Willis Lease Finance Corp 10-Q for FY2026 Q3
Willis Lease Finance Corp (WLFC)
10-Q
2026-11-03
For: 2026-09-30
View Original
Added on
November 03, 2026
About this 10-Q
Willis Lease Finance Corp filed this 10-Q on November 3, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Willis reported 18.3% total revenue growth for the nine months ended September 30, 2026, while net income attributable to common shareholders fell to 62,635 from 97,316 and Adjusted EBITDA declined to 345,469 from 354,396 (in thousands). AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $246.32M
- up 34.3% from $183.39M a year earlier
- Net income
- $11.67M
- down 52.0% from net income of $24.32M a year earlier
- Diluted EPS
- $0.47
- down 56.5% from $1.08 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________________
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
Commission File Number: 001-15369
______________________________________________________________________
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |||||||
| (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 | ||||||||||||
______________________________________________________________________
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 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 | ☐ | ☒ | |||||||||
| 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of the registrant’s Common Stock outstanding as of October 30, 2026 was 21,162,209 .
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
INDEX
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain forward-looking statements, including, without limitation, statements concerning the conditions in our industry, our operations, our economic performance and financial condition, including, in particular, statements relating to our business, operations, growth strategy and service development efforts, the potential impact of changes in interest rates or inflation, as well as the impact of new or increased tariffs on the Company’s business, operating results and financial condition, and the execution of our quarterly dividend and stock repurchase program. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements so long as such information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those expressed in or projected by forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words “may,” “might,” “should,” “estimate,” “project,” “plan,” “anticipate,” “expect,” “intend,” “outlook,” “believe,” “forecast” and other similar expressions are intended to identify forward-looking statements and information. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. These risks and uncertainties include, without limitation, those in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on March 10, 2026, as amended by our Amendment to the Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 30, 2026 (together, the “2025 Form 10-K”), this quarterly report on Form 10-Q for the three and nine months ended September 30, 2026, and our other reports filed with the SEC. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Reference is also made to such risks and uncertainties detailed from time to time in our other filings with the SEC.
3
PART I — FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
| September 30, 2026 | December 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
Equipment held for operating lease, less accumulated depreciation of $ | |||||||||||
| Maintenance rights | |||||||||||
| Equipment held for sale | |||||||||||
Receivables, net of allowances of $ | |||||||||||
| Spare parts inventory | |||||||||||
| Investments | |||||||||||
Property, equipment & furnishings, less accumulated depreciation of $ | |||||||||||
| Intangible assets, net | |||||||||||
Notes receivable, net of allowances of $ | |||||||||||
Investments in sales-type leases, net of allowances of $ | |||||||||||
| Due from affiliates | |||||||||||
| Other assets | |||||||||||
| Total assets (1) | $ | $ | |||||||||
| LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY | |||||||||||
| Liabilities: | |||||||||||
| Accounts payable and accrued expenses | $ | $ | |||||||||
| Deferred income taxes | |||||||||||
| Debt obligations | |||||||||||
| Maintenance reserves | |||||||||||
| Security deposits | |||||||||||
| Unearned revenue | |||||||||||
| Total liabilities (2) | |||||||||||
Redeemable preferred stock ($ | |||||||||||
| Shareholders’ equity: | |||||||||||
Common stock ($ | |||||||||||
| Paid-in capital in excess of par | |||||||||||
| Retained earnings | |||||||||||
Accumulated other comprehensive income (loss), net of income tax expense (benefit) of $ | ( | ||||||||||
Total Willis Lease Finance Corporation (“WLFC”) shareholders’ equity | |||||||||||
4
| Noncontrolling interests | |||||||||||
Total equity | |||||||||||
| Total liabilities, redeemable preferred stock and equity | $ | $ | |||||||||
_____________________________
(1)Total assets at September 30, 2026 and December 31, 2025, include the following assets of variable interest entities (“VIEs”) that can only be used to settle the liabilities of the VIEs: Restricted cash $122,610 and $530,500 ; Equipment $1,630,780 and $1,892,356 ; Maintenance rights $17,411 and $19,502 ; Notes receivable $65,549 and $139,538 ; Investments in sales-type leases $0 and $15,774 ; and Other assets $6,917 and $9,759 (each respectively).
(2)Total liabilities at September 30, 2026 and December 31, 2025, include the following liabilities of VIEs for which the VIEs’ creditors do not have recourse to Willis Lease Finance Corporation: Debt obligations $1,477,749 and $1,933,119 , respectively. Further, refer to Note 6 of the Condensed Consolidated Financial Statements for details of the Company’s commitments and contingencies.
See accompanying notes to the unaudited condensed consolidated financial statements.
5
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| REVENUE | |||||||||||||||||||||||
| Lease rent revenue | $ | $ | $ | $ | |||||||||||||||||||
| Maintenance reserve revenue | |||||||||||||||||||||||
| Spare parts and equipment sales | |||||||||||||||||||||||
| Interest revenue | |||||||||||||||||||||||
| Gain on sale of leased equipment | |||||||||||||||||||||||
| Gain on sale of financial assets | |||||||||||||||||||||||
| Maintenance services revenue | |||||||||||||||||||||||
| Management and advisory fees | |||||||||||||||||||||||
| Other revenue | |||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||||||||
| Cost of spare parts and equipment sales | |||||||||||||||||||||||
| Cost of maintenance services | |||||||||||||||||||||||
| Write-down of equipment | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Technical expense | |||||||||||||||||||||||
| Net finance costs: | |||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Loss on debt extinguishment | |||||||||||||||||||||||
| Total net finance costs | |||||||||||||||||||||||
| Total expenses | |||||||||||||||||||||||
| Income from operations | |||||||||||||||||||||||
| Gain on sale of business | |||||||||||||||||||||||
| Income from investments | |||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | ( | ||||||||||||||||||||||
| Net income attributable to WLFC | |||||||||||||||||||||||
| Preferred stock dividends | |||||||||||||||||||||||
| Accretion of preferred stock issuance costs | |||||||||||||||||||||||
| Net income attributable to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
| Basic weighted average income per common share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted weighted average income per common share | $ | $ | $ | $ | |||||||||||||||||||
6
| Basic weighted average common shares outstanding | |||||||||||||||||||||||
| Diluted weighted average common shares outstanding | |||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
7
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Currency translation adjustment | |||||||||||||||||||||||
| Unrealized gain (loss) on derivative instruments | ( | ( | |||||||||||||||||||||
| Reclassification of loss (gain) on derivative instruments to interest expense | ( | ||||||||||||||||||||||
| Share of unrealized gain (loss) on derivative instruments at equity method investees | ( | ( | |||||||||||||||||||||
| Net gain (loss) recognized in other comprehensive income | ( | ( | |||||||||||||||||||||
| Tax expense (benefit) related to items of other comprehensive income | ( | ( | |||||||||||||||||||||
| Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Comprehensive loss (income) attributable to non-controlling interests | ( | ||||||||||||||||||||||
| Comprehensive income attributable to WLFC | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
8
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Redeemable Preferred Stock and Equity
Three months ended September 30, 2026 and 2025
(In thousands)
(Unaudited)
| Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redeemable Preferred Stock | Common Stock | Paid in Capital in Excess of par | Retained Earnings | Accumulated Other Comprehensive Income | Total WLFC Shareholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at June 30, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributed to WLFC | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributed to noncontrolling interests | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital contributions | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recallable return of capital | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net unrealized gain from currency translation adjustment, net of tax expense of $ | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net unrealized gain from derivative instruments, net of tax expense of $ | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net unrealized gain from derivative instruments | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued under stock compensation plans | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of restricted stock in satisfaction of withholding tax | — | — | ( | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense, net of forfeitures | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of preferred stock | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accretion of preferred shares issuance costs | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividends paid ($ | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends ($ | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at September 30, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
9
| Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Redeemable Preferred Stock | Common Stock | Paid in Capital in Excess of par | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
| Balances at June 30, 2025 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Net unrealized gain from currency translation adjustment, net of tax expense of $ | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Net unrealized loss from derivative instruments, net of tax benefit of $ | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Net realized loss from derivative instruments, net of tax benefit of $ | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued under stock compensation plans | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of restricted stock in satisfaction of withholding tax | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense, net of forfeitures | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Accretion of preferred shares issuance costs | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividends paid ($ | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends ($ | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Balances at September 30, 2025 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
10
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Redeemable Preferred Stock and Equity
Nine months ended September 30, 2026 and 2025
(In thousands)
(Unaudited)
| Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redeemable Preferred Stock | Common Stock | Paid in Capital in Excess of par | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total WLFC Shareholders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2025 | $ | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to WLFC | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital contributions | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net unrealized gain from currency translation adjustment, net of tax expense of $ | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net unrealized gain from derivative instruments, net of tax expense of $ | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized gain from derivative instruments, net of tax expense of $ | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net unrealized gain from derivative instruments | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued under stock compensation plans | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of restricted stock in satisfaction of withholding tax | — | — | ( | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense, net of forfeitures | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Preferred Stock | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accretion of preferred shares issuance costs | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividends paid ($ | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends ($ | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at September 30, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11
| Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Redeemable Preferred Stock | Common Stock | Paid in Capital in Excess of par | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2024 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Net unrealized gain from currency translation adjustment, net of tax expense of $ | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Net unrealized loss from derivative instruments, net of tax benefit of $ | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Net realized loss from derivative instruments, net of tax benefit of $ | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued under stock compensation plans | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of restricted stock in satisfaction of withholding tax | — | — | ( | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense, net of forfeitures | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Accretion of preferred shares issuance costs | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividends paid ($ | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends ($ | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Balances at September 30, 2025 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
12
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Nine months ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization expense | |||||||||||
| Gain on sale of leased equipment | ( | ( | |||||||||
| Stock-based compensation expense | |||||||||||
| Income from investments | ( | ( | |||||||||
| Loss on debt extinguishment | |||||||||||
| Write-down of equipment | |||||||||||
| Accretion of deferred costs and note discounts | |||||||||||
| Amortization of contract asset | |||||||||||
| Payments received on sales-type leases | |||||||||||
| Allowances and provisions | |||||||||||
| (Gain) loss on derivative instruments | ( | ||||||||||
| Gain on sale of financial assets | ( | ( | |||||||||
| Loss on disposal of property, equipment and furnishings | |||||||||||
| Gain on sale of business | ( | ||||||||||
| Deferred income taxes | |||||||||||
| Changes in assets and liabilities: | |||||||||||
| Receivables | ( | ( | |||||||||
| Distributions received from joint ventures | |||||||||||
| Inventory | |||||||||||
| Other assets | ( | ( | |||||||||
| Due from affiliates | ( | ||||||||||
| Accounts payable and accrued expenses | ( | ||||||||||
| Maintenance reserves | |||||||||||
| Security deposits | |||||||||||
| Unearned revenue | ( | ( | |||||||||
| Due to affiliates | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of equipment held for operating lease and for sale | ( | ( | |||||||||
| Proceeds from sale of equipment (net of selling expenses) | |||||||||||
| Proceeds from sale of notes receivable (net of selling expenses) | |||||||||||
| Issuance of notes receivable | ( | ||||||||||
| Purchase of investments and contributions to joint ventures | ( | ( | |||||||||
| Proceeds from sale of investments in sales- type leases | |||||||||||
| Payments received on notes receivable | |||||||||||
| Purchase of property, equipment and furnishings | ( | ( | |||||||||
| Proceeds from sale of business | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Principal payments on debt obligations | ( | ( | |||||||||
| Proceeds from debt obligations | |||||||||||
| Proceeds from issuance of preferred stock, net | |||||||||||
| Cancellation of restricted stock units in satisfaction of withholding tax | ( | ( | |||||||||
| Debt issuance costs | ( | ( | |||||||||
| Common stock cash dividends paid | ( | ( | |||||||||
| Debt extinguishment payments | ( | ||||||||||
| Preferred stock dividends | ( | ( | |||||||||
| Contributions from non-controlling interest holders | |||||||||||
| Proceeds from shares issued under stock compensation plans | |||||||||||
13
| Distributions to non-controlling interest holders | ( | ||||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| (Decrease) increase in cash, cash equivalents and restricted cash | ( | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Net cash paid for: | |||||||||||
| Interest | $ | $ | |||||||||
| Income Taxes | $ | $ | |||||||||
| Supplemental disclosures of non-cash activities: | |||||||||||
| Transfers from Equipment held for operating lease to Equipment held for sale | $ | $ | |||||||||
| Transfers from Equipment held for sale to Equipment held for operating lease | $ | $ | |||||||||
| Transfers from Equipment held for operating lease to Spare parts inventory | $ | $ | |||||||||
| Transfers from Notes receivable to Equipment held for operating lease | $ | $ | |||||||||
| Contributions to joint ventures | $ | $ | |||||||||
| Proceeds from sale of business | $ | $ | |||||||||
| Additions to Equipment held for operating lease (1) | $ | $ | |||||||||
| Transfers from Spare parts inventory to Equipment held for sale | $ | $ | |||||||||
| Transfers from Notes receivable to Equipment held for sale | $ | $ | |||||||||
| Accretion of preferred stock issuance costs | $ | $ | |||||||||
_____________________________
1.During the nine months ended September 30, 2025, the Company engaged in an exchange transaction with a third party in which the Company sold aircraft engines in exchange for aircraft engines. This transaction was accounted for under Accounting Standards Codification (“ASC”) 805 and ASC 845 and resulted in $8.1 million in non-cash additions to equipment held for operating lease for the associated total gain.
See accompanying notes to the unaudited condensed consolidated financial statements.
14
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2026
(Unaudited)
Unless the context requires otherwise, references to the “Company,” “WLFC,” “we,” “us” or “our” in this Quarterly Report on Form 10-Q refer to Willis Lease Finance Corporation and its subsidiaries.
1. Summary of Significant Accounting Policies
The significant accounting policies of the Company were described in Note 1 to the Audited Consolidated Financial Statements included in the Company’s 2025 Form 10-K. There have been no significant changes in the Company’s significant accounting policies for the nine months ended September 30, 2026.
In March and April 2026, the Company commenced operations as general partner of two investment fund partnerships. The Company accounts for its investments in these investment fund partnerships under the equity method of accounting and recognizes management and advisory fees in accordance with its existing revenue recognition policies.
(a) Basis of Presentation
The accompanying Unaudited Condensed Consolidated Financial Statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), consistent in all material respects with those applied in the 2025 Form 10-K, for interim financial information and in accordance with the rules and regulations of the SEC. Therefore, they do not include all information and footnotes normally included in annual consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the 2025 Form 10-K. In the opinion of management, the Unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting principally of normal recurring accruals) necessary for a fair presentation of the Condensed Consolidated Balance Sheets, Statements of Income, Statements of Comprehensive Income, Statements of Redeemable Preferred Stock and Equity, and Statements of Cash Flows for such interim periods presented. Operating results for interim periods are not necessarily indicative of the results that can be expected for a full year.
On July 17, 2026, the Company effected a three -for-one forward common stock split through an amendment to its Certificate of Incorporation. Common stock trading on a split-adjusted basis commenced on July 21, 2026. All common share and per share amounts, as well as common stock and additional paid-in capital balances, presented in these Condensed Consolidated Financial Statements have been retroactively adjusted to reflect the stock split.
On September 30, 2026, the Company effected a three -for-one forward stock split of its Series A and Series B Preferred Stock. Except as otherwise indicated, all preferred stock share and per-share amounts presented in these Condensed Consolidated Financial Statements have been retroactively adjusted to reflect the stock split.
Certain reclassifications have been made to the prior year presentation to conform to the current year presentation. These reclassifications had no effect on the reported total revenue, income from operations, or net income. The following is a summary of the changes to the presentation in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2025:
•Management and advisory fees primarily consist of fees earned from the Company’s investment fund partnerships in its role as general partner and fees related to servicing the Willis Mitsui & Company Engine Support Limited (“WMES”) and third-party lease portfolios, including ongoing management and transactional services such as marketing and procurement. In prior periods, servicing fees were included in “Other revenue.” For the three and nine months ended September 30, 2025, $1.9 6.4
In accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. In preparing these Unaudited Condensed Consolidated Financial Statements, management has made its best estimates and judgments of certain amounts included therein, giving due consideration to materiality. These estimates and judgments are based on historical experience and other assumptions that management believes are reasonable and take into account the economic implications of factors such as changes in interest rates, inflation, and new or increased tariffs on the Company’s critical and significant accounting estimates.
15
The application of these accounting policies requires the use of judgment and assumptions regarding matters that are inherently uncertain; accordingly, actual results may differ materially from those estimates. Significant estimates reflected in the accompanying Unaudited Condensed Consolidated Financial Statements include, among others, those related to intangible assets, long-lived assets, equipment held for sale, allowances for doubtful accounts and credit losses, inventory, deferred in-substance fixed payment use fees included in “Unearned revenue” on the Condensed Consolidated Balance Sheets, the Company’s share of earnings or losses from equity method investments based on net asset value, which reflects changes in the fair value of the underlying investments, and income taxes.
Given the uncertainty surrounding future changes in interest rates, inflation, potential new or increased tariffs, and broader macroeconomic and geopolitical conditions, the Company will continue to evaluate the nature and extent of such impacts on its business, results of operations, and financial condition.
(b) Principles of Consolidation
The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries, as well as VIEs, for which the Company is the primary beneficiary, in accordance with consolidation guidance. The Company evaluates all entities in which it has an economic interest to determine whether such entities are VIEs or voting interest entities (“VOEs”).
For entities determined to be VIEs, the Company consolidates the entity if it has a controlling financial interest, defined as the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entity. For entities determined to be VOEs, the Company consolidates the entity when it has a controlling financial interest, generally evidenced by ownership of a majority of the voting interests. Intercompany transactions and balances have been eliminated in consolidation.
(c) Risks and Uncertainties
The Company continues to monitor global macroeconomic and geopolitical conditions, including changes in interest rates, inflation, tariffs, ongoing conflicts, and the price of jet fuel, which may contribute to market volatility and potential disruptions to global aviation operations.
The duration and scope of these conflicts, including the potential for further regional escalation, remain uncertain and could adversely affect the global economy, financial markets, and our customers, which in turn could impact the Company. The ultimate extent of any such impacts will depend on future developments that are highly uncertain and not reasonably estimable at this time, and such impacts could persist for an extended period.
Other than what has been reflected in the Unaudited Condensed Consolidated Financial Statements, the Company is not aware of any specific event or circumstance 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 Unaudited Condensed Consolidated Financial Statements.
(d) Recent Accounting Pronouncements
Recent Accounting Pronouncements Adopted by the Company
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” The ASU provides public entities with a practical expedient when estimating expected credit losses for accounts receivable and contract assets. The practical expedient assumes that current conditions of the balance sheet do not change for the remaining life of the asset. The Company adopted ASU 2025-05 as of January 1, 2026 on a prospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
Recent Accounting Pronouncements To Be Adopted by the Company
16
In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-04) Disaggregation of Income Statement Expenses.” The ASU requires public entities, on both an interim and annual basis, to disclose additional disaggregated information about specific expense categories in the notes to the financial statements. The ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company expects to adopt this accounting standard update for the year ended December 31, 2027 and is currently evaluating the potential effects on the consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-10, “Accounting for Government Grants Received by Business Entities.” The ASU provides guidance on the recognition, measurement, presentation, and disclosure of government grants. The ASU is effective for fiscal years beginning after December 15, 2028, with early adoption permitted. The Company is currently evaluating the impact of adopting this new pronouncement.
In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements.” The amendments in this ASU are effective for interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting this new pronouncement.
In May 2026, the FASB issued ASU 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818).” The ASU establishes new guidance for the accounting and disclosure of environmental credits and environmental credit obligations. The ASU is effective for public business entities for fiscal years beginning after December 15, 2027, including interim reporting periods within those fiscal years, with early adoption permitted. Based on the Company’s current operations, the Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements or related disclosures.
(e) Government Grant Income
Historically, there was no specific guidance in GAAP that addresses the recognition and measurement of government assistance received by a business entity. In the absence of authoritative GAAP guidance, the Company considered the application of other authoritative accounting guidance by analogy and concluded that the guidance outlined in International Accounting Standard 20 – Accounting for Government Grants and Disclosures of Government Assistance (“IAS 20”) was the most appropriate. Under IAS 20, grant income is recognized to the extent that there is reasonable assurance that the Company will comply with the conditions attached to the grant, and the grant will be received.
During the nine months ended September 30, 2026, the Company received approximately $1.0 million in government grant proceeds related to its hangar construction project at Teesside International Airport. The Company was awarded the grant in May 2025, the primary intent of which is job creation. As of September 30, 2026, all proceeds received were recorded as a liability in “Accounts payable and accrued expenses” on the Condensed Consolidated Balance Sheets, as the associated conditions for recognition had not yet been met. During the year ended December 31, 2025, the Company received approximately $1.7 million in grant proceeds related to the same project. As of September 30, 2026, approximately $1.5 million of such proceeds remained recorded as a liability for the same reason. These amounts will be recognized as a reduction of personnel expenses within “General and administrative expenses” as qualifying jobs are created.
Additionally, with respect to the Company’s sustainable aviation fuel project, which was suspended in December 2025, the Company recognized approximately $1.6 million of government grant income during the nine months ended September 30, 2026, recorded as a reduction of “General and administrative expenses” in the Condensed Consolidated Statements of Income. The timing of recognition was based on the terms of the grant agreement and communications with the grantor.
2. Equipment Held for Operating Lease and Notes Receivable
As of September 30, 2026, the Company had $3,024.4 million of equipment held in our operating lease portfolio, $128.6 million of notes receivable, and $146.5 million of maintenance rights, which represented 341 engines, 31 aircraft, one marine vessel, and other leased parts and equipment. As of December 31, 2025, the Company had $2,801.7 million of equipment held in our operating lease portfolio, $139.9 million of notes receivable, $30.6 million of maintenance rights, and $16.6 million of investments in sales-type leases, which represented 363 engines, 20 aircraft, one marine vessel and other leased parts and equipment.
Acquisition of WNG Aircraft Portfolio
17
On August 24, 2026, Willis Dallas Ltd., a wholly owned subsidiary of the Company, completed the acquisition of the entire issued share capital of WNG II Aircraft Leasing (Cayman) Ltd. and 100 % of the limited liability company interests of WNG Aircraft Management 3, LLC (together with their subsidiaries, the “Target Companies”), pursuant to a Purchase and Sale Agreement dated July 10, 2026, as amended by Amendment No. 1 dated August 24, 2026. The Target Companies hold a portfolio of twelve commercial aircraft and thirteen spare aircraft engines. At closing, the adjusted purchase price was approximately $262.9 million, which reflected downward adjustments from the $379.3 million base purchase price for rent, maintenance reserves, security deposits and other revenue received after the agreed economic closing date. Of the purchase price, $1.5 million is being held back for nine months to cover pre-closing leakage, and the purchase price remains subject to a post-closing true-up. The Company intends to allocate ten of the acquired engines and six of the acquired aircraft to subsidiaries of joint ventures of, or investment vehicles managed by, the Company. The Company accounted for the WNG Acquisition as an asset acquisition.
The following table disaggregates equipment held for operating lease by asset class (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Gross Value | Accumulated Depreciation | Net Book Value | Gross Value | Accumulated Depreciation | Net Book Value | ||||||||||||||||||||||||||||||
| Engines and related equipment | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Aircraft and airframes | ( | ( | |||||||||||||||||||||||||||||||||
| Marine vessel | ( | ( | |||||||||||||||||||||||||||||||||
| $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Notes Receivable and Investments in Sales-Type Leases
During the three months ended September 30, 2026 and 2025, the Company recorded interest revenue related to the notes receivable and investments in sales-type leases of $2.6 million and $3.4 million, respectively, and $6.6 million and $10.9 million during the nine months ended September 30, 2026 and 2025, respectively. During the nine months ended September 30, 2026, certain of these assets were sold to the Company’s unconsolidated investment fund partnership, for which the Company recognizes its share of earnings under the equity method. See Note 3 “Investments.” The effective interest rates on the Company’s notes receivable and investments in sales-type leases ranged from 7.6 % to 12.2 % as of September 30, 2026 and 6.0 % to 12.2 % as of September 30, 2025.
3. Investments
Joint Ventures
In 2011, the Company entered into an agreement with Mitsui & Co., Ltd. to form a joint venture, WMES, a Dublin-based Irish limited company that acquires and leases jet engines. Each partner holds a 50 % interest, and the Company uses the equity method in recording investment activity. As of September 30, 2026, WMES owned a lease portfolio of 77 engines and seven aircraft, and other parts and equipment with a net book value of $823.0 million.
In 2014, the Company entered into an agreement with China Aviation Supplies Import & Export Corporation (“CASC”) to form a joint venture, CASC Willis Lease Company Limited (“CASC Willis”), a Shanghai-based Chinese limited company that acquires and leases jet engines to Chinese airlines. Each partner holds a 50 % interest, and the Company uses the equity method in recording investment activity. As of September 30, 2026, CASC Willis owned a lease portfolio of six engines with a net book value of $51.8 million.
In March 2025, the Company entered into an agreement with independent MRO (Maintenance, Repair and Overhaul) provider, Global Engine Maintenance, to form Willis Global Engine Testing (“WGET”), a joint venture established to develop an engine test facility in West Palm Beach, Florida. The Company has a 70 % membership interest in WGET; however, WGET is a VIE for which the Company is not the primary beneficiary, as decision-making authority over the activities that most significantly impact economic performance is shared between the partners. Accordingly, WGET is not consolidated, and the Company uses the equity method in recording investment activity. The Company’s maximum exposure to loss is limited to its investment of $4.6 million. In 2025, WGET entered into a contract for the design of the engine test facility. The Company anticipates its portion of the remaining committed amount, which will be funded through future contributions, to be approximately $17.7 million.
The following table presents a roll forward of the Company’s investments in joint ventures:
18
| (in thousands) | ||||||||
| Investments in joint ventures as of December 31, 2025 | $ | |||||||
| Income from joint ventures | ||||||||
| Foreign currency translation adjustment | ||||||||
| Other comprehensive gain from joint ventures | ||||||||
| Contributions | ||||||||
| Distributions | ( | |||||||
| Investments in joint ventures as of September 30, 2026 | $ | |||||||
As of September 30, 2026 and as of December 31, 2025, the currency translation adjustment balance was $1.0 million and $1.4 million, respectively.
“Management and advisory fees” on the Condensed Consolidated Statements of Income includes management fees earned of $2.7 million and $1.0 million during the three months ended September 30, 2026 and 2025, respectively, and $6.6 million and $4.0 million during the nine months ended September 30, 2026 and 2025, respectively, related to the servicing of engines for the WMES lease portfolio. Additionally, “Management and advisory fees” on the Condensed Consolidated Statements of Income includes management fees earned of $30 thousand and $0.2 million for the three and nine months ended September 30, 2026, respectively, related to a new servicing agreement for the CASC Willis portfolio. No such fees were recognized during the corresponding periods in 2025.
During the nine months ended September 30, 2026, the Company sold six engines to WMES for a total of $59.7 million, less economic closing adjustments, which resulted in a total gain of $16.2 million for the Company. Additionally, during the nine months ended September 30, 2026, the Company sold five aircraft that were acquired in connection with the WNG Acquisition to WMES for $100.8 million, less economic closing adjustments, which resulted in a trading profit of $1.7 million for the Company. During the nine months ended September 30, 2025, the Company sold three engines and one airframe to WMES for a total of $32.2 million, less economic closing adjustments, which resulted in a total gain of $1.6 million for the Company. Additionally, during the nine months ended September 30, 2025, the Company sold one engine to WMES for $21.1 million, less economic closing adjustments, which resulted in a trading profit of $1.4 million for the Company.
During the nine months ended September 30, 2026, the Company did no t purchase any engines from WMES. During the nine months ended September 30, 2025, the Company purchased an engine from WMES for $7.2 million.
During the nine months ended September 30, 2026, the Company did no t purchase or sell any engines to CASC Willis. During the nine months ended September 30, 2025, the Company sold two engines to CASC Willis for $13.6 million, which resulted in a total gain of $1.5 million for the Company.
As of September 30, 2026, the Company subleased two WMES engines to a third party, with WMES as the head lessor. One engine is subject to a lease agreement through December 2027, and the other continues on a month-to-month basis. As of September 30, 2026, the ROU asset and lease liability balances associated with the lease ending December 2027 were $2.1 0.8 million and $0.7 million, respectively, under these leases as of September 30, 2025. The ROU asset and lease liability balances are included in Other assets and Accounts payable and accrued expenses, respectively, on the Condensed Consolidated Balance Sheets.
During the nine months ended September 30, 2026, the Company paid WMES $1.9 million for fleet management services.
During the nine months ended September 30, 2026, the Company made capital contributions of $29.5 million to WMES and committed to contribute an additional $10.0 million.
Investment Fund Partnerships
In December 2025, the Company entered into investment fund partnerships with Liberty Mutual Investments (“LMI”) and Blackstone Credit & Insurance (“BXCI”) (together, the “Funds”), referred to as the LMI Fund and the BXCI Fund, respectively. The LMI Fund is expected to invest up to $600 million in loan and loan-like aircraft engine financings and is supported by a warehouse debt facility, while the BXCI Fund is expected to deploy over $1 billion in assets similar to our lease portfolio, including current and next-generation aircraft engines, and is also supported by a warehouse debt facility.
19
The Company holds a general partnership interest in each Fund but is not the majority owner. The Company holds ownership interests of 10.0 % and 17.5 % in the LMI Fund and the BXCI Fund, respectively. The limited partners retain substantive kick-out rights, including the ability to liquidate the Funds by simple majority vote. Accordingly, under ASC 810, Consolidation, each Fund is a voting interest entity that the Company does not consolidate, and the Company accounts for its investments under the equity method.
The LMI Fund commenced operations in March 2026. The BXCI Fund commenced operations in April 2026.
The following table presents a roll forward of the Company’s investments in funds:
| (in thousands) | |||||
| Investments in funds as of December 31, 2025 | $ | ||||
| Investment income | |||||
| Other comprehensive income from funds | |||||
| Contributions | |||||
| Investments in funds as of September 30, 2026 | $ | ||||
During the nine months ended September 30, 2026, the Company sold 12 notes receivable and investments in sales-type leases to the LMI Fund, for a total of $104.0 million, which resulted in a total gain on sale of financial assets of $0.6 million for the Company. The LMI Fund is considered a related party as the Company serves as its general partner. Also during the nine months ended September 30, 2026, the Company sold 14 aircraft engines to the BXCI Fund, for a total of $216.2 million, which resulted in a total gain of $33.3 million for the Company. The LMI Fund and the BXCI Fund are considered related parties as the Company serves as general partner.
As of September 30, 2026, the Company subleased two engines to a third party under arrangements in which Blackstone is the head lessor and the Company is the sublessor. The aggregate ROU asset and lease liability balances associated with these leases were $1.7 million, each, as of September 30, 2026. The ROU asset and lease liability balances are included in Other assets and Accounts payable and accrued expenses, respectively, on the Condensed Consolidated Balance Sheets.
The Company, as general partner of the Funds, earns management and advisory fees for providing asset management, administrative, and other advisory services to the Funds, which may also include reimbursement of costs incurred by the Company on behalf of the Funds. The Company also earns management fees for managing assets owned by third parties. Revenue is recognized over time as the related services are performed because the customer simultaneously receives and consumes the benefits of the Company’s performance. Reimbursements of eligible expenses are recognized when the underlying costs are incurred and the Company has a right to reimbursement. For the three and nine months ended September 30, 2026, management and advisory fee income was $1.5 million and $9.2 million, respectively, and included in “Management and advisory fees” in the Company’s Condensed Consolidated Statements of Income. These amounts reflected a combination of management and advisory fees earned by the Company and reimbursement of in-period expenses paid by the Company on behalf of the Funds. As of September 30, 2026, there was $3.2 million in amounts due from the Funds and included in “Due from affiliates” in the Company’s Condensed Consolidated Balance Sheets. Additionally, there was $0.6 million in amounts due to the Funds and included in “Due to affiliates” in the Company’s Condensed Consolidated Balance Sheets.
In connection with the Funds, the Company’s maximum exposure to loss consists of the Company’s investment of $15.1 million and unfunded capital commitments of $32.5 million. A portion of the Company’s capital commitments is expected to be funded by certain executives and employees through participation arrangements with the Company totaling $10.0 million; however, the Company remains the primary obligor for the full amount of its commitment.
20
4. Debt Obligations
Debt obligations consisted of the following:
| September 30, 2026 | December 31, 2025 | ||||||||||
| (in thousands) | |||||||||||
Credit facility at a floating rate of interest of one-month term Secured Overnight Financing Rate (“SOFR”) plus | $ | $ | |||||||||
WEST IX Series A 2025 term notes payable at a fixed rate of interest of | |||||||||||
WEST IX Series B 2025 term note payable at a fixed rate of interest of | |||||||||||
WEST VIII Series A 2025 term notes payable at a fixed rate of interest of | |||||||||||
WEST VIII Series B 2025 term note payable at a fixed rate of interest of | |||||||||||
WEST VII Series A 2023 term notes payable at a fixed rate of interest of | |||||||||||
WEST VI Series A 2021 term notes payable at a fixed rate of interest of | |||||||||||
WEST VI Series B 2021 term notes payable at a fixed rate of interest of | |||||||||||
WEST VI Series C 2021 term notes payable at a fixed rate of interest of | |||||||||||
WEST V Series A 2020 term notes payable at a fixed rate of interest of | |||||||||||
WEST V Series B 2020 term notes payable at a fixed rate of interest of | |||||||||||
WEST V Series C 2020 term notes payable at a fixed rate of interest of | |||||||||||
WEST III Series A 2017 term notes payable at a fixed rate of interest of | |||||||||||
WEST III Series B 2017 term notes payable at a fixed rate of interest of | |||||||||||
Willis Warehouse Facility LLC (“WWFL”) credit facility was terminated during the nine months ended September 30, 2026 | |||||||||||
Convertible senior notes at a fixed rate of interest of | |||||||||||
Other fixed-rate engine notes (interest between | |||||||||||
| Less: unamortized debt issuance costs and note discounts | ( | ( | |||||||||
| Total debt obligations | $ | $ | |||||||||
One-month term SOFR was 3.90 % and 3.87 % as of September 30, 2026 and December 31, 2025, respectively.
Certain notes payable totaling $165.8 million as of September 30, 2026 relate to failed sale-leaseback transactions secured by eight engines. During the nine months ended September 30, 2026, the Company entered into two such transactions totaling $45.0 million. The Company has options to repurchase the underlying engines at predetermined prices ranging from $14.7 million to $19.3 million per engine, exercisable between July 2031 and March 2034.
21
In May 2026, the Company issued $200.0 million aggregate principal amount of 2.50 % Convertible Senior Notes due in May 2031. The notes are senior unsecured obligations of the Company and bear interest at a rate of 2.50 % per annum, payable semi-annually beginning in November 2026. The notes were initially convertible at a rate of 11.1606 shares of common stock per $1,000 principal amount, which was equivalent to an initial conversion price of approximately $89.60 per share. As a result of the three -for-one forward common stock split effected on July 17, 2026, the conversion rate was adjusted to 33.4818 shares of common stock per $1,000 principal amount, equivalent to a conversion price of approximately $29.87 per share, subject to further customary anti-dilution adjustments and the terms and conditions of the indenture. The net proceeds from the offering were used to temporarily repay borrowings under the Company’s revolving credit facility until deployed for general corporate purposes. In connection with the offering, the Company amended its revolving credit agreement (Amendment No. 4) to permit the issuance of the notes and related transactions, as well as to make certain conforming revisions.
In March 2026, the Company terminated its WWFL credit facility as well as amended and extended its existing revolving credit facility (Amendment No. 3), increasing total commitments from $1.0 billion to $1.75 billion and extending the maturity to April 2031.
In February 2026, the Company entered into Amendment No. 2 to the Credit Agreement. Amendment No. 2 among other things, excludes certain amounts from inclusion in “Total Debt” (as defined in the Credit Agreement) that is used for purposes of calculating the “Maximum Leverage Ratio” (as defined in the Credit Agreement).
Principal outstanding at September 30, 2026 is expected to be repayable as follows:
| Year | (in thousands) | |||||||
| 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total | $ | |||||||
Virtually all of the Company’s debt requires ongoing compliance with certain financial covenants, including debt and tangible net worth ratios, minimum interest coverage ratios, and other eligibility criteria including asset type, customer and geographic concentration restrictions. The Company also has certain negative financial covenant obligations that relate to such items as liens, advances, changes in business, sales of assets, dividends and stock repurchases. Compliance with these covenants is tested either monthly, quarterly or annually, as required, and the Company was in full compliance with all financial covenant requirements at September 30, 2026.
5. Derivative Instruments
The Company periodically holds interest rate derivative instruments to mitigate exposure to changes in interest rates, predominantly one-month term SOFR, with $697.0 million and $732.7 million of variable rate borrowings at September 30, 2026 and December 31, 2025, respectively. As a matter of policy, management does not use derivatives for speculative purposes. As of September 30, 2026, the Company had one interest rate swap agreement, with a total notional amount of $50.0 million. During 2021, the Company entered into four fixed-rate interest swap agreements, each having notional amounts of $100.0 million, two of which matured during the year ended December 31, 2024 and two of which matured during the nine months ended September 30, 2026. During 2024, the Company entered into three fixed-rate interest swap agreements, each having notional amounts of $50.0 million, two of which were terminated during the year ended December 31, 2025 and one of which was terminated during nine months ended September 30, 2026. During 2024, the Company also entered into one fixed-rate interest swap agreement, which had a notional amount of $75.0 million, was partially terminated during the year ended December 31, 2025, and was fully terminated during the nine months ended September 30, 2026. During 2025, the Company entered into one fixed-rate interest swap agreement, having a notional amount of $50.0 million, and with a remaining term of 37 months as of September 30, 2026. The derivative instruments were each designated as cash flow hedges at inception and recorded at fair value.
The following table displays the total notional amount of the Company’s outstanding fixed-rate interest swap agreements:
22
| Derivatives in Cash Flow Hedging Relationships | As of September 30, | As of December 31, | ||||||||||||
| 2026 | 2025 | |||||||||||||
| (in thousands) | ||||||||||||||
| Interest rate contracts | $ | $ | ||||||||||||
The Company evaluated the effectiveness of the swap agreements to hedge the interest rate risk associated with its variable rate debt and concluded at the swap inception dates that each swap was highly effective in hedging that risk. The Company evaluates the effectiveness of the hedging relationships on an ongoing basis and concluded there was no ineffectiveness in the hedges for the period ended September 30, 2026.
The Company estimates the fair value of derivative instruments using a discounted cash flow technique. 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 that are effective and for which the related forecasted transaction is probable of occurring.
The following table displays the total pre-tax (gain) loss reclassified from accumulated other comprehensive income (“AOCI”) to earnings as a result of the terminations of the interest rate derivative instruments described above, as these forecasted transactions were no longer probable of occurring:
| Derivatives in Cash Flow Hedging Relationships | As of September 30, | As of December 31, | ||||||||||||||||||
| Location of (Gain) Loss | 2026 | 2025 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Interest rate contracts | Interest expense | $ | ( | $ | ||||||||||||||||
The following table displays the total fair value of the Company’s outstanding fixed-rate interest swap agreements in the Condensed Consolidated Balance Sheets:
| Derivative Assets | ||||||||||||||||||||
| Derivatives in Cash Flow Hedging Relationships | As of September 30, | As of December 31, | ||||||||||||||||||
| Balance Sheet Location | 2026 | 2025 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Interest rate contracts | Other assets | $ | $ | |||||||||||||||||
| Derivative Liabilities | ||||||||||||||||||||
| Derivatives in Cash Flow Hedging Relationships | As of September 30, | As of December 31, | ||||||||||||||||||
| Balance Sheet Location | 2026 | 2025 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Interest rate contracts | Accounts payable and accrued expenses | $ | $ | |||||||||||||||||
The Company recorded an adjustment to interest expense of $(49 ) thousand and $0.5 million during the three months ended September 30, 2026 and 2025, respectively, from derivative investments. The Company recorded an adjustment to interest expense of $(1.0 ) million and $(4.4 ) million during the nine months ended September 30, 2026 and 2025, respectively, from derivative investments.
23
Effect of Derivative Instruments on Earnings in the Condensed Consolidated 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 three and nine months ended September 30, 2026 and 2025:
| Derivatives in Cash Flow Hedging Relationships | Amount of Unrealized Gain (Loss) Recognized in OCI on Derivatives (Effective Portion) | |||||||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Interest rate contracts | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
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 when it is determined to be improbable that the forecasted transaction will occur. The ineffective portion of the hedges, if any, is recorded in earnings in the current period.
Counterparty Credit Risk
The Company evaluates the creditworthiness of the counterparties under its hedging agreements. The counterparties for the interest rate swaps are large financial institutions that possess investment grade credit ratings. Based on these ratings, the Company believes that the counterparties are credit-worthy and that their continuing performance under the hedging agreements is probable and does not require the counterparties to provide collateral or other security to the Company.
6. 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. As of September 30, 2026, the Company had $0.8 billion in purchase commitments of equipment that are expected to be satisfied within fiscal years. The purchase obligations are subject to escalation based on the closing date of each transaction. Our purchase agreements generally contain terms that allow the Company to defer or cancel purchase commitments in certain situations. These deferrals or cancellations 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.
In December 2020, the Company entered into definitive agreements for the purchase of 25 Pratt & Whitney aircraft engines. In connection with the purchase agreements, the Company is obligated to perform certain future overhaul and maintenance services, which are currently estimated to aggregate between $106.6 million and $132.1 million by 2030. If such services are not completed by that date, performance may extend through 2035, with total costs not expected to exceed $172.8 million.
7. Income Taxes
Income tax expense for the three and nine months ended September 30, 2026 was $7.1 million and $26.7 million, respectively. The effective tax rate for the three and nine months ended September 30, 2026 was 37.9 % and 28.5 %, respectively. Income tax expense for the three and nine months ended September 30, 2025 was $18.9 million and $41.2 million, respectively. The effective tax rate for the three and nine months ended September 30, 2025 was 43.7 % and 28.9 %, respectively. The Company’s effective tax rates differed from the U.S. federal statutory rate of 21.0% primarily due to executive compensation exceeding $1.0 million as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and a worthless stock deduction recognized on the Company’s foreign sustainable aviation fuel subsidiary, which resulted in an ordinary tax loss.
The Company records tax expense or benefit for unusual or infrequent items discretely in the period in which they occur. The Company’s tax rate is subject to change based on changes in the mix of assets leased to domestic and foreign lessees, the proportion of revenue generated within and outside of each state, the amount of executive compensation exceeding $1.0 million as defined in Section 162(m) of the Code, and numerous other factors, including changes in tax law.
24
H.R. 1., also known as the One Big Beautiful Bill Act (“OBBBA”), was enacted on July 4, 2025. The legislation includes several provisions that may impact the timing and magnitude of certain tax deductions. Key provisions include the permanent extension of several business tax benefits originally introduced under the 2017 Tax Cuts and Jobs Act. The effective tax rate for the three and nine months ended September 30, 2026 considers the enactment of OBBBA, which did not have a material impact to income tax expense. OBBBA is not expected to materially impact our 2026 annual effective tax rate.
8. 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 in contrast to 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 Condensed 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 September 30, 2026 and December 31, 2025 was estimated to have a fair value of approximately $124.9 million and $138.6 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).
•Investments in sales-type leases: The Company had no investments in sales-type leases outstanding as of September 30, 2026. The carrying amount of the Company’s outstanding balance on its Investments in sales-type leases as of December 31, 2025 was estimated to have a fair value of approximately $16.9 million, 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 September 30, 2026 and December 31, 2025 was estimated to have a fair value of approximately $2,124.5 million and $2,419.8 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).
25
Assets Measured and Recorded at Fair Value on a Recurring Basis and a Nonrecurring Basis
As of September 30, 2026 and December 31, 2025, 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. The net fair value of the interest rate swaps as of September 30, 2026 was $2.0 million, representing an asset and reflected within “Other assets” on the Condensed Consolidated Balance Sheets. The net fair value of the interest rate swaps as of December 31, 2025 was $0.1 million, representing an asset of $0.4 million and a liability of $0.3 million, and reflected within “Other assets” and “Accounts payable and accrued expenses” on the Condensed Consolidated Balance Sheets, respectively. The Company recorded an adjustment to interest expense of $(49 ) thousand and $0.5 million during the three months ended September 30, 2026 and 2025, respectively, from derivative investments. The Company recorded an adjustment to interest expense of $(1.0 ) million and $(4.4 ) million during the nine months ended September 30, 2026 and 2025, respectively, from derivative investments.
Goodwill is assessed for impairment annually, at each year end by comparing the fair values of the reporting units to their carrying amounts. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test.
During the nine months ended September 30, 2026, the Company recognized $8.2 million of finite-lived intangible assets in connection with the acquisitions of leased aircraft, including in the WNG Acquisition described in Note 2. The intangible assets represent the value assigned to favorable lease contracts associated with the acquired aircraft and are amortized on a straight-line basis over the remaining noncancelable lease terms of the related leases, which have a weighted-average remaining term of approximately one year . Amortization expense is recognized within lease rent expense in the Condensed Consolidated Statements of Income. The carrying amount of favorable lease contract intangible assets was $6.0 million at September 30, 2026.
The Company evaluates favorable lease contract assets for impairment whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. If a carrying amount is determined to be unrecoverable, an impairment loss is recognized for the amount by which the carrying amount exceeds its fair value.
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’, the Company evaluates the carrying value of the assets in our lease portfolio to determine if any impairment exists.
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), estimated future cash flows, changes in market conditions, and other factors. An impairment charge is recorded when the carrying value of the asset exceeds its fair value. The Company uses Level 2 inputs to measure write-downs of equipment held for lease and equipment held for sale.
| Write-down of Equipment | |||||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Equipment held for lease | $ | $ | $ | $ | |||||||||||||||||||
| Equipment held for sale | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
26
9. 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 awards and non-qualified stock options 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.
Potentially dilutive securities for the three and nine months ended September 30, 2026 included restricted stock awards, a non-qualified stock option, and the Company’s 2.50 % Convertible Senior Notes due 2031. The Convertible Senior Notes were evaluated using the if-converted method and were excluded from the computation of diluted earnings per common share for the three and nine months ended September 30, 2026 because their effect would have been anti-dilutive. There were approximately 136,000 and 266,000 anti-dilutive weighted shares excluded from the computations of diluted weighted average earnings per common share for the three and nine months ended September 30, 2025, respectively.
The following table presents the calculation of basic and diluted earnings per share (in thousands, except per share data):
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income attributable to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
| Basic weighted average common shares outstanding | |||||||||||||||||||||||
| Potentially dilutive common shares | |||||||||||||||||||||||
| Diluted weighted average common shares outstanding | |||||||||||||||||||||||
| Basic weighted average earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted weighted average earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
10. Equity
Common Stock Repurchase
In December 2024, the Board of Directors (the “Board”) approved the renewal of the existing common stock repurchase plan which allows for repurchases of up to $60.0 million of the Company’s common stock, extending the plan through December 31, 2026. Repurchased shares are immediately retired. During the nine months ended September 30, 2026 and 2025, no 39.6 million of common stock was available to purchase shares under the plan.
Redeemable Preferred Stock
All preferred stock share and per-share amounts presented herein have been retroactively adjusted to reflect the stock split, except as otherwise indicated. The Company completed a private placement of 1,750,000 shares (on a pre-split basis) of newly issued Series B Preferred Stock on September 29, 2026 to the Development Bank of Japan Inc. at a purchase price of $20.00 per share, resulting in gross proceeds of $35.0 million before offering costs. On September 30, 2026, the Company effected a three -for-one forward stock split of its Series A and Series B Preferred Stock, increasing the number of outstanding shares to 9,750,000 and 5,250,000 , respectively.
The rights and privileges of the Series A and Series B Preferred Stock are described below:
Voting Rights: Holders of the Series A and Series B Preferred Stock do not have general voting rights.
27
Dividends: The Company’s Series A and Series B Preferred Stock accrue quarterly dividends at the rates per annum of 8.35 % and 8.09 % per share, respectively. During each of the nine months ended September 30, 2026 and 2025, the Company paid total Series A Preferred Stock dividends of $4.1 4.3 1.1 million in Series A Preferred Stock dividends accrued but not paid, or approximately $0.12 per share of the Series A Preferred Stock.
Liquidation Preference: The holders of the Series A and Series B 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 $6.667 per share, plus any declared but unpaid dividends.
Redemption: The Series A and Series B Preferred Stock have no stated maturity dates.
Holders of the Series A Preferred Stock have the option to require the Company to redeem all or any portion of the Series A Preferred Stock for cash upon occurrence of any of the following: (i) a material breach of the Stock Purchase Agreement, (ii) changes in the ownership structure of the Company, including by means of a change of control transaction, (iii) incurrence of operating loss or ordinary loss by the Company for two consecutive fiscal years, (iv) the Company’s surplus is less than its liquidation value at certain specified measurement dates, (v) occurrence of a merger, consolidation, or sale of greater than 50 % of the Company’s assets, or (vi) the occurrence of liquidity events as set forth in the Stock Purchase Agreement. The redemption price is $6.667 per share plus dividends accrued but not paid. The Company is accreting the Series A Preferred Stock to redemption value over the period from the date of issuance to the date first callable by the Series A Preferred stockholders (September 27, 2031), such that the carrying amount of the security will equal the redemption amount at the earliest redemption date.
Holders of at least two-thirds of the Series B Preferred Stock have the option to require the Company to redeem all or any portion of the Series B Preferred Stock for cash, on ninety days’ advance written notice, upon the occurrence of the following: (i) September 29, 2031, (ii) an uncured material breach of the Series B Preferred Stock Purchase Agreement, (iii) specified changes in the Company’s ownership structure, (iv) the Company’s surplus falling below specified liquidation value thresholds, (v) operating losses or ordinary losses for two consecutive fiscal years, and (vi) certain mergers, consolidations or significant asset dispositions. The redemption price is $6.667 per share plus dividends accrued but not paid. The Company is accreting the Series B Preferred Stock to redemption value over the period from the date of issuance to the date first callable by the Series B Preferred stockholders (September 29, 2031), such that the carrying amount of the security will equal the redemption amount at the earliest redemption date.
11. Stock-Based Compensation Plans
The components of stock-based compensation expense were as follows:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| 2023 Incentive Stock Plan | $ | $ | $ | $ | |||||||||||||||||||
| Employee Stock Purchase Plan | |||||||||||||||||||||||
| Total Stock Compensation Expense | $ | $ | $ | $ | |||||||||||||||||||
Under the 2023 Incentive Stock Plan (the “2023 Plan”), stock-based compensation is generally in the form of restricted stock awards (“RSAs”). The RSAs are subject to either service-based vesting, which is typically between and four years , in which a specific period of continued employment must pass before an award vests, or performance-based vesting, which is typically between and three years . 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. As it relates to performance-based awards, accrual of compensation expense is based on the probable outcome of the performance condition. 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.
In November 2025, the Compensation Committee of the Board of Directors approved the grant of a non-qualified stock option to our Executive Chairman, to purchase up to 900,000 shares of the Company’s common stock. The option award vests in four equal annual installments and has a six-year term. The expense associated with this option is recognized on a straight-line basis over the vesting period.
28
As of September 30, 2026, the Company had granted 8,540,162 shares under the 2023 Plan and had 1,614,712 shares available for future issuance. The fair value of the RSAs equaled the stock price at the grant date.
The following table summarizes the restricted stock activity during the nine months ended September 30, 2026:
| Shares | |||||
| Balance of unvested shares as of December 31, 2025 | |||||
| Shares granted | |||||
| Shares forfeited | ( | ||||
| Shares vested | ( | ||||
| Balance of unvested shares as of September 30, 2026 | |||||
Under the Employee Stock Purchase Plan (“ESPP”), as amended and restated effective November 2021, 1,275,000 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 ESPP. Participants may purchase the lesser of 3,000 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. During the nine months ended September 30, 2026 and 2025, 12,459 and 9,582 shares of common stock, respectively, were issued under the ESPP. The Company issues new shares through its transfer agent upon an employee stock purchase.
12. Reportable Segments
The Company has two reportable segments: (i) Leasing and Related Operations, which involves acquiring and leasing, primarily pursuant to operating leases, commercial aircraft, aircraft engines, and other aircraft equipment, the selective purchase and resale of commercial aircraft engines and other aircraft equipment, service and maintenance related businesses, and asset management and servicing activities, 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’s Chief Operating Decision Maker (“CODM”) is Austin Willis, Chief Executive Officer. The CODM uses segment income (loss) from operations to evaluate the operating performance of each reportable segment, assess trends affecting each business, and make decisions regarding the allocation of resources, including capital investments and operational priorities. Although the Company believes there are synergies between its two reportable segments, the segments are managed separately because each requires different business strategies.
Prior period segment information is presented on a comparable basis to the basis on which current period segment information is presented and reviewed by the CODM.
Intersegment transactions primarily consist of spare parts and equipment sales between the Company’s reportable segments and are recorded at internally established transfer prices and eliminated in consolidation.
29
The following tables present a summary of the reportable segments (in thousands):
| Three months ended September 30, 2026 | Leasing and Related Operations | Spare Parts Sales | Total | |||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Lease rent revenue | $ | $ | $ | |||||||||||||||||
| Maintenance reserve revenue | ||||||||||||||||||||
| Spare parts and equipment sales | ||||||||||||||||||||
| Interest revenue | ||||||||||||||||||||
| Gain on sale of leased equipment | ||||||||||||||||||||
| Maintenance services revenue | ||||||||||||||||||||
| Management and advisory fees | ||||||||||||||||||||
| Other revenue | ||||||||||||||||||||
| Total revenue, before intersegment adjustments | ||||||||||||||||||||
| Intersegment revenue | ||||||||||||||||||||
| Total revenue | ||||||||||||||||||||
| Reconciliation to consolidated revenue: | ||||||||||||||||||||
| Elimination of intersegment revenue | ( | |||||||||||||||||||
| Total consolidated revenue | ||||||||||||||||||||
| Expenses: | ||||||||||||||||||||
| Depreciation and amortization expense | ||||||||||||||||||||
| Cost of spare parts and equipment sales | ||||||||||||||||||||
| Cost of maintenance services | ||||||||||||||||||||
| Write-down of equipment | ||||||||||||||||||||
| General and administrative | ||||||||||||||||||||
| Technical expense | ||||||||||||||||||||
| Net finance costs: | ||||||||||||||||||||
| Interest expense | ||||||||||||||||||||
| Loss on debt extinguishment | ||||||||||||||||||||
| Total finance costs | ||||||||||||||||||||
| Total expenses | ||||||||||||||||||||
| Income (loss) from operations | ( | |||||||||||||||||||
| Reconciliation to consolidated amounts: | Total | |||||||||||||||||||
| Total reportable segment income from operations | ||||||||||||||||||||
| Other * | ( | |||||||||||||||||||
| Intersegment eliminations | ( | |||||||||||||||||||
| Consolidated income from operations | ||||||||||||||||||||
| Income from investments | ||||||||||||||||||||
| Consolidated income before income taxes | $ | |||||||||||||||||||
_____________________________
* During the three months ended September 30, 2026, the Company recognized $11 thousand of loss related to its sustainable aviation fuel project. The Company decided to cease further investment in the project in December 2025.
30
| Three months ended September 30, 2025 | Leasing and Related Operations | Spare Parts Sales | Total | |||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Lease rent revenue | $ | $ | $ | |||||||||||||||||
| Maintenance reserve revenue | ||||||||||||||||||||
| Spare parts and equipment sales | ||||||||||||||||||||
| Interest revenue | ||||||||||||||||||||
| Gain on sale of leased equipment | ||||||||||||||||||||
| Maintenance services revenue | ||||||||||||||||||||
| Management and advisory fees | ||||||||||||||||||||
| Other revenue | ( | |||||||||||||||||||
| Total revenue, before intersegment adjustments | ||||||||||||||||||||
| Intersegment revenue | ||||||||||||||||||||
| Total revenue | ||||||||||||||||||||
| Reconciliation to consolidated revenue: | ||||||||||||||||||||
| Elimination of intersegment revenue | ( | |||||||||||||||||||
| Total consolidated revenue | ||||||||||||||||||||
| Expenses: | ||||||||||||||||||||
| Depreciation and amortization expense | ||||||||||||||||||||
| Cost of spare parts and equipment sales | ||||||||||||||||||||
| Cost of maintenance services | ||||||||||||||||||||
| Write-down of equipment | ||||||||||||||||||||
| General and administrative | ||||||||||||||||||||
| Technical expense | ||||||||||||||||||||
| Net finance costs: | ||||||||||||||||||||
| Interest expense | ||||||||||||||||||||
| Loss on debt extinguishment | ||||||||||||||||||||
| Total finance costs | ||||||||||||||||||||
| Total expenses | ||||||||||||||||||||
| Income (loss) from operations | ( | |||||||||||||||||||
| Reconciliation to consolidated amounts: | Total | |||||||||||||||||||
| Total reportable segment income from operations | ||||||||||||||||||||
| Other * | ( | |||||||||||||||||||
| Intersegment eliminations | ( | |||||||||||||||||||
| Consolidated income from operations | ||||||||||||||||||||
| Income from investments | ||||||||||||||||||||
| Consolidated income before income taxes | $ | |||||||||||||||||||
_____________________________
* During the three months ended September 30, 2025, the Company recognized $3.8 million of loss related to its sustainable aviation fuel project. The Company decided to cease further investment in the project in December 2025.
31
| Nine months ended September 30, 2026 | Leasing and Related Operations | Spare Parts Sales | Total | |||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Lease rent revenue | $ | $ | $ | |||||||||||||||||
| Maintenance reserve revenue | ||||||||||||||||||||
| Spare parts and equipment sales | ||||||||||||||||||||
| Interest revenue | ||||||||||||||||||||
| Gain on sale of leased equipment | ||||||||||||||||||||
| Gain on sale of financial assets | ||||||||||||||||||||
| Maintenance services revenue | ||||||||||||||||||||
| Management and advisory fees | ||||||||||||||||||||
| Other revenue | ||||||||||||||||||||
| Total revenue, before intersegment adjustments | ||||||||||||||||||||
| Intersegment revenue | ||||||||||||||||||||
| Total revenue | ||||||||||||||||||||
| Reconciliation to consolidated revenue: | ||||||||||||||||||||
| Elimination of intersegment revenue | ( | |||||||||||||||||||
| Total consolidated revenue | ||||||||||||||||||||
| Expenses: | ||||||||||||||||||||
| Depreciation and amortization expense | ||||||||||||||||||||
| Cost of spare parts and equipment sales | ||||||||||||||||||||
| Cost of maintenance services | ||||||||||||||||||||
| Write-down of equipment | ||||||||||||||||||||
| General and administrative | ||||||||||||||||||||
| Technical expense | ||||||||||||||||||||
| Net finance costs: | ||||||||||||||||||||
| Interest expense | ||||||||||||||||||||
| Loss on debt extinguishment | ||||||||||||||||||||
| Total finance costs | ||||||||||||||||||||
| Total expenses | ||||||||||||||||||||
| Income (loss) from operations | ( | |||||||||||||||||||
| Reconciliation to consolidated amounts: | Total | |||||||||||||||||||
| Total reportable segment income from operations | ||||||||||||||||||||
| Other * | ||||||||||||||||||||
| Intersegment eliminations | ( | |||||||||||||||||||
| Consolidated income from operations | ||||||||||||||||||||
| Income from investments | ||||||||||||||||||||
| Consolidated income before income taxes | $ | |||||||||||||||||||
* During the nine months ended September 30, 2026, the Company recognized $1.6 million of income related to its sustainable aviation fuel project. The Company decided to cease further investment in the project in December 2025.
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| Nine months ended September 30, 2025 | Leasing and Related Operations | Spare Parts Sales | Total | |||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Lease rent revenue | $ | $ | $ | |||||||||||||||||
| Maintenance reserve revenue | ||||||||||||||||||||
| Spare parts and equipment sales | ||||||||||||||||||||
| Interest revenue | ||||||||||||||||||||
| Gain on sale of leased equipment | ||||||||||||||||||||
| Gain on sale of financial assets | ||||||||||||||||||||
| Maintenance services revenue | ||||||||||||||||||||
| Management and advisory fees | ||||||||||||||||||||
| Other revenue | ||||||||||||||||||||
| Total revenue, before intersegment adjustments | ||||||||||||||||||||
| Intersegment revenue | ||||||||||||||||||||
| Total revenue | ||||||||||||||||||||
| Reconciliation to consolidated revenue: | ||||||||||||||||||||
| Elimination of intersegment revenue | ( | |||||||||||||||||||
| Total consolidated revenue | ||||||||||||||||||||
| Expenses: | ||||||||||||||||||||
| Depreciation and amortization expense | ||||||||||||||||||||
| Cost of spare parts and equipment sales | ||||||||||||||||||||
| Cost of maintenance services | ||||||||||||||||||||
| Write-down of equipment | ||||||||||||||||||||
| General and administrative | ||||||||||||||||||||
| Technical expense | ||||||||||||||||||||
| Net finance costs: | ||||||||||||||||||||
| Interest expense | ||||||||||||||||||||
| Loss on debt extinguishment | ||||||||||||||||||||
| Total finance costs | ||||||||||||||||||||
| Total expenses | ||||||||||||||||||||
| Income (loss) from operations | ( | |||||||||||||||||||
| Reconciliation to consolidated amounts: | Total | |||||||||||||||||||
| Total reportable segment income from operations | ||||||||||||||||||||
| Other * | ( | |||||||||||||||||||
| Intersegment eliminations | ( | |||||||||||||||||||
| Consolidated income from operations | ||||||||||||||||||||
| Gain on sale of business | ||||||||||||||||||||
| Income from investments | ||||||||||||||||||||
| Consolidated income before income taxes | $ | |||||||||||||||||||
_____________________________
* During the nine months ended September 30, 2025, the Company recognized $10.3 million of loss related to its sustainable aviation fuel project. The Company decided to cease further investment in the project in December 2025.
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| Total Assets | September 30, 2026 | December 31, 2025 | ||||||||||||
| Leasing and Related Operations | $ | $ | ||||||||||||
| Spare Parts Sales | ||||||||||||||
| Other * | ||||||||||||||
| Total | $ | $ | ||||||||||||
* As of September 30, 2026, the Company had total assets of $5 thousand related to its sustainable aviation fuel project. The Company decided to cease further investment in the project in December 2025.
13. Related Party Transactions
Joint Ventures
“Management and advisory fees” on the Condensed Consolidated Statements of Income includes management fees earned of $2.7 million and $1.0 million during the three months ended September 30, 2026 and 2025, respectively, and $6.6 million and $4.0 million during the nine months ended September 30, 2026 and 2025, respectively, related to the servicing of engines for the WMES lease portfolio. Additionally, “Management and advisory fees” on the Condensed Consolidated Statements of Income includes management fees earned of $30 thousand and $0.2 million for the three and nine months ended September 30, 2026, respectively, related to a new servicing agreement for the CASC Willis portfolio. No such fees were recognized during the corresponding periods in 2025.
During the nine months ended September 30, 2026, the Company sold six engines to WMES for a total of $59.7 million, less economic closing adjustments, which resulted in a total gain of $16.2 million for the Company. Additionally, during the nine months ended September 30, 2026, the Company sold five aircraft that were acquired in connection with the WNG Acquisition to WMES for $100.8 million, less economic closing adjustments, which resulted in a trading profit of $1.7 million for the Company. During the nine months ended September 30, 2025, the Company sold three engines and one airframe to WMES for a total of $32.2 million, less economic closing adjustments, which resulted in a total gain of $1.6 million for the Company. Additionally, during the nine months ended September 30, 2025, the Company sold one engine to WMES for $21.1 million, less economic closing adjustments, which resulted in a trading profit of $1.4 million for the Company.
During the nine months ended September 30, 2026, the Company did no t purchase any engines from WMES. During the nine months ended September 30, 2025, the Company purchased an engine from WMES for $7.2 million.
During the nine months ended September 30, 2026, the Company did no t purchase or sell any engines to CASC Willis. During the nine months ended September 30, 2025, the Company sold two engines to CASC Willis for $13.6 million, which resulted in a total gain of $1.5 million for the Company.
As of September 30, 2026, the Company subleased two WMES engines to a third party, with WMES as the head lessor. One engine is subject to a lease agreement through December 2027, and the other continues on a month-to-month basis. As of September 30, 2026, the ROU asset and lease liability balances associated with the lease ending December 2027 were $2.1 0.8 million and $0.7 million, respectively, under these leases as of September 30, 2025. The ROU asset and lease liability balances are included in Other assets and Accounts payable and accrued expenses, respectively, on the Condensed Consolidated Balance Sheets.
During the nine months ended September 30, 2026, the Company paid WMES $1.9 million for fleet management services.
During the nine months ended September 30, 2026, the Company made capital contributions of $29.5 million to WMES and committed to contribute an additional $10.0 million.
Investment Fund Partnerships
34
During the nine months ended September 30, 2026, the Company sold 12 notes receivable and investments in sales-type leases to the LMI Fund, for a total of $104.0 million, which resulted in a total gain on sale of financial assets of $0.6 million for the Company. Also during the nine months ended September 30, 2026, the Company sold 14 aircraft engines to the BXCI Fund, for a total of $216.2 million, which resulted in a total gain of $33.3 million for the Company. The LMI Fund and the BXCI Fund are considered related parties as the Company serves as general partner.
As of September 30, 2026, the Company subleased two engines to a third party under arrangements in which Blackstone is the head lessor and the Company is the sublessor. The aggregate ROU asset and lease liability balances associated with these leases were $1.7
The Company, as general partner of the Funds, may earn management and advisory fees and expense reimbursements. For the three and nine months ended September 30, 2026, the Company recognized management and advisory fee income of $1.5 million and $9.2 million, which is included in “Management and advisory fees” in the Condensed Consolidated Statements of Income. These amounts reflected a combination of management and advisory fees earned by the Company and reimbursement of in-period expenses paid by the Company on behalf of the Funds. As of September 30, 2026, there was $3.2 million in amounts due from the Funds and included in “Due from affiliates” in the Company’s Condensed Consolidated Balance Sheets. Additionally, there was $0.6 million in amounts due to the Funds and included in “Due to affiliates” in the Company’s Condensed Consolidated Balance Sheets.
Other
During the nine months ended September 30, 2026 and September 30 2025, the Company accrued General and administrative expense of approximately $44 thousand and $66 thousand, respectively, to Mikchalk Lake, LLC, an entity in which our Executive Chairman retains an ownership interest. These expenses were for lodging and other business-related services and were approved by the Board’s Independent Directors.
14. Subsequent Events
On October 28, 2026, the Board of Directors of the Company declared a quarterly dividend of $0.15 per share on the Company’s outstanding common stock. The dividend is payable on November 25, 2026 to stockholders of record at the close of business on November 16, 2026.
On October 28, 2026, the Board of Directors of the Company approved the renewal of its share repurchase program under which the Company may repurchase its common stock for a total aggregate purchase price of up to $200.0 million (the “Share Repurchase Program”). Share repurchases may be made at management’s discretion from time to time in the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The actual number of shares of common stock repurchased, and the timing and price of any repurchases, will depend on market conditions, applicable legal requirements and other factors. The Company is not obligated to acquire any particular number of shares of common stock. The Share Repurchase Program has been extended through December 31, 2031, but also may be suspended, modified or discontinued at any time.
In October 2026, the Company completed the acquisition of three commercial buildings totaling approximately 375,000 square feet in Coconut Creek, Florida, for an aggregate purchase price of $118.0 million. The properties will support the Company’s expanding operations, including its corporate headquarters, spare parts business, maintenance, repair and overhaul services, and aircraft engine preservation and storage activities.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and notes thereto included under Part I, Item 1 of this Quarterly Report on Form 10-Q. In addition, reference should be made to our Audited Consolidated Financial Statements and notes thereto and related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2025 Form 10-K. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs, including the potential impact of changes in interest rates or inflation, as well as the impact of new or increased tariffs on our business, results of operations and financial condition. Our actual results may differ materially from those contained in or implied by any forward-looking statements. The financial information included in this discussion and in our consolidated financial statements may not be indicative of our consolidated financial position, operating results, changes in equity and cash flows in the future. See “Special Note Regarding Forward-Looking Statements” included earlier in this report.
Overview
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 September 30, 2026, the majority of our leases were operating leases, with the exception of certain sale-leaseback transactions that do not meet lease criteria and are therefore classified as notes receivable under the guidance provided by Accounting Standards Codification (“ASC”) 842, Leases, and investments in sales-type leases. As of September 30, 2026, we had 79 lessees in 48 countries. Our portfolio is continually changing due to equipment acquisitions and sales. As of September 30, 2026, we had $3,024.4 million of equipment held in our operating lease portfolio, $128.6 million of notes receivable, and $146.5 million of maintenance rights, comprised of 341 engines, 31 aircraft, one marine vessel, and other leased parts and equipment. As of September 30, 2026, we also managed 155 engines, five airframes, and related equipment on behalf of other parties.
Willis Aeronautical Services, Inc. is a wholly-owned and vertically-integrated subsidiary whose primary focus is the sale of aircraft engine parts and materials through the acquisition or consignment of aircraft and engines. Additionally, through Willis Engine Repair Center®, Jet Centre by Willis, and Willis Aviation Services Limited, the Company’s service offerings include Part 145 engine maintenance, aircraft line and base maintenance, aircraft disassembly, parking and storage, airport fixed base operator (“FBO”) and ground and cargo handling services.
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.
Risks and Uncertainties
Given the uncertainty surrounding future changes in interest rates, inflation, potential new or increased tariffs, and broader macroeconomic and geopolitical conditions, the Company will continue to evaluate the nature and extent of such impacts on its business, results of operations, and financial condition. The ultimate extent of any such impacts will depend on future developments that are highly uncertain and not reasonably estimable at this time, and such impacts could persist for an extended period. Currently, we do not believe these tariffs have a material impact on our business.
Recent Developments
Acquisition of WNG Aircraft Portfolio
On August 24, 2026, Willis Dallas Ltd., a wholly owned subsidiary of the Company, completed the acquisition of the entire issued share capital of WNG II Aircraft Leasing (Cayman) Ltd. and 100% of the limited liability company interests of WNG Aircraft Management 3, LLC (together with their subsidiaries, the “Target Companies”), pursuant to a Purchase and Sale Agreement dated July 10, 2026, as amended by Amendment No. 1 dated August 24, 2026. The Target Companies hold a portfolio of twelve commercial aircraft and thirteen spare aircraft engines. At closing, the adjusted purchase price was approximately $262.9 million, which reflected downward adjustments from the $379.3 million base purchase price for rent, maintenance reserves, security deposits and other revenue received after the agreed economic closing date. Of the purchase price, $1.5 million is being held back for nine months to cover pre-closing leakage, and the purchase price remains subject to a post-closing true-up. The Company intends to allocate ten of the acquired engines and six of the acquired aircraft to subsidiaries of joint ventures of, or investment vehicles managed by, the Company.
Preferred Stock Private Placement
36
On September 29, 2026, we completed a private placement of Series B Preferred Stock to Development Bank of Japan Inc. for gross proceeds of $35.0 million, before offering costs. The Series B Preferred Stock pays dividends at an annual rate of 8.09%. Holders of at least two-thirds of the Series B Preferred Stock may require us to redeem the shares for cash on September 29, 2031, or earlier upon certain events, at the liquidation preference plus accrued and unpaid dividends.
New Headquarters
In addition, on August 3, 2026, we entered into an agreement to purchase three commercial buildings in Coconut Creek, Florida, totaling 375,000 square feet, for $118.0 million, to support our corporate headquarters, spare parts, maintenance, repair and overhaul, and engine storage operations. The acquisition closed in October 2026. We believe our unused borrowing capacity under our revolving credit facility, together with cash flows from operations, is sufficient to fund these commitments.
Share Repurchase Program
On October 28, 2026, the Board of Directors of the Company approved the renewal of its share repurchase program under which the Company may repurchase its common stock for a total aggregate purchase price of up to $200.0 million (the “Share Repurchase Program”). Share repurchases may be made at management’s discretion from time to time in the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The actual number of shares of common stock repurchased, and the timing and price of any repurchases, will depend on market conditions, applicable legal requirements and other factors. The Company is not obligated to acquire any particular number of shares of common stock. The Share Repurchase Program has been extended through December 31, 2031, but also may be suspended, modified or discontinued at any time.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2025 Form 10-K.
Results of Operations
Three months ended September 30, 2026 compared to the three months ended September 30, 2025
Revenue is summarized as follows:
| Three months ended September 30, | |||||||||||||||||
| 2026 | 2025 | % Change | |||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Lease rent revenue | $ | 84,379 | $ | 76,552 | 10.2 | % | |||||||||||
| Maintenance reserve revenue | 39,326 | 76,054 | (48.3) | % | |||||||||||||
| Spare parts and equipment sales | 98,131 | 5,394 | 1,719.3 | % | |||||||||||||
| Interest revenue | 2,585 | 3,360 | (23.1) | % | |||||||||||||
| Gain on sale of leased equipment | 5,452 | 16,134 | (66.2) | % | |||||||||||||
| Maintenance services revenue | 11,217 | 3,636 | 208.5 | % | |||||||||||||
| Management and advisory fees | 4,515 | 1,881 | 140.0 | % | |||||||||||||
| Other revenue | 717 | 378 | 89.7 | % | |||||||||||||
| Total revenue | $ | 246,322 | $ | 183,389 | 34.3 | % | |||||||||||
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 increased by $7.8 million, or 10.2%, to $84.4 million in the three months ended September 30, 2026, from $76.6 million for the three months ended September 30, 2025. The increase is due to an increase in the average size of the portfolio as compared to that of the prior year period.
At September 30, 2026, the Company had $3,024.4 million of equipment held in our operating lease portfolio, $128.6 million of notes receivable, and $146.5 million of maintenance rights. At September 30, 2025, the Company had $2,700.4 million of equipment held in our operating lease portfolio, $144.8 million of notes receivable, $27.0 million of maintenance rights, and $16.3 million of investments in sales-type leases. Average utilization (based on net book value of equipment held for operating lease, maintenance rights, and notes receivable and investments in sales-type leases net of allowances) was approximately 83.2% and 86.0% for the three months ended September 30, 2026 and 2025, respectively.
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Two customers each accounted for approximately 9% and 9% of the Company’s total lease rent revenue during the three months ended September 30, 2026, and two customers accounted for approximately 12% and 10%, respectively, of the Company’s total lease rent revenue during the three months ended September 30, 2025.
Maintenance Reserve Revenue. Maintenance reserve revenue decreased $36.7 million, or 48.3%, to $39.3 million for the three months ended September 30, 2026, from $76.1 million for the three months ended September 30, 2025. We recognized $2.6 million in long-term maintenance revenue for the three months ended September 30, 2026, compared to $29.5 million in long-term maintenance revenue recognized in the prior comparable period as the maintenance reserves and end-of-lease payments for assets coming off lease with long-term conditions were higher in the prior comparable period. Long-term maintenance revenue is influenced by end-of-lease compensation and the realization of long-term maintenance reserves associated with assets coming off lease. Engines on lease with “non-reimbursable” usage fees generated $36.8 million of short-term maintenance revenues, compared to $46.6 million in the comparable prior period. Short-term maintenance revenues are a proxy for flight time of our portfolio of engines.
Spare Parts and Equipment Sales. Spare parts and equipment sales increased by $92.7 million, to $98.1 million for the three months ended September 30, 2026, compared to $5.4 million for the three months ended September 30, 2025. Spare parts sales were $9.1 million and $5.4 million for the three months ended September 30, 2026 and 2025, respectively, an increase of $3.7 million, or 67.8%, compared to the same period in 2025. The increase in spare parts sales reflects variations in the timing of sales to third-party customers and is not reflective of intra-company sales as the parts business provides used serviceable material across the broader Willis platform. Equipment sales for the three months ended September 30, 2026 were $89.1 million for the sale of five aircraft, two engines, and one airframe. There were no equipment sales for the three months ended September 30, 2025. The increase primarily reflects the sale of five aircraft acquired in connection with the WNG Acquisition to the Company’s joint venture, Willis Mitsui & Company Engine Support Limited (“WMES”), as well as differences in the timing of sales to third-party customers. The increase is not indicative of intra-company sales trends, as the parts business supplies used serviceable material across the broader Willis platform.
Interest Revenue. Interest revenue decreased by $0.8 million, or 23.1%, for the three months ended September 30, 2026, as compared to that of the three months ended September 30, 2025. The decrease was due to a lower balance of notes receivable and sales-type leases outstanding during the respective periods, partially attributable to the Company’s sale of 12 notes receivable and sales-type leases to the Company’s investment fund partnership with Liberty Mutual Investments (“LMI”) (“LMI Fund”) during the nine months ended September 30, 2026.
Gain on Sale of Leased Equipment. During the three months ended September 30, 2026, we sold eight engines and other parts and equipment from the lease portfolio for a net gain of $5.5 million. During the three months ended September 30, 2025, we sold 10 engines, one airframe, and other parts and equipment from the lease portfolio, resulting in a net gain of $16.1 million.
Maintenance Services Revenue. Maintenance services revenue predominately represent engine and aircraft storage and repair services, and revenue related to FBO services provided to third parties, such as refueling, maintenance, and hangar services. Maintenance services revenue increased by $7.6 million, or 208.5%, to $11.2 million for the three months ended September 30, 2026, from $3.6 million for the three months ended September 30, 2025. The increase reflects growth in engine and aircraft storage and repair services.
Management and Advisory Fees. Management and advisory fees increased by $2.6 million to $4.5 million for the three months ended September 30, 2026, from $1.9 million for the three months ended September 30, 2025, primarily driven by $1.5 million of fees earned from the LMI Fund and the Blackstone Credit & Insurance (“BXCI”) Fund (“BXCI Fund”) in the Company’s role as general partner. The LMI Fund and the BXCI Fund commenced operations in March and April 2026, respectively.
Depreciation and Amortization Expense. Depreciation and amortization expense increased by $2.7 million, or 9.4%, to $31.4 million for the three months ended September 30, 2026, compared to $28.7 million for the three months ended September 30, 2025. The increase is primarily due to an increase in the size of our lease portfolio and the timing of placing acquired engines on lease.
Cost of Spare Parts and Equipment Sales. Cost of spare parts and equipment sales increased by $84.4 million, to $91.1 million for the three months ended September 30, 2026, compared to $6.7 million for the three months ended September 30, 2025. Cost of spare parts sales were $8.2 million and $6.7 million for the three months ended September 30, 2026 and 2025, respectively, an increase of $1.5 million, or 22.2%, reflecting the increase in spare parts sales. Cost of equipment sales were $82.9 million for the three months ended September 30, 2026. There were no cost of equipment sales for the three months ended September 30, 2025. The increase primarily reflects the sale of five aircraft acquired in connection with the WNG Acquisition to the Company’s joint venture, WMES, as well as differences in the timing of sales to third-party customers.
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Cost of Maintenance Services. Cost of maintenance services predominately represent the costs of fleet management, engine and aircraft storage and repair services, and the management of fixed base operator services provided to third parties. Cost of maintenance services increased by $7.8 million, or 151.6%, to $12.9 million for the three months ended September 30, 2026, compared to $5.1 million for the three months ended September 30, 2025, reflecting the increase in maintenance services revenue.
Write-down of Equipment. There was $4.5 million in write-downs of equipment for the three months ended September 30, 2026, reflecting the write-down of three engines. There was $10.2 million in write-downs of equipment for the three months ended September 30, 2025, reflecting the write-down of eight engines.
General and Administrative Expenses. General and administrative expenses decreased by $0.5 million, or 0.9%, to $48.7 million for the three months ended September 30, 2026, compared to $49.2 million for the three months ended September 30, 2025.
Technical Expense. Technical expense consists of the non-capitalized cost of engine repairs, engine thrust rental fees, outsourced technical support services, sublease engine rental expense, engine storage and freight costs. Technical expense increased by $5.1 million to $13.5 million for the three months ended September 30, 2026, compared to $8.4 million for the three months ended September 30, 2025, primarily due to an increased level of engine repair activity as compared to that of the prior period.
Net Finance Costs. Net finance costs decreased $4.3 million, or 11.7%, to $32.8 million for the three months ended September 30, 2026, compared to $37.1 million for the three months ended September 30, 2025. The decrease is primarily due to a decrease of $5.4 million in interest expense associated with Willis Engine Structured Trust VII (“WEST VII”) notes payable, a decrease of $2.5 million in interest expense associated with our warehouse credit facility, and a decrease of $1.6 million in interest expense associated with Willis Engine Structured Trust IV (“WEST IV”) notes payable, as these debt instruments were paid down or terminated as part of the Company’s refinancing and capital restructuring. Further, there was a decrease in loss on debt extinguishment of $2.4 million. These decreases were partially offset by an increase of $5.0 million in interest expense associated with Willis Engine Structured Trust IX (“WEST IX”) notes payable, which did not close until December 2025, a $3.2 million decrease in interest income, and $1.3 million of interest on the convertible notes issued in May 2026.
Income Tax Expense. Income tax expense was $7.1 million for the three months ended September 30, 2026, compared to income tax expense of $18.9 million for the three months ended September 30, 2025. The effective tax rate for the third quarter of 2026 was 37.9%, compared to 43.7% in the prior year period. The Company’s effective tax rate differed from the U.S. federal statutory rate of 21.0% primarily due to executive compensation exceeding $1.0 million as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). The effective tax rate variance in the prior year period was also impacted by the One Big Beautiful Bill Act (“OBBBA”) which limited the Company’s ability to benefit from the Section 250 deduction. Our third-quarter effective tax rate includes a one-time charge of approximately $0.6 million, or 3 percentage points, related to the finalization of our 2025 Florida tax return. This adjustment reflects the impact of Florida's 2026 legislative decision not to adopt certain federal tax law changes under OBBBA and the resulting updates to our current and deferred tax estimates. As this adjustment relates to prior-year tax positions, we do not expect it to recur.
Nine months ended September 30, 2026 compared to the nine months ended September 30, 2025
Revenue is summarized as follows:
| Nine months ended September 30, | |||||||||||||||||
| 2026 | 2025 | % Change | |||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Lease rent revenue | $ | 238,901 | $ | 216,559 | 10.3 | % | |||||||||||
| Maintenance reserve revenue | 141,294 | 181,656 | (22.2) | % | |||||||||||||
| Spare parts and equipment sales | 140,998 | 53,988 | 161.2 | % | |||||||||||||
| Interest revenue | 6,556 | 10,943 | (40.1) | % | |||||||||||||
| Gain on sale of leased equipment | 55,449 | 48,153 | 15.2 | % | |||||||||||||
| Gain on sale of financial assets | 592 | 378 | 56.6 | % | |||||||||||||
| Maintenance services revenue | 29,969 | 17,253 | 73.7 | % | |||||||||||||
| Management and advisory fees | 17,934 | 6,431 | 178.9 | % | |||||||||||||
| Other revenue | 2,992 | 1,262 | 137.1 | % | |||||||||||||
| Total revenue | $ | 634,685 | $ | 536,623 | 18.3 | % | |||||||||||
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Lease Rent Revenue. Lease rent revenue increased by $22.3 million, or 10.3%, to $238.9 million for the nine months ended September 30, 2026, compared to $216.6 million for the nine months ended September 30, 2025. The increase is due to an increase in the average size of the portfolio as compared to that of the prior year period as well as an increase in average utilization (based on net book value of equipment held for operating lease, maintenance rights, and notes receivable and investments in sales-type leases net of allowances) of equipment held in our operating lease portfolio.
At September 30, 2026, the Company had $3,024.4 million of equipment held in our operating lease portfolio, $128.6 million of notes receivable, and $146.5 million of maintenance rights. At September 30, 2025, the Company had $2,700.4 million of equipment held in our operating lease portfolio, $144.8 million of notes receivable, $27.0 million of maintenance rights, and $16.3 million of investments in sales-type leases. Average utilization (based on net book value of equipment held for operating lease, maintenance rights, and notes receivable and investments in sales-type leases net of allowances) was approximately 84.7% and 84.4% for the nine months ended September 30, 2026 and 2025, respectively.
Two customers accounted for approximately 11% and 10%, respectively, of the Company’s total lease rent revenue during the nine months ended September 30, 2026, and two customers accounted for approximately 13% and 10%, respectively, of the Company’s total lease rent revenue during the nine months ended September 30, 2025.
Maintenance Reserve Revenue. Maintenance reserve revenue decreased $40.4 million, or 22.2%, to $141.3 million for the nine months ended September 30, 2026 from $181.7 million for the nine months ended September 30, 2025. Long-term maintenance revenue was $22.4 million for the nine months ended September 30, 2026 compared to $39.5 million in the prior year period as the maintenance reserves and end-of-lease payments for assets coming off lease with long-term conditions were higher in the prior year period. Long-term maintenance revenue is influenced by end-of-lease compensation and the realization of long-term maintenance reserves associated with assets coming off lease. Engines on lease with “non-reimbursable” usage fees generated $118.9 million of short-term maintenance revenues compared to $142.1 million in the comparable prior year period. Short-term maintenance revenues are a proxy for flight time of our portfolio of engines.
Spare Parts and Equipment Sales. Spare parts and equipment sales increased by $87.0 million, or 161.2%, to $141.0 million for the nine months ended September 30, 2026 compared to $54.0 million in the prior year period. Spare parts sales were $30.4 million and $30.7 million for the nine months ended September 30, 2026 and 2025, respectively, a decrease of $0.3 million, or 0.9%, compared to the same period in 2025. Equipment sales for the nine months ended September 30, 2026 were $110.6 million for the sale of seven engines, five aircraft, and two airframes. Equipment sales for the nine months ended September 30, 2025 were $23.3 million for the sale of two engines. The increase primarily reflects the sale of five aircraft acquired in connection with the WNG Acquisition to the Company’s joint venture, WMES, as well as differences in the timing of sales to third-party customers.
Interest Revenue. Interest revenue decreased by $4.4 million, or 40.1%, to $6.6 million for the nine months ended September 30, 2026 compared to $10.9 million for the nine months ended September 30, 2025. The decrease was due to a lower balance of notes receivable and sales-type leases outstanding during the respective periods, partially attributable to the Company’s sale of 12 notes receivable and sales-type leases to the Company’s investment fund partnership with LMI during the nine months ended September 30, 2026.
Gain on Sale of Leased Equipment. During the nine months ended September 30, 2026, we sold 43 engines and other parts and equipment from the lease portfolio for $317.0 million less economic closing adjustments, resulting in a net gain of $55.4 million. During the nine months ended September 30, 2025, we sold 31 engines, four airframes, and other parts and equipment from the lease portfolio, resulting in a net gain of $48.2 million.
Gain on Sale of Financial Assets. During the nine months ended September 30, 2026, we sold 12 notes receivable and investments in sales-type lease assets for a net gain of $0.6 million. We sold two investments in sales-type lease assets for a net gain of $0.4 million during the nine months ended September 30, 2025.
Maintenance Services Revenue. Maintenance services revenue increased by $12.7 million, or 73.7%, to $30.0 million for the nine months ended September 30, 2026, from $17.3 million for the nine months ended September 30, 2025. The increase reflects growth in engine and aircraft storage and repair services partially offset by the lack of fleet management revenues in the current period due to the sale of that business in 2025.
Management and Advisory Fees. Management and advisory fees increased by $11.5 million to $17.9 million for the nine months ended September 30, 2026, from $6.4 million for the nine months ended September 30, 2025, primarily driven by $9.2 million of fees earned from the LMI Fund and the BXCI Fund in the Company’s role as general partner. The LMI Fund and the BXCI Fund commenced operations in March and April 2026, respectively.
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Depreciation and Amortization Expense. Depreciation and amortization expense increased by $9.4 million, or 11.5%, to $90.6 million for the nine months ended September 30, 2026 compared to $81.2 million for the nine months ended September 30, 2025. The increase is primarily due to an increase in the size of our lease portfolio and the timing of placing acquired engines on lease.
Cost of Spare Parts and Equipment Sales. Cost of spare parts and equipment sales increased by $70.5 million, or 140.6%, to $120.6 million for the nine months ended September 30, 2026 compared to $50.1 million for the nine months ended September 30, 2025. Cost of spare parts sales were $26.9 million and $28.8 million for the nine months ended September 30, 2026 and 2025, respectively, a decrease of $2.0 million, or 6.8%, reflecting the decrease in spare parts sales. Cost of equipment sales were $93.7 million and $21.3 million for the nine months ended September 30, 2026 and September 30, 2025, respectively, reflecting the increase in equipment sales. The increase primarily reflects the sale of five aircraft acquired in connection with the WNG Acquisition to the Company’s joint venture, WMES, as well as differences in the timing of sales to third-party customers.
Cost of Maintenance Services. Cost of maintenance services increased by $13.0 million, or 68.3%, to $32.1 million for the nine months ended September 30, 2026, compared to $19.1 million for the nine months ended September 30, 2025, reflecting the increase in maintenance services revenue.
Write-down of Equipment. Write-down of equipment was $10.5 million for the nine months ended September 30, 2026, primarily reflecting the write-down of eight engines. Write-down of equipment was $23.8 million for the nine months ended September 30, 2025, primarily reflecting the write-down of 19 engines.
General and Administrative Expenses. General and administrative expenses increased by $13.6 million, or 9.2%, to $160.9 million for the nine months ended September 30, 2026 compared to $147.3 million for the nine months ended September 30, 2025. The increase was primarily driven by a $5.6 million rise in personnel costs, including a $6.8 million increase in wages and a $3.8 million increase in share-based compensation, offset by a $6.6 million decrease in incentive compensation. The increase in wages was primarily attributable to higher headcount supporting the Company’s expanding operations. The higher share-based compensation reflects appreciation in the market value of the Company’s equity, as well as equity awards granted to new personnel to support the Company’s continued growth. General and administrative expenses also increased due to a $9.6 million rise in legal fees primarily related to financing and strategic initiatives. These increases were partially offset by a $11.1 million decrease in consulting fees, primarily resulting from the Company’s decision to discontinue its sustainable aviation fuel project. General and administrative costs for the nine months ended September 30, 2026 also included $6.5 million of costs which were recharged to the LMI Fund and BXCI Fund, with the associated revenue of $6.5 million included in Management and Advisory Fees.
Technical Expense. Technical expense increased by $11.0 million, or 50.0%, to $33.1 million for the nine months ended September 30, 2026 compared to $22.1 million for the nine months ended September 30, 2025, primarily due to an increased level of engine repair activity as compared to that of the prior period.
Net Finance Costs. Net finance costs increased by $4.8 million, or 4.6%, to $107.6 million for the nine months ended September 30, 2026 compared to $102.8 million for the nine months ended September 30, 2025. The increase was primarily attributable to an increase of $15.0 million in interest expense associated with WEST IX notes payable, which did not close until December 2025, and an increase of $14.9 million in interest expense associated with Willis Engine Structured Trust VIII (“WEST VIII”) notes payable, which did not close until June 2025. Further, there was an increase in loss on debt extinguishment of $10.0 million, as the Company refinanced its debt. Additionally, derivative-related receipts were $1.0 million for the nine months ended September 30, 2026, as compared to $4.4 million for the nine months ended September 30, 2025, primarily because certain interest rate swap positions were either terminated or matured. These increases were partially offset by a decrease of $14.4 million in interest expense associated with WEST VII notes payable, a decrease of $10.2 million in interest expense associated with our revolving credit facility, a decrease of $9.1 million in interest expense associated with our warehouse credit facility, and a decrease of $7.0 million in interest expense associated with WEST IV notes payable, as these debt instruments were paid down or terminated as part of the Company’s refinancing and capital restructuring.
Gain on Sale of Business. During the nine months ended September 30, 2025, Willis Asset Management Limited (“WAML”), a wholly-owned subsidiary of the Company, entered into a Share Purchase Agreement (the “SPA”), by and between WAML and WMES. Pursuant to the SPA, WAML sold the entire issued share capital of Bridgend Asset Management Limited (“BAML”), a United Kingdom-based aviation consultancy business, to WMES for a total purchase price of $45.0 million subject to certain working capital adjustments. The transaction closed on June 30, 2025, resulting in a gain on sale of business of approximately $43.0 million for the Company.
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Income Tax Expense. Income tax expense was $26.7 million for the nine months ended September 30, 2026 compared to $41.2 million for the nine months ended September 30, 2025. The effective tax rate for the nine months ended September 30, 2026 was 28.5% compared to 28.9% in the prior year period. The Company’s effective tax rate differed from the U.S. federal statutory rate of 21.0% primarily due to executive compensation exceeding $1.0 million as defined in Section 162(m) of the Code, and a worthless stock deduction recognized on the Company’s foreign sustainable aviation fuel subsidiary, which resulted in an ordinary tax loss. The effective tax rate variance in the prior year period was also impacted by the sale of the Company’s entire issued share capital of BAML, for which no statutory tax was due on the gain recognized.
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA
We analyze our financial data to evaluate the health of our business and assess our performance. As appropriate, in addition to income or loss from operations under GAAP, we use Adjusted EBITDA, a non-GAAP financial measure, to evaluate our business. We believe that this non-GAAP financial measure provides meaningful supplemental information regarding our performance as it excludes certain items that may not be indicative of our recurring operating results. We also believe that investors, in addition to management, benefit from referring to this non-GAAP financial measure in assessing our performance, when viewed together with our GAAP results. While items excluded from Adjusted EBITDA may be recurring in nature and should not be disregarded in evaluating performance, it can be useful to exclude such items as they can vary significantly between periods and or not be indicative of current or future operating results.
Because non-GAAP financial measures are not standardized, our calculation of Adjusted EBITDA may differ from similarly titled non-GAAP measures, if any, reported by other companies. This non-GAAP financial measure should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
We define Adjusted EBITDA as net income attributable to common shareholders, excluding (i) income tax expense, (ii) interest expense, (iii) preferred stock dividends/costs, (iv) loss on debt extinguishment, (v) depreciation and amortization expense, (vi) stock compensation expense, (vii) write-down of equipment, (viii) acquisition, financing and divestitures related expenses, and (ix) other items not indicative of our ongoing operating performance.
Adjusted EBITDA was approximately $100.9 million and $135.0 million for the three months ended September 30, 2026 and 2025, respectively, and $345.5 million and $354.4 million for the nine months ended September 30, 2026 and 2025, respectively. The decreases in Adjusted EBITDA were primarily driven by the changes noted in the Results of Operations section above. See below for the reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net income attributable to common shareholders.
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||
| Net income attributable to common shareholders | $ | 10,228 | $ | 22,885 | $ | 62,635 | $ | 97,316 | |||||||||||||||
| Add: Income tax expense | 7,126 | 18,893 | 26,709 | 41,198 | |||||||||||||||||||
| Add: Interest expense | 32,243 | 34,177 | 94,565 | 99,840 | |||||||||||||||||||
| Add: Preferred stock dividends/costs | 1,446 | 1,439 | 4,291 | 4,254 | |||||||||||||||||||
| Add: Loss on debt extinguishment | 562 | 2,963 | 13,010 | 2,963 | |||||||||||||||||||
| Add: Depreciation and amortization expense | 31,367 | 28,662 | 90,613 | 81,236 | |||||||||||||||||||
| Add: Stock compensation expense | 12,262 | 11,281 | 38,717 | 34,939 | |||||||||||||||||||
| Add: Write-down of equipment | 4,450 | 10,201 | 10,509 | 23,768 | |||||||||||||||||||
| Add: Acquisition, financing and divestitures related expenses | 1,164 | 676 | 5,966 | 1,504 | |||||||||||||||||||
| Add: Other (1) | 35 | 3,826 | (1,546) | (32,622) | |||||||||||||||||||
| Adjusted EBITDA | $ | 100,883 | $ | 135,003 | $ | 345,469 | $ | 354,396 | |||||||||||||||
________________________________________________________
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1.During the three months ended September 30, 2026 and 2025, the Company recognized $11 thousand and $3.8 million, respectively, and $(1.6) million and $10.3 million, respectively, during the nine months ended September 30, 2026 and 2025 in non-recurring project expenses associated with the sustainable aviation fuel project, which the Company decided to cease further investment in. The negative expense recognized during the nine-month period ended September 30, 2026 reflects government grant proceeds recognized. Additionally, during the three and nine months ended September 30, 2026, the Company recognized $24 thousand in expense associated with reincorporation, and during the nine months ended September 30, 2025, the Company recognized $43.0 million in relation to the gain on sale of the BAML business.
Financial Position, Liquidity and Capital Resources
Liquidity
At September 30, 2026, the Company had $11.1 million of cash and cash equivalents and $122.6 million of restricted cash. We fund our operations primarily from cash provided by our leasing activities. We finance our growth through borrowings secured primarily by our equipment lease portfolio. Cash of approximately $1,255.0 million and $1,005.1 million for the nine months ended September 30, 2026 and 2025, respectively, was derived from our borrowing activities. In these same time periods, $1,433.2 million and $1,029.8 million, respectively, was used to pay down related debt. At September 30, 2026, the Company had approximately $1.1 billion of unused borrowing capacity on its credit facility.
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 may hedge additional amounts of our floating rate debt in the future.
Cash Flows Discussion
Cash flows provided by operating activities were $239.0 million and $209.1 million for the nine months ended September 30, 2026 and 2025, respectively. The $29.9 million, or 14.3%, increase in operating cash flows was primarily driven by a period over period $32.5 million increase in cash flows from changes in accounts payable and accrued expenses as well as a $11.7 million increase in cash flow from changes in maintenance reserves for the nine months ended September 30, 2026. 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. The average utilization rate (based on net book value of equipment held for operating lease, maintenance rights, and notes receivable and investments in sales-type leases net of allowances) for the nine months ended September 30, 2026 and 2025 was approximately 84.7% and 84.4%, 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.
Cash flows used in investing activities were $453.3 million for the nine months ended September 30, 2026 and primarily reflected $837.6 million for the purchase of equipment held for operating lease and for sale (including capitalized costs and prepaid deposits made in the period), $85.5 million for the issuance of notes receivable, and $52.8 million for the purchase of investments and contributions to joint ventures, partially offset by proceeds from sale of equipment (net of selling expenses) of $418.0 million and proceeds from sale of notes receivable (net of selling expenses) of $88.4 million. Cash flows used in investing activities were $108.2 million for the nine months ended September 30, 2025 and primarily reflected $310.6 million for the purchase of equipment held for operating lease and for sale (including capitalized costs and prepaid deposits made in the period) and $23.2 million for the purchase of property, equipment and furnishings, which was primarily related to leasehold improvements, partially offset by proceeds from sale of equipment (net of selling expenses) of $194.3 million and proceeds from sale of business of $21.9 million.
Cash flows used in financing activities were $198.9 million for the nine months ended September 30, 2026 and primarily reflected $1,433.2 million in principal payments, $28.1 million in cancellation of restricted stock units in satisfaction of withholding tax, $11.7 million in debt issuance costs, and $9.2 million in common stock cash dividends paid, partially offset by $1,255.0 million in proceeds from debt obligations and $34.4 million in proceeds from issuance of preferred stock, net. Cash flows used in financing activities were $62.4 million for the nine months ended September 30, 2025 and primarily reflected $1,029.8 million in principal payments on debt obligations and $18.7 million in cancellation of restricted stock in satisfaction of withholding tax, partially offset by $1,005.1 million in proceeds from debt obligations.
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Cash Dividends
During the nine months ended September 30, 2026 and September 30, 2025, the Company paid cash dividends of $9.2 million and $5.7 million, respectively, to shareholders of common stock.
Preferred Stock Dividends
The Company’s Series A and Series B Preferred Stock accrue quarterly dividends at the rates per annum of 8.35% and 8.09% per share, respectively. During each of the nine months ended September 30, 2026 and 2025, the Company paid total Series A Preferred Stock dividends of $4.1 million and $4.3 million, respectively.
Debt Obligations and Covenant Compliance
At September 30, 2026, debt obligations consisted of loans totaling $2,524.7 million, net of unamortized issuance costs and note discounts, payable with interest rates varying between approximately 2.5% and 8.0%. Substantially all of our assets are pledged to secure our obligations to creditors. For further information on our debt instruments, see Note 4 “Debt Obligations” in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Virtually all of our debt requires our ongoing compliance with certain financial covenants 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 borrow no more than 85% of an engine’s net book value and 65% of the net book value of an airframe, spare parts or other assets. Therefore, we must have other available funds for the balance of the purchase price of any new equipment to be purchased. Our revolving credit facility, certain indentures and other debt related agreements also contain cross-default provisions. 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 debt is secured by engines and aircraft, and to the extent that engines or aircraft are sold, repayment of that portion of the debt could be required.
At September 30, 2026, we were in compliance with the covenants specified in our revolving credit facility, including the Interest Coverage Ratio requirement of at least 2.25 to 1.00, and the Total Leverage Ratio requirement of not greater than 4.25 to 1.00. The Interest Coverage Ratio, as defined in the credit facility, is the ratio of earnings before interest, taxes, depreciation and amortization 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 September 30, 2026, we were in compliance with the covenants specified in the WEST III, WEST V, WEST VI, WEST VII, WEST VIII, and WEST IX indentures and servicing and other debt related agreements.
Off-Balance Sheet Arrangements
As of September 30, 2026, 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.
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Contractual Obligations 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 September 30, 2026:
| Payment due by period (in thousands) | |||||||||||||||||||||||||||||
| Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | |||||||||||||||||||||||||
| Debt obligations | $ | 2,553,934 | $ | 116,701 | $ | 528,017 | $ | 1,502,837 | $ | 406,379 | |||||||||||||||||||
| Interest payments under debt obligations | 359,013 | 86,999 | 154,149 | 112,131 | 5,734 | ||||||||||||||||||||||||
| Purchase obligations | 840,406 | 151,602 | 578,285 | 110,519 | — | ||||||||||||||||||||||||
| Operating lease obligations | 28,127 | 6,249 | 7,286 | 1,859 | 12,733 | ||||||||||||||||||||||||
| Total | $ | 3,781,480 | $ | 361,551 | $ | 1,267,737 | $ | 1,727,346 | $ | 424,846 | |||||||||||||||||||
From time to time we enter into contractual commitments to purchase engines directly from original equipment manufacturers. We are currently committed to purchasing 27 additional new LEAP-1A engines and 13 additional new LEAP-1B engines for an aggregate total of $840.4 million by 2030. Further, we are currently committed to purchasing three engines and two aircraft for approximately $96.3 million in 2026. The purchase obligations are subject to escalation based on the closing date of each transaction. 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.
In December 2020, the Company entered into definitive agreements for the purchase of 25 Pratt & Whitney aircraft engines. In connection with the purchase agreements, the Company is obligated to perform certain future overhaul and maintenance services, which are currently estimated to aggregate between $106.6 million and $132.1 million by 2030. If such services are not completed by that date, performance may extend through 2035, with total costs not expected to exceed $172.8 million.
We have estimated the interest payments due under debt obligations by applying the interest rates applicable at September 30, 2026 to the remaining debt, adjusted for the estimated debt repayments identified in the table above. Actual interest payments made will vary due to changes in the rates.
We believe our equity base, cash on hand, internally generated funds and existing debt facilities are sufficient to maintain our level of operations for the next twelve months. The level of internally generated funds could decline if the amount of equipment off-lease increases, there is a decrease in availability under our existing debt facilities, or there is a significant increase in borrowing costs. Such decline would impair our ability to sustain our current 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 would be limited to that which can be funded from internally generated capital.
Recent Accounting Pronouncements
The most recent adopted accounting pronouncements and accounting pronouncements to be adopted by the Company are described in Note 1 to our Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
Our primary market risk exposure is that of interest rate risk. A change in interest 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 September 30, 2026, $697.0 million of our outstanding debt is variable rate debt. We estimate that for every one percent increase or decrease in interest rates on our variable rate debt, net of our interest rate swaps, our annual interest expense would increase or decrease by $6.5 million.
We hedge a portion of our borrowings from time to time, effectively fixing the rate of these borrowings. This hedging activity, which at times is required by our borrowing facilities, 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 changes 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. Substantially all of our leases require payment in U.S. dollars. During the nine months ended September 30, 2026 and 2025, 61% and 70%, respectively, of our lease rent revenues came from non-United States domiciled lessees. If these lessees’ currency devalues against the U.S. dollar, the lessees could potentially encounter difficulty in making their lease payments.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures. In accordance with Rule 13a-15(b) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness and design of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, our CEO and CFO have concluded that as of September 30, 2026, our disclosure controls and procedures were 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 our management, including our CEO and CFO, 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 error 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 error 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.
(c) Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting during our fiscal quarter ended September 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Investors should carefully consider the risks in the “Risk Factors” in Part 1: Item 1A of our 2025 Form 10-K, filed with the SEC on March 10, 2026, and our other filings with the SEC. These risks are not the only ones facing the Company. Additional risks not currently known to us or that we currently believe are immaterial may also impair our business operations. Any of these risks could adversely affect our business, cash flows, financial condition and results of operations. The trading price of our common stock could fluctuate due to any of these risks, and investors may lose all or part of their investment. In assessing these risks, investors should also refer to the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q. There have been no material changes in our risk factors from those discussed in our 2025 Form 10-K.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) None.
(b) None.
(c) Issuer Purchases of Equity Securities. In December 2024, the Board of Directors approved the renewal of the existing common stock repurchase plan which allows for repurchases of up to $60.0 million of the Company’s common stock, extending the plan through December 31, 2026. Repurchased shares are immediately retired. No shares were repurchased during the nine months ended September 30, 2026 under the plan. Share repurchase activity during the three months ended September 30, 2026 was as follows (in thousands):
| Period | (a) Total Number of Shares Purchased | (b) Average Price Paid per Share | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | d) Approximate Dollar Value of Shares that May Yet be Purchased under the Plans of Programs | ||||||||||||||||||||||
| July 1, 2026 through July 31, 2026 | — | — | — | $ | 39,595 | |||||||||||||||||||||
| August 1, 2026 through August 31, 2026 | — | — | — | $ | 39,595 | |||||||||||||||||||||
| September 1, 2026 through September 30, 2026 | — | — | — | $ | 39,595 | |||||||||||||||||||||
| Total | — | — | — | $ | 39,595 | |||||||||||||||||||||
On October 28, 2026, the Board of Directors of the Company approved the renewal of its share repurchase program under which the Company may repurchase its common stock for a total aggregate purchase price of up to $200.0 million (the “Share Repurchase Program”). Share repurchases may be made at management’s discretion from time to time in the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The actual number of shares of common stock repurchased, and the timing and price of any repurchases, will depend on market conditions, applicable legal requirements and other factors. The Company is not obligated to acquire any particular number of shares of common stock. The Share Repurchase Program has been extended through December 31, 2031, but also may be suspended, modified or discontinued at any time.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the quarter ended September 30, 2026, none of the Company’s Section 16 officers or directors (as defined in Rule 16a-1 under the Exchange Act) informed us of the adoption termination of a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408, except as described in the table below:
| Name & Title | Date Adopted | Character of Trading Arrangement (1) | Aggregate Number of Shares of Common Stock to be Purchased or Sold Pursuant to Trading Arrangement | Duration (2) | Other Material Items | Date Terminated | ||||||||||||||
| May 18, 2026 | Up to 600,000 shares to be sold (3) | November 30, 2026 (4) | N/A | |||||||||||||||||
(1) Except as indicated by footnote, each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended (the “Rule”).
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(2) Except as indicated by footnote, each trading arrangement permitted or permits transactions through and including the earlier to occur of (a) the completion of all purchases or sales or (b) the date listed in the table. Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” only permitted or only permits transactions upon expiration of the applicable mandatory cooling-off period under the Rule.
(3) Charles F. Willis, IV ’s trading plan provided for the sale of up to 600,000 shares of the Company’s common stock, subject to price and volume limits. The arrangement was terminated on August 26, 2026, as reported on the Form 4 filed on August 27, 2026.
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Item 6.
EXHIBITS
________________________________________________________
* Filed herewith.
** Furnished herewith.
# Portions of this exhibit have been omitted in accordance with Item 601(b)(10)(iv) of Regulation S-K.
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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, thereunto duly authorized.
Date: November 3, 2026
| Willis Lease Finance Corporation | ||||||||
| By: | /s/ Scott B. Flaherty | |||||||
| Scott B. Flaherty | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial and Accounting Officer) | ||||||||
50
Execution Version PURCHASE AND SALE AGREEMENT
Dated as of July 10, 2026
WNG INTERNATIONAL MASTER FUND II, L.P.
as Cayman Seller,
as Cayman Seller,
WNG II AIRCRAFT MANAGEMENT (DELAWARE), LLC
as U.S. Seller,
as U.S. Seller,
WILLIS DALLAS LTD.
as Purchaser
as Purchaser
and
WILLIS LEASE FINANCE CORPORATION
solely for the limited purposes set forth in Section 9.1
solely for the limited purposes set forth in Section 9.1
TABLE OF CONTENTS
PAGE
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3 | ||||||||
4 | ||||||||
| Schedule 1 | – | Assets | ||||||
| Schedule 2 | – | Information about each Target Company | ||||||
| Schedule 3 | – | Example Purchase Price Calculation | ||||||
| Schedule 4 | – | Closing Conditions | ||||||
| Schedule 5 | – | Sellers’ Representations and Warranties | ||||||
| Schedule 6 | – | Pre-Closing Conduct | ||||||
| Schedule 7 | – | Anticipated Transactions | ||||||
| Schedule 8 | – | Excluded Revenue Amounts | ||||||
| Exhibit A | – | Form of Transition Services Agreement | ||||||
5 | ||||||||
THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of July 10, 2026, by and among WNG International Master Fund II, L.P., a Cayman Islands exempted limited partnership (the “Cayman Seller”), WNG II Aircraft Management (Delaware), LLC, a Delaware limited liability company (the “U.S. Seller” and together with the Cayman Seller, the “Sellers”), Willis Dallas Ltd., a Cayman Islands exempted company (the “Purchaser”) and, solely for the limited purposes set forth in Section 9.1 of this Agreement, Willis Lease Finance Corporation, a Delaware corporation (the “Purchaser Parent Guarantor”). Each of the Sellers and the Purchaser is a “Party” and are referred to collectively herein as the “Parties.”
RECITALS
WHEREAS, the Cayman Seller is the sole legal and beneficial owner of the entire issued share capital of WNG II Aircraft Leasing (Cayman) Ltd. (the “Cayman Company”);
WHEREAS, the U.S. Seller is the sole legal owner of 100% of the issued and outstanding limited liability company interests of WNG Aircraft Management 3, LLC, a Delaware limited liability company (the “U.S. Company”);
WHEREAS, the Cayman Seller desires to sell to the Purchaser, and the Purchaser desires to purchase from the Cayman Seller, the entire issued share capital of the Cayman Company (the “Cayman Sale Interests”) upon the terms and subject to the conditions set forth herein; and
WHEREAS, the U.S. Seller desires to sell to the Purchaser, and the Purchaser desires to purchase from the U.S. Seller, 100% of the issued and outstanding limited liability interests of the U.S. Company (the “U.S. Sale Interests”) upon the terms and subject to the conditions set forth herein; and
NOW, THEREFORE, in consideration of the foregoing, the representations, warranties, covenants and agreements set forth in this Agreement, and other good and valuable consideration, the adequacy and receipt of which is hereby acknowledged, the Parties hereby agree as follows:
Article I
DEFINITIONS
DEFINITIONS
Section 1.1.Definitions. For purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires, the following terms, when used in this Agreement and other documents delivered in connection herewith, have the meanings assigned to them in this Section 1.1.
“2024 Accounts” means, with respect to the Irish DACs and any Asset Owning Company listed in Part A of Schedule 2, the audited accounts of each such Irish DAC and/or Asset Owning Company for the year ended December 31, 2024 contained in folder 3.7.1.5 of the applicable Data Room.
“2025 Management Accounts and Financial Schedules” means, with respect to the Irish DACs and any Asset Owning Company listed in Schedule 2, the draft management accounts and
financial schedules for the Irish DACs and each Asset Owning Company for the year ended December 31, 2025 contained in folders 3.7.2.30, 3.7.2.24 and 3.7.2.26 of the applicable Data Room.
“2026 Trial Balance” means, with respect to any Target Company listed in Schedule 2, a trial balance for such Target Company as at March 31, 2026, contained in folder 3.7.2.29.15 of the applicable Data Room.
“Actual Adjusted Purchase Price” has the meaning given in Section 2.10(a).
“Adjusted Purchase Price” has the meaning given in Section 2.1.
“Adjustment Period” means the period from (but excluding) the Economic Closing Date to and including the Closing Date.
“Adjustment Rate” means a rate per annum equal to 6.25% calculated on the basis of a 360-day year and the actual number of days in the relevant period.
“Affiliate” means, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, through one or more intermediaries or otherwise. For the purposes of this definition, “control” (including, with correlative meaning, the terms “controlling,” “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of such Person through the ownership of the voting securities, by contract or otherwise. For purposes of the definition of “control”, a general partner or managing member of a Person shall always be considered to control such Person.
“Affiliate Transaction” has the meaning given in paragraph 14.2 of Schedule 5.
“Agreed Adjustment Amount” means US$823,154.70.
“Agreed RWI Amount” means US$190,000.
“Agreement” is defined in the Preamble.
“Aircraft” means each Aircraft listed in Schedule 1-A, including the related Aircraft Engines and Aircraft Parts installed thereon (to the extent title is vested in the Lessor or owner of such Aircraft (if different)).
“Aircraft Documents” has, in respect of an Aircraft, the meaning given to such term in the relevant Aircraft Lease (or, if such Aircraft is not subject to an Aircraft Lease on the date of this Agreement, a substantially equivalent meaning ascribed to such term in the Leases generally).
“Aircraft Engines” means, with respect to each Aircraft, the Engines in respect of such Aircraft, as listed in Schedule 1-A.
“Aircraft Engine Lease” means, with respect to each Aircraft Engine, the Lease Agreement listed in Schedule 1-A in respect of such Aircraft Engine.
“Aircraft Lease” means, with respect to each Aircraft, the Lease Agreement listed in Schedule 1-A with respect to such Aircraft.
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“Aircraft Owning Company” means each of the entities listed as an “Aircraft Owning Company” in Schedule 2.
“Aircraft Parts” means, with respect to each Aircraft, the “Parts” (or similar term) as defined in the Aircraft Lease of such Aircraft (or, if such Aircraft is not subject to an Aircraft Lease on the date of this Agreement, a substantially equivalent meaning ascribed to such term in the Leases generally).
“Allocated Consideration Amount” has the meaning given to it in Section 2.1.
“AML Laws” means any anti-money laundering or anti-terrorism financing laws, rules or regulations, including, without limitation, (a) the U.S. Bank Secrecy Act, as amended by the USA PATRIOT Act, (b) any laws, rules or regulations by any EU member state, including Ireland, to implement the Fourth EU Money Laundering Directive (Directive 2015/849/EC), (c) the Cayman Islands Proceeds of Crime Act, Anti-Money Laundering Regulations, Proliferation Financing (Prohibition) Act and Terrorism Act, and (d) any financial-reporting, record-keeping, and know-your-client requirements under any of the foregoing, in each case as amended from time-to-time.
“Anti-Bribery Laws” means any anti-corruption or anti-bribery laws, rules or regulations, including, without limitation, (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended, (b) the UK Bribery Act 2010, and (c) any laws, rules or regulations enacted to implement the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and (d) the Irish Criminal Justice (Corruption Offences) Act 2018.
“Anticipated Transactions” means each of the transactions detailed and described in Schedule 7, as such may be amended from time to time solely pursuant to and in accordance with Section 4.7(b).
“Asset” means each Aircraft and each Spare Engine.
“Asset Manager” means WNG Aircraft Services Limited.
“Asset Owning Company” means each of the Aircraft Owning Companies and the Spare Engine Owning Companies.
“Assignment Agreement” means the assignment agreement by and between the U.S. Seller and the Purchaser in respect of the U.S. Sale Interests, to be entered into at the Closing, in form and substance reasonably acceptable to the U.S. Seller and the Purchaser.
“Bank Account” means each of the bank accounts listed in Schedule 2.
“Base Purchase Price” has the meaning given in Section 2.1.
“Business Day” means a day other than:
(a)a Saturday or Sunday; or
(b)a public holiday in New York City, U.S.A., Tokyo, Japan, or the Republic of Ireland.
“Cap” has the meaning given in Section 8.5(b).
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“Cash Sweep Date” has the meaning given in Section 2.1(d)(ix).
“Cayman Company” is defined in the recitals.
“Cayman Sale Interests” is defined in the recitals.
“Claim” has the meaning given in Section 8.1.
“Claim Notice” has the meaning given in Section 8.4.
“Closing” is defined in Section 2.3(a).
“Closing Conditions” means the Purchaser Closing Conditions and the Seller Closing Conditions.
“Closing Date” means the date on which Closing occurs.
“Closing Leakage” has the meaning given in Section 2.2(b).
“Closing Purchase Price” has the meaning given in Section 2.2(a).
“Closing Purchase Price Calculation Statement” has the meaning given in Section 2.2(b).
“Cloudcards” means Cloudcards Limited.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company Policies” has the meaning given in paragraph 11 of Schedule 5.
“Data Room(s)” means the virtual data room titled “WNG II Project” provided by the Sellers and hosted by Intralinks and the virtual data room named “WNG Data Room” hosted by Sparta as at the Data Room Cut-Off Time.
“Data Room Cut-Off Time” means 11:59 p.m. on the date that is one (1) day prior to the date of this Agreement.
“Data Room Index” means the Index of each of the Data Rooms in the agreed form attached to the Disclosure Letter.
“Deposit” has the meaning given in Section 2.3.
“Disclosure Letter” means the letter, dated as of the date hereof, from the Sellers to the Purchaser in relation to the Seller Representations and Warranties, and the receipt of which has been acknowledged by the Purchaser.
“Disposal Entity” means WNG II Aircraft Leasing (Sweden 1) AB.
“Disposal Tax Return” has the meaning given in Section 6.6.
“Dispute Period” has the meaning given in Section 8.6(a).
“Dispute Statement” has the meaning given in Section 2.10(b).
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“Disputed Item” has the meaning given in Section 2.10(b).
“Dormant Entities” means each of WNG II Aircraft Leasing 1 Limited, WNG II Aircraft Leasing 8 Limited, WNG II Aircraft Leasing 11 Limited, WNG II Aircraft Leasing 14 Limited, WNG II Aircraft Leasing 19 Limited, WNG II Aircraft Leasing 21 Limited and WNG II Aircraft Leasing 13 Limited.
“Economic Closing Date” means June 30, 2025.
“Economic Closing Date Accounts” means, with respect to the Irish DACs and any Asset Owning Company listed in Schedule 2, the management accounts and financial schedules for the Irish DACs and each Asset Owning Company as at June 30, 2025 contained in file 3.7.2.20, folder 3.7.2.25 and file 3.7.2.24.2 of the applicable Data Room.
“Employee” means any Person who:
(i)as at the date of this Agreement is employed by the Sellers or any of its Affiliates; or
(ii)is (a) employed by the Sellers or any of its Affiliates in the period commencing at the date of this Agreement and ending on the date falling (12) months after the Closing Date and (b) is providing services under, or in connection with, the Transition Services Agreement,
(for the avoidance of doubt, any Person who was engaged as an independent contractor but is deemed by operation of law to be an employee shall be deemed to be employed for the purposes of this definition).
“Encumbrance” means any claim, charge, lease, covenant, easement, encumbrance, pledge, security interest, lien, option, pledge, right of others, mortgage, deed of trust, hypothecation, conditional sale, or restriction (whether on voting, sale, transfer, disposition, or otherwise), whether imposed by contract or understanding or Law.
“Engagement” has the meaning given in Section 4.13(c)(ii).
“Engines” means the Aircraft Engines and the Spare Engines.
“Environmental Law” means any Law regulating or relating to the protection of human health, natural resources or the environment, including Laws relating to contamination and the use, generation, management, handling, transport, treatment, disposal, storage, release or threatened release of, or exposure to, hazardous substances.
“Environmental Permit” means any consent, approval, authorization, franchise, license, registration, permit, exemption, waiver, variance or certificate of, or granted by, any Governmental Entity required pursuant to applicable Environmental Laws.
“Equity Interest” means, with respect to each of the Irish DACs and the Asset Owning Companies, the entire issued share capital of each such Irish DAC and/or each Asset Owning Company respectively and as more particularly set out in Schedule 2.
“Escrow Agent” means Wilmington Trust, National Association.
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“Escrow Agreement” means the Escrow Agreement dated 9 April 2026 among Purchaser’s Parent Guarantor, WNG and Escrow Agent.
“Estimated True-Up Amount” has the meaning given in Section 2.10(a).
“Event of Default” means, with respect to any Asset, any event described as an “Event of Default” or similar term in the Lease or Lease Document of such Asset.
“Example Purchase Price Calculation” has the meaning given in Section 2.2(b).
“Exchange Rate” means for a particular currency for a particular day, the rate for the conversion of that currency into US Dollars published on Bloomberg page “BFIX” showing as having been fixed at 4.00 pm, New York time, for the required currency pair.
“Existing Lessor” means, in respect of each Asset that is subject to a Lease, the person designated in Schedule 1 as the Existing Lessor under such Lease of such Asset.
“Excluded Revenue Amounts” means, in respect of an Asset:
(i)all revenue received on or prior the Economic Closing Date;
(ii)the amounts set forth on Schedule 8, which represent all amounts in respect of an Asset that (A) are insurance proceeds or reimbursement amounts (including indemnity payments) in respect of an Asset that would constitute Other Revenue but that are an asset or a legal right of a Seller or its Affiliates (other than the Target Companies) and (B) were received by a Target Company for the account of the Sellers or their Affiliates (other than any of the Target Companies) after the Economic Closing Date through (and including) the date of this Agreement; and
(iii)amounts that the Sellers demonstrate in writing (A) are insurance proceeds or reimbursement amounts (including indemnity payments) in respect of an Asset that would constitute Other Revenue but that are an asset or a legal right of a Seller or its Affiliates (other than the Target Companies) and (B) were received by a Target Company for the account of the Sellers or their Affiliates (other than any of the Target Companies) after the date of this Agreement through (and including) the Closing.
“Export Controls” means any laws, rules or regulations controlling the export of any goods, technology or services, including, without limitation, the Export Administration Regulations administered by the U.S. Department of Commerce and the International Traffic in Arms Regulations administered by the U.S. Department of State.
“Final Closing Date” means (i) the date that is sixty (60) days after the date of this Agreement or (ii) such later date as agreed in writing by the Sellers and the Purchaser.
“Final Holdback Leakage Adjustment” has the meaning given in Section 3.4(a).
“Final Holdback Settlement Date” has the meaning given in Section 3.4(a).
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“Final Settlement Date” has the meaning given in Section 2.10(b).
“Governmental Entity” means any nation, state, territory, province, county, city or other unit or subdivision thereof or any entity, authority, agency, department, board, commission, instrumentality, court or other judicial body authorized on behalf of any of the foregoing to exercise legislative, judicial, regulatory or administrative functions and any governmental or non-governmental self-regulatory organization of which the Sellers, the Purchaser or any Affiliate of any of the foregoing Persons, as applicable, is a member or to whose regulations any of the foregoing Persons is subject.
“Guaranteed Obligations” has the meaning given in Section 9.1.
“Guaranteed Agreement” has the meaning given in Section 9.1.
“Holdback Amount” means $1,517,200.
“Holdback Leakage” has the meaning given in Section 3.2(a).
“Holdback Leakage Adjustment” has the meaning given in Section 3.2.
“Holdback Leakage Dispute” has the meaning given in Section 3.4.
“Holdback Leakage Dispute Statement” has the meaning given in Section 3.4(a).
“Holdback Leakage Statement” has the meaning given in Section 3.2.
“Holdback Payment Date” has the meaning given in Section 3.3.
“IFRS” means International Financial Reporting Standards.
“Indebtedness” means with respect to any Person, at any particular time, (a) all Liabilities or obligations of such Person for borrowed money, whether current, short-term or long-term, whether secured or unsecured, and whether or not represented by bonds, notes, debentures or similar instruments or debt securities (including the principal amount thereof or, if applicable, the accreted amount thereof and the amount of accrued and unpaid interest thereon, related expenses, prepayment penalties, commitment and other fees, reimbursements, indemnities and all other amounts payable in connection therewith); (b) Liabilities or obligations of such Person evidenced by bonds, debentures, notes, or other similar instruments or debt securities; (c) all obligations of a such Person as lessee under a lease required to be accounted for as a capital lease and/or finance lease in accordance with IFRS; (d) all Liabilities or obligations for the deferred purchase price of property or services with respect to which such Person is liable, contingently or otherwise, as obligor or otherwise, including all seller notes, contingent payments, earnouts and non-competition payments; (e) contingent reimbursement obligations, whether or not drawn or incurred, with respect to letters of credit or similar obligations and bankers’ acceptances issued for the account of such Person; (f) all Liabilities or obligations guaranteed in any manner by such Person (including guarantees in the form of an agreement to repurchase or reimburse); (g) all Liabilities or obligations secured by a lien on the assets or properties of such Person; (h) all deferred purchase price obligations related to past acquisitions by such Person; (i) any accrued and unpaid interest owed with respect to any obligation described in the preceding clauses (a) through (h); (j) all fees, expenses, premiums, penalties (including pre-payment penalties), breakage costs, change of control payments, redemption fees or make whole payments attributable to or arising under the terms of any obligation described in the preceding clauses (a) through (i); and (k) any guarantees (direct or indirect), make-whole agreements, hold harmless agreements or similar arrangements with respect to any amounts of a
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type described in the preceding clauses (a) through (j); provided that, for the avoidance of doubt, “Indebtedness” shall not include any Taxes.
“Independent Firm” has the meaning given in Section 2.10(b).
“Inside Date” has the meaning given in Section 2.3(a).
“Insurance Policies” has the meaning given in paragraph 11 of Schedule 5.
“Intellectual Property Rights” means any and all intellectual property rights anywhere in the world, including all patents, patent applications, rights to inventions, copyright and related rights in works of authorship, moral rights, trademarks, trade names, service marks business names and domain names, and all associated goodwill, rights in designs, rights in software, database rights, trade secrets, rights to use, and protect the confidentiality of, confidential information (including know-how), and all other intellectual property rights, in each case whether registered or unregistered and including with respect to any of the foregoing all applications and rights to apply for and be granted, renewals or extensions of, and rights to claim priority therefrom.
“Interim Period” means the period from the date of this Agreement until the earlier of the Closing and the termination of this Agreement, as applicable.
“Intercompany Accounts” means any accounts, balances, payables, receivables or Indebtedness or other amounts owing between (a) the Sellers or any of their respective Affiliates (other than any Target Company), on the one hand, and (b) any Target Company, on the other hand.
“Intercompany Release Documents” means each release document in respect of intercompany debt, internal financings or similar transactions between a Target Company and any other Person (other than another Target Company).
“Intra-Group Payables” means, with respect to each Target Company, all amounts owing by such Target Company to another Target Company (but excluding amounts to be repaid at Closing) calculated on the basis that all servicing, swap or other agreements between a Target Company and the relevant Target Company have been terminated.
“Irish Companies Act” means the Companies Act 2014 and all acts of the Oireachtas and statutory instruments which are to be read as one with, or construed or read together as one with, the Companies Act 2014, and every statutory modification or re-enactment thereof for the time being in force (or, where the context so admits or requires, any one or more of such Acts) and all orders and regulations made thereunder.
“Irish DACs” means WNG II Aircraft Leasing (Ireland) DAC and WNG II Funding DAC (collectively Irish DACs and individually referred to as an “Irish DAC”).
“Law” means any statute or law (including common law), rule, treaty or regulation and any decree, injunction, judgment, order, ruling, assessment or writ of any applicable Governmental Entity.
“Leakage” has the meaning given in Section 3.1.
“Lease” means each Aircraft Lease and each Spare Engine Lease.
8 | ||||||||
“Lease Documents” means, with respect to any Asset, all documents related to such Asset contained in folders 1.1 and 2.1 of the applicable Data Room.
“Lessees” means, in respect of each Asset, the party set forth as the Lessee in Schedule 1 (each, a “Lessee”).
“Lessors” means, in respect of each Asset, the party set forth as the Lessor in Schedule 1 (each, a “Lessor”).
“Lessor Maintenance Contributions” means, with respect to any applicable Asset, the amount of maintenance contributions or other payments paid by any Asset Owning Company to the Lessee of such Asset under and in accordance with the Lease Documents for such Asset.
“Liability” and “Liabilities” means any and all liabilities, obligations, or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute, or contingent, accrued or unaccrued, matured or unmatured or otherwise.
“Loss” means any loss, liability, fees, out-of-pocket costs and expenses (including reasonable and documented out-of-pocket legal fees, costs, expenses and related charges and fees, costs and expenses of investigation) in each case, that are actually incurred by a Seller Indemnitee; provided, however, that the term “Loss” shall not include any Seller Indemnitee’s management time or overhead expenses.
“Maintenance Expenses” means aircraft-related maintenance expenses paid by an Asset Owning Company in accordance with the terms of an applicable Lease and which are not paid from Maintenance Reserve Payments.
“Maintenance Reserve Balance” means the balance of Maintenance Reserve Payments held by the Asset Owning Companies on the Economic Closing Date, in the amount of $77,057,790.23.
“Maintenance Reserve Expense” means, with respect to any Asset, the amounts paid by any Asset Owning Company to the Lessee of such Asset in respect of amounts received as Maintenance Reserve Payments from time to time under the Lease of such Asset.
“Maintenance Reserve Payment” means, with respect to any Asset, amounts paid by the Lessee of such Asset to an Asset Owning Company by way of maintenance reserve payment (howsoever described) under the Lease of such Asset (and, for the avoidance of doubt, fees described as Use Fees in Spare Engine Lease are not Maintenance Reserve Payments).
“Maintenance Reserve Rates” means, with respect to any Asset for which Maintenance Reserve Payments are applicable, the rates (whether by hour, cycle, calendar time or otherwise) specified in the applicable Lease pursuant to which the applicable Lessee’s Maintenance Reserve Payments are determined.
“Major Damage” means, with respect to any Asset, damage in excess of the damage notification threshold under the Lease Document, or, with respect to any off-lease Asset, damage in excess of $100,000.
“Material Adverse Effect” means any event, fact, matter or circumstance occurring after the execution of this Agreement that, individually or in the aggregate, has had, or would be reasonably likely to have, a material adverse effect on the business, results of operation, assets, liabilities or condition (financial or otherwise) of the Target Companies as a whole.
9 | ||||||||
“Material Contract” has the meaning given in paragraph 13.1 of Schedule 5.
“Net Insurance Proceeds” has the meaning given in Section 2.7.
“Net Rent” means, with respect to an Asset, an amount equal to (x) the aggregate amount of Rent paid in respect of such Asset minus (y) the aggregate amount of Willis Asset Expenses in respect of such Asset plus (z) without duplication of amounts already included as Rent in clause (x), the aggregate amount of any Rent that was offset by security or other deposits for payment in respect of such Asset.
“Other Revenues” means, with respect to an Asset, all other amounts paid to or in respect of any Target Company or any Asset from (and excluding) the Economic Closing Date through (and including) the Closing, including, without limitation, (a) indemnity payments, insurance proceeds and amounts paid in respect of such Asset to an Asset Owning Company by way of end of lease compensation (howsoever described) or (b) other periodic or unscheduled payments under the Lease Documents for such Asset; provided that Other Revenues shall not include any (i) Rent, (ii) Maintenance Reserve Payment (other than the release of such amount into income), (iii) Security Deposits or (iv) Excluded Revenue Amounts.
“Payoff Amount” has the meaning given in the definition of “Volofin Payoff Letter”.
“Parts” means the Aircraft Parts and the Spare Engine Parts.
“Party” and “Parties” is defined in the Preamble.
“Permitted Security Interest” means, with respect to any Asset, (a) any Permitted Lien or Permitted Security Interest, as the case may be (in each case as defined under the relevant Lease), excluding for the purposes hereof any (i) Lessor’s Lien or Lessor Lien, as the case may be (or similar term, in each case as defined in under the relevant Lease) and (ii) any Encumbrance arising from any Financing Documents (or similar term, as defined in the relevant Lease), (b) any Encumbrance created by or resulting from any Indebtedness, Liability, act or omission of the Purchaser, and (c) any Encumbrance which the relevant Lessee is obliged to remove pursuant to the terms of the relevant Lease and/or for which the relevant Lessee is obliged to indemnify the applicable Target Company pursuant to the terms of the relevant Lease.
“Person” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, governmental entity or instrumentality or other entity of any kind.
“Policy” means, with respect to any Asset, the insurance relating to such Asset procured by the Lessee thereof pursuant to the Lease thereof, as evidenced by the applicable insurance certificate provided in accordance with the applicable Lease.
“Post-Closing Statement” has the meaning given in Section 2.10(a).
“Pre-Closing Tax Period” means (i) each taxable period ending on or before the Closing Date and (ii) with respect to a taxable period that begins on or before, and ends after, the Closing Date, the portion of such taxable period ending on the Closing Date.
“Pre-Paid Vendor Costs” means an aggregate amount up to $271,000, representing a portion of the pre-paid service fees previously paid by or on behalf of the relevant Target Company pursuant to (i) that certain Engagement Letter, dated as of December 7, 2020, by and between WNG II Aircraft Leasing (Ireland) DAC and Nexus Taxation Limited and (ii) that certain Corporate Services Agreement, dated as of October 14, 2019, by and among Apex IFS
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Limited, WNG Aircraft Services Limited and certain of the Target Companies as set forth therein, as amended from time to time.
“Prohibited Person” means any (a) Sanctioned Person or any Person that owns 50% or more of, or otherwise exercises control over, any Sanctioned Person (b) any Person that is identified on, or 50% or more owned or controlled by, or owns 50% or more of, or otherwise exercises control over, one or more Persons identified on, any Export Controls-related list of designated parties, including, without limitation, (i) the Denied Persons List, Entity List, Military End-User List and the Unverified List maintained by the Bureau of Industry and Security of the U.S. Department of Commerce, and (ii) the Debarred Parties List maintained by the Directorate of Defense Trade Controls of the U.S. Department of State.
“Purchase Price” has the meaning given in Section 2.1.
“Purchaser” is defined in the Preamble.
“Purchaser Closing Conditions” means the conditions precedent in favor of Purchaser set out in Schedule 4-Part 1
“Purchaser Parent Guarantee” has the meaning given in Section 9.1(a).
“Purchaser Parent Guarantor” is defined in the Preamble.
“Purchaser Signatories” has the meaning given in Section 6.2.
“Purchaser’s Designee” has the meaning given in Section 7.1.
“Relief” means any loss, relief, allowance, exemption, set-off, deduction, right to repayment or credit or other relief of a similar nature granted by or available in relation to any Tax.
“Remaining Leakage Holdback Amount” means an amount equal to the lesser of (i) the Holdback Amount less the Final Holdback Leakage Adjustment or (ii) the Tax Holdback Amount.
“Removable Asset” means Aircraft bearing MSN 33018 and its related Aircraft Engines.
“Rent” has, with respect to any Asset, the meaning given in the Lease of such Asset to basic rent and use fees or, if different, any “Supplemental Rent”, to the extent intended to cover rent or use fees but not Maintenance Reserve Payments, if and as such term is defined in such Lease).
“Reorganization Documents” has the meaning given in Section 4.7(a).
“Required Financial Information” has the meaning given in Section 4.9(b).
“Resigning Officers” has the meaning given in Schedule 4-Part 1.
“R&W Insurance Policy” is defined in Section 5.5.
“R&W Waiver” is defined in Section 5.5.
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“Sale Interests” means collectively, the Cayman Sale Interests and the U.S. Sale Interests.
“Sanctioned Jurisdiction” means any country, jurisdiction or geographic region that is , at the relevant time, the subject of comprehensive Sanctions (currently, Cuba, Iran, North Korea and the Crimea, so-called Donetsk People’s Republic and Luhansk People’s Republic regions of Ukraine).
“Sanctioned Person” means any Person, aircraft or Asset that is: (a) designated on any Sanctions-related list, including, without limitation (i) the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury; (ii) the UK Sanctions List maintained by the UK Foreign, Commonwealth & Development Office (including as extended to the Cayman Islands), or any other Person that is the subject or target of Sanctions under the laws of the Cayman Islands) and (iii) the Consolidated List of Persons, Groups and Entities Subject to EU Financial Sanctions maintained by the European Union; (b) domiciled in, a resident or national of, or organized under the laws of a Sanctioned Jurisdiction; or (c) owned or controlled by one or more Persons described in clause (a) or (b); or (d) otherwise the subject or target of Sanctions.
“Sanctions” means any economic or financial sanctions or trade embargoes or restrictive measures from time to time imposed, administered or enforced by (i) the United States government (including the Office of Foreign Assets Control of the U.S. Department of the Treasury and the Office of Economic Sanctions Policy and Implementation of the U.S. Department of State), (ii) the United Nations Security Council, (iii) the European Union or any member state thereof, (iv) the United Kingdom (including the Foreign, Commonwealth & Development Office and the Office of Financial Sanctions Implementation of His Majesty’s Treasury) and (v) the Cayman Islands, including those of the United Kingdom extended to the Cayman Islands by Orders in Council (including the Financial Reporting Authority) or (vi) any other relevant Governmental Authority that imposes, administers or enforces economic or financial sanctions or trade embargoes.
“Security Deposits” has, with respect to any Asset, the meaning given to such term or any analogous term in the Lease of such Asset.
“Seller” or “Sellers” is defined in the Preamble.
“Seller Closing Conditions” means the conditions precedent in favor of Seller set out in Schedule 4 Part 2.
“Seller Fundamental Representations and Warranties” means those representations and warranties set forth in paragraphs 1 (Capacity and Authority), 2 (Sale Interests), 3 (Asset Owning Companies), 4 (Insolvency, Winding Up, etc.), sub-paragraphs 6.4, 6.5 only of Paragraph 6 (Aircraft and Leases) and 18 (Brokerage) of Schedule 5.
“Seller Indemnitees” is defined in Section 8.1.
“Seller Representations and Warranties” means the representations and warranties set forth in Schedule 5.
“Share Transfer Form” means the instrument of transfer in the agreed form for the transfer of the Cayman Sale Interests from the Cayman Seller to the Purchaser.
“Spare Engine” means each Engine listed in Schedule 1-B, including (i) the Spare Engine Parts installed thereon (to the extent title is vested in the Spare Engine), (ii) the Neutral
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QEC, in respect of the CFM and RB211 engines, and the EBU, in respect of the V2500 engines, and (iii) any transportation stand and MVP bags, in each case, as set forth on Schedule 1-B.
“Spare Engine Lease” means, with respect to each Spare Engine, the Lease Agreement, if any, listed in Schedule 1-B.
“Spare Engine Parts” means, with respect to each Spare Engine, the “Parts” as defined in the Spare Engine Lease of such Spare Engine (or, if such Spare Engine is not subject to a Spare Engine Lease on the date of this Agreement, a substantially equivalent meaning ascribed to such term in the Leases generally).
“Spare Engine Owning Company” means each of the companies listed as an “Owner” in Schedule 1-B.
“Subsidiary” means, with respect to any Person, any other Person that is Controlled by such first Person. For purposes of this definition, “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of such Person through the ownership of voting securities, by contract or otherwise.
“Target Company” means each of the U.S. Company, the Cayman Company and their Subsidiaries but excluding the Disposal Entities and the Dormant Entity, in each case, solely if such entity has been disposed of prior to the Closing pursuant to and in accordance with the Anticipated Transactions set forth on Schedule 7 (collectively the “Target Companies”).
“Taxes” means any form of tax, duty, charge, contribution, withholding, impost, rate, levy or other imposition whenever and by whatever authority imposed, whether of Ireland or elsewhere, including, without limitation, income tax, corporation tax, advance corporation tax, capital gains tax, capital transfer tax, inheritance tax, development land tax, sales or use tax, property tax, value added tax, customs duties, export or import tax, excise duties, rates, council tax, stamp duty, stamp duty reserve tax, stamp duty land tax, capital duty, national insurance and social security or other similar contributions, and any interest, penalty, fine or surcharge in connection with any such tax.
“Tax Authority” means any governmental, state or municipality or any local, state, federal or other authority, body or official anywhere in the world exercising a fiscal, revenue, customs or excise function (including, without limitation, the Office of the Irish Revenue Commissioners).
“Tax Leakage” has the meaning given in Section 3.1(a)(xi).
“Tax Holdback Amount” means $400,000.
“Tax Holdback Payment Date” has the meaning given in Section 3.3(b).
“Tax Return” means any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Tax Sharing Agreements” means all existing agreements (whether or not written) that provide for the allocation, apportionment, sharing or assignment of any Tax liability or benefit, or the transfer or assignment of income, revenues, receipts, or gains for the purpose of determining any Person’s Tax liability (excluding (i) any such agreement that addresses responsibility for Taxes in a customary and commercial manner and the primary purpose of which is other than the allocation or sharing of Tax liabilities and (ii) agreements among
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members of the same VAT group provided that the only members of such VAT group are Target Companies.
“TCA” means the Irish Taxes Consolidation Act of 1997.
“Third Party Claim” has the meaning given in Section 8.6(a).
“Third Party Debt” means, with respect to any Asset, the aggregate amount of Indebtedness outstanding with respect thereto, including amounts of principal and any accrued and unpaid interest and any amounts payable on termination of any swap or other hedging instrument relating to such Indebtedness (but excluding in the case of each Target Company Intra-Group Payables owed by such Target Company);
“Total Loss” has, with respect to any Asset, the meaning given to such term or any analogous term indicating a total loss of such Asset in the Lease of such Asset (or, to the extent any Asset is not subject to a Lease as of the date of this Agreement, substantially equivalent to the meaning ascribed to such term in the Leases generally);
“Transaction Documents” means, collectively:
(a)this Agreement;
(b)the Disclosure Letter;
(c)the Share Transfer Form;
(d)the Assignment Agreement;
(e)the Volofin Payoff Letter;
(f)the Volofin Release Documents;
(g)the Intercompany Release Documents;
(h)the Transition Services Agreement;
(i)the Escrow Agreement;
(j)termination agreements (in form and substance reasonably satisfactory to Purchaser) in respect of any of the servicing agreement between each Target Company and Asset Manager, in each case as servicer; and
(k)all other agreements, instruments, certificates or documents executed or required to be executed and delivered by any Party pursuant to this Agreement (each, a “Transaction Document”).
“Transfer Taxes” means all registration, documentary, stamp, stamp duty, and transfer taxes and duties or their equivalents, and all penalties, charges, costs and interest relating thereto, and shall include, without limitation, transfer taxes in the form of VAT, sales, use, consumption or similar Taxes.
“Transition Services Agreement” means a transition services agreement in the form attached hereto as Exhibit A.
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“TUPE” means the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 in Ireland.
“TWDV” means, with respect to an Aircraft or Engine, the tax written down value taking account of the original cost for Tax purposes and the capital allowances claimed at a particular date for such Aircraft or Engine.
“U.S. Company” is defined in the recitals.
“U.S. Sale Interests” is defined in the recitals.
“U.S. Seller” is defined in the recitals.
“VAT” means value added tax as provided for in Directive 2006/112/EC and any other Tax of a similar nature, whether introduced in a member state of the European Union in substitution for or in addition to such Tax, or elsewhere.
“Volofin Credit Agreement” means that certain Loan Agreement, dated as of December 22, 2021, by and among WNG II Aircraft Leasing 6 Limited, as borrower, Volofin Holdings DAC, as facility agent and security trustee, Volofin Capital Management Ltd, as arranger, and the various lenders named therein.
“Volofin Security Documents” means collectively, (i) that certain Aircraft Security Agreement, dated as of December 22, 2021, by and between WNG II Aircraft Leasing 6 Limited, as mortgagor, and Volofin Holdings DAC as security trustee and mortgagee in respect of two Airbus Model A-321-200 Aircraft on lease to Air Canada, (ii) that certain Share Mortgage, dated as of December 22, 2021, in respect of Shares held in WNG II Aircraft Leasing 6 Limited, by and between WNG II Aircraft Leasing 6 Limited, as mortgagor, and Volofin Holdings DAC, as security trustee, (iii) that certain Security Agreement Supplement regarding MSN 1772, dated as of December 30, 2021, by WNG II Aircraft Leasing 6 Limited to Volofin Holdings DAC, as security trustee, and (iv) that certain Security Agreement Supplement regarding MSN 1783, dated as of December 30, 2021, by WNG II Aircraft Leasing 6 Limited to Volofin Holdings DAC, as security trustee.
“Volofin Payoff Letter” means a payoff letter, in form and substance reasonably satisfactory to the Purchaser, executed by the applicable lenders or other obliges (or their agent) providing for the satisfaction and discharge of all amounts due under (including principal of, interest on, premium, if any, and any expenses, break fees or other amounts owing in respect of) (the “Payoff Amount”), and the termination of all obligations (including the release of all Encumbrances and termination of all applicable loan documents) with respect to all Indebtedness outstanding under the Volofin Credit Agreement.
“Volofin Release Documents” means the documents, instruments, agreements, notices and forms required to release all Encumbrances granted over or in respect of WNG II Aircraft Leasing 6 Limited or any other applicable Target Company or any of their respective assets in relation to the Volofin Credit Agreement and the Volofin Security Documents concurrently with the repayment of the Payoff Amount, in form and substance reasonably acceptable to the Purchaser.
“Willis Asset Expenses” means, with respect to an Asset (excluding the Removable Asset, if the Removable Asset has been removed from this Agreement prior to the Closing Date pursuant to Schedule 6), operating expenses paid by the Asset Owning Company of such Asset, in each case, solely to the extent incurred in respect of (a) insurance, (b) tax fees, (c) outside counsel legal fees and expenses, (d) third-party audit and accounting expenses, and (e) third-
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party technical expenses relating to the Assets other than the Assets (namely ESNs 888977 and 892392) that are leased to (i) as of the date hereof, MTU Maintenance Lease Services B.V., or (ii) as of December 31, 2025, ASL Aviation Holdings DAC (the “Willis Technical Expenses”), in each case of the foregoing clauses (a)-(e), to the extent incurred in the ordinary course of business and consistent with the type and quantum of similar expenses incurred during the twelve-month period ending on the Economic Closing Date and set forth in the Closing Purchase Price Calculation Statement. For the avoidance of doubt, Willis Asset Expenses shall in no event include any WNG Asset Expenses.
“WNG” means WNG Capital LLC.
“WNG Asset Expenses” means, with respect to an Asset, all operating expenses paid by the Asset Owning Company of such Asset, including, without limitation, servicing fees, director fees, administrative fees and back-office support, third-party technical expenses other than the Willis Technical Expenses, and other operating expenses (other than the expenses described in clauses (a)-(e) of the definition of Willis Asset Expenses).
Section 1.2.Interpretation. In this Agreement, a reference to:
(a)liability under, pursuant to or arising out of (or any analogous expression) any agreement, contract, deed or other instrument includes a reference to contingent liability under, pursuant to or arising out of (or any analogous expression) that agreement, contract, deed or other instrument;
(b)a document in the “agreed form” is a reference to a document in a form approved and for the purposes of identification initialed by or on behalf of each party;
(c)a statutory provision includes a reference to the statutory provision as modified or re-enacted or both from time to time before the date of this Agreement and any subordinate legislation made under the statutory provision (as so modified or re-enacted) before the date of this Agreement; a “person” includes a reference to any individual, firm, company, corporation or other body corporate, government, state or agency of a state or any joint venture, association or partnership, or employee representative body (whether or not having separate legal personality);
(d)a person includes a reference to that person’s legal personal representatives, successors and permitted assigns;
(e)a “party” includes a reference to that party’s successors and permitted assigns;
(f)a Section, clause, paragraph or schedule, unless the context otherwise requires, is a reference to a Section, clause, or paragraph of, or schedule to, this Agreement;
(g)the singular shall include the plural and vice versa; and reference to one gender include all genders;
(h)“costs” and/or “expenses” incurred by a person shall not include any amount in respect of VAT comprised in such costs or expenses for which either that person or, if relevant, any other member of the VAT group to which that person belongs is entitled to credit or repayment as input tax;
(i)The headings in this Agreement do not affect its interpretation and the word “Agreement” shall mean this Agreement as amended or supplemented.
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(j)References to US Dollars or US$ are references to the lawful currency from time to time of the United States.
(k)Any monetary sum to be taken into account for the purposes of any representation or warranty where that sum is expressed in a currency other than US Dollars shall be translated into US Dollars at the Exchange Rate applicable to the balance of all such amounts as are expressed in a currency other than US Dollars on the day immediately preceding the date of this Agreement (or, if such day is not a Business Day, on the Business Day immediately preceding such day).
(l)A reference in Schedule 5 to “so far as the Seller is aware” (or other similar references to the Seller’s awareness) means the actual knowledge, after reasonable inquiry, of the individuals set forth on the list contained in file 3.22 of the applicable Data Room.
(m)A reference to “so far as the Purchaser is aware” (or other similar references to the Purchaser’s awareness) means the actual knowledge, after reasonable inquiry, of each of Clif Dameron and Pascal Picano.
(n)Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”
(o)The titles and headings herein are for reference purposes only and shall not in any manner limit the construction of this Agreement which shall be considered as a whole.
(p)References to a Cayman Islands exempted limited partnership taking any action, having any power or authority or owning, holding or dealing with any assets are to such exempted limited partnership acting through its general partner(s).
Article II
SALE AND PURCHASE OF THE SALE INTERESTS
SALE AND PURCHASE OF THE SALE INTERESTS
Section 2.1.Sale and Purchase of the Sale Interests.
(a)Upon and subject to the terms and conditions of this Agreement, at Closing, (i) the Cayman Seller shall sell and transfer (A) its entire legal and beneficial interest in and to the Sale Interests, and (B) the benefit of all rights attached or accruing to the Sale Interests including, without limitation, all of Seller’s right, title and interest in and to the profits, capital, surplus, assets, allocations and distributions, while the Cayman Company is in existence and upon any dissolution or liquidation of the Cayman Company (in each case from and after the Closing Date), if any shall occur, to the Purchaser, in each case free and clear of all Encumbrances and with the benefit of all rights attached or accruing thereto, and (ii) the U.S. Seller shall sell, assign, transfer and convey to the Purchaser (or the Purchaser’s Designee), and the Purchaser shall purchase and acquire from the U.S. Seller, all of the U.S. Seller’s right, title and interest in and to the U.S. Sale Interests, free and clear of all Encumbrances.
(b)The base combined consideration for the transfer of the Sale Interests at Closing shall be Three Hundred Seventy Ninety Million Three Hundred Thousand Dollars $379,300,000 (the “Base Purchase Price”).
(c)The amount of the Base Purchase Price allocable to each Asset (each an “Allocated Consideration Amount”) is the amount set out opposite the Manufacturer’s Serial Number for the relevant Asset in Column (5) of Schedule 1.
(d)At Closing, the Base Purchase Price shall be adjusted by:
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(i)Reducing the Base Purchase Price by (x) the Allocated Consideration Amount allocable to (a) any Asset that has suffered a Total Loss prior to the Closing Date and (b), if the Removable Asset has been removed from this Agreement prior to the Closing Date pursuant to Schedule 6, the Removable Asset and (y) in respect of any Asset (other than the Removable Asset) that has been removed from this Agreement, sold or otherwise disposed of prior to Closing (if any), the greater of (a) the Allocated Consideration Amount allocable to such Asset and (b) the purchase price payable pursuant to a third party sale agreement for such Asset;
(ii)adding an amount equal to the Base Purchase Price as adjusted under clause (i) multiplied by the Adjustment Rate for the Adjustment Period;
(iii)deducting an amount equal to the aggregate amount of Net Rent for all Asset Owning Companies paid from, but excluding, the Economic Closing Date to and including the Closing Date;
(iv)deducting an amount equal to the sum of (x) the Maintenance Reserve Balance plus (y) an amount equal to the difference of (A) the aggregate amount of Maintenance Reserve Payments paid by or on behalf of the Lessees under the Leases minus (B) the aggregate amount of Maintenance Reserve Expenses and Maintenance Expenses paid by the Asset Owning Companies, in each case with respect to all Asset Owning Companies from, but excluding, the Economic Closing Date to and including the Closing Date;
(v)deducting an amount equal to the Other Revenues with respect to all Asset Owning Companies;
(vi)deducting an amount equal to Closing Leakage (if any);
(vii)if the Removable Asset has not been removed from this Agreement prior to the Closing Date pursuant to Schedule 6, deducting an aggregate amount equal to (a) the deposit received by the applicable Target Company, the Sellers or an Affiliate of the Sellers in respect of such Removable Asset plus (b) an amount equal to the difference, if positive, between (x) the Allocated Consideration Amount for the Removable Asset, as adjusted by the foregoing clauses (ii)-(vi) in respect of or otherwise allocable to such Removable Asset less (y) the agreed purchase price for the Removable Asset with any third-party buyer;
(viii)deducting an amount equal to the aggregate amount of cash security deposits accrued as of the Economic Closing Date or paid by or on behalf of the Lessees under the Leases from, but excluding, the Economic Closing Date to and including the Closing Date;
(ix)deducting an amount equal to the Agreed Adjustment Amount;
(x)deducting an amount equal to the Agreed RWI Amount;
(xi)deducting an amount (which shall not be less than $0) equal to $2,900,000 minus an amount equal to the sum of (x) the product of $200,000 multiplied by the number of Business Days up to a maximum of five Business Days after, and not including, the Inside Date, or if later, the date on which Step 2 of Section 4.2 of Schedule 7 is completed, until, and including, the Closing Date, plus (y) if the Closing Date has not occurred by the end of such five Business Day period, the product of (A) a fraction equal to $300,000 divided by the number of Business Days remaining between such date and
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the Final Closing Date, and (B) the number of Business Days between such date and the Closing Date, and
(xii)adding an amount equal to the aggregate amount of Net Rent for all Asset Owning Companies actually received after the Cash Sweep Date (as defined below) and prior to the Closing and that is held in cash by a Target Company and has not been distributed by such Asset Owning Companies to the Sellers or their respective Affiliates (excluding the Target Companies); provided that the Sellers shall have caused all Net Rent held by the Target Companies as of five (5) Business Days prior to the Closing Date (the “Cash Sweep Date”) to be distributed to the Sellers or their Affiliates (other than the Target Companies) prior to the Closing in accordance with the relevant steps set forth on Schedule 7.
The Base Purchase Price as adjusted by the foregoing clauses (i)-(xii), the “Adjusted Purchase Price”, and as further adjusted pursuant to the post-closing purchase price adjustment set forth in Section 2.10, the “Purchase Price”.
Section 2.2.Payment.
(a)At the Closing, the Purchaser shall pay, or cause to be paid, (i) to Sellers an amount equal to the Adjusted Purchase Price less the Deposit less the Holdback Amount less the Payoff Amount plus the Pre-Paid Vendor Costs (the “Closing Purchase Price”), by wire transfer of immediately available funds to an account specified in writing by the Sellers no later than three (3) Business Days prior to the Closing and (ii) on behalf of the borrower Target Companies specified in the Volofin Payoff Letter, the Payoff Amount to the applicable lender(s), as specified in the Volofin Payoff Letter and in accordance with the steps described in Schedule 7 in respect of such Payoff Amount. The Closing Purchase Price shall be allocated between, and paid by wire transfer of immediately available funds to, the respective accounts specified in writing by each of the Cayman Seller and the U.S. Seller, with the allocation of such payments to be determined and provided by the Sellers in writing no later than three (3) Business Days prior to Closing.
(b)No later than seven (7) Business Days prior to the anticipated Closing Date, the Sellers shall deliver to the Purchaser a written statement (the “Closing Purchase Price Calculation Statement”) setting forth the Sellers’ good faith estimate, in reasonable detail, of the Adjusted Purchase Price and each component thereof, determined in each case in accordance with the accounting principles, methodologies, practices and procedures used to prepare the illustrative example calculation of the Adjusted Purchase Price set forth on Schedule 3 (the “Example Purchase Price Calculation”). Sellers’ shall provide the Purchaser with reasonable access (during normal business hours and upon reasonable prior notice) to Sellers’ workpapers (subject to mutually agreeable release letters) and to the preparers of the Closing Purchase Price Calculation Statement and to the books and records on which the Closing Purchase Price Calculation Statement is based, in each case, to the extent reasonably necessary to review the calculations set forth in the Closing Purchase Price Calculation Statement and as reasonably requested by the Purchaser. The Sellers shall consider in good faith any revisions proposed by the Purchaser to the calculations set forth in the Closing Purchase Price Calculation Statement, and to the extent the Sellers agree to any such revisions, the Closing Purchase Price Calculation Statement shall be modified to reflect such revisions; provided, that the Closing shall not be delayed as a result of any unresolved comments or changes to the Closing Purchase Price Calculation Statement requested by the Purchaser. The Sellers’ determination of Leakage set forth in the Closing Purchase Price Calculation Statement (the “Closing Leakage”) shall be without prejudice to the right of the Purchaser in respect of Holdback Leakage to the extent it disputes the Sellers’ determination of the amount of Closing Leakage (but without duplication of
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any adjustments to the Purchase Price resulting from adjustments to Closing Leakage pursuant to Section 2.10).
Section 2.3.Closing.
(a)Closing will take place on the later to occur of (i) the seventh Business Day following the date on which the Closing Conditions are satisfied or waived by Sellers or Purchaser, as applicable, and (ii) August 24, 2026 (the “Inside Date”) (but subject to the satisfaction or waiver by the applicable Party of the Closing Conditions on such date) or on such other date and time as may be mutually agreed by the Parties in writing (“Closing”).
(b)At Closing, the Purchaser’s obligation to buy the Sale Interests shall be subject to the satisfaction of, or waiver by the Purchaser of, the Purchaser Closing Conditions (in form and substance satisfactory to the Purchaser), on or prior to the Closing Date.
(c)At Closing, the Sellers’ obligation to sell the Sale Interests shall be subject to the satisfaction of, or waiver by the Sellers of, the Seller Closing Conditions, on or prior to the Closing Date.
(d)At or prior to Closing, the Cayman Seller shall procure that a meeting of the board of directors of the Cayman Company is held (or written resolutions of the directors are passed) at which the transfer of the Cayman Sale Interests to the Purchaser and, the registration of the Purchaser as the holder of the Cayman Sale Interests in the register of members of the Cayman Company are approved.
Section 2.4.Deposit.
(a)The Purchaser Parent Guarantor and WNG have entered into the Escrow Agreement with the Escrow Agent, pursuant to which the Purchaser Parent Guarantor has deposited with the Escrow Agent a deposit of Ten Million Dollars ($10,000,000) for the Purchaser’s acquisition of the Sale Interests (the “Deposit”).
(b)The Deposit shall be treated as an advance against amounts owed from the Purchaser to the Sellers at the Closing. At the Closing, an aggregate amount equal to the Deposit shall be applied against the Purchase Price, and the Purchaser shall direct the Purchaser Parent Guarantor, and the Sellers shall direct WNG, to jointly instruct the Escrow Agent to release the Deposit to the Sellers in accordance with the terms of the Escrow Agreement.
Section 2.5.Termination.
This Agreement may be terminated at any time prior to the Closing only as follows:
(a)by the mutual written consent of the Purchaser and the Sellers:
(b)by the Purchaser, on the one hand, or by the Sellers, on the other hand, by written notice to the other Parties, if Closing has not occurred on or before 11:59 p.m., New York time, on the Final Closing Date, provided that such Party (being, with respect to the Purchaser, the Purchaser, and with respect to the Sellers, any Seller) is not in breach of its obligations hereunder before the Final Closing Date;
(c)by the Purchaser if there is a material breach or inaccuracy of, or failure to comply with, any representation, warranty, covenant or agreement of the Sellers or the Target Companies set forth in this Agreement, in each case that would reasonably be expected to result in the failure of any of the Purchaser Closing Conditions to be satisfied and is not curable, or if curable, is not curable within 30 days after written notice of such breach is given to the Seller by the Purchaser; or
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(d)by the Sellers if there is a material breach or inaccuracy of, or failure to comply with, any representation, warranty, covenant or agreement of the Purchaser set forth in this Agreement, in each case that would reasonably be expected to result in the failure of any of the Seller Closing Conditions to be satisfied and is not curable, or if curable, is not curable within 30 days after written notice of such breach is given to the Purchaser by the Sellers.
Section 2.6.Consequence of Termination.
(a)Except as set forth in this Section 2.6, if this Agreement is terminated pursuant to and in accordance with Section 2.5, then there will be no Liability on the part of any Party or any other Person in respect of this Agreement; provided that such termination shall not relieve any Party from any Liability for fraud or for any willful or intentional breach of this Agreement prior to such termination.
(b)If this Agreement is terminated pursuant to Section 2.5(a), Section 2.5(b) or Section 2.5(c), then the Purchaser shall direct the Purchaser Parent Guarantor, and the Sellers shall direct WNG, to jointly instruct the Escrow Agent to disburse and release the Deposit to the Purchaser by wire transfer of immediately available funds to such account(s) specified by the Purchaser in writing. The Deposit shall be released to the Purchaser promptly and in any event within five (5) Business Days after such termination.
(c)If this Agreement is terminated pursuant to Section 2.5(d), the Purchaser shall direct the Purchaser Parent Guarantor, and the Sellers shall direct WNG, to jointly instruct the Escrow Agent to disburse and release the Deposit to the Sellers by wire transfer of immediately available funds to such account(s) specified by the applicable Seller in writing. The Deposit shall be released to the applicable Seller promptly and in any event within five (5) Business Days after such termination.
Section 2.7.Payment following a Total Loss in advance of Closing. If a Total Loss of any Asset occurs prior to the Closing Date, such Asset is not purchased by Purchaser and the Purchaser or any Target Company receives insurance proceeds following the Closing in respect of an insurance claim relating to such Total Loss, the Purchaser shall and shall cause the Target Companies to, promptly endorse, assign and/or remit to the Sellers an amount equal to (i) any insurance proceeds less (ii) any costs of collection and other reasonable out-of-pocket costs and expenses incurred by the Purchaser or any Target Company as a result of such insurance claim relating to such Total Loss (such net insurance proceeds, the “Net Insurance Proceeds”), provided that the Purchaser shall not be obligated to remit Net Insurance Proceeds in excess of the Allocated Consideration Amount allocable to the applicable Asset that suffered a Total Loss. The Purchaser shall take all actions reasonably requested by the Sellers to facilitate the payment of the Net Insurance Proceeds to the Sellers promptly upon receipt of such insurance proceeds.
Section 2.8.Withholding. The Purchaser, the Purchaser Parent Guarantor and the Target Companies (as applicable) shall be entitled to deduct and withhold from the amounts payable under this Agreement such amounts as may be required to be deducted and withheld under any applicable Tax Laws. To the extent that amounts are so deducted and withheld by the Purchaser, the Purchaser Parent Guarantor or any Target Company, such deducted and withheld amounts (a) shall be remitted by the Purchaser, the Purchaser Parent Guarantor or such Target Company (as applicable) to the applicable Governmental Entity within the time and in the manner required by applicable Law and (b) shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. The Purchaser and the Purchaser Parent Guarantor represent that, under applicable Tax Laws as in effect on the date hereof, assuming each Seller delivers a properly completed IRS Form W-9 or applicable IRS Form W-8, as applicable, of such Seller (or, if such Seller is a disregarded entity for U.S. federal income tax purposes, its sole regarded owner) to the Purchaser prior to or at the Closing, neither the Purchaser nor the Purchaser Parent Guarantor is required to make any
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such withholdings or deductions from the Purchase Price payable to the Sellers under this Agreement.
Section 2.9.Transfer Taxes. All Transfer Taxes related to the conveyance and transfer pursuant to this Agreement of the Sale Interests and the rights attached or accruing thereto shall be borne 50% by the Purchaser and 50% by the Sellers. Any Tax Return required by applicable Law to be filed with respect to any such Transfer Taxes will be prepared and timely filed by the party legally responsible therefor. To the extent required by applicable Law, the non-filing party will execute, and (to the extent relevant) will cause its Affiliates to join in the execution of, any such Tax Return; provided that such non-filing party has been given the reasonable opportunity to review and comment on such Tax Return. Neither Party shall execute any transfer document in, or bring any transfer document into, the Cayman Islands, and any Party that does so shall be solely responsible for any Taxes arising as a result thereof.
Section 2.10.Post-Closing Purchase Price Adjustment.
(a)No later than the date that is the later to occur of (i) 60 days after the Closing Date and (ii) 10 Business Days after the finalization of the audited financials of the Target Companies for the year ended 2025,the Purchaser shall prepare and deliver, or cause to be prepared and delivered, to the Sellers, a written statement (the “Post-Closing Statement”) setting forth the Purchaser’s good faith determination, in reasonable detail, of the estimated adjustment, if any, to the Adjusted Purchase Price taking into account any component of clause 2.1(d)(i) through (xi) (without double counting), determined in each case in accordance with the accounting principles, methodologies, practices and procedures used to prepare the Example Purchase Price Calculation, that arose during the Adjustment Period that results in a direct impact on the Purchase Price paid at Closing (such amount the “Estimated True-up Amount”). The Purchaser shall provide Sellers reasonable access during normal business hours and upon reasonable advance written notice to the Purchaser and to the Purchaser’s and the Target Companies’ books and records as may be reasonably requested by the Sellers for purposes of, and solely to the extent relevant to, Sellers’ review of the Post-Closing Statement.
(b)The Post-Closing Statement and all items set forth therein shall become final and binding on the Parties on the earlier of (i) the day immediately after the expiration of the 30-day period after the Sellers’ receipt thereof and (ii) the date Sellers notify the Purchaser in writing of its acceptance of the calculation of the Post-Closing Statement (the “Final Settlement Date”), unless the Sellers’ deliver written notice to the Purchaser disputing any item set forth on the Closing Statement prior to such date (such notice, a “Dispute Statement,” and each such item, a “Disputed Item”). The Dispute Statement shall specify, in reasonable detail, the nature of any such disagreement, including Sellers’ own determination of the calculation of each item with which it disagrees and the Purchase Price resulting therefrom. If the Sellers deliver a Dispute Statement pursuant to and in accordance with this Section 2.10, then the Purchaser and Sellers shall negotiate in good faith a resolution of all Disputed Items during the 30 days following the date of delivery of the Dispute Statement, and the Final Settlement Date shall instead be the earlier of (A) the date on which the Parties agree in writing to a resolution with respect to all Disputed Items and (B) the date on which the Independent Firm issues its final determination pursuant to and in accordance with this Section 2.10. Promptly following the expiration of such 30-day period, and in any event no later than ten (10) Business Days thereafter, the Purchaser or the Sellers may submit the remaining Disputed Items to an internationally recognized firm of independent certified public accounting, consulting or professional services (in each case, with significant dispute resolution experience related to the purchase price adjustment disputes) that is mutually agreed between the Purchaser and the Sellers (the “Independent Firm”) within such ten (10)-Business Day period (or, in the absence of agreement between the Sellers and the Purchaser by the close of business on such tenth (10th) Business Day, as selected by the New York, New York office of the American Arbitration Association). The Purchaser and the Sellers shall instruct the Independent Firm to (1) act as an expert and not an arbitrator, (2) render a determination of all remaining Disputed Items, which shall (x) include a written statement of findings and conclusions, including a written explanation
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of its reasoning with respect to such findings and conclusions and (y) absent manifest error or fraud, be final and binding on the Parties and (3) prepare a definitive Post-Closing Statement setting forth a definitive adjustment (if any) to the Estimated True-Up Amount, taking into account its determination with respect to the Disputed Items submitted to it and any other Disputed Items previously resolved in writing by the Parties. The Purchaser and the Sellers shall instruct the Independent Firm (I) to render its determination as soon as practicable and in any event within thirty (30) days after the submission of the Disputed Items to it pursuant to and in accordance with this Section 2.10 and only with respect to the Disputed Items submitted to it; provided that, to the extent that the determination of any remaining Disputed Items affects the determination of any other item set forth in the Post-Closing Statement, such effect may be taken into account by the Independent Firm, (II) to base its determination solely on information provided to it by the Purchaser and the Sellers and (III) not to assign a value to any item more favorable to the Purchaser than the amount of such item reflected in the Post-Closing Statement prepared by the Purchaser, on the one hand, or more favorable to the Sellers than the amount of such item reflected in the Dispute Statement delivered by the Sellers, on the other hand. No ex parte conferences, oral examinations, testimony, depositions, discovery or other form of evidence gathering or hearings shall be conducted or allowed with the Independent Firm in connection with the resolution of the dispute items. The final and binding amount of each adjustment (if any) to the Estimated True-Up Amount shall be deemed to be the amounts agreed to by the Sellers and the Purchaser in writing, or as resolved by the Independent Firm’s final determination hereunder, as the case may be. All fees and expenses of the Independent Firm pursuant to its engagement by the Sellers and the Purchaser to make its determination with respect to such dispute shall be borne by the Purchaser, on the one hand, and the Sellers, on the other hand, in the same proportion as the aggregate amount of the items specified in the Dispute Statement that are unsuccessfully disputed by each Party (as determined by the Independent Firm) bears to the total amount of the items specified in the Dispute Statement submitted to the Independent Firm. For example, if the total amount of the Disputed Items is $1,000 (all of which is submitted to the Independent Firm for resolution) and the aggregate amount of the Disputed Items resolved by the Independent Firm in favor of the Sellers is $600, then the Purchaser shall bear 60% of the fees and expenses of the Independent Firm, and the Sellers shall bear 40% of the fees and expenses of the Independent Firm.
(c)If the Estimate True-Up Amount indicates that an adjustment is required to be made to the Adjusted Purchase Price to correct a shortfall owed to the Sellers of the Purchase Price, then, on or before the fifth (5th) Business Day after the Final Settlement Date, the Purchaser shall pay to the Sellers, an aggregate amount in cash equal to the shortfall amount, by wire transfer of immediately available funds to such account(s) specified by the Sellers to the Purchaser in writing at least three (3) Business Days prior to such payment date. If the Estimated True-Up Amount indicates that an adjustment is required to be made to the Adjusted Purchase Price to correct an overpayment by the Purchaser of the Purchase Price, then, on or before the fifth (5th) Business Day after the Final Settlement Date, the Sellers shall pay to the Purchaser, an aggregate amount in cash equal to the excess amount, by wire transfer of immediately available funds to such account(s) specified by the Purchaser to the Sellers in writing at least three (3) Business Days prior to such payment date.
(d)All payments made pursuant to this 2.10 shall be treated as adjustments to the Purchase Price for all Tax purposes, unless otherwise required by applicable Law.
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Article III
LOCKED BOX
LOCKED BOX
Section 3.1.Locked Box.
(a)For purposes of this Agreement, the occurrence of any of the following during the Adjustment Period shall constitute “Leakage”:
(i)any dividend, bonus or other distribution of profits or assets declared, authorized, paid or made by any of the Target Companies to or for the benefit of the Sellers or any of their respective Affiliates (excluding any Target Company);
(ii)any redemption, repurchase, repayment or return (whether by reduction of capital, purchase of shares or otherwise) of share capital of any of the Target Companies to or for the benefit of, or that has resulted or will result in a payment to or an agreement or obligation to make a payment to, the Sellers or their respective Affiliates (excluding any Target Company);
(iii)any transfer, divestiture or surrender of Assets by any of the Target Companies to the Sellers or their respective Affiliates (excluding any Target Company);
(iv)any amendment to any service agreement in respect of any Asset or the Target Companies that increases the obligations of the Target Companies;
(v)any assumption or incurrence of Liabilities (or any guarantee, indemnity or other similar security given in respect thereof) by any of the Target Companies for the benefit of the Sellers or their respective Affiliates (excluding any Target Company), in each case to the extent not settled or discharged in full in accordance with this Agreement on or before the Closing without resulting in any other Leakage;
(vi)any waiver, release or forgiveness of Liabilities owed by the Sellers or their respective Affiliates to any Target Company;
(vii)any Encumbrance provided in respect of, or created over, any of the assets of any of its Target Companies in favor of or for the benefit of the Sellers or any of their respective Affiliates (excluding any Target Company);
(viii)any costs, commissions, bonuses, incentive payments, fees or expenses of the Sellers or any of their respective Affiliates (excluding any Target Company) relating to the sale of the Sale Interests (to any person), or to the other transactions contemplated by this Agreement (including any professional advisers’ fees and any transaction or sale bonuses or other payments payable as a result of the consummation of the sale of the Sale Interests (to any person)), in each case, that are paid or incurred by or on behalf of any of the Target Companies to or on behalf of the Sellers or any of their respective Affiliates (excluding any Target Company);
(ix)any management, advisory, monitoring or servicing fees paid to the Sellers or their Affiliates (including the Asset Manager) in excess of amounts payable under the existing agreements at rates prevailing as of the Economic Closing Date;
(x)any costs or expenses relating to the employment of, or any retention or incentive arrangement with, any current or former employee, officer,
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director, individual consultant or worker engaged in the Business, that are paid or incurred by or on behalf of any of the Target Companies;
(xi)any Tax liabilities of any Target Company resulting from or attributable to the transfer of the Removable Asset, disposal transactions or any other Anticipated Transactions (the “Tax Leakage”), provided that the amount of Leakage determined pursuant to this Section 3.1(a)(xi) shall not exceed the Tax Holdback Amount;
(xii)any agreement or commitment to do or give effect to any of the things set out in clauses (i) through (xi) (inclusive) above; and
(xiii)any other payment or transfer of value (whether in cash or in-kind) from any Target Company to or for the benefit of the Sellers or any of their respective Affiliates (excluding any Target Company).
Section 3.2.Holdback Leakage Statement. By no later than seven (7) Business Days prior to the Holdback Payment Date, the Purchaser shall deliver to the Sellers a statement (the “Holdback Leakage Statement”) setting out in reasonable detail its determination of the Holdback Leakage Adjustment. For purposes hereof, “Holdback Leakage Adjustment” shall mean an amount equal to:
(a)the value of all Leakage (other than Closing Leakage) suffered or incurred by the Target Companies during the Adjustment Period (the “Holdback Leakage”); plus
(b)(provided that there shall be no double counting in respect of amounts of Holdback Leakage determined in clause (a)) the amount of any increased Tax liability of any of the Target Companies to the extent arising as a result of such Holdback Leakage minus the amount of any decreased Tax liability of any of the Target Companies in the taxable year in which the Closing occurs to the extent arising as a result of such Holdback Leakage; plus
(c)an amount equal to the product of (i) the value of such Holdback Leakage multiplied by (ii) the Adjustment Rate multiplied by (iii) a fraction, the numerator of which is the number of calendar days from the date such Holdback Leakage occurred until the Holdback Payment Date, and the denominator of which is 360.
Section 3.3.Holdback Payment.
(a)On the date that is nine months following the Closing Date (the “Holdback Payment Date”) the Purchaser shall pay to the Sellers, by wire transfer of immediately available funds to one or more account(s) designated in writing by the Sellers no later than three (3) Business Days prior to the Holdback Payment Date, an amount equal to the Holdback Amount less the Holdback Leakage Adjustment less the Tax Holdback Amount.
(b)No later than seven (7) Business Days following the filing by the Purchaser or any Target Company of the last Disposal Tax Return pursuant to and in accordance with Section 6.6 (the “Tax Holdback Payment Date”), the Purchaser shall pay to the Sellers, by wire transfer of immediately available funds to one or more account(s) designated in writing by the Sellers no later than three (3) Business Days prior to the Tax Holdback Payment Date, an amount equal to (i) the Remaining Leakage Holdback Amount less (ii) the aggregate amount of Tax Leakage shown as due on the Disposal Tax Returns, provided that the Purchaser’s payment obligations pursuant to this Section 3.3(b) shall in no event exceed the Tax Holdback Amount.
Section 3.4.Holdback Leakage Dispute.
(a)The Holdback Leakage Statement and all items set forth therein shall be deemed final and binding on the Parties on the date that is the earlier of (i) the day immediately
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after the expiration of the 30-day period after the Sellers’ receipt thereof and (ii) the date the Sellers notify the Purchaser in writing of its acceptance of the calculation of the Holdback Leakage Adjustment, unless the Sellers deliver written notice of an objection to all or any portion of Purchaser’s determination of the Holdback Leakage Adjustment in the Holdback Leakage Statement prior to such date (such notice, a “Holdback Leakage Dispute Statement”, and such dispute, a “Holdback Leakage Dispute”). The Holdback Leakage Dispute Statement shall specify, in reasonable detail, the nature of any such disagreement, including the Sellers’ own determination of the calculation of each item with which it disagrees and the Holdback Leakage Adjustment resulting therefrom. If the Sellers timely deliver a Holdback Leakage Dispute Statement pursuant to and in accordance with this Section 3.4(a), the Parties shall follow the dispute resolution procedures set forth in Section 2.10(c), which shall apply to the resolution of such Holdback Leakage Dispute and determination of the final Holdback Leakage Adjustment mutatis mutandis.
(b)The Holdback Leakage Adjustment, as deemed final pursuant to Section 3.4(a)(i), agreed in writing by Sellers pursuant to Section 3.4(a)(ii) or, in the case of a Holdback Leakage Dispute, finally determined pursuant to Section 3.4(a) and the procedures set forth in Section 2.10(c) (applied mutatis mutandis for purposes of Section 3.4(a)), shall be referred to as the “Final Holdback Leakage Adjustment”, and the date on which the Holdback Leakage Statement is deemed final, agreed in writing by Sellers or finally determined pursuant to Section 3.4(a) shall be referred to as the “Final Holdback Settlement Date”).
(c)Within five (5) Business Days of the Final Holdback Settlement Date, if
(i)the Final Holdback Leakage Adjustment less the Tax Holdback Amount is less than the Holdback Leakage Adjustment set forth in the Holdback Leakage Statement, then the Purchaser shall pay the amount of such difference to the Sellers;
(ii)the Final Holdback Leakage Adjustment is equal to the Holdback Leakage Adjustment set forth in the Holdback Leakage Statement, then neither party shall owe any further amount in respect thereof; and
(iii)the Final Holdback Leakage Adjustment is greater than the Holdback Leakage Adjustment set forth in the Holdback Leakage Statement, then the Sellers shall pay the amount of such difference to the Purchaser (provided that for purposes of calculating the Final Leakage Holdback Adjustment under this Section 3.4(c)(iii), the Adjustment Rate contemplated by Section 3.2(c) shall be applied through the date of payment by the Sellers of the amount required by Section 3.4(c)(iii) instead of the Holdback Payment Date); provided further that in no event shall the Sellers’ aggregate payment obligations pursuant to this Section 3.4(c)(iii), together with any portion of the Holdback Amount retained by the Purchaser pursuant to Section 3.3, exceed, in the aggregate, the Holdback Amount.
Article IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLERS
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLERS
Section 4.1.Representations and Warranties. Each Seller represents and warrants, severally and not jointly, to the Purchaser in the terms set out in Schedule 5 (Sellers’ Warranties) as of the date of this Agreement and as of the Closing Date (except for Seller Representations and Warranties made as of a specified date, in which case, as of such specified date), except as set forth in the Disclosure Letter.
Section 4.2.[Intentionally Deleted.]
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Section 4.3.Pre-Closing Conduct. Between the date of this Agreement and the Closing, subject to applicable law and regulation and the terms of this Agreement (including the restrictions set forth in Schedule 6), the Sellers shall retain all rights to manage the Irish DACs, Assets and each Asset Owning Company in its sole reasonable discretion; provided that the Sellers shall exercise all rights available to them to ensure, and shall and shall cause the Target Companies to, conduct their business and manage the Assets in the ordinary course of business consistent with past practice and shall comply with the obligations set out in Part A of Schedule 6 (Pre-Closing Conduct). The provisions of this Section 4.3 shall not operate as to restrict or prevent any of the actions set out in Part B of Schedule 6 (Pre-Closing-Conduct).
Section 4.4.Efforts to Close.
(a)Each Party shall (and shall cause its respective Affiliates to) use reasonable commercial efforts to take (or cause to be taken) all actions necessary to consummate, as soon as practicable following the date of this Agreement (but no later than the Final Closing Date), the transactions contemplated by this Agreement and the other Transaction Agreements and cause each of the Closing Conditions to be satisfied.
(b)Each Party shall (and shall cause its respective Affiliates to) use its commercially reasonable efforts to obtain or make, and reasonably cooperate with the other Party in obtaining or making, all consents, approvals, authorizations, waiver, filings, registrations or notifications, from or with any Person necessary to consummate, as soon as practicable following the date of this Agreement (but prior to the Final Closing Date), the transactions contemplated by this Agreement and the other Transaction Documents; provided that, in no event shall any Party, any of their respective Affiliates, or any of their or their representatives be required to make any payment, engage in any litigation or assume any Liability or grant any other accommodation (financial or otherwise) not required to be paid, assumed or granted by the terms of an existing contract.
Section 4.5.Data Rooms. By no later than fifteen (15) Business Days following the date of this Agreement, Sellers shall deliver (or cause to be delivered) to Purchaser one or more USB drives containing copies of the documents contained in each of the Data Rooms.
Section 4.6.Payoff Letter. At least three (3) Business Days prior to the anticipated Closing Date, the Sellers shall deliver, or cause to be delivered, to the Purchaser true and complete copies of the Volofin Payoff Letter and the Volofin Release Documents in accordance with the steps set forth on Schedule 7.
Section 4.7.Anticipated Transactions; Affiliate Transactions.
(a)During the Interim Period but no later than immediately prior to the Closing, the Sellers shall, and shall cause the Target Companies to, consummate each of Anticipated Transactions in accordance with the steps set forth in Schedule 7. Each document to be executed by any of the Target Companies to effect the Anticipated Transactions (the “Reorganization Documents”) shall be in form and substance reasonably acceptable to the Purchaser and prior to executing (or permitting any Target Company to execute) any Reorganization Document, the Sellers shall provide the Purchaser reasonable opportunity to review and comment thereon. Prior to the Closing, the Sellers shall provide the Purchaser with copies of the executed Reorganization Documents effecting the applicable Anticipated Transaction to which any of the Target Companies is party.
(b)The Purchaser’s prior written consent shall be required for any change to the steps or the terms of the Anticipated Transactions set forth on Schedule 7. Without prejudice to the foregoing, the Sellers shall, and shall cause the Target Companies to, use commercially reasonable efforts to ensure that the Anticipated Transactions occur in a location and a manner that will not give rise to any material liability for or in respect of VAT or notarial, registration, stamp or transfer Taxes, fees or duties for the Purchaser or any Target Company.
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(c)To the extent not covered by the Anticipated Transactions, at or prior to the Closing, the Sellers shall have caused all Affiliate Transactions to be terminated, in each case, without any further force or effect following the Closing such that the Purchaser and the Target Companies, on the one hand, and the Sellers and their respective Affiliates (other than the Target Companies), on the other hand, do not have any further Liability to one another in respect thereof following the Closing. The Sellers shall deliver to the Purchaser at or prior to the Closing, customary supporting documentation evidencing satisfaction of the Sellers’ obligations under this Section 4.7(c).
(d)For the avoidance of doubt, the actions contemplated by this Section 4.7 shall not be prohibited by Section 3.1, so long as (i) such actions are in accordance with the steps set forth on Schedule 7 in respect of such Anticipated Transaction and (ii) any Leakage resulting therefrom is included by Sellers as Closing Leakage in the Closing Purchase Price Calculation Statement and taken into account in the determination of the Closing Purchase Price payable at Closing.
Section 4.8.Access. During the Interim Period, the Sellers shall provide the Purchaser, its Affiliates and its and their respective representatives (including any prospective or incoming servicer or asset manager and their respective representatives) (at the Purchaser’s sole cost and expense) with reasonable access during normal business hours and upon reasonable advance written notice to the properties, assets, operations, books and records, information, of the Target Companies, in each case, solely for a purpose reasonably related to the consummation of the transactions contemplated by this Agreement or any Transaction Document (including for preparing for the operation of the business of the Target Companies following Closing); provided, that such access does not unreasonably interfere with the normal operations of the Target Companies.
Section 4.9.Financing Cooperation; Financial Statements Cooperation.
(a)During the Interim Period, and only insofar as permitted by applicable law, the Sellers shall, and shall cause the Target Companies to, use commercially reasonable efforts to provide cooperation reasonably requested by the Purchaser in connection with any debt financing to be obtained in connection with the acquisition contemplated in this Agreement, including (a) making appropriate personnel reasonably available, furnishing customary financial and other information to the extent not provided in each of the Data Room, (b) providing assistance reasonably necessary to facilitate such financing (so long as it does not negatively impact the timeline of this transaction) and (c) providing all documentation and other information as is required by applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act and the Beneficial Ownership Regulation (31 C.F.R. § 1010.230) to the extent reasonably requested by the Purchaser or Purchaser’s financing sources; provided that (i) such cooperation shall be at the Purchaser’s cost and expense, (ii) neither the Sellers nor any Target Company shall be required to incur any unreimbursed out-of-pocket costs or expenses (provided that such reimbursable out-of-costs and expenses shall be reasonable and documented), make any payments, assume any obligations or liabilities, provide any guarantees or credit support, or take any action that would conflict with their respective organizational documents or applicable law, (iii) such cooperation shall not unreasonably interfere with the business or operations of the Seller or the Target Companies, (iv) no Seller or Target Company shall be required to enter into or be bound by any agreement, certificate, opinion, pledge or other document that is not expressly contingent upon the Closing or becomes effective prior to the Closing, (v) no Target Company shall be required to provide any form of Financial Assistance (as such term is described in section 82 of the Irish Companies Act), and (vi) no Target Company shall, nor shall the directors of any Target Company be, required to carry out a Summary Approval Procedure (as described in Chapter 7 of Part 4 of the Irish Companies Act), in connection with the acquisition by the Purchaser of the Target Companies.
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(b)During the Interim Period, and only insofar as permitted by applicable law, the Sellers shall, and shall cause the Target Companies to, use commercially reasonable efforts to, at the expense of the Purchaser, provide all cooperation reasonably requested by the Purchaser, including using commercially reasonable efforts in respect of the following:
(i)causing its independent auditors to (A) provide drafts and executed versions of auditors consents and comfort letters with respect to financial information relating to the Target Companies and (B) provide assistance in the preparation of any pro forma financial statements and information required for purposes of the Purchaser’s regulatory compliance obligations;
(ii)furnishing the Purchaser with customary financial information relating to the Target Companies (including (A) audited consolidated historical financial statements of the Target Companies for each of the three (3) fiscal years ended at least ninety (90) days prior to the Closing Date and unaudited consolidated financial statements of the Target Companies for the most recent fiscal quarter (and the corresponding period from the prior fiscal year), (B) such financial statements and information that satisfy the requirements of Regulation S-X under the Securities Act, as such regulation applies to financial information included in a Registration Statement on Form S-1 registering non-convertible debt securities, with any quarterly statements subjected to review procedures characterized as Statement on Auditing Standards No. 100 procedures, (C) financial statements of the Target Companies reasonably requested by the Purchaser to enable it to prepare statements giving pro forma effect to Purchaser’s financing of the transactions contemplated by this Agreement or any other financing that satisfy the requirements of Regulation S-X under the Securities Act, as such regulation applies to financial information included in a Registration Statement on Form S-1 registering non-convertible debt securities and (D) information regarding the Target Companies as is customarily included in an offering memorandum for private placements under Rule 144A of the Securities Act), financial projections and other pertinent information relating to the Target Companies (all such information in this clause (ii) being referred to herein as the “Required Financial Information”);
(iii)providing the Purchaser with all such financial data, audit reports and other information reasonably requested by the Purchaser (to the extent not previously provided) in connection with the preparation by the Purchaser or its Affiliates of any statements, forms, schedules, reports or other documents filed or furnished with the U.S. Securities and Exchange Commission or any successor governmental entity or any other Governmental Entities as are required of the Purchaser or its Affiliates under applicable Law;
provided, that (w) such cooperation shall be at the Purchaser’s cost and expense, (v) neither the Sellers nor any Target Company shall be required to incur any unreimbursed costs or expenses (provided that such reimbursable out-of-costs and expenses shall be reasonable and documented), make any payments, assume any obligations or liabilities, provide any guarantees or credit support, or take any action that would conflict with their respective organizational documents or applicable law, (x) such cooperation shall not unreasonably interfere with the business or operations of the Seller or the Target Companies, (y) no Seller or Target Company shall be required to enter into or be bound by any agreement, certificate, opinion, pledge or other document that is not expressly contingent upon the Closing or becomes effective prior to the Closing, and (z) the Purchaser shall indemnify and hold harmless the Sellers and the Target Companies and their respective officers, directors, agents or representatives from and against any
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and all Losses suffered or incurred arising from the Required Financial Information prepared or delivered or the cooperation provided by the Sellers, the Target Companies and their respective officers, directors, agents or representatives pursuant to this Section 4.9(b), in each case, except to the extent suffered or incurred as a result of fraud, bad faith, gross negligence or willful misconduct by the Sellers or any Target Company or their respective officers, directors, agents or representatives.
Section 4.10.Lessee Cooperation.
(a)During the Interim Period, the Sellers shall, and shall cause the Target Companies to, use commercially reasonable efforts to provide cooperation reasonably requested by the Purchaser in connection with any affiliate transfer, assignment, novation or replacement of servicer to occur on or after the Closing (including any requested amendments to Leases pursuant to Schedule 4 made prior to Closing), including making appropriate personnel reasonably available, assisting with obtaining customary third‑party consents, and facilitating the preparation and execution at Closing of customary transfer documentation and related materials (noting that no transfer documents will interfere or impact the Closing contemplated under this Agreement); provided that (i) such cooperation shall be at the Purchaser’s cost and expense, (ii) neither the Sellers nor any Target Company shall be required to incur any unreimbursed costs or expenses, make any payment, assume any obligation or liability, provide guarantees or credit support, or take any action that would conflict with organizational documents or applicable law, (iii) such cooperation shall not unreasonably interfere with the business or operations of the Sellers or the Target Companies, and (iv) neither the Sellers nor any Target Company shall be required to enter into or be bound by any agreement or take any action that is not expressly contingent upon the Closing or becomes effective prior thereto.
Section 4.11.Cloudcards Cooperation. During the Interim Period, the Sellers shall use commercially reasonable efforts to assist the Purchaser, its Affiliates and its and their respective representatives in good faith as reasonably necessary to enter into an agreement, statement of work or other contract to permit Cloudcards or its representatives to migrate data related to the business of the Target Companies processed by Cloudcards from the Sellers’ environment to Purchaser’s or an Affiliate’s environment, including, if required, consenting to such migration; provided that any third party costs associated with such migration of data shall be at Purchaser’s costs and expense. To the extent that any such data to be migrated includes personal data, the Parties agree to cooperate in good faith to implement any processes or take such other steps as reasonably necessary to migrate such personal data to the Purchaser or its Affiliate in compliance with applicable Law. To the extent that Cloudcards provides not more than two named individuals employees of Willis Lease Finance Corporation access to the Sellers’ instance of Cloudcards during the Interim Period, the Sellers authorize and permit such access and use with respect to the business of the Target Companies in compliance with the provisions of this Agreement.
Section 4.12.Exclusivity; No Remarketing. Between the date of this Agreement and the earlier of the valid termination of this Agreement and the Closing, the Sellers shall not, and shall cause the Target Companies and their respective officers, directors, agents and other representatives not to, directly or indirectly, remarket any Asset or solicit, initiate, encourage or discuss, or enter into any contract with respect to, any offers for the sale of any Asset or any other transaction that would be an alternative, in whole or in part, to the transaction contemplated by this Agreement. The foregoing shall not prevent the Sellers from transferring or disposing any Removable Assets in accordance with this Agreement.
Section 4.13.TUPE.
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(a)The understanding and intention of the Parties is that the transactions contemplated by this Agreement (including any related termination of services contracts) does not give rise to the application of TUPE in respect of any Person.
(b)The Sellers undertake to the Purchaser to indemnify, and keep indemnified, and hold harmless the Purchaser for itself and as trustee and agent for its Affiliates from and against any and all liabilities, losses, costs, charges, damages, expenses (including legal costs), fines, penalties, interest, taxes, awards, claims, actions, proceedings, employment severance costs (including accrued salary, notice and any other amounts required under Law or contract), and any judgments, decrees, directions or orders of any court or tribunal whatsoever which are suffered or incurred arising out of or in connection with any Employee making any employment or employment related claim within a period of thirteen (13) months from the Closing Date (including the termination of their employment by the Purchaser or its relevant Affiliate) against, or alleging any employment or employment related liability or obligation has arisen with or has transferred to the Purchaser or any Affiliate as a result of the application of TUPE in relation to the transactions contemplated by this Agreement (including any related termination of services contracts).
(c)The indemnity in Section 4.13(b) shall immediately and automatically cease to apply:
(i) in respect of any such Employee from the date on which such Employee has entered into a duly executed settlement agreement, waiver or release of claims (in each case in a form satisfactory to the Purchaser) which validly compromises or waives all of the relevant employment or employment related claims outlined in Section 4.13(b). The entry by any Employee into such settlement agreement, waiver or release of claims shall not affect the Sellers’ liability under the indemnity in Section 4.13(b) in respect of any claim, action or proceeding brought, or circumstances giving rise to a claim notified, prior to the date of such settlement agreement, waiver or release; and / or
(ii)if the Purchaser or any of its Affiliates directly or indirectly: (a) encourages, induces, or solicits any Covered Employee (as defined in the Transition Services Agreement) to leave their position with the Seller or any of its Affiliates; or (b) hires, employs, engages or attempts to hire, employ, or engage any Covered Employee, (in each case, an “Engagement”), with immediate effect from the date of such Engagement, and the Seller and its Affiliates shall have no liability under the indemnity provided in Section 4.13(b) whether arising prior to or after the Engagement.
Section 4.14.Termination of Tax Sharing Agreements. Any and all Tax allocation or Tax Sharing Agreements between any Target Company, on the one hand, and any Seller or any of its Affiliates, on the other hand, shall be terminated as of the Closing Date and, from and after the Closing Date, no Target Company shall be obligated to make any payment pursuant to any such agreement for any past or future period.
Section 4.15.Non-Survival of Representations and Warranties. To the fullest extent permitted by applicable Law, the representations, warranties, covenants and agreements of the Sellers contained in this Agreement or in any certificate, instrument, opinion, agreement or other document of the Sellers shall terminate effective as of the Closing and there shall be no Liability in respect thereof, whether such Liability has accrued prior to, on or after the Closing, on the part of the Sellers, their respective Affiliates or any of their respective direct or indirect equity holders, officers, directors, agents or other representatives, except (a) in the case of fraud, (b) for Leakage Claims as provided in Article III and (c) for those covenants and agreements that by their terms are to be performed in whole or in part at or after the Closing, which shall survive in
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accordance with their terms and, if no term is specified, then until the expiration of the applicable statute of limitations.
Section 4.16.Limitation on Representations and Warranties.
(a)The representations and warranties contained in this Article IV are the only representations and warranties being made by the Sellers pursuant to this Agreement, and, except as set out in any other Transaction Document, no other representations or warranties, express or implied, are being made or may be relied upon by the Purchaser in connection with its execution of this Agreement and consummation of the transactions contemplated hereby.
(b)EACH SALE SHARE AND EACH AIRCRAFT, EACH ENGINE AND EACH PART IS BEING SOLD, ASSIGNED, TRANSFERRED AND CONVEYED TO THE PURCHASER ON AN ”AS IS, WHERE IS” BASIS AND, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, WITHOUT ANY REPRESENTATION, GUARANTEE OR WARRANTY OF THE SELLERS EXPRESS OR IMPLIED, OF ANY KIND, ARISING BY LAW OR OTHERWISE AS TO THE CONDITION THEREOF.
(c)WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE PURCHASER UNCONDITIONALLY AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AS BETWEEN THE PURCHASER AND THE SELLERS, EACH SALE INTEREST AND EACH AIRCRAFT, EACH ENGINE AND EACH PART THEREOF IS TO BE SOLD AND PURCHASED ON AN ”AS IS, WHERE IS” BASIS AS AT THE CLOSING DATE, AND NO TERM, CONDITION, WARRANTY, REPRESENTATION OR COVENANT OF ANY KIND HAS BEEN ACCEPTED, MADE OR IS GIVEN BY THE SELLERS IN RESPECT OF THE AIRWORTHINESS, VALUE, QUALITY, DURABILITY, TITLE, DATE PROCESSING, CONDITION, DESIGN, OPERATION, DESCRIPTION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF ANY AIRCRAFT, ANY ENGINE OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT, INHERENT OR OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE), AS TO THE COMPLETENESS OR CONDITION OF THE AIRCRAFT DOCUMENTS, OR AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, COPYRIGHT, DESIGN, OR OTHER PROPRIETARY RIGHTS; AND ALL CONDITIONS, WARRANTIES AND REPRESENTATIONS (OR OBLIGATION OR LIABILITY, IN CONTRACT OR IN TORT) IN RELATION TO ANY OF THOSE MATTERS, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, ARE EXPRESSLY EXCLUDED.
(d)NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN SHALL ELIMINATE OR RESTRICT ANY LIABILITY OF THE SELLERS FOR FRAUD.
Article V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER
Section 5.1.Representations and Warranties. The Purchaser represents and warrants to the Sellers as at the date of this Agreement and as of the Closing Date that:
(a)each of the Purchaser and Purchaser Parent Guarantor is validly incorporated, in existence and duly registered under the laws of its jurisdiction and has full power to conduct its business as conducted on the date of this Agreement;
(b)each of the Purchaser and Purchaser Parent Guarantor has and will have the right, power and authority, and has and will have taken all action necessary, to execute, deliver and exercise its rights and perform its obligations under this Agreement and each Transaction Document to which it is or will be a party;
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(c)the Purchaser’s and Purchaser Parent Guarantor’s obligations under this Agreement, any other Transaction Document to which it is party are, or when the relevant Transaction Document is executed will constitute, binding obligations in accordance with their respective terms;
(d)neither the Purchaser, Purchaser Parent Guarantor, nor any Affiliate of the Purchaser or Purchaser Parent Guarantor which may due to its materiality to the Purchaser or Purchaser Guarantor give rise to a similar event for the Purchaser or Purchaser Parent Guarantor (a “Relevant Purchaser Affiliate”) is insolvent under the laws of its jurisdiction of incorporation, unable to pay its debts as they fall due or has proposed or is liable to any arrangement (whether by court process or otherwise) under which its creditors (or any group of them) would receive less than the amounts due to them. There are no proceedings in relation to any compromise or arrangement with creditors or any winding up, or insolvency proceedings concerning the Purchaser or its Relevant Purchaser Affiliates and no events have occurred which would justify such proceedings. No steps have been taken to enforce any security over any assets of the Purchaser or its Relevant Purchaser Affiliates and, so far as the Purchaser is aware, no event has occurred to give the right to enforce such security;
(e)the execution and delivery of, and the performance by the Purchaser and the Purchaser Parent Guarantor of its obligations under, this Agreement, any Transaction Document to which it is a party will not:
(i)result in a breach of any provision of the memorandum or articles of association or by laws or equivalent constitutional documents of the Purchaser or the Purchaser Parent Guarantor;
(ii)result in a breach of, or constitute a default under, any instrument to which the Purchaser or Purchaser Parent Guarantor is a party or by which the Purchaser or Purchaser Parent Guarantor is bound and which is material in the context of this Agreement;
(iii)result in a breach of any order, judgment or decree of any Governmental Entity to which the Purchaser or Parent Purchaser Guarantor is a party or by which the Purchaser or Parent Purchaser Guarantor is bound or submits; or
(iv)require the Purchaser or Purchaser Parent Guarantor to obtain any consent or approval of, or give any notice to or make any registration with, any Governmental Entity which has not been obtained or made at the date hereof both on an unconditional basis and on a basis which cannot be revoked (save pursuant to any legal or regulatory entitlement to revoke the same other than by reason of any misrepresentation or misstatement); or
(v)require the Purchaser or Purchaser Parent Guarantor to obtain any consent or approval of any of its shareholders or any other person;
except, in the case of clauses (i), (iii), (iv) or (v), as will not, or is not (in the opinion of the Purchaser, acting reasonably) likely to, prevent or materially delay the fulfilment of any of the Closing Conditions;
(f)so far as the Purchaser is aware, neither the Purchaser nor the Purchaser Parent Guarantor nor any Relevant Purchaser Affiliate is subject to any order, judgment, direction, investigation or other proceeding by any Governmental Entity which will, or is (in the
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opinion of the Purchaser, acting reasonably) likely to, prevent or delay the fulfilment of any of the Closing Conditions; and
(g)Purchaser is neither tax resident in a jurisdiction outside of the Cayman Islands nor carries on any business through a branch or agency outside of the Cayman Islands.
Section 5.2.Use of Name. The Purchaser shall procure that:
(a)as soon as reasonably practicable after the Closing Date and in any event within 120 days afterwards or such longer period as is reasonably practicable in view of local law requirements, the name of any Target Company which consists of or incorporates the word “WNG” is changed to a name which does not include that word or words or any name which, in the reasonable opinion of the Sellers, is substantially similar or confusing; and
(b)as soon as reasonably practicable after the Closing Date and in any event within 120 days afterwards, each Target Company shall cease to use or display any trade or service name or mark, business name, logo or domain name used or held by any such entity, or any mark, name or logo which, in the reasonable opinion of the Sellers, is substantially or confusingly similar to any of them.
Section 5.3.Non-Survival of Representations and Warranties. To the fullest extent permitted by applicable Law, the representations, warranties, covenants and agreements of the Purchaser contained in this Agreement or in any certificate, instrument, opinion, agreement or other document of the Purchaser shall terminate effective as of the Closing and there shall be no Liability in respect thereof, whether such Liability has accrued prior to, on or after the Closing, on the part of the Purchaser, its Affiliates or any of their respective direct or indirect equity holders, officers, directors, agents or other representatives, except for those covenants and agreements that by their terms are to be performed in whole or in part at or after the Closing, which shall survive in accordance with their terms and, if no term is specified, then until the expiration of the applicable statute of limitations.
Section 5.4.Limitation on Representations and Warranties. The representations and warranties contained in this Article V are the only representations and warranties being made by the Purchaser pursuant to this Agreement, and except as set out in any other Transaction Document, no other representations or warranties, express or implied, are being made or may be relied upon by the Sellers in connection with its execution of this Agreement and consummation of the transactions contemplated hereby. In connection with any breach or breaches by the Purchaser of the representations and warranties contained in this Article V, in no event shall the Purchaser be liable for any punitive damages.
Section 5.5.R&W Insurance Policy.
(a)On or prior to the date hereof, the Purchaser has obtained a representations and warranties insurance policy, to be bound as of the Closing Date (the “R&W Insurance Policy”). The Purchaser has delivered a true and correct copy of the R&W Insurance Policy to Sellers on or prior to the date hereof. The R&W Insurance Policy has not been amended or modified, no such amendment or modification is contemplated, and the commitments contained in the R&W Insurance Policy have not been withdrawn or rescinded in any respect. There are no side letters or other arrangements related to the insuring of the transactions contemplated hereby other than as expressly set forth in the R&W Insurance Policy. All fees payable in connection with the R&W Insurance Policy shall be borne by the Purchaser, provided that the Sellers shall economically bear the Agreed RWI Amount as provided in Section 2.1(d). The R&W Insurance Policy expressly provides that, except in the case of fraud, no insurer thereunder has any rights against, and each insurer thereunder has expressly waived and has agreed not to pursue, directly or indirectly, any claims by way of subrogation, contribution or otherwise against, the Sellers or any of their respective former, current or future Affiliates or representatives, or representatives of any of the foregoing, or any heir, executor, administrator, successor or assign of any of the foregoing, including with respect to any claim made by any insured thereunder (the “R&W
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Waiver”). The R&W Insurance Policy expressly provides that the Sellers are a third-party beneficiary of, and may enforce its rights under, the R&W Waiver.
(b)Neither the Sellers nor any Affiliate thereof will have any Liability to indemnify or compensate the Purchaser or any other Person as a result of whether the Purchaser can maintain the R&W Insurance Policy, whether the terms thereof do not provide coverage for any specific type or category of claims or Losses, or whether the issuer or underwriter of such policy terminates the same or does not for any reason accept or pay any claims made thereunder. The Purchaser shall not, and shall cause its Affiliates not to, waive, amend, modify or otherwise revise the R&W Waiver under the R&W Insurance Policy. The Purchaser acknowledges and agrees that the effectiveness of the R&W Insurance Policy is not a condition to the Closing and reaffirms its obligation to consummate the transactions contemplated hereby irrespective and independently of the availability or effectiveness of the R&W Insurance Policy, subject only to the satisfaction or waiver of the conditions to the Closing set forth in Schedule 4.
Article VI
POST CLOSING MATTERS
POST CLOSING MATTERS
Section 6.1.International Registry. As soon as reasonably practicable following Closing, the Sellers will assist in transferring the administration of the International Registry account for the applicable Target Company from the Seller (or the entity that is the current International Registry administrator), to the Purchaser (or its nominee).
Section 6.2.Bank Accounts. The Sellers shall reasonably cooperate with Purchaser in respect of the Bank Accounts in accordance with the Transition Services Agreement.
Section 6.3.Records / Post-Closing Access.
(a)Following the Closing, the Sellers shall provide the Purchaser, at the request of the Purchaser, such factual information as is available to the Seller or as reasonably may be obtained by the Sellers and that would not otherwise be available to the Purchaser, in each case regarding the Target Companies and/or any Asset (including such information as may be necessary for the preparation of the Target Companies’ tax and financial statements).
(b)Following the Closing, the Purchaser shall provide the Sellers, at the request of the Sellers, such factual information as is available to the Purchaser or as reasonably may be obtained by the Purchaser and that would not otherwise be available to the Sellers, in each case regarding the Target Companies and/or any Asset for periods prior to the Closing as may be necessary for the preparation of the Sellers’ audit, tax or financial statements for the fiscal years ending on December 31, 2025 and December 31, 2026.
Section 6.4.Amounts Received in Error. To the extent that, after the Closing, the Sellers or any Affiliate or financier of the Sellers receive from any Lessee any amounts payable by any Lessee pursuant to the Lease Documents in respect of any period after the Economic Closing Date (except to the extent the Purchaser received a credit for such payment against the Purchase Price pursuant to this Agreement), the Sellers shall cause such amounts to be paid to the Purchaser promptly (and in any event within 5 days) after its receipt (and pending such payment the Seller shall hold or cause that such amount is held on trust for the Purchaser). To the extent that, after the Closing, the Purchaser or any Affiliate or financier of the Purchaser receives from any Lessee any amounts payable by any Lessee pursuant to the Lease Documents in respect of any period prior to the Economic Closing Date (except to the extent the Sellers received a received a positive adjustment to the Purchase Price for such payment pursuant to this Agreement), the Purchaser shall cause such amounts to be paid to the Sellers promptly (and in any event within 5 days) after its receipt (and pending such payment the Purchaser shall hold or cause that such amount is held on trust for the Sellers). To the extent that, after the Closing, the Target Companies, the Purchaser or any Affiliate or financier of the Purchaser receives from any
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Lessee any amounts payable by any Lessee which were intended to be made to, or for the benefit of, the Dormant Entities (and which are an asset or a legal right of the applicable Dormant Entity) after completion of the Anticipated Transactions in accordance with the steps set out on Schedule 7, the Purchaser shall cause such amounts to be paid to the Sellers promptly (and in any event within 5 days) after its receipt (and pending such payment the Purchaser shall hold or cause that such amount is held on trust for the Sellers).
Section 6.5.Tax Cooperation. After the Closing Date, the Sellers and the Purchaser shall (and shall cause their respective Affiliates to):
(a)assist the other Party, at its reasonable request, in preparing any Tax Returns that such other Party is responsible for preparing and filing;
(b)reasonably cooperate in responding to any inquiries from or preparing for any audits of, or disputes with Tax Authorities regarding, any Taxes or Tax Returns of the Target Companies; and
(c)make available to the other Party, as reasonably requested, all information in its possession relating to the Target Companies that may be relevant to any Tax Return, audit or examination, proceeding or determination by any Tax Authority, and as reasonably requested by Seller or Purchaser all information, records, and documents relating to Taxes of the Target Companies.
Section 6.6.Certain Tax Matters. Unless (in each case) required by Law or the Sellers provide the Purchaser with prior written consent (not to be unreasonably withheld, conditioned or delayed), after the Closing, the Purchaser shall not with respect to a Target Company, and shall not permit any Target Company to, (A) make, revoke or change any U.S. federal income Tax election (including under U.S. Treasury Regulations Section 301.7701-3) that would be effective in any Pre-Closing Tax Period, (B) file or amend any Tax Return of a Target Company for (x) a Pre-Closing Tax Period beginning on or after January 1, 2025 in a manner that is inconsistent with past practice (and for the avoidance of doubt, if there is no past practice with respect to an item then the Sellers shall have no consent right over such item), or (y) a taxable period ending on or before December 31, 2024, or (C) make or cause to be made any extraordinary transactions or events on the Closing Date after the Closing with respect to any Target Company that are not contemplated by this Agreement. The Purchaser shall not, and shall not permit any Target Company to, file any Tax Return of a Target Company with respect to a Pre-Closing Tax Period beginning on or after January 1, 2025 that includes any Tax liability that would be included in Section 3.1(a)(xi) of Leakage (any such Tax Return, a “Disposal Tax Return” and collectively, the “Disposal Tax Returns”) without the Sellers’ prior written consent (not to be unreasonably withheld, conditioned or delayed) to the reporting positions taken with respect to the transfer of the Removable Asset, disposal transactions or any other Anticipated Transactions giving rise to such tax liability (assuming such items are the only items reported on such Tax Returns).
Article VII
MISCELLANEOUS
MISCELLANEOUS
Section 7.1.Assignment; Binding Effect. This Agreement and the rights hereunder are not assignable by any Party unless such assignment is consented to in writing by the other Party except that the Purchaser may without the prior written consent of the Sellers (a) assign all or any portion of its rights and obligations under this Agreement to one or more of its Affiliates or Affiliates of the Purchaser Parent Guarantor (which, for the avoidance of doubt, shall include Willis Mitsui & Co. Engine Support Limited, Willis Aviation Capital and WLFC/Blackstone fund) (any such permitted assignee, a “Purchaser’s Designee”) so long as the Purchaser remains obligated under this Agreement and (b) grant an assignment by way of security at or following Closing in connection with its financing arrangements. Any other assignment by Purchaser shall
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require the prior written consent of the Seller. For the avoidance of doubt, any such assignment shall not impact the obligation of Purchaser Parent Guarantor in respect of the Guaranteed Obligations. Subject to the preceding sentence, this Agreement and all the provisions hereof shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.
Section 7.2.Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
Section 7.3.Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, COUNTY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, THE PARTIES IRREVOCABLY (I) ACCEPT GENERALLY AND UNCONDITIONALLY THE NON-EXCLUSIVE JURISDICTION AND VENUE OF THESE COURTS, (II) WAIVE ANY OBJECTIONS WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (I) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (III) AGREE THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH PARTY AT THEIR RESPECTIVE ADDRESSES PROVIDED IN ACCORDANCE WITH SECTION 7.4, AND (IV) AGREE THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. THE PARTIES IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION TO ENFORCE OR INTERPRET THE PROVISIONS OF THIS AGREEMENT.
Section 7.4.Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally, when sent by email, when sent by overnight courier service or when mailed by certified or registered mail, return receipt requested, with postage prepaid to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice):
(a)If to the Sellers:
c/o WNG Capital LLC
5801 Tennyson Parkway
Suite 400
Plano, TX 75024
Attention: Legal Department
Email: legal@wngcapital.com
Email: legal@wngcapital.com
with a copy (which shall not constitute notice) to:
Vedder Price P.C.
600 Brickell Avenue, Suite 1500
600 Brickell Avenue, Suite 1500
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Miami, Florida 33131
Attention: Geoffrey Kass; Raviv Surpin
Email: gkass@vedder.com; rsurpin@vedder.com
Attention: Geoffrey Kass; Raviv Surpin
Email: gkass@vedder.com; rsurpin@vedder.com
(b)If to the Purchaser:
Willis Dallas Ltd.
c/o Willis Lease Finance Corporation
4700 Lyons Technology Parkway
Coconut Creek, Florida 33073
Attention: General Counsel
Email: legalnotices@willislease.com
c/o Willis Lease Finance Corporation
4700 Lyons Technology Parkway
Coconut Creek, Florida 33073
Attention: General Counsel
Email: legalnotices@willislease.com
with a copy (which shall not constitute notice) to:
Milbank LLP
55 Hudson Yards
New York, New York 10001
Attention: Drew Fine; Dean Sattler; Benjamin Fidler
Email: dfine@milbank.com; dsattler@milbank.com; bfidler@milbank.com
55 Hudson Yards
New York, New York 10001
Attention: Drew Fine; Dean Sattler; Benjamin Fidler
Email: dfine@milbank.com; dsattler@milbank.com; bfidler@milbank.com
Section 7.5.Headings. The headings contained in this Agreement are inserted for convenience only and shall not be considered in interpreting or construing any of the provisions contained in this Agreement.
Section 7.6.Fees and Expenses. Each Party shall be responsible for and shall pay any fees, costs and expenses (including, without limitation, legal fees) incurred by it in connection with the preparation, negotiation and Closing of this Agreement, the other Transaction Documents and the performance of the transactions contemplated hereby and thereby. Any costs of the R&W Insurance Policy will be paid by the Purchaser.
Section 7.7.Entire Agreement. This Agreement and the Transaction Documents constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings between the Parties with respect to such subject matter.
Section 7.8.Waiver and Amendment. This Agreement shall not be amended, modified or supplemented other than by mutual written agreement executed by the Parties. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
Section 7.9.Counterparts. This Agreement and the other Transaction Documents may be executed in any number of counterparts, each of which when executed shall be deemed to be an original and all of which together will be deemed to be one and the same instrument binding upon all of the parties hereto and thereto notwithstanding the fact that all such parties are not signatory to the original or the same counterpart. Delivery of an executed counterpart of a signature page to a Transaction Document by email (PDF) or telecopy shall be effective as delivery of a manually executed counterpart of a Transaction Document. A party's electronic signature (complying with the New York Electronic Signatures and Records Act (N.Y. State Tech. §§ 301-309), as amended from time to time, or other applicable Law) shall have the same validity and effect as a signature affixed by the party's hand.
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Section 7.10.Electronic Execution. It is agreed by the Parties that this Agreement and each other Transaction Document may be executed by way of electronic signatures. For the avoidance of doubt, each Party hereby consents to the execution of this Agreement and the other Transaction Documents by the other parties hereto and thereto by way of electronic signature and agrees that the electronic signature of such other parties is the legal equivalent of their manual signature on this Agreement and the other Transaction Documents and is conclusive of such party’s intention to be bound by this Agreement and the other Transaction Documents. Each Party further agrees it will not seek to avoid its responsibilities to the other parties under this Agreement and the other Transaction Documents based on the fact that it or any other party signed this Agreement or any other Transaction Document using an electronic signature as opposed to a manuscript signature. The parties further agree that an executed copy of this Agreement and the other Transaction Documents may be retained in electronic form and acknowledge that such electronic form shall constitute an original of that document and may be relied upon as evidence of that document.
Section 7.11.Third-Party Beneficiaries. Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the Parties and their successors and permitted assigns, any right or remedies under or by reason of this Agreement.
Section 7.12.Severability. If any provision of this Agreement or the application of any such provision to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof.
Section 7.13.Publicity. No public announcement of, or any other statement or communication of any kind or nature regarding, this transaction shall be made without the express written mutual consent of the Parties (such consent not to be unreasonably withheld, conditioned or delayed), provided that the foregoing shall not apply to (i) a joint announcement (the contents of which have been previously agreed by each Party), (ii) any press-release, public announcement or other disclosure required by Law or any rule or other requirement of any applicable securities exchange or any Governmental Entity, after giving at least seventy-two (72) hours’ prior notice, in which case the on-disclosing Party shall have the right to review and comment on such press release, public announcement or other disclosure (and the disclosing Party shall consider in good faith the non-disclosing Party’s comments), provided that in the event that in the event that a disclosure is required by applicable Law or by the rules of any applicable securities exchange in less than seventy two (72) hours, such notice shall be provided at the disclosing Party’s earliest opportunity, and the consenting Party shall use best commercial efforts to review and comment upon such disclosure within the requested time period, or (iii) a customary press release and any associated disclosure by the Purchaser or any of its Affiliates required by applicable Law or the rules of any applicable securities exchange following the date of this Agreement so long as the Sellers are provided at least twenty-four (24) hours’ prior notice and the opportunity to review and comment on such press release, in which case the Purchaser shall consider in good faith any reasonable comments provided by the Sellers prior to such press release. Notwithstanding anything to the contrary in this Agreement, the Purchaser shall have the right to disclose any information regarding the transactions contemplated by this Agreement or the other Transaction Documents (a) to any of its Affiliates or representatives, (b) to any of its joint venture partners, (c) for purposes of compliance with its or its Affiliates’ respective financial reporting obligations, or (d) in connection with its or its Affiliates’ acquisition financing activities.
Section 7.14.Tax Treatment. The Sellers and the Purchaser agree that they shall treat the transactions contemplated by this Agreement, for U.S. federal and applicable state and local income tax purposes, as a taxable sale of assets by the Seller to the Purchaser.
Section 7.15.Further Assurances. Each Party shall, from time to time, at the request of the other Party and without further consideration, execute and deliver further instruments and take such other actions as the requesting Party may reasonably require to effectuate the
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transactions as contemplated by the Transaction Documents and otherwise satisfy the obligations of the Parties hereunder.
Article VIII
INDEMNITY
INDEMNITY
Section 8.1.Purchaser’s General Indemnity. With respect to each Asset, for a period of three (3) years following the Closing, the Purchaser shall defend, indemnify and hold harmless the Seller, and its officers, directors, employees, shareholders and managers, and Asset Manager (the “Seller Indemnitees”) from any and all liabilities, obligations, Losses, damages, penalties, claims, actions, suits, documented out-of-pocket costs, disbursements and expenses (including reasonable documented and out-of-pocket legal fees, costs and related expenses), but excluding in each case any consequential, indirect, punitive or speculative damages (collectively, “Claims”) which may be incurred by a Seller Indemnitee after the Closing Date arising out of or relating to the maintenance, lease, possession, control, use or operation of the Aircraft (or any Engine) from and after the Closing Date, except, in each case, for Claims (1) that arise out of or result from fraud, willful misconduct or gross negligence of a Seller Indemnitee, (2) which are operating or overhead expenses of such Seller Indemnitee, (3) that arise out of or result from any act, omission, event or circumstance occurring before the Closing Date (it being understood that the Seller Indemnitee shall bear the burden of proving that this clause (3) does not apply to any Claim), (4) that arise out of or result from the failure by the Seller to comply with any of its express obligations under this Agreement or any representation or warranty given by the Seller not being true and correct at the time they were made, (5) which represent a Tax or loss of Tax benefits, or (6) which have been covered by receipt of any insurance proceeds or proceeds from any other Person by the relevant Seller Indemnitee.
Section 8.2.Tax Treatment of Indemnity Payments. Each Party shall treat all payments made pursuant to Section 8.1 as adjustments of the Purchase Price for all Tax purposes except as otherwise required by applicable law.
Section 8.3.Subrogation. Upon the payment in full of any indemnity pursuant to this Article VIII by the Purchaser, then the Purchaser will be subrogated to any right of the Seller Indemnitee in respect of the matter against which such indemnity has been made.
Section 8.4.Notice. The Sellers shall cause each Seller Indemnitee to give prompt written notice to the Purchaser (a “Claim Notice”) of any Claim for which the Purchaser is, or may be, liable under Section 8.1 provided, however, that failure to give such notice will not terminate any of the rights of Seller Indemnitees under this Article VIII except to the extent that the Purchaser has been materially prejudiced by the failure to provide such notice. Each Claim Notice shall include a header that clearly labels it as a “Notice of Claim for Indemnification” and shall set forth reasonable details (both as to the factual and legal basis), together with supporting documentation, of the applicable Claim, together with the Seller Indemnitee’s reasonable estimate of indemnifiable Losses in respect thereof.
Section 8.5.Limitations on Indemnification; Mitigation and Refunds.
(a)In no event shall the Purchaser be obligated to indemnify any Seller Indemnitee under this Article VIII unless and until the aggregate amount of Losses incurred by the Seller Indemnitees exceeds $100,000, in which event the Purchaser shall be liable for all such Losses starting from the first dollar.
(b)In respect of each Asset, in no event shall the aggregate amount payable by Purchaser to the Seller Indemnitees under this Article VIII exceed the Allocable Consideration Amount for such Asset (the “Cap”), and upon payment by Purchaser to the Seller Indemnitees of an aggregate amount equal to the Cap, Purchaser shall have no further obligations to the Sellers and the Seller Indemnitees under this Article VIII with respect to such Asset.
(c)The Sellers shall, and shall cause each Seller Indemnitee to, use commercially reasonable efforts to mitigate the amount of indemnifiable Loss subject to
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indemnification hereunder, including by seeking to recover such losses from available insurance proceeds or other sources of third party indemnification. If any Seller Indemnitee obtains a recovery of all or any part of any amount which the Purchaser has paid to such Seller Indemnitee, such Seller Indemnitee will pay to the Purchaser the net amount recovered by such Seller Indemnitee.
Section 8.6.Defense of Claims.
(a)In the event any claim or demand in respect of which a Seller Indemnitee might seek indemnity under this Article VIII is asserted against or sought to be collected from such Seller Indemnitee by a Person other than Purchaser or any Affiliate of the Sellers or of the Purchaser (a “Third Party Claim”), the Sellers shall, or shall cause the applicable Seller Indemnitee to, deliver a notice Claim Notice with reasonable promptness to the Purchaser. The Purchaser will notify the Seller Indemnitee as soon as practicable within sixty (60) days following delivery of the Claim Notice (the “Dispute Period”) whether the Purchaser disputes its liability to the Seller Indemnitee under this Article VIII and whether the Purchaser desires, at its sole cost and expense, to defend the Seller Indemnitee against such Third Party Claim.
(b)If the Purchaser notifies the Seller Indemnitee within the Dispute Period that the Purchaser desires to defend the Seller Indemnitee with respect to the Third Party Claim pursuant to this Section 8.6(a), then the Purchaser will have the right to defend, at the sole cost and expense of the Purchaser, such Third Party Claim by all appropriate proceedings, which proceedings will be vigorously and diligently prosecuted by the Purchaser to a final conclusion or will be settled at the discretion of the Purchaser; provided, that the Seller Indemnitee’s prior written consent shall be required for any settlement that provides for any relief against such Seller Indemnitee other than monetary damages for which the Seller Indemnitee will be indemnified in full. The Purchaser will have full control of such defense and proceedings, including any settlement thereof (subject to the immediately preceding sentence); provided, however, that if requested by the Purchaser, the Seller Indemnitee will, at the sole cost and expense of the Purchaser, cooperate with the Purchaser and its counsel in contesting any Third Party Claim that the Purchaser elects to contest, or, if appropriate and related to the Third Party Claim in question, in making any counterclaim against the Person asserting the Third Party Claim, or any cross-complaint against any Person (other than the Seller Indemnitee or any of its Affiliates). The Seller Indemnitee may retain separate counsel to represent it in, but not control, the defense of a Third Party Claim that is controlled by the Purchaser, and the Seller Indemnitee will bear the costs and expenses of such counsel unless (x) outside counsel advises in writing that an actual or potential conflict of interest with the Purchaser exists which makes representation of both Purchaser and the Seller Indemnitee inappropriate under applicable standards of professional conduct or (y) both the Purchaser and Seller Indemnitee are named parties to such Third Party Claim and outside counsel advises in writing that defenses are available to the Seller Indemnitee that are unavailable to the Purchaser. Notwithstanding this Section 8.6(a), the Seller Indemnitee may retain or take over the control of the defense or settlement of any Third Party Claim the defense of which the Purchaser has elected to control if the Seller Indemnitee irrevocably waives its right to indemnity under this Agreement with respect to such Third Party Claim.
(c)If the Purchaser fails to notify the Seller Indemnitee within the Dispute Period that the Purchaser desires to defend the Third Party Claim pursuant to Section 8.6(a), then the Seller Indemnitee will have the right to defend, at the sole cost and expense of the Purchaser, the Third Party Claim by all appropriate proceedings, which proceedings will be vigorously and diligently prosecuted by the Seller Indemnitee to a final conclusion or will be settled at the discretion of the Seller Indemnitee (with the consent of the Purchaser, which consent will not be unreasonably withheld). The Seller Indemnitee will have full control of such defense and proceedings, including (except as provided in the immediately preceding sentence) any settlement thereof; provided, however, that if requested by the Seller Indemnitee, the Purchaser
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will, at the sole cost and expense of the Purchaser, cooperate with the Seller Indemnitee and its counsel in contesting any Third Party Claim which the Seller Indemnitee is contesting, or, if appropriate and related to the Third Party Claim in question, in making any counterclaim against the Person asserting the Third Party Claim, or any cross-complaint against any Person (other than the Purchaser or any of its Affiliates). Notwithstanding the foregoing provisions of this clause (c), if the Purchaser has notified the Seller Indemnitee within the Dispute Period that the Purchaser disputes its liability hereunder to the Seller Indemnitee with respect to such Third Party Claim and if such dispute is resolved in favor of the Purchaser in the manner provided in clause (d) below, the Purchaser will not be required to bear the costs and expenses of the Seller Indemnitee’s defense pursuant to this clause (c) or of the Purchaser’s participation therein at the Seller Indemnitee’s request, and the Seller Indemnitee will reimburse the Purchaser in full for all reasonable costs and expenses incurred by the Purchaser in connection with such litigation. The Purchaser may retain separate counsel to represent it in, but not control, any defense or settlement controlled by the Seller Indemnitee pursuant to this clause (c), and the Purchaser will bear its own costs and expenses with respect to such participation.
(d)If the Purchaser notifies the Seller Indemnitee that it does not dispute its liability to the Seller Indemnitee with respect to a Third Party Claim under Section 8.6(a), the Loss arising from such Third Party Claim will be conclusively deemed a liability of the Purchaser under Section 8.1 and the Purchaser shall pay the amount of such Loss to the Seller Indemnitee on demand following the final determination thereof. If the Purchaser has timely disputed its liability with respect to such Third Party Claim, the Purchaser and the Seller Indemnitee will proceed in good faith to negotiate a resolution of such dispute for thirty (30) days, and if such dispute is not resolved through mutual agreement, such dispute shall be subject to resolution in accordance with the terms of this Agreement (including Sections 7.2 and 7.3 hereof).
Section 8.7.Direct Claims. In the event any Seller Indemnitee should have a claim under Section 8.1 against any Purchaser that does not involve a Third Party Claim, the Seller Indemnitee shall deliver a Claim Notice with reasonable promptness to the Purchaser. If the Purchaser notifies the Seller Indemnitee that it does not dispute the Claim described in such Claim Notice or fails to respond during the Dispute Period, the Loss arising from the Claim specified in such Claim Notice will be conclusively deemed a liability of the Purchaser under Section 8.1 and the Purchaser shall pay the amount of such Loss to the Seller Indemnitee on demand following the final determination thereof. If the Purchaser has timely disputed its liability with respect to such Claim, Purchaser and the Seller Indemnitee shall proceed in good faith to negotiate a resolution of such dispute for thirty (30) days, and if such dispute is not resolved through mutual agreement, such dispute shall be subject to resolution in accordance with the terms of this Agreement (including Sections 7.2 and 7.3 hereof).
Section 8.8.Access. In the event of any claim for indemnity under this Article VIII, the Sellers and their respective Affiliates agree to give Purchaser and its Representatives reasonable access to its books and records and employees of Seller and its Affiliates in connection with the matters for which indemnification is sought to the extent Purchaser reasonably deems necessary in connection with its rights and obligations under this Article VIII. To the extent any Seller or the applicable Seller Indemnitee does not comply with its obligations under this Section 8.8, the Dispute Period shall be tolled until the relevant information is provided to the Purchaser.
Article IX
PURCHASER PARENT GUARANTEE
PURCHASER PARENT GUARANTEE
Section 9.1.Purchaser Parent Guarantee.
(a)The Purchaser Parent Guarantor hereby absolutely, unconditionally and irrevocably guarantees as primary obligor and not merely as surety, to the Sellers, the due and
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punctual payment under and performance of and compliance in full with all of the covenants, agreements, terms, conditions and representations and warranties of this Agreement and all other Transaction Documents to which Purchaser is a party (“Guaranteed Agreements”) under which Purchaser is required to pay or which are required to be performed or complied with by the Purchaser (collectively, the “Guaranteed Obligations”) (the “Purchaser Parent Guarantee”). In the event that the Purchaser fails to pay under or perform or comply in full with any such covenant, agreement, term, condition or representation or warranty under the Guaranteed Agreement, the Purchaser Parent Guarantor shall, after the expiry of any relevant cure period provided thereunder:
(i)forthwith pay the same to the person or entity entitled thereto, within three (3) Business Days of receipt of notice from the Sellers in the case of any payment to be made by Purchaser under the Guaranteed Agreement (including payments of damages for breach thereof by Purchaser); and
(ii)perform or comply with such covenant, agreement, term or condition or cause the same forthwith to be performed or complied with within five (5) days of receipt of notice from the Sellers in the case of any obligation of Purchaser under the Guaranteed Agreement other than an obligation to make a payment.
(b)The guarantee by the Purchaser Parent Guarantor contained in Section 9.1(a) is a primary obligation of the Purchaser Parent Guarantor, is in addition to and not in substitution for any other security which the Sellers may now or hereafter hold for the obligations of Purchaser under the Guaranteed Agreement and is an unconditional, absolute, present and continuing obligation and is not conditional in any way upon the institution of suit or the taking of any other action or any attempt to enforce performance of or compliance with the covenants, agreements, terms or conditions (including without limitation any payment obligations) applicable to Purchaser contained in the Guaranteed Agreement and, to the extent permitted by law, shall be binding upon and enforceable against the Purchaser Parent Guarantor without regard to the validity or enforceability of the Guaranteed Agreement to the extent the same are compromised by any legal limitation or incapacity of the Purchaser. To the extent that performance of or compliance with the guarantee by the Purchaser Parent Guarantor contained in Section 9.1(a) requires the payment of money, such guarantee is an absolute, unconditional, present and continuing guarantee of payment and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Purchaser or any other person or entity or to institute a suit against the Purchaser or any other person or entity or to perfect or to enforce any security or upon any other condition or contingency or upon any other action, occurrence or circumstance whatsoever. Such guarantee will continue to be effective, or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the sums due to the Sellers from the Purchaser or the Purchaser Parent Guarantor pursuant to the terms of the Guaranteed Agreement or Section 9 herein is rescinded or must otherwise be restored or returned upon the bankruptcy, insolvency, reorganization, arrangement, adjustment, composition, dissolution, liquidation or the like, of Purchaser or the Purchaser Parent Guarantor, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to Purchaser or the Purchaser Parent Guarantor, or any part of their respective property, or otherwise, all as though such payment had not been made.
(c)For so long as the Guaranteed Obligations remain outstanding the obligations of the Purchaser Parent Guarantor hereunder shall remain in full force and effect without regard to, and shall not be impaired or affected by:
(i)any extension or indulgence in respect of the payment of any amount payable, or the performance of any covenant, agreement, term or condition under the Guaranteed Agreement; or
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(ii)any exercise or non-exercise by the Sellers of any right, power, privilege or remedy under or in respect of the guarantee provided herein or the Guaranteed Agreement; or
(iii)any bankruptcy, insolvency, reorganization, arrangement, adjustment, composition, dissolution, liquidation or the like, of the Purchaser or the Purchaser Parent Guarantor; or
(iv)any limitation of the liability of Purchaser under the terms of the Guaranteed Agreement which may now or hereafter be imposed by any statute, regulation or rule of law, or any invalidity or unenforceability, in whole or in part, of the Guaranteed Agreement or any terms thereof; or
(v)any merger or consolidation of Purchaser or the Purchaser Parent Guarantor into or with any other person or entity, or any sale, lease or transfer of any or all of the assets of Purchaser to any other person or entity; or
(vi)any indebtedness of Purchaser to any person or entity, including the Purchaser Parent Guarantor; or
(vii)any claim, set off, deduction or defense the Purchaser Parent Guarantor or the Purchaser or may have against the Sellers, whether hereunder or under the Guaranteed Agreement or independent of or unrelated to the transactions contemplated by the Guaranteed Agreement; or
(viii)any intermediate payment, performance, discharge or satisfaction in whole or in part of any of the Guaranteed Obligations except to the extent of such payment, performance, discharge or satisfaction of such obligations,
provided that notwithstanding the foregoing or any other provision of this Section 9, the Purchaser Parent Guarantor may assert as a defense to any claim by the Sellers for payment or performance hereunder in respect of any claim by the Sellers against the Purchaser under the Guaranteed Agreement (a “Seller Claim”), any defense, claim, set-off or deduction which Purchaser could have asserted in respect of such Seller Claim other than any such defense, claim, set-off or deduction available to the Purchaser (i) under any bankruptcy, reorganization, insolvency, readjustment of debt, suspension of payments, dissolution, liquidation or similar law in any proceeding thereunder against Purchaser, or (ii) based on the lack of validity or unenforceability of any Guaranteed Obligations.
(d)the Purchaser Parent Guarantor unconditionally waives, to the fullest extent permitted by law, (i) notice of any of the matters referred to in Section 9.1(c) hereof, (ii) any notice of or proof of reliance or acceptance by the Sellers upon the guarantee provided herein (the Guaranteed Obligations shall conclusively be deemed to have been created, contracted, incurred or renewed, extended, amended or waived in reliance upon the guarantee herein and all dealings between the Purchaser or Purchaser’s Parent Guarantor and the Sellers shall be conclusively presumed to have been had or consummated in reliance upon the guarantee provided herein), (iii) all notices which may be required by statute, rule of law or otherwise now or hereafter in effect, to preserve intact any rights of the Sellers against Guarantor, including, without limitation, any demand, presentment and protest, notice of creation of any obligation, proof of notice of non payment under the Guaranteed Agreement, and notice of default or any failure on the part of Purchaser to perform or comply with any covenant, agreement, term or condition of the Guaranteed Agreement executed or to be executed by it.
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(e)The guarantee contained in Section 9 is not assignable by either Purchaser’s Parent Guarantor or the Purchaser without the prior written consent of the Sellers.
(f)The Purchaser Parent Guarantee and all obligations of the Purchaser Parent Guarantor hereunder shall automatically and irrevocably terminate and be of no further force or effect upon the earlier to occur of (a) the indefeasible satisfaction in full of all Guaranteed Obligations, (b) the valid termination of this Agreement in accordance with Section 2.5 and (c) the date on which the Sellers or any of their Affiliates breach any material obligation under this Agreement that has not been cured within thirty (30) days following the written notice thereof from the Purchaser Parent Guarantor or the Purchaser to the Sellers.
(g)The Purchaser Parent Guarantor hereby represents and warrants on the date hereof and the Closing Date that: (i) it is properly formed and registered in the State of Delaware and, since the date of its formation, it has been maintained in accordance with all applicable Laws; (ii) in entering into this Agreement and performing its obligations hereunder, it does not contravene any applicable Laws; (iii) all necessary authorizations have been obtained for the execution by it of this Agreement and the performance of its obligations hereunder and it has the power to enter into this Agreement and the issuance of the guarantee provided herein is within the purposes of the Purchaser Parent Guarantor and corresponds to a commercial benefit to the Purchaser Parent Guarantor; (iv) its obligations under this Agreement are legal, valid, binding and enforceable against it in accordance with its terms except to the extent that such enforcement may be affected by laws relating to bankruptcy, reorganization, insolvency or creditors’ rights or general principles of equity, regardless of whether enforcement is considered in a proceeding at law or in equity; and (v) it is not involved in any litigation or other dispute the outcome of which would reasonably be expected to materially and adversely affect its ability to perform the Guaranteed Obligations.
[Signature Pages Follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written.
SELLERS:
WNG INTERNATIONAL MASTER
FUND II, L.P.
FUND II, L.P.
By: WNG Aircraft Opportunities Fund II
GP, L.P.
Its: General Partner
GP, L.P.
Its: General Partner
By: WNG Aircraft Opportunities Fund II
UTGP, L.L.C.
Its: General Partner
UTGP, L.L.C.
Its: General Partner
By: /s/ Albert Nigro
Name: Albert Nigro
Title: Managing Member
Name: Albert Nigro
Title: Managing Member
WNG II AIRCRAFT MANAGEMENT (DELAWARE), LLC
By: WNG U.S. Master Fund II, L.P.,
Its: Sole Member
Its: Sole Member
By: WNG Aircraft Opportunities Fund II
GP, L.P.
Its: General Partner
GP, L.P.
Its: General Partner
By: WNG Aircraft Opportunities Fund II
UTGP, L.L.C.
Its: General Partner
UTGP, L.L.C.
Its: General Partner
By: /s/ Albert Nigro
Name: Albert Nigro
Title: Managing Member
Name: Albert Nigro
Title: Managing Member
PURCHASER:
WILLIS DALLAS LTD.
By: /s/ Scott B. Flaherty
Name: Scott B. Flaherty
Title: Director
Name: Scott B. Flaherty
Title: Director
SOLELY FOR PURPOSES OF
SECTION 9.1:
SECTION 9.1:
WILLIS LEASE FINANCE
CORPORATION
CORPORATION
By: /s/ Z. Clifton Dameron IV
Name: Z. Clifton Dameron IV
Title: SVP & General Counsel
Name: Z. Clifton Dameron IV
Title: SVP & General Counsel
Exhibit 31.1
CERTIFICATIONS
I, Austin C. Willis, certify that:
1. I have reviewed this report on Form 10-Q 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: | November 3, 2026 | /s/ Austin C. Willis | |||||||||
| Austin C. Willis | |||||||||||
| Chief Executive Officer | |||||||||||
Exhibit 31.2
CERTIFICATIONS
I, Scott B. Flaherty, certify that:
1. I have reviewed this report on Form 10-Q 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: | November 3, 2026 | /s/ Scott B. Flaherty | |||||||||
| Scott B. Flaherty | |||||||||||
| Chief Financial Officer | |||||||||||
Exhibit 32.1
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 Quarterly Report of the Company on Form 10-Q for the period ended September 30, 2026 fully complies with the requirements of Section 13(a) 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.
| Dated: November 3, 2026 | |||||
| /s/ Austin C. Willis | |||||
| Austin C. Willis | |||||
| Chief Executive Officer | |||||
| /s/ Scott B. Flaherty | |||||
| Scott B. Flaherty | |||||
| Chief Financial Officer | |||||