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Consent Waiver And Forbearance Agreement No. 11

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Sectors: Transportation
Effective Date: September 10, 2001
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Exhibit 10.7


Consent, Waiver and Forbearance Agreement No. 11 for
Lease Agreement and
Certain Other Operative Agreements


THIS CONSENT, WAIVER AND FORBEARANCE AGREEMENT NO. 11 (this "Consent Agreement") is made and entered into as of the 10th day of September, 2001, by and among AVIATION SALES COMPANY, a Delaware corporation ("Aviation Sales"), as Construction Agent (the "Construction Agent"); AVIATION SALES COMPANY, as Lessee (the "Lessee"); WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association, f/k/a First Security Bank, National Association, not individually, except as expressly stated in the Operative Agreements, but solely as Owner Trustee under the Aviation Sales Trust 1998-1 (the "Owner Trustee"); BANK OF AMERICA, N.A., successor to NationsBank, National Association ("Bank of America"), as a Holder and as a Lender; BANK OF AMERICA, N.A., successor to NationsBank, National Association, as Administrative Agent (the "Agent"); each of the holders party to the Trust Agreement (defined below) (the "Holders"); each of the Lenders party to the Credit Agreement (defined below)(the "Lenders"); and each of the Guarantors party to the Guaranty Agreement (defined below).


W I T N E S S E T H:
-------------------


WHEREAS, the Construction Agent, the Lessee, the Owner Trustee, the Agent, the Lenders and the Holders have entered into the Participation Agreement dated as of December 17, 1998 (as amended, the "Participation Agreement"); and


WHEREAS, the Owner Trustee, the Lenders and the Agent have entered into the Credit Agreement dated as of December 17, 1998 (as amended, the "Credit Agreement"); and


WHEREAS, the Holders and the Owner Trustee have entered into the Amended and Restated Trust Agreement dated as of December 17, 1998 (as amended, the "Trust Agreement"); and


WHEREAS, the Owner Trustee and the Lessee have entered into the Lease Agreement dated as of December 17, 1998 (as amended, the "Lease" or "Lease Agreement"); and


WHEREAS, Aviation Sales, Subsidiaries of Aviation Sales, and the Agent have entered into the respective Guaranty Agreements (Series A Obligations) dated as of December 17, 1998, February 18, 2000, March 31, 2000 or May 31, 2000, as the case may be, (collectively, the "Series A Guaranty Agreement"); and the Subsidiaries of Aviation Sales and the Owner Trustee have entered into the respective Guaranty Agreements (Lessee Obligations) dated as of December 17, 1998, February 18, 2000, March 31, 2000 or May 31, 2000, as the case may be, (collectively, the "Lessee Guaranty Agreement", and collectively with the Series A Guaranty Agreement and any other Guaranty Agreement (as defined in the Participation Agreement), the "Guaranty Agreement" or "Guaranty"); and


WHEREAS, the Lessee has informed the Owner Trustee, the Holders, the Agent and the Lenders that certain Events of Default have occurred and are continuing; and


WHEREAS, the Lessee has requested that the Owner Trustee, the Holders, the Agent and the Lenders forbear from exercising their rights and remedies with respect to certain Events of Default as described herein and in the 2001 Forbearance Letter (as defined herein); and


WHEREAS, the Lessee has requested that the Owner Trustee, the Holders, the Agent and the Lenders waive certain Events of Default as described herein; and


WHEREAS, the parties hereto desire to amend the Lease Agreement and certain other Operative Agreements in the manner herein set forth;


NOW, THEREFORE, the Construction Agent, the Lessee, the Owner Trustee, the Holders, the Agent and the Lenders do hereby agree as follows:


1. Definitions. The terms "Participation Agreement", "Lease" and "Lease
----------- Agreement" as used herein and in the Operative Agreements (as defined in the Participation Agreement) shall mean such agreements as hereby amended and modified, and as further amended, modified, supplemented or restated from time to time in accordance with the terms thereof. Unless the context otherwise requires, all terms used herein without definition shall have the definition provided therefore in the Participation Agreement.


2. Letter of Credit. Aviation Sales, its Subsidiaries, the Owner Trustee,
---------------- hereby agree to and acknowledge the following by their signature hereof:


Notwithstanding any provision contained in the Operative Documents and whether or not any Event of Default has occurred or is continuing, in accordance with the Credit Agreement and other Operative Documents, each of Aviation Sales and the Owner Trustee hereby irrevocably authorizes the Agent:


(a) to draw the full amount of the Letter of Credit at any time (in
the Agent's sole discretion) (up to and including the expiration date set
forth in the Letter of Credit), and for any reason; and


(b) to apply (in such order as the Agent in its sole discretion shall
determine) the funds drawn by the Agent under the Letter of Credit to repay
or prepay (i) outstanding Loans, Holder Fundings, Property Costs, interest,
fees or Holder Yield, or (ii) any amounts that may be due and owning under
any Operative Agreement.


Aviation Sales, its Subsidiaries and the Owner Trustee hereby give notice to the Agent, the Lenders and Holders, pursuant to Section 2.6(a) of the Credit
-------------- Agreement and Section 3.4 of the Trust Agreement, that the Borrower shall prepay
----------- the Loans and Holder Fundings in an aggregate amount equal to the amount drawn by the Agent under the Letter of Credit pursuant to this Section 2 (after
--------- deducting any amounts that the Agent may apply to other purposes in accordance with Section 2(a) or (b) above). Such prepayment shall be accomplished by the
------------ --- Agent's application of such remaining proceeds of the Letter of Credit to the Loans and Holder Fundings (in such ratio between Loans and Holder Fundings as the Agent in its sole discretion


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shall determine), and such prepayment shall occur on the date (the "Prepayment Date") that is the later of (y) two (2) Business Days after the date hereof or (z) the date that the Agent draws on the Letter of Credit. Accordingly, such prepayment shall be due and owing on the Prepayment Date.


3. Consent and Waiver. Effective upon the satisfaction of the conditions
------------------ precedent set forth in Section 6 hereof, the Agent, the Owner Trustee, the
--------- Lenders and the Holders hereby consent to the extension of the Forbearance Period (as defined in that certain letter dated August 16, 2001 (the "2001 Forbearance Letter") with respect to the forbearance of the Agent, the Owner Trustee, the Lenders and the Holders from exercising rights and remedies with respect to the Events of Default specifically identified in the 2001 Forbearance Letter) until December 31, 2001, such extension subject to the conditions attached hereto as Exhibit B (the "Extended Forbearance Period"); provided,
--------- -------- however, that the existing Events of Default subject to the Extended Forbearance - ------- Period shall not be deemed cured (i) as a result of any waiver by (x) the trustee for the Senior Subordinated Notes, (y) the holders of the Senior Subordinated Notes or (z) the lenders under the Citicorp Loan Documents or (ii) as a result of the payment of interest which was due on August 15, 2001 with respect to the Senior Subordinated Notes; and such Events of Default shall continue to exist during and after the Forbearance Period and the Extended Forbearance Period whether or not the underlying defaults (including payment of such interest) under the Senior Subordinated Notes, Subordinated Debt Indenture and related documents or the Citicorp Loan Documents have been waived or cured.


Subject to the satisfaction of the conditions precedent set forth in Section 5 hereof, the Agent, the Owner Trustee, the Lenders and the Holders - --------- hereby waive the rights and remedies of the Agent, the Owner Trustee, the Lenders and the Holders arising due to the failure of Aviation Sales and its Subsidiaries to deliver the quarterly Financial Statements and corresponding Officer's Certificate for the period ended June 30, 2001, as and when required by Section 28.1.1 of the Lease Agreement; provided that such Financial
-------------- -------- ---- Statements are delivered by no later than September 14, 2001.


The consent and waiver contained in this Section 3 are granted only for the
--------- specific instances described herein and are not intended to create a course of dealing or otherwise impair the future ability of the Lessor, the Agent, any Lender or any Holder to declare an Event of Default or otherwise enforce the terms of any Operative Agreement. Neither any such consent nor any such waiver is intended to be nor shall it be construed to be a general waiver or alteration of any of the terms or conditions of any Operative Agreement.


4. Representations, Warranties and Covenants. The Lessee and the
----------------------------------------- Construction Agent hereby represent, warrant and covenant that:


(a) The representations and warranties made by the Lessee and the
Construction Agent in Section 7 of the Participation Agreement are true on
and as of the date set forth in such Section.


(b) The audited consolidated financial statements of each of the
Construction Agent and the Lessee as of December 31, 2000, copies of which
have been furnished to the Agent and the Owner Trustee, were prepared in
accordance with GAAP and fairly present the financial condition of each of
the Construction Agent and the Lessee and their


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Subsidiaries on a consolidated basis as of such date and their consolidated
results of operations for the fiscal year then ended. Neither Aviation
Sales nor any Guarantor or any Subsidiary of Aviation Sales has as of the
date any Accommodation Obligation, contingent liability or liability for
any taxes, long-term leases or commi
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