- ------------------------------------------------------------------------------
WLFC FUNDING CORPORATION
Issuer
and
THE BANK OF NEW YORK
Indenture Trustee
------------------------------
AMENDED AND RESTATED SERIES 1997-1 SUPPLEMENT (*)
Dated as of February 11, 1999
to
INDENTURE
Dated as of September 1, 1997
------------------------------
SERIES 1997-1 NOTES
- ------------------------------------------------------------------------------
- -------------------------
(*) 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 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.
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS; CALCULATION GUIDELINES . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Calculation Guidelines . . . . . . . . . . . . . . . . . .12
ARTICLE II CREATION OF THE SERIES 1997-1 NOTES. . . . . . . . . . . . . . . .12
Section 2.1. Designation; General Terms and Conditions. . . . . . . . .12
Section 2.2. Interest Payments on the Series 1997-1 Notes.. . . . . . .13
Section 2.3. Principal Payments on the Series 1997-1 Notes. . . . . . .14
Section 2.4. Amounts and Terms of Series 1997-1 Noteholder Commitments.14
Section 2.5. Increased Costs; Capital Adequacy; Illegality. . . . . . .15
Section 2.6. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .15
Section 2.7. Payments, Computations, Etc. . . . . . . . . . . . . . . .15
ARTICLE III SERIES 1997-1 SERIES ACCOUNT AND ALLOCATION AND
APPLICATION OF AMOUNTS THEREIN. . . . . . . . . . . . . . . . . . . . . . .16
Section 3.1. Series 1997-1 Series Account.. . . . . . . . . . . . . . .16
Section 3.2. Distributions from Series 1997-1 Series Account on each
Payment Date . . . . . . . . . . . . . . . . . . . . . . .16
Section 3.3. Allocation of Excess Cash Available for Distribution.. . .19
Section 3.4. Series 1997-1 Restricted Cash Account. . . . . . . . . . .20
Section 3.5. Series 1997-1 Engine Reserve Account.. . . . . . . . . . .20
Section 3.6. Series 1997-1 Security Deposit Account.. . . . . . . . . .21
Section 3.7. Securities Accounts. . . . . . . . . . . . . . . . . . . .21
ARTICLE IV ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . .22
Section 4.1. Additional Series. . . . . . . . . . . . . . . . . . . . .22
Section 4.2. Control Party. . . . . . . . . . . . . . . . . . . . . . .22
Section 4.3. Inspections. . . . . . . . . . . . . . . . . . . . . . . .22
Section 4.4. Reserved.. . . . . . . . . . . . . . . . . . . . . . . . .22
Section 4.5. Interest Rate Hedge Agreements.. . . . . . . . . . . . . .22
Section 4.6. Insurance. . . . . . . . . . . . . . . . . . . . . . . . .23
Section 4.7. Lessee Acknowledgment. . . . . . . . . . . . . . . . . . .23
Section 4.8. Opinions of Foreign Local Counsel. . . . . . . . . . . . .23
ARTICLE V CONDITIONS OF EFFECTIVENESS AND FUTURE LENDING. . . . . . . . . . .24
Section 5.1. Effectiveness of Supplement. . . . . . . . . . . . . . . .24
Section 5.2. Advances on Class A Notes. . . . . . . . . . . . . . . . .25
i
ARTICLE VI REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . .28
Section 6.1. Existence. . . . . . . . . . . . . . . . . . . . . . . . .28
Section 6.2. Authorization. . . . . . . . . . . . . . . . . . . . . . .28
Section 6.3. No Conflict; Legal Compliance. . . . . . . . . . . . . . .29
Section 6.4. Validity and Binding Effect. . . . . . . . . . . . . . . .29
Section 6.5. Financial Statements.. . . . . . . . . . . . . . . . . . .29
Section 6.6. Executive Offices. . . . . . . . . . . . . . . . . . . . .29
Section 6.7. No Agreements or Contracts.. . . . . . . . . . . . . . . .29
Section 6.8. Consents and Approvals.. . . . . . . . . . . . . . . . . .30
Section 6.9. Margin Regulations.. . . . . . . . . . . . . . . . . . . .30
Section 6.10. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .30
Section 6.11. Other Regulations. . . . . . . . . . . . . . . . . . . . .30
Section 6.12. Solvency and Separateness. . . . . . . . . . . . . . . . .31
Section 6.13. No Proceedings.. . . . . . . . . . . . . . . . . . . . . .32
Section 6.14. Recourse Against Certain Parties.. . . . . . . . . . . . .33
Section 6.15. Survival of Representations and Warranties.. . . . . . . .34
Section 6.16. No Event of Default or Early Amortization Event. . . . . .34
Section 6.17. Litigation and Contingent Liabilities. . . . . . . . . . .34
Section 6.18. Title; Liens.. . . . . . . . . . . . . . . . . . . . . . .34
Section 6.19. Subsidiaries.. . . . . . . . . . . . . . . . . . . . . . .34
Section 6.20. No Partnership.. . . . . . . . . . . . . . . . . . . . . .34
Section 6.21. Pension and Welfare Plans. . . . . . . . . . . . . . . . .34
Section 6.22. Ownership of Issuer. . . . . . . . . . . . . . . . . . . .35
Section 6.23. Security Interest. . . . . . . . . . . . . . . . . . . . .35
Section 6.24. Eligible Lease Agreements; Eligible Engines. . . . . . . .35
ARTICLE VII EARLY AMORTIZATION EVENT. . . . . . . . . . . . . . . . . . . . .35
Section 7.1. Early Amortization Event.. . . . . . . . . . . . . . . . .35
ARTICLE VIII MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . .37
Section 8.1. Ratification of Indenture. . . . . . . . . . . . . . . . .37
Section 8.2. Counterparts.. . . . . . . . . . . . . . . . . . . . . . .37
Section 8.3. Governing Law. . . . . . . . . . . . . . . . . . . . . . .37
ii
AMENDED AND RESTATED SERIES 1997-1 SUPPLEMENT, dated as of February 11,
1999 (the "Supplement" or the "Series 1997-1 Supplement"), between WLFC
Funding Corporation, a corporation organized and existing under the laws of
the State of Delaware (the "Issuer"), and The Bank of New York, a New York
banking corporation, as Indenture Trustee (the "Indenture Trustee").
Pursuant to the Indenture, dated as of September 1, 1997 (as amended and
supplemented, the "Indenture"), between the Issuer and the Indenture Trustee,
the Issuer may from time to time direct the Indenture Trustee to authenticate
one or more new Series of Notes. The Principal Terms of any new Series are to
be set forth in a Supplement to the Indenture.
Pursuant to this Supplement, the Issuer and the Indenture Trustee have
created the Series 1997-1 Notes and specified the Principal Terms thereof.
Pursuant to this Supplement, the Issuer and the Indenture Trustee wish
to, INTER ALIA, (i) exchange the promissory note, dated December 19, 1997
issued to First Union National Bank for a new promissory note issued to the
Class A Noteholders, (ii) modify the terms of payment of principal and
interest on the Series 1997-1 Notes, and (iii) pursuant to an Assignment
dated as of February 11, 1999 (the "Assignment"), to accommodate the
assignment of all right, title and interest of First Union National Bank
under the Series 1997-1 Transaction Documents to the Deal Agent for the
benefit of the Class A Noteholders.
The parties hereto have agreed to enter into such transactions but only
upon the terms and conditions hereinafter set forth and in reliance on the
representations and warranties of the Issuer set forth herein.
NOW THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; CALCULATION GUIDELINES
SECTION 1.1. DEFINITIONS.
(a) Capitalized terms used in this Supplement but not defined herein
shall have the meaning assigned to such terms in the Indenture. Whenever
used in this Supplement, the following words and phrases shall have the
following meanings, and the definitions of such terms are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
"ADJUSTED EURODOLLAR RATE" means on any day, an interest rate per annum
equal to the quotient, expressed as a percentage and rounded upwards (if
necessary) to the nearest 1/100 of
1
1%, obtained by dividing (i) the LIBOR Rate on such day by (ii) the decimal
equivalent of 100% minus the Eurodollar Reserve Percentage on such day.
"ADMINISTRATIVE AGENT FEE" means the fee payable by the Issuer to the
Administrative Agent pursuant to Section 2.4(e) hereof.
"AGENT'S ACCOUNT" means a special account (account number 01 41 96 47)
in the name of the Deal Agent or, so long as VFCC is the sole beneficial
owner of the Class A Note hereunder, in the name of VFCC, at Bankers Trust
Company.
"ALTERNATIVE RATE" means on any day, an interest rate per annum equal to
the Adjusted Eurodollar Rate; PROVIDED, HOWEVER, that the Alternative Rate
for the outstanding principal amount of any Loan allocated to a Interest
Accrual Period shall be the Base Rate if (a) on or before the first day of
such Interest Accrual Period, a Purchaser shall have notified the Deal Agent
that a Eurodollar Disruption Event has occurred, (b) such Interest Accrual
Period is a period of less than one month, or (c) such outstanding principal
amount of such Loan is less than $5,000,000.
"APPLICABLE PERCENTAGE" has the meaning set forth in Schedule 1.
"BASE RATE" means on any date, a fluctuating rate of interest per annum
equal to the higher of (a) the Prime Rate and (b) the Federal Funds Rate PLUS
0.50% per annum.
"BREAKAGE COSTS" means any amount or amounts as shall compensate a
Purchaser for any loss, cost or expense incurred by such Purchaser in
connection with funding obtained by it with respect to a Loan (as reasonably
determined by the Deal Agent in its sole discretion on behalf of the
Purchaser) as a result of a prepayment by the Issuer of principal or Interest
pursuant to the terms hereof.
"CLASS A NOTE" means any one of the Class A Notes of Series 1997-1
issued pursuant to the terms of this Supplement, substantially in the form of
EXHIBIT A to this Supplement.
"CLASS A NOTE COMMITMENT" has the meaning set forth in Schedule 1.
"CLASS A NOTE INTEREST ARREARAGE" means, for any Payment Date, an amount
equal to the excess, if any, of (a) the Class A Note Interest Payment for
such Payment Date and any outstanding Class A Note Interest Arrearage from
the immediately preceding Payment Date plus interest on any outstanding Class
A Note Interest Arrearage, to the extent permitted by law, at the Overdue
Rate over (b) the amount of Class A Note Interest Payment and Class A Note
Interest Arrearage actually distributed to the Purchasers on such Payment
Date.
"CLASS A NOTE INTEREST PAYMENT" means, as of any Payment Date, the
amount of any accrued and unpaid interest as of the end of the immediately
preceding Interest Accrual Period.
"CLASS A NOTE PRINCIPAL BALANCE" means an amount equal to the excess of
(x) the sum of (A) the outstanding principal balance of the Class A Notes on
the Closing Date plus (B) the
2
principal balance of all Loans made subsequent to the Closing Date, over (y)
all amounts paid to the Purchasers representing the sum of the following, to
the extent actually received by the Purchasers: (i) Class A Note Principal
Payments, (ii) Prepayments paid to the Purchasers, and (iii) repayments of
the Class A Note Principal Balance made pursuant to Section 2.4(c) hereof.
"CLASS A NOTE PRINCIPAL PAYMENT" means, for any Payment Date, one of the
amounts set forth in (A) or (B):
(A) (i) Prior to the Conversion Date if no Early Amortization
Event has occurred or is continuing on such Payment Date, an amount equal
to the excess, if any, of (1) the Class A Note Principal Balance over (2)
the Asset Base; and
(ii) On or after the Conversion Date if no Early
Amortization Event has occurred or is continuing on such Payment Date, an
amount equal to the excess, if any, of (1) the sum of (A) the product of
(i) ninety percent (90%) and (ii) all Engine Revenues actually received by,
or on behalf of, the Issuer during the related Collection Period with
respect to the Series 1997-1 Engines and (B) the product of (x) a fraction,
expressed as a percentage, the numerator of which shall equal the Class A
Note Principal Balance (prior to giving effect to any payments of principal
on such Payment Date) and the denominator of which shall equal the sum of
the Net Book Values of all Series 1997-1 Engines (calculated as of the last
day of the immediately preceding month) and (y) the greater of (i) the sum
of the Net Book Values of all Series 1997-1 Engines sold during the related
Collection Period (which Net Book Values will be determined as of the last
day of the month immediately preceding such sale), and (ii) the aggregate
Sales Proceeds of all Series 1997-1 Engines sold during the related
Collection Period, over (2) the amount paid pursuant to clauses (A) through
(H) inclusive, of Section 3.2(II) hereof; or
(B) If an Early Amortization Event is continuing, all remaining
amounts on deposit in the Series 1997-1 Series Account after payment of the
amounts set forth in clauses (A) through (G), inclusive, of Section 3.2(II)
of this Supplement, until the Class A Note Principal Balance is reduced to
zero.
"CLASS A NOTE PURCHASE AGREEMENT" means the Class A Note Purchase
Agreement, dated as of February 11, 1999, among the Issuer, the Servicer,
FCM, the Investors named therein, VFCC and First Union National Bank.
"CLASS A NOTEHOLDER(S)" means, at any time of determination for the
Series 1997-1 Notes, any person in whose name a Class A Note is registered in
the Note Register and each other person for whose benefit the Class A Note is
held by such Person (including, without limitation, the "Purchasers" under
(and as defined in) the Class A Note Purchase Agreement).
"CLOSING" means the time at which each of the conditions precedent set
forth in Section 5.2 of this Supplement (with respect to the initial Loan
made hereunder by VFCC) shall have been duly fulfilled or satisfied.
"CLOSING DATE" means the date on which Closing occurs.
3
"COMMERCIAL PAPER" means commercial paper issued by VFCC.
"CONTROL PARTY" shall be determined in accordance with Section 4.2 of
this Supplement.
"CONVERSION DATE" means the Payment Date occurring on the first annual
anniversary of the initial Payment Date; PROVIDED, HOWEVER, that such
Conversion Date may be extended annually by the Issuer for one year periods
if approved by all of the Holders of the Class A Notes.
"CP RATE" means on any day, the per annum rate equivalent to the
weighted average of the per annum rates paid or payable by VFCC from time to
time as interest or otherwise (by means of interest rate hedges or otherwise)
in respect of the promissory notes issued by VFCC that are allocated, in
whole or in part, by the Deal Agent (on behalf of VFCC) to fund or maintain
the Loans during the related Interest Accrual Period, as determined by the
Deal Agent (on behalf of VFCC) and reported to the Issuer and the Servicer,
which rates shall reflect and give effect to the commissions of placement
agents and dealers in respect of such Commercial Paper, to the extent such
commissions are allocated, in whole or in part, to such promissory notes by
the Deal Agent (on behalf of VFCC); PROVIDED, HOWEVER, that if any component
of such rate is a discount rate, in calculating the "CP Rate" the Deal Agent
shall for such component use the rate resulting from converting such discount
rate to an interest bearing equivalent rate per annum.
"DEAL AGENT" means First Union Capital Markets Corp.
"DEFAULT INTEREST" is defined in Section 2.2(b) of this Supplement.
"DETERMINATION DATE" means the third Business Day prior to any Payment
Date.
"DOLLARS" and the sign "$" means lawful money of the United States of
America.
"EARLY AMORTIZATION EVENT" is defined in Section 7.1 of this Supplement.
"EFFECTIVE DATE" means the date on which each of the conditions
precedent set forth in Section 5.1 of this Supplement shall have been duly
fulfilled or satisfied.
"ELIGIBLE ENGINE" means any Engine which, individually or when
considered with all Eligible Engines then owned by Issuer, as applicable,
shall comply with each of the following requirements, unless any of such
requirements is waived in writing by the Deal Agent:
(1) ELIGIBLE LEASE. Each Engine is subject to an Eligible Lease
on the related Transfer Date; and
(2) ENGINE REPRESENTATIONS AND WARRANTIES. Each Engine complies
with the Engine Representations and Warranties on the related Transfer Date,
including without limitation, that representation and warranty of the Seller
set forth in Section 3.1(o) of the Contribution and Sale Agreement; and
4
(3) CASUALTY LOSS. No Casualty Loss shall have been suffered by
the related Engine; and
(4) DEPRECIATION POLICY. The depreciation method utilized in
calculating the Net Book Value of such Engine as of such Transfer Date is the
Depreciation Policy.
"ELIGIBLE LEASE" means each Lease Agreement that encumbers an Engine on
any Transfer Date or that encumbers an Eligible Engine on any date thereafter
that complies with all of the following requirements unless any of such
requirements is waived in writing by the Deal Agent:
(1) DELINQUENCIES. No Scheduled Payment on such Lease Agreement
is delinquent for more than 30 days as of the related Transfer Date;
(2) VALID CONTRACT. Each Lease Agreement is a legal, valid and
binding full recourse payment obligation of the related Lessee, is
enforceable in accordance with its terms (except as may be limited by
applicable insolvency, bankruptcy, moratorium, reorganization, or other
similar laws affecting enforceability of creditors' rights generally and the
availability of equitable remedies) and is in full force and effect and such
Lease Agreement has not been satisfied, subordinated or rescinded;
(3) HELL-OR-HIGH WATER OBLIGATION. The Lessee's obligations under
each Lease Agreement are non-cancelable and unconditional and not subject to
any right of set-off, counterclaim, reduction or recoupment;
(5) NET LEASE. Each Lease Agreement contains provisions requiring
the related Lessee to pay all sales, use, excise, rental, property or similar
taxes imposed on or with respect to the Engine and to assume all risk of loss
or malfunction of the related Engine; each Lease Agreement requires the
Lessee to maintain the Engine in good and workable order and as are necessary
to maintain the Engine's serviceability standards pursuant to FAA
requirements or requirements of other appropriate Governmental Authorities;
(6) LEGAL CAPACITY. The Lessee had the legal capacity to execute
such Lease Agreement and the Seller had the legal capacity to execute such
Lease Agreement or the related acquisition documentation, as the case may be;
(7) U.S. DOLLARS. All payments under each Lease Agreement are
required to be made in Dollars;
(8) NO CONSENT. No Lease Agreement requires the prior written
consent of a Lessee or contains another restriction relating to the transfer
or assignment of such Lease Agreement by Seller or the Issuer (except such
consent as have been obtained or restrictions satisfied on or prior to the
related Transfer Date);
5
(9) SCHEDULED PAYMENTS. Each Lease Agreement provides for
the payment of Scheduled Payments on a basis no less frequently than
quarterly;
(10) PREPAYMENT. As of the Transfer Date, no Scheduled
Payment under any Lease Agreement has been prepaid;
(11) CUSTOMARY PRACTICES. The Lease Agreement was originated
or acquired by the Seller in the ordinary course of its business;
(12) BANKRUPT LESSEE. On the Transfer Date, the related Engine
is not subject to a Lease Agreement with a Lessee that is subject to an
Insolvency Proceeding;
(13) INSURANCE. The Lease Agreement requires the Lessee to
provide liability insurance, all risk ground and flight hull and engine
coverage for damage/loss of engine, war risk, and where requested by the Deal
Agent, governmental confiscation and expropriation insurance coverage with
acceptable deductibles, all of which shall name the Indenture Trustee as
additional insured and first loss payee;
(14) GEOGRAPHIC OPERATING RESTRICTIONS. In the related Lease
Agreement the Lessee agrees not to operate the aircraft and not to be based
in any jurisdiction excluded from the insurance coverage referred to in item
(13) above; and
(15) CHATTEL PAPER. Any original counterpart of each Lease
Agreement (other than the one held by the Lessee or filed with any relevant
Governmental Authority) that constitutes "chattel paper" for purposes of the
UCC as in effect in the jurisdiction whose law governs the Lease Agreement
has been delivered to the Indenture Trustee.
"ENGINE TYPE EXCESS CONCENTRATION AMOUNT" means at any date of
determination, the dollar amount, if any, by which the sum of the Net Book
Values of all Eligible Engines (relating to Loans hereunder) of the same
engine type exceeds the applicable concentration limits set forth in Section
5.2(o) hereof.
"EURODOLLAR DISRUPTION EVENT" means with respect to all Loans allocated
to any Interest Accrual Period, any of the following: (a) a determination by
a Purchaser that it would be contrary to law or to the directive of any
central bank or other governmental authority (whether or not having the force
of law) to obtain Dollars in the London interbank market to make, fund or
maintain any Loan for such Interest Accrual Period, (b) a determination by a
Purchaser that the rate at which deposits of Dollars are being offered to
such lender in the London interbank market does not accurately reflect the
cost to such Purchaser of making, funding or maintaining any Loan for such
Interest Accrual Period or (c) the inability of a Purchaser to obtain Dollars
in the London interbank market to make, fund or maintain any Loan for such
Interest Accrual Period.
"EURODOLLAR RESERVE PERCENTAGE" means for any day in any Interest
Accrual Period, the reserve percentage applicable on such day under
regulations issued from time to time by the Federal Reserve Board (or any
successor) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
6
requirement) for FUNB with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (as defined in Regulation D of the Federal
Reserve Board, as in effect from time to time) and having a term equal to
such Interest Accrual Period.
"EXCESS CONCENTRATION AMOUNT" means, at any date of determination, an
amount equal to the highest of the Engine Type Excess Concentration Amount,
the Single Lessee Excess Concentration Amount, the Three Lessee Excess
Concentration Amount, the Geographic Region Excess Concentration Amount and
the Wide Body Aircraft Excess Concentration Amount.
"EXISTING AND POSSIBLE LOANS" means Loans outstanding hereunder and
Loans proposed to be made on any Transfer Date.
"FACILITY FEE" has the meaning set forth in the Issuer Fee Letter.
"FEDERAL FUNDS RATE" means for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of
the federal funds rates and confirmed in Federal Reserve Board Statistical
Release H.15 (519) or any successor or substitute publication selected by
FUNB (or, if such day is not a Business Day, for the next preceding Business
Day), or, if, for any reason, such rate is not available on any day, the rate
determined, in the sole opinion of FUNB, to be the rate at which federal
funds are being offered for sale in the national federal funds market at 9:00
a.m. (New York City time).
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"FINAL PAYMENT DATE" means, with respect to Series 1997-1 Notes, the
date which is the seventh annual anniversary of the Conversion Date, or if
such date is not a Business Day, the Business Day immediately succeeding such
date.
"FCM" means First Union Capital Markets Corp.
"FUNB" means First Union National Bank.
"GEOGRAPHIC REGION EXCESS CONCENTRATION AMOUNT" means at any date of
determination, the dollar amount, if any, by which the sum of the Net Book
Values of all Eligible Engines (relating to Loans hereunder) subject to a
Lease Agreement with Lessees having corporate headquarters located in the
geographic areas set forth in Section 5.2(r) hereof exceeds the applicable
concentration limits set forth in Section 5.2(r) hereof.
"GUARANTOR" means Willis Lease Finance Corporation and its successors
and permitted assigns.
"GUARANTY" means that certain Amended and Restated Guaranty, dated as of
February 11, 1999 made by the Guarantor in favor of FUNB, together with its
successors and assigns.
7
"INCREASED COSTS" shall have the meaning set forth in the Class A Note
Purchase Agreement.
"INDENTURE COMPLIANCE CERTIFICATE" means the certificate of the Issuer
given pursuant to Section 5.2(c) hereof.
"INTEREST" means for each Interest Accrual Period and for each Loan
outstanding, the sum of the products (for each such day during such Interest
Accrual Period) of :
IR x P x 1/360
where:
IR = the Interest Rate applicable on such day; and
P = the Loans outstanding on such day.
PROVIDED, HOWEVER, that (i) no provision of this Supplement shall require the
payment or permit the collection of Interest in excess of the maximum
permitted by applicable law and (ii) Interest shall not be considered paid
by any distribution if such distribution is rescinded or must otherwise be
returned for any reason.
"INTEREST ACCRUAL PERIOD" means for any Payment Date, the period
beginning with and including the day next following the end of the preceding
Interest Accrual Period and ending on and including the 15th day of the
following month; except that, in the case of the first Interest Accrual
Period, the period beginning with and including the Effective Date and ending
on and including the 15th day of the month next following the month in which
the Effective Date occurs. If such period is associated with LIBOR Rate
fundings the Interest Accrual Period shall be at the Deal Agent's discretion;
PROVIDED, HOWEVER, that such period shall end on no later than either the
15th day of the following month or the 15th day of the second succeeding
month. When switching from LIBOR Rate to CP Rate or Base Rate funding, the
first such Interest Accrual Period shall be at the Deal Agent's discretion.
"INTEREST RATE" means for any Loans on any day:
(a) to the extent the relevant Purchaser will be funding such
Loans through the issuance of Commercial Paper, a rate equal to the CP Rate
on such day, or
(b) to the extent the relevant Purchaser will not be funding
such Loans through the issuance of Commercial Paper, a rate equal to the
Alternative Rate on such day.
"ISSUER FEE LETTER" means the Issuer Fee Letter, dated as of February
11, 1999, between the Issuer and the Deal Agent, as may be amended from time
to time.
"LEASE AGREEMENT" means any lease agreement entered into from time to
time by the Issuer, either directly or pursuant to an assignment, pursuant to
which the Issuer leases one or more Eligible Engines, as identified on
Schedule 2 hereto, and any additions, substitutions and
8
replacements therefor made in accordance with the Series 1997-1 Transaction
Documents and reflected in an amendment to such Schedule 2.
"LIBOR RATE" means for any Interest Accrual Period, an interest rate per
annum equal to the average per annum rate of interest determined by FUNB on
the basis of the offered rates for deposits in dollars for a term equal to
the Interest Accrual Period; and commencing on the first day of such Interest
Accrual Period, appearing on Telerate Page 3750 (or, if, for any reason,
Telerate Page 3750 is not available, the Reuters Screen LIBO Page) as of
11:00 A.M. (London time) on the Business Day which is the second Business Day
immediately preceding the first day of the applicable Interest Accrual
Period. If neither Telerate Page 3750 nor the Reuters Screen LIBO Page is
available, then the LIBOR Rate shall be the rate determined by FUNB at its
principal office in Charlotte, North Carolina as its LIBOR Rate (each such
determination, absent manifest error, to be conclusive and binding on all
parties hereto and their assignees) as of two Business Days prior to the
applicable Interest Accrual Period as the rate at which deposits in
immediately available funds in U.S. dollars are being, have been, or would be
offered or quoted by FUNB to major banks in the applicable interbank market
for Eurodollar deposits at or about 11:00 A.M. (Charlotte, North Carolina
time) on the Business Day which is the second Business Day immediately
preceding the first day of the applicable Interest Accrual Period for
delivery on the first day of such Interest Accrual Period for a term equal to
such Interest Accrual Period.
"LOAN" means an extension of credit made by the Purchasers pursuant to
Section 2.4 hereof.
"MAJORITY OF HOLDERS" means, with respect to the Series 1997-1 Notes,
Purchasers representing more than fifty percent (50%) of the unpaid principal
balance of the Class A Notes then Outstanding.
"ON-LEASE PERCENTAGE" means, a fraction, expressed as a percentage, the
numerator of which is equal to the Net Book Value of all Eligible Engines
(relating to Loans hereunder) subject to a Lease Agreement and the
denominator of which is equal to the sum of the Net Book Values of all
Engines (relating to Loans hereunder).
"OTHER TAXES" shall have the meaning set forth in Section 2.5(b) of this
Supplement.
"OVERDUE RATE" means, with respect to any Notes, an interest rate per
annum equal to the sum of (i) the interest rate per annum that would have
otherwise been in effect with respect to such Loan plus (ii) two percent (2%).
"PAYMENT DATE" means, with respect to the Series 1997-1 Notes, the
twentieth day of each month, or, if such day is not a Business Day, the
immediately following Business Day; PROVIDED, HOWEVER, that the initial
Payment Date shall be the twentieth day of the second month immediately
succeeding the Closing Date, or if such day is not a Business Day, the
immediately following Business Day.
"PREPAYMENT" means any mandatory or optional prepayment of principal of
Notes including, without limitation, any Prepayment pursuant to Section 702
of the Indenture.
9
"PRIME RATE" means the rate announced by FUNB from time to time as its
prime rate in the United States, such rate to change as and when such
designated rate changes. The Prime Rate is not intended to be the lowest
rate of interest charged by FUNB in connection with extensions of credit to
debtors.
"PROGRAM FEE" has the meaning set forth in the Issuer Fee Letter.
"PURCHASERS" shall have the meaning set forth in the Class A Note
Purchase Agreement.
"SECURITIES ACCOUNTS" means the Series 1997-1 Series Account and the
Series 1997-1 Restricted Cash Account.
"SECURITIES INTERMEDIARY" means The Bank of New York, a New York banking
corporation, as securities intermediary (as such term is defined under UCC
Section 8-102(a)(14)) with respect to the Securities Accounts.
"SERIES COLLATERAL" shall have the meaning set forth in Section 2.1
hereof.
"SERIES 1997-1" shall mean the Series of Notes the terms of which are
specified in this Supplement.
"SERIES 1997-1 ENGINES" shall mean the Engines identified on Schedule 2
hereto, and any additions, substitutions and replacements therefor made in
accordance with the Series 1997-1 Transaction Documents and reflected in an
amendment to such Schedule 2.
"SERIES 1997-1 ENGINE RESERVE ACCOUNT" means the subaccount established
by the Issuer with the Indenture Trustee into which Maintenance Reserve
Payments are deposited pursuant to Section 308 of the Indenture and Section
3.05 hereof.
"SERIES 1997-1 NOTEHOLDER" shall mean the Person in whose name a Series
1997-1 Note is registered in the Note Register.
"SERIES 1997-1 NOTES" means the Class A Notes, and shall include any and
all replacements, extensions, substitutions or renewals of such notes.
"SERIES 1997-1 RESTRICTED CASH ACCOUNT" means the subaccount (designated
as such) of the account established pursuant to Section 3.7 of the Indenture.
"SERIES 1997-1 RESTRICTED CASH AMOUNT" means the amount required to be
deposited or maintained in the Series 1997-1 Restricted Cash Account, which
on the date on which the initial Loan is made and on any Payment Date
thereafter shall be equal to the product of (x) two percent (2%) and (y) the
Class A Note Principal Balance on such date on which the initial Loan is made
or on such Payment Date, as the case may be (after giving effect to all Loans
made on such date on which the initial Loan is made or on such Payment Date
and all Class A Note
10
Principal Payments actually paid on such date on which the initial Loan is
made or on such Payment Date).
"SERIES 1997-1 SECURITY DEPOSIT ACCOUNT" means the subaccount
established by the Issuer with the Indenture Trustee into which Security
Deposits are deposited pursuant to Section 309 of the Indenture and Section
3.6 hereof.
"SERIES 1997-1 SERIES ACCOUNT" means the account established by the
Issuer with the Indenture Trustee into which funds are deposited from the
Trust Account pursuant to Section 303 of the Indenture.
"SERIES 1997-1 TRANSACTION DOCUMENTS" means any and all of the
Indenture, this Supplement, the Series 1997-1 Notes, the Servicing Agreement,
the Contribution and Sale Agreement, the Class A Note Purchase Agreement, the
Administration Agreement and any and all other agreements, documents and
instruments executed and delivered by or on behalf or in support of Issuer
with respect to the issuance and sale of the Series 1997-1 Notes, as any of
the foregoing may from time to time be amended, modified, supplemented or
renewed.
"SERVICER ADVANCE" means all extraordinary out of pocket payments
payable pursuant to Section 3.04 of the Servicing Agreement and made by the
Servicer which have been authorized by the Deal Agent.
"SERVICER REPORT" means, with respect to Series 1997-1, the monthly
report prepared by the Servicer in the form set forth in Exhibit A to the
Servicing Agreement.
"SERVICING FEE" has the meaning set forth in Schedule 1.
"SINGLE LESSEE EXCESS CONCENTRATION AMOUNT" means at any date of
determination, the dollar amount, if any, by which the aggregate of the sum
of the Net Book Values of all Eligible Engines (relating to Loans hereunder)
that are subject to a Lease Agreement with any single Lessee (including
Affiliates thereof) exceeds the applicable concentration limits set forth in
Section 5.2(p) hereof.
"SINGLE LESSEE PERCENTAGE" has the meaning set forth in Schedule 1.
"TARGET EBIT RATIO" has the meaning set forth in Schedule 1.
"TARGET ONE YEAR LEASE EXPIRY CONCENTRATION PERCENTAGE" has the meaning
set forth in Schedule 1.
"TARGET TWO YEAR LEASE EXPIRY CONCENTRATION PERCENTAGE" has the meaning
set forth in Schedule 1.
"TAXES" means any present or future taxes, levies, imposes, duties,
charges, assessment or fees of any nature (including interest, penalties and
additions thereto) that are imposed by any government or other taxing
authority.
11
"THREE LESSEE EXCESS CONCENTRATION AMOUNT" means at any date of
determination, the dollar amount, if any, by which the sum of the Net Book
Values of all Eligible Engines (relating to Loans hereunder) that are subject
to a Lease Agreement with the three (3) largest Lessees with respect to
aggregate Net Book Values (including Affiliates thereof) exceeds the
applicable concentration limits set forth in Section 5.2(q) hereof.
"THREE LESSEE PERCENTAGE" has the meaning set forth in Schedule 1.
"VFCC" means Variable Funding Capital Corporation, the initial purchaser
of the Class A Notes.
"WEIGHTED AVERAGE LEASE RATE PERCENTAGE" has the meaning set forth in
Schedule 1.
"WIDE BODY AIRCRAFT EXCESS CONCENTRATION AMOUNT" means, at any date of
determination, the dollar amount, if any, by which the sum of the Net Book
Values of all Eligible Engines (relating to Loans hereunder) designed to
power Wide Body Aircraft exceeds the applicable concentration limits set
forth in Section 5.2(s) hereof.
"WIDE BODY AIRCRAFT PERCENTAGE" has the meaning set forth in Schedule 1.
SECTION 1.2. CALCULATION GUIDELINES
For purposes of calculating the Class A Note Interest Payment, the Class
A Note Principal Balance shall at all times be equal to the sum of all Loans
then outstanding.
ARTICLE II
CREATION OF THE SERIES 1997-1 NOTES
SECTION 2.1. DESIGNATION; GENERAL TERMS AND CONDITIONS.
(a) There is hereby created a Series of Notes to be issued in one
Class pursuant to the Indenture and this Supplement to be known respectively
as the "WLFC Funding Corporation Secured Notes, Series 1997-1, Class A". The
Series 1997-1 Notes shall not be rated by any Rating Agency as of the
Effective Date.
(b) The Payment Date with respect to the Series 1997-1 Notes shall be
the twentieth day of each month, or, if such day is not a Business Day, the
immediately following Business Day.
(c) The Class A Notes shall be issued in definitive form substantially
in the form of EXHIBIT A hereto.
12
(d) Payments of principal and interest on the Series 1997-1 Notes
shall be payable solely from funds on deposit in the Series 1997-1 Series
Account or otherwise at the times and in the amounts set forth in Article III
of this Supplement.
(e) In furtherance of, and in addition to the property identified in,
the Granting Clause set forth in the Indenture, as it relates to this
Supplement, the Issuer hereby grants to the Indenture Trustee, for the
benefit of the Series 1997-1 Noteholders, a security interest in all of
Issuer's right, title and interest in and to (i) each of the Series 1997-1
Engines, (ii) the Lease Agreements that encumber the Series 1997-1 Engines on
the Closing Date or on any date thereafter, (iii) the Series 1997-1 Series
Account, the Series 1997-1 Engine Reserve Account, the Series 1997-1 Security
Deposit Account and the Series 1997-1 Restricted Cash Account and all amounts
and Eligible Investments from time to time on deposit therein and (iv) all
income, payments and proceeds of the foregoing (all such property identified
in this Section 2.1(e), collectively, the "Series Collateral"). Such Series
Collateral (except as set forth in Section 401(d) of the Indenture with
respect to Excess Cash Available for Distribution) shall not be available to
pay any other Aggregate Outstanding Obligations until all Outstanding
Obligations under this Supplement have been paid in full.
(f) In the event that any term or provision contained herein shall
conflict with or be inconsistent with any term or provision contained in the
Indenture, the terms and provisions of this Supplement shall govern.
(g) The Series 1997-1 Notes created hereunder are not securities under
federal or state securities laws, but evidence the Issuer's obligation in
accordance with the terms hereof, to repay an extension of credit
constituting the Loans made to the Issuer by the Series 1997-1 Noteholders.
SECTION 2.2. INTEREST PAYMENTS ON THE SERIES 1997-1 NOTES.
(a) INTEREST ON SERIES 1997-1 NOTES. Each Loan shall bear interest on
the outstanding principal amount thereof from the date when made, continued
or converted until paid in full at a rate per annum equal to the applicable
Interest Rate. Such interest shall be payable on each Payment Date from
amounts on deposit in the Series 1997-1 Series Account in accordance with
Section 302 of the Indenture and Section 3.2 of this Supplement.
(b) DEFAULT INTEREST. Upon the occurrence of an Event of Default with
respect to the Series 1997-1 Notes, the Issuer shall, pursuant to Section 3.2
hereof, from time to time pay interest ("Default Interest") in accordance
with the terms of the Indenture, at a rate per annum equal to the Overdue
Rate, for the period during which such amounts shall remain unpaid.
(c) DETERMINATION OF INTEREST. The Deal Agent shall determine the
Interest pursuant to Section 2.6 of the Class A Note Purchase Agreement.
13
SECTION 2.3. PRINCIPAL PAYMENTS ON THE SERIES 1997-1 NOTES.
Principal of the Series 1997-1 Notes shall be payable on each Payment
Date in the amount of the Class A Note Principal Payment from amounts on
deposit in the Series 1997-1 Series Account (and on the Final Payment Date,
from amounts on deposit in the Series 1997-1 Restricted Cash Account) in
accordance with Section 3.2 of this Supplement. The unpaid principal amount
of the Series 1997-1 Notes shall be due and payable in full on the Final
Payment Date, together with all unpaid interest, fees, expenses, costs and
other amounts payable by the Issuer pursuant to the terms of the Indenture
and this Supplement.
SECTION 2.4. AMOUNTS AND TERMS OF SERIES 1997-1 NOTEHOLDER COMMITMENTS.
(a) Subject to the terms and conditions of this Supplement and the
Class A Note Purchase Agreement, the Class A Note Commitment shall be
available to the Issuer on and after the Closing Date until the Conversion
Date.
(b) Prior to the Conversion Date, the Class A Note shall be a
revolving note with a maximum principal amount equal to the Class A Note
Commitment then in effect; PROVIDED, HOWEVER, that at no time shall the Class
A Note Principal Balance exceed the Asset Base for this Series 1997-1. The
Deal Agent shall maintain a record of all Loans and repayments made on the
Class A Note and absent manifest error such records shall be conclusive. On
any date requested by the Issuer, after the Issuer shall have satisfied all
applicable conditions precedent set forth in Article V hereof, each Purchaser
shall, at the Issuer's request for a Loan as specified in a notice given to
the Deal Agent in accordance with the terms of the Class A Note Purchase
Agreement, make payment thereof (in proportion to its respective commitment)
in an amount equal to (i) the Applicable Percentage of the Net Purchase Price
for the Eligible Engines pledged as collateral for such Loan and, with
respect to any Capital Improvements, (ii) the Applicable Percentage of the
value of Capital Improvements made to the Eligible Engines pledged as
collateral for such Loan, as determined in accordance with GAAP, and in
accordance with the written direction of the Issuer by wire transfer in same
day funds provided, that each request for an advance of principal of the
Class A Note shall, subject to the Class A Note Commitment then in effect, be
in a minimum aggregate amount as set forth in Section 2.4(b) of the Class A
Note Purchase Agreement. The Issuer shall pay interest on the Class A Notes
at the rates and in the manner set forth in Section 2.2 hereof. The unpaid
principal amount of the Class A Notes and all unpaid interest accrued
thereon, together with any unpaid Program Fee, Facility Fee and all other
fees, expenses, costs and other sums chargeable to the Issuer incurred in
connection therewith, shall be due and payable on the Final Payment Date.
Each request for a Loan shall constitute a reaffirmation by the Issuer
that (1) no Event of Default or Early Amortization Event has occurred and is
continuing and (2) the representations and warranties contained in the Series
1997-1 Transaction Documents are true, correct and complete in all material
respects to the same extent as though made on and as of the date of the
request, except to the extent such representations and warranties
specifically relate to an earlier date, in which event they shall be true,
correct and complete in all material respects as of such earlier date.
14
(c) The Issuer may, on any Payment Date or on the maturity date of any
Loan, repay all or any portion of the Class A Note Principal Balance after
the Issuer specifies in a notice given to the Deal Agent at least 30 days
(and not more than 90 days) before such Payment Date and in accordance with
the terms of this Supplement, by making a wire transfer to the Deal Agent;
PROVIDED, HOWEVER, that the Issuer may not make such repayment from funds in
the Series 1997-1 Restricted Cash Account unless the Issuer is repaying all
of the Class A Note Principal Balance. Such repayment shall be accompanied
by instructions to apply such cash to the reduction of principal and accrued
Interest through the date of such payment. If the Issuer does not notify
each Purchaser and the Deal Agent of any such principal reduction at least 30
days prior to such principal reduction, the Issuer shall pay all costs
related to the reduction of outstanding principal, including Breakage Costs
and all costs associated with the outstanding Commercial Paper related to
such principal reduction. The Issuer understands (i) that Commercial Paper
issued in connection with such principal may not be prepaid, (ii) that the
amount of cash proceeds received by each Purchaser may not match the amount
of maturing Commercial Paper on the desired repayment date and (iii) that
each Purchaser shall use its reasonable best efforts to minimize any such
Breakage Costs.
(d) The Issuer may terminate or reduce the Class A Note Commitment
pursuant to Section 2.5 of the Class A Note Purchase Agreement.
(e) The Issuer shall pay on each quarterly Payment Date, beginning
with the third Payment Date, an Administrative Agent Fee to the
Administrative Agent as set forth in Schedule 1.
(f) The Issuer shall pay on each Payment Date a Program Fee to the
Deal Agent as set forth in the Issuer Fee Letter.
(g) The Issuer shall pay on each Payment Date the Facility Fee to the
Deal Agent as set forth in the Issuer Fee Letter.
SECTION 2.5. INCREASED COSTS; CAPITAL ADEQUACY; ILLEGALITY.
The provisions regarding Increased Costs, Capital Adequacy and
Illegality as set forth in Section 2.8 of the Class A Note Purchase Agreement
are incorporated herein.
SECTION 2.6. TAXES.
The provisions regarding Taxes as set forth in Section 2.9 of the Class
A Note Purchase Agreement are incorporated herein.
SECTION 2.7. PAYMENTS, COMPUTATIONS, ETC.
(a) Unless otherwise expressly provided herein, all amounts to be paid
or deposited by the Issuer or the Servicer hereunder shall be paid or
deposited in accordance with the terms hereof no later than 11:00 A.M.
(Charlotte, North Carolina time) on the day when due in lawful money of the
United States in immediately available funds to the Agent's Account. The
Issuer
15
shall, to the extent permitted by law, pay to the Purchasers interest on all
amounts not paid or deposited when due hereunder at 1% per annum above the
Base Rate, payable on demand; PROVIDED, HOWEVER, that such interest rate
shall not at any time exceed the maximum rate permitted by applicable law.
Such interest shall be retained by the Deal Agent except to the extent that
such failure to make a timely payment or deposit has continued beyond the
date for distribution by the Deal Agent of such overdue amount to the
Purchasers, in which case such interest accruing after such date shall be for
the account of, and distributed by the Deal Agent to the Purchasers. All
computations of interest and other fees hereunder shall be made on the basis
of a year of 360 days for the actual number of days (including the first but
excluding the last day) elapsed.
(b) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in
the computation of payment of Interest or any fee payable hereunder, as the
case may be.
(c) If any Loan requested by the Issuer and approved by a Purchaser
and the Deal Agent pursuant to Section 2.2 is not, for any reason whatsoever
related to a default or nonperformance by the Issuer, made or effectuated, as
the case may be, on the date specified therefor, the Issuer shall indemnify
such Purchaser against any reasonable loss, cost or expense incurred by such
Purchaser, including, without limitation, any loss (including loss of
anticipated profits, net of anticipated profits in the reemployment of such
funds in the manner determined by such Purchaser), cost or expense incurred
by reason of the liquidation or reemployment of deposits or other funds
acquired by such Purchaser to fund or maintain such Loan, as the case may be,
during such Interest Accrual Period.
ARTICLE III
SERIES 1997-1 SERIES ACCOUNT AND
ALLOCATION AND APPLICATION OF AMOUNTS THEREIN
SECTION 3.1. SERIES 1997-1 SERIES ACCOUNT.
The Issuer shall establish on the Effective Date and maintain, so long
as any Series 1997-1 Note is Outstanding, an Eligible Account with the
Indenture Trustee which shall be designated as the Series 1997-1 Series
Account, which account is hereby pledged to the Indenture Trustee for the
benefit of the Series 1997-1 Noteholders pursuant to the Indenture and this
Supplement. All deposits of funds by or for the benefit of the Series 1997-1
Noteholders from the Trust Account and the Series 1997-1 Restricted Cash
Account shall be accumulated in, and withdrawn from, the Series 1997-1 Series
Account in accordance with the provisions of the Indenture and this
Supplement.
SECTION 3.2. DISTRIBUTIONS FROM SERIES 1997-1 SERIES ACCOUNT ON EACH
PAYMENT DATE.
16
On each Payment Date, the Indenture Trustee shall, in accordance with
the Servicer Report, distribute funds then on deposit in the Series 1997-1
Series Account to the following Persons and in the following order of
priority:
(I) If an Early Amortization Event shall not then be continuing:
(A) To the Indenture Trustee by wire transfer of
immediately available funds, all Indenture Trustee's Fees then due and
payable for Series 1997-1 to the extent not paid by the Servicer;
(B) (i) If the Indenture Trustee has received the Servicer
Report for the related Collection Period, to the Servicer by wire transfer of
immediately available funds, an amount equal to the sum of any (x) Servicing
Fee Arrearage and (y) Servicing Fee then due and payable and (ii) to the
Servicer by wire transfer of immediately available funds, an amount equal to
the Servicer Advance then due and payable;
(C) To the Administrative Agent, any fees and expenses
then payable to the Administrative Agent approved by the Requisite Global
Majority pursuant to Section 405(b) of the Indenture;
(D) To an Interest Rate Hedge Provider, any payments owing
under an Interest Rate Hedge Agreement other than termination payments;
(E) To each Holder of a Class A Note on the immediately
preceding Determination Date, an amount equal to its PRO RATA portion of
FIRST, any Class A Note Interest Arrearage, and SECOND, the Class A Note
Interest Payment for such Payment Date;
(F) To the Series 1997-1 Restricted Cash Account, an
amount sufficient so that the total amount on deposit therein is equal to the
Series 1997-1 Restricted Cash Amount for such Payment Date;
(G) (i) To the Deal Agent an amount equal to the sum of
(x) the Facility Fee and the Program Fee then due and payable and (y) any
unpaid Facility Fee and Program Fee from all prior Payment Dates and (ii) to
the Administrative Agent an amount equal to the sum of (x) the Administrative
Agent Fee then due and payable and (y) any unpaid Administrative Agent Fee
from all prior Payment Dates;
(H) To each Holder of a Class A Note on the immediately
preceding Determination Date, an amount equal to its PRO RATA portion of
prepayments deposited in the Series 1997-1 Series Account for the related
Collection Period;
(I) To each Holder of a Class A Note on the immediately
preceding Determination Date, an amount equal to its PRO RATA portion of the
Class A Note Principal Payment;
(J) [RESERVED];
17
(K) To each Holder of a Class A Note on the immediately
preceding Determination Date, PRO RATA, any Default Interest then due and
payable;
(L) To each Holder of a Class A Note on the immediately
preceding Determination Date, PRO RATA, an amount equal to Taxes, Other
Taxes, Increased Costs and amounts due pursuant to Sections 2.5, 2.6 and 2.7
hereof, if any, then due and payable with respect to such Class A Note and
any other costs, expenses, taxes and indemnities payable by the Issuer
pursuant to the Class A Note Purchase Agreement;
(M) To an Interest Rate Hedge Provider any termination
payments owing under any Interest Rate Hedge Agreement;
(N) To the Indenture Trustee for distribution pursuant to
Section 401(d) of the Indenture, as Excess Cash Available for Distribution,
to the extent that any Deficient Series is Outstanding on such Payment Date;
(O) To the Issuer by wire transfer of immediately
available funds, any remaining amount on deposit in the Series 1997-1 Series
Account on such Payment Date.
Notwithstanding the foregoing, the amounts set forth in clause (P)
shall be payable only at such times as no Deficient Series then exists.
(II) If an Early Amortization Event shall then be continuing:
(A) To the Indenture Trustee by wire transfer of
immediately available funds, all Indenture Trustee's Fees then due and
payable for Series 1997-1 to the extent not paid by the Servicer;
(B) (i) If the Indenture Trustee has received the Servicer
Report for the related Collection Period, to the Servicer by wire transfer of
immediately available funds, an amount equal to the sum of any (x) Servicer
Fee Arrearage and (y) Servicer Fee then due and payable and (ii) to the
Servicer by wire transfer of immediately available funds, an amount equal to
the Servicer Advance then due and payable;
(C) To the Administrative Agent, any fees and expenses
then payable to the Administrative Agent approved by the Requisite Global
Majority pursuant to Section 405(b) of the Indenture;
(D) To an Interest Rate Hedge Provider, any payments owing
under an Interest Rate Hedge Agreement other than termination payments;
(E) To each Holder of a Class A Note on the immediately
preceding Determination Date, an amount equal to its PRO RATA portion of
FIRST, any Class A Note Interest Arrearage and SECOND, the Class A Note
Interest Payment for such Payment Date;
18
(F) (i) to the Deal Agent, an amount equal to the sum of
(x) the Facility Fee and Program Fee then due and payable and (y) any unpaid
Facility Fee and Program Fee from all prior Payment Dates and (ii) to the
Administrative Agent an amount equal to the sum of (x) the Administrative
Agent Fee then due and payable and (y) any unpaid Administrative Agent Fee
from all prior Payment Dates;
(G) To each Holder of a Class A Note on the immediately
preceding Determination Date, an amount equal to its PRO RATA portion of
prepayments deposited in the Series 1997-1 Series Account for the related
Collection Period;
(H) To each Holder of a Class A Note on the immediately
preceding Determination Date, an amount equal to its PRO RATA portion of the
Class A Note Principal Payment;
(I) To each Holder of a Class A Note on the immediately
preceding Determination Date, PRO RATA, any Default Interest then due and
payable;
(J) To each Holder of a Class A Note on the immediately
preceding Determination Date, PRO RATA, an amount equal to Taxes, Other
Taxes, Increased Costs and amounts due pursuant to Sections 2.5, 2.6 and 2.7
hereof, if any, then due and payable with respect to such Class A Note and
any other costs, expenses, taxes and indemnities payable by the Issuer
pursuant to the Class A Note Purchase Agreement;
(K) To an Interest Rate Hedge Provider any termination
payments owing under any Interest Rate Hedge Agreement;
(L) To the Indenture Trustee for distribution pursuant to
Section 401(d) of the Indenture, as Excess Cash Available for Distribution,
to the extent that any Deficient Series is Outstanding on such Payment Date;
(M) To the Issuer by wire transfer of immediately
available funds, any remaining amount on deposit in the Series 1997-1 Series
Account on such Payment Date.
Notwithstanding the foregoing, if an Event of Default has occurred and
the Indenture Trustee has sold or otherwise liquidated any Series Collateral
or any other asset of the Issuer, then solely with respect to funds realized
by the Indenture Trustee from such sale or liquidation, the amounts set forth
in clause (K) shall be payable pari passu with the amounts set forth in
clause (H) in proportion to the amounts due under clauses (K) and (H),
respectively.
Any amounts payable to a Purchaser shall be made by wire transfer of
immediately available funds to the account that such Noteholder has
designated to the Indenture Trustee in writing on or prior to the Business
Day immediately preceding the Payment Date.
SECTION 3.3. ALLOCATION OF EXCESS CASH AVAILABLE FOR DISTRIBUTION.
19
On each Payment Date, the Indenture Trustee shall distribute any Excess
Cash Available for Distribution deposited into the Series 1997-1 Series
Account in accordance with Section 401 of the Indenture in payment of the
amounts and in the order of priority set forth in Section 3.2(I) or (II)
hereof, as the case may be.
SECTION 3.4. SERIES 1997-1 RESTRICTED CASH ACCOUNT.
(a) The Issuer shall establish on the Effective Date and maintain so
long as any Series 1997-1 Note is Outstanding an Eligible Account with the
Indenture Trustee which shall be designated as the Series 1997-1 Restricted
Cash Account, which account is hereby pledged to the Indenture Trustee
pursuant to the Indenture and this Supplement. On the date on which the
initial Loan is made, the Issuer will deposit the Series 1997-1 Restricted
Cash Amount in the Series 1997-1 Restricted Cash Account from the proceeds of
issuance of the Series 1997-1 Notes and thereafter amounts shall be deposited
in the Series 1997-1 Restricted Cash Account in accordance with Section 3.2
of this Supplement. Any and all moneys remitted by the Indenture Trustee to
the Series 1997-1 Restricted Cash Account shall be invested in Eligible
Investments in accordance with the Indenture and shall be distributed in
accordance with this Section 3.4.
(b) No later than 10:00 a.m. North Carolina time on the Business Day
prior to each Payment Date, the Indenture Trustee shall, in accordance with
the written instructions from the Deal Agent, make a draw on the Series
1997-1 Restricted Cash Account in an amount equal to the extent by which
amounts on deposit in the Series 1997-1 Series Account will be insufficient
to pay those amounts payable pursuant to Section 3.2(I)(E) or Section
3.2(II)(E), as the case may be, on such Payment Date (after giving effect to
any distributions to be made on such Payment Date prior to the payment of
such amounts) and the amount of any such draw shall be deposited in the
Series 1997-1 Series Account.
(c) On each Payment Date, the Indenture Trustee shall, in accordance
with the Servicer Report or pursuant to written instructions from the Deal
Agent, deposit in the Series 1997-1 Series Account the excess, if any, of (A)
amounts then on deposit in the Restricted Cash Account (after giving effect
to any withdrawals therefrom on such Payment Date) over (B) the Series 1997-1
Restricted Cash Amount. On the Final Payment Date, any remaining funds in
the Series 1997-1 Restricted Cash Account shall be deposited in the Series
1997-1 Series Account and distributed in accordance with Section 3.2 of this
Supplement.
SECTION 3.5. SERIES 1997-1 ENGINE RESERVE ACCOUNT.
(a) The Issuer shall establish on the Effective Date and maintain an
Eligible Account with the Indenture Trustee which shall be designated as the
Series 1997-1 Engine Reserve Account, which account is hereby pledged to the
Indenture Trustee pursuant to the Indenture and this Supplement. The Issuer,
or Servicer on its behalf, shall cause the Lessees to remit the Maintenance
Reserve Payments to the Trust Account, and the Servicer, pursuant to the
Servicing Agreement, shall, by not later than each Determination Date,
specifically identify those Maintenance Reserve Payments to a particular
Eligible Engine and instruct the Indenture Trustee to allocate all
Maintenance Reserve Payments on deposit in the Trust Account which relate to
20
any Engine pledged as collateral for the Series 1997-1 Notes, to the Series
1997-1 Engine Reserve Account.
(b) The Issuer shall maintain (or shall cause the Servicer to
maintain) records that will identify amounts on deposit in the Series 1997-1
Engine Reserve Account to a specific Eligible Engine. The Servicer shall be
entitled to withdraw funds from the Series 1997-1 Engine Reserve Account for
the payment of maintenance expenses with respect to the related Eligible
Engine, at the times and subject to the further conditions set forth in the
Servicing Agreement; PROVIDED, HOWEVER, that so long as a Servicer Default is
then in effect, the Servicer shall not be entitled to make such withdrawal
except upon presentation of supporting documentation reasonably determined by
the Deal Agent to comply with the terms of the applicable Lease Agreement
(which shall evidence its determination by written instrument delivered to
the Indenture Trustee).
SECTION 3.6. SERIES 1997-1 SECURITY DEPOSIT ACCOUNT.
(a) The Issuer shall establish on the Effective Date and maintain an
Eligible Account with the Indenture Trustee which shall be designated as the
Series 1997-1 Security Deposit Account, which account is hereby pledged to
the Indenture Trustee pursuant to the Indenture and this Supplement. The
Issuer, or Servicer on its behalf, shall cause the Lessees to remit the
Security Deposits to the Trust Account, and the Servicer, pursuant to the
Servicing Agreement, shall, by not later than each Determination Date,
specifically identify those Security Deposits to a particular Eligible Engine
and instruct the Indenture Trustee to allocate all Security Deposits on
deposit in the Trust Account which relate to any Engine pledged as collateral
for the Series 1997-1 Notes, to the Series 1997-1 Security Deposit Account.
(b) The Issuer shall maintain (or shall cause the Servicer to
maintain) records that will identify amounts on deposit in the Series 1997-1
Security Deposit Account to a specific Eligible Engine. The Servicer shall
be entitled to withdraw funds from the Series 1997-1 Security Deposit Account
for the refund to the Lessee of the Security Deposit with respect to the
related Eligible Engine, at the times and subject to the further conditions
set forth in the Servicing Agreement; PROVIDED, HOWEVER, that so long as a
Servicer Default is then in effect, the Servicer shall not be entitled to
make such withdrawal except upon presentation of supporting documentation
reasonably determined by the Deal Agent to comply with the terms of the
applicable Lease Agreement (which shall evidence its determination by written
instrument delivered to the Indenture Trustee).
SECTION 3.7. SECURITIES ACCOUNTS.
(a) Notwithstanding any other provision of this Supplement or the
Indenture, with respect to each of the Securities Accounts, the Securities
Intermediary hereby agrees that it will comply with entitlement orders (as
such term is defined under the UCC) originated by the Indenture Trustee
without further consent by the Issuer.
(b) Each of the Issuer, the Securities Intermediary and the Indenture
Trustee intends that the provisions of Section 3.7(a) will give the Indenture
Trustee "control" over the Securities
21
Accounts (as the term "control" is defined under the UCC), without prejudice
to any other provision of the UCC that also would be deemed to give the
Indenture Trustee such control.
ARTICLE IV
ADDITIONAL COVENANTS
In addition to the covenants set forth in Article VI of the Indenture,
the Issuer hereby makes the following additional covenants for the benefit of
the Series 1997-1 Noteholders:
SECTION 4.1. ADDITIONAL SERIES.
The Issuer shall not issue any additional Series of Notes on or after
the Effective Date without (a) the prior written consent of the Deal Agent,
(b) confirmation in writing that the Outstanding Obligations of each Series
of Notes (calculated after giving effect to such proposed issues) shall not
exceed the Asset Base for such Series of Notes as evidenced by the related
Asset Base Certificate most recently received by the Indenture Trustee (but
not earlier than the preceding Payment Date) and (c) confirmation in writing
that no Early Amortization Event or Event of Default has occurred and is then
continuing, and as a result of the issuance of such new Series no Early
Amortization Event or Event of Default will exist.
SECTION 4.2. CONTROL PARTY.
For purposes of determining a Requisite Global Majority pursuant to
Section 503 of the Indenture, the Control Party of Series 1997-1 shall mean
the Majority of Holders of the Outstanding Class A Notes.
SECTION 4.3. INSPECTIONS.
The Issuer agrees that any Person designated in writing by the Deal
Agent may consult with the proper officials of the Issuer (including, without
limitation, officials of any Affiliate of the Issuer in charge of servicing
the Lease Agreements) at such times during normal business hours and as often
as the Deal Agent may reasonably request regarding the information required
to be furnished pursuant to the Servicing Agreement or regarding the
performance of its respective covenants and agreements contained in any of
this Supplement or any of the Related Documents to which it is a party;
SECTION 4.4. RESERVED.
SECTION 4.5. INTEREST RATE HEDGE AGREEMENTS.
(a) The Issuer shall enter into Interest Rate Hedge Agreements in
order to protect the Issuer, to the extent commercially practicable, from
fluctuations in interest rates which would increase the interest payments of
the Issuer on Notes issued under this Supplement; provided that all Interest
Rate Hedge Agreements shall be in the amount specified in Schedule 1 and in
form
22
and substance acceptable to the Deal Agent and be with an Interest Rate Hedge
Provider acceptable to the Deal Agent; PROVIDED, HOWEVER, that following any
Servicer Default the Deal Agent shall have the right, in its sole discretion
but after consultation with the initial Servicer if the initial Servicer is
still an operating entity, to direct the Indenture Trustee to enter into
Interest Rate Hedge Agreements on the Issuer's or the Indenture Trustee's
behalf. On or prior to the effective date of each such Interest Rate Hedge
Agreement which is not solely a cap agreement, the Interest Rate Hedge
Providers thereunder shall agree, for the period of one year after all
Indebtedness under this Supplement shall have been paid in full, not to
commence any case, proceeding or other action under any existing or future
Insolvency Law seeking to have an order for relief entered with respect to
the Issuer. In addition, long term senior unsecured indebtedness of the
related Interest Rate Hedge Provider shall be rated not less than A by
Standard & Poor's Rating Services, a division of the McGraw-Hill Companies,
Inc. and A2 by Moody's Ratings Services.
(b) Each Interest Rate Hedge Agreement shall provide that all payments
made pursuant thereto shall be paid directly to the Series 1997-1 Series
Account or shall be assigned to the Issuer with directions from the Issuer to
deposit such payments in the Series 1997-1 Series Account, and all payments
received from an Interest Rate Hedge Provider shall be deposited by the
Issuer or the Indenture Trustee directly into the Series 1997-1 Series
Account.
SECTION 4.6. INSURANCE.
The Issuer shall deliver to the Deal Agent and the Indenture Trustee,
within 90 days of the Closing Date or the Transfer Date related to the
transfer of any additional Transferred Assets, as the case may be,
certificates evidencing the Issuer's insurance coverage (in addition to any
insurance coverage required under the Servicing Agreement), which shall be
satisfactory to the Deal Agent, and shall name the Indenture Trustee on
behalf of the Series 1997-1 Noteholders as additional loss payee, in the case
of casualty insurance, and as additional insured in the case of liability
insurance.
SECTION 4.7. LESSEE ACKNOWLEDGMENT.
Within 90 days of the Closing Date or the Transfer Date related to each
Lease Agreement that is the subject of a Loan, as the case may be, the Lessee
under each Lease Agreement that is the subject of a Loan made on such date
shall have executed and delivered to the Deal Agent a written certificate,
substantially in the form attached hereto as Exhibit C, in which the Lessee
confirms (i) its remaining obligations under such Lease Agreement, (ii) that
no event of default (as defined in the Lease Agreements), or condition or
event which with the giving of notice or the passage of time or both would
constitute an event of default, exists under any related Lease Agreement and
(iii) that it will name the Indenture Trustee as additional loss payee, in
the case of casualty insurance, and as additional insured in the case of
liability insurance.
SECTION 4.8. OPINIONS OF FOREIGN LOCAL COUNSEL.
Within 120 days of the Closing Date or the Transfer Date related to each
Engine and related Lease Agreement, as the case may be, the Issuer shall
cause the delivery to the Series
23
1997-1 Noteholders of Opinions of Counsel, other than counsel employed by the
Issuer, the Seller or the Servicer for purposes other than solely with
respect to the issuance of such opinions, in form and substance satisfactory
to the Series 1997-1 Noteholders, as to the perfection and priority (to the
extent applicable in such jurisdiction) of the Indenture Trustee's security
interest in each Engine and related Lease Agreement, which are subject to the
applicable laws of any jurisdiction other than the United States.
ARTICLE V
CONDITIONS OF EFFECTIVENESS AND FUTURE LENDING
SECTION 5.1. EFFECTIVENESS OF SUPPLEMENT.
The effectiveness of this Supplement is subject to the condition
precedent that the Indenture Trustee shall have received all of the
following, each duly executed and dated as of the Effective Date, in form and
substance satisfactory to all of the initial Series 1997-1 Noteholders and
each (except for the Series 1997-1 Notes, of which only the originals shall
be signed) in sufficient number of signed counterparts to provide one for
each Series 1997-1 Noteholder:
(a) SERIES 1997-1 NOTES. Separate Series 1997-1 Notes executed by the
Issuer, and duly authenticated by the Indenture Trustee, in favor of each
Series 1997-1 Noteholder in the stated principal amount of such Series 1997-1
Notes that such Series 1997-1 Noteholder has agreed to purchase.
(b) CERTIFICATE(S) OF SECRETARY OR ASSISTANT SECRETARY. Separate
certificates executed by the corporate secretary or assistant secretary of
each of Seller (as Seller and Servicer), the Servicer, the Guarantor and the
Issuer, dated the Effective Date, certifying (i) that the respective company
has the authority to execute and deliver, and perform its respective
obligations under each of the Series 1997-1 Transaction Documents to which it
is a party, and (ii) that attached are true, correct and complete copies of
the Certificate of Incorporation, by-laws, board resolutions and incumbency
certificates in form and substance satisfactory to all of the initial Series
1997-1 Noteholders, as to such matters as they shall require.
(c) SECURITY DOCUMENTS. The Indenture and this Supplement, in form and
substance satisfactory to all of the initial Series 1997-1 Noteholders, shall
have been executed and delivered by Issuer, and all other parties thereto,
together with other documents reasonably requested by Series 1997-1
Noteholders.
(d) OPINIONS OF COUNSEL. Opinions of Counsel to the Issuer, the
Seller, the Guarantor, the Servicer and the Indenture Trustee, in form and in
substance satisfactory to the initial Series 1997-1 Noteholder as to such
matters as it shall require.
(e) SERIES 1997-1 TRANSACTION DOCUMENTS. Each of the Amendment to the
Servicing Agreement, the Contribution and Sale Agreement, the Structuring Fee
Letter Agreement, the Administration Agreement, the Indenture, the
Assignment, the Class A Note Purchase
24
Agreement, this Supplement and the Issuer Fee Letter shall have been duly
executed and delivered.
(f) GOOD STANDING CERTIFICATES. Good Standing Certificates in the
state(s) of formation and location for each of the Seller (as Seller and
Servicer), the Guarantor and the Issuer.
(g) ESTABLISHMENT OF ACCOUNTS. Each of the Trust Account, the Series
1997-1 Series Account, the Restricted Cash Account, the Series 1997-1
Restricted Cash Account, the Engine Reserve Account, the Series 1997-1 Engine
Reserve Account, the Security Deposit Account and the Series 1997-1 Security
Deposit Account shall have been established with the Indenture Trustee as
evidenced by a certificate of an authorized officer of the Indenture Trustee.
(h) GUARANTY. The Guarantor shall have duly executed and delivered
the Guaranty.
(i) LEGAL FEES. The Issuer shall have paid to Thacher Proffitt & Wood
and to Kilpatrick Stockton LLP, their fees and expenses as counsel for the
Deal Agent and the Purchasers.
Purchase of the Series 1997-1 Notes by the Series 1997-1 Noteholders
shall be conclusive evidence, upon which the Indenture Trustee may rely that
the Series 1997-1 Noteholders have determined that the conditions precedent
to the effectiveness of the Series 1997-1 Supplement set forth in (a) through
(i) above, have been complied with to their satisfaction.
SECTION 5.2. ADVANCES ON CLASS A NOTES.
The obligation of a Purchaser to make any Loans pursuant to its Class A
Note Commitment under this Supplement and the Class A Note Purchase Agreement
is subject to the following further conditions precedent; PROVIDED, HOWEVER,
that the Deal Agent may waive in writing those conditions precedent set forth
in subdivisions (o), (r), (s), (v) and (w) of this Section 5.2:
(a) DEFAULT. Before and after giving effect to such advance, no Event
of Default shall have occurred and be continuing.
(b) EARLY AMORTIZATION EVENT. Before and after giving effect to such
advance, no Early Amortization Event shall have occurred and be continuing
unless each of the Requisite Global Majority and Holders representing one
hundred percent (100%) of the Class A Note Principal Balance have approved
such advance.
(c) CERTIFICATION. Issuer shall have delivered to the Purchasers a
compliance certificate, signed by an officer of Issuer, as to the matters set
out in Article V and in Article VI of this Supplement.
(d) ASSET BASE CERTIFICATE. Issuer shall have delivered to the
Purchasers a duly completed and executed Asset Base Certificate, as of a date
not earlier than thirty (30) days prior
25
to the date of such proposed advance of principal of the Class A Note, which
states that the Class A Note Principal Balance (after giving effect to such
proposed advance of principal of the Class A Note) will not exceed the Asset
Base for Series 1997-1 and complies with the requirements therefor set forth
in the Indenture and this Supplement.
(e) CONVERSION DATE. The Conversion Date shall not have occurred.
(f) SECURITY DOCUMENTS. All UCC financing statements, documents of
similar import in other jurisdictions, and other documents reasonably
requested by Series 1997-1 Noteholders shall have been delivered to the Deal
Agent.
(g) CERTIFICATE AS TO ENGINES. A certificate from the Servicer
certifying that it is managing all of the Contributed Engines in accordance
with the Servicing Agreement.
(h) OPINIONS OF COUNSEL. Opinions of Counsel to the Issuer, other
than counsel employed by the Issuer, the Seller or the Servicer, as to
perfection and priority of the Indenture Trustee's security interest in the
Collateral, in form and substance satisfactory to the Series 1997-1
Noteholder as to such matters as it shall require.
(i) PERFECTED SECURITY INTEREST. The Deal Agent shall have received
evidence to its satisfaction that the Indenture Trustee has (or upon funding,
will have) a first priority security in each Engine, and related Lease
Agreements that will be the subject of such Loan; PROVIDED, HOWEVER, that if
the applicable laws of any jurisdiction in which an Engine is required to be
registered does not provide for a means to obtain such first priority
security, then the Issuer shall provide additional assurances satisfactory to
the Purchasers. Such evidence shall, if requested by the Deal Agent, include
any Opinion of Counsel, other than counsel employed by the Issuer, the Seller
or the Servicer, as to the perfection of such security interest including,
without limitation, a written opinion from outside counsel for the Issuer,
regarding FAA matters.
(j) APPRAISAL. The Deal Agent shall have received an Appraisal in
form, scope and for a value satisfactory to the Deal Agent with respect to
each Engine that will be the subject of such Loan.
(k) CHATTEL PAPER. Any original counterpart of each Lease Agreement
(other than the one held by the Lessee or filed with any relevant
Governmental Authority) that will be the subject of a Loan that constitutes
"chattel paper" for purposes of the UCC as in effect in the jurisdiction
whose law governs the Lease Agreement has been delivered to the Indenture
Trustee.
(l) REMITTANCE TO TRUST ACCOUNT. The Lessee under each Lease
Agreement that will be the subject of a Loan shall have been directed to
remit to the Trust Account all Scheduled Payments and other amounts owing
pursuant to such Lease Agreement.
(m) LESSEE ACKNOWLEDGMENT. The Lessee under each Lease Agreement that
will be the subject of a Loan shall have received a written certificate, in
substantially the form attached hereto as Exhibit C, in which the Lessee will
confirm (i) its remaining obligations under such Lease Agreement, (ii) no
event of default (as defined in the Lease Agreements), or condition or
26
event which with the giving of notice or the passage of time or both would
constitute an event of default, exist under any such Lease Agreement and
(iii) that it will name the Indenture Trustee as additional loss payee, in
the case of casualty insurance, and as additional insured in the case of
liability insurance.
(n) DEAL AGENT APPROVAL. The Deal Agent shall have approved each
Lease Agreement which is proposed as collateral for a Loan hereunder (the
Deal Agent shall communicate, within five Business Days of receipt of all
information from the Issuer reasonably requested by the Deal Agent, its
approval or disapproval of each Lease Agreement which is proposed as
collateral for a Loan hereunder).
(o) MAXIMUM CONCENTRATION BY ENGINE TYPES. Each Engine shall have
been manufactured by one of the manufacturers set forth under the column
titled "Manufacturer" on Exhibit B hereto and shall be one of the engine
types set forth opposite the name of such manufacturer under the column
titled "Engine Type" on Exhibit B hereto. After giving effect to the
transfer of Engines on any Transfer Date, the sum of the Net Book Values of
all Eligible Engines (relating to Existing and Possible Loans) of the same
engine type shall not exceed an amount equal to the product of (i) the
percentage set forth opposite such engine type in the column entitled
"Maximum Concentration" on Exhibit B hereto and (ii) the Aggregate Net Book
Value (relating to Existing and Possible Loans) on such Transfer Date.
(p) MAXIMUM CONCENTRATION FOR SINGLE LESSEE. After giving effect to
the transfer of Engines and the related Lease Agreements on any Transfer
Date, the sum of the Net Book Values of all Eligible Engines (relating to
Existing and Possible Loans) that are or would be subject to a Lease
Agreement with a single Lessee (including Affiliates thereof) shall not
exceed an amount equal to the product of (i) the Single Lessee Percentage and
(ii) the Aggregate Net Book Value (relating to Existing and Possible Loans).
(q) MAXIMUM CONCENTRATION FOR ANY THREE LESSEES. After giving effect
to the transfer of Engines and the related Lease Agreements on any Transfer
Date, the sum of the Net Book Values of all Eligible Engines (relating to
Existing and Possible Loans) that are or would be subject to a Lease
Agreement with the three (3) largest Lessees with respect to aggregate Net
Book Values (including Affiliates thereof) shall not exceed an amount equal
to the product of (i) the Three Lessee Percentage and (ii) the Aggregate Net
Book Value (relating to Existing and Possible Loans).
(r) MAXIMUM CONCENTRATION BY GEOGRAPHIC REGION. After giving effect
to the transfer of Engines and the related Lease Agreements on any Transfer
Date, the sum of the Net Book Values of all Engines (relating to Existing and
Possible Loans) that are or would be subject to a Lease Agreement with
Lessees having corporate headquarters located in the geographic areas set
forth below shall not exceed an amount equal to the product of (i) the
percentage set forth opposite such geographic region under the column
entitled "Maximum Geographic Percentage" in the Geographic Concentration
Table in Schedule 1 and (ii) the Aggregate Net Book Value (relating to
Existing and Possible Loans).
27
(s) CONCENTRATION OF ENGINES FOR WIDE BODY AIRCRAFT. After giving
effect to the transfer of Engines on any Transfer Date, the sum of the Net
Book Values of all Eligible Engines (relating to Existing and Possible Loans)
designed to power Wide Body Aircraft shall not exceed an amount equal to the
product of (i) the Wide Body Aircraft Percentage and (ii) Aggregate Net Book
Value (relating to Existing and Possible Loans).
(t) ON-LEASE PERCENTAGE. After giving effect to the transfer of
Engines on any Transfer Date, the On-Lease Percentage of all Eligible Engines
(relating to Existing and Possible Loans) as of such Transfer Date shall not
be less than the Applicable Percentage.
(u) WEIGHTED AVERAGE LEASE RATE FACTOR. After giving effect to the
transfer of Engines on any Transfer Date, the Weighted Average Lease Rate
Factor for all Eligible Engines (relating to Existing and Possible Loans)
shall not be less than the Weighted Average Lease Rate Percentage.
(v) ONE YEAR LEASE EXPIRY CONCENTRATION PERCENTAGE. After giving
effect to the transfer of Engines on any Transfer Date, the One Year Lease
Expiry Concentration Percentage for Eligible Engines (relating to Existing
and Possible Loans) on such Transfer Date shall not exceed the Target One
Year Lease Expiry Concentration Percentage.
(w) TWO YEAR LEASE EXPIRY CONCENTRATION PERCENTAGE. After giving
effect to the transfer of Engines on any Transfer Date, the Two Year Lease
Expiry Concentration Percentage for Eligible Engines (relating to Existing
and Possible Loans) on such Transfer Date shall not exceed the Target Two
Year Lease Expiry Concentration Percentage.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
To induce the Series 1997-1 Noteholders to purchase the Series 1997-1
Notes hereunder, the Issuer hereby represents and warrants to the Series
1997-1 Noteholders as of the Effective Date, the Closing Date and each date
on which a Loan is made (to the extent applicable to the Issuer generally and
to the assets added to the Collateral on such date on which a Loan is made,
unless otherwise specified) that:
SECTION 6.1. EXISTENCE.
Issuer is a corporation duly organized, validly existing and in
compliance under the laws of the State of Delaware. Issuer is in good
standing and is duly qualified to do business in each jurisdiction where the
failure to do so would have a material adverse effect upon the Issuer.
SECTION 6.2. AUTHORIZATION.
Issuer has the power and is duly authorized to execute and deliver this
Supplement and the other Series 1997-1 Transaction Documents to which it is a
party; Issuer is and will continue
28
to be duly authorized to borrow monies hereunder; and Issuer is and will
continue to be authorized to perform its obligations under this Supplement
and under the other Series 1997-1 Transaction Documents. The execution,
delivery and performance by Issuer of this Supplement and the other Series
1997-1 Transaction Documents to which it is a party and the borrowings
hereunder do not and will not require any consent or approval of any
Governmental Authority, stockholder or any other Person which has not already
been obtained.
SECTION 6.3. NO CONFLICT; LEGAL COMPLIANCE.
The execution, delivery and performance of this Supplement and each of
the other Series 1997-1 Transaction Documents and the execution, delivery and
payment of the Series 1997-1 Notes will not: (a) contravene any provision of
Issuer's charter documents or bylaws or other organizational documents; (b)
contravene, conflict with or violate any applicable law or regulation, or any
order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority; or (c) materially violate or result in the breach of,
or constitute a default under any indenture or other loan or credit
agreement, or other agreement or instrument to which Issuer is a party or by
which Issuer, or its property and assets may be bound or affected. Issuer is
not in material violation or breach of or default under any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
or any contract, agreement, lease, license, indenture or other instrument to
which it is a party.
SECTION 6.4. VALIDITY AND BINDING EFFECT.
This Supplement is, and each Series 1997-1 Transaction Document to which
Issuer is a party, when duly executed and delivered, will be, legal, valid
and binding obligations of Issuer, enforceable against Issuer in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency or other similar laws of general application affecting
the enforcement of creditors' rights or by general principles of equity
limiting the availability of equitable remedies.
SECTION 6.5. FINANCIAL STATEMENTS.
Since September 30, 1998, there has been no Material Adverse Change in
the financial condition of the Seller or the Servicer.
SECTION 6.6. EXECUTIVE OFFICES.
The current location of Issuer's chief executive office and principal
place of business is located at 2320 Marinship Way, Suite 300, Sausalito,
California 94965. The Issuer does not have trade names or doing business
names.
SECTION 6.7. NO AGREEMENTS OR CONTRACTS.
The Issuer has not transacted any business on or prior to the Effective
Date. The Issuer is not now and has not been a party to any contract or
agreement (whether written or oral), other than the Series 1997-1 Transaction
Documents and contracts or agreements incidental thereto.
29
SECTION 6.8. CONSENTS AND APPROVALS.
No approval, authorization or consent of any trustee or holder of any
Indebtedness or obligation of Issuer or of any other Person under any
material agreement, contract, lease or license or similar document or
instrument to which Issuer is a party or by which Issuer is bound, is
required to be obtained by Issuer in order to make or consummate the
transactions contemplated under the Series 1997-1 Transaction Documents. All
consents and approvals of, filings and registrations with, and other actions
in respect of, all Governmental Authorities required to be obtained by Issuer
in order to make or consummate the transactions contemplated under the Series
1997-1 Transaction Documents have been, or prior to the time when required
will have been, obtained, given, filed or taken and are or will be in full
force and effect.
SECTION 6.9. MARGIN REGULATIONS.
Issuer does not own any "margin security", as that term is defined in
Regulations G and U of the Federal Reserve Board, and the proceeds of the
Series 1997-1 Notes issued under this Supplement will be used only for the
purposes contemplated hereunder. None of such proceeds will be used, directly
or indirectly, for the purpose of purchasing or carrying any margin security,
for the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose
which might cause any of the loans under this Supplement to be considered a
"purpose credit" within the meaning of Regulations T, U and X. Issuer will
not take or permit any agent acting on its behalf to take any action which
might cause this Supplement or any document or instrument delivered pursuant
hereto to violate any regulation of the Federal Reserve Board.
SECTION 6.10. TAXES.
All federal, state, local and foreign tax returns, reports and
statements required to be filed by Issuer have been filed with the
appropriate Governmental Authorities, and all Taxes, Other Taxes and other
impositions shown thereon to be due and payable by Issuer have been paid
prior to the date on which any fine, penalty, interest or late charge may be
added thereto for nonpayment thereof, or any such fine, penalty, interest,
late charge or loss has been paid, or Issuer is contesting its liability
therefor in good faith and has fully reserved all such amounts according to
GAAP in the financial statements provided to the Noteholders pursuant to
Section 626 of the Indenture. Issuer has paid when due and payable all
material charges upon the books of Issuer and no Government Authority has
asserted any Lien against Issuer with respect to unpaid Taxes or Other Taxes.
Proper and accurate amounts have been withheld by Issuer and its Subsidiaries
from its employees for all periods in full and complete compliance with the
tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have been timely
paid to the respective Governmental Authorities.
SECTION 6.11. OTHER REGULATIONS.
30
Issuer is not: (a) a "public utility company" or a "holding company,"
or an "affiliate" or a "Subsidiary company" of a "holding company," or an
"affiliate" of such a "Subsidiary company," as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended, or (b) an "investment
company," or an "affiliated person" of, or a "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended. The issuance of the Notes
hereunder and the application of the proceeds and repayment thereof by Issuer
and the performance of the transactions contemplated by this Supplement and
the other Series 1997-1 Transaction Documents will not violate any provision
of the Investment Company Act of 1940, as amended, or the Public Utility
Holding Company Act of 1935, as amended, or any rule, regulation or order
issued by the Securities and Exchange Commission thereunder.
SECTION 6.12. SOLVENCY AND SEPARATENESS.
The Issuer represents, warrants and covenants to take the following
actions to maintain its existence separate and apart from any other Person:
(i) maintain books of account in accordance with GAAP and
maintain its accounts, books and records separate from any other person or
entity:
(ii) not commingle its funds or assets with those of any
other entity;
(iii) hold its assets in its own name;
(iv) conduct its business solely in its own name;
(v) pay its own liabilities out of its own funds and assets;
(vi) observe all corporate formalities;
(vii) maintain an arms-length relationship with its
affiliates;
(viii) not assume or guarantee or become obligated for the
debts of any other entity or hold out its credit as being available to
satisfy the obligation of any other entity, and will not permit any other
person to assume or guarantee or become obligated for its debts or hold out
its credit as being available to satisfy the Issuer's obligations, except
with respect to obligations in connection with the Guaranty and the Seller
also may be required from time to time, as parent corporation of the
Issuer, to guaranty the Issuer's obligations, if any, as lessor under
certain Lease Agreements sold by the Seller to the Issuer.
(ix) not acquire obligations or securities of its
stockholders;
(x) allocate fairly and reasonably overhead or other
expenses that are properly shared with any other person or entity,
including without limitation, shared office space, and use separate
stationery, invoices and checks;
31
(xi) identify and hold itself out as a separate and distinct
entity under its own name and not as a division or part of any other person
or entity;
(xii) correct any known misunderstanding regarding its
separate identity;
(xiii) not make loans to any person or entity;
(xiv) not identify its stockholders, or any affiliates of any
of them, as a division or part of itself;
(xv) not enter into, or be a party to, any transaction with
its stockholders or their affiliates, except in the ordinary course of its
business and on terms which are intrinsically fair and are no less
favorable to it than would be obtained in a comparable arms-length
transaction with an unrelated third party;
(xvi) pay the salaries of its own employees, if any, from its
own funds;
(xvii) maintain capital that is adequate for the business and
undertakings of the Issuer;
(xviii) have one director who shall not have been, at the time
of his or her appointment or at any time in the preceding five (5) years:
(a) a direct or indirect legal or beneficial stockholder of the Issuer or
any of its affiliates; (b) a creditor, supplier, employee, officer,
director, manager or contractor of the Issuer or any of its affiliates; (c)
a person who controls the Issuer or any of its affiliates; or (d) a member
of the immediate family of a person defined in (a), (b) or (c) immediately
above;
(xix) is not insolvent under the Insolvency Law and will not
be rendered insolvent by the transactions contemplated by the Series 1997-1
Transaction Documents and after giving effect to such transactions, the
Issuer will not be left with an unreasonably small amount of capital with
which to engage in its business nor will the Issuer have intended to incur,
or believed that it has incurred, debts beyond its ability to pay such
debts as they mature. The Issuer does not contemplate the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, trustee or similar person in respect
of the Issuer or any of its assets.
SECTION 6.13. NO PROCEEDINGS.
Each of the Issuer and the Indenture Trustee hereby agrees that it will
not institute against, or join any other Person in instituting against VFCC
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceedings under the laws of the United States
or any other state of the United States, so long as any commercial paper
issued by VFCC shall be outstanding and there shall not have elapsed one year
and one day since the last day on which any such commercial paper shall have
been outstanding.
32
SECTION 6.14. RECOURSE AGAINST CERTAIN PARTIES.
(a) No recourse under or with respect to any obligation, covenant or
agreement (including, without limitation, the payment of any fees or any
other obligations) of any of the Issuer, the Servicer, VFCC, any Purchaser or
the Deal Agent as contained in the Deal Documents or any other agreement,
instrument or document entered into by it pursuant hereto or in connection
herewith shall be had against any administrator of such party or any
incorporator, affiliate, stockholder, officer, employee or director of such
party or of any such administrator, as such, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any statute
or otherwise; IT BEING EXPRESSLY AGREED AND UNDERSTOOD that the agreements of
such party contained in the Deal Documents and all of the other agreements,
instruments and documents entered into by it pursuant hereto or in connection
herewith are, in each case, solely the corporate obligations of such party,
PROVIDED THAT, in the case of VFCC, such liabilities shall be paid only after
the repayment in full of all Commercial Paper and all other liabilities
contemplated in the program documents with respect to VFCC, and that no
personal liability whatsoever shall attach to or be incurred by any
administrator of such party or any incorporator, stockholder, affiliate,
officer, employee or director of such party or of any such administrator, as
such, or any of them, under or by reason of any of the obligations, covenants
or agreements of such Purchaser contained in the Deal Documents or in any
other such instrument, document or agreement, or which are implied therefrom,
and that any and all personal liability of every such administrator of such
party and each incorporator, stockholder, affiliate, officer, employee or
director of such party or of any such administrator, or any of them, for
breaches by such party of any such obligations, covenants or agreements,
which liability may arise either at common law or in equity, by statute or
constitution, or otherwise, is hereby expressly waived as a condition of, and
in consideration for, the execution of the Deal Documents.
(b) Notwithstanding anything contained in this Agreement or any other
Series 1997-1 Transaction Document, VFCC shall have no obligation to pay any
amount required to be paid by it hereunder or in excess of any amount
available to VFCC after paying or making provision for the payment of its
Commercial Paper. All payment obligations of VFCC hereunder thereunder are
contingent upon the availability of funds in excess of the amounts necessary
to pay Commercial Paper; and each of the Issuer, the Deal Agent, the
Liquidity Agent, the Servicer and each Investor agrees that they shall not
have a claim under Section 101(5) of the United States Bankruptcy Code if and
to the extent that any such payment obligation exceeds the amount available
to VFCC to pay such amounts after paying or making provision for the payment
of its Commercial Paper.
(c) The provisions of this Section 6.14 shall survive the termination
of this Agreement.
33
SECTION 6.15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
So long as any of the Notes shall be Outstanding and until payment and
performance in full of the Outstanding Obligations, the representations and
warranties contained herein shall have a continuing effect as having been
true when made.
SECTION 6.16. NO EVENT OF DEFAULT OR EARLY AMORTIZATION EVENT.
No Event of Default or Early Amortization Event has occurred and is
continuing.
SECTION 6.17. LITIGATION AND CONTINGENT LIABILITIES.
No claims, litigation, arbitration proceedings or governmental
proceedings by any Governmental Authority are pending or threatened against
or are affecting Issuer or any of its Subsidiaries the results of which might
interfere with the consummation of any of the transactions contemplated by
this Supplement or any document issued or delivered in connection herewith.
Section 6.18. TITLE; LIENS.
THE Issuer has good, legal and marketable title to its assets including
the Collateral, and none of such assets is subject to any Lien, except for
the Lien created pursuant to the Indenture. The Issuer has not assigned,
conveyed, pledged or otherwise transferred to any other Person any of its
right, title or interest in the Collateral.
SECTION 6.19. SUBSIDIARIES.
At all times on or prior to the Effective Date, the Issuer has had no
subsidiaries.
SECTION 6.20. NO PARTNERSHIP.
The Issuer is not a partner or joint venturer in any partnership or
joint venture.
SECTION 6.21. PENSION AND WELFARE PLANS.
No accumulated funding deficiency (as defined in Section 412 of the Code
or Section 302 of ERISA) or reportable event (within the meaning of section
4043 of ERISA), has occurred with respect to any Plan. The present value of
all benefit liabilities under all Plans subject to Title IV of ERISA, as
defined in Section 4001(a)(16) of ERISA, exceeds the fair market value of all
assets of Plans subject to Title IV of ERISA (determined as of the most
recent valuation date for such Plan on the basis of assumptions prescribed by
the Pension Benefit Guaranty Corporation for the purpose of Section 4044 of
ERISA), by no more than $1.9 million. Neither Issuer nor any ERISA Affiliate
is subject to any present or potential withdrawal liability pursuant to Title
IV of ERISA and no multiemployer plan (within the meaning of section
4001(a)(3) of ERISA) to which the Issuer or any ERISA Affiliate has an
obligation to contribute or any liability, is or is likely to be disqualified
for tax purposes, in reorganization within the meaning of Section 4241
34
of ERISA or Section 418 of the Code) or is insolvent (as defined in Section
4245 of ERISA). No liability (other than liability to make periodic
contributions to fund benefits) with respect to any Plan of Issuer, or Plan
subject to Title IV of ERISA of any ERISA Affiliate, has been, or is expected
to be, incurred by Issuer or an ERISA Affiliate, either directly or
indirectly. All Plans of Issuer are in material compliance with ERISA and
the Code. No lien under Section 412 of the Code or 302(f) of ERISA or
requirement to provide security under the Code or ERISA has been or is
reasonably expected by Issuer to be imposed on its assets. The Issuer does
not have any obligation under any collective bargaining agreement. As of the
Effective Date, the Issuer is not an employee benefit plan within the meaning
of ERISA or a "plan" within the meaning of section 4975 of the Code and
assets of the Issuer do not constitute "plan assets" within the meaning of
section 2510.3-101 of the regulations of the Department of Labor.
SECTION 6.22. OWNERSHIP OF ISSUER.
On the Effective Date, all of the issued and outstanding common shares
of the Issuer are owned by Willis Lease Finance Corporation.
SECTION 6.23. SECURITY INTEREST.
The security interest in the Collateral created pursuant to the
Indenture and this Supplement has been validly created, and no other action
is required to be taken by any person in order for the full benefit of the
security interest created thereby to vest in the Indenture Trustee in order
to insure the first priority perfected security interest of the Indenture
Trustee (for the benefit of the Series 1997-1 Noteholders) in the Collateral.
Each Lease Agreement is "chattel paper" (under the UCC, if the UCC is in
effect in the jurisdiction whose law governs the Lease Agreement). All
executed counterparts of each Lease Agreement (other than the one held by the
related Lessee or filed with any relevant Governmental Authority) that
constitutes "chattel paper" are in the possession of the Indenture Trustee.
SECTION 6.24. ELIGIBLE LEASE AGREEMENTS; ELIGIBLE ENGINES.
Each of the Lease Agreements is an Eligible Lease and each Engine is an
Eligible Engine.
ARTICLE VII
EARLY AMORTIZATION EVENT
SECTION 7.1. EARLY AMORTIZATION EVENT.
With respect to the Series 1997-1 Notes, as of any date of
determination, the existence of any one of the following events or conditions
shall constitute an Early Amortization Event:
(1) An "event of default" under any Related Document (including an
Event of Default) shall have occurred and then be continuing;
(2) A Servicer Default shall have occurred and then be continuing;
35
(3) The amount of any scheduled payment of interest or principal
then due and owing on the Series 1997-1 Notes is not paid in
full;
(4) The EBIT Ratio of Issuer shall be less than the Target EBIT
Ratio;
(5) The Asset Base shall be less than or equal to $25,000,000;
(6) The notational balances of all Interest Rate Hedge Agreements
exceeds the Class A Note Principal Balance for a period of
more than thirty (30) consecutive calendar days;
(7) The occurrence of any other Early Amortization Event as
specified in the Indenture.
36
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.1. RATIFICATION OF INDENTURE.
As supplemented by this Supplement, the Indenture is in all respects
ratified and confirmed and the Indenture as so supplemented by this
Supplement shall be read, taken and construed as one and the same instrument.
SECTION 8.2. COUNTERPARTS.
This Supplement may be executed in two or more counterparts, and by
different parties on separate counterparts, each of which shall be an
original, but all of which shall constitute one and the same instrument.
SECTION 8.3. GOVERNING LAW.
THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICTS OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
[Remainder of Page Intentionally Left Blank]
37
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Supplement to be duly executed and delivered by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
WLFC FUNDING CORPORATION
By: /s/ James D. McBride
Name: JAMES D. MCBRIDE
Title: CHIEF FINANCIAL OFFICER
THE BANK OF NEW YORK,
as indenture trustee
By: /s/ Cheryl L. Laser
Name: CHERYL L. LASER
Title: ASSISTANT VICE PRESIDENT
THE BANK OF NEW YORK,
as securities intermediary
By: /s/ Cheryl L. Laser
Name: CHERYL L. LASER
Title: ASSISTANT VICE PRESIDENT
38
SCHEDULE 1
SECTION 1: DEFINITIONS
"APPLICABLE PERCENTAGE" means _______________ percent (___%).(*)
"CLASS A NOTE COMMITMENT" means an amount not to exceed
$80,000,000, subject to the terms and conditions set forth herein 100% of
which to be allocated between VFCC and the Investors (as defined in the Class
A Note Purchase Agreement) as determined at any time by the Deal Agent in its
sole discretion; PROVIDED, HOWEVER, that at no time shall the Class A Note
Principal Balance exceed the Asset Base for this Series 1997-1.
"SERVICING FEE" means for any Payment Date an amount equal to the
product of (x) five percent (5%) and (y) the aggregate amount of Engine
Revenues with respect to the Series 1997-1 Engines during the immediately
preceding Collection Period.
"SINGLE LESSEE PERCENTAGE" means _______________ percent (___%).*
"TARGET EBIT RATIO" means 1.20:1.0.
"TARGET ONE YEAR LEASE EXPIRY CONCENTRATION PERCENTAGE" means
_______________ percent (___%).*
"TARGET TWO YEAR LEASE EXPIRY CONCENTRATION PERCENTAGE" means
_______________ percent (___%).*
"THREE LESSEE PERCENTAGE" means _______________ percent (___%).*
"WEIGHTED AVERAGE LEASE RATE PERCENTAGE" means one percent (1.0%).
"WIDE BODY AIRCRAFT PERCENTAGE" means _______________ percent
(___%).*
SECTION 2: CERTAIN ADDITIONAL TERMS
ADMINISTRATIVE AGENT FEE. The Issuer shall pay on each quarterly
Payment Date, beginning with the third Payment Date, an Administrative Agent
Fee to the Deal Agent an amount equal to the product of (x) .075%, (y)
one-fourth and (2) the Class A Note Principal Balance. Such Administrative
Agent Fee shall be payable on each quarterly Payment Date from amounts then
on deposit in the Series 1997-1 Series Account in accordance with Section
3.02 of the Supplement.
- ------------------------
(*) The redacted material has been omitted pursuant to a request for
confidential treatment and the redacted material has been filed
separately with the Commission.
1
INTEREST RATE HEDGE AGREEMENTS. Beginning on March 31, 1999, the
Issuer at all times shall have Interest Rate Hedge Agreements in effect, each
of which has an aggregate notional amount of not less than 50% of the
Outstanding Obligations of the Series 1997-1 Notes.
SECTION 3: GEOGRAPHIC CONCENTRATION TABLE (*)
--------------------------------------------------------------
GEOGRAPHIC REGION MAXIMUM GEOGRAPHIC
PERCENTAGE
--------------------------------------------------------------
Africa ___%
--------------------------------------------------------------
Asia (including China) ___%
--------------------------------------------------------------
China ___%
--------------------------------------------------------------
Australia and New Zealand ___%
--------------------------------------------------------------
Western Europe ___%
--------------------------------------------------------------
Middle East ___%
--------------------------------------------------------------
North America ___%
--------------------------------------------------------------
Latin America ___%
--------------------------------------------------------------
- -----------------------
(*) The redacted material has been omitted pursuant to a request for
confidential treatment and the redacted material has been filed
separately with the Commission.
2