Document:

Prepared by MERRILL CORPORATION

EXHIBIT 10.3

 

PPM Loan No. 99–0014

 

PROMISSORY NOTE

 

	

  $4,500,000.00

  	

   

  	

  December 15, 1999

  

 

1.             Promise to Pay.  FOR VALUE

RECEIVED, the undersigned, CHORUS

CORPORATION a Minnesota corporation (“Maker”), hereby promises to

pay to the order of JACKSON NATIONAL LIFE

INSURANCE COMPANY, a Michigan corporation, its successors or assigns

(“Noteholder”), the principal sum of Four Million Five Hundred Thousand and

No/100 Dollars ($4,500,000.00), with interest on the unpaid principal balance

thereof from the date hereof until maturity at the rates per annum hereinafter

specified (the rate from time to time in effect hereunder being herein referred

to as the “Interest Rate”), both principal and interest being payable as

hereinafter provided in lawful money of the United States of America at 225

West Wacker Drive, Suite 1200, Chicago, Illinois 60606 or at such other place

as from time to time may be designated by Noteholder.  Interest shall be calculated and paid on the basis of a 30–day

month and 360–day year.

 

2.             Interest Rate and Payments.  The unpaid principal balance of this Note

shall accrue interest at the rate or rates per annum set forth below and shall

be payable as follows:

 

2.1           Interest

Rate.  Subject to the following

provisions of this paragraph 2.1 and to the provisions of paragraph 2.2 below,

the outstanding principal balance hereof shall bear interest at the rate of

eight and fifty–one one hundredths percent (8.51%) per annum.  Subject to the provisions of paragraph 2.2

below, the Interest Rate shall be adjusted, effective as of the first (1st) day

of January, 2000 and the first (1st) day of each month thereafter, to the rate

per annum equal to the greater of (i) the Index Rate determined with respect to

such date, plus two and five one hundredths percent (2.05%), or (ii) six

percent (6%).  For purposes hereof, the

term “Index Rate” shall mean the one–month London Interbank Offered Rates

(LIBOR) as shown in the “Money Rates” column in the “Money and Investing”

section of The Wall Street Journal as published on the last business day prior

to the date on which the applicable interest rate adjustment is to occur, or if

such index is no longer published daily, the one–month LIBOR as available

through the Bloomberg L.P. or a similar service designated by Noteholder.

 

2.2           At any time on or after January 1,

2000, and prior to June 30, 2004, but only once during any calendar year, Maker

shall have the right to request, by written notice to Noteholder, that

Noteholder convert this Note and the loan evidenced hereby to a fixed rate

Note. Within fifteen (15) days after such written notice is given by Maker

(which notice shall be accompanied by current financial statements for the

property encumbered by the Mortgage and such other documents as are reasonably

requested by Noteholder), Noteholder shall give written notice to Maker

specifying the interest rate spread which Noteholder intends to use to

calculate the adjusted Interest Rate, which will be quoted over a nineteen (19)–year

U.S. Treasury Index if Maker makes such request during the first Loan Year (as

hereinafter defined), and which will be quoted over the U.S. Treasury Index

having a maturity closest to January 1, 2020. If Maker makes such request

during the first Loan Year, the interest rate spread shall be two and fifteen

one hundredths percent (2.15%). If Maker makes such request after the first

Loan Year, the interest rate spread shall be selected by Noteholder in its sole

discretion. Maker agrees to provide Noteholder with any updated financial

information and other information reasonably requested by Noteholder necessary

for Noteholder to determine the appropriate interest rate spread. Maker, if it

so elects, shall notify Noteholder in writing, on or before the date five (5)

business days after such written notice specifying the interest rate spread was

given by Noteholder (the date of such written notice by Maker being herein

referred to as the “Reset Date”) that Maker accepts and agrees to Noteholder’s

proposed interest rate spread. If Maker does not accept and agree to

Noteholder’s proposed interest rate spread by giving written notice of such

acceptance and agreement to Noteholder as provided above, Maker shall be deemed

to have elected to withdraw its request to convert this Note and the loan

evidenced hereby to a fixed rate, and this Note shall bear interest as provided

in paragraph 2.1 above, and otherwise be payable, as though Maker had not

requested such conversion. In the event Maker accepts and agrees to

Noteholder’s proposed interest rate spread, (i) the Interest Rate shall be

adjusted, effective as of the first day of the first full calendar month

occurring at least forty–five (45) days after the Reset Date (such first

day of such month being herein referred to as the “Fixed Rate Loan Commencement

Date”), to the rate per annum equal to (x) the applicable U.S. Treasury Index

in effect on the Reset Date, plus (y) Lender’s proposed interest rate

spread, and (ii) commencing on the first day of the first full calendar month

following the Fixed Rate Loan Commencement Date, and on the first day of each

month thereafter, Maker shall pay Noteholder monthly payments of principal and

interest in an amount equal to the amount necessary to amortize the unpaid

principal balance of this Note as of the Fixed Rate Loan Commencement Date

(following the payment of principal due on such date), together with interest

thereon at the Interest Rate, as adjusted in accordance with the provisions of

this paragraph 2.2, in equal monthly payments over the period commencing on the

Fixed Rate Loan Commencement Date to and including December 31, 2019 (i.e., the

remainder of the original 20–year amortization period), and (iii) Maker

and Noteholder shall enter into such documents amending this Note and the other

Loan Documents as Noteholder may request, and (iv) Maker shall have no further

right to request that Noteholder convert this Note to a fixed rate Note. Maker

shall pay all costs and expenses incurred by Noteholder in connection with any

such request, whether or not Maker thereafter elects to accept and agree to

Noteholder’s proposed interest rate spread, including without limitation

Noteholder’s attorneys’ fees incurred in connection with such request and

amending this Note and the other Loan Documents, title insurance premiums and

costs and recording fees.

 

2.3           Monthly Payments.  Principal and interest upon this Note shall

be paid as follows:

 

(a)           Interest only on the unpaid principal

balance at the Interest Rate shall be due and payable on the date hereof in an

amount equal to interest accrued from and including the date hereof through the

last day of December, 1999.

 

(b)           Subject to the provisions of

paragraph 2.2 above, on the first (1st) day of February, 2000, and on the first

(1st) day of each month thereafter, Maker shall pay Noteholder monthly payments

of principal and interest in an amount equal to the amount necessary to

amortize the then unpaid principal balance of this Note, together with interest

hereon at the Interest Rate in effect on the day immediately prior to the date

on which the monthly payment in question is due, in equal monthly payments over

the period commencing on the first (1st) of the month preceding the date on

which such monthly payment is due to and including December 31, 2019.

 

(c)           On the first (1st) day of January,

2005, or, if this Note is converted to a fixed rate Note pursuant to the

provisions of Section 2.2 above, on the first (1st) day of January, 2020 (the

applicable date being herein referred to as the “Maturity Date”), the entire

unpaid principal balance together with all accrued interest, if not sooner

paid, shall be due and payable.

 

3.             Treatment

of Payments.  All payments of

principal, interest, late charges (as described below), and prepayment premium

(as described below), if any, due under this Note shall be paid to Noteholder

by wire transfer or check of immediately available funds to such bank or place,

and in such other manner, as Noteholder may from time to time designate. If

such payment is received by 2:00 p.m., such payment will be credited to Maker’s

account as of the date on which received. If such payment is received after

2:00 p.m., such payment will be credited to Maker’s account on the business day

next following the date on which received. Each installment payment under this

Note shall be applied first to the payment of any cost or expense for which

Maker is liable hereunder or under the other Loan Documents, including any

unpaid late charge, then to accrued interest and the remainder to the reduction

of unpaid principal. Time is of the essence as to all payments hereunder.

 

4.             Late Charges.  If any monthly installment of principal

and/or interest is not paid in full on or before the tenth day of the month in

which such payment is due, then a charge for late payment (“Late Charge”) in the

amount of five percent (5%) of the amount of such installment shall be

immediately assessed and shall be immediately due and payable by Maker. The

parties hereby recognize that the Late Charge is a reasonable approximation of

an actual loss difficult to estimate. 

Noteholder’s failure to collect such Late Charge shall not constitute a

waiver of Noteholder’ s right to require payment of such Late Charge for past

or future defaults. The Late Charge shall be in addition to all other rights

and remedies available to Noteholder upon the occurrence of a default under the

Loan Documents.

 

5.             Default

Interest.  Upon the occurrence of

(a) an Event of Default (as defined in the Loan Agreement) or (b) maturity of

this Note, interest shall accrue hereunder at an annual rate (the “Default

Rate”) equal to the lesser of (i) eighteen percent (18%) and (ii) the maximum

rate allowed by law. The Default Rate shall accrue on the entire outstanding

balance hereof, including, without limitation, delinquent interest and any and all

costs and expenses incurred by Noteholder in connection therewith.

 

6.             Security.  This Note is made pursuant to a Loan

Agreement of even date herewith (the “Loan Agreement”) and secured by, among

other things, a Mortgage, Security Agreement and Financing Statement

(hereinafter called the “Mortgage”) of even date herewith in favor of

Noteholder evidencing a lien on certain real property in Ramsey County,

Minnesota, described therein, and evidencing a security interest in certain

personal property, fixtures and equipment described therein. Capitalized terms

not otherwise defined herein shall have the meanings ascribed to such terms in

the Loan Agreement.

 

7.             Event

of Default.  Upon the failure to pay

any installment of principal and/or interest due on this Note as above promised

or upon the occurrence of an Event of Default, Noteholder shall have the option

of declaring the indebtedness evidenced hereby to be immediately due and

payable (“the Loan Acceleration”).  After

Loan Acceleration, Noteholder shall have the option of applying any payments

received to principal or interest or any other costs due pursuant to the terms

of this Note or the Loan Documents.

 

8.             Prepayment.  No prepayment of the principal balance of

the Note is allowed prior to the expiration of the first Loan Year. Thereafter,

prior to the conversion, if any, of this Note to a fixed rate Note pursuant to

Section 2.2 hereof, the Maker may prepay this Note in whole, but not in part,

upon 30 days’ prior written notice, upon payment of a prepayment premium equal

to 3% of the principal amount being prepaid if prepayment is made during the

second Loan Year, 2% of the principal amount being prepaid if prepayment is

made during the third Loan Year, 1% of the principal amount being prepaid if

prepayment is made during the fourth Loan Year, and no prepayment premium shall

be payable if prepayment is made thereafter. If this Note is converted to a

fixed rate Note pursuant to Section 2.2 hereof, the provisions of the

immediately preceding sentence of this paragraph 8 shall no longer apply, and

thereafter Maker may prepay this Note in whole, but not in part, upon 30 days’

prior written notice, upon payment of a yield maintenance premium (“Premium”)

equal to the greater of (i) 1% of the outstanding principal balance at the time

of prepayment or (ii) the present value on the date of prepayment of all future

principal and interest payments beginning with the payment due on the second

month following the date of prepayment, including any balloon payments, assuming

payment in accordance with the repayment terms of this Note less the current

outstanding principal balance of the loan evidenced hereby. The interest rate

used in calculating the present value shall be the Treasury Rate, as defined

herein, divided by twelve. “Treasury Rate” shall be the yield as reported by

Bloomberg L.P. of U.S. Government Treasury Securities having a maturity date

which is the same as the Maturity Date three (3) business days prior to the

date of prepayment (“Index”).   If for

any reason the Index is not published, the Treasury Rate shall be based on the

yields reported in another publication of comparable reliability and

institutional acceptance as selected by Noteholder in its sole discretion which

most closely approximates yields in percent per annum of selected U.S. Treasury

securities of varying maturities. If no Treasury Constant Maturities are

published for the specific length of time to the Maturity Date, the index to be

utilized shall be the weighted average of the Treasury Constant Maturities

published for the two periods most nearly corresponding to the Maturity

Date.  No Premium shall apply to a

payment in full during the ninety (90)–day period prior to the Maturity

Date or due to taking through condemnation or a casualty where Noteholder

applies proceeds to prepay the loan evidenced hereby.  No involuntary partial prepayment shall suspend or reduce any

required installment payments.  If Loan

Acceleration has occurred, and Maker wishes to pay the loan evidenced hereby in

full, the payment tendered must include either (i) the applicable prepayment

premium, if the payment is tendered during a period when prepayment is

permitted under this Note, or (ii) the greater of such prepayment premium or

10% of the principal amount owed on the date of default, if the payment is

tendered during a period when prepayment is prohibited under this Note.  For purposes of this Note, the term “Loan

Year” shall mean the one–year period commencing on January 1, 2000, and

each one–year period thereafter.

 

9.             Non–Usurious Loan.  It is the intent of Noteholder and Maker in

this Note and the other Loan Documents now or hereafter securing this Note to

contract in strict compliance with applicable usury law.  In furtherance thereof, Noteholder and Maker

stipulate and agree that none of the terms and provisions contained in this

Note, or in any other instrument executed in connection herewith including but

not limited to the Loan Documents, shall ever be construed to create a contract

to pay for the use, forbearance or detention of money, or interest at a rate in

excess of the maximum interest rate permitted to be charged by applicable law.

Neither Maker nor any guarantors, endorsers or other parties now or hereafter

becoming liable for payment of this Note shall ever be required to pay interest

on this Note at a rate in excess of the maximum interest that may be lawfully

charged under applicable law, and the provisions of this paragraph shall

control over all other provisions of this Note, the Loan Documents and any

other instruments now or hereafter executed in connection herewith which may be

in apparent conflict herewith. Noteholder expressly disavows any intention to

charge or collect excessive unearned interest or finance charges in the event

the maturity of this Note is accelerated. If the maturity of this Note is

accelerated for any reason or if the principal of this Note is paid prior to

the Maturity Date, and as a result thereof the interest received for the actual

period of existence of this Note exceeds the applicable maximum lawful rate,

Noteholder shall, at its option, either refund the amount of such excess or

credit the amount of such excess against the principal balance of this Note

then outstanding and thereby shall render inapplicable any and all penalties of

any kind provided by applicable law as a result of such excess interest.  In the event that Noteholder collects monies

which are deemed to constitute interest which would increase the effective

interest rate on this Note to a rate in excess of that permitted to be charged

by applicable law, all such sums deemed to constitute interest in excess of the

lawful rate shall, upon such determination, at the option of Noteholder, be

either immediately returned or credited against the principal balance of this

Note then outstanding, in which event any and all penalties of any kind under

applicable law as a result of such excess interest shall be inapplicable.  By execution of this Note Maker acknowledges

that it believes this Note and all interest and fees paid in connection with

the loan represented by this Note, to be nonusurious. Maker agrees that if, at

any time, Maker should believe that this Note or the loan represented by this

Note is in fact usurious, Maker will give Noteholder notice of such condition

and Maker agrees that Noteholder shall have ninety (90) days in which to make

appropriate refund or other adjustment in order to correct such condition if in

fact such condition exists. The term “applicable law” as used in this Note

shall mean the laws of the State of Minnesota or the laws of the United States,

whichever allows the greater rate of Interest, as such laws now exist or may be

changed or amended or come into effect in the future.

 

10.           Noteholder’s

Attorney Fees.  Should the

indebtedness represented by this Note or any part thereof be collected at law

or in equity or through any bankruptcy, receivership, probate or other court

proceedings or if this Note is placed in the hands of attorneys for collection

after default, or if the lien or priority of the lien represented by the

Mortgage or the other Loan Documents is the subject of any court proceeding,

Maker and all endorsers, guarantors and sureties of this Note jointly and

severally agree to pay to Noteholder in addition to the principal and interest

due and payable hereon reasonable attorney and collection fees including those

incurred by Noteholder for any appeal.

 

11.           Maker’s

Waivers.  Maker and all endorsers,

guarantors and sureties of this Note and all other persons liable or to become

liable on this Note severally waive presentment for payment, demand, notice of

demand and of dishonor and nonpayment of this Note, notice of intention to

accelerate the maturity of this Note, notice of acceleration, protest and

notice of protest, diligence in collecting, and the bringing of suit against

any other party, and agree to all renewals, extensions, modifications, partial

payments, releases or substitutions of security, in whole or in part, with or

without notice, before or after maturity.

 

12.           Payment

of Taxes and Fees.  Maker agrees to

pay the cost of any revenue, tax or other documentary fee or stamps now or

hereafter required by law to be affixed to this Note or the Mortgage.

 

13.           Governing

Law.  This Note and the rights,

duties and liabilities of the parties hereunder and/or arising from or relating

in any way to the indebtedness evidenced by this Note or the transaction of

which such indebtedness is a part shall be governed and construed for all

purposes by the law of the State of Minnesota.

 

14.          WAIVER

OF TRIAL BY JURY.  MAKER HEREBY

WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN

ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE,

RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED HEREBY, THE APPLICATION

FOR THE LOAN EVIDENCED HEREBY, THE LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF

NOTEHOLDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION

THEREWITH.

 

IN WITNESS WHEREOF, Maker has caused this

Note to be duly executed as of the day and year first above written.

 

	

   

  	

  MAKER:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  CHORUS CORPORATION, a Minnesota

  	

   

  
	

   

  	

  corporation

  	

   

  
	

   

  	

  Taxpayer ID Number: 41–1569588

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Frank Kraemer

  	 

	

   

  	

  Name:

  	

   

  	

   

  	

  Frank Kraemer

  	 

	

   

  	

  Title:

  	

   

  	

  CFO

  	 

								

 

	

  STATE OF MINNESOTA

  	

  )

  
	

   

  	

  )  ss

  
	

  COUNTY OF HENNEPIN

  	

  )

  

 

The foregoing instrument was acknowledged

before me this 15 day of

December, 1999, by                     Frank Kraemer         , the                       CFO                      of

Chorus Corporation, a corporation organized under the laws of the State

of Minnesota, on behalf of the corporation.

 

	

   

  	

   

  	

   

  	

  /s/ John R. Haley

  	 

	

   

  	

   

  	

  Notary Public

  
	

  NOTARY

  STAMP:

  	

   

  	

   

  
	

  John

  R. Haley

  	

   

  	

   

  
	

  Notary

  Public-Minnesota

  	

   

  	

   

  
	

  ANOKA

  COUNTY

  	

   

  	

   

  
	

  My

  Commission Expires Jan. 31, 2000Prepared by MERRILL CORPORATION

Exhibit 10.25

 

CREDIT

AGREEMENT*

 

Dated as of September 21, 2001

 

Between

 

WILLIS

LEASE FINANCE CORPORATION,

as Borrower

 

and

 

ABB

CREDIT FINANS AB (publ)

 

*              Portions of the material in this

Exhibit have been redacted pursuant to a request for confidential treatment,

and the redacted material has been filed separately with the Securities and

Exchange Commission (the "Commission").  An asterisk has been placed in the precise places in this

Agreement where we have redacted information, and the asterisk is keyed to a

legend which states that the material has been omitted pursuant to a request

for confidential treatment.

 

Schnader Harrison Segal & Lewis LLP

140 Broadway, Suite 3100

New York, NY 10005-9998

 

TABLE

OF CONTENTS

 

	

  SECTION

  1 CERTAIN DEFINITIONS

  
	

   

  	

  1.1

  	

  Definitions.

  
	

   

  	

  1.2

  	

  Accounting Terms.

  
	

   

  	

  1.3

  	

  Construction.

  
	

  SECTION

  2 THE CREDIT

  
	

   

  	

  2.1

  	

  The

  Loans.

  
	

   

  	

  2.2

  	

  The

  Notes.

  
	

   

  	

  2.3

  	

  Funding Procedures.

  
	

   

  	

  2.4

  	

  Facility Fee.

  
	

   

  	

  2.5

  	

  Mandatory Prepayments.

  
	

   

  	

  2.6

  	

  Interest.

  
	

   

  	

  2.7

  	

  Blocked Account; Payments of Interest and

  Principal.

  
	

   

  	

  2.8

  	

  Loan Maturities.

  
	

   

  	

  2.9

  	

  Debt to Value Maintenance.

  
	

   

  	

  2.10

  	

  Voluntary Prepayments.

  
	

   

  	

  2.11

  	

  Payments.

  
	

   

  	

  2.12

  	

  Change in Circumstances, Yield Protection.

  
	

   

  	

  2.13

  	

  Illegality.

  
	

   

  	

  2.14

  	

  Taxes.

  
	

   

  	

  2.15

  	

  Maintenance Reserves; Security Deposits;

  Insurance Proceeds.

  
	

  SECTION

  3 REPRESENTATIONS AND WARRANTIES

  
	

   

  	

  3.1

  	

  Organization, Standing.

  
	

   

  	

  3.2

  	

  Corporate Authority, Validity, Etc.

  
	

   

  	

  3.3

  	

  Validity of Loan Documents.

  
	

   

  	

  3.4

  	

  Litigation.

  
	

   

  	

  3.5

  	

  ERISA.

  
	

   

  	

  3.6

  	

  Financial Statements.

  
	

   

  	

  3.7

  	

  No Material Adverse Change.

  
	

   

  	

  3.8

  	

  Not in Default, Judgments, Etc.

  
	

   

  	

  3.9

  	

  Taxes.

  
	

   

  	

  3.10

  	

  Permits,

  Licenses, Etc.

  
	

   

  	

  3.11

  	

  No Materially Adverse Contracts, Etc.

  
	

   

  	

  3.12

  	

  Compliance with Laws, Etc.

  
	

   

  	

  3.13

  	

  Solvency.

  
	

   

  	

  3.14

  	

  Use of Proceeds.

  
	

   

  	

  3.15

  	

  Depreciation Policies.

  
	

   

  	

  3.16

  	

  Disclosure Generally.

  
	

  SECTION

  4 CONDITIONS PRECEDENT

  
	

   

  	

  4.1

  	

  Conditions to the Effectiveness of the

  Agreement.

  
	

   

  	

  4.2

  	

  All

  Loans.

  

 

	

  SECTION

  5 AFFIRMATIVE COVENANTS

  
	

   

  	

  5.1

  	

  Financial Statements and Reports.

  
	

   

  	

  5.2

  	

  Corporate Existence.

  
	

   

  	

  5.3

  	

  ERISA.

  
	

   

  	

  5.4

  	

  Compliance with Regulations.

  
	

   

  	

  5.5

  	

  Conduct of Business; Permits and Approvals,

  Compliance with Laws.

  
	

   

  	

  5.6

  	

  Maintenance of Properties.

  
	

   

  	

  5.7

  	

  Maintenance of Insurance.

  
	

   

  	

  5.8

  	

  Payment of Taxes, Etc.

  
	

   

  	

  5.9

  	

  Notice of Events.

  
	

   

  	

  5.10

  	

  Inspection Rights.

  
	

   

  	

  5.11

  	

  Generally Accepted Accounting Principles.

  
	

   

  	

  5.12

  	

  Compliance with Material Contracts.

  
	

   

  	

  5.13

  	

  Use of Proceeds.

  
	

   

  	

  5.14

  	

  Further Assurances.

  
	

   

  	

  5.15

  	

  Placards.

  
	

   

  	

  5.16

  	

  Lease Event of Default.

  
	

   

  	

  5.17

  	

  Special Indemnification.

  
	

  SECTION

  6 NEGATIVE COVENANTS

  
	

   

  	

  6.1

  	

  Consolidation and Merger.

  
	

   

  	

  6.2

  	

  Liens.

  
	

   

  	

  6.3

  	

  Margin Stock.

  
	

   

  	

  6.4

  	

  Transfer of Assets; Nature of Business.

  
	

   

  	

  6.5

  	

  Accounting Change.

  
	

   

  	

  6.6

  	

  Transactions with Affiliates of the

  Borrower.

  
	

   

  	

  6.7

  	

  Restricted Payments.

  
	

   

  	

  6.8

  	

  Restriction on Amendment of this Agreement.

  
	

   

  	

  6.9

  	

  Change

  of Incorporation.

  
	

  SECTION

  7 FINANCIAL COVENANTS

  
	

   

  	

  7.1

  	

  No Losses.

  
	

   

  	

  7.2

  	

  Minimum Tangible Net Worth.

  
	

   

  	

  7.3

  	

  Leverage

  Ratio.

  
	

   

  	

  7.4

  	

  Adjusted

  Total Debt to Adjusted Tangible Net Worth.

  
	

   

  	

  7.5

  	

  Minimum

  Interest Coverage Ratio.

  
	

   

  	

  7.6

  	

  Investments in Unrestricted Subsidiaries.

  
	

  SECTION

  8 DEFAULT

  
	

   

  	

  8.1

  	

  Events

  of Default.

  
	

  SECTION

  9 COLLATERAL

  
	

   

  	

  9.1

  	

  Collateral.

  
	

   

  	

  9.2

  	

  Security

  Documents.

  
	

   

  	

  9.3

  	

  Release

  of Collateral.

  
	

  SECTION 10 MISCELLANEOUS

  
	

   

  	

  10.1

  	

  Waiver.

  
	

   

  	

  10.2

  	

  Amendments.

  
	

   

  	

  10.3

  	

  GOVERNING LAW.

  
	

   

  	

  10.4

  	

  Participations and Assignments.

  
	

   

  	

  10.5

  	

  Captions.

  
	

   

  	

  10.6

  	

  Notices.

  
	

   

  	

  10.7

  	

  Application of Payments.

  
	

   

  	

  10.8

  	

  Expenses.

  
	

   

  	

  10.9

  	

  Survival

  of Warranties and Certain Agreements.

  
	

   

  	

  10.10

  	

  Severability.

  
	

   

  	

  10.11

  	

  No Fiduciary

  Relationship.

  
	

   

  	

  10.12

  	

  CONSENT

  TO JURISDICTION AND SERVICE OF PROCESS.

  
	

   

  	

  10.13

  	

  WAIVER OF

  JURY TRIAL.

  
	

   

  	

  10.14

  	

  Counterparts; Effectiveness.

  
	

   

  	

  10.15

  	

  Use of Defined Terms.

  
	

   

  	

  10.16

  	

  Offsets.

  
	

   

  	

  10.17

  	

  Entire Agreement.

  
	

   

  	

  10.18

  	

  Confidentiality.

  

 

Exhibits

Exhibit A    Form of Beneficial Interest Pledge and

Security Agreement

Exhibit B    Form of Compliance Certificate

Exhibit C    Form of Consent and Agreement

Exhibit D    Form of Note

Exhibit E    Form of Owner Trustee Mortgage

Exhibit F    Form of Security Agreement-Blocked Account

Exhibit G   Depreciation Policy

Exhibit H   Form of Request for Advance

 

Disclosure Schedule

 

Schedule 10.4

 

[Credit Agreement]

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT, dated as of

September 21, 2001 (this “Agreement”), is entered into by and between

WILLIS LEASE FINANCE CORPORATION, a Delaware corporation (successor by merger

to Willis Lease Finance Corporation, a California corporation) (“Willis” or the

“Borrower”), and ABB Credit Finans AB (publ) (the “Lender”).

 

PRELIMINARY STATEMENT

 

WHEREAS, the Borrower desires to have

available to it a  credit facility (the

“Credit Facility”) which will be used for the purchase or refinance of Engines

(defined below).

 

WHEREAS, the Lender is willing to establish

such Credit Facility and make loans to the Borrower under the terms and

conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the

premises and promises hereinafter set forth and intending to be legally bound

hereby, the parties hereto agree as follows:

 

SECTION 1

CERTAIN

DEFINITIONS

1.1           Definitions.

 

“Acceptable Manufacturer” shall mean

CFM International, General Electric, Pratt & Whitney, Rolls Royce and

International Aero Engines.

 

“Adjusted Tangible Net Worth” shall

mean Tangible Net Worth of the Willis Companies, less any stockholder’s equity

in any Unrestricted Subsidiaries where the Debt of such Unrestricted Subsidiary

is nonrecourse to the Borrower.

 

“Adjusted Total Debt” shall mean all

Debt of the Willis Companies, less any Debt to the extent such Debt is

nonrecourse to the Borrower.

 

“Affiliate” shall mean, with respect

to any Person, any other Person:  (i)

which directly or indirectly controls, or is controlled by, or is under common

control with such Person; (ii) which directly or indirectly beneficially owns

or holds ten percent (10%) or more of any class of voting stock of such Person;

or (iii) ten percent (10%) or more of whose voting stock is directly or indirectly

beneficially owned or held by such Person. 

The term “control” means the possession, directly or indirectly, of the

power to direct or cause the direction of the management and policies of a

Person, whether through the ownership of voting securities, by contract, or

otherwise.

 

“Agreement” shall mean this Agreement,

as amended, supplemented, modified, replaced, substituted for or restated from

time to time and all exhibits and schedules attached hereto.

 

“Bank” shall mean California Bank

& Trust.

“Beneficial

Interest” shall mean a beneficial interest in a trust which owns one or

more Engines.

 

“Beneficial Interest Pledge Agreement”

shall mean a Beneficial Interest Pledge and Security Agreement substantially in

form and substance attached hereto as Exhibit A.

 

“Blocked Account” shall mean the

following account maintained by the Borrower at the Bank into which all

payments made by or on behalf of the Borrower in payment of the Loan shall be

deposited:

 

ABA:                      121

002 042

Bank:                      California

Bank & Trust

                                San Francisco, CA

Account:               1170011641

Acct Name:           Willis

Lease Finance Corporation

 

“Blocked Account Agreement” shall mean

the Three Party Deposit Account Agreement-Blocked Account between the Bank, the

Borrower and the Lender.

 

“Break Costs” shall have the meaning

given such term in Section 2.10.

 

“Business Day” shall mean any day

other than a Saturday, Sunday, or other day on which commercial banks in

Stockholm, Sweden, San Francisco, California, U.S.A. or New York, New York,

U.S.A. are authorized or required to close under the laws of either Sweden, the

State of California, or the State of New York and a day on which dealings in

Dollar deposits are also carried on in the London interbank market and banks

are open for business in London (“London Business Day”).

 

“Capitalized Lease” shall mean all

lease obligations of any Person for any property (whether real, personal or

mixed) which have been or should be capitalized on the books of the lessee in

accordance with Generally Accepted Accounting Principles.

 

“Capitalized Lease Obligations” with

respect to any Person, shall mean the aggregate amount which, in accordance

with GAAP, is required to be reported as a liability on the balance sheet of

such Person at such time in respect of such Person’s interest as lessee under a

Capitalized Lease.

 

“Change of Control” shall mean, with

respect to the Borrower, any action occurring or set of circumstances existing

that would result in any Person or group (other than Charles F. Willis IV, his

trusts, family limited partnerships or heirs and other than any member of the

SwissAir Group pursuant to the exercise of options outstanding on the date of

this Agreement) beneficially owning (as defined in Rule 13(d)-3 promulgated

under the Securities Exchange Act of 1934, as amended), directly or indirectly,

an amount of the outstanding capital stock of the Borrower entitling such

Person or group to 30% or more of the voting power of all the outstanding

capital stock of the Borrower.  The percentage

of voting power shall be determined based on the number of votes a holder of

capital stock can cast in the election of directors, compared to the total

number of votes that all shareholders can cast in such election.

“Closing

Date” shall mean the date on which this Agreement shall become effective as

determined in accordance with Section 4.1.

 

“Code” shall mean the Internal Revenue

Code of 1986, as amended from time to time, and all rules and regulations with

respect thereto in effect from time to time.

 

“Collateral” shall mean, collectively,

the “Collateral”, (as such term is defined in the Beneficial Interest

Pledge Agreements executed, delivered and outstanding from time to time) and

the “Collateral” (as such term is defined in the Owner Trustee Mortgages

executed, delivered and outstanding from time to time).

 

“Commitment Fee” shall mean the

commitment fee payable by the Borrower pursuant to Section 2.11(c).

 

“Compliance Certificate” shall mean a

certificate in substantially the form attached hereto as Exhibit B which shall

be signed by the chief financial officer, chief administrative officer or chief

executive officer of Borrower.

 

“Consent and Agreement” shall mean a

Consent and Agreement in substantially the form attached hereto as Exhibit C in

respect of each Lease between the Lender and the Owner Trustee and the Lessee

parties to such Lease.

 

"Contribution Agreement"

shall have the meaning ascribed to such term in the Other Facility Agreement.

 

 “Debt” shall

mean, as to any Person at any time (without duplication) and, for the Borrower,

determined on a consolidated basis:  (i)

all obligations of such Person for borrowed money; (ii) all obligations of such

Person evidenced by bonds, notes, debentures, or other similar instruments;

(iii) all obligations of such Person to pay the deferred purchase price of

property or services, except trade accounts payable of such Person arising in

the ordinary course of business which are not past due by more than ninety (90)

days unless such trade accounts payable are being contested in good faith by appropriate

proceedings; (iv) all Capitalized Lease Obligations of such Person; (v) all

obligations of such Person under guaranties, letters of credit, endorsements

(other than for collection or deposit in the ordinary course of business),

assumptions or other contingent obligations, in respect of, or to purchase or

otherwise acquire, any obligation or indebtedness of any other Person, or any

other obligation, contingent or otherwise, of such Person directly or

indirectly protecting the holder of any obligation or indebtedness of any other

Person, contingent or otherwise, against loss (whether by partnership

arrangements, agreements to keep-well, to purchase assets, goods, securities,

or services, to take-or-pay or otherwise); (vi) all obligations of any other

Person secured by a Lien existing on property owned by such Person, whether or

not the obligations secured thereby have been assumed by such Person or are

non-recourse to the credit of such Person; (vii) all reimbursement obligations

of such Person (whether contingent or otherwise) in respect of letters of

credit, bankers’ acceptances, surety or other bonds and similar instruments;

(viii) the net present value of Operating Leases for engines, aircraft and

parts packages, using a 10% discount rate; and (ix) all obligations with

respect to deposits or maintenance reserves to the extent not supported by cash

reserved specifically therefor.

“Default

Rate” on any Loan shall mean two percent (2%) per annum above the Interest

Rate then applicable to each Loan or portion thereof.

 

“Determination Date” shall have the

meaning given such term in Section 2.9.

 

"Disclosure Schedule" shall

mean the schedule referred to in Sections 3.4, 3.6, 3.9 and 3.16.

 

“Dollars” shall mean the lawful

currency of the United States of America.

 

“EBIT” shall mean the sum of (i) Net

Income less any extraordinary gain or loss included in the calculation thereof,

plus (ii) amounts deducted for interest expense and income taxes.

 

“Eligibility Criteria” shall mean the

applicable criteria set forth below to be used to determine whether any Engine

and the Lease thereof are eligible as Collateral.

 

The Eligibility Criteria for an Engine are as

follows:  *

 

The Eligibility Criteria for any Lease is as

follows:  *

 

“Eligible Engines”

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

 

“Eligible Lease” shall mean a Lease of

an Engine which meets all of the Eligibility Criteria for Leases and in which *

 

“Engine” shall mean any Stage III

engine owned by Borrower or an Owner Trustee (acting pursuant to a Trust

Agreement) designed or suitable for use to propel an aircraft, whether or not

subject to a Lease.

 

“Engine Records” shall mean all

technical and other records in respect of an Engine required by the

manufacturer thereof or any applicable Governmental Authority to be maintained.

 

“Environmental Control Statutes” shall

mean each and every applicable federal, state, county or municipal

environmental statute, ordinance, rule, regulation, order, directive or

requirement, together with all successor statutes, ordinances, rules,

regulations, orders, directives or requirements, of any Governmental Authority,

including without limitation laws in any way related to Hazardous Substances.

 

“ERISA” shall mean the Employee

Retirement Income Security Act of 1974, as it may be amended from time to time.

 

*              This redacted material has been

omitted pursuant to a request for confidential treatment, and the material has

been filed separately with the Commission.

“ERISA

Affiliate” shall mean any corporation which is a member of the same

controlled group of corporations as the Borrower within the meaning of Section

414(b) of the Code, or any trade or business which is under common control with

the Borrower within the meaning of Section 414(c) of the Code.

 

“Event of Default” shall have the

meaning set forth in Section 8.1.

 

“Facility Fee” shall mean an amount

equal to one-half of one percent (0.50%) of the Maximum Loan Commitment.

 

“Fair Market Value” shall mean with

respect to an Engine, an amount as determined by an appraiser to be the amount

that would be obtained in an arm’s-length cash transaction between willing,

able and knowledgeable parties, acting prudently, with an absence of duress and

with a reasonable time period available for marketing, adjusted to account for

the maintenance status of such Engine (which shall reflect any existing

maintenance reserves).  In determining

such value, it will be assumed that (i) no value will be attributed to lease payments

made under the related Lease and (ii) no value shall be attributed to any

security deposit under the related Lease. 

The appraiser shall be retained by the Borrower and shall be reasonably

acceptable to the Lender (such appraisal fees to be paid by the Borrower).

 

“FAR” means the Federal Aviation

Regulations issued by the Federal Aviation Administration as in effect from

time to time.

 

“Fiscal Quarter” shall mean a fiscal

quarter of the Borrower, which shall be any quarterly period ending on March

31, June 30, September 30 or December 31 of any year.

 

“Fiscal Year” shall mean a fiscal year

of the Borrower, which shall end on the last day of December.

 

“Generally Accepted Accounting Principles”

or “GAAP” shall mean generally accepted accounting principles as in

effect from time to time in the United States of America, consistently applied.

 

"Geneva Convention" shall

mean the International Recognition of Rights in Aircraft Convention between the

United States of America and Other Governments, June 19, 1948, 310

U.N.T.S. 151.

 

“Governmental Authority” shall mean

any federal, state, county or municipal government, or any department, agency,

bureau or other similar type body obtaining authority therefrom or created

pursuant to any laws, including, without limitation, Environmental Control

Statutes.

 

“Hazardous Substances” shall mean

without limitation, any regulated substance, toxic substance, hazardous

substance, hazardous waste, pollution, pollutant or contaminant, as defined or

referred to in the Resource Conservation and Recovery Act, as amended, 15

U.S.C., § 2601 et seq.; the Comprehensive Environmental Response,

Compensation and Liability Act, 33 U.S.C. § 1251 et seq.; the

federal underground storage tank law, Subtitle I of the Resource Conservation

and Recovery Act, as amended, P.L. 98-616, 42 U.S.C. § 6901 et seq.;

together with any amendments thereto, regulations promulgated thereunder and

all substitutions thereof, as well as words of similar purport or meaning

referred to in any other federal, state, county or municipal environmental statute,

ordinance, rule or regulation.

“Indebtedness

for Borrowed Money” shall mean (i) all indebtedness, liabilities, and

obligations, now existing or hereafter arising, for money borrowed by the

Borrower or its Restricted Subsidiaries, whether or not evidenced by any note,

indenture, or agreement (including, without limitation, the Notes and any

indebtedness for money borrowed from an Affiliate of the Borrower) and (ii) all

indebtedness of others for money borrowed (including indebtedness of an

Affiliate of the Borrower) with respect to which the Borrower or its Restricted

Subsidiaries have become liable by way of a guarantee or indemnity.

 

“Intangible Assets” shall mean all

assets which would be classified as intangible assets under GAAP consistently

applied, including, without limitation, goodwill (whether representing the

excess of cost over book value of assets acquired or otherwise), patents,

trademarks, trade names, copyrights, franchises and deferred charges

(including, without limitation, unamortized debt discount and expense,

organization costs, and research and development costs).  For purposes of this definition, prepayments

of taxes, license fees and other expenses shall not be deemed Intangible

Assets.

 

“Interest Coverage Ratio” shall mean

the ratio of EBIT of the Willis Companies plus rent expenses of the Willis

Companies to interest expense of the Willis Companies plus rent expenses of the

Willis Companies.

 

“Interest Rate” means, in respect of

any Loan, the LIBO Rate for the Interest Rate Period elected pursuant to the

Interest Rate Option plus the Margin.

 

“Interest Rate Option” shall mean one,

three or six month LIBO designated by the Borrower as provided for in Section

2.6.

 

“Interest Rate Period” shall mean the

one, three or six month period elected pursuant to exercise of the Interest

Rate Option.

 

“Investment” in any Person shall mean,

without duplication, (i) the acquisition (whether for cash, property, services

or securities or otherwise) of capital stock, bonds, notes, debentures, partnership

or other ownership interests or other securities of such Person; (ii) any

deposit with, or advance, loan or other extension of credit to, such Person

(other than any such deposit, advance, loan or extension of credit having a

term not exceeding ninety (90) days representing the purchase price of

inventory or supplies purchased in the ordinary course of business) or

guarantee or assumption of, or other contingent obligation with respect to,

Indebtedness for Borrowed Money or other liability of such Person (other than

unsecured (except for a pledge of Shares (as defined in the Share Pledge

Agreement) and records related to such Shares of any Unrestricted Subsidiary)

guaranties of the obligations of Restricted or Unrestricted Subsidiaries);

(iii) any transfer or contribution of assets to an Unrestricted Subsidiary to

the extent that the net book value of such assets is not paid in full at the

time of transfer; and (iv) any amount that may, pursuant to the terms of such

investment, be required to be paid, deposited, advanced, lent or extended to or

guaranteed (other than the guaranties described above) or assumed on behalf of

such Person.

“Lease”

shall mean a written lease agreement assigned to or entered into between Owner

Trustee (acting pursuant to a Trust Agreement), as lessor, and a third party

(including WLFC (Ireland) Limited and any member of the SwissAir Group) as

lessee, pursuant to which such Owner Trustee leases to the third party for a

fixed period of time one or more Engines.

 

“Lease Document” shall mean such Lease

and all documents executed and delivered in connection therewith.

 

“Lease Event of Default” shall mean

the failure by a lessee pursuant to the terms of an Eligible Lease to which it

is a party after the expiration of any applicable notice or cure period to pay

any amount when due, to provide insurance in accordance with the terms thereof

or to perform maintenance on the Eligible Engine leased pursuant to such

Eligible Lease in accordance with the terms of such Eligible Lease.

 

“Leverage Ratio” shall mean the ratio

of all Debt of the Willis Companies to their Tangible Net Worth calculated

based on the most recent financial statements furnished to the Lender in

accordance herewith.

 

“LIBO Rate” shall mean the arithmetic

average of the rates of interest per annum (rounded upwards, if necessary to

the next 1/16 of 1%) at which the Lender, individually, is offered deposits of

United States Dollars by leading banks in the interbank eurodollar or

eurocurrency market on or about eleven o’clock (11:00) a.m., London time, two

(2) London Business Days prior to the commencement of the requested Interest

Rate Period in an amount substantially equal to the outstanding principal

amount of the Loan requested for a maturity of comparable duration to the Interest

Rate Period; provided, however that if for any such period or comparable

period, the Lender is not offered deposits of United States Dollars by leading

banks as described above, the LIBO Rate in respect of such period shall mean

the rate per annum (rounded upwards, if necessary to the next 1/16 of 1%) for

deposits in United States Dollars for a period equal or comparable to such

period which appears on Page 3750 on the Dow Jones Telerate Service (the

“Telerate Page 3750") (or such other page as may replace such Telerate

Page 3750 for the purpose of displaying London interbank offered rates for

United States Dollar deposits), on or about eleven o’clock (11:00) a.m., London

time, two (2) London Business Days prior to the commencement of the requested Interest

Rate Period in an amount substantially equal to the outstanding principal

amount of the Loan requested for a maturity of comparable duration to the

Interest Rate Period; provided further, that if for any such period or

comparable period no such rate appears on the Telerate Page 3750 (or such other

page as may replace such Telerate Page 3750 for the purpose of displaying

London interbank offered rates for United States Dollar deposits), the LIBO

Rate in respect of such period shall be the arithmetic mean, as determined by

the Lender, of the rates per annum (rounded upwards, if necessary to the next

1/16 of 1%) appearing on the Reuters Screen “LIBO” page in respect of amounts

denominated in Dollars, on or about eleven o’clock (11:00) a.m., London time, two

(2) London Business Days prior to the commencement of the requested Interest

Rate Period in an amount substantially equal to the outstanding principal

amount of the Loan requested for a maturity of comparable duration to the

Interest Rate Period.

“Lien”

shall mean any lien, mortgage, security interest, chattel mortgage, pledge or

other encumbrance (statutory or otherwise) of any kind securing satisfaction of

an obligation, including any agreement to give any of the foregoing, any

conditional sales or other title retention agreement, any lease in the nature

thereof, and the filing of or the agreement to give any financing statement

under the Uniform Commercial Code of any jurisdiction or similar evidence of

any encumbrance, whether within or outside the United States of America.

 

“Loan” or “Loans” shall mean

the Loan or Loans made pursuant hereto and as provided for in Section 2.1.

 

“Loan Closing Date” shall mean, in

respect of each Loan, the date such Loan is made.

 

“Loan Commitment” shall have the meaning

set forth in Section 2.1.

 

“Loan Documents” shall mean this

Agreement, each Note, the Blocked Account Agreement, the Security

Agreement-Blocked Account, each Consent and Agreement, each Owner Trustee

Mortgage, each Beneficial Interest Pledge Agreement, each Recognition of Rights

Agreement, if any, and all other documents directly related or incidental to

said documents, the Loans or the Collateral.

 

“Loan Termination Date” shall have the

meaning set forth in Section 2.1.

 

“Margin” means two hundred basis

points.

 

“Material Adverse Change” shall mean

any event or condition which, in the reasonable determination of the Lender,

would result in a material adverse change in the financial condition, business,

properties or profits of the Borrower and which gives reasonable grounds to

conclude that the Borrower would likely not be able to perform or observe (in

the normal course) its obligations under the Loan Documents to which it is a

party, including but not limited to the Notes.

 

“Material Adverse Effect” shall mean a

material adverse effect on (i) the financial condition, business, properties,

or profits of the Borrower, (ii) the ability of the Borrower to perform its

obligations under this Agreement, the Notes and the other Loan Documents, or

(iii) the legality, validity or enforceability of this Agreement or the Notes

or the rights and remedies of the holders of the Loans.

 

“Maximum Loan Commitment” shall mean

Thirty-Five Million Dollars ($35,000,000).

 

“Multiemployer Plan” shall mean a

multiemployer plan as defined in ERISA Section 4001(a)(3), which covers

employees of the Borrower or any ERISA Affiliate.

 

“Net Book Value” of an Engine shall be

calculated as the lesser of:  (i) the

cost to Borrower of such Engine or (ii) such Engine’s Fair Market Value.  In any event, the Net Book Value will be

reduced utilizing depreciation methods consistent with current practice and

Generally Accepted Accounting Principles.

“Net

Income” shall mean net income of the Willis Companies after taxes,

determined in accordance with GAAP.

 

“Net Worth” shall mean, at any

particular time, all amounts, in conformity with GAAP, that would be included

as stockholder’s equity on a consolidated balance sheet of the Willis Companies

excluding other comprehensive income or loss resulting from the implementation

of FAS 133.

 

"Nonrecognition of Rights

Jurisdictions" shall  mean, in

connection with each Lease involving a lessee (or, in the case of a Lease to

WLFC (Ireland) Limited, involving a sublessee) domiciled or principally located

in a non-U.S. jurisdiction, any non-U.S. jurisdiction of such domicile or

location unless (a) the Borrower shall have obtained a legal opinion in form

and substance reasonably satisfactory to Lender from local counsel in such

jurisdiction to the effect that under and in accordance with applicable local

law, an aircraft engine, upon its installation on an aircraft (i) should remain

the property of the Owner Trustee and not become an accession to such aircraft

(thereby vesting a superior right to title in the owner of such aircraft) and

(ii) will not vest a security interest in such Engine in a Person holding a

security interest in such aircraft, or (b) the Owner Trustee shall have become

a party to or otherwise obtained the benefit of a Recognition of Rights Agreement.

 

“Note” or “Notes” shall mean

one or more promissory notes substantially in the form attached hereto as

Exhibit D.

 

“Obligations” shall mean all now

existing or hereafter arising debts, obligations, covenants, and duties of

payment or performance of every kind, matured or unmatured, direct or

contingent, owing, arising, due, or payable to the Lender by the Borrower or

any Owner Trustee arising out of this Agreement or any other Loan Document,

including, without limitation, all obligations to repay principal of and

interest on the Loans and all obligations related to any interest rate swap

agreement, interest rate cap agreement, interest collar agreement, interest

rate hedging agreement, interest rate floor agreement or other similar

agreement or arrangement related to the foregoing, and to pay interest, fees,

costs, charges, expenses, professional fees, and all sums chargeable to the

Borrower or any Owner Trustee or for which the Borrower or any Owner Trustee is

liable as indemnitor under the Loan Documents, whether or not evidenced by any

note or other instrument.

 

“Off-Lease” shall mean, at the time of

determination, an Engine not subject to a Lease.

 

“Operating Lease” shall mean, with

respect to any Person, the aggregate amount which, in accordance with GAAP, is

not required to be reported as a liability on the balance sheet of such Person

at such time in respect of such Person’s interest as lessee under an operating

lease.

 

“Other Facility Agreement” shall mean

the Credit Agreement dated as of May 1, 2001 among Borrower, National City

Bank, as Administrative Agent, Fortis Bank [Nederland] N.V., as Structuring

Agent, Fortis Bank [Nederland] N.V., as Security Agent and the several

institutions signatory thereto, as amended from time to time.

“Other

Indebtedness” shall mean Indebtedness for Borrowed Money (i) with a final

maturity not less than the final maturity of this Credit Facility; (ii) with an

average life no less than the remaining average life of this Credit Facility;

(iii) with terms, covenants and conditions no more restrictive than those in

this Agreement; and (iv) with respect to which the initial advance rates on the

assets financed with such Indebtedness for Borrowed Money are not less than

those under this Credit Facility.

 

“Owner Trustee” shall mean Wells Fargo

Bank Northwest, National Association (formerly known as First Security Bank,

National Association) or another bank or trust company reasonably satisfactory

to the Lender acting as trustee under a Trust Agreement of which the Borrower is

the beneficiary.

 

“Owner Trustee Mortgage” shall mean an

Owner Trustee Mortgage and Security Agreement substantially in the form

attached hereto as Exhibit E.

 

“Parts” shall mean components of an

aircraft or an Engine or any systems within an aircraft or an Engine that have

either been removed from an aircraft or an Engine or have not yet been

incorporated into an aircraft or an Engine.

 

“Payment Date” shall have the meaning

given such term in Section 2.7(b).

 

“Payment Period” in

respect of each Loan shall mean an initial period commencing on the Loan

Closing Date of such Loan and ending on the third Business Day of the calendar

month next following the calendar month in which such Loan Closing Date occurs;

thereafter periods commencing on the third Business Day of each calendar month

and ending on the third Business Day of the next following calendar month; and,

if the term of the relevant Lease ends on a day other than the third Business

Day of a calendar month, a final period commencing on the third Business Day of

the calendar month in which the term of such Lease ends (or the next prior

calendar month if the Lease ends on the first, second or third day of a

calendar month) and ending the day on which such Lease ends.

 

“PBGC” shall mean the Pension Benefit

Guaranty Corporation and any successor thereto.

 

“Pension Plan” shall mean, at any

time, any Plan (including a Multiemployer Plan), the funding requirements of

which (under Section 302 of ERISA or Section 412 of the Code) are, or at any

time within the six years immediately preceding the time in question, were in

whole or in part, the responsibility of the Borrower or any ERISA Affiliate of

the Borrower.

“Permitted

Liens” shall mean (i) any Liens for current taxes, assessments and other

governmental charges not yet due and payable or being contested in good faith

by the Borrower (or by a lessee) by appropriate proceedings and for which

adequate reserves have been established by the Borrower as reflected in the

Borrower’s financial statements (or by the lessee as reflected in such lessee’s

financial statements); (ii) any mechanic’s, materialman’s, carrier’s,

warehousemen’s or similar Liens for sums not yet due or being contested in good

faith by the Borrower (or by a lessee) by appropriate proceedings and for which

adequate reserves have been established by the Borrower as reflected in the

Borrower’s financial statements (or by the lessee as reflected in such lessee’s

financial statements); (iii) Liens in favor of Lender in the Collateral as

contemplated by this Agreement and the other Loan Documents; (iv) the rights of

a lessee or sublessee to utilize the Collateral pursuant to the terms of a

Lease; (v) Liens arising from the following types of liabilities of a lessee or

any other operator of an Engine, so long as such liabilities are either not yet

due or are being contested in good faith through appropriate proceedings that

do not give rise to any reasonable likelihood of the sale, forfeiture or other

loss of such Engine, title thereto or the Lender’s security interest therein or

of criminal or unindemnified civil liability on the part of Borrower or the

Lender and with respect to which the lessee maintains adequate reserves (in the

reasonable judgment of Borrower):  (A)

fees or charges of any airport or air navigation authority, (B) judgments, or

(C) salvage or other rights of insurers; (vi) Liens permitted in accordance

with Section 8.1(j); and (vii) rights accorded the Bank under the Blocked

Account Agreement.

 

“Person” shall mean any individual,

corporation, partnership, joint venture, association, company, business trust

or entity, or other entity of whatever nature.

 

“Plan” shall mean an employee benefit

plan as defined in Section 3(3) of ERISA, other than a Multiemployer Plan,

whether formal or informal and whether legally binding or not.

 

“Potential Default” shall mean an

event, condition or circumstance that with the giving of notice or lapse of

time or both would become an Event of Default.

 

“Prohibited Transaction” shall mean a

transaction that is prohibited under Section 4975 of the Code or Section 406 of

ERISA and not exempt under Section 4975 of the Code or Section 4.08 of ERISA.

 

“Purchase Agreement” shall mean a

written purchase agreement assigned to or entered into between Borrower or an

Owner Trustee (acting pursuant to a Trust Agreement), as purchaser, and a third

party, as seller, pursuant to which Borrower or such Owner Trustee purchased

from such third party one or more Engines.

 

“Purchase Documents” shall mean each

Purchase Agreement and all documents executed and delivered in connection

therewith.

 

“Recognition of Rights Agreement”

shall mean an agreement reasonably acceptable to the Lender pursuant to which

an owner or holder of a lien on any aircraft to which an Engine is attached

agrees to recognize the Lender’s Lien in such Engine pursuant to the terms of

the relevant Owner Trustee Mortgage.

 

“Regulation” shall mean any statute,

law, ordinance, regulation, order or rule of any United States of America or

foreign, federal, state, local or other government or governmental body,

including, without limitation, those covering or related to banking, financial

transactions, securities, public utilities, environmental control, energy,

safety, health, transportation, bribery, record keeping, zoning,

antidiscrimination, antitrust, wages and hours, employee benefits, and price

and wage control matters.

“Reportable

Event” shall mean, with respect to a Pension Plan:  (i) Any of the events set forth in Sections

4043(b) (other than a reportable event as to which the provision of 30 days’

notice to the PBGC is waived under applicable regulations) or 4063(a) of ERISA

or the regulations thereunder, (ii) an event requiring the Borrower or any

ERISA Affiliate to provide security to a Pension Plan under Section 401(a)(29)

of the Code and (iii) any failure by the Borrower or any ERISA Affiliate to

make payments required by Section 412(m) of the Code.

 

“Request for Advance” shall have the

meaning set forth in Section 2.3(b), substantially in the form attached hereto

as Exhibit H.

 

“Required Monthly Minimum” shall have

the meaning given such term in Section 2.7(b).

 

“Restricted Subsidiary” shall mean any

Subsidiary, direct or indirect, of the Borrower that is not an Unrestricted

Subsidiary.  Without limiting the foregoing,

and notwithstanding anything to the contrary contained in this Agreement or any

other Loan Document, each of (i) T-4 Inc., (ii) T-7 Inc., (iii) T-8 Inc., (iv)

T-10 Inc., (v) WLFC (Ireland) Limited, (vi) WLFC Engine Pooling Company and

(vii) Terandon Leasing Corporation shall constitute a “Restricted Subsidiary”.

 

“Security Agreement-Blocked Account”

shall mean the Security Agreement-Blocked Account in the form attached hereto

as Exhibit F, to be dated the initial Loan Closing Date between the Lender, the

Owner Trustee, the Borrower and the Bank.

 

“Share Pledge Agreement” shall have

the meaning ascribed to such term in the Other Facility Agreement.

 

“Solvent” shall mean, with respect to

any Person, that the aggregate present fair saleable value of such Person’s

assets is in excess of the total amount of its probable liabilities on its

existing Debt as they become absolute and matured, such Person has not incurred

debts beyond its foreseeable ability to pay such debts as they mature, and such

Person has capital adequate to conduct the business in which it is presently

engaged or in which is about to engage.

 

“Stage III” as it relates to any

aircraft or engine, shall mean any aircraft or engine which, at the time of its

manufacture, was compliant with the noise regulations set forth in FAR Part 36.

 

“Subsidiary” shall mean a corporation

or other entity the shares of stock or other equity interests of which having

ordinary voting power (other than stock or other equity interests having such

power only by reason of the happening of a contingency) to elect a majority of

the board of directors or other managers of such corporation are at the time

owned, or the management of which is otherwise controlled, directly or

indirectly through one or more intermediaries or both, by the Borrower.

 

“SwissAir Group” shall mean SwissAir

Group, a Swiss corporation, and its Affiliates, including without limitation

(but in each case only so long as such Person is an Affiliate of SwissAir

Group), FlightTechnics, LLC, Flightlease AG, SRT Group America, Inc., SR

Technics Group, and SR Technics Switzerland f/k/a SR Technics AG.

“Tangible

Net Worth” shall mean Net Worth minus Intangible Assets.

 

“Trust Agreement” shall mean a Trust

Agreement in form and scope acceptable to the Lender between each Owner Trustee

and the Borrower under which the Borrower is the sole beneficiary.

 

“Trust Estate” shall mean the Trust

Estate as defined in each Trust Agreement.

 

 “Unrestricted

Subsidiary” shall mean WLFC Funding Corporation or any other Subsidiary of

Borrower established to facilitate securitizations and any Subsidiary of the

Borrower designated as an unrestricted subsidiary by the Borrower.  In no event shall WLFC (Ireland) Limited be

designated as an Unrestricted Subsidiary.

 

“Willis Companies” shall mean the

Borrower and its consolidated Subsidiaries.

 

1.2           Accounting Terms.  All accounting terms not specifically

defined herein shall be construed in accordance with Generally Accepted

Accounting Principles consistent with those applied in the preparation of the

financial statements referred to in Section 3.6, and all financial data

submitted pursuant to this Agreement shall be prepared in accordance with such

principles.

 

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

and visa versa.

 

SECTION 2

THE CREDIT

 

2.1           The Loans.

 

(a)           Loans;

Loan Commitment.  Subject to the

terms and conditions herein set forth and in reliance upon the representations,

warranties and covenants contained herein, the Lender agrees to make one or

more loans (individually, a "Loan" and, collectively, the “Loans”) to

the Borrower during the period beginning on the Closing Date and ending on the

last day of the calendar month in which the first annual anniversary of the

Closing Date occurs or such subsequent date to which this Agreement may be

extended pursuant to this Section 2.1, or on the earlier date of

termination in full pursuant to Section 8.1 hereof of the obligations of

the Lender (such first annual anniversary or such date to which this Agreement

is extended or such earlier date of termination being herein called the “Loan

Termination Date” in amounts not to exceed at any time the Maximum Loan

Commitment, such amount being the “Loan Commitment”).  The Loan Commitment shall be automatically extended for periods

of one year unless either the Borrower or the Bank, in its sole discretion, on

not less than 90 days prior notice, shall elect to terminate this Agreement, in

which case, subject to Section 2.8,this Agreement shall terminate on the last

day of the month immediately preceding the next annual anniversary of the

Closing Date.

(b)           Maximum

Loans Outstanding.  The Borrower

shall not be entitled to any new Loan if, after giving effect to such Loan, the

unpaid principal amount of the then outstanding Loans would exceed the Maximum

Loan Commitment.

 

(c)           Prepayment

and Reborrowing.  Prior to the Loan

Termination Date, subject to the terms hereof and within the limits of the

Maximum Loan Commitment, the Borrower may borrow, prepay and reborrow

Loans.  All Loans shall mature and be

due and payable as provided in Section 2.8.

 

2.2           The

Notes.  Each Loan made by the Lender

shall be evidenced by a single promissory note of the Borrower (each such

promissory note as it may be amended, extended, modified or renewed, a “Note”

and, together, the “Notes”) in the principal face amount equal to the

Loan requested, payable to the order of the Lender.  Each Note shall be dated the relevant Loan Closing Date, shall

bear interest at the Interest Rate and be payable as to principal and interest

in accordance with the terms hereof and thereof.  Each outstanding Loan shall be due and payable as set forth in

Section 2.8 unless the maturity of said Loans is accelerated as provided in

Section 8.1 hereof.

 

2.3           Funding Procedures.  In the event the Borrower shall fail to

borrow any Loan on the Loan Closing Date provided in a Request for Advance, the

Borrower shall pay to the Lender such amounts as may be necessary to compensate

the Lender for all direct and indirect costs and losses (including losses from

redeployment of prepaid or unborrowed funds at rates lower than the cost of

such funds to the Lender, and including lost profits incurred or sustained by

the Lender as a result of such failure to borrow).

 

(a)           Preliminary

Information.  In respect of each

transaction as to which the Borrower is considering making a Request for

Advance, the Borrower shall provide the Lender with such information regarding

the proposed Eligible Lease and proposed Eligible Engine as the Lender shall

reasonably request.  Lender shall have

the right, at the Borrower’s cost and expense, to request an opinion of counsel

licensed to practice in the jurisdiction in which the lessee under such Eligible

Lease resides or is domiciled as to such matters as Lender shall reasonably

request concerning the Collateral and the enforcement of rights of the Lender

under an Owner Trustee Mortgage.

 

(b)           Request

for Advance.  Each request for a

Loan shall be made not later than 2:00 p.m. Stockholm prevailing time on a

Business Day which shall be given not less than three (3) London Business Days

prior to the date of the proposed borrowing by delivery to the Lender of a

written request signed by the Borrower or, in the alternative, a telephone

request followed promptly by written confirmation of the request in

substantially the form attached as Exhibit H (a “Request for Advance”),

specifying the requested Loan Closing Date and amount of the Loan to be made

and selecting the Interest Rate Option applicable thereto.  No Loan shall be in an amount in excess of

90% of the then Net Book Value of the Engine to be financed by such Loan.  Each Request for Advance shall be

accompanied by evidence reasonably satisfactory to the Lender of such Net Book

Value, a copy of the relevant Eligible Lease and information as to the relevant

Eligible Engine and such other information regarding such Lease and Engine as

the Lender shall reasonably request.  No

request shall be effective until actually received in writing by the Lender.  Each Request for Advance shall be for a Loan

at a single interest rate option.  Upon

receipt by the Lender of a Request for Advance, the request shall not be

revocable by the Borrower.

(c)           Provided

(i) no Event of Default or Potential Default shall have occurred and be

continuing, and (ii) all the conditions precedent set forth in Section 4.2 have

been met by the Borrower or waived by the Lender, on the Loan Closing Date

specified in the Request for Advance, the Lender will make the Loan to the

Borrower requested therein.

 

2.4           Facility

Fee.  The Borrower agrees to pay to the Lender on the Closing Date the

Facility Fee.

 

2.5           Mandatory Prepayments.

 

(a)          

If the aggregate principal amount of Loans outstanding under this Credit

Facility at any time exceeds the total Maximum Loan Commitment, the Borrower

shall make immediate prepayments to reduce such outstanding Loans to an amount

not to exceed the Maximum Loan Commitment; provided however that this covenant

shall not be deemed breached if at the time such aggregate amount exceeds this

level, within four (4) Business Days after the date on which the Borrower first

has knowledge of such excess, the Borrower shall make a prepayment of Loans in

an amount sufficient to reduce such principal of Loans outstanding to not more

than the Maximum Loan Commitment and the Lender shall apply such amount so

remitted pro-rata to repayment of the then outstanding principal balance of all

Loans then outstanding.  The Borrower

shall not be entitled to utilize this mechanism to avoid a breachof this

covenant (or the covenant in Section 2.9) more than two (2) times during any

twelve-month period.

 

(b)           In

the event (i) an Engine is sold, the Borrower shall immediately prepay in full

the Loan made in respect of such Engine, or (ii) an Engine comes Off-Lease,

then upon the earlier to occur of (A) the date such Engine is sold and (B) 120

days after the date such Engine comes Off-Lease, the Borrower shall repay in

full the Loan made in respect of such Engine, in each case including but not

limited to all unpaid interest accrued to and including the date of such

payment and the then outstanding principal balance of such Loan and Break

Costs, if any, but without penalty or premium. 

Upon payment in full of the amounts specified in this Section 2.5(b),

Lender, at the Borrower's expense, shall execute all documents provided by

Borrower to release the applicable Engine and related Collateral (including,

without limitation, the related Lease and all letters of credit, security

deposits and similar credit enhancements provided by the lessee under the

Lease) from the Lien of the Owner Trustee Mortgage and each other applicable

Loan Document.

 

2.6           Interest.  Each

Loan shall bear interest on the unpaid principal amount thereof at the LIBO

Rate plus the Margin.  Interest on Loans

shall be computed on the basis of actual days elapsed in a year of 360 days,

and be based upon the Interest Rate Option selected by the Borrower in the

relevant Request for Advance.  In

respect of each Loan the Borrower shall have the right to exercise the Interest

Rate Option and the Interest Rate so elected shall apply during the applicable

Interest Rate Period.  The Borrower

shall have the right, by written notice given to the Lender on or prior to the

third Business Day prior to the expiration of each Interest Rate Period, to

exercise the Interest Rate Option and thereby elect a new Interest Rate Period

and LIBO Rate.  In the event the

Borrower fails to exercise the Interest Rate Option, in respect of the next

Interest Rate Period the Borrower shall be deemed to have exercised the same

Interest Rate Option and LIBO Rate as the Borrower elected for the prior

Interest Rate Period.

2.7           Blocked

Account; Payments of Interest and Principal.

 

(a)           Blocked Account.  The Borrower shall open the Blocked Account

and direct each Lessee to make all payments due under the relevant Lease (other

than maintenance reserves, security deposits, if any, casualty insurance

proceeds and Excluded Payments as that term is defined in each Owner Trustee Mortgage)

to the Blocked Account.  The Borrower

shall be responsible for and shall pay to the Bank any and all costs, fees and

charges imposed or levied by the Bank in respect of the Blocked Account, and

shall indemnify and hold harmless the Lender from and against any and all loss,

liability, cost, damage and expense, including, without limitation, legal and

accounting fees and expenses, which the Lender may sustain by virtue of its

becoming a party to the Security Agreement-Blocked Account other than due to

the Lender’s gross negligence or willful misconduct.  In the event the Bank terminates the Blocked Account Agreement,

and provided no Event of Default or Potential Default shall have occurred and

be continuing, the Borrower and the Lender shall cooperate in setting up a

substitute blocked account upon terms and conditions substantially similar to

those contained in the Blocked Account Agreement, and in respect of such

substituted blocked account, the Borrower shall execute and deliver a

substitute security agreement containing terms and conditions substantially

similar to those in the Security Agreement-Blocked Account.

 

(b)           Payments.  On the third Business Day of each calendar

month (“Payment Date”) out of the Blocked Account the Lender shall apply in payment

of the Obligations amounts sufficient: (i) to reimburse the Lender for all

amounts then due Lender under the Loan Documents other than interest and

principal under the Loans; (ii) next to pay interest due under each Loan; and

(iii) the remainder to amortize twenty-five one hundredths of one percent

(0.25%) of the original principal balance of all Loans.  Provided no Event of Default or Potential

Default shall have occurred and then be continuing, the Lender shall instruct

the Bank to remit to the Borrower on such Payment Date any and all amounts then

remaining in the Blocked Account after payment of the amounts set forth in the

foregoing clauses (i), (ii) and (iii). 

In the event on the first day of any calendar month there shall not be

in the Blocked Account an amount at least equal to the amounts required to be

paid pursuant to the preceding clauses (i), (ii) and (iii) (“the Required

Monthly Minimum”), on the next Business Day after receipt of notice thereof

from the Lender, the Borrower shall deposit in the Blocked Account an amount

equal to the amount by which the Required Monthly Minimum exceeds the amount in

the Blocked Account on such first Business Day, and the Lender shall apply such

amount so deposited as provided hereinabove.

 

(c)           Form

of Payments, Application of Payments Administration, Etc.  Subject to the provisions of Section 10.7,

all payments of principal, interest, fees, or other amounts payable by the

Borrower hereunder and under the other Loan Documents shall be made to the

Blocked Account and shall be applied by the Lender to the Loans in accordance

with Section 2.7(b).  Such payments

shall be remitted in Dollars to the Blocked Account or to such other account as

the Lender shall specify to the Borrower, in immediately available funds not

later than 10:00 a.m. San Francisco prevailing time on the day when due.  Whenever any payment is stated as due on a

day which is not a Business Day, the maturity of such payment shall, except as

otherwise provided in the definition of “Payment Period,” be extended to the

next succeeding Business Day and interest and commitment fees shall continue to

accrue during such extension.  The

Borrower authorizes the Lender to deduct from any account of the Borrower maintained

at the Lender or over which the Lender has control any amount payable under

this Agreement, the Notes or any other Loan Document.  The Lender’s failure to deliver any bill, statement or invoice

with respect to amounts due under this Section or under any Loan Document shall

not affect the Borrower’s obligation to pay any installment of principal,

interest or any other amount under this Agreement when due and payable.

2.8           Loan Maturities.  Except as provided in Section 2.5(b), each Loan shall mature at

the expiration of the term of the Lease in respect of which such Loan is made

(or at such earlier date as may be provided herein), as the same may be

extended pursuant to the terms of such Lease, 

and so long as any Loan and all other obligations of the Borrower shall

not have been paid in full and fully discharged, all the terms of this

Agreement shall remain in full force and effect notwithstanding termination

pursuant to Section 2.1 of the Lender's obligation to make Loans.

 

2.9           Debt to Value Maintenance.  Until all Loans, including interest and

principal thereon, have been paid in full and all other obligations of the

Borrower to the Lender under the Loan Documents have been fully discharged, the

aggregate outstanding principal balance of all the Loans shall at no time

exceed __% of the aggregate Fair Market Value of all Eligible Engines subject

to a Lien in favor of the Lender provided however that this covenant shall not

be deemed breached if at the time such aggregate amount exceeds said level,

within four (4) Business Days of the date the Borrower first has knowledge of

such excess, the Borrower shall make a prepayment of Loans in an amount

sufficient to reduce such principal of Loans outstanding to not more than __%

of such Fair Market Value, and the Lender shall apply such amount so remitted

pro-rata to the repayment of the then outstanding principal balance of all

Loans then outstanding..  The Borrower

shall not be entitled to utilize this mechanism to avoid a breach of this

covenant (or the covenant in Section 2.5(a)) more than two (2) times during any

twelve-month period.  In addition,

without limiting the foregoing, on or prior to the one hundred twentieth

(120th) day preceding each annual anniversary date of the Closing Date, the

Borrower shall provide the Lender with a determination of the aggregate Fair

Market Value of all such Engines (predicated on the assumption that such

Engines as of the Determination Date (as defined below) are in half-time,

half-life status”) as of a date not more than five (5) months prior to such

annual anniversary of the Closing Date ("Determination Date").  If the aggregate outstanding principal

balance of all the Loans as of the Determination Date exceed __% of the

aggregate Fair Market Value of all such Engines as of the Determination Date,

the Borrower shall at Lender's request, immediately remit to the Lender an

amount sufficient to reduce such principal of Loans outstanding to not more

than __% of such Fair Market Value and the Lender shall apply such amount so

remitted pro-rata to the repayment of the then outstanding principal balance of

all Loans then outstanding.*

 

*              This redacted material has been

omitted pursuant to a request for confidential treatment, and the material has

been filed separately with the Commission.

2.10         Voluntary

Prepayments. 

On one London Business Day’s notice to the Lender, the Borrower may, at

any time, without penalty, at its option, prepay any Loan in whole or in part

(but if in part only in multiples of $1,000,000); provided that if the

Borrower shall prepay a Loan prior to the last day of a Payment Period, the

Borrower shall pay to the Lender, in addition to the principal and interest

then to be paid in the case of a prepayment, on such date of prepayment, such

additional amounts as may be necessary to compensate the Lender for all direct

and indirect costs and losses, if any, losses resulting from redeployment of

prepaid funds at rates lower than the cost of such funds to the Lender, and

including lost profits incurred or sustained by the Lender) as a result of such

repayment (“Break Costs”).  Upon payment

in full of the amounts specified in this Section 2.10, Lender, at the

Borrower's expense, shall execute all documents provided by Borrower to release

the applicable Engine and related Collateral (including, without limitation,

the related Lease and all letters of credit, security deposits and similar

credit enhancements provided by the lessee under the Lease) from the Lien of

the Owner Trustee Mortgage and each other applicable Loan Document.

 

2.11         Payments.

 

(a)           Interest.  Interest on and principal of Loans shall be

payable at the times and in the manner set forth in Section 2.7(b).

 

(b)           Net Payments.  All payments made to the Lender by the

Borrower hereunder, under any Note or under any other Loan Document will be

made without set-off, counterclaim or other defense and will be made without

deduction or withholding for or on account of any taxes as provided in Section

2.14.

 

(c)           Commitment Fee.  Borrower agrees to pay to the Lender as

compensation for the Maximum Loan Commitment a fee of twenty-five one hundreths

of one percent (0.25%) of the average daily unused portion of the Maximum Loan

Commitment (the “Commitment Fee”) for the number of days in the immediately

preceding three calendar month period (except that the first such period shall

be the period commencing on the Loan Closing Date and ending December 1,

2001).  The Commitment Fee shall be

payable quarterly in arrears on the first day of each March, June, September

and December and on the Loan Termination Date, commencing December 1,

2001.  The Borrower may, at any time on

not less than three (3) days prior written notice to the Lender, terminate or

permanently reduce the Maximum Loan Commitment, provided that any reduction shall

be in the minimum amount of $1,000,000 or a multiple thereof and that no such

reduction shall reduce the Maximum Loan Commitment to an amount less than the

aggregate unpaid principal amount of all Loans then outstanding.

2.12         Change

in Circumstances,

Yield Protection.

 

(a)           Certain Regulatory Changes.  If any regulatory change or compliance by

the Lender with any request made after the date of this Agreement by any

regulatory authority or other central bank or fiscal, monetary or similar

authority (in each case whether or not having the force of law) shall (i)

impose, modify or make applicable any reserve, special deposit, premium or

similar requirement or imposition against assets held by, or deposits in or for

the account of, or loans made by, or any other acquisition of funds for loans

or advances by, the Lender; (ii) impose on the Lender any other condition

regarding the Notes; (iii) subject the Lender to, or cause the withdrawal or

termination of any previously granted exemption with respect to, any tax

(including any withholding tax but not including any income tax not currently

causing the Lender to be subject to withholding) or any other levy, impost,

duty, charge, fee or deduction on or from any payments due from the Borrower;

or (iv) change the basis of taxation of payments from the Borrower to the

Lender (other than by reason of a change in the method of taxation of the

Lender’s net income); and the result of any of the foregoing events is to

increase the cost to the Lender of making or maintaining any Loan or to reduce

the amount of principal, interest or fees to be received by the Lender in

respect of any Loan, the Lender will immediately so notify the Borrower.  If the Lender determines in good faith that

the effects of the change resulting in such increased cost or reduced amount

cannot reasonably be avoided or the cost thereof mitigated, then upon notice by

the Lender to the Borrower, the Borrower shall pay to the Lender on each

interest payment date of the Loans, such additional amount as shall be

necessary to compensate that Bank for such increased cost or reduced amount.

 

(b)           Capital Adequacy.  If the Lender shall determine that any

Regulation regarding capital adequacy or the adoption of any Regulation

regarding capital adequacy, which Regulation is applicable to banks (or their holding

companies) generally or to the Lender (or its holding company) specifically, or

any change therein, or any change in the interpretation or administration

thereof by any governmental authority, central bank or comparable agency

charged with the interpretation or administration thereof, or compliance by the

Lender (or its holding company) with any such request or directive regarding

capital adequacy (whether or not having the force of law) of any such

authority, central bank or comparable agency, has the effect of reducing the

rate of return on the Lender’s capital as a consequence of its obligations

hereunder to a level below that which the Lender could have achieved but for

such adoption, change or compliance (taking into consideration the Lender’s policies

with respect to capital adequacy) by an amount deemed by Lender to be material,

the Borrower shall promptly pay to the Lender, upon the demand of the Lender,

such additional amount or amounts as will compensate the Lender for such

reduction.

 

(c)           Ability to Determine LIBO Rate.  If the Lender shall determine (which

determination shall be, in the absence of fraud or manifest error, conclusive

and binding upon all parties hereto) that by reason of abnormal circumstances

affecting the interbank eurodollar or applicable eurocurrency market adequate

and reasonable means do not exist for ascertaining the LIBO Rate to be

applicable to the requested Loan or that eurodollar or eurocurrency funds in

amounts sufficient to fund all the Loans are not obtainable on reasonable

terms, the Lender shall give notice of such inability or determination by

telephone to the Borrower at least two (2) Business Days prior to the date of

the proposed Loan and thereupon the obligations of the Lender to make such Loan

shall be excused, subject, however, to the right of the Borrower at any time

thereafter to submit another request.

(d)           Yield Protection.  Determination by the Lender for purposes

hereof of the effect of any Regulatory Change or other change or circumstance

referred to in this Section 2.12 on its costs of making or maintaining Loans or

on amounts receivable by it in respect of the Loans and of the additional

amounts required to compensate the Lender in respect of any additional costs,

shall be made in good faith and shall be evidenced by a certificate, signed by

an officer of the Lender and delivered to the Borrower, as to the fact and

amount of the increased cost incurred by or the reduced amount accruing to the

Lender owing to such event or events. 

Such certificate shall be prepared in reasonable detail and shall be

conclusive as to the facts and amounts stated therein, absent manifest

error.  The Borrower shall pay the

Lender the amount shown as due at the times required herein.

 

(e)           Notice of Events.  The Lender will notify the Borrower of any

event occurring after the date of this Agreement that will entitle the Lender

to compensation pursuant to this Section as promptly as practicable after it

obtains knowledge thereof and determines to request such compensation.  Said notice shall be in writing, shall

specify the applicable Section or Sections of this Agreement to which it

relates and shall set forth the amount or amounts then payable pursuant to this

Section.

 

2.13         Illegality.  Notwithstanding any other provision in this

Agreement, if the adoption of any applicable Regulation, or any change therein,

or any change in the interpretation or administration thereof by any

governmental authority, central bank, or comparable agency charged with the

interpretation or administration thereof, or compliance by the Lender with any

request or directive (whether or not having the force of law) of any such

authority, central bank, or comparable agency shall make it unlawful or

impossible for the Lender to maintain its Loan Commitment, then upon notice to

the Borrower by the Lender, its Loan Commitment shall terminate.

 

2.14         Taxes.

 

(a)           Tax Gross-Up.  Notwithstanding any provision in this

Agreement to the contrary, all payments made to the Lender by the Borrower

hereunder, under any Note or under any Loan Document shall be made without

deduction or withholding for or on account of any present or future taxes,

except as required by applicable law. 

If such payments are or become subject to any tax imposed by way of

withholding or deduction under the applicable law of any jurisdiction, Borrower

shall indemnify and hold harmless the Lender against such taxes and shall pay

an additional amount to the Lender for the account of the Lender so that the

net amount to be received by the Lender, after reduction by any such deduction

or withholding including any reduction for taxes applicable to additional sums

payable under this Section 2.14, shall be equal to the full amount that the

Lender would have otherwise received absent such withholding or deduction.  Whenever any withholding taxes are paid by

the Borrower, the Borrower shall promptly forward to the Lender an official

receipt (or certified copy thereof) or other documentation reasonably

acceptable to the Lender evidencing such payment to the relevant taxing

authority.

 

(b)           Tax Indemnity.  Except as provided below, the Borrower shall

indemnify the Lender against any loss or liability which the Lender suffers

(directly or indirectly) for or on account of any tax in relation to a payment

received or receivable (or any payment deemed to be received or receivable)

under this Agreement.  The preceding

sentence does not apply to any tax (including income taxes, taxes on profits

and franchise taxes) imposed on or measure by the Lender's net income or

profits under the laws of the jurisdiction or any political subdivision thereof

in which (i) the Lender is incorporated or organized or in which the Lender is

treated as resident for tax purposes or in which the Lender maintains a place

of business or is otherwise connected (other than a connection resulting solely

from the execution, delivery, or performance of this Agreement and the other

Loan Documents), or (ii) the Lender's office is located in respect of amounts

received or receivable in that jurisdiction. 

If the Lender makes, or intends to make, a claim hereunder, it must

promptly notify the Borrower if the event which will give, or has given, rise

to the claim.

(c)           Other Related Tax Matters.  If the Borrower is required to pay any

amount to the Lender pursuant to this Section 2.14, then the Lender shall use

reasonable efforts (consistent with legal and regulatory restrictions) to

change the jurisdiction of its lending office so as to eliminate any such

additional payment by the Borrower which may thereafter accrue, if such change

in the reasonable judgment of the Lender is not otherwise disadvantageous to

the Lender.  If the Lender is entitled

to an exemption from or reduction of tax, with respect to payments under this

Agreement, it shall, upon the written request of the Borrower, deliver to the

Borrower at such times as reasonably requested by the Borrower in writing, such

properly completed and executed documentation prescribed by applicable law as

will permit such payments to be made without withholding or at a reduced

rate.  Notwithstanding anything therein

to the contrary, the Borrower shall not be required to pay any additional

amounts pursuant to this Section 2.14 with respect to taxes that are attributable

to the Lender's failure to comply with the foregoing sentence.  If the Lender shall become aware that it is

entitled to receive a refund in respect of amounts paid by the Borrower

pursuant to this Section 2.14, which refund in the good faith judgment of the

Lender is allocable to such payment, it shall promptly notify the Borrower of

the availability of such refund and shall, within thirty (30) days after the

receipt of a request by the Borrower, apply for such refund.  If the Lender receives a refund in respect

of any amounts paid by the Borrower pursuant to this Section 2.14, which refund

in the good faith judgment of the Lender is allocable to such payment, it shall

promptly notify the Borrower of such refund and shall, within thirty (30) days

after receipt, repay such refund to the Borrower net of all out-of-pocket

expenses of the Lender; provided, however, that the Borrower, upon the request

of the Lender, agrees to repay the amount paid over to the Borrower to the

Lender in the event the Lender is required to repay such refund.

 

2.15         Maintenance Reserves; Security Deposits;

Insurance Proceeds.  All maintenance reserves, security deposits and proceeds of

casualty insurance shall be held and applied by the Lender pursuant to and in

accordance with the Owner Trustee Mortgage.

 

SECTION 3

REPRESENTATIONS

AND WARRANTIES

 

The Borrower represents and warrants to the

Lender that on the date hereof and on each Loan Closing Date:

 

3.1           Organization, Standing.  It (a) is a corporation duly organized,

validly existing and in good standing under the laws of Delaware, (b) has the

corporate power and authority necessary to own its assets, carry on its

business and enter into and perform its obligations hereunder, and under each

Loan Document to which it is a party, and (c) is qualified to do business and is

in good standing in each jurisdiction where the nature of its business or the

ownership of its properties requires such qualification, except where the

failure to be so qualified would not have a Material Adverse Effect.

3.2           Corporate

Authority, Validity,

Etc.  The making and

performance of the Loan Documents to which it is a party are within its power

and authority and have been duly authorized by all necessary corporate

action.  The making and performance of

the Loan Documents do not and under present law will not require any consent or

approval not obtained of any of its shareholders, or any other Person

(including, without limitation, any Governmental Authority), do not and under

present law will not violate any law, rule, regulation order, writ, judgment,

injunction, decree, determination or award, do not violate any provision of its

charter or by-laws, do not and will not result in any breach of any material

agreement, lease or instrument to which it is a party, by which it is bound or

to which any of its assets are or may be subject, and do not and will not give

rise to any Lien upon any of its assets except the Lien in favor of the Lender

contemplated hereby.  The Borrower is

not in default under any agreement, lease or instrument except to the extent

such default reasonably could not have a Material Adverse Effect.  No authorizations, approvals or consents of,

and no filings or registrations with, any Governmental Authority are necessary

for the execution, delivery or performance by the Borrower of any Loan Document

to which it is a party or for the validity or enforceability thereof, except

any filings or registrations expressly contemplated by the Loan Documents.

 

3.3           Validity

of Loan Documents.  The Loan Documents to which Borrower is a

party, when executed and delivered by Borrower, will have been duly executed

and delivered by the Borrower and constitute legal, valid, and binding

obligations of the Borrower, enforceable in accordance with their respective

terms.

 

3.4           Litigation.  Except as disclosed in Section 3.4 of the

Disclosure Schedule, there are no actions, suits or proceedings pending or, to

the Borrower’s knowledge, threatened against or affecting the Borrower or any

of its assets before any court, government agency, or other tribunal which if

adversely determined reasonably could have a Material Adverse Effect.  If there is any disclosure on Section 3.4 of

the Disclosure Schedule, the status (including the tribunal, the nature of the

claim and the amount in controversy) of each such litigation matter as of the

date of this Agreement is set forth in Section 3.4 of the Disclosure Schedule.

 

3.5           ERISA. (a)

The Borrower and each ERISA Affiliate is in compliance in all material respects

with all applicable provisions of ERISA and the regulations promulgated

thereunder; and, neither Borrower, nor any ERISA Affiliate maintains or

contributes to or has maintained or contributed to any multiemployer plan (as

defined in Section 4001 of ERISA) under which the Borrower or any ERISA

Affiliate could have any withdrawal liability; (b) neither the Borrower nor any

ERISA Affiliate, sponsors or maintains any Plan under which there is an

accumulated funding deficiency within the meaning of Section 412 of the Code,

whether or not waived; (c) the aggregate liability for accrued benefits and

other ancillary benefits under each Plan that is or will be sponsored or

maintained by the Borrower or any ERISA Affiliate (determined on the basis of

the actuarial assumptions prescribed for valuing benefits under terminating single-employer

defined benefit plans under Title IV of ERISA) does not exceed the aggregate

fair market value of the assets under each such defined benefit pension Plan;

(d) the aggregate liability of the Borrower and each ERISA Affiliate arising

out of or relating to a failure of any Plan to comply with the provisions of

ERISA or the Code, will not have a Material Adverse Effect; and (e) there does

not exist any unfunded liability (determined on the basis of actuarial

assumptions utilized by the actuary for the plan in preparing the most recent

annual report) of the Borrower or any ERISA Affiliate under any plan, program

or arrangement providing post-retirement life or health benefits.

3.6           Financial

Statements.  The consolidated financial statements of Borrower

as of and for the Fiscal Year ended December 31, 2000 and for the Fiscal

Quarter ended June 30, 2001, in each case, consisting of a balance sheet, a

statement of operations, a statement of shareholders’ equity, a statement of

cash flows and except for the Fiscal Quarter Statement accompanying footnotes

furnished to the Lender in connection herewith, present fairly, in all material

respects, the financial position, results of operations and operating

statistics of the Borrower as of the dates and for the periods referred to, in

conformity with GAAP.  Except as set

forth on Section 3.6 of the Disclosure Schedule, there are no material

liabilities, fixed or contingent, which are not reflected in such financial

statements, the accompanying footnotes, or the Borrower’s Form 10K filed for

the period ended December 31, 2000 or the Borrower's Form 10Q filed for the

period ended June 30, 2001, other than liabilities which are not required to be

reflected in such financial statements.

 

3.7           No Material Adverse Change.  Since June 30, 2001, there has been no

Material Adverse Change.

 

3.8           Not in Default, Judgments, Etc.  No Event of Default or Potential Default

under any Loan Document has occurred and is continuing.  The Borrower has satisfied all judgments

(other than judgments which do not constitute an Event of Default under Section

8.1(g)), and is not in default under any order, writ, injunction, or decree of

any court, arbitrator, or federal, state, municipal, or other governmental

authority, commission, board bureau, agency, or instrumentality, domestic or

foreign.

 

3.9           Taxes.  The Borrower has filed all federal, state,

local and foreign tax returns and reports which it is required by law to file

and as to which its failure to file would have a Material Adverse Effect, and

has paid all taxes, including wage taxes, assessments, withholdings and other

governmental charges which are presently due and payable, other than those

being contested in good faith by appropriate proceedings, if any, and disclosed

on Section 3.9 of the Disclosure Schedule. 

The tax charges, accruals and reserves on the books of the Borrower are

adequate to pay all such taxes that have accrued but are not presently due and

payable.

 

3.10         Permits,

Licenses, Etc. 

The Borrower possesses all permits, licenses, franchises, trademarks,

trade names, copyrights and patents necessary to the conduct of its business as

presently conducted or as presently proposed to be conducted, except where the

failure to possess the same would not have a Material Adverse Effect.

 

3.11         No Materially Adverse Contracts,

Etc. 

The Borrower is not subject to any charter, corporate or (to the best of

its knowledge) other legal restriction, or any judgment, decree, order, or (to

the best of its knowledge) rule or regulation which in the judgment of its

directors or officers has or is expected in the future to have a Material

Adverse Effect.  The Borrower is not a

party to any contract or agreement which in the judgment of its directors or

officers has or is expected to have any Material Adverse Effect, except as

otherwise reflected in adequate reserves.

3.12         Compliance

with Laws, Etc.  The Borrower is in compliance in all

material respects with all Regulations applicable to its business (including

obtaining all authorizations, consents, approvals, orders, licenses, exemptions

from, and making all filings or registrations or qualifications with, any court

or governmental department, public body or authority, commission, board,

bureau, agency, or instrumentality), the noncompliance with which reasonably

would likely have a Material Adverse Effect.

 

3.13         Solvency.  The Borrower is, and after giving effect to

the transactions contemplated hereby, will be, Solvent.

 

3.14         Use of Proceeds.  The Borrower will use the proceeds of any

Loan to be made pursuant hereto for the purchase, financing and refinancing of

Engines.

 

3.15         Depreciation

Policies.  The Borrower’s depreciation policies with

respect to the Engines are as set forth on Exhibit G.  These policies have been in effect substantially without change

since January 1, 1997.

 

3.16         Disclosure Generally.  The representations and statements made by

the Borrower or on its behalf in connection with this Agreement and the Loans,

including representations and statements in each of the Loan Documents, do not

and will not contain any untrue statement of a material fact or omit to state a

material fact or any fact necessary to make the representations made not

materially misleading.  No written

information, exhibit, report, brochure or financial statement furnished by the

Borrower to the Lender in connection with this Agreement, the Loans or any Loan

Document contains or will contain any material misstatement of fact or omit to

state a material fact or any fact necessary to make the statements contained

therein not misleading.  Notwithstanding

anything to the contrary in this Agreement, the Disclosure Schedule to this

Agreement shall be promptly updated by the Borrower whenever necessary to

reflect events that have occurred which would make the latest information

contained therein delivered by the Borrower to the Lender inaccurate or

misleading; provided, however, that no updating of any such Disclosure

Schedule shall operate to:  (i) cure a

breach of a representation or warranty previously made by the Borrower; (ii)

modify any of the covenants or obligations of the Borrower under this Agreement

or any other Loan Document (including any affirmative covenants, negative

covenants or financial covenants); (iii) prevent the occurrence of the

disclosed event from constituting a Potential Default or Event of Default if

the occurrence of such event otherwise constitutes a Potential Default or Event

of Default under this Agreement or any other Loan Document; or (iv) expand the

definition of “Permitted Liens” allowed under this Agreement.

 

SECTION 4

CONDITIONS

PRECEDENT

 

4.1           Conditions

to the Effectiveness of

the Agreement.  The

effectiveness of this Agreement is conditioned upon the following:

 

(a)           Due Execution.  This Agreement shall be executed and

delivered by the Borrower and the Lender and shall be in full force and effect.

(b)           Facility Fee.  The Borrower shall have paid to Lender the

applicable Facility Fee.

 

(c)           Opinion.  The Lender shall have received a favorable

written legal opinion from counsel to the Borrower dated the Closing Date in

form and substance and from counsel satisfactory to the Lender, which shall be

addressed to the Lender, with respect to the due authorization, execution, and

delivery by the Borrower of this Agreement, the enforceability of this

Agreement against the Borrower, and such other matters as the Lender shall

reasonably request.

 

(d)           Other Documents and Information.  The Lender shall have received copies of all

other documents and information as it shall have reasonably requested, each in

form and substance satisfactory to the Lender.

 

4.2           All

Loans. 

The obligation of the Lender to make any Loan is conditioned upon the

following:

 

(a)           Articles, Bylaws.  The Lender shall have received copies of the

Articles or Certificate of Incorporation and Bylaws of the Borrower certified

by its corporate secretary or secretary, together with Certificate of Good

Standing from any jurisdiction where the nature of its business or the

ownership of its properties requires such qualification except where the

failure to be so qualified would not have a Material Adverse Effect.

 

(b)           Evidence of Authorization.  The Lender shall have received copies

certified by the Secretary or Assistant Secretary of the Borrower of all

corporate or other action taken by Borrower to authorize its execution and

delivery and performance of the Loan Documents and to authorize the Loans

 

(c)           Incumbency.  The Lender shall have received a certificate

signed by the secretary or assistant secretary of the Borrower, together with

the true signature of the officer or officers authorized to execute and deliver

the Loan Documents and certificates thereunder, upon which the Lender shall be

entitled to rely conclusively until they shall have received a further

certificate of the secretary or assistant secretary of the Borrower amending

the prior certificate and submitting the signature of the officer or officers

named in the new certificate as being authorized to execute and deliver the

Loan Documents and certificates thereunder.

 

(d)           Consents.  The Borrower shall have provided to the

Lender evidence satisfactory to the Lender that all governmental, shareholder

and third party consents and approvals necessary in connection with the

transactions contemplated hereby have been obtained and remain in effect.

 

(e)           Blocked Account.  The Borrower shall have opened the Blocked

Account and have delivered to the Lender the Blocked Account Agreement executed

by the Borrower and the Bank and the Security Agreement-Blocked Account,

executed by the Borrower.

(f)            Owner Trustee Documents.  The Lender shall have received (i) a copy of

the resolutions of the Board of Directors of the Owner Trustee, in its

individual capacity, certified by the Secretary or an Assistant Secretary of

the Owner Trustee, duly authorizing the execution, delivery and performance by

the Owner Trustee of each of the Loan Documents to which the Owner Trustee is

or will be a party and (ii) an incumbency certificate of Owner Trustee, as to

the persons authorized to execute and deliver the Loan Documents to which it is

or will be a party and the signatures of such person or persons.

 

(g)           Opinions.  The Lender shall have received a favorable

written legal opinion from counsel to the Borrower dated each Loan Closing Date

in form and substance and from counsel satisfactory to the Lender, which shall

be addressed to the Borrower, with respect to the due authorization, execution,

delivery and enforceability by the Lender of each of the Loan Documents to

which the Borrower is a party, the enforceability of such Loan Documents

against the Borrower, and as to such other matters as the Lender shall

reasonably request; provided in respect of each Loan Closing Date after the

initial Loan Closing Date, the Borrower may satisfy the requirements of this

clause (g) by providing the Lender with a letter of counsel having

rendered the opinion to the effect that the Borrower may rely on such opinion

on such Loan Closing Date.

 

(h)           Other Agreements.  The Borrower and each Owner Trustee as

applicable shall have executed and delivered to each other the other Loan

Documents required hereunder.

 

(i)            Other Fees, Expenses.  The Borrower shall simultaneously pay or

shall have paid all fees (in addition to those described in Section 4.1(b)) and

expenses, if any, due hereunder or under any other Loan Document.

 

(j)            Request For Advance.  The Borrower shall have delivered and the

Lender shall have received a Request for Advance for such Loan, in such form as

the Lender may request from time to time.

 

(k)           Loan Documents.  The Borrower shall have delivered to the

Lender and the Lender shall have received:

(i)            a

fully executed counterpart of the relevant Purchase Agreement, if available to

the Borrower;

 

(ii)           the

fully executed chattel paper counterpart of the relevant Lease;

 

(iii)          a

counterpart of the relevant Owner Trustee Mortgage, executed by the relevant

Owner Trustee;

 

(iv)          a

counterpart of the relevant Beneficial Interest Pledge Agreement, executed by

the Borrower;

 

(v)           a

Note in the principal amount of the relevant Loan, executed by the Borrower;

(vi)          a

Consent and Agreement, executed by the relevant Lessee and the relevant Owner

Trustee;

 

(vii)         if

the lessee’s domicile or principal location is a non-U.S. jurisdiction,

evidence in form and substance reasonably satisfactory to Lender that such

domicile or principal location is excluded from the definition of

“Nonrecognition of Rights Jurisdictions” under clause (a) or (b) thereof.

 

(l)            Lease and Purchase Documents.  To the extent available to the Borrower,

with respect to each Lease and Purchase Agreement, the Lender shall have

received copies of all documents the delivery of which is provided for therein

as a condition precedent to the effectiveness thereof.

 

(m)          Covenants; Representations.  The Borrower and each Owner Trustee shall be

in compliance with all covenants, agreements and conditions in each Lease

Document and each Purchase Document, and each representation and warranty

contained in each Loan Document and made by the Borrower or an Owner Trustee

shall be true in all material respects with the same effect as if such

representation or warranty had been made on the date such Loan is made or

issued, except to the extent such representation or warranty relates to a

specific prior date.

 

(n)           Compliance Certificate.  The Lender shall have received from the

Borrower a Compliance Certificate to the effect that (a) since the date of the

Borrower's most recently published financial statements there has been no

Material Adverse Change, (b) each of the representations of the Borrower and

the Owner Trustee in each Loan Document to which it is a party are true and

correct in all material respects (other than Loan representations made as of

and relevant only to a specific date) and (c) no Event of Default or Potential

Default has occurred and is continuing.

 

(o)           Material Adverse Change.  Since the date of the most recent financial

statements of the Borrower, there shall not have been any Material Adverse

Change.

 

(p)           Legal Opinions.  The Lender shall have received a favorable

legal opinion (i) from counsel to the Owner Trustee dated the Loan Closing Date

in form and substance satisfactory, and from counsel reasonably acceptable, to

the Lender with respect to the due authorization and delivery by the Owner

Trustee of the Loan Documents to which it is a party, the enforceability

thereof, the Lien created thereby and as to such other matters as the Lender

shall reasonably request, and (ii) from McAfee & Taft, special FAA

counsel, as to the Owner Trustee Mortgage and such other matters as the Lender

shall reasonably request.

 

(q)           Insurance.  Evidence, in form and scope satisfactory to

the Lender, of the insurance required by Section 3.06 of the relevant

Owner Trustee Mortgage, provided the Borrower shall have the right to defer

delivery thereof for a period of up to 30 days from the Loan Closing Date.

 

(r)            Documents.  The Lender shall have received all

certificates, instruments and other documents then required to be delivered to

the Lender pursuant to any Loan Document, in each instance in form and

substance reasonably satisfactory to it.

(s)           Security Interest.  The Borrower shall furnish evidence

satisfactory to the Lender that the Lender holds a perfected, first-priority

lien against all Collateral which is the subject of such Loan, subject to the

proviso set forth in Section 9.1 and the exceptions contained in Section 8.1 or

in any other Loan Document.

 

(t)            Financial Statements.  The Lender shall have received the most

recently published financial statements of the Willis Companies, including

balance sheets, income and cash-flow statements, audited by independent public

accountants of recognized national standing, and prepared in conformity with

GAAP.

 

(u)           Litigation.  There shall be no actions, suits,

investigations or proceedings pending or threatened in any court or before any

arbitrator or Governmental Authority that could have a Material Adverse Effect.

 

(v)           Other Fees, Expenses.  The Borrower shall simultaneously pay or

shall have paid all fees and expenses, if any, due hereunder or under any other

Loan Document.

 

(w)          Other Documents.  The Lender shall have received such other

certificates, documents and opinions as the Lender shall reasonably request.

 

SECTION 5

AFFIRMATIVE

COVENANTS

 

The Borrower covenants and agrees that, without

the prior written consent of the Lender, from and after the date hereof and so

long as the Loan Commitment is in effect or any Obligation remains unpaid or

outstanding, it will:

 

5.1           Financial Statements and Reports.  Furnish to the Lender the following

financial information:

 

(a)           Annual Statements.  No later than ninety (90) days after the end

of each Fiscal Year, the consolidated and consolidating balance sheet of the

Willis Companies as of the end of such year and the prior year in comparative

form, and related statements of operations, shareholders’ equity and cash flows

for such Fiscal Year and the prior Fiscal Year in comparative form.  The financial statements shall be in

reasonable detail with appropriate notes, and shall be prepared in accordance

with GAAP.  The consolidated annual

financial statements shall be certified (without any qualification or

exception) by KPMG LLP or other independent public accountants reasonably

acceptable to the Lender.  Such

financial statements shall be accompanied by a report of such independent

certified public accountants stating that, in the opinion of such accountants,

such financial statements present fairly, in all material respects, the

financial position, the results of operations and the cash flows of the Willis

Companies for the period then ended in conformity with GAAP, except for

inconsistencies resulting from changes in accounting principles and methods

agreed to by such accountants and specified in such report, and that, in the

case of such financial statements, the examination by such accountants of such

financial statements has been made in accordance with generally accepted

auditing standards and accordingly included examining, on a test basis,

evidence supporting the amounts and disclosures in the financial statements and

assessing the accounting principles used and significant estimates made, as

well as evaluating the overall financial statement presentation.  Each financial statement provided under this

subsection (a) shall be accompanied by a certificate signed by such accountants

either stating that during the course of their examination nothing came to

their attention which would cause them to believe that any event has occurred

and is continuing which constitutes an Event of Default or Potential Default,

or describing each such event.  In

addition to the annual financial statements, the Borrower shall, promptly upon

receipt thereof, furnish to the Lender a copy of the portion of each other

report or management letter submitted to its board of directors by its

independent accountants in connection with any annual, interim or special audit

made by them of the financial records of the Borrower in which the Borrower’s

accountants give any comment critical of the valuation of, or controls or

procedures related to, the Collateral.

(b)           Quarterly Statements.  No later than forty-five (45) calendar days

after the end of each Fiscal Quarter of each Fiscal Year except for the Fiscal

Quarter ending on December 31, the consolidated and consolidating balance sheet

and related statements of operations, shareholders’ equity and cash flows of

the Willis Companies for such quarterly period and for the period from the

beginning of such fiscal year to the end of such Fiscal Quarter and a

corresponding financial statement for the same periods in the preceding Fiscal

Year certified by the chief financial officer, chief administrative officer

or  chief executive officer of the

Willis Companies as having been prepared in accordance with GAAP (subject to

changes resulting from audits, year-end adjustments and the absence of

footnotes).  Such quarterly statement

shall be accompanied by a Compliance Certificate in the form attached hereto as

Exhibit B or such other form as the Lender shall reasonably request.

 

(c)           No Default.  Within forty-five (45) calendar days after

the end of each of the first three Fiscal Quarters of each Fiscal Year and

within ninety (90) calendar days after the end of each Fiscal Year, a

certificate signed by the chief financial officer, chief administrative officer

or chief executive officer of the Willis Companies certifying that, to the best

of such officer’s knowledge, after due inquiry, (i) the Borrower has complied

with all covenants, agreements and conditions in each Loan Document and that

each representation and warranty contained in each Loan Document is true and

correct with the same effect as though each such representation and warranty

had been made on the date of such certificate (except (A) to the extent such

representation or warranty relates to a specific prior date, or (B) to the

extent that any events have occurred that require a change to the Disclosure

Schedule, in which case an updated Disclosure Schedule will be delivered by the

Borrower in accordance with the requirements of Section 3.16 hereof, in which

case the representation shall be updated by the Borrower to reflect any changes

occurring since that prior date, and (ii) no event has occurred and is

continuing which constitutes an Event of Default or Potential Default, or

describing each such event and the remedial steps being taken by the Borrower,

as applicable.

 

(d)           ERISA.  All reports and forms filed with respect to

all Plans, except as filed in the normal course of business and that would not

result in an adverse action to be taken under ERISA, and details of related

information of a Reportable Event, promptly following each filing.

 

(e)           Material Changes.  Notification to the Lender of any

litigation, administrative proceeding, investigation, business development, or

change in financial condition which could reasonably have a Material Adverse

Effect, promptly following its discovery.

(f)            Other Information.  Promptly, upon request by the Lender from

time to time (which may be on a monthly or other basis), the Borrower shall

provide such other information and reports regarding its operations, business

affairs, prospects and financial condition as the Lender may reasonably

request.

 

(g)           Annual Compliance Report.  As soon as practicable and in any event

within 90 days after the end of each fiscal year, the Borrower shall deliver to

the Lender a Compliance Certificate.

 

(h)           Maintenance of Current

Depreciation Policies.  The Borrower

shall maintain its method of depreciating its assets substantially consistent

with past practices as set forth in Exhibit G and will promptly notify the  Lender of any deviation from such practices.

 

5.2           Corporate Existence.  Preserve its corporate existence and all

material franchises, licenses, patents, copyrights, trademarks and trade names

consistent with good business practice; and maintain, keep, and preserve all of

its properties (tangible and intangible) necessary or useful in the conduct of

its business in good working order and condition, ordinary wear and tear

excepted.

 

5.3           ERISA.  Comply in all material respects with the

provisions of ERISA to the extent applicable to any Plan maintained for the

employees of the Borrower or any ERISA Affiliate; do or cause to be done all

such acts and things that are required to maintain the qualified status of each

Plan and tax exempt status of each trust forming part of such Plan; not incur

any material accumulated funding deficiency (within the meaning of ERISA and

the regulations promulgated thereunder), or any material liability to the PBGC

(as established by ERISA); not permit any event to occur as described in

Section 4042 of ERISA or which may result in the imposition of a lien on its

properties or assets; notify the  Lender

in writing promptly after it has come to the attention of senior management of

the Borrower of the assertion or threat of any Reportable Event or other event

described in Section 4042 of ERISA (relating to the soundness of a Plan) or the

PBGC’s ability to assert a material liability against the Borrower or impose a

lien on its, or any ERISA Affiliates’, properties or assets; and refrain from

engaging in any Prohibited Transactions or actions causing possible liability

under Section 5.02 of ERISA.

 

5.4           Compliance with Regulations.  Comply in all material respects with all

Regulations applicable to its business, the noncompliance with which reasonably

could have a Material Adverse Effect.

 

5.5           Conduct of Business; Permits and

Approvals, Compliance with Laws.  Continue to engage in an efficient and

economical manner in a business of the same general type as conducted by it on

the date of this Agreement; maintain in full force and effect, its franchises,

and all licenses, patents, trademarks, trade names, contracts, permits,

approvals and other rights necessary to the profitable conduct of its business.

5.6           Maintenance

of Properties.  Maintain or cause to be maintained in good

repair, working order and condition all properties used or useful in its

business and make all reasonable and necessary renewals, replacements,

additions, betterments and improvements thereof and thereto, so that the

business carried on in connection therewith may be conducted in the ordinary

course at all times.

 

5.7           Maintenance of Insurance.  Maintain insurance with financially sound

and reputable insurance companies or associations in such amounts and covering

such risks (including but not limited to coverage for aviation war risk

liabilities) as are usually carried by companies engaged in the same or a

similar business and similarly situated, which insurance may provide for

reasonable deductibility from coverage thereof.

 

5.8           Payment of Taxes, Etc.  Promptly pay and discharge (a) all taxes,

assessments, and governmental charges or levies imposed upon it or upon its

income and profits, upon any of its property, real, personal or mixed, or upon

any part thereof, before the same shall become in default; and (b) all lawful

claims for labor, materials and supplies or otherwise, which, if unpaid, might

become a lien or charge upon such property or any part thereof; provided, however,

that so long as the Borrower first notifies the Lender of its intention to do

so, it shall not be required to pay and discharge any such tax, assessment,

charge, levy or claim so long as the failure to so pay or discharge does not

constitute or result in an Event of Default or a Potential Default hereunder

and so long as no foreclosure or other similar proceedings shall have been

commenced against such property or any part thereof and so long as the validity

thereof shall be contested in good faith by appropriate proceedings diligently

pursued and it shall have set aside on its books adequate reserves with respect

thereto.

 

5.9           Notice of Events.  Promptly upon discovery of any of the

following events, provide telephone notice to the Lender (confirmed within

three (3) calendar days by written notice from the Borrower to the Lender)

describing the event and all action the Borrower proposes to take with respect

thereto:

 

(a)           an Event of Default or Potential

Default under this Agreement or any other Loan Document;

 

(b)           any default or event of default under

a contract or contracts and the default or event of default involves payments

by the Borrower in an aggregate amount equal to or in excess of $3,000,000;

 

(c)           a default or event of default under

or as defined in any evidence of or agreements for Indebtedness for Borrowed

Money under which the Borrower’s liability is equal to or in excess of

$3,000,000, singularly or in the aggregate, whether or not an event of default

thereunder has been declared by any party to such agreement or any event which,

upon the lapse of time or the giving of notice or both, would become an event

of default under any such agreement or instrument or would permit any party to

any such instrument or agreement to terminate or suspend any commitment to lend

to the Borrower or to declare or to cause any such indebtedness to be

accelerated or payable before it would otherwise be due;

(d)           the institution of, any material

adverse determination in, or the entry of any default judgment or order or

stipulated judgment or order in, any suit, action, arbitration, administrative

proceeding, criminal prosecution or governmental investigation against the

Borrower in which the amount in controversy is in excess of $3,000,000,

singularly or in the aggregate;

 

(e)           any change in any Regulation,

including, without limitation, changes in tax laws and regulations, which would

have a Material Adverse Effect; or

 

(f)            any “Event of Default” (as defined

in the Other Facility Agreement) under the Other Facility Agreement.

 

5.10         Inspection Rights.  At any time during regular business hours

and upon reasonable notice permit the Lender or any authorized officer,

employee, agent, or representative of the Lender (a) to discuss the affairs,

finances, and accounts of the Borrower with its Chairman, President, any

executive vice president, its chief financial officer, treasurer, controller or

independent accountants or (b) subject to the terms of the relevant Lease to

inspect an Engine and its Engine Records and make such copies thereof as the

Lender may elect.  In conducting each

such inspection, visit or discussion (each an “inspection”), the Lender and

each of its officers, employees, agents and representatives shall take all

reasonable action to minimize any disruption to the normal operations of the

Borrower and the relevant Lessee. If no Event of Default or Potential Default

shall be in existence, the Lender in respect of each Engine and otherwise

generally, shall limit such inspection of each of the foregoing to once each

calendar year.  If an inspection shall

be made during the continuance of a Potential Default or an Event of Default,

the Borrower shall reimburse the Lender for its reasonable out-of-pocket

expense of such inspection.  If an

inspection shall be made when no Event of Default or Potential Default shall be

in existence, the Borrower shall reimburse the Lender for its reasonable

out-of-pocket expense of such inspection up to $5,000 in the aggregate; any

expenses incurred by the Lender in excess of such amount shall be for the

Lender’s account.  At all times, it is

understood and agreed by the Borrower that all expenses in connection with any

such inspection which may be incurred by the Borrower, any officers and employees

thereof and the attorneys and independent certified public accountants therefor

shall be expenses payable by the Borrower and shall not be expenses of the

Lender.

 

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

accordance with Generally Accepted Accounting Principles.

 

5.12         Compliance with Material Contracts.  Comply in all material respects with all

obligations, terms, conditions and covenants, as applicable, in all instruments

and agreements to which it is a party or by which it is bound, including but

not limited to any Lease which has been assigned to the Lender, or any of its

properties is affected and in respect of which the failure to comply reasonably

could have a Material Adverse Effect.

 

5.13         Use

of Proceeds.  Use the proceeds of any Loan to be made

pursuant hereto for the purchase or refinancing of Engines as contemplated

herein.

 

5.14         Further Assurances. 

Do such further acts and things and execute and deliver to the

Lender such additional assignments, agreements, powers and instruments, as the

Lender may reasonably require or reasonably deem advisable, to carry into

effect the purposes of this Agreement or to better assure and confirm unto the

Lender its rights, powers and remedies hereunder.

5.15         Placards. 

Subject only to restrictions contained in the Lease, require each lessee

under such Lease relating to each Eligible Engine to affix to and maintain on

such Eligible Engine subject to such Lease a placard satisfactory to the Lender

bearing an inscription substantially in the form of “THIS ENGINE IS OWNED BY

WILLIS LEASE FINANCE CORPORATION OR AN AFFILIATE, AND IS SUBJECT TO A FIRST

PRIORITY SECURITY INTEREST IN FAVOR OF ONE OR MORE FINANCIAL INSTITUTIONS”, or

such other inscription as the Lender from time to time may reasonably request.

 

5.16         Lease

Event of Default.  If a Lease Event of Default shall occur

under an Eligible Lease, Lender shall have the right to require the Borrower to

prepay, and the Borrower shall prepay, on a date no later than 180 days from

the date of the Lender’s request for such prepayment, the entire then

outstanding principal of the relevant Loan, together with interest thereon and

all other amounts due the Lender under the Loan Documents to the extent they

relate to such relevant Loan (including, but not limited to, Break Costs);

provided, however, in respect of any Eligible Lease the Borrower shall have the

right to cure two such Lease Events of Default before the Lender shall have the

right to require the prepayment provided for herein.

 

5.17         Special Indemnification.  If, pursuant to Section 13 of the

Blocked Account Agreement, the Lender is required to indemnify the Bank, the

Borrower, immediately upon receipt of request from the Lender therefor, shall

reimburse the Lender for all amounts paid or required to be paid by the Lender

to the Bank pursuant to such Section 13, unless due to the Lender’s gross

negligence or willful misconduct.

 

SECTION 6

NEGATIVE

COVENANTS

 

The Borrower covenants and agrees that,

without the prior written consent of the Lender, from and after the date hereof

and so long as any Loan Commitment is in effect or any Obligation remains

unpaid or outstanding, it will not:

 

6.1           Consolidation and Merger.  Without the consent of the Lender which

shall not be unreasonably withheld or delayed, merge or consolidate with or

into any corporation except, if (a) no Potential Default or Event of Default

shall have occurred and be continuing either immediately prior to or upon the

consummation of such transaction, and (b) the Borrower is the surviving entity.  The Borrower will promptly notify the  Lender of any merger or consolidation

involving the Borrower.

 

6.2           Liens.  Create, assume or permit to exist any Lien

on the Collateral, whether now owned or hereafter acquired, or upon any income

or profits therefrom, except Permitted Liens, or allow or permit to exist any

Lien (other than Permitted Liens) on any Collateral owned by an Owner

Trustee.  Without limiting the

foregoing, the Borrower, at the Borrower’s expense, shall, or shall cause the

relevant Owner Trustee to, promptly discharge any such Lien, except Permitted

Liens.

6.3           Margin Stock. 

Use or permit any proceeds of the Loans to be used, either directly or

indirectly, for the purpose, whether immediate, incidental or ultimate, of

buying or carrying margin stock within the meaning of Regulation U of The Board

of Governors of the Federal Reserve System, as amended from time to time.

 

6.4           Transfer of Assets; Nature of Business.  The Borrower and its Restricted Subsidiaries

may not sell, transfer, lease or dispose of assets constituting in the

aggregate more than twenty percent (20%) of the net book value of their

combined assets during any twelve-month period without the prior written

consent of the Lender, such consent not to be unreasonably withheld.  Notwithstanding the above:  (a) the Borrower may or may cause an Owner

Trustee to lease engines and other equipment in the ordinary course of

business, (b) the Borrower may or may cause an Owner Trustee to sell, transfer

or otherwise dispose of engines and other equipment subject to a lease

(including, without limitation, related assets such as security deposits and

maintenance reserves, as applicable), or assign a Beneficial Interest, in the

ordinary course of business, for its then fair market value; (c) the Borrower

may or may cause an Owner Trustee to sell, transfer or otherwise dispose of

engines and other equipment that are declared a total loss or destroyed or that

suffer damage that is not economically repairable (or assign any Beneficial

Interest relating to any such engine or item of equipment), for their then fair

market value; (d) the Borrower may or may cause an Owner Trustee to sell,

transfer, assign, lease, re-lease or otherwise dispose of any engine or any

other item of equipment with respect to which the relevant lease has expired or

is expiring (or assign any Beneficial Interest relating to any such engine or

such item) if such sale or disposition is in the ordinary course of its

business, for its then fair market value; (e) the Borrower may or may cause an

Owner Trustee to transfer Contributed Assets (as such term is defined in the

Contribution Agreement) or similar assets to WLFC Funding Corporation or to any

other Subsidiary of the Borrower (in each case as such term is defined in any

other contribution or similar agreement entered into in connection with a

similar securitization transaction); (f) the Borrower may or may cause an Owner

Trustee to transfer engines or other equipment in connection with non-recourse

or partial recourse financing of leases and related engines and other

equipment; (g) the Borrower may or may cause an Owner Trustee to sell Parts to

non-Affiliates of the Borrower in the ordinary course of business; and (h) the

Borrower may or may cause an Owner Trustee to sell engines, other equipment,

leases or related assets (or assign any Beneficial Interest related thereto) to

a Restricted Subsidiary for not less than their net book value at the time of

transfer.  The Borrower may not discontinue,

liquidate or change in any material respect any substantial part of its

operations or business.

 

6.5           Accounting Change.  Without the prior written approval of the

Lender, make or permit any material change in financial accounting policies or

financial reporting practices, except as required by Generally Accepted

Accounting Principles or regulations of the Securities and Exchange Commission,

if applicable.  Notwithstanding the

foregoing, without the prior written approval of the Lender, the Borrower shall

not make or permit any material change in financial accounting policies or

financial reporting practices as they relate to, or in connection with, any

current or future securitizations, except as required by GAAP or regulations of

the Securities and Exchange Commission, if applicable (and in such case, the

Borrower shall promptly notify the Lender of the need for such change).

6.6           Transactions

with Affiliates of the Borrower.  Enter into any material transaction

(including, without limitation, the purchase, sale or exchange of property, the

rendering of any services or the payment of management fees) with any Affiliate

of the Borrower, except transactions in the ordinary course of, and pursuant to

the reasonable requirements of, its business, and in good faith and upon

commercially reasonable terms and except for transactions with any member of

the SwissAir Group and except for securitization transactions contemplated by

the WLFC Funding Facility and any similar securitization transactions entered

into from time to time by Subsidiaries of the Borrower.

 

6.7           Restricted Payments.

 

(a)           Make or pay any redemptions,

repurchases, dividends or distributions of any kind with respect to its capital

stock.

 

(b)           Redeem or prepay any Debt other than

under this Credit Facility provided, however, that the Borrower shall be

permitted to redeem, prepay, or refinance Debt if such redemption, prepayment,

or refinancing (i) is in the ordinary course of the Borrower’s business, and

(ii) no Potential Default or Event of Default exists prior to or after such

refinancing.

 

6.8           Restriction on Amendment of this Agreement.  Enter into or otherwise become subject to or

suffer to exist any agreement which would require it to obtain the consent of

any other Person as a condition to the ability of the  Lender and the Borrower to amend or otherwise modify this

Agreement.

 

6.9           Change

of Incorporation.  Reincorporate (or otherwise reorganize)

under the laws of a jurisdiction other than Delaware.

 

SECTION 7

FINANCIAL

COVENANTS

 

The Borrower covenants and agrees that,

without the prior written consent of the Lender, from and after the date hereof

and so long as any Loan Commitment is in effect or any Obligation remains

unpaid or outstanding:

 

7.1           No

Losses. 

From and after the Closing Date, the Willis Companies shall not at any

time suffer a net loss for *.

 

7.2           Minimum Tangible Net Worth.  Tangible Net Worth of the Willis Companies

will not at any time be less than the sum of: 

(i) $__________, plus (ii) if positive, ___% of the cumulative Net

Income of the Willis Companies for each fiscal quarter earned from and after

the Closing Date (without any deduction for net losses for any fiscal quarter);

plus (iii) ___% of the net proceeds received by Borrower from the issuance of

common stock or preferred stock of Borrower after January 1, 2001.*

 

*              This redacted material has been

omitted pursuant to a request for confidential treatment, and the material has

been filed separately with the Commission.

7.3           Leverage

Ratio.  From and after

the Closing Date, the Leverage Ratio will not exceed ________ as of the end of

any Fiscal Quarter.*

 

7.4           Adjusted

Total Debt to Adjusted Tangible Net Worth.  From and after the Closing Date, as of the

end of any Fiscal Quarter, the ratio of (a) Adjusted Total Debt to Adjusted

Tangible Net Worth will not exceed ________.*

 

7.5           Minimum

Interest Coverage Ratio.  From and after the Closing Date, the

Interest Coverage Ratio of the Willis Companies (measured at the end of each

Fiscal Quarter on a rolling four-quarter basis) will not be less than

________.*

 

7.6           Investments in Unrestricted

Subsidiaries.  From and

after the Closing Date, except for Borrower's investment in WLFC Funding

Corporation or any other Subsidiary of Borrower established to facilitate

securitizations, the Borrower will not make or maintain any Investments in

Unrestricted Subsidiaries which exceed in the aggregate fifteen percent (15%)

of Net Worth of the Borrower.

 

SECTION 8

DEFAULT

 

8.1           Events

of Default. 

The Borrower shall be in default if any one or more of the following

events (each an “Event of Default”) occurs:

 

(a)           Payments.  The Borrower fails to pay the principal due

on any Note when due and payable (whether at maturity, by notice of intention

to prepay, or otherwise); or fails to pay interest or any other amount payable

hereunder or under any other Loan Document within three Business Days after the

date such interest or other amount is due and payable.

 

(b)           Covenants.  The Borrower or any Owner Trustee, as

applicable, fails to observe or perform: 

(i) any term, condition or covenant set forth in Sections 5.1(a),

5.1(b), 5.1(c), 5.1(g) or 5.1(h), Section 5.2, Section 5.7, Section 5.9,

Section 5.10, Section 5.14, Sections 6.1 through 6.9 or Sections 7.1 through

7.6 herein, as and when required; or (ii) any term, condition or covenant contained

in this Agreement or any other Loan Document, other than any Event of Default

set forth in any other subsection of this Section 8.1, and other than as set

forth in (i) above, as and when required and such failure shall continue

unremedied for a period of 10 Business Days after the earlier of (1) actual

knowledge of any executive officer of the Borrower or (2) written notice

thereof by the Lender to the Borrower.

 

(c)           Owner Trustee Mortgage.  There shall occur an Event of Default (as

that term is defined in the Owner Trustee Mortgage), and such Event of Default

shall not have been cured within a period of 10 Business Days after the earlier

of (1) actual knowledge of any executive officer of the Borrower or (2) written

notice thereof from the Lender to the Borrower.

 

*              This

redacted material has been omitted pursuant to a request for confidential

treatment, and the material has been filed separately with the Commission.

(d)           Representations, Warranties.  Any representation or warranty made or

deemed to be made by the Borrower or any Owner Trustee in its capacity as such,

as applicable, herein or in any Loan Document or in any exhibit, schedule,

report or certificate delivered pursuant hereto or thereto shall prove to have

been false, misleading or incorrect in any material respect when made or deemed

to have been made.

 

(e)           Bankruptcy.  The Borrower or any Owner Trustee in its

capacity as such is dissolved or liquidated, makes an assignment for the

benefit of creditors, files a petition in bankruptcy, is adjudicated insolvent

or bankrupt, petitions or applies to any tribunal for any receiver or trustee,

commences any proceeding relating to itself under any bankruptcy,

reorganization, readjustment of debt, dissolution or liquidation law or statute

of any jurisdiction, has commenced against it any such proceeding which remains

undismissed for a period of sixty (60) days, or indicates its consent to,

approval of or acquiescence in any such proceeding, or any receiver of or

trustee for the Borrower or any Owner Trustee in its capacity as such or any

substantial part of its property is appointed, or if any such receivership or

trusteeship continues undischarged for a period of sixty (60) days.

 

(f)            Certain Other Defaults.  The Borrower or any Restricted Subsidiary

shall fail to pay when due any Indebtedness for Borrowed Money which singularly

or in the aggregate exceeds $3,000,000, and such failure shall continue beyond

any applicable cure period, or the Borrower or a Restricted Subsidiary shall

suffer to exist any default or event of default in the performance or

observance, subject to any applicable grace period, of any agreement, term,

condition or covenant with respect to any agreement or document relating to

Indebtedness for Borrowed Money which singularly or in the aggregate exceeds

$3,000,000 if the effect of such default is to permit, with the giving of

notice or passage of time or both, the holders thereof, or any trustee or agent

for said holders, to terminate or suspend any commitment (which is equal to or

in excess of $3,000,000) to lend money or to cause or declare any portion of

any borrowings thereunder to become due and payable prior to the date on which

it would otherwise be due and payable, provided that during any applicable cure

period the Lender’s obligations hereunder to make further Loans shall be

suspended.

 

(g)           Judgments.  Any judgments against the Borrower or any

Owner Trustee in its capacity as such against the assets of the Borrower or any

Owner Trustee in its capacity as such or property for amounts in excess of

$3,000,000 in the aggregate remain unpaid, unstayed on appeal, undischarged,

unbonded and undismissed for a period of thirty (30) days.

 

(h)           Attachments.  Any assets of the Borrower or the Trust

Estate shall be subject to attachments, levies garnishments for amounts in

excess of $3,000,000 in the aggregate which have not been dissolved or

satisfied within twenty (20) days after service of notice thereof to the

Borrower.

 

(i)            Change in Control of the Borrower.  Any Change of Control of the Borrower should

occur.

(j)            Security Interests.  Any security interest created pursuant to

any Loan Document shall cease to be in full force and effect or shall cease in

any material respect to give the Lender the Liens, rights, powers and

privileges purported to be created thereby (including, without limitation, a

perfected first security interest in, and Lien on, all of the Collateral, but

subject, in the case of any Lease to a lessee domiciled or principally located

in a non U.S. jurisdiction, to the proviso set forth in Section 9.1)

superior to and prior to the rights of all third Persons, and subject to no

other Liens (except as permitted by Section 6.2 and, insofar as the issue of

accession may be deemed to affect such rights or to create any such Lien,

except to the extent that the lessee (or, in the case of a Lease to WLFC

(Ireland) Limited, the sublessee) of the Collateral is domiciled or principally

located in a jurisdiction that satisfies one of the criteria for exclusion from

the definition of “Nonrecognition of Rights Jurisdictions”).

 

THEN and in every such event other than that

specified in Section 8.1(e), the Lender may immediately terminate the Maximum

Loan Commitment by notice in writing to the Borrower and immediately declare

any and all Notes, including without limitation accrued interest, and all other

obligations to be, and they shall thereupon forthwith become, due and payable

without presentment, demand or notice of any kind, all of which are hereby

expressly waived by the Borrower; provided however in the event of the

occurrence of an Event of Default of the kind specified in Section 8.1(c),

Lender may only immediately terminate the Loan with respect to such Engine by

notice in writing to the Borrower and immediately declare any corresponding

Note, including without limitation accrued interest, to be, and it shall

thereupon forthwith become, due and payable without presentment, demand or

notice of any kind, all of which are hereby expressly waived by the Borrower.  Upon the occurrence of any event specified

in Section 8.1(e), the Maximum Loan Commitment shall automatically terminate

and the Notes, including without limitation accrued interest, and all other

Obligations, shall immediately be due and payable without presentment, demand,

protest or other notice of any kind, all of which are hereby expressly waived

by the Borrower.  Any date on which the

Notes and such other Obligations are declared due and payable pursuant to this

Section 8.1 shall be the Loan Termination Date for purposes of this

Agreement.  From and after the date an

Event of Default shall have occurred and for so long as an Event of Default

shall be continuing, the Loans shall bear interest at the Default Rate.

 

SECTION 9

COLLATERAL

 

9.1           Collateral.  Except as otherwise specifically set forth herein (including but

not limited to the exceptions contained in Section 8.1(j)) or in any other Loan

Document, the Borrower covenants and agrees that any Obligations made and

outstanding and their repayment at all times shall be secured by a first

priority perfected security interest in all of the Collateral; provided that,

Borrower shall not be required to take any additional steps to create or

perfect any security interest in any Lease or Engine under the laws of any

jurisdiction outside the United States of America.

 

9.2           Security

Documents. 

In respect of each Loan, as security for the punctual payment in full of

the related Note (including all payments of principal, and interest and other

costs contemplated hereby) the Borrower shall execute, or shall cause the Owner

Trustee to execute, and deliver to the Lender the relevant Owner Trustee

Mortgage and Beneficial Interest Pledge Agreement and such other documents as

may be necessary to constitute and evidence and perfect a security interest in

the Collateral.

9.3           Release of Collateral.  The Borrower shall be entitled to remove and

request the Lender to release certain items of Collateral in accordance with

the provisions of Section 22 of the applicable Beneficial Pledge Agreement and

Section 8.09 of the applicable Owner Trustee Mortgage.  The Lender will cooperate with the Borrower

in effecting any such release.

 

SECTION 10

MISCELLANEOUS

 

10.1         Waiver. 

No failure or delay on the part of the Lender or any holder of any Note

in exercising any right, power or remedy under any Loan Document shall operate

as a waiver thereof; nor shall any single or partial exercise of any such

right, power or remedy preclude any other or further exercise thereof or the

exercise of any other right, power or remedy under any Loan Document.  The remedies provided under the Loan

Documents are cumulative and not exclusive of any remedies provided by law.

 

10.2         Amendments.  No amendment, modification, termination,

renewal or waiver of any Loan Document or any provision thereof nor any consent

to any departure by the Borrower therefrom shall be effective unless the same

shall have been approved in writing by the Lender.

 

10.3         GOVERNING LAW.  THE LOAN DOCUMENTS AND ALL RIGHTS AND

OBLIGATIONS OF THE PARTIES THEREUNDER SHALL BE GOVERNED BY AND BE CONSTRUED AND

ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO

NEW YORK OR FEDERAL PRINCIPLES OF CONFLICT OF LAWS.

 

10.4         Participations and Assignments.  The Borrower hereby acknowledges and agrees

that so long as the Lender is not in default of its obligations under this

Agreement, the Lender may at any time: 

(a) grant participations in all or any portion of its Loan Commitment or

any portion of its Note(s) or of its right, title and interest therein or in or

to this Agreement (collectively, “Participations”) to any other lending

office of the Lender or to any other bank, lending institution or other entity

which has the requisite sophistication to evaluate the merits and risks of

investments in Participations (“Participants”); provided,

however, that:  (i) all amounts payable

by the Borrower hereunder shall be determined as if the Lender had not granted

such Participation; (ii) the Lender shall act as agent for all Participants;

and (iii) any agreement pursuant to which the Lender may grant a

Participation:  (x) shall provide that

the Lender shall retain the sole right and responsibility to enforce the

obligations of the Borrower hereunder including, without limitation, the right

to approve any amendment, modification or waiver of any provisions of this

Agreement; and (y) shall not relieve the Lender from its obligations, which

shall remain absolute, to make Loans hereunder; and (b) assign to any third

party any of its Loans and its Loan Commitment. Upon execution and delivery by

the assignee to the Borrower of an instrument in writing pursuant to which such

assignee agrees to become a “Lender” hereunder having the Loan Commitment and

Loans specified in such instrument, the assignee shall have, to the extent of

such assignment (unless otherwise provided in such assignment with the consent

of the Borrower), the obligations, rights and benefits of the Lender hereunder

holding the Loan Commitment and Loans (or portions thereof) assigned to it, and

the Lender shall, to the extent of such assignment, be released from the Loan

Commitment (or portion(s) thereof) so assigned.  Notwithstanding anything to the contrary in this

Section 10.4, unless a Potential Default or an Event of Default then

exists, Lender shall not be entitled to grant Participations or assign any of

its Loans or its Loan Commitment to any grantee or assignee if at the time of

such proposed Participation or assignment (1) the grantee or the assignee or

any affiliate thereof is a bank or financial institution identified on

Schedule 10.4 attached hereto, (2) the grantee or the assignee or any of

its affiliates is engaged in the business of leasing airplanes, airplane

engines or parts to third parties, or (3) the grantee or the assignee or any of

its affiliates has a lending relationship with any person engaged in the

business of leasing airplanes, airplane engines or parts to third parties, or

any affiliates thereof.  Prior to the

release of any confidential information of the Borrower to any prospective

Participant or assignee, the Lender will identify the prospective Participant

or assignee to the Borrower and receive the Borrower’s prior written approval

of the release of the information. 

Without limiting the foregoing, the Lender shall not release any

confidential information of the Borrower to any prospective Participant or

assignee without obtaining the agreement of such prospective Participant or

assignee to be bound by the provisions of Section 10.18 hereof.

10.5         Captions.  Captions in the Loan Documents are included

for convenience of reference only and shall not constitute a part of any Loan

Document for any other purpose.

 

10.6         Notices.  All notices, requests, demands, directions,

declarations and other communications between the Lender and the Borrower

provided for in any Loan Document shall, except as otherwise expressly

provided, be mailed by registered or certified mail, return receipt requested,

or telegraphed, or faxed, or delivered in hand or by a recognized overnight

courier to the applicable party at its address indicated opposite its name on

the signature pages hereto.  The

foregoing shall be effective and deemed received three days after being

deposited in the mails, postage prepaid, addressed as aforesaid and shall

whenever sent by telegram, telegraph or facsimile (provided the transmitting

facsimile machine provides written confirmation that the transmission was

successfully completed) or delivered in hand or by a nationally recognized

overnight courier be effective when received. 

Any party may change its address by a communication in accordance

herewith.

 

10.7         Application of Payments.  If an Event of Default or Potential Default

shall have occurred and be continuing, the Lender agrees that all payments on

account of the Obligations shall be applied as follows:

 

First, to the Lender for all costs, expenses

and fees then due and payable from the Borrower under the Loan Documents until

such costs, expenses and fees are paid in full;

 

Second, to the Lender for all interest then

due and payable from the Borrower under the Loan Documents allocated in respect

of each Loan as the Lender, in its sole discretion, shall determine until such

interest is paid in full;

Third,

to the Lender for the principal amount of the Obligations then due and payable

from the Borrower under the Loan Documents allocated in respect of each loan as

the Lender, in its sole discretion, shall determine until such principal is

paid in full; and

 

Fourth, if any amounts remain after satisfying

the amounts specified in clauses First through Third above, the

balance, if any, shall be remitted to the Borrower.

 

10.8         Expenses.  The Borrower will from time to time

reimburse the Lender promptly following demand for all reasonable out-of-pocket

expenses (including the reasonable fees and expenses of its legal counsel) in

connection with (a) the preparation of the Loan Documents, (b) the making of

any Loans and (c) the administration of the Loan Documents.  The Borrower also will from to time

reimburse the Lender for all out-of-pocket expenses (including reasonable fees

and expenses of its counsel) in connection with the enforcement of the Loan

Documents.

 

10.9         Survival of Warranties and Certain Agreements.  All agreements, representations and

warranties expressly made herein shall survive the execution and delivery of

this Agreement, the making of the Loans hereunder and the execution and

delivery of the Notes.  Notwithstanding

anything in this Agreement or implied by law to the contrary, the agreements of

the Borrower set forth in Section 10.8 shall survive the payment of the Loans

and the termination of this Agreement and continue for the benefit of the

Lender, notwithstanding the failure of the transactions contemplated hereby to

be consummated.  This Agreement shall remain

in full force and effect until the repayment in full of all amounts owed by the

Borrower under the Notes or any other Loan Document.

 

10.10       Severability.  The invalidity, illegality or

unenforceability in any jurisdiction of any provision in or obligation under

this Agreement, any Note or other Loan Document shall not affect or impair the

validity, legality or enforceability of the remaining provisions or obligations

under this Agreement, the Notes or other Loan Documents or of such provision or

obligation in any other jurisdiction.

 

10.11       No Fiduciary Relationship.  No provision in this Agreement or in any of

the other Loan Documents and no course of dealing between the parties shall be

deemed to create any fiduciary duty by any Lender to the Borrower.

 

10.12       CONSENT TO JURISDICTION AND SERVICE OF PROCESS.  EACH OF THE BORROWER AND THE LENDER HEREBY

CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE

CITY, COUNTY AND STATE OF NEW YORK AND IRREVOCABLY AGREES THAT, ANY ACTIONS OR

PROCEEDINGS ARISING OUT OF OR RELATING TO THE NOTES, THIS AGREEMENT OR THE

OTHER LOAN DOCUMENTS MAY BE LITIGATED IN SUCH COURTS.  EACH PARTY TO THIS AGREEMENT ACCEPTS FOR ITSELF AND IN CONNECTION

WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE

JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON

CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY

IN CONNECTION WITH THIS AGREEMENT, ANY NOTE, OR SUCH OTHER LOAN DOCUMENT.

10.13       WAIVER

OF JURY TRIAL.  THE BORROWER AND THE LENDER EACH HEREBY

WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION

BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY

DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE

LENDER/BORROWER RELATIONSHIP ESTABLISHED HEREBY.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF

ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE

SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT

CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND

STATUTORY CLAIMS.  THE BORROWER AND THE

LENDER EACH ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE

TRANSACTION, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS

AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED

FUTURE DEALINGS.  THE BORROWER AND THE

LENDER EACH FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER

WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY

TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, AND THE WAIVER

SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, MODIFICATIONS,

REPLACEMENTS OR RESTATEMENTS TO THIS AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY

OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A

WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

10.14       Counterparts;

Effectiveness. 

This Agreement and any amendment hereto or waiver hereof may be signed

in any number of counterparts, each of which shall be an original, with the

same effect as if the signatures thereto and hereto were upon the same

instrument.  This Agreement and any

amendments hereto or waivers hereof shall become effective when the Lender

shall have received signed counterparts or notice by fax of the signature page

that the counterpart has been signed and is being delivered to it or facsimile

that such counterparts have been signed by all the parties hereto or thereto.

 

10.15       Use of Defined Terms.  All words used herein in the singular or

plural shall be deemed to have been used in the plural or singular where the

context or construction so requires. 

Any defined term used in the singular preceded by “any” shall be taken

to indicate any number of the members of the relevant class.

 

10.16       Offsets.  Nothing in this Agreement shall be deemed a

waiver or prohibition of the Lender’s right of banker’s lien or offset.

 

10.17       Entire Agreement.  This Agreement, the Notes issued hereunder

and the other Loan Documents constitute the entire understanding of the parties

hereto as of the date hereof with respect to the subject matter hereof and

thereof and supersede any prior agreements, written or oral, with respect

hereto or thereto.

10.18       Confidentiality.  In handling any written information

specifically marked “confidential” prior to its delivery, the Borrower and the

Lender shall exercise the same degree of care that it exercises with respect to

its own proprietary information of the same type to maintain the

confidentiality of any non-public information thereby received or received

pursuant to this Agreement or any other Loan Documents except that disclosure

of such information may be made (a) to the agents, employees, subsidiaries or

Affiliates of such Person in connection with this Agreement or any other Loan

Document, (b) to prospective participants or assignees of the Loans, subject to

Section 10.4, (c) as required by law, regulation, rule or order, subpoena,

judicial order or similar order, and (d) as may be required in connection with

the examination, audit or similar investigation of such Person.  Confidential information shall not include

information that either (x) is in the public domain, or becomes a part of the

public domain after disclosure to such Person through no fault of such Person

or (y) is disclosed to such Person by a third party, provided such Person does

not have knowledge that such third party is prohibited from disclosing such

information.

 

*          *          *

 

IN WITNESS

WHEREOF, the parties hereto have each caused this Agreement to be duly executed

by their duly authorized representatives as of the date first above written.

 

	

   

  	

  WILLIS LEASE FINANCE CORPORATION

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /S/ NICHOLAS

  J. NOVASIC

  	

   

  
	

   

  	

   

  	

  Name:

  Nicholas J. Novasic

  	

   

  
	

   

  	

   

  	

  Title: Chief

  Financial Officer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Notices To:

  	

   

  	

   

  	

   

  
	

  2320 Marinship Way

  	

   

  	

   

  	

   

  
	

  Suite 300

  	

   

  	

   

  	

   

  
	

  Sausalito, CA  94965

  	

   

  	

   

  	

   

  
	

  Fax No. (415) 331-5167

  	

   

  	

   

  	

   

  
	

  Attention: 

  General Counsel

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  With copy to:

  	

   

  	

   

  	

   

  
	

  Cooley Godward LLP

  	

   

  	

   

  	

   

  
	

  One Maritime Plaza, 20th

  Floor

  	

   

  	

   

  	

   

  
	

  San Francisco, CA 94111-3580

  	

   

  	

   

  	

   

  
	

  Fax:  (415) 951-3699

  	

   

  	

   

  	

   

  
	

  Attention:  Barry A. Graynor, Esq.

  	

   

  	

   

  	

   

  

 

	

   

  	

  ABB CREDIT FINANS AB (publ)

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /S/ ANDERS

  LIDEFELT AND /S/ JOHN BERG

  
	

   

  	

   

  	

  Name:  Anders Lidefelt and John Berg

  
	

   

  	

   

  	

  Title:  Director and __________

  
	

   

  	

   

  	

   

  
	

  Notices To:

  	

   

  	

   

  
	

  Birger Jarlsgatan 57B

  	

   

  	

   

  
	

  SE-113 96 Stockholm

  	

   

  	

   

  
	

  Sweden

  	

   

  	

   

  
	

  Fax No. 

  46 8 458 58 96

  	

   

  	

   

  
	

  Attention:    (1) Business Administration and

  	

   

  	

   

  
	

  (2) Manager, Aviation Finance

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  With copy to:

  	

   

  	

   

  
	

  Schnader Harrison Segal & Lewis LLP

  	

   

  	

   

  
	

  140 Broadway, Suite 3100

  	

   

  	

   

  
	

  New York, NY  10005

  	

   

  	

   

  
	

  Fax No. (212) 972-8798

  	

   

  	

   

  
	

  Attention: Joel Hasen, Esq.

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