Document:

WWW.EXFILE.COM, INC. -- 13756 -- AMERICAN POWER CONVERSION CORP. -- EXHIBIT 10.1 TO FORM 8-K

    

    

    EXHIBIT
      10.1

    

    AMENDMENT
      TO CHANGE-IN-CONTROL SEVERANCE AGREEMENT

    

    THIS
      AMENDMENT, dated as of July 29, 2005, by and between American Power Conversion
      Corporation, with its principal place of business at 132 Fairgrounds Road,
      West
      Kingston, RI (the “Company”) and ________________ (the
“Executive”).

    

    WHEREAS,
      the Company and the Executive have entered into a Change-In-Control Severance
      Agreement dated as of __________, 2000 (the “Agreement”); 

    

    WHEREAS,
      the Compensation and Stock Option Committee of the Board of Directors of the
      Company has authorized the amendment of such Agreements to comply with Section
      409A of the Internal Revenue Code;

    

    NOW,
      THEREFORE, in consideration of the mutual covenants and agreements hereinafter
      contained and other good and valuable consideration, the receipt and sufficiency
      of which are hereby acknowledged, the Company and the Executive agree as
      follow:

    

    1.    Paragraph
      (i) in the definition of “Change in Control” in Section 1 of the Agreement is
      deleted in its entirety and the following is substituted in its
      place:

    

    “(i) the
      members of the Board at the beginning of any consecutive 12-calendar-month
      period (the “Incumbent Directors”) cease for any reason other than due to death
      to constitute at least a majority of the members of the Board; provided that
      any
      director whose election, or nomination for election by the Company’s
      stockholders, was approved by a vote of at least a majority of the members
      of
      the Board then still in office who were members of the Board at the beginning
      of
      such 12-calendar-month period, shall be deemed to be an Incumbent
      Director;”

    

    2.    The
      following is added as a new paragraph following Paragraph (iii) in the
      definition of “Change in Control” in Section 1 of the Agreement:

    

    “Notwithstanding
      the foregoing, none of the foregoing event(s) shall constitute a Change in
      Control unless such event(s) constitute a “change in the ownership or effective
      control” or a change “in the ownership of a substantial portion of the assets,”
      in each case within the meaning of Section 409A(a)(2)(A)(v) of the Code and
      any
      regulations and other guidance in effect from time to time thereunder including
      without limitation Notice 2005-1.”

    

    3.    The
      following is added as new Section 2.6:

    

    “Notwithstanding
      any other provision of this Agreement, if the Executive is a “key employee” as
      defined in Section 416(i) of the Code without regard to paragraph 5 thereof,
      no
      payment under this Agreement with respect to separation from service shall
      be
      made before the date which is six months after the date of separation from
      service (or, if earlier, the date of death of the Executive).”

    

    4.    In
      all
      other respects, the Agreement shall remain in full force and
      effect.

    

    IN
      WITNESS WHEREOF, the undersigned have caused this instrument to be executed
      as
      of the day and year first set forth above.

     

    
      	 	 	 
	 	AMERICAN
              POWER CONVERSION CORPORATION
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
	 	Title:Exhibit
10.42

 

LOAN AND AIRCRAFT SECURITY
AGREEMENT (S/N 3004)

 

THIS LOAN AND AIRCRAFT SECURITY AGREEMENT (S/N 3004)
(together with all Addenda, Riders and Annexes hereto, this “Agreement”)
is dated as of October 29, 2004 (the “Closing Date”), by and between
WILLIS LEASE FINANCE CORPORATION, a Delaware corporation (“Customer”), and FLEET CAPITAL CORPORATION, a
Rhode Island corporation (“Lender”).

 

In consideration of the mutual agreements contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:

 

Capitalized terms used but not otherwise defined in
this Agreement shall have the meanings ascribed to them in Annex A
attached hereto and made a part hereof.

 

SECTION 1.  Terms of Loans.

 

1.1           Tranche 1 Loan. 
Subject to the terms and conditions of this Agreement, Lender agrees to
make a loan to Customer in the principal amount set forth in Annex B
attached hereto and made a part hereof and designated as the Tranche 1 Loan
(the “Tranche 1 Loan”).  The
Customer’s obligation to repay the Loan shall be evidenced by a Promissory Note
dated on the Initial Closing Date, payable by Customer to the order of Lender
in the original principal amount of the Tranche 1 Loan (as amended, modified,
restated, extended and renewed from time to time, the “Tranche 1 Note”).  The Tranche 1 Loan shall bear interest and be
repaid by Customer at the times and in the manner set forth in the Tranche 1
Note

 

1.2           Tranche 2 Loan. 
Subject to the terms and conditions of this Agreement, Lender agrees to
make a loan to Customer in the principal amount set forth in Annex B hereto and
designated as the Tranche 2 Loan (the “Tranche 2 Loan”) on the Requested
Advance Date set forth in the applicable Request for Advance (the “Final
Closing Date”).  The Customer’s
obligation to repay the Tranche 2 Loan shall be evidenced by a promissory note
in the same form as the Tranche 1 Note, payable by Customer to the order of
Lender in the original principal amount of the Tranche 2 Loan (as amended,
modified, restated, extended and renewed from time to time, the “Tranche 2 Note”).  The Tranche 2 Loan shall bear interest and be
repaid by Customer at the times and in the manner set forth in the Tranche 2
Note.  Unless sooner terminated pursuant
to the provisions of this Agreement, the obligation of Lender to make the
Tranche 2 Loan hereunder shall automatically terminate on March 31, 2005,
without further action by, or notice of any kind from, Lender.

 

1.3           Prepayment.  The Loans may be prepaid only
in the manner and subject to terms and conditions set forth in the Notes and,
if applicable, Section 4.7 hereof.

 

1.4           Use of Proceeds. 
Customer shall use the proceeds of the Tranche 1 Loan to finance or the
cost of the acquisition of the Aircraft, and the proceeds of the Tranche 2 Loan
to pay for Lender approved refurbishment and upgrades to the Aircraft.

 

SECTION 2.  Conditions of Borrowing.  Lender’s obligation to make the Tranche 1
Loan shall be both subject to and conditioned upon the satisfaction of all of
the conditions precedent specified with respect thereto in the Closing Terms
Addendum attached hereto and made a part hereof.  Lender’s obligation to make the Tranche 2
Loan shall be both subject to and conditioned upon the satisfaction of all of
the conditions precedent specified with respect thereto in the Closing Terms
Addendum attached hereto and made a part hereof.

 

SECTION 3.  Representations and Warranties.  In order to induce Lender to enter into this
Agreement and to make the Loans herein provided for, Customer represents and
warrants to Lender that:

 

 

(a)           Customer (i) is duly qualified to do business
in each jurisdiction in which the conduct of its business or the ownership or
operation of its assets requires such qualification, including the jurisdiction
of the primary hangar location of the Aircraft; (ii) has the necessary
authority and power to own and operate the Aircraft and its other assets and to
transact the business in which it is engaged; (iii) is a “citizen of the United
States” within the meaning of the Federal Aviation Act; and (iv) has full
power, authority and legal right to execute and deliver this Agreement, the
Note and the other Loan Documents, to perform its obligations hereunder and
thereunder, to borrow hereunder and to grant the assignment and security
interest created by this Agreement;

 

(b)           Customer’s name as shown in the preamble of
this Agreement is Customer’s exact legal name as shown on its Certificate of
Incorporation amended as of the Closing Date; Customer has the form of business
organization set forth in Annex B hereto and is and will remain duly
organized, validly existing and in good standing under the laws of the state of
its organization set forth in Annex B hereto, and Customer’s state-issued
organizational identification number (if any) and the chief executive office
and principal place of business address of Customer are all as set forth on Annex
B hereto;

 

(c)           each of the Loans (i) has been duly
authorized by all necessary action on the part of Customer consistent with its
form of organization, and does not require the approval of or notice to any
other party (including any trustees or holders of indebtedness), or any
governmental authority; (ii) does not contravene or constitute a default under
any Applicable Law, Certificate of Incorporation or organization or by-laws, or
any agreement, indenture, or other instrument to which Customer is a party or
by which it may be bound;  (iii) does not
require approval of, or notice to, any governmental body, authority, or agency
in connection with either the execution, delivery or performance by Customer of
this Agreement, the Note and the other Loan Documents, or the validity or
enforceability of this Agreement, the Note and the other Loan Documents, except
for recordation of this Agreement with the FAA, which shall have been duly
effected as of the Initial closing Date and the filing of UCC financing
statements in the appropriate recording offices, which shall have been duly
effected as of the Initial Closing Date; and (iv) will not result in the
creation or imposition of any Lien on any of the assets of Customer other than
the security interest intended to be created hereby;

 

(d)           this Agreement, the Notes and the other Loan
Documents have each been duly authorized, executed and delivered by Customer
and constitutes the legal, valid and binding obligation of Customer enforceable
in accordance with its terms (including, without limitation, the grant of
security interest in this Agreement), except to the extent that the enforcement
of remedies may be limited under applicable bankruptcy and insolvency laws, and
the equitable discretion of any court of competent jurisdiction;

 

(e)           there are no proceedings pending or, so far
as the officers of Customer know, threatened against or affecting Customer or
any of its property before any court, administrative officer or administrative
agency that could impair Customer’s title to the Aircraft, or that, if decided
adversely, could materially affect the financial condition or operations of
Customer or its ability to perform its obligations under this Agreement, the
Notes and the other Loan Documents, and Customer has no pending claims and has
no knowledge of any facts upon which a future claim may be based, against any
prior owner, the manufacturer or supplier of the Aircraft, or of any engine or
part thereof for breach of warranty or otherwise;

 

(i)            Customer is not in default, and no event or
condition exists which after the giving of notice or lapse of time or both
would constitute an event of default, under any mortgage, indenture, contract,
agreement, judgment or other undertaking to which Customer is a party or which
purports to be binding upon Customer or upon any of its assets;

 

(h)           (i) Customer has good title to the Aircraft
subject to no Liens except the security interest created hereby in favor of
Lender; (ii) Lender has a legal, valid and continuing first priority security
interest in the Collateral, free and clear of all other Liens; and (iii) all filings,
recordings or other actions necessary or desirable in order to establish,
perfect and give first priority to such security interest (including, the
filing of this Agreement with the FAA as of the Initial Closing Date) have been
duly effected, and all Impositions in connection therewith have been duly paid;

 

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(j)            all financial statements of Customer, copies
of which have been heretofore delivered to Lender, are complete and correct,
have been prepared in accordance with GAAP and present fairly the financial
position of Customer as at the date thereof and the results of its operations
for the period then ended and there has been no material adverse change in the
financial condition, business or operations of Customer since the date thereof;

 

(k)           Customer has filed all Federal, state and
local income tax returns that are required to be filed and has paid all taxes
as shown on said returns and all assessments received by it to the extent that
such taxes and assessments have become due, and Customer does not have any
knowledge of any actual or proposed deficiency or additional assessment in
connection therewith;

 

SECTION 4. 
Covenants.  Customer
covenants and agrees that from and after the Initial Closing Date and so long
as any of the Obligations are outstanding:

 

4.1           Notices; Financial Information; and Further
Assurances.  Customer will, at its sole expense:

 

(a)  promptly
give written notice to Lender of (i) the occurrence of any Event of Default or
any event which with notice, with lapse of time and/or with any further
condition, event or act would constitute an Event of Default; (ii) the
occurrence of any Event of Loss; (iii) the commencement or threat of any
material litigation or proceedings affecting Customer or any material
litigation or proceedings affecting the Aircraft; and (iv) any dispute between
Customer and any governmental regulatory body or other party that involves the
Aircraft or that might materially interfere with the normal business operations
of Customer;

 

(b)  furnish
to Lender (i) within ninety (90) days of the close of each fiscal year of
Customer, Customer’s consolidated (and, if applicable, consolidating) balance
sheet, statement of shareholders’ equity, statement of cash flows and statement
of operations, all on a comparative basis with the prior fiscal year and
prepared in accordance with GAAP, certified by a recognized firm of certified
public accountants, (ii) within ninety (90) days of the close of each fiscal
quarter of Customer, Customer’s quarterly financial report certified by the
chief financial officer of Customer, (iii) all of Customer’s Forms 10-K and
10-Q, if any, filed with the SEC within thirty (30) days after the date on
which they are filed (by furnishing these SEC Forms, or making them publicly
available in electronic form, Customer shall be deemed to have satisfied the
requirements of clauses (b)(i),(ii) or (iii)), and (iv) promptly, such
additional financial and other information as Lender may from time to time reasonably
request; and

 

(c)  promptly
execute and deliver to Lender such further instruments, UCC and FAA filings and
other documents, and take such further action, as Lender may from time to time
reasonably request in order to further carry out the intent and purpose of this
Agreement and to establish and protect the rights, interests and remedies
created, or intended to be created, in favor of Lender hereby.  Customer hereby irrevocably authorizes Lender
and any employee, officer or agent thereof, in such jurisdictions where such
action is authorized by law, to effect any such recordation or filing without
the signature of Customer thereto. 
Customer hereby further agrees that (i) Customer shall not change its
presently existing legal name or its form or state of organization or
incorporation on or at any time after the date of this Agreement without Lender’s
prior written consent, (ii) if Customer’s presently existing state
organizational identification number changes, or if Customer currently has no
such state organizational number but is subsequently issued such a number, on
or at any time after the date of this Agreement, Customer shall immediately
notify Lender thereof, and (iii) Customer shall not change the presently
existing mailing, chief executive office and/or principal place of business
address on or at any time after the date of this Agreement without giving
Lender thirty (30) days’ prior written notice of the same.  Customer will pay, or reimburse Lender for,
any and all fees, taxes, insurance premiums, costs and expenses of whatever
kind or nature incurred in connection with the creation, preservation and
protection of the Collateral and Lender’s first priority and only security
interest therein.

 

3

 

4.2           General Obligations. 
Customer shall: (a) duly observe and conform to all requirements of
Applicable Law relating to the conduct of its business and the Aircraft; (b)
obtain and keep in full force and effect all rights, franchises, licenses and
permits that are necessary to the proper conduct of its business; (c) remain a “citizen
of the United States” within the meaning of the Federal Aviation Act; (d)
obtain or cause to be obtained as promptly as possible any governmental,
administrative or agency approval and make any filing or registration therewith
required with respect to the performance of its obligations under this
Agreement and the other Loan Documents and the operation of the Aircraft and
its business; (e) cause the Aircraft to remain duly registered, in its name,
under the Federal Aviation Act; and (f) pay and perform all of its obligations
and liabilities when due

 

4.3           Taxes.  Customer will file with all
appropriate taxing authorities all Federal, state and local income tax returns
that are required to be filed and all registrations, declarations, returns and
other documentation with respect to any personal property taxes (or any other
taxes in the nature of or imposed in lieu of property taxes) due or to become
due with respect to the Aircraft. 
Customer will (i) pay on or before the date when due all taxes as shown
on said returns and all taxes assessed, billed or otherwise payable with
respect to the Aircraft directly to the appropriate taxing authorities; and
(ii) pay when due all license and/or registration fees, assessments,
governmental charges and sales, use, property, excise, privilege, value added
and other taxes (including any related interest or penalties) or other charges
or fees now or hereafter imposed by any governmental body or agency upon
Customer or the Aircraft with respect to the landing, airport use,
manufacturing, ordering, shipment, purchase, ownership, delivery, installation,
leasing, chartering, operation, possession, use or other disposition of the
Aircraft (the items referred to in (i) and (ii) above being referred to herein
collectively, as “Impositions”).

 

4.4           No Disposition of Collateral or Liens; Title
and Security Interest.  Customer shall not sell, assign, enter into
any Third Party Agreement, convey, mortgage, exchange or otherwise transfer or
relinquish possession of or dispose of the Aircraft, any part thereof or any of
the other Collateral or attempt or offer to do any of the foregoing.  The foregoing shall not be deemed to prohibit
the delivery of possession of the Aircraft, any APU, Engine or Part to another
Person for testing, service, repair, maintenance, overhaul or, to the extent
permitted hereby, for alteration or modification.  Customer will not create, assume or suffer to
exist any Liens on or with respect to the Aircraft, any APU, Engine, Part or
any of the other Collateral, or Customer’s interest therein other than
Permitted Liens.  Customer will promptly
take such action as directed by Lender to duly discharge any such Lien.  Customer will warrant and defend its good and
marketable title to the Aircraft and Lender’s first and only perfected security
interest in the Collateral, against all claims and demands whatsoever.  Notwithstanding the foregoing, provided that
no Event of Default has occurred and is continuing, Customer may enter into a
management agreement, with or without charter, (“Management Agreement”), with a
qualified aviation management company or charter operator (“Manager”), subject
to the satisfaction of the following conditions: (i) the Management Agreement
shall provide that it shall terminate, or be canceled, at the option of Lender,
upon the occurrence of an Event of Default; (ii) the Management Agreement shall
be expressly, and at all times remain, subject and subordinate to this Agreement
and the rights of Lender hereunder and in and to the Aircraft; (iii) in no
event shall the Management Agreement (including as amended from time to time)
contain provisions that are inconsistent with the provisions of this Agreement
or cause Customer to breach any of its representations, warranties or
agreements under this Agreement; and (iv) Customer shall deliver to Lender a
Consent to Management Agreement, in form and substance satisfactory to Lender,
duly executed by Customer and Manager (the “Consent”), together with a copy of
the executed Management Agreement and a copy of a valid Air Carrier Certificate
FAA Form 8430-18, if applicable.  The
Management Agreement will not reduce any of the obligations of Customer
hereunder or the rights of Lender hereunder, under the Note or under any of the
other documents executed and/or delivered in connection herewith, and Customer
acknowledges that all of its obligations shall be and remain primary and shall
continue in full force and effect as the obligations of a principal and not of
a guarantor or surety.  Any delegation of
duties hereunder or any assumption of the same shall be effective only as
between Customer and Manager.

 

4

 

4.5           Use of Aircraft; Maintenance; Modifications;
Security.

 

(a)   Customer will operate the Aircraft under and
in compliance with Part 91 of the FARs. 
Except as otherwise expressly permitted in Section 4.4 above,,
Customer shall not operate or permit the Aircraft to be operated for air taxi
operations or otherwise under Part 135 of the FARs.  The Aircraft at all times will be operated by
duly qualified pilots having satisfied all requirements established and
specified by the FAA, the Transportation Security Administration, any other
applicable governmental authority and the insurance policies required under
this Agreement.

 

(b)   Customer will operate the Aircraft in a
careful and proper manner in compliance with all Applicable Standards,
including, without limitation, its operation, maintenance and security.  The Aircraft shall not be operated, used or
located outside the continental United States, except that it may be flown
temporarily to any country in the world for any purpose expressly permitted under
this Agreement.  Notwithstanding the foregoing,
the Aircraft shall not be flown, operated, used or located in, to or over any
such country or area (temporarily or otherwise), (i) that is excluded from the
insurance required hereunder (or specifically not covered by such insurance),
(ii) with which the United States does not maintain favorable diplomatic
relations, (iii) in any area of recognized or threatened hostilities, or (iv)
in violation of this Agreement or any Applicable Standards, including any U.S.
law or United Nations Security Council Directive.  Customer shall implement all security
measures required by any governmental authority, or by any insurance policies
or that are necessary or appropriate for the proper protection of the Aircraft
(whether on the ground or in flight) against theft, vandalism, hijacking,
destruction, bombing, terrorism or similar acts.

 

(c)   Customer will, at its own expense, (i)
maintain, inspect, service, repair, overhaul and test the Airframe, each
Engine, any APU and each Part in accordance with Applicable Standards; (ii)
make any alteration or modification to the Aircraft that may at any time be
required to comply with Applicable Standards, to cause the Aircraft to remain
airworthy or to maintain the Aircraft’s airworthiness certification; (iii)
furnish all parts, replacements, mechanisms, devices and servicing required
therefor so that the condition and operating efficiency of the applicable
Airframe, Engine, APU or Part will at all times be no less than its condition
and operating efficiency as and when delivered to Customer, ordinary wear and
tear from proper use alone excepted; (iv) promptly replace all Parts that
become worn out, lost, stolen, taken, destroyed, damaged beyond repair or
permanently rendered or declared unfit for use for any reason whatsoever; (v)
maintain (in English) all Records in accordance with Applicable Standards.  All repairs, parts, replacements, mechanisms
and devices so furnished shall immediately, without further act, become part of
the Aircraft and subject to the security interest created by this
Agreement.  All maintenance procedures
shall be performed by properly trained, licensed, and certified maintenance
sources and maintenance personnel utilizing replacement parts approved by the
FAA and the manufacturer of the applicable Airframe, Engine, APU or Part.  Without limiting the foregoing, Customer
shall comply with all mandatory service bulletins and airworthiness directives
by causing compliance to such bulletins and/or directives to be completed
through corrective modification in lieu of operating manual restrictions.

 

(d)   Customer will not make or authorize any
improvement, change, addition or alteration to the Aircraft that will impair
the originally intended function or use of the Aircraft, diminish the value of
the Aircraft as it existed immediately prior thereto, or violate any Applicable
Standard; and any Part, mechanism, device or replacement added to the Aircraft
in connection therewith shall immediately, without further act, become part of
the Aircraft and subject to the security interest created by this Agreement.

 

4.6           Insurance.

 

(a)   Customer agrees to maintain at all times, at
its sole cost and expense, with insurers of recognized reputation and
responsibility satisfactory to Lender (but in no event having an A.M. Best or
comparable agency rating of less than “A-”):

 

(i)            (A) comprehensive aircraft liability
insurance against bodily injury or property damage claims including, without
limitation, contractual liability, premises damage, public liability, death and
property damage liability, public and passenger legal liability coverage in an
amount not less than $200,000,000.00

 

5

 

for
each single occurrence, and (B) personal injury liability in an amount not less
than $25,000,000.00 in the aggregate.

 

(ii)           (A) “all-risk” ground, taxiing, and flight
hull insurance on an agreed-value basis, covering the Aircraft, provided that
such insurance shall at all times be in an amount not less than the aggregate
unpaid principal amounts of the Notes (each such amount re-determined as of
each anniversary of the date hereof for the next succeeding year throughout the
term of this Agreement); and

 

(iii)          war risk and allied perils (including
confiscation, appropriation, terrorism and hijacking insurance) in the amounts
required in paragraphs (i) and (ii), as applicable, subject to liability war
and allied perils risks limit of $50,000,000.00 in the aggregate with respect
to non-passengers.

 

(b)   Any policies of insurance carried in
accordance with this Section 4.6 and any policies taken out in
substitution or replacement of any such policies shall (i) be endorsed to name
Lender as an additional insured as its interests may appear (but without
responsibility for premiums), (ii) provide, with respect to insurance carried
in accordance with Section 4.6(a)(ii) or with respect to the hull coverage
pursuant to (a)(iii) above, that any amount payable thereunder shall be paid
directly to Lender as sole loss payee and not to Lender and Customer jointly, (iii)
provide for thirty (30) days’ (seven (7) days’, or such other notice period as
specified in the insurance policy from time to time, in the case of war,
hijacking and allied perils) insurance prior written notice by such insurer of
cancellation, or material change (iv) include a severability of interest clause
providing that such policy shall operate in the same manner as if there were a
separate policy covering each insured, (v) waive any right of set-off against
Lender, and any rights of subrogation against Lender, (vi) provide that in
respect of the interests of Lender in such policies, that the insurance shall
not be invalidated by any action or inaction of Customer or any other Person
operating or in possession of the Aircraft, regardless of any breach or
violation of any warranties, declarations or conditions contained in such
policies by or binding upon Customer or any other Person operating or in
possession of the Aircraft, and (vii) be primary, not subject to any
co-insurance clause and shall be without right of contribution from any other
insurance carried by Lender. 
Notwithstanding clause (ii) of the preceding sentence, so long as no
Default has occurred and is continuing, and no Default, Event of Default or
Event of Loss with respect to the Aircraft has occurred, any amount payable to
Lender pursuant to clause (ii) above shall be paid if (A) $100,000.00, or more,
in the aggregate, to Lender and Customer, jointly, as their interests may
appear, and released by Lender to Customer or other appropriate Persons in
payment of the costs actually incurred with respect to repairs made to the
Aircraft so as to restore it to the operating condition required by this
Agreement, or shall be disbursed by Lender as otherwise required by this
Agreement, or (B) less than $100,000.00 in the aggregate, to Customer (and such
amounts shall be applied by Customer to pay the costs of such repairs).

 

(c)   All of the coverages required herein shall be
in full force and effect worldwide throughout any geographical areas to, in or
over which the Aircraft is operated.  All
hull insurance proceeds payable under the requisite policies shall be payable
in U.S. Dollars.

 

(d)   Annually on or before the anniversary of the
policy expiration date, Customer shall furnish to Lender evidence of insurance
coverage in form and substance satisfactory to Lender evidencing that Customer
has obtained the insurance coverages required herein for a twelve (12) month or
greater period commencing from and after such anniversary date.  In the event Customer shall fail to maintain
insurance as herein provided, Lender may, at its option, provide such
insurance, and Customer shall, upon demand, reimburse Lender for the cost
thereof, together with interest at the default rate of interest provided for in
the Notes from the date of payment through the date of reimbursement.

 

4.7           Event of Loss; Loaner Engines

 

(a)   Upon the occurrence of any Event of Loss with
respect to the Airframe and/or the Aircraft, Customer shall notify Lender of
any such Event of Loss within five (5) days of the date thereof.  Customer shall pay, on the earlier of (i)
sixty (60) days after the occurrence of such Event of Loss or (ii) receipt of
insurance proceeds, the following amounts: (a) the aggregate unpaid principal
amounts of the Notes, (b) interest accrued thereon to the date of prepayment,
and (c) the prepayment fee set forth in the Note and any

 

6

 

and
all other amounts then due hereunder or under the other Loan Documents.  Upon indefeasible payment in full of such
amounts and so long as no Event of Default has occurred and is continuing, the
Aircraft shall be released from the security interest of this Agreement, and
insurance proceeds received by Lender in excess of such amounts, if any, shall
be remitted to Customer.

 

(b)   Upon an Event of Loss with respect to any
Engine or APU under circumstances in which there has not occurred an Event of
Loss with respect to the Airframe, Customer shall, within sixty (60) days after
the occurrence of such Event of Loss, replace such Engine or APU, as
applicable, and grant to Lender a first priority security interest in a similar
or better engine or auxiliary power unit, as applicable.  Such engine or auxiliary power unit, as
applicable, shall be of the same make and model number as the Engine or APU
suffering the Event of Loss and shall be free and clear of all Liens and shall
have a value, utility and useful life at least equal to, and be in as good an
operating condition as, the Engine or APU suffering the Event of Loss, assuming
such Engine or APU was in the condition and repair required by the terms hereof
immediately prior to the occurrence of such Event of Loss.  Customer, at its own cost and expense, shall
furnish Lender with such documents to evidence such conveyance and make such
filings as Lender shall request to subject such engine or auxiliary power unit,
as applicable, to the lien of this Agreement. 
Each such replacement engine or auxiliary power unit, as applicable,
shall, after such conveyance be deemed an “Engine” or “APU” (as defined
herein), as applicable, and shall be deemed part of the same Aircraft as was
the Engine or APU replaced thereby.

 

(c)   In the event any Engine is damaged and is
being repaired, or is being inspected or overhauled, Customer, at its option,
may temporarily substitute another engine of the same make and model as the
Engine being repaired or overhauled (any such substitute engine being
hereinafter referred to as a “Loaner Engine”) during the period of such
repair or overhaul; provided no Event of Default or Default has occurred
and is continuing and (i) installation of the Loaner Engine is performed by a
maintenance facility certified by the FAA and manufacturer with respect to an
aircraft of this type, (ii) the Loaner Engine is removed, and the repaired or
overhauled original Engine is reinstalled on the Airframe promptly upon
completion of the repair or overhaul but in no event later than the earlier of
one hundred twenty (120) days after removal or the occurrence of an Event of
Default, and (iii) the Loaner Engine is free and clear of any Lien that might
impair Lender’s rights or interests in the Aircraft and is maintained in
accordance herewith

 

SECTION 5.           Security Interest; Power of Attorney;
Inspection.

 

5.1           Grant of Security Interest.  As
collateral security for the prompt and complete payment and performance as and
when due of all of the Obligations and in order to induce Lender to enter into
this Agreement and make the Loans to Customer in accordance with the terms
hereof, Customer hereby grants to Lender a first priority security interest in
and lien on, and collaterally assigns to Lender, all of Customer’s right, title
and interest in, to and under all of the following collateral (collectively,
the “Collateral”):  (i) the
Aircraft, (ii) the Airframe, (iii) each of the Engines, (iv) the Parts, (v) the
Records; (vi) all present and future Third Party Agreements; and (vii) all
Proceeds of the foregoing.  The foregoing
shall not be deemed in any way whatsoever as an agreement by Lender to permit
or allow Customer to enter into any Third Party Agreements, and Customer shall
only be allowed to enter into any of the foregoing in accordance with the terms
of this Agreement.  Notwithstanding
anything to the contrary contained herewith or otherwise, Lender does not by
virtue of this Agreement or otherwise assume any obligations, liabilities
and/or duties of any kind whatsoever of Customer (and/or of any other Person)
under, or with respect to, the Collateral, and Lender shall not be responsible
in any way whatsoever for the performance of any obligations, liabilities
and/or duties of any kind whatsoever by Customer (and/or by any other Person)
in connection with, relating to, or arising under, the Collateral.

 

5.2           Lender Appointed as Attorney-in-Fact. 
Customer hereby irrevocably constitutes and appoints Lender and any
employee, officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full power and authority in the place and
stead of Customer and in the name of Customer or in its own name, from time to
time in Lender’s sole discretion, for the purpose of carrying out the terms of
this Agreement, and Customer hereby further irrevocably authorizes Lender and
any employee, officer or agent thereof to take any and all appropriate action
and to make, execute, deliver, file and/or record any and all instruments or
documents (including, without limitation, any FAA filings, UCC financing

 

7

 

statements
or UCC amendments or any control agreements) that may be necessary or desirable
to accomplish the purposes of this Agreement or any of the other Loan
Documents.  This appointment is coupled
with an interest, is irrevocable and shall terminate only upon payment and
performance in full of all of the Obligations. 
Without limiting the generality of the foregoing, Customer hereby
further agrees that (i) Lender shall have authority, during the continuance of
an Event of Default, to endorse Customer’s name on any checks, notes, drafts or
any other payments or instrument relating to the Collateral that come into
Lender’s possession or control and to settle, adjust, receive payment and make
claim or proof of loss and (ii) Customer shall not file or record any
corrective or termination statements with respect to any UCC financing
statements, amendments or assignments or control agreements filed or recorded
by or for the benefit of Lender with respect to any of the Collateral without
Lender’s prior written consent.  The
powers conferred on Lender hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such
powers.  Lender shall be accountable only
for amounts that it actually receives as a result of the exercise of such
powers and neither it nor any of its officers, directors, employees or agents
shall be responsible to Customer for any act or failure to act.

 

5.3           Inspection.  Lender or its authorized
representatives shall have the right, but not the duty, to inspect the
Aircraft, any part thereof and/or the Records, at any reasonable time and from
time to time, wherever located, upon reasonable prior notice to Customer;
except that no advance notice shall be necessary prior to any inspection conducted,
and such inspection may be conducted at any time, after the occurrence of a
Default or an Event of Default.  Upon
request of Lender, Customer shall promptly provide Lender with notice of the
location of the Aircraft and with all Records. 
Customer shall be responsible for the cost of any inspection conducted
after the occurrence of a Default or an Event of Default and shall pay Lender
such amount promptly upon demand.

 

SECTION 6.  Events of Default.  The term “Event of Default”, wherever
used herein, shall mean:

 

(a)        Customer shall fail to pay any Obligation
within ten (10) days after the same shall become due and payable (whether at
the stated maturity, by acceleration, upon demand or otherwise); or

 

(b)        Customer shall default in the payment or performance
of any indebtedness, liability or obligation to Lender or any Affiliate of
Lender under any note, security agreement, lease, title retention or
conditional sales agreement or any other instrument or agreement; or

 

(c)        Customer shall be in default in any payment
on any obligation for borrowed money to any Person other than Lender, the
amount of which, whether accelerated or otherwise, is in excess of
$2,500,000.00, and any applicable grace period with respect thereto has
expired; or

 

(d)        Customer shall fail to keep in full force and
effect any of the insurance coverages required under this Agreement, or shall
operate the Aircraft at a time when, or at a place in which, such insurance
shall not be in effect; or

 

(e)        Customer shall fail to maintain, use or
operate the Aircraft in compliance with this Agreement; or

 

(f)         Customer shall (except as expressly permitted
by the provisions of this Agreement) sell, assign, charter, lease, timeshare,
pool, interchange, convey, mortgage, exchange or otherwise transfer or
relinquish possession of or dispose of, or create, assume or suffer to exist
any Liens (other than Permitted Liens) on or with respect to, the Aircraft, any
part thereof or any of the other Collateral, or Customer’s interest therein, or
attempt or offer to do any of the foregoing, or permit the same to occur; or

 

(g)        Customer shall fail to perform or observe any
agreement (other than those specifically referred to in this Section 6)
required to be performed or observed by it under this Agreement or in any of
the other Loan Documents, and such failure shall continue uncured for thirty
(30) days after written notice thereof from Lender to Customer (but such notice
and cure period will not be applicable unless such breach is curable by
practical means within such notice period); or

 

8

 

(h)        any representation or warranty made by
Customer in this Agreement or in any of the other Loan Documents or in any
agreement, document or certificate delivered by Customer in connection herewith
or pursuant hereto shall prove to have been incorrect, misleading, or
inaccurate in any material respect when such representation or warranty was
made or given (or, if a continuing representation or warranty, at any time); or

 

(i)         Customer shall (i) generally fail to pay its
debts as they became due, admit its inability to pay its debts or obligations
generally as they fall due, or shall file a voluntary petition in bankruptcy or
a voluntary petition or an answer seeking reorganization in a proceeding under
any bankruptcy laws or other insolvency laws, or an answer admitting the
material allegations of such a petition filed against Customer in any such
proceeding; or (ii) by voluntary petition, answer or consent, seek relief under
the provisions of any other bankruptcy or other insolvency or similar law
providing for the reorganization or liquidation of corporations, or providing
for an assignment for the benefit of creditors, or providing for an agreement,
composition, extension or adjustment with its creditors; or

 

(j)         a petition against Customer in a proceeding
under applicable bankruptcy laws or other insolvency laws, as now or hereafter
in effect, shall be filed and shall not be withdrawn or dismissed within sixty
(60) days thereafter, or if, under the provisions of any law providing for
reorganization or liquidation of corporations that may apply to Customer, any
court of competent jurisdiction shall assume jurisdiction, custody or control
of Customer or of any substantial part of its property and such jurisdiction,
custody or control shall remain in force unrelinquished, unstayed or
unterminated for a period of sixty (60) days after the filing date; or

 

(k)        any judgment, attachment or garnishment
against Customer with respect to aggregate claims in excess of $2,500,000.00
shall remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed
for a period of thirty (30) days; or

 

(l)         the occurrence of any of the following events
without Lender’s prior written consent: (A) Customer enters into any
transaction of merger, consolidation or reorganization, (unless Customer is the
surviving entity and has the same or better financial condition as it had at
the inception of this Agreement); (B) Customer
ceases to do business as a going concern, liquidates, or dissolves, or sells,
transfers or otherwise disposes of all or substantially all of its assets or
property; (C) Customer becomes the subject of, or engages in, a leveraged
buy-out; (D) Customer changes the form of organization of its business; (E) if
Customer is privately owned as of the Closing Date, there is any substantial
change in the ownership or control of the capital stock or membership interests
of Customer such that the holder(s) that own or control fifty percent (50%) or
more of such equity interests as of the Initial Closing Date no longer do so;
or (F) if Customer is publicly held as of the Initial Closing Date, any change
so that Customer is no longer subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended, or no longer registered under
Section 12 of the Securities Act of 1933, as amended; or

 

SECTION 7. 
Remedies.

 

7.1           Termination of Commitment.  If
an Event of Default specified in Sections 6 (i) or (j) above shall occur, then,
and in any such event, the Obligations (including, without limitation, the
aggregate unpaid principal amounts of the Notes, together with all accrued but
unpaid interest thereon, any prepayment fees and all other amounts due and
payable under or with respect to the Loan Documents) shall become immediately
due and payable without any notice or other action by Lender.  If any other Event of Default shall occur,
then, and in any such event, Lender, in its sole discretion, may declare the
Obligations to be forthwith due and payable, whereupon the Obligations
(including, without limitation, the aggregate unpaid principal amounts of the
Notes, together with all accrued but unpaid interest thereon, any prepayment
fees and all other amounts due and payable under or with respect to the Loan
Documents), shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Loan Documents to the
contrary notwithstanding.  During the
continuance of any Event of Default hereunder, Lender shall have the right to
pursue and enforce any of its rights and remedies under this Section 7.

 

9

 

7.2           Additional Remedies.  If
an Event of Default occurs, in addition to all other rights and remedies
granted to it in this Agreement and in the other Loan Documents, Lender may
exercise all rights and remedies of a secured party under the UCC or under any
other Applicable Law.  Without limiting
the generality of the foregoing, Customer agrees that upon the occurrence of an
Event of Default, Lender, without demand or notice of any kind (except the
notice specified below of time and place of public or private sale) to or upon
Customer or any other Person (all and each of which demands and/or notices are
hereby expressly waived), in its sole discretion, may exercise any one or more
of the following remedies: (i) proceed at law or in equity, to enforce
specifically Customer’s performance or to recover damages; (ii) terminate the
right of any third party to use of the Aircraft; (iii) enter the premises where
the Aircraft is located and take immediate possession of and remove (or disable
in place) the Aircraft (and/or the APU, any Engines and Parts then unattached
to the Aircraft) by self-help, summary proceedings or otherwise without
liability; (iv) use Customer’s premises for storage without liability; (v)
sell, lease, assign or otherwise dispose of the Aircraft (or any Engine, APU or
Part) or any of the other Collateral, whether or not in Lender’s possession, in
one or more parcels, at public or private sale or sales, at such prices as
Lender may deem best, or keep the Aircraft idle; (vi) apply any deposit, other
cash collateral or any proceeds of any Collateral to reduce any amounts due to
Lender; and (vii)  collect, receive,
appropriate and realize upon the Collateral, or any part thereof.  Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such
private sale, or sales to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in Customer, which right or
equity of redemption is hereby expressly released.  Customer further agrees, at Lender’s request,
to assemble the Collateral, make it available to Lender at such places as
Lender shall reasonably select, whether at Customer’s premises or
elsewhere.  Lender shall apply the net
proceeds of any such realization (after deducting all reasonable costs and
expenses of every kind incurred in connection therewith) to the payment in
whole or in part of the Obligations, in such order and manner as Lender may
elect.  To the extent permitted by
applicable law, Customer waives all claims, damages and demands against Lender
arising out of the repossession, retention, sale or other disposition of the
Collateral.  Customer agrees that Lender
need not give more than ten (10) days’ notice of the time and place of any
public sale or of the time after which a private sale may take place and that
such notice is reasonable notification of such matters.  Customer shall be liable for any deficiency
if the proceeds of any sale or disposition of the Collateral are insufficient
to pay all amounts to which Lender is entitled hereunder.

 

7.3           No Waiver: Cumulative Remedies.  No
right or remedy is exclusive.  Each may
be used successively and cumulatively and in addition to any other right or
remedy referred to above or otherwise available to Lender at law or in equity,
including, such rights and/or remedies as are provided for in the UCC, but in
no event shall Lender be entitled to recover any amount in excess of the
maximum amount recoverable under applicable law with respect to any Event of
Default.  No express or implied waiver by
Lender of any Default or Event of Default hereunder shall in any way be, or be
construed to be, a waiver of any future or subsequent Default or Event of
Default.  The failure or delay of Lender
in exercising any rights granted it hereunder upon the occurrence of any of the
contingencies set forth herein shall not constitute a waiver of any such right
upon the continuation or reoccurrence of any such contingencies or similar
contingencies, and any single or partial exercise of any particular right by
Lender shall not exhaust the same or constitute a waiver of any other right
provided for or otherwise referred to herein. 
After the occurrence of any Default or Event of Default, the acceptance
by Lender of any installment of principal and/or interest or of any other sum
owing hereunder or under the other Loan Documents shall not constitute a waiver
of such Default or Event of Default, regardless of Lender’s knowledge or lack
of knowledge thereof at the time of acceptance of any such payment and shall
not constitute a reinstatement of this Agreement if Lender has sent Customer a
notice of default, unless Lender shall have agreed in writing to reinstate this
Agreement and waive the Default or Event of Default.  To the extent permitted by Applicable Law,
Customer waives any rights now or hereafter conferred by statute or otherwise
that limit or modify any of Lender’s rights or remedies under this Agreement.

 

10

 

SECTION 8.           Miscellaneous.

 

8.1           Notices.  All communications and notices
provided for herein shall be in writing and shall be deemed to have been duly
given or made (i) upon hand delivery, or (ii) upon delivery by an overnight
delivery service, or (iii) two (2) Business Days after being deposited in the U.S.
mail, return receipt requested, first class postage prepaid, and addressed to
Lender or Customer at their respective addresses set forth under their
signatures hereto or such other address as either party may hereafter designate
by written notice to the other, or (iv) when sent by telecopy (with customary
confirmation of receipt of such telecopy) on the Business Day when sent or upon
the next Business Day if sent on other than a Business Day.

 

8.2           Expenses and Fees; Indemnity; Performance of
Customer’s Obligations.

 

(a)        Customer shall pay to Lender upon demand all
fees, costs and expenses incurred by or on behalf of Lender at any time in
connection with (i) the negotiation, preparation, execution, delivery and
enforcement of this Agreement and the other Loan Documents and the collection
of the Obligations, (ii) the creation, preservation and protection of the
Collateral and Lender’s first priority and only security interest therein, or
(iii) Customer’s exercise of any right granted under, or any amendment or other
modification to any of, the Loan Documents. 
Such fees, costs and expenses shall include, without limitation,
appraisal and inspection fees, the fees and expenses of FAA Counsel and of
Lender’s counsel, consultants and brokers, UCC, FAA and other applicable title
and lien searches, and costs and expenses relating to recovery, repossession,
storage, insurance, transportation, repair, refurbishment, advertising, sale
and other disposition of the Aircraft. 
Customer shall also pay all fees (including license, filing and
registration fees), taxes, assessments and other charges of whatever kind or
nature that may be payable or determined to be payable in connection with the
execution, delivery, recording or performance of this Agreement or any of the other
Loan Documents or any modification thereof.

 

(b)        Customer hereby further agrees, whether or
not the transactions contemplated by this Agreement shall be consummated, to
pay, indemnify, and hold Lender and its affiliates and all of the Lender’s and
such affiliates’ respective directors, shareholders, officers, employees,
agents, predecessors, attorneys-in-fact, lawyers, successors and assigns
(Lender, its affiliates and all of such other parties and entities sometimes
hereinafter collectively, the “Indemnified Parties”) harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, out-of pocket costs, expenses or disbursements of
any kind or nature whatsoever arising with respect to or in connection with the
ownership, lease, possession, use, sale or other disposition of the Aircraft or
the execution, delivery, enforcement, performance or administration of this
Agreement and the Note (the foregoing being referred to as the “indemnified
liabilities”), provided, that Customer shall have no obligations
thereunder with respect to indemnified liabilities arising from the gross
negligence or willful misconduct of Lender.

 

(c)        If Customer fails to perform or comply with
any of its agreements contained herein or in the other Loan Documents,
including, without limitation, its obligations to keep the Aircraft free of
Liens, comply with Applicable Standards, or obtain the requisite insurance
coverages, Lender shall have the right, but shall not be obligated, to effect
such performance or compliance, with such agreement.  Any expenses of Lender incurred in connection
with effecting such performance or compliance, together with interest thereon
at the default rate of interest provided for in the Notes from the date
incurred until reimbursed, shall be payable by Customer to Lender promptly on
demand and until such payment shall constitute part of the Obligations secured
hereby.  Any such action shall not be a
cure or waiver of any Default or Event of Default hereunder.

 

8.3           Entire Agreement; Modifications.  This
Agreement and the other Loan Documents constitute the entire understanding and
agreement of the parties hereto with respect to the matters contained herein
and shall completely and fully supersede all other prior agreements (including
any proposal letter, commitment letter, and/or term sheet), both written and
oral, between Lender and Customer relating to the Obligations.  Neither Lender nor Customer shall hereafter have
any rights under such prior agreements but shall look solely to this Agreement
and the other Loan Documents for the definition and determination of all of
their respective rights, liabilities and responsibilities relating to the
Obligations.  Neither this Agreement, nor
any terms hereof, may be changed, waived, discharged or

 

11

 

terminated
orally, but only by an instrument in writing signed by the party against which
enforcement of a change, waiver, discharge or termination is sought.

 

8.4           Construction of this Agreement and Related
Matters.  All representations and warranties made in
this Agreement and in the other Loan Documents shall survive the execution and
delivery of this Agreement and the making of the Loan hereunder.  Customer’s obligations contained in
Section 8.2 hereof shall survive the payment and performance of the
Obligations and the termination of this Agreement.  This Agreement may be executed by the parties
hereto on any number of separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument. 
The headings of the Sections hereof are for convenience only, are not
part of this Agreement and shall not be deemed to affect the meaning or
construction of any of the provisions hereof. 
Time is of the essence in the payment and performance of all of Customer’s
obligations under this Agreement.  Any
provision of this Agreement that may be determined to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective in such jurisdiction to the extent thereof without invalidating the
remaining provisions of this Agreement, which shall remain in full force and
effect.

 

8.5           Lender’s Assignment. 
Lender, may at any time, with notice to Customer, grant a security
interest in, sell, assign or otherwise transfer (an “Assignment”) all or
any part of its interest in this Agreement and the other Loan Documents or any
amount due or to become due hereunder or thereunder, and Customer shall perform
all of its obligations under the Loan Documents, to the extent so transferred,
for the benefit of the beneficiary of such Assignment (such beneficiary,
including any successors and assigns, an “Assignee”).  Upon receipt of Lender’s notice of an
Assignment, Customer may, within ten (10) Business Days after receipt of such
notice, elect to refinance the Loans with another financial institution.  If Customer so elects, such refinancing must
be consummated within sixty (60) days after receipt of Lender’s notice of an
Assignment.  Customer hereby waives any
right to assert, and agrees not to assert, against any Assignee any abatement,
reduction, defense, setoff, recoupment, claim or counterclaim that Customer may
have against Lender.  Upon the express
assumption by such Assignee of Lender’s obligations hereunder, Lender shall be
relieved of any such assumed obligations. 
If so directed in writing, Customer shall pay all amounts due or to
become due under the Loan Documents directly to the Assignee or any other party
designated in writing by Lender. 
Customer acknowledges and agrees that Lender’s right to enter into an
Assignment is essential to Lender and, accordingly, waives any restrictions
under Applicable Law with respect to an Assignment and any related
remedies.  Upon the request of Lender or
any Assignee, Customer also agrees (a) to promptly execute and deliver to
Lender or to such Assignee an acknowledgment of assignment in form and
substance satisfactory to the requesting party, an insurance certificate naming
Assignee as additional insured and loss payee and otherwise evidencing the
insurance coverages required hereby and such other documents and assurances
reasonably requested by Lender or Assignee, and (b) to comply with the
reasonable requirements of any such Assignee in order to perfect such Assignee’s
security interest and lien on the Collateral.

 

8.6           Jurisdiction. 
Customer hereby irrevocably consents and agrees that any legal action,
suit or proceeding arising out of or in any way in connection with this
Agreement or any of the other Loan Documents may be instituted or brought in
the courts of the State of New York or in the United States Courts for the
Southern District of New York, as Lender may elect or in any other state or
Federal court as Lender shall deem appropriate, and by execution and delivery
of this Agreement, Customer hereby irrevocably accepts and submits to, for
itself and in respect of its property, generally and unconditionally, the
non-exclusive jurisdiction of any such court, and to all proceedings in such
courts.  Customer irrevocably consents to
service of any summons and/or legal process by first class, certified United
States air mail, postage prepaid, to Customer at the address set forth below
their signatures hereto, such method of service to constitute, in every
respect, sufficient and effective service of process in any such legal action
or proceeding.  Nothing in this Agreement
or in any of the other Loan Documents shall affect the right to service of
process in any other manner permitted by law or limit the right of Lender to
bring actions, suits or proceedings in the courts of any other
jurisdiction.  Customer further agrees
that final judgment against it in any such legal action, suit or proceeding
shall be conclusive and may be enforced in any other jurisdiction, within or
outside the United States of America, by suit on the judgment, a

 

12

 

certified
or exemplified copy of which shall be conclusive evidence of the fact and the
amount of the liability.

 

8.7           Governing Law; Binding Effect.  This
Agreement shall be construed and enforced in accordance with, and the rights of
both parties shall be governed by, the internal laws of the State of New York
(without regard to the conflict of laws principles of such state, except as to
the effect of Title 14, Section 5-1401 of the New York General Obligations
Law), including all matters of construction, validity, and performance.  This Agreement shall be binding upon and
inure to the benefit of Customer and Lender and their respective successors and
assigns, except that Customer may not assign or transfer its rights hereunder
or any interest herein.

 

8.8           Jury Waiver.  CUSTOMER HEREBY KNOWINGLY AND
FREELY WAIVES ITS RIGHTS TO A JURY TRIAL IN ANY ACTION, SUIT OR PROCEEDING
RELATING TO, ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR
ANY OF THE OTHER LOAN DOCUMENTS.

 

[SIGNATURES ON NEXT PAGE]

 

13

 

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

 

 

	
  FLEET CAPITAL CORPORATION

  	
  WILLIS LEASE FINANCE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Deborah
  M. Hayes

  	
   

  	
  By:

  	
  /s/ Monica
  J. Burke

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Deborah M. Hayes

  	
  Name:

  	
  Monica J. Burke

  
	
   

  	
   

  	
  Executive Vice President

  
	
  Title:

  	
  Vice President

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
  Notice Address:

  	
  Notice Address:

  
	
   

  	
   

  
	
  One Financial Plaza, 5th Floor

  	
  2320 Marinship Way, Suite 300

  
	
  Providence, Rhode Island  02903

  	
  Sausalito, CA 94965

  
	
  Attention: Director of Aircraft Operations

  	
  Attn: General Counsel

  
	
  Telephone:  800-238-3737

  	
  Telephone:415-331-5281

  
	
  Facsimile:   401-278-7941

  	
  Facsimile: 415-331-5167

  
								

 

14

 

ANNEX A

 

DEFINITIONS

 

The
following terms shall have the following meanings for all purposes of this
Agreement:

 

Acceptance Certificate shall mean Annex C hereto, which shall be executed and delivered to
Lender as of the Initial Closing Date.

 

Affiliate
shall mean, with respect to either Lender or Customer, as applicable, any
affiliated Person controlling, controlled by or under common control with such
party, and for this purpose, ‘control’ means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of any such Person, whether through the legal or beneficial ownership
of voting securities, by contract or otherwise.

 

Aircraft
shall mean (i) the Airframe, (ii) the Engines, (iii) any APU, and (iv) the
Records, and all accessories, additions, accessions, alterations,
modifications, Parts, repairs and attachments now or hereafter affixed thereto
or used in connection therewith, and all replacements, substitutions and
exchanges (including trade-ins) for any of the foregoing.

 

Airframe
shall mean (i) the Aircraft described in Annex C hereto and shall not
include the Engines or any APU, and (ii) any and all Parts from time to time
incorporated in, installed on or attached to the Aircraft and any and all Parts
removed therefrom so long as Lender shall retain an interest therein in
accordance with the applicable terms of this Agreement after removal from the
Aircraft.

 

Applicable Law
shall mean all applicable laws, statutes, treaties, conventions, judgments,
decrees, injunctions, writs and orders of any court, governmental agency or
authority and rules, regulations, orders, directives, licenses and permits of
any governmental body, instrumentality, agency or authority as amended and
revised, and any judicial or administrative interpretation, of any of the same,
including the airworthiness certificate issued with respect to the Aircraft,
all FARs, airworthiness directives, and/or any of the same relating to noise,
the environment, national security, public safety, exports or imports or
contraband.

 

Applicable Standards shall mean (i) Applicable Law, (ii) the requirements of the insurance
policies required hereunder, and (iii), with respect to the Airframe or any
Engine, APU or Part, all compliance requirements set forth in or under (A) all
maintenance manuals initially furnished with respect thereto, including any
subsequent amendments or supplements to such manuals issued by the manufacturer
or supplier thereof from time to time, (B) all mandatory service bulletins issued, supplied, or available by or through the
applicable manufacturer with respect thereto, (C) all applicable airworthiness
directives issued by the FAA or similar regulatory agency having jurisdictional
authority, (D) all conditions to the enforcement of any warranties pertaining
thereto, (E) Customer’s FAA approved maintenance program with respect to the
Airframe, the Engines, any APU or Part.

 

APU shall
mean (i) any auxiliary power unit described in Annex C hereto and
installed on the Airframe as of the Initial Closing Date, whether or not
hereafter installed on the Airframe or any other airframe from time to time;
(ii) any auxiliary power unit that may from time to time be substituted,
pursuant to the applicable terms of this Agreement, for an APU; and (iii) any
and all Parts incorporated in or installed on or attached to such auxiliary
power unit or any and all Parts removed therefrom so long as Lender shall
retain an interest therein in accordance with the applicable terms of this
Agreement after such removal.

 

Business Day
shall mean any day other than a Saturday, Sunday or other day on which banks
located in Providence, Rhode Island or San Francisco, California are closed or
are authorized to close.

 

Collateral
shall have the meaning set forth in Section 5.1 hereof.

 

15

 

Default shall
mean an event or circumstance that, after the giving of notice or lapse of
time, or both, would become an Event of Default.

 

Engine shall
mean (i) each of the engines and described in Annex C hereto and
installed on the Airframe as of the Initial Closing Date, whether or not
hereafter installed on the Airframe or any other airframe from time to time;
(ii) any engine that may from time to time be substituted, pursuant to the
applicable terms of this Agreement, for an Engine; and (iii) any and all Parts
incorporated in or installed on or attached to such engine or any and all Parts
removed therefrom so long as Lender shall retain an interest therein in
accordance with the applicable terms of this Agreement after such removal.

 

Event of Default
shall have the meaning set forth in Section 6 hereof.

 

Event of Loss
with respect to the Aircraft, the Airframe, any Engine or any APU shall mean
any of the following events: (i) loss of such property or the use thereof due
to theft, disappearance, destruction, damage beyond repair or rendition of such
property permanently unfit for normal use for any reason whatsoever; (ii) any
damage to such property that results in an insurance settlement with respect to
such property on the basis of a total loss or constructive total loss; (iii)
the condemnation, confiscation or seizure of, or requisition of title to or use
of, such property by the act of any government (foreign or domestic) or of any
state or local authority or any instrumentality or agency of the foregoing (“Requisition
of Use”); (iv) as a result of any rule, regulation, order or other action
by any government (foreign or domestic) or governmental body (including,
without limitation, the FAA or any similar foreign governmental body) having
jurisdiction, the use of such property shall have been prohibited, or such
property shall have been declared unfit for use, for a period of six (6) consecutive
months, unless Customer, prior to the expiration of such six-month period,
shall have undertaken and, in the opinion of Lender, shall be diligently
carrying forward all steps that are necessary or desirable to permit the normal
use of such property by Customer or, in any event, if use shall have been
prohibited, or such property shall have been declared unfit for use, for a
period of twelve (12) consecutive months; (v) with respect to an Engine or an
APU, the removal thereof from the Airframe for a period of six (6) consecutive
months or longer, whether or not such Engine or APU is operational; or (vi) an
Engine or an APU is returned to the manufacturer thereof, other than for
modification in the event of patent infringement or for repair or replacement
(any such return being herein referred to as a “Return to Manufacturer”).  The date of such Event of Loss shall be the
date of such theft, disappearance, destruction, damage, Requisition of Use,
prohibition, unfitness for use for the stated period, removal for the stated
period or Return to Manufacturer.

 

FAA shall
mean the United States Federal Aviation Administration and/or the Administrator
of the Federal Aviation Administration and the Department of Transportation, or
any Person, governmental department, bureau, authority, commission or agency
succeeding the functions of any of the foregoing, including, where applicable,
the Transportation Security Administration.

 

FAA Counsel
shall mean such counsel as Lender may designate from time to time to assist it
with FAA matters.

 

FARs shall
mean the Federal Aviation Regulations, any supplemental Federal Aviation
Regulations and all successor regulations thereto.

 

Federal Aviation Act shall mean Subtitle VII of Title 49 of the United States Code, as
amended and recodified.

 

Final Closing Date shall have the meaning set forth in Section 1.2 hereof.

 

GAAP shall
mean generally accepted accounting principles consistently applied.

 

Impositions
shall have the meaning set forth in Section 4.3 hereof.

 

16

 

Liens shall
mean all liens, charges, security interests, leaseholds and encumbrances of
every nature and description whatever, including, without limitation, and
rights of third parties under Third Party Agreements.

 

Loan Documents
shall mean this Agreement, the Tranche 1 Note, the Tranche 2 Note and any other
documents, agreements or instruments securing, evidencing or relating to the
Obligations.

 

Loans shall
mean the Tranche 1 Loan and the Tranche 2 Loan.

 

Material Damage
shall mean any damage: (a) required to be reported pursuant to any governmental
reporting requirement, (b) with respect to which an insurance claim is being
made, or (c) requiring that the Aircraft or any Engine be taken out of service
for more than one (1) day to repair.

 

Obligations
shall mean: (i) the unpaid principal amount of, and accrued interest on, the
Note; and (ii) all other indebtedness, obligations or liabilities of Customer
owing to Lender, or to any Affiliate of Lender, of every kind and description,
direct or indirect, secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or performance, now
existing or hereafter arising, including, but not limited to, all indebtedness,
obligations or liabilities under, arising out of or in connection with this
Agreement, the Note or any of the other Loan Documents.

 

Parts shall
mean all appliances, avionics, parts, instruments, appurtenances, accessories,
furnishings and other equipment of whatever nature (other than complete
Engines) that may from time to time be incorporated or installed in or attached
to the Airframe, any Engine or any APU, and any and all such appliances,
avionics, parts, instruments, appurtenances, accessories, furnishings and other
equipment removed therefrom so long as Lender shall retain a security interest
therein in accordance with the applicable terms of this Agreement after such
removal.

 

Permitted Liens
shall mean (a) the respective rights of others under Third Party Agreements, if
any, to the extent expressly provided and permitted by the terms of
Section 4.4 of this Agreement, (b) Liens for taxes either not yet due or
being contested by Customer in good faith with due diligence and by appropriate
proceedings, so long as such proceedings do not involve, in Lender’s sole
judgment, any material danger of the sale, foreclosure, transfer, forfeiture or
loss of the Collateral, or title thereto, the rights of Lender hereunder or
Lender’s interest therein, and for the payment of which taxes adequate reserves
shall have been established in accordance with GAAP or other appropriate
provisions satisfactory to Lender have been made, and (c) inchoate materialmen’s,
mechanic’s, workmen’s, repairmen’s, employee’s, or other like Liens arising in
the ordinary course of business of Customer for sums not yet delinquent or
being contested in good faith with due diligence and by appropriate
proceedings, so long as such proceedings do not involve, in Lender’s sole
judgment, any material danger of the sale, foreclosure, transfer, forfeiture or
loss of the Collateral, or title thereto, the rights of Lender hereunder or
Lender’s interest therein, and for the payment of which sums adequate reserves
shall have been established in accordance with GAAP or other appropriate
provisions satisfactory to Lender have been made.

 

Person shall
mean any individual, partnership, corporation, limited liability company,
trust, association, joint venture, joint stock company, or non-incorporated
organization or government or any department or agency thereof, or any other
entity of any kind whatsoever.

 

Proceeds
shall have the meaning assigned to it in the UCC, and in any event, shall
include, but not be limited to, all goods, accounts, chattel paper, documents,
instruments, general intangibles, investment property, deposit accounts, letter
of credit rights, investment property, deposit accounts and supporting
obligations (to the extent any of the foregoing terms are defined in the UCC,
any such foregoing terms shall have the meanings given to the same in the UCC),
and all of Customer’s rights in and to any of the foregoing, and any and all
rents, payments, charter hire and other amounts of any kind whatsoever due or
payable under or in connection with the Aircraft, including, without
limitation, (A) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to Customer from time to time with respect to the Aircraft,
(B) any and all payments (in any form whatsoever) made or due and payable to
Customer from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of the Aircraft by any governmental body,
authority, bureau or agency or any other Person (whether or not

 

17

 

acting
under color of governmental authority), and (C) any and all other rents or
profits or other amounts from time to time paid or payable under or in
connection with the Aircraft.

 

Records shall
mean any and all logs, manuals, certificates and data and inspection,
modification, maintenance, engineering, technical, and overhaul records
(whether in written or electronic form) with respect to the Aircraft,
including, without limitation, all records (i) required to be maintained by the
FAA or any other governmental agency or authority having jurisdiction with
respect to the Aircraft or by any manufacturer or supplier of the Aircraft (or
any part thereof) with respect to the enforcement of warranties or otherwise,
all records (ii) evidencing Customer’s compliance with Applicable Standards.

 

Request for Advance shall mean, with respect to the Tranche 2 Loan, a Request for Advance
executed by Customer, in substantially the form and substance set forth as
Exhibit A hereto.

 

Third Party Agreements shall mean any and all leases, subleases, interchange agreements,
charter agreements, pooling agreements, timeshare agreements and any other
similar agreements or arrangements of any kind whatsoever relating to the
Aircraft or any part thereof.

 

Tranche 1 Note
shall mean that certain Promissory Note dated as of the Initial Closing Date,
in the amount of the Tranche 1 Loan as set forth in Annex B attached
hereto.

 

Tranche 2 Note
shall mean that certain Promissory Note dated as of the Final Closing Date,
having a term which shall be co-terminous with the then remaining term of the
Tranche 1 Note, and in the amount of the Tranche 1 Loan as set forth in Annex
b attached hereto.

 

UCC shall
mean the applicable Uniform Commercial Code as then in effect in the applicable
jurisdiction.

 

18

 

ANNEX B

 

LOAN AMOUNT AND CUSTOMER
INFORMATION

 

 

	
  Customer’s Chief Executive Offices

  	
   

  	
   

  
	
  And Principal Place of Business:

  	
   

  	
  2320 Marinship Way, Suite 300

  
	
   

  	
   

  	
  Sausalito, California 94965

  
	
   

  	
   

  	
   

  
	
  Customer’s form of Organization:

  	
   

  	
  corporation

  
	
   

  	
   

  	
   

  
	
  State of Organization:

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
  Additional State(s) in which

  	
   

  	
   

  
	
  Customer is qualified:

  	
   

  	
  California

  
	
   

  	
   

  	
   

  
	
  State issued Organizational

  	
   

  	
   

  
	
  Identification Number:

  	
   

  	
  2870540

  
	
   

  	
   

  	
   

  
	
  Federal Taxpayer ID Number:

  	
   

  	
  68-0070656

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Principal Amount of the Tranche 1 Loan:

  	
   

  	
  $6,450,000.00

  
	
   

  	
   

  	
   

  
	
  Principal Amount of the Tranche 2 Loan:

  	
   

  	
  Lesser of (i) the actual costs of
  refurbishment and upgrades, or (ii) $550,000.00

  

 

19

 

ANNEX C

 

CERTIFICATE OF ACCEPTANCE

 

In
accordance with the Loan and Aircraft Security Agreement (S/N 3004) dated as of
October     , 2004 (the “Agreement”), between
the undersigned Customer and Fleet Capital Corporation (“Lender”),
Customer hereby represents and warrants to Lender that on the date hereof:

 

(1)           The representations and warranties of
Customer set forth in the Agreement and all Loan Documents delivered in
connection therewith were true and correct in all respects when made and are
true and correct as of the date hereof, with the same force and effect as if
the same had been made on this date.

 

(2)           Customer has satisfied or complied with all
conditions precedent and requirements as set forth in the Agreement which are
required to be or to have been satisfied or complied with on or prior to the
date thereof.

 

(3)           No Default or Event of Default under the
Agreement has occurred and is continuing on the date hereof.

 

(4)           Customer has obtained, and there are in full
force and effect, such insurance policies with respect to the Aircraft, as such
term is defined in the Agreement, as are required to be obtained under the
terms of the Agreement.

 

(5)           Customer has furnished no equipment for the
Aircraft (other than any equipment of which Customer has expressly informed
Lender), and all of the avionics and equipment set forth on Schedule A
hereto are on board the Aircraft and are in proper working condition;

 

(6)           the Aircraft (i) has been delivered to
Customer, is in Customer’s possession and is, as of the Closing Date, unconditionally,
irrevocably and fully accepted by Customer, (ii) has been inspected by Customer
to its complete satisfaction and, without limiting the foregoing, (A) has been
found to be airworthy and otherwise in good working order, repair and condition
and fully equipped to operate as required under Applicable Standards for its
purpose, and (B) is in conformity with the requirements of the related purchase
agreements and the Applicable Standards; (iii) is currently certified under
existing Federal Aviation Administration rules and regulations and is
completely airworthy in all respects, and (iv) is and will remain primarily
hangered at the location set forth herein;

 

All
capitalized terms used herein that are not otherwise defined herein shall have
the meaning given to such terms in this Agreement.

 

20

 

AIRCRAFT DESCRIPTION

 

One
(1) 1983 Canadair Ltd.Model CL-600 
(Challenger 601-1A) aircraft that consists of the following components:

 

	
  (a)

  	
  Airframe bearing FAA Registration Mark N45PH and manufacturer’s
  serial number 3004.

  
	
   

  	
   

  
	
  (b)

  	
  Two (2) General Electric Model CF-34-3A aircraft engines bearing
  manufacturer’s serial numbers 350110     and 350115
  (each of which has 750 or more rated takeoff horsepower or the equivalent of
  such horsepower).

  
	
   

  	
   

  
	
  (c)

  	
  One (1) Garrett model GTCP36-100E auxiliary power unit bearing
  manufacturer’s serial number P243.

  
	
   

  	
   

  
	
  (d)

  	
  Standard avionics and equipment, all other accessories, additions,
  modifications and attachments to, and all replacements and substitutions for,
  any of the foregoing, all as more particularly described on Schedule A
  attached hereto and made a part hereof.

  

 

	
  PRIMARY HANGER LOCATION:

  	
  4002 Cirrus Drive

  
	
   

  	
  Medford, OR 79504

  

 

 

[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

21

 

IN
WITNESS WHEREOF, Customer has caused this Certificate of Acceptance to be
executed by its duly authorized officer as of
October     , 2004.

 

 

	
   

  	
  WILLIS LEASE
  FINANCE CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

22

 

SCHEDULE A

TO

CERTIFICATE OF ACCEPTANCE

 

Avionics:

 

	
  Dual Honeywell 650 F/DIR

  	
   

  	
  Dual Honeywell YG1779 LASEREF IRS’

  
	
  Sperry EDZ-801 EFIS

  	
   

  	
  Voice Checklist – Heads Up Checklist

  
	
  Universal MFD-640 Multifunction Display

  	
   

  	
  Baker Master Audio Control System

  
	
  Honeywell Primus 880 Digital Weather Radio

  	
   

  	
  Dual King KHF950 HF’s

  
	
  Safeflight Scat System

  	
   

  	
  Dual Sperry AZ-800 Digital Air Data

  
	
  Safeflight Windshear Warning System

  	
   

  	
  603.4 w/Performance Database A12501

  
	
  Dual Collins VHF-20C COMM (8.33 Spacing)

  	
   

  	
  F-800 Flight Data Recorder

  
	
  Single Collins VHF-22B COMM

  	
   

  	
  Fairchild A-100 Cockpit Voice Recorder

  
	
  Dual Collins VIR-30 NAV (FM Immunity)

  	
   

  	
  Magnastar C-2000 Digital Airborn Telephone

  
	
  Computer w/VN-800 VNAV

  	
   

  	
  Unilink

  
	
  Dual GPS-1000 Sensors

  	
   

  	
  Allied Signal CAS-81 TCAS II REV.7

  
	
  Dual Universal UNS-1B+ FMS; Software Ver.

  	
   

  	
  Allied Signal MK VI GPWS

  

 

Interior:

 

Beige
Leather, Fireblocked, 10 PAX interior, Including forward 4-place club, AFT 2
place club opposite a 4-place divan. 
Airshow 200 with 10” LCD display. 
Brother 6500 FAX/Laser printer. 
Galley includes a microwave oven, Hi-temp Nordskorg oven, Mapco coffee
pot.  Forward cloak closet, AFT storage
closet and AFT baggage.

 

Exterior:

 

Matterhorn
white with red and black stripes.

 

TOGETHER WITH ALL OTHER AVIONICS, EQUIPMENT,
LOOSE EQUIPMENT INSTALLED AND/OR ONBOARD, ALL ADDITIONS, SUBSTITUTIONS,
ACCESSIONS, REPLACEMENTS, PARTS, NOW OR HEREAFTER ACQUIRED, AND ALL RECORDS,
MANUALS, LOGBOOKS, MAINTENANCE RECORDS, WHETHER IN WRITTEN OR COMPUTER DATA
FORM, NOW OR HEREAFTER CREATED, AND ALL PROCEEDS OF THE FOREGOING, INCLUDING
INSURANCE PROCEEDS

 

23

 

CLOSING
TERMS ADDENDUM (“Closing Terms Addendum”) to Loan and Aircraft Security
Agreement (S/N 3004) dated as of October     , 2004
(the “Agreement”), by and between FLEET CAPITAL CORPORATION, as lender (“Lender”),
and WILLIS LEASE FINANCE CORPORATION, as Customer (“Customer”).

 

All capitalized terms not defined in this Closing
Terms Addendum are defined in the Agreement. 
Execution of the Agreement by Customer and Lender shall be deemed to
constitute execution and acceptance of the terms and conditions of this Closing
Terms Addendum, and it shall supplement and be a part of the Agreement.

 

Conditions Precedent to the Tranche 1 Loan:

 

1.             On or prior to the Initial Closing Date and
at least one full Business Day prior to closing, Lender shall have received all
of the following, in form and substance satisfactory to Lender:

 

(a)           the Agreement, the Acceptance Certificate
executed and dated as of the Initial Closing Date, the Tranche 1 Note and Pay
Proceeds Letter #1 for the Tranche 1 Loan duly executed by Customer;

 

(b)           [INTENTIONALLY OMITTED]

 

(c)           if required by Lender, an opinion of counsel
for Customer addressed to Lender as to such matters incident to the Loan as
Lender may reasonably require;

 

(d)           Certificate(s) of good standing for Customer
from its state(s) of organization and the state(s) where the primary hangar
location of the Aircraft and Customer’s chief executive offices and principal
place of business are located;

 

(e)           a certificate for Customer executed by
Customer’s secretary or other authorized representative certifying: (i) that
the execution, delivery and performance of the Agreement and the other Loan
Documents and the entry by Customer into the transactions contemplated hereby
and thereby have been duly authorized, (ii) the name(s) of the Person(s)
authorized to execute and deliver such documents on behalf of Customer together
with specimen signature(s) of such Person(s); and (iii) Customer’s charter and
by-laws, operating agreement and other organizational documents, as applicable;

 

(f)            evidence
as to the insurance coverage required under the Agreement, including, but not
limited to, a certificate of insurance, copies of endorsements (including a
Lender endorsement), and, if requested by Lender, copies of applicable policies
and written confirmation from the insurance underwriter or broker that the
insurance coverage provided is in compliance with the requirements of
Section 4.6 of the Agreement;

 

(g)           a complete copy of the pre-buy inspection
report on the Aircraft and an appraisal satisfactory to Lender with respect to
the Aircraft prepared by an appraiser acceptable to Lender;

 

(h)           copies of: (i) any purchase agreements
entered into by Customer in connection with the acquisition of the Aircraft,
(ii) the warranty bill of sale conveying title to the Aircraft from seller or
vendor to Customer; (iii) if required by Lender, invoices for the purchase of
the Aircraft, and (iv) such other documents relating to the purchase or
conveyance of title as Lender may request;

 

(i)            copies of the executed FAA Aircraft
Registration Application (AC Form 8050-1), FAA Bill of Sale (AC Form 8050-2),
and FAA Standard Airworthiness Certificate (AC Form 8100-2) for the Aircraft;
and

 

24

 

such other documents, certificates and opinions, and
evidence of such other matters, as Lender, Lender’s counsel or FAA Counsel, may
reasonably request in order to effect the terms of this Agreement and/or to
protect Lender’s security interest in the Collateral.

 

2.             If the Aircraft is not then owned by
Customer, Lender shall have received evidence on the Initial Closing Date that
the Aircraft shall have been duly delivered to and accepted by Customer and
that the entire purchase price of the Aircraft has been fully paid.

 

3.             On or prior to the Initial Closing Date,
Lender shall have received evidence that FAA Counsel has received in escrow:
(i) if the Aircraft is not then owned by Customer, the executed FAA Aircraft
Bill of Sale (AC Form 8050-2) in the name of Customer and the executed FAA
Aircraft Registration Application (AC Form 8050-1) in the name of Customer (except
for the pink copy, which shall be available to be placed on the Aircraft upon
acceptance thereof); (ii) executed releases in form and substance satisfactory
to FAA Counsel of any Liens on the Aircraft; (iii) such other documents as are
necessary, in the opinion of Lender’s counsel and/or FAA Counsel to vest good
title to the Aircraft in the name of Customer and to perfect Lender’s first
priority security interest in the Aircraft; and (iv) the executed original of
the Agreement, all the foregoing being in proper form for filing with the FAA.

 

4.             On the Initial Closing Date, Lender shall
have received assurances from FAA Counsel satisfactory to Lender, in form and
substance satisfactory to Lender, that (i) the Aircraft (including the Airframe
and Engines) is free and clear of all other Liens of record with the FAA, (ii)
title to the Airframe is vested in Customer or that, upon filing of the FAA
Aircraft Bill of Sale (AC Form 8050-2) in the name of Customer, title to the
Airframe will be vested in Customer, (iii) 
Lender, upon filing of the Agreement with the FAA, will have a valid and
perfected security interest in the Aircraft (including the Airframe and the
Engines), and (iv) the filing of the Agreement with the FAA has been effected.

 

Conditions Precedent to the Tranche 2 Loan:

 

On or prior to the Final Closing Date and at least
one full business Day prior to the closing, Lender shall have received all of
the following, in form and substance satisfactory to Lender:

 

(a)           Request for Advance, the Tranche 2 Note, and
Pay Proceeds Letter #2 executed by customer

 

(b)           copies of all vendor work orders and invoices
for the refurbishment and upgrades and, if customer has previously paid such
invoices, evidence of such payment

 

(c)           revised evidence of insurance coverage,
confirming that the amount of hull coverage has been increased by an amount not
less than the amount of the Tranche 2 Note

 

such
other documents, certificates and opinions, and evidence of such other matters,
as Lender or Lender’s counsel, may reasonably request in order to effect the
terms of this Agreement and/or to protect Lender’s security interest in the
Collateral

 

25

 

EXHIBIT A

 

REQUEST FOR ADVANCE

 

TO:         Fleet
Capital Corporation

One
Financial Plaza, 5th Floor

Providence,
Rhode Island 02903

 

Reference
is hereby made to the Loan and Aircraft Security Agreement (S/N 3004) dated as
of October     , 2004 (as amended, restated or
supplemented from time to time, the “Agreement”), between Willis Lease Finance
Corporation (“Customer”), and Fleet Capital Corporation (“Lender”).  Capitalized terms not otherwise defined
herein are used herein as defined in the Agreement.

 

1.             Customer
hereby requests that Lender fund the Tranche 2 Loan in the amount of
$              
on                     ,
200   , which is a Business Day that is at least three (3) Business
Days after the date this Request for Advance is delivered to Lender (the “Requested
Advance Date”).

 

2.             In
connection with such funding, Customer hereby represents and warrants to Lender
as follows:

 

(a)           all of the work described on the Work Order(s) (copies of
which have been provided to Lender) with respect to the refurbishment and/or
upgrades to the Aircraft has been completed to Customer’s satisfaction, and has
been irrevocably accepted by Customer;

 

(b)           [Customer has paid all amounts due under vendor invoices
for the work performed and has provided evidence to Lender of such payment;]

 

(c)           no material adverse change in the financial condition of
Customer has occurred since the date of the last financial statements of
Customer delivered to Lender; and

 

(d)           all of the applicable conditions precedent to this funding
under Section 2 of the Agreement have been satisfied.

 

Please wire transfer the proceeds of the funding requested
hereby in accordance with the Pay Proceeds Letter #2.

 

The
Customer has caused this Request for Advance to be executed and delivered by
its duly authorized representative this
                            day
of                                      ,

 

 

	
   

  	
  Willis Finance Lease Corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

26

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