waives the right to direct the application of any and all payments received at any time by any Credit Facility Lender from or

 

42

 

on behalf of Borrower and specifically waives any provisions of the law of the State of New York or any other Applicable Law giving Borrower the right to designate application of payments.  All amounts received by Administrative Agent for application to the Obligations shall be applied by Administrative Agent in the following order of priority:  (i) to the payment of any fees then due and payable, (ii) to the payments of all other amounts not otherwise referred to in this Section 2.13 then due and payable hereunder or under the other Loan Documents (including any costs and expenses incurred by Administrative Agent as a result of a Default or an Event of Default), (iii) to the payment of interest then due and payable on the Loans, and (iv) to the payment of principal then due and payable on the Loans.  Notwithstanding the foregoing, Borrower irrevocably agrees that, during the occurrence of an Event of Default, Credit Facility Lenders shall have the continuing exclusive right to determine the order and method of the application of payments against the then due and payable Obligations of Borrower in each of the Credit Facility Lenders’ sole discretion and to revise such application prospectively or retroactively in Credit Facility Lenders’ sole discretion, provided that all proceeds of Collateral shall be distributed pari passu to the Credit Facility Lenders.

 

2.14                        Use of Proceeds.  The proceeds of the Loans shall be used by Borrower for general corporate purposes, including financing aircraft engines owned and held for lease and the purchase of Parts.

 

2.15                        All Obligations to Constitute One Obligation.  All Obligations related to the Credit Facilities constitute one general obligation of Borrower and shall be secured by Security Agent’s Liens upon all of the Collateral, and by all other Liens previously, now or at any time in the future granted by Borrower to Security Agent, Administrative Agent or any Credit Facility Lender to the extent provided in the Collateral Documents and permitted by this Agreement.

 

2.16                        Authorization to Make Loans.  Administrative Agent, each Lender and Swing Line Lender (each, an “Authorized Party”) are authorized to make the Loans based on telephonic or other oral or written instructions received from any Person that an Authorized Party believes in good faith to be an authorized representative of Borrower, or at the discretion of such Authorized Party, if such Loans are necessary to satisfy any of the Obligations.  Borrower consents to the recordation of any telephonic or other communications between an Authorized Party and Borrower for the purpose of maintaining such party’s business records of such transactions.

 

2.17                        Authorization to Debit Accounts.  Borrower authorizes each Authorized Party, upon prior notice to Borrower, to debit any of Borrower’s bank accounts with such party for the purpose of Borrower’s payment of principal, interest or other costs and expenses due and payable by Borrower to Lenders under this Agreement.

 

2.18                        Administrative Agent’s Right to Assume Funds Available for Revolving Loans.  Unless Administrative Agent shall have been notified by any Lender no later than 10:00 a.m. on the Business Day of the proposed funding by Administrative Agent of any Revolving Loan that such Lender does not intend to make available to Administrative Agent such Lender’s portion of the total amount of such Revolving Loan, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on the date of the Revolving Loan and Administrative Agent may, in reliance upon such assumption, make available to Borrower a

 

43

 

corresponding amount.  If Administrative Agent has made funds available to Borrower based on such assumption and such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender.  If such Lender does not pay such corresponding amount forthwith upon Administrative Agent’s demand therefor, Administrative Agent promptly shall notify Borrower and Borrower shall either (i) pay such corresponding amount to Administrative Agent or (ii) arrange for another Lender or Lenders to assume the Defaulting Lender’s commitment to pay such corresponding amount and such assuming Lender(s) shall pay the corresponding amount to Administrative Agent (upon which payment the Defaulting Lender’s and any such assuming Lender’s Pro Rata Share shall be adjusted accordingly).  Administrative Agent also shall be entitled to recover from such Defaulting Lender interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by Administrative Agent to Borrower to the date such corresponding amount is recovered by Administrative Agent, at a rate per annum equal to the daily Federal Funds Rate.  Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its share of the Revolving Commitment or to prejudice any rights which Administrative Agent or Borrower may have against any Lender as a result of any default by such Lender hereunder.

 

3.                                      SECURITY

 

To secure the prompt payment and performance of all Obligations, for the ratable benefit of Credit Facility Lenders, Borrower, each Engine Owner, each Equipment Owner and each Leasing Subsidiary, as applicable, shall enter into the Collateral Documents creating security interests in the Collateral.

 

4.                                      CONDITIONS PRECEDENT

 

4.1                               Conditions Precedent to Closing.  Credit Facility Lenders shall not be obligated to make any Loan, or to take, fulfill, or perform any other action under this Agreement, until the following conditions have been satisfied to their reasonable satisfaction or waived in writing by each such lender:

 

4.1.1                                             Administrative Agent shall have received:

 

(a)                                 originals of the documents set forth on Schedule 1.1e (Schedule of Documents), each duly executed by the appropriate parties, together with such other assurances, certificates, documents or consents related to the foregoing as Administrative Agent reasonably may require, all in form and substance satisfactory to Administrative Agent;

 

(b)                                 such documentation as Administrative Agent may reasonably require to establish the due organization, valid existence and good standing of Borrower and each Leasing Subsidiary, and as to each, its qualification to engage in business in each material jurisdiction in which it is engaged in business or required to be so qualified, its authority to execute, deliver and perform the Loan Documents to which it is a party, the identity, authority and capacity of each Authorized Signatory thereof authorized to act on its behalf, including certified copies of articles of organization and amendments thereto, bylaws and operating agreements and amendments thereto, certificates of good standing and/or qualification to engage

 

44

 

in business, tax clearance certificates, certificates of corporate resolutions, incumbency certificates, certificates of Authorized Signatory, and the like;

 

(c)                                  (i) a list of all current insurance of any nature maintained by Borrower, as well as a summary of the terms of such insurance, including insurance for Engines and Equipment leased pursuant to an Eligible Lease and (ii) a copy of all insurance certificates or other evidence of insurance for the Collateral, as requested by Agent;

 

(d)                                 originals of favorable written opinions, dated as of the date hereof, of independent and internal counsel to the Borrower, Leasing Subsidiary and the Owner Trustee, in each case acceptable to Administrative Agent, addressed to Agents and Credit Facility Lenders (and their respective participants and assigns) and otherwise in form and substance satisfactory to Administrative Agent as to such matters as Administrative Agent shall determine;

 

(e)                                  a Compliance Certificate dated as of the Closing Date;

 

(f)                                   copies of all consents and authorizations of, permits from or filings with, any Governmental Authority or other Person required in connection with the execution, delivery, performance or enforceability of the Loan Documents or any provision thereof and no material changes in governmental regulations affecting the Borrower, Agents or the Lenders shall have occurred; and

 

(g)                                  a certified lien search for the State of Delaware with respect to the Borrower and each of its Subsidiaries, and (ii) a Federal tax lien search with respect to the Borrower and each of its Subsidiaries, and any other searches as may be required by Administrative Agent or Security Agent.

 

4.1.2                                             All of the financing statements and other documentation described in the Security Agreement shall have been filed with the appropriate Governmental Agencies, and, subject to the first sentence of Section 4.3, Security Agent shall hold a first priority perfected Lien in the Collateral, for the ratable benefit of Credit Facility Lenders, subject only to Permitted Liens.

 

4.1.3                                             The following statements shall be true, and Administrative Agent shall have received evidence reasonably satisfactory to it (including, with respect to each Registerable Asset which is eligible for registration with the International Registry, a printout of the “priority search certificate” from the International Registry or other valid evidence of such ownership reasonably acceptable to the Security Agent showing the Engine Owners’ or Equipment Owners’ ownership interest with respect to such Registerable Asset under a contract of sale) with respect to each Registerable Asset and any related Lease included in the Borrowing Base to the effect that:

 

(a)                                 the applicable Engine Owner or Equipment Owner owns such Registerable Asset and the related Lease, free and clear of Liens other than (i) Permitted Liens and (ii) the Lien, the International Interests and assignment of International Interests created by the Mortgage and Security Agreement; and

 

45

 

(b)                                 with respect to each Registerable Asset, the Borrower is in compliance with the applicable requirements of the Security Agreement and the Mortgage and Security Agreement or the Owner Trustee Mortgage and Security Agreement, as applicable.

 

4.1.4                                             Borrower shall have paid to Administrative Agent all fees, costs, and expenses of closing (including reasonable fees of legal counsel to Administrative Agent presented as of the Closing Date).

 

4.1.5                                             Borrower shall have paid to each Lender such upfront fees, if any, payable on or prior to the Closing Date as heretofore agreed upon by separate letter agreement between Borrower and any such Lender.

 

4.1.6                                             There shall be no action, proceeding, investigation, regulation or legislation which shall have been instituted, threatened or proposed before any court, Governmental Authority or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of, or which is related to or arises out of, this Agreement or any other Loan Document or the consummation of the transactions contemplated hereby or thereby and which, in any Lender’s sole judgment, would make it inadvisable to consummate the transactions contemplated by this Agreement or any other Loan Document.

 

4.1.7                                             Administrative Agent shall have completed its independent business and legal due diligence, including but not limited to financial, legal and insurance reviews, with results satisfactory to Administrative Agent.

 

4.1.8                                             All of the representations and warranties of Borrower under this Agreement shall be true and correct as of the Closing Date.

 

4.1.9                                             Credit Facility Lenders, Administrative Agent, and Security Agent each shall have obtained satisfactory credit or other required internal approval(s) in connection with the transactions contemplated by this Agreement and the Loan Documents.

 

4.1.10                                      The Closing Date shall occur on or before June 4, 2014.

 

4.1.11                                      No circumstance or event shall have occurred, including but not limited to any litigation, actions, suits, proceedings or investigations pending as to Borrower, that constitutes a Material Adverse Effect as of the Closing Date.

 

4.1.12                                      Borrower shall be in compliance with all the terms and provisions of the Loan Documents, and no Default or Event of Default shall have occurred and be continuing.

 

4.1.13                                      Borrower shall have established the Demand Deposit Account with Administrative Agent.

 

If any other term of any Loan Document should conflict, or appear to conflict, with this Section 4.1, the terms of this Section 4.1 shall control, and Borrower shall have no rights under this Agreement or any other Loan Document until each of the conditions of this Section 4.1 has been complied with to Administrative Agent’s and Lenders’ satisfaction or specifically waived in a writing by Lenders.

 

46

 

4.2                               Conditions to All Loans.  It shall be a condition to the funding of any Loan that the following statements be true on the date of each such funding or advance, as the case may be:

 

4.2.1                                             Administrative Agent shall have timely received a Borrowing Notice or telephonic request, as applicable, together with an Borrowing Base Certificate dated as of the date of such Borrowing Notice.

 

4.2.2                                             Administrative Agent shall determine that, after giving effect to the requested Revolving Loan, no Overadvance will exist and that the conditions of Section 2.2.1 have been satisfied.

 

4.2.3                                             All of the representations and warranties of Borrower under this Agreement and the other Loan Documents shall be true and correct at such date, except to the extent any such representations and warranties relate to an earlier date, both before and after giving effect to the funding or issuance of such Loan, and Administrative Agent shall have received, if it so elects, a certification to that effect signed by an Authorized Signatory.

 

4.2.4                                             Borrower shall be in compliance with all the terms and provisions of the Loan Documents, and no Default or Event of Default shall have occurred and be continuing or would result after giving effect to such Loan.

 

4.2.5                                             No circumstance or event shall have occurred since the Closing Date, or would result from the funding, advance or incurrence of any Loan, that constitutes a Material Adverse Effect.

 

4.2.6                                             Subject to the first sentence of Section 4.3, Security Agent shall hold a perfected, first priority Lien on all Collateral, for the ratable benefit of Credit Facility Lenders, subject only to Permitted Liens.

 

4.2.7                                             Each Lender shall have received such information from Borrower and its Affiliates as required by such Lender to confirm that Borrower and its Affiliates are in compliance with the Patriot Act and similar laws.

 

4.3                               Conditions to Borrowing Base Inclusion.  As of the Closing Date, and thereafter, with respect to each new Engine or item of Equipment the following conditions shall be satisfied within five (5) Business Days following an advance of the Loan related thereto:

 

4.3.1                                             With respect to each Engine or item of Equipment which is owned by an Owner Trustee, Security Agent (or the Custodian) shall have received the documentation (including, without limitation, the Owner Trustee Guaranties, Owner Trustee Mortgage and Security Agreements, Trust Agreements, Beneficial Interest Pledge Agreements, Leasing Subsidiary Security Assignment, as applicable) set forth in the definitions of “Eligible Asset” and “Eligible Lease.”

 

4.3.2                                             In respect of any Owner Trustee which shall not have previously provided such documents to Administrative Agent, 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

 

47

 

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.

 

4.3.3                                             In the case of any Registerable Asset, the Borrower (for itself or Owner Trustee) will have caused a Prospective International Interest (or International Interest) in such Registerable Asset listing Security Agent as creditor to be registered with the International Registry with respect to the Mortgage and Security Agreement for such Registerable Asset and shall have caused to be filed with the FAA the Mortgage and Security Agreement or Owner Trustee Mortgage and Security Agreement with respect thereto and delivered the same to Security Agent.

 

4.3.4                                             In the case of any Registerable Asset, Administrative Agent shall have received evidence reasonably satisfactory to it (including, with respect to each Registerable Asset which is eligible for registration with the International Registry, a printout of the “priority search certificate” (as defined in the Regulations for the International Registry) from the International Registry or other valid evidence of such ownership acceptable to the Security Agent relating to Security Agent’s International Interest with respect to such Registerable Asset) with respect to such Registerable Asset to the effect that:

 

(a)                                 the applicable Engine Owner or Equipment Owner owns such Engine, free and clear of Liens other than Permitted Liens, and the Lien and International Interests and assignment of International Interests created by the Mortgage and Security Agreement or Owner Trustee Mortgage and Security Agreement, as the case may be;

 

(b)                                 the Lien and International Interest (or Prospective International Interest) of the Mortgage and Security Agreement created (or to be created) with respect to such Registerable Asset shall have been registered with the International Registry and the FAA, and, other than any Lease in effect prior to either (x) the date of the Original Credit Agreement, or (y) the acquisition of such Registerable Asset by the Borrower, no Lien or International Interest shall have been registered on the International Registry or with the FAA prior to such International Interest (or Prospective International Interest) with respect to such Registerable Asset; and

 

(c)                                  with respect to such Registerable Asset and any related Lease, the Borrower is in compliance with the applicable provisions of the Security Agreement and the Mortgage and Security Agreement;

 

4.3.5                                             If any Registerable Asset is subject to a Lease, then the following statements shall be true, and Administrative Agent shall have received evidence reasonably satisfactory to it (including, with respect to each Cape Town Eligible Lease, a printout of the “priority search certificate” (as defined in the Regulations for the International Registry) from the International Registry or other valid evidence of such ownership acceptable to the Security Agent relating to the Lessor’s interest in and International Interest with respect to such Registerable Asset under such Lease) with respect to such Registerable Asset and the related Lease to the effect that:

 

48

 

(a)                                 the applicable Engine Owner or Equipment Owner owns such Registerable Asset and Lease, free and clear of Liens other than Permitted Liens and the Lien, the International Interests and the assignment of International Interests created by the Mortgage and Security Agreement and/or Owner Trustee Mortgage and Security Agreement;

 

(b)                                 if the Lessee under such Lease is situated in a Contracting State, (x) the International Interest created by such Lease shall have been registered with the International Registry, and no International Interest shall have been registered on the International Registry prior to the registration of such International Interest (or Prospective International Interest) with respect to such Lease, (y) with respect to any Lease entered into after the date of the Original Credit Agreement, the registration of the International Interest created by such Lease shall be subordinate to the International Interest of Security Agent in the related Registerable Asset, and (z) the assignment (or prospective assignment) of such International Interest by the Lessor to Security Agent shall have been registered with the International Registry; and

 

(c)                                  the Borrower shall have caused executed originals of the Mortgage and Security Agreement or Owner Trustee Mortgage and Security Agreement with respect to such Registerable Asset and/or Lease to be filed with the FAA.

 

Notwithstanding the foregoing, but subject to clause (a) of this Section 4.3.5 if the Mortgage and Security Agreement or Owner Trustee Mortgage and Security Agreement and/or Lease for any Registerable Asset is not available on any Borrowing Date, but provided that in the case of a Lease of any Registerable Asset, the Lessee thereunder is situated in a Contracting State, the parties hereto agree nevertheless to close on the financing of such Registerable Asset so long as a Prospective International Interest or International Interest in such Registerable Asset and such Mortgage and Security Agreement or Owner Trustee Mortgage and Security Agreement and/or Lease has been duly registered in favor of Security Agent at the International Registry (with no prior International Interest in such Registerable Asset or Lease having been registered at the International Registry prior to the registration of such Prospective International Interest or International Interest in favor of Security Agent), in which case the Borrower shall cause the Mortgage and Security Agreement or Owner Trustee Mortgage and Security Agreement and/or Lease to be filed with the FAA within three (3) days of such registration of Prospective International Interest or International Interest.

 

4.3.6                                             The Borrower shall have caused its legal counsel to deliver to the Administrative Agent and the Borrower a memorandum as to the filing with the FAA for recordation and registration of an International Interest on the International Registry with respect to, the Mortgage and Security Agreement or Owner Trustee Mortgage and Security Agreement and/or Lease and the lack of filing with the FAA of any intervening documents, and the lack of registration with the International Registry of any intervening interests, with respect to such Registerable Asset and/or Lease, as applicable.

 

The request and acceptance by Borrower of the proceeds of the Loan shall be deemed to constitute, as of the date of such Loan, (1) a representation and warranty by Borrower that the conditions in Sections 4.2 and 4.3, as applicable, have been satisfied, and (2) a

 

49

 

confirmation by Borrower of the granting and continuance of Security Agent’s Liens pursuant to the Collateral Documents.

 

5.                                      REPRESENTATIONS AND WARRANTIES

 

Borrower represents, warrants and agrees that from and after the Closing Date and until the Termination Date:

 

5.1                               Corporate Existence; Compliance with Law.  Borrower is a corporation duly formed, validly existing and in good standing under the Applicable Laws of Delaware.  Borrower is duly qualified or registered to transact business and is in good standing in Delaware, New York, California and in each other jurisdiction in which the conduct of its business or the ownership or leasing of its Property makes such qualification or registration necessary and in which the failure to be so qualified or registered could have a Material Adverse Effect.  Borrower has all requisite power and authority to conduct its business, to own, pledge, mortgage or otherwise encumber and operate its Property, to lease the Property it operates under lease, to conduct its business as now or proposed to be conducted, to execute and deliver each Loan Document to which it is a party and to perform its Obligations. Borrower is in compliance with all Applicable Laws and other legal requirements applicable to its business, has obtained all authorizations, consents, approvals, orders, licenses and permits from, and has accomplished all filings, registrations and qualifications with, or obtained exemptions from any of the foregoing from, any Governmental Authority that are necessary for the transaction of its business.

 

5.2                               Executive Offices; Corporate or Other Names; Conduct of Business.  The locations of Borrower’s executive offices and principal place of business, and locations where all of Borrower’s records with respect to Collateral are kept are as set forth in Schedule 5.2, which schedule Borrower may update at any time without consent of, but with notice to, Agent.  Notwithstanding the foregoing, Borrower shall not change its (a) name, (b) chief executive office, (c) principal place of business or jurisdiction of formation, or (d) location of its records concerning the Collateral, without, in each instance, giving thirty (30) days’ subsequent written notice thereof to Administrative Agent and Security Agent and taking all actions deemed necessary or appropriate by Administrative Agent to protect and perfect Security Agent’s Liens continuously upon the Collateral.  Notwithstanding the foregoing, Borrower shall not change its principal place of business to a location outside the United States.

 

5.3                               Authority; Compliance with Other Agreements and Instruments and Government Regulations.  The execution, delivery and performance by Borrower, any Owner Trustee, any Leasing Subsidiary, and any Subsidiary of the Loan Documents to which each is a party have been duly authorized by all necessary corporate action, and do not and will not:

 

5.3.1                                             Require any consent or approval not heretofore obtained of any member, partner, director, stockholder, security holder or creditor of such party;

 

5.3.2                                             Violate or conflict with any provision of such party’s operating agreement, charter, articles of incorporation or bylaws, as applicable;

 

50

 

5.3.3                                             Result in or require the creation or imposition of any Lien (other than pursuant to the Loan Documents) upon or with respect to any Property now owned or leased or hereafter acquired or leased by such party;

 

5.3.4                                             Violate any Applicable Law; or

 

5.3.5                                             Result in a breach of or constitute a default under, or cause or permit the acceleration of any obligation owed under, any indenture or loan or credit agreement or any other Contractual Obligation to which such party is a party or by which such party or any of its property is bound or affected; and such party is not in violation of, or default under, any Applicable Law or Contractual Obligation, or any indenture, loan or credit agreement, in any respect.

 

5.4                               No Governmental Approvals Required.  Except as previously obtained or made, no authorization, consent, approval, order, license or permit from, or filing, registration or qualification with, any Governmental Authority is or will be required to authorize or permit under Applicable Laws the execution, delivery and performance by Borrower, any Owner Trustee, any Leasing Subsidiary, and any Subsidiary of the Loan Documents to which it is a party.

 

5.5                               Subsidiaries

 

5.5.1                                             As of the Closing Date, Schedule 5.5 hereto correctly sets forth the names, form of legal entity, membership interests or stock of Borrower or a Subsidiary of Borrower (specifying such owner) and jurisdictions of organization of all Subsidiaries of Borrower.  Except as described in Schedule 5.5, Borrower does not own any capital stock, equity interest or debt security which is convertible, or exchangeable, for capital stock or equity interest in any Person.  Unless otherwise indicated in Schedule 5.5, all of the outstanding shares of capital stock, or all of the units of equity interest, as the case may be, of each Subsidiary are owned of record and beneficially by Borrower, there are no outstanding options, warrants or other rights to purchase capital stock of any such Subsidiary, and all such shares or equity interests so owned are duly authorized, validly issued, fully paid and non-assessable, and were issued in compliance with all applicable state and federal securities and other Applicable Laws, and are free and clear of all Liens, except for Permitted Liens.

 

5.5.2                                             Each Subsidiary is a legal entity of the type described in Schedule 5.5 duly formed, validly existing and in good standing under the Applicable Laws of its jurisdiction of organization and is duly qualified to do business as a foreign organization and in good standing as such in each jurisdiction in which the conduct of its business or the ownership or leasing of its property makes such qualification necessary and in which the failure to be so qualified or registered could adversely affect the Borrower in any material respect, and has all requisite power and authority to conduct its business and to own and lease its property.

 

5.5.3                                             Each Subsidiary is in compliance with all Applicable Laws and other requirements applicable to its business and has obtained all authorizations, consents, approvals, orders, licenses, and permits from, and each such Subsidiary has accomplished all filings,

 

51

 

registrations, and qualifications with, or obtained exemptions from any of the foregoing from, any Governmental Authority that are necessary for the transaction of its business.

 

5.5.4                                             Borrower shall update Schedule 5.5, as necessary and without the consent of, but with notice to, Agent, to maintain the accuracy and correctness of such schedule at all times from the Closing Date through the Termination Date.

 

5.5.5                                             WLFC Funding (Ireland) Limited is a Wholly-Owned Subsidiary which is not currently operating as a business and which has no assets or operating income.

 

5.5.6                                             Willis Lease France is a Subsidiary whose operations are limited to the employment of persons resident in France and which has no material assets or material operating income.

 

5.6                               Financial Statements.  Borrower has furnished to Lender the audited financial statements of Borrower and its Subsidiaries (on a consolidated basis) as of the fiscal year ending December 31, 2013 (including balance sheets and income statements) and the unaudited financial statements of Borrower and its Subsidiaries (on a consolidated basis) as of the Fiscal Quarter ending March 31, 2014.  The financial information contained therein fairly presents in all material respects the financial condition, results of operations and changes in financial position of Borrower and its Subsidiaries (on a consolidated basis) as of such dates and for such periods.

 

5.7                               No Material Adverse Effect.  Except as set forth on Schedule 5.7, as of the Closing Date, no circumstance or event has occurred that constitutes a Material Adverse Effect.

 

5.8                               Title To and Location of Property.  Borrower and its Subsidiaries have valid title, to, or leasehold interests in, the Property, including all Engines and Equipment, as reflected in the balance sheet(s) described in Section 5.6, other than items of Property or exceptions to title which are in each case immaterial and Property subsequently sold or disposed of in the ordinary course of business.  Such Property is free and clear of all Liens, other than those described in Schedule 5.8 and Permitted Liens.

 

5.9                               Intellectual Property.  Borrower and its Subsidiaries own, or possess the right to use to the extent necessary in their respective businesses, all Intellectual Property, and no such Intellectual Property conflicts with the valid Intellectual Property of any other Person.  Except as set forth in Schedule 5.9, which schedule shall be accurate as of the Closing Date only and which Borrower shall not be required to update, Borrower has not used any trade name, trade style or “dba” during the five-year period ending on the Closing Date.

 

5.10                        Litigation.  Except for matters set forth in Schedule 5.10, there are no actions, suits, proceedings or investigations pending as to which Borrower or any of its Subsidiaries have been served or have received notice or, to the best knowledge of Borrower, threatened against or affecting Borrower or any of its Subsidiaries or any Property of any of them, the Collateral, or any other transactions contemplated by this Agreement, in each case, which if determined adversely, could reasonably have a Material Adverse Effect.

 

52

 

5.11                        Binding Obligations.  Each of the Loan Documents to which Borrower, any Owner Trustee, any Leasing Subsidiary, and any Subsidiary is a party will, when executed and delivered by such party, constitute the legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms, except as enforcement may be limited by (i) the Bankruptcy Code of the United States of America, as amended from time to time, and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws from time to time in effect affecting the rights of creditors generally, or (ii) equitable principles relating to the granting of specific performance and other equitable remedies as a matter of judicial discretion.

 

5.12                        No Default.  No event has occurred and is continuing that is a Default or Event of Default.

 

5.13                        ERISA.  Neither Borrower nor any of its Subsidiaries has any Pension Plans (as defined in this Section 5.13).  Neither Borrower nor any of its Subsidiaries has incurred or expects to incur any withdrawal liability to any Multiemployer Plan (as defined in this Section 5.13).  As used in this Agreement, “Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA)) and “Multiemployer Plan” means any employee benefit plan of the type described in Section 001(a)(3) of ERISA to which Borrower or any of its ERISA affiliates contributes or is obligated to contribute.

 

5.14                        Regulation U; Investment Company Act.  No part of the proceeds of any Loan hereunder will be used to purchase or carry, or to extend credit to others for the purpose of purchasing or carrying, any margin stock in violation of Regulation U.  Neither Borrower nor any of its Subsidiaries is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

 

5.15                        Disclosure.  None of the representations or warranties made by the Borrower in the Loan Documents as of the date such representations and warranties are made, and none of the statements contained in any exhibit, report, or certificate furnished by the Borrower in connection with the Loan Documents, contained any untrue statement of a material fact (when taken as a whole) or omitted a material fact necessary to make the statement made not misleading in light of all the circumstances existing at the date the statement was made; provided that with respect to information relating to the Borrower’s business generally and not to Borrower specifically, the Borrower represents and warrants only that such information was derived from sources the Borrower believes to be reliable and the Borrower has no reason to believe at the time such information was furnished or provided to the Administrative Agent or any Lender that such information was misleading; and provided further that to the extent any such information, report, financial statement, exhibit or schedule was based upon or constitutes a forecast or projection, the Borrower represents only that it acted in good faith and utilized reasonable assumptions and due care in the preparation of such information, report, financial statement, exhibit or schedule (it being understood that forecasts and projections by their nature involve approximations and uncertainties).

 

5.16                        Tax Liability.  Borrower and its Subsidiaries have filed all tax returns which are required to be filed, and have paid, or made provision for the payment of, all taxes with respect

 

53

 

to the periods, Property or transactions covered by said returns, or pursuant to any assessment received by Borrower or any of its Subsidiaries, except such taxes, if any, as are being contested in good faith by appropriate proceedings and as to which adequate reserves have been established and maintained.

 

5.17                        Hazardous Materials.  Except as described in Schedule 5.17, as of the Closing Date (a) neither Borrower nor any of its Subsidiaries at any time has disposed of, discharged, released or threatened the release of any Hazardous Materials in violation of any Hazardous Materials Law, (b) to the best knowledge of Borrower, no condition exists that violates any Hazardous Material Law affecting any real property owned by Borrower or any of its Subsidiaries, (c) no real property or any portion thereof is or has been utilized by Borrower or any of its Subsidiaries as a site for the manufacture of any Hazardous Materials and (d) to the extent that any Hazardous Materials are used, generated or stored by Borrower or any of its Subsidiaries on any real property, or transported to or from such real property by Borrower or any of its Subsidiaries, such use, generation, storage and transportation are in compliance with all Hazardous Materials Laws.

 

5.18                        Security Interests.  Upon the execution and delivery of all of the Collateral Documents and the completion of all actions to perfect the security interests so created, the Security Agreement will create a valid first priority security interest in the Collateral described therein securing the Obligations, subject only to Permitted Liens.

 

5.19                        Leases, Engines and Equipment.  Each of the following is true and correct with respect to each Lease for an Engine and item of Equipment included in the Borrowing Base:

 

5.19.1                                      The amounts of rent and other amounts due under each Lease, as shown on the Borrower’s books and records and on any statement or schedule delivered to Administrative Agent in connection therewith, are the true and correct amounts actually owed to the Borrower and the other Lessors;

 

5.19.2                                      The Lessor delivered to the Custodian an original counterpart of such Lease;

 

5.19.3                                      All rentals, fees, costs, expenses and charges paid or payable by the Lessee under any Lease, including without limitation, any brokerage and other fees paid to the Borrower do not violate any Applicable Law relating to the maximum fees, costs, expenses or charges that can be charged in any jurisdiction in which any Engine or Equipment is located or in which the corresponding Lessee is located, or in which a transaction was consummated, or in any other jurisdiction which may have jurisdiction with respect to any such Engine, Equipment, Lease or Lessee.

 

5.20                        Cape Town Convention  The Borrower is (a) a “Transactional User Entity” (as such term is defined in the Regulations for the International Registry); (b) “situated”, for the purposes of the Cape Town Convention, in the United States; and (c) has the “power to dispose” (as such term is used in the Cape Town Convention) of the Aircraft, Airframe, Engines or Turboprop Engines;

 

54

 

5.20.1                                      The Registerable Assets are “aircraft objects” (as such term is defined in the Cape Town Convention); and

 

5.20.2                                      The payment of principal of and interest on the Notes, and the performance by the Borrower of the Lender

 

5.20.3                                      Obligations, are “associated rights” (as such term is defined in the Cape Town Convention) with respect to each Registerable Asset.

 

5.21                        Depreciation Policies.  The Borrower’s depreciation policies in effect as of the Closing Date with respect to the Engines and the Equipment are as set forth on Schedule 5.21.

 

5.22                        [Reserved].

 

5.23                        Eligible Engines and Equipment.  A list of all Eligible Engines and/or items of Eligible Equipment (other than Eligible Parts), and indicating whether such Eligible Engine or Eligible Equipment is subject to a Lease in effect as of the Closing Date is set forth in Schedule 5.23.

 

5.24                        Preservation of International Interests.  The Lien, International Interest and assignment of International Interest of each Mortgage and Security Agreement and Owner Trustee Mortgage and Security Agreement and the International Interest of each Cape Town Eligible Lease shall be registered with the FAA and/or International Registry, and such rights, International Interests and assignments of International Interest of the Engine Owner, Equipment Owner and Security Agent in each Registerable Asset are at all times maintained as against any third parties under the applicable laws of any jurisdiction within the United States and as against any third parties in any Contracting State under the Cape Town Convention.

 

5.25                        Collateral Documents.  As of the Closing Date, Borrower hereby reaffirms all of the agreements and obligations as set forth in the Collateral Documents to which Borrower is a party and such Collateral Documents remain in full force and effect and continue to secure Borrower’s Obligations under this Credit Agreement.

 

6.                                      AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND REPORTING REQUIREMENTS)

 

So long as any portion of the Loan remains in force and/or any Obligation remains unpaid, Borrower shall, and shall cause its Subsidiaries to:

 

6.1                               Payment of Taxes and Other Potential Liens.  Pay and discharge promptly all material taxes, assessments and governmental charges or levies imposed upon any of them, upon its respective Property or any part thereof and upon its respective income or profits or any part thereof, except that Borrower and its Subsidiaries shall not be required to pay or cause to be paid any tax, assessment, charge or levy that is not yet past due, or is being contested in good faith by appropriate proceedings so long as the relevant entity has established and maintains adequate reserves for the payment of the same and provided that such contested amounts shall not exceed in the aggregate $5,000,000.00.

 

55

 

6.2                               Preservation of Existence.  Except as permitted under Sections 7.1 and 7.5, preserve and maintain its respective existence in the jurisdiction of its formation and all material authorizations, rights, franchises, privileges, consents, approvals, orders, licenses, permits, or registrations from any Governmental Authority that are necessary for the transaction of its respective business and qualify and remain qualified to transact business in each jurisdiction in which such qualification is necessary in view of its respective business or the ownership or leasing of its respective Property, unless failing to do so would not have a Material Adverse Effect.

 

6.3                               Maintenance of Property.  Maintain, or, with respect to Property subject to Leases, require the Lessees to maintain, in good working order and condition consistent with industry practices and standards (taking into consideration ordinary wear and tear), all of its Property and not permit any waste thereof, and, in the ordinary course of business, make all needful and proper repairs, replacements, additions and improvements thereto as are necessary for the conduct of its business, except that the failure to maintain, preserve and protect a particular item of Property shall not constitute a violation of this covenant if such failure shall not cause a Material Adverse Effect or if such item is at the end of its useful life or otherwise is not of significant value, either intrinsically or to the operations of Borrower.

 

6.4                               Maintenance of Insurance.  Maintain or cause Lessee(s), as applicable, liability, casualty and other insurance (subject to customary deductibles and retentions) on all Property with responsible insurance companies in such amounts and against such risks as is carried by responsible companies engaged in similar businesses and owning similar assets in the general areas in which Borrower and its Subsidiaries operate and shall furnish to Lenders statements of its insurance coverage and shall promptly, upon Administrative Agent’s request, furnish other or additional insurance deemed reasonably necessary by Administrative Agent to the extent that such insurance may be commercially available.  Borrower shall take all actions required to maintain the foregoing insurance and/or to comply with all requirements of such insurance coverage.  Prior to any Loan disbursement, Agents shall be named as additional insureds on all liability insurance, all risk ground and flight engine coverage for damage or loss of the related Engine or Engines, and war risk insurance (if applicable) and Agents shall be named as a loss payee under all hull insurance policies insuring the Collateral.  Borrower shall deliver to Administrative Agent endorsements to all of its (a) “All Risk” and business interruption insurance policies naming Administrative Agent as loss payee, and (b) general liability and other liability policies naming Administrative Agent as an additional insured.  All policies of insurance on real and personal property will include an endorsement, in form and substance acceptable to Administrative Agent, showing loss payable to Administrative Agent (Form 438 BFU or equivalent) and extra expense and business interruption endorsements.  Such endorsement, or an independent instrument furnished to Administrative Agent, will provide that the insurer will give at least thirty (30) days’ prior written notice to Administrative Agent before any such policy or policies of insurance shall be canceled.  Upon the occurrence and continuation of a Default or Event of Default, Borrower hereby directs all present and future insurers under its and its Subsidiaries’ “All Risk” policies of insurance to pay all proceeds payable thereunder directly to Administrative Agent for the ratable benefit of Lenders.  Administrative Agent reserves the right at any time, upon review of Borrower’s risk profile, to require additional forms and limits of insurance to adequately protect Lenders’ interests in accordance with Administrative Agent’s

 

56

 

normal practices for similarly situated borrowers, and if the circumstances are unusual, in Administrative Agent’s sole opinion.

 

6.5                               Compliance with Applicable Laws.  Comply with all Applicable Laws, except that Borrower and its Subsidiaries need not comply with an Applicable Law then being contested by any of them in good faith by appropriate proceedings or when failure to comply would not have a Material Adverse Effect.

 

6.6                               Inspection Rights.  Upon reasonable notice, at any time during regular business hours (but not so as to materially interfere with the business of Borrower or any of its Subsidiaries) and up to two times per Fiscal Year if no Event of Default has occurred and is then continuing and as often as requested after the occurrence and during the continuation of an Event of Default, permit Agent, or any authorized employee or representative thereof, to examine, audit and make copies and abstracts from the records and books of account of, and to visit and inspect the Property of, Borrower and its Subsidiaries and to discuss the affairs, finances, accounts and validate Placard affixation to Eligible Equipment of Borrower and its Subsidiaries with any of its officers, key employees or accountants.  Borrower shall reimburse Agent for up to $25,000.00 of inspection-related expenses per year; provided that Borrower shall reimburse Agent for all inspection-related expenses incurred while Event of Default has occurred and is then continuing.

 

6.7                               Keeping of Records and Books of Account.  Keep adequate records and books of account reflecting all financial transactions in conformity with GAAP, consistently applied, and in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over Borrower and its Subsidiaries.

 

6.8                               Compliance with Agreements.  Promptly and fully comply in all material respects with all Contractual Obligations to which any one or more of them is a party, except for any such Contractual Obligations then being contested by any of them in good faith by appropriate proceedings.

 

6.9                               Use of Proceeds.  Use the proceeds of the Loans only for the purposes set forth in this Agreement.

 

6.10                        Hazardous Materials Laws.  Keep and maintain all real property used and/or owned by Borrower and any of its Subsidiaries and each portion thereof in compliance in all material respects with all applicable Hazardous Materials Laws and promptly notify Lender in writing (attaching a copy of any pertinent written material) of (a) any and all material enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened in writing by a Governmental Authority pursuant to any applicable Hazardous Materials Laws, (b) any and all material claims made or threatened in writing by any Person against Borrower relating to damage, contribution, cost recovery, compensation, loss or injury resulting from any Hazardous Materials and (c) discovery by any senior officer of any of Borrower of any material occurrence or condition on any real property adjoining or in the vicinity of such real property that could reasonably be expected to cause such real property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of such real property under any applicable Hazardous Materials Laws.

 

57

 

6.11                        Future Subsidiaries.  Notify Lender of the existence of any Subsidiary not disclosed on Schedule 5.5.

 

6.12                        Conduct of Business.  Conduct its business substantially as now conducted or as otherwise permitted hereunder.

 

6.13                        Further Assurances; Schedule Supplements.  At any time and from time to time, upon the written request of Administrative Agent or Security Agent and at the sole expense of Borrower, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as such Agent may reasonably request to obtain the full benefits of this Agreement and to protect, preserve and maintain all respective parties’ rights in the Collateral and under this Agreement.  Upon the occurrence and continuation of a Default or Event of Default and as often as Agent may thereafter require, Borrower will supplement each Schedule to this Agreement with respect to any matter hereafter arising that, if existing or occurring as of the Closing Date, would have been required to be set forth or described in such Schedule; provided that except for Schedules 5.2, 5.5 and 5.9, such supplement shall not be deemed to be an amendment thereof unless expressly consented to in writing by Administrative Agent.

 

6.14                        Financial Covenants.  Maintain the following financial covenants on a consolidated basis, each of which shall be calculated in accordance with GAAP consistently applied:

 

6.14.1                                      Minimum Pre-Tax Income.  For each Fiscal Year, the sum of (a) Net Income for that Fiscal Year (without giving effect to any reduction thereto on account of dividends or other Distributions paid or payable with respect to such Fiscal Year) plus (b) the aggregate amount of federal and state taxes on or measured by income of Borrower and its Subsidiaries for that period (whether or not payable during that period), minus (c) the aggregate amount of federal and state credits against taxes on or measured by income of such Borrower and its Subsidiaries for that period (whether or not usable during that period) plus (d) any amounts arising under clause (h) of the definition of EBITDA, shall be no less than $5,000,000.00.

 

6.14.2                                      Leverage Ratio. A ratio of Total Debt on that date to Tangible Net Worth of not more than 5.00 : 1.0, calculated as of the end of each Fiscal Quarter.

 

6.14.3                                      Minimum Ratio of EBITDA to Consolidated Interest.  A ratio of EBITDA to Consolidated Interest of at least 2.25 : 1.00, calculated as of the end of each Fiscal Quarter, on a rolling four (4) quarter basis.

 

6.15                        Subordination of Third Party Fees.  Agree to subordinate, on terms satisfactory to Administrative Agent, any fees paid to any Subsidiaries or Affiliates of Borrower pursuant to ongoing contractual arrangements for services provided to Borrower, including without limitation, licensing, management and marketing fees.

 

6.16                        Maintenance of Borrowing Base.  Subject to Borrower’s right to cure set forth in Section 2.8.3, maintain the value of the Borrowing Base at all times such that no Borrowing Base Deficiency occurs.

 

58

 

6.17                        Placards.  Affix and maintain or use its best efforts to cause each Lessee under a Lease to affix to and maintain on all Eligible Engine(s) or item(s) of Eligible Equipment (other than Eligible Parts) a placard bearing an inscription substantially in the form attached hereto as Exhibit L or such other inscription as Security Agent from time to time may reasonably request.  The Borrower shall, upon request, provide to Administrative Agent and Security Agent a list of all Eligible Engines or items of Eligible Equipment (other than Eligible Parts) subject to a Lease indicating, to the best knowledge of the Borrower, which Engines have placards affixed and on which no such placard is affixed.

 

6.18                        Maintenance of Current Depreciation Policies.  Maintain its method of depreciating its assets substantially consistent with past practices as set forth in Schedule 5.22 and promptly notify the Banks of any deviation from such practices.

 

6.19                        Preservation of International Interests.  Cause, or shall cause any other Party, as applicable, at Borrower’s expense, to (i) register with the FAA and/or International Registry, and thereafter maintain, the Lien, International Interest and assignment of International Interest of each Mortgage and Security Agreement and Owner Trustee Mortgage and Security Agreement and the International Interest of each Cape Town Eligible Lease; and (ii) maintain the rights and International Interests and assignment of International Interest of the Engine Owner, Equipment Owner and Security Agent in each Registerable Asset, as against any third parties under the applicable laws of any jurisdiction within the United States and as against any third parties in any Contracting State under the Cape Town Convention.  The Borrower agrees to furnish Security Agent with copies of all documents relating to the foregoing and with recording and registration data as promptly as practicable following the issuance of the same by the FAA and the International Registry.

 

6.20                        Maintenance of WEST Management Agreement and Servicing Agreement.  Maintain substantially consistent with past practices and not terminate Borrower’s interest and/or role under the WEST Administrative Agency Agreement and Borrower’s management fee arrangement under the WEST Servicing Agreement and promptly notify the Banks of any deviation from such practices.

 

7.                                      NEGATIVE COVENANTS

 

Borrower covenants and agrees that Borrower and its Subsidiaries shall not, directly or indirectly, by operation of law or otherwise:

 

7.1                               Modification of Formation Documents.  Amend its certificate of incorporation or formation documents in such a way that could reasonably be expected to have a Material Adverse Effect.

 

7.2                               Modification of Debt.  Cancel or modify any Indebtedness owing to it, except for reasonable consideration in the ordinary course of its business or to the extent that it would not have a Material Adverse Effect on Borrower’s financial condition.

 

7.3                               [Reserved]

 

59

 

7.4                               Payment of Subordinated Obligations.  Pay any (a) principal (including sinking fund payments) or any other amount (other than scheduled interest payments) with respect to any Subordinated Obligation, or purchase or redeem (or offer to purchase or redeem) any Subordinated Obligation, or deposit any monies, securities or other Property with any trustee or other Person to provide assurance that the principal or any portion thereof of any Subordinated Obligation will be paid when due or otherwise to provide for the defeasance of any Subordinated Obligation or (b) scheduled interest on any Subordinated Obligation unless the payment thereof is then permitted pursuant to the terms of the indenture or other agreement governing such Subordinated Obligation; provided that Borrower and its Subsidiaries shall be permitted to pay regularly scheduled payments of principal and interest on Subordinated Obligations so long as no Event of Default is then continuing.

 

7.5                               Mergers.  Merge or consolidate with or into any Person, except (a) mergers and consolidations of a Subsidiary of Borrower into Borrower or a Wholly-Owned Subsidiary or of Subsidiaries with each other and (b) a merger or consolidation of a Person into Borrower or with or into a Wholly-Owned Subsidiary of Borrower that is not prohibited by Section 7.6; provided that (i) Borrower is the surviving entity, (ii) no Change in Control results therefrom, (iii) no Default or Event of Default then exists or would result therefrom, (iv) Borrower executes such amendments to the Loan Documents as Administrative Agent may reasonably determine are appropriate as a result of such merger, (v) the aggregate consideration paid or to be paid (whether cash, notes, stock, or assumption of debt or otherwise) by the Borrower and/or its Subsidiaries in any one such merger or consolidation does not exceed $25,000,000.00, and (vi) such aggregate consideration with respect to all such mergers or consolidations shall not exceed $50,000,000.00 in any Fiscal Year.  Without limitation, no such merger or consolidation shall result in a violation of the terms of Section 6.2 or Section 6.14 based on pro forma financials.

 

7.6                               Hostile Acquisitions.  Directly or indirectly use the proceeds of any Loan in connection with the Acquisition of a public corporation if such Acquisition is opposed by the board of directors of such corporation or business entity.

 

7.7                               ERISA.  Create or maintain any Pension Plans or incur any withdrawal liability to any Multiemployer Plan (as defined in Section 5.13).

 

7.8                               Change in Nature of Business.  Make any material change in the nature of the business of Borrower and its Subsidiaries, taken as a whole.

 

7.9                               Liens and Negative Pledges.  Create, incur, assume or suffer to exist any Lien or Negative Pledge of any nature upon or with respect to any of its respective Property or any Collateral or engage in any sale and leaseback transaction with respect to any of its respective Property or any Collateral, whether now owned or hereafter acquired, except:

 

7.9.1                                             Liens and Negative Pledges under the Loan Documents and as permitted in Section 7.18;

 

7.9.2                                             Permitted Liens; or

 

60

 

7.9.3                                             Liens on Property acquired by Borrower or any of its Subsidiaries that were in existence at the time of the acquisition of such Property and were not created in contemplation of such acquisition; or

 

7.9.4                                             Liens securing (i) purchase money Indebtedness permitted by Section 7.10.8 and (ii) Indebtedness that directly or indirectly refinances purchase money Indebtedness referred to in clause (i) and that is otherwise permitted by Section 7.10, solely to the extent such Liens are on and limited to the capital assets acquired, constructed or financed with the proceeds of the Indebtedness referred to in clause (i);

 

7.9.5                                             Sale and leaseback transactions with respect to Engines or Equipment not included in the Borrowing Base; or

 

7.9.6                                             Negative Pledges on the stock of any Excluded Subsidiary granted by Borrower in favor of a lender in connection with any financing thereof, in each case where such financing otherwise complies with the requirements of this Agreement.

 

7.10                        Indebtedness and Guaranteed Indebtedness.  Create, incur or assume any Indebtedness or Guaranty Indebtedness except:

 

7.10.1                                      Indebtedness and Guaranteed Indebtedness existing on the Closing Date and disclosed in Schedule 7.10, and refinancings, renewals, extensions or amendments that do not increase the amount thereof;

 

7.10.2                                      Indebtedness and Guaranteed Indebtedness under the Loan Documents;

 

7.10.3                                      In addition to Indebtedness permitted in Section 7.10.7 below, intercompany Indebtedness and intercompany Guaranteed Indebtedness of Borrower or any of its Subsidiaries not to exceed $5,000,000.00 outstanding at any one time;

 

7.10.4                                      Indebtedness consisting of Capital Lease Obligations not to exceed $5,000,000.00 outstanding at any one time;

 

7.10.5                                      Subordinated Obligations in such amount as may be approved in writing by Agents and Credit Facility Lenders;

 

7.10.6                                      Indebtedness consisting of Interest Rate Protection Agreements solely to the extent entered into in the ordinary course of business for the purpose of mitigating risks associated with liabilities, commitments, investments, assets or property and not for the purpose of speculation or taking a market risk;

 

7.10.7                                      Guaranteed Indebtedness in support of the obligations of a Wholly-Owned Subsidiary, provided that such primary obligations of the Wholly-Owned Subsidiary are not prohibited by this Agreement; and

 

7.10.8                                      In addition to the foregoing, Permitted Indebtedness.

 

61

 

7.11                        Transactions with Affiliates.  Make, or suffer to exist, any loan or advance or extend any credit to any Person, including, without limitation, any Affiliate of the Borrower other than:

 

7.11.1                                      advances to employees in the ordinary course of business not to exceed $100,000.00 in the aggregate outstanding at any time;

 

7.11.2                                      trade credit advanced in the ordinary course of business;

 

7.11.3                                      transactions between or among Borrower and its Subsidiaries; and

 

7.11.4                                      transactions on overall terms at least as favorable to Borrower or its Subsidiaries as would be the case in an arm’s length transaction between unrelated parties of equal bargaining power.

 

7.12                        Amendments to Subordinated Obligations.  Amend or modify any term or provision of any indenture, agreement or instrument evidencing or governing any Subordinated Obligation in any respect that will or may adversely affect the interests of Lenders.

 

7.13                        [Reserved]

 

7.14                        Distributions.  Purchase, redeem, retire or otherwise acquire, directly or indirectly, or make any sinking fund payments with respect to, any shares of its Stock now or hereafter outstanding (each and collectively a “Distribution”); provided that the Borrower may declare and pay dividends and repurchase Stock if no Default or Event of Default exists prior to or after giving effect to such declaration or payment, including on the Permitted Preferred Stock.

 

7.15                        Investments.  Make or suffer to exist any Investment, other than:

 

7.15.1                                      Investments in existence on the Closing Date and disclosed on Schedule 7.15;

 

7.15.2                                      Investments consisting of Cash Equivalents or Cash, which may be held in ordinary demand deposit accounts;

 

7.15.3                                      Investments in a Person that is the subject of an Acquisition not prohibited by Section 7.6;

 

7.15.4                                      Investments consisting of advances to officers, directors and employees of Borrower and its Subsidiaries for travel, entertainment, relocation, anticipated bonus and analogous ordinary business purposes;

 

7.15.5                                      Investments in a Subsidiary that is a Wholly-Owned Subsidiary but that is not an Excluded Subsidiary; provided that Borrower shall not (a) create, acquire or allow to exist any Subsidiary other than Excluded Subsidiaries, unless such Subsidiary shall have executed and delivered to the Security Agent and the Administrative Agent a Subsidiary Guaranty and a joinder agreement to the Security Agreement in form acceptable to the Security Agent creating in favor of the Security Agent a first priority perfected Lien on its assets,

 

62

 

provided that such Lien shall be subject and subordinate to any Lien on assets permitted by Section 7.9 securing Indebtedness permitted by Section 7.10 unless the Borrower, despite the exercise of reasonable efforts, shall be unable to close such financing with the Security Agent’s subordinate Lien thereon (in which event, assuming no Default exists or would exist after giving effect to such financing, the Security Agent shall not be required to have a Lien on the assets securing such Permitted Indebtedness; provided, however, in such instance, Borrower shall have executed and delivered to the Security Agent and the Administrative Agent a Stock Pledge Agreement in form acceptable to the Security Agent pledging all issued and outstanding shares of stock held by Borrower in such Subsidiary to Security Agent), or (b) purchase or otherwise acquire (unless no Default exists or would exist immediately thereafter) 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, except for stock, obligations or securities received in settlement of debts owing to it created in the ordinary course of business and Investments otherwise expressly permitted under this Agreement;

 

7.15.6                                      Investments consisting of the extension of credit to customers or suppliers of Borrower and its Subsidiaries in the ordinary course of business and any Investments received in satisfaction or partial satisfaction thereof;

 

7.15.7                                      Investments received in connection with the settlement of a bona fide dispute with another Person;

 

7.15.8                                      Investments: (i) up to $100,000,000.00 in the aggregate from the Closing Date to the Maturity Date and (ii) in excess of $100,000,000.00 or more in the aggregate, provided such Investments are approved in writing by the Requisite Lenders;

 

7.15.9                                      Notes receivable in an aggregate up to $10,000,000.00; or

 

7.15.10                               Interest Rate Protection Agreements.

 

7.16                        [Reserved].

 

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

 

7.18                        Negative Pledge/WEST.  Not (i) cause or create Liens or Negative Pledges on Borrower’s interest in the WEST Subsidiaries or the WEST Administrative Agency Agreement and/or management fee arrangement with WEST under the Servicing Agreement (including, without limitation, any rights to payment thereunder) or (ii) permit any Lien on Borrower’s interest in the WEST Subsidiaries or the WEST Administrative Agency Agreement and/or management fee arrangement with WEST under the Servicing Agreement, other than Liens or Negative Pledges currently existing under the WEST Funding Facility provided such Liens or Negative Pledges shall not adversely affect such management agreement or Borrower’s interest therein.

 

63

 

7.19                        Subsidiary Operations.  Borrower (i) shall not permit WLFC Funding (Ireland) Limited to maintain operations or assets or earn any income and (ii) shall not permit Willis Lease France to maintain any operations other than employment of persons resident in France or hold material assets or earn material operating income unless, in each case, such Subsidiary shall have executed a Subsidiary Guaranty and Security Agreement as required under this Agreement (or if a Subsidiary Guaranty and Security Agreement cannot feasibly be delivered under Applicable Law, Borrower shall have pledged its equity ownership interest in such entity to Security Agent as Collateral).

 

8.                                      INFORMATION AND REPORTING REQUIREMENTS

 

8.1                               Reports and Notices.  Borrower represents, warrants and agrees that, from and after the Closing Date until the Termination Date, Borrower shall deliver to Administrative Agent:

 

8.1.1                                             within forty-five (45) days following the end of each of the first three Fiscal Quarters of each Fiscal Year (unless an extension is approved by the Securities Exchange Commission), (1) SEC Form 10-Q of Borrower (if required by Applicable Law) for such Fiscal Quarter, (2) a Compliance Certificate and (3) a company prepared financial statement for Borrower on a non-consolidated basis.

 

8.1.2                                             within ninety (90) days following the end of each Fiscal Year (unless an extension is approved by the Securities Exchange Commission) or, in any event, within fifteen (15) days of a timely filing with the SEC, (1) the Financial Statements of Borrower for such Fiscal Year accompanied by an unqualified report and opinion by an independent certified public accounting firm acceptable to Administrative Agent certified by an Authorized Signatory, and (2) a Compliance Certificate.

 

8.1.3                                             on or before May 31 of each calendar year, the audited financial statements of WEST II (unconsolidated), and, when formed, WEST III.

 

8.1.4                                             as soon as practicable and in any event within 15 days after the end of each calendar month, a report listing the Leases of Engines and Equipment in the Borrowing Base (in form and substance reasonably satisfactory to the Administrative Agent).

 

8.1.5                                             as soon as available, but in any event within fifteen (15) days after the end of the immediately preceding calendar month, a Borrowing Base Certificate of the Borrower showing, as of the end of such calendar month setting forth, among other things, the Eligible Engines and Eligible Equipment that are subject to an Eligible Lease.  The Borrowing Base Certificate shall also include a list of all Engines and Equipment acquired by the Borrower since the date of the last Borrowing Base Certificate delivered to Administrative Agent.

 

8.1.6                                             within twenty (20) days following the receipt by Administrative Agent of the Borrowing Base Certificate covering the last month of a Fiscal Quarter, an Appraisal with respect to Eligible Engines, Eligible Equipment and/or Eligible Saleable Assets added to the Borrowing Base during the Fiscal Quarter just ended.  In addition, at least once per each Fiscal Year, the Borrower shall permit the Security Agent to retain an Appraiser (at Borrower’s expense) to conduct an appraisal with respect to all Eligible Engines, Eligible Equipment and/or

 

64

 

Eligible Saleable Assets included in the Borrowing Base.  Each Appraisal shall assign specific values for the Engines covered thereby.

 

8.1.7                                             promptly, notice in writing of (i) any litigation, legal proceeding or dispute, other than disputes in the ordinary course of business or, whether or not in the ordinary course of business, involving amounts, individually or in the aggregate, in excess of $5,000,000, affecting the Borrower or any Subsidiary as a defendant, whether or not fully covered by insurance, and regardless of the subject matter thereof, or, if no monetary amounts are claimed in connection therewith, which proceeding or dispute, if determined or resolved against the Borrower or any Subsidiary is reasonably likely to have a Material Adverse Effect on the Borrower or any Subsidiary or (ii) any cancellation or threatened cancellation by any insurance carrier of any insurance policy or policies carried by the Borrower or by any of its Subsidiaries on the assets and properties of the Borrower or any Subsidiary.

 

8.1.8                                             promptly, and in any event within two (2) Business Days of when the Borrower becomes aware or, in the exercise of reasonable due diligence should have become aware of the same, notice in writing in the event that at any time a Borrowing Base Deficiency exists, and promptly, and in any event within five (5) Business Days, notify in writing the Administrative Agent of any material damage to or other Event of Loss with respect to any Eligible Engine or Eligible Equipment.

 

8.1.9                                             promptly upon the earlier of the date on which the Borrower becomes aware or, in the exercise of reasonable due diligence should have become aware of the same, notify the Administrative Agent (or, in the case of (f) below, the Security Agent) by telephone (to be confirmed within three calendar days in writing from the Borrower to each Bank) of the occurrence of any of the following:

 

(a)                                 any Default or Event of Default;

 

(b)                                 any breach under any contract or contracts and breach involves payments by the Borrower in an aggregate amount equal to or in excess of $5,000,000;

 

(c)                                  a default or event of default under or as defined in any evidence of or agreements for any Indebtedness for borrowed money under which the Borrower’s liability is equal to or in excess of $5,000,000, individually 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;

 

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

 

(e)                                  any litigation, administrative proceeding or investigation which could reasonably have a Material Adverse Effect on the Borrower or any Subsidiary;

 

65

 

(f)                                   any instance in which Engines or Equipment are operated (x) on routes with respect to which it is customary for air carriers flying comparable routes to carry confiscation or expropriation insurance for which such insurance has not been obtained or (y) in any area designated by companies providing such coverage as a recognized or threatened war zone or area of hostilities or an area where there is a substantial risk of confiscation or expropriation; and

 

(g)                                  any “Early Amortization Event,” Event of Default or “Servicer Termination Event” (as such terms are defined in the WEST Funding Facility) under the WEST Funding Facility.

 

8.1.10                                      promptly upon the filing thereof with the SEC one copy of each financial statement, report, notice or proxy statement sent by the Borrower to stockholders generally, and, a copy of each regular or periodic report, and any registration statement, or prospectus in respect thereof, filed by the Borrower with any securities exchange or with federal or state securities and exchange commissions or any successor agency.

 

8.1.11                                      subject to the prohibitions set forth in Section 7.1 hereof, promptly deliver to the Administrative Agent copies of any material amendments, modifications or supplements to (i) certificate of incorporation or by-laws, and (ii) the WEST Funding Facility, certified, with respect to the certificate of incorporation, by the appropriate state officials, and, with respect to the other foregoing documents, by the secretary or assistant secretary of the Borrower as a true and correct copy thereof.

 

8.1.12                                      promptly, notice in writing of any merger or consolidation involving the Borrower.

 

8.2                               Other Reports.  Borrower shall, upon the request of any Agent, furnish to Administrative Agent and/or Security Agent such other reports in connection with the affairs, business, financial condition, operations, prospects or management of Borrower or the Collateral, all in reasonable detail in each case as the Administrative Agent shall reasonably request.

 

9.                                      EVENTS OF DEFAULT; RIGHTS AND REMEDIES

 

9.1                               Events of Default.  The occurrence of any one or more of the following events (regardless of the reason therefor) shall constitute an “Event of Default” under this Agreement:

 

9.1.1                                             Borrower shall fail to make any required payment in respect of any Obligations within three (3) Business Days after the same shall become due and payable or is declared due and payable (provided that no grace period shall apply to principal payments required under this Agreement or to nonpayment of the Obligations on the Maturity Date); or

 

9.1.2                                             Borrower shall fail or neglect to, or shall fail to cause the applicable Owner Trustee to, perform, keep or observe any of the covenants, promises, agreements, requirements, conditions or other terms, Obligations (other than under Section 9.1.1) or provisions contained in this Agreement or any of the other Loan Documents and such default shall have continued for a period of thirty (30) days after Agent’s or any Lender’s notice to Borrower, of such default hereunder; provided, that there shall be no grace period for Borrower’s

 

66

 

failure to perform, keep or observe any of the covenants, promises, agreements, requirements, conditions or other terms or provisions contained in Section 6.14 and Section 7 (except for Section 7.9); or

 

9.1.3                                             an event of default shall occur under any Indebtedness to which Borrower, any Subsidiary or Excluded Subsidiaries other than a Special Purpose Financing Vehicle is a party, or by which any such Person or its property is bound, and such event of default (1) involves the failure to make any payment, whether of principal, interest or otherwise, and whether due by scheduled maturity, required prepayment, acceleration, demand or otherwise, in respect of any Indebtedness (other than the Obligations) of such Person in an aggregate amount exceeding $5,000,000, or (2) causes (or permits any holder of such Indebtedness or a trustee to cause) such Indebtedness, or a portion thereof, in an aggregate amount exceeding $5,000,000 to become due prior to its stated maturity or prior to its regularly scheduled dates of payment; or

 

9.1.4                                             any representation or warranty in this Agreement or any other Loan Document, or in any written statement, report or certificate pursuant hereto or thereto, shall be untrue or incorrect in any material respect as of the date when made or deemed to be made by the Borrower or any Subsidiaries; or

 

9.1.5                                             any of the assets of Borrower or any Subsidiary having a value of $5,000,000 or more shall be attached, seized, levied upon or subjected to a writ or distress warrant or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors of such Person, and any of the foregoing shall remain unstayed or undismissed for sixty (60) consecutive days; or any Person other than Borrower or any Subsidiary shall apply for the appointment of a receiver, trustee or custodian for the assets of Borrower or any Subsidiary and the order appointing such receiver, trustee or custodian shall remain unstayed or undismissed for sixty (60) consecutive days; or Borrower or any Subsidiary shall have concealed, removed or permitted to be concealed or removed, any part of its Property with intent to hinder, delay or defraud its creditors or any of them or made or suffered a transfer of any of its property or the incurring of an obligation which may be fraudulent under any bankruptcy, fraudulent transfer or other similar law; or

 

9.1.6                                             a case or proceeding shall have been commenced involuntarily against Borrower or any Subsidiary in a court having competent jurisdiction seeking a decree or order:  (1) under the Bankruptcy Code or any other applicable Federal, state or foreign Bankruptcy or other similar law, and seeking either (i) the appointment of a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of such Person or of any substantial part of its properties, or (ii) the reorganization or winding up or liquidation of the affairs of any such Person and such case or proceeding shall remain undismissed or unstayed for sixty (60) consecutive days or such court shall enter a decree or order granting the relief sought in such case or proceeding; or (2) invalidating or denying (i) any Person’s right, power, or competence to enter into or perform any of its obligations under any Loan Document, or (ii) the validity or enforceability of this Agreement or any other Loan Document or any action taken hereunder or thereunder; or

 

67

 

9.1.7                                             Borrower or any Subsidiary shall (1) file a petition under the Bankruptcy Code or any other applicable Federal, state or foreign bankruptcy or other similar law, (2) consent to the institution of proceedings thereunder or to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of any such Person or of any substantial part of its properties, (3) fail generally to pay (or admit in writing its inability to pay) its debts as such debts become due, or (4) take any corporate action in furtherance of any such action; or

 

9.1.8                                             final judgment or judgments (after the expiration of all times to appeal therefrom) for the payment of money in excess of $5,000,000 in the aggregate shall be rendered against Borrower or any Subsidiary, unless the same shall be (i) fully covered by insurance (subject to any contractual deductibles) and the issuer(s) of the applicable policies shall have acknowledged substantial coverage in writing within thirty (30) days of judgment, or (ii) vacated, stayed, bonded, paid or discharged within a period of thirty (30) days from the date of such judgment; or

 

9.1.9                                             Borrower or any Subsidiary voluntarily or involuntarily dissolves or is dissolved, terminates or is terminated, provided that (i) the Borrower may terminate any Owner Trust in connection with a sale or consignment of the Collateral owned by such Owner Trust and (ii) the Borrower may, with the prior approval of the Administrative Agent, dissolve, terminate or otherwise liquidate any Subsidiary so long as (A) the aggregate total assets of the Subsidiary dissolved, terminated or liquidated immediately prior to such event does not represent more than five percent (5%) of the consolidated total assets of Borrower and its Subsidiaries, and (B) with respect to any such Subsidiary that has or is required to execute a Subsidiary Guaranty, following the dissolution, termination or liquidation of such Person, substantially all of the assets of such Person are transferred to Borrower or another Person that then guaranties the Obligations pursuant to a Subsidiary Guaranty; or

 

9.1.10                                      Borrower or any Subsidiary is enjoined, restrained, or in any way prevented by the order of any court or other Governmental Authority, the effect of which order restricts such Person from conducting all or any material part of its business; or

 

9.1.11                                      the loss, suspension, revocation or failure to renew any License or permit now held or hereafter acquired by Borrower or any Subsidiary, which loss, suspension, revocation or failure to renew could reasonably be expected to have a Material Adverse Effect; or

 

9.1.12                                      any Lien or any provision of any Loan Document shall for any reason cease to be valid, binding and enforceable in accordance with its terms, or any Lien granted, or intended by the Loan Documents to be granted, to Security Agent shall cease to be a valid and perfected Lien having the first priority (or a lesser priority if expressly permitted in the Loan Documents) in any of the Collateral covered or purported to be covered thereby; or

 

9.1.13                                      any Change in Control of Borrower shall have occurred (for the avoidance of doubt, a Permitted Change in Control shall not constitute a Change in Control); or

 

68

 

9.1.14                                      The occurrence of any Event of Default or Servicer Termination (as such terms are defined in the WEST Funding Facility) under the WEST Funding Facility.

 

9.2                               Remedies.  If any Default or Event of Default has occurred and is continuing, then, subject to Section 13.4.4 hereof, Administrative Agent will be entitled to, with the prior written approval of Requisite Lenders (or all of the Lenders, as applicable), exercise one or more of the following remedies:  (1) upon notice to Borrower from Administrative Agent, increase the rate of interest applicable to the Loans to the Default Rate effective as of the date of the initial Default; or (2) terminate or suspend Lenders’ obligation to make further Loans.  In addition, if any Event of Default shall have occurred and be continuing, Agent may (upon prior written approval of Requisite Lenders), without notice, take any one or more of the following actions:  (i) declare all or any portion of the Obligations to be forthwith due and payable, whereupon such Obligations shall become and be due and payable; or (ii) exercise any rights and remedies provided to Agents under the Loan Documents or at law or equity, including all remedies provided under the UCC; provided, that upon the occurrence of an Event of Default specified in Sections 9.1.5, 9.1.6 or 9.1.7, the Obligations shall become immediately due and payable (and any obligation of Lenders to make further Loans, if not previously terminated, shall immediately be terminated) without declaration, notice or demand by Agent.

 

9.3                               Waivers by Borrower.  Except for notices that Administrative Agent or Lender has otherwise agreed to give in this Agreement (whether under notice and cure provisions or otherwise) and to the fullest extent permitted by Applicable Law, Borrower waives:  (a) presentment, demand, protest, notice of maturity, intent to accelerate, acceleration, default, and release of any or all Loan Documents or the Notes; (b) all rights to notice and a hearing prior to Lender’s taking possession or control of, or to Lender’s replevin, attachment or levy upon, any Collateral or any bond or security which might be required by any court prior to allowing Lender to exercise any of its remedies; and (c) the benefit of all valuation, appraisal and exemption laws.  Borrower acknowledges that it has been advised by counsel with respect to this Agreement, the other Loan Documents and the transactions evidenced hereby and thereby.

 

9.4                               Proceeds. The Proceeds of any sale, disposition or other realization upon any Collateral shall be applied by any Lender upon receipt as set forth in Section 2.13.

 

10.                               SUCCESSORS AND ASSIGNS

 

Subject to the limitations on assignment and the grants of participations set forth in Section 12.8, each Loan Document shall be binding on and shall inure to the benefit of Borrower, Credit Facility Lenders, Security Agent and their respective successors and assigns, except as otherwise provided herein or therein.  Borrower shall not assign, transfer, hypothecate or otherwise convey its rights, benefits, obligations or duties under any Loan Document without the prior written consent of all of the Lenders, and any such purported assignment, transfer, hypothecation or other conveyance by Borrower without the prior express written consent of all Lenders shall be void.  The terms and provisions of this Agreement and the other Loan Documents are for the purpose of defining the relative rights and obligations of Borrower and Lenders with respect to the transactions contemplated hereby and thereby, and there shall be no third party beneficiaries of any of the terms and provisions of any of the Loan Documents.

 

69

 

11.                               [Reserved.]

 

12.                               MISCELLANEOUS

 

12.1                        Complete Agreement; Modification of Agreement.  This Agreement and the other Loan Documents constitute the complete agreement among the parties with respect to the subject matter hereof and thereof, supersede all prior agreements, commitments, understandings or inducements (oral or written, expressed or implied), and may not be modified, altered or amended except by a written agreement signed by Administrative Agent, Security Agent, Credit Facility Lenders, Borrower and each other Person executing this Agreement or any other Loan Document, as applicable, and in accordance with Section 12.16 hereof.

 

12.2                        Reimbursement and Expenses.  Borrower will promptly pay:

 

12.2.1                                      without regard for whether any Loans are made, all reasonable out-of-pocket expenses of Agents in connection with the preparation, negotiation, execution, and delivery of this Agreement, the Notes and the other Loan Documents, including all due diligence, all post-closing matters, syndication, and the transactions contemplated hereunder and thereunder and the making of the Loans, including, recording and filing fees, and the reasonable fees and disbursements of counsel for Agents;

 

12.2.2                                      subject to the limitations set forth in Section 6.6, all reasonable out-of-pocket expenses of Agents in connection with the administration or monitoring of the Loans, the Collateral, this Agreement and the other Loan Documents in accordance with the provisions thereof, the restructuring and refinancing of the transaction herein contemplated, and in connection with the preparation, negotiation, execution, and delivery of any waiver, amendment, or consent by Agents relating to this Agreement or the other Loan Documents, including, auditing costs and expenses with respect to the Collateral and the reasonable attorneys’ fees and expenses of counsel;

 

12.2.3                                      all of Agents’ out-of-pocket costs and expenses of obtaining performance under this Agreement or the other Loan Documents, of collection of the Obligations, in any arbitration, mediation, legal action or proceeding (including any case under the Bankruptcy Code or similar laws), which, in each case, shall include reasonable fees and expenses of counsel for Agents;

 

12.2.4                                      all Charges levied on, or assessed, placed or made against any Collateral, the Notes or the other Loan Documents or the Obligations.

 

12.3                        Indemnity.

 

12.3.1                                      Borrower shall indemnify and hold each Indemnified Person harmless from and against any Claim which may be instituted or asserted against or incurred by any such Indemnified Person as the result of credit having been extended or not extended under this Agreement and the other Loan Documents or otherwise in connection with or arising out of the transactions contemplated hereunder or thereunder, including any Claim for Environmental Liabilities and Costs and legal costs and expenses of disputes between the parties to this Agreement; provided, that Borrower shall not be liable for indemnification of an Indemnified

 

70

 

Person to the extent that (a) such Claim is brought by any Indemnified Person against Borrower and Borrower is the prevailing party thereunder or (b) any such Claim is finally determined by a court of competent jurisdiction to have resulted from such Indemnified Person’s gross negligence or willful misconduct.  NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED OR NOT EXTENDED UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

 

12.3.2                                      In any suit, proceeding or action brought by Agent or any Credit Facility Lender relating to any item of Collateral or any amount owing hereunder, or to enforce any provision of any item of Collateral, Borrower shall save, indemnify and keep Agent and each Credit Facility Lender harmless from and against all expense, loss or damage suffered by reason of such action or any defense, setoff, or counterclaim asserted for any reason by the other party or parties to such litigation and however arising unless (a) such suit, proceeding or action is brought by Agent or any Credit Facility Lender against Borrower and Borrower is the prevailing party thereunder, or (b) any such suit, proceeding or action is finally determined by a court of competent jurisdiction to have resulted from Agent’s or any Credit Facility Lender’s gross negligence or willful misconduct.  All obligations of Borrower with respect to any item of Collateral shall be and remain enforceable against, and only against, Borrower and shall not be enforceable against Agent or any Credit Facility Lender.  This Section 12.3.2 shall survive the Termination Date.

 

12.4                        No Waiver.  Neither Agent’s nor any Credit Facility Lender’s failure, at any time or times, to require strict performance by Borrower of any provision of any Loan Document, nor Agent’s or any Credit Facility Lender’s failure to exercise, nor any delay in exercising, any right, power or privilege under this Agreement, (a) shall waive, affect or diminish any right of such Agent or any Credit Facility Lender thereafter to demand strict compliance and performance therewith, or (b) shall operate as a waiver thereof.  Subject to Section 12.16, any suspension or waiver of a Default, Event of Default, or other provision under the Loan Documents must be in writing signed by an authorized employee of Administrative Agent and each applicable Credit Facility Lender to be effective and shall not suspend, waive or affect any other Default or Event of Default, whether the same is prior or subsequent thereto and whether of the same or of a different type, and shall not be construed as a bar to any right or remedy which Agent and each applicable Credit Facility Lender would otherwise have had on any future occasion.

 

12.5                        Severability; Drafting.  Wherever possible, each provision of the Loan Documents shall be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of any Loan Document shall be prohibited by or invalid under Applicable Law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of such Loan Document.  Except as otherwise expressly provided herein or in any other Loan Document, all undertakings, agreements, covenants, warranties and representations of or binding upon Borrower and all rights of Agents and Credit Facility Lender, all as contained in the Loan Documents, shall not

 

71

 

terminate or expire, but rather shall survive such termination or cancellation and shall continue in full force and effect until the Termination Date; provided that the reimbursement and expense provisions of Section 12.2, the indemnity provisions of Section 12.3, and the governing law and venue provisions of Section 12.14 shall all survive the Termination Date.  In the event of a dispute between any of the parties hereto over the meaning of this Agreement, all parties shall be deemed to have been the drafter hereof, and any Applicable Law that states that contracts are construed against the drafter shall not apply.

 

12.6                        Conflict of Terms.  Except as otherwise provided in any Loan Document by specific reference to the applicable provisions of this Agreement, if any provision contained in this Agreement is in conflict with, or inconsistent with, any provision in any other Loan Document, the provision contained in this Agreement shall govern and control.

 

12.7                        Notices.

 

12.7.1                                      All notices and other communications under this Agreement and the other Loan Documents shall be in writing and shall be deemed to have been given three (3) days after deposit in the mail, first class mail, postage prepaid, or one (1) day after being entrusted to a reputable commercial overnight delivery service, or when sent out by facsimile transmission or by electronic mail delivery addressed to the party to which such notice is directed at its address determined as provided in this Section 12.7 (provided that for electronic mail delivery of notices other than pursuant to Sections 8.1.1-8.1.5, an identical notice is also sent simultaneously by mail, overnight courier, or as otherwise provided in this Section 12.7).  All notices and other communications under this Agreement shall be given to the parties hereto at the following addresses:

 

(a)                                 If to Borrower:

 

Willis Lease Finance Corporation

773 San Marin Drive, Suite 2215

Novato, CA 94998

Attn:  General Counsel

Telephone No.:  (415) 408-4732

Facsimile No.:  (415) 408-4701

Email: dpoulakidas@willislease.com

 

(b)                                 If to Administrative Agent and/or Security Agent:

 

Union Bank, N.A.

Northern California Commercial Banking Division

350 California Street

San Francisco, CA 94104

Attn:  Commercial Finance Division

Telephone No.:  (415) 705-7385

Facsimile No.:  (415) 705-7111

Email: Kevin.Sullivan@unionbank.com

 

72

 

with a copy to:

 

Sheppard Mullin Richter & Hampton LLP

Four Embarcadero Center, 17th Floor

San Francisco, CA 94111-4106

Attn:  Juliette M. Ebert, Esq.

Telephone No.:  (415) 434-9100

Facsimile No.:  (415) 434-3947

Email: jebert@sheppardmullin.com

 

12.7.2                                      Any party to this Agreement may change the address to which notices shall be directed under this Section 12.7 by giving ten (10) days’ written notice of such change to the other parties in the manner specified in this Section 12.7.

 

12.8                        Binding Effect; Assignment.

 

12.8.1                                      This Agreement and the other Loan Documents to which Borrower is a party will be binding upon and inure to the benefit of Borrower, Agents, each of Credit Facility Lenders, and their respective permitted successors and assigns, except that Borrower may not assign its rights hereunder or thereunder or any interest herein or therein without the prior written consent of all Lenders.  Each Credit Facility Lender represents that it is not acquiring its Note with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (subject to any requirement that disposition of such Note must be within the control of such Lender).  Any Credit Facility Lender may at any time pledge its Note or any other instrument evidencing its rights as a lender under this Agreement to a Federal Reserve Bank, but no such pledge shall release that lender from its obligations hereunder or grant to such Federal Reserve Bank the rights of a Credit Facility Lender hereunder absent foreclosure of such pledge.

 

12.8.2                                      From time to time following the Closing Date, each Lender may assign to one or more Eligible Assignees all or any portion of its Pro Rata Share of the Revolving Commitment; provided that (i) such Eligible Assignee, if not then a Lender or an Affiliate of the assigning Lender, shall be approved by Administrative Agent and, provided no Default or Event of Default then exists, Borrower, which approval(s) shall not be unreasonably withheld, conditioned or delayed; (ii) such assignment shall be evidenced by a Commitment Assignment and Acceptance, a copy of which shall be furnished to Administrative Agent as hereinbelow provided; (iii) except in the case of an assignment (a) to an Affiliate of the assigning Lender or to another Lender or (b) of the entire remaining Revolving Commitment of the assigning Lender, the assignment shall not assign a Pro Rata Share of the Revolving Commitment that is equivalent to less than $5,000,000.00; and (iv) the effective date of any such assignment shall be as specified in the Commitment Assignment and Acceptance, but not earlier than the date which is five (5) Business Days after the date Administrative Agent has received the Commitment Assignment and Acceptance.  Upon the effective date of such Commitment Assignment and Acceptance, the Eligible Assignee named therein shall be a Lender for all purposes of this Agreement, with the Pro Rata Share of the Revolving Commitment therein set forth and, to the extent of such Pro Rata Share, the assigning Lender shall be released from its further obligations under this Agreement.  Borrower agrees that it shall execute and deliver (against delivery by the assigning Lender to Borrower of its Note(s)) to such assignee Lender, Note(s) evidencing that

 

73

 

assignee Lender’s Pro Rata Share of the Revolving Commitment, and to the assigning Lender, Note(s) evidencing the Pro Rata Share retained by the assigning Lender.

 

12.8.3                                      By executing and delivering a Commitment Assignment and Acceptance, the Eligible Assignee thereunder acknowledges and agrees that:  (i) other than the representation and warranty that it is the legal and beneficial owner of the Pro Rata Share of the Revolving Commitment being assigned thereby free and clear of any adverse claim, the assigning Lender has made no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness or sufficiency of this Agreement or any other Loan Document; (ii) the assigning Lender has made no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance by Borrower of the Obligations; (iii) it has received a copy of this Agreement, together with copies of the most recent financial statements delivered pursuant to Section 8 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Commitment Assignment and Acceptance; (iv) it will, independently and without reliance upon Administrative Agent or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) it appoints and authorizes Administrative Agent to take such action and to exercise such powers under this Agreement as are delegated to Administrative Agent by this Agreement; and (vi) it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

 

12.8.4                                      Administrative Agent shall maintain at Administrative Agent’s Office a copy of each Commitment Assignment and Acceptance delivered to it and a register (the “Register”) of the names and address of each of the Lenders and the Pro Rata Share of the Commitments held by each Lender, giving effect to each Commitment Assignment and Acceptance.  The Register shall be available during normal business hours for inspection by Borrower or any Lender upon reasonable prior notice to Administrative Agent.  After receipt of a completed Commitment Assignment and Acceptance executed by any Lender and an Eligible Assignee, and receipt of a non-refundable assignment fee of Three Thousand Five Hundred Dollars ($3,500.00) from such Lender or Eligible Assignee, Administrative Agent shall, promptly following the effective date thereof, provide to Borrower and the Lenders a revised Schedule 2.1 giving effect thereto.  Borrower, Administrative Agent and the Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the Pro Rata Share of the Revolving Commitment listed therein for all purposes hereof, and no assignment or transfer of any such Pro Rata Share of the Revolving Commitment shall be effective, in each case unless and until a Commitment Assignment and Acceptance effecting the assignment or transfer thereof shall have been accepted by Administrative Agent and recorded in the Register as provided above.  Prior to such recordation, all amounts owed with respect to the applicable Pro Rata Share of the Revolving Commitment shall be owed to the Lender listed in the Register as the owner thereof, and any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Pro Rata Share of the Revolving Commitment.

 

74

 

12.8.5                                      Each Lender may from time to time grant participations to one or more banks or other financial institutions in a portion of its Pro Rata Share of the Revolving Commitment; provided that (i) such Lender’s obligations under this Agreement shall remain unchanged; (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; (iii) the participating banks or other financial institutions shall not be a Lender hereunder for any purpose except, if the participation agreement so provides, for the purposes of Section 12.3 but only to the extent that the cost of such benefits to Borrower does not exceed the cost which Borrower would have incurred in respect of such Lender absent the participation; (iv) Borrower, Agents and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement; (v) the participation interest shall be expressed as a percentage of the granting Lender’s Pro Rata Share of the Revolving Commitment as it then exists and shall not restrict an increase in the Revolving Commitment, or in the granting Lender’s Pro Rata Share of the Revolving Commitment, so long as the amount of the participation interest is not affected thereby; and (vi) the consent of the holder of such participation interest shall not be required for amendments or waivers of provisions of the Loan Documents and the Lender granting such participation shall be empowered to bind such participant for the purpose of all consents, waiver and amendments other than those which (A) extend the Maturity Date or any other date upon which any payment of money is due to the Lenders, (B) reduce the rate of interest on the Notes, any fee or any other monetary amount payable to the Lenders, (C) reduce the amount of any installment of principal due under the Notes, or (D) release all or a substantial portion of the Collateral from the Lien of the Collateral Documents if the effect thereof is to cause the outstanding principal amount of the Loans to exceed the amount of the Borrowing Base, except if such release of Collateral occurs in connection with a disposition permitted under this Agreement in which case such release shall not require the consent of any of the Lenders or of any holder of a participation interest in the Revolving Commitment.

 

12.9                        Right of Setoff.  If an Event of Default has occurred and is continuing, Agent or any Lender (but in each case only with the consent of the Requisite Lenders) may exercise its rights under Article 9 of the UCC and other Applicable Laws and, to the extent permitted by Applicable Laws, apply any funds in any deposit account maintained with it by Borrower and/or any Property of Borrower in its possession against the Obligations.

 

12.10                 Sharing of Setoffs.  Each Lender severally agrees that if it, through the exercise of any right of setoff, banker’s lien or counterclaim against Borrower, or otherwise, receives payment of the Obligations held by it that is ratably more than any other Lender, through any means, receives in payment of the Obligations held by that Lender, then, subject to Applicable Laws:  (a) the Lender exercising the right of setoff, banker’s lien or counterclaim or otherwise receiving such payment shall purchase, and shall be deemed to have simultaneously purchased, from each of the other Lenders a participation in the Obligations held by the other Lenders and shall pay to the other Lenders a purchase price in an amount so that the share of the Obligations held by each Lender after the exercise of the right of setoff, banker’s lien or counterclaim or receipt of payment shall be in the same proportion that existed prior to the exercise of the right of setoff, banker’s lien or counterclaim or receipt of payment; and (b) such other adjustments and purchases of participations shall be made from time to time as shall be equitable to ensure that all of the Lenders share any payment obtained in respect of the Obligations ratably in accordance with each Lender’s share of the Obligations immediately prior to, and without taking into

 

75

 

account, the payment; provided that if all or any portion of a disproportionate payment obtained as a result of the exercise of the right of setoff, banker’s lien, counterclaim or otherwise is thereafter recovered from the purchasing Lender by Borrower or any Person claiming through or succeeding to the rights of Borrower, the purchase of a participation shall be rescinded and the purchase price thereof shall be restored to the extent of the recovery, but without interest.  Each Lender that purchases a participation in the Obligations pursuant to this Section 12.10 shall from and after the purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased.  Borrower expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in an Obligation so purchased pursuant to this Section 12.10 may exercise any and all rights of setoff, banker’s lien or counterclaim with respect to the participation as fully as if the Lender were the original owner of the Obligation purchased.

 

12.11                 Section Titles.  The Section titles and Table of Contents contained in this Agreement and any other Loan Document are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

 

12.12                 Counterparts.  Each Loan Document may be executed in any number of identical counterparts, which shall constitute an original and collectively and separately constitute a single instrument or agreement.  Execution of any such counterpart may be evidenced by a facsimile transmission or electronic delivery of the signature of such party.  The execution of this Agreement or any other Loan Document by any Party hereto or thereto will not become effective until counterparts hereof or thereof, as the case may be, have been executed by all the parties hereto or thereto.

 

12.13                 Time of the Essence.  Time is of the essence for payment and performance of the Obligations.

 

12.14                 GOVERNING LAW; VENUE.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.  BORROWER HEREBY CONSENTS AND AGREES, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, THAT THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND ANY CREDIT FACILITY LENDER PERTAINING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT CREDIT FACILITY LENDERS AND

 

76

 

BORROWER ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT OR ANY CREDIT FACILITY LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH AGENT OR CREDIT FACILITY LENDER. BORROWER EXPRESSLY SUBMITS AND CONSENTS TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN SECTION 12.7 AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE BORROWER’S ACTUAL RECEIPT THEREOF.

 

12.15                 WAIVER OF JURY TRIAL.  To the extent permitted by law, in connection with any action or proceeding, whether brought in state or federal court, Borrower, Agents and each Credit Facility Lender hereby expressly, intentionally and deliberately waive any right such party may otherwise have to trial by jury of any claim, cause of action, action, dispute or controversy between or among such parties, whether sounding in contract, tort or otherwise, which arises out of or relates to: (i) any of the Loan Documents and any and all related documents, instruments and agreements, and any and all extensions, renewals, amendments and replacements of any of the foregoing, (ii) any negotiations or communications relating to the Loan Documents and any and all related documents, instruments and agreements, and any and all extensions, renewals, amendments and replacements thereof, whether or not incorporated into the Loan Documents; or (iii) any alleged agreements, promises, representations or transactions in connection therewith.

 

12.16                 Amendments; Consents.  No amendment, modification, supplement, extension, termination or waiver of any provision of this Agreement or any other Loan Document, no approval or consent thereunder, and no consent to any departure by Borrower or any other party therefrom, may in any event be effective unless in writing signed by Agents with the written approval of the Requisite Lenders (to the extent such Requisite Lender approval is required by this Agreement and, in the case of any amendment, modification or supplement of or to any Loan Document to which Borrower is a party, signed by Borrower, and, in the case of any amendment, modification or supplement to Section 13 or Section 14, signed by Administrative Agent or Security Agent, respectively), and then only in the specific instance and for the specific purpose given; and, without the approval in writing of all the Lenders, no amendment, modification, supplement, termination, waiver or consent may be effective:

 

77

 

12.16.1                               To amend or modify the principal of, or the amount of principal, principal prepayments or the rate of interest payable on, any Note, or the amount of the Revolving Commitment or the Pro Rata Share of any Lender or the amount of any commitment fee payable to any Lender, or any other fee or amount payable to any Lender under the Loan Documents or to waive an Event of Default consisting of the failure of Borrower to pay when due principal, interest or any fee;

 

12.16.2                               To postpone any date fixed for any payment of principal of, prepayment of principal of or any installment of interest on, any Note or any installment of any fee, or to extend the term of the Revolving Commitment;

 

12.16.3                               To amend the provisions of the definition of “Requisite Lenders” or “Maturity Date” or to increase the percentages of Net Book Value as set forth in paragraphs (a) — (e) in the definition of “Borrowing Base,” or

 

12.16.4                               To release all or a substantial portion of the Collateral from the Lien of the Collateral Documents if the effect thereof would be to cause a Borrowing Base Deficiency;

 

12.16.5                               To amend or waive Section 4 or this Section 12.16 or any part thereof; or

 

12.16.6                               To amend any provision of this Agreement that expressly requires the consent or approval of all or a specified portion of the Lenders.

 

Any amendment, modification, supplement, termination, waiver or consent pursuant to this Section 12.16 shall apply equally to, and shall be binding upon, all the Lenders and Administrative Agent.  Notwithstanding anything in this Agreement or any other Loan Document to the contrary, the Administrative Agent shall have the discretion, is authorized to grant and may direct the Security Agent to grant any consent, waiver, amendment, release of Collateral or other accommodation reasonably necessary to (a) give effect to the transactions contemplated to occur in connection with a refinancing of WEST permitted hereunder and scheduled to occur on the WEST Refinancing Closing Date or otherwise in connection with the transactions referred to in clause (ii) of the definition of WEST Funding Facility, and (b) incur any Indebtedness of any Special Purpose Financing Vehicle permitted hereunder, provided that after giving effect to any such transactions (including the transactions scheduled to occur on the WEST Refinancing Closing Date), Borrower shall not, in either of the foregoing clauses (a) or (b), be in Default of any of its obligations hereunder and such transactions (or series of transactions scheduled to occur on such dates) will not adversely affect the interest of the Lenders.

 

12.17                 Foreign Lenders and Participants.  Each Lender that is incorporated or otherwise organized under the Applicable Laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia shall deliver to Borrower (with a copy to Administrative Agent), on or before the Closing Date (or on or before accepting an assignment or receiving a participation interest herein pursuant to Section 12.8, if applicable) two duly completed copies, signed by an authorized officer, of either Form 1001 (relating to such Lender and entitling it to a complete exemption from withholding on all payments to be made to such

 

78

 

Lender by Borrower pursuant to this Agreement) or Form W-8BEN (relating to all payments to be made to such Lender by the Borrower pursuant to this Agreement) of the United States Internal Revenue Service or such other evidence (including, if reasonably necessary, Form W-9) satisfactory to Borrower and Administrative Agent that no withholding under the federal income tax laws is required with respect to such Lender.  Thereafter and from time to time, each such Lender shall (a) promptly submit to Borrower (with a copy to Administrative Agent), such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is satisfactory to Borrower and Administrative Agent of any available exemption from, United States withholding taxes in respect of all payments to be made to such Lender by Borrower pursuant to this Agreement and (b) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re designation of its LIBOR lending office, if any) to avoid any requirement of Applicable Laws that Borrower make any deduction or withholding for taxes from amounts payable to such Lender.  In the event that Borrower or Administrative Agent become aware that a participation has been granted pursuant to Section 12.8.5 to a financial institution that is incorporated or otherwise organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia, then, upon request made by Borrower or Administrative Agent to the Lender which granted such participation, such Lender shall cause such participant financial institution to deliver the same documents and information to Borrower and Administrative Agent as would be required under this Section if such financial institution were a Lender.

 

12.18                 Custodial Agreement.  The Security Agent has entered 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 as set forth in Schedule 5.23. Without limiting the foregoing, the Administrative Agent and each of the other Lenders 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.

 

13.                               ADMINISTRATIVE AGENT

 

13.1                        Appointment and Authorization.  Subject to Section 12.8, each Credit Facility Lender hereby irrevocably appoints and authorizes Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to Administrative Agent by the terms thereof or are reasonably incidental, as determined by Administrative Agent, thereto.  This appointment and authorization is intended solely for the purpose of facilitating the servicing of the Loans and does not constitute appointment of Administrative Agent as trustee for any Credit Facility Lender or as representative of any Credit Facility Lender for any other purpose and, except as specifically set forth in the Loan Documents to the contrary, Administrative Agent shall take such action and exercise such powers only in an administrative and ministerial capacity.

 

79

 

13.2                        Administrative Agent and Affiliates.  Union Bank, N.A. (and each successor Administrative Agent) has the same rights and powers under the Loan Documents as any other Credit Facility Lender and may exercise the same as though it were not Administrative Agent, and the term “Lender” or “Lenders” includes Union Bank, N.A. in its individual capacity.  Union Bank, N.A. (and each successor Administrative Agent) and its Affiliates may accept deposits from, lend money to and generally engage in any kind of banking, trust or other business with Borrower or any Affiliate of Borrower, as if it were not Administrative Agent and without any duty to account therefor to Credit Facility Lenders.  Union Bank, N.A. (and each successor Administrative Agent) need not account to any other Credit Facility Lender for any monies received by it in its capacity as a Credit Facility Lender hereunder.  Administrative Agent shall not be deemed to hold a fiduciary relationship with any Credit Facility Lender and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against Administrative Agent.

 

13.3                        Lenders’ Credit Decisions.  Each Credit Facility Lender agrees that it has, independently and without reliance upon Administrative Agent, any other Credit Facility Lender or the directors, officers, agents, employees or attorneys of the foregoing parties, and instead in reliance upon information supplied to it by or on behalf of Borrower and upon such other information as it has deemed appropriate, made its own independent credit analysis and decision to enter into this Agreement.  Each Credit Facility Lender also agrees that it shall, independently and without reliance upon Administrative Agent, any other Credit Facility Lender or the directors, officers, agents, employees or attorneys of the foregoing parties, continue to make its own independent credit analyses and decisions in acting or not acting under the Loan Documents.

 

13.4                        Action by Administrative Agent.

 

13.4.1                                      Absent actual knowledge of Administrative Agent of the existence of a Default, Administrative Agent may assume that no Default has occurred and is continuing, unless Administrative Agent (or the Credit Facility Lender that is then Administrative Agent) has received notice from Borrower stating the nature of the Default or has received notice from a Credit Facility Lender stating the nature of the Default and that such Credit Facility Lender considers the Default to have occurred and to be continuing.

 

13.4.2                                      Administrative Agent has only those obligations under the Loan Documents as are expressly set forth therein.

 

13.4.3                                      Except for any obligation expressly set forth in the Loan Documents and as long as Administrative Agent may assume that no Event of Default has occurred and is continuing, Administrative Agent may, but shall not be required to, exercise its discretion to act or not act, except that Administrative Agent shall be required to act or not act upon the instructions of the Requisite Lenders (or of all the Lenders, to the extent required by Section 12.16) and those instructions shall be binding upon Administrative Agent and Credit Facility Lenders, provided that Administrative Agent shall not be required to act or not act if to do so would be contrary to any Loan Document or to Applicable Law or would result, in the reasonable judgment of Administrative Agent, in substantial risk of liability to Administrative Agent.

 

80

 

13.4.4                                      If Administrative Agent has received a notice of any Event of Default, Administrative Agent shall immediately give notice thereof to Credit Facility Lenders and shall act or not act upon the instructions of the Requisite Lenders (or of all the Lenders, to the extent required by Section 12.16), provided that Administrative Agent shall not be required to act or not act if to do so would be contrary to any Loan Document or to Applicable Law or would result, in the reasonable judgment of Administrative Agent, in substantial risk of liability to Administrative Agent, and except that if the Requisite Lenders fail, for five (5) Business Days after the receipt of notice from Administrative Agent, to instruct Administrative Agent, then Administrative Agent, in its sole discretion, may act or not act as it deems advisable for the protection of the interests of Credit Facility Lenders.

 

13.4.5                                      Absent its gross negligence or willful misconduct, Administrative Agent shall have no liability to any Credit Facility Lender for acting, or not acting, as instructed by the Requisite Lenders, notwithstanding any other provision hereof.

 

13.5                        Liability of Administrative Agent.  Neither Administrative Agent nor any of its directors, officers, agents, employees or attorneys shall be liable for any action taken or not taken by them under or in connection with the Loan Documents, except for their own gross negligence or willful misconduct.  Without limitation on the foregoing, Administrative Agent and its directors, officers, agents, employees and attorneys:

 

13.5.1                                      May treat the payee of any Note as the holder thereof until Administrative Agent receives notice of the assignment or transfer thereof, in form satisfactory to Administrative Agent, signed by the payee, and may treat each Credit Facility Lender as the owner of that Credit Facility Lender’s interest in the Obligations for all purposes of this Agreement until Administrative Agent receives notice of the assignment or transfer thereof, in form satisfactory to Administrative Agent, signed by that Credit Facility Lender;

 

13.5.2                                      May consult with legal counsel (including in-house legal counsel), accountants (including in house accountants) and other professionals or experts selected by it, or with legal counsel, accountants or other professionals or experts for Borrower or Credit Facility Lenders, and shall not be liable for any action taken or not taken by it in good faith in accordance with any advice of such legal counsel, accountants or other professionals or experts selected by it with reasonable care;

 

13.5.3                                      Shall not be responsible to any Credit Facility Lender for any statement, warranty or representation made in any of the Loan Documents or in any notice, certificate, report, request or other statement (written or oral) given or made in connection with any of the Loan Documents except for those expressly made by it;

 

13.5.4                                      Except to the extent expressly set forth in the Loan Documents, shall have no duty to ask or inquire as to the performance or observance by Borrower of any of the terms, conditions or covenants of any of the Loan Documents or to inspect any collateral or any Property, books or records of Borrower;

 

13.5.5                                      Will not be responsible to any Credit Facility Lender for the due execution, legality, validity, enforceability, genuineness, effectiveness, sufficiency or value of

 

81

 

any Loan Document, any other instrument or writing furnished pursuant thereto or in connection therewith, or any collateral;

 

13.5.6                                      Will not incur any liability by acting or not acting in reliance upon any Loan Document, notice, consent, certificate, statement, request or other instrument or writing reasonably believed by it to be genuine and signed or sent by the proper party or parties; and

 

13.5.7                                      Will not incur any liability for any arithmetical error in computing any amount paid or payable by Borrower thereof or paid or payable to or received or receivable from any Credit Facility Lender under any Loan Document, including, without limitation, principal, interest, commitment fees, Loans and other amounts; provided that, promptly upon discovery of such an error in computation, Administrative Agent, Credit Facility Lenders and (to the extent applicable) Borrower shall make such adjustments as are necessary to correct such error and to restore the parties to the position that they would have occupied had the error not occurred.

 

13.6                        Indemnification.  Each Credit Facility Lender shall, ratably in accordance with its proportion of the aggregate Indebtedness then evidenced by the Notes, indemnify and hold Administrative Agent and its directors, officers, agents, employees and attorneys harmless against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including reasonable attorneys’ fees and disbursements and allocated costs of attorneys employed by Administrative Agent) that may be imposed on, incurred by or asserted against it or them in any way relating to or arising out of the Loan Documents (other than losses incurred by reason of the failure of Borrower to pay the Indebtedness represented by the Notes) or any action taken or not taken by it as Administrative Agent thereunder, except such as result from its own gross negligence or willful misconduct.  Without limitation on the foregoing, each Credit Facility Lender shall reimburse Administrative Agent upon demand for that Credit Facility Lender’s share (as set forth in this Section) of any out of pocket cost or expense incurred by Administrative Agent in connection with the negotiation, preparation, execution, delivery, amendment, waiver, restructuring, reorganization (including a bankruptcy reorganization), enforcement or attempted enforcement of the Loan Documents, to the extent that Borrower or any other party is required by Section 12.2 to pay that cost or expense but fails to do so upon demand.  Nothing in this Section 13.6 shall entitle Administrative Agent or any indemnitee referred to above to recover any amount from Credit Facility Lenders if and to the extent that such amount has theretofore been recovered from Borrower.  To the extent that Administrative Agent or any indemnitee referred to above is later reimbursed such amount by Borrower, it shall return the amounts paid to it by Credit Facility Lenders in respect of such amount.

 

13.7                        Successor Administrative Agent.  Administrative Agent may, and at the request of the Requisite Lenders shall, resign as Administrative Agent upon reasonable notice to Credit Facility Lenders and Borrower, effective upon acceptance of appointment by a successor Administrative Agent.  If Administrative Agent shall resign as Administrative Agent under this Agreement, the Requisite Lenders shall appoint from among Credit Facility Lenders a successor Administrative Agent for Credit Facility Lenders, which successor Administrative Agent shall be approved by Borrower (and such approval shall not be unreasonably withheld or delayed).  If no successor Administrative Agent is appointed prior to the effective date of the resignation of Administrative Agent, Administrative Agent may appoint, after consulting with Credit Facility

 

82

 

Lenders and Borrower, a successor Administrative Agent from among Credit Facility Lenders.  Upon the acceptance of its appointment as successor Administrative Agent hereunder, such successor Administrative Agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the term “Administrative Agent” shall mean such successor Administrative Agent and the retiring Administrative Agent’s appointment, powers and duties as Administrative Agent shall be terminated.  After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Section 13, and Section 12.3, shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement.  Notwithstanding the foregoing, if (a) Administrative Agent has not been paid those fees referenced in Section 2.6.3 or has not been reimbursed for any expense reimbursable to it under Sections 12.2 or 12.3, in either case for a period of at least one (1) year and (b) no successor Administrative Agent has accepted appointment as Administrative Agent by the date which is thirty (30) days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and Credit Facility Lenders shall perform all of the duties of Administrative Agent hereunder until such time, if any, as the Requisite Lenders appoint a successor Administrative Agent as provided for above.

 

13.8                        No Obligations of Borrower.  Nothing contained in this Section 13 shall be deemed to impose upon Borrower any obligation in respect of the due and punctual performance by Administrative Agent of its obligations to Credit Facility Lenders under any provision of this Agreement, and Borrower shall have no liability to Administrative Agent or any of Credit Facility Lenders in respect of any failure by Administrative Agent or any Credit Facility Lender to perform any of its obligations to Administrative Agent or Credit Facility Lenders under this Agreement.  Without limiting the generality of the foregoing, where any provision of this Agreement relating to the payment of any amounts due and owing under the Loan Documents provides that such payments shall be made by Borrower to Administrative Agent for the account of Credit Facility Lenders, Borrower’s obligations to Credit Facility Lenders in respect of such payments shall be deemed to be satisfied upon the making of such payments to Administrative Agent in the manner provided by this Agreement.  In addition, Borrower may rely on a written statement by Administrative Agent to the effect that it has obtained the written consent of the Requisite Lenders or Credit Facility Lenders, as applicable under Section 12.16, in connection with a waiver, amendment, consent, approval or other action by Credit Facility Lenders hereunder, and shall have no obligation to verify or confirm the same.

 

14.                               SECURITY AGENT

 

14.1                        Appointment and Authorization.  Each Credit Facility Lender hereby irrevocably appoints and authorizes Security Agent to take such action as agent on its behalf and to exercise such powers under the Collateral Documents and any other Loan Documents as are delegated to Security Agent by the terms thereof or are reasonably incidental, as determined by Security Agent, thereto.  This appointment and authorization is intended solely for the purpose of securing the Collateral as set forth in this Agreement and does not constitute appointment of Security Agent as trustee for any Credit Facility Lender or as representative of any Credit Facility Lender for any other purpose and, except as specifically set forth in the Loan Documents to the contrary, Security Agent shall take such action and exercise such powers only in an administrative and ministerial capacity.

 

83

 

14.2                        Security Agent and Affiliates.  Union Bank, N.A. (and each successor Security Agent) shall not be deemed to hold a fiduciary relationship with any Credit Facility Lender and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against Security Agent.

 

14.3                        Proportionate Interest in any Collateral.  Security Agent, on behalf of Credit Facility Lenders, shall hold in accordance with the Loan Documents all items of any collateral or interests therein to be received or held by Security Agent.  Subject to Agents’ and Credit Facility Lenders’ rights to reimbursement for their costs and expenses hereunder (including reasonable attorneys’ fees and disbursements and other professional services and the reasonably allocated costs of attorneys employed by Security Agent or a Credit Facility Lender) and subject to the application of payments in accordance with Section 9.4, each Credit Facility Lender shall have an interest in such collateral or interests therein in the same proportion that the aggregate obligations owed such Credit Facility Lender under the Loan Documents bears to the aggregate obligations owed under the Loan Documents, without priority or preference among Credit Facility Lenders.

 

14.4                        Lenders’ Credit Decisions.  Each Credit Facility Lender agrees that it has, independently and without reliance upon Security Agent, any other Credit Facility Lender or the directors, officers, agents, employees or attorneys of the foregoing parties, and instead in reliance upon information supplied to it by or on behalf of Borrower and upon such other information as it has deemed appropriate, made its own independent credit analysis and decision to enter into this Agreement.  Each Credit Facility Lender also agrees that it shall, independently and without reliance upon Security Agent, any other Credit Facility Lender or the directors, officers, agents, employees or attorneys of the foregoing parties, continue to make its own independent credit analyses and decisions in acting or not acting under the Loan Documents.

 

14.5                        Action by Security Agent.

 

14.5.1                                      Absent actual knowledge of Security Agent of the existence of a Default, Security Agent may assume that no Default has occurred and is continuing, unless Security Agent (or the Lender that is then Security Agent) has received notice from Borrower stating the nature of the Default or has received notice from a Credit Facility Lender stating the nature of the Default and that such Credit Facility Lender considers the Default to have occurred and to be continuing.

 

14.5.2                                      Security Agent has only those obligations under the Loan Documents as are expressly set forth therein.

 

14.5.3                                      Except for any obligation expressly set forth in the Loan Documents and as long as Security Agent may assume that no Event of Default has occurred and is continuing, Security Agent may, but shall not be required to, exercise its discretion to act or not act, except that Security Agent shall be required to act or not act upon the instructions of the Requisite Lenders (or of all the Lenders, to the extent required by Section 12.16) and those instructions shall be binding upon Security Agent and all Credit Facility Lenders, provided that Security Agent shall not be required to act or not act if to do so would be contrary to any Loan

 

84

 

Document or to Applicable Law or would result, in the reasonable judgment of Security Agent, in substantial risk of liability to Security Agent.

 

14.5.4                                      If Security Agent has received a notice specified in Section 14.5.1, Security Agent shall immediately give notice thereof to Credit Facility Lenders and shall act or not act upon the instructions of the Requisite Lenders (or of all the Lenders, to the extent required by Section 12.16), provided that Security Agent shall not be required to act or not act if to do so would be contrary to any Loan Document or to Applicable Law or would result, in the reasonable judgment of Security Agent, in substantial risk of liability to Security Agent, and except that if the Requisite Lenders fail, for five (5) Business Days after the receipt of notice from Security Agent, to instruct Security Agent, then Security Agent, in its sole discretion, may act or not act as it deems advisable for the protection of the interests of Credit Facility Lenders.

 

14.5.5                                      Absent its gross negligence or willful misconduct, Security Agent shall have no liability to any Credit Facility Lender for acting, or not acting, as instructed by the Requisite Lenders, notwithstanding any other provision hereof.

 

14.6                        Liability of Security Agent.  Neither Security Agent nor any of its directors, officers, agents, employees or attorneys shall be liable for any action taken or not taken by them under or in connection with the Loan Documents, except for their own gross negligence or willful misconduct.  Without limitation on the foregoing, Security Agent and its directors, officers, agents, employees and attorneys:

 

14.6.1                                      May treat the payee of any Note as the holder thereof until Security Agent receives notice of the assignment or transfer thereof, signed by the payee, and may treat each Credit Facility Lender as the owner of that Credit Facility Lender’s interest in the Obligations for all purposes of this Agreement until Security Agent receives notice of the assignment or transfer thereof, signed by that Credit Facility Lender;

 

14.6.2                                      May consult with legal counsel (including in-house legal counsel), accountants (including in house accountants) and other professionals or experts selected by it, or with legal counsel, accountants or other professionals or experts for Borrower or Credit Facility Lenders, and shall not be liable for any action taken or not taken by it in good faith in accordance with any advice of such legal counsel, accountants or other professionals or experts selected by it with reasonable care;

 

14.6.3                                      Shall not be responsible to any Credit Facility Lender for any statement, warranty or representation made in any of the Loan Documents or in any notice, certificate, report, request or other statement (written or oral) given or made in connection with any of the Loan Documents except for those expressly made by it;

 

14.6.4                                      Except to the extent expressly set forth in the Loan Documents, shall have no duty to ask or inquire as to the performance or observance by Borrower of any of the terms, conditions or covenants of any of the Loan Documents or to inspect any collateral or any Property, books or records of Borrower;

 

14.6.5                                      Will not be responsible to any Credit Facility Lender for the due execution, legality, validity, enforceability, genuineness, effectiveness, sufficiency or value of

 

85

 

any Loan Document, any other instrument or writing furnished pursuant thereto or in connection therewith, or any collateral; and

 

14.6.6                                      Will not incur any liability by acting or not acting in reliance upon any Loan Document, notice, consent, certificate, statement, request or other instrument or writing reasonably believed by it to be genuine and signed or sent by the proper party or parties.

 

14.7                        Indemnification.  Each Credit Facility Lender shall, ratably in accordance with its proportion of the aggregate Indebtedness then evidenced by the Notes, indemnify and hold Security Agent and its directors, officers, agents, employees and attorneys harmless against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including reasonable attorneys’ fees and disbursements and allocated costs of attorneys employed by Security Agent) that may be imposed on, incurred by or asserted against it or them in any way relating to or arising out of the Loan Documents (other than losses incurred by reason of the failure of Borrower to pay the Indebtedness represented by the Notes) or any action taken or not taken by it as Security Agent thereunder, except such as result from its own gross negligence or willful misconduct.  Without limitation on the foregoing, each Credit Facility Lender shall reimburse Security Agent upon demand for that Lender’s Pro Rata Share of any out of pocket cost or expense incurred by Security Agent in connection with the negotiation, preparation, execution, delivery, amendment, waiver, restructuring, reorganization (including a bankruptcy reorganization), enforcement or attempted enforcement of the Loan Documents, to the extent that Borrower or any other party is required by Section 12.2 to pay that cost or expense but fails to do so upon demand.  Nothing in this Section 14.7 shall entitle Security Agent or any indemnitee referred to above to recover any amount from Credit Facility Lenders if and to the extent that such amount has theretofore been recovered from Borrower.  To the extent that Security Agent or any indemnitee referred to above is later reimbursed such amount by Borrower, it shall return the amounts paid to it by Credit Facility Lenders in respect of such amount.

 

14.8                        Successor Security Agent.  Security Agent may, and at the request of the Requisite Lenders shall, resign as Security Agent upon reasonable notice to Credit Facility Lenders and Borrower effective upon acceptance of appointment by a successor Security Agent.  If Security Agent shall resign as Security Agent under this Agreement, the Requisite Lenders shall appoint from among Credit Facility Lenders a successor Security Agent for Credit Facility Lenders, which successor Security Agent shall be approved by Borrower (and such approval shall not be unreasonably withheld or delayed).  If no successor Security Agent is appointed prior to the effective date of the resignation of Security Agent, Security Agent may appoint, after consulting with Credit Facility Lenders and Borrower, a successor Security Agent from among Credit Facility Lenders.  Upon the acceptance of its appointment as successor Security Agent hereunder, such successor Security Agent shall succeed to all the rights, powers and duties of the retiring Security Agent and the term “Security Agent” shall mean such successor Security Agent and the retiring Security Agent’s appointment, powers and duties as Security Agent shall be terminated.  After any retiring Security Agent’s resignation hereunder as Security Agent, the provisions of this Section 14, and Section 12.3, shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Security Agent under this Agreement.  Notwithstanding the foregoing, if (a) Security Agent has not been paid those fees referenced in Section 2.6.3 or has not been reimbursed for any expense reimbursable to it under Sections 12.2 or 12.3, in either

 

86

 

case for a period of at least one (1) year and (b) no successor Security Agent has accepted appointment as Security Agent by the date which is thirty (30) days following a retiring Security Agent’s notice of resignation, the retiring Security Agent’s resignation shall nevertheless thereupon become effective and Credit Facility Lenders shall perform all of the duties of Security Agent hereunder until such time, if any, as the Requisite Lenders appoint a successor Security Agent as provided for above.

 

14.9                        No Obligations of Borrower.  Nothing contained in this Section 14 shall be deemed to impose upon Borrower any obligation in respect of the due and punctual performance by Security Agent of its obligations to Credit Facility Lenders under any provision of this Agreement, and Borrower shall have no liability to Security Agent or any of Credit Facility Lenders in respect of any failure by Security Agent or any Credit Facility Lender to perform any of its obligations to Security Agent or Credit Facility Lenders under this Agreement.

 

15.                               COMMITMENT COSTS AND RELATED MATTERS.

 

15.1                        Eurodollar Costs and Related Matters.

 

15.1.1                                      In the event that any Governmental Authority imposes on any Credit Facility Lender any reserve, special deposit or comparable requirement (including any emergency, supplemental or other reserve) with respect to the Eurodollar liabilities (as defined in Regulation D or any comparable regulation of any Governmental Authority having jurisdiction over any Credit Facility Lender) of any Credit Facility Lender, Borrower shall pay such lender within five (5) Business Days after demand all amounts necessary to compensate such Credit Facility Lender (determined as though such lender’s LIBOR lending office had funded 100% of its LIBOR Loan in the Designated Eurodollar Market) in respect of the imposition of such reserve requirements (provided that Borrower shall not be obligated to pay any such amount which arose prior to the date which is forty five (45) days preceding the date of such demand or is attributable to periods prior to the date which is forty five (45) days preceding the date of such demand).  Such Credit Facility Lender’s determination of such amount shall be conclusive in the absence of manifest error.

 

15.1.2                                      If, after the date hereof, the existence or occurrence of any Special Eurodollar Circumstance:

 

(a)                                 shall subject any Credit Facility Lender or its LIBOR lending office to any tax, duty or other charge or cost with respect to any LIBOR Loan, its Note evidencing such LIBOR Loan(s) or its obligation to make LIBOR Loans, or shall change the basis of taxation of payments to any Credit Facility Lender attributable to the principal of or interest on any LIBOR Loan or any other amounts due under this Agreement in respect of any LIBOR Loan, its Note evidencing such LIBOR Loan(s) or its obligation to make LIBOR Loans, excluding taxes imposed on or measured in whole or in part by its overall net income by (A) any jurisdiction (or political subdivision thereof) in which it is organized or maintains its principal office or LIBOR lending office or (B) any jurisdiction (or political subdivision thereof) in which it is “doing business”;

 

87

 

(b)                                 shall impose, modify or deem applicable any reserve not applicable or deemed applicable on the date hereof (including any reserve imposed by the Board of Governors of the Federal Reserve System, special deposit, capital or similar requirements against assets of, deposits with or for the account of, or credit extended by, any Credit Facility Lender or its LIBOR lending office); or

 

(c)                                  shall impose on any Credit Facility Lender or its LIBOR lending office or the Designated Eurodollar Market any other condition affecting any LIBOR Loan, its Note evidencing such LIBOR Loan(s), its obligation to make LIBOR Loans or this Agreement, or shall otherwise affect any of the same;

 

and the result of any of the foregoing, as determined in good faith by any Credit Facility Lender, increases the cost to any Credit Facility Lender or its LIBOR lending office of making or maintaining any LIBOR Loan or in respect of any LIBOR Loan, any Note evidencing LIBOR Loans or its obligation to make LIBOR Loans or reduces the amount of any sum received or receivable by any Credit Facility Lender or its LIBOR lending office with respect to any LIBOR Loan, its Note evidencing such LIBOR Loan(s) or its obligation to make LIBOR Loans (assuming such Credit Facility Lender’s LIBOR lending office had funded 100% of its LIBOR Loan in the Designated Eurodollar Market), then, within five (5) Business Days after demand by such lender (with a copy to Administrative Agent), Borrower shall pay to such Credit Facility Lender such additional amount or amounts as will compensate such lender for such increased cost or reduction (determined as though such Credit Facility Lender’s LIBOR lending office had funded 100% of its LIBOR Loan in the Designated Eurodollar Market); provided that Borrower shall not be obligated to pay any such amount which arose prior to the date which is ninety (90) days preceding the date of such demand or is attributable to periods prior to the date which is ninety (90) days preceding the date of such demand.  A statement of Credit Facility Lender claiming compensation under this subsection shall be conclusive in the absence of manifest error.

 

15.1.3                                      If, after the date hereof, the existence or occurrence of any Special Eurodollar Circumstance shall, in the good faith opinion of Credit Facility Lender, make it unlawful or impossible for Credit Facility Lender or its LIBOR lending office to make, maintain or fund its portion of any LIBOR Loan, or materially restrict the authority of Credit Facility Lender to purchase or sell, or to take deposits of, Dollars in the Designated Eurodollar Market, or to determine or charge interest rates based upon the LIBOR Basis, and Credit Facility Lender shall so notify Administrative Agent, then such Credit Facility Lender’s obligation to make LIBOR Loans shall be suspended for the duration of such illegality or impossibility and Credit Facility Lender forthwith shall give notice thereof to the other Credit Facility Lenders and Borrower.  Upon receipt of such notice, the outstanding principal amount of such Credit Facility Lender’s LIBOR Loans, together with accrued interest thereon, automatically shall be converted to Base Rate Loans on either (1) the last day of the LIBOR Loan Period(s) applicable to such LIBOR Loans if such lender may lawfully continue to maintain and fund such LIBOR Loans to such day(s) or (2) immediately if such lender may not lawfully continue to fund and maintain such LIBOR Loans to such day(s), provided that in such event the conversion shall not be subject to payment of a prepayment fee under Section 2.8.5.  Credit Facility Lenders agrees to endeavor promptly to notify Borrower of any event of which it has actual knowledge, occurring after the Closing Date, which will cause any Credit Facility Lender to notify Administrative Agent under this Section, and agrees to designate a different LIBOR lending office if such

 

88

 

designation will avoid the need for such notice and will not, in the good faith judgment of such lender, otherwise be materially disadvantageous to such lender.  In the event that any Credit Facility Lender is unable, for the reasons set forth above, to make, maintain or fund its portion of any LIBOR Loan, such Credit Facility Lender shall fund such amount as a Base Rate Loan for the same period of time, and such amount shall be treated in all respects as a Base Rate Loan.  Any Credit Facility Lender whose obligation to make LIBOR Loans has been suspended under this Section shall promptly notify Administrative Agent and Borrower of the cessation of the Special Eurodollar Circumstance which gave rise to such suspension. Borrower shall have the right to terminate the Revolving Commitment of any Credit Facility Lender for which the funding of LIBOR Loans becomes unlawful or impossible, as set forth above, and to substitute a new Credit Facility Lender into this Agreement subject to the provisions of Section 12.8 of this Agreement.

 

15.1.4                                      If, with respect to any proposed LIBOR Loan, any Credit Facility Lender:

 

(a)                                 reasonably determines that, by reason of circumstances affecting the Designated Eurodollar Market generally that are beyond the reasonable control of such lender, deposits in Dollars (in the applicable amounts) are not being offered to lender in the Designated Eurodollar Market for the applicable LIBOR Loan Period; or

 

(b)                                 LIBOR Basis as determined by such lender (i) does not represent the effective pricing to lender for deposits in Dollars in the Designated Eurodollar Market in the relevant amount for the applicable LIBOR Loan Period, or (ii) will not adequately and fairly reflect the cost to such lender of making the applicable LIBOR Loans;

 

then such Credit Facility Lender forthwith shall give notice thereof to Borrower and Administrative Agent, whereupon until such Credit Facility Lender notifies Borrower that the circumstances giving rise to such suspension no longer exist, the obligation of such Credit Facility Lender to make any future LIBOR Loans shall be suspended and such Credit Facility Lender’s Loans shall be treated in all respects as a Base Rate Loan.

 

15.1.5                                      Each Credit Facility Lender agrees to endeavor promptly to notify Borrower of any event of which it has actual knowledge, occurring after the Closing Date, which will entitle any Credit Facility Lender to compensation pursuant to this Section, and agrees to designate a different LIBOR lending office if such designation will avoid the need for or reduce the amount of such compensation and will not, in the good faith judgment of such lender, otherwise be materially disadvantageous to lender.  Any request for compensation by any Credit Facility Lender under this Section shall set forth the basis upon which it has been determined that such an amount is due from Borrower, a calculation of the amount due, and a certification that the corresponding costs have been incurred by such lender.

 

15.2                        Capital Adequacy.  If, after the date hereof, any Credit Facility Lender (or any Affiliate of any Credit Facility Lender) shall have reasonably determined that the adoption of any Applicable Law, governmental rule, regulation or order regarding the capital adequacy of banks or bank holding companies, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency

 

89

 

charged with the interpretation or administration thereof, or compliance by any Credit Facility Lender (or any Affiliate of any Credit Facility Lender) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of Credit Facility Lender (or any Affiliate of Credit Facility Lender) as a consequence of any of such Credit Facility Lender’s obligations hereunder to a level below that which it could have achieved but for such adoption, change or compliance (taking into consideration the policies of any Credit Facility Lender (or Affiliate of any Credit Facility Lender) with respect to capital adequacy immediately before such adoption, change or compliance and assuming that the capital of such Credit Facility Lender (or Affiliate of such Credit Facility Lender) was fully utilized prior to such adoption, change or compliance), then, upon demand by such Credit Facility Lender, Borrower shall immediately pay to such lender such additional amounts as shall be sufficient to compensate such lender for any such reduction actually suffered; provided that there shall be no duplication of amounts paid to any Credit Facility Lender pursuant to this sentence and Section 15.1.  For purposes of this Section 15.2, a change in Applicable Law, governmental rule, regulation or order shall include, without limitation, (x) any change made or which becomes effective on the basis of a law, treaty, rule, regulation, interpretation administration or implementation then in force, the effective date of which change is delayed by the terms of such law, treaty, rule, regulation, interpretation, administration or implementation, (y) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173) and all requests, rules, regulations, guidelines, interpretations or directives promulgated thereunder or issued in connection therewith, regardless of the date enacted, adopted, issued or promulgated, whether before or after the Closing Date and (z) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities.  Such Credit Facility Lender’s determination of the amount to be paid to such lender by Borrower as a result of any event referred to in this Section 15.2 shall, absent manifest error, be deemed final, binding and conclusive upon Borrower.

 

15.3                        Federal Reserve System/Wire Transfers.  The obligation of any Credit Facility Lender to make any loan by wire transfer to Borrower or any other Person shall be subject to all Applicable Laws, including the policy of the Board of Governors of the Federal Reserve System on Reduction of Payments System Risk as in effect from time to time.  Borrower acknowledges that such laws, regulations and policy may delay the transmission of any funds to Borrower.

 

15.4                        Assignment of Commitments Under Certain Circumstances; Duty to Mitigate.  In the event any Credit Facility Lender (i) requests compensation pursuant to Section 15.1 or 15.2, above, (ii) delivers a notice described in Section 15.1 or 15.2, above, (iii) refuses to consent to any amendment, waiver or other modification of any Loan Document requested by any Borrower and which amendment, waiver or other modification is required under this Agreement for such amendment, waiver or other modification, or (iv) is a Defaulting Lender, Borrower may, at its sole expense and effort (including with respect to the assignment fee referred to in Section 12.8), upon notice to such Credit Facility Lender and Administrative Agent, require such Credit Facility Lender to transfer and assign, without recourse (in accordance with and subject to the restrictions contained in Section 12.8), all of its interests, rights and obligations under this Agreement to an Eligible Assignee that shall assume such assigned obligations (which Eligible Assignee may be another Lender, if a Lender accepts such assignment); provided that (x) such

 

90

 

assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority having jurisdiction, (y) Borrower shall have received the prior written consent of Administrative Agent, which consent shall not unreasonably be withheld or delayed, and (z) the Borrower or such assignee shall have paid to the affected Credit Facility Lender in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Loans of such Credit Facility Lender, respectively, affected by such assignment plus all fees and other amounts accrued for the account of such Credit Facility Lender hereunder; provided that Borrower shall not be required to pay any costs and expenses that are incurred by a Defaulting Lender solely as a result of such Credit Facility Lender’s default of its obligations hereunder; provided further that, if prior to any such transfer and assignment the circumstances or event that resulted in such Credit Facility Lender’s claim for compensation or notice, as referred to above in (i) and (ii) of this Section 15.4, as the case may be, cease to cause such Credit Facility Lender to suffer increased costs or reductions in amounts received or receivable or reduction in return on capital, or cease to have the consequences specified in Section 15.1 or 15.2, above, or cease to result in amounts being payable under Section 15.1 or 15.2, as the case may be, or if such Credit Facility Lender shall waive its right to claim or notice under Section 15.1 or 15.2, as applicable in respect of such circumstances or event or shall consent to the proposed amendment, waiver, consent or other modification, as the case may be, then such Credit Facility Lender shall not thereafter be required to make any such transfer and assignment hereunder.  Each Credit Facility Lender hereby grants to Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Credit Facility Lender as assignor, any Commitment Assignment and Acceptance necessary to effectuate any assignment of such Credit Facility Lender’s interests hereunder in the circumstances contemplated by this paragraph.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Credit Facility Lender in connection with any such filing or assignment, delegation and transfer; provided that Borrower shall not pay any such costs and expenses incurred by any Credit Facility Lender who has defaulted on its obligations to make loans or other extensions of credit.

 

91

 

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.

 

	
 
    	
BORROWER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WILLIS   LEASE FINANCE CORPORATION,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Dean M. Poulakidas
    
	
 
    	
Name:
    	
Dean   M. Poulakidas
    
	
 
    	
Title:
    	
Senior   Vice President
    

 

S-1

 

	
 
    	
ADMINISTRATIVE   AGENT AND SECURITY AGENT:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
UNION   BANK, N.A.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Kevin Sullivan
    
	
 
    	
Name:
    	
Kevin   Sullivan
    
	
 
    	
Title:
    	
Senior   Vice President
    

 

S-2

 

	
 
    	
CO-SYNDICATION   AGENT AND LENDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WELLS   FARGO BANK, NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Carlos Lua
    
	
 
    	
Name:
    	
CARLOS   LUA
    
	
 
    	
Title:
    	
VP
    

 

S-3

 

	
 
    	
CO-SYNDICATION   AGENT AND LENDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BANK   OF AMERICA N.A.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Russell Mcclymont
    
	
 
    	
Name:
    	
Russell   Mcclymont
    
	
 
    	
Title:
    	
Sr.   Vice President
    

 

S-4

 

	
 
    	
DOCUMENTATION   AGENT AND LENDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
U.S.   BANK NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Cecilia K. Person
    
	
 
    	
Name:
    	
Cecilia   K. Person
    
	
 
    	
Title:
    	
Vice   President
    

 

S-5

 

	
 
    	
LENDER   AND SWING LINE LENDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
UNION   BANK, N.A.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Kevin Sullivan
    
	
 
    	
Name:
    	
Kevin   Sullivan
    
	
 
    	
Title:
    	
Senior   Vice President
    

 

S-6

 

	
 
    	
LENDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DEUTSCHE   BANK AG, NEW YORK BRANCH
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jon Treers
    
	
 
    	
Name:
    	
JON   TREERS
    
	
 
    	
Title:
    	
DIRECTOR
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Evelyn Peters
    
	
 
    	
Name:
    	
Evelyn   Peters
    
	
 
    	
Title:
    	
Vice   President
    

 

S-7

 

	
 
    	
LENDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CREDIT   AGRICOLE CORPORATE AND INVESTMENT BANK
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles Moran
    
	
 
    	
Name:
    	
Charles   Moran
    
	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Thomas Jean
    
	
 
    	
Name:
    	
Thomas   Jean
    
	
 
    	
Title:
    	
Director
    

 

S-8

 

	
 
    	
LENDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HSBC   BANK USA, NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher M. Ames
    
	
 
    	
Name:
    	
Christopher   M. Ames
    
	
 
    	
Title:
    	
Vice   President 19275
    
	
 
    	
 
    	
Commercial   Banking
    
	
 
    	
 
    	
HSBC   Bank USA, N.A.
    

 

S-9

 

	
 
    	
LENDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CITY   NATIONAL BANK, A NATIONAL BANKING ASSOCIATION
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jeanine Smith
    
	
 
    	
Name:
    	
Jeanine   Smith
    
	
 
    	
Title:
    	
Vice   President
    

 

S-10

 

	
 
    	
LENDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
THE   HUNTINGTON NATIONAL BANK
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Gregory Braun
    
	
 
    	
Name:
    	
GREGORY   BRAUN
    
	
 
    	
Title:
    	
AVP   HUNTINGTON BANK
    

 

S-11

 

	
 
    	
LENDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
UMPQUA   BANK
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   George P. Diesch
    
	
 
    	
Name:
    	
George   P. Diesch
    
	
 
    	
Title:
    	
SVP
    

 

S-12

 

	
 
    	
LENDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CAPITAL   ONE, N.A.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Matthew Tallo
    
	
 
    	
Name:
    	
Matthew   Tallo
    
	
 
    	
Title:
    	
Managing   Director
    

 

S-13

 

	
 
    	
LENDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CRÉDIT INDUSTRIEL ET COMMERCIAL
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Andrew McKuin
    
	
 
    	
Name:
    	
Andrew   McKuin
    
	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Alex Aupoix
    
	
 
    	
Name:
    	
Alex   Aupoix
    
	
 
    	
Title:
    	
Managing   Director
    

 

S-14

 

Exhibit A

 

Form of Borrowing Base Certificate

 

[Appended.]

 

A-1

 

BORROWING BASE CERTIFICATE

 

To:                             UNION BANK, as Administrative Agent

 

This Borrowing Base Certificate (“Certificate”) is delivered pursuant to that certain Second Amended and Restated Credit Agreement dated as of June 4, 2014, between Willis Lease Finance Corporation, a Delaware corporation (“Borrower”), Union Bank, N.A., together with any other Lender thereunder from time to time (collectively, the “Lenders” and individually, a “Lender”) and Union Bank, N.A., as administrative agent (in such capacity, “Administrative Agent”), as the Swing Line Lender (in such capacity, “Swing Line Lender”), Security Agent (in such capacity, “Security Agent”), and Joint Lead Arranger and Joint Bookrunner, Wells Fargo Bank, National Association, as Co-Syndication Agent (in such capacity, collectively with each other Co-Syndication Agent, “Syndication Agent”), Wells Fargo Securities, LLC, as Joint Lead Arranger and Joint Bookrunner, Bank of America N.A., as Co-Syndication Agent (in such capacity, collectively with each other Co-Syndication Agent, “Syndication Agent”), Merrill Lynch, Pierce, Fenner And Smith Incorporated, as Joint Lead Arranger and Joint Bookrunner, U.S. Bank National Association, as Documentation Agent (in such capacity, “Documentation Agent”), Joint Lead Arranger and Joint Bookrunner and Deutsche Bank AG, New York Branch, as Senior Managing Agent (as amended from time to time, the “Credit Agreement”).  Terms defined in the Credit Agreement and not otherwise defined in this Certificate shall have the meanings defined for them in the Credit Agreement.  Section references herein relate to the Credit Agreement unless stated otherwise.  This Certificate covers the fiscal month ending               , 20     (the “Determination Date”), and is delivered to Administrative Agent pursuant to Section 8.1.5 of the Credit Agreement.

 

The following calculations determine the Borrowing Base and the Borrowing Availability as of the Determination Date under the Revolving Commitment described in the Credit Agreement and related Loan Documents.  Such calculations are derived from the Books and Records of Borrower in accordance with the relevant definitions of financial terms set forth in the Credit Agreement:

 

	
I.
    	
BORROWING   BASE
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(1)    Eligible Engines (not Off-Lease for more than 180 days)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(i) Net   Book Value of Eligible Engines that are not Off-Lease at such time and that   have not been Off-Lease for more than 180 days
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(ii) times   ***%
    	
 
    	
x
    	
***
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Total   Eligible Engines (not Off-Lease) [(i)  x (ii)]
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    
	
(2)    Eligible Engines (Off-Lease)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(i) Net   Book Value of all other Eligible Engines
    	
 
    	
$
    	
 
    

 

*** Confidential information omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.

 

A-2

 

	
 
    	
(ii) times   ***%
    	
 
    	
x
    	
***
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Total   of Eligible Engines (Off-Lease) [(i)  x (ii)]
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
(3)    Eligible Equipment (not Off-Lease for more than 180 days)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(i) Net   Book Value of Eligible Equipment that is not Off-Lease and that has not been   Off-Lease for more than 180 days
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(ii) times   ***%
    	
 
    	
x
    	
***
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Total   Eligible Equipment (not Off-Lease) [(i)  x (ii)]
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
(4)    Eligible Equipment (Off-Lease)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(i) Net   Book Value of all other Eligible Equipment
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(ii) times   ***%
    	
 
    	
x
    	
***
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Total   Eligible Equipment (Off-Lease) [(i)  x (ii)]
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
(5)    Eligible Saleable Assets
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(i) Net   Book Value of Eligible Saleable Assets
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(ii) times   ***%
    	
 
    	
x
    	
***
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Total   Eligible Saleable Assets [(i)  x (ii)]
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
(6)    Appraisal Adjustment to Borrowing Base
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(i)    Borrowing Base [Sum of Totals for (1), (2), (3), (4), and (5)]
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
less:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(ii)    Appraisal adjustment (based on annual Appraisal (pursuant to definition of   Borrowing Base (subsection x)), if applicable)
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
BORROWING   BASE (Adjusted for Appraisal)
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
II.
    	
BORROWING   AVAILABILITY
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Borrower’s   Borrowing Availability under the Revolving Commitment as of the Determination   Date is calculated as the lesser of the following (1) and (2):
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(1)    Maximum Amount ($700,000,000.00 subject to Section 2.10)
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
 
    
	
And
    	
 
    	
 
    

 

*** Confidential information omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.

 

A-3

 

	
(2)    Borrowing Base
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(i)    Borrowing Base (Adjusted for Appraisal in Item 6 above) as of the   Determination Date
    	
 
    	
$
    
	
 
    	
 
    	
 
    
	
BORROWING AVAILABILITY [Equals   lesser of (1) and (2)]
    	
 
    	
$
    
				

 

[Signature on following page.]

 

A-4

 

This Certificate is executed on                     , 20    , by the                           of Borrower, an Authorized Signatory.  The undersigned hereby further certifies that each and every matter contained herein is derived from the Books and Records of Borrowers and is true and correct in all material respects.

 

 

	
 
    	
of   WILLIS LEASE FINANCE CORPORATION, a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[Printed   name]
    

 

A-5

 

Exhibit B

 

Form of Borrowing Notice

 

[Appended.]

 

B-1

 

BORROWING NOTICE

 

1.                                      This BORROWING NOTICE is executed and delivered by Willis Lease Finance Corporation, a Delaware corporation (“Borrower”), to Union Bank, N.A. (“Administrative Agent”) pursuant to that certain Second Amended and Restated Credit Agreement dated as of June 4, 2014, between Borrower, Union Bank, N.A., together with any other Lender thereunder from time to time (collectively, the “Lenders” and individually, a “Lender”) and Administrative Agent, Union Bank, N.A., as the Swing Line Lender (in such capacity, “Swing Line Lender”), Security Agent (in such capacity, “Security Agent”), and Joint Lead Arranger and Joint Bookrunner, Wells Fargo Bank, National Association, as Co-Syndication Agent (in such capacity, collectively with each other Co-Syndication Agent, “Syndication Agent”), Wells Fargo Securities, LLC, as Joint Lead Arranger and Joint Bookrunner, Bank of America N.A., as Co-Syndication Agent (in such capacity, collectively with each other Co-Syndication Agent, “Syndication Agent”), Merrill Lynch, Pierce, Fenner And Smith Incorporated, as Joint Lead Arranger and Joint Bookrunner, U.S. Bank National Association, as Documentation Agent (in such capacity, “Documentation Agent”), Joint Lead Arranger and Joint Bookrunner and Deutsche Bank AG, New York Branch, as Senior Managing Agent (as amended, extended, renewed, supplemented or otherwise modified from time to time, the “Credit Agreement”).  Any terms used herein and not defined herein shall have the meanings set forth for such terms in the Credit Agreement.

 

2.                                      Borrower hereby requests a Revolving Loan pursuant to the Credit Agreement as follows:

 

(a)                                 AMOUNT OF REQUESTED ADVANCE(1):  $

 

(b)                                 DATE OF REQUESTED ADVANCE:

 

(c)                                  TYPE OF REQUESTED ADVANCE (Check one box):

 

o                                    BASE RATE LOAN

 

o                                    LIBOR RATE LOAN(2), FOR A LIBOR LOAN PERIOD OF                  MONTHS (3)

 

3.                                      In connection with this request, Borrower certifies that:

 

(a)                                 After giving effect to such Advance, the aggregate amount of all Loans then outstanding shall not exceed the lesser of the (i) Maximum Amount and (ii) the Borrowing Base.

 

(1)  Each LIBOR Loan must be in a principal amount of at least $5,000,000.00 and in an integral multiple of $100,000.

 

(2)  Maximum of 10 tranches of LIBOR Loans collectively may be outstanding at once.

 

(3)  Specify whether 1, 2, 3 or 6-month Libor Loan Period.

 

B-2

 

(b)                                 Now and as of the date of the requested Advance, except (i) for representations and warranties which expressly relate to a particular date or which are no longer true and correct as a result of a change permitted by the Credit Agreement or the other Loan Documents, or (ii) as disclosed by Borrower and approved in writing by Administrative Agent, each representation and warranty made by Borrower in Section 5 of the Credit Agreement will be true and correct in all material respects, both immediately before and after giving effect to such Advance, as though such representations and warranties were made on and as of that date;

 

(c)                                  No circumstance or event has occurred that constitutes a Material Adverse Effect since the Closing Date; and

 

(d)                                 No Default or Event of Default presently exists or will have occurred and be continuing as a result of the Borrowing requested hereunder.

 

4.                                      This Borrowing Notice is executed on                           , 20    , by an Authorized Signatory of Borrower.  The undersigned, in such capacity, hereby certifies, on behalf of Borrower, each and every matter contained herein to be true and correct.

 

	
 
    	
WILLIS   LEASE FINANCE CORPORATION,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name: 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

B-3

 

Exhibit C

 

Form of Commitment Assignment and Acceptance

 

[Appended.]

 

C-1

 

COMMITMENT ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

This COMMITMENT ASSIGNMENT AND ACCEPTANCE AGREEMENT (this “Assignment and Acceptance”) dated as of                               , 20     is made between                                                (the “Assignor”) and                                                (the “Assignee”).

 

RECITALS

 

WHEREAS, the Assignor is party to that certain Second Amended and Restated Credit Agreement dated as of June 4, 2014, between Willis Lease Finance Corporation, a Delaware corporation (“Borrower”), Union Bank, N.A., together with any other Lender thereunder from time to time (collectively, the “Lenders” and individually, a “Lender”) and Union Bank, N.A., as administrative agent (in such capacity, “Administrative Agent”), as the Swing Line Lender (in such capacity, “Swing Line Lender”), Security Agent (in such capacity, “Security Agent”), and Joint Lead Arranger and Joint Bookrunner, Wells Fargo Bank, National Association, as Co-Syndication Agent (in such capacity, collectively with each other Co-Syndication Agent, “Syndication Agent”), Wells Fargo Securities, LLC, as Joint Lead Arranger and Joint Bookrunner, Bank of America N.A., as Co-Syndication Agent (in such capacity, collectively with each other Co-Syndication Agent, “Syndication Agent”), Merrill Lynch, Pierce, Fenner And Smith Incorporated, as Joint Lead Arranger and Joint Bookrunner, U.S. Bank National Association, as Documentation Agent (in such capacity, “Documentation Agent”), Joint Lead Arranger and Joint Bookrunner and Deutsche Bank AG, New York Branch, as Senior Managing Agent (the “Credit Agreement”).  All capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed to them in the Credit Agreement;

 

WHEREAS, as provided under the Credit Agreement, the Assignor has committed to making Revolving Loans (the “Committed Loans”) to the Borrower for Assignor’s Pro Rata Share of the Revolving Commitment in an aggregate amount not to exceed $                       (the “Commitment”);

 

WHEREAS, [the Assignor has made Committed Loans in the aggregate principal amount of $                           to the Borrower] [no Committed Loans are outstanding under the Credit Agreement];

 

WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all] rights and obligations of the Assignor under the Credit Agreement in respect of its Commitment, in an amount equal to $                         (the “Assigned Amount”) on the terms and subject to the conditions set forth herein and the Assignee wishes to accept assignment of such rights and to assume such obligations from the Assignor on such terms and subject to such conditions;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows:

 

1.                                      Assignment and Acceptance.

 

(a)                                 Subject to the terms and conditions of this Assignment and Acceptance, (i) the Assignor hereby sells, transfers and assigns to the Assignee, and (ii) the Assignee hereby

 

C-2

 

purchases, assumes and undertakes from the Assignor, without recourse and without representation or warranty (except as provided in this Assignment and Acceptance)       % (the “Assignee’s Percentage Share”) of (A) the Commitment of the Assignor, and (B) all related rights, benefits, obligations, liabilities and indemnities of the Assignor under and in connection with the Credit Agreement and the Loan Documents.

 

(b)                                 With effect on and after the Effective Date (as defined in Section 5 hereof), the Assignee shall be a party to the Credit Agreement and succeed to all of the rights and be obligated to perform all of the obligations of a Lender under the Credit Agreement, with a Commitment in an amount equal to the Assigned Amount.  The Assignee agrees that it will perform in accordance with their terms all of the obligations which it is required to perform as a Lender under the Credit Agreement.  It is the intent of the parties hereto that the Commitment of the Assignor shall, as of the Effective Date, be reduced by an amount equal to the Assigned Amount and the Assignor shall relinquish its rights and be released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee; provided that the Assignor shall not relinquish its rights under Sections 12.2 (Reimbursement and Expenses) and 12.3 (Indemnity) of the Credit Agreement to the extent such rights relate to the time prior to the Effective Date.

 

(c)                                  After giving effect to the assignment and acceptance set forth herein, on the Effective Date the Assignor’s Commitment will be $                     (an amount equal to         % of the Revolving Commitment).

 

(d)                                 After giving effect to the assignment and acceptance set forth herein, on the Effective Date the Assignee’s Commitment will be $                    (an amount equal to         % of the Revolving Commitment).

 

2.                                      Payments.

 

(a)                                 As consideration for the sale, assignment and transfer contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date in immediately available funds an amount equal to $                    , representing the Assignee’s Percentage Share of the Principal amount of all Committed Loans.

 

(b)                                 The [Assignor] [Assignee] further agrees to pay to Administrative Agent an administrative fee in the amount specified in Section 12.8.4 of the Credit Agreement.

 

(c)                                  Administrative Agent shall retain all additional amounts paid by the Borrower as a commitment fee or as interest on the Committed Loans outstanding to the Borrower with respect to the Assignee’s Commitment.

 

3.                                      Reallocation of Payments.  Any interest, fees and other payments accrued to the Effective Date with respect to the Commitment shall be for the account of the Assignor.  Any interest, fees and other payments accrued on and after the Effective Date with respect to the Assigned Amount shall be for the account of the Assignee.  Each of the Assignor and the Assignee agrees that it will hold in trust for the other party any interest, fees and other amounts which it may receive to which the other party is entitled pursuant to the preceding sentence and pay to the other party any such amounts which it may receive promptly upon receipt.

 

C-3

 

4.                                      Independent Credit Decision.  The Assignee (a) acknowledges that it has received a copy of the Credit Agreement and the Schedules and Exhibits thereto, together with copies of the most recent financial statements referred to in the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own credit and legal analysis and decision to enter into this Assignment and Acceptance; and (b) agrees that it will, independently and without reliance upon the Assignor, Agents or any Credit Facility Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit and legal decisions in taking or not taking action under the Credit Agreement.

 

5.                                      Effective Date; Notices.

 

(a)                                 As between the Assignor and the Assignee, the effective date for this Assignment and Acceptance shall be                     , 20     (the “Effective Date”); provided that the following conditions precedent have been satisfied on or before the Effective Date:

 

(i)                                     this Assignment and Acceptance shall be executed and delivered by the Assignor and the Assignee and a copy shall have been delivered to Administrative Agent;

 

(ii)                                  the consent of Administrative Agent and Borrower (as applicable) required for an effective assignment of the Assigned Amount by the Assignor to the Assignee under the Credit Agreement shall have been duly obtained and shall be in full force and effect as of the Effective Date;

 

(iii)                               the Assignee shall pay to the Assignor all amounts due to the Assignor under this Assignment and Acceptance;

 

(iv)                              the Assignee shall have complied with all terms and conditions for such assignment and otherwise as set forth in the Credit Agreement;

 

(v)                                 the administrative fee referred to in Section 12.8.4 of the Credit Agreement shall have been paid to Administrative Agent; and

 

(vi)                              the Assignor shall have assigned and the Assignee shall have assumed a percentage equal to the Assignee’s Pro Rata Share of the rights and obligations of the Assignor under the Credit Agreement.

 

(b)                                 Notwithstanding the foregoing, the Effective Date of this Assignment and Acceptance shall not be earlier than five (5) Business Days after the date on which Administrative Agent receives a copy of the Assignment and Acceptance as set forth above.

 

[6.                                  Administrative Agent.  [INCLUDE ONLY IF THE ASSIGNOR IS ADMINISTRATIVE AGENT]

 

(a)                                 The Assignee hereby appoints and authorizes the Assignor to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to Administrative Agent by the Lenders pursuant to the terms of the Credit Agreement.

 

C-4

 

(b)                                 The Assignee shall assume no duties or obligations held by the Assignor in its capacity as Administrative Agent under the Credit Agreement.]

 

7.                                      Withholding Tax.  The Assignee (a) represents and warrants to the Credit Facility Lenders, Administrative Agent and the Borrower that under applicable law and treaties no tax will be required to be withheld by the Lenders with respect to any payments to be made to the Assignee hereunder, (b) agrees to furnish (if it is organized under the laws of any jurisdiction other than the United States or any state thereof) to Administrative Agent and the Borrower prior to the time that Administrative Agent or the Borrower is required to make any payment of principal, interest or fees hereunder, duplicate executed originals of either U.S. Internal Revenue Service Form W-8BEN or U.S. Internal Revenue Service Form 1001 (wherein the Assignee claims entitlement to the benefits of a tax treaty that provides for a complete exemption from U.S. federal income withholding tax and all payments hereunder) and agrees to provide new Forms W-8BEN or 1001 upon the expiration of any previously delivered form or comparable statements in accordance with applicable U.S. law and regulations and amendments thereto, duly executed and completed by the Assignee, and (c) agrees to comply with all applicable U.S. laws and regulations with regard to such withholding tax exemption.

 

8.                                      Representations and Warranties.

 

(a)                                 The Assignor represents and warrants to the Assignee that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any Lien or other adverse claim; (ii) it is duly organized and existing and it has the full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance and to fulfill its obligations hereunder; (iii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the Credit Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance; and (iv) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Assignor, enforceable against the Assignor in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors’ rights and to general equitable principles.

 

(b)                                 The Assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto.  The Assignor makes no representation or warranty in connection with, and assumes no responsibility with respect to, the solvency, financial condition or statements of the Borrower, or the performance or observance by the Borrower, of any of its respective obligations under the Credit Agreement or any other instrument or document furnished in connection therewith.

 

C-5

 

(c)                                  The Assignee represents and warrants to the Assignor that (i) it is duly organized and existing and it has full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance, and to fulfill its obligations hereunder; (ii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance; and apart from any agreements or undertakings or filings required by the Credit Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance; (iii) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Assignee, enforceable against the Assignee in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors’ rights and to general equitable principles; and (iv) it is an Eligible Assignee.

 

9.                                      Further Assurances.  The Assignor and the Assignee each hereby agree to execute and deliver such other instruments, and to take such other action, as either party may reasonably request in connection with the transactions contemplated by this Assignment and Acceptance, including the delivery of any notices or other documents or instruments to the Borrower or Administrative Agent, which may be required in connection with the assignment and acceptance contemplated hereby.

 

10.                               Miscellaneous.

 

(a)                                 Any amendment or waiver of any provision of this Assignment and Acceptance shall be in writing and signed by the parties hereto.  No failure or delay by either party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof and any waiver of any breach of the provisions of this Assignment and Acceptance shall be without prejudice to any rights with respect to any other or further breach thereof.

 

(b)                                 All payments made hereunder shall be made without any set-off or counterclaim.

 

(c)                                  The Assignor and the Assignee shall each pay its own costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Assignment and Acceptance.

 

(d)                                 This Assignment and Acceptance may be executed in any number of counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

 

(e)                                  THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  The Assignor and the Assignee each irrevocably submit to the non-exclusive jurisdiction of any State or Federal court sitting in New York over any suit, action or proceeding arising out of or relating to this Assignment and Acceptance and irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York

 

C-6

 

State or Federal court.  Each party to this Assignment and Acceptance hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding.

 

(f)                                   THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENTS (WHETHER ORAL OR WRITTEN).

 

C-7

 

IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Acceptance to be executed and delivered by their duly authorized officers as of the date first above written.

 

	
 
    	
[ASSIGNOR]
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Title: 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
[ASSIGNEE]
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
Address:
    

 

C-8

 

Exhibit D

 

Form of Compliance Certificate

 

[Appended]

 

D-1

 

COMPLIANCE CERTIFICATE

 

To:                             UNION BANK, N.A., as Administrative Agent

 

This Compliance Certificate (this “Certificate”) is delivered pursuant to that certain Second Amended and Restated Credit Agreement dated as of June 4, 2014, between Willis Lease Finance Corporation, a Delaware corporation (“Borrower”), Union Bank, N.A., together with any other Lender thereunder from time to time (collectively, the “Lenders” and individually, a “Lender”) and Union Bank, N.A., as administrative agent (in such capacity, “Administrative Agent”), as the Swing Line Lender (in such capacity, “Swing Line Lender”), Security Agent (in such capacity, “Security Agent”), and Joint Lead Arranger and Joint Bookrunner, Wells Fargo Bank, National Association, as Co-Syndication Agent (in such capacity, collectively with each other Co-Syndication Agent, “Syndication Agent”), Wells Fargo Securities, LLC, as Joint Lead Arranger and Joint Bookrunner, Bank of America N.A., as Co-Syndication Agent (in such capacity, collectively with each other Co-Syndication Agent, “Syndication Agent”), Merrill Lynch, Pierce, Fenner And Smith Incorporated, as Joint Lead Arranger and Joint Bookrunner, U.S. Bank National Association, as Documentation Agent (in such capacity, “Documentation Agent”), Joint Lead Arranger and Joint Bookrunner and Deutsche Bank AG, New York Branch, as Senior Managing Agent (as amended from time to time, the “Credit Agreement”).  Terms defined in the Credit Agreement and not otherwise defined in this Certificate shall have the meanings defined for them in the Credit Agreement.  Section references herein relate to the Credit Agreement unless stated otherwise.

 

This Certificate is delivered to Administrative Agent by Borrower in accordance with Section 8 of the Credit Agreement.  This Certificate is delivered with respect to the Fiscal Quarter ended                                   , 20     (“Determination Date”).  Computations and other information indicating compliance with respect to the covenants contained in Sections 6.14.1, 6.14.2 and 6.14.3 of the Credit Agreement are set forth below:

 

	
I.                                        Section   6.14.1:  Minimum Pre-Tax Income.(4)
    	
 
    
	
 
    	
 
    
	
(a)                                 As of the   Determination Date, Pre-Tax Income (as calculated below) was:
    	
$
    
	
 
    	
 
    
	
(b)                                 Minimum   required:
    	
$5,000,000
    
	
 
    	
 
    
	
(c)                                  Net Income   for the most recently completed Fiscal Year(5):
    	
$
    
	
 
    	
 
    
	
(d)                                 Aggregate   amount of federal and state taxes on or measured by income of Borrower and   its Subsidiaries for such Fiscal Year (whether or not payable during such   Fiscal Year):
    	
$
    

 

(4)  Required only for each Fiscal Year.

 

(5)  Without giving any effect to any reduction thereto on account of dividends or other Distributions paid or payable with respect to such Fiscal Year.

 

D-2

 

	
(e)                                  Aggregate   amount of federal and state credits against taxes on or measured by income of   Borrower and its Subsidiaries for such Fiscal Year (whether or not usable   during such Fiscal Year):
    	
$
    
	
 
    	
 
    
	
(f)                                   any   non-recurring expenses, charges, accruals, reserves, transaction costs, fees,   losses, expenses (including expenses for third party professional advisors)   and intangibles (including those with respect to any amendment or waiver of   loan documents governing Permitted Indebtedness or Indebtedness of any   Excluded Subsidiary) payable in connection with a Permitted Change in   Control:
    	
$
    
	
 
    	
 
    
	
Equals Pre-Tax Income[sum   of (c) plus (d) less (e) plus (f)]:
    	
$
    
	
 
    	
 
    
	
II.                                   Section   6.14.2:  Leverage Ratio.
    	
 
    
	
 
    	
 
    
	
(a)                                 As of the   Determination Date, the Leverage Ratio (as calculated below) was:
    	
          :   1.00
    
	
 
    	
 
    
	
(b)                                 Maximum   Permitted:
    	
5.00   : 1.00
    
	
 
    	
 
    
	
(c)                                  The Leverage   Ratio was computed as follows:
    	
 
    
	
 
    	
 
    
	
(i)                                                             Total Debt as   of the Determination Date(6)
    	
$
    
	
 
    	
 
    
	
divided   by:
    	
 
    
	
 
    	
 
    
	
(ii)                                                          Tangible Net   Worth as of the Determination Date, determined as follows:
    	
$
    
	
 
    	
 
    
	
(A)   total assets
    	
$
    
	
 
    	
 
    
	
less:
    	
 
    
	
 
    	
 
    
	
(B)   total liabilities
    	
$
    
	
 
    	
 
    
	
less:
    	
 
    

 

(6)  All Indebtedness of Borrower and its consolidated Subsidiaries, including, without limitation, Non-Recourse Debt (other than Non-Recourse Debt incurred in connection with an investment in the Permitted JV), Partial Recourse Debt and Subordinated Obligations.

 

D-3

 

	
(C)   intangibles (excluding (i) gains and losses from fair value of derivatives   charges whether or not included in other comprehensive income or net income   and (ii) any non-recurring expenses, charges, accruals, reserves, transaction   costs, fees, losses, expenses (including expenses for third party   professional advisors) and intangibles (including those with respect to any   amendment or waiver of loan documents governing Permitted Indebtedness or   Indebtedness of any Excluded Subsidiary) payable in connection with a   Permitted Change in Control), on the Determination Date
    	
$
    
	
 
    	
 
    
	
(d)                                 Equals   Tangible Net Worth [sum of (A) less (B) & (C)]
    	
$
    
	
 
    	
 
    
	
Equals Leverage Ratio   [(c)(i)÷(d)]
    	
              :   1.00
    
	
 
    	
 
    
	
III.                              Section   6.14.3:  Minimum Ratio of EBITDA to   Consolidated Interest.
    	
 
    
	
 
    	
 
    
	
(a)                                 As of the   Determination Date, the Ratio of EBITDA to Consolidated Interest (as   calculated below) was:
    	
          :   1.00
    
	
 
    	
 
    
	
(b)                                 Minimum   Required:
    	
2.25:   1.00
    
	
 
    	
 
    
	
(c)                                  The Ratio of   EBITDA to Consolidated Interest was computed as follows:
    	
 
    
	
 
    	
 
    
	
(i)                                                             Net Income   for that period
    	
$
    
	
 
    	
 
    
	
plus:
    	
 
    
	
 
    	
 
    
	
(ii)                                  any   non-operating non-recurring loss reflected in such Net Income
    	
$
    
	
 
    	
 
    
	
minus:
    	
 
    
	
 
    	
 
    
	
(iii)                               any   non-operating non-recurring gain reflected in such Net Income
    	
$
    
	
 
    	
 
    
	
plus:
    	
 
    
	
 
    	
 
    
	
(iv)                              interest   expense of Borrower and its Subsidiaries for that period, including net   payment obligations pursuant to Interest Rate Protection Agreements
    	
$
    
	
 
    	
 
    
	
plus:
    	
 
    
	
 
    	
 
    
	
(v)                                 the aggregate   amount of federal and state taxes on or measured by income of Borrower and   its Subsidiaries
    	
$
    

 

D-4

 

	
for that period (whether   or not payable during that period)
    	
 
    
	
 
    	
 
    
	
minus:
    	
 
    
	
 
    	
 
    
	
(vi)                                                      the aggregate   amount of federal and state credits against taxes on or measured by income of   Borrower and its Subsidiaries for that period (whether or not usable during   that period).
    	
$
    
	
 
    	
 
    
	
plus:
    	
 
    
	
 
    	
 
    
	
(vii)                            depreciation,   amortization and Engine or Equipment write-downs of Borrower and its   Subsidiaries for that period, in each case as determined in accordance with   GAAP, consistently applied
    	
$
    
	
 
    	
 
    
	
plus:
    	
 
    
	
 
    	
 
    
	
(viii) any   non-recurring expenses, charges, accruals, reserves, transaction costs, fees,   losses, expenses (including expenses for third party professional advisors)   and intangibles (including those with respect to any amendment or waiver of   loan documents governing Permitted Indebtedness or Indebtedness of any   Excluded Subsidiary) payable in connection with a Permitted Change in Control
    	
$
    
	
 
    	
 
    
	
(ix)                                                      Equals EBITDA   [the sum of (i) through (viii)]
    	
$
    
	
 
    	
 
    
	
divided by:
    	
 
    
	
 
    	
 
    
	
(x)                                 Consolidated   Interest:  all interest, fees, charges   and related expenses (in each case as such expenses are calculated according   to GAAP) paid or payable (without duplication) for that fiscal period to a   lender in connection with borrowed money (including any obligations for fees,   charges and related expenses payable to the issuer of any letter of credit)   or the deferred purchase price of assets that are considered “interest   expense” under GAAP
    	
$
    
	
 
    	
 
    
	
(xi)                              Ratio of   EBITDA divided by Consolidated Interest [(ix) divided by (i)]
    	
             : 1.00
    

 

D-5

 

A review of the activities of Borrower during the fiscal period covered by this Certificate has been made under the supervision of the undersigned with a view to determining whether during such fiscal period Borrower performed and observed all of its Obligations.  To the best knowledge of the undersigned, during the fiscal period covered by this Certificate, all covenants and conditions have been so performed and observed and no Default or Event of Default has occurred and is continuing, with the exceptions set forth below in response to which Borrower has taken or proposes to take the following actions (if none, so state).

 

The undersigned an Authorized Signatory of Borrower certifies that the calculations made and the information contained herein are derived from the Books and Records of Borrower, as applicable, and that each and every matter contained herein correctly reflects those Books and Records.

 

To the best knowledge of the undersigned no event or circumstance has occurred that constitutes a Material Adverse Effect since the date the most recent Compliance Certificate was executed and delivered, with the exceptions set forth below (if none, so state).

 

This Certificate is executed on                     , 20    , by the                                        of Borrower, an Authorized Signatory.

 

 

	
 
    	
of   WILLIS LEASE FINANCE CORPORATION, a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[Printed   name]
    

 

D-6

 

Exhibit E

 

[Reserved]

 

E-1

 

Exhibit F

 

Form of Beneficial Interest Pledge Agreement

 

[Appended]

 

F-1

 

Exhibit G

 

Form of Owner Trustee Mortgage and Security Agreement

 

[Appended]

 

G-1

 

Exhibit H

 

Form of Owner Trustee Guaranty

 

[Appended]

 

H-1

 

Exhibit I

 

Form of Leasing Subsidiary Security Assignment

 

[Appended]

 

I-1

 

Exhibit J

 

Form of Subsidiary Guaranty

 

[Appended]

 

J-1

 

Exhibit K

 

Form of Trust Agreement

 

[Appended]

 

K-1

 

Exhibit L

 

Form of Placard

 

Placard to be used for Engines owned by Owner Trustee:

 

THIS ENGINE IS OWNED BY AND LEASED FROM WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, AS OWNER TRUSTEE, AND IS SUBJECT TO A FIRST PRIORITY SECURITY INTEREST IN FAVOR OF ONE OR MORE FINANCIAL INSTITUTIONS.

 

C/O Willis Lease Finance Corporation, as Servicer
 773 San Marin Drive, Suite 2215
 Novato, CA 94998
 415-408-4700

 

Placard to be used for Engines owned by Borrower:

 

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.

 

Willis Lease Finance Corporation
 773 San Marin Drive, Suite 2215
 Novato, CA 94998
 415-408-4700

 

L-1

 

Schedule 1.1d

 

Liens of Record

 

Liens in favor of Bank of America Leasing and Capital, LLC on (1) one Canadair Ltd. Model CL-600 2412 (Challenger 601-1A) aircraft bearing MSN *** and (2) two General Electric Model CF-34-3A aircraft engines bearing MSNs and ***

 

Liens in favor of Norddeutsche Landesbank Girozentrale, as lender on the following equipment:

 

One CFM56-7B aircraft engine bearing MSN ***

 

One CFM56-7B aircraft engine bearing MSN ***

 

One V2500-A aircraft engine bearing MSN ***

 

Liens in favor of HSH Nordbank, as lender, on (2) A340-300 aircraft and engines

 

Liens in favor of Bank of Communications, as lender on the following equipment:

 

One CFM56-5B4/3 aircraft engine bearing MSN ***

 

*** Confidential information omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.

 

 

Schedule 1.1e

 

Schedule of Documents

 

Second Amended and Restated Credit Agreement

 

Amended and Restated Revolving Notes for each of the Lenders

 

Amended and Restated Swing Line Note

 

Affirmation of Owner Trustee Mortgage and Security Agreements and Owner Trustee Guaranties

 

Affirmation of Leasing Subsidiary Guaranty and Lease Security Assignments (Willis Lease (Ireland) Limited)

 

Affirmation of Subsidiary Guaranty and Beneficial Interest Pledge and Security Agreement (West Engine Funding LLC)

 

Affirmation of Leasing Subsidiary Guaranty (West Engine Funding (Ireland) Limited)

 

Affirmation of Subsidiary Guaranty (Willis Aeronautical Services, Inc.)

 

Affirmation of Leasing Guaranty and Lease Security Assignment (WLFC (Ireland) Limited)

 

 

Schedule 2.1

 

Revolving Commitment — Pro Rata Share

 

	
Lender
    	
 
    	
Commitment
    	
 
    	
Pro Rata Share
    	
 
    
	
Union Bank, N.A.
    	
 
    	
$
    	
110,000,000
    	
 
    	
15.714285713
    	
%
    
	
Wells Fargo Bank, National Association
    	
 
    	
$
    	
100,000,000
    	
 
    	
14.285714286
    	
%
    
	
Bank of America N.A.
    	
 
    	
$
    	
100,000,000
    	
 
    	
14.285714286
    	
%
    
	
U.S. Bank National Association
    	
 
    	
$
    	
80,000,000
    	
 
    	
11.428571429
    	
%
    
	
Deutsche Bank AG, New York Branch
    	
 
    	
$
    	
60,000,000
    	
 
    	
8.571428571
    	
%
    
	
Credit Agricole Corporate and Investment Bank
    	
 
    	
$
    	
50,000,000
    	
 
    	
7.142857143
    	
%
    
	
HSBC Bank USA, National Association
    	
 
    	
$
    	
40,000,000
    	
 
    	
5.714285714
    	
%
    
	
City National Bank
    	
 
    	
$
    	
35,000,000
    	
 
    	
5.000000000
    	
%
    
	
The Huntington National Bank
    	
 
    	
$
    	
35,000,000
    	
 
    	
5.000000000
    	
%
    
	
Umpqua Bank
    	
 
    	
$
    	
30,000,000
    	
 
    	
4.285714286
    	
%
    
	
Capital One, N.A.
    	
 
    	
$
    	
30,000,000
    	
 
    	
4.285714286
    	
%
    
	
Crédit Industriel et Commercial
    	
 
    	
$
    	
30,000,000
    	
 
    	
4.285714286
    	
%
    
	
TOTAL
    	
 
    	
$
    	
700,000,000
    	
 
    	
100.000000000
    	
%
    

 

 

Schedule 5.2

 

Executive Offices; Corporate or Other Names; Conduct of Business

 

Willis Lease Finance Corporation — Corporate Headquarters

773 San Marin Drive, Ste. 2215

Novato, CA 94945

 

Willis Lease Finance Corporation — Technical office

6495 Marindustry Place
 San Diego, CA 92121

 

Willis Lease Finance Corporation — London Office
  34 St. James’s Street, 2nd Floor
 London, SW1A 1HD, UK

 

Willis Lease France — Office of French Subsidiary
  17 Avenue Didier Daurat
 Immeuble Socrate, BP10051
 31702 Blagnac, France

 

Willis Aviation Finance Limited — Office of Irish Subsidiary
  3rd Floor
 12/13 Exchange Place
 IFSC 
 Dublin 1

 

Willis Aeronautical Services, Inc.

2035 High Ridge Road

Boynton Beach, FL 33426

 

The Bank of New York — Collateral Custodian

MBS Collateral Services

5730 Katella Avenue

Cypress, CA 90630

 

 

Schedule 5.5

 

Subsidiaries

 

	
Wholly-Owned Subsidiaries
    	
 
    	
State or Jurisdiction
   of Incorporation
    
	
Facility   Engine Acquisition LLC*
    	
 
    	
Delaware;   limited liability company
    
	
Willis   Engine Securitization Trust II*
    	
 
    	
Delaware;   business trust
    
	
West   Engine Acquisition LLC*
    	
 
    	
Delaware;   limited liability company
    
	
WEST   Engine Funding LLC
    	
 
    	
Delaware;   limited liability company
    
	
WEST   Engine Funding (Ireland) Limited
    	
 
    	
Rep.   of Ireland; limited liability company
    
	
West   Engine Securitization (Ireland) Limited*
    	
 
    	
Rep.   of Ireland; limited liability company
    
	
Willis   Lease (Ireland) Limited
    	
 
    	
Rep.   of Ireland; limited liability company
    
	
WLFC   (Ireland) Limited
    	
 
    	
Rep.   of Ireland; limited liability company
    
	
WLFC   Funding (Ireland) Limited*
    	
 
    	
Rep.   of Ireland; limited liability company
    
	
WOLF   A340, LLC*
    	
 
    	
Delaware;   limited liability company
    
	
Willis   Aviation Finance Limited*
    	
 
    	
Rep.   of Ireland; limited liability company
    
	
Willis   Lease France*
    	
 
    	
France; Société par actions simplifiées (SAS)
    
	
Willis   Lease (China) Limited*
    	
 
    	
People’s   Republic of China; limited liability company
    
	
Willis   Aeronautical Services, Inc.
    	
 
    	
Delaware   corporation
    

 

* Excluded Subsidiary

 

	
Other Non-Subsidiary Equity Interests
    	
 
    	
Percentage Interest
    	
 
    
	
Willis   Mitsui & Co Engine Support Limited
   (Limited company formed under the laws of the Republic of Ireland)
    	
 
    	
50.0
    	
%
    

 

 

Schedule 5.7

 

No Other Liabilities; No Material Adverse Changes

 

None.

 

 

Schedule 5.9

 

Trade Names

 

Willis Leasing

 

Willis Lease

 

WLFC

 

 

Schedule 5.10

 

Litigation

 

None.

 

 

Schedule 5.17

 

Hazardous Materials

 

None.

 

 

Schedule 5.21

 

Depreciation Policies

 

The Borrower generally depreciates engines on a straight-line basis over 15 years to a 55% residual value. Spare parts packages are generally depreciated on a straight-line basis over 15 years to a 25% residual value. Aircraft are generally depreciated on a straight-line basis over 13-20 years to a 15%-17% residual value. Major overhauls paid for by the Borrower, which improve functionality or extend the original useful life, are capitalized and depreciated over the shorter of the estimated period to the next overhaul (“deferral method”) or the remaining useful life of the equipment. The Borrower does not accrue for planned major maintenance. For equipment which is unlikely to be repaired at the end of its current expected life, and is likely to be disassembled upon lease termination, the Borrower depreciates the equipment over its estimated life to a residual value based on an estimate of the wholesale value of the parts after disassembly. If useful lives or residual values are lower than those estimated by the Borrower, upon sale of the equipment, a loss may be realized. It is the Borrower’s policy to review estimates regularly to more accurately expense the cost of equipment over the useful life of the engines.

 

 

Schedule 5.23

 

Eligible Engines and Equipment as of the Closing Date

 

	
 
    	
 
    	
MSN
    	
 
    	
Equipment
   Type
    	
 
    	
Owner
    	
 
    	
Leased
    as of
    Closing Date
    	
 
    	
Lessee
    	
 
    	
Location of
   Chattel Paper
   Original
    
	
1.
    	
 
    	
***
    	
 
    	
ATR72
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
2.
    	
 
    	
***
    	
 
    	
ATR72
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
3.
    	
 
    	
***
    	
 
    	
Trent 772B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
4.
    	
 
    	
***
    	
 
    	
PW121
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
5.
    	
 
    	
***
    	
 
    	
PW121
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
6.
    	
 
    	
***
    	
 
    	
PW124
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
7.
    	
 
    	
***
    	
 
    	
PW121
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
8.
    	
 
    	
***
    	
 
    	
PW120
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
9.
    	
 
    	
***
    	
 
    	
PW121
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
10.
    	
 
    	
***
    	
 
    	
PW121
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
11.
    	
 
    	
***
    	
 
    	
PW123
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
12.
    	
 
    	
***
    	
 
    	
PW124B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
13.
    	
 
    	
***
    	
 
    	
PW124
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
14.
    	
 
    	
***
    	
 
    	
PW124
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
15.
    	
 
    	
***
    	
 
    	
PW124
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
16.
    	
 
    	
***
    	
 
    	
PW124B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
17.
    	
 
    	
***
    	
 
    	
PW125
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
18.
    	
 
    	
***
    	
 
    	
PW127F
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
19.
    	
 
    	
***
    	
 
    	
PW127
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
20.
    	
 
    	
***
    	
 
    	
PW127
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
21.
    	
 
    	
***
    	
 
    	
PW127
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
22.
    	
 
    	
***
    	
 
    	
PW127
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
23.
    	
 
    	
***
    	
 
    	
PW127
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
24.
    	
 
    	
***
    	
 
    	
PW127
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
25.
    	
 
    	
***
    	
 
    	
CF34-8C5
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
26.
    	
 
    	
***
    	
 
    	
CF34-8C5
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
27.
    	
 
    	
***
    	
 
    	
CF34-8C5
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
28.
    	
 
    	
***
    	
 
    	
CF34-8C5
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
29.
    	
 
    	
***
    	
 
    	
CF34-10E
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
30.
    	
 
    	
***
    	
 
    	
CF34-10E
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    

 

*** Confidential information omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.

 

 

	
 
    	
 
    	
MSN
    	
 
    	
Equipment Type
    	
 
    	
Owner
    	
 
    	
Leased
    as of
    Closing Date
    	
 
    	
Lessee
    	
 
    	
Location of
   Chattel Paper
   Original
    
	
31.
    	
 
    	
***
    	
 
    	
CF34-10E7
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
32.
    	
 
    	
***
    	
 
    	
CFM56-5C4
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
33.
    	
 
    	
***
    	
 
    	
CFM56-5C4
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
34.
    	
 
    	
***
    	
 
    	
CFM56-5C4
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
35.
    	
 
    	
***
    	
 
    	
CFM56-5C4
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
36.
    	
 
    	
***
    	
 
    	
CFM56-5B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
37.
    	
 
    	
***
    	
 
    	
CFM56-5B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
38.
    	
 
    	
***
    	
 
    	
CFM56-5B4/P
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
39.
    	
 
    	
***
    	
 
    	
CFM56-5B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
40.
    	
 
    	
***
    	
 
    	
CFM56-5B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
41.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
42.
    	
 
    	
***
    	
 
    	
CF6-80C2-B4
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
43.
    	
 
    	
***
    	
 
    	
CFM56-5B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
44.
    	
 
    	
***
    	
 
    	
CFM56-5B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
45.
    	
 
    	
***
    	
 
    	
CF6-80C2B4
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
46.
    	
 
    	
***
    	
 
    	
PW2040
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
47.
    	
 
    	
***
    	
 
    	
CFM56-3C1
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
48.
    	
 
    	
***
    	
 
    	
CFM56-3C1
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
49.
    	
 
    	
***
    	
 
    	
CFM56-3C1
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
50.
    	
 
    	
***
    	
 
    	
CFM56-3C1
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
51.
    	
 
    	
***
    	
 
    	
CFM56-3C1
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
52.
    	
 
    	
***
    	
 
    	
CFM56-3C1
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
53.
    	
 
    	
***
    	
 
    	
CFM56-3C1
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
54.
    	
 
    	
***
    	
 
    	
CFM56-3C1
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
55.
    	
 
    	
***
    	
 
    	
CFM56-3C1
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
56.
    	
 
    	
***
    	
 
    	
PW4056
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
57.
    	
 
    	
***
    	
 
    	
PW4168A
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
58.
    	
 
    	
***
    	
 
    	
PW4168A
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
59.
    	
 
    	
***
    	
 
    	
CFM56-5C4
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
60.
    	
 
    	
***
    	
 
    	
CFM56-5B4
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
61.
    	
 
    	
***
    	
 
    	
CFM56-5B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
62.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
63.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    

 

*** Confidential information omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.

 

 

	
 
    	
 
    	
MSN
    	
 
    	
Equipment Type
    	
 
    	
Owner
    	
 
    	
Leased
    as of
    Closing Date
    	
 
    	
Lessee
    	
 
    	
Location of
   Chattel Paper
   Original
    
	
64.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
65.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
66.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
67.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
68.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
69.
    	
 
    	
***
    	
 
    	
CF6-80C2B4
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
70.
    	
 
    	
***
    	
 
    	
CFM56-3C1
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
71.
    	
 
    	
***
    	
 
    	
CF34-3B1
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
72.
    	
 
    	
***
    	
 
    	
CF34-3B1
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
73.
    	
 
    	
***
    	
 
    	
CF34-3B1
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
74.
    	
 
    	
***
    	
 
    	
CF34-3B1
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
75.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
76.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
77.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
78.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
79.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
80.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
81.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
82.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
83.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
84.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
85.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
86.
    	
 
    	
***
    	
 
    	
CFM56-7B
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
87.
    	
 
    	
***
    	
 
    	
CF34-10E7
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
88.
    	
 
    	
***
    	
 
    	
CF34-10E7
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
89.
    	
 
    	
***
    	
 
    	
CF34-10E
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
90.
    	
 
    	
***
    	
 
    	
[-5C4-P QEC Kit]
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
91.
    	
 
    	
***
    	
 
    	
PW123
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
92.
    	
 
    	
***
    	
 
    	
PW124
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
93.
    	
 
    	
***
    	
 
    	
PW127F
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
94.
    	
 
    	
***
    	
 
    	
ATR72
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
95.
    	
 
    	
***
    	
 
    	
PW127
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    

 

*** Confidential information omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.

 

 

	
 
    	
 
    	
MSN
    	
 
    	
Equipment Type
    	
 
    	
Owner
    	
 
    	
Leased
    as of
    Closing Date
    	
 
    	
Lessee
    	
 
    	
Location of
   Chattel Paper
   Original
    
	
96.
    	
 
    	
***
    	
 
    	
PW127F
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
97.
    	
 
    	
***
    	
 
    	
PW127F
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
98.
    	
 
    	
***
    	
 
    	
PW127F
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
99.
    	
 
    	
***
    	
 
    	
PW127F
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
100.
    	
 
    	
***
    	
 
    	
PW127M
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
101.
    	
 
    	
***
    	
 
    	
PW150
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
102.
    	
 
    	
***
    	
 
    	
PW150
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
103.
    	
 
    	
***
    	
 
    	
PW150
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
104.
    	
 
    	
***
    	
 
    	
PW150
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
105.
    	
 
    	
***
    	
 
    	
PW150
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
106.
    	
 
    	
***
    	
 
    	
PW150
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
107.
    	
 
    	
***
    	
 
    	
PW150
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
108.
    	
 
    	
***
    	
 
    	
APU
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
109.
    	
 
    	
***
    	
 
    	
APU
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
110.
    	
 
    	
***
    	
 
    	
APU
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
111.
    	
 
    	
***
    	
 
    	
V2500-A
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
112.
    	
 
    	
***
    	
 
    	
V2500-A
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
113.
    	
 
    	
***
    	
 
    	
V2500-A
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
114.
    	
 
    	
***
    	
 
    	
V2500-A
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
115.
    	
 
    	
***
    	
 
    	
V2500-A
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
116.
    	
 
    	
***
    	
 
    	
V2500-A
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
117.
    	
 
    	
***
    	
 
    	
V2500-A
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
118.
    	
 
    	
***
    	
 
    	
V2500-A
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
119.
    	
 
    	
***
    	
 
    	
V2500-A
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
120.
    	
 
    	
***
    	
 
    	
V2500-A
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
121.
    	
 
    	
***
    	
 
    	
V2500-A
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
122.
    	
 
    	
***
    	
 
    	
V2500-A
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    

 

*** Confidential information omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.

 

 

Schedule 7.10

 

Indebtedness and Guaranteed Indebtedness existing on the Closing Date

 

	
Creditor
    	
 
    	
Original
   Principal
   Amount /
   Notional
   Amount
    	
 
    	
Balance as of the
   Closing Date
    	
 
    	
Description
    
	
HSH   Nord Bank
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
Norddeutsche   Landesbank Girozentrale
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
Bank   of Communications
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    
	
Bank   of America Leasing and Capital, LLC
    	
 
    	
***
    	
 
    	
***
    	
 
    	
***
    

 

*** Confidential information omitted pursuant to a request for confidential treatment filed separately with the Securities and Exchange Commission.

 

 

Schedule 7.15

 

Investments Existing as of the Closing Date

 

1.              50.0% membership interest in a joint venture, Willis Mitsui & Co Engine Support Limited, limited liability company formed under the laws of the Republic of Ireland

 

2.              Investments in each “Excluded Subsidiary” as defined in the Second Amended and Restated Credit Agreement2014.06.30-Ex 10.1

Exhibit 10.1
Employment Agreement
This Employment Agreement dated as of April 10, 2014 (the “Agreement”), is made by and between Skilled Healthcare, LLC, a Delaware limited liability company (together with Skilled Healthcare Group, Inc., a Delaware corporation (“Parent”), and any successor thereto, the “Company”) and Paxton Wiffler (the “Executive”).
RECITALS
A.    It is the desire of the Company to assure itself of the services of the Executive by entering into this Agreement.
B.    The Executive and the Company mutually desire that Executive provide services to the Company on the terms herein provided.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below the parties hereto agree as follows:
		
	1.
	Employment. 

		
	(a)
	General.  The Company shall employ the Executive and the Executive shall enter the employ of the Company, for the period set forth in Section 1(b), in the position set forth in Section 1(c), and upon the other terms and conditions herein provided.

		
	(b)
	Employment Term.  The initial term of employment under this Agreement (the “Initial Term”) shall be for the period beginning on May 8, 2014 (the “Effective Date”) and ending on (and including) the second anniversary thereof, unless earlier terminated as provided in Section 3.  The employment term hereunder shall automatically be extended for successive one-year periods (“Extension Terms” and, collectively with the Initial Term, the “Term”) unless either party gives written notice of non-extension to the other no later than thirty (30) days and no more than ninety (90) days prior to the expiration of the then-applicable Term and subject to earlier termination as provided in Section 3.

		
	(c)
	Position and Duties.  The Executive shall serve as the Chief Operating Officer of the Company with such customary responsibilities, duties and authority as may from time to time be assigned to the Executive by the Chief Executive Officer of the Company, or the Board of Directors of the Company or by the Board of Directors of Parent (the “Board”).  The Executive shall devote substantially all his working time and efforts to the business and affairs of the Company (which may include service to the Company and its direct and indirect subsidiaries).  The Executive agrees to observe and comply with the rules and policies of the Company as adopted by or under the authority of the Board from time to time.  During the Term, it shall not be a violation of this Agreement for the Executive to serve on industry trade, civic or charitable boards or committees and manage his personal investments and affairs, as long as such activities do not materially interfere with the performance of the Executive's duties and responsibilities as an employee of the Company.  During his employment and following termination of his employment with the 

1

Company, the Executive agrees not to disparage the Company, any of its products or practices, or any of its directors, officers, agents, representatives, stockholders or affiliates, either orally or in writing.
		
	(d)
	Location.  The Executive acknowledges that the Company's principal executive offices are currently located at Foothill Ranch, California.  The Executive shall operate principally out of such executive offices, as they may be moved from time to time within 40 miles of their current location in Foothill Ranch, California.  The Company expects, and the Executive agrees, that the Executive shall be required to travel from time to time in order to fulfill his duties to the Company.

		
	(e)
	Compliance with Applicable Policies, Standards, Rules and Regulations.  Executive agrees that in all aspects of such employment, Executive shall comply in all material respects with all material policies, standards, rules and regulations of the Company, as well as applicable state and federal regulations, established from time to time, and shall perform Executive’s duties faithfully, to the best of Executive’s ability and in the best interest of the Company.  The Company has adopted the Skilled Healthcare Group Code of Conduct, the Facility Code of Conduct Handbook, the Employee Handbook and the Employee Dispute Resolution Book (collectively, the “Company Policies”).  The Company Policies are available online and Executive acknowledges hereby that he/she has been provided copies of the Company Policies and is required to review and abide by each of the Company Policies.  

		
	(f)
	No Conflict.  Executive represents and warrants that Executive’s execution of this Agreement, Executive’s employment with the Company, and the performance of Executive’s proposed duties under this Agreement shall not violate any obligations Executive may have to any other employer, person or entity, including obligations with respect to proprietary or confidential information of any other person or entity.

		
	2.
	Compensation and Related Matters. 

		
	(a)
	Annual Base Salary.  During the Term, the Executive shall receive a base salary at a rate of $500,000 per annum (the “Annual Base Salary”), which shall be paid in accordance with the customary payroll practices of the Company, subject to upward adjustment as may be determined by the Board in its discretion.  In the case of such upward adjustment, “Annual Base Salary” shall mean such increased base salary.

		
	(b)
	Annual Bonus.  During the Term, the Executive will be eligible to participate in an annual performance-based bonus plan that provides an opportunity of 75% of the Executive’s Annual Base Salary (pro rated for the first year of the Term, if a partial calendar year) on terms substantially the same as the bonus plan adopted by the Board for other senior officers of the Company.  Executive will be entitled to receive any such bonus if he is employed with Company on the last day of the applicable performance period for which such bonus is earned, although payment of any annual bonus, to the extent any annual bonus becomes payable, shall be paid to the Executive on or prior to March 15 of the year immediately following the year in which such annual bonus is earned. 

		
	(c)
	Equity Plan.  During the Term, the Executive shall be eligible to participate in the 2007 Equity Award Plan of Parent, or a successor plan thereto (the “Equity Plan”), pursuant to which, on the Effective Date, the Executive shall receive an award of 400,000 shares of restricted common stock 

2

of Parent (the “Restricted Stock Award”) in accordance with the terms of the award agreement attached hereto as Schedule 1.     
		
	(d)
	Benefits.  During the Term, the Executive shall be entitled to participate in group medical insurance, 401(k) and other standard benefits provided by the Company, as may be amended from time to time, which are applicable to the senior officers of the Company.

		
	(e)
	Vacation.  During the Term, the Executive shall not participate in any Company sponsored vacation plan; however the Executive will be expected to work a minimum of forty-eight (48) weeks during each of the Initial Term and any Extension Term, which will allow four (4) weeks off, with pay, during each of the Initial Term and any Extension Term.  The minimum work threshold is tied to the applicable Initial Term and/or Extension Term, and no rollover is permitted.  Any vacation shall be taken at the reasonable and mutual convenience of the Company and the Executive.  

		
	(f)
	Expenses.  During the Term, the Company shall reimburse the Executive for all reasonable travel and other business expenses incurred by him in the performance of his duties to the Company in accordance with the Company's expense reimbursement policy.

		
	(g)
	Key Person Insurance.  At any time during the Term, the Company shall have the right to insure the life of the Executive for the Company's sole benefit.  The Company shall have the right to determine the amount of insurance and the type of policy.  The Executive shall cooperate with the Company in obtaining such insurance by submitting to physical examinations, by supplying all information reasonably required by any insurance carrier, and by executing all necessary documents reasonably required by any insurance carrier.  The Executive shall incur no financial obligation by executing any required document, and shall have no interest in any such policy.

		
	(h)
	Annual Review.  Approximately every 12 months during the Term, the Executive and the Chief Executive Officer shall meet to discuss the Executive's performance and terms of the Executive's employment by the Company.

		
	3.
	Termination. 

The Term and the Executive's employment hereunder may be terminated by the Company or the Executive, as applicable, without any breach of this Agreement only under the following circumstances:
		
	(a)
	Circumstances.

		
	(i)
	Death.  The Term and the Executive's employment hereunder shall terminate upon his death.

		
	(ii)
	Disability.  If the Executive has incurred a Disability, the Company may terminate the Term and the Executive's employment hereunder.

		
	(iii)
	Termination for Cause.  The Company may terminate the Term and the Executive's employment hereunder for Cause.

3

		
	(iv)
	Termination without Cause.  The Company may terminate the Term and the Executive's employment hereunder without Cause.

		
	(v)
	Resignation by the Executive.  The Executive may resign his employment and terminate the Term for any reason.

		
	(vi)
	Non-extension of Term by the Company.  The Company may give notice of non-extension of the Term to the Executive pursuant to Section 1(b).

		
	(vii)
	Non-extension of Term by the Executive. The Executive may give notice of non-extension of the Term to the Company pursuant to Section 1(b).  

		
	(b)
	Notice of Termination.  Any termination of the Executive's employment by the Company or by the Executive under this Section 3 (other than termination pursuant to paragraph (a)(i)) shall be communicated by a written notice to the other party indicating the specific termination provision in this Agreement relied upon, and specifying a Date of Termination which, if submitted by the Executive, shall be at least two weeks following the date of such notice (a “Notice of Termination”) or, such earlier date as the Company may prescribe.  A Notice of Termination submitted by the Company may provide for a Date of Termination on the date the Executive receives the Notice of Termination, or any date thereafter elected by the Company in its sole discretion, provided that in the event of a termination pursuant to Section 3(a)(vi), the Date of Termination must be the date of expiration of the then-applicable Term.

		
	(c)
	Company Obligations Upon Termination.  Upon termination of the Executive's employment, the Executive (or the Executive's estate) shall be entitled to receive the sum of the Executive's Annual Base Salary through the Date of Termination not theretofore paid, any expenses owed to the Executive under Section 2(f), and, except as otherwise provided herein, any amount accrued and arising from the Executive's participation in, or benefits accrued under any employee benefit plans, programs or arrangements under Section 2(d), which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements, and such other or additional benefits as may be, or become, due to him under the applicable terms of applicable plans, programs, agreements, corporate governance documents and other arrangements of the Company and its parent and subsidiaries (collectively, the “Company Arrangements”).

		
	(d)
	Resignation of Directorships.  Upon termination of the Executive's employment for any reason, the Executive shall be deemed to have resigned from all offices and directorships, if any, then held with the Company or any subsidiary or affiliate thereof, and, at the Company’s request, Executive shall execute such documents as the Company determines to be necessary or desirable to effectuate such resignations.

		
	4.
	Severance Payments. 

		
	(a)
	Termination for Cause, Resignation by the Executive, Non-extension of Term by the Executive or the Company, death or Disability.  If the Executive's employment is terminated pursuant to Section 3(a)(iii) for Cause, pursuant to Section 3(a)(v) for Resignation by the Executive, or pursuant to Section 3(a)(vii) due to non-extension of the Term by the Executive, the Executive shall not be entitled to any severance payment or benefits.  If the Executive's employment is terminated 

4

pursuant to Section 3(a)(i) as a result of Executive's death or pursuant to Section 3(a)(ii) as a result of the Executive's Disability, the Company shall, subject to the Executive or his estate, as applicable, signing, within twenty-one (21) days (or forty-five (45) days if necessary to comply with applicable law) following the Date of Termination, a separation and release agreement in the form attached hereto at Annex A (the “Release”) and not revoking the Release within seven (7) days thereafter, (i) pay to the Executive or his estate, as applicable, an amount equal to the product of (x) the bonus that the Executive would have earned during the calendar year in which the Date of Termination occurs, if any, and (y) a fraction, the numerator of which is the number of days that elapsed in such calendar year through the Date of Termination and the denominator of which is 365, payable when bonuses would have otherwise been payable had the Executive's employment not terminated, but in no event later than March 15 of the year following the year in which the Date of Termination occurs, (ii) pay (as taxable compensation), within sixty (60) days following the Date of Termination, a lump sum amount equal to the aggregate health insurance premium cost for the Executive (unless the Term was terminated pursuant to Section 3(a)(i)) and his spouse and dependents under the Company’s group health plans for a period of twelve (12) months, based on the premium level and coverage in effect for the Executive and his spouse and dependents as of the Date of Termination (the “Supplemental Amount”), and (iii) in the case of termination pursuant to Section 3(a)(ii) as a result of the Executive's Disability, pay to the Executive, in a lump sum within sixty (60) days following the Date of Termination, an amount equal to the excess, if any, of (x) the amount that would have been payable to the Executive pursuant to Section 4(b)(i) if the Executive had been terminated by the Company without Cause pursuant to Section 3(a)(iv) over (y) the present value of the benefits to be received by the Executive (or his beneficiaries) under any disability plan sponsored by the Company or its affiliates (for purposes of this clause (iii) the amounts in (x) and (y) shall be determined by the Company on an after-tax basis to the extent that their receipt by the Executive (or his beneficiaries) would be subject to tax and on actuarial assumptions satisfactory to the Company).  If the Executive's employment is terminated pursuant to Section 3(a)(vi) due to non-extension of the Term by the Company, the Company shall, subject to the Executive signing the Release within twenty-one (21) days (or forty-five (45) days if necessary to comply with applicable law) following the Date of Termination and not revoking the Release within seven (7) days thereafter, (i) pay to the Executive an amount equal to the product of (x) the bonus that the Executive would have earned during the calendar year in which the Date of Termination occurs, if any, and (y) a fraction, the numerator of which is the number of days that elapsed in such calendar year through the Date of Termination and the denominator of which is 365, payable when bonuses would have otherwise been payable had the Executive's employment not terminated, but in no event later than March 15 of the year following the year in which the Date of Termination occurs, and (ii) pay to the Executive, in a lump sum within sixty (60) days following the Date of Termination, an amount equal to the Annual Base Salary that the Executive would have been entitled to receive if the Executive had continued his employment hereunder for a period of 12 months following the Date of Termination.  Notwithstanding the foregoing, solely to the extent required by Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), in the event that the 60 day period that the Company has to pay certain of the severance amounts set forth above overlaps two calendar years, then such severance amounts shall not be paid until such second calendar year (but within such 60 day period).  
		
	(b)
	Termination without Cause.  If the Executive's employment shall be terminated by the Company without Cause pursuant to Section 3(a)(iv), the Company shall, subject to the Executive signing the Release within twenty-one (21) days (or forty-five days (45) if necessary to comply with 

5

applicable law) following the Date of Termination and not revoking the Release within seven (7) days thereafter:
		
	(i)
	pay to the Executive, in a lump sum within sixty (60) days following the Date of Termination, an amount equal to the Annual Base Salary that the Executive would have been entitled to receive if the Executive had continued his employment hereunder for a period of 24 months following the Date of Termination; 

		
	(ii)
	pay to the Executive an amount equal to the product of (x) the bonus that the Executive would have earned during the calendar year in which the Date of Termination occurs, if any, and (y) a fraction, the numerator of which is the number of days that elapsed in such calendar year through the Date of Termination and the denominator of which is 365, payable when bonuses would have otherwise been payable had the Executive's employment not terminated, but in no event later than March 15 of the year following the year in which the Date of Termination occurs; and 

		
	(iii)
	pay (as taxable compensation), within sixty (60) days following the Date of Termination, the Supplemental Amount. 

Notwithstanding the foregoing, solely to the extent required by Code Section 409A, in the event that the 60 day period that the Company has to pay certain of the severance amounts set forth above overlaps two calendar years, then such severance amounts shall not be paid until such second calendar year (but within such 60 day period). 
		
	(c)
	Survival.  The expiration or termination of the Term shall not impair the rights or obligations of any party hereto, which shall have accrued prior to such expiration or termination.

		
	(d)
	Section 409A Six-Month Delay.  Notwithstanding anything to the contrary in this Section 4, no payments in this Section 4 will be paid during the six-month period following the Executive's termination of employment unless the Company determines, in its good faith judgment, that paying such amounts at the time or times indicated in this Section would not cause the Executive to incur an additional tax or penalties under Code Section 409A (in which case such amounts shall be paid at the time or times indicated in this Section).  If the payment of any amounts are delayed as a result of the previous sentence, on the first day following the end of the six-month period, the Company will pay the Executive a lump-sum amount equal to the cumulative amounts that would have otherwise been previously paid to the Executive under this Section 4.  Thereafter, payments will resume in accordance with this Section.

		
	5.
	Executive’s Covenants. 

		
	(a)
	The Executive shall not, at any time during the Term directly or indirectly engage in, have any equity interest in, or manage or operate any person, firm, corporation, partnership or business (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) that engages in any business (x) which competes with any business of the Company anywhere in the States of California, Kansas, Missouri, Nevada or Texas, (y) which competes with any business of the Company in any State in which the Company operated a facility at any time (whether before or after the date of this Agreement) that the Executive was employed by the Company or (z) which derives $500,000,000 or more in annual consolidated revenues from the operation of skilled nursing facilities in the United States; provided, however, that the Executive 

6

shall be permitted to acquire a passive stock interest in such a business provided the stock acquired is publicly traded and is not more than five percent (5%) of the outstanding interest in such business.
		
	(b)
	The Executive shall not at any time during the Term or during the two-year period following the Date of Termination, directly or indirectly, recruit or otherwise solicit or induce or encourage any employee of the Company to terminate his or her employment or relationship with the Company.  The Executive shall not at any time during the Term or thereafter use any trade secret of the Company or its subsidiaries or affiliates to solicit, induce, or encourage any customer, client, contractor, supplier or other party doing business with the Company (i) to terminate its relationship therewith or transfer its business from the Company, (ii) to otherwise change its relationship with the Company, or (iii) to establish any relationship with the Executive or any other person, firm, corporation or other entity for any business purpose competitive with the business of the Company.

		
	(c)
	In the event the terms of this Section 5 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.

		
	(d)
	As used in this Section 5, the term “Company” shall include Parent, the Company and their respective direct or indirect subsidiaries.

		
	6.
	Nondisclosure of Proprietary Information. 

		
	(a)
	Except in connection with the faithful performance of the Executive's duties hereunder or pursuant to Section 6(c), the Executive shall, in perpetuity, maintain in confidence and shall not directly, indirectly or otherwise, use, disseminate, disclose or publish, or use for his benefit or the benefit of any person, firm, corporation or other entity any confidential or proprietary information or trade secrets of or relating to the Company (including, without limitation, intellectual property in the form of patents, trademarks and copyrights and applications therefor, ideas, inventions, works, discoveries, improvements, information, documents, formulae, practices, processes, methods, developments, source code, modifications, technology, techniques, data, programs, other know-how or materials, owned, developed or possessed by the Company, whether in tangible or intangible form, information with respect to the Company's operations, processes, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, prospects and compensation paid to employees or other terms of employment), or deliver to any person, firm, corporation or other entity any document, record, notebook, computer program or similar repository of or containing any such confidential or proprietary information or trade secrets.  The parties hereby stipulate and agree that as between them the foregoing matters are important, material and confidential proprietary information and trade secrets and affect the successful conduct of the businesses of the Company (and any successor or assignee of the Company).  Confidential Information shall not include any information which has entered the public domain through no fault of the Executive.

7

		
	(b)
	Upon termination of the Executive's employment with the Company for any reason, the Executive will promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning the Company's customers, business plans, marketing strategies, products or processes.

		
	(c)
	The Executive may respond to a lawful and valid subpoena or other legal process but shall give the Company the earliest possible notice thereof, shall, as much in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought and shall assist such counsel at Company's expense in resisting or otherwise responding to such process.

		
	(d)
	As used in this Section 6 and Section 7, the term “Company” shall include the Company and its direct or indirect parents, if any, and subsidiaries.

		
	(e)
	Nothing in this Agreement shall prohibit the Executive from (i) disclosing information and documents when required by law, subpoena or court order (subject to the requirements of Section 6(c) above), (ii) disclosing information and documents to his attorney or tax adviser on a confidential basis for the purpose of securing legal or tax advice, (iii) disclosing the post-employment restrictions in this Agreement in confidence to any potential new employer, or (iv) retaining, at any time, his personal correspondence, his personal rolodex and documents related to his own personal benefits, entitlements and obligations.

		
	7.
	Inventions. 

All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the business of the Company, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Executive may discover, invent or originate during the Term, either alone or with others and whether or not during working hours or by the use of the facilities of the Company (“Inventions”), shall be the exclusive property of the Company.  The Executive shall promptly disclose all Inventions to the Company, shall execute at the request of the Company any assignments or other documents the Company may deem reasonably necessary to protect or perfect its rights therein, and shall assist the Company, upon reasonable request and at the Company's expense, in obtaining, defending and enforcing the Company's rights therein.  The Executive hereby appoints the Company as his attorney-in-fact to execute on his behalf any assignments or other documents reasonably deemed necessary by the Company to protect or perfect its rights to any Inventions.
		
	8.
	Injunctive Relief. 

It is recognized and acknowledged by the Executive that a breach of the covenants contained in Sections 5, 6 and 7 will cause irreparable damage to Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate.  Accordingly, the Executive agrees that in the event of a breach of any of the covenants contained in Sections 5, 6 and 7, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and temporary, preliminary and permanent injunctive relief.
		
	9.
	Assignment and Successors. 

8

The Company may assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise).  This Agreement shall be binding upon and inure to the benefit of the Company, the Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable.  None of the Executive's rights or obligations may be assigned or transferred by the Executive, other than the Executive's rights to payments hereunder, which may be transferred only by will or operation of law.  Notwithstanding the foregoing, the Executive shall be entitled, to the extent permitted under applicable law and applicable Company Arrangements, to select and change a beneficiary or beneficiaries to receive compensation hereunder following his death by giving written notice thereof to the Company.
		
	10.
	Certain Definitions. 

		
	(a)
	Cause.  The Company shall have “Cause” to terminate the Term and the Executive's employment hereunder upon:

		
	(i)
	the Executive's failure to perform substantially his duties as an employee of the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness), which is not cured within 15 days after a written demand for performance is given to the Executive by the Board specifying in reasonable detail the manner in which the Executive has failed to perform substantially his duties as an employee of the Company;

		
	(ii)
	the Executive's failure to carry out, or comply with, in any material respect any lawful and reasonable directive of the Board consistent with the terms of this Agreement that, if capable of cure, is not cured by the Executive within 15 days after written notice given to the Executive describing such failure in reasonable detail;

		
	(iii)
	the Executive's conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or, to the extent involving fraud, dishonesty, theft, embezzlement or moral turpitude, any other crime;

		
	(iv)
	the Executive's violation of a material regulatory requirement relating to the business of the Company and its subsidiaries that, in the good faith judgment of the Board, is injurious to the Company in any material respect;

		
	(v)
	the Executive's unlawful use (including being under the influence) or possession of illegal drugs on the Company's premises or while performing the Executive's duties and responsibilities under this Agreement;

		
	(vi)
	the Executive's breach of this Agreement in any material respect that, if capable of cure, is not cured by the Executive within 15 days after written notice given to the Executive describing such breach in reasonable detail; or

		
	(vii)
	the Executive's commission of an act of fraud, embezzlement, misappropriation, willful misconduct, gross negligence or breach of fiduciary duty with respect to the Company or any of its affiliates;

9

		
	(b)
	Date of Termination.  “Date of Termination” shall mean (i) if the Executive's employment is terminated by his death, the date of his death; (ii) if the Executive's employment is terminated pursuant to Section 3(a)(ii)-(v) either the date indicated in the Notice of Termination or the date specified by the Company pursuant to Section 3(b), whichever is earlier; (iii) if the Executive's employment is terminated pursuant to Section 3(a)(vi) or Section 3(a)(vii), the expiration of the then-applicable Term; or (iv) if Executive’s employment is terminated pursuant to Section 3(a)(viii), the date indicated in the Notice of Termination sent by Executive within the time periods described in Section 10(d) below.

		
	(c)
	Disability.  “Disability” shall mean, at any time the Company or any of its affiliates sponsors a long-term disability plan for the Company's employees in which the Executive participates, “disability” as defined in such long-term disability plan for the purpose of determining a participant's eligibility for benefits, provided, however, if the long-term disability plan contains multiple definitions of disability, “Disability” shall refer to that definition of disability which, if the Executive qualified for such disability benefits, would provide coverage for the longest period of time.  The determination of whether the Executive has a Disability shall be made by the person or persons required to make disability determinations under the long-term disability plan.  At any time the Company does not sponsor a long-term disability plan for its employees in which the Executive participates, Disability shall mean the Executive's inability to perform, with or without reasonable accommodation, the essential functions of his position hereunder for a total of six months during any 12-month period as a result of incapacity due to mental or physical illness as determined by a physician selected by the Board and acceptable to the Executive or the Executive's legal representative, such agreement as to acceptability not to be unreasonably withheld or delayed.  Any refusal by the Executive to submit to a medical examination for the purpose of determining Disability shall be deemed to constitute conclusive evidence of the Executive's Disability.  

		
	11.
	Governing Law. 

This Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the State of California, without reference to the principles of conflicts of law, and where applicable, the federal laws of the United States.
		
	12.
	Validity. 

The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
		
	13.
	Notices. 

Any notice, request, claim, demand, document and other communication hereunder to any party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by facsimile or certified or registered mail, postage prepaid, or any nationally recognized overnight courier service with signature certification of receipt, as follows:
		
	(a)
	If to the Company:

10

Skilled Healthcare Group, Inc.  
27442 Portola Parkway 
Suite 200 
Foothill Ranch, California 92610  
Attn: General Counsel
		
	(b)
	If to the Executive, to his most recent address on the Company’s books and records.

or at any other address as any party shall have specified by notice in writing to the other party.
		
	14.
	Counterparts. 

This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.  Signatures delivered by facsimile shall be deemed effective for all purposes.
		
	15.
	Entire Agreement. 

The terms of this Agreement are intended by the parties to be the final expression of their agreement with respect to the employment of the Executive by the Company and supersede all prior understandings and agreements, whether written or oral.  The parties further intend that this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.
		
	16.
	Amendments; Waivers. 

This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by the Executive and a duly authorized officer of Company.  By an instrument in writing similarly executed, the Executive or a duly authorized officer of the Company may waive compliance by the other party or parties with any specifically identified provision of this Agreement that such other party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure.  No failure to exercise and no delay in exercising any right, remedy, or power hereunder preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.  Except as otherwise set forth in this Agreement, the respective rights and obligations of the parties under this Agreement shall survive any termination of Executive's employment.
		
	17.
	No Inconsistent Actions. 

The parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement.  Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.
		
	18.
	Construction. 

This Agreement shall be deemed drafted equally by both the parties.  Its language shall be construed as a whole and according to its fair meaning.  Any presumption or principle that the language is to be construed against any party shall not apply.  The headings in this Agreement are only for convenience and are not intended to affect 

11

construction or interpretation.  Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary.  Also, unless the context clearly indicates to the contrary, (a) the plural includes the singular and the singular includes the plural; (b) “and” and “or” are each used both conjunctively and disjunctively; (c) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (d) “includes” and “including” are each “without limitation”; (e) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (f) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.
		
	19.
	Arbitration. 

Any controversy arising out of or relating to this Agreement, its enforcement or interpretation, or because of an alleged breach, default, or misrepresentation in connection with any of its provisions, or any other controversy arising out of the Executive's employment by the Company, including, but not limited to, any state or federal statutory claims, shall be submitted to arbitration in Los Angeles County, California, before a sole neutral arbitrator (the “Arbitrator”), mutually selected and agreeable to both parties and selected from Judicial Arbitration and Mediation Services, Inc., Los Angeles County, California, or its successor (“JAMS”), or if JAMS is no longer able to supply the Arbitrator, such Arbitrator shall be selected from the American Arbitration Association, and shall be conducted in accordance with the provisions of California Code of Civil Procedure §§ 1280 et seq. as the exclusive forum for the resolution of such dispute; provided, however, that provisional injunctive relief (including, but not limited to, temporary restraining orders and preliminary injunctions) may, but need not, be sought by either party to this Agreement in any court of competent jurisdiction while arbitration proceedings are pending, and any provisional injunctive relief granted by such court shall remain effective until the matter is finally determined by the Arbitrator; no bond or other security shall be required in connection therewith.
Final resolution of any dispute through arbitration may include any remedy or relief that the Arbitrator deems just and equitable, including any and all remedies provided by applicable state or federal statutes.  At the conclusion of the arbitration, the Arbitrator shall issue a written decision that sets forth the essential findings and conclusions upon which the Arbitrator's award or decision is based.  Any award or relief granted by the Arbitrator hereunder shall be final and binding on the parties hereto and may be enforced by any court of competent jurisdiction.
The parties acknowledge and agree that they are hereby waiving any rights to trial by jury in any action, proceeding or counterclaim brought by either of the parties against the other in connection with any matter whatsoever arising out of or in any way connected with this Agreement or the services rendered hereunder.  The parties agree that the Company shall be responsible for payment of the forum costs of any arbitration hereunder, including the Arbitrator's fee.  The Executive and the Company further agree that in any proceeding to enforce the terms of this Agreement, the prevailing party shall be entitled to its or her reasonable attorneys' fees and costs (other than forum costs associated with the arbitration) incurred by it or him in connection with resolution of the dispute up to a maximum of Fifty Thousand Dollars ($50,000.00) in addition to any other relief granted.
		
	20.
	Enforcement. 

If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement.  Furthermore, in 

12

lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
		
	21.
	Withholding. 

The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold.  The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.
		
	22.
	Indemnification. 

The Company agrees that (a) if the Executive is made a party, or is threatened to be made a party, to any threatened or actual action, suit or proceeding whether civil, criminal, administrative, investigative, appellate or other (a “Proceeding”) by reason of the fact that he is or was a director, officer, employee, agent, manager, consultant or representative of the Company or (b) if any claim, demand, request, investigation, controversy, threat, discovery request or request for testimony or information (a “Claim”) is made, or threatened to be made, that arises out of or relates to the Executive's service in any of the foregoing capacities, then the Executive shall promptly be indemnified and held harmless by the Company to the fullest extent permitted by the laws of the state of incorporation of the Company, against any and all costs, expenses, liabilities and losses incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive even if he has ceased to be a director, member, employee, agent, manager, consultant or representative of the Company and shall inure to the benefit of the Executive's heirs, executors and administrators.  The Company may assume the defense of any Proceeding or Claim with counsel selected by the Company and reasonably satisfactory to the Executive and, if it does so, the Executive shall not be entitled to be reimbursed for any separate counsel he may retain in connection with such Proceeding or Claim.
Neither the failure of the Company (including its Board, independent legal counsel or stockholders) to have made a determination in connection with any request for indemnification that the Executive has satisfied any applicable standard of conduct, nor a determination by the Company (including its Board, independent legal counsel or stockholders) that the Executive has not met any applicable standard of conduct, shall create a presumption that the Executive has not met an applicable standard of conduct.
During the period of employment and for a period of time thereafter determined as provided below, the Company shall keep in place a directors and officers' liability insurance policy (or policies) providing coverage, or such coverage may be provided under a policy that provides coverage to Onex Corporation or Onex Partners LP and their affiliates, to the Executive if and to the extent that the Company provides such coverage to its directors and such coverage (or other directors and officers liability insurance coverage) shall continue after the termination of the period of employment if and for the period of time that such coverage is extended to the Company's former director, other than former directors who are employees of Onex Corporation, Onex Partners LP or their affiliates.
		
	23.
	Code Section 409A. 

		
	(a)
	To the extent applicable, this Agreement shall be interpreted and applied consistent and in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder (“Section 409A”).  If, however, the Company determines that any compensation or benefits payable under this Agreement may be or become subject to Section 409A, the Executive and the Company shall cooperate to adopt such amendments to this 

13

Agreement or to adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take such other actions, as are necessary or appropriate to (i) exempt the compensation and benefits payable under this Agreement from Section 409A and/or preserve the intended tax treatment of such compensation and benefits, or (ii) comply with the requirements of Section 409A; provided, however, that this Section 23 shall not create any obligation on the part of the Company to adopt any such amendment, policy or procedure or take any such other action.  For purposes of Section 409A, each payment made under this Agreement shall be treated as a separate payment.

		
	(b)
	Notwithstanding anything herein to the contrary, Executive acknowledges and agrees that in the event that any tax is imposed under Section 409A in respect of any compensation or benefits payable to Executive, whether under or in connection with this Agreement or otherwise, then (i) the payment of such tax shall be solely Executive’s responsibility, and (ii) neither the Company, its affiliates nor any of their respective past or present directors, officers, employees or agents shall have any liability for any such tax (unless caused by the Company’s intentional misconduct).  

		
	(c)
	To the extent that any payments or reimbursements provided to Executive under this Agreement are deemed to constitute compensation to which Treasury Regulation Section 1.409A-3(i)(1)(iv) would apply, such payments or reimbursements shall be made or provided in accordance with the requirements of Section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during Executive’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit.  

		
	24.
	Clawback. 

The Executive agrees that all compensation paid or payable to the Executive pursuant to this Agreement shall be subject to the provisions of the Company’s claw-back policy (as it may be amended from time to time), or any claw-back policy adopted by the Company from time to time.
		
	25.
	Cooperation in Litigation. 

For a period of 10 years following the Date of Termination, the Executive promises and agrees that, following the date his employment by the Company terminates, he will reasonably cooperate with the Company in any litigation in which the Company is a party or otherwise involved which arises out of events occurring prior to the termination of his employment, including but not limited to, serving as a consultant (at a reasonable hourly rate) or witness and producing documents and information relevant to the case or helpful to the Company.
		
	26.
	Employee Acknowledgement. 

The Executive acknowledges that he has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on his own judgment.

14

IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.
	
		
	SKILLED HEALTHCARE, LLC.

	By:
	/s/ Roland G. Rapp

	 
	Name:   Roland G. Rapp

	 
	Title:   General Counsel, Secretary and Chief Administrative Officer

	
		
	EXECUTIVE

	By:
	/s/ Paxton Wiffler

	 
	Name:  Paxton Wiffler

	 
	Title: Chief Operating Officer

ACKNOWLEDGED AND AGREED
SOLELY FOR PURPOSES OF SECTION 2(c)

	
		
	SKILLED HEALTHCARE GROUP, INC.

	/s/ Roland G. Rapp
	 

	Name:   Roland G. Rapp
	 

	Title:   General Counsel, Secretary and Chief Administrative Officer
	 

15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}]]