[CONFIDENTIAL TREATMENT REQUESTED. UNREDACTED VERSION SEPARATELY FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION.]
COOPERATION AGREEMENT
by and among
▇▇▇▇▇▇ LEASE FINANCE CORPORATION,
FLIGHTLEASE AG
and
SR TECHNICS GROUP
November 7, 2000
Cooperation Agreement
COOPERATION AGREEMENT
THIS COOPERATION AGREEMENT (this "Agreement") is made as of the 7th day of
November, 2000 by and among ▇▇▇▇▇▇ LEASE FINANCE CORPORATION, a Delaware
corporation ("WLFC"), FLIGHTLEASE AG, a company organized under the laws of
Switzerland ("Flightlease") and SR TECHNICS GROUP, a company organized under the
laws of Switzerland ("SRT").
WHEREAS, WLFC desires to issue to Flightlease, SRT and/or a subsidiary
designated by them, and Flightlease and SRT desire to directly or indirectly
acquire from WLFC, common stock of WLFC as described and on the terms and
conditions set forth in the Investment Agreement dated as of the date hereof
(the "Investment Agreement") among the parties hereto, and in conjunction with
the transactions contemplated thereby, the parties hereto desire to set forth
their understanding on the on-going conduct of their respective businesses in
relation to aircraft engines and related aviation equipment, with effect from
and after the closing of the transactions contemplated by the Investment
Agreement.
NOW, THEREFORE, the parties hereto confirm their understanding as follows:
1. Composition of WLFC's Engine Portfolio. WLFC shall ensure that at least
1 member of WLFC's Steering Committee established and maintained in accordance
with the Stockholders' Agreement (as defined in the Investment Agreement) shall
be a person appointed by Flightlease and/or SRT and shall otherwise use its
reasonable commercial efforts to reasonably ensure that aircraft engines of the
make, model, type and sub-type that represent any portion of the aircraft
leasing business of Flightlease or any of its subsidiaries from time to time or
the maintenance business of SRT or any of its subsidiaries from time to time and
as to which Flightlease or SRT, as the case may be, has expressed to WLFC a need
for WLFC's spares support, will be available from the portfolio of aircraft
engines held or obtained by WLFC (the "WLFC Engines"), it being understood,
however, that nothing contained herein shall restrict WLFC's ability, in the
normal conduct of its business, to utilize WLFC Engines that have not been
placed with Flightlease, SRT or Designated Customers (as defined in Section 2
below) pursuant to this Agreement. In furtherance and without limiting the
generality of the foregoing, WLFC hereby agrees that (a) if there should from
time to time be engines that represent any portion of such businesses of
Flightlease, SRT or any of their respective subsidiaries and as to which
Flightlease or SRT has expressed to WLFC a need for WLFC's spares support, that
is not then in WLFC's engine portfolio, then, upon consultation with SRT, and
agreement on commercially reasonable terms, WLFC shall introduce such engines of
the appropriate type into its portfolio, and (b) WLFC shall provide to SRT
quarterly reports, commencing with a report on or about December 31, 2000, as to
the types of WLFC Engines that are available for lease or purchase from WLFC,
and SRT shall be afforded a 2-week period to elect to lease or purchase, as the
case may be, any one or more of the WLFC Engines identified in such quarterly
report. Flightlease and SRT shall also provide quarterly reports, commencing
with a report on or about December 31, 2000, as to their anticipated
requirements for WLFC Engine support.
2. Availability of Engines from WLFC.
(a) Long-Term Lease. Excluding the engines subject to the General Terms
Engine Lease Agreement to be entered into between WLFC (or a trustee or other
designee of WLFC) and SR Technics AG, and the individual Aircraft Engine Lease
Agreements entered
Cooperation Agreement
into thereunder, in each case, as referred to in the Investment Agreement
(collectively, the "Sale/Leaseback Lease"), WLFC shall, upon request (which
request shall specify the exact engine requested and identify the air carrier
that will operate such engine), make available spare engines to SRT, Flightlease
or any air carrier or affiliate thereof designated by Flightlease or SRT from
time to time (a "Designated Customer") for lease, subject to a commercially
reasonable availability date to be mutually agreed in each instance between WLFC
and the requesting party. Such lease transaction may take the form of, but not
limited to, an operating lease, finance lease in particular, synthetic lease,
any form of structured lease transaction involving the use of special-purpose
vehicles or other form of lease structure and shall be for a term of 1 to 10
years, in each case, as designated by such requesting party, each with the
concurrence of WLFC, and shall provide preferential pricing (as described in
clause (c) below) and other competitive terms and conditions reasonably
satisfactory to such requesting party and WLFC (with respect to the
reasonableness of such terms and conditions, taking into consideration, without
limitation, general engine leasing market conditions, the creditworthiness of
the prospective lessee, the credit risks associated with the jurisdiction of
such lessee, WLFC's financial condition and ability to take on various levels of
risks, and other factors). The parties hereto shall use their respective
reasonable commercial efforts to complete the documentation of such lease and
effect delivery of the subject engine thereunder within a commercially
reasonable period of time.
(b) Short-Term Lease. Excluding the engines subject to the Sale/Leaseback
Lease, WLFC shall use its reasonable commercial efforts to have available or
arrange immediate access to spare WLFC Engines then in WLFC's portfolio, of the
type specified in Schedule 1 (as amended from time to time by mutual agreement
of the parties hereto), for lease to Flightlease, SRT or any Designated
Customer, for a term shorter than that described in clause (a) above, as
designated by the requesting party (which request shall specify the exact engine
requested and identify the air carrier that will operate such engine), with the
concurrence of WLFC, and otherwise on preferential pricing (as described in
clause (c) below) and other competitive terms and conditions reasonably
satisfactory to such requesting party and WLFC. The parties hereto shall use
their respective reasonable commercial efforts to complete the documentation of
such lease and effect delivery of the subject engine thereunder as soon as
possible and within any specific period of time as mutually agreed between the
parties to such lease. Flightlease and SRT shall provide WLFC from time to time
an anticipated schedule of the time periods during which WLFC Engines of a
particular type may be required for lease under this clause (b), and WLFC shall
use its reasonable commercial efforts to arrange for the availability of such
WLFC Engines in accordance therewith.
(c) Preferential Pricing. For purposes of the foregoing clauses (a) and
(b), "preferential pricing" shall mean XXX [CONFIDENTIAL TREATMENT REQUESTED.]
3. "Most Favored Nation" Status. In relation to any proposed lease of any
WLFC Engine to Flightlease, SRT or any Designated Customer, WLFC shall offer
pricing and other terms and conditions that are at least as favorable, in the
reasonable judgment of the parties hereto, as any other comparable WLFC Engine
lease to any other comparable entity that was entered into after the date hereof
and as in effect on the date of such proposed lease or that is then being
offered to such other entity. WLFC shall provide to Flightlease and SRT
Cooperation Agreement
quarterly reports, commencing with a report on or about December 31, 2000,
listing each engine lease transaction entered into by WLFC during the calendar
quarter then ended, in response to which Flightlease or SRT may at any time
request information and copies of lease documents (consisting of a general terms
lease agreement, an engine lease agreement and supplements, amendments, side
letter agreements and other documents governing the terms of such leasing
arrangement, as the case may be) in respect of any particular transaction
identified in such report (subject to the need for any confidentiality agreement
that may need to be executed by Flightlease or SRT as a condition to the release
of such information or documents).
4. Engine Pooling Arrangements. The parties hereto shall use their
respective commercially reasonable efforts to establish a sufficient customer
base for participation in engine pooling arrangements for particular types of
engines within WLFC's then-current portfolio designated by Flightlease or SRT.
If, in the reasonable judgment of Flightlease or SRT, such customer base has
been established, Flightlease or SRT shall provide notice thereof to WLFC, and
(a) WLFC shall within 3 weeks provide an economic analysis of such pooling
arrangement to WLFC's Steering Committee for review and consideration of the
Steering Committee and (b) the parties hereto shall cooperate to develop a
mutually acceptable pooling product within 5 months (assuming such customer base
has been reasonably identified sufficiently prior to the end of such 5-month
period) after the Effective Date (as defined in Section 11(e) below), and
negotiate in good faith the following terms and conditions applicable thereto:
(i) the specifics of WLFC's lead pool management responsibilities;
(ii) the extent and nature of advantages to Flightlease, SRT, as the
case may be, and the other pooling participants, as compared to current
pooling arrangements to which such entity(ies) is (are) a participant;
(iii) the extent and nature of any volume discount (such as, by way
of example, a volume discount based upon the relative number of engine
contributions into the pool) that may be afforded to Flightlease, SRT and
the other pooling participants; and
(iv) the extent and nature of any fractional engine interest and
correspondingly fractional pooling fees that may be offered to pooling
participants.
5. Access to Network.
(a) In providing engines to Flightlease, SRT or any Designated Customer
pursuant to any other provision of this Agreement, WLFC shall not be limited to
engines then owned, leased or otherwise held by WLFC at any relevant point in
time, but WLFC shall use its reasonable commercial efforts to provide (or assist
Flightlease, SRT or such Designated Customer in obtaining) engines for such
purposes from manufacturers, airlines, lessors or other engine providers with
whom WLFC shall be doing business from time to time, including arranging for the
use of spare engines that may be held by such entities.
(b) When necessary to assist WLFC in the performance of its obligations
under clause (a) above, Flightlease and SRT will grant WLFC similar access to
(i) spare engines then owned by Flightlease or SRT, as the case may be, subject
to contractual restrictions binding on Flightlease or SRT, as the case may be,
limiting the availability of such engines,
Cooperation Agreement
and (ii) Flightlease's or SRT's network of manufacturers, airlines, lessors or
other engine providers with whom Fightlease or SRT, as the case may be, shall be
doing business from time to time, and where appropriate and practicable, make
available Flightlease's or SRT's, as the case may be, purchasing power in the
new and used engine and financial markets.
(c) If requested by WLFC, each of Flightlease and SRT shall consult with
WLFC concerning business opportunities with Flightlease's or SRT's, as the case
may be, airline partners and business customers for purposes of promoting WLFC's
engine leasing and other businesses, and when desired by WLFC, facilitate
dialogue with and presentation of business proposals to such airline partners
and business customers.
6. Location of Spare Engines and WLFC Personnel in Zurich.
(a) WLFC shall physically place spare WLFC Engines at the Zurich Airport
as mutually agreed among the parties hereto from time to time in a commercially
reasonable manner, to support short term lease arrangements, subject to Section
2(b) above.
(b) WLFC shall at all times establish and maintain an office in Zurich
staffed by at least 1 person who is knowledgeable about this Agreement, the
Sale/Leaseback Lease and the subject matter hereof and thereof and who is
competent to interact with Flightlease and SRT concerning such matters,
including, without limitation, where appropriate, to take actions (subject to
having obtained any necessary approval of management located at WLFC's head
office) with respect to WLFC Engines located at the Zurich Airport pursuant to
the foregoing clause (a) (including being able to carry out instructions from
WLFC's head office regarding the release of any such engine to Flightlease, SRT
or a Designated Customer).
7. Termination of Engine Lease or Pooling Agreement. In the event that
Flightlease, SRT or any Designated Customer desires to terminate any leasing,
pooling or other provisioning of any WLFC Engine effected hereunder prior to the
scheduled expiry thereof, the parties hereto shall negotiate mutually acceptable
and commercially reasonable financial terms governing any compensation to be
paid to WLFC in connection with such early termination (or alternatively, any
purchase option in lieu thereof), taking into account the engine fleet
management, financial and other considerations applicable to each party to such
terminated transaction.
8. Services by SRT. If WLFC shall propose to enter into a maintenance
agreement with, or otherwise seeks to contract or subcontract out engine
maintenance work to, any other maintenance provider with respect to any WLFC
Engine of the type that SRT performs similar maintenance work on (excluding such
WLFC Engines subject to leases under which the lessees have the right to
designate maintenance providers), then WLFC shall provide notice of the bona
fide terms of such proposed agreement to SRT and SRT shall have the option to
enter into such agreement with WLFC. SRT shall notify WLFC of its decision
within 2 weeks after its receipt of such notice from WLFC. If SRT shall decline
such offer, WLFC shall enter into such agreement with such other maintenance
provider on the same terms described in its notice, within 2 weeks of such
notice. With respect to any engine maintenance work to be provided by SRT to
WLFC, SRT shall negotiate in good faith with WLFC with a view toward offering
preferential pricing for such work.
9. Cross-Marketing. Each of Flightlease and SRT will provide reasonable
assistance and market support to WLFC in promoting WLFC's engine leasing efforts
and the
Cooperation Agreement
development and marketing of other products, and WLFC will provide reasonable
assistance and market support to Flightlease and SRT in promoting their
respective leasing and maintenance businesses, including "maintenance by the
hour" or other engine maintenance proposals of SRT, and the development and
marketing of other products, it being understood, however, that no party hereto
shall be obligated to use or require the use of the others' products and
services.
10. China Joint Venture. If requested by Flightlease or SRT, WLFC shall
consult with Flightlease and SRT concerning business opportunities with Sichuan
Snecma Aero-Engine Maintenance Co., Ltd., a joint venture in which WLFC is a
participant (including without limitation the acquisition by Flightlease or SRT
of WLFC's participation in such joint venture) and when desired by Flightlease
or SRT, facilitate dialogue with and presentation of business proposals to such
joint venture.
11. Miscellaneous.
(a) Notices. Any notice required or permitted hereunder shall be given in
accordance with the Investment Agreement.
(b) Successors and Assigns. This Agreement shall inure to the benefit of
the successors and assigns of each party hereto.
(c) Governing Law; Dispute Resolution. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York. The
arbitration provisions and any related attorneys' fees provision contained in
the Investment Agreement shall apply to this Agreement as if set forth herein in
full, mutatis mutandis.
(d) Amendment. This Agreement may not be amended or modified, in whole or
in part, except by an agreement in writing signed by each of the parties hereto.
(e) Effectiveness; Termination. This Agreement shall be in effect for a
term of 3 years from the date of the closing of the initial capital investment
contemplated by the Investment Agreement (the "Effective Date"), so long as
during such time period, Flightlease, SRT and/or a subsidiary designated by them
shall collectively hold at least the initial capital investment made by them in
accordance with the Investment Agreement (unless extended or earlier terminated
by mutual agreement among the parties hereto), and thereafter, until terminated
by mutual agreement among the parties hereto for as long as Flightlease, SRT
and/or a subsidiary designated by them shall collectively hold at least 30% of
the capital stock of WLFC.
(f) Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.
(g) Waiver. The rights of the parties to this Agreement are cumulative and
not alternative. Neither any failure nor any delay by any party in exercising
any right, power, or privilege under this Agreement or any of the documents
referred to in this Agreement will
Cooperation Agreement
operate as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege.
(h) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(i) Securitization. Notwithstanding anything to the contrary contained
herein, with respect to any engine, engine lease or other engine-related assets
(collectively, the "Securitized Assets") that are now or hereafter a part of the
engine, engine lease and other engine-related asset pool subject to (i) the
existing WLFC Funding Corporation securitization, wherein Variable Funding
Capital Corporation ("VFCC") and First Union Securities, Inc. ("First Union")
are transaction participants, as amended from time to time (including increases
thereof), (ii) any other securitization transaction with or involving WLFC, VFCC
and First Union (or any of their respective affiliates) or (iii) any refinancing
or securitization with other parties of any Securitized Assets theretofore
subject to a securitization described in the foregoing clause (i) or (ii) (each,
a "Securitization"), WLFC's obligations hereunder with respect to any
Securitized Asset shall be strictly subject to all applicable contractual
restrictions and limitations contained in documents effecting the
Securitization. For the avoidance of doubt, each party hereto agrees and
confirms that no Securitized Asset shall be subject to any of the foregoing
provisions of this Agreement. WLFC hereby confirms that it is the "Servicer"
under the existing Securitization documentation and that engines subject to the
existing Securitization are, and engines subject to future Securitizations are
anticipated to be, typically utilized for long-term leases (not less than 6
months). WLFC hereby agrees that it will provide Flightlease and SRT prompt
notice of any engine in any Securitization that comes off-lease and notice prior
to placing any engine into any Securitization.
[Signature page follows.]
Cooperation Agreement
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
▇▇▇▇▇▇ LEASE FINANCE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
Chief Executive Officer and President
FLIGHTLEASE AG
By: /s/ HANS ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Hans ▇▇▇▇ ▇▇▇▇▇▇▇▇
President
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Head of Business Development
SR TECHNICS GROUP
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ BEYELER
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
President and CEO
By: /s/ GEORG RADON
-------------------------------------
Georg Radon
Vice-President and CFO
Cooperation Agreement