0001018164FALSE2020FYus-gaap:AccountingStandardsUpdate201602MemberP3YP1YP1Yus-gaap:OtherAssetsus-gaap:OtherAssetsus-gaap:AccountsPayableAndAccruedLiabilitiesCurrentAndNoncurrentus-gaap:AccountsPayableAndAccruedLiabilitiesCurrentAndNoncurrentP3YP1YP1Y00Subsequent Events00010181642020-01-012020-12-31iso4217:USD00010181642020-06-30xbrli:shares00010181642021-03-1000010181642020-12-3100010181642019-12-310001018164us-gaap:AssetsLeasedToOthersMember2020-12-310001018164us-gaap:AssetsLeasedToOthersMember2019-12-31iso4217:USDxbrli:shares0001018164us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-12-310001018164us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2019-12-310001018164wlfc:LeaseRentRevenueMember2020-01-012020-12-310001018164wlfc:LeaseRentRevenueMember2019-01-012019-12-310001018164wlfc:MaintenanceReserveRevenueMember2020-01-012020-12-310001018164wlfc:MaintenanceReserveRevenueMember2019-01-012019-12-310001018164wlfc:SparePartsAndEquipmentSalesMember2020-01-012020-12-310001018164wlfc:SparePartsAndEquipmentSalesMember2019-01-012019-12-3100010181642019-01-012019-12-310001018164wlfc:ManagedServicesAndOtherRevenueMember2020-01-012020-12-310001018164wlfc:ManagedServicesAndOtherRevenueMember2019-01-012019-12-310001018164us-gaap:PreferredStockMember2018-12-310001018164us-gaap:CommonStockMember2018-12-310001018164us-gaap:AdditionalPaidInCapitalMember2018-12-310001018164us-gaap:RetainedEarningsMember2018-12-310001018164us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-3100010181642018-12-310001018164us-gaap:RetainedEarningsMember2019-01-012019-12-310001018164us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-12-310001018164us-gaap:CommonStockMember2019-01-012019-12-310001018164us-gaap:AdditionalPaidInCapitalMember2019-01-012019-12-310001018164us-gaap:PreferredStockMember2019-01-012019-12-3100010181642017-01-012017-12-310001018164us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310001018164srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310001018164us-gaap:PreferredStockMember2019-12-310001018164us-gaap:CommonStockMember2019-12-310001018164us-gaap:AdditionalPaidInCapitalMember2019-12-310001018164us-gaap:RetainedEarningsMember2019-12-310001018164us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001018164us-gaap:RetainedEarningsMember2020-01-012020-12-310001018164us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-12-310001018164us-gaap:CommonStockMember2020-01-012020-12-310001018164us-gaap:AdditionalPaidInCapitalMember2020-01-012020-12-310001018164us-gaap:PreferredStockMember2020-01-012020-12-310001018164us-gaap:PreferredStockMember2020-12-310001018164us-gaap:CommonStockMember2020-12-310001018164us-gaap:AdditionalPaidInCapitalMember2020-12-310001018164us-gaap:RetainedEarningsMember2020-12-310001018164us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-31xbrli:pure0001018164wlfc:WillisEngineSecuritizationTrustIIMember2020-12-310001018164wlfc:WillisEngineStructuredTrustIIIMember2020-12-310001018164wlfc:WillisEngineStructuredTrustIVMember2020-12-310001018164wlfc:WillisEngineStructuredTrustVMemberwlfc:WESTVNotesMember2020-03-310001018164wlfc:WillisEngineStructuredTrustVMemberwlfc:WESTVSeriesANotesMember2020-03-310001018164wlfc:WillisEngineStructuredTrustVMemberwlfc:WESTVSeriesBNotesMember2020-03-310001018164wlfc:WillisEngineStructuredTrustVMemberwlfc:WESTVSeriesCNotesMember2020-03-310001018164us-gaap:CustomerConcentrationRiskMemberwlfc:OneCustomerMemberus-gaap:SalesRevenueNetMember2020-01-012020-12-310001018164us-gaap:PropertyAvailableForOperatingLeaseMemberwlfc:EnginesAndRelatedEquipmentMember2020-01-012020-12-310001018164us-gaap:PropertyAvailableForOperatingLeaseMemberwlfc:EnginesAndRelatedEquipmentMember2020-12-310001018164wlfc:NewEngineMemberus-gaap:PropertyAvailableForOperatingLeaseMembersrt:MaximumMember2020-01-012020-12-310001018164srt:MinimumMemberus-gaap:PropertyAvailableForOperatingLeaseMemberwlfc:AircraftMember2020-01-012020-12-310001018164us-gaap:PropertyAvailableForOperatingLeaseMemberwlfc:AircraftMembersrt:MaximumMember2020-01-012020-12-310001018164srt:MinimumMemberus-gaap:PropertyAvailableForOperatingLeaseMemberwlfc:AircraftMember2020-12-310001018164us-gaap:PropertyAvailableForOperatingLeaseMemberwlfc:AircraftMembersrt:MaximumMember2020-12-310001018164wlfc:MarineVesselsMemberus-gaap:PropertyAvailableForOperatingLeaseMember2020-01-012020-12-310001018164wlfc:MarineVesselsMemberus-gaap:PropertyAvailableForOperatingLeaseMember2020-12-310001018164wlfc:SparePartPackagesMembersrt:MinimumMemberus-gaap:PropertyAvailableForOperatingLeaseMember2020-01-012020-12-310001018164wlfc:SparePartPackagesMemberus-gaap:PropertyAvailableForOperatingLeaseMembersrt:MaximumMember2020-01-012020-12-310001018164wlfc:SparePartPackagesMemberus-gaap:PropertyAvailableForOperatingLeaseMember2020-12-310001018164us-gaap:PropertyAvailableForOperatingLeaseMemberwlfc:EnginesAndRelatedEquipmentMember2019-12-310001018164us-gaap:PropertyAvailableForOperatingLeaseMemberwlfc:AircraftMember2020-12-310001018164us-gaap:PropertyAvailableForOperatingLeaseMemberwlfc:AircraftMember2019-12-310001018164wlfc:MarineVesselsMemberus-gaap:PropertyAvailableForOperatingLeaseMember2019-12-310001018164us-gaap:PropertyAvailableForOperatingLeaseMember2020-12-310001018164us-gaap:PropertyAvailableForOperatingLeaseMember2019-12-31wlfc:engine0001018164us-gaap:PropertyAvailableForOperatingLeaseMemberwlfc:OlderGenerationEnginesMember2020-12-310001018164srt:MinimumMemberus-gaap:PropertyAvailableForOperatingLeaseMemberwlfc:OlderGenerationEnginesMember2020-01-012020-12-310001018164us-gaap:PropertyAvailableForOperatingLeaseMemberwlfc:OlderGenerationEnginesMembersrt:MaximumMember2020-01-012020-12-310001018164us-gaap:PropertyAvailableForOperatingLeaseMember2020-01-012020-12-310001018164us-gaap:PropertyAvailableForOperatingLeaseMember2019-01-012019-12-310001018164srt:MinimumMember2020-01-012020-12-310001018164srt:MaximumMember2020-01-012020-12-310001018164wlfc:WestIIINotesMember2020-01-012020-12-310001018164wlfc:WestIIINotesMember2020-12-310001018164wlfc:WESTIVNotesMember2020-01-012020-12-310001018164wlfc:WESTIVNotesMember2020-12-310001018164wlfc:WESTVNotesMember2020-01-012020-12-310001018164wlfc:WESTVNotesMember2020-12-310001018164wlfc:WESTIIINotesWESTIVNotesAndWESTVNotesMember2020-01-012020-12-310001018164wlfc:WESTIIINotesWESTIVNotesAndWESTVNotesMember2020-12-310001018164us-gaap:CustomerRelationshipsMember2020-01-012020-12-310001018164us-gaap:IndefinitelivedIntangibleAssetsMember2020-12-310001018164wlfc:ContingenciesRelatedToCOVID19Member2020-12-310001018164wlfc:ContingenciesRelatedToCOVID19Member2020-01-012020-12-310001018164srt:MinimumMember2020-12-310001018164srt:MaximumMember2020-12-310001018164wlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:LeaseRentRevenueMember2020-01-012020-12-310001018164wlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:LeaseRentRevenueMember2020-01-012020-12-310001018164us-gaap:IntersegmentEliminationMemberwlfc:LeaseRentRevenueMember2020-01-012020-12-310001018164wlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:MaintenanceReserveRevenueMember2020-01-012020-12-310001018164wlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:MaintenanceReserveRevenueMember2020-01-012020-12-310001018164wlfc:MaintenanceReserveRevenueMemberus-gaap:IntersegmentEliminationMember2020-01-012020-12-310001018164wlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:SparePartsAndEquipmentSalesMember2020-01-012020-12-310001018164wlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:SparePartsAndEquipmentSalesMember2020-01-012020-12-310001018164us-gaap:IntersegmentEliminationMemberwlfc:SparePartsAndEquipmentSalesMember2020-01-012020-12-310001018164wlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMember2020-01-012020-12-310001018164wlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMember2020-01-012020-12-310001018164us-gaap:IntersegmentEliminationMember2020-01-012020-12-310001018164wlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:ManagedServicesMember2020-01-012020-12-310001018164wlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:ManagedServicesMember2020-01-012020-12-310001018164us-gaap:IntersegmentEliminationMemberwlfc:ManagedServicesMember2020-01-012020-12-310001018164wlfc:ManagedServicesMember2020-01-012020-12-310001018164wlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:OtherRevenueMember2020-01-012020-12-310001018164wlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:OtherRevenueMember2020-01-012020-12-310001018164wlfc:OtherRevenueMemberus-gaap:IntersegmentEliminationMember2020-01-012020-12-310001018164wlfc:OtherRevenueMember2020-01-012020-12-310001018164wlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:LeaseRentRevenueMember2019-01-012019-12-310001018164wlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:LeaseRentRevenueMember2019-01-012019-12-310001018164us-gaap:IntersegmentEliminationMemberwlfc:LeaseRentRevenueMember2019-01-012019-12-310001018164wlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:MaintenanceReserveRevenueMember2019-01-012019-12-310001018164wlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:MaintenanceReserveRevenueMember2019-01-012019-12-310001018164wlfc:MaintenanceReserveRevenueMemberus-gaap:IntersegmentEliminationMember2019-01-012019-12-310001018164wlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:SparePartsAndEquipmentSalesMember2019-01-012019-12-310001018164wlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:SparePartsAndEquipmentSalesMember2019-01-012019-12-310001018164us-gaap:IntersegmentEliminationMemberwlfc:SparePartsAndEquipmentSalesMember2019-01-012019-12-310001018164wlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMember2019-01-012019-12-310001018164wlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMember2019-01-012019-12-310001018164us-gaap:IntersegmentEliminationMember2019-01-012019-12-310001018164wlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:ManagedServicesMember2019-01-012019-12-310001018164wlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:ManagedServicesMember2019-01-012019-12-310001018164us-gaap:IntersegmentEliminationMemberwlfc:ManagedServicesMember2019-01-012019-12-310001018164wlfc:ManagedServicesMember2019-01-012019-12-310001018164wlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:OtherRevenueMember2019-01-012019-12-310001018164wlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMemberwlfc:OtherRevenueMember2019-01-012019-12-310001018164wlfc:OtherRevenueMemberus-gaap:IntersegmentEliminationMember2019-01-012019-12-310001018164wlfc:OtherRevenueMember2019-01-012019-12-31wlfc:aircraft.wlfc:vesselwlfc:marineVesselwlfc:regions0001018164srt:EuropeMember2020-01-012020-12-310001018164srt:EuropeMember2019-01-012019-12-310001018164country:US2020-01-012020-12-310001018164country:US2019-01-012019-12-310001018164srt:AsiaMember2020-01-012020-12-310001018164srt:AsiaMember2019-01-012019-12-310001018164srt:SouthAmericaMember2020-01-012020-12-310001018164srt:SouthAmericaMember2019-01-012019-12-310001018164country:MX2020-01-012020-12-310001018164country:MX2019-01-012019-12-310001018164us-gaap:MiddleEastMember2020-01-012020-12-310001018164us-gaap:MiddleEastMember2019-01-012019-12-310001018164country:CA2020-01-012020-12-310001018164country:CA2019-01-012019-12-310001018164srt:AfricaMember2020-01-012020-12-310001018164srt:AfricaMember2019-01-012019-12-310001018164srt:EuropeMember2020-12-310001018164srt:EuropeMember2019-12-310001018164country:US2020-12-310001018164country:US2019-12-310001018164srt:AsiaMember2020-12-310001018164srt:AsiaMember2019-12-310001018164country:MX2020-12-310001018164country:MX2019-12-310001018164srt:SouthAmericaMember2020-12-310001018164srt:SouthAmericaMember2019-12-310001018164us-gaap:MiddleEastMember2020-12-310001018164us-gaap:MiddleEastMember2019-12-310001018164country:CA2020-12-310001018164country:CA2019-12-310001018164srt:AfricaMember2020-12-310001018164srt:AfricaMember2019-12-310001018164wlfc:OffLeaseAndOtherEquipmentMember2020-12-310001018164wlfc:OffLeaseAndOtherEquipmentMember2019-12-310001018164wlfc:EquipmentHeldForOperatingLeaseMonthToMonthMaturityMember2020-12-310001018164wlfc:EquipmentHeldForOperatingLeaseMaturingInNextTwelveMonthsMember2020-12-310001018164wlfc:EquipmentHeldForOperatingLeaseMaturingInYear2Member2020-12-310001018164wlfc:EquipmentHeldForOperatingLeaseMaturingInYear3Member2020-12-310001018164wlfc:EquipmentHeldForOperatingLeaseMaturingInYear4Member2020-12-310001018164wlfc:EquipmentHeldForOperatingLeaseMaturingInYear5Member2020-12-310001018164wlfc:EquipmentHeldForOperatingLeaseMaturingThereafterMember2020-12-310001018164wlfc:WillisMitsuiAndCompanyEngineSupportLimitedMember2020-12-310001018164wlfc:WillisMitsuiAndCompanyEngineSupportLimitedMember2020-01-012020-12-310001018164wlfc:WillisMitsuiAndCompanyEngineSupportLimitedMemberus-gaap:AssetsLeasedToOthersMember2020-12-310001018164wlfc:CSCWillisEngineLeaseCompanyLimitedMember2020-12-310001018164wlfc:CSCWillisEngineLeaseCompanyLimitedMember2020-01-012020-12-310001018164us-gaap:AssetsLeasedToOthersMemberwlfc:CSCWillisEngineLeaseCompanyLimitedMember2020-12-310001018164wlfc:WillisMitsuiAndCompanyEngineSupportLimitedMember2018-12-310001018164wlfc:CSCWillisEngineLeaseCompanyLimitedMember2018-12-310001018164wlfc:WillisMitsuiAndCompanyEngineSupportLimitedMember2019-01-012019-12-310001018164wlfc:CSCWillisEngineLeaseCompanyLimitedMember2019-01-012019-12-310001018164wlfc:WillisMitsuiAndCompanyEngineSupportLimitedMember2019-12-310001018164wlfc:CSCWillisEngineLeaseCompanyLimitedMember2019-12-310001018164wlfc:WillisMitsuiAndCompanyEngineSupportLimitedMemberus-gaap:OtherIncomeMember2020-01-012020-12-310001018164wlfc:WillisMitsuiAndCompanyEngineSupportLimitedMemberus-gaap:OtherIncomeMember2019-01-012019-12-310001018164us-gaap:LondonInterbankOfferedRateLIBORMemberwlfc:SecuredCreditFacilityDueApril2021Member2020-01-012020-12-310001018164us-gaap:RevolvingCreditFacilityMemberwlfc:SecuredCreditFacilityDueApril2021Member2019-06-300001018164wlfc:SecuredCreditFacilityDueApril2021Member2020-12-310001018164wlfc:SecuredCreditFacilityDueApril2021Member2019-12-310001018164wlfc:WESTVSeriesANotesMember2020-12-310001018164wlfc:WESTVSeriesANotesMember2019-12-310001018164wlfc:WESTVSeriesBNotesMember2020-12-310001018164wlfc:WESTVSeriesBNotesMember2019-12-310001018164wlfc:WESTVSeriesCNotesMember2020-12-310001018164wlfc:WESTVSeriesCNotesMember2019-12-310001018164wlfc:WESTIVSeriesANotesMember2020-12-310001018164wlfc:WESTIVSeriesANotesMember2019-12-310001018164wlfc:WESTIVSeriesBNotesMember2020-12-310001018164wlfc:WESTIVSeriesBNotesMember2019-12-310001018164wlfc:WESTIIISeriesANotesMember2020-12-310001018164wlfc:WESTIIISeriesANotesMember2019-12-310001018164wlfc:WESTIIISeriesBNotesMember2020-12-310001018164wlfc:WESTIIISeriesBNotesMember2019-12-310001018164wlfc:WestIISeriesANotesMember2019-12-310001018164wlfc:WestIISeriesANotesMember2020-12-310001018164wlfc:NotesPayableDueJuly2022Membersrt:MinimumMemberus-gaap:LondonInterbankOfferedRateLIBORMember2020-01-012020-12-310001018164wlfc:NotesPayableDueJuly2022Memberus-gaap:LondonInterbankOfferedRateLIBORMembersrt:MaximumMember2020-01-012020-12-310001018164wlfc:NotesPayableDueJuly2022Member2020-12-310001018164wlfc:NotesPayableDueJuly2022Member2019-12-310001018164wlfc:NotesPayableDueJuly2024Member2020-12-310001018164wlfc:NotesPayableDueJuly2024Member2019-12-310001018164us-gaap:RevolvingCreditFacilityMemberwlfc:SecuredCreditFacilityDueApril2021Member2018-12-310001018164us-gaap:RevolvingCreditFacilityMemberwlfc:SecuredCreditFacilityDueApril2021Member2020-12-310001018164us-gaap:RevolvingCreditFacilityMemberwlfc:SecuredCreditFacilityDueApril2021Member2020-01-012020-12-310001018164us-gaap:RevolvingCreditFacilityMemberwlfc:SecuredCreditFacilityDueApril2021Member2019-12-310001018164wlfc:WESTVMemberwlfc:WESTVNotesMember2020-03-310001018164wlfc:WESTVMemberwlfc:WESTVSeriesANotesMember2020-03-310001018164wlfc:WESTVMemberwlfc:WESTVSeriesBNotesMember2020-03-310001018164wlfc:WESTVSeriesCNotesMemberwlfc:WESTVMember2020-03-310001018164wlfc:WESTVMember2020-03-31wlfc:airframe0001018164wlfc:AssetsUnderPurchaseAgreementWithWESTVMemberwlfc:WESTVMember2020-03-310001018164wlfc:WESTVMemberwlfc:WESTVSeriesANotesMember2020-03-012020-03-310001018164wlfc:WESTVMemberwlfc:WESTVSeriesBNotesMember2020-03-012020-03-310001018164wlfc:WESTVSeriesCNotesMemberwlfc:WESTVMember2020-03-012020-03-310001018164wlfc:Class2012ATermNotesMember2020-03-012020-03-310001018164wlfc:NotesPayableDueJuly2024Membersrt:MaximumMember2019-07-310001018164wlfc:NotesPayableDueJuly2022Member2019-02-280001018164us-gaap:InterestRateContractMember2020-12-310001018164us-gaap:InterestRateContractMember2019-12-31wlfc:agreement0001018164us-gaap:InterestRateContractMember2016-12-310001018164wlfc:InterestRateContract1Member2020-01-012020-12-310001018164us-gaap:InterestRateContractMember2019-10-310001018164wlfc:InterestRateContract2Member2020-01-012020-12-310001018164us-gaap:InterestRateContractMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-01-012020-12-310001018164us-gaap:InterestRateContractMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2019-01-012019-12-310001018164us-gaap:InterestRateContractMemberus-gaap:InterestExpenseMemberus-gaap:CashFlowHedgingMember2020-01-012020-12-310001018164us-gaap:InterestRateContractMemberus-gaap:InterestExpenseMemberus-gaap:CashFlowHedgingMember2019-01-012019-12-310001018164us-gaap:CashFlowHedgingMember2020-01-012020-12-310001018164us-gaap:CashFlowHedgingMember2019-01-012019-12-310001018164us-gaap:SubsequentEventMemberus-gaap:InterestRateContractMember2021-01-310001018164us-gaap:SubsequentEventMemberwlfc:InterestRateContract3Member2021-01-310001018164us-gaap:SubsequentEventMemberwlfc:InterestRateContract4Member2021-01-310001018164us-gaap:InternalRevenueServiceIRSMember2020-12-310001018164us-gaap:StateAndLocalJurisdictionMember2020-12-310001018164us-gaap:CaliforniaFranchiseTaxBoardMemberus-gaap:StateAndLocalJurisdictionMember2020-12-310001018164wlfc:GeorgiaDepartmentOfRevenueMemberus-gaap:StateAndLocalJurisdictionMember2020-12-310001018164us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001018164us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001018164us-gaap:FairValueMeasurementsNonrecurringMember2020-01-012020-12-310001018164us-gaap:FairValueMeasurementsNonrecurringMember2019-01-012019-12-310001018164wlfc:AssetsToBeSoldOrPartedOutMember2020-01-012020-12-310001018164wlfc:ImpairedAssetsMember2020-01-012020-12-310001018164us-gaap:FairValueMeasurementsNonrecurringMemberwlfc:AssetsToBeSoldOrPartedOutMember2019-01-012019-12-310001018164wlfc:AssetsToBeSoldOrPartedOutMember2019-01-012019-12-310001018164us-gaap:FairValueMeasurementsNonrecurringMemberwlfc:ImpairedAssetsMember2019-01-012019-12-310001018164wlfc:ImpairedAssetsMember2019-01-012019-12-310001018164wlfc:AssetsToBeSoldOrPartedOutMemberus-gaap:PropertyAvailableForOperatingLeaseMember2020-12-31wlfc:modernEngine0001018164us-gaap:CapitalAdditionsMember2020-12-310001018164us-gaap:CapitalAdditionsMembersrt:MinimumMember2020-12-310001018164us-gaap:CapitalAdditionsMembersrt:MaximumMember2020-12-310001018164wlfc:SeriesOnePreferredStockMember2016-10-310001018164wlfc:SeriesOnePreferredStockMember2016-10-012016-10-310001018164wlfc:SeriesTwoPreferredStockMember2017-09-300001018164wlfc:SeriesTwoPreferredStockMember2017-09-012017-09-300001018164wlfc:SeriesTwoPreferredStockMember2019-01-012019-12-310001018164wlfc:SeriesOnePreferredStockMember2020-01-012020-12-310001018164wlfc:IncentiveAwardPlan2007Member2020-01-012020-12-310001018164wlfc:IncentiveAwardPlan2007Member2019-01-012019-12-310001018164wlfc:The2018StockIncentivePlanMember2020-01-012020-12-310001018164wlfc:The2018StockIncentivePlanMember2019-01-012019-12-310001018164wlfc:EmployeeStockPurchasePlanMember2020-01-012020-12-310001018164wlfc:EmployeeStockPurchasePlanMember2019-01-012019-12-310001018164wlfc:IncentiveAwardPlan2007Member2007-05-310001018164wlfc:IncentiveAwardPlan2007Membersrt:MinimumMember2020-01-012020-12-310001018164wlfc:IncentiveAwardPlan2007Membersrt:MaximumMember2020-01-012020-12-310001018164wlfc:IncentiveAwardPlan2007Memberus-gaap:StockOptionMember2020-12-310001018164wlfc:The2018StockIncentivePlanMember2018-05-310001018164wlfc:The2018StockIncentivePlanMembersrt:MinimumMember2020-01-012020-12-310001018164wlfc:The2018StockIncentivePlanMembersrt:MaximumMember2020-01-012020-12-310001018164us-gaap:RestrictedStockMemberwlfc:The2018StockIncentivePlanMember2020-01-012020-12-310001018164us-gaap:RestrictedStockMemberwlfc:The2018StockIncentivePlanMember2020-12-310001018164us-gaap:RestrictedStockMember2018-12-310001018164us-gaap:RestrictedStockMember2019-01-012019-12-310001018164us-gaap:RestrictedStockMember2019-12-310001018164us-gaap:RestrictedStockMember2020-01-012020-12-310001018164us-gaap:RestrictedStockMember2020-12-310001018164wlfc:IncentiveAwardPlan2007Memberus-gaap:RestrictedStockMember2020-01-012020-12-310001018164wlfc:IncentiveAwardPlan2007Memberus-gaap:RestrictedStockMember2020-12-310001018164wlfc:EmployeeStockPurchasePlanMember2018-04-0100010181642020-01-012020-03-3100010181642020-04-012020-06-3000010181642020-07-012020-09-3000010181642020-10-012020-12-3100010181642019-01-012019-03-3100010181642019-04-012019-06-3000010181642019-07-012019-09-3000010181642019-10-012019-12-31wlfc:noteReceivable0001018164wlfc:WillisAeronauticalServicesInc.Member2019-01-012019-12-310001018164srt:ChiefExecutiveOfficerMemberwlfc:SaleofVehicleMember2019-01-012019-01-310001018164srt:ChiefExecutiveOfficerMemberwlfc:UseofMarineVesselMember2019-01-012019-12-310001018164wlfc:MikchalkLakeLlcMember2019-01-012019-12-310001018164srt:ChiefExecutiveOfficerMember2020-01-012020-12-310001018164us-gaap:SubsequentEventMembersrt:ChiefExecutiveOfficerMember2021-01-012021-03-11wlfc:segment.0001018164wlfc:ManagedServicesAndOtherRevenueMemberwlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMember2020-01-012020-12-310001018164wlfc:ManagedServicesAndOtherRevenueMemberwlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMember2020-01-012020-12-310001018164wlfc:ManagedServicesAndOtherRevenueMemberus-gaap:IntersegmentEliminationMember2020-01-012020-12-310001018164wlfc:ManagedServicesAndOtherRevenueMemberwlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMember2019-01-012019-12-310001018164wlfc:ManagedServicesAndOtherRevenueMemberwlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMember2019-01-012019-12-310001018164wlfc:ManagedServicesAndOtherRevenueMemberus-gaap:IntersegmentEliminationMember2019-01-012019-12-310001018164wlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMember2020-12-310001018164wlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMember2020-12-310001018164us-gaap:IntersegmentEliminationMember2020-12-310001018164wlfc:LeasingAndRelatedOperationsSegmentMemberus-gaap:OperatingSegmentsMember2019-12-310001018164wlfc:SparePartsSalesSegmentMemberus-gaap:OperatingSegmentsMember2019-12-310001018164us-gaap:IntersegmentEliminationMember2019-12-310001018164us-gaap:AllowanceForCreditLossMember2018-12-310001018164us-gaap:AllowanceForCreditLossMember2019-01-012019-12-310001018164us-gaap:AllowanceForCreditLossMember2019-12-310001018164us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2018-12-310001018164us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2019-01-012019-12-310001018164us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2019-12-310001018164us-gaap:AllowanceForCreditLossMember2020-01-012020-12-310001018164us-gaap:AllowanceForCreditLossMember2020-12-310001018164us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2020-01-012020-12-310001018164us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2020-12-31
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2020
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number: 001-15369
WILLIS LEASE FINANCE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 68-0070656
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
4700 Lyons Technology Parkway Coconut Creek Florida 33073
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (561) 349-9989
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol Name of exchange on which registered
Common Stock, $0.01 par value per share WLFC Nasdaq Global Market
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.   Yes   No 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   Yes  No  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes   No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-Accelerated Filer
Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No 
The aggregate market value of voting stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter (June 30, 2020) was approximately $76.6 million (based on a closing sale price of $24.28 per share as reported on the NASDAQ Stock Market).
The number of shares of the registrant’s Common Stock outstanding as of March 10, 2021 was 5,997,543.
DOCUMENTS INCORPORATED BY REFERENCE
The Company’s Proxy Statement for the 2021 Annual Meeting of Stockholders is incorporated by reference into Part III of this Form 10-K.


Table of Contents
WILLIS LEASE FINANCE CORPORATION
2020 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
3
9
22
23
23
23
23
24
24
32
32
32
32
33
33
33
33
33
33
34
38
2

Table of Contents
PART I
ITEM 1.     BUSINESS

INTRODUCTION

Willis Lease Finance Corporation with its subsidiaries (“WLFC” or the “Company”) is a leading lessor and servicer of commercial aircraft and aircraft engines. Our principal business objective is to build value for our shareholders by acquiring commercial aircraft and engines and managing those assets in order to provide a return on investment, primarily through lease rent and maintenance reserve revenues, as well as through management fees earned for managing assets owned by other parties. As of December 31, 2020, our $1,886.6 million equipment held for operating lease portfolio and $158.7 million notes receivable represented 291 engines, eight aircraft, one marine vessel and other leased parts and equipment with 70 lessees in 41 countries. In addition to our owned portfolio, as of December 31, 2020, we managed a total lease portfolio of 400 engines, aircraft and related equipment for other parties.
Willis Aeronautical Services, Inc. (“Willis Aero”) is a wholly owned subsidiary whose primary focus is the sale of aircraft engine parts and materials through the acquisition or consignment of aircraft and engines.
Willis Asset Management Limited (“Willis Asset Management”) is a wholly owned subsidiary whose primary focus is the engine management and consulting business. Willis Asset Management had 362 engines, excluding WLFC engines, under management as of December 31, 2020.
We are a Delaware corporation, incorporated in 1998. Our executive offices are located at 4700 Lyons Technology Parkway, Coconut Creek, Florida 33073. We transact business directly and through our subsidiaries and consolidated variable interest entities (“VIE”) unless otherwise indicated.
We maintain a website at www.willislease.com where our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports are available without charge, as soon as reasonably practicable following the time they are filed with or furnished to the SEC. The SEC also maintains an electronic Internet site that contains our reports, proxies and information statements, and other information that we file or furnish at http://www.sec.gov.
We separate our business into two reportable segments, Leasing and Related Operations and Spare Parts Sales. Our business activities by reportable segment are described below.
Leasing and Related Operations
Our strategy is to lease aircraft and aircraft engines and provide related services to a diversified group of commercial aircraft operators and maintenance, repair and overhaul organizations (“MROs”) worldwide. Commercial aircraft operators need engines in addition to those installed on the aircraft that they operate. These spare engines are required for various reasons, including requirements that engines be inspected and repaired at regular intervals based on equipment utilization. Furthermore, unscheduled events such as mechanical failure, Federal Aviation Administration (“FAA”) airworthiness directives or manufacturer-recommended actions for maintenance, repair and overhaul of engines result in the need for spare engines. Commercial aircraft operators and others in the industry generally estimate that the total number of spare engines needed is around 12% of the total number of installed engines. Industry research suggests that there are nearly 52,000 engines installed on commercial aircraft. Accordingly, it is estimated that there are 6,200 spare engines in the market, including both owned and leased spare engines.
Our engine portfolio primarily consists of noise-compliant Stage IV commercial jet engines manufactured by CFMI, General Electric, Pratt & Whitney, Rolls Royce and International Aero Engines. These engines generally may be used on one or more aircraft types and are the most widely used engines in the world, powering Airbus, Boeing, Bombardier and Embraer aircraft.
The Company acquires engines for its leasing portfolio in a number of ways. It enters into sale and lease back transactions with operators of aircraft, original equipment manufacturers of engines and providers of engine maintenance cost per hour services. We also purchase both new and used engines that are subject to a lease when purchased and on a speculative basis (i.e. without a lease attached from manufacturers or other parties which own such engines).
Total revenues from our Leasing and Related Operations reportable segment was 94.1% and 86.3% of the respective total consolidated revenue for the years ended December 31, 2020 and 2019, respectively.
At December 31, 2020, approximately 75% of our on-lease engines, aircraft, and related equipment (all of which we sometimes refer to as “equipment”) by net book value are leased and operated internationally. Substantially all leases relating to this equipment are denominated and payable in U.S. dollars, which is customary in the industry. Future leases may provide for payments to be made in euros or other foreign currencies. In 2020, we leased our equipment to lessees domiciled in eight geographic regions.
3

Table of Contents
Spare Parts Sales
Our wholly owned subsidiary Willis Aero primarily engages in the sale of aircraft engine parts and materials through the acquisition or consignment of engines from third parties or from the leasing portfolio. This business segment enables our Company to provide end-of-life solutions for the growing supply of surplus aircraft and engines, as well as manage the full lifecycle of our lease assets, enhance the returns on our engine portfolio and create incremental value for our shareholders.

COVID-19 Impact

The worldwide spread of the COVID-19 virus has resulted in a global slowdown of economic activity. While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment actions, it has had an adverse effect on the global economy and the ultimate societal and economic impact of the COVID-19 pandemic remains unknown. In particular, the ongoing COVID-19 pandemic has caused significant disruptions to the airline industry that has resulted in a dramatic reduction in demand for air travel domestically and abroad, which is likely to continue for the foreseeable future. Throughout the next year, we plan to continue to stay focused on cost control and remain prudent with our capital expenditures. In addition to the impacts described below, dramatically lower demand for air travel in turn presents significant risks to our Company, not all of which we are able to fully evaluate or even to foresee at the current time, and could negatively impact collections of accounts receivable, cause our lessee customers to not enter into new leases, reduce spending from new and existing customers for leases or spare parts or equipment, lower usage fees, cause some of our customers to go out of business, and limit the ability of our personnel to travel to customers and potential customers, all of which could adversely affect our business, results of operations, and financial condition. During the year ended December 31, 2020, we experienced declining average utilization and a corresponding decrease in revenue, as well as a significant decline in spare parts and equipment sales, in each case as compared to the prior year periods. Additionally, we have, in certain situations, agreed to rent concessions which resulted in a total reduction to rent revenues of $6.5 million during 2020. The COVID-19 pandemic has materially affected our business and financial results for the year ended December 31, 2020, and may continue to do so indefinitely thereafter. We have temporarily closed our headquarters and other offices, required our employees and contractors to predominately work remotely, and implemented travel restrictions, all of which represent a significant disruption in how we operate our business. We have taken various proactive actions in an attempt to mitigate the financial impact of the COVID-19 pandemic. Additionally, during 2020, 9% of our employees have been either furloughed, or subject to a form of reduced compensation. The operations of our partners and customers have likewise been disrupted.

The scope and nature of the impact of COVID-19 on the airline industry, and in turn our business, continue to evolve and the outcomes are uncertain. Given the uncertainty in the rapidly changing market and economic conditions related to COVID-19, we will continue to evaluate the nature and extent of the impact to our business and financial position. The ultimate extent of the effects of the COVID-19 pandemic on our Company will depend on future developments, and such effects could exist for an extended period of time.
INDUSTRY BACKGROUND - THE DEMAND FOR LEASED AIRCRAFT ENGINES
Historically, commercial aircraft operators owned rather than leased their spare engines. As engines become more powerful and technically sophisticated, they also become more expensive to acquire and maintain. In part due to cash constraints on commercial aircraft operators and the costs associated with engine ownership, commercial aircraft operators have become more cost-conscious and now utilize operating leases for a portion of their spare engines and are therefore better able to manage their finances in this capital-intensive business. Engine leasing is a specialized business that has evolved into a discrete sector of the commercial aviation market. Participants in this sector need access to capital, as well as specialized technical knowledge, in order to compete successfully.
Growth in the spare engine leasing industry is dependent on two fundamental drivers:
the number of commercial aircraft, and therefore engines, in the market; and
the proportion of engines that are leased, rather than owned, by commercial aircraft operators.
While COVID-19 has significantly impacted engine leasing, we still believe leasing will increase over time but more slowly.
Increased number of aircraft, and therefore engines, in the market
We believe that the number of commercial and cargo aircraft, and hence spare engines, will increase. Boeing projects 3.2% annual growth in the global commercial jet fleet, increasing the current fleet to over 48,400 aircraft by 2039. Aircraft equipment manufacturers have predicted such an increase in aircraft to address the rapid growth of both passenger and cargo traffic in the Asian markets, as well as demand for new aircraft in more mature markets. While we believe these predictions are accurate over the long term, COVID-19 has materially disrupted the airline industry and significantly slowed down passenger growth globally, including in
4

Table of Contents
the U.S., and we believe such growth and demand may be negatively impacted over the short to medium term. See “Risk Factors” below.
Increased lease penetration rate
Spare engines provide support for installed engines in the event of routine or other engine maintenance or unscheduled removal. The number of spare engines needed to service any fleet is determined by many factors. These factors include:
the number and type of aircraft in an aircraft operator’s fleet;
the geographic scope of such aircraft operator’s destinations;
the time an engine is on-wing between removals;
average shop visit time; and
the number of spare engines an aircraft operator requires in order to ensure coverage for predicted and unscheduled removals.
We believe that commercial aircraft operators are increasingly considering their spare engines as significant capital assets, where operating leases may be more attractive than finance leases or ownership of spare engines. We believe that currently 35% of the spare engine market falls under the category of leased engines. Industry analysts have forecast that the percentage of leased engines is likely to increase over the next 15 years as engine leasing follows the growth of aircraft leasing. We believe this is due to the increasing cost of newer engines, the anticipated modernization of the worldwide aircraft fleet and the significant cost associated therewith, and the emergence of new niche-focused airlines which generally use leasing in order to obtain their capital assets.
ENGINE LEASING
As of December 31, 2020, the majority of our leases to air carriers, manufacturers and MROs were operating leases with the exception of certain failed sale-leaseback transactions classified as notes receivable under Accounting Standards Codification (“ASC”) 842. Under operating leases, we retain the potential benefit and assume the risk of the residual value of the equipment, in contrast to finance leases where the lessee has more of the potential benefits and risks of ownership. Operating leases allow commercial aircraft operators greater fleet and financial flexibility due to the relatively small initial capital outlay necessary to obtain use of the aircraft equipment, and the availability of short- and long-term leases to better meet their needs. Operating lease rates are generally higher than finance lease rates, in part because of the lessor retained residual value risk.
We describe all of our current leases as “triple-net” operating leases. A triple-net operating lease requires the lessee to make the full lease payment and pay any other expenses associated with the use of the engines, such as maintenance, casualty and liability insurance, sales or use taxes and personal property taxes. The leases contain detailed provisions specifying the lessees’ responsibility for engine damage, maintenance standards and the required condition of the engine upon return at the end of the lease. During the term of the lease, we require the lessee to maintain the engine in accordance with an approved maintenance program designed to meet applicable regulatory requirements in the jurisdictions in which the lessee operates.
We enter into both long-term and short-term leases which typically provide for monthly payment. Long-term leases typically have original lease terms in excess of one year. Characteristics of a long-term lease also include specified return conditions. Return conditions can be met by the customer through a maintenance overhaul in advance of asset return or a cash settlement at lease end resulting in maintenance revenue at that time. Maintenance reserves are often used for payment of maintenance overhauls in advance of asset returns. The cash settlement may, in some instances, be taken from maintenance reserves paid throughout the course of the lease. Short-term leases typically have an original lease term of less than one year. Short-term leases also include non-refundable, usage-based maintenance fees, which are billed at contractual rates and recognized as revenue over the term of the leases. Payment terms of our leases are predominately monthly in advance for rent and in arrears for usage. As of December 31, 2020 and 2019, 28% and 40%, respectively, of the Company’s leases by net book value were short-term leases.
We try to mitigate risk where possible. For example, we make an analysis of the credit risk associated with the lessee before entering into any significant lease transaction. Our credit analysis generally consists of evaluating the prospective lessee’s financial standing by utilizing financial statements and trade and/or banking references. In certain circumstances, we may require our lessees to provide additional credit support, such as a letter of credit or a guaranty from a bank or a third party or a security deposit. We also evaluate insurance and expropriation risk and evaluate and monitor the political and legal climate of the country in which a particular lessee is located in order to determine our ability to repossess our engines should the need arise. Despite these guidelines, we cannot give assurance that we will not experience collection problems or significant losses in the future. See “Risk Factors” below.
At the commencement of a lease, we may collect, in advance, a security deposit normally equal to at least one month’s lease payment. The security deposit is returned to the lessee after all lease return conditions have been met. Under the terms of some of our
5

Table of Contents
leases, during the term of the lease, the lessee pays amounts to us based on usage of the engine, which is referred to as maintenance reserves or use fees, which are designed to cover the expected future maintenance costs. For those leases in which the maintenance reserves are reimbursable to the lessee, maintenance reserves are collected and are reimbursed to the lessee when qualifying maintenance is performed. Under longer-term leases, to the extent that cumulative use fee billings are inadequate to fund expenditures required prior to return of the engine to us, the lessee is obligated to cover the shortfall.
During the lease period, our leases require that maintenance and inspection of the leased engines be performed at qualified maintenance facilities certified by the FAA or its foreign equivalent. In addition, when an engine becomes off-lease, it undergoes inspection to verify compliance with lease return conditions. Our management believes that our attention to our lessees and our emphasis on maintenance and inspection helps preserve residual values and generally helps us to recover our investment in our leased engines.
Upon termination of a lease, we will either enter into a new lease, sell or part out the related engines or airframe. The demand for aftermarket engines for either sale or lease may be affected by a number of variables, including:
general market conditions;
regulatory changes (particularly those imposing environmental, maintenance and other requirements on the operation of engines);
changes in demand for air travel;
fuel costs;
changes in the supply and cost of aircraft equipment; and
technological developments.
The value of a particular used engine or airframe varies greatly depending upon its condition, the maintenance services performed during the lease term and, as applicable, the number of hours or cycles remaining until the next major maintenance interval. If we are unable to lease or sell engines on favorable terms, our financial results and our ability to service debt may be adversely affected. See “Risk Factors” below.
The value of a particular model of engine is heavily dependent on the status of the types of aircraft on which it is installed. We believe values of engines tend to be stable as long as the host aircraft for the engines and the engines themselves are still being manufactured. Prices will also tend to remain stable and even rise after a host aircraft is no longer manufactured as long as there is sufficient demand for the host aircraft. However, the value of an engine begins to decline rapidly once the host aircraft is retired from service and/or parted out in significant numbers. Values of engines also may decline because of manufacturing defects that may surface subsequently.
As of December 31, 2020, our $1,886.6 million equipment held for operating lease portfolio and $158.7 million notes receivable represented 291 engines, eight aircraft, one marine vessel and other leased parts and equipment. As of December 31, 2019, our $1,650.9 million equipment held for operating lease portfolio and $38.1 million notes receivable represented 263 engines, 12 aircraft, one marine vessel and other leased parts and equipment.
As of December 31, 2020 minimum future rentals under non-cancelable operating leases of these engines, related equipment and aircraft assets were as follows:
Year (in thousands)
2021 $ 120,393 
2022 75,835 
2023 28,452 
2024 15,091 
2025 5,647 
Thereafter 8,002 
$ 253,420 
As of December 31, 2020, we had 70 lessees of commercial aircraft engines and related equipment, aircraft, and other leased parts and equipment in 41 countries. We believe the loss of any one customer would not have a significant long-term adverse effect on our business. We operate in a global market in which our engines are easily transferable among lessees located in many countries, which
6

Table of Contents
stabilizes demand and allows us to recover from the loss of a particular customer. As a result, we do not believe we are dependent on a single customer or a few customers, the loss of which would have a material adverse effect on our revenues.
In 2011 we entered into an agreement with Mitsui & Co., Ltd. to participate in a joint venture formed as a Dublin-based Irish limited company — Willis Mitsui & Company Engine Support Limited (“WMES”) for the purpose of acquiring and leasing jet engines. Each partner holds a fifty percent interest in the joint venture. WMES owned a lease portfolio, inclusive of a note receivable, of 36 engines and five aircraft with a net book value of $289.2 million as of December 31, 2020. Our investment in the joint venture was $37.4 million as of December 31, 2020.
In 2014 we entered into an agreement with China Aviation Supplies Import & Export Corporation (“CASC”) to participate in a joint venture named CASC Willis Lease Finance Company Limited (“CASC Willis”), a new joint venture based in Shanghai, China. Each partner holds a fifty percent interest in the joint venture. CASC Willis acquires and leases jet engines to Chinese airlines and concentrates on meeting the fast-growing demand for leased commercial aircraft engines and aviation assets in the People’s Republic of China. CASC Willis owned a lease portfolio of four engines with a net book value of $50.1 million as of December 31, 2020. Our investment in the joint venture was $15.9 million as of December 31, 2020. 
AIRCRAFT LEASING
As of December 31, 2020, our operating lease portfolio and notes receivable included two Boeing 737 aircraft, five A319-111 aircraft, and one A321-200 aircraft with an aggregate net book value of $105.2 million.
Our aircraft leases are “triple-net” leases and the lessee is responsible for making the full lease payment and paying any other expenses associated with the use of the aircraft, such as maintenance, casualty and liability insurance, sales or use taxes and personal property taxes. In addition, the lessee is responsible for normal maintenance and repairs, engine and airframe overhauls, and compliance with return conditions of flight equipment on lease. Under the provisions of many leases, for certain engine and airframe overhauls, we reimburse the lessee for costs incurred up to but not exceeding maintenance reserves the lessee has paid to us. Maintenance reserves are designed to cover the expected maintenance costs. The lessee is also responsible for compliance with all applicable laws and regulations with respect to the aircraft. We require our lessees to comply with FAA requirements. We periodically inspect our leased aircraft. Generally, we require a deposit as security for the lessee’s performance of obligations under the lease and the condition of the aircraft upon return. In addition, the leases contain extensive provisions regarding our remedies and rights in the event of a default by the lessee and specific provisions regarding the condition of the aircraft upon return. The lessee is required to continue to make lease payments under all circumstances, including periods during which the aircraft is not in operation due to maintenance or grounding.
SPARE PARTS SALES
The sale of spare parts is managed by the Company’s wholly owned subsidiary, Willis Aero. Willis Aero primarily engages in the sale of aircraft engine parts and materials through the acquisition or consignment from third parties or from the leasing portfolio. This business segment enables our Company to provide end-of-life solutions for the growing supply of surplus aircraft and engines, as well as manage the full lifecycle of our lease assets, enhance the returns on our engine portfolio and create incremental value for our shareholders.  As of December 31, 2020, spare parts inventory had a carrying value of $59.4 million.
ASSET MANAGEMENT
Willis Asset Management is a wholly owned subsidiary whose primary focus is the engine management and consulting business. Willis Asset Management had 362 engines, excluding WLFC engines, under management as of December 31, 2020.
COMPETITION
The markets for our products and services are very competitive, and we face competition from a number of sources. These competitors include aircraft engine and aircraft parts manufacturers, aircraft and aircraft engine lessors, airline and aircraft service and repair companies and aircraft and aircraft engine spare parts distributors. Many of our competitors have substantially greater resources than us. Those resources may include greater name recognition, larger product lines, complementary lines of business, greater financial, marketing, information systems and other resources. In addition, equipment manufacturers, aircraft maintenance providers, FAA certified repair facilities and other aviation aftermarket suppliers may vertically integrate into the markets that we serve, thereby significantly increasing industry competition and negatively impacting the Company. We can give no assurance that competitive pressures will not materially and adversely affect our business, financial condition or results of operations.
We compete primarily with aircraft engine manufacturers as well as with other aircraft engine lessors. It is common for commercial aircraft operators and MROs to utilize several leasing companies to meet their aircraft engine needs and to minimize reliance on a single leasing company.
7

Table of Contents
Our competitors compete with us in many ways, including pricing, technical expertise, lease flexibility, engine availability, supply reliability, customer service and the quality and condition of engines. Many of our competitors have greater financial resources than we do, or are affiliates of larger companies. We emphasize the quality of our portfolio of aircraft engines, supply reliability and high level of customer service to our aircraft equipment lessees. We focus on ensuring adequate aircraft engine availability in high-demand locations, dedicate large portions of our organization to building relationships with lessees, maintain close day-to-day coordination with lessees and have developed an engine pooling arrangement that allows pool members quick access to available spare aircraft engines.
INSURANCE
In addition to requiring full indemnification under the terms of our leases, we require our lessees to carry the types of insurance customary in the air transportation industry, including comprehensive third-party liability insurance and physical damage and casualty insurance. We require that we be named as an additional insured on liability insurance with ourselves and our lenders normally identified as the loss payee for damage to the equipment on policies carried by lessees. We monitor compliance with the insurance provisions of the leases. We also carry contingent physical damage and third-party liability insurance as well as product liability insurance.
GOVERNMENT REGULATION
Our customers are subject to a high degree of regulation in the jurisdictions in which they operate. For example, the FAA regulates the manufacture, repair and operation of all aircraft operated in the United States and equivalent regulatory agencies in other countries, such as the European Aviation Safety Agency (“EASA”) in Europe, regulate aircraft operated in those countries. Such regulations also indirectly affect our business operations. All aircraft operated in the United States must be maintained under a continuous condition-monitoring program and must periodically undergo thorough inspection and maintenance. The inspection, maintenance and repair procedures for commercial aircraft are prescribed by regulatory authorities and can be performed only by certified repair facilities utilizing certified technicians. The FAA can suspend or revoke the authority of air carriers or their licensed personnel for failure to comply with regulations and ground aircraft if their airworthiness is in question.
While our leasing and reselling business is not regulated, the aircraft, engines and related parts that we purchase, lease and sell must be accompanied by documentation that enables the customer to comply with applicable regulatory requirements. Furthermore, before parts may be installed in an aircraft, they must meet certain standards of condition established by the FAA and/or the equivalent regulatory agencies in other countries. Specific regulations vary from country to country, although regulatory requirements in other countries are generally satisfied by compliance with FAA requirements. With respect to a particular engine or engine component, we utilize FAA and/or EASA certified repair stations to repair and certify engines and components to ensure marketability.
Governmental regulations where the related airframe is registered, and where the aircraft is operated, stipulate noise and emissions levels restrictions. For example, jurisdictions throughout the world have adopted noise regulations which require all aircraft to comply with Stage III noise requirements. In addition to the current Stage III compliance requirements, the United States and the International Civil Aviation Organization, or “ICAO,” have adopted a more stringent set of “Stage IV” standards for noise levels which apply to engines manufactured or certified from 2006 onward. At this time, the United States regulations do not require any phase-out of aircraft that qualify only for Stage III compliance, but the European Union has established a framework for the imposition of operating limitations on non-Stage IV aircraft.
As of December 31, 2020, most of the engines in our lease portfolio are Stage IV engines and are generally suitable for use on one or more commonly used aircraft.
We believe that the aviation industry will be subject to continued regulatory activity. Additionally, increased oversight will continue to originate from the quality assurance departments of airline operators. We have been able to meet all such requirements to date, and believe that we will be able to meet any additional requirements that may be imposed. We cannot give assurance, however, that new, more stringent government regulations will not be adopted in the future or that any such new regulations, if enacted, would not have a material adverse impact on us.
FINANCING/SOURCE OF FUNDS
We, directly or through our Willis Engine Structured Trust III, IV, and V (“WEST III”, “WEST IV” and “WEST V”) asset-backed securitizations (“ABS”) typically acquire engines with a combination of equity capital and funds borrowed from financial institutions. In order to facilitate financing and leasing of engines, each engine is generally owned through a statutory or common law trust that is wholly owned by us or our subsidiaries. We usually borrow up to 85% of an engine purchase price. Substantially all of our assets secure our related indebtedness. We typically acquire engines from airlines, engine manufacturers or from other lessors. From time to time, we selectively acquire engines prior to a firm commitment to lease or sell the engine, depending on the price of the
8

Table of Contents
engine and market demand with the expectation that we can lease or sell such engines in the future. Additionally, for discrete financing purposes, we will enter into bi-lateral and preferred financing arrangements from time to time.
EMPLOYEES
As of December 31, 2020, we had 232 total employees, of which 217 are full-time employees (excluding consultants), in sales and marketing, technical service and administration. During 2020, 9% of our employees have been either furloughed, or subject to a form of reduced compensation. None of our employees are covered by a collective bargaining agreement and we believe our employee relations are satisfactory.
ITEM 1A.    RISK FACTORS
The following risk factors and other information included in this Annual Report should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks occur, our business, financial condition, operating results, and cash flows could be materially and adversely affected.
RISKS RELATING TO OUR BUSINESS
Risks Related to Our Operations
Our business has been and will continue to be negatively impacted by the recent COVID-19 outbreak, and COVID-19 related impacts have had a material adverse effect on the Company’s business, operating results and financial condition.

The worldwide spread of the COVID-19 virus has resulted in a global slowdown of economic activity. While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, it has had an adverse effect on the global economy and the ultimate societal and economic impact of the COVID-19 pandemic remains unknown. In particular, the ongoing COVID-19 pandemic has caused significant disruptions to the airline industry that continue to persist and result in reduced demand for air travel for the foreseeable future. We have experienced, and expect to continue to experience, diminished demand for leases of our engines and aircraft as a result of the COVID-19 pandemic, which has significantly disrupted domestic and international passenger airline travel. These COVID-19 pandemic-related impacts have, in the aggregate, had a material adverse impact on our business, results of operations and financial condition. For example, for the year ended December 31, 2020, our lease rent revenue decreased by 25.1% and our spare parts and equipment sales declined by 75.1% when compared to 2019. We also agreed to rent concessions, which resulted in a total reduction of rent revenues of $6.5 million for the year ended December 31, 2020 as a result of impacts from COVID-19. We are unable to predict the extent or duration of these impacts as they will depend on future developments, which are highly uncertain and cannot be predicted at this time, such as the duration of the coronavirus pandemic, the incidents and extent of outbreaks, the availability and effectiveness of treatments for COVID-19, such as vaccines, and the timing and extent that passenger airline travel will increase and recover to levels before the pandemic. Challenges for our Company include possible declines in the values of aircraft, engines and related aircraft equipment in our portfolio, lower market rents for engines and aircraft offered for lease by us, and continued and further reductions in demand by potential and existing customers for additional or replacement engines offered by us. In addition, the significant cash flow issues faced by airlines, including some of our customers, may cause some of our customers to be unable to timely meet their lease obligations to us or go out of business. Any nonpayment or late payment of lease payments by a significant lessee or combination of lessees could in turn impose limits on our ability to fund our ongoing operations. Even after the COVID-19 pandemic has subsided, we may experience materially adverse impacts to our business due to a lingering economic recession or any resulting depression. Additionally, concerns over the economic impact of COVID-19 have caused extreme volatility in financial and other capital markets which has and may continue to adversely impact the market value of our common stock and may adversely affect our ability to access capital markets. In addition, as a result of the COVID-19 pandemic, we have temporarily closed our headquarters and other offices, required our employees and contractors to predominately work remotely, and implemented travel restrictions, all of which represent a significant disruption in how we operate our business. Also, during 2020, 9% of our employees have been either furloughed, or subject to a form of reduced compensation. The operations of our partners and customers have likewise been disrupted.
We are affected by the risks faced by commercial aircraft operators and MROs because they are our customers.
We operate as a supplier of engines, aircraft and related parts (“aviation equipment”) to commercial aircraft operators and MROs and are indirectly impacted by all the risks facing commercial aircraft operators and MROs today. The ability of each lessee to perform its obligations under the relevant lease and the demand of companies to purchase aviation equipment will depend primarily on the lessee’s (or in the case of parts and materials, the purchaser’s) financial condition and cash flow. This may be affected by factors beyond our control, including:
general economic conditions in the countries in which our customers operate, including changes in gross domestic product;
9

Table of Contents
demand for air travel and air cargo shipments;
increased competition;
the availability of government support, which may be in the form of subsidies, loans (including export/import financing), guarantees, equity investments or otherwise;
changes in interest rates and the availability and terms of credit available to commercial aircraft operators including covenants in financings, terms imposed by credit card issuers, collateral posting requirements contained in fuel hedging contracts and the ability of airlines and MROs to make or refinance principal payments as they come due;
geopolitical and other events, including concerns about security, terrorism, war, pandemics and similar public health concerns and political instability; 
changing political conditions, including risk of rising protectionism and imposition of new trade barriers;
inclement weather and natural disasters;
environmental compliance and other regulatory costs, including noise regulations, emissions regulations, climate change initiatives, and aircraft age limitations;
cyber risk, including information hacking, viruses and malware;
labor contracts, labor costs and strikes or stoppages at commercial aircraft operators;
operating costs, including the price and availability of fuel, maintenance costs, and insurance costs and coverages;
technological developments;
airport access and air traffic control infrastructure constraints;
industry capacity, utilization and general market conditions; and
market prices for aviation equipment.
To the extent that our customers are negatively affected by these risk factors, we may experience:
a decrease in demand for some types of aviation equipment in our portfolio;
greater credit risks from our customers, and a higher incidence of lessee defaults and corresponding repossessions;
an inability to quickly lease engines and aircraft on commercially acceptable terms when these become available through our purchase commitments and regular lease terminations;
shorter lease terms, which may increase our expenses and reduce our utilization rates; and
fewer opportunities to manage aviation equipment for other companies, and/or less profitable terms.
Our operating results vary and comparisons to results for preceding periods may not be meaningful.
Due to a number of factors, including the risks described in this ITEM 1A, our operating results may fluctuate. These fluctuations may also be caused by:
the timing and number of purchases and sales of engines or aircraft;
the timing and amount of maintenance reserve revenues recorded resulting from the termination of long term leases, for which significant amounts of maintenance reserves may have accumulated;
the termination or announced termination of production of particular aircraft and engine types;
the retirement or announced retirement of particular aircraft models by aircraft operators;
the operating history of any particular engine, aircraft or engine or aircraft model;
10

Table of Contents
the length of our operating leases; and
the timing of necessary overhauls of engines and aircraft.
These risks may reduce our utilization rates, lease margins, maintenance reserve revenues and proceeds from engine and aircraft sales, and result in higher legal, technical, maintenance, storage and insurance costs related to repossession and the cost of engines being off lease. As a result of the foregoing and other factors, the availability of engines and aircraft for lease or sale periodically experiences cycles of oversupply and undersupply of given engine or aircraft models. The incidence of an oversupply of engines or aircraft may produce substantial decreases in lease rates and the appraised and resale value of aviation equipment and may increase the time and costs incurred to lease or sell engines.
We anticipate that fluctuations from period to period will continue in the future. As a result, we believe that comparisons to results for preceding periods may not be meaningful and that results of prior periods should not be relied upon as an indication of our future performance.
We and our customers operate in a highly regulated industry and changes in laws or regulations may adversely affect our ability to lease or sell our engines or aircraft.
Licenses and consents
We and our customers operate in a highly regulated industry. A number of our leases require specific governmental or regulatory licenses, consents or approvals. These include consents for certain payments under the leases and for the export, import or re-export of our engines or aircraft. Consents needed in connection with future leasing or sale of our engines or aircraft may not be received timely or have economically feasible terms. Any of these events could adversely affect our ability to lease or sell engines or aircraft.
Civil aviation regulation
Users of engines and aircraft are subject to general civil aviation authorities, including the FAA and the EASA, who regulate the maintenance of engines and issue airworthiness directives. Airworthiness directives typically set forth special maintenance actions or modifications to certain engine and aircraft types or series of specific engines that must be implemented for the engine or aircraft to remain in service. Also, airworthiness directives may require the lessee to make more frequent inspections of an engine, aircraft or particular engine parts. Each lessee of an engine or aircraft generally is responsible for complying with all airworthiness directives. However, if the engine or aircraft is off lease, we may be forced to bear the cost of compliance with such airworthiness directives, and if the engine or aircraft is leased, subject to the terms of the lease, if any, we may be forced to share the cost of compliance.
Environmental regulation
Governmental regulations of noise and emissions levels may be applicable where the related airframe is registered, and where the aircraft is operated. For example, jurisdictions throughout the world have adopted noise regulations which require all aircraft to comply with Stage III noise requirements. In addition to the current Stage III compliance requirements, the United States and the ICAO have adopted a more stringent set of “Stage IV” standards for noise levels which apply to engines manufactured or certified from 2006 onward. At this time, the United States regulations do not require any phase-out of aircraft that qualify only for Stage III compliance, but the European Union has established a framework for the imposition of operating limitations on non-Stage IV aircraft. These regulations could limit the economic life of our engines and aircraft or reduce their value, could limit our ability to lease or sell the non-compliant engines or aircraft or, if modifications are permitted, require us to make significant additional investments in the engines or aircraft to make them compliant.
The United States and other jurisdictions are imposing more stringent limits on the emission of nitrogen oxide, carbon monoxide and carbon dioxide emissions from engines, consistent with ICAO standards. These limits generally apply only to engines manufactured after 1999. In 2005, the European Union launched an Emissions Trading System limiting greenhouse gas emissions by various industries and persons, including aircraft operators.  Concerns over global warming, climate change or other environmental issues could result in more stringent limitations on the operation of older, non-compliant engines and aircraft.
Failure to comply with anti-corruption laws, trade controls, economic sanctions and similar laws and regulations could subject us to penalties and other adverse consequences.
Our operations are subject to U.S. and foreign anti-corruption and trade control laws and regulations, such as the Foreign Corrupt Practices Act (“FCPA”) and other anti-bribery laws in other jurisdictions, including the UK Bribery Act 2010, export controls and economic sanctions programs, including those administered by the U.S. Department of State, U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) and the Bureau of Industry and Security (“BIS”) of the Department of Commerce.
11

Table of Contents
As part of our business, we may deal with state-owned business enterprises, the employees of which are considered foreign officials for purposes of the FCPA’s prohibition on providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage. In addition, we must comply with various laws and regulations relating to the export of products and technology from the U.S. and other countries having jurisdiction over our operations. Obtaining the necessary export license or other authorization for a particular lease may be time-consuming and may result in the delay or loss of leasing opportunities.
We are also subject to certain economic and trade sanctions programs that are administered by OFAC, which prohibit or restrict transactions to or from or dealings with specified countries, their governments, and in certain circumstances, their nationals, and with individuals and entities that are specially-designated nationals of those countries. It is possible that, without our knowledge, engines or other equipment that we export end up in the possession of individuals or entities that have been designated by OFAC or are located in a country subject to sanctions.
We have established policies and procedures designed to assist with our compliance with these laws and regulations. However, maintaining and enhancing our policies and procedures in response to changing laws and regulations or business circumstances can be costly and place restrictions on our operations, and we cannot guarantee that the precautions we take will prevent violations of anti-corruption and trade control laws and regulations. Violations of these regulations are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as criminal fines and imprisonment. In addition, the costs associated with responding to a government investigation and remediating any violations can be substantial. Accordingly, violations could adversely affect, among other things, our reputation, business, financial condition, results of operations and cash flows.
Our aircraft, engines or parts could cause bodily injury or property damage, exposing us to liability claims.
We are exposed to potential liability claims if the use of our aircraft, engines or parts is alleged to have caused bodily injury or property damage. Our leases require our lessees to indemnify us against these claims and to carry insurance customary in the air transportation industry, including liability, property damage and hull all risks insurance on our engines and on our aircraft at agreed upon levels. We can give no assurance that one or more catastrophic events will not exceed insurance coverage limits or that lessees’ insurance will cover all claims that may be asserted against us. Any insurance coverage deficiency or default by lessees under their indemnification or insurance obligations may reduce our recovery of losses upon an event of loss.
Our financial reporting for lease revenue may be adversely impacted by any future change to lease accounting, as well as any future change to current tax laws or accounting principles pertaining to operating or other lease financing.
Our lessees enjoy favorable accounting and tax treatment generally by using operating leases. Changes in tax laws or accounting principles that make operating leases less attractive to our lessees could have a material adverse effect on demand for our leases and on our business.
Our consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles (“GAAP”).  If there are future changes in GAAP with regard to how we and our customers must account for leases, it could change the way we and our customers conduct our businesses and, therefore, could have the potential to have an adverse effect on our business.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The FASB issued ASU 2016-02 to increase transparency and comparability among organizations recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under ASU 2016-02, lessors will account for leases using an approach that is substantially equivalent to existing GAAP for sales-type leases, direct financing leases and operating leases. Unlike prior guidance, however, a lease with collectability uncertainties may be classified as a sales-type lease. If collectability of lease payments, plus any amount necessary to satisfy a lessee residual value guarantee, is not probable, lease payments received will be recognized as a deposit liability and the underlying assets will not be derecognized until collectability of the remaining amounts becomes probable. The amendments in this accounting standard update were effective for the Company on January 1, 2019, with early adoption permitted. The Company adopted this accounting standard update effective January 1, 2019. The Company adopted the standard using the optional transition method with no restatement of comparative periods and a cumulative effect adjustment recognized as of the date of adoption.
We may not be adequately covered by insurance.
By virtue of holding title to engines and aircraft, parties suffering damage as a result of malfunction of an engine or aircraft may assert that lessors are strictly liable for losses resulting from the operation of the engines and aircraft. Such liability may be asserted even under circumstances in which the lessor is not directly controlling the operation of the relevant aircraft. While we maintain contingent insurance covering losses not covered by our lessees’ insurance, such coverage may not be available in circumstances where the lessees’ insurance coverage is insufficient. In addition, if a lessee is not obligated to maintain sufficient insurance, we may
12

Table of Contents
incur the costs of additional insurance coverage during the related lease. We are required under certain of our debt facilities to obtain political risk insurance for leases to lessees in specified jurisdictions. We can give no assurance that such insurance will be available at commercially reasonable rates, if at all.
We and our lenders generally are named as additional insureds on liability insurance policies carried by our lessees and are usually the loss payees for damage to our engines and aircraft. However, an uninsured or partially insured claim, or a claim for which third-party indemnification is not available, could have a material adverse effect upon us. A loss of an aircraft where we lease the airframe, an engine or other leased equipment could result in significant monetary claims for which there may not be sufficient insurance coverage.
Natural disasters, public health emergencies, such as the outbreak of the COVID-19 virus, and other business disruptions could cause significant harm to our customer base, which may materially adversely affect our business, results of operations, and financial condition.

Our business has been adversely impacted by the effects of the COVID-19 pandemic, which has significantly impacted the airline industry. A number of countries have imposed travel restrictions and mandatory quarantine periods causing significant economic disruption, a reduction in commercial airline traffic and flight cancellations. The continuing spread of the virus to other countries and regions may result in the imposition of additional restrictions, increased flight cancellations and greater reluctance to travel, all of which may lead to greater economic disruption and a broader adverse impact on air travel and the aviation industry, resulting in lower demand for leases of our aircraft and engines and possibly impacting the ability of our lessees to satisfy their payment obligations to us. The International Air Transport Association recently estimated that the airline industry has lost over $118 billion in sales due to reductions in air travel and flight cancellations as a result of the coronavirus.
Our U.S. and international operations and warehouse facilities are also susceptible to losses and interruptions caused by floods, hurricanes, earthquakes, typhoons, and similar natural disasters, as well as power outages, telecommunications failures, and similar events.
A decrease in air travel, lack of demand for air travel or downturn in the aviation industry caused by public health emergencies or natural disasters could result in lower utilization of our engine and aircraft assets, which could in turn materially and adversely affect our business, financial condition and results of operations. In addition, the occurrence of natural disasters and health emergency or similar events in any of the regions in which we operate could disrupt the operations of our business.
Risks Related to Our Aviation Assets
The value and lease rates of our engines and aircraft could decline.
The value of a particular model of engine depends heavily on the types of aircraft on which it may be installed and the supply of available engines. We believe values of engines tend to be relatively stable so long as there is sufficient demand for the host aircraft, and the demand for aircraft depend on numerous factors, including age, technology, and customer preference. We believe the value of an engine begins to decline rapidly once the host aircraft begins to be retired from service and/or used for spare parts in significant numbers. Certain types of engines and aircraft may be used in significant numbers by commercial aircraft operators that are currently experiencing financial difficulties. If such operators were to go into liquidation or similar proceedings, the resulting over-supply of engines and aircraft from these operators could have an adverse effect on the demand for the affected engine and aircraft types and the values of such aviation equipment.
Upon termination of a lease, we may be unable to enter into new leases or sell the affected aviation equipment on acceptable terms.
We directly or indirectly own the aviation equipment that we lease to customers and bear the risk of not recovering our entire investment through leasing and selling the applicable aircraft and engines. Upon termination of a lease, we seek to enter a new lease or to sell or part-out the applicable aviation equipment. We also selectively sell aviation equipment on an opportunistic basis. We cannot give assurance that we will be able to find, in a timely manner, a lessee or a buyer for aviation equipment coming off-lease or for the associated parts. If we do find a lessee, we may not be able to obtain satisfactory lease rates and terms (including maintenance and redelivery conditions) or rates and terms comparable to our current leases, and we can give no assurance that the creditworthiness of any future lessee will be equal to or better than that of the existing lessees of our engines. Engine leases with terms of 12 months or less, including engines off-lease, which as of December 31, 2020 constituted approximately 37.1% of our leased engines, may frequently need to be remarketed. We face the risk that we may not be able to keep our engines on lease consistently.
13

Table of Contents
Although leases of engines account for most of our revenue, leases of aircraft expose us to greater risks than leases of engines and these risks could materially impact our financial condition and results of operations.
We are exposed to a number of risks related to our aircraft leasing activities. For example, leases of aircraft subject us to greater maintenance risks because the maintenance fees we charge may not cover aircraft maintenance costs that may be higher than anticipated. In addition, we face greater credit risk from lessees in this business as the assets that we lease to them tend to have higher net book values than individual engines. Moreover, aircraft technology is constantly improving and, as a result, aircraft of a particular model and type tend to become obsolete and less in demand over time, when newer, more advanced and efficient aircraft become available. Consequently, we may experience difficulty in leasing or selling aircraft. Any of these risks could have a material adverse impact on our financial condition and results of operations.
We carry the risk of maintenance for our leased assets. Our maintenance reserves may be inadequate or lessees may default on their obligations to perform maintenance, which could increase our expenses.
Under most of our engine and aircraft leases, the lessee makes monthly maintenance reserve payments to us based on the asset’s usage and management’s estimate of maintenance costs. A certain level of maintenance reserve payments on the WEST III, WEST IV and WEST V engines are held in related engine reserve restricted cash accounts. Generally, the lessee under long term leases is responsible for all scheduled maintenance costs, even if they exceed the amounts of maintenance reserves paid. As of December 31, 2020, 113 of our leases comprising approximately 34.7% of the net book value of our on-lease assets do not provide for any monthly maintenance reserve payments to be made by lessees, and we can give no assurance that future leases of our engines or aircraft will require maintenance reserves. In some cases, including engine and aircraft repossessions, we may decide to pay for refurbishments or repairs if the accumulated use fees are inadequate.
We can give no assurance that our operating cash flows and available liquidity reserves, including the amounts held in the reserve restricted cash accounts, will be sufficient to fund necessary engine and aircraft maintenance. Actual maintenance reserve payments by lessees and other cash that we receive may be significantly less than projected as a result of numerous factors, including defaults by lessees. Furthermore, we can provide no assurance that lessees will meet their obligations to make maintenance reserve payments or perform required scheduled maintenance or, to the extent that maintenance reserve payments are insufficient, to cover the cost of refurbishments or repairs.
Failures by lessees to meet their maintenance and recordkeeping obligations under our leases could adversely affect the value of our leased engines and aircraft and our ability to lease the engines and aircraft in a timely manner following termination of the leases.
The value and income producing potential of an engine or aircraft depends heavily on it being maintained in accordance with an approved maintenance system and complying with all applicable governmental directives and manufacturer requirements. In addition, for an engine or aircraft to be available for service, all records, logs, licenses and documentation relating to maintenance and operations of the engine or aircraft must be maintained in accordance with governmental and manufacturer specifications.
Our leases make the lessees primarily responsible for maintaining the engines or aircraft, keeping related records and complying with governmental directives and manufacturer requirements. Over time, certain lessees have experienced, and may experience in the future, difficulties in meeting their maintenance and recordkeeping obligations as specified by the terms of our leases.
Our ability to determine the condition of the engines or aircraft and whether the lessees are properly maintaining our assets is generally limited to the lessees’ reporting of monthly usage and any maintenance performed, confirmed by periodic inspections performed by us and third parties. A lessee’s failure to meet its maintenance or recordkeeping obligations under a lease could result in:
a grounding of the related engine or aircraft;
a repossession that would likely cause us to incur additional and potentially substantial expenditures in restoring the engine or aircraft to an acceptable maintenance condition;
a need to incur additional costs and devote resources to recreate the records prior to the sale or lease of the engine or aircraft;
loss of lease revenue while we perform refurbishments or repairs and recreate records; and
a lower lease rate and/or shorter lease term under a new lease entered into by us following repossession of the engine or aircraft.
Any of these events may adversely affect the value of the engine or aircraft, unless and until remedied, and reduce our revenues and increase our expenses. If aviation equipment is damaged during a lease and we are unable to recover from the lessee or though insurance, we may incur a loss.
14

Table of Contents
The advent of superior engine and aircraft technology and higher production levels could cause our existing portfolio of aviation equipment to become outdated and therefore less desirable.
As manufacturers introduce technological innovations and new types of engines and aircraft, certain engines and aircraft in our existing portfolio of aviation equipment may become less desirable to potential lessees or purchasers. This next generation of engines and aircraft is expected to deliver improved fuel consumption and reduced noise and emissions with lower operating costs compared to current-technology aircraft.
The introduction of new models of engines and aircraft and the potential resulting overcapacity in supply, could adversely affect the residual values and the lease rates for our engines and aircraft, our ability to lease or sell our engines and aircraft on favorable terms, or at all, or result in us recording future impairment charges.
Our customers face intense competition and some carriers are in troubled financial condition.
As a general matter, commercial aircraft operators with weak capital structures are more likely than well-capitalized operators to seek operating leases, and, at any point in time, investors should expect a varying number of lessees and sub-lessees to experience payment difficulties. As a result of such commercial aircraft operators’ weak financial condition and lack of liquidity, a portion of lessees over time may be significantly in arrears in their rental or maintenance payments and may default on their lease obligations. Given the size of our portfolio of engines and aircraft, we expect that from time to time some lessees will be slow in making, or will fail to make, their payments in full under their leases. As of December 31, 2020, we had an aggregate of approximately $4.6 million in lease rent and $1.9 million in maintenance reserve payments more than 30 days past due as compared to $2.7 million in lease rent and $3.8 million in maintenance reserve payments more than 30 days past due as of December 31, 2019. Our inability to collect receivables or to repossess engines, aircraft or other leased equipment in the event of a default by a lessee could have a material adverse effect on us.
We may not correctly assess the credit risk of each lessee or may not be in a position to charge risk-adjusted lease rates, and lessees may not be able to continue to perform their financial and other obligations under our leases in the future. A delayed, reduced or missed rental payment from a lessee may decrease our revenues and cash flow and may adversely affect our ability to make payments on our indebtedness or to comply with financial covenants in our loan documents (see “Our Financing Facilities Impose Restrictions on our Operations”). While we typically experience some level of delinquency under our leases, default levels may increase over time, particularly as our portfolio of engines and aircraft ages and if economic conditions deteriorate.
Various airlines have filed for bankruptcy in the United States and in foreign jurisdictions, with some seeking to restructure their operations and others ceasing operations entirely. In the case of airlines that are restructuring, such airlines often reduce their flights or eliminate the use of certain types of aircraft and the related engine types. Applicable bankruptcy laws often allow these airlines to terminate leases early and to return our engines or aircraft without meeting the contractual return conditions. In that case, we may not be paid the full amount, or any part, of our claims for these lease terminations. Alternatively, we might negotiate agreements with those airlines under which the airline continues to lease the engine or aircraft, but under modified lease terms. If requests for payment restructuring or rescheduling are made and granted, reduced or deferred rental payments may be payable over all or some part of the remaining term of the lease, although the terms of any revised payment schedules may be unfavorable and such payments may not be made.  In the case of an airline which has ceased operations entirely, in addition to the risk of nonpayment, we face the enhanced risk of deterioration or total loss of an engine or aircraft while it is under uncertain custody and control. In that case, we may be required to take legal action to secure the return of the engine or aircraft and its records or, alternatively, to negotiate a settlement under which we can immediately recover the engine or aircraft and its records in exchange for waiving subsequent legal claims.
We may not be able to repossess an engine or aircraft when the lessee defaults, and even if we are able to repossess the engine or aircraft, we may have to expend significant funds in the repossession, remarketing and leasing of the asset.
When a lessee defaults and such default is not cured in a timely manner, we typically seek to terminate the lease and repossess the engine or aircraft. If a defaulting lessee contests the termination and repossession or is under court protection, enforcement of our rights under the lease may be difficult, expensive and time-consuming. We may not realize any practical benefits from our legal rights and we may need to obtain consents to export the engine or aircraft. As a result, the relevant asset may be off-lease or not producing revenue for a prolonged period. In addition, we will incur direct costs associated with repossessing our engine or aircraft. These costs may include legal and similar costs, the direct costs of transporting, storing and insuring the engine or aircraft, and costs associated with necessary maintenance and recordkeeping to make the asset available for lease or sale. During this time, we will realize no revenue from the leased engine or aircraft, and we will continue to be obligated to pay any debt financing applicable to the asset. If an engine is installed on an airframe, the airframe may be owned by an aircraft lessor or other third party. Our ability to recover engines installed on airframes may depend on the cooperation of the airframe owner.
15

Table of Contents
Risks Related to Our Orders of New Engines
We have committed to purchase new engines in 2021 with an aggregate value of up to $215.5 million. Our ability to lease these assets on favorable terms, if at all, may be adversely affected by risks to the commercial airline industry generally. If we are unable to obtain commitments for the remaining deliveries or otherwise satisfy our contractual obligations to the engine manufacturers, we will be subject to several potential risks, including:
forfeiting advance deposits, as well as incurring certain significant costs related to these commitments such as contractual damages and legal, accounting and financial advisory expenses;
defaulting on any future lease commitments we may have entered into with respect to these engines, which could result in monetary damages and strained relationships with lessees;
failing to realize the benefits of purchasing and leasing the engines; and
risking harm to our business reputation, which would make it more difficult to purchase and lease engines in the future on agreeable terms, if at all.
Risks Relating to Our Capital Structure
Our future growth and profitability will depend on our ability to acquire aviation equipment and make other strategic investments.  As a result, our inability to obtain sufficient capital to finance these acquisitions would constrain our ability to grow our portfolio and to increase our revenues.
Our business is capital intensive and highly leveraged. Accordingly, our ability to successfully execute our business strategy and maintain our operations depends on the availability and cost of debt and equity capital. Additionally, our ability to borrow against our portfolio of engines, aircraft and strategic investments is dependent, in part, on the appraised value of such engines, aircraft and investments. If the appraised value of our portfolio declines, we may be required to either refrain from borrowings or reduce the principal outstanding under certain of our debt facilities.
A significant increase in our cost to acquire engines and aircraft, or in our cost of strategic investments, due to increased interest expense or cost of capital will make it more difficult for us to make accretive acquisitions. The disruptions may also adversely affect our ability to raise additional capital to fund our continued growth. Although we have adequate debt commitments from our lenders, assuming they are willing and able to meet their contractual obligation to lend to us, market disruptions may adversely affect our ability to raise additional equity capital to fund future growth, requiring us to rely on internally generated funds. This would lower our rate of capital investment.
We can give no assurance that the capital we need will be available to us on favorable terms, or at all. Our inability to obtain sufficient capital, or to renew or expand our credit facilities, could result in increased funding costs and would limit our ability to:
meet the terms and maturities of our existing and future debt facilities;
add new equipment to our portfolio;
fund our working capital needs and maintain adequate liquidity; and
finance other growth initiatives.
Our financing facilities impose restrictions on our operations.
We have, and expect to continue to have, various credit and financing arrangements with third parties. These financing arrangements are secured by all or substantially all of our assets. Our existing credit and financing arrangements require us to meet certain financial condition tests. Our revolving credit facility prohibits our purchasing or redeeming stock, or declaring or paying dividends on shares of any class or series of our common or preferred stock if an event of default under such facility has or will occur and remains uncured. The agreements governing our debt, including the issuance of notes by WEST III, WEST IV and WEST V, also include restrictive financial covenants. A breach of those and other covenants could, unless waived or amended by our creditors, result in a cross-default to other indebtedness and an acceleration of all or substantially all of our debt. We have obtained such waivers and amendments to our financing agreements in the past, but we cannot provide any assurance that we will receive such waivers or amendments in the future if we require them. If our outstanding debt is accelerated at any time, we likely would have little or no cash or other assets available after payment of our debts, which could cause the value or market price of our outstanding equity securities to decline significantly and we would have few, if any, assets available for distributions to our equity holders in liquidation.
16

Table of Contents
We are exposed to interest rate risk on our leases, which could have a negative impact on our margins.
We are affected by fluctuations in interest rates. Our lease rates are generally fixed, and a portion of our debt bears variable rate interest based on one-month London Interbank Offered Rate (“LIBOR”), so changes in interest rates directly affect our lease margins. From time to time, we seek to reduce our interest rate volatility and uncertainty through hedging with interest rate derivative contracts with respect to a portion of our debt. Our lease margins, as well as our earnings and cash flows may be adversely affected by increases in interest rates. To the extent we do not have hedges or other derivatives in place or if our hedges or other derivatives do not mitigate our interest rate exposure from an economic standpoint, we would be adversely affected by increasing interest rates. As reported by Intercontinental Exchange, the one-month LIBOR was approximately 0.14% and 1.76% on December 31, 2020 and December 31, 2019, respectively.
Changes in the method of determining LIBOR, or the replacement of LIBOR with an alternative reference rate, may adversely affect interest rates on our current or future indebtedness and may otherwise adversely affect our financial condition and results of operations.
Certain of our indebtedness is made at variable interest rates that use LIBOR (or metrics derived from or related to LIBOR), as a benchmark for establishing the interest rate. On July 27, 2017, the United Kingdom’s Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. Subsequently, the United Kingdom’s Financial Conduct Authority announced the date has been moved to June 2023. These reforms may cause LIBOR to cease to exist, new methods of calculating LIBOR to be established, or alternative reference rates to be established. The potential consequences cannot be fully predicted and could have an adverse impact on the market value for or value of LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us. Changes in market interest rates may influence our financing costs, returns on financial investments and the valuation of derivative contracts and could reduce our earnings and cash flows. In addition, any transition process may involve, among other things, increased volatility or illiquidity in markets for instruments that rely on LIBOR, reductions in the value of certain instruments or the effectiveness of related transactions such as hedges, increased borrowing costs, uncertainty under applicable documentation, or difficult and costly consent processes. This could materially and adversely affect our results of operations, cash flows, and liquidity. We cannot predict the effect of the potential changes to LIBOR or the establishment and use of alternative rates or benchmarks.

In March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting", which provides temporary optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Among other things, for all types of hedging relationships, the guidance allows an entity to change the reference rate and other critical terms related to reference rate reform without having to remeasure the value or reassess a previous accounting determination. The amendments in this guidance should be applied on a prospective basis and, for companies with a fiscal year ending December 31, are effective from January 1, 2020 through December 31, 2022. The Company adopted this guidance effective January 1, 2020. When the transition occurs, the Company expects to apply this expedient to its existing debt instruments and interest rate swaps that reference LIBOR, and to any other new transactions that reference LIBOR or another reference rate that is discontinued, through December 31, 2022. The adoption of this ASU did not impact the Company’s consolidated financial statements.
An increase in interest rates or in our borrowing margin would increase the cost of servicing our debt and could reduce our profitability.
A significant portion of our outstanding debt bears interest at floating rates. As a result, to the extent we have not hedged against rising interest rates, an increase in the applicable benchmark interest rates would increase our cost of servicing our debt and could materially and adversely affect our results of operations, financial condition, liquidity and cash flows.
In addition, we regularly refinance our indebtedness. If interest rates or our borrowing margins increase between the time an existing financing arrangement was consummated and the time such financing arrangement is refinanced, the cost of servicing our debt would increase and our results of operations, financial condition, liquidity and cash flows could be materially and adversely affected.
We have risks in managing our portfolio of engines to meet customer needs.
The relatively long life cycles of aircraft and jet engines can be shortened by world events, government regulation or customer preferences. We seek to manage these risks by trying to anticipate demand for particular engine and aircraft types, maintaining a portfolio mix of engines that we believe is diversified and that will have long-term value and will be sought by lessees in the global market for jet engines, and by selling engines and aircraft that we expect will experience obsolescence or declining usefulness in the foreseeable future.
17

Table of Contents
The WEST III securitization facility includes restrictions and limitations on the sale of assets in that facility including, with respect to pro forma limitations on assets subject to part-out agreements, a 15% limitation on sales prior to August 2019 and 20% thereafter, and also, in certain situations, with respect to a 25% limit on assets sold below a specific dollar threshold.
The WEST IV securitization facility includes restrictions and limitations on the sale of assets in that facility including, with respect to pro forma limitations on assets subject to part-out agreements, a 15% limitation on sales prior to August 2020 and 20% thereafter, and also, in certain situations, with respect to a 25% limit on assets sold below a specific dollar threshold.
The WEST V securitization facility includes restrictions and limitations on the sale of assets in that facility including, with respect to pro forma limitations on assets subject to part-out agreements, a 15% limitation on sales prior to March 2022 and a 20% limitation on sales prior to March 2024, and also, in certain situations, with respect to a 25% limit on assets sold below a specific dollar threshold.
Our inability to maintain sufficient liquidity could limit our operational flexibility and also impact our ability to make payments on our obligations as they come due.
In addition to being capital intensive and highly leveraged, our business also requires that we maintain sufficient liquidity to enable us to contribute the non-financed portion of engine and aircraft purchases as well as to service our payment obligations to our creditors as they become due, despite the fact that the timing and amounts of payments under our leases do not match the timing under our debt service obligations. Our restricted cash is unavailable for general corporate purposes. Accordingly, our ability to successfully execute our business strategy and maintain our operations depends on our ability to continue to maintain sufficient liquidity, cash and available credit under our credit facilities. Our liquidity could be adversely impacted if we are subjected to one or more of the following: a significant decline in lease revenues, a material increase in interest expense that is not matched by a corresponding increase in lease rates, a significant increase in operating expenses, or a reduction in our available credit under our credit facilities. If we do not maintain sufficient liquidity, our ability to meet our payment obligations to creditors or to borrow additional funds could become impaired as could our ability to make dividend payments or other distributions to our equity holders. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Position, Liquidity and Capital Resources.”
RISKS RELATING TO THE COMMON STOCK TRADING PRICE
The Company’s Common Stock trading price may be affected by numerous factors that may impose a financial risk on the Company’s stockholders.
The trading price of our common stock may fluctuate due to many factors, including:
risks relating to our business described in this Annual Report;
sales of our securities by a few stockholders or even a single significant stockholder;
general economic conditions;
changes in accounting mandated under GAAP;
quarterly variations in our operating results;
our financial condition, performance and prospects;
changes in financial estimates by us;
the level, direction and volatility of interest rates and expectations of changes in rates;
the market for securities similar to our common stock; and
changes in our capital structure, including additional issuances by us of debt or equity securities.
In addition, the U.S. stock markets have experienced price and volume volatility that has affected many companies’ stock prices, often for reasons unrelated to the operating performance of those companies.
18

Table of Contents
RISKS RELATING TO OUR FOREIGN OPERATIONS
A substantial portion of our lease revenue comes from foreign customers, subjecting us to divergent regulatory requirements.
For the year ended December 31, 2020, 77% of our lease revenue was generated by leases to foreign customers. Such international leases present risks to us because certain foreign laws, regulations and judicial procedures may not be as protective of lessor rights as those which apply in the United States. We are also subject to risks of foreign laws that affect the timing and access to courts and may limit our remedies when collecting lease payments and recovering assets. None of our leased engines have been expropriated; however, we can give no assurance that political instability abroad and changes in the policies of foreign nations will not present expropriation risks in the future that are not covered by insurance.
Substantially all of our leases require payments in U.S. dollars but many of our customers operate in other currencies; if foreign currencies devalue against the U.S. dollar, our lessees may be unable to make their payments to us.
Substantially all of our current leases require that payments be made in U.S. dollars. If the currency that our lessees typically use in operating their businesses devalues against the U.S. dollar, those lessees could encounter difficulties in making payments in U.S. dollars. Furthermore, many foreign countries have currency and exchange laws regulating international payments that may impede or prevent payments from being paid to us in U.S. dollars. Future leases may provide for payments to be made in euros or other foreign currencies. Any change in the currency exchange rate that reduces the amount of U.S. dollars obtained by us upon conversion of future lease payments denominated in euros or other foreign currencies, may, if not appropriately hedged by us, have a material adverse effect on us and increase the volatility of our earnings. If payments on our leases are made in foreign currency, our risks and hedging costs will increase.
We operate globally and are affected by our customers’ local and regional economic and other risks.
We believe that our customers’ growth and financial condition are driven by economic growth in their service areas. The largest portion of our lease revenues comes from Europe. European airline operations are among the most heavily regulated in the world. At the same time, low-cost carriers have exerted substantial competitive and financial pressure on major European airlines. Low-cost carriers are having similar effects in North America and elsewhere.
Our operations may also be affected by political or economic instability in the areas where we have customers.
We may not be able to enforce our rights as a creditor if a lessee files for bankruptcy outside of the United States.
When a debtor seeks protection under the United States Bankruptcy Code, creditors are automatically stayed from enforcing their rights. In the case of United States-certificated airlines, Section 1110 of the Bankruptcy Code provides certain relief to lessors of aircraft equipment. Section 1110 has been the subject of significant litigation and we can give no assurance that Section 1110 will protect our investment in aircraft or engines in the event of a lessee’s bankruptcy. In addition, Section 1110 does not apply to lessees located outside of the United States and applicable foreign laws may not provide comparable protection.
Liens on our engines or aircraft could exceed the value of such assets, which could negatively affect our ability to repossess, lease or sell a particular engine or aircraft.
Liens that secure the payment of repairers’ charges or other liens may, depending on the jurisdiction, attach to engines and aircraft. Engines also may be installed on airframes to which liens unrelated to the engines have attached. These liens may secure substantial sums that may, in certain jurisdictions or for limited types of liens, exceed the value of the particular engine or aircraft to which the liens have attached. In some jurisdictions, a lien may give the holder the right to detain or, in limited cases, sell or cause the forfeiture of the engine or aircraft. Such liens may have priority over our interest as well as our creditors’ interest in the engines or aircraft, either because they have such priority under applicable local law or because our creditors’ security interests are not filed in jurisdictions outside the United States. These liens and lien holders could impair our ability to repossess and lease or sell the engines or aircraft. We cannot give assurance that our lessees will comply with their obligations to discharge third-party liens on our assets. If they do not, we may, in the future, find it necessary to pay the claims secured by such liens to repossess such assets.
In certain countries, an engine affixed to an aircraft may become an accession to the aircraft and we may not be able to exercise our ownership rights over the engine.
In some jurisdictions, an engine affixed to an aircraft may become an accession to the aircraft, so that the ownership rights of the owner of the aircraft supersede the ownership rights of the owner of the engine. If an aircraft is security for the owner’s obligations to a third-party, the security interest in the aircraft may supersede our rights as owner of the engine. This legal principle could limit our ability to repossess an engine in the event of a lessee bankruptcy or lease default while the aircraft with the engine installed remains in such a jurisdiction. We may suffer a loss if we are not able to repossess engines leased to lessees in these jurisdictions.
19

Table of Contents
Changes to trade policy, tariff, sanction and import/export regulations may have a material adverse effect on our business, financial condition and results of operations.
Changes in U.S. or international, political, regulatory and economic conditions or in laws and policies governing foreign trade and investment in the territories or countries where we currently conduct our business, could adversely affect our business. The executive branch of the United States government has instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S., economic sanctions on corporations or countries, and other government regulations affecting trade between the U.S. and other countries that will affect the manner in which we conduct our business. Trading partners of the United States have also implemented and threatened to implement retaliatory tariffs and/or other impediments to trade.
As a result of new or threatened tariffs, sanctions and/or impediments to trade, both from the United States and other countries, there may be greater restrictions and economic disincentives on international trade. The new or threatened tariffs, sanctions and other changes in trade policy could trigger retaliatory actions by affected countries, and certain foreign governments have instituted or are considering imposing tariffs and/or economic sanctions on certain U.S. goods. We do a significant amount of business that would be impacted by changes to the trade policies of the U.S. and foreign countries (including governmental action related to tariffs, international trade agreements, or economic sanctions). Such changes have the potential to adversely impact the U.S. economy or certain sectors thereof, our industry and the global demand for our products and services, and as a result, could have an adverse effect on our business, financial condition and results of operations.

The effects of the United Kingdom’s withdrawal from the European Union (“Brexit”), including trade agreements, are not yet known and the uncertainty creates challenges and risks which may adversely affect our business.
On June 23, 2016, the UK voted in favor of a referendum to leave the European Union, commonly referred to as “Brexit” and the UK ceased to be a member of the European Union on January 31, 2020. A transition period through December 31, 2020 has been established to allow the UK and the European Union to negotiate the terms of the UK’s withdrawal. However, there is continued uncertainty surrounding the future relationship between the UK and European, including any trade agreements between them, which could adversely affect European and worldwide economic and market conditions, and contribute to instability in global financial and foreign exchange markets. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the United Kingdom determines which European Laws to replace or replicate. The ultimate effects of Brexit will depend on the specific terms of any agreement the UK and the European Union reach to provide access to each other’s respective markets.
We have a presence in the UK and certain European Union countries, including Ireland, and France. During 2020, we derived approximately 77% of our core leasing revenue from international business. The consequences of Brexit could introduce significant uncertainties into global financial markets and adversely impact the markets in which we and our customers operate.
RISKS RELATED TO OUR SMALL SIZE AND CORPORATE STRUCTURE
Intense competition in our industry, particularly with major companies with substantially greater financial, personnel, marketing and other resources, could cause our revenues and business to suffer.
The engine and aircraft leasing industry is highly competitive and global. Our primary competitors include GE Capital Aviation Services, Shannon Engine Support Ltd., Pratt & Whitney, Rolls-Royce Partners Finance and Engine Lease Finance Corporation.
Our primary competitors generally have significantly greater financial, personnel and other resources, as well as a physical presence in more locations, than we do. In addition, competing engine lessors may have lower costs of capital and may provide financial or technical services or other inducements to customers, including the ability to sell or lease aircraft, offer maintenance and repair services or provide other forms of financing that we do not provide. We cannot give assurance that we will be able to compete effectively or that competitive pressures will not adversely affect us.
There is no organized market for the spare engines or the aircraft we purchase. Typically, we purchase engines and aircraft from commercial aircraft operators, engine manufacturers, MROs and other suppliers. We rely on our representatives, advertisements and reputation to generate opportunities to purchase and sell engines and aircraft. The market for purchasing engine and aircraft portfolios is highly competitive, generally involving an auction bidding process. We can give no assurance that engines and aircraft will continue to be available to us on acceptable terms and in the types and quantities we seek consistent with the diversification requirements of our debt facilities and our portfolio diversification goals.
Substantially all of our assets are pledged to our creditors.
Substantially all of our assets are pledged to secure our obligations to creditors. Our revolving credit banks have a lien on all of our assets, including our residual interests in WEST III, WEST IV and WEST V. Due to WEST III’s, WEST IV’s and WEST V’s bankruptcy remote structure, that interest is subject to the prior payments of WEST III’s, WEST IV’s and WEST V’s debt and other
20

Table of Contents
obligations. Therefore, our rights and the rights of our creditors to participate in any distribution of the assets of WEST III, WEST IV and WEST V upon liquidation, reorganization, dissolution or winding up will be subject to the prior claims of WEST III’s, WEST IV’s and WEST V’s creditors. Similarly, the rights of our shareholders are subject to satisfaction of the claims of our lenders and other creditors.
We may be unable to manage the expansion of our operations.
We can give no assurance that we will be able to manage effectively the current and potential expansion of our operations, or that if we are successful expanding our operations that our systems, procedures or controls will be adequate to support our operations, in which event our business, financial condition, results and cash flows could be adversely affected.
Any acquisition or expansion involves various risks, which may include some or all of the following:
incurring or assuming additional debt;
diversion of management’s time and attention from ongoing business operations;
future charges to earnings related to the possible impairment of goodwill and the write down of other intangible assets;
risks of unknown or contingent liabilities;
difficulties in the assimilation of operations, services, products and personnel;
unanticipated costs and delays;
risk that the acquired business does not perform consistently with our growth and profitability expectations;
risk that growth will strain our infrastructure, staff, internal controls and management, which may require additional personnel, time and expenditures; and
potential loss of key employees and customers.
Any of the above factors could have a material adverse effect on us.
Compliance with the regulatory requirements imposed on us as a public company results in significant costs that may have an adverse effect on our results.
As a public company, we are subject to various regulatory requirements including, but not limited to, compliance with the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Compliance with these regulations results in significant additional costs to us both directly, through increased audit and consulting fees, and indirectly, through the time required by our limited resources to address such regulations. We have complied with Section 404a of the Sarbanes-Oxley Act since December 31, 2007, completing our annual assessment of internal controls over financial reporting. We have complied with Section 404b of the Sarbanes-Oxley Act since December 31, 2009, and our independent registered public accounting firm audits our internal controls over financial reporting. Such compliance requires us to incur additional costs on audit and consulting fees and requires additional management time that may adversely affect our results of operations and cash flows.
We are subject to governmental regulation and our failure to comply with these regulations could cause the government to withdraw or revoke our authorizations and approvals to do business and could subject us to penalties and sanctions that could harm our business.
Governmental agencies throughout the world, including the FAA, highly regulate the manufacture, repair and operation of all aircraft operated in the United States and equivalent regulatory agencies in other countries, such as the EASA in Europe, regulate aircraft operated in those countries. We include, with the aircraft, engines and related parts that we purchase, lease and sell to our customers, documentation certifying that each part complies with applicable regulatory requirements and meets applicable standards of airworthiness established by the FAA or the equivalent regulatory agencies in other countries. Specific regulations vary from country to country, although regulatory requirements in other countries are generally satisfied by compliance with FAA requirements. With respect to a particular engine or engine component, we utilize FAA and/or EASA certified repair stations to repair and certify engines and components to ensure marketability. The revocation or suspension of any of our material authorizations or approvals would have an adverse effect on our business, financial condition and results of operations. New and more stringent government regulations, if adopted and enacted, could have an adverse effect on our business, financial condition and results of operations. In addition, certain product sales to foreign countries require approval or licensing from the U.S. government.  Denial of export licenses could reduce our sales to those countries and could have a material adverse effect on our business.
21

Table of Contents
We are effectively controlled by one principal stockholder, who has the power to contest the outcome of most matters submitted to the stockholders for approval and to affect our stock prices adversely if he were to sell substantial amounts of his common stock.
Charles F. Willis, IV is the founder of WLFC, has served as Chief Executive Officer and a Director since our establishment in 1985, served as President until July 2011, and has served as Chairman of the Board of Directors since 1996. Mr. Willis has over 45 years of experience in the aviation industry which includes serving as President of Willis Lease’s predecessor, Charles F. Willis Company, which purchased, financed and sold a variety of large commercial transport aircraft and provided consulting services to the aviation industry,  Assistant Vice President of Sales at Seaboard World Airlines, a freight carrier, and various positions at Alaska Airlines, including positions in the flight operations, sales and marketing departments. As our founder and Chief Executive Officer, Mr. Willis brings to the Board significant senior leadership, sales and marketing, industry, technical and global experience, as well as a deep institutional knowledge of the Company, its operations and customer relations.
As of December 31, 2020, Mr. Willis beneficially owned or had the ability to direct the voting of 2,943,952 shares of our common stock, representing approximately 45% of the outstanding shares of our common stock. As a result, Mr. Willis effectively controls us and has the power to contest the outcome of substantially all matters submitted to our stockholders for approval, including the election of our board of directors. In addition, future sales by Mr. Willis of substantial amounts of our common stock, or the potential for such sales, could adversely affect the prevailing market price of our common stock.
Our business might suffer if we were to lose the services of certain key employees.
Our business operations depend upon our key employees, including our executive officers. Loss of any of these employees, particularly our Chief Executive Officer, could have a material adverse effect on our business as our key employees have knowledge of our industry and customers and would be difficult to replace.
We are the servicer and administrative agent for the WEST III, WEST IV and WEST V facilities and our cash flows would be materially and adversely affected if we were removed from these positions.
We are the servicer and administrative agent with respect to engines in the WEST III, WEST IV and WEST V facilities. We receive monthly fees of 11.5% as servicer (3.5% of which is subordinated in each case) and 2.0% as administrative agent of the aggregate net rents actually received by WEST III, WEST IV and WEST V on their engines. We may be removed as servicer and or administrative agent of our WEST III, WEST IV and WEST V facilities by an affirmative vote of a requisite number of the WEST III, WEST IV and WEST V note holders. Such vote could happen upon the occurrence of certain specified events as outlined in the WEST III, WEST IV and WEST V servicing and administrative agency agreements.
As of December 31, 2020, we were in compliance with the financial covenants set forth in the WEST III, WEST IV and WEST V servicing and administrative agency agreements. There can be no assurance that we will be in compliance with these covenants in the future or will not otherwise be terminated as servicer or administrative agent for the WEST III, WEST IV and WEST V facilities. If we are removed from such role with those facilities, our expenses would increase as our consolidated VIE’s WEST III, WEST IV and WEST V, would have to hire an outside provider to replace the servicer and administrative agent functions, and we would be materially and adversely affected. Consequently, our business, financial condition, results of operations and cash flows would be adversely affected.
Provisions in Delaware law and our charter and bylaws might prevent or delay a change of control.
Certain provisions of law, our amended certificate of incorporation, bylaws and amended rights agreement could make the following more difficult: (1) an acquisition of us by means of a tender offer, a proxy contest or otherwise, and (2) the removal of incumbent officers and directors.
Our board of directors has authorized the issuance of shares of 6.5% Series A Preferred Stock and 6.5% Series A-2 Preferred Stock, by us and to Development Bank of Japan Inc. (“DBJ”) with American Stock Transfer and Trust Company, serving as rights agent. The rights agreement could make it more difficult to proceed with and tends to discourage a merger, tender offer or proxy contest. Our amended certificate of incorporation also provides that stockholder action can be taken only at an annual or special meeting of stockholders and may not be taken by written consent and, in certain circumstances relating to acquisitions or other changes in control, requires an 80% super majority vote of all outstanding shares of our common stock. Our bylaws also limit the ability of stockholders to raise matters at a meeting of stockholders without giving advance notice.
ITEM 1B.    UNRESOLVED STAFF COMMENTS
None.
22

Table of Contents
ITEM 2.    PROPERTIES  
Our principal offices are located in Coconut Creek, Florida where we own 56,000 square feet of office and warehouse space. We also own 30,000 square feet of office and warehouse space in Bridgend, Wales, UK. We lease 41,000 square feet of hangar and office space in Darlington, UK. We sub-lease 1,615 square feet of office and warehouse space for our operations in San Diego, California. We lease 4,166 square feet of office space in Dublin, Ireland. We also lease facilities for sales and operations in Larkspur, CA; Shanghai, China; Singapore; and Blagnac, France.
The Company’s Leasing and Related Operations segment conducts business in all of the properties above. The Spare Parts segment primarily conducts business in the Coconut Creek, Florida facility.
ITEM 3.    LEGAL PROCEEDINGS
None.
ITEM 4.    MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5.    MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Our Common Stock is listed on the NASDAQ Stock Market under the symbol WLFC. As of March 9, 2021, there were approximately 2,432 shareholders of record of our Common Stock.
We have not made any dividend payments to our common shareholders since our inception as all available cash has been utilized for the business. We have no intention of paying dividends on our common stock in the foreseeable future. In addition, certain of our debt facilities contain negative covenants which, in certain situations, prohibit us from paying any dividends or making distributions of any kind with respect to our common stock. The Series A-1 and Series A-2 Preferred Stock carry a quarterly dividend at the rate per annum of 6.5% per share, with a $20.00 liquidation preference per share.
The following table outlines our Equity Compensation Plan Information:
Plan Category Number of securities to be
issued upon exercise of
outstanding 
options, warrants and rights
Weighted-average exercise 
price of outstanding
options, warrants and rights
Number of securities
remaining available for
future issuance under 
equity compensation 
plans (excluding securities
reflected in column (a))
  (a)   (b)   (c)  
Plans Not Approved by Shareholders:      
None n/a n/a n/a
       
Plans Approved by Shareholders:      
Employee Stock Purchase Plan n/a 51,538 
2007 Stock Incentive Plan n/a
2018 Stock Incentive Plan n/a 295,846 
Total —  n/a 347,384 
The 2007 Stock Incentive Plan (the “2007 Plan”) was adopted in May 2007. Under this 2007 Plan, a total of 2,800,000 shares were authorized for stock-based compensation available in the form of either restricted stock awards (“RSAs”) or stock options. The RSAs are subject to service-based vesting, typically between one and four years, where a specific period of continued employment must pass before an award vests. The expense associated with these awards is recognized on a straight-line basis over the respective vesting period, with forfeitures accounted for as they occur. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is equal to the portion of the grant‑date fair value of the award tranche that is actually vested at that date. As of December 31, 2020, there were no stock options outstanding under the 2007 Plan.
The 2018 Stock Incentive Plan (the “2018 Plan”) was adopted in May 2018. Under this 2018 Plan, a total of 800,000 shares were authorized for stock-based compensation, plus the number of shares remaining under the 2007 Plan and any future forfeited awards under the 2007 Plan, in the form of RSAs. The RSAs are subject to service-based vesting, typically between one and four years, where
23

Table of Contents
a specific period of continued employment must pass before an award vests. The expense associated with these awards is recognized on a straight-line basis over the respective vesting period, with forfeitures accounted for as they occur. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is equal to the portion of the grant‑date fair value of the award tranche that is actually vested at that date.
As of December 31, 2020, the Company had granted 598,750 RSAs under the 2018 Plan and has 295,846 shares available for future issuance. The fair value of the restricted stock awards equaled the stock price at the grant date.
Effective December 31, 2018, the Board of Directors approved the renewal of the existing common stock repurchase plan extending the plan through December 31, 2020 and amending the plan to allow for repurchases of up to $60.0 million of the Company’s common stock until such date. Effective December 31, 2020, the Board of Directors approved the renewal of the existing common stock repurchase plan extending the plan through December 31, 2022. Repurchased shares are immediately retired. During 2020, the Company repurchased 55,426 shares of common stock for approximately $1.5 million at a weighted average price of $27.24. At December 31, 2020, approximately $54.9 million was available to purchase shares under the plan. In July 2020, the Company suspended repurchases under its 10b-18 plan and no repurchases were made between that date and December 31, 2020. As of December 31, 2020, the total number of common shares outstanding was approximately 6.6 million.
ITEM 6.    SELECTED FINANCIAL DATA

Not applicable.
ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Forward-Looking Statements. This Annual Report on Form 10-K includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding prospects or future results of operations or financial position, made in this Annual Report on Form 10-K are forward-looking. We use words such as anticipates, believes, expects, future, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Actual results could differ materially for a variety of reasons, including, among others: the effects on the airline industry and the global economy of events such as terrorist activity and the COVID-19 pandemic, changes in oil prices and other disruptions to the world markets; trends in the airline industry and our ability to capitalize on those trends, including growth rates of markets and other economic factors; risks associated with owning and leasing jet engines and aircraft; our ability to successfully negotiate equipment purchases, sales and leases, to collect outstanding amounts due and to control costs and expenses; changes in interest rates and availability of capital, both to us and our customers; our ability to continue to meet the changing customer demands; regulatory changes affecting airline operations, aircraft maintenance, accounting standards and taxes; and the market value of engines and other assets in our portfolio. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ significantly from management’s expectations, are described in greater detail in Item 1A “Risk Factors” of Part I which, along with the other discussion in this report, describes some, but not all, of the factors that could cause actual results to differ significantly from management’s expectations.
General. Our core business is acquiring and leasing commercial aircraft and aircraft engines and related aircraft equipment pursuant to operating leases, all of which we sometimes collectively refer to as “equipment.” As of December 31, 2020, the majority of our leases were operating leases with the exception of certain failed sale-leaseback transactions classified as notes receivable under the guidance provided by ASC 842. As of December 31, 2020, we had 70 lessees in 41 countries. Our portfolio is continually changing due to acquisitions and sales. As of December 31, 2020, our $1,886.6 million equipment held for operating lease portfolio and $158.7 million notes receivable represented 291 engines, eight aircraft, one marine vessel and other leased parts and equipment. As of December 31, 2020, we also managed 400 engines, aircraft and related equipment on behalf of other parties. 
    Our wholly owned subsidiary Willis Asset Management Limited (“Willis Asset Management”) is focused on the engine management and consulting business. Willis Aeronautical Services, Inc. (“Willis Aero”) is a wholly owned subsidiary whose primary focus is the sale of aircraft engine parts and materials through the acquisition or consignment of aircraft and engines.
In 2011 we entered into an agreement with Mitsui & Co., Ltd. to participate in a joint venture formed as a Dublin-based Irish limited company, WMES, for the purpose of acquiring and leasing jet engines. Each partner holds a 50% interest in the joint venture. WMES owns a lease portfolio, inclusive of a note receivable, of 36 engines and five aircraft with a net book value of $289.2 million at December 31, 2020. Our investment in the joint venture was $37.4 million as of December 31, 2020.
In 2014 we entered into an agreement with CASC to participate in CASC Willis, a new joint venture based in Shanghai, China. Each partner holds a 50% interest in the joint venture. The company acquires and leases jet engines to Chinese airlines and
24

Table of Contents
concentrates on meeting the fast-growing demand for leased commercial aircraft engines and aviation assets in the People’s Republic of China. CASC Willis owned a lease portfolio of four engines with a net book value of $50.1 million as of December 31, 2020. Our investment in the joint venture was $15.9 million as of December 31, 2020.
We actively manage our portfolio and structure our leases to maximize the residual values of our leased assets. Our leasing business focuses on popular Stage IV commercial jet engines manufactured by CFMI, General Electric, Pratt & Whitney, Rolls Royce and International Aero Engines. These engines are the most widely used engines in the world, powering Airbus, Boeing, Bombardier and Embraer aircraft.

COVID-19 Impact. Throughout the next year, we plan to continue to stay focused on cost control and remain prudent with our capital expenditures. We have temporarily closed our headquarters and other offices, required our employees and contractors to predominately work remotely, and implemented travel restrictions, all of which represent a significant disruption in how we operate our business. We have taken various proactive actions in an attempt to mitigate the financial impact of the COVID-19 pandemic. Additionally, during 2020, 9% of our employees have been either furloughed, or subject to a form of reduced compensation. The operations of our partners and customers have likewise been disrupted. The worldwide spread of the COVID-19 virus has resulted in a global slowdown of economic activity. While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment actions, it has had an adverse effect on the global economy and the ultimate societal and economic impact of the COVID-19 pandemic remains unknown. In particular, the ongoing COVID-19 pandemic has caused significant disruptions to the airline industry that has resulted in a dramatic reduction in demand for air travel domestically and abroad, which is likely to continue for the foreseeable future. In addition, dramatically lower demand for air travel in turn presents significant risks to our Company, not all of which we are able to fully evaluate or even to foresee at the current time, and could negatively impact collections of accounts receivable, cause our lessee customers to not enter into new leases, reduce spending from new and existing customers for leases or spare parts or equipment, lower usage fees, cause some of our customers to go out of business, and limit the ability of our personnel to travel to customers and potential customers, all of which could adversely affect our business, results of operations, and financial condition. Due to the impact of recent events, including challenges from declines in market conditions, we have performed quarterly interim impairment analysis during 2020. The results of the analysis indicated $0.5 million additional impairment during 2020 for two engines having net book values in excess of their respective fair value. During 2020, we experienced declining average utilization and a corresponding decrease in revenue, as well as a significant decline in spare parts and equipment sales, in each case as compared to the prior year periods. Additionally, as of December 31, 2020, we have, in certain situations, agreed to rent concessions which resulted in a total reduction to rent revenues of $6.5 million. The COVID-19 pandemic has materially affected our business and financial results for the year ended December 31, 2020 and may continue to do so indefinitely thereafter.

The scope and nature of the impact of COVID-19 on the airline industry, and in turn our business, continue to evolve and the outcomes are uncertain. Given the uncertainty in the rapidly changing market and economic conditions related to COVID-19, we will continue to evaluate the nature and extent of the impact to our business and financial position. The ultimate extent of the effects of the COVID-19 pandemic on our Company will depend on future developments, and such effects could exist for an extended period of time.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to residual values, estimated asset lives, impairments and bad debts. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We believe the following critical accounting policies, grouped by our activities, affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:
Leasing Related Activities. Revenue from leasing of aircraft equipment is recognized as operating lease revenue on a straight-line basis over the terms of the applicable lease agreements. Where collection cannot be reasonably assured, for example, upon a lessee bankruptcy, we do not recognize revenue until cash is received. We also estimate and charge to income a provision for bad debts based on our experience in the business and with each specific customer and the level of past due accounts. The financial condition of our customers may deteriorate and result in actual losses exceeding the estimated allowances. In addition, any deterioration in the financial condition of our customers may adversely affect future lease revenues. As of December 31, 2020, the majority of our leases were operating leases with the exception of certain failed sale-leaseback transactions classified as notes receivable under the guidance provided by ASC 842. Under an operating lease, we retain title to the leased equipment, thereby retaining the potential benefit and assuming the risk of the residual value of the leased equipment. 

25

Table of Contents
We generally depreciate engines on a straight-line basis over 15 years to a 55% residual value. Aircraft and airframes are generally depreciated on a straight-line basis over 13 to 20 years to a 15% to 17% residual value. The marine vessel is depreciated on a straight-line basis over an estimated useful life of 18 years to a 15% residual value. Other leased parts and equipment are generally depreciated on a straight-line basis over 14 to 15 years to a 25% residual value. Major overhauls paid for by us, which improve functionality or extend the original useful life, are capitalized and depreciated over the shorter of the estimated period to the next overhaul (“deferral method”) or the remaining useful life of the equipment. We do not accrue for planned major maintenance. For equipment which is unlikely to be repaired at the end of its current expected life, and is likely to be disassembled upon lease termination, we depreciate the equipment over its estimated life to a residual value based on an estimate of the wholesale value of the parts after disassembly. As of December 31, 2020, 50 engines having a net book value of $51.6 million were depreciated under this policy with estimated useful lives ranging from 1 to 125 months.
Asset Valuation. Long-lived assets and certain identifiable intangibles to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable, and long-lived assets and certain identifiable intangibles to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
On a quarterly basis, management monitors the lease portfolio for events which may indicate that a particular asset may need to be evaluated for potential impairment. These events may include a decision to part-out or sell an asset, knowledge of specific damage to an asset, or supply/demand events which may impact the Company’s ability to lease an asset in the future. On an annual basis, even absent any such ‘triggering event’, we evaluate the carrying value of the assets in our lease portfolio to determine if any impairment exists.
Impairment may be identified by several factors, including, comparison of estimated sales proceeds or forecasted undiscounted cash flows over the life of the asset with the asset’s book value. If the forecasted undiscounted cash flows are less than the book value, the asset is written down to its fair value. When evaluating for impairment, we test at the individual asset level (e.g., engine or aircraft), as each asset generates its own stream of cash flows, including lease rents, maintenance reserves and repair costs.
We must make assumptions which underlie the most significant and subjective estimates in determining whether any impairment exists.  Those estimates, and the underlying assumptions, are as follows:
Fair value – we determine fair value by reference to independent appraisals, quoted market prices (e.g., an offer to purchase) and other factors such as current data from airlines, engine manufacturers and MRO providers as well as specific market sales and repair cost data.
Future cash flows – when evaluating the future cash flows that an asset will generate, we make assumptions regarding the lease market for specific engine models, including estimates of market lease rates and future demand. These assumptions are based upon lease rates that we are obtaining in the current market as well as our expectation of future demand for the specific engine/aircraft model. 
If the forecasted undiscounted cash flows and fair value of our long-lived assets decrease in the future we may incur impairment charges.
Management continuously monitors the aviation industry and evaluates any trends, events or uncertainties involving airlines, individual aircraft and engine models, as well as the engine leasing and sale market which would materially affect the methodology or assumptions employed by WLFC. We do not consider there to be any trends, events or uncertainties that currently exist or that are reasonably likely to occur that would materially affect our methodology or assumptions. However, should any arise, we will adjust our methodology and our disclosure accordingly.
Spare parts inventory is stated at lower of cost or net realizable value. An impairment charge for excess or inactive inventory is recorded based upon an analysis that considers current inventory levels, historical usage patterns, future sales expectations and salvage value.
Accounting for Maintenance Expenditures and Maintenance Reserves. Use fees received are recognized in revenue as maintenance reserve revenue if they are not reimbursable to the lessee. Use fees that are reimbursable are recorded as a maintenance reserve liability until they are reimbursed to the lessee, the lease terminates, or the obligation to reimburse the lessee for such reserves ceases to exist, at which time they are recognized in revenue as maintenance reserve revenue. Our expenditures for maintenance are expensed as incurred. Expenditures that meet the criteria for capitalization are recorded as an addition to equipment recorded on the balance sheet.
RECENT ACCOUNTING PRONOUNCEMENTS
The most recent adopted and to be adopted accounting pronouncements are described in Note 1(x) to our Consolidated financial statements included in this Annual Report on Form 10-K.
26

Table of Contents
RESULTS OF OPERATIONS
Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019
Revenue is summarized as follows:
  Years Ended December 31,
  2020 2019 % Change
  (dollars in thousands)
Lease rent revenue $ 142,895  $ 190,690  (25.1) %
Maintenance reserve revenue 105,365  108,998  (3.3) %
Spare parts and equipment sales 18,625  74,651  (75.1) %
Gain on sale of leased equipment 3,391  20,044  (83.1) %
Other revenue 18,416  14,777  24.6  %
Total revenue $ 288,692  $ 409,160  (29.4) %

Lease Rent Revenue. Lease rent revenue consists of rental income from long-term and short-term engine leases, aircraft leases, and other leased parts and equipment. Lease rent revenue decreased by $47.8 million, or 25.1%, to $142.9 million for the year ended December 31, 2020 from $190.7 million for the year ended December 31, 2019. The decrease is primarily due to lower average utilization and rent concessions for reduced rent of $6.5 million given during 2020, directly related to impacts of the COVID-19 pandemic, when compared to the prior year. During the year ended December 31, 2020, we purchased equipment (including capitalized costs) totaling $409.3 million, which primarily consisted of 38 engines and other parts and equipment purchased for our lease portfolio. During the year ended December 31, 2019, 45 engines, 6 aircraft, one marine vessel and other lease equipment were added to our lease portfolio at a total cost of $289.4 million (including capitalized costs).

One customer accounted for 11.4% of total lease rent revenue during the year ended December 31, 2020 and no customers accounted for more than 10% of total lease rent revenue during the year ended December 31, 2019.

The aggregate net book value of equipment held for lease at December 31, 2020 and 2019 was $1,886.6 million and $158.7 million notes receivable and $1,650.9 million and $38.1 million notes receivable, respectively, an increase of 14.3%. Average utilization (based on net book value) was approximately 84% and 88% for the year ended December 31, 2020 and 2019, respectively.

Maintenance Reserve Revenue. Maintenance reserve revenue for the year ended December 31, 2020 decreased $3.6 million, or 3.3%, to $105.4 million from $109.0 million for the year ended December 31, 2019. Long-term maintenance revenue, which is influenced by end of lease compensation, was $87.7 million for the year ended December 31, 2020 compared to $37.6 million in 2019. “Non-reimbursable” maintenance reserve revenue is directly influenced by on lease engine flight hours and cycles. Engines out on lease with “non-reimbursable” usage fees generated $17.7 million of short-term maintenance revenues for the year ended December 31, 2020 compared to $71.4 million in the prior year, resulting from the decline in global flight traffic related to the COVID-19 pandemic.

Spare Parts and Equipment Sales. Spare parts and equipment sales for the year ended December 31, 2020 decreased by $56.0 million, or 75.1%, to $18.6 million compared to $74.7 million in 2019. Spare parts sales for the year ended December 31, 2020 were $17.7 million compared to $56.3 million in 2019. The decline in spare parts sales paralleled the slowdown in global flight traffic, which was directly affected by the impacts of the COVID-19 pandemic. Equipment sales for the year ended December 31, 2020 were $0.9 million for the sale of one engine compared to $18.4 million for the sale of three engines, two airframes and one equipment package in 2019.
Gain on Sale of Leased Equipment. During the year ended December 31, 2020, we sold 11 engines and two airframes from the lease portfolio for a net gain of $3.4 million. During the year ended December 31, 2019, we sold 16 engines, seven aircraft, four airframes and other related equipment from the lease portfolio for a net gain of $20.0 million.
Other Revenue. Other revenue increased by $3.6 million, to $18.4 million for the year ended December 31, 2020 from $14.8 million in 2019. The increase was primarily due to the increase in interest income from our notes receivable, partly offset by a decrease in service related fees. Other revenue also includes a net loss on sale of a note receivable to WMES of $0.1 million.
Depreciation and Amortization Expense. Depreciation and amortization expense increased $8.3 million, or 9.6%, to $94.5 million for the year ended December 31, 2020 compared to $86.2 million for the year ended December 31, 2019. The increase in depreciation reflects an increase in the number of assets held in the portfolio as well as the change in mix of portfolio, as compared to the prior year period.
Cost of Spare Parts and Equipment Sales. Cost of spare parts and equipment sales decreased by $45.9 million, or 73.2%, to $16.8 million for the year ended December 31, 2020 compared to $62.6 million in the prior year period. Cost of spare parts sales for the year
27

ended December 31, 2020 were $16.6 million compared to $47.4 million in 2019 due to lower spare parts sales, coupled with lower of cost or market write-downs and scrap sales. The reduced sales were driven by lower industry wide demand resulting from the impacts of the COVID-19 pandemic. Cost of equipment sales was $0.1 million and $15.2 million in the years ended December 31, 2020 and 2019, respectively.

Write-down of Equipment. Write-down of equipment was $20.5 million for the year ended December 31, 2020 and reflects the write-down of 10 engines and two airframes due to a management decision to monetize the assets either by sale to third-party or for part-out and an adjustment of the carrying value of seven impaired engines. Write-down of equipment was $18.2 million for the year ended December 31, 2019 reflecting the write-down of 11 engines due to a management decision to monetize the engines either by sale to a third-party or for part-out and an adjustment of the carrying value of seven impaired engines.
General and Administrative Expenses. General and administrative expenses decreased 21.5% to $67.9 million for the year ended December 31, 2020 compared to $86.5 million in 2019. The decrease, when compared to the prior year period, primarily reflects no bonus accrual in the current year due to operating performance as well as the effect of reduced business travel spending and procurement of outside services.
Technical Expense. Technical expenses consist of the cost of engine repairs, engine thrust rental fees, outsourced technical support services, sublease engine rental expense, engine storage and freight costs. These expenses decreased 19.6% to $6.5 million for the year ended December 31, 2020, compared to $8.1 million in 2019. The decrease is primarily due to a decrease in technical support services driven by lower industry-wide demand due to impact of the COVID-19 pandemic.

Net Finance Costs.  Net finance costs increased 0.9% to $67.7 million in the year ended December 31, 2020, from $67.1 million for the year ended December 31, 2019. The increase was primarily due to a loss on debt extinguishment of $4.7 million, partly offset by lower interest expense as a result of lower interest rates in 2020 as compared to the prior year period.
Income Taxes. Income tax expense for the year ended December 31, 2020 decreased to $7.6 million from $22.0 million for the comparable period in 2019. The effective tax rate for the years ended December 31, 2020 and December 31, 2019 was 43.8% and 24.7%, respectively. The increase in the effective tax rate was predominantly due to non-deductible officer compensation.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2020, the Company had $78.9 million of cash, cash equivalents and restricted cash. At December 31, 2020, $6.8 million in cash and cash equivalents and restricted cash were held in foreign subsidiaries. We do not intend to repatriate the funds held in foreign subsidiaries to the United States. In the event that we decide to repatriate these funds to the United States, we would be required to accrue and pay taxes upon the repatriation.
We finance our growth through borrowings secured by our equipment lease portfolio. Cash of approximately $973.2 million and $340.1 million in the years ended December 31, 2020 and 2019, respectively, was derived from this borrowing activity. In these same time periods $530.8 million and $428.1 million, respectively, was used to pay down related debt.
The impact of the COVID-19 pandemic on the global business environment has caused and could result in additional customer bankruptcies, early lease returns, payment defaults, or future rental concessions which could reduce rent or defer customer payments, negatively impacting our financial results.
Preferred Stock Dividends
In October 2016, the Company sold and issued to Development Bank of Japan Inc. (“DBJ”) an aggregate of 1,000,000 shares of the Company’s 6.5% Series A Preferred Stock, $0.01 par value per share (the “Series A Preferred Stock”) at a purchase price of $20.00 per share. The net proceeds to the Company after deducting investor fees were $19.8 million.
In September 2017, the Company sold and issued to DBJ an aggregate of 1,500,000 shares of the Company’s 6.5% Series A-2 Preferred Stock, $0.01 par value per share (the “Series A-2 Preferred Stock”) at a purchase price of $20.00 per share. The net proceeds to the Company after deducting issuance costs were $29.7 million.
The Company’s Series A-1 Preferred Stock and Series A-2 Preferred Stock accrue quarterly dividends at the rate per annum of 6.5% per share. During the years ended December 31, 2020 and 2019, the Company paid total dividends of $3.3 million on the Series A-1 and Series A-2 Preferred Stock, respectively.
Cash Flows Discussion
Cash flows provided by operating activities were $93.4 million and $230.3 million in the years ended December 31, 2020 and 2019, respectively.
28

Cash flows from operations are driven significantly by payments made under our lease agreements, which comprise lease revenue, security deposits and maintenance reserves, and are offset by interest expense and general and administrative costs. Cash received as maintenance reserve payments for some of our engines on lease are partially restricted by our debt arrangements. The lease revenue stream, in the short-term, is at fixed rates while a portion of our debt is at variable rates. If interest rates increase, it is unlikely we could increase lease rates in the short term and this would cause a reduction in our earnings and operating cash flows. Revenue and maintenance reserves are also affected by the amount of equipment off lease. Approximately 78% and 86%, by book value, of our assets were on-lease as of December 31, 2020 and 2019, respectively. The average utilization rate for the year ended December 31, 2020 and 2019 was approximately 84% and 88%, respectively. If there is an increase in off-lease rates or deterioration in lease rates that are not offset by reductions in interest rates, there will be a negative impact on earnings and cash flows from operations.
Distributions received from our investment in WMES were $7.2 million and $3.3 million in the years ended December 31, 2020 and 2019, respectively.
Cash flows used in investing activities were $506.7 million for the year ended December 31, 2020 and primarily reflected $136.6 million related to leases entered into during 2020 which were classified as notes receivable under ASC 842 and $409.3 million for the purchase of equipment held for operating lease (including capitalized costs and prepaid deposits made during the year), partly offset by $26.1 million in proceeds from sales of equipment (net of selling expenses) and $8.4 million in proceeds from the sale of a note receivable (net of selling expenses). Cash flows used in investing activities were $147.4 million for the year ended December 31, 2019 and primarily reflected $289.4 million for the purchase of equipment held for operating lease (including capitalized costs and prepaid deposits made during the year) and $42.9 million related to leases entered into during 2019 which were classified as notes receivable under ASC 842, partly offset by $191.9 million in proceeds from sales of equipment (net of selling expenses).
Cash flows provided by financing activities for the year ended December 31, 2020 were $428.5 million and primarily reflected $973.2 million in proceeds from the issuance of debt obligations, partly offset by $530.8 million in principal payments, $6.1 million in debt issuance costs, $2.4 million in debt prepayment costs and $1.5 million in share repurchases. Cash flows used in financing activities for the year ended December 31, 2019 were $101.2 million and primarily reflected $428.1 million in principal payments and $3.6 million in share repurchases, partly offset by $340.1 million in proceeds from the issuance of debt obligations.
Debt Obligations and Covenant Compliance
At December 31, 2020, debt obligations consists of loans totaling $1,693.8 million, net of unamortized issuance costs, payable with interest rates varying between approximately 1.5% and 6.7%. Substantially all of our assets are pledged to secure our obligations to creditors. For further information on our debt instruments, see Note 6 “Debt Obligations” in Part II, Item 8 of this Form 10-K.

In March 2020, WEST V (formerly known as “WEST II”), a consolidated VIE of the Company, closed its offering of $366.2 million aggregate principal amount of fixed rate notes (the “WEST V Notes”). The WEST V Notes were issued in three series, with the Series A Notes issued in an aggregate principal amount of $303.0 million, the Series B Notes issued in an aggregate principal amount of $42.1 million and the Series C Notes issued in an aggregate principal amount of $21.1 million. The WEST V Notes are secured by, among other things, WEST V’s direct and indirect ownership interests in a portfolio of 54 aircraft engines and three airframes.

The Series A Notes have a fixed coupon of 3.228%, an expected maturity of approximately eight years and a final maturity date of March 15, 2045, the Series B Notes have a fixed coupon of 4.212%, an expected maturity of approximately eight years and a final maturity date of March 15, 2045 and the Series C Notes have a fixed coupon of 6.657%, an expected maturity of approximately eight years and a final maturity date of March 15, 2045. The Series A Notes were issued at a price of 99.99859% of par, the Series B Notes were issued at a price of 99.99493% of par and the Series C Notes were issued at a price of 99.99918% of par. Principal on the WEST V Notes is payable monthly to the extent of available cash in accordance with a priority of payments included in the indenture for the WEST V Notes. Proceeds from asset sales by WEST V will be used, at WEST V’s election subject to certain conditions, to reduce WEST V’s debt or to acquire other engines or airframes.

The assets of WEST V are not available to satisfy the Company’s obligations other than the obligations specific to WEST V. WEST V is consolidated VIE for financial statement presentation purposes. WEST V’s ability to make distributions and pay dividends to the Company is subject to the prior payments of its debt and other obligations and WEST V’s maintenance of adequate reserves and capital. Under WEST V, cash is collected in a restricted account, which is used to service the debt and any remaining amounts, after debt service and defined expenses, are distributed to the Company. Additionally, a portion of maintenance reserve payments and lease security deposits are formulaically accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. The WEST V indenture requires that a minimum threshold of maintenance reserve and security deposit balances be held in restricted cash accounts.

We recognized a $4.7 million loss on debt extinguishment upon the repayment of the WEST II Series A 2012 term notes in March 2020.
29


In June 2019, the Company entered into the Fourth Amended and Restated Credit Agreement (“Amended Credit Agreement”) which increased the revolving credit facility from $890.0 million to $1.0 billion and extended the maturity of the credit facility to June 2024. As a result, the Company incurred and deferred an additional $2.8 million of debt issuance costs and recognized a loss on debt extinguishment of $0.2 million. In December 2019, the Company entered into Amendment No. 1 to the Fourth Amended and Restated Credit Agreement and Amendment No. 5 to the Security Agreement. The amendments, which among other things, increase the maximum leverage ratio from 4.00:1.00 to 4.50:1.00 through December 31, 2020, if a permitted change in control is consummated.

In October 2020, the Company entered into a Limited Waiver (the “Waiver”) to its Fourth Amended and Restated Credit Agreement. The Waiver provides for the partial exclusion for specified periods of certain asset book values in the calculation of customer concentration limits, as such limits are defined in the Amended Credit Agreement.

In February 2019, the Company entered into an $8.1 million loan with a financial institution with a maturity date of July 2022. Interest is payable at three-month LIBOR plus a margin ranging from 1.85% to 2.50% and principal and interest are paid quarterly. The loan is secured by two engines. 
Virtually all of the above debt requires our ongoing compliance with the covenants of each financing, including debt/equity ratios, minimum tangible net worth and minimum interest coverage ratios, and other eligibility criteria including customer and geographic concentration restrictions. Under our revolving credit facility, we can typically borrow up to 85% of an engine’s net book value and 65% of spare part’s net book value. Therefore we must have other available funds for the balance of the purchase price of any new equipment to be purchased or we will not be permitted to draw on our revolver. The facilities are also cross-defaulted against other facilities. If we do not comply with the covenants or eligibility requirements, we may not be permitted to borrow additional funds and accelerated payments may become necessary. Additionally, much of the above debt is secured by engines and aircraft to the extent that engines or aircraft are sold, repayment of that portion of the debt could be required.
At December 31, 2020, we were in compliance with the covenants specified in the revolving credit facility, including the Interest Coverage Ratio requirement of at least 2.25 to 1.00, and the Total Leverage Ratio requirement to remain below 4.50 to 1.00. The Interest Coverage Ratio, as defined in the credit facility, is the ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) and other one-time charges to consolidated interest expense.  The Total Leverage Ratio, as defined in the credit facility, is the ratio of total indebtedness to tangible net worth. At December 31, 2020, we were in compliance with the covenants specified in the WEST III, WEST IV and WEST V indentures, servicing and other debt related agreements.
Off-Balance Sheet Arrangements
As of December 31, 2020, we had no material off-balance sheet arrangements or obligations that have or are reasonably likely to have a current or future effect on our financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.
Contractual Obligation and Commitments
Repayments of our gross debt obligations primarily consist of scheduled installments due under term loans and are funded by the use of unrestricted cash reserves and from cash flows from ongoing operations. The table below summarizes our contractual commitments at December 31, 2020:
  Payment due by period (in thousands)
Total Less than
1 Year
1-3 Years 3-5 Years More than
5 Years
Debt obligations $ 1,712,886  $ 51,497  $ 109,810  $ 879,037  $ 672,542 
Interest payments under debt obligations 258,609  52,113  96,778  69,572  40,146 
Operating lease obligations 4,350  1,227  1,743  788  592 
Purchase obligations 470,974  215,493  255,481  —  — 
Total $ 2,446,819  $ 320,330  $ 463,812  $ 949,397  $ 713,280 

From time to time we enter into contractual commitments to purchase engines directly from original equipment manufacturers. As of the date of this report we have purchased three new LEAP-1B engines and are currently committed to purchasing 17 additional new LEAP-1B engines. Our purchase agreements generally contain terms that allow the Company to defer or cancel purchase commitments in certain situations. These deferrals or conversions would not result in penalties or increased costs other than any potential increase due to the normal year-over-year change in engine list prices, which is akin to ordinary inflation. The Company continues to expect demand for LEAP-1B engines to increase as the 737 Max is re-certified and aircraft (and their installed engines) that have been parked and in storage for more than one year begin the technical process of returning to service.
30


In December 2020, we entered into definitive agreements for the purchase of 25 modern technology aircraft engines. As part of the purchase, we have committed to certain future overhaul and maintenance services which are anticipated to range between $67.1 million and $112.0 million.
We have estimated the interest payments due under debt obligations by applying the interest rates applicable at December 31, 2020 to the remaining debt, adjusted for the estimated debt repayments identified in the table above. Actual interest payments made will vary due to actual changes in the rates for one-month and three-month LIBOR.
We believe our equity base, internally generated funds and existing debt facilities are sufficient to maintain our level of operations through 2021. A decline in the level of internally generated funds could result if the amount of equipment off-lease increases, there is a decrease in availability under our existing debt facilities, or there is a significant step-up in borrowing costs. Such decline would impair our ability to sustain our level of operations. We continue to discuss additions to our capital base with our commercial and investment banks. If we are not able to access additional capital, our ability to continue to grow our asset base consistent with historical trends will be impaired and our future growth limited to that which can be funded from internally generated capital.
MANAGEMENT OF INTEREST RATE EXPOSURE
At December 31, 2020, $783.1 million of our borrowings were on a variable rate basis at various interest rates tied to one-month and three-month LIBOR. Our equipment leases are generally structured at fixed rental rates for specified terms. Increases in interest rates could narrow or result in a negative spread between the rental revenue we realize under our leases and the interest rate that we pay under our borrowings. Historically, we have entered into interest rate derivative instruments to mitigate our exposure to interest rate risk and not to speculate or trade in these derivative products. As of December 31, 2020, we have two interest rate swap agreements. One interest rate swap was entered into during 2016 which has a notional outstanding amount of $100.0 million, with a remaining term of four months as of December 31, 2020. During 2019, we entered into one additional fixed-rate interest swap agreement which has a notional outstanding amount of $100.0 million, with a remaining term of 42 months as of December 31, 2020. The net fair value of the swaps was $4.0 million and $1.7 million, representing a net liability, at December 31, 2020 and 2019, respectively.
We record derivative instruments at fair value as either an asset or liability. We have used derivative instruments (primarily interest rate swaps) to manage the risk of interest rate fluctuation. While substantially all our derivative transactions are entered into for the purposes described above, hedge accounting is only applied where specific criteria have been met and it is practicable to do so. In order to apply hedge accounting, the transaction must be designated as a hedge and the hedge relationship must be highly effective. The hedging instrument’s effectiveness is assessed utilizing regression analysis at the inception of the hedge and on at least a quarterly basis throughout its life. All of the transactions that we have designated as hedges are accounted for as cash flow hedges. The effective portion of the gain or loss on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income and is reclassified into earnings in the period during which the transaction being hedged affects earnings. The ineffective portion of these hedges flows through earnings in the current period. The hedge accounting for these derivative instrument arrangements increased interest expense by $2.0 million and reduced interest expense by $0.7 million for the years ended December 31, 2020 and 2019, respectively. This incremental adjustment for the swaps effective for hedge accounting was included in interest expense for the respective periods.
For any interest rate swaps that we enter into, we will be exposed to risk in the event of non-performance of the interest rate hedge counter-parties. We anticipate that we may hedge additional amounts of our floating rate debt in the future.
RELATED PARTY TRANSACTIONS
Joint Ventures
“Other revenue” on the Consolidated Statements of Income includes management fees earned of $1.6 million and $2.9 million during the years ended December 31, 2020 and 2019, respectively, related to the servicing of engines for the WMES lease portfolio.
During 2020, the Company sold one note receivable to WMES for $8.4 million. During 2019, the Company sold five aircraft and other equipment to WMES for $76.4 million. Additionally, during 2019, WMES sold one engine to Willis Aeronautical Services, Inc., a wholly-owned subsidiary of the Company, for $2.6 million.
There were no engine or aircraft sales to CASC Willis during 2020 or 2019.
Other
During 2019, the Special Committee of the Board of Directors approved a transaction in which the Company’s Chief Executive Officer (“CEO”), Charles F. Willis, purchased a car at its market value of $0.1 million from the Company.
31

During 2019, the Company’s CEO was charged $0.2 million for usage of the Company’s marine vessel in the Company’s lease portfolio.
During 2019, the Company paid approximately $36,000 of expenses payable to Mikchalk Lake, LLC, an entity in which our CEO retains an ownership interest. These expenses were for lodging and other business related services.  These transactions were approved by the Board’s independent Directors.
During 2020, the Board’s independent directors approved the Company’s agreement to a lease with our CEO in support of the Company’s vessel leasing business. That lease provides for a payment to our CEO of $500 per day for the use of his tender in support of our vessel lease to a third-party lessee. In addition, the Company has purchased a hull insurance policy, for our CEO’s tender, at a rate of $6,800 per annum, plus a one-time subscriber fee of $695 to insure his tender while in the service of the Company’s vessel leasing business. The lease agreement was subsequently amended and approved by the Board’s independent directors to increase the daily rate to $750 per day. The Company has paid a total of $9,750 for usage of the tender. Additionally, our CEO was charged $4,000 for personal expenses while onboard the Company’s marine vessel.
During 2020, the Company’s CEO was charged $9,100 for the purchase of artwork.
ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our primary market risk exposure is that of interest rate risk. A change in LIBOR rates would affect our cost of borrowing. Increases in interest rates, which may cause us to raise the implicit rates charged to our customers, could result in a reduction in demand for our leases. Alternatively, we may price our leases based on market rates so as to keep the fleet on-lease and suffer a decrease in our operating margin due to interest costs that we are unable to pass on to our customers. As of December 31, 2020, $783.1 million of our outstanding debt is variable rate debt. We estimate that for every 1% increase or decrease in interest rate, the annual interest expense for our variable rate debt, would increase or decrease $5.8 million compared to $2.0 million in 2019.
We hedge a portion of our borrowings from time to time, effectively fixing the rate of these borrowings. This hedging activity helps protect us against reduced margins on longer term fixed rate leases. Such hedging activities may limit our ability to participate in the benefits of any decrease in interest rates, but may also protect us from increases in interest rates. Furthermore, since lease rates tend to vary with interest rate levels, it is possible that we can adjust lease rates for the effect of change in interest rates at the termination of leases. Other financial assets and liabilities are at fixed rates.
We are also exposed to currency devaluation risk. During the years ended December 31, 2020 and 2019, respectively, 77% and 79% of our total lease rent revenues came from non-United States domiciled lessees. Substantially all of our leases require payment in U.S. dollars. If these lessees’ currency devalues against the U.S. dollar, the lessees could potentially encounter difficulty in making their lease payments.
ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is submitted as a separate section of this report beginning on page 40.
ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.    CONTROLS AND PROCEDURES
(a)Evaluation of disclosure controls and procedures. Based on management’s evaluation (with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO)), as of the end of the period covered by this report, our CEO and CFO have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
(b)Inherent Limitations on Controls. Management, including the CEO and CFO, does not expect that our disclosure controls and procedures will prevent or detect all errors and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met.  Further, no evaluation of controls can provide absolute assurance that misstatements due to errors or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.  The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.
32

Table of Contents
(c)Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting includes policies and procedures that: (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of assets; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and Board of Directors; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Our internal control over financial reporting is a process designed with the participation of our principal executive officer and principal financial officer or persons performing similar functions to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounted principles.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on this assessment our management believes that, as of December 31, 2020, our internal control over financial reporting is effective under those criteria.
KPMG LLP, the independent registered public accounting firm that audited the Company’s financial statements included in this Annual Report, issued an audit report on the Company’s internal control over financial reporting. KPMG’s audit report appears on page 41.
(d)Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting during our fourth fiscal quarter ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.    OTHER INFORMATION
None.

PART III
ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
We have adopted a Standards of Ethical Conduct Policy (the “Code of Ethics”) that applies to all directors and employees including our Chief Executive Officer, President, and Chief Financial Officer. The Code of Ethics is filed in Exhibit 14.1 and is also available on our website at www.willislease.com.
The remainder of the information required by this item is incorporated by reference to our Proxy Statement.
ITEM 11.    EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to our Proxy Statement. 
ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information in Item 5 of this report regarding our Equity Compensation Plans is incorporated herein by reference. The remainder of the information required by this item is incorporated by reference to our Proxy Statement.
ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to our Proxy Statement.
ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated by reference to our Proxy Statement.

33

Table of Contents
PART IV
ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) (1) Financial Statements
The response to this portion of Item 15 is submitted as a separate section of this report beginning on page 43.
(a) (2) Financial Statement Schedules
Schedule II, Valuation Accounts, is submitted as a separate section of this report starting on page 72.
All other financial statement schedules have been omitted as the required information is not pertinent to the Registrant or is not material or because the required information is included in the Financial Statements and Notes thereto.
(a) (3),(b) and (c):Exhibits:  The response to this portion of Item 15 is submitted below.
34

Table of Contents
EXHIBITS
Exhibit 
Number
Description
3.1
3.2
4.1
4.2
4.3
4.3.1
4.4
4.5
4.6
4.7
4.8
10.1†
10.2†
10.3†
10.4†
10.5†
10.6*
10.7*
10.8*
10.9*
10.10*
35

Table of Contents
10.11*
10.12†
10.13†
10.14
10.15
10.16
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
10.26*
10.27*
10.28*
10.29
10.30†
10.31*
10.32*
10.33*
10.34*
36

Table of Contents
10.35*
10.36*
10.37*
10.38*
10.39*
10.40*
10.41*
10.42*
10.43*
10.44*
10.45*
10.46*
10.47*
10.48*
10.49*
10.50*
10.51*
10.52*
10.53*
10.54*
10.55*
10.56*
37

Table of Contents
10.57*
14.1
16.1
21.1
23.1
31.1
31.2
32
101.INS  XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101 The following financial statements from the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Redeemable Preferred Stock and Shareholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
________________________________________________________
*    Certain portions of this exhibit have been redacted pursuant to an SEC order granting confidential treatment or constitute confidential information have been redacted in accordance with Regulation S-K, Item 601(b)(10).
†    Indicates a management contract or compensatory plan or arrangement.
Financial Statements are submitted as a separate section of this report beginning on page 43.
ITEM 16.    FORM 10-K SUMMARY
None.

38

Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, duly authorized officers and directors.
Dated: March 15, 2021
Willis Lease Finance Corporation
By: /s/ CHARLES F. WILLIS, IV
Charles F. Willis, IV
Chairman of the Board and
Chief Executive Officer
Dated: Title Signature
Date: March 15, 2021 Chief Executive Officer and Director /s/ CHARLES F. WILLIS, IV
(Principal Executive Officer) Charles F. Willis, IV
Date: March 15, 2021 Chief Financial Officer /s/ SCOTT B. FLAHERTY
(Principal Financial and Accounting Officer) Scott B. Flaherty
Date: March 15, 2021 Director /s/ HANS JOERG HUNZIKER
Hans Joerg Hunziker
Date: March 15, 2021 Director /s/ ROBERT J. KEADY
Robert J. Keady
Date: March 15, 2021 Director /s/ RAE ANN MCKEATING
Rae Ann McKeating
Date: March 15, 2021 Director /s/ AUSTIN C. WILLIS
Austin C. Willis
39

Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
41
43
44
45
46
47
48
72
40

Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Willis Lease Finance Corporation:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Willis Lease Finance Corporation and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, redeemable preferred stock and shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes and financial statement Schedule II, Valuation Accounts (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020 based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
41

Table of Contents
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statement and (2) involved our especially challenging, subjective, or complex judgements. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of equipment held for operating lease

As discussed in Notes 1(d), 4 and 9 to the consolidated financial statements, the Company reviews its equipment held for operating lease for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company conducts a formal annual review of the carrying value of equipment held for operating lease and also evaluates assets during the year if a triggering event is identified. Impairment is determined through the review of independent appraisals or by comparison of the forecasted undiscounted cash flows, including estimated sales proceeds, over the expected holding period of the asset to the assets' book value. When undiscounted cash flows are insufficient to recover the carrying value of the asset, an impairment charge is recorded for the excess of the carrying value over fair value, which is determined per individual asset by reference to independent appraisals, quoted market prices (e.g. an offer to purchase) and other factors considered relevant by the Company. The equipment held for operating lease balance as of December 31, 2020 was $1.89 billion and the Company recorded impairment charges of approximately $20.54 million for the year ended December 31, 2020.

We identified the valuation of equipment held for operating lease as a critical audit matter. The forecasted undiscounted cash flows used to estimate recoverability of asset carrying values were challenging to test as they represented subjective determinations of future market and economic conditions that are sensitive to variation. Minor changes to certain assumptions, such as estimated lease rates, expected lease period and estimated sales proceeds, could have a significant effect on the Company's assessment of the carrying value of equipment held for operating lease. Additionally, the audit effort associated with procedures related to the independent appraisals required specialized skills and knowledge.

The following are the primary procedures we performed to address the critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This included controls related to the Company's assessment of equipment held for operating lease for impairment, including the controls over the:

evaluation of independent appraisals, including considerations of the accuracy of data used by management's specialists

determination of estimated lease rates, expected lease period, and estimated sales proceeds used in the forecasted undiscounted cash flows.

We assessed the reasonableness of forecasted undiscounted cash flows by comparing the Company's estimated lease rates, expected lease period and estimated sales proceeds to historical trends and Company specific market data. We compared the Company's historical forecasted undiscounted cash flows to actual results to assess the Company's ability to accurately forecast. For a selection of assets, we assessed the reasonableness of asset condition data used by the independent appraisers engaged by management. We involved valuation professional with specialized skills and knowledge, who assisted in the:

evaluation of the qualification of the independent appraisers used by management; and

assessment of the methodologies utilized and reasonableness of independent appraisal values by comparing a selection of appraised values from appraisers engaged by management and to published industry benchmark values of comparable assets.

/s/ KPMG LLP

We have not been able to determine the specific year that we began serving as the Company’s auditor; however, we are aware that we have served as the Company’s auditor since at least 1991.

Fort Lauderdale, Florida
March 15, 2021
42

Table of Contents
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share data)
December 31, 2020 December 31, 2019
ASSETS
Cash and cash equivalents $ 42,540  $ 6,720 
Restricted cash 36,385  56,948 
Equipment held for operating lease, less accumulated depreciation of $454,123 and $414,835 at December 31, 2020 and 2019, respectively
1,886,613  1,650,918 
Maintenance rights 20,097  3,133 
Equipment held for sale 2,850  120 
Receivables, net of allowances of $1,372 and $1,730 at December 31, 2020 and 2019, respectively
28,269  24,059 
Spare parts inventory 59,434  41,759 
Investments 53,275  57,936 
Property, equipment & furnishings, less accumulated depreciation of $11,356 and $8,666 at December 31, 2020 and 2019, respectively
31,753  31,520 
Intangible assets, net 1,246  1,312 
Notes receivable 158,708  38,145 
Other assets 43,778  28,038 
Total assets (1) $ 2,364,948  $ 1,940,608 
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued expenses $ 26,977  $ 45,648 
Deferred income taxes 116,838  110,418 
Debt obligations 1,693,753  1,251,006 
Maintenance reserves 82,484  106,870 
Security deposits 19,522  20,569 
Unearned revenue 11,637  6,121 
Total liabilities (2) 1,951,211  1,540,632 
Redeemable preferred stock ($0.01 par value, 2,500 shares authorized; 2,500 shares issued and outstanding at December 31, 2020 and 2019, respectively)
49,722  49,638 
Shareholders’ equity:
Common stock ($0.01 par value, 20,000 shares authorized; 6,570 and 6,356 shares issued at December 31, 2020 and 2019, respectively)
66  64 
Paid-in capital in excess of par 13,696  4,557 
Retained earnings 355,370  348,965 
Accumulated other comprehensive loss, net of income tax benefit of $1,428 and $896 at December 31, 2020 and 2019, respectively.
(5,117) (3,248)
Total shareholders’ equity 364,015  350,338 
Total liabilities, redeemable preferred stock and shareholders’ equity $ 2,364,948  $ 1,940,608 
________________________________________________________
(1)Total assets at December 31, 2020 and 2019 include the following assets of variable interest entity’s (“VIE’s”) that can only be used to settle the liabilities of the VIE’s: Cash, $0 and $134; Restricted Cash, $35,262 and $56,523, Equipment, $1,037,684 and $1,004,851; Maintenance Rights, $767 and $3,133; Inventory, $5,437 and $2,832; and Other, $558 and $668 respectively.
(2)Total liabilities at December 31, 2020 and 2019 include the following liabilities of VIE’s for which the VIE’s creditors do not have recourse to Willis Lease Finance Corporation: Debt obligations, $907,550 and $842,996, respectively.
See accompanying notes to the consolidated financial statements.
43

Table of Contents
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share data)
Years Ended December 31,
2020 2019
REVENUE
Lease rent revenue $ 142,895  $ 190,690 
Maintenance reserve revenue 105,365  108,998 
Spare parts and equipment sales 18,625  74,651 
Gain on sale of leased equipment 3,391  20,044 
Other revenue 18,416  14,777 
Total revenue 288,692  409,160 
EXPENSES
Depreciation and amortization expense 94,541  86,236 
Cost of spare parts and equipment sales 16,762  62,647 
Write-down of equipment 20,540  18,220 
General and administrative 67,910  86,523 
Technical expense 6,533  8,122 
Net finance costs:
Interest expense 63,024  66,889 
Loss on debt extinguishment 4,688  220 
Total net finance costs 67,712  67,109 
Total expenses 273,998  328,857 
Earnings from operations 14,694  80,303 
Earnings from joint ventures 2,642  8,578 
Income before income taxes 17,336  88,881 
Income tax expense 7,588  21,959 
Net income 9,748  66,922 
Preferred stock dividends 3,259  3,250 
Accretion of preferred stock issuance costs 84  84 
Net income attributable to common shareholders $ 6,405  $ 63,588 
Basic weighted average earnings per common share: $ 1.07  $ 10.90 
Diluted weighted average earnings per common share: $ 1.05  $ 10.50 
Basic weighted average common shares outstanding 5,963  5,836 
Diluted weighted average common shares outstanding 6,128  6,058 
See accompanying notes to the consolidated financial statements.
44

Table of Contents
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(In thousands)
Years Ended December 31,
2020 2019
Net income $ 9,748  $ 66,922 
Other comprehensive loss:
Currency translation adjustment 1,018  (222)
Unrealized loss on derivative instruments (2,298) (3,331)
Unrealized loss on derivative instruments at joint venture (1,121) (774)
Net loss recognized in other comprehensive income (2,401) (4,327)
Tax benefit related to items of other comprehensive loss 532  977 
Other comprehensive loss (1,869) (3,350)
Total comprehensive income $ 7,879  $ 63,572 
See accompanying notes to the consolidated financial statements.
45

Table of Contents
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Redeemable Preferred Stock and Shareholders’ Equity
Years Ended December 31, 2020 and 2019
(In thousands, except per share data)
Shareholders' Equity
Redeemable Accumulated Other
Preferred Stock Common Stock Paid-in Capital in Retained Comprehensive Total Shareholders’
Shares Amount Shares Amount Excess of par Earnings Income/(Loss) Equity
Balances at December 31, 2018 2,500  $ 49,554  6,176  $ 62  $ —  $ 286,623  $ 102  $ 286,787 
Net income —  —  —  —  —  66,922  —  66,922 
Net unrealized loss from currency translation adjustment, net of tax benefit of $50
—  —  —  —  —  —  (172) (172)
Net unrealized loss from derivative instruments, net of tax benefit of $927
—  —  —  —  —  —  (3,178) (3,178)
Shares repurchased —  —  (72) (1) (2,087) (1,479) —  (3,567)
Shares issued under stock compensation plans —  —  289  332  —  —  335 
Cancellation of restricted stock units in satisfaction of withholding tax —  —  (37) —  (1,475) —  —  (1,475)
Stock-based compensation, net of forfeitures —  —  —  —  7,787  —  —  7,787 
Accretion of preferred shares issuance costs —  84  —  —  —  (84) —  (84)
Preferred stock dividends ($1.30 per share)
—  —  —  —  —  (3,250) —  (3,250)
Adoption of ASU 2016-02 —  —  —  —  —  233  —  233 
Balances at December 31, 2019 2,500  49,638  6,356  64  4,557  348,965  (3,248) 350,338 
Net income —  —  —  —  —  9,748  —  9,748 
Net unrealized gain from currency translation adjustment, net of tax expense of $225
—  —  —  —  —  —  793  793 
Net unrealized loss from derivative instruments, net of tax benefit of $757
—  —  —  —  —  —  (2,662) (2,662)
Shares repurchased —  —  (56) —  (1,510) —  —  (1,510)
Shares issued under stock compensation plans —  —  331  425  —  —  428 
Cancellation of restricted stock in satisfaction of withholding tax —  —  (61) (1) (1,154) —  —  (1,155)
Stock-based compensation, net of forfeitures —  —  —  —  11,378  —  —  11,378 
Accretion of preferred shares issuance costs —  84  —  —  —  (84) —  (84)
Preferred stock dividends ($1.30 per share)
—  —  —  —  —  (3,259) —  (3,259)
Balances at December 31, 2020 2,500  $ 49,722  6,570  $ 66  $ 13,696  $ 355,370  $ (5,117) $ 364,015 
See accompanying notes to the consolidated financial statements.
46

Table of Contents
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
  Years Ended December 31,
  2020 2019
Cash flows from operating activities:
Net income $ 9,748  $ 66,922 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 94,541  86,236 
Write-down of equipment 20,540  18,220 
Stock-based compensation expenses 11,378  7,787 
Amortization of deferred costs 5,140  6,364 
Allowances and provisions (272)
Gain on sale of leased equipment (3,391) (20,044)
Income from joint ventures (2,642) (8,578)
Loss on sale of note receivable 79  — 
(Gain) Loss on disposal of property, equipment and furnishings (9) 42 
Loss on debt extinguishment 4,688  220 
Deferred income taxes 6,953  21,074 
Changes in assets and liabilities:
Receivables (4,215) (517)
Distributions received from joint ventures 7,200  3,300 
Inventory 7,026  29,114 
Other assets (16,252) (2,519)
Accounts payable and accrued expenses (18,441) 2,131 
Maintenance reserves (24,386) 22,282 
Security deposits (1,166) (2,108)
Unearned revenue (3,352) 661 
Net cash provided by operating activities 93,444  230,315 
Cash flows from investing activities:
Proceeds from sale of equipment (net of selling expenses) 26,078  191,891 
Proceeds from sale of note receivable (net of selling expenses) 8,431  — 
Issuance of notes receivable (136,583) (42,857)
Payments received on notes receivable 7,630  4,950 
Capital contributions to joint ventures —  (5,713)
Purchase of equipment held for operating lease (409,250) (289,385)
Purchase of property, equipment and furnishings (2,976) (6,330)
Net cash used in investing activities (506,670) (147,444)
Cash flows from financing activities:
Proceeds from issuance of debt obligations 973,200  340,120 
Debt issuance costs (6,065) (3,142)
Principal payments on debt obligations (530,783) (428,081)
Interest bearing security deposits —  (2,092)
Debt prepayment costs (2,373) — 
Proceeds from shares issued under stock compensation plans 428  335 
Repurchase of common stock (1,510) (3,567)
Preferred stock dividends (3,259) (3,250)
Cancellation of restricted stock units in satisfaction of withholding tax (1,155) (1,475)
Net cash provided by (used in) financing activities 428,483  (101,152)
Increase/(Decrease) in cash, cash equivalents and restricted cash 15,257  (18,281)
Cash, cash equivalents and restricted cash at beginning of period 63,668  81,949 
Cash, cash equivalents and restricted cash at end of period $ 78,925  $ 63,668 
Supplemental disclosures of cash flow information:
Net cash paid for:
Interest $ 54,339  $ 63,585 
Income Taxes $ 510  $ 222 
Supplemental disclosures of non-cash activities:
Liabilities assumed in purchase of equipment held for operating lease $ 8,868  $ 2,515 
Transfers from Equipment held for operating lease to Equipment held for sale $ 2,800  $ 10,131 
Transfers from Equipment held for operating lease to Spare parts inventory $ 24,702  $ 23,931 
Transfers from Equipment held for sale to Spare parts inventory $ —  $ 422 
Accretion of preferred stock issuance costs $ 84  $ 84 
See accompanying notes to the consolidated financial statements.
47

Table of Contents
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Organization and Summary of Significant Accounting Policies
Unless the context requires otherwise, references to the “Company”, “WLFC”, “we”, “us” or “our” in this Annual Report on Form 10-K refer to Willis Lease Finance Corporation and its subsidiaries.
(a)Organization
Willis Lease Finance Corporation with its subsidiaries is a provider of aviation services whose primary focus is providing operating leases of commercial aircraft, aircraft engines and other aircraft-related equipment to air carriers, manufacturers and overhaul/repair facilities worldwide. The Company also engages in the selective purchase and resale of commercial aircraft engines.
Willis Aeronautical Services, Inc. (“Willis Aero”) is a wholly-owned subsidiary whose primary focus is the sale of aircraft engine parts and materials through the acquisition or consignment of aircraft engines.
Willis Asset Management Limited (“Willis Asset Management”) is a wholly-owned subsidiary whose primary focus is the engine management and consulting business.
Willis Engine Securitization Trust II (“WEST II” or the “WEST II Notes”) is a bankruptcy remote special purpose vehicle which was established for the purpose of financing aircraft engines through an asset-backed securitization (“ABS”), of which the Company is the sole beneficiary. WEST II is a variable interest entity (“VIE”) which the Company owns 100% of the interest and consolidates in its financial statements.
Willis Engine Securitization Trust III (“WEST III” or the “WEST III Notes”) is a bankruptcy remote special purpose vehicle which was established for the purpose of financing aircraft engines through an ABS, of which the Company is the sole beneficiary. WEST III is a VIE which the Company owns 100% of the interest and consolidates in its financial statements. 
Willis Engine Securitization Trust IV (“WEST IV” or the “WEST IV Notes”) is a bankruptcy remote special purpose vehicle which was established for the purpose of financing aircraft engines through an ABS, of which the Company is the sole beneficiary. WEST IV is a VIE which the Company owns 100% of the interest and consolidates in its financial statements.
In March 2020, the Company and its direct, consolidated VIE Willis Engine Structured Trust V (“WEST V”) (formerly WEST II), closed its offering of $366.2 million aggregate principal amount of fixed rate notes (the “WEST V Notes”). The WEST V Notes were issued in three series, with the Series A Notes issued in an aggregate principal amount of $303.0 million, the Series B Notes issued in an aggregate principal amount of $42.1 million and the Series C Notes issued in an aggregate principal amount of $21.1 million.
Principal and interest on the WEST III, IV and V Notes are payable monthly to the extent of available cash in accordance with a priority of payments included in the respective indenture agreements.
The WEST III, IV and V Notes are secured by, among other things, the respective ABS’s direct and indirect interests in a portfolio of assets. The WEST III, WEST IV and WEST V Notes have scheduled amortizations and are payable solely from revenue received from the engines and the engine leases, after payment of certain expenses of the respective ABS. The assets of WEST III, WEST IV and WEST V are not available to satisfy the Company’s obligations other than the obligations specific to the respective ABS. WEST III, WEST IV and WEST V are consolidated for financial statement presentation purposes, with the respective assets and liabilities on the Company’s balance sheet. The ABS’ ability to make distributions and pay dividends to the Company is subject to the prior payments of its debt and other obligations and maintenance of adequate reserves and capital. Under each ABS, cash is collected in a restricted account, which is used to service the debt and any remaining amounts, after debt service and defined expenses, are distributed to the Company. Additionally, a portion of the maintenance reserve payments and lease security deposits are formulaically accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively.
Additionally, in connection with WEST III, WEST IV and WEST V, the Company entered into servicing agreements and administrative agency agreements to provide certain engine, lease management and reporting functions in return for fees based on a percentage of collected lease revenues and asset sales. Because WEST III, WEST IV and WEST V are consolidated for financial statement reporting purposes, all fees eliminate upon consolidation.
48

Table of Contents
(b)Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements include the accounts of WLFC and its wholly owned subsidiaries, including VIEs where the Company is the primary beneficiary, in accordance with consolidation guidance. The Company first evaluates all entities in which it has an economic interest to determine whether for accounting purposes the entity is either a VIE or voting interest entity. If the entity is a VIE, the Company consolidates the financial statements of that entity if it is the primary beneficiary of such entities’ activities. If the entity is a voting interest entity, the Company consolidates the entity when it has a majority of voting interests in such entity. Intercompany transactions and balances have been eliminated in consolidation. 
(c)Revenue Recognition
Leasing revenue
Revenue from leasing of engines, aircraft and related parts and equipment is recognized as operating lease revenue on a straight-line basis over the terms of the applicable lease agreements. Revenue is not recognized when cash collection is not reasonably assured. When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received.
Under the terms of some of the Company’s leases, the lessees pay use fees (also known as maintenance reserves) to the Company based on usage of the leased asset, which are designed to cover expected future maintenance costs. Some of these amounts are reimbursable to the lessee if they make specifically defined maintenance expenditures. Use fees received are recognized in revenue as maintenance reserve revenue if they are not reimbursable to the lessee. Use fees that are reimbursable are recorded as a maintenance reserve liability until they are reimbursed to the lessee, the lease terminates, or the obligation to reimburse the lessee for such reserves ceases to exist, at which time they are recognized in revenue as maintenance reserve revenue.
Certain lessees may be significantly delinquent in their rental payments and may default on their lease obligations. As of December 31, 2020, the Company had an aggregate of approximately $4.6 million in lease rent and $1.9 million in maintenance reserve receivables more than 30 days past due. Inability to collect receivables or to repossess engines or other leased equipment in the event of a default by a lessee could have a material adverse effect on the Company. The Company estimates an allowance for doubtful accounts for receivables it does not consider fully collectible. The allowance for doubtful accounts includes the following: (1) specific reserves for receivables which are impaired for which management believes full collection is doubtful; and (2) a general reserve for estimated losses based on historical experience. 
One customer accounted for 11.4% of total lease rent revenue during the year ended December 31, 2020. No customer accounted for more than 10% of total lease rent revenue during the year ended December 31, 2019.
Gain on sale of leased equipment  
The Company regularly sells equipment from its lease portfolio. This equipment may or may not be subject to a lease at the time of sale. The net gain or loss on such sales is recognized as revenue and consists of proceeds associated with the sale less the net book value of the asset sold and any direct costs associated with the sale. To the extent that deposits associated with the equipment are not included in the sale, any such amount is included in the calculation of gain or loss.
Spare parts sales
The Spare Parts Sales reportable segment primarily engages in the sale of aircraft engine parts and materials through the acquisition or consignment of engines from third parties or the Company’s leasing operations. The parts are sold at a fixed price with no right of return. In determining the performance obligation, management has identified the promise in the contract to be the shipment of the spare parts to the customer.  Title passes to the buyer when the goods are shipped, and the buyer is responsible for any loss in transit, and the Company has a legal right to payment for the spare parts. Management has determined that physical acceptance of the spare parts to be a formality in accordance with Accounting Standards Codification (“ASC”) 606-10-5-86. 
The spare parts transaction price is a fixed dollar amount and is stated on each purchase order for a fixed amount by total number of parts. Spare parts revenue is based on a set price for a set number of parts as defined in the purchase order. The performance obligation is completed once the parts have shipped and, as a result, all of the transaction price is allocated to that performance obligation. Management has determined that it is appropriate for the Company to recognize spare parts sales at a point in time (i.e., the date the parts are shipped) under ASC 606.
Equipment Sales
Equipment sales represent the selective purchase and resale of commercial aircraft engines and other aircraft equipment. The Company and customer enter into an agreement which outlines the place and date of sale, purchase price, payment terms, condition of
49

Table of Contents
the asset, bill of sale, and the assignment of rights and warranties from the Company to the customer. Management has identified the promise in the equipment sale contract to be the transfer of ownership of the asset. Management believes the asset holds standalone value to the customer as it is not dependent on any other services for functionality purposes and therefore is distinct within the context of the contract and as described in ASC 606-10. As such, management has identified the transfer of the asset as the performance obligation. The transaction price is set at a fixed dollar amount per fixed quantity (number of assets) and is explicitly stated in each contract. Equipment sales revenue is based on a set price for a set number of assets, which is allocated to the performance obligation discussed above, in its entirety. The Company has determined the date of transfer to the customer to be the date the customer obtains control and title over the asset and the date which revenue is to be recognized and payment is due.
Managed Services
Managed services revenue predominantly represents fleet management and engine storage services which may be combined on a single contract with a customer. Fleet management services are performed for a stated fixed fee as agreed upon in the services agreement. Engine storage services are for a fixed monthly fee. For a contract containing more than one performance obligation, the allocation of the transaction price is generally performed on the basis of the relative stand-alone selling price of each distinct good or service in the contract. As each of the services provided within the contract have separate prices, the Company allocates the price to its related performance obligation described above. Management has determined each of the revenue elements contain performance obligations that are satisfied over time and therefore recognizes revenue over time in accordance with ASC 606-10-25-27. The Company utilizes the percentage-of-completion method (input method) for recognizing fleet management services and will calculate revenues based on labor hours incurred. Additionally, as is required by ASC 606-10-25-35, as circumstances change over time, the Company will update its measure of progress to reflect any changes in the outcome of the performance obligation. Engine storage services are recognized on a monthly basis utilizing the input method of days passed.
Amounts owed for managed services are typically billed upon contract completion. At December 31, 2020, unbilled revenue was $0.8 million and the Company expects it to be fully recognized by June 30, 2021. Additionally, managed services are presented within the Other revenue line in the Consolidated Statements of Income.
Other Revenue
Other revenue consists primarily of management fee income, lease administration fees, third party consignment commissions earned, service fee revenue, interest income on notes receivable related to failed sale-leasebacks where the Company was the buyer-lessor, and other discrete revenue items.
(d)Equipment Held for Operating Lease
Aircraft assets held for operating lease are stated at cost, less accumulated depreciation. Certain costs incurred in connection with the acquisition of aircraft assets are capitalized as part of the cost of such assets. Major overhauls paid for by the Company, which improve functionality or extend the original useful life, are capitalized and depreciated over the shorter of the estimated period to the next overhaul (“deferral method”) or the remaining useful life of the equipment. The Company does not accrue for planned major maintenance. The cost of overhauls of aircraft assets under long term leases, for which the lessee is responsible for maintenance during the period of the lease, are paid for by the lessee or from reimbursable maintenance reserves paid to the Company in accordance with the lease, and are not capitalized.
Based on specific aspects of the equipment, the Company generally depreciates engines on a straight-line basis over a 15-year period from the acquisition date to a 55% residual value. This methodology is believed to accurately reflect the Company’s typical holding period for the engine assets and that the residual value assumption reasonably approximates the selling price of the assets 15 years from the date of acquisition. The typical 15 year holding period is the estimated useful life of the Company’s engines based on its business model and plans, and represents how long the Company anticipates holding a newly acquired engine. The technical useful life of a new engine can be in excess of 25 years. The Company reviews the useful life and residual values of all engines periodically as demand changes to accurately depreciate the cost of equipment over the useful life of the engines.
The aircraft and airframes owned by the Company are depreciated on a straight-line basis over an estimated useful life of 13 to 20 years to a 15% to 17% residual value. The marine vessel owned by the Company is depreciated on a straight-line basis over an estimated useful life of 18 years to a 15% residual value. The other leased parts and related equipment owned by the Company are depreciated on a straight-line basis over an estimated useful life of 14 to 15 years to a 25% residual value.
50

Table of Contents
The following table disaggregates equipment held for operating lease by asset class (in thousands):
As of December 31,
2020 2019
Gross value Accumulated depreciation Net book value Gross value Accumulated depreciation Net book value
(in thousands)
Engines and related equipment $ 2,238,160  $ (445,780) $ 1,792,380  $ 1,920,215  $ (401,776) $ 1,518,439 
Aircraft and airframes 89,613  (7,312) 82,301  133,424  (12,630) 120,794 
Marine vessel 12,963  (1,031) 11,932  12,114  (429) 11,685 
$ 2,340,736  $ (454,123) $ 1,886,613  $ 2,065,753  $ (414,835) $ 1,650,918 
The useful life of older generation engines and aircraft may be significantly less based upon the technical status of the engine, as well as supply and demand factors. For these older generation engines and aircraft, the remaining useful life and the remaining expected holding period are typically the same. For older generation engines or aircraft that are unlikely to be repaired at the end of the current expected useful lives, the Company depreciates the engines or aircraft over their estimated lives to a residual value based on an estimate of the wholesale value of the parts after disassembly. As of December 31, 2020, 50 engines having a net book value of $51.6 million were depreciated under this policy with estimated useful lives ranging from 1 to 125 months. The Company adjusts its estimates annually for these older generation assets, including updating estimates of an engine’s or aircraft’s remaining operating life as well as future residual value expected from part-out based on the current technical status of the engine or aircraft.
The Company reviews its long-lived assets, including certain failed sale-leaseback transactions classified as notes receivable under ASC 842, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets to be disposed are reported at the lower of carrying amount or fair value less cost to sell. Impairment is identified by review of appraisals or by comparison of undiscounted forecasted cash flows, including estimated sales proceeds, over the life of the asset with the assets’ book value. If the undiscounted forecasted cash flows are less than the book value, the asset is written down to its fair value. Fair value is determined per individual asset by reference to independent appraisals, quoted market prices (e.g. an offer to purchase) and other factors considered relevant by the Company. The Company conducts a formal annual review of the carrying value of long-lived assets and also evaluates assets during the year if a triggering event is identified indicating impairment is possible. Such annual review resulted in an impairment charge of $4.9 million and $6.4 million in 2020 and 2019, respectively (included in “Write-down of equipment” in the Consolidated Statements of Income). 
(e)Equipment Held for Sale
Equipment held for sale includes assets being marketed for sale as well as third party consigned assets. The assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell.
(f)Debt Issuance Costs and Related Fees
Fees paid in order to secure debt are capitalized, included in Debt obligations on the Consolidated Balance Sheets, and amortized over the life of the related loan using the effective interest method.
(g)Interest Rate Hedging
The Company enters into various derivative instruments periodically to mitigate the exposure on variable rate borrowings. The derivative instruments are fixed-rate interest swaps that are recorded at fair value as either an asset or liability.
While substantially all of the Company’s derivative transactions are entered into for the purposes described above, hedge accounting is only applied where specific criteria have been met and it is practicable to do so. In order to apply hedge accounting, the transaction must be designated as a hedge and it must be highly effective. The hedging instrument’s effectiveness is assessed utilizing regression analysis at the inception of the hedge and on at least a quarterly basis throughout its life. All of the transactions that the Company has designated as hedges are cash flow hedges. The effective portion of the change in fair value on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income and is reclassified into earnings in the period during which the transaction being hedged affects earnings. The ineffective portion of the hedges is recorded in earnings in the current period.
(h)Income Taxes
The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to
51

Table of Contents
future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes of a change in the tax rates is recognized in income in the period that includes the enactment date.
The Company recognizes in the financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs (see Note 8).
The Company files income tax returns in various states and countries which may have different statutes of limitations. The Company records penalties and accrued interest related to uncertain tax positions in income tax expense. Such adjustments have historically been minimal and immaterial to our financial results.
(i)Property, Equipment and Furnishings
Property, equipment and furnishings are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets, which range from three to 37 years. Leasehold improvements are recorded at cost and depreciated by the straight-line method over the shorter of the lease term or useful life of the leasehold.
(j)Cash and Cash Equivalents
The Company considers highly liquid investments readily convertible into known amounts of cash, with original maturities of 90 days or less, as cash equivalents.
(k)Restricted Cash
The Company has certain bank accounts that are subject to restrictions in connection with its WEST III, WEST IV and WEST V notes payable. Under these borrowings cash is collected in restricted accounts, which are used to service the debt and any remaining amounts, after debt service and defined expenses, are distributed to the Company. Additionally, a portion of projected maintenance obligations and some or all of the lease security deposits are accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. Under WEST III, cash equal to a portion of the projected maintenance obligations for the subsequent nine months is held in a restricted account and is subject to a minimum balance of $10.0 million. Under WEST IV, cash equal to a portion of the projected maintenance obligations for the subsequent ten months is held in a restricted account and is subject to a minimum balance of $5.0 million. Under WEST V, cash equal to a portion of the projected maintenance obligations for the subsequent twelve months is held in a restricted account and is subject to a minimum balance of $5.0 million. Under WEST III, WEST IV and WEST V, security deposits are held in restricted accounts equal to a portion of the security deposits for leases scheduled to terminate over the subsequent four months, in each case, subject to a minimum balance of $1.0 million. Provided lease return conditions have been met, these deposits will be returned to the lessee. To the extent return conditions are not met, these deposits may be retained by the Company.
(l)Spare Parts Inventory
Spare parts inventory consists of spare aircraft and engine parts purchased either directly by Willis Aero and also engines removed from the lease portfolio to be parted out. Spare parts inventory is stated at lower of cost or net realizable value. An impairment charge for excess or inactive inventory is recorded based upon an analysis that considers current inventory levels, historical usage patterns, future sales expectations and salvage value.
(m)Intangible Assets
Intangible assets include customer relationships and goodwill at Willis Asset Management. Intangible assets are accounted for in accordance with ASC 350, “Intangibles — Goodwill and Other.”
Customer relationships are amortized on a straight line basis over their estimated useful life of five years. The Company has no intangible assets with indefinite useful lives. Goodwill is assessed for impairment annually.
(n)Other assets
Other assets typically include prepaid purchase deposits and other prepaid expenses. As of December 31, 2020 and 2019, other assets included prepaid deposits of $10.5 million and $10.6 million, respectively, relating to commitments to purchase equipment.
(o)Management Estimates
These financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States.
52

Table of Contents
The preparation of consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Management evaluates estimates on an ongoing basis, including those related to residual values, estimated asset lives, impairments and bad debts. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Management believes that the accounting policies on revenue recognition, maintenance reserves and expenditures, useful life of equipment, asset residual values, asset impairment and allowance for doubtful accounts are critical to the results of operations.
If the useful lives or residual values are lower than those estimated, upon sale of the asset a loss may be realized. Significant management judgment is required in the forecasting of future operating results, which are used in the preparation of projected undiscounted cash-flows and should different conditions prevail, material impairment write-downs may occur.
(p)Earnings per share information
Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is computed by dividing net income by the weighted average number of shares outstanding, adjusted for the dilutive effect of unvested restricted stock awards (“RSAs”). See Note 10 for more information on the computation of earnings per share.
(q)Investments
The Company’s investments are joint ventures, where it owns 50% of the equity of the ventures and are accounted for using the equity method of accounting. The investments are recorded at the amount invested plus or minus our 50% share of net income or loss, less any distributions or return of capital received from the entities.
(r)Stock Based Compensation
The Company recognizes stock based compensation expense in the financial statements for share-based awards based on the grant-date fair value of those awards. Stock based compensation expense is recognized over the requisite service periods of the awards on a straight-line basis, which is generally commensurate with the vesting term. Forfeitures are accounted for as they occur.
(s)Initial Direct Costs associated with Leases
The Company accounts for the initial direct costs, including sales commissions and legal fees, incurred in obtaining a new lease by deferring and amortizing those costs over the term of the lease. The amortization of these costs is recorded under general and administrative expenses in the Consolidated Statements of Income. The amounts amortized were $1.5 million and $2.0 million for the years ended December 31, 2020 and 2019, respectively.
(t)Maintenance Rights
The Company identifies, measures and accounts for maintenance right assets and liabilities associated with acquisitions of equipment with in-place leases. A maintenance right asset represents the fair value of the contractual right under a lease to receive equipment in an improved maintenance condition as compared to the maintenance condition on the acquisition date. A maintenance right liability represents the Company’s obligation to pay the lessee for the difference between the lease-end contractual maintenance condition of the equipment and the actual maintenance condition of the equipment on the acquisition date. The equipment condition at the end of the lease term may result in either overhaul work being performed by the lessee to meet the required return condition or a financial settlement.
When a capital event is performed on the equipment by the lessee, which satisfies their maintenance right obligation, the maintenance rights are added to the equipment basis and depreciated to the next capital event. When equipment is sold before the end of the pre-existing lease, the maintenance rights are applied against any accumulated maintenance reserves, if paid by the lessee, and the remaining balance is applied to the disposition gain or loss. When a lease terminates, an end of lease true-up is performed and the maintenance right is applied against the accumulated maintenance reserves or, for non-reserve lessees the final settlement payment, and any remaining net maintenance right is recorded in the income statement.
(u)Foreign Currency Translation
The Company’s foreign investments have been converted at rates of exchange in effect at the balance sheet dates. The changes in exchange rates in our foreign investments reported under the equity method are included in stockholders’ equity as accumulated other comprehensive income.
53

Table of Contents
(v)Risk Concentrations
Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash deposits, lease receivables and interest rate swaps.
The Company places its cash deposits with financial institutions and other credit-worthy institutions, such as money market funds, and limits the amount of credit exposure to any one party. Management opts for security of principal as opposed to yield. Concentrations of credit risk with respect to lease receivables are limited due to the large number of customers comprising the customer base, and their dispersion across different geographic areas. Some lessees are required to make payments for maintenance reserves at the end of the lease however, this risk is considered limited due to the relatively few lessees which have this provision in the lease. The Company enters into interest rate swap agreements with counterparties that are investment grade financial institutions.
(w)Risks and Uncertainties

As a result of the COVID-19 pandemic, the Company has temporarily closed its headquarters and other offices, required its employees and contractors to predominately work remotely, and implemented travel restrictions, all of which represent a significant disruption in how the Company operates its business. In addition, during 2020, 9% of our employees have been either furloughed, or subject to a form of reduced compensation. The operations of the Company’s partners and customers have likewise been disrupted. The worldwide spread of the COVID-19 virus has resulted in a global slowdown of economic activity. While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment actions, it has had an adverse effect on the global economy and the ultimate societal and economic impact of the COVID-19 pandemic remains unknown. In particular, the ongoing COVID-19 pandemic has caused significant disruptions to the airline industry and has resulted in a dramatic reduction in demand for air travel domestically and abroad, which is likely to continue for the foreseeable future. In addition to the impacts described below, dramatically lower demand for air travel in turn presents significant risks to the Company, not all of which the Company is able to fully evaluate or even to foresee at the current time, and could negatively impact collections of accounts receivable, cause the Company’s lessee customers to not enter into new leases, reduce spending from new and existing customers for leases or spare parts or equipment, lower usage fees, cause some of the Company’s customers to go out of business, and limit the ability of the Company’s personnel to travel to customers and potential customers, all of which could adversely affect the Company’s business, results of operations, and financial condition. While significant uncertainty exists as to the full impact of the COVID-19 pandemic on our liquidity and capital resources, as of the date of this report, we believe our cash liquidity, equity base, internally generated funds and existing debt facilities are sufficient to maintain our level of operations through the next twelve months. Due to the impact of recent events, including challenges from declines in market conditions, the Company performed quarterly interim impairment analysis during 2020. The results of the analysis indicated $0.5 million additional impairment in 2020 for two engines having net book values in excess of their respective fair value. During 2020, we experienced declining average utilization and a corresponding decrease in revenue, as well as a significant decline in spare parts and equipment sales, in each case as compared to the prior year. Additionally, as of December 31, 2020, the Company has, in certain situations, agreed to rent concessions which resulted in a total reduction to rent revenues of $6.5 million for the year ended December 31, 2020. The rent concessions provide lessees with payment deferral options or reduced rent, where the revised cash flows are substantially the same or less (i.e., the rights of the lessor and obligations of the lessee have not substantially increased) as the original lease agreements. There is no impact on the timing of revenue recognition for rent concessions that result in short term payment deferrals. The rent concessions with reduced rent qualify for the COVID-19 practical expedient to account for the rent concessions outside of the modification framework.

Other than what has been reflected in the Consolidated Financial Statements, the Company is not aware of any specific event or circumstance related to the COVID-19 pandemic that would require it to update its estimates or judgments or adjust the carrying value of its assets or liabilities. Actual results could differ from those estimates and any such differences may be material to the Consolidated Financial Statements.
(x)Recent Accounting Pronouncements
Recent Accounting Pronouncements Adopted by the Company

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-03, “Codification Improvements to Financial Instruments” (“ASU 2020-03”). The ASU improves a variety of codification topics by eliminating inconsistencies and providing clarifications making the codification easier to apply. The conforming amendments are effective upon issuance and did not materially impact our consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting", which provides temporary optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Among other things, for all types of hedging relationships, the guidance allows an entity to change
54

Table of Contents
the reference rate and other critical terms related to reference rate reform without having to remeasure the value or reassess a previous accounting determination. The amendments in this guidance should be applied on a prospective basis and, for companies with a fiscal year ending December 31, are effective from January 1, 2020 through December 31, 2022. The Company adopted this guidance effective January 1, 2020. When the transition occurs, the Company expects to apply this expedient to its existing debt instruments and interest rate swaps that reference LIBOR, and to any other new transactions that reference LIBOR or another reference rate that is discontinued, through December 31, 2022. The adoption of this ASU did not impact the Company’s consolidated financial statements.

In October 2020, the FASB issued ASU 2020-10, “Codification Improvements” (“ASU 2020-10”). The ASU improves a variety of codification topics by improving the consistency of the codification and providing clarifications. The Company adopted this guidance effective October 1, 2020 and it did not materially impact our consolidated financial statements.
Recent Accounting Pronouncements To Be Adopted by the Company

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology. ASU 2016-13 affects trade receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash. Additional disclosures about significant estimates and credit quality are also required. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” This ASU clarifies receivables from operating leases are accounted for using the lease guidance and not as financial instruments. In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” This ASU clarifies various scoping and other issues arising from ASU 2016-13. In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments.” This ASU improves the Codification and amends the interaction of Topic 842 and Topic 326. The amendments in this ASU are effective for the Company on January 1, 2023, with early adoption permitted. The Company expects to adopt this accounting standard update effective January 1, 2023. The Company is evaluating the potential effects on the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. ASU 2019-12 also improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The Company plans to adopt this guidance effective January 1, 2021 and is currently evaluating the potential impact adoption will have on the consolidated financial statements and related disclosures.
2. Leases
As lessor, and as of December 31, 2020, the majority of our leases were operating leases with the exception of certain failed sale-leaseback transactions classified as notes receivable under the guidance provided by ASC 842.
As lessee, the significant majority of leases the Company enters are for real estate (office and warehouse space for our operations as well as automobiles). These lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leases with terms of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Some of the Company’s leases include variable non-lease components (e.g., taxes) which are not separated from associated lease components (e.g. fixed rent, common-area maintenance costs, vehicle protection plans and other service fees) as elected under the practical expedient package provided by ASC 842.
The Company’s leases have remaining lease terms of one to six years, some of which include options to renew or extend the lease term from one to five years. Our automobile leases include an option to purchase the vehicle at lease termination. The depreciable life of assets is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The exercise of lease renewal options or purchase at lease termination is at the Company’s sole discretion. If it is reasonably certain that we will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of our ROU assets and lease liabilities.
55

Table of Contents
Supplemental balance sheet information related to leases was as follows:
Leases Classification December 31, 2020 December 31, 2019
(in thousands, except lease term and discount rate)
Assets
Operating lease right-of-use assets Other assets $ 3,784  $ 4,084 
Total leased assets $ 3,784  $ 4,084 
Liabilities
Operating lease right-of-use liabilities Accounts payable and accrued expenses $ 3,873  $ 3,835 
Total lease liabilities $ 3,873  $ 3,835 
Weighted average remaining lease term (years)
Operating leases 4.20 5.17
Weighted average discount rate
Operating leases 3.1  % 4.5  %

The weighted average discount rate is based on the discount rate for each lease and the remaining balance of the lease payments for each lease at the reporting date.

Future maturities of the Company’s operating lease liabilities at December 31, 2020 are as follows:
Year (in thousands)
2021 $ 1,189 
2022 1,033 
2023 708 
2024 394 
2025 394 
Thereafter 591 
Total lease payments 4,309 
Less: interest (436)
Total lease liabilities $ 3,873 

The following table represents future minimum lease payments under non-cancelable operating leases at December 31, 2020:
Year (in thousands)
2021 $ 1,227 
2022 1,055 
2023 688 
2024 394 
2025 394 
Thereafter 592 
$ 4,350 

56

Table of Contents
The components of lease expense were as follows:
Years Ended December 31,
Lease expense Classification 2020 2019
(in thousands)
Operating lease cost General and administrative $ 1,141  $ 1,326 
Net lease cost $ 1,141  $ 1,326 

Supplemental cash flow information related to leases was as follows:
Years Ended December 31,
2020 2019
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 1,083  $ 920 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 705  $ 495 
3. Revenue from Contracts with Customers
The following tables disaggregate revenue by major source for the years ended December 31, 2020 and 2019 (in thousands):
Year ended December 31, 2020 Leasing and 
Related Operations
Spare Parts Sales Eliminations (1) Total
Leasing revenue $ 142,895  $ —  $ —  $ 142,895 
Maintenance reserve revenue 105,365  —  —  105,365 
Spare parts and equipment sales 1,514  17,514  (403) 18,625 
Gain on sale of leased equipment 3,391  —  —  3,391 
Managed services 8,753  —  —  8,753 
Other revenue 9,651  327  (315) 9,663 
Total revenue $ 271,569  $ 17,841  $ (718) $ 288,692 
Year ended December 31, 2019 Leasing and 
Related Operations
Spare Parts Sales Eliminations (1) Total
Leasing revenue $ 190,690  $ —  $ —  $ 190,690 
Maintenance reserve revenue 108,998  —  —  108,998 
Spare parts and equipment sales 18,684  55,967  —  74,651 
Gain on sale of leased equipment 20,044  —  —  20,044 
Managed services 10,843  —  —  10,843 
Other revenue 3,895  277  (238) 3,934 
Total revenue $ 353,154  $ 56,244  $ (238) $ 409,160 
________________________________________________________
(1)Represents revenue generated between our reportable segments.
4. Equipment Held for Operating Lease
As of December 31, 2020, the Company’s $1,886.6 million equipment held for operating lease portfolio and $158.7 million notes receivable represented 291 engines, eight aircraft, one marine vessel and other leased parts and equipment. As of December 31, 2019, the Company’s $1,650.9 million equipment held for operating lease portfolio and $38.1 million notes receivable represented 263 engines, 12 aircraft, one marine vessel and other leased parts and equipment.
A majority of the equipment is leased and operated internationally. Substantially all leases relating to this equipment are denominated and payable in U.S. dollars.
57

Table of Contents
The Company leases equipment to lessees domiciled in eight geographic regions. The tables below set forth geographic information about the leased equipment grouped by domicile of the lessee (which is not necessarily indicative of the asset’s actual location):
Years Ended December 31,
Lease rent revenue 2020 2019
Region (in thousands)
Europe $ 57,972  $ 84,335 
United States 33,291  39,178 
Asia 32,198  42,127 
South America 11,686  10,030 
Mexico 3,670  5,284 
Middle East 2,067  4,117 
Canada 2,011  3,279 
Africa —  2,340 
Totals $ 142,895  $ 190,690 

As of December 31,
Net book value of equipment held for operating lease 2020 2019
Region (in thousands)
Europe $ 460,664  $ 554,529 
United States 362,471  240,454 
Asia 324,946  427,246 
Mexico 168,593  51,573 
South America 104,671  110,563 
Middle East 47,899  26,732 
Canada 8,500  22,640 
Africa —  2,597 
Off-lease and other 408,869  214,584 
Totals $ 1,886,613  $ 1,650,918 
As of December 31, 2020, the lease status of the equipment held for operating lease (in thousands) was as follows:
Lease Term Net Book Value
Off-lease and other $ 408,869 
Month-to-month leases 339,868 
Leases expiring 2021 208,302 
Leases expiring 2022 526,244 
Leases expiring 2023 252,186 
Leases expiring 2024 78,496 
Leases expiring 2025 44,430 
Leases expiring thereafter 28,218 
$ 1,886,613 
58

Table of Contents
As of December 31, 2020, minimum future payments under non-cancelable leases were as follows:
Year (in thousands)
2021 $ 120,393 
2022 75,835 
2023 28,452 
2024 15,091 
2025 5,647 
Thereafter 8,002 
$ 253,420 
5. Investments
In 2011, the Company entered into an agreement with Mitsui & Co., Ltd. to participate in a joint venture formed as a Dublin-based Irish limited company – Willis Mitsui & Company Engine Support Limited (“WMES”) for the purpose of acquiring and leasing jet engines. Each partner holds a 50% interest in the joint venture and the Company uses the equity method in recording investment activity. As of December 31, 2020, WMES owned a lease portfolio, inclusive of a note receivable, of 36 engines and five aircraft with a net book value of $289.2 million.
In 2014, the Company entered into an agreement with China Aviation Supplies Import & Export Corporation (“CASC”) to participate in a joint venture named CASC Willis Lease Finance Company Limited (“CASC Willis”), a joint venture based in Shanghai, China. Each partner holds a 50% interest in the joint venture and the Company uses the equity method in recording investment activity. CASC Willis acquires and leases jet engines to Chinese airlines and concentrates on the demand for leased commercial aircraft engines and aviation assets in the People’s Republic of China. As of December 31, 2020, CASC Willis owned a lease portfolio of four engines with a net book value of $50.1 million.
As of December 31, 2020 WMES CASC Willis Total
(in thousands)
Investment in joint ventures as of December 31, 2018 $ 34,183  $ 13,758  $ 47,941 
Earnings from joint ventures 8,312  266  8,578 
Contribution 5,713  —  5,713 
Distribution (3,300) —  (3,300)
Foreign currency translation adjustment —  (222) (222)
Other comprehensive loss from joint ventures (774) —  (774)
Investment in joint ventures as of December 31, 2019 44,134  13,802  57,936 
Earnings from joint ventures 1,552  1,090  2,642 
Contribution —  —  — 
Distribution (7,200) —  (7,200)
Foreign currency translation adjustment —  1,018  1,018 
Other comprehensive loss from joint ventures (1,121) —  (1,121)
Investment in joint ventures as of December 31, 2020 $ 37,365  $ 15,910  $ 53,275 
“Other revenue” on the Consolidated Statements of Income includes management fees earned of $1.6 million and $2.9 million during the years ended December 31, 2020 and 2019, respectively, related to the servicing of engines for the WMES lease portfolio.
59

Table of Contents
Unaudited summarized financial information for 100% of WMES is presented in the following table:
  Years Ended December 31,
2020 2019
(in thousands)
Revenue $ 38,086  $ 55,770 
Expenses 35,190  41,253 
WMES net income $ 2,896  $ 14,517 
  As of December 31,
2020 2019
(in thousands)
Total assets $ 303,886  $ 322,606 
Total liabilities 219,836  227,052 
Total WMES net equity $ 84,050  $ 95,554 
The difference between the Company’s investment in WMES and 50% of total WMES net equity is primarily attributable to the recognition of deferred gains related to engines sold by the Company to WMES.
6. Debt Obligations
Debt obligations consisted of the following:
As of December 31,
2020 2019
(in thousands)
Credit facility at a floating rate of interest of one-month LIBOR plus 1.38% at December 31, 2020, secured by engines. The facility has a committed amount of $1.0 billion at December 31, 2020, which revolves until the maturity date of June 2024
$ 777,000  $ 397,000 
WEST V Series A 2020 term notes payable at a fixed rate of interest of 3.23%, maturing in March 2045, secured by engines
286,863  — 
WEST V Series B 2020 term notes payable at a fixed rate of interest of 4.21%, maturing in March 2045, secured by engines
39,855  — 
WEST V Series C 2020 term notes payable at a fixed rate of interest of 6.66%, maturing in March 2045, secured by engines
19,043  — 
WEST IV Series A 2018 term notes payable at a fixed rate of interest of 4.75%, maturing in September 2043, secured by engines
277,481  307,014 
WEST IV Series B 2018 term notes payable at a fixed rate of interest of 5.44%, maturing in September 2043, secured by engines
39,640  43,859 
WEST III Series A 2017 term notes payable at a fixed rate of interest of 4.69%, maturing in August 2042, secured by engines
227,138  257,754 
WEST III Series B 2017 term notes payable at a fixed rate of interest of 6.36%, maturing in August 2042, secured by engines
32,481  36,860 
WEST II Series A 2012 term notes payable at a fixed rate of interest of 5.50%, repaid in March 2020, secured by engines
—  211,572 
Note payable at three-month LIBOR plus a margin ranging from 1.85% to 2.50% at December 31, 2020, maturing in July 2022, secured by engines
6,138  7,286 
Note payable at a fixed rate of interest of 3.18%, maturing in July 2024, secured by an aircraft
7,247  9,124 
  1,712,886  1,270,469 
Less: unamortized debt issuance costs (19,133) (19,463)
Total debt obligations $ 1,693,753  $ 1,251,006 
One-month LIBOR was 0.14% and 1.76% as of December 31, 2020 and December 31, 2019, respectively. Three-month LIBOR was 0.24% and 1.91% as of December 31, 2020 and December 31, 2019, respectively.
60

Table of Contents
Principal outstanding at December 31, 2020, is expected to be repayable as follows:
Year (in thousands)
2021 $ 51,497 
2022 57,341 
2023 52,469 
2024 828,636 
2025 50,401 
Thereafter 672,542 
Total $ 1,712,886 
At December 31, 2020, the Company had a revolving credit facility to finance the acquisition of equipment for lease as well as for general working capital purposes, with the amounts drawn under the facility not to exceed that which is allowed under the borrowing base as defined by the credit agreement. In June 2019, the Company entered into the Fourth Amended and Restated Credit Agreement (“Amended Credit Agreement”) which increased the revolving credit facility from $890.0 million to $1.0 billion. The Amended Credit Agreement incorporates an accordion feature that can expand the credit facility up to $1.3 billion, extends the maturity of the credit facility to June 2024 and provides for certain other amendments to covenants, interest rates and commitment fees.

In connection with entering into the Amended Credit Agreement in June 2019, the Company incurred and deferred an additional $2.8 million of debt issuance costs, and recognized a loss on debt extinguishment of $0.2 million. Unamortized debt issuance costs are included as a reduction to “Debt Obligations” in the consolidated balance sheets and are amortized to “Interest expense” on a straight-line basis through the maturity date of the Amended Credit Agreement. Pursuant to the Amended Credit Agreement, all obligations under the revolving credit facility are collateralized by the title and interest of the Company and certain of its subsidiaries, and to substantially all of its assets and properties.

On October 30, 2020, the Company entered into a Limited Waiver (the “Waiver”) to its Amended Credit Agreement. The Waiver provides for the partial exclusion for specified periods of certain asset book values in the calculation of customer concentration limits, as such limits are defined in the Amended Credit Agreement.
As of December 31, 2020 and 2019, $223.0 million and $603.0 million were available under this facility, respectively. On a quarterly basis, the interest rate is adjusted based on the Company’s leverage ratio, as calculated under the terms of the revolving credit facility. Under the revolving credit facility, all subsidiaries except WEST III, WEST IV, and WEST V jointly and severally guarantee payment and performance of the terms of the loan agreement. The guarantee would be triggered by a default under the agreement.
In March 2020, WLFC and its direct, wholly-owned subsidiary WEST V, closed its offering of $366.2 million aggregate principal amount of fixed rate notes. The WEST V Notes were issued in three series, with the Series A Notes issued in an aggregate principal amount of $303.0 million, the Series B Notes issued in an aggregate principal amount of $42.1 million and the Series C Notes issued in an aggregate principal amount of $21.1 million. The WEST V Notes are secured by, among other things, WEST V’s direct and indirect ownership interests in a portfolio of 54 aircraft engines and three airframes, including 25 aircraft engines and three airframes which WEST V acquired from WLFC pursuant to an asset purchase agreement.

The Series A Notes have a fixed coupon of 3.228%, an expected maturity of approximately eight years and a final maturity date of March 15, 2045, the Series B Notes have a fixed coupon of 4.212%, an expected maturity of approximately eight years and a final maturity date of March 15, 2045 and the Series C Notes have a fixed coupon of 6.657%, an expected maturity of approximately eight years and a final maturity date of March 15, 2045. The Series A Notes were issued at a price of 99.99859% of par, the Series B Notes were issued at a price of 99.99493% of par and the Series C Notes were issued at a price of 99.99918% of par. Principal on the WEST V Notes is payable monthly to the extent of available cash in accordance with a priority of payments included in the indenture for the WEST V Notes. Proceeds from asset sales by WEST V will be used, at WEST V’s election subject to certain conditions, to reduce WEST V's debt or to acquire other engines or airframes.

The Company recognized a $4.7 million loss on debt extinguishment upon the repayment of the WEST II Series A 2012 term notes in March 2020.
The assets of WEST III, WEST IV and WEST V are not available to satisfy the Company’s obligations other than the obligations specific to that WEST entity. WEST III, WEST IV and WEST V are consolidated for financial statement presentation purposes. WEST III, WEST IV and WEST V’s ability to make distributions and pay dividends to the Company is subject to the prior payments of their debt and other obligations and their maintenance of adequate reserves and capital. Under WEST III, WEST IV and WEST V, cash is collected in a restricted account, which is used to service the debt and any remaining amounts, after debt service and defined expenses, are distributed to the Company. Additionally, a portion of maintenance reserve payments and lease security deposits are
61

Table of Contents
formulaically accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. The WEST III, WEST IV, and WEST V indentures require that a minimum threshold of maintenance reserve and security deposit balances be held in restricted cash accounts.
In July 2019, the Company’s note payable secured by a corporate aircraft was repriced at a fixed interest rate of 3.18% and will continue to mature in July 2024. The balance outstanding on this loan was $7.2 million and $9.1 million as of December 31, 2020 and December 31, 2019, respectively.
In February 2019, the Company entered into a new $8.1 million loan with a financial institution and has a maturity date of July 2022. Interest is payable at three-month LIBOR plus a margin ranging from 1.85% to 2.50% and principal and interest are paid quarterly.  The loan is secured by two engines.
Virtually all of the above debt requires ongoing compliance with the covenants of each financing, including debt/equity ratios, minimum tangible net worth and minimum interest coverage ratios, and other eligibility criteria including customer and geographic concentration restrictions. The Company also has certain negative financial covenants such as liens, advances, change in business, sales of assets, dividends and stock repurchases. These covenants are tested either monthly or quarterly and the Company was in full compliance with all financial covenant requirements at December 31, 2020.
7. Derivative Instruments
The Company periodically holds interest rate derivative instruments to mitigate exposure to changes in interest rates, to predominantly one-month LIBOR, with $783.1 million and $404.3 million of variable rate borrowings at December 31, 2020 and 2019, respectively. As a matter of policy, management does not use derivatives for speculative purposes. As of December 31, 2020, the Company has two interest rate swap agreements. One interest rate swap agreement was entered into during 2016 which has notional outstanding amount of $100.0 million, with remaining terms of four months as of December 31, 2020. During October 2019, the Company entered into one additional fixed-rate interest swap agreement which has a notional outstanding amount of $100.0 million, with remaining terms of 42 months as of December 31, 2020. The derivative instruments were designated as a cash flow hedge and recorded at fair value.
The Company evaluated the effectiveness of the swaps to hedge the interest rate risk associated with its variable rate debt and concluded at the swap inception date that the swaps were highly effective in hedging that risk. The Company evaluates the effectiveness of the hedging relationship on an ongoing basis.
The Company estimates the fair value of derivative instruments using a discounted cash flow technique and has used creditworthiness inputs that corroborate observable market data evaluating the Company’s and counterparties’ risk of non-performance. Valuation of the derivative instruments requires certain assumptions for underlying variables and the use of different assumptions would result in a different valuation. Management believes it has applied assumptions consistently during the period. The Company applies hedge accounting and accounts for the change in fair value of its cash flow hedges through other comprehensive income for all derivative instruments.
The net fair value of the interest rate swaps were net liabilities of $4.0 million and $1.7 million at December 31, 2020 and 2019, respectively. The Company recorded interest expense of $2.0 million and a reduction to interest expense of $0.7 million during the years ended December 31, 2020 and 2019, respectively, from derivative investments.
Effect of Derivative Instruments on Earnings in the Statements of Income and of Comprehensive Income
The following table provides additional information about the financial statement effects related to the cash flow hedges for the years ended December 31, 2020 and 2019:
Derivatives in Cash Flow Hedging Relationships Amount of Loss Recognized in OCI on Derivatives
(Effective Portion)
Years Ended December 31,
2020 2019
  (in thousands)
Interest rate contracts $ 2,298  $ 3,331 
Total $ 2,298  $ 3,331 
The effective portion of the change in fair value on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income and is reclassified into earnings in the period during which the transaction being hedged affects earnings or it is probable that the forecasted transaction will not occur. The ineffective portion of the hedges, if any, is recorded in earnings in the current period. There was no ineffectiveness in the hedges for the years ended December 31, 2020 and 2019.
62

Table of Contents
Counterparty Credit Risk
The Company evaluates the creditworthiness of the counterparties under its hedging agreements. The counterparties for both interest rate swaps are large financial institutions that possessed an investment grade credit rating. Based on this rating, the Company believes that the counterparties were credit-worthy and that their continuing performance under the hedging agreement was probable and did not require the counterparties to provide collateral or other security to the Company.
Subsequent Event
In January 2021, the Company entered into four additional fixed-rate interest swap agreements to mitigate the exposure on the variable rate borrowings. All four of the swaps have notional amounts of $100.0 million, two of which mature in January 2024 and the other two maturing in January 2026.
8. Income Taxes
The components of income before income taxes are as follows:
  Years ended December 31,
  2020 2019
  (in thousands)
United States $ 16,990  $ 88,182 
Foreign 346  699 
Income before income taxes $ 17,336  $ 88,881 
The components of income tax expense for the years ended December 31, 2020 and 2019 were as follows:
  Federal State Foreign Total
  (in thousands)
2020        
Current $ —  $ (88) $ 723  $ 635 
Deferred 6,251  702  —  6,953 
Total $ 6,251  $ 614  $ 723  $ 7,588 
2019
Current $ —  $ 722  $ 163  $ 885 
Deferred 20,205  869  —  21,074 
Total $ 20,205  $ 1,591  $ 163  $ 21,959 
The following is a reconciliation of the federal income tax expense at the statutory rate of 21% for the years ended December 31, 2020 and 2019 to the effective income tax expense:
  Years Ended December 31,
  2020 2019
  (in thousands)
Statutory federal income tax expense $ 3,640  $ 18,665 
State taxes, net of federal benefit 633  1,440 
Foreign tax paid —  — 
Foreign jurisdiction rate differential 508  475 
Permanent differences-nondeductible executive compensation 2,748  2,083 
Permanent differences and other 59  (704)
Effective income tax expense $ 7,588  $ 21,959 
The Company records tax expense or benefit for unusual or infrequent items discretely in the period in which they occur.
63

Table of Contents
The following table summarizes the activity related to the Company’s unrecognized tax benefits:
  (in thousands)
Balance as of December 31, 2018 $ 182 
Increases related to current year tax positions 250 
Decreases due to tax positions expired (162)
Balance as of December 31, 2019 270 
Increases related to current year tax positions 66 
Decreases due to tax positions expired (6)
Balance as of December 31, 2020 $ 330 
A $0.3 million and $0.2 million reserve was established as of December 31, 2020 and 2019, respectively, for the exposure in Europe. If the Company is able to eventually recognize these uncertain tax positions, all of the unrecognized benefit would reduce the Company’s effective tax rate.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:
  As of December 31,
  2020 2019
  (in thousands)
Deferred tax assets:    
Unearned lease revenue $ 2,519  $ 1,277 
State taxes 10  152 
Inventory 2,153  — 
Reserves and allowances 4,356  1,988 
Other accruals 1,769  4,974 
Foreign tax credit —  19 
Lease liability 198  271 
Net operating loss carry forward 74,045  12,091 
California alternative minimum tax credit 33  — 
Charitable contributions 65  57 
Total deferred tax assets 85,148  20,829 
Less: valuation allowance (468) (153)
Net deferred tax assets 84,680  20,676 
Deferred tax liabilities:
Depreciation and impairment on aircraft engines and equipment (163,773) (118,595)
Inventory —  (2,350)
Notes receivable (34,426) (6,640)
Right of use liability (184) (260)
Other deferred tax assets (liabilities) (4,616) (4,198)
Net deferred tax liabilities (202,999) (132,043)
Other comprehensive loss deferred tax liability 1,481  949 
Net deferred tax liabilities $ (116,838) $ (110,418)
As of December 31, 2020, the Company had net operating loss carry forwards of approximately $348.0 million for federal tax purposes and $1.2 million (tax effected) for state tax purposes. The majority of the federal net operating loss carry forwards were generated this year and can be carried forward indefinitely, the remainder will expire at various times from 2032 to 2037, and the state net operating loss carry forwards will expire at various times from 2026 to 2042. There is a $0.4 million valuation allowance for net operating losses in California that expire between 2034 and 2042 and a $0.1 million valuation allowance for net operating losses in Georgia that expire between 2032 and 2040. The Company’s ability to utilize the net operating loss and tax credit carry forwards in
64

Table of Contents
the future may be subject to restriction in the event of past or future ownership changes as defined in Section 382 of the Internal Revenue Code and similar state tax law. Management believes that no valuation allowance is required on deferred tax assets related to federal net operating loss carry forwards, as it is more likely than not that all amounts are recoverable through future taxable income. The open tax years for federal and state tax purposes are from 2003-2020, respectively.

It is the Company's intention to reinvest undistributed earnings of their wholly owned foreign operations and thereby indefinitely postpone their remittance. Accordingly, no provision has been made for foreign withholding taxes or U.S. Income taxes.
9. Fair Value Measurements
The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of judgment, and therefore cannot be determined with precision.
Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:
Cash and cash equivalents, restricted cash, receivables, and accounts payable: The amounts reported in the accompanying Consolidated Balance Sheets approximate fair value due to their short-term nature.
Notes receivable: The carrying amount of the Company’s outstanding balance on its Notes receivable as of December 31, 2020 and 2019 was estimated to have a fair value of approximately $159.2 million and $39.7 million, respectively, based on the fair value of estimated future payments calculated using interest rates that approximate prevailing market rates at each period end (Level 2 inputs).
Debt obligations: The carrying amount of the Company’s outstanding balance on its Debt obligations as of December 31, 2020 and 2019 was estimated to have a fair value of approximately $1,691.0 million and $1,262.6 million, respectively, based on the fair value of estimated future payments calculated using interest rates that approximate prevailing market rates at each year end (Level 2 inputs).
Assets Measured and Recorded at Fair Value on a Recurring Basis
As of December 31, 2020 and 2019, the Company measured the fair value of its interest rate swaps based on Level 2 inputs, due to the usage of inputs that can be corroborated by observable market data. The Company estimates the fair value of derivative instruments using a discounted cash flow technique and has used creditworthiness inputs that corroborate observable market data evaluating the Company’s and counterparties’ risk of non-performance. The interest rate swaps had a net fair value of $4.0 million and $1.7 million representing a net liability as of December 31, 2020 and 2019, respectively. The Company recorded interest expense of $2.0 million and a reduction to interest expense of $0.7 million during the years ended December 31, 2020 and 2019, respectively, from derivative investments.
Assets Measured and Recorded at Fair Value on a Nonrecurring Basis
The Company determines fair value of long-lived assets held and used, such as Equipment held for operating lease and Equipment held for sale, by reference to independent appraisals, quoted market prices (e.g. an offer to purchase) and other factors. An impairment charge is recorded when the carrying value of the asset exceeds its fair value. The Company used Level 2 inputs to measure write-downs of equipment held for lease and equipment held for sale. 
65

Table of Contents
  Total Losses
  Years Ended December 31,
  2020 2019
  (in thousands)
Equipment held for lease $ 20,470  $ 18,132 
Equipment held for sale 70  88 
Total $ 20,540  $ 18,220 
Write-downs of equipment to their estimated fair values totaled $20.5 million for the year ended December 31, 2020 which included write-downs of $15.2 million due to a management decision to monetize 10 engines and two airframes either by sale to a third party or for part-out and $5.3 million for the adjustment of the carrying value of seven impaired engines.
Write-downs of equipment to their estimated fair values totaled $18.2 million for the year ended December 31, 2019 which included write-downs of $11.8 million due to a management decision to monetize 11 engines either by sale to a third party or for part-out and $6.4 million for the adjustment of the carrying value of seven impaired engines.
As of December 31, 2020, $37.6 million book value for 21 of these engines remains within equipment held for operating lease, equipment held for sale and spare parts inventory.
10. Earnings Per Share
Basic earnings per common share is computed by dividing net income, less preferred stock dividends and accretion of preferred stock issuance costs, by the weighted average number of common shares outstanding for the period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings per share attributable to common stockholders is computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Dilutive securities are common stock equivalents that are freely exercisable into common stock at less than market prices or otherwise dilute earnings if converted. The net effect of common stock equivalents is based on the incremental common stock that would be issued upon the vesting of restricted stock using the treasury stock method. Common stock equivalents are not included in diluted earnings per share when their inclusion is anti-dilutive. Additionally, redeemable preferred stock is not convertible and does not affect dilutive shares.

There were no anti-dilutive shares excluded in the computations of diluted weighted average earnings per common share for the years ended December 31, 2020 and 2019.
The following table presents the calculation of basic and diluted EPS:
  Year Ended December 31,
  2020 2019
  (in thousands)
Net income attributable to common shareholders $ 6,405  $ 63,588 
Basic weighted average common shares outstanding 5,963  5,836 
Potentially dilutive common shares 165  222 
Diluted weighted average common shares outstanding 6,128  6,058 
Basic weighted average earnings per common share $ 1.07  $ 10.90 
Diluted weighted average earnings per common share $ 1.05  $ 10.50 
11. Commitments, Contingencies, Guarantees and Indemnities
Other obligations 
Other obligations, such as certain purchase obligations are not recognized as liabilities in the consolidated financial statements but are required to be disclosed in the footnotes to the financial statements. These funding commitments could potentially require the Company’s performance in the event of demands by third parties or contingent events. As of December 31, 2020, the Company had $471.0 million in purchase commitments of equipment that will be satisfied within three fiscal years. The purchase obligations are subject to escalation based on the closing date of each transaction.
66

Table of Contents
In December 2020, the Company entered into definitive agreements for the purchase of 25 modern technology aircraft engines. As part of the purchase, the Company has committed to certain future overhaul and maintenance services which is anticipated to range between $67.1 million and $112.0 million.
12. Equity
Common Stock Repurchase
Effective December 31, 2018, the Board of Directors approved the renewal of the existing common stock repurchase plan extending the plan through December 31, 2020 and amending the plan to allow for repurchases of up to $60.0 million of the Company’s common stock until such date. Effective December 31, 2020, the Board of Directors approved the renewal of the existing common stock repurchase plan extending the plan through December 31, 2022. Repurchased shares are immediately retired. During 2020, the Company repurchased 55,426 shares of common stock for approximately $1.5 million under the plan, at a weighted average price of $27.24 per share. During 2019, the Company repurchased 72,324 shares of common stock for approximately $3.6 million under the plan, at a weighted average price of $49.29 per share. As of July 2, 2020, the Company terminated its 10b-18 plan. At December 31, 2020, approximately $54.9 million was available to purchase shares under the plan.
Redeemable Preferred Stock
In October 2016, the Company sold and issued to Development Bank of Japan Inc. (“DBJ”) an aggregate of 1,000,000 shares of the Company’s 6.5% Series A Preferred Stock, $0.01 par value per share (the “Series A Preferred Stock”) at a purchase price of $20.00 per share. The net proceeds to the Company after deducting investor fees were $19.8 million.
In September 2017, the Company sold and issued to DBJ an aggregate of 1,500,000 shares of the Company’s 6.5% Series A-2 Preferred Stock, $0.01 par value per share (the “Series A-2 Preferred Stock”) at a purchase price of $20.00 per share. The net proceeds to the Company after deducting issuance costs were $29.7 million.
The rights and privileges of the Preferred Stock are described below:
Voting Rights: Holders of the Preferred Stock do not have general voting rights.
Dividends: The Company’s Series A-1 Preferred Stock and Series A-2 Preferred Stock accrue quarterly dividends at the rate per annum of 6.5% per share. During the years ended December 31, 2020 and 2019, the Company paid total dividends of $3.3 million on the Series A-1 and Series A-2 Preferred Stock, respectively.
Liquidation Preference: The holders of the Preferred Stock have preference in the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the corporation, including a merger or consolidation. Upon such liquidation event, the Preferred Stockholders are entitled to be paid out of the assets of the Company available for distribution to its stockholders after payment of all the Company’s indebtedness and other obligations and before any payment shall be made to the holders of common stock or any other class or series of stock ranking on liquidation junior to the Preferred Stock an amount equal to $20.00 per share, plus any declared but unpaid dividends.
Redemption: The Preferred Stock has no stated maturity date, however the holders of the Preferred Stock have the option to require the Company to redeem all or any portion of the Preferred Stock for cash upon occurrence of any significant changes in operating results, ownership structure, or liquidity events as defined in the Preferred Stock purchase agreements.  The redemption price is $20.00 per share plus dividends accrued but not paid.  The Company is accreting the Preferred Stock to redemption value over the period from the date of issuance to the date first callable by the Preferred Stockholders (October 2023 for the Series A Preferred Stock and September 2024 for the Series A-2 Preferred Stock), such that the carrying amounts of the securities will equal the redemption amounts at the earliest redemption dates.
67

Table of Contents
13. Stock-Based Compensation Plans
The components of stock compensation expense were as follows:
Year Ended December 31,
  2020 2019
  (in thousands)
2007 Stock Incentive Plan $ 3,142  $ 4,584 
2018 Stock Incentive Plan 7,960  3,117 
Employee Stock Purchase Plan 276  86 
Total Stock Compensation Expense $ 11,378  $ 7,787 
The significant stock compensation plans are described below.
The 2007 Stock Incentive Plan (the “2007 Plan”) was adopted in May 2007. Under this 2007 Plan, a total of 2,800,000 shares were authorized for stock-based compensation available in the form of either restricted stock awards (“RSAs”) or stock options. The RSAs are subject to service-based vesting, typically between one and four years, where a specific period of continued employment must pass before an award vests. The expense associated with these awards is recognized on a straight-line basis over the respective vesting period, with forfeitures accounted for as they occur. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is equal to the portion of the grant date fair value of the award tranche that is actually vested at that date. As of December 31, 2020, there are no stock options outstanding under the 2007 Plan.
The 2018 Stock Incentive Plan (the “2018 Plan”) was adopted in May 2018. Under this 2018 Plan, a total of 800,000 shares were authorized for stock-based compensation, plus the number of shares remaining under the 2007 Plan and any future forfeited awards under the 2007 Plan, in the form of RSAs. The RSAs are subject to service-based vesting, typically between one and four years, where a specific period of continued employment must pass before an award vests. The expense associated with these awards is recognized on a straight-line basis over the respective vesting period, with forfeitures accounted for as they occur. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is equal to the portion of the grant date fair value of the award tranche that is actually vested at that date.
As of December 31, 2020, the Company has granted 598,750 RSAs under the 2018 Plan and has 295,846 shares available for future issuance. The fair value of the restricted stock awards equaled the stock price at the grant date.
The following table summarizes restricted stock activity under the 2007 and 2018 Plans for the years ended December 31, 2020 and 2019:
  Number Outstanding Weighted Average
Grant Date Fair Value
Aggregate Grant
Date Fair Value
(in thousands)
Balance as of December 31, 2018 417,890  $ 30.54  $ 12,763 
Shares granted 279,400  42.28  11,813 
Shares forfeited (3,866) 30.43  (118)
Shares vested (187,957) 28.74  (5,402)
Balance as of December 31, 2019 505,467  37.70  19,056 
Shares granted 319,350  19.00  6,068 
Shares forfeited —  —  — 
Shares vested (243,102) 28.35  (6,892)
Balance as of December 31, 2020 581,715  $ 31.34  $ 18,232 
At December 31, 2020 the stock compensation expense related to the RSAs that will be recognized over the average remaining vesting period of 1.3 years totaled $9.2 million. At December 31, 2020, the intrinsic value of unvested RSAs was $17.7 million.
Under the Employee Stock Purchase Plan (“ESPP”), as amended and restated effective April 1, 2018, 325,000 shares of common stock have been reserved for issuance. Eligible employees may designate no more than 10% of their base cash compensation to be deducted each pay period for the purchase of common stock under the Purchase Plan. Participants may purchase no more than 1000 shares or $25,000 of common stock in any one calendar year. Each January 31 and July 31 shares of common stock are purchased with the employees’ payroll deductions from the immediately preceding six months at a price per share of 85% of the lesser of the market price of the common stock on the purchase date or the market price of the common stock on the date of entry into an offering period. In 2020 and 2019, 11,394 and 13,193 shares of common stock, respectively, were issued under the ESPP. The Company issues new shares through its transfer agent upon employee stock purchase.
68

Table of Contents
14. Employee 401(k) Plan
The Company adopted The Willis 401(k) Plan (the “401(k) Plan”) effective as of January 1997. The 401(k) Plan provides for deferred compensation as described in Section 401(k) of the Internal Revenue Code. The 401(k) Plan is a contributory plan available to all full-time and part-time employees in the United States. In 2020, employees who participated in the 401(k) Plan could elect to defer and contribute to the 401(k) Plan up to 75% of pretax salary or wages up to $19,500 (or $26,000 for employees at least 50 years of age). The Company matches 50% of employee contributions and was capped at $13,000 per employee in 2020. The Company match totaled $0.8 million and $0.5 million for the years ended December 31, 2020 and 2019, respectively.
15. Quarterly Consolidated Financial Information (Unaudited)
The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 2020 and 2019 (in thousands, except per share data):
2020 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year
Total revenue $ 81,609  $ 74,983  $ 70,613  $ 61,487  $ 288,692 
Net income (loss) attributable to common shareholders $ 3,455  $ 4,540  $ 2,144  $ (3,734) $ 6,405 
Basic earnings (loss) per common share $ 0.59  $ 0.75  $ 0.36  $ (0.62) $ 1.07 
Diluted earnings (loss) per common share $ 0.56  $ 0.74  $ 0.35  $ (0.62) $ 1.05 
Basic weighted average common shares outstanding 5,860  6,016  5,985  5,988  5,963 
Diluted weighted average common shares outstanding 6,124  6,103  6,084  5,988  6,128 
2019 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year
Total revenue $ 103,769  $ 95,797  $ 120,366  $ 89,228  $ 409,160 
Net income attributable to common shareholders $ 20,056  $ 16,144  $ 23,232  $ 4,156  $ 63,588 
Basic earnings per common share $ 3.47  $ 2.75  $ 3.97  $ 0.71  $ 10.90 
Diluted earnings per common share $ 3.35  $ 2.66  $ 3.81  $ 0.68  $ 10.50 
Basic weighted average common shares outstanding 5,779  5,866  5,847  5,850  5,836 
Diluted weighted average common shares outstanding 5,978  6,061  6,094  6,099  6,058 
16. Related Party Transactions
Joint Ventures
“Other revenue” on the Consolidated Statement of Income includes management fees earned of $1.6 million and $2.9 million during the years ended December 31, 2020 and 2019, respectively, related to the servicing of engines for the WMES lease portfolio.
During 2020, the Company sold one note receivable to WMES for $8.4 million. During 2019, the Company sold five aircraft and other equipment to WMES for $76.4 million. Additionally, during 2019, WMES sold one engine to Willis Aeronautical Services, Inc., a wholly-owned subsidiary of the Company, for $2.6 million.
There were no aircraft or engine sales to CASC Willis during 2020 or 2019.
Other
During 2019, the Special Committee of the Board of Directors approved a transaction in which the Company’s Chief Executive Officer (“CEO”), Charles F. Willis, purchased a car at its market value of $0.1 million from the Company.
During 2019, the Company’s CEO was charged $0.2 million for usage of the Company’s marine vessel in the Company’s lease portfolio.
During 2019, the Company paid approximately $36,000 of expenses payable to Mikchalk Lake, LLC, an entity in which our CEO retains an ownership interest. These expenses were for lodging and other business related services.  These transactions were approved by the Board’s independent Directors.
During 2020, the Board's independent directors approved the Company’s agreement to a lease with our CEO in support of the Company’s vessel leasing business. That lease provides for a payment to our CEO of $500 per day for the use of his tender in support
69

Table of Contents
of our vessel lease to a third-party lessee. In addition, the Company has purchased a hull insurance policy, for our CEO’s tender, at a rate of $6,800 per annum, plus a one-time subscriber fee of $695 to insure his tender while in the service of the Company’s vessel leasing business. The lease agreement was subsequently amended and approved by the Board’s independent directors to increase the daily rate to $750 per day. The Company has paid a total of $9,750 for usage of the tender. Additionally, our CEO was charged $4,000 for personal expenses while onboard the Company’s marine vessel.
During 2020, the Company’s CEO was charged $9,100 for the purchase of artwork.
17. Reportable Segments
The Company has two reportable business segments: (i) Leasing and Related Operations which involves acquiring and leasing, primarily pursuant to operating leases, commercial aircraft, aircraft engines and other aircraft equipment and the selective purchase and resale of commercial aircraft engines and other aircraft equipment and other related businesses and (ii) Spare Parts Sales which involves the purchase and resale of after-market engine parts, whole engines, engine modules and portable aircraft components.
The Company evaluates the performance of each of the segments based on profit or loss after general and administrative expenses. While the Company believes there are synergies between the two business segments, the segments are managed separately because each requires different business strategies.
The following tables present a summary of the reportable segments (in thousands):
For the year ended December 31, 2020 Leasing and
Related Operations
Spare Parts Sales Eliminations (1) Total
Revenue:        
Lease rent revenue $ 142,895  $ —  $ —  $ 142,895 
Maintenance reserve revenue 105,365  —  —  105,365 
Spare parts and equipment sales 1,514  17,514  (403) 18,625 
Gain on sale of leased equipment 3,391  —  —  3,391 
Other revenue 18,404  327  (315) 18,416 
Total revenue 271,569  17,841  (718) 288,692 
Expenses:
Depreciation and amortization expense 94,442  99  —  94,541 
Cost of spare parts and equipment sales 156  16,606  —  16,762 
Write-down of equipment 20,540  —  —  20,540 
General and administrative 63,993  3,514  403  67,910 
Technical expense 6,533  —  —  6,533 
Net finance costs:
Interest expense 63,024  —  —  63,024 
Loss on debt extinguishment 4,688  —  —  4,688 
Total finance costs 67,712  —  —  67,712 
Total expenses 253,376  20,219  403  273,998 
Earnings (loss) from operations $ 18,193  $ (2,378) $ (1,121) $ 14,694 
70

Table of Contents
For the Year ended December 31, 2019 Leasing and
Related Operations
Spare Parts Sales Eliminations (1) Total
Revenue:        
Lease rent revenue $ 190,690  $ —  $ —  $ 190,690 
Maintenance reserve revenue 108,998  —  —  108,998 
Spare parts and equipment sales 18,684  55,967  —  74,651 
Gain on sale of leased equipment 20,044  —  —  20,044 
Other revenue 14,738  277  (238) 14,777 
Total revenue 353,154  56,244  (238) 409,160 
Expenses:
Depreciation and amortization expense 86,159  77  —  86,236 
Cost of spare parts and equipment sales 15,241  47,406  —  62,647 
Write-down of equipment 18,220  —  —  18,220 
General and administrative 81,302  5,221  —  86,523 
Technical expense 8,122  —  —  8,122 
Net finance costs:
Interest expense 66,889  —  —  66,889 
Loss on debt extinguishment 220  220 
Total finance costs 67,109  —  —  67,109 
Total expenses 276,153  52,704  —  328,857 
Earnings from operations $ 77,001  $ 3,540  $ (238) $ 80,303 
________________________
(1)    Represents revenue generated between our operating segments.
Leasing and Related Operations Spare Parts Sales Eliminations Total
Total assets as of December 31, 2020 $ 2,312,172  $ 52,776  $ —  $ 2,364,948 
Total assets as of December 31, 2019 $ 1,898,313  $ 42,295  $ —  $ 1,940,608 
71

Table of Contents
WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES
SCHEDULE II — VALUATION ACCOUNTS
(In thousands)
  Balance at
Beginning
of Period
Additions
Charged
(Credited)
to Expense
Net
(Deductions)
Recoveries
Balance at
End of Period
Year Ended December 31, 2019
Accounts receivable, allowance for doubtful accounts $ 2,559  $ (829) $ —  $ 1,730 
Deferred tax valuation allowance $ 652  $ (499) $ —  $ 153 
Year Ended December 31, 2020
Accounts receivable, allowance for doubtful accounts $ 1,730  $ $ (363) $ 1,372 
Deferred tax valuation allowance $ 153  $ 315  $ —  $ 468 
Deductions in allowance for doubtful accounts represent uncollectible accounts written off, net of recoveries. 
72





USED ENGINES SALE AGREEMENT

between

PRATT & WHITNEY ENGINE LEASING, LLC

and

WILLIS LEASE FINANCE CORPORATION, FOR ITSELF AND SERVICER
December 3, 2020

    






This document contains proprietary information of Pratt & Whitney Engine Leasing, LLC (“Seller”). Seller offers the information contained in this document on the condition that you not disclose or reproduce the information to or for the benefit of any third party without Seller’s written consent. Neither receipt nor possession of this document, from any source, constitutes Seller’s permission. Possessing, using, copying or disclosing this document to or for the benefit of any third party without Seller’s written consent may result in criminal and/or civil liability.
This document does not contain any export regulated technical data.
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version



TABLE OF CONTENTS
Article Page Number
1. DEFINITIONS 1
2. DESCRIPTION OF SALE, DATE OF SALE AND DELIVERY LOCATION 3
3. PURCHASE PRICE AND PAYMENT 4
4. INSPECTION 4
5. CONDITIONS PRECEDENT 5
6. CLOSING AND DELIVERY 5
7. RISK OF LOSS AND TITLE 6
8. COVENANTS OF BUYER 6
9. REPRESENTATIONS AND WARRANTIES 7
10. LIMITED WARRANTIES AND DISCLAIMERS 8
11. EXCUSABLE DELAYS 9
12. INDEMNITIES 9
13. EXPENSES AND TAXES 10
14. EXPORT 10
15. MISCELLANEOUS 11
Appendix I [*] Engines List
Appendix II Demountable Powerplant Specification
Appendix III Collins Aerospace QEC Kit Excluded Parts
Appendix IV Form of Acceptance Certificate
Appendix V Form of Engine Bill of Sale
Appendix VI [*] Engine and Parts Service Policy
Appendix VII List of Permitted Affiliates
Appendix VIII Form of Pre-closing Engine Certification
Appendix IX Post-close Engine Documentation Short List

Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.

Willis [*] Used Engines Sale Agreement Execution Version


USED ENGINES SALE AGREEMENT
This Used Engines Sale Agreement, dated as of December 3, 2020 (this “Agreement”), is between Pratt & Whitney Leasing, LLC, as Seller, and Willis Lease Finance Corporation (for itself and in its capacity as servicer on behalf of the Permitted Affiliates (as defined below)), as Buyer. Each a “Party” and together the “Parties”.
The subject matter of this Agreement is [*] used, serviceable aircraft engines, as described in Section 2.2, which Seller desires to sell to Buyer and Buyer is willing to purchase from Seller.
In consideration of and subject to the mutual covenants, terms and conditions contained in this Agreement, the Parties agree as follows.
1.DEFINITIONS
In this Agreement, unless the context otherwise requires:
1.1    “Acceptance Certificate” means an acceptance certificate in the form attached as Appendix IV to this Agreement.
1.2    “BFE” means “Buyer Furnished Equipment”, which is the aircraft manufacturer- supplied or buyer furnished engine-mounted accessories (typically including such items as integrated drive generator, quick accessory disconnect adapter, hydraulic pumps, shutoff valve, and pressure regulating valve).
1.3    “Bill of Sale” means a bill of sale in the form attached as Appendix V to this Agreement.
1.4    “Buyer” means Willis Lease Finance Corporation, a corporation organized and existing under the laws of Delaware, with a place of business at 4700 Lyons Technology Parkway, Coconut Creek, Florida 33073.
1.5    “Buyer Indemnitee” has the meaning set forth in Section 12.1.
1.6    “Closing” has the meaning set forth in Section 6.2.
1.7    “DER” means Designated Engineering Representative.
1.8    “Delivery Location” has the meaning set forth in Section 2.3.
1.9    “Dollars and $” mean the lawful currency of the United States of America.
1.10    “Engine” has the meaning set forth in Section 2.2.
1.11    “Engine Activity” means the ownership, possession, use, import, export, registration, re-registration, deregistration, non-registration, manufacture, performance, transportation, management, location, movement, acquisition,
Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.

Willis [*] Used Engines Sale Agreement Execution Version


disposal, transfer, exchange, control, design, condition, defect, testing, inspection, acceptance, delivery, redelivery, leasing, subleasing, wet-leasing, pooling, interchange, maintenance, repair, loss, damage, emissions, refurbishment, insurance, reinsurance, service, modification, overhaul, replacement, alteration, storage, removal or operation of the Engine or any part thereof (whether in the air or on the ground or otherwise).
1.12    “Engine Documentation” has the meaning set forth in Section 2.2.
1.13    “Engine Stand” has the meaning set forth in Section 2.2.
1.14    “Engine Storage Bag” has the meaning set forth in Section 2.2.
1.15    “FAA” means the United States Federal Aviation Administration.
1.16    “Final Closing Date” has the meaning set forth in Section 2.5.
1.17    “Fixed Price Repair Agreement” means that certain agreement between Pratt & Whitney and Buyer entered into contemporaneously with this Agreement and pursuant to which Pratt & Whitney will provide repair coverage for each Engine pursuant to the terms thereof.
1.18    “Liens” means, collectively, security interests, liens, claims, charges, other encumbrances or rights of others.
1.19    “Loss” means any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature.
1.20    “[*] Engine” has the meaning set forth in Section 2.3(b).
1.21    “OEM” means original equipment manufacturer.
1.22    “Permitted Affiliates” means, collectively, those parties set forth in Appendix VII to this Agreement, or such other parties as consented to in writing by Pratt & Whitney, such consent not to be unreasonably withheld or delayed; provided, however, that if Pratt & Whitney or Seller is legally prohibited from doing business with such party, then such party will cease to be a Permitted Affiliate.
1.23    “PMA” means Parts Manufacturer Approval, the authority granted by the FAA to manufacture parts for installation in type-certificated products.
1.24    “Pratt & Whitney” means Raytheon Technologies Corporation, a Delaware corporation, acting through its Pratt & Whitney division, with a place of business at 400 Main Street, East Hartford, Connecticut 06118, USA, and which is an affiliate of Seller.


Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 2


1.25    “Pre-closing Records” has the meaning set forth in Section 4.2.
1.26    “Purchase Price” has the meaning set forth in Section 3.1.
1.27    [*]
1.28    “QEC Kit” means a used serviceable quick engine change kit bearing part number [*] with the specifications identified in the Specification. The QEC Kit does not include BFE parts.
1.29    “QEC Kit Excluded Parts” means the QEC Kit parts that Seller will not provide, which are listed in Appendix III to this Agreement.
1.30    [*]
1.31    “Right of First Refusal” has the meaning set forth in Section 8.2.
1.32    “Scheduled Closing Date” has the meaning set forth in Section 2.4.
1.33    “Seller” means Pratt & Whitney Engine Leasing, LLC, a limited liability company organized and existing under the laws of Delaware, which has an office located at 400 Main Street, East Hartford, Connecticut 06118.
1.34    “Seller Indemnitee” has the meaning set forth in Section 12.2.
1.35    “Specification” means the Demountable Powerplant Specification attached as Appendix II to this Agreement.
2.DESCRIPTION OF SALE, DATE OR SALE AND DELIVERY LOCATION
2.1    Agreement to Sell. Subject to the terms of this Agreement, Seller agrees to sell to Buyer and Buyer agrees to purchase from Seller all right, title and interest in and to the Engines on the Scheduled Closing Date and for the Purchase Price.
2.2    Description of the Engines. As used herein, “Engines” means, individually or collectively, as the context requires: (i) the [*], serviceable [*] model aircraft engines manufactured by Pratt & Whitney, which are the subject of this Agreement and further described in the Specification, and bear the manufacturer’s serial numbers listed, and the technical status and configuration as of [*] identified, in Appendix I to this Agreement, [*]; (ii) Pratt & Whitney-approved engine transportation stand for each Engine part number [*] (“Engine Stands”); (iii) Pratt & Whitney-approved engine moisture and vapor proof storage bag for each Engine (“Engine Storage Bags”); (iv) QEC Kit for each Engine; and (v) all appliances, parts, instruments, appurtenances, accessories, furnishings, and other equipment and property installed in or attached or related to the Engines, except for the engine mount brace (part number [*]) and the QEC Kit


Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 3


Excluded Parts; and (vi) all documents and records relating to the operation and maintenance of the Engines and in the possession of Seller in electronic form (“Engine Documentation”). Except where the context otherwise requires, the term “Engine” when used in this Agreement refers to an Engine together with the QEC Kit, Engine Stand, Engine Storage Bag, and Engine Documentation.
2.3    Delivery Location.
(a)    [*]. Seller will tender the Engine for sale [*], or as otherwise agreed by the Parties. Buyer will notify Seller within [*] prior to Closing of the preferred Delivery Location.
(b)    [*].
2.4    Scheduled Closing Date. As of the date hereof, the sale of each Engine by Seller to Buyer is scheduled to occur on [*], or such other date as the Parties mutually agree in writing (the “Scheduled Closing Date”).
2.5    Cancellation [*]. [*]
3.PURCHASE PRICE AND PAYMENT

3.1    Purchase Price. The purchase price for each Engine is the amount set forth in Appendix I to this Agreement (each, a “Purchase Price”). For the avoidance of doubt, the aggregate purchase price for the Engines is [*] (the “Aggregate Purchase Price”).
3.2    Payments. All payments under this Agreement, including the Purchase Price, must be made in Dollars, without any withholdings or deductions whatsoever, by wire transfer to the account of Seller identified below:
[*]
3.3    [*]. [*]
4.INSPECTION
4.1    Engines. [*].
4.2    Pre-closing Records. For each Engine, Buyer will have an opportunity to inspect the following Engine Documentation prior to Closing: [*]. Seller will provide Buyer electronic access to the Pre-closing Records.
4.3    Engine Documentation Post-Closing: As soon as possible after a Closing, but no later than [*], Seller will provide Buyer electronic access to the Engine Documentation identified in Appendix IX to this Agreement for each Engine.


Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 4


5.CONDITIONS PRECEDENT
5.1    Conditions to Buyer’s Obligations. The following are conditions precedent to Buyer’s obligation to purchase an Engine from Seller, which Buyer may waive in full or in part in its sole discretion:
(a)The Engine is located at the Delivery Location;
(b)[*], the Engine is installed on the Engine Stand, has been preserved for the longest available storage period in accordance with the aircraft maintenance manual or engine manual applicable to the Engine, and it is otherwise prepared and wrapped for shipment in an Engine Storage Bag;
(c)[*];
(d)Buyer is satisfied with the results of the inspection of the Engine’s Pre-closing Records;
(e)The Engine operates at the thrust configuration listed in Appendix I to this Agreement or as otherwise mutually agreed by the Parties;
(f)Seller’s representations and warranties set forth in Section 9.2 are true and correct, and Seller is not in breach of any of its obligations under this Agreement; and
(g)No change in applicable laws or regulations or in the interpretation thereof has occurred after the date of this Agreement that would make it unlawful for Buyer to perform its obligations under this Agreement.

5.2    Conditions to Seller’s Obligations. The following are conditions precedent to Seller’s obligation to sell an Engine to Buyer, which Seller may waive in full or in part in its sole discretion:
(a)Seller has received an executed Acceptance Certificate for the Engine;
(b)Seller has received the full amount of the Purchase Price for the Engine;
(c)Buyer’s representations and warranties set forth in Section 9.1 are true and correct, and Buyer is not in breach of its obligations under this Agreement; and
(d)No change in applicable laws or regulations or in the interpretation thereof has occurred after the date of this Agreement that would make it unlawful for Seller to perform its obligations under this Agreement.
6.CLOSING AND DELIVERY
6.1    Date of Closing. Seller and Buyer will use commercially reasonable efforts to cause the sale of each Engine to occur on the Scheduled Closing Date.
6.2    Closing. For each Engine, upon the satisfaction (or waiver by Buyer in its sole discretion) of each of the conditions precedent set forth in Section 5.1 with respect to such Engine, Buyer will execute and deliver the Acceptance Certificate for the Engine to Seller and pay the Purchase Price for that Engine. Upon the satisfaction (or waiver by Seller in its sole discretion) of each of the conditions precedent set forth in Section 5.2 with respect to the Engine, including Seller’s confirmation of its receipt of the Engine’s Purchase Price, Seller will execute and


Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 5


deliver to Buyer the Bill of Sale for the Engine on the day of Closing (each, a “Closing”). [*].
6.3    Ownership plate. Seller will, or cause Pratt & Whitney to, affix a new ownership plate on each Engine, as agreed with Buyer, within [*] of Closing, or as otherwise mutually agreed by the Parties.
7.RISK OF LOSS AND TITLE
7.1    Risk of Loss. Risk of loss and damage to an Engine and its QEC Kit, Engine Stand, Engine Storage Bag and Engine Documentation will pass to Buyer at Closing.
7.2    Title. Title to the Engine and its QEC Kit, Engine Stand, Engine Storage Bag and Engine Documentation will pass to Buyer at Closing.
8.COVENANTS OF BUYER
8.1    Covenant Against Engine Part-Out. Buyer agrees that the Engines are for the sole purpose of supporting Buyer’s engine leasing business through the loan or lease of the Engines to Buyer’s customers. For a period of [*] from the manufacture date of the Engine, Buyer: (i) will not disassemble any of the Engines into parts to be used or sold separately, and (ii) will ensure that any agreement with its customers will prohibit the disassembly of such Engine into parts to be used or sold separately and will include Seller as a third party beneficiary of such prohibition. Failure to comply with this Section 8.1 is a material breach of Agreement and Seller may, in its discretion, exercise any and all rights, remedies, powers and privileges afforded by applicable law or in equity.
8.2    Right of First Refusal. With respect to each Engine, for a period of [*] from the manufacture date of the Engine, in the event Buyer decides to transfer, sell, or otherwise dispose of the Engine in an arm’s length transaction to an independent third party, Buyer agrees to grant Seller the right of first refusal to purchase the Engine at the price and upon substantially the same terms offered by the third party. Upon receipt of any bona fide offer, Buyer will notify Seller in writing of the price and terms, and Seller will respond to this notice within [*] after receipt thereof, indicating whether Seller desires to exercise its rights hereunder. For purposes of this Section 8.2, a sale (or an offer to sell) to an independent third party does not include a sale by Buyer to: (i) [*]; provided however, that any such sale agreement with (i) or (ii) will grant Seller the right of first refusal to purchase the Engine, consistent with the terms of this Section 8.2, in the event the Engine is subsequently offered to be sold in an arm’s length transaction to an independent third party.
8.3    Engine On-Sell. With respect to each Engine, for a period of [*] from the manufacture date of the Engine, if Seller elects not to exercise its Right of First Refusal in connection with a proposed sale, assignment, transfer, or other


Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 6


disposal of an Engine to a third party (the “Purchaser”), Buyer agrees that: (i) the agreement for such sale, assignment, transfer, or other disposal of the Engine to the Purchaser strictly covenants the Purchaser from disassembling the Engine into parts to be used or sold separately for a period equal to [*] from birth, (ii) such agreement will make Seller a third party beneficiary of such commitment by the Purchaser, and (iii) if the Purchaser seeks to resell such Engine, it shall abide by the terms set forth herein. Buyer’s failure to comply with this Section 8.3 constitutes a material breach of this Agreement and will cause irreparable harm to Seller. In the event of any breach or threatened breach of such obligation, Seller, without prejudice to any other rights or remedies it may have herein, at law or in equity, will be entitled to equitable relief, including injunction and/or specific performance. Buyer agrees that it will not oppose the granting of such relief on the basis that Seller has an adequate remedy at law.
9.REPRESENTATIONS AND WARRANTIES
9.1    Buyer Representations and Warranties. Buyer represents and warrants to Seller both on the date of this Agreement and as of the Closing, that:
(a)Buyer: (i) is duly organized, validly existing and in good standing as a corporation under the laws of Delaware, and (ii) has the requisite power and authority and has taken all necessary and appropriate action to authorize the execution, delivery and performance of this Agreement and the Acceptance Certificate;
(b)Each of this Agreement and the Acceptance Certificate has been (or will be) duly executed and delivered by Buyer, and constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application relating to creditors’ rights generally and by general equitable principles (regardless of whether the issue of enforceability is considered in a proceeding in equity or at law); and
(c)No third party is involved as a broker or finder on behalf of Buyer in connection with the transactions contemplated by this Agreement.

9.2    Seller Representations and Warranties. Seller represents and warrants to Buyer, both on the date of this Agreement and as of the Closing, that:
(a)Seller: (i) is duly organized, validly existing and in good standing as a limited liability company under the laws of Delaware, and (ii) has the requisite power and authority and has taken all necessary and appropriate action to authorize the execution, delivery and performance of this Agreement and the Bill of Sale;
(b)Each of this Agreement and the Bill of Sale has been (or will be) duly executed and delivered by Seller, and constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforceability may be limited by applicable


Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 7


bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application relating to creditors’ rights generally and by general equitable principles (regardless of whether the issue of enforceability is considered in a proceeding in equity or at law);
(c)As of the time of the Closing, Seller has good and valid title to the applicable Engine to transfer to Buyer, free and clear of all Liens; and
(d)No third party is involved as a broker or finder on behalf of Seller in connection with the transactions contemplated by this Agreement.
10.LIMITED WARRANTIES AND DISCLAIMERS
10.1    Seller hereby warrants to Buyer that, at the time of Closing, Seller will transfer to Buyer good, legal and merchantable title to the Engine, free and clear of any and all Liens.
10.2    Seller will assign and transfer to Buyer any remaining benefits of the Engines’ [*] Engine and Parts Service Policy, attached as Appendix VI to this Agreement, prorated to the Engine’s status as of the Engine’s Closing in accordance with the following:
[*]

The Parties agree to execute and deliver any and all reasonable documentation required to accomplish the assignment and transfer of rights, interests and benefits referred to in this Section 10.2.
10.3    Except as expressly set forth in this Article 10 and in the Bill of Sale, each Engine is sold in “AS IS, WHERE-IS” and “WITH ALL FAULTS” condition, and Seller makes no warranties, guarantees or representations of any kind, either express or implied, statutory or otherwise, with respect to each Engine, and Buyer hereby waives all other remedies, warranties and liabilities, express or implied, arising by law or otherwise, with respect to each Engine or any part thereof, including but not limited to: (a) any express or implied warranty or representation as to condition, airworthiness, value, merchantability, manufacture, fitness for a particular purpose, absence of latent, inherent or other defects (whether or not discoverable) or as to freedom from any rightful claim by way of infringement of any patent, copyright, design or other proprietary rights, and (b) any implied warranty arising from course of performance, course of dealing or usage or trade. The foregoing disclaimer of warranty shall not be construed to be a waiver by Buyer of any claim against Seller arising from Seller’s breach of any of the terms, covenants, conditions, representations or warranties in this Agreement or the Bill of Sale made by, applicable to or to be performed by Seller.
10.4    The provisions of this Article 10 survive the completion of the transactions contemplated by this Agreement.


Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 8


11.EXCUSABLE DELAYS
Neither Party is responsible to the other Party for any delay or failure to perform under this Agreement when such interruption, suspension, delay or failure to perform under this Agreement results from, relates to or arises out of causes beyond either Party’s reasonable control, including without limitation (i) acts of God, acts of Government, fires, floods, epidemics, pandemics, quarantine restrictions, labor disputes, strikes, freight embargoes, riots, wars, the hostile acts of any person, acts of terrorism, compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it proves to be invalid, litigation, court orders, or other legal or regulatory actions or unusually severe weather, or any other event or circumstance beyond the reasonable control of either Party, (ii) a delay attributable to suppliers, or [*] (“Excusable Delay”). In the event of an Excusable Delay, the Party experiencing such delay will promptly notify the other Party, and, if feasible, will specify the estimated extent of such delay. Neither Party is deemed to be in default due to an Excusable Delay.
12.INDEMNITIES
12.1    Seller Indemnity. Seller will defend, indemnify and hold harmless Buyer and each of its Permitted Affiliates, successors and assigns, and each such person’s respective directors, officers, employees, contractors, agents, shareholders and subsidiaries (collectively, “Buyer Indemnitees”) from and against any Loss which may be incurred by a Buyer Indemnitee after Closing and arising directly out of any Engine Activity occurring prior to Closing, provided that the foregoing will not apply to any Loss that results from: (i) the gross negligence or willful misconduct of a Buyer Indemnitee, or (ii) the breach by Buyer of any of its obligations, representations or warranties hereunder.
12.2    Buyer Indemnity. Buyer will defend, indemnify and hold harmless Seller and each of its affiliates, successors and assigns, and each such person’s respective directors, officers, employees, contractors, agents, shareholders and subsidiaries (collectively, “Seller Indemnitees”) from and against any Loss which may be incurred by a Seller Indemnitee after Closing and arising directly out of any Engine Activity occurring after Closing, provided that the foregoing will not apply to any Loss that results from: (i) the gross negligence or willful misconduct of a Seller Indemnitee, or (ii) the breach by Seller of any of its obligations, representations or warranties hereunder.
12.3    Waiver of Consequential Damages. To the fullest extent permitted by applicable law, and notwithstanding anything herein to the contrary, no Party will have any liability to any person or entity under this Agreement for any special, indirect, exemplary, incidental, consequential or punitive damages (as opposed to direct and actual damages).
12.4    Survival. The provisions of this Article 12 survive the completion of the transactions contemplated by, or the termination of, this Agreement.


Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 9


13.EXPENSES AND TAXES
13.1    Costs and Expenses of Sale. Each Party will pay its own costs, charges and expenses in connection with the negotiation, preparation, execution and implementation of this Agreement.
13.2    Taxes. [*].
13.3    Survival. The provisions of this Article 13 will survive the completion of the transactions contemplated by, or the termination of, this Agreement.
14.EXPORT
14.1    The Parties agree to comply with any and all applicable export, import, sanctions and U.S. anti-boycott laws, regulations, orders and authorizations that apply to their respective activities and obligations set forth in this Agreement (collectively “Export Laws”), including but not limited to the International Traffic in Arms Regulations (22 CFR 120130) (“ITAR”), the Export Administration Regulations (15 CFR 730 et seq.) (“EAR”) and any regulations and orders administered by the Treasury Department's Office of Foreign Assets Control Regulations (31 CFR Chapter V). Nothing in this Agreement shall be construed as requiring a Party to perform an obligation that is noncompliant with any Export Laws. Furthermore, any Party that receives any technology, commodity, technical data, software, goods and services (including products derived from or based on such technical data) information or any other item subject to any applicable Export Laws, shall adhere to and comply with those laws, regulations, orders and authorizations.
14.2    The Parties shall use best efforts to apply for, obtain, comply with and maintain all export, re-export, and transfer authorizations, including approvals, consents, licenses, agreements, registrations and other authorizations (collectively, “Export Licenses”) that are required or may be required to perform the activities and obligations set forth in this Agreement. No ITAR regulated items, technical data, or defense services will be provided without obtaining the proper authorization or Export Licenses.
14.3    Prior to the transfer of any U.S. origin technical data, item or document, controlled by the EAR or ITAR, the transferring Party shall provide to the receiving Party the Export Control Classification Number (ECCN) or the ITAR category of such technical data and shall clearly indicate such on the technical data, item or document.
14.4    The Parties shall not knowingly or unknowingly divert or cause to be diverted, any commodities, technical data, software, goods and services (including products derived from or based on such technical data) subject to the Export Laws to any (i) person, (ii) entity, (iii) country or (iv) any entity located or incorporated in a country, that is on any denied party list or list of sanctioned


Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 10


countries, pursuant to either the Export Laws or any other applicable governing regulations.
14.5    If ITAR or EAR controlled technical data or items are transferred to a U.S. entity, then that entity must only allow access to that technical data or items by the following personnel: (i) U.S. citizens, or (ii) U.S. permanent resident alien, or (iii) who have U.S. protected individual status as defined by 8 USC 1324b(a)(3), or (iv) who are working under a valid U.S. export authorization. Upon request of the transferring Party, the receiving Party shall provide appropriate documentation evidencing the aforementioned requirements.
14.6    The Parties shall not export, re-export, transfer, disclose or otherwise provide physical or electronic access to technical data controlled under the Export Laws to any person (including unauthorized third party information technology (“IT”) service providers) not authorized to receive said technical data under existing Export Laws and/or Export Licenses.
14.7    Neither Party shall modify or divert the other Party’s technical data controlled by the Export Laws to any military application, unless (i) such Party receives advance, written authorization from the other Party and (ii) such modification or diversion is done in compliance with all applicable Export Laws. Neither Party shall modify or divert the other Party’s technical data controlled by the Export Laws to any military application or other end-use prohibited by applicable Export Laws.
14.8    Buyer represents that it is aware that all sales and distribution of Seller’s Products, which include all tangible items and related software, technology or services (together “Products and Services”), may constitute an export, re-export, or retransfer of such Products and Services. Buyer certifies that such sales and distribution will be conducted in accordance with applicable Export Laws, which may require prior approval and/or prohibit transactions with sanctioned countries/regions or designated parties/entities/individuals. Buyer shall not sell, transfer, export, or re-export the Products and Services, or provide any warranty, repair, replacement, or guarantee services for end-use in Cuba, Iran, North Korea, Sudan and/or Syria.
14.9    Each Party agrees to indemnify and hold the other Party harmless against any liability arising from any breach of its obligations under this Article 14.
15.MISCELLANEOUS
15.1    Notices. All notices, requests and demands to or upon the Parties to be effective must be in writing, and will be deemed to have been duly given or made upon the earlier to occur of: (i) actual receipt by the relevant Party, and (ii) (A) if delivered by hand or courier, when signed for by or on behalf of the relevant Party, (B) if delivered by mail, five (5) business days after being deposited in the mail, postage prepaid, and (C) if delivered by email, upon the sender’s receipt of an


Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 11


acknowledgement from the intended recipient (such as by the “return receipt requested” function, return email or other written acknowledgement), provided that, in the case of sub-clause (ii)(C) above, if such email is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient. Notices, requests, demands and other communications delivered hereunder will be given to or made upon the respective Parties at their respective addresses set forth below or as otherwise notified in writing from time to time.
If to Seller, to:
Pratt & Whitney Engine Leasing, LLC
c/o: Pratt & Whitney
400 Main Street, Mail Stop [*]
East Hartford, CT 06118
Attention: Associate General Counsel & Executive Director, Commercial Engines Contracts

E-Fax: [*]
Email:

If to Buyer, to:
Willis Lease Finance Corporation
60 East Sir Francis Drake Boulevard, Suite 209
Larkspur, California 94939
Attention: Dean Poulakidas, General Counsel
Email:

15.2    Governing Law and Dispute Resolution.
(a)This Agreement, each Acceptance Certificate and each Bill of Sale (including any dispute relating to their existence, validity or termination) are governed by and construed and enforced in accordance with the substantive laws of the State of New York, United States of America, without regard to principles of conflicts of law. The United Nations Convention of Contracts for the International Sale of Goods shall not apply.
(b)[*].
(c)[*].
(d)Each Party will comply with all applicable United States of America laws, rules and regulations in exercising its rights and performing its obligations hereunder.
(e)The Parties agree that all controversies, disputes, claims, differences or matters that arise from this Agreement and any arbitration that arise thereof are subject to the confidentiality provisions set forth in Section 15.5.


Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 12


15.3    Amendments, Waivers and Consents. Any term, covenant, agreement or condition of this Agreement may be amended or waived only in a writing signed by each Party.
15.4    Assignment. Neither Party may assign its rights or delegate its obligations under this Agreement, in whole or in part, without the prior written consent of the other Party, except that: (i) Buyer may, upon prior written notice to Seller, assign this Agreement or any of its obligations hereunder, whether in whole or part, to any Permitted Affiliate(s), without the prior written consent of Seller, and (ii) Seller may, without recourse, assign its rights and/or delegate its obligations under this Agreement to any subsidiary or affiliate of Raytheon Technologies Corporation, or in connection with the merger, consolidation, reorganization or voluntary sale or transfer of its assets. Any assignment or delegation made in contravention of this provision will be invalid.
15.5    Confidentiality. This Agreement and any technical information provided in connection with it are confidential and proprietary to Seller and Buyer. Each Party agrees to limit disclosures of such confidential information only to persons who have a need to know within their own organizations, outside auditors, outside advisors and government agencies. If either Party is subject to a legal action or proceeding or a requirement under applicable government regulations to disclose such confidential information (“Obligated Party”), the Obligated Party will forthwith notify the other Party, and upon the request of the other Party, will cooperate with the other Party in contesting such disclosure. Each Party agrees that it will not, and will not permit any of its affiliates, directors, officers, employees, advisors, agents or other representatives to issue any report, statement or release relating in any way to the Agreement or the subject matter thereof without the prior written consent of the other Party.
15.6    International Registry. Seller acknowledges and agrees that it will cooperate with Buyer in order to register the Bill of Sale for each Engine delivered under this Agreement as a contract of sale on the International Registry of Mobile Assets established pursuant to a Convention on International Interests in Mobile Equipment, adopted on November 16, 2001 in Cape Town, South Africa, within forty-eight (48) hours following the Closing of each Engine.
15.7    Data Privacy. Each Party will comply with applicable laws relating to data privacy, the protection of personal information or data, and the cross-border transfer of personal information or data and will be responsible for providing any notice required by law to the data subjects whose personal data such Party provides to the other Party.
15.8    Titles and Captions. Titles and captions of Articles, Sections and subsections in, and the table of contents of, this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement.


Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 13


15.9    Severability of Provisions. Any provision of this Agreement, the Acceptance Certificates or the Bills of Sale that is prohibited or unenforceable in any jurisdiction, as to such jurisdiction, will be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.
15.10    Interpretation. The Parties jointly participated in drafting this Agreement. This Agreement shall be construed neither against nor in favor of either Party.
15.11    Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties in different counterparts), each of which will constitute an original, but all of which when taken together will constitute a single contract. This Agreement, the Acceptance Certificates and the Bills of Sale constitute the entire agreement between the Parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement will become effective when it has been executed by the Parties and when each Party has received counterparts hereof that, when taken together, bear the signatures of each Party. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format is as effective as delivery of a manually executed counterpart of this Agreement.
(Signature page follows)



Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 14


IN WITNESS WHEREOF, the Parties have caused this Used Engines Sale Agreement to be executed as of the date and year first set forth above.

Pratt & Whitney Engine Leasing, LLC



By:    /s/ Paul F. Oechsli_______________________
Name:    Paul F. Oechsli
Title:    President


WILLIS LEASE FINANCE CORPORATION



By:    /s/ Austin Willis__________________________
Name:    Austin Willis
Title:    Senior Vice President, Corporate Development




    
    
Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Signature Page


APPENDIX I
USED ENGINES SALE AGREEMENT
[*] ENGINE LIST
[*]


Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Appendix I



APPENDIX II

DEMOUNTABLE POWERPLANT SPECIFICATION

[*]
Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
    Appendix II



APPENDIX III

COLLINS AEROSPACE QEC KIT EXCLUDED PARTS

[*]
Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Appendix III




APPENDIX IV
FORM OF ACCEPTANCE CERTIFICATE
ACCEPTANCE CERTIFICATE
Reference is hereby made to that certain Used Engines Sale Agreement, dated as of __________, 2020 (the “Agreement”), between Pratt & Whitney Engine Leasing, LLC (“Seller”) and Willis Lease Finance Corporation (“Buyer”). Pursuant to the Agreement, Buyer does hereby represent, warrant and acknowledge to Seller as follows:
1.Buyer has this ____ day of ____________, 2020, accepted for purchase from Seller the following:
(a)one (1) Pratt & Whitney [*] model aircraft engine bearing manufacturer’s serial number [ ], including all parts, components and accessories related thereto and as specified in the Agreement;
(b)one (1) QEC Kit;
(c)the Engine Storage Bag;
(d)the Engine Stand; and
(e)the Engine Documentation.
2.All of the foregoing has been delivered and accepted on the date set forth above to Buyer’s full satisfaction and pursuant to the terms and provisions of the Agreement.
Unless otherwise defined herein, capitalized terms used in this Acceptance Certificate have the same meaning as those used in the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Acceptance Certificate as of the date first set forth above.
WILLIS LEASE FINANCE CORPORATION
as Buyer



By:    ____________________________________
Name:    
Title:    



Acceptance Certificate
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.


APPENDIX V
FORM OF BILL OF SALE
ENGINE BILL OF SALE
______________, 2020
Pratt & Whitney Engine Leasing, LLC (“Seller”), is the owner of good and marketable title to the following equipment (collectively, the “Engine”), all as further described in that certain Used Engines Sale Agreement, dated as of ______________, 2020 (the “Agreement”), between Seller and Willis Lease Finance Corporation (“Buyer”):
1.one (1) Pratt & Whitney [*] [indicate specific thrust rating] model aircraft engine bearing manufacturer’s serial number [ ];
2.one (1) QEC Kit;
3.all appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment and property installed in or attached or related to the Engine and as specified in the Agreement, to which Seller holds title;
4.the Engine Storage Bag;
5.the Engine Stand; and
6.the Engine Documentation.
For and in consideration of the sum of Ten Dollars ($10) and other valuable consideration, receipt of which is hereby acknowledged, Seller does hereby sell, grant, transfer, deliver and set over to Buyer and its successors and assignees forever all of Seller’s right, title and interest in and to the Engine, to have and to hold the Engine for its and their use forever.
Seller hereby warrants to Buyer and its successors and assigns that there is hereby conveyed to Buyer title to the Engine free of Liens and that Seller will warrant and defend such title forever against all claims and demands.
Unless otherwise defined herein, capitalized terms used in this Bill of Sale have the same meaning as those used in the Agreement. This Bill of Sale will be governed by and construed in accordance with the laws of the State of New York.

IN WITNESS WHEREOF, the undersigned has duly executed this Bill of Sale as of the date first set forth above.
PRATT & WHITNEY ENGINE LEASING, LLC


By:    ____________________________________
Name:    
Title:    

Bill of Sale
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.


APPENDIX VI
[*] ENGINE AND PARTS SERVICE POLICY
(See next page)

Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version                Appendix VI


APPENDIX VII
LIST OF PERMITTED AFFILIATES
WEST Engine Acquisition LLC, a limited liability company organized and existing under the laws of the State of Delaware
Willis Engine Structured Trust III, a statutory trust organized and existing under the laws of the State of Delaware
Willis Engine Structured Trust IV, a statutory trust organized and existing under the laws of the State of Delaware
Willis Engine Structured Trust V, a statutory trust organized and existing under the laws of the State of Delaware
Willis Mitsui & Co Engine Support Limited, a limited company organized and existing under the laws of Ireland
CASC Willis Lease Finance Company Limited, a Sino-foreign equity joint venture organized and existing under the laws of China (Shanghai) Pilot Free Trade Zone, People’s Republic of China
Wells Fargo Trust Company, N.A., a national banking association organized and existing under the laws of the United States of America, US Bank National Association, a national banking association organized and existing under the laws of the United States of America, or Bank of Utah, a corporation organized and existing under the laws of the State of Utah, in each case, not in its individual capacity but solely as Owner Trustee for the benefit of any of the foregoing.

Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
    Appendix VII



APPENDIX VIII
FORM OF PRE-CLOSING ENGINE CERTIFICATION
To be printed on Seller’s letterhead
ENGINE CERTIFICATION
This statement certifies to the best of our knowledge, that Engine _________ s/n ________, has not been involved in an incident or accident, major failure, or fire, nor has the Engine or the parts installed thereon, been immersed in salt water or exposed to corrosive agents outside normal operation, been subjected to extreme stress or heat nor been obtained from any Government, or Military source while Leased and/or Operated since birth and in the case of a part installed on the Engine while Leased and/or Operated since birth has not been subjected to, or removed from an engine that has been involved in an incident or accident, major failure, or fire, or been subjected to extreme stress or heat nor been obtained from any Government, or Military source; unless its airworthiness status was re-established by an approved maintenance organization in accordance with the instructions of the type certificate holder and/or original engine manufacturer of the part and supported by an authorized release certificate.
Additionally, this statement certifies to the best of our knowledge, that Engine __________ does not contain any non-OEM repairs or PMA parts, or other non-OEM approved hardware.
As of October 31, 2020:
Engine Total Time: _________ Engine Total Cycles: ________

Signature:
Name:
Title:
Date:




Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
    Appendix VIII



APPENDIX X
POST-CLOSNG ENGINE DOCUMENTATION SHORT LIST
[*]

Pratt & Whitney Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
    Appendix IX






USED ENGINES SALE AGREEMENT

between

[*] ENGINE LEASING, LLC

and

WILLIS LEASE FINANCE CORPORATION, FOR ITSELF AND AS SERVICER
December 3, 2020

    






This document contains proprietary information of [*] Engine Leasing, LLC (“Seller”). Seller offers the information contained in this document on the condition that you not disclose or reproduce the information to or for the benefit of any third party without Seller’s written consent. Neither receipt nor possession of this document, from any source, constitutes Seller’s permission. Possessing, using, copying or disclosing this document to or for the benefit of any third party without Seller’s written consent may result in criminal and/or civil liability.
This document does not contain any export regulated technical data.
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version


TABLE OF CONTENTS
Article Page Number
1. DEFINITIONS 1
2. DESCRIPTION OF SALE, DATE OF SALE AND DELIVERY LOCATION 3
3. PURCHASE PRICE AND PAYMENT 4
4. INSPECTION 4
5. CONDITIONS PRECEDENT 5
6. CLOSING AND DELIVERY 5
7. RISK OF LOSS AND TITLE 6
8. COVENANTS OF BUYER 6
9. REPRESENTATIONS AND WARRANTIES 7
10. LIMITED WARRANTIES AND DISCLAIMERS 8
11. EXCUSABLE DELAYS 9
12. INDEMNITIES 9
13. EXPENSES AND TAXES 10
14. EXPORT 10
15. MISCELLANEOUS 11
Appendix I [*] Engines List
Appendix II Demountable Powerplant Specification
Appendix III Collins Aerospace QEC Kit Excluded Parts
Appendix IV [*] Engines Delivery Location
Appendix V Form of Acceptance Certificate
Appendix VI Form of Engine Bill of Sale
Appendix VII [*] Engine and Parts Service Policy
Appendix VIII List of Permitted Affiliates
Appendix IX Form of Pre-closing Engine Certification
Appendix X Post-closing Engine Documentation Short List

[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.

Willis [*] Used Engines Sale Agreement Execution Version


USED ENGINES SALE AGREEMENT
This Used Engines Sale Agreement, dated as of December 3, 2020 (this “Agreement”), is between [*] Engine Leasing, LLC, as Seller, and Willis Lease Finance Corporation (for itself and in its capacity as Servicer on behalf of the Permitted Affiliates (as defined below)), as Buyer. Each a “Party” and together the “Parties”.
The subject matter of this Agreement is [*] used, serviceable aircraft engines, as described in Section 2.2, which Seller desires to sell to Buyer and Buyer is willing to purchase from Seller.
In consideration of and subject to the mutual covenants, terms and conditions contained in this Agreement, the Parties agree as follows.
1.DEFINITIONS
In this Agreement, unless the context otherwise requires:
1.1    “Acceptance Certificate” means an acceptance certificate in the form attached as Appendix V to this Agreement.
1.2    “BFE” means “Buyer Furnished Equipment”, which is the aircraft manufacturer- supplied or buyer furnished engine-mounted accessories (typically including such items as integrated drive generator, quick accessory disconnect adapter, hydraulic pumps, shutoff valve, and pressure regulating valve).
1.3    “Bill of Sale” means a bill of sale in the form attached as Appendix VI to this Agreement.
1.4    “Buyer” means Willis Lease Finance Corporation, a corporation organized and existing under the laws of Delaware, with a place of business at 4700 Lyons Technology Parkway, Coconut Creek, Florida 33073.
1.5    “Buyer Indemnitee” has the meaning set forth in Section 12.1.
1.6    “Closing” has the meaning set forth in Section 6.2.
1.7    “DER” means Designated Engineering Representative.
1.8    “Delivery Location” has the meaning set forth in Section 2.3.
1.9    “Dollars and $” mean the lawful currency of the United States of America.
1.10    “Engine” has the meaning set forth in Section 2.2.
1.11    “Engine Activity” means the ownership, possession, use, import, export, registration, re-registration, deregistration, non-registration, manufacture, performance, transportation, management, location, movement, acquisition,

[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.

Willis [*] Used Engines Sale Agreement Execution Version



disposal, transfer, exchange, control, design, condition, defect, testing, inspection, acceptance, delivery, redelivery, leasing, subleasing, wet-leasing, pooling, interchange, maintenance, repair, loss, damage, emissions, refurbishment, insurance, reinsurance, service, modification, overhaul, replacement, alteration, storage, removal or operation of the Engine or any part thereof (whether in the air or on the ground or otherwise).
1.12    “Engine Documentation” has the meaning set forth in Section 2.2.
1.13    “Engine Stand” has the meaning set forth in Section 2.2.
1.14    “Engine Storage Bag” has the meaning set forth in Section 2.2.
1.15    “FAA” means the United States Federal Aviation Administration.
1.16    “Final Closing Date” has the meaning set forth in Section 2.5.
1.17    “Fixed Price Repair Agreement” means that certain agreement between IAE LLC and Buyer entered into contemporaneously with this Agreement and pursuant to which IAE LLC will provide repair coverage for each Engine pursuant to the terms thereof.
1.18    “IAE LLC” means International Aero Engines, LLC, a limited liability company organized and existing under the laws of Delaware, which has an office located at 400 Main Street, East Hartford, Connecticut 06118, and which is an affiliate of Seller.
1.19    “Liens” means, collectively, security interests, liens, claims, charges, other encumbrances or rights of others.
1.20    “Loss” means any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees, costs and related expenses) of every kind and nature.
1.21    “[*] Engine” has the meaning set forth in Section 2.3(b).
1.22    “OEM” means original equipment manufacturer.
1.23    “Permitted Affiliates” means, collectively, those parties set forth in Appendix VIII to this Agreement, or such other parties as consented to in writing by IAE LLC, such consent not to be unreasonably withheld or delayed; provided, however, that if IAE LLC or Seller is legally prohibited from doing business with such party, then such party will cease to be a Permitted Affiliate.
1.24    “PMA” means Parts Manufacturer Approval, the authority granted by the FAA to manufacture parts for installation in type-certificated products.

[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 2


1.25    “Pre-closing Records” has the meaning set forth in Section 4.2.
1.26    “Purchase Price” has the meaning set forth in Section 3.1.
1.27    [*].
1.28    “QEC Kit” means a used serviceable quick engine change kit bearing part number [*] with the specifications identified in the Specification. The QEC Kit does not include BFE parts.
1.29    “QEC Kit Excluded Parts” means the QEC Kit parts that Seller will not provide, which are listed in Appendix III to this Agreement.
1.30    [*]
1.31    “Right of First Refusal” has the meaning set forth in Section 8.2.
1.32    “Scheduled Closing Date” has the meaning set forth in Section 2.4.
1.33    “Seller” means [*] Engine Leasing, LLC, a limited liability company organized and existing under the laws of Delaware, which has an office located at 400 Main Street, East Hartford, Connecticut 06118.
1.34    “Seller Indemnitee” has the meaning set forth in Section 12.2.
1.35    “Specification” means the Demountable Powerplant Specification attached as Appendix II to this Agreement.
2.DESCRIPTION OF SALE, DATE OR SALE AND DELIVERY LOCATION
2.1    Agreement to Sell. Subject to the terms of this Agreement, Seller agrees to sell to Buyer and Buyer agrees to purchase from Seller all right, title and interest in and to the Engines on the Scheduled Closing Date and for the Purchase Price.
2.2    Description of the Engines. As used herein, “Engines” means, individually or collectively, as the context requires: (i) the [*] used, serviceable [*] model aircraft engines manufactured by IAE LLC, which are the subject of this Agreement and further described in the Specification, and bear the manufacturer’s serial numbers listed, and the technical status and configuration as of [*] identified, in Appendix I to this Agreement, [*]; (ii) IAE LLC-approved engine transportation stand for each Engine part number [*] (“Engine Stands”); (iii) IAE LLC-approved engine moisture and vapor proof storage bag for each Engine (“Engine Storage Bags”); (iv) QEC Kit for each Engine; and (v) all appliances, parts, instruments, appurtenances, accessories, furnishings, and other equipment and property installed in or attached or related to the Engines, except for the engine mount brace (part number [*]) and the QEC Kit Excluded Parts; and (vi) all documents

[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 3


and records relating to the operation and maintenance of the Engines and in the possession of Seller in electronic form (“Engine Documentation”). Except where the context otherwise requires, the term “Engine” when used in this Agreement refers to an Engine together with the QEC Kit, Engine Stand, Engine Storage Bag, and Engine Documentation.
2.3    Delivery Location.
(a)[*]. Seller will tender the Engine for sale [*], or as otherwise agreed by the Parties. Buyer will notify Seller within [*] prior to Closing of the preferred Delivery Location.
(b)[*].
2.4    Scheduled Closing Date. As of the date hereof, the sale of each Engine by Seller to Buyer is scheduled to occur on [*], or such other date as the Parties mutually agree in writing (the “Scheduled Closing Date”).
2.5    Cancellation [*]. [*].
3.PURCHASE PRICE AND PAYMENT
3.1    Purchase Price. The purchase price for each Engine is the amount set forth in Appendix I to this Agreement (each, a “Purchase Price”). For the avoidance of doubt, the aggregate purchase price for the Engines is [*] (the “Aggregate Purchase Price”).
3.2    Payments. All payments under this Agreement, including the Purchase Price, must be made in Dollars, without any withholdings or deductions whatsoever, by wire transfer to the account of Seller identified below:
[*]

3.3    [*]. [*]

4.INSPECTION
4.1    Engines. [*].
4.2    Pre-closing Records. For each Engine, Buyer will have an opportunity to inspect the following Engine Documentation prior to Closing: (i) [*]. Seller will provide Buyer electronic access to the Pre-closing Records.

[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 4


4.3    Engine Documentation Post-Closing: As soon as possible after a Closing, but no later than [*], Seller will provide Buyer electronic access to the Engine Documentation identified in Appendix X to this Agreement for each Engine.
5.CONDITIONS PRECEDENT
5.1    Conditions to Buyer’s Obligations. The following are conditions precedent to Buyer’s obligation to purchase an Engine from Seller, which Buyer may waive in full or in part in its sole discretion:
(a)The Engine is located at the Delivery Location;
(b)[*], the Engine is installed on the Engine Stand, has been preserved for the longest available storage period in accordance with the aircraft maintenance manual or engine manual applicable to the Engine, and it is otherwise prepared and wrapped for shipment in an Engine Storage Bag;
(c)[*];
(d)Buyer is satisfied with the results of the inspection of the Engine’s Pre-closing Records;
(e)The Engine operates at the thrust configuration listed in Appendix I to this Agreement or as otherwise mutually agreed by the Parties;
(f)Seller’s representations and warranties set forth in Section 9.2 are true and correct, and Seller is not in breach of any of its obligations under this Agreement; and
(g)No change in applicable laws or regulations or in the interpretation thereof has occurred after the date of this Agreement that would make it unlawful for Buyer to perform its obligations under this Agreement.

5.2    Conditions to Seller’s Obligations. The following are conditions precedent to Seller’s obligation to sell an Engine to Buyer, which Seller may waive in full or in part in its sole discretion:
(a)Seller has received an executed Acceptance Certificate for the Engine;
(b)Seller has received the full amount of the Purchase Price for the Engine;
(c)Buyer’s representations and warranties set forth in Section 9.1 are true and correct, and Buyer is not in breach of its obligations under this Agreement; and
(d)No change in applicable laws or regulations or in the interpretation thereof has occurred after the date of this Agreement that would make it unlawful for Seller to perform its obligations under this Agreement.
6.CLOSING AND DELIVERY
6.1    Date of Closing. Seller and Buyer will use commercially reasonable efforts to cause the sale of each Engine to occur on the Scheduled Closing Date.
6.2    Closing. For each Engine, upon the satisfaction (or waiver by Buyer in its sole discretion) of each of the conditions precedent set forth in Section 5.1 with respect to such Engine, Buyer will execute and deliver the Acceptance Certificate

[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 5


for the Engine to Seller and pay the Purchase Price for that Engine. Upon the satisfaction (or waiver by Seller in its sole discretion) of each of the conditions precedent set forth in Section 5.2 with respect to the Engine, including Seller’s confirmation of its receipt of the Engine’s Purchase Price, Seller will execute and deliver to Buyer the Bill of Sale for the Engine on the day of Closing (each, a “Closing”).[*].
6.3    Ownership plate. Seller will, or cause IAE LLC to, affix a new ownership plate on each Engine, as agreed with Buyer, within [*] of Closing, or as otherwise mutually agreed by the Parties.
7.RISK OF LOSS AND TITLE
7.1    Risk of Loss. Risk of loss and damage to an Engine and its QEC Kit, Engine Stand, Engine Storage Bag and Engine Documentation will pass to Buyer at Closing.
7.2    Title. Title to the Engine and its QEC Kit, Engine Stand, Engine Storage Bag and Engine Documentation will pass to Buyer at Closing.
8.COVENANTS OF BUYER
8.1    Covenant Against Engine Part-Out. Buyer agrees that the Engines are for the sole purpose of supporting Buyer’s engine leasing business through the loan or lease of the Engines to Buyer’s customers. For a period of [*] from the manufacture date of the Engine, Buyer: (i) will not disassemble any of the Engines into parts to be used or sold separately, and (ii) will ensure that any agreement with its customers will prohibit the disassembly of such Engine into parts to be used or sold separately and will include Seller as a third party beneficiary of such prohibition. Failure to comply with this Section 8.1 is a material breach of Agreement and Seller may, in its discretion, exercise any and all rights, remedies, powers and privileges afforded by applicable law or in equity.
8.2    Right of First Refusal. With respect to each Engine, for a period of [*] from the manufacture date of the Engine, in the event Buyer decides to transfer, sell, or otherwise dispose of the Engine in an arm’s length transaction to an independent third party, Buyer agrees to grant Seller the right of first refusal to purchase the Engine at the price and upon substantially the same terms offered by the third party. Upon receipt of any bona fide offer, Buyer will notify Seller in writing of the price and terms, and Seller will respond to this notice within [*] after receipt thereof, indicating whether Seller desires to exercise its rights hereunder. For purposes of this Section 8.2, a sale (or an offer to sell) to an independent third party does not include a sale by Buyer to: (i) [*]; provided however, that any such sale agreement with (i) or (ii) will grant Seller the right of first refusal to purchase the Engine, consistent with the terms of this Section 8.2, in the event the Engine is subsequently offered to be sold in an arm’s length transaction to an independent third party.

[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 6


8.3    Engine On-Sell. With respect to each Engine, for a period of [*] from the manufacture date of the Engine, if Seller elects not to exercise its Right of First Refusal in connection with a proposed sale, assignment, transfer, or other disposal of an Engine to a third party (the “Purchaser”), Buyer agrees that: (i) the agreement for such sale, assignment, transfer, or other disposal of the Engine to the Purchaser strictly covenants the Purchaser from disassembling the Engine into parts to be used or sold separately for a period equal to [*] from birth, (ii) such agreement will make Seller a third party beneficiary of such commitment by the Purchaser, and (iii) if the Purchaser seeks to resell such Engine, it shall abide by the terms set forth herein. Buyer’s failure to comply with this Section 8.3 constitutes a material breach of this Agreement and will cause irreparable harm to Seller. In the event of any breach or threatened breach of such obligation, Seller, without prejudice to any other rights or remedies it may have herein, at law or in equity, will be entitled to equitable relief, including injunction and/or specific performance. Buyer agrees that it will not oppose the granting of such relief on the basis that Seller has an adequate remedy at law.
9.REPRESENTATIONS AND WARRANTIES
9.1    Buyer Representations and Warranties. Buyer represents and warrants to Seller both on the date of this Agreement and as of the Closing, that:
(a)Buyer: (i) is duly organized, validly existing and in good standing as a corporation under the laws of Delaware, and (ii) has the requisite power and authority and has taken all necessary and appropriate action to authorize the execution, delivery and performance of this Agreement and the Acceptance Certificate;
(b)Each of this Agreement and the Acceptance Certificate has been (or will be) duly executed and delivered by Buyer, and constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application relating to creditors’ rights generally and by general equitable principles (regardless of whether the issue of enforceability is considered in a proceeding in equity or at law); and
(c)No third party is involved as a broker or finder on behalf of Buyer in connection with the transactions contemplated by this Agreement.

9.2    Seller Representations and Warranties. Seller represents and warrants to Buyer, both on the date of this Agreement and as of the Closing, that:
(a)Seller: (i) is duly organized, validly existing and in good standing as a limited liability company under the laws of Delaware, and (ii) has the requisite power and authority and has taken all necessary and appropriate action to authorize the execution, delivery and performance of this Agreement and the Bill of Sale;
(b)Each of this Agreement and the Bill of Sale has been (or will be) duly executed and delivered by Seller, and constitutes the legal, valid and

[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 7


binding obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application relating to creditors’ rights generally and by general equitable principles (regardless of whether the issue of enforceability is considered in a proceeding in equity or at law);
(c)As of the time of the Closing, Seller has good and valid title to the applicable Engine to transfer to Buyer, free and clear of all Liens; and
(d)No third party is involved as a broker or finder on behalf of Seller in connection with the transactions contemplated by this Agreement.
10.LIMITED WARRANTIES AND DISCLAIMERS
10.1    Seller hereby warrants to Buyer that, at the time of Closing, Seller will transfer to Buyer good, legal and merchantable title to the Engine, free and clear of any and all Liens.
10.2    Seller will assign and transfer to Buyer any remaining benefits of the Engines’ [*] Engine and Parts Service Policy, attached as Appendix VII to this Agreement, prorated to the Engine’s status as of the Engine’s Closing in accordance with the following:
[*]
The Parties agree to execute and deliver any and all reasonable documentation required to accomplish the assignment and transfer of rights, interests and benefits referred to in this Section 10.2.
10.3    Except as expressly set forth in this Article 10 and in the Bill of Sale, each Engine is sold in “AS IS, WHERE-IS” and “WITH ALL FAULTS” condition, and Seller makes no warranties, guarantees or representations of any kind, either express or implied, statutory or otherwise, with respect to each Engine, and Buyer hereby waives all other remedies, warranties and liabilities, express or implied, arising by law or otherwise, with respect to each Engine or any part thereof, including but not limited to: (a) any express or implied warranty or representation as to condition, airworthiness, value, merchantability, manufacture, fitness for a particular purpose, absence of latent, inherent or other defects (whether or not discoverable) or as to freedom from any rightful claim by way of infringement of any patent, copyright, design or other proprietary rights, and (b) any implied warranty arising from course of performance, course of dealing or usage or trade. The foregoing disclaimer of warranty shall not be construed to be a waiver by Buyer of any claim against Seller arising from Seller’s breach of any of the terms, covenants, conditions, representations or warranties in this Agreement or the Bill of Sale made by, applicable to or to be performed by Seller.

10.4    The provisions of this Article 10 survive the completion of the transactions contemplated by this Agreement.


[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 8


11.EXCUSABLE DELAYS
Neither Party is responsible to the other Party for any delay or failure to perform under this Agreement when such interruption, suspension, delay or failure to perform under this Agreement results from, relates to or arises out of causes beyond either Party’s reasonable control, including without limitation (i) acts of God, acts of Government, fires, floods, epidemics, pandemics, quarantine restrictions, labor disputes, strikes, freight embargoes, riots, wars, the hostile acts of any person, acts of terrorism, compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it proves to be invalid, litigation, court orders, or other legal or regulatory actions or unusually severe weather, or any other event or circumstance beyond the reasonable control of either Party, (ii) a delay attributable to suppliers, or [*] (“Excusable Delay”). In the event of an Excusable Delay, the Party experiencing such delay will promptly notify the other Party, and, if feasible, will specify the estimated extent of such delay. Neither Party is deemed to be in default due to an Excusable Delay.
12.INDEMNITIES
12.1    Seller Indemnity. Seller will defend, indemnify and hold harmless Buyer and each of its Permitted Affiliates, successors and assigns, and each such person’s respective directors, officers, employees, contractors, agents, shareholders and subsidiaries (collectively, “Buyer Indemnitees”) from and against any Loss which may be incurred by a Buyer Indemnitee after Closing and arising directly out of any Engine Activity occurring prior to Closing, provided that the foregoing will not apply to any Loss that results from: (i) the gross negligence or willful misconduct of a Buyer Indemnitee, or (ii) the breach by Buyer of any of its obligations, representations or warranties hereunder.

12.2    Buyer Indemnity. Buyer will defend, indemnify and hold harmless Seller and each of its affiliates, successors and assigns, and each such person’s respective directors, officers, employees, contractors, agents, shareholders and subsidiaries (collectively, “Seller Indemnitees”) from and against any Loss which may be incurred by a Seller Indemnitee after Closing and arising directly out of any Engine Activity occurring after Closing, provided that the foregoing will not apply to any Loss that results from: (i) the gross negligence or willful misconduct of a Seller Indemnitee, or (ii) the breach by Seller of any of its obligations, representations or warranties hereunder.

12.3    Waiver of Consequential Damages. To the fullest extent permitted by applicable law, and notwithstanding anything herein to the contrary, no Party will have any liability to any person or entity under this Agreement for any special, indirect, exemplary, incidental, consequential or punitive damages (as opposed to direct and actual damages).

12.4    Survival. The provisions of this Article 12 survive the completion of the transactions contemplated by, or the termination of, this Agreement.



[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 9


13.EXPENSES AND TAXES
13.1    Costs and Expenses of Sale. Each Party will pay its own costs, charges and expenses in connection with the negotiation, preparation, execution and implementation of this Agreement.

13.2    Taxes. [*].

13.3    Survival. The provisions of this Article 13 will survive the completion of the transactions contemplated by, or the termination of, this Agreement.
14.EXPORT
14.1    The Parties agree to comply with any and all applicable export, import, sanctions and U.S. anti-boycott laws, regulations, orders and authorizations that apply to their respective activities and obligations set forth in this Agreement (collectively “Export Laws”), including but not limited to the International Traffic in Arms Regulations (22 CFR 120130) (“ITAR”), the Export Administration Regulations (15 CFR 730 et seq.) (“EAR”) and any regulations and orders administered by the Treasury Department's Office of Foreign Assets Control Regulations (31 CFR Chapter V). Nothing in this Agreement shall be construed as requiring a Party to perform an obligation that is noncompliant with any Export Laws. Furthermore, any Party that receives any technology, commodity, technical data, software, goods and services (including products derived from or based on such technical data) information or any other item subject to any applicable Export Laws, shall adhere to and comply with those laws, regulations, orders and authorizations.
14.2    The Parties shall use best efforts to apply for, obtain, comply with and maintain all export, re-export, and transfer authorizations, including approvals, consents, licenses, agreements, registrations and other authorizations (collectively, “Export Licenses”) that are required or may be required to perform the activities and obligations set forth in this Agreement. No ITAR regulated items, technical data, or defense services will be provided without obtaining the proper authorization or Export Licenses.
14.3    Prior to the transfer of any U.S. origin technical data, item or document, controlled by the EAR or ITAR, the transferring Party shall provide to the receiving Party the Export Control Classification Number (ECCN) or the ITAR category of such technical data and shall clearly indicate such on the technical data, item or document.
14.4    The Parties shall not knowingly or unknowingly divert or cause to be diverted, any commodities, technical data, software, goods and services (including products derived from or based on such technical data) subject to the Export Laws to any (i) person, (ii) entity, (iii) country or (iv) any entity located or incorporated in a country, that is on any denied party list or list of sanctioned countries, pursuant to either the Export Laws or any other applicable governing regulations.

[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 10


14.5    If ITAR or EAR controlled technical data or items are transferred to a U.S. entity, then that entity must only allow access to that technical data or items by the following personnel: (i) U.S. citizens, or (ii) U.S. permanent resident alien, or (iii) who have U.S. protected individual status as defined by 8 USC 1324b(a)(3), or (iv) who are working under a valid U.S. export authorization. Upon request of the transferring Party, the receiving Party shall provide appropriate documentation evidencing the aforementioned requirements.
14.6    The Parties shall not export, re-export, transfer, disclose or otherwise provide physical or electronic access to technical data controlled under the Export Laws to any person (including unauthorized third party information technology (“IT”) service providers) not authorized to receive said technical data under existing Export Laws and/or Export Licenses.
14.7    Neither Party shall modify or divert the other Party’s technical data controlled by the Export Laws to any military application, unless (i) such Party receives advance, written authorization from the other Party and (ii) such modification or diversion is done in compliance with all applicable Export Laws. Neither Party shall modify or divert the other Party’s technical data controlled by the Export Laws to any military application or other end-use prohibited by applicable Export Laws.
14.8    Buyer represents that it is aware that all sales and distribution of Seller’s Products, which include all tangible items and related software, technology or services (together “Products and Services”), may constitute an export, re-export, or retransfer of such Products and Services. Buyer certifies that such sales and distribution will be conducted in accordance with applicable Export Laws, which may require prior approval and/or prohibit transactions with sanctioned countries/regions or designated parties/entities/individuals. Buyer shall not sell, transfer, export, or re-export the Products and Services, or provide any warranty, repair, replacement, or guarantee services for end-use in Cuba, Iran, North Korea, Sudan and/or Syria.
14.9    Each Party agrees to indemnify and hold the other Party harmless against any liability arising from any breach of its obligations under this Article 14.
15.MISCELLANEOUS
15.1    Notices. All notices, requests and demands to or upon the Parties to be effective must be in writing, and will be deemed to have been duly given or made upon the earlier to occur of: (i) actual receipt by the relevant Party, and (ii) (A) if delivered by hand or courier, when signed for by or on behalf of the relevant Party, (B) if delivered by mail, five (5) business days after being deposited in the mail, postage prepaid, and (C) if delivered by email, upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, return email or other written acknowledgement), provided that, in the case of sub-clause (ii)(C) above, if such email is not sent during the

[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 11


normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient. Notices, requests, demands and other communications delivered hereunder will be given to or made upon the respective Parties at their respective addresses set forth below or as otherwise notified in writing from time to time.
If to Seller, to:
[*] Engine Leasing, LLC
c/o: International Aero Engines, LLC
400 Main Street, Mail Stop [*]
East Hartford, CT 06118
Attention: Chief Legal Officer

E-Fax: [*]
Email:

If to Buyer, to:
Willis Lease Finance Corporation
60 East Sir Francis Drake Boulevard, Suite 209
Larkspur, California 94939
Attention: Dean Poulakidas, General Counsel
Email:

15.2    Governing Law and Dispute Resolution.
(a)This Agreement, each Acceptance Certificate and each Bill of Sale (including any dispute relating to their existence, validity or termination) are governed by and construed and enforced in accordance with the substantive laws of the State of New York, United States of America, without regard to principles of conflicts of law. The United Nations Convention of Contracts for the International Sale of Goods shall not apply.
(b)[*].
(c)[*].
(d)Each Party will comply with all applicable United States of America laws, rules and regulations in exercising its rights and performing its obligations hereunder.
(e)The Parties agree that all controversies, disputes, claims, differences or matters that arise from this Agreement and any arbitration that arise thereof are subject to the confidentiality provisions set forth in Section 15.5.
15.3    Amendments, Waivers and Consents. Any term, covenant, agreement or condition of this Agreement may be amended or waived only in a writing signed by each Party.

[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 12


15.4    Assignment. Neither Party may assign its rights or delegate its obligations under this Agreement, in whole or in part, without the prior written consent of the other Party, except that: (i) Buyer may, upon prior written notice to Seller, assign this Agreement or any of its obligations hereunder, whether in whole or part, to any Permitted Affiliate(s), without the prior written consent of Seller, and (ii) Seller may, without recourse, assign its rights and/or delegate its obligations under this Agreement to any subsidiary or affiliate of Raytheon Technologies Corporation, or in connection with the merger, consolidation, reorganization or voluntary sale or transfer of its assets. Any assignment or delegation made in contravention of this provision will be invalid.
15.5    Confidentiality. This Agreement and any technical information provided in connection with it are confidential and proprietary to Seller and Buyer. Each Party agrees to limit disclosures of such confidential information only to persons who have a need to know within their own organizations, outside auditors, outside advisors and government agencies. If either Party is subject to a legal action or proceeding or a requirement under applicable government regulations to disclose such confidential information (“Obligated Party”), the Obligated Party will forthwith notify the other Party, and upon the request of the other Party, will cooperate with the other Party in contesting such disclosure. Each Party agrees that it will not, and will not permit any of its affiliates, directors, officers, employees, advisors, agents or other representatives to issue any report, statement or release relating in any way to the Agreement or the subject matter thereof without the prior written consent of the other Party.
15.6    International Registry. Seller acknowledges and agrees that it will cooperate with Buyer in order to register the Bill of Sale for each Engine delivered under this Agreement as a contract of sale on the International Registry of Mobile Assets established pursuant to a Convention on International Interests in Mobile Equipment, adopted on November 16, 2001 in Cape Town, South Africa, within forty-eight (48) hours following the Closing of each Engine.
15.7    Data Privacy. Each Party will comply with applicable laws relating to data privacy, the protection of personal information or data, and the cross-border transfer of personal information or data and will be responsible for providing any notice required by law to the data subjects whose personal data such Party provides to the other Party.
15.8    Titles and Captions. Titles and captions of Articles, Sections and subsections in, and the table of contents of, this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement.
15.9    Severability of Provisions. Any provision of this Agreement, the Acceptance Certificates or the Bills of Sale that is prohibited or unenforceable in any jurisdiction, as to such jurisdiction, will be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.

[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 13


15.10    Interpretation. The Parties jointly participated in drafting this Agreement. This Agreement shall be construed neither against nor in favor of either Party.
15.11    Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties in different counterparts), each of which will constitute an original, but all of which when taken together will constitute a single contract. This Agreement, the Acceptance Certificates and the Bills of Sale constitute the entire agreement between the Parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement will become effective when it has been executed by the Parties and when each Party has received counterparts hereof that, when taken together, bear the signatures of each Party. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format is as effective as delivery of a manually executed counterpart of this Agreement.
(Signature page follows)


[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Page 14


IN WITNESS WHEREOF, the Parties have caused this Used Engines Sale Agreement to be executed as of the date and year first set forth above.

[*] ENGINE LEASING, LLC



By:    /s/ Scott Cika__________________________
Name:    Scott Cika
Title:    President


WILLIS LEASE FINANCE CORPORATION



By:    /s/ Austin Willis_________________________
Name:    Austin Willis
Title:    Senior Vice President, Corporate Development




    
    
[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
Signature Page


APPENDIX I
USED ENGINES SALE AGREEMENT
[*] ENGINE LIST
[*]


[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Appendix I



APPENDIX II

DEMOUNTABLE POWERPLANT SPECIFICATION

[*]
[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
    Appendix II



APPENDIX III

COLLINS AEROSPACE QEC KIT EXCLUDED PARTS

[*]


[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
Appendix III



APPENDIX IV
[*] ENGINES DELIVERY LOCATION
[*]
[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Appendix IV
Willis [*] Used Engines Sale Agreement Execution Version



APPENDIX V
FORM OF ACCEPTANCE CERTIFICATE
ACCEPTANCE CERTIFICATE
Reference is hereby made to that certain Used Engines Sale Agreement, dated as of __________, 2020 (the “Agreement”), between [*] Engine Leasing, LLC (“Seller”) and Willis Lease Finance Corporation (“Buyer”). Pursuant to the Agreement, Buyer does hereby represent, warrant and acknowledge to Seller as follows:
1.Buyer has this ____ day of ____________, 2020, accepted for purchase from Seller the following:
(a)one (1) [*] model aircraft engine bearing manufacturer’s serial number [ ], including all parts, components and accessories related thereto and as specified in the Agreement;
(b)one (1) QEC Kit;
(c)the Engine Storage Bag;
(d)the Engine Stand; and
(e)the Engine Documentation.
2.All of the foregoing has been delivered and accepted on the date set forth above to Buyer’s full satisfaction and pursuant to the terms and provisions of the Agreement.
Unless otherwise defined herein, capitalized terms used in this Acceptance Certificate have the same meaning as those used in the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Acceptance Certificate as of the date first set forth above.
WILLIS LEASE FINANCE CORPORATION
as Buyer



By:    ____________________________________
Name:    
Title:    



Acceptance Certificate
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.


APPENDIX VI
FORM OF BILL OF SALE
ENGINE BILL OF SALE
______________, 2020
[*] Engine Leasing, LLC (“Seller”), is the owner of good and marketable title to the following equipment (collectively, the “Engine”), all as further described in that certain Used Engines Sale Agreement, dated as of ______________, 2020 (the “Agreement”), between Seller and Willis Lease Finance Corporation (“Buyer”):
1.one (1) [*] [indicate specific thrust rating] model aircraft engine bearing manufacturer’s serial number [ ];
2.one (1) QEC Kit;
3.all appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment and property installed in or attached or related to the Engine and as specified in the Agreement, to which Seller holds title;
4.the Engine Storage Bag;
5.the Engine Stand; and
6.the Engine Documentation.
For and in consideration of the sum of [*] and other valuable consideration, receipt of which is hereby acknowledged, Seller does hereby sell, grant, transfer, deliver and set over to Buyer and its successors and assignees forever all of Seller’s right, title and interest in and to the Engine, to have and to hold the Engine for its and their use forever.
Seller hereby warrants to Buyer and its successors and assigns that there is hereby conveyed to Buyer title to the Engine free of Liens and that Seller will warrant and defend such title forever against all claims and demands.
Unless otherwise defined herein, capitalized terms used in this Bill of Sale have the same meaning as those used in the Agreement. This Bill of Sale will be governed by and construed in accordance with the laws of the State of New York.

IN WITNESS WHEREOF, the undersigned has duly executed this Bill of Sale as of the date first set forth above.
[*] ENGINE LEASING, LLC


By:    ____________________________________
Name:    
Title:    

Bill of Sale
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.


APPENDIX VII
[*] ENGINE AND PARTS SERVICE POLICY
(See next page)

[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version                         Appendix VII


APPENDIX VIII
LIST OF PERMITTED AFFILIATES
WEST Engine Acquisition LLC, a limited liability company organized and existing under the laws of the State of Delaware
Willis Engine Structured Trust III, a statutory trust organized and existing under the laws of the State of Delaware
Willis Engine Structured Trust IV, a statutory trust organized and existing under the laws of the State of Delaware
Willis Engine Structured Trust V, a statutory trust organized and existing under the laws of the State of Delaware
Willis Mitsui & Co Engine Support Limited, a limited company organized and existing under the laws of Ireland
CASC Willis Lease Finance Company Limited, a Sino-foreign equity joint venture organized and existing under the laws of China (Shanghai) Pilot Free Trade Zone, People’s Republic of China
Wells Fargo Trust Company, N.A., a national banking association organized and existing under the laws of the United States of America, US Bank National Association, a national banking association organized and existing under the laws of the United States of America, or Bank of Utah, a corporation organized and existing under the laws of the State of Utah, in each case, not in its individual capacity but solely as Owner Trustee for the benefit of any of the foregoing.

[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
    Appendix VIII



APPENDIX IX
FORM OF PRE-CLOSING ENGINE CERTIFICATION
To be printed on Seller’s letterhead
ENGINE CERTIFICATION
This statement certifies to the best of our knowledge, that Engine _________ s/n ________, has not been involved in an incident or accident, major failure, or fire, nor has the Engine or the parts installed thereon, been immersed in salt water or exposed to corrosive agents outside normal operation, been subjected to extreme stress or heat nor been obtained from any Government, or Military source while Leased and/or Operated since birth and in the case of a part installed on the Engine while Leased and/or Operated since birth has not been subjected to, or removed from an engine that has been involved in an incident or accident, major failure, or fire, or been subjected to extreme stress or heat nor been obtained from any Government, or Military source; unless its airworthiness status was re-established by an approved maintenance organization in accordance with the instructions of the type certificate holder and/or original engine manufacturer of the part and supported by an authorized release certificate.
Additionally, this statement certifies to the best of our knowledge, that Engine __________ does not contain any non-OEM repairs or PMA parts, or other non-OEM approved hardware.
As of October 31, 2020:
Engine Total Time: _________ Engine Total Cycles: ________

Signature:
Name:
Title:
Date:




[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
    Appendix IX



APPENDIX X
POST-CLOSING ENGINE DOCUMENTATION SHORT LIST
[*]
[*] Engine Leasing, LLC Proprietary
Subject to restrictions on the first page; this document does not contain any export regulated technical data
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] Used Engines Sale Agreement Execution Version
    Appendix X


[*] FIXED PRICE REPAIR AGREEMENT
BY AND BETWEEN
WILLIS LEASE FINANCE CORPORATION
AND
RAYTHEON TECHNOLOGIES CORPORATION,
PRATT & WHITNEY DIVISION
DATED AS OF DECEMBER 3, 2020


This document contains proprietary information of Raytheon Technologies Corporation, Pratt & Whitney Division (“Pratt & Whitney”). Pratt & Whitney offers the information contained in this document on the condition that you not disclose or reproduce the information to or for the benefit of any third party without Pratt & Whitney’s written consent. Neither receipt nor possession of this document, from any source, constitutes Pratt & Whitney’s permission. Possessing, using, copying or disclosing this document to or for the benefit of any third party without Pratt & Whitney’s written consent may result in criminal and/or civil liability.
This document does not contain any export regulated technical data.
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] FPA (2020-NOV-24) Final
LC



TABLE OF CONTENTS
1.    PERIOD OF COVER AND SCOPE
4
2.    EXCLUSIVITY
4
3.    MINIMUM SHOP VISIT COMMITMENT
4
4.    FPA SERVICES
5
5.    FIXED PRICE, RATES, AND ESCALATION
6
6.    LLP COMMITMENT AND LIFE ASSURANCE PLAN
8
7.    OPERATING CONDITIONS
8
8.    FPA SHOP VISIT COVERAGE
9
9.    EXCESS WORK
11
10.    OBLIGATIONS OF WILLIS
14
11.    PARTIES' RESPONSIBILITY
17
12.    WARRANTY BENEFITS AND REMEDIES
18
13.    TURNAROUND TIME (“TAT”)
18
14.    TRANSPORTATION
19
15.    PAYMENT
20
16.    DUPLICATE BENEFITS
22
17.    TERMINATION
22
18.    TERMS AND CONDITIONS
23
19.    ENTIRE AGREEMENT
23
20.    COMMUNICATION AND NOTICES
24
21.    ACCEPTANCE
24



NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 2



List of Attachments
Attachment 1    Definitions
Attachment 2    Eligible Engines
Attachment 3    LLP [*]
Attachment 4    FPA Escalation Formula
Attachment 5    [*] Fixed Price Labor Table
Attachment 6    [*] Engine Model Specification
Attachment 7    Addresses
Attachment 8    Excess Work
Attachment 9    FPA Shop Visit Workscopes and Fixed Prices and Fixed Price
Workscope Determination
Attachment 10    Terms and Conditions of Sale of Goods and Services
Attachment 11    Accessories Covered By Fixed Price Workscope Tables
Attachment 12    Service Bulletin List
Attachment 13    Willis Affiliates
Attachment 14    Life Limited Parts - Shops Requirements for Replaced Parts




NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 3



[*] Fixed Price Repair Agreement
This Fixed Price Repair Agreement dated as of December 3, 2020 (this “Agreement”) is entered into by and between Willis Lease Finance Corporation, a corporation organized and existing under the laws of Delaware, with a place of business at 4700 Lyons Technology Parkway, Coconut Creek, Florida 33073, (“Willis”) and Raytheon Technologies Corporation, Pratt & Whitney Division, a corporation organized and existing under the laws of Delaware, which has an office located at 400 Main Street, East Hartford, Connecticut  06118 (“P&W”). Each a “Party” and together the “Parties”. Capitalized terms used, but not otherwise defined in this Agreement will have the meanings set forth in Attachment 1.
WHEREAS:
Willis and P&W desire to establish fixed price repair coverage for [*] and [*] Engines identified in Attachment 2.
NOW THEREFORE IT IS AGREED AS FOLLOWS:
1.PERIOD OF COVER AND SCOPE
The period of cover for an Eligible Engine under this Agreement shall commence upon the date of execution of this Agreement and shall continue until each Eligible Engine has completed [*] (the “Period of Cover”). [*]
2.EXCLUSIVITY
Willis shall exclusively utilize P&W (including the P&W Network) for all of its [*] for the duration of Period of Cover, including, without limitation, [*] P&W shall consult with Willis in good faith regarding which maintenance center in the P&W Network will perform the Shop Visit for an Eligible Engine. [*]
3.MINIMUM SHOP VISIT COMMITMENT
3.1    The fixed pricing contained herein is conditioned upon each Eligible Engine completing [*]. In the event that the parties mutually agree that an Eligible Engine’s [*] naturally falls beyond [*] of the execution of this Agreement, this Agreement will be extended to cover the completion of that [*] and consequentially any terms related to [*] shall be extended for a mutually agreed period of time.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 4


3.2    BER Prior to [*]:
In the event an Eligible Engine is damaged Beyond Economic Repair or has suffered a Total Loss (a “BER Engine”) prior to its [*], [*] and neither party shall have any further obligations with respect to the BER Engine under this Agreement. From and after such date, such BER Engine will cease to be an “Eligible Engine” for purposes of this Agreement.
3.3    BER After [*]:
In the event that following [*] and prior to completion of [*], an Eligible Engine is deemed a BER Engine loss, then Willis may [*]. The Parties agree that they will negotiate in good faith to identify a [*] based on mutually agreeable terms.
Upon the [*] by Willis, the [*] shall immediately become an "Eligible Engine" under this Agreement, and the BER Engine will cease to be an "Eligible Engine" for purposes of this Agreement.
[*]
4.FPA Services
4.1    P&W shall provide to Willis the following repair service coverage during the Period of Cover for each Eligible Engine, unless otherwise stated below:
4.1.1    Eligible Engine Shop Visit coverage in accordance with the terms of Articles 5, 7 and 8 below;
4.1.2    LLP [*] in accordance with the terms of Article 6; and
4.1.3    Excess Work as required in accordance with the terms of Article 9;
4.2    P&W will assign an FPA Manager to work with Willis pursuant to the terms of this Agreement. In addition to its other responsibilities set forth herein, the FPA Manager shall work with Willis in connection with the scheduling of all Shop Visits and meet with Willis on a regular basis to discuss the performance of the maintenance services provided hereunder.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 5


5.FIXED PRICE, RATES, AND ESCALATION
5.1    P&W shall provide exclusive off-wing FPA Shop Visit maintenance for the Eligible Engines in accordance with the Workscopes set forth in Attachment 9 and for the fixed prices also set forth in Attachment 9 (the “Fixed Prices”).
5.1.1    Attachment 9 provides “minimum baseline workscopes” for each Eligible Engine’s [*] and [*] (“Minimum Baseline Workscope”) and the Fixed Prices for such Minimum Baseline Workscopes.
a.[*]: As set forth in Attachment 9, for each Eligible Engine’s [*] after closing of the purchase of the Eligible Engines by Willis, [*], P&W will perform the maintenance service for the applicable Minimum Baseline Workscope per the applicable build standard [*], subject to Article 8 and Article 9. For the avoidance of doubt, any workscope escalations for [*] that are required in accordance with the CEMP or LLP replacement beyond the Minimum Baseline Workscope for [*] to enable the Eligible Engine to run to its [*] shall be performed at [*].
b.[*]: As set forth in Attachment 9, for each Eligible Engine’s [*] after closing of the purchase of the Eligible Engines by Willis [*]. P&W will perform the maintenance services for the applicable Minimum Baseline Workscopes at the Fixed Prices for such Minimum Baseline Workscopes, subject to Article 8 and 9.
5.1.2    In the event the module workscope level for a FPA Shop Visit for an Eligible Engine expands beyond the applicable Minimum Baseline Workscope at any time, for any reason, the Fixed Prices, and which Party pays for expansions (as applicable), are set forth in Attachment 9.
5.1.3    [*]
5.2    [*] Shop Visits
P&W shall provide exclusive off-wing maintenance for any Miscellaneous Shop Visit that occurs [*] for any Eligible Engine [*]. P&W shall perform the applicable Maintenance Services at the [*]. Notwithstanding the foregoing, Maintenance Services required per Sections 9.1.3, 9.1.4, 9.1.12, and 9.1.15, will be covered for any Miscellaneous Shop Visits prior to [*].

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 6


For all [*] Visits P&W reserves the right to upgrade the visit to a [*], subject to Willis’ right to [*], in accordance with the terms hereof, including, without limitation, Article 8 (FPA Shop Visit Coverage) and Article 9 (Excess Work).
5.3    [*], in the event an Eligible Engine is redelivered to Willis on [*] and has not undergone a [*] within [*] after the execution of this Agreement, at Willis’ request, P&W shall elect to either promptly (i) perform maintenance on the Engine in accordance with Section 5.2 to remove [*] or (ii) perform [*] in accordance with Section 5.1.
5.4    [*]
5.5    Miscellaneous Shop Visit Material Discount

Willis shall be entitled to a [*] on P&W’s [*] for all non-LLP material purchased and installed at a Miscellaneous Shop Visit. With respect to all non-LLP material purchased by Willis, [*], P&W shall receive title and possession of each related displaced part.

5.6    Fixed Price Escalation

The Fixed Prices set forth in Attachment 9 and the [*] set forth in Section 5.4 are each expressed in [*] United States Dollars and are subject to escalation in accordance with the P&W escalation formula as set forth in Attachment 4 (“FPA Escalation Formula”). For the Fixed Prices and the [*] beginning [*] and annually thereafter, the escalation as calculated by the FPA Escalation Formula will be capped at [*] (the “Escalation Cap”). Notwithstanding the foregoing, if in any calendar year, the escalation as calculated by the FPA Escalation Formula for that period exceeds the Escalation Cap by more than [*] (the “FPA Hyper Band”), then the FPA Escalation Cap will be increased by [*] of such exceedance. The resultant compounding Fixed Price escalation for that year, which includes the FPA Escalation Cap plus the amount shared above the FPA Hyper Band, will become the new FPA Escalation Cap for [*] period thereafter.
5.7    LLP Escalation

All LLP prices are subject to escalation in accordance with P&W’s then-current catalog list pricing for LLPs. For LLP catalog list price escalation incurred with inductions for Shop Visits beginning [*] and annually thereafter, escalation will be capped at a rate of [*] (the “LLP Price Escalation Cap”). Notwithstanding the foregoing, if in a calendar year, the escalation for that period exceeds the LLP Price Escalation Cap by more than [*] (the “LLP Price Hyper Band”), then the LLP Price Escalation Cap will be increased by [*] of such exceedance. The resultant

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 7


compounding LLP price escalation for that year, which includes the LLP Price Escalation Cap plus the amount shared above the LLP Price Hyper Band, will become the new LLP Price Escalation Cap for [*] thereafter.
5.8    [*]

Willis has concurrently entered into a separate fixed price agreement with P&W’s affiliate, International Aero Engines, LLC, for maintenance services on [*], the [*] Fixed Price Repair Agreement dated on or about the date hereof [*].
[*]
6.LLP COMMITMENT AND [*]
6.1    [*] Visits

If (i) at [*] for any Eligible Engine the [*] part is not replaced with a part capable of meeting the applicable minimum build standard as outlined in Section 11.2, (ii) there is no planned in situ increase in the life of such installed [*] that would render it capable of achieving the minimum build standard, and (iii) a Miscellaneous Shop Visit occurs after [*] and prior to [*] for such engine that is caused solely due to life expiration of the [*] part installed at [*], then [*] for an amount [*] up to a maximum aggregate amount of [*]. Accordingly, [*] will be responsible for the cost of all [*] (by virtue of issuing the [*]) until the aggregate cost of all the [*] equals [*]. From and after this point [*] shall be responsible for all costs for [*]. The [*] shall be the exclusive remedy with respect to any [*] related matters disclosed prior to the effective date of this Agreement and the maximum aggregate amount of [*] issued hereunder shall not exceed [*].
6.2    LLP [*]

Willis shall receive the benefits of an LLP [*] as set forth in Attachment 3. The LLP [*] is applicable for each Eligible Engine for its respective Period of Cover under this Agreement. For the avoidance of doubt, any [*] part replacements that occur at Miscellaneous Shop Visits which do not qualify as an [*] will be eligible for the LLP [*] in accordance with Attachment 3.
7.Operating Conditions
The Fixed Prices being offered to Willis are predicated upon the following conditions (i) the operation of the Aircraft and Eligible Engines in accordance with [*] and P&W’s technical manuals, bulletins, and instructions, and the applicable CEMP and (ii) no

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 8


operation of any Eligible Engine in any environments that are deemed to be Extreme Environmental Conditions (as defined in Attachment 1).
Should any of the above conditions not be met, P&W may make reasonable and appropriate adjustments to this Agreement, including revision of the Fixed Prices set forth in Attachment 9, credits and discounts, with appropriate retroactive application, to address any deviations from such conditions. For any adjustments the methodologies used will be [*] and Willis and P&W shall review the impact of such deviations. Should P&W make changes to the Fixed Prices set forth herein, P&W [*].
8.FPA Shop Visit Coverage
8.1    Each Eligible Engine following an Eligible Engine removal shall be forwarded to the applicable P&W Network facility. The following services are included in the Fixed Prices for the Workscopes set forth in Attachment 9 for both [*] and [*]:

8.1.1    perform Eligible Engine reconditioning and repair in accordance with the CEMP to render the Eligible Engine serviceable in accordance with the specifications established in P&W technical publications, Airworthiness Directives and other P&W or Aviation Authority-approved maintenance procedures;
8.1.2    shop labor for (i) disassembly, cleaning, inspection, and reassembly of the Eligible Engine, modules, and Parts (including LLPs); and (ii) removal, visual inspection, and reinstallation of External Equipment installed on the Eligible Engine when it is received at the P&W Network facility;
8.1.3    repair of Parts in an Eligible Engine (subject to the exclusions in Article 9 below);
8.1.4    repair of LLPs (to the extent available);
8.1.5    maintenance required to address Minor FOD;
8.1.6    replacement of Parts in an Eligible Engine (subject to the exclusions in Article 9 below) using P&W’s inventories of new, used-serviceable; P&W will take title to the replaced Parts;
8.1.7    comply with Airworthiness Directives for Parts in an Eligible Engine (subject to the exclusions in Article 9 below);
8.1.8    maintenance to comply with Service Bulletins as described below:

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 9


a.categories [*], as set forth in the CEMP, capped at [*] per Eligible Engine Shop Visit;
b.At [*], Service Bulletins listed in Attachment 12, subject to material availability;
8.1.9    replacement of major cases and frames up to [*] per major case or frame;
8.1.10    material and vendor handling fees for those materials and services covered by the fixed price;
8.1.11    perform a post-repair Eligible Engine test, including fuel and oil;
8.1.12    provision of Shop Visit documentation as follows:
a.Authorized Release Certificate: ACC-038 and FAA 8130-3 with EASA Form One dual release or EASA Form One with FAA 8130 dual release; FAA-337 and AAC-085; (CAAC, as applicable);
b.AD Status Report and List of incorporated SBs, ADs;
c.Life Limited Parts listing and back-to-birth documentation about change/exchange Parts (original certification, NIS, removal/installation record and release certification), including the replacement Life Limited Parts listed in Attachment 14:
d.Engine Test Data Sheet;
e.Engine accessory list; Major Parts/accessory;
f.ACC/QEC repair records or change/exchange record (including TT/TC, TSO/CSO and copies of corresponding Release Certificate AAC-038, FAA-8130 or EASA Form One);
g.Missing Parts list;
h.Engine build-up record including fan blades moment weight and HPT blades record;
i.Borescope inspection report with video of the full engine gaspath;

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 10


j.On / off log (engine major Parts removal/installation record);
k.Preservation Documentation and Preservation Tag;
l.Report of any open actions required by Customer prior to and during engine service;
m.Inspection report (Shop Finding Report); and
n.Dirty finger prints. [*]
Notwithstanding the foregoing, the [*] caps referenced in Sections 8.1.8a and 8.1.9, shall not apply to the [*] for any Eligible Engine.
8.2    P&W may supply and install compatible new, repaired, or used serviceable Parts and LLPs (“Exchange Parts”) in exchange for Willis’ Parts. For Exchange Parts with a value of more than [*] P&W will notify Willis of the exchange and Willis shall have [*] to reject the exchange, otherwise Willis shall have been deemed to have accepted such Exchange Part.

8.2.1    Title-for-title exchanges would simultaneously occur for all such Parts and LLPs. Willis warrants that it will convey good title and such maintenance records as P&W may request for Willis’ Exchange Parts, including (i) original certification; (ii) Non-Incident Statement (“NIS”) or Incident Accident Clearance Statement (ICS) prior to induction; (iii) removal/installation record for the Eligible Engine and LLPs and hard time components only; (iv) release certificate and back-to-birth documentation for LLPs including the list in Attachment 14; and (v) flight hours and cycles since new and the number of repairs for HPTs, airfoils and major cases.
8.2.2    P&W will take title to all Parts that are displaced from the Eligible Engine during Maintenance Services. P&W will have no liability to compensate Willis for these displaced Part(s). Willis warrants that it will convey good title and maintenance records for these displaced Parts.
9.EXCESS WORK
9.1    Any costs incurred by P&W or an P&W Network facility not covered in Article 8 under this Agreement shall be deemed to be “Excess Work” and shall be paid for by Willis in accordance with the charges in Attachment 8, Excess Work, and payment terms in Article 15. Notwithstanding the foregoing, Excess Work for an Eligible Engine shall not include the costs for those maintenance obligations for

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 11


which [*]. As used herein, “Excess Work” shall include, but not be limited to, any labor, material, and other charges for Eligible Engines that arise from or relate to the following:

9.1.1    repairs for in-flight and/or ground accident damage;
9.1.2    repairs for Major FOD;
9.1.3    repair or replacement of Parts required for incorporation of Service Bulletins Categories [*];
9.1.4    replacement of LLPs for any reason, including compliance with AD and SB;
9.1.5    the provision of any Line Maintenance requirements;
9.1.6    any cost incurred due to failure of Willis to undertake any of its obligations as set out in Article 10 below;
9.1.7    any cost incurred due to misuse, neglect, accident or maintenance error or improper maintenance activity by any party other than P&W or the applicable P&W Network facility;
9.1.8    additional work (module or Part) required to meet any lease return conditions;
9.1.9    the removal and replacement of non-P&W approved Part or Parts with non-P&W approved repairs and any resulting damages caused by such aforementioned Part(s);
9.1.10    exposure by Willis, or anyone operating an Eligible Engine, to exceedance of Engine operating limits published by the AMM or Flight Crew Operations Manual;
9.1.11    delivery of an Eligible Engine to the applicable P&W Network facility with missing or non-serviceable Accessories, requiring the use of units provided by the P&W Network facility to permit the testing of the Eligible Engine following its refurbishment;
9.1.12    repair, exchange, replacement, or provision (including new material) of Accessories (except parts listed in Attachment 11), QEC items, BFE items or EBU items, nacelle items, and External Equipment; this 9.1.12 includes

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 12


any repair or replacement costs related to Accessories (except parts listed in Attachment 11), EBU items, QEC items, BFE items, nacelle items for SBs, and ADs;
9.1.13    charges associated with placing Eligible Engines into a Testable Engine configuration in the event that an Eligible Engine has not been delivered to the applicable P&W Network facility in a Testable Engine configuration. For the avoidance of doubt, charges associated with the strip and rebuild of Eligible Engines that have been delivered to the applicable P&W Network facility in a Testable Engine configuration following an eligible removal shall be borne by P&W;
9.1.14    provision, repair or replacement of transportation equipment and repair of Eligible Engines required due to transportation of Eligible Engines without necessary protective transportation equipment;
9.1.15    charges for handling associated with (i) replacing Life Limited Parts for any reason, (ii) Accessories, EBU items, QEC items, BFE items, nacelle items, and other Excess Work items as set forth in Attachment 8, and (iii) any other services or charges related to Excess Work;
9.1.16    the use of Parts or any other services not provided by P&W or the use or replacement of any PMA parts or any other customer-directed services that are not approved by the FPA Manager;
9.1.17    the performance of DER repairs not acceptable to the FPA Manager;
9.1.18    Labor, material and subcontract charges for Eligible Engine involved in operation outside the terms in Article 6, accidents and incidents such as but not limited to FOD and EGT exceedance ;
9.1.19    Eligible Engines deemed as BER;
9.1.20    Miscellaneous Shop Visit costs that occur after [*];
9.1.21    on-wing and near wing repairs; and
9.1.22    any work done in a Full Interval Shop Visit that does not meet the minimum baseline workscope requirements as set forth in Attachment 9.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 13


9.2    Excess Work shall be charged at P&W’s [*] for Parts or repairs, as applicable, in addition to the other applicable rates, fees, and charges set forth in Attachment 8 hereto.
9.3    In the event P&W determines that an Eligible Engine requires a Shop Visit that will be considered entirely to be Excess Work due to any of the causes in Section 9.1, then the FPA Manager shall promptly notify Willis with reasonable detail, and the Parties shall discuss in good faith, [*], the action that will be taken. In the event that a Shop Visit is deemed to be [*], P&W may develop a customized workscope and fixed price for Willis’ review and approval. Absent approval from Willis [*] the shop visit shall be invoiced by P&W in accordance with the Excess Work amounts and rates set forth in Attachment 8.
9.3.1    Willis shall pay for any services performed by P&W for such Eligible Engine; and
9.3.2    Willis shall arrange and pay for all packing and transportation expenses;
10.OBLIGATIONS OF WILLIS
Willis agrees to fulfill the following responsibilities and perform the following tasks and to reasonably cooperate with P&W in the performance of P&W’s responsibilities hereunder.
10.1    Data and Procedures
[*] for an Eligible Engine, Willis shall or cause an Engine Operator to:
10.1.1    As reasonably requested or at minimum, after engine removal or upon the termination or expiration of an Engine Operator’s lease of any Eligible Engine during the Period of Cover maintain, collect and provide to P&W performance trend monitoring data on each Eligible Engine, maintain timely records in form and detail sufficient for the accurate and expeditious administration of the terms of this Agreement including the assessment of operating conditions relative to those set out in Article 7 of this Agreement;
10.1.2    As reasonably requested or at minimum, after engine removal or upon the termination or expiration of an Engine Operator’s lease of any Eligible Engine during the Period of Cover, make available, and provide P&W’s electronic condition monitoring and analysis provider with access to, summary data (such data to be collected in accordance with this Section 10.1).

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 14


10.1.3    within [*] during the term of this Agreement, report to P&W, in an electronic format mutually agreed between P&W and Willis, [*] for each flight by each Eligible Engine during the preceding month;
10.1.4    ensure that all reasonable data required by P&W to facilitate the correction of any problem causing an Eligible Engine removal is made available to P&W;
10.1.5    ensure that each Eligible Engine delivered to an P&W Network Facility is accompanied by a record of Eligible Engine [*], in a form provided by P&W and mutually agreed by both Parties;
10.1.6    ensure Eligible Engines are available for maintenance services in a Testable Engine configuration when inducted at an P&W Network facility, and are preserved in accordance with P&W technical manuals and [*] recommendations; and
10.1.7    provide all engine records required to write the workscope within [*] after the Eligible Engine has been removed from the applicable Aircraft.
10.2    Workscope Approvals
10.2.1    For [*], Willis shall, or shall cause an Engine Operator to provide a Workscope recommendation to the FPA Manager [*] prior to Eligible Engine induction into the applicable P&W Network facility and use commercially reasonable efforts to approve the Workscope not less than [*] Days prior to induction of such Eligible Engine;
10.2.2    Willis or P&W shall approve any incremental workscope increase during a Shop Visit within [*] after notification of such workscope increase by P&W or Willis.
10.3    Operation, Maintenance and Troubleshooting of Eligible Engines
Willis shall or shall cause the Engine Operator, to service, repair, overhaul, and maintain the Eligible Engine, in accordance with the applicable Engine Operator’s Approved Maintenance Program, which shall be substantially equivalent to FAA FAR 121 or 135 and EASA equivalent (the “Approved Maintenance Program”), so as to keep the Eligible Engine in as good operating condition as when delivered to Engine Operator, ordinary wear and tear excepted.  Such maintenance will include line maintenance and replacement of components and parts as may be required, and shall be performed in the same manner and with the same care as

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 15


shall be the case with similar engines owned by or operated by or on behalf of Engine Operator without discrimination except that Engine Operator will, at the time of redelivery of the Eligible Engine, return the Eligible Engine in a condition that includes no PMA parts that have not been approved by the OEM, and will ensure that all repairs, parts and limitations will be in accordance with the applicable OEM’s approved data and will not impose any additional limiting condition and/or limitation on the Eligible Engine or part. Additionally, the Engine Operator agrees that the Eligible Engine will not be changed, altered or repaired in any way that may reduce the Eligible Engine’s utility, marketability, remaining useful life, or impair the Eligible Engine’s condition, airworthiness or ability to obtain Engine Type Certificate Holder technical support. In the case of an ETOPS Engine, the ETOPS standard with respect to Configuration, Maintenance and Procedures will be maintained to the most current published revision throughout the applicable Lease Term.  The Engine Operator will advise Willis who will inform P&W of any Non-routine Repairs.  “Non-routine Repair” means a repair that, due to the absence of the respective OEM’s published approved repair data, requires the Engine Operator, or its agents or designees to obtain such approved data from the OEM. 
Willis shall cause the Engine Operator to use each Engine in a safe manner and in accordance with the manufacturer's recommended operating procedures and manuals and instructions in effect and as revised from time to time only on commercial transport aircraft owned or operated by Lessee or by any sub-lessee permitted in the Lease.  Willis shall cause the Engine Operator not to operate or locate the Equipment or permit the Equipment to be operated or located in any area excluded from insurance coverage.
10.4    Engineering Authorizations
During the course of Shop Visits and/or on-or-near-wing services, P&W may incorporate original equipment manufacturer generated and Aviation Authority-approved deviations from the published technical data and Engine Manuals for the Eligible Engines (an “Engineering Authorization” or “EA”). P&W currently defines three (3) types of EAs that will be generated from time to time:
10.4.1    [*];
10.4.2    [*]; and
10.4.3    [*].

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 16


Willis shall not unreasonably withhold its approval of any proposed utilization of an P&W and Aviation Authority-approved deviation on Willis’ Eligible Engines. Any additional maintenance resulting from the rejection of an EA will be charged as Excess Work at the Excess Work Rates defined in this Agreement. P&W reserves the right to delay the performance of the maintenance services on an Eligible Engine while Willis’ approval of an EA is pending. Willis’ delay beyond [*] will be considered an Excusable Delay for purposes of this Agreement.
10.5    Records
Willis shall, and shall cause the Engine Operator to, maintain adequate records as required to meet Willis’ obligations and compliance with the applicable provisions of this Agreement.
10.6    All incremental maintenance services resulting from Willis’ failure to fulfill obligations in accordance with Article 10, shall be charged as Excess Work. For the avoidance of doubt, failure to fulfull obligations in accordance with this Article 10 will not disqualify the respective engine’s status as an Eligible Engine under this Agreement.
11.PARTIES' RESPONSIBILITIES
11.1    Customized Engine Maintenance Program
Willis and P&W will mutually agree upon a CEMP establishing maintenance requirements for the Eligible Engines. The CEMP will be consistent with P&W’s and other TCHs’ Approved Technical Data. P&W will be responsible for off-wing engine maintenance consistent with the CEMP. P&W will workscope the Eligible Engines in accordance with the thrust rating in Attachment 2.
11.2    At an FPA Shop Visit, P&W will replace LLPs in accordance with the following minimum build standard for each engine model:
[*]
The build standards above are predicated on each Eligible Engine’s operational compliance with the following operational parameters:

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 17


Flight Length [*]
Takeoff Derate [*]
Average Equivalent Sea Level Ambient Takeoff Temperature [*]

Notwithstanding the foregoing, to the extent that the certified life [*] does not meet the applicable minimum build standard, the replacement of such part shall be in accordance with Article 6.
11.3    No later than [*] from execution of this Agreement, Willis will review and provide written approval for the CEMP. If Willis does not approve the CEMP at least [*] from execution of this Agreement, all off-wing Engine maintenance for Eligible Engines will be performed under the generic EMP.
During the Period of Cover, but not more than [*], P&W may propose reasonable revisions to the CEMP. Revisions proposed by P&W will be reviewed and accepted by Willis within [*], provided that any such revisions will only be implemented upon mutual agreement of Willis and P&W (which will not be unreasonably withheld or delayed). If Willis does not reasonably accept changes within [*], P&W may revert to use of the generic EMP.
12.WARRANTY BENEFITS AND REMEDIES
P&W will provide Willis with the warranty benefits and remedies described in Article 4 of the Terms and Conditions of Sale of Goods and Services in Attachment 10.
13.[*]
13.1    [*]
13.2    [*]
13.3    [*]
13.3.1    [*]
13.3.2    [*]

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 18


14.Transportation
14.1    [*] in which P&W has agreed to be responsible for transportation, for an Eligible Engine, P&W shall be responsible for the removal and transportation of the Eligible Engine, including the risks and costs, to the P&W Network facility.
14.2    After [*], Willis shall be responsible for the transportation of the Eligible Engine and shall perform, or cause to be performed, the tasks set forth below:
14.2.1    Willis shall cause the Engine Operator, to remove the Eligible Engine from wing and accomplish engine preservation in accordance with the Engine Manual. Willis or the Engine Operator is responsible for correct engine shipping configuration including the draining of fuel and oil, and the gaining of dangerous goods (DG) compliance as necessary. Willis or the Engine Operator will be responsible for delivering the removed Eligible Engine including the risks and costs associated with the delivery to the P&W Network facility. If an Eligible Engine arrives at the P&W Network facility not in accordance with the recommended shipping procedure, the P&W Network facility shall contact the appropriate Willis representative. Upon completion of maintenance services, the P&W Network facility will preserve Eligible Engine in accordance with the Method 2 of the Engine Manual (greater than [*] preservation), and deliver the Eligible Engine Ex Works the P&W Network facility.
14.2.2    Willis will ship complete Eligible Engines without Missing Parts to the P&W Network facility unless agreed in advance with P&W. P&W reserves the right to, unilaterally, purchase and replace any Missing Part or scrap Part that costs less than [*] per Part. Such Part and/or scrap report will be made available to Willis upon Willis’ request. Notwithstanding any provision in Incoterms 2010 to the contrary, risk of loss during transit of Eligible Engines will at all times remain with Willis.
14.2.3    Willis will be responsible for costs, if any, including without limitation government levies, taxes, customs duties (other than the P&W Network facility’s country of origin), and loading and unloading charges.
14.2.4    Willis will be responsible for providing and keeping in full force and effect insurance covering the Eligible Engine for all risks including risk of loss during transportation of the Eligible Engines.
14.2.5    For the purposes of delivering the Eligible Engine to and from the P&W Network facility, Willis will be responsible for providing, at its own risk and

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 19


expense proper shipping stands for delivering the Eligible Engine to the P&W Network facility. If Willis needs its shipping stand prior to the completion of the Maintenance Services, then the P&W Network facility will return the shipping stand at Willis’ risk and expense. If Willis collects the shipping stand prior to re-delivery of the Eligible Engine by the P&W Network facility to Willis, then Willis will provide a substitute shipping stand upon completion of the Maintenance Services so that P&W Network facility can re-deliver the Eligible Engine to Willis. If any repairs to a Willis’ shipping stand are necessary to make it serviceable for delivery purposes, Willis agrees to repair the shipping stand at its own expense.
14.2.6    Any delay in induction or Eligible Engine re-delivery directly caused by Willis may result in the Eligible Engine being stored at the P&W Network facility or any storage facility designated by Willis. During any such storage period, Willis agrees to be liable for all rental rates and charges incurred for engine storage at the P&W Network facility or any such designated storage facility. Alternatively, P&W, in its sole discretion, may ship the Eligible Engine to Willis at Willis’ expense and risk.
14.2.7    [*]
15.PAYMENT
15.1    [*] FPA Shop Visit Fixed Prices
15.1.1    With respect to [*] FPA Shop Visits only, P&W shall invoice Willis [*] of the then-current Fixed Price per the applicable Workscope as set forth in Attachment 9, no less than [*] prior to induction of the Eligible Engine into the applicable P&W Network facility, and Willis shall pay such invoices in full prior to the date of induction of the Eligible Engine. P&W shall invoice Willis for the final [*] of the then-current Fixed Price per the applicable Workscope as set forth in Attachment 9 no less than [*] prior to redelivery of the Eligible Engine and Willis shall pay such invoice in full upon Willis’ receipt of the documentation set forth in Section 8.1.12a through 8.1.12l. For the avoidance of doubt, nothing in the foregoing shall be deemed to restrict P&W from charging any additional amounts in the event a Workscope for a shop visit is subsequently expanded in accordance with the terms hereof.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 20


15.2    Excess Work Invoices
15.2.1    Charges for Excess Work shall be invoiced to Willis by P&W as such Excess Work is performed in accordance with the prices, fees and rates set forth in Attachment 8.
15.2.2    P&W may also invoice Willis its reasonable estimate of the cost of any Excess Work for Shop Visits prior to commencement, or during the execution, of such Excess Work. P&W shall invoice Willis for the balance of the cost of any Excess Work upon receipt of the corresponding invoice from the applicable P&W Network facility (or promptly issue a credit to Willis’ account with P&W for any excess payment received from Willis).
15.2.3    P&W will render a final invoice within [*] after re-delivery of the Eligible Engine to Willis for all Excess Work charges incurred. The final invoice will reflect actual Excess Work charges. P&W will credit Willis’ payment of the pre-delivery invoices, if applicable, to the final invoice. Willis will pay such final invoice [*] net cash from invoice date.
15.3    Willis shall pay the full invoiced amount due per this Article 15 without delay, unless such amounts are in dispute in accordance with Section 15.5.
15.4    All payments shall be made by electronic transfer and shall be deposited not later than the due date of payment with:
[*]
or to such other account as P&W may from time to time designate in writing, which designation shall be effective upon receipt by Willis of such notice.
15.5    If Willis fails to make any payment to P&W required by this Article 15, and in addition to any other rights which P&W may have in this Agreement, P&W reserves the right to halt any work in progress and/or to refuse to induct additional Eligible Engines. Notwithstanding the foregoing, in the event of a bona fide dispute regarding any amount to be paid pursuant to any invoice issued pursuant to this Article 15, or any portion thereof, Willis shall within [*] of receipt of such invoice give written notice to P&W of such disputed invoice, or disputed portion thereof, together with reasonable substantiation of such dispute and any supporting documentation. P&W and Willis shall use their respective best efforts and allocate sufficient resources to resolve such dispute within [*] or as soon as practicable thereafter. In the event the Parties fail to resolve any such dispute invoice within such period, the dispute shall be resolved by designating senior

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 21


managers to reach a resolution. Upon resolution, P&W shall correct the invoice and reissue, or Willis shall pay to P&W, as applicable, settled amount of the disputed portion of the invoice within [*]. For clarification, Willis shall be required to pay the undisputed portion of any invoice in accordance with the payment terms for the applicable invoices set forth in this Article 15. To the extent Willis complies with the requirements of this Article 15, P&W shall [*] during that period of time such amount is disputed by the Parties.
16.DUPLICATE BENEFITS
Willis and P&W agree that it is not the intention to provide duplicate benefits under the terms of this Agreement or under any other arrangement between P&W or P&W’s suppliers or any applicable lessor and Willis. In the event of any such duplication of benefits, Willis may, at the relevant time in respect of the relevant circumstances receive any one such benefit to the exclusion of all other duplicate benefits.
17.TERMINATION
17.1    Failure to Make Payments or to Meet Obligations
17.1.1    If Willis fails to make any payment to P&W when due under this Agreement (including any interest due thereon), unless such payments are in dispute pursuant to Section 15.5, or fails to meet any other material obligation under this Agreement, then, without prejudice to any other rights which P&W may have in contract, at law, or in equity, P&W shall notify Willis and have the right to suspend provision of services under this Agreement and not to induct, to suspend all work on, or not to release from any P&W Network facility any Eligible Engine until such failure is corrected or full payment is made by Willis to P&W, as the case may be.
17.1.2    P&W shall have the right to terminate this Agreement: (i) if any default shall occur in the payment by Willis of any amount hereunder when and as the same becomes due and payable and such default continues for a period of [*] after P&W’s written notice of such default or (ii) if Willis shall fail to comply with any other material obligation under this Agreement, which failure has not been fully corrected within [*] after P&W’s written notice of such failure to comply with any other material obligation.
17.1.3    Willis shall have the right to terminate this Agreement in the event that P&W fails to fulfill a material obligation under this Agreement and such failure reoccurs in at least [*] after P&W was first given written notice of

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 22


such failure by Willis, provided however that in no event shall P&W have fewer than [*] to cure such failure.
17.1.4    In the event of a breach of this Agreement by P&W or any of its affiliates, to include the scenario described in 17.1.3 above, the parties will [*]. If P&W or its affiliates have not cured such breach within [*] from its occurrence, Willis will be entitled to [*]. Further, nothing in Section 3.1, shall limit Willis’ ability to seek damages to the fullest extent permitted hereunder.
17.2    Expiration
This Agreement shall be effective from the day and year first above written until the end of the Period of Cover for the last Eligible Engine(s) or until earlier terminated in accordance with this Article 17.
17.3    Effect of Termination or Expiration
Except as otherwise set out in this Article 17 and Article 16 (Survivability) of Attachment 10 any rights or obligations arising under the applicable law, the rights and obligations of the Parties under this Agreement shall terminate upon the termination or expiration of this Agreement in accordance with the terms hereof, and Willis shall no longer be provided with coverage under, or any of the other benefits accruing to it pursuant to, the terms of this Agreement.
Upon any termination or expiration of this Agreement, all liabilities and obligations (including payment obligations) that have accrued prior to such termination or expiration (including payment due for Excess Work) shall survive.
18.TERMS AND CONDITIONS
This Agreement including its attachments will govern exclusively the performance of the Maintenance Services hereunder. If there is any conflict between the Terms and Conditions of Sale of Goods and Services attached as Attachment 10 hereto and any other, more specific, provision of this Agreement, the specific provision in this Agreement will control.
19.ENTIRE AGREEMENT
This Agreement and all attachments hereto contain the entire understanding between the Parties with respect to the subject matter hereof and supersede in their entirety all prior communications between the Parties, whether oral or in writing, and of any and

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 23


every nature with respect to the subject matter hereof. No amendment or modification of this Agreement will be binding upon either Party unless set forth in a written instrument signed by both Parties. This Agreement may be executed in one or more counterparts, each of which will be considered an original but all of which together constitute one and the same instrument.
20.COMMUNICATIONS AND NOTICES
Any notice to be served pursuant to this Agreement shall be sent by registered mail, by internationally recognized overnight courier, or by email (with the original notice sent by registered mail or internationally recognized overnight courier) to the applicable address indicated in Attachment 7.
Willis agrees that P&W shall only be obligated to communicate with Willis (and not any Willis Affiliate, Designated Third Party or Engine Operator) with respect to any matters arising under this Agreement. Willis has the authority to act on behalf of each of Willis Affiliates, Designated Third Parties and any Engine Operator for all purposes of this Agreement, and P&W shall be entitled to conclusively and exclusively rely on the communications from Willis regarding all matters arising under this Agreement.
Willis shall be the only party to initiate any action or claims against P&W under this Agreement and P&W shall incur no additional obligations, costs, expenses, losses or liabilities whatsoever by virtue of an Eligible Engine being owned by a person other than Willis the foregoing, this shall not limit any of P&W’s obligations under this Agreement with respect to an Eligible Engine in the event the Eligible Engine is sold, transferred or assigned to a Willis Affiliate or Designated Third Party in accordance with the term hereof.
21.ACCEPTANCE
This Agreement will remain available for Willis’ acceptance until December 5, 2020. Please indicate such acceptance of this Agreement by having an authorized officer of Willis sign each of the two (2) duplicate originals in the space provided and return both signed originals to [*] by December 5, 2020.
Upon mutual execution, this document will become an enforceable contract and will be deemed executed in the jurisdiction in which it was signed by P&W. After acceptance by P&W, P&W will return one (1) fully executed duplicate original Agreement to Willis. The Parties agree that facsimile, electronic or PDF signatures will be deemed to be of the same force and effect as an originally executed document. The Parties agree to provide original signature pages upon request.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 24


IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first entered above and deem that it is executed in the State of Connecticut.
RAYTHEON TECHNOLOGIES CORPORATION,
Pratt & Whitney Division
By /s/ Hendrik Deurloo
Typed Name Hendrik Deurloo
Title Senior Vice President and Chief Commercial Officer


WILLIS LEASE FINANCE CORPORATION
By /s/ Austin Willis
Typed Name Austin Willis
Title Senior Vice President, Corporate Development



NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 25



ATTACHMENT 1
DEFINITIONS
“Accepted Technical Data” is OEM data, recommendations, or information that has been provided by the OEM that is not “Approved Technical Data” (as defined herein). This includes, but is not limited to, all operator wires, special instructions, illustrated parts catalogs, and Eaglenet wires.
“Accessory” or “Accessories” includes those items listed in Attachment 11 to this Agreement and any attaching hardware for such Accessories.
“[*]” shall mean [*].
“Aircraft” shall mean the [*] family aircraft operated by the Engine Operator which are powered by the Eligible Engines.
“Aircraft Maintenance Manual” or “AMM” means the aircraft maintenance manual published by [*] for the Aircraft.
“Airworthiness Directive” or “AD” shall mean any applicable airworthiness directive issued prior to or during the Period of Cover by the Aviation Authority based on certification rules current as of the date of this Agreement.
“Approved Technical Data” is technical data that has been approved by the Aviation Authority or by an Aviation Authority DER.
“Aviation Authority” means the FAA or any other authorities, government departments, committees, or agencies which (i) under the laws of the state of registration of the relevant Aircraft, may from time to time, have control or supervision of civil aviation in that state; and (ii) have jurisdiction over the registration, airworthiness or operation of, or other matters relating to a Aircraft, provided that it is substantially similar to, and no more prescriptive than, the FAA requirements.
Beyond Economic Repair” or “BER” generally means that the cost of the repair, exclusive of modification and transportation costs, would be equal to or greater than [*] of the [*] of the Part or Engine at the time the repair is considered, or would be otherwise reasonably determined by P&W. If an Eligible Engine is deemed BER, it will be excluded from the list of Eligible Engines.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 26


“BFE” means Buyer Furnished Equipment, which is the aircraft manufacturer-supplied or buyer furnished engine-mounted accessories (typically including such items as integrated drive generator, quick accessory disconnect adapter, hydraulic pumps, shut-off valve, and pressure regulating valve).
“Business Day(s)” shall mean a day other than a Saturday, Sunday or holiday scheduled by law for commercial banking institutions in the City of New York, New York, United States.
“Customized Engine Maintenance Program” or “CEMP” shall mean the program for engine maintenance established by P&W for Willis in accordance with Section 11.1 of this Agreement.
“DER” means Designated Engineering Representative.
“Designated Third Party” means any third party which Willis is acting as manager in respect of an Eligible Engine as consented to in writing by P&W, such consent not to be unreasonably withheld or delayed; provided, however, that if P&W or an P&W Network facility is legally prohibited from doing business with such party, then such party will cease to be a Designated Third Party.
“Eligible Engine” shall mean Engines identified by Engine serial numbers listed in Attachment 2.
“Engine(s)” means an [*] engine, described as Standard Equipment in the Engine Specification, attached as Attachment 6, sold by P&W for commercial aviation use.
“Engine Build Up” or “EBU” means refers to the EBU described in the Additional Equipment section of the Engine Specification.
“Engine Manual” shall mean the P&W document which sets forth the requirements for Engine off-wing repair.
“Engine Operator” shall mean an operator who is utilizing the Eligible Engine in commercial service pursuant to which Willis or any Willis Affiliate is acting as lessor, manager and/or servicer in respect of such Eligible Engine.
“Engine Specification” means the Engine specification attached as Attachment 6.
“Equipment” shall mean Eligible Engines or any Part contained within an Eligible Engine covered by this Agreement, regardless if such Eligible Engine is owned directly by Willis or any Willis Affiliates, or any Designated Third Party which Willis is acting as manager in respect of such Eligible Engine.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 27


“External Equipment” means any accessory, component, or part that is mounted, directly or indirectly, to the outside of any engine case, case flange, or to the main gearbox, including Engine accessory components, line replacement units, BFE, EBU parts and hardware, nacelle propulsion system components and any related mounting hardware, wiring harnesses, plumbing, brackets, hoses, and kit-and-bin material associated with any such components. External Equipment also includes accessories or components that are maintained per the manufacturer’s component maintenance manual and any related mounting hardware, wiring harnesses, plumbing, brackets, hoses, and kit-and-bin material associated with any such accessories or components.
“Extreme Environmental Conditions” means atmospheric conditions typical of a severe environment, including but not limited to, high temperature or high concentrations of particulates such as sand, volcanic ash, calcium sulfate, or other contaminates that are in excess of or outside of the typical conditions in which commercial aircraft routinely fly as of the date of this Agreement. For the avoidance of doubt, Eligible Engines that are operated by any Engine Operators shall not be considered to be operating in Extreme Environmental Conditions, except to the extent that there is a significant documented change in that environment that occurs after the date of this Agreement (including an increase in pollutions or volcanic ash in the air) as detailed by (a) service bulletins or all operator wires issued by P&W or [*], and (b) the aircraft maintenance manual or engine manual revisions, or (c) ADs or other publications issued by the FAA or other applicable civil aviation authority and to the extent that it can be reasonably determined that such change in the environment has reduced the expected time to the [*].
“FAA” shall mean the United States Federal Aviation Administration.
“Failure” shall mean the breakage or malfunction of a Part (or Parts) rendering the Engine unserviceable and incapable of continued operation without corrective action which is not as a result of misuse, neglect, accident or maintenance error or improper maintenance activities by any party other than P&W or an P&W Network facility.
“Foreign Object Damage” or “FOD” means foreign object damage. Such damage refers to any damage to an Eligible Engine that is directly caused by an object that is foreign to the Engine. For clarity, if damage is not conclusively attributed to an Engine Part, it is attributable to a foreign object.
“FPA Manager” shall mean a contact person appointed by P&W to be the program manager for this Agreement.
“FPA Shop Visit” shall mean a shop visit with a Fixed Price and Workscope as set forth in Attachment 9 of this Agreement.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 28


“Full Interval Shop Visit” means a performance restoration shop visit at which maintenance is performed to enable an Eligible Engine to achieve its next full interval in accordance with the CEMP.
“GTA” means the General Terms Engine Lease Agreement between [ ], as lessor and [ ] as lessee dated November ____, 2020.
“LLPs” or “Life Limited Parts” means those rotating Parts that have Parts Life Limit. For purposes of this Agreement, LLPs do not include static, non-rotating LLPs.
[*].
“Line Maintenance” shall mean any routine maintenance to be carried out by Willis, the Engine Operator, or any of their respective subcontractors) on an Eligible Engine in accordance with the appropriate Aircraft Maintenance Manuals and which can be accomplished either on-wing or off-wing without requiring the induction of such Eligible Engine into an P&W Network facility.
“Maintenance Services” means services provided pursuant to and in accordance with this Agreement by P&W and/or its Subcontractors in connection with the repair, maintenance, modification and/or overhaul of Equipment.
“Major FOD” means damage to an Eligible Engine arising out of or related to or caused by FOD, whether such FOD is manifested at the time of impact or discovered after the event, which requires the Eligible Engine to be removed from service due to an out of limit condition per the AMM.
“Minor FOD” means FOD that is (i) not Major FOD, (ii) not caused by the negligence of Willis and (iii) repairable by performing minor repairs, (e.g., blends or the repair is covered under the standard overhaul procedure that would be required for the Level of maintenance of the module), and excludes any material replacement, major repairs, or the overhaul of Parts that are infrequent for the particular module’s level of maintenance.
“Miscellaneous Shop Visit” shall mean any unavoidable visit of an Eligible Engine to a P&W Network facility or for complex, extensive, and mechanic certified maintenance tasks incremental to those line maintenance services that an Engine Operator is required to perform under the applicable Aviation Authority or any onsite on- or near-wing maintenance services provided by P&W to Willis resulting from Failure of a Part in an Eligible Engine or any other unplanned cause and, in each case, which does not constitute a FPA Shop Visit, or a substantially similar restoration shop visit, being undertaken. For the avoidance of doubt a Miscellaneous Shop Visit shall be further defined as a Shop Visit undertaken in which the Eligible Engine’s restoration interval is not reset to zero, LLPs are not replaced, Eligible Engine’s hot section is not worn beyond AMM limits, or sufficient EGT margin remains per fleet

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 29


specification. Should the Workscope increase from Miscellaneous Shop Visit to non-LLP restoration or a shop visit where an LLP is replaced, such Shop Visit would then be priced as Excess Work pursuant to Attachment 8, or priced in accordance with the Fixed Prices set forth in Attachment 9, if applicable. All labor for Miscellaneous Shop Visits will be charged in accordance with Attachment 5.
“Missing Part” means any part, including, but not limited to, accessories, that was not installed on an Eligible Engine at the time of engine induction or was not subsequently provided to P&W by Willis for such Eligible Engine’s Shop Visit.
“P&W Network” means P&W’s designated network of maintenance, repair, and/or overhaul facilities.
“PAH” means Production Approval Holder, an entity holding a production certificate issued under the authority of the FAA.
“Parts”, as defined in the [*] standard warranty and service policy, means Engine parts sold by P&W and delivered as original equipment in an Engine or Engine parts sold and delivered by P&W as new spare parts in support of an Engine.
“Period of Cover” shall mean the period set out in Article 1 of this Agreement.
“PMA” means Parts Manufacturer Approval, the authority granted by the FAA to manufacture parts for installation in type-certificated products.
“QEC”    means quick engine change and similar engine-mounted hardware required to interface an Engine to a specific airframe. QEC includes the following systems: fuel, hydraulic, pneumatic, fire detection, electrical, integrated drive generator system, cooling, engine control, nacelle drain and vent, starter, nacelle and engine instrumentation, inlet anti-icing, engine pressure ratio, engine mounts and engine vibration monitoring.
“Service Bulletin (s) or SB(s)” means an P&W-issued Engine service bulletin.
“Shop Visit” shall mean a FPA Shop Visit or Miscellaneous Shop Visit, as context requires.
“Standard Equipment” means any item identified under the Standard Equipment section in the Engine Specification, Attachment 6.
[*]
“TCH” means Type Certificate Holder, an entity holding a type certificate issued under the authority of the FAA.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 30


“Testable Engine” shall mean an Engine with all Accessories and EBU items installed so as to enable the Engine to be tested either prior to or following its repair without the need for making use of units provided by a P&W Network facility, as further described in the applicable Engine Manual.
“Willis Affiliate(s)” means, collectively, those parties set forth in Attachment 13 to this Agreement, or such other parties as consented to in writing by P&W, such consent not to be unreasonably withheld or delayed; provided, however, that if P&W or an P&W Network facility is legally prohibited from doing business with such party, then such party will cease to be a Willis Affiliate.
“Workscope” shall mean a written statement of repairs to be performed on an Eligible Engine by a P&W Network facility. Workscopes shall be issued by P&W and approved by Willis in accordance with the terms herein. Any workscope shall be prepared in accordance with the CEMP.



NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 31



ATTACHMENT 2
ELIGIBLE ENGINES
[*]

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 32



ATTACHMENT 3
LLP [*]
SCHEDULE 1 – LLP TARGET PARTS LIFE LIMIT TABLE
[*]





NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 33



ATTACHMENT 4
FPA ESCALATION FORMULA
[*]





NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 34



ATTACHMENT 5
[*] FIXED PRICE LABOR TABLE*
[*]






NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 35









NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 36



ATTACHMENT 6
[*] ENGINE MODEL SPECIFICATION
[*]



NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 37



ATTACHMENT 7
ADDRESSES
1.    Willis Addresses
1.1    Address for Notices:
Willis Lease Finance Corporation
60 East Sir Francis Drake Boulevard, Suite 209
Larkspur, California 94939
E-mail:        [*]
Attention:     Dean Poulakidas, General Counsel
1.2    Address for Invoices:
Willis Lease Finance Corporation
4700 Lyons Technology Parkway
Coconut Creek, Florida  33073
E-mail:        [*]
Attention:    Accounting
2.    P&W Addresses
2.1    Address for Notices:
Raytheon Technologies Corporation,
Pratt & Whitney Division
400 Main Street, Mail Stop 115-25
East Hartford, Connecticut 06118
USA
E-Fax:        [*]
Email:         [*]
Attention:    Associate General Counsel & Executive Director

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 38


2.2    Address for Invoices:
Raytheon Technologies Corporation,
Pratt & Whitney Division
400 Main Street, Mail Stop 115-25
East Hartford, Connecticut 06118
USA
Fax:        [*]
Attention:    Accounts Receivable Manager
2.3    Address for all Other FPA Matters:
Raytheon Technologies Corporation,
Pratt & Whitney Division
400 Main Street, Mail Stop 115-25
East Hartford, Connecticut 06118
USA
Fax:        [*]
Attention:    Willis Customer Fleet Director



NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 39



ATTACHMENT 8
EXCESS WORK
Excess Work shall be charged at P&W’s [*] prices for Parts or repairs as applicable, in addition to the other applicable rates, fees, and charges set forth in this Attachment 8.
[*]


NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 40



[*]



NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 41



ATTACHMENT 9
FPA SHOP VISIT WORKSCOPE AND FIXED PRICES
AND FIXED PRICE WORKSCOPE DETERMINATION



[*] WORKSCOPES AND FIXED PRICES
[*]
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                                        Page 42


[*] WORKSCOPE AND FIXED PRICES

FIXED PRICE WORKSCOPE DETERMINATION

[*]


NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                                        Page 43



ATTACHMENT 10
TERMS AND CONDITIONS OF SALE OF GOODS AND SERVICES
1.    MAINTENANCE SERVICES
1.1    P&W and/or its approved subcontractors, will perform repair, maintenance, modification and/or overhaul services (“Maintenance Services”) on Customer’s Equipment in accordance with technical data approved or accepted by the U.S. Federal Aviation Administration (“FAA”) or other airworthiness authority with relevant jurisdiction.
1.2    For Equipment originally manufactured by P&W, P&W will perform Maintenance Services using P&W repair procedures and replacement parts. If Customer requests in writing and P&W agrees, P&W will perform Maintenance Services using other repair procedures, parts and/or vendors approved or accepted by the FAA or other airworthiness authority with relevant jurisdiction. P&W will not be liable for, and Customer will indemnify and hold P&W harmless against all liabilities arising from the use of these other repair procedures, parts and/or vendors.
1.3    If P&W did not originally manufacture the Equipment, then P&W will perform Maintenance Services using repair procedures and replacement parts approved or accepted by the FAA or other airworthiness authority with relevant jurisdiction.
1.4    P&W may supply and install compatible new or used serviceable parts (“Exchange Parts”) in exchange for Customer’s parts (“Customer Exchange Parts”) if needed for the timely completion of the Maintenance Services. Title-for-title exchanges with respect to such parts will take place. Customer warrants that it will convey good title and such maintenance records as P&W may request for Customer Exchange Parts. P&W warrants that it will convey good title and such maintenance records as Customer may request for Exchange Parts in accordance with Section 4.4. Customer will be required to pay for the repairs performed by P&W on Customer Exchange Parts.
1.5    P&W may refuse to perform Maintenance Services if P&W did not receive payment in accordance with Article 9 hereunder or it believes the Equipment: (a) contains unapproved repairs or parts; (b) is in a state of extreme deterioration or damage; or (c) was involved in an accident or subject to extreme environmental conditions or other abnormal operating conditions.
1.6    No modification of this Agreement or of the agreed-upon workscope for the Maintenance Services will be binding unless agreed to in writing and signed by both Customer and P&W. P&W may nevertheless perform all work necessary to perform Maintenance Services or to comply with applicable regulations. A workscope modification that increases the cost to P&W of performing Maintenance Services hereunder will entitle P&W to an equitable price adjustment.
2.    TITLE, DELIVERY, RISK OF LOSS, AND SHIPPING
Title to goods and risk of loss of all goods and Equipment sold hereunder by P&W, will pass to Customer upon delivery Ex works P&W’s designated facility (“Ex works” has the meaning set forth in Incoterms 2010).
[*]
Upon P&W’s delivery of the goods or completion of Maintenance Services, Customer will pick up the goods or Equipment within ten (10) days of being notified that the goods or Equipment are ready for shipment. If Customer does not do so, P&W may, at the sole expense and risk of Customer: (a) ship the goods or Equipment by a carrier of P&W’s selection to Customer’s place of business or another destination that P&W believes to be suitable; or (b) warehouse the Equipment.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 44


3.    CUSTOMER’S INSPECTION OF goods or EQUIPMENT
Customer will inspect all goods or Equipment within [*] of receipt from P&W and notify P&W in writing within [*] thereafter of any (a) defects in the workmanship related to the Maintenance Services or (b) defects in the material and manufacture of the goods, as applicable. Customer will not bring any claim relating to any defects which were or which could or should have been discovered during such inspection and about which Customer did not notify P&W within the prescribed time.
4.    WARRANTIES, REMEDIES, AND LIMITATIONS
4.1    Notwithstanding the warranties set forth in the Engine Warranty and Service Policy, P&W warrants to Customer that the Maintenance Services will be performed in a workmanlike manner and that the P&W parts used therein or goods or Equipment sold hereunder will be free from defect in material and manufacture when furnished by P&W. This warranty terminates after [*] after P&W delivers the goods or re delivers the Equipment, whichever first occurs (the “Warranty Period”).
4.2    If P&W breaches the warranties set forth in Section 4.1, P&W will provide to Customer the remedy set forth in Section 4.3, provided that Customer has given written notice of any such breach to P&W within the Warranty Period.
4.3    P&W’s liability and Customer’s remedy under the warranties set forth in Section 4.1 [*].
4.4    P&W warrants to Customer that P&W will convey good title to all goods or Equipment sold or exchanged by P&W hereunder. P&W’s liability and Customer’s sole remedy under the warranty set forth in this Section 4.4 are limited to [*].
4.5    In the event any suit, claim or action is brought against Customer (or a person expressly indemnified by Customer) alleging that, without further combination, Customer’s use or resale of (a) goods (b) a part made by or under P&W’s control and in accordance with the specification or design provided by P&W or (c) a P&W-owned process patent involving a process that was developed by P&W directly infringes any patents, P&W will, [*], conduct the entire defense including any and all necessary court action, settlements, and appeals. [*]. If the use or resale of such goods or part(s) is finally enjoined, P&W will, at its option: (a) procure for Customer the right to use or resell such goods or parts; (b) replace such goods or parts with equivalent non-infringing parts; (c) modify such goods or parts so they become non-infringing but equivalent; or (d) remove such goods or part(s) and refund the purchase price (less a reasonable allowance for use, damage or obsolescence).
The preceding provision is applicable only if the following conditions are met: (a) the goods, part(s), services, or process involved in the suit, claim, or action must have been provided under this Agreement during Maintenance Services in accordance with this Agreement, as applicable; (b) the alleged infringement must be a direct infringement of any patents of the nation in which Customer’s principal place of business is located; (c) Customer must provide P&W with timely notice of such suit, claim, or action and the full opportunity to assume the entire defense thereof; and (d) Customer must provide P&W with all information available to Customer and other defendants pertaining to the alleged infringement.
For the avoidance of doubt, this provision will not apply to (a) any alleged patent infringement in any nation other than as specified above; (b) any Customer-furnished specification or design or the performance of a process not recommended in writing by P&W; (c) any goods or parts or components thereof manufactured according to a non-P&W specification or design; (d) the use or sale of goods or parts delivered hereunder in combination with other goods not delivered to Customer by P&W; or (e) any instance not specified in the preceding paragraphs. In such instances, Customer will indemnify and hold P&W harmless.
4.6    [*].
4.7    P&W makes no warranty and disclaims all liability for goods or Equipment, whether supplied by P&W or not, that were not originally manufactured by or on behalf of P&W, though P&W will, to the extent it has a right to do so, make available to Customer the benefit of any warranty provided by such original manufacturer.
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 45


5.    [*]
6.    REPRESENTATIONS AND COVENANTS
6.1    Customer represents that, to the best of its knowledge, any and all Equipment delivered for Maintenance Services is repairable based upon methods, techniques and practices acceptable to the FAA or other airworthiness authority with relevant jurisdiction. Customer further represents that, unless otherwise disclosed to P&W in writing, the Equipment: (a) is of proper configuration; (b) was produced in compliance with applicable aviation regulations; (c) has not been involved in an accident, extreme environmental conditions, or other abnormal operating conditions; and (d) does not contain any prior repairs or modifications not performed in full compliance with applicable regulatory requirements. If so requested by P&W, Customer agrees to provide P&W with a written statement containing these representations set forth in this Section 6.1.
6.2    If so requested by P&W, Customer agrees that it will promptly replace any Customer Exchange Part which has been repaired or which contains parts manufactured with other than the Type Certificate Holder’s approved technical data.
6.3    Customer agrees to indemnify and hold harmless P&W, P&W’s majority member, their subsidiaries, affiliates, stockholders, directors, officers, employees, assigns and agents, from and against any claims, suits, obligations, liabilities, damages, losses, judgments, injury, or expense (including attorneys’ fees and expenses) resulting or arising from a breach of any of the representations or covenants set forth in this Article 6, for all liabilities arising from P&W’s use of non-P&W repair procedures, parts and vendors pursuant to Section 1.2, and for all liabilities arising out of the breach of Customer’s obligations in Article 11.
7.    CHANGES
No modification of this Agreement will be binding unless agreed to in writing and signed by both Customer and P&W.
8.    TAXES AND OTHER CHARGES
[*]
9.    INVOICES AND PAYMENT
9.1    If, before completion of performance by P&W of this Agreement, or at any time thereafter, (a) Customer becomes unable or refuses to make payment to P&W in accordance with any of Customer’s obligations to P&W, (b) a receiver or trustee is appointed by a court of competent jurisdiction for any of Customer’s property, or (c) Customer becomes insolvent or makes an assignment for the benefit of creditors, or takes or attempts to take the benefit of any insolvency act, or any execution is issued pursuant to a judgment rendered against Customer, P&W may, at its option in any of such events and without prejudice to any of its other remedies, (i) immediately cease performance under this Agreement including performance of any Maintenance Services, (ii) retain possession of all goods and/or Equipment in the possession of P&W until P&W receives all payments due from Customer and/or (iii) terminate this Agreement by giving to Customer written notice of P&W’s intention so to do. P&W will thereupon be relieved of any further obligations to Customer, and Customer will reimburse P&W for its termination costs and expenses and a reasonable allowance for profit.
9.2    If P&W determines, since the date of execution of this Agreement, that there has been any material adverse change in the financial condition or business operation of Customer or any subsidiary which has a material adverse effect on the ability of Customer to perform its obligations pursuant to this Agreement, P&W may terminate or modify this Agreement in its sole discretion.
9.3    Invoices are due and payable, net cash, on the date specified on the relevant invoice (“Due Date”). So long as Customer makes payment [*], no interest will accrue on the invoice amount. If P&W does not receive payment of any amount owed by Customer within the grace period, P&W may charge interest on the overdue amount at the rate of one and [*] for each [*] or portion thereof (but not more than the maximum rate of interest allowed by applicable law), from the Due Date until the date on which P&W receives payment in full. Customer agrees that if it fails to pay when due any amount owed to P&W, Customer will also reimburse P&W for all costs that P&W incurs to collect such unpaid amount. If P&W determines that
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 46


Customer’s financial condition has materially changed, or if Customer fails to pay to P&W when due any amount owed, P&W will have the right to specify alternative payment terms which will supersede the payment terms specified in this Agreement.
9.4    P&W may set off any amount that Customer owes P&W against any credits, deposits, or other amount that P&W’s majority member, or any of their subsidiaries or affiliates owes Customer. Any credits available to Customer under this Agreement shall expire [*] from the date such credit was earned, and upon expiration, any and all remaining unclaimed credits are null and void. For the purposes of this Agreement, a credit is earned on the date Customer is eligible to request the issuance of the credit and P&W becomes obligated to pay such credit. Unless stated otherwise, credits shall not be subject to escalation or interest.
10.    EXCUSABLE DELAYS
Customer will not hold P&W liable for any interruption or suspension in the provision of the goods, Equipment or Maintenance Services, or any delay or failure to perform under this Agreement when such interruption, suspension, delay or failure to perform under this Agreement results from, relates to or arises out of causes beyond P&W’s reasonable control, including without limitation (i) acts of God, acts of Government, fires, floods, epidemics, pandemics, quarantine restrictions, labor disputes, strikes, freight embargoes, riots, wars, the hostile acts of any person, acts of terrorism, compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it proves to be invalid, litigation, court orders, or other legal or regulatory actions or unusually severe weather, or any other event or circumstance beyond the reasonable control of P&W, (ii) a delay attributable to suppliers or Customer, or (iii) an event which interferes with the performance of P&W’s obligations.
11.    EXPORT
11.1    The Parties agree to comply with any and all applicable export, import, sanctions and U.S. anti-boycott laws, regulations, orders and authorizations that apply to their respective activities and obligations set forth in this Agreement (collectively “Export Laws”), including but not limited to the International Traffic in Arms Regulations (22 CFR 120130) (“ITAR”), the Export Administration Regulations (15 CFR 730 et seq.) (“EAR”) and any regulations and orders administered by the Treasury Department's Office of Foreign Assets Control Regulations (31 CFR Chapter V). Nothing in this Agreement shall be construed as requiring a Party to perform an obligation that is noncompliant with any Export Laws. Furthermore, any Party that receives any technology, commodity, technical data, software, goods and services (including products derived from or based on such technical data) information or any other item subject to any applicable Export Laws, shall adhere to and comply with those laws, regulations, orders and authorizations.
11.2    The Parties shall use best efforts to apply for, obtain, comply with and maintain all export, re-export, and transfer authorizations, including approvals, consents, licenses, agreements, registrations and other authorizations (collectively “Export Licenses”) that are required or may be required to perform the activities and obligations set forth in this Agreement. No ITAR regulated items, technical data, or defense services will be provided without obtaining the proper authorization or Export Licenses.
11.3    Prior to the transfer of any U.S. origin technical data, item or document, controlled by the EAR or ITAR, the transferring Party shall provide to the receiving Party the Export Control Classification Number (ECCN) or the ITAR category of such technical data and shall clearly indicate such on the technical data, item or document.
11.4    The Parties to this Agreement shall not knowingly or unknowingly divert or cause to be diverted, any commodities, technical data, software, goods and services (including products derived from or based on such technical data) subject to the Export Laws to any (i) person, (ii) entity, (iii) country or (iv) any entity located or incorporated in a country, that is on any denied party list or list of sanctioned countries, pursuant to either the Export Laws or any other applicable governing regulations.
11.5    If ITAR or EAR controlled technical data or items are transferred to a U.S. entity, then that entity must only allow access to that technical data or items by the following personnel: (i) U.S. citizens, or (ii) U.S. permanent resident alien, or (iii) who have U.S. protected individual status as defined by 8 USC 1324b(a)(3), or (iv) who are working under a valid U.S. export authorization. Upon request of the transferring Party, the receiving Party shall provide appropriate documentation evidencing the aforementioned requirements.
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 47


11.6    The Parties shall not export, re-export, transfer, disclose or otherwise provide physical or electronic access to technical data controlled under the Export Laws to any person (including unauthorized third-party information technology (“IT”) service providers) not authorized to receive said technical data under existing Export Laws and/or Export Licenses. 
11.7    Neither Party shall modify or divert the other Party’s technical data controlled by the Export Laws to any military application, unless (i) such Party receives advance, written authorization from the other Party and (ii) such modification or diversion is done in compliance with all applicable Export Laws. Neither Party shall modify or divert the other Party’s technical data controlled by the Export Laws to any military application or other end-use prohibited by applicable Export Laws.
11.8    Customer represents that it is aware that all sales and distribution of P&W Products, which include all tangible items and related software, technology or services (together “Products and Services”), may constitute an export, re-export, or retransfer of such Products and Services. Customer certifies that such sales and distribution will be conducted in accordance with applicable Export Laws, which may require prior approval and/or prohibit transactions with sanctioned countries/regions or designated parties/entities/individuals. Customer shall not sell, transfer, export, or re-export the Products and Services, or provide any warranty, repair, replacement, or guarantee services for end-use in Cuba, Iran, North Korea, Sudan and/or Syria.
11.9    Each Party agrees to indemnify and hold the other Party harmless against any liability arising from any breach of its obligations under this Article 11.
12.    Press Release
Either Party may issue a press release announcing that Customer has selected P&W or its designated affiliate to supply the goods and/or perform the Maintenance Services described in this Agreement. Before any press release is announced, the announcing party must receive prior written approval, which shall not be unreasonably withheld, to announce such press release from the other party.
13.    CONFIDENTIALITY
This Agreement and any technical information provided in connection with it are confidential and proprietary to P&W and Customer. Each Party agrees to limit disclosures of such confidential information only to persons who have a need to know within their own organizations, outside auditors, outside advisors, government agencies and third parties that are suppliers of P&W or participate with P&W in the manufacture, sale and support of P&W engines and propulsion systems. Should either Party be subject to a legal action or proceeding or a requirement under applicable government regulations to disclose such confidential information (“Obligated Party”), the Obligated Party shall forthwith notify the other Party, and upon the request of the other Party, shall cooperate with the other Party in contesting such disclosure.
14.    ASSIGNMENT
Neither Party may assign its rights or delegate its obligations under this Agreement, in whole or in part, without the prior written consent of the other Party, except that: P&W may, without recourse, assign its rights and/or delegate its obligations under this Agreement to any subsidiary or affiliate of P&W’s majority member, or in connection with the merger, consolidation, reorganization, or voluntary sale or transfer of its assets. Any assignment or delegation made in contravention of this provision will be invalid.
15.     GOVERNING LAW and DISPUTE RESOLUTION
15.1    This Agreement (including any dispute relating to its existence, validity or termination) is governed by and construed and enforced in accordance with the substantive laws of the State of New York, United States of America, without regard to principles of conflicts of law. The United Nations Convention of Contracts for the International Sale of Goods shall not apply.
15.2    [*]
15.3    [*]
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 48


15.4    Each Party shall comply with all applicable U.S. laws and regulations and all obligations of both Parties are subject to compliance with such laws and regulations.
15.5    The Parties agree all controversies, disputes, claims, differences or matters that arise from this Agreement and any arbitration that arise thereof are subject to the confidentiality provisions set forth in Article 13 of these terms and conditions.
16.    SURVIVABILITY
Notwithstanding anything in this Agreement to the contrary, the following provisions shall survive the expiration or early termination of this Agreement: Article 4 (Warranties, Remedies, and Limitations); [*]; Article 6 (Representations and Covenants); Article 8 (Taxes and Other Charges); Article 9 (Invoices and Payment); Article 11 (Export); Article 13 (Confidentiality); Article 15 (Governing Law and Dispute Resolution); and this Article 16 (Survivability). The termination or expiration of this Agreement shall not relieve either Party hereto of any obligation or liability accruing prior to the effective date of such termination or expiration. All other rights and obligations of the Parties, unless expressly provided otherwise, will cease upon termination or expiration of this Agreement.
17.    DEFINITIONS AND MISCELLANEOUS PROVISIONS
In these terms and conditions, “Agreement” means the agreement or order to which these terms and conditions are appended or in which they are incorporated by reference. Terms and conditions on Customer’s purchase orders will have no effect.
“Customer” means that entity set forth in the first paragraph of this Agreement to which these terms and conditions are appended.
“Party” shall mean either P&W or Customer, collectively, the Parties.
Captions used in this Agreement are for convenience of reference only and will not be interpreted as in any way limiting or extending the meaning of the provisions to which such captions may refer. If any provision of this Agreement is for any reason held invalid, such invalidity will not affect the validity of the remainder of the terms of this Agreement. No Party will be deemed to have waived any of its rights under this Agreement except by a written waiver signed by such Party’s authorized representative. Failure to complain of any action or inaction by the other Party or to declare the other Party in default under this Agreement, regardless of the duration of such failure, will not constitute a waiver of any of the rights of the non-defaulting Party. This Agreement constitutes the full agreement of the Parties.
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 49



ATTACHMENT 11
[*]


NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 50



ATTACHMENT 12
SERVICE BULLETIN LIST
[*]

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 51



ATTACHMENT 13
WILLIS affiliates
WEST Engine Acquisition LLC, a limited liability company organized and existing under the laws of the State of Delaware
Willis Engine Structured Trust III, a statutory trust organized and existing under the laws of the State of Delaware
Willis Engine Structured Trust IV, a statutory trust organized and existing under the laws of the State of Delaware
Willis Engine Structured Trust V, a statutory trust organized and existing under the laws of the State of Delaware
Willis Mitsui & Co Engine Support Limited, a limited company organized and existing under the laws of Ireland
CASC Willis Lease Finance Company Limited, a Sino-foreign equity joint venture organized and existing under the laws of China (Shanghai) Pilot Free Trade Zone, People’s Republic of China
Wells Fargo Trust Company, N.A., a national banking association organized and existing under the laws of the United States of America, U.S. Bank National Association, a national banking association organized and existing under the laws of the United States of America, or Bank of Utah, a corporation organized and existing under the laws of the State of Utah, in each case, not in its individual capacity but solely as Owner Trustee for the benefit of any of the foregoing.


NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 52



ATTACHMENT 14
LIFE LIMITED PARTS - SHOP VISIT REQUIREMENTS FOR REPLACED PARTS
[*]

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 53

[*] FIXED PRICE REPAIR AGREEMENT
BY AND BETWEEN
WILLIS LEASE FINANCE CORPORATION
AND
INTERNATIONAL AERO ENGINES, LLC
DATED AS OF DECEMBER 3, 2020


This document contains proprietary information of International Aero Engines, LLC ("IAE"). IAE offers the information contained in this document on the condition that you not disclose or reproduce the information to or for the benefit of any third party without IAE's written consent. Neither receipt nor possession of this document, from any source, constitutes IAE's permission. Possessing, using, copying or disclosing this document to or for the benefit of any third party without IAE's written consent may result in criminal and/or civil liability.
This document does not contain any export regulated technical data.
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Willis [*] FPA (2020-NOV-24) Final
LC



TABLE OF CONTENTS
1.    PERIOD OF COVER AND SCOPE
4
2.    EXCLUSIVITY
4
3.    MINIMUM SHOP VISIT COMMITMENT
4
4.    FPA SERVICES
5
5.    FIXED PRICE, RATES, AND ESCALATION
6
6.    LLP COMMITMENT AND LIFE ASSURANCE PLAN
8
7.    OPERATING CONDITIONS
9
8.    FPA SHOP VISIT COVERAGE
9
9.    EXCESS WORK
12
10.    OBLIGATIONS OF WILLIS
14
11.    PARTIES' RESPONSIBILITY
17
12.    WARRANTY BENEFITS AND REMEDIES
18
13.    TURNAROUND TIME (“TAT”)
19
14.    TRANSPORTATION
19
15.    PAYMENT
20
16.    DUPLICATE BENEFITS
22
17.    TERMINATION
22
18.    TERMS AND CONDITIONS
23
19.    ENTIRE AGREEMENT
24
20.    COMMUNICATION AND NOTICES
24
21.    ACCEPTANCE
24


NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 2



List of Attachments
Attachment 1        Definitions
Attachment 2        Eligible Engines
Attachment 3        LLP [*]
Attachment 4        FPA Escalation Formula
Attachment 5        [*] Fixed Price Labor Table
Attachment 6        [*] Engine Model Specification
Attachment 7        Addresses
Attachment 8        Excess Work
Attachment 9        FPA Shop Visit Workscopes and Fixed Prices and Fixed Price
Workscope Determination
Attachment 10        Terms and Conditions of Sale of Goods and Services
Attachment 11        Accessories Covered By Fixed Price Workscope Tables
Attachment 12        Service Bulletin List
Attachment 13        Willis Affiliates
Attachment 14        Life Limited Parts - Shops Requirements for Replaced Parts




NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 3



[*] Fixed Price Repair Agreement
This Fixed Price Repair Agreement dated as of December 3, 2020 (this “Agreement”) is entered into by and between Willis Lease Finance Corporation, a corporation organized and existing under the laws of Delaware, with a place of business at 4700 Lyons Technology Parkway, Coconut Creek, Florida 33073, (“Willis”) and International Aero Engines, LLC, a limited liability company organized and existing under the laws of Delaware, which has an office located at 400 Main Street, East Hartford, Connecticut  06118 (“IAE”). Each a “Party” and together the “Parties”. Capitalized terms used, but not otherwise defined in this Agreement will have the meanings set forth in Attachment 1.
WHEREAS:
Willis and IAE desire to establish fixed price repair coverage for the [*] Engines identified in Attachment 2.
NOW THEREFORE IT IS AGREED AS FOLLOWS:
1.PERIOD OF COVER AND SCOPE
The period of cover for an Eligible Engine under this Agreement shall commence upon the date of execution of this Agreement and shall continue until each Eligible Engine has completed [*] (the “Period of Cover”). [*]
2.EXCLUSIVITY
Willis shall exclusively utilize IAE (including the IAE Network) for all of its [*] for the duration of Period of Cover, including, without limitation, [*] IAE shall consult with Willis in good faith regarding which maintenance center in the IAE Network will perform the Shop Visit for an Eligible Engine. [*]
3.MINIMUM SHOP VISIT COMMITMENT
3.1    The fixed pricing contained herein is conditioned upon each Eligible Engine completing [*]. In the event that the parties mutually agree that an Eligible Engine’s [*] naturally falls beyond [*] of the execution of this Agreement, this Agreement will be extended to cover the completion of that [*] and consequentially any terms related to [*] shall be extended for a mutually agreed period of time.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 4


3.2    BER Prior to [*]:
In the event an Eligible Engine is damaged Beyond Economic Repair or has suffered a Total Loss (a “BER Engine”) prior to its [*], [*] and neither party shall have any further obligations with respect to the BER Engine under this Agreement. From and after such date, such BER Engine will cease to be an “Eligible Engine” for purposes of this Agreement.
3.3    BER After [*]:
In the event that following [*] and prior to completion of [*], an Eligible Engine is deemed a BER Engine loss, then Willis may [*]. The Parties agree that they will negotiate in good faith to identify a [*] based on mutually agreeable terms.
Upon the [*] by Willis, the [*] shall immediately become an "Eligible Engine" under this Agreement, and the BER Engine will cease to be an "Eligible Engine" for purposes of this Agreement.
[*]
4.FPA Services
4.1    IAE shall provide to Willis the following repair service coverage during the Period of Cover for each Eligible Engine, unless otherwise stated below:
4.1.1    Eligible Engine Shop Visit coverage in accordance with the terms of Articles 5, 7 and 8 below;
4.1.2    LLP [*] in accordance with the terms of Article 6; and
4.1.3    Excess Work as required in accordance with the terms of Article 9;
4.2    IAE will assign an FPA Manager to work with Willis pursuant to the terms of this Agreement. In addition to its other responsibilities set forth herein, the FPA Manager shall work with Willis in connection with the scheduling of all Shop Visits and meet with Willis on a regular basis to discuss the performance of the maintenance services provided hereunder.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 5


5.FIXED PRICE, RATES, AND ESCALATION
5.1    IAE shall provide exclusive off-wing FPA Shop Visit maintenance for the Eligible Engines in accordance with the Workscopes set forth in Attachment 9 and for the fixed prices also set forth in Attachment 9 (the “Fixed Prices”).
5.1.1    Attachment 9 provides “minimum baseline workscopes” for each Eligible Engine’s [*] and [*] (“Minimum Baseline Workscope”) and the Fixed Prices for such Minimum Baseline Workscopes.
a.[*]: As set forth in Attachment 9, for each Eligible Engine’s [*] after closing of the purchase of the Eligible Engines by Willis, [*], IAE will perform the maintenance service for the applicable Minimum Baseline Workscope per the applicable build standard [*], subject to Article 8 and Article 9. For the avoidance of doubt, any workscope escalations for [*] that are required in accordance with the CEMP or LLP replacement beyond the Minimum Baseline Workscope for [*] to enable the Eligible Engine to run to its [*] shall be performed at [*].

[*]

b.[*]: As set forth in Attachment 9, for each Eligible Engine’s [*] after closing of the purchase of the Eligible Engines by Willis [*]. IAE will perform the maintenance services for the applicable Minimum Baseline Workscopes at the Fixed Prices for such Minimum Baseline Workscopes, subject to Article 8 and 9.
5.1.2    In the event the module workscope level for a FPA Shop Visit for an Eligible Engine expands beyond the applicable Minimum Baseline Workscope at any time, for any reason, the Fixed Prices, and which Party pays for expansions (as applicable), are set forth in Attachment 9.
5.1.3    [*]
5.2    [*] Shop Visits
IAE shall provide exclusive off-wing maintenance for any Miscellaneous Shop Visit that occurs [*] for any Eligible Engine [*]. IAE shall perform the applicable Maintenance Services at the [*]. Notwithstanding the foregoing, Maintenance Services required per Sections 9.1.3, 9.1.4, 9.1.12, and 9.1.15, will be covered for any Miscellaneous Shop Visits prior to [*].

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 6


For all [*] Visits IAE reserves the right to upgrade the visit to a [*], subject to Willis’ right to [*], in accordance with the terms hereof, including, without limitation, Article 8 (FPA Shop Visit Coverage) and Article 9 (Excess Work).
5.3    [*], in the event an Eligible Engine is redelivered to Willis on [*] and has not undergone a [*] within [*] after the execution of this Agreement, at Willis’ request, IAE shall elect to either promptly (i) perform maintenance on the Engine in accordance with Section 5.2 to remove [*] or (ii) perform [*] in accordance with Section 5.1.
5.4    [*]
5.5    Miscellaneous Shop Visit Material Discount

Willis shall be entitled to a [*] on IAE’s [*] for all non-LLP material purchased and installed at a Miscellaneous Shop Visit. With respect to all non-LLP material purchased by Willis [*], IAE shall receive title and possession of each related displaced part.

5.6    Fixed Price Escalation

The Fixed Prices set forth in Attachment 9 and the [*] set forth in Section 5.4 are each expressed in [*] United States Dollars and are subject to escalation in accordance with the IAE escalation formula as set forth in Attachment 4 (“FPA Escalation Formula”). For the Fixed Prices and the [*] beginning [*] and annually thereafter, the escalation as calculated by the FPA Escalation Formula will be capped at [*] (the “Escalation Cap”). Notwithstanding the foregoing, if in any calendar year, the escalation as calculated by the FPA Escalation Formula for that period exceeds the Escalation Cap by more than [*] (the “FPA Hyper Band”), then the FPA Escalation Cap will be increased by [*] of such exceedance. The resultant compounding Fixed Price escalation for that year, which includes the FPA Escalation Cap plus the amount shared above the FPA Hyper Band, will become the new FPA Escalation Cap for [*] period thereafter.
5.7    LLP Escalation

All LLP prices are subject to escalation in accordance with IAE’s then-current catalog list pricing for LLPs. For LLP catalog list price escalation incurred with inductions for Shop Visits beginning [*] and annually thereafter, escalation will be capped at a rate of [*] (the “LLP Price Escalation Cap”). Notwithstanding the foregoing, if in a calendar year, the escalation for that period exceeds the LLP Price Escalation Cap by more than [*] (the “LLP Price Hyper Band”), then the LLP Price Escalation Cap will be increased by [*] of such exceedance. The resultant

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 7


compounding LLP price escalation for that year, which includes the LLP Price Escalation Cap plus the amount shared above the LLP Price Hyper Band, will become the new LLP Price Escalation Cap for [*] thereafter.
5.8    [*]

Willis has concurrently entered into a separate fixed price agreement with IAE’s affiliate, Pratt & Whitney, for maintenance services on [*] engines [*] Fixed Price Repair Agreement dated on or about the date hereof [*]. For purposes of this paragraph, term “Eligible Engines” shall be deemed to include both Eligible Engines as defined this Agreement and the ‘Eligible Engines’ as defined in the [*]. For the combined pool of Eligible Engines under this Agreement and the [*], starting at the [*] Eligible Engine removal for [*] that occurs solely due to [*], IAE will apply (or arranged to be applied) a [*] to the final [*] invoice for that Eligible Engine and any Eligible Engines thereafter that are removed solely due to [*] based on the following formula:

[*]
6.LLP COMMITMENT [*]
6.1    [*] Visits

If (i) at [*] for any Eligible Engine the [*] part is not replaced with a part capable of meeting the applicable minimum build standard as outlined in Section 11.2, (ii) there is no planned in situ increase in the life of such installed [*] part that would render it capable of achieving the minimum build standard, and (iii) a Miscellaneous Shop Visit occurs after [*] and prior to [*] for such engine that is caused solely due to life expiration of the [*] part installed at [*], then [*] for an amount [*] up to a maximum aggregate amount of [*]. Accordingly, [*] will be responsible for the cost of all [*] (by virtue of issuing the [*]) until the aggregate cost of all the [*] equals [*]. From and after this point [*] shall be responsible for all costs for [*]. The [*] shall be the exclusive remedy with respect to any [*] related matters disclosed prior to the effective date of this Agreement and the maximum aggregate amount of [*] issued hereunder shall not exceed [*].
6.2    LLP [*]

Willis shall receive the benefits of an LLP [*] as set forth in Attachment 3. The LLP [*] is applicable for each Eligible Engine for its respective Period of Cover under this Agreement. For the avoidance of doubt, any [*] part replacements that occur at Miscellaneous Shop Visits which do not qualify as an [*] will be eligible for the LLP [*] in accordance with Attachment 3.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 8


7.Operating Conditions
The Fixed Prices being offered to Willis are predicated upon the following conditions (i) the operation of the Aircraft and Eligible Engines in accordance with [*] and IAE’s technical manuals, bulletins, and instructions, and the applicable CEMP and (ii) no operation of any Eligible Engine in any environments that are deemed to be Extreme Environmental Conditions (as defined in Attachment 1).
Should any of the above conditions not be met, IAE may make reasonable and appropriate adjustments to this Agreement, including revision of the Fixed Prices set forth in Attachment 9, credits and discounts, with appropriate retroactive application, to address any deviations from such conditions. For any adjustments the methodologies used will be [*] and Willis and IAE shall review the impact of such deviations. Should IAE make changes to the Fixed Prices set forth herein, IAE [*].
8.FPA Shop Visit Coverage
8.1    Each Eligible Engine following an Eligible Engine removal shall be forwarded to the applicable IAE Network facility. The following services are included in the Fixed Prices for the Workscopes set forth in Attachment 9 for both [*] and [*]:

8.1.1    perform Eligible Engine reconditioning and repair in accordance with the CEMP to render the Eligible Engine serviceable in accordance with the specifications established in IAE technical publications, Airworthiness Directives and other IAE or Aviation Authority-approved maintenance procedures;
8.1.2    shop labor for (i) disassembly, cleaning, inspection, and reassembly of the Eligible Engine, modules, and Parts (including LLPs); and (ii) removal, visual inspection, and reinstallation of External Equipment installed on the Eligible Engine when it is received at the IAE Network facility;
8.1.3    repair of Parts in an Eligible Engine (subject to the exclusions in Article 9 below);
8.1.4    repair of LLPs (to the extent available);
8.1.5    maintenance required to address Minor FOD;
8.1.6    replacement of Parts in an Eligible Engine (subject to the exclusions in Article 9 below) using IAE’s inventories of new, used-serviceable; IAE will take title to the replaced Parts;

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 9


8.1.7    comply with Airworthiness Directives for Parts in an Eligible Engine (subject to the exclusions in Article 9 below);
8.1.8    maintenance to comply with Service Bulletins as described below:
a.categories [*], as set forth in the CEMP, capped at [*] per Eligible Engine Shop Visit;
b.At [*], Service Bulletins listed in Attachment 12, subject to material availability;
8.1.9    replacement of major cases and frames up to [*] per major case or frame;
8.1.10    material and vendor handling fees for those materials and services covered by the fixed price;
8.1.11    perform a post-repair Eligible Engine test, including fuel and oil;
8.1.12    provision of Shop Visit documentation as follows:
a.Authorized Release Certificate: ACC-038 and FAA 8130-3 with EASA Form One dual release or EASA Form One with FAA 8130 dual release; FAA-337 and AAC-085; (CAAC, as applicable);
b.AD Status Report and List of incorporated SBs, ADs;
c.Life Limited Parts listing and back-to-birth documentation about change/exchange Parts (original certification, NIS, removal/installation record and release certification), including the replacement Life Limited Parts listed in Attachment 14:
d.Engine Test Data Sheet;
e.Engine accessory list; Major Parts/accessory;
f.ACC/QEC repair records or change/exchange record (including TT/TC, TSO/CSO and copies of corresponding Release Certificate AAC-038, FAA-8130 or EASA Form One);
g.Missing Parts list;

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 10


h.Engine build-up record including fan blades moment weight and HPT blades record;
i.Borescope inspection report with video of the full engine gaspath;
j.On / off log (engine major Parts removal/installation record);
k.Preservation Documentation and Preservation Tag;
l.Report of any open actions required by Customer prior to and during engine service;
m.Inspection report (Shop Finding Report); and
n.Dirty finger prints. [*]
Notwithstanding the foregoing, the [*] caps referenced in Sections 8.1.8a and 8.1.9, shall not apply to the [*] for any Eligible Engine.
8.2    IAE may supply and install compatible new, repaired, or used serviceable Parts and LLPs (“Exchange Parts”) in exchange for Willis’ Parts. For Exchange Parts with a value of more than [*] IAE will notify Willis of the exchange and Willis shall have [*] to reject the exchange, otherwise Willis shall have been deemed to have accepted such Exchange Part.

8.2.1    Title-for-title exchanges would simultaneously occur for all such Parts and LLPs. Willis warrants that it will convey good title and such maintenance records as IAE may request for Willis’ Exchange Parts, including (i) original certification; (ii) Non-Incident Statement (“NIS”) or Incident Accident Clearance Statement (ICS) prior to induction; (iii) removal/installation record for the Eligible Engine and LLPs and hard time components only; (iv) release certificate and back-to-birth documentation for LLPs including the list in Attachment 14; and (v) flight hours and cycles since new and the number of repairs for HPTs, airfoils and major cases.
8.2.2    IAE will take title to all Parts that are displaced from the Eligible Engine during Maintenance Services. IAE will have no liability to compensate Willis for these displaced Part(s). Willis warrants that it will convey good title and maintenance records for these displaced Parts.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 11


9.EXCESS WORK
9.1    Any costs incurred by IAE or an IAE Network facility not covered in Article 8 under this Agreement shall be deemed to be “Excess Work” and shall be paid for by Willis in accordance with the charges in Attachment 8, Excess Work, and payment terms in Article 15. Notwithstanding the foregoing, Excess Work for an Eligible Engine shall not include the costs for those maintenance obligations for which [*]. As used herein, “Excess Work” shall include, but not be limited to, any labor, material, and other charges for Eligible Engines that arise from or relate to the following:

9.1.1    repairs for in-flight and/or ground accident damage;
9.1.2    repairs for Major FOD;
9.1.3    repair or replacement of Parts required for incorporation of Service Bulletins Categories [*];
9.1.4    replacement of LLPs for any reason, including compliance with AD and SB;
9.1.5    the provision of any Line Maintenance requirements;
9.1.6    any cost incurred due to failure of Willis to undertake any of its obligations as set out in Article 10 below;
9.1.7    any cost incurred due to misuse, neglect, accident or maintenance error or improper maintenance activity by any party other than IAE or the applicable IAE Network facility;
9.1.8    additional work (module or Part) required to meet any lease return conditions;
9.1.9    the removal and replacement of non-IAE approved Part or Parts with non-IAE approved repairs and any resulting damages caused by such aforementioned Part(s);
9.1.10    exposure by Willis, or anyone operating an Eligible Engine, to exceedance of Engine operating limits published by the AMM or Flight Crew Operations Manual;

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 12


9.1.11    delivery of an Eligible Engine to the applicable IAE Network facility with missing or non-serviceable Accessories, requiring the use of units provided by the IAE Network facility to permit the testing of the Eligible Engine following its refurbishment;
9.1.12    repair, exchange, replacement, or provision (including new material) of Accessories (except parts listed in Attachment 11), QEC items, BFE items or EBU items, nacelle items, and External Equipment; this 9.1.12 includes any repair or replacement costs related to Accessories (except parts listed in Attachment 11), EBU items, QEC items, BFE items, nacelle items for SBs, and ADs;
9.1.13    charges associated with placing Eligible Engines into a Testable Engine configuration in the event that an Eligible Engine has not been delivered to the applicable IAE Network facility in a Testable Engine configuration. For the avoidance of doubt, charges associated with the strip and rebuild of Eligible Engines that have been delivered to the applicable IAE Network facility in a Testable Engine configuration following an eligible removal shall be borne by IAE;
9.1.14    provision, repair or replacement of transportation equipment and repair of Eligible Engines required due to transportation of Eligible Engines without necessary protective transportation equipment;
9.1.15    charges for handling associated with (i) replacing Life Limited Parts for any reason, (ii) Accessories, EBU items, QEC items, BFE items, nacelle items, and other Excess Work items as set forth in Attachment 8, and (iii) any other services or charges related to Excess Work;
9.1.16    the use of Parts or any other services not provided by IAE or the use or replacement of any PMA parts or any other customer-directed services that are not approved by the FPA Manager;
9.1.17    the performance of DER repairs not acceptable to the FPA Manager;
9.1.18    Labor, material and subcontract charges for Eligible Engine involved in operation outside the terms in Article 6, accidents and incidents such as but not limited to FOD and EGT exceedance ;
9.1.19    Eligible Engines deemed as BER;
9.1.20    Miscellaneous Shop Visit costs that occur after [*];

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 13


9.1.21    on-wing and near wing repairs; and
9.1.22    any work done in a Full Interval Shop Visit that does not meet the minimum baseline workscope requirements as set forth in Attachment 9.
9.2    Excess Work shall be charged at IAE’s [*] for Parts or repairs, as applicable, in addition to the other applicable rates, fees, and charges set forth in Attachment 8 hereto.
9.3    In the event IAE determines that an Eligible Engine requires a Shop Visit that will be considered entirely to be Excess Work due to any of the causes in Section 9.1, then the FPA Manager shall promptly notify Willis with reasonable detail, and the Parties shall discuss in good faith, within [*], the action that will be taken. In the event that a Shop Visit is deemed to be [*], IAE may develop a customized workscope and fixed price for Willis’ review and approval. Absent approval from Willis within [*], the shop visit shall be invoiced by IAE in accordance with the Excess Work amounts and rates set forth in Attachment 8.
9.3.1    Willis shall pay for any services performed by IAE for such Eligible Engine; and
9.3.2    Willis shall arrange and pay for all packing and transportation expenses;
10.OBLIGATIONS OF WILLIS
Willis agrees to fulfill the following responsibilities and perform the following tasks and to reasonably cooperate with IAE in the performance of IAE’s responsibilities hereunder.
10.1    Data and Procedures
[*] for an Eligible Engine, Willis shall or cause an Engine Operator to:
10.1.1    As reasonably requested or at minimum, after engine removal or upon the termination or expiration of an Engine Operator’s lease of any Eligible Engine during the Period of Cover maintain, collect and provide to IAE performance trend monitoring data on each Eligible Engine, maintain timely records in form and detail sufficient for the accurate and expeditious administration of the terms of this Agreement including the assessment of operating conditions relative to those set out in Article 7 of this Agreement;

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 14


10.1.2    As reasonably requested or at minimum, after engine removal or upon the termination or expiration of an Engine Operator’s lease of any Eligible Engine during the Period of Cover, make available, and provide IAE’s electronic condition monitoring and analysis provider with access to, summary data (such data to be collected in accordance with this Section 10.1).
10.1.3    within [*] during the term of this Agreement, report to IAE, in an electronic format mutually agreed between IAE and Willis, [*] for each flight by each Eligible Engine during the preceding month;
10.1.4    ensure that all reasonable data required by IAE to facilitate the correction of any problem causing an Eligible Engine removal is made available to IAE;
10.1.5    ensure that each Eligible Engine delivered to an IAE Network Facility is accompanied by a record of Eligible Engine total [*], in a form provided by IAE and mutually agreed by both Parties;
10.1.6    ensure Eligible Engines are available for maintenance services in a Testable Engine configuration when inducted at an IAE Network facility, and are preserved in accordance with IAE technical manuals and [*] recommendations; and
10.1.7    provide all engine records required to write the workscope within [*] after the Eligible Engine has been removed from the applicable Aircraft.
10.2    Workscope Approvals
10.2.1    For [*], Willis shall, or shall cause an Engine Operator to provide a Workscope recommendation to the FPA Manager [*] prior to Eligible Engine induction into the applicable IAE Network facility and use commercially reasonable efforts to approve the Workscope not less than [*] prior to induction of such Eligible Engine;
10.2.2    Willis or IAE shall approve any incremental workscope increase during a Shop Visit within [*] after notification of such workscope increase by IAE or Willis.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 15


10.3    Operation, Maintenance and Troubleshooting of Eligible Engines
Willis shall or shall cause the Engine Operator, to service, repair, overhaul, and maintain the Eligible Engine, in accordance with the applicable Engine Operator’s Approved Maintenance Program, which shall be substantially equivalent to FAA FAR 121 or 135 and EASA equivalent (the “Approved Maintenance Program”), so as to keep the Eligible Engine in as good operating condition as when delivered to Engine Operator, ordinary wear and tear excepted.  Such maintenance will include line maintenance and replacement of components and parts as may be required, and shall be performed in the same manner and with the same care as shall be the case with similar engines owned by or operated by or on behalf of Engine Operator without discrimination except that Engine Operator will, at the time of redelivery of the Eligible Engine, return the Eligible Engine in a condition that includes no PMA parts that have not been approved by the OEM, and will ensure that all repairs, parts and limitations will be in accordance with the applicable OEM’s approved data and will not impose any additional limiting condition and/or limitation on the Eligible Engine or part. Additionally, the Engine Operator agrees that the Eligible Engine will not be changed, altered or repaired in any way that may reduce the Eligible Engine’s utility, marketability, remaining useful life, or impair the Eligible Engine’s condition, airworthiness or ability to obtain Engine Type Certificate Holder technical support. In the case of an ETOPS Engine, the ETOPS standard with respect to Configuration, Maintenance and Procedures will be maintained to the most current published revision throughout the applicable Lease Term.  The Engine Operator will advise Willis who will inform IAE of any Non-routine Repairs.  “Non-routine Repair” means a repair that, due to the absence of the respective OEM’s published approved repair data, requires the Engine Operator, or its agents or designees to obtain such approved data from the OEM. 
Willis shall cause the Engine Operator to use each Engine in a safe manner and in accordance with the manufacturer's recommended operating procedures and manuals and instructions in effect and as revised from time to time only on commercial transport aircraft owned or operated by Lessee or by any sub-lessee permitted in the Lease.  Willis shall cause the Engine Operator not to operate or locate the Equipment or permit the Equipment to be operated or located in any area excluded from insurance coverage.
10.4    Engineering Authorizations
During the course of Shop Visits and/or on-or-near-wing services, IAE may incorporate original equipment manufacturer generated and Aviation Authority-approved deviations from the published technical data and Engine Manuals for

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 16


the Eligible Engines (an “Engineering Authorization” or “EA”). IAE currently defines [*] EAs that will be generated from time to time:
10.4.1    [*];
10.4.2    [*]; and
10.4.3    [*].
Willis shall not unreasonably withhold its approval of any proposed utilization of an IAE and Aviation Authority-approved deviation on Willis’ Eligible Engines. Any additional maintenance resulting from the rejection of an EA will be charged as Excess Work at the Excess Work Rates defined in this Agreement. IAE reserves the right to delay the performance of the maintenance services on an Eligible Engine while Willis’ approval of an EA is pending. Willis’ delay beyond [*] will be considered an Excusable Delay for purposes of this Agreement.
10.5    Records
Willis shall, and shall cause the Engine Operator to, maintain adequate records as required to meet Willis’ obligations and compliance with the applicable provisions of this Agreement.
10.6    All incremental maintenance services resulting from Willis’ failure to fulfill obligations in accordance with Article 10, shall be charged as Excess Work. For the avoidance of doubt, failure to fulfull obligations in accordance with this Article 10 will not disqualify the respective engine’s status as an Eligible Engine under this Agreement.
11.PARTIES' RESPONSIBILITIES
11.1    Customized Engine Maintenance Program
Willis and IAE will mutually agree upon a CEMP establishing maintenance requirements for the Eligible Engines. The CEMP will be consistent with IAE’s and other TCHs’ Approved Technical Data. IAE will be responsible for off-wing engine maintenance consistent with the CEMP. IAE will workscope the Eligible Engines in accordance with the thrust rating in Attachment 2.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 17


11.2    At an FPA Shop Visit, IAE will replace LLPs in accordance with the following minimum build standard for each engine model:
[*]
The build standards above are predicated on each Eligible Engine’s operational compliance with the following operational parameters:
Flight Length [*]
Takeoff Derate [*]
Average Equivalent Sea Level Ambient Takeoff Temperature [*]

Notwithstanding the foregoing, to the extent that the certified life of [*] does not meet the applicable minimum build standard, the replacement of such part shall be in accordance with Article 6.
11.3    No later than [*] from execution of this Agreement, Willis will review and provide written approval for the CEMP. If Willis does not approve the CEMP at least [*] from execution of this Agreement, all off-wing Engine maintenance for Eligible Engines will be performed under the generic EMP.
During the Period of Cover, but not more than [*], IAE may propose reasonable revisions to the CEMP. Revisions proposed by IAE will be reviewed and accepted by Willis within [*], provided that any such revisions will only be implemented upon mutual agreement of Willis and IAE (which will not be unreasonably withheld or delayed). If Willis does not reasonably accept changes within [*], IAE may revert to use of the generic EMP.
12.WARRANTY BENEFITS AND REMEDIES
IAE will provide Willis with the warranty benefits and remedies described in Article 4 of the Terms and Conditions of Sale of Goods and Services in Attachment 10.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 18


13.[*]
13.1    [*]
13.2    [*]
13.3    [*]
14.Transportation
14.1    [*] in which IAE has agreed to be responsible for transportation, for an Eligible Engine, IAE shall be responsible for the removal and transportation of the Eligible Engine, including the risks and costs, to the IAE Network facility.
14.2    After [*], Willis shall be responsible for the transportation of the Eligible Engine and shall perform, or cause to be performed, the tasks set forth below:
14.2.1    Willis shall cause the Engine Operator, to remove the Eligible Engine from wing and accomplish engine preservation in accordance with the Engine Manual. Willis or the Engine Operator is responsible for correct engine shipping configuration including the draining of fuel and oil, and the gaining of dangerous goods (DG) compliance as necessary. Willis or the Engine Operator will be responsible for delivering the removed Eligible Engine including the risks and costs associated with the delivery to the IAE Network facility. If an Eligible Engine arrives at the IAE Network facility not in accordance with the recommended shipping procedure, the IAE Network facility shall contact the appropriate Willis representative. Upon completion of maintenance services, the IAE Network facility will preserve Eligible Engine in accordance with the Method 2 of the Engine Manual (greater than [*] preservation), and deliver the Eligible Engine Ex Works the IAE Network facility.
14.2.2    Willis will ship complete Eligible Engines without Missing Parts to the IAE Network facility unless agreed in advance with IAE. IAE reserves the right to, unilaterally, purchase and replace any Missing Part or scrap Part that costs less than [*] per Part. Such Part and/or scrap report will be made available to Willis upon Willis’ request. Notwithstanding any provision in Incoterms 2010 to the contrary, risk of loss during transit of Eligible Engines will at all times remain with Willis.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 19


14.2.3    Willis will be responsible for costs, if any, including without limitation government levies, taxes, customs duties (other than the IAE Network facility’s country of origin), and loading and unloading charges.
14.2.4    Willis will be responsible for providing and keeping in full force and effect insurance covering the Eligible Engine for all risks including risk of loss during transportation of the Eligible Engines.
14.2.5    For the purposes of delivering the Eligible Engine to and from the IAE Network facility, Willis will be responsible for providing, at its own risk and expense proper shipping stands for delivering the Eligible Engine to the IAE Network facility. If Willis needs its shipping stand prior to the completion of the Maintenance Services, then the IAE Network facility will return the shipping stand at Willis’ risk and expense. If Willis collects the shipping stand prior to re-delivery of the Eligible Engine by the IAE Network facility to Willis, then Willis will provide a substitute shipping stand upon completion of the Maintenance Services so that IAE Network facility can re-deliver the Eligible Engine to Willis. If any repairs to a Willis’ shipping stand are necessary to make it serviceable for delivery purposes, Willis agrees to repair the shipping stand at its own expense.
14.2.6    Any delay in induction or Eligible Engine re-delivery directly caused by Willis may result in the Eligible Engine being stored at the IAE Network facility or any storage facility designated by Willis. During any such storage period, Willis agrees to be liable for all rental rates and charges incurred for engine storage at the IAE Network facility or any such designated storage facility. Alternatively, IAE, in its sole discretion, may ship the Eligible Engine to Willis at Willis’ expense and risk.
14.2.7    [*].
15.PAYMENT
15.1    [*] FPA Shop Visit Fixed Prices
15.1.1    With respect to [*] FPA Shop Visits only, IAE shall invoice Willis [*] of the then-current Fixed Price per the applicable Workscope as set forth in Attachment 9, no less than [*] prior to induction of the Eligible Engine into the applicable IAE Network facility, and Willis shall pay such invoices in full prior to the date of induction of the Eligible Engine. IAE shall invoice Willis for the final [*] of the then-current Fixed Price per the applicable Workscope as set forth in Attachment 9 no less than [*] prior to redelivery

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 20


of the Eligible Engine and Willis shall pay such invoice in full upon Willis’ receipt of the documentation set forth in Section 8.1.12a through 8.1.12l. For the avoidance of doubt, nothing in the foregoing shall be deemed to restrict IAE from charging any additional amounts in the event a Workscope for a shop visit is subsequently expanded in accordance with the terms hereof.
15.2    Excess Work Invoices
15.2.1    Charges for Excess Work shall be invoiced to Willis by IAE as such Excess Work is performed in accordance with the prices, fees and rates set forth in Attachment 8.
15.2.2    IAE may also invoice Willis its reasonable estimate of the cost of any Excess Work for Shop Visits prior to commencement, or during the execution, of such Excess Work. IAE shall invoice Willis for the balance of the cost of any Excess Work upon receipt of the corresponding invoice from the applicable IAE Network facility (or promptly issue a credit to Willis’ account with IAE for any excess payment received from Willis).
15.2.3    IAE will render a final invoice within [*] after re-delivery of the Eligible Engine to Willis for all Excess Work charges incurred. The final invoice will reflect actual Excess Work charges. IAE will credit Willis’ payment of the pre-delivery invoices, if applicable, to the final invoice. Willis will pay such final invoice [*] net cash from invoice date.
15.3    Willis shall pay the full invoiced amount due per this Article 15 without delay, unless such amounts are in dispute in accordance with Section 15.5.
15.4    All payments shall be made by electronic transfer and shall be deposited not later than the due date of payment with:
[*]
or to such other account as IAE may from time to time designate in writing, which designation shall be effective upon receipt by Willis of such notice.
15.5    If Willis fails to make any payment to IAE required by this Article 15, and in addition to any other rights which IAE may have in this Agreement, IAE reserves the right to halt any work in progress and/or to refuse to induct additional Eligible Engines. Notwithstanding the foregoing, in the event of a bona fide dispute regarding any amount to be paid pursuant to any invoice issued pursuant to this

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 21


Article 15, or any portion thereof, Willis shall within [*] of receipt of such invoice give written notice to IAE of such disputed invoice, or disputed portion thereof, together with reasonable substantiation of such dispute and any supporting documentation. IAE and Willis shall use their respective best efforts and allocate sufficient resources to resolve such dispute within [*] or as soon as practicable thereafter. In the event the Parties fail to resolve any such dispute invoice within such period, the dispute shall be resolved by designating senior managers to reach a resolution. Upon resolution, IAE shall correct the invoice and reissue, or Willis shall pay to IAE, as applicable, settled amount of the disputed portion of the invoice within [*]. For clarification, Willis shall be required to pay the undisputed portion of any invoice in accordance with the payment terms for the applicable invoices set forth in this Article 15. To the extent Willis complies with the requirements of this Article 15, IAE shall [*] during that period of time such amount is disputed by the Parties.
16.DUPLICATE BENEFITS
Willis and IAE agree that it is not the intention to provide duplicate benefits under the terms of this Agreement or under any other arrangement between IAE or IAE’s suppliers or any applicable lessor and Willis. In the event of any such duplication of benefits, Willis may, at the relevant time in respect of the relevant circumstances receive any one such benefit to the exclusion of all other duplicate benefits.
17.TERMINATION
17.1    Failure to Make Payments or to Meet Obligations
17.1.1    If Willis fails to make any payment to IAE when due under this Agreement (including any interest due thereon), unless such payments are in dispute pursuant to Section 15.5, or fails to meet any other material obligation under this Agreement, then, without prejudice to any other rights which IAE may have in contract, at law, or in equity, IAE shall notify Willis and have the right to suspend provision of services under this Agreement and not to induct, to suspend all work on, or not to release from any IAE Network facility any Eligible Engine until such failure is corrected or full payment is made by Willis to IAE, as the case may be.
17.1.2    IAE shall have the right to terminate this Agreement: (i) if any default shall occur in the payment by Willis of any amount hereunder when and as the same becomes due and payable and such default continues for a period of [*] or more after IAE’s written notice of such default or (ii) if Willis shall fail to comply with any other material obligation under this Agreement,

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 22


which failure has not been fully corrected within [*] after IAE’s written notice of such failure to comply with any other material obligation.
17.1.3    Willis shall have the right to terminate this Agreement in the event that IAE fails to fulfill a material obligation under this Agreement and such failure reoccurs in at least [*] after IAE was first given written notice of such failure by Willis, provided however that in no event shall IAE have fewer than [*] to cure such failure.
17.1.4    In the event of a breach of this Agreement by IAE or any of its affiliates, to include the scenario described in 17.1.3 above, the parties will [*]. If IAE or its affiliates have not cured such breach within [*] from its occurrence, Willis will be entitled to [*]. Further, nothing in Section 3.1, shall limit Willis’ ability to seek damages to the fullest extent permitted hereunder.
17.2    Expiration
This Agreement shall be effective from the day and year first above written until the end of the Period of Cover for the last Eligible Engine(s) or until earlier terminated in accordance with this Article 17.
17.3    Effect of Termination or Expiration
Except as otherwise set out in this Article 17 and Article 16 (Survivability) of Attachment 10 any rights or obligations arising under the applicable law, the rights and obligations of the Parties under this Agreement shall terminate upon the termination or expiration of this Agreement in accordance with the terms hereof, and Willis shall no longer be provided with coverage under, or any of the other benefits accruing to it pursuant to, the terms of this Agreement.
Upon any termination or expiration of this Agreement, all liabilities and obligations (including payment obligations) that have accrued prior to such termination or expiration (including payment due for Excess Work) shall survive.
18.TERMS AND CONDITIONS
This Agreement including its attachments will govern exclusively the performance of the Maintenance Services hereunder. If there is any conflict between the Terms and Conditions of Sale of Goods and Services attached as Attachment 10 hereto and any other, more specific, provision of this Agreement, the specific provision in this Agreement will control.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 23


19.ENTIRE AGREEMENT
This Agreement and all attachments hereto contain the entire understanding between the Parties with respect to the subject matter hereof and supersede in their entirety all prior communications between the Parties, whether oral or in writing, and of any and every nature with respect to the subject matter hereof. No amendment or modification of this Agreement will be binding upon either Party unless set forth in a written instrument signed by both Parties. This Agreement may be executed in one or more counterparts, each of which will be considered an original but all of which together constitute one and the same instrument.
20.COMMUNICATIONS AND NOTICES
Any notice to be served pursuant to this Agreement shall be sent by registered mail, by internationally recognized overnight courier, or by email (with the original notice sent by registered mail or internationally recognized overnight courier) to the applicable address indicated in Attachment 7.
Willis agrees that IAE shall only be obligated to communicate with Willis (and not any Willis Affiliate, Designated Third Party or Engine Operator) with respect to any matters arising under this Agreement. Willis has the authority to act on behalf of each of Willis Affiliates, Designated Third Parties and any Engine Operator for all purposes of this Agreement, and IAE shall be entitled to conclusively and exclusively rely on the communications from Willis regarding all matters arising under this Agreement.
Willis shall be the only party to initiate any action or claims against IAE under this Agreement and IAE shall incur no additional obligations, costs, expenses, losses or liabilities whatsoever by virtue of an Eligible Engine being owned by a person other than Willis the foregoing, this shall not limit any of IAE’s obligations under this Agreement with respect to an Eligible Engine in the event the Eligible Engine is sold, transferred or assigned to a Willis Affiliate or Designated Third Party in accordance with the term hereof.
21.ACCEPTANCE
This Agreement will remain available for Willis’ acceptance until December 5, 2020. Please indicate such acceptance of this Agreement by having an authorized officer of Willis sign each of the two (2) duplicate originals in the space provided and return both signed originals to [*] by December 5, 2020.
Upon mutual execution, this document will become an enforceable contract and will be deemed executed in the jurisdiction in which it was signed by IAE. After acceptance by IAE, IAE will

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 24


return one (1) fully executed duplicate original Agreement to Willis. The Parties agree that facsimile, electronic or PDF signatures will be deemed to be of the same force and effect as an originally executed document. The Parties agree to provide original signature pages upon request.


NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 25


IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first entered above and deem that it is executed in the State of Connecticut.
INTERNATIONAL AERO ENGINES
By /s/ Hendrik Deurloo
Typed Name Hendrik Deurloo
Title Vice President, Sales


WILLIS LEASE FINANCE CORPORATION
By /s/ Austin Willis
Typed Name Austin Willis
Title Senior Vice President, Corporate Development



NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 26



ATTACHMENT 1
DEFINITIONS
“Accepted Technical Data” is OEM data, recommendations, or information that has been provided by the OEM that is not “Approved Technical Data” (as defined herein). This includes, but is not limited to, all operator wires, special instructions, illustrated parts catalogs, and Eaglenet wires.
“Accessory” or “Accessories” includes those items listed in Attachment 11 to this Agreement and any attaching hardware for such Accessories.
“[*]” shall mean [*].
“Aircraft” shall mean the [*] family aircraft operated by the Engine Operator which are powered by the Eligible Engines.
“Aircraft Maintenance Manual” or “AMM” means the aircraft maintenance manual published by [*] for the Aircraft.
“Airworthiness Directive” or “AD” shall mean any applicable airworthiness directive issued prior to or during the Period of Cover by the Aviation Authority based on certification rules current as of the date of this Agreement.
“Approved Technical Data” is technical data that has been approved by the Aviation Authority or by an Aviation Authority DER.
“Aviation Authority” means the FAA or any other authorities, government departments, committees, or agencies which (i) under the laws of the state of registration of the relevant Aircraft, may from time to time, have control or supervision of civil aviation in that state; and (ii) have jurisdiction over the registration, airworthiness or operation of, or other matters relating to a Aircraft, provided that it is substantially similar to, and no more prescriptive than, the FAA requirements.
Beyond Economic Repair” or “BER” generally means that the cost of the repair, exclusive of modification and transportation costs, would be equal to or greater than [*] of the [*] of the Part or Engine at the time the repair is considered, or would be otherwise reasonably determined by IAE. If an Eligible Engine is deemed BER, it will be excluded from the list of Eligible Engines.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 27


“BFE” means Buyer Furnished Equipment, which is the aircraft manufacturer-supplied or buyer furnished engine-mounted accessories (typically including such items as integrated drive generator, quick accessory disconnect adapter, hydraulic pumps, shut-off valve, and pressure regulating valve).
“Business Day(s)” shall mean a day other than a Saturday, Sunday or holiday scheduled by law for commercial banking institutions in the City of New York, New York, United States.
“Customized Engine Maintenance Program” or “CEMP” shall mean the program for engine maintenance established by IAE for Willis in accordance with Section 11.1 of this Agreement.
“DER” means Designated Engineering Representative.
“Designated Third Party” means any third party which Willis is acting as manager in respect of an Eligible Engine as consented to in writing by IAE, such consent not to be unreasonably withheld or delayed; provided, however, that if IAE or an IAE Network facility is legally prohibited from doing business with such party, then such party will cease to be a Designated Third Party.
“Eligible Engine” shall mean Engines identified by Engine serial numbers listed in Attachment 2.
“Engine(s)” means an IAE [*] engine, described as Standard Equipment in the Engine Specification, attached as Attachment 6, sold by IAE for commercial aviation use.
“Engine Build Up” or “EBU” means refers to the EBU described in the Additional Equipment section of the Engine Specification.
“Engine Manual” shall mean the IAE document which sets forth the requirements for Engine off-wing repair.
“Engine Operator” shall mean an operator who is utilizing the Eligible Engine in commercial service pursuant to which Willis or any Willis Affiliate is acting as lessor, manager and/or servicer in respect of such Eligible Engine.
“Engine Specification” means the Engine specification attached as Attachment 6.
“Equipment” shall mean Eligible Engines or any Part contained within an Eligible Engine covered by this Agreement, regardless if such Eligible Engine is owned directly by Willis or any Willis Affiliates, or any Designated Third Party which Willis is acting as manager in respect of such Eligible Engine.
“External Equipment” means any accessory, component, or part that is mounted, directly or indirectly, to the outside of any engine case, case flange, or to the main gearbox, including

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 28


Engine accessory components, line replacement units, BFE, EBU parts and hardware, nacelle propulsion system components and any related mounting hardware, wiring harnesses, plumbing, brackets, hoses, and kit-and-bin material associated with any such components. External Equipment also includes accessories or components that are maintained per the manufacturer’s component maintenance manual and any related mounting hardware, wiring harnesses, plumbing, brackets, hoses, and kit-and-bin material associated with any such accessories or components.
“Extreme Environmental Conditions” means atmospheric conditions typical of a severe environment, including but not limited to, high temperature or high concentrations of particulates such as sand, volcanic ash, calcium sulfate, or other contaminates that are in excess of or outside of the typical conditions in which commercial aircraft routinely fly as of the date of this Agreement. For the avoidance of doubt, Eligible Engines that are operated by any Engine Operators shall not be considered to be operating in Extreme Environmental Conditions, except to the extent that there is a significant documented change in that environment that occurs after the date of this Agreement (including an increase in pollutions or volcanic ash in the air) as detailed by (a) service bulletins or all operator wires issued by PW/IAE or [*], and (b) the aircraft maintenance manual or engine manual revisions, or (c) ADs or other publications issued by the FAA or other applicable civil aviation authority and to the extent that it can be reasonably determined that such change in the environment has reduced the expected time to the [*].
“FAA” shall mean the United States Federal Aviation Administration.
“Failure” shall mean the breakage or malfunction of a Part (or Parts) rendering the Engine unserviceable and incapable of continued operation without corrective action which is not as a result of misuse, neglect, accident or maintenance error or improper maintenance activities by any party other than IAE or an IAE Network facility.
“Foreign Object Damage” or “FOD” means foreign object damage. Such damage refers to any damage to an Eligible Engine that is directly caused by an object that is foreign to the Engine. For clarity, if damage is not conclusively attributed to an Engine Part, it is attributable to a foreign object.
“FPA Manager” shall mean a contact person appointed by IAE to be the program manager for this Agreement.
“FPA Shop Visit” shall mean a shop visit with a Fixed Price and Workscope as set forth in Attachment 9 of this Agreement.
“Full Interval Shop Visit” means a performance restoration shop visit at which maintenance is performed to enable an Eligible Engine to achieve its next full interval in accordance with the CEMP.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 29


“GTA” means the General Terms Engine Lease Agreement between [ ], as lessor and [ ] as lessee dated November ____, 2020.

“IAE Network” means IAE's designated network of maintenance, repair, and/or overhaul facilities.

“LLPs” or “Life Limited Parts” means those rotating Parts that have Parts Life Limit. For purposes of this Agreement, LLPs do not include static, non-rotating LLPs.
[*]
“Line Maintenance” shall mean any routine maintenance to be carried out by Willis, the Engine Operator, or any of their respective subcontractors) on an Eligible Engine in accordance with the appropriate Aircraft Maintenance Manuals and which can be accomplished either on-wing or off-wing without requiring the induction of such Eligible Engine into an IAE Network facility.
“Maintenance Services” means services provided pursuant to and in accordance with this Agreement by IAE and/or its Subcontractors in connection with the repair, maintenance, modification and/or overhaul of Equipment.
“Major FOD” means damage to an Eligible Engine arising out of or related to or caused by FOD, whether such FOD is manifested at the time of impact or discovered after the event, which requires the Eligible Engine to be removed from service due to an out of limit condition per the AMM.
“Minor FOD” means FOD that is (i) not Major FOD, (ii) not caused by the negligence of Willis and (iii) repairable by performing minor repairs, (e.g., blends or the repair is covered under the standard overhaul procedure that would be required for the Level of maintenance of the module), and excludes any material replacement, major repairs, or the overhaul of Parts that are infrequent for the particular module’s level of maintenance.
“Miscellaneous Shop Visit” shall mean any unavoidable visit of an Eligible Engine to a IAE Network facility or for complex, extensive, and mechanic certified maintenance tasks incremental to those line maintenance services that an Engine Operator is required to perform under the applicable Aviation Authority or any onsite on- or near-wing maintenance services provided by IAE to Willis resulting from Failure of a Part in an Eligible Engine or any other unplanned cause and, in each case, which does not constitute a FPA Shop Visit, or a substantially similar restoration shop visit, being undertaken. For the avoidance of doubt a Miscellaneous Shop Visit shall be further defined as a Shop Visit undertaken in which the Eligible Engine’s restoration interval is not reset to zero, LLPs are not replaced, Eligible Engine’s hot section is not worn beyond AMM limits, or sufficient EGT margin remains per fleet specification. Should the Workscope increase from Miscellaneous Shop Visit to non-LLP restoration or a shop visit where an LLP is replaced, such Shop Visit would then be priced as

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 30


Excess Work pursuant to Attachment 8, or priced in accordance with the Fixed Prices set forth in Attachment 9, if applicable. All labor for Miscellaneous Shop Visits will be charged in accordance with Attachment 5.
“Missing Part” means any part, including, but not limited to, accessories, that was not installed on an Eligible Engine at the time of engine induction or was not subsequently provided to IAE by Willis for such Eligible Engine’s Shop Visit.
“PAH” means Production Approval Holder, an entity holding a production certificate issued under the authority of the FAA.
“Parts”, as defined in the IAE's [*] standard warranty and service policy, means Engine parts sold by IAE and delivered as original equipment in an Engine or Engine parts sold and delivered by IAE as new spare parts in support of an Engine.
“Period of Cover” shall mean the period set out in Article 1 of this Agreement.
“PMA” means Parts Manufacturer Approval, the authority granted by the FAA to manufacture parts for installation in type-certificated products.
“QEC”    means quick engine change and similar engine-mounted hardware required to interface an Engine to a specific airframe. QEC includes the following systems: fuel, hydraulic, pneumatic, fire detection, electrical, integrated drive generator system, cooling, engine control, nacelle drain and vent, starter, nacelle and engine instrumentation, inlet anti-icing, engine pressure ratio, engine mounts and engine vibration monitoring.
“Service Bulletin (s) or SB(s)” means an IAE-issued Engine service bulletin.
“Shop Visit” shall mean a FPA Shop Visit or Miscellaneous Shop Visit, as context requires.
“Standard Equipment” means any item identified under the Standard Equipment section in the Engine Specification, Attachment 6.
[*]
“TCH” means Type Certificate Holder, an entity holding a type certificate issued under the authority of the FAA.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 31


“Testable Engine” shall mean an Engine with all Accessories and EBU Items installed so as to enable the Engine to be tested either prior to or following its repair without the need for making use of units provided by a IAE Network facility, as further described in the applicable Engine Manual.
“Willis Affiliate(s)” means, collectively, those parties set forth in Attachment 13 to this Agreement, or such other parties as consented to in writing by IAE, such consent not to be unreasonably withheld or delayed; provided, however, that if IAE or an IAE Network facility is legally prohibited from doing business with such party, then such party will cease to be a Willis Affiliate.
“Workscope” shall mean a written statement of repairs to be performed on an Eligible Engine by a IAE Network facility. Workscopes shall be issued by IAE and approved by Willis in accordance with the terms herein. Any workscope shall be prepared in accordance with the CEMP.



NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 32



ATTACHMENT 2
ELIGIBLE ENGINES
[*]

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 33



ATTACHMENT 3
LLP [*]
[*]


NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 34


SCHEDULE 1 – LLP TARGET PARTS LIFE LIMIT TABLE
[*]





NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 35



ATTACHMENT 4
FPA ESCALATION FORMULA
[*]





NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 36



ATTACHMENT 5
[*] FIXED PRICE LABOR TABLE*
[*]






NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 37









NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 38



ATTACHMENT 6
[*] ENGINE MODEL SPECIFICATION
[*]



NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 39



ATTACHMENT 7
ADDRESSES
1.    Willis Addresses
1.1    Address for Notices:
Willis Lease Finance Corporation
60 East Sir Francis Drake Boulevard, Suite 209
Larkspur, California 94939
E-mail:        [*]
Attention:     Dean Poulakidas, General Counsel
1.2    Address for Invoices:
Willis Lease Finance Corporation
4700 Lyons Technology Parkway
Coconut Creek, Florida  33073
E-mail:        [*]
Attention:    Accounting
2.    IAE Addresses
2.1    Address for Notices:
International Aero Engines, LLC
400 Main Street, Mail Stop 115-25
East Hartford, Connecticut 06118
USA
E-Fax:        [*]
Email:         [*]
Attention:    Chief Legal Officer

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 40


2.2    Address for Invoices:
International Aero Engines, LLC
400 Main Street, Mail Stop 115-25
East Hartford, Connecticut 06118
USA
Fax:        [*]
Attention:    Accounts Receivable Manager
2.3    Address for all Other FPA Matters:
International Aero Engines, LLC
400 Main Street, Mail Stop 115-25
East Hartford, Connecticut 06118
USA
Fax:        [*]
Attention:    Willis Customer Fleet Director



NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 41



ATTACHMENT 8
EXCESS WORK
Excess Work shall be charged at IAE’s [*] prices for Parts or repairs as applicable, in addition to the other applicable rates, fees, and charges set forth in this Attachment 8.
[*]


NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 42







NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
IAE Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 43



ATTACHMENT 9
FPA SHOP VISIT WORKSCOPE AND FIXED PRICES




[*] WORKSCOPES AND FIXED PRICES
The Fixed Prices provided below are expressed in [*] United States Dollars and are subject to escalation in accorandance with Article 5.6 of this Agreement.

[*] Minimum Baseline Workscope and expansion tables*
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                                        Page 44


[*] WORKSCOPE AND FIXED PRICES

The Fixed Prices provided below are expressed in [*] United States Dollars and are subject to escalation in accorandance with Article 5.6 of this Agreement.

[*] Minimum Baseline Workscope and expansion tables*
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                                        Page 45


FIXED PRICE WORKSCOPE DETERMINATION

[*]


NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                                        Page 46



ATTACHMENT 10
TERMS AND CONDITIONS OF SALE OF GOODS AND SERVICES
1.    MAINTENANCE SERVICES
1.1    IAE and/or its approved subcontractors, will perform repair, maintenance, modification and/or overhaul services (“Maintenance Services”) on Customer’s Equipment in accordance with technical data approved or accepted by the U.S. Federal Aviation Administration (“FAA”) or other airworthiness authority with relevant jurisdiction.
1.2    For Equipment originally manufactured by IAE, IAE will perform Maintenance Services using IAE repair procedures and replacement parts. If Customer requests in writing and IAE agrees, IAE will perform Maintenance Services using other repair procedures, parts and/or vendors approved or accepted by the FAA or other airworthiness authority with relevant jurisdiction. IAE will not be liable for, and Customer will indemnify and hold IAE harmless against all liabilities arising from the use of these other repair procedures, parts and/or vendors.
1.3    If IAE did not originally manufacture the Equipment, then IAE will perform Maintenance Services using repair procedures and replacement parts approved or accepted by the FAA or other airworthiness authority with relevant jurisdiction.
1.4    IAE may supply and install compatible new or used serviceable parts (“Exchange Parts”) in exchange for Customer’s parts (“Customer Exchange Parts”) if needed for the timely completion of the Maintenance Services. Title-for-title exchanges with respect to such parts will take place. Customer warrants that it will convey good title and such maintenance records as IAE may request for Customer Exchange Parts. IAE warrants that it will convey good title and such maintenance records as Customer may request for Exchange Parts in accordance with Section 4.4. Customer will be required to pay for the repairs performed by IAE on Customer Exchange Parts.
1.5    IAE may refuse to perform Maintenance Services if IAE did not receive payment in accordance with Article 9 hereunder or it believes the Equipment: (a) contains unapproved repairs or parts; (b) is in a state of extreme deterioration or damage; or (c) was involved in an accident or subject to extreme environmental conditions or other abnormal operating conditions.
1.6    No modification of this Agreement or of the agreed-upon workscope for the Maintenance Services will be binding unless agreed to in writing and signed by both Customer and IAE. IAE may nevertheless perform all work necessary to perform Maintenance Services or to comply with applicable regulations. A workscope modification that increases the cost to IAE of performing Maintenance Services hereunder will entitle IAE to an equitable price adjustment.
2.    TITLE, DELIVERY, RISK OF LOSS, AND SHIPPING
Title to goods and risk of loss of all goods and Equipment sold hereunder by IAE, will pass to Customer upon delivery Ex works IAE’s designated facility (“Ex works” has the meaning set forth in Incoterms 2010).
[*]
3.    CUSTOMER’S INSPECTION OF goods or EQUIPMENT
Customer will inspect all goods or Equipment within [*] of receipt from IAE and notify IAE in writing within [*] thereafter of any (a) defects in the workmanship related to the Maintenance Services or (b) defects in the material and manufacture of the goods, as applicable. Customer will not bring any claim relating to any defects which were or which could or should have been discovered during such inspection and about which Customer did not notify IAE within the prescribed time.

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 47


4.    WARRANTIES, REMEDIES, AND LIMITATIONS
4.1    Notwithstanding the warranties set forth in the Engine Warranty and Service Policy, IAE warrants to Customer that the Maintenance Services will be performed in a workmanlike manner and that the IAE parts used therein or goods or Equipment sold hereunder will be free from defect in material and manufacture when furnished by IAE. This warranty terminates after [*] after IAE delivers the goods or re delivers the Equipment, whichever first occurs (the “Warranty Period”).
4.2    If IAE breaches the warranties set forth in Section 4.1, IAE will provide to Customer the remedy set forth in Section 4.3, provided that Customer has given written notice of any such breach to IAE within the Warranty Period.
4.3    IAE’s liability and Customer’s remedy under the warranties set forth in Section 4.1 [*].
4.4    IAE warrants to Customer that IAE will convey good title to all goods or Equipment sold or exchanged by IAE hereunder. IAE’s liability and Customer’s sole remedy under the warranty set forth in this Section 4.4 are limited to [*].
4.5    In the event any suit, claim or action is brought against Customer (or a person expressly indemnified by Customer) alleging that, without further combination, Customer’s use or resale of (a) goods (b) a part made by or under IAE’s control and in accordance with the specification or design provided by IAE or (c) a IAE-owned process patent involving a process that was developed by IAE directly infringes any patents, IAE will, [*], conduct the entire defense including any and all necessary court action, settlements, and appeals. [*]. If the use or resale of such goods or part(s) is finally enjoined, IAE will, at its option: (a) procure for Customer the right to use or resell such goods or parts; (b) replace such goods or parts with equivalent non-infringing parts; (c) modify such goods or parts so they become non-infringing but equivalent; or (d) remove such goods or part(s) and refund the purchase price (less a reasonable allowance for use, damage or obsolescence).
The preceding provision is applicable only if the following conditions are met: (a) the goods, part(s), services, or process involved in the suit, claim, or action must have been provided under this Agreement during Maintenance Services in accordance with this Agreement, as applicable; (b) the alleged infringement must be a direct infringement of any patents of the nation in which Customer’s principal place of business is located; (c) Customer must provide IAE with timely notice of such suit, claim, or action and the full opportunity to assume the entire defense thereof; and (d) Customer must provide IAE with all information available to Customer and other defendants pertaining to the alleged infringement.
For the avoidance of doubt, this provision will not apply to (a) any alleged patent infringement in any nation other than as specified above; (b) any Customer-furnished specification or design or the performance of a process not recommended in writing by IAE; (c) any goods or parts or components thereof manufactured according to a non-IAE specification or design; (d) the use or sale of goods or parts delivered hereunder in combination with other goods not delivered to Customer by IAE; or (e) any instance not specified in the preceding paragraphs. In such instances, Customer will indemnify and hold IAE harmless.
4.6    [*]
4.7    IAE makes no warranty and disclaims all liability for goods or Equipment, whether supplied by IAE or not, that were not originally manufactured by or on behalf of IAE, though IAE will, to the extent it has a right to do so, make available to Customer the benefit of any warranty provided by such original manufacturer.
5.    [*]
6.    REPRESENTATIONS AND COVENANTS
6.1    Customer represents that, to the best of its knowledge, any and all Equipment delivered for Maintenance Services is repairable based upon methods, techniques and practices acceptable to the FAA or other airworthiness authority with relevant jurisdiction. Customer further represents that, unless otherwise disclosed to IAE in writing, the Equipment: (a) is of proper configuration; (b) was produced in compliance with applicable aviation regulations; (c) has not been involved in an accident, extreme environmental conditions, or other abnormal operating conditions; and (d) does not contain any prior repairs or
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 48


modifications not performed in full compliance with applicable regulatory requirements. If so requested by IAE, Customer agrees to provide IAE with a written statement containing these representations set forth in this Section 6.1.
6.2    If so requested by IAE, Customer agrees that it will promptly replace any Customer Exchange Part which has been repaired or which contains parts manufactured with other than the Type Certificate Holder’s approved technical data.
6.3    Customer agrees to indemnify and hold harmless IAE, IAE’s majority member, their subsidiaries, affiliates, stockholders, directors, officers, employees, assigns and agents, from and against any claims, suits, obligations, liabilities, damages, losses, judgments, injury, or expense (including attorneys’ fees and expenses) resulting or arising from a breach of any of the representations or covenants set forth in this Article 6, for all liabilities arising from IAE’s use of non-IAE repair procedures, parts and vendors pursuant to Section 1.2, and for all liabilities arising out of the breach of Customer’s obligations in Article 11.
7.    CHANGES
No modification of this Agreement will be binding unless agreed to in writing and signed by both Customer and IAE.
8.    TAXES AND OTHER CHARGES
[*]
9.    INVOICES AND PAYMENT
9.1    If, before completion of performance by IAE of this Agreement, or at any time thereafter, (a) Customer becomes unable or refuses to make payment to IAE in accordance with any of Customer’s obligations to IAE, (b) a receiver or trustee is appointed by a court of competent jurisdiction for any of Customer’s property, or (c) Customer becomes insolvent or makes an assignment for the benefit of creditors, or takes or attempts to take the benefit of any insolvency act, or any execution is issued pursuant to a judgment rendered against Customer, IAE may, at its option in any of such events and without prejudice to any of its other remedies, (i) immediately cease performance under this Agreement including performance of any Maintenance Services, (ii) retain possession of all goods and/or Equipment in the possession of IAE until IAE receives all payments due from Customer and/or (iii) terminate this Agreement by giving to Customer written notice of IAE’s intention so to do. IAE will thereupon be relieved of any further obligations to Customer, and Customer will reimburse IAE for its termination costs and expenses and a reasonable allowance for profit.
9.2    If IAE determines, since the date of execution of this Agreement, that there has been any material adverse change in the financial condition or business operation of Customer or any subsidiary which has a material adverse effect on the ability of Customer to perform its obligations pursuant to this Agreement, IAE may terminate or modify this Agreement in its sole discretion.
9.3    Invoices are due and payable, net cash, on the date specified on the relevant invoice (“Due Date”). So long as Customer makes payment [*], no interest will accrue on the invoice amount. If IAE does not receive payment of any amount owed by Customer within the grace period, IAE may charge interest on the overdue amount at the rate of one and [*] for each [*] or portion thereof (but not more than the maximum rate of interest allowed by applicable law), from the Due Date until the date on which IAE receives payment in full. Customer agrees that if it fails to pay when due any amount owed to IAE, Customer will also reimburse IAE for all costs that IAE incurs to collect such unpaid amount. If IAE determines that Customer’s financial condition has materially changed, or if Customer fails to pay to IAE when due any amount owed, IAE will have the right to specify alternative payment terms which will supersede the payment terms specified in this Agreement.
9.4    IAE may set off any amount that Customer owes IAE against any credits, deposits, or other amount that IAE’s majority member, or any of their subsidiaries or affiliates owes Customer. Any credits available to Customer under this Agreement shall expire [*] from the date such credit was earned, and upon expiration, any and all remaining unclaimed credits are null and void. For the purposes of this Agreement, a credit is earned on the date Customer is eligible to request the issuance of the credit and IAE becomes obligated to pay such credit. Unless stated otherwise, credits shall not be subject to escalation or interest.
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 49


10.    EXCUSABLE DELAYS
Customer will not hold IAE liable for any interruption or suspension in the provision of the goods, Equipment or Maintenance Services, or any delay or failure to perform under this Agreement when such interruption, suspension, delay or failure to perform under this Agreement results from, relates to or arises out of causes beyond IAE’s reasonable control, including without limitation (i) acts of God, acts of Government, fires, floods, epidemics, pandemics, quarantine restrictions, labor disputes, strikes, freight embargoes, riots, wars, the hostile acts of any person, acts of terrorism, compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it proves to be invalid, litigation, court orders, or other legal or regulatory actions or unusually severe weather, or any other event or circumstance beyond the reasonable control of IAE, (ii) a delay attributable to suppliers or Customer, or (iii) an event which interferes with the performance of IAE’s obligations.
11.    EXPORT
11.1    The Parties agree to comply with any and all applicable export, import, sanctions and U.S. anti-boycott laws, regulations, orders and authorizations that apply to their respective activities and obligations set forth in this Agreement (collectively “Export Laws”), including but not limited to the International Traffic in Arms Regulations (22 CFR 120130) (“ITAR”), the Export Administration Regulations (15 CFR 730 et seq.) (“EAR”) and any regulations and orders administered by the Treasury Department's Office of Foreign Assets Control Regulations (31 CFR Chapter V). Nothing in this Agreement shall be construed as requiring a Party to perform an obligation that is noncompliant with any Export Laws. Furthermore, any Party that receives any technology, commodity, technical data, software, goods and services (including products derived from or based on such technical data) information or any other item subject to any applicable Export Laws, shall adhere to and comply with those laws, regulations, orders and authorizations.
11.2    The Parties shall use best efforts to apply for, obtain, comply with and maintain all export, re-export, and transfer authorizations, including approvals, consents, licenses, agreements, registrations and other authorizations (collectively “Export Licenses”) that are required or may be required to perform the activities and obligations set forth in this Agreement. No ITAR regulated items, technical data, or defense services will be provided without obtaining the proper authorization or Export Licenses.
11.3    Prior to the transfer of any U.S. origin technical data, item or document, controlled by the EAR or ITAR, the transferring Party shall provide to the receiving Party the Export Control Classification Number (ECCN) or the ITAR category of such technical data and shall clearly indicate such on the technical data, item or document.
11.4    The Parties to this Agreement shall not knowingly or unknowingly divert or cause to be diverted, any commodities, technical data, software, goods and services (including products derived from or based on such technical data) subject to the Export Laws to any (i) person, (ii) entity, (iii) country or (iv) any entity located or incorporated in a country, that is on any denied party list or list of sanctioned countries, pursuant to either the Export Laws or any other applicable governing regulations.
11.5    If ITAR or EAR controlled technical data or items are transferred to a U.S. entity, then that entity must only allow access to that technical data or items by the following personnel: (i) U.S. citizens, or (ii) U.S. permanent resident alien, or (iii) who have U.S. protected individual status as defined by 8 USC 1324b(a)(3), or (iv) who are working under a valid U.S. export authorization. Upon request of the transferring Party, the receiving Party shall provide appropriate documentation evidencing the aforementioned requirements.
11.6    The Parties shall not export, re-export, transfer, disclose or otherwise provide physical or electronic access to technical data controlled under the Export Laws to any person (including unauthorized third-party information technology (“IT”) service providers) not authorized to receive said technical data under existing Export Laws and/or Export Licenses. 
11.7    Neither Party shall modify or divert the other Party’s technical data controlled by the Export Laws to any military application, unless (i) such Party receives advance, written authorization from the other Party and (ii) such modification or diversion is done in compliance with all applicable Export Laws. Neither Party shall modify or divert the other Party’s technical data controlled by the Export Laws to any military application or other end-use prohibited by applicable Export Laws.
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 50


11.8    Customer represents that it is aware that all sales and distribution of IAE Products, which include all tangible items and related software, technology or services (together “Products and Services”), may constitute an export, re-export, or retransfer of such Products and Services. Customer certifies that such sales and distribution will be conducted in accordance with applicable Export Laws, which may require prior approval and/or prohibit transactions with sanctioned countries/regions or designated parties/entities/individuals. Customer shall not sell, transfer, export, or re-export the Products and Services, or provide any warranty, repair, replacement, or guarantee services for end-use in Cuba, Iran, North Korea, Sudan and/or Syria.
11.9    Each Party agrees to indemnify and hold the other Party harmless against any liability arising from any breach of its obligations under this Article 11.
12.    Press Release
Either Party may issue a press release announcing that Customer has selected IAE or its designated affiliate to supply the goods and/or perform the Maintenance Services described in this Agreement. Before any press release is announced, the announcing party must receive prior written approval, which shall not be unreasonably withheld, to announce such press release from the other party.
13.    CONFIDENTIALITY
This Agreement and any technical information provided in connection with it are confidential and proprietary to IAE and Customer. Each Party agrees to limit disclosures of such confidential information only to persons who have a need to know within their own organizations, outside auditors, outside advisors, government agencies and third parties that are suppliers of IAE or participate with IAE in the manufacture, sale and support of IAE engines and propulsion systems. Should either Party be subject to a legal action or proceeding or a requirement under applicable government regulations to disclose such confidential information (“Obligated Party”), the Obligated Party shall forthwith notify the other Party, and upon the request of the other Party, shall cooperate with the other Party in contesting such disclosure.
14.    ASSIGNMENT
Neither Party may assign its rights or delegate its obligations under this Agreement, in whole or in part, without the prior written consent of the other Party, except that: IAE may, without recourse, assign its rights and/or delegate its obligations under this Agreement to any subsidiary or affiliate of IAE’s majority member, or in connection with the merger, consolidation, reorganization, or voluntary sale or transfer of its assets. Any assignment or delegation made in contravention of this provision will be invalid.
15.     GOVERNING LAW and DISPUTE RESOLUTION
15.1    This Agreement (including any dispute relating to its existence, validity or termination) is governed by and construed and enforced in accordance with the substantive laws of the State of New York, United States of America, without regard to principles of conflicts of law. The United Nations Convention of Contracts for the International Sale of Goods shall not apply.
15.2    [*]
15.3    [*]
15.4    Each Party shall comply with all applicable U.S. laws and regulations and all obligations of both Parties are subject to compliance with such laws and regulations.
15.5    The Parties agree all controversies, disputes, claims, differences or matters that arise from this Agreement and any arbitration that arise thereof are subject to the confidentiality provisions set forth in Article 13 of these terms and conditions.
16.    SURVIVABILITY
Notwithstanding anything in this Agreement to the contrary, the following provisions shall survive the expiration or early termination of this Agreement: Article 4 (Warranties, Remedies, and Limitations); [*]; Article 6 (Representations and Covenants); Article 8 (Taxes and Other Charges); Article 9 (Invoices and Payment); Article 11 (Export); Article 13 (Confidentiality); Article 15 (Governing Law and Dispute Resolution);
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 51


and this Article 16 (Survivability). The termination or expiration of this Agreement shall not relieve either Party hereto of any obligation or liability accruing prior to the effective date of such termination or expiration. All other rights and obligations of the Parties, unless expressly provided otherwise, will cease upon termination or expiration of this Agreement.
17.    DEFINITIONS AND MISCELLANEOUS PROVISIONS
In these terms and conditions, “Agreement” means the agreement or order to which these terms and conditions are appended or in which they are incorporated by reference. Terms and conditions on Customer’s purchase orders will have no effect.
“Customer” means that entity set forth in the first paragraph of this Agreement to which these terms and conditions are appended.
“Party” shall mean either IAE or Customer, collectively, the Parties.
Captions used in this Agreement are for convenience of reference only and will not be interpreted as in any way limiting or extending the meaning of the provisions to which such captions may refer. If any provision of this Agreement is for any reason held invalid, such invalidity will not affect the validity of the remainder of the terms of this Agreement. No Party will be deemed to have waived any of its rights under this Agreement except by a written waiver signed by such Party’s authorized representative. Failure to complain of any action or inaction by the other Party or to declare the other Party in default under this Agreement, regardless of the duration of such failure, will not constitute a waiver of any of the rights of the non-defaulting Party. This Agreement constitutes the full agreement of the Parties.
NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 52



ATTACHMENT 11
[*]


NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 53



ATTACHMENT 12
SERVICE BULLETIN LIST
[*]

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 54



ATTACHMENT 13
WILLIS affiliates
WEST Engine Acquisition LLC, a limited liability company organized and existing under the laws of the State of Delaware
Willis Engine Structured Trust III, a statutory trust organized and existing under the laws of the State of Delaware
Willis Engine Structured Trust IV, a statutory trust organized and existing under the laws of the State of Delaware
Willis Engine Structured Trust V, a statutory trust organized and existing under the laws of the State of Delaware
Willis Mitsui & Co Engine Support Limited, a limited company organized and existing under the laws of Ireland
CASC Willis Lease Finance Company Limited, a Sino-foreign equity joint venture organized and existing under the laws of China (Shanghai) Pilot Free Trade Zone, People’s Republic of China
Wells Fargo Trust Company, N.A., a national banking association organized and existing under the laws of the United States of America, U.S. Bank National Association, a national banking association organized and existing under the laws of the United States of America, or Bank of Utah, a corporation organized and existing under the laws of the State of Utah, in each case, not in its individual capacity but solely as Owner Trustee for the benefit of any of the foregoing.


NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 55



ATTACHMENT 14
LIFE LIMITED PARTS - SHOP VISIT REQUIREMENTS FOR REPLACED PARTS
[*]

NOTE: Certain Confidential Information in this document (indicated by [*]) has been omitted because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
Pratt & Whitney Proprietary - Subject to the Restrictions on the Front Page
Willis [*] FPA (2020-NOV-24) Final                                    Page 56

Exhibit 21.1

WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
List of Subsidiaries
Subsidiary State or Jurisdiction of Incorporation
WEST Engine Funding LLC
Delaware
Willis Lease (Ireland) Limited
Rep. of Ireland
WLFC (Ireland) Limited
Rep. of Ireland
WLFC Funding (Ireland) Limited
Rep. of Ireland
Willis Lease Finance (Ireland) Limited
Rep. of Ireland
Willis Lease France
France
Willis Lease Finance (China) Limited People’s Republic of China
Willis Engine Structured Trust V Delaware
WEST Engine Acquisition LLC
Delaware
Facility Engine Acquisition LLC
Delaware
WEST V Engines (Ireland) Limited Rep. of Ireland
Willis Aeronautical Services, Inc.
Delaware
Willis Lease Singapore Pte. Ltd.
Singapore
Willis Asset Management Limited
United Kingdom
Willis Engine Structured Trust III
Delaware
Coconut Creek Aviation Assets LLC
Delaware
Willis Engine Structured Trust IV
Delaware
WEST III Engines (Ireland) Limited
Rep. of Ireland
WEST IV Engines (Ireland) Limited
Rep. of Ireland
WEST V France France
WEST III France
France
WEST IV France
France
Willis Lease Marine LLC
Cayman Islands



Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Willis Lease Finance Corporation:
We consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-226695, 333-221463, 333-219572, 333-170049, 333-142914 and 333-118127) of Willis Lease Finance Corporation (the “Company”) of our report dated March 15, 2021, with respect to the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, redeemable preferred stock and shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes and financial statement Schedule II, Valuation Accounts, and the effectiveness of internal control over financial reporting as of December 31, 2020, which report appears in the December 31, 2020 annual report on Form 10-K of the Company.
/s/ KPMG LLP
Fort Lauderdale, Florida
March 15, 2021



Exhibit 31.1
CERTIFICATIONS
I, Charles F. Willis IV, certify that:
1.I have reviewed this report on Form 10-K of Willis Lease Finance Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 15, 2021 /s/ Charles F. Willis, IV
Charles F. Willis, IV
Chief Executive Officer
Chairman of the Board


Exhibit 31.2
CERTIFICATIONS
I, Scott B. Flaherty, certify that:
1.I have reviewed this report on Form 10-K of Willis Lease Finance Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 15, 2021 /s/ Scott B. Flaherty
Scott B. Flaherty
Chief Financial Officer


Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Each of the undersigned hereby certifies, in his or her capacity as an officer of Willis Lease Finance Corporation (the “Company”), for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his or her knowledge:
the Annual Report of the Company on Form 10-K for the year ended December 31, 2020 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
the information contained in such report fairly presents, in all material respects, the financial condition and results of operation of the Company.
Date: March 15, 2021
/s/ Charles F. Willis, IV
Charles F. Willis, IV
Chairman of the Board and Chief Executive Officer
/s/ Scott B. Flaherty
Scott B. Flaherty
Chief Financial Officer