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EXHIBIT 10.68
SECURITY AGREEMENT AND CHATTEL MORTGAGE
(AIRCRAFT NO. N509MC)
THIS SECURITY AGREEMENT AND CHATTEL MORTGAGE is dated as of May 29, 1997
(this "Mortgage"), and entered into by and between ATLAS AIR, INC., a Delaware
corporation (the "Lessee"), ATLAS FREIGHTER LEASING, INC., a Delaware
corporation ("Company" or "Lessor"), and BANKERS TRUST COMPANY, as agent for and
representative of (in such capacity, the "Agent") the financial institutions
("Lenders") party to the Credit Agreement referred to below.
PRELIMINARY STATEMENTS
Company has entered into a credit agreement dated as of May 29, 1997 (said
credit agreement, as it may be amended, restated, supplemented or otherwise
modified from time to time, being the "Credit Agreement") with Lenders and
Agent, pursuant to which Lenders have agreed, on the terms and conditions set
forth in the Credit Agreement, to make term loans to Company in the principal
amount of up to $185 million (the "Loans") to enable Company to refinance
certain indebtedness currently encumbering the Aircraft Collateral (as defined
below). The indebtedness with respect to Loans made by Lenders is to be
evidenced by certain promissory notes of Company to the order of Lenders of even
date herewith issued under and pursuant to the Credit Agreement (such promissory
notes, as they may be amended, modified, supplemented, renewed, converted or
extended from time to time, being the "Notes"). It is a condition precedent to
the making by Lenders of the Loans under the Credit Agreement that this Mortgage
be executed, delivered and filed for recordation.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make the Loans, Company hereby agrees with Agent as follows:
SECTION 1. Mortgage and Grant of Security.
To secure the due and punctual payment of the Notes, together with accrued
interest thereon, and all other amounts from time to time payable by Company
under the Credit Agreement, this Mortgage and the other Loan Documents (as
defined below) (including payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the United States
Bankruptcy Code), and to secure performance of all obligations and covenants of
Company under the Credit Agreement, this Mortgage and the other Loan Documents
(all such payment and performance obligations of Company, the "Secured
Obligations"), Company hereby mortgages to Agent, for the benefit of Lenders,
and their respective successors and assigns, and hereby grants and assigns to
Agent, for the benefit of Lenders, and their respective successors and assigns,
a first priority security in-
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terest in the Aircraft and the Spare Engines (the "Aircraft Collateral") and a
first priority security interest in all estate, right, title and interest of
Company in, to and under, the other below described property wherever the same
may be located (the "Aircraft Related Collateral"):
(a) Aircraft Collateral. All of Company's right, title and interest in
and to:
(i) the airframe (the Aircraft except for the Engines or engines
from time to time installed thereon), which is described on Schedule I
hereto and any replacement airframe which may be substituted for such
airframe in accordance with the provisions of Section 4(f) hereof
together with any and all Parts (as hereinafter defined) incorporated
or installed in or attached to such airframe and all Parts removed
from such airframe until such Parts are replaced in accordance with
Section 4(e) hereof (such airframe, together with any replacement
airframe and all such Parts, hereinafter referred to as the
"Airframe");
(ii) each of the engines, which are listed in Schedule II hereto
or which are described in a Supplemental Chattel Mortgage (a
"Supplemental Chattel Mortgage") substantially in the form of Exhibit
A attached hereto, supplementing this Mortgage, and listed by
manufacturer's serial numbers in such Schedule or in such Supplemental
Chattel Mortgage, whether or not from time to time thereafter
installed on the airframe or on any other airframe or aircraft,
including, any engine designated as a spare engine (the "Spare
Engine"), and any replacement engine which may be substituted for such
engine in accordance with the provisions of Section 4(f) hereof,
together, in each case, with any and all Parts incorporated or
installed in or attached thereto and any and all Parts removed
therefrom, until such Parts are replaced in accordance with Section
4(e) hereof (each such engine, spare engine and replacement engine,
together with any and all such Parts, hereinafter referred to as an
"Engine" and collectively, the "Engines");
(iii) all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other
than complete Engines or engines), which may from time to time be
incorporated or installed in or attached to the Airframe or any
Engine, including all such appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment purchased
by Company for incorporation or installation in or attachment to the
Airframe or any Engine pursuant to the terms of any agreement whether
or not identified in a Supplemental Chattel Mortgage (collectively
referred to herein as "Parts"); and
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(iv) all records, logs and other materials required by applicable
law or regulation to be maintained and all other records, logs and
materials maintained in the ordinary course of business with respect
to the properties described in paragraphs (i), (ii) and (iii) above
(together with such Airframe and Engines (other than the Spare
Engine), the "Aircraft").
(b) Aircraft Related Collateral. All of Company's right, title and
interest in and to:
(i) all the tolls, rents, issues, profits, revenues and other
income of the property subject or required to be subject to the lien
of this Mortgage including, without limitation, all payments or
proceeds payable to Company after termination of the Lease with
respect to the Aircraft as the result of the sale, lease or other
disposition thereof, and all estate, right, title interest of every
nature whatsoever of Company in and to the same and every part
thereof;
(ii) all monies and securities deposited or required to be
deposited with Agent pursuant to any term of this Mortgage and held or
required to be held by Agent hereunder or paid to Agent in accordance
with the terms of the Lease;
(iii) the contractual rights of the Company under any purchase or
modification agreement or manufacturer's warranty, together with all
rights, powers, privileges, options, licenses and other benefits of
Company (including such indemnities, rights of assignment, rights and
remedies for breach of any warranty and/or claims for damages, rights
to receive title to parts and materials to the extent same relates to
the Aircraft including any agreement assigned therewith;
(iv) all amounts payable to Company by any manufacturer, supplier
or vendor of any of the Aircraft Collateral or any component thereof
pursuant to any warranty or indemnity covering any such Collateral;
(v) all amounts payable as proceeds of insurance, as an award or
otherwise in connection with any confiscation, condemnation,
requisition or other taking of any Aircraft Collateral to the extent
payable to Company under the Lease or to Agent hereunder;
(vi) the Lease, including without limitation all Basic Rent,
Supplemental Rent, insurance proceeds, requisition, indemnity and
other payments of any kind thereunder, and including all rights of
Company, as lessor, to execute any election or option or to give any
notice, consent, waiver or approval under or in respect of the Lease
or to accept any surrender of
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any of the Aircraft or any part thereof, as well as any rights,
powers or remedies on the part of the Lessor, whether arising
under the Lease or by statute or at law or in equity, or otherwise,
arising out of any Lease Event of Default (as defined in the Lease),
including, without limitation, all rights under Section 1110 of the
Bankruptcy Code; and
(vii) all proceeds of any and all of the properties described
above, including, without limitation, all payments under insurance
proceeds or payment under any indemnity, payable by reason of any loss
or damage to the Aircraft or any Engine.
Company shall deliver to Agent an executed chattel paper original
counterpart of each Lease and the Lease Supplements covering the Aircraft. All
property referred to in this granting clause, whenever acquired by the Lessor
under the Lease, shall secure all Secured Obligations. Company does hereby
warrant and represent that it has not assigned or pledged, and hereby covenants
that it will not assign or pledge, so long as the assignment hereunder shall
remain in effect, any of its right, title or interest hereby assigned to anyone
other than Agent, and that it will not, except as provided herein or in the
Credit Agreement, enter into any agreement amending or supplementing any
purchase agreement, modification agreement to the extent such agreement relates
to the Aircraft, or execute any waiver or modification of, or consent under, any
such agreement, or settle or compromise any claim arising under any such
agreement or submit or consent to the submission of any dispute, difference or
other matter arising under or in any respect of any such agreement to
arbitration thereunder.
SECTION 2. Definitions.
Unless the context otherwise requires, the following terms shall have the
following meanings for all purposes of this Mortgage and shall be equally
applicable to both the singular and the plural forms of such terms. Terms
defined in the Credit Agreement and not otherwise defined herein are used herein
as therein defined.
"Acceptable Alternate Airframe" means a Boeing 747-200 which is in
cargo configuration capable of immediate operation in the business of
Lessee and has a maximum gross takeoff weight of at least 800,000 pounds
and is of the equivalent or greater residual value, condition, utility,
airworthiness, and remaining useful life and which shall have been
maintained, serviced, repaired and overhauled in substantially the same
manner as Atlas maintains, services, repairs and overhauls similar
airframes utilized by Atlas and without in any way discriminating against
such airframe.
"Acceptable Alternate Engine" means a ▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT9D-7A engine
for the aircraft bearing U.S. registration number N808MC and a General
Electric CF6-50E2 aircraft engine for the aircraft bearing U.S.
registration numbers
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N505MC, N508MC, N507MC, N509MC and N516MC or an engine of the same or
another manufacturer of equivalent or greater residual value, condition,
utility, airworthiness, and remaining useful life and suitable for
installation and use on the Airframe; provided that such engine shall be
of the same make, model and manufacturer as the other engines installed on
the Airframe, shall be an engine of a type then being utilized by Lessee
on other Boeing 747-200 aircraft operated by Lessee, and shall have been
maintained, serviced, repaired and overhauled in substantially the same
manner as Lessee maintains, services, repairs and overhauls similar
engines utilized by Lessee and without in any way discriminating against
such engine.
"ACMI Contract" means (i) any contract entered into by Atlas pursuant
to which Atlas furnishes the aircraft, crew, maintenance and insurance and
customers bear all other operating expenses and (ii) any similar contract
in which the customer provides the flight crew, all in accordance with
Atlas's historical practices.
"Act" means the Federal Aviation Act of 1958, as amended and
recodified in ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, or any similar legislation of
the United States enacted to supersede, amend or supplement such Act and
the rules and regulations promulgated thereunder.
"Agent" has the meaning specified in the first paragraph of this
instrument.
"Aircraft" has the meaning specified in Section 1 hereof.
"Aircraft Collateral" has the meaning specified in Section 1 hereof.
"Aircraft Related Collateral" has the meaning specified in Section 1
hereof.
"Airframe" has the meaning specified in Section 1 hereof.
"Company" has the meaning specified in the first paragraph of this
instrument.
"Credit Agreement" has the meaning specified in the Preliminary
Statements.
"Domestic Air Carrier" means any United States "domestic air carrier,"
as defined in Part 121 of the Federal Aviation Regulations, that is
operating in accordance with the operating certificate and appropriate
operations specifications issued under Part 121 or any successor
regulations.
"Engine" has the meaning specified in Section 1 hereof.
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"Event of Default" means any Event of Default as defined in the Credit
Agreement.
"Lease" means that certain Lease Agreement, dated as of May 29, 1997,
by and between Atlas Freighter Leasing, Inc., as Lessor, and Atlas Air,
Inc., as Lessee, for the lease of the Aircraft, together with any
amendments, modifications, supplements or additions thereto.
"Lessee" means Atlas Air, Inc.
"Lessor" has the meaning specified in the first paragraph of this
Mortgage.
"Loans" has the meaning specified in the Preliminary Statements.
"Mortgage" has the meaning specified in the first paragraph of this
instrument.
"Notes" has the meaning specified in the Preliminary Statements.
"Parts" has the meaning specified in Section 1 hereof.
"Secured Obligations" has the meaning specified in Section 1 hereof.
"Spare Engine" has the meaning specified in Section 1 hereof.
"Supplemental Chattel Mortgage" has the meaning specified in Section 1
hereof.
SECTION 3. Representations and Warranties.
Company hereby represents and warrants that, in the case of the Airframe or
each Engine initially or subsequently mortgaged hereunder on the date the
Airframe or such Engine is mortgaged hereunder as follows:
(a) Company has good and marketable title to the Aircraft Collateral
free and clear of all Liens except for the lien of this Mortgage and
Permitted Encumbrances and the Lease and has full power and authority to
mortgage and grant the lien and security interest in the Aircraft
Collateral and Aircraft Related Collateral intended by the terms hereof and
in the manner aforesaid and has not assigned or pledged any of its right,
title or interest hereby assigned to anyone other than Agent.
(b) Company is a "citizen of the United States" as defined in Section
40102(15) of Title 49 of the United States Code.
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(c) Ownership of the Airframe is duly registered in the name of
Company in accordance with the Act; and the Airframe is not registered
under the laws of any other country.
(d) This Mortgage or a Supplemental Chattel Mortgage, as the case may
be, is in due form for recording in accordance with the Act and has been
duly filed for recording in accordance with the Act against the Aircraft or
such Engine(s) as the case may be.
(e) An airworthiness certificate has been duly issued under the Act
for the Aircraft (evidence of which has been supplied to Agent), and the
airworthiness certificate for the Aircraft is in full force and effect.
(f) The Aircraft and Engines are in such condition so as to comply
with the requirements of Section 4(c) hereof; and the insurance required by
Section 4(g) hereof is in full force and effect.
(g) This Mortgage or this Mortgage as supplemented by a Supplemental
Chattel Mortgage constitutes the legally valid and binding obligation of
Company enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws or equitable principles relating to or limiting
creditors' rights generally, and creates a valid, perfected and first
priority mortgage on and security interest in the Aircraft Collateral,
securing the payment and performance of the Secured Obligations.
(h) Company has delivered to Agent for filing financing statements
under Article 9 of the Uniform Commercial Code of the States of Colorado
and New York and such other states as may be required with respect to that
portion of the Aircraft Collateral not covered by the filing system
established under the Act and with respect to the Aircraft Related
Collateral; and except for the filings described in this paragraph and in
paragraph (d) above of this Section 2, no filing or recording of any
instrument shall be required to establish and perfect a first priority
security interest in the Aircraft Collateral and Aircraft Related
Collateral under the laws of the United States or any State thereof.
(i) The chief place of business and the chief executive office of
Company is located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 4. Covenants.
Company hereby covenants that so long as this Mortgage is in effect:
(a) Liens. Company will not directly or indirectly create, incur,
assume or suffer to exist any Lien, on or with respect to any of the
Aircraft Collateral, or Air-
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craft Related Collateral, title thereto or any interest therein, except the
lien of this Mortgage and Permitted Encumbrances, including the Lease.
Company will promptly, at its own expense, take such action as may be
necessary to duly discharge any such Lien not excepted above if the same
shall arise at any time.
(b) Taxes. Company will pay, and hereby indemnifies Agent from and
against, any and all fees and taxes, levies, imposts, duties, charges or
withholdings, together with any penalties, fines or interest thereon (any
of the foregoing for the purposes of this Section 4(b) being called a
"Tax"), which may from time to time be imposed on or asserted against Agent
or any Lender or the Airframe or any Engine or any part thereof or interest
therein by any Federal, state or local government or other taxing authority
in the United States or by any foreign government or subdivision thereof or
by any foreign taxing authority in connection with, relating to or
resulting from: (i) the Airframe or any Engine or any part thereof of
interest therein; (ii) the manufacture, purchase, ownership, mortgaging,
lease, sublease, use, storage, maintenance, sale or other disposition of
the Airframe or any Engine; (iii) any rentals or other earnings therefor or
arising therefrom or the income or other proceeds received with respect
thereto; or (iv) this Mortgage; provided, however, that there shall be
excluded from any indemnification any Lessor Tax (as defined in the Lease)
and unless the payment of any such Tax shall be a condition to the
enforceability of this Mortgage or the perfection of the lien hereof or
unless proceedings shall have been commenced to foreclose any lien which
may have attached as security for such Tax, nothing in this Section shall
require the payment of any Tax so long as and to extent that validity
thereof shall be contested in good faith by appropriate legal proceedings
promptly instituted and diligently conducted and Company shall have set
aside on its books adequate reserves with respect thereto in accordance
with generally accepted accounting principles.
(c) Registration; Maintenance and Operation. Company, at its own cost
and expense, (i) will be a "citizen of the United States" as defined in
Section 40102(15) of Title 49 of the United States Code; (ii) will cause
ownership of the Aircraft to be duly registered and remain duly registered
in the name of Company in accordance with the Act; and (iii) will cause
Lessee to service, repair, inspect, test, maintain, overhaul the Airframe
and each Engine and install replacement equipment and parts on the Aircraft
and each Engine (A) so as to keep the Airframe and each Engine in such
operating condition as may be required to permit the Airframe and each
Engine to be utilized in commercial operations, (B) so as to enable the
airworthiness certification of the Airframe to be maintained in good
standing at all times under the Act, except when aircraft of the same type,
model or series as the Air-frame (powered by engines of the same type as
those with which the Airframe shall be equipped at the time of grounding)
registered in the United States have been grounded by the FAA; provided,
however, that if following its issuance, the United States FAA
airworthiness certificate of the Aircraft shall be withdrawn, then
subject
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to the provisions of Section 4(f) hereof, so long as Company is diligently
taking or causing to be taken all necessary action to promptly correct the
condition which caused such withdrawal, no Event of Default shall arise
from such withdrawal, (C) in accordance with Lessee's FAA-approved
maintenance, inspection and maintenance control programs, and in the same
manner and with the same care used by Lessee with respect to the same or
similar aircraft and engines owned or operated by Lessee so as to keep the
same in as good operating condition as when originally mortgaged hereunder,
ordinary wear and tear excepted, which practices shall at all times be at
or above the standard of the industry in the United States for prudent
maintenance of similar equipment, and (D) in such manner as may be
necessary to maintain in full force all warranties of the manufacturers
thereof. Company shall maintain, or shall cause Lessee to maintain, all
records, logs and other materials which may be required to permit the
Airframe and each Engine to be so utilized.
Company will comply in all material respects with all airworthiness
directives, mandatory notes or modifications or similar requirements
affecting the same (including those issued by the manufacturer or supplier)
in such condition so as to comply with the provisions of this Mortgage and
the rules and regulations of the FAA from time to time in force and
applicable to the Aircraft and Engines. Neither the Airframe nor any Engine
will be maintained, used or operated in violation of any law or any rule,
regulation or order of any government or governmental authority having
jurisdiction (domestic or foreign), or in violation of any airworthiness
certificate, license or registration relating to the Airframe or such
Engine issued by any such authority, and in the event that such laws,
rules, regulations or orders require alteration of the Airframe or any
Engine, Company, at its own cost and expense, will conform thereto or
obtain conformance therewith and will maintain the same in proper operating
condition under such laws, rules, regulations and orders; provided,
however, that Company may, in good faith (after having delivered to Agent
an Officer's Certificate stating the facts with respect thereto), contest
the validity or application of any such law, rule, regulation or order in
any reasonable manner which does not, in Agent's opinion, adversely affect
the interests under this Mortgage of Agent or any Lender.
Company will not operate, use or locate the Airframe or any Engine,
(I) in any area in which any insurance required to be maintained pursuant to
Section 4(g) shall not be at the time in full force and effect, or in any area
excluded from coverage by an insurance policy in effect with respect to the
Airframe or such Engine, except in the case of a requisition for use by the
United States of America, and then only if Company obtains indemnity or "war
risk" insurance in lieu of such insurance from the United States of America
against the risks and in the amounts required by said Section covering such
area, or (II) in any recognized or threatened area of hostilities unless fully
covered to Agent's satisfaction by war risk and political risk and allied perils
insurance or unless the Airframe or such Engine is operated or used un-
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der contract with the Government of the United States of America under
which contract that Government provides "war risk" insurance or assumes
liabilities for any damages, loss, destruction or failure to return
possession of the Airframe or such Engine at the end of the term of such
contract and for injury to persons or damage to property of others.
Company shall not use the Aircraft nor suffer it to be used in any
manner or for any purpose excepted from any of the insurance on or in
respect of the Aircraft or for the purpose of carriage of goods of any
description excepted from such insurance nor do, or permit to be done,
anything which, or admit to do anything the admission of which, may
invalidate any of such insurance.
(d) Possession. Company will not, without the prior written consent of
Agent, sell, assign, lease or otherwise in any manner deliver, transfer or
relinquish possession or control of, or transfer the right, title or
interest of Company in, the Airframe or any Engine except that Company may
enter into and perform all provisions and terms of the Lease and Lessee or
the Company, unless a Potential Event of Default or Event of Default shall
have occurred and be continuing, without the prior written consent of
Agent, may take the following actions so long as the actions to be taken
shall not deprive the Agent of the first priority Lien of this Mortgage on
the assets subject hereto and so long as the actions to be taken shall not
deprive Company as Lessor of the protections of Section 1110 of the
Bankruptcy Code with respect to the Aircraft nor shall such actions deprive
the Agent of the protections of Section 1110 of the Bankruptcy Code with
respect to the Aircraft as assignee of Company's rights under this
Mortgage:
(i) transfer possession of the Airframe or any Engine other than
by lease to the United States of America or any instrumentality
thereof pursuant to the Civil Reserve Air Fleet Program (as
administered pursuant to Executive Order 12656, or any substitute
order) or any similar or substitute programs;
(ii) transfer possession of the Airframe or any Engine to the
manufacturer thereof for testing or other similar purposes or any
other organization for service, repairs, maintenance or overhaul or,
to the extent permitted by Section 4(e) hereof, for alterations or
modifications;
(iii) subject any Engine to normal interchange or pooling
agreements or arrangements of the type customary in the United States
airline industry and entered into by Company or Lessee in the ordinary
course of business which do not contemplate or require the transfer of
title to, use for the remainder of its useful life, or registration
of the Airframe or title to, or use for the remainder of its useful
life of such Engine; provided, however if Company's title to or use
for the remainder of its useful life, of the Airframe
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or any Engines shall be divested under any such agreement or
arrangement, such divesture shall be deemed to be an Event of Loss
with respect to the Airframe or such Engine and Company shall comply
with Section 4(f) in respect thereof;
(iv) install an Engine on an airframe which is owned by Lessee;
provided that such airframe is free and clear of all Liens on property
of Lessee except (A) Liens permitted under the Lease, (B) Liens that
apply only to the engines (other than the Engines), appliances, parts,
instruments, appurtenances, accessories, furnishings and other
equipment (other than Parts) installed on such airframe (but not to
the airframe as an entirety), and (C) the rights of any Domestic Air
Carrier, under normal interchange agreements which are customary in
the airline industry and do not contemplate or require the transfer of
title to such airframe or the engines installed thereon;
(v) install an Engine on an airframe leased to Lessee or owned by
Lessee subject to a conditional sale or other security agreement,
provided: (A) such airframe is free and clear of all Liens, except the
rights of the parties to the lease or conditional sale or other
security agreement covering such airframe and except Liens of the type
permitted by clause (iv) above; and (B) Agent shall have received from
the lessor, conditional vendor or secured party and each of the
purchasers, mortgagees and encumbrancers of such lessor, conditional
vendor or secured party of such airframe a written agreement (which
may be the lease, conditional sale agreement or mortgage covering such
airframe), whereby such lessor, conditional vendor or secured party
and each of the purchasers, mortgagees and encumbrancers of such
lessor, conditional vendor or secured party expressly and effectively
agrees that neither it nor its successors and assigns will acquire or
claim any right, title or interest in any Engine by reason of such
Engine being installed on such airframe at any time when such Engine
is subject to this Mortgage;
(vi) install an Engine on an airframe owned or leased by Lessee
subject to a conditional sale or other security agreement under
circumstances where neither clause (iv) nor clause (v) above is
applicable; provided that any divesture of title to such Engine
resulting from such installation shall be deemed to be an Event of
Loss with respect to such Engine and Company shall comply with Section
4(f) in respect thereof;
(vii) authorize or permit the Lessee to enter into an ACMI
Contract or wet lease for the Airframe and the Engines or engines
installed thereon with any third party pursuant to which Company has
operational control of the Airframe and any Engines installed thereon
such operation to be performed solely by individuals under the
operational control of Company pos-
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sessing all current certificates and licenses that would be required
under the applicable laws of the United States for the performance by
such employees of similar functions within the United States; provided
that Company's obligations hereunder shall continue in full force and
effect notwithstanding any such ACMI Contract or wet lease;
provided, however, that the rights of any transferee who receives
possession of the Airframe or any Engine permitted by the terms hereof
shall be made subject and subordinate to, and the Leases shall be made
expressly subject and subordinate to, the lien and security interest of
this Mortgage and all of Agent's rights hereunder and Company shall remain
primarily liable hereunder for the performance of all the terms of this
Mortgage to the same extent as if such transfer had not occurred, and any
such instrument of transfer shall include appropriate provisions for the
maintenance and insurance of the Airframe or such Engine, and any such
instrument of transfer (other than the Lease) shall expressly prohibit any
further transfer of the Airframe or such Engine or any assignment of the
rights thereunder; and provided, further, that no such lease, pooling
arrangement or other transfer or relinquishment of the possession of the
Airframe or any Engine shall in any way discharge or diminish any of
Company's obligations to Agent hereunder or under the Credit Agreement. In
the event Agent shall have received from the lessor, conditional vendor or
secured party of any airframe leased to Lessee or purchased by Lessee
subject to a conditional sale or other security agreement, a written
agreement complying with clause (B) of Section 4(d)(v), and the lease or
conditional sale or other security agreement covering such airframe also
covers an engine or engines owned by the lessor under such lease,
conditionally owned by the conditional vendor under such conditional sale
agreement, or subject to such security agreement, Agent hereby agrees for
the benefit of such lessor, conditional vendor or secured party that Agent
will not acquire or claim, as against such lessor, conditional vendor or
secured party, any right, title or interest in any such engine as the
result of such engine being installed on the Airframe at any time while
such engine is subject to such lease or conditional sale or other security
agreement and owned by such lessor, conditionally owned by such conditional
vendor or subject to such security agreement.
(e) Replacement and Pooling of Parts; Alterations, Modifications and
Additions.
(i) Except as otherwise provided in Section 4(e)(iv), Company,
at its own cost and expense, will promptly replace all Parts, which
may from time to time be incorporated or installed in or attached to
the Airframe or any Engine and which may from time to time become
worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any reason
whatsoever. In addition, in the ordinary course of maintenance,
service, repair or testing, Company at its own cost
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and expense may remove any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use, provided that, except as otherwise
provided in Section 4(e)(iv), Company at its own cost and expense
shall replace such Parts as promptly as practicable. All replacement
Parts shall be owned by Company free and clear of all Liens (except
Permitted Encumbrances and the Lease, and for pooling arrangements to
the extent permitted by Section 4(e)(ii)), and shall be in as good
operating condition as, and shall have a value and utility at least
equal to, the Parts replaced assuming such property were in the
condition and repair required to be maintained by the terms hereof.
All Parts at any time removed from the Airframe or any Engine
shall remain the property of Company and shall remain subject to the
lien and security interest of this Mortgage, no matter where located
until such time as such Parts shall be replaced by parts which have
been incorporated or installed in or attached to the Airframe or any
Engine and which meet the requirements for replacement parts specified
above. Immediately upon any replacement Part becoming incorporated or
installed in or attached to the Airframe or any Engine as above
provided, without further act, (A) title to such replacement Part
shall vest in and such replacement part shall become the property of
Company and shall become subject to the lien and security interest of
this Mortgage and shall be deemed part of the Airframe or such Engine
for all purposes hereof to the same extent as the property originally
comprising, or installed on, such Airframe or such Engine, and (B)
title to the replaced part shall no longer be the property of Company
and shall thereupon become free and clear of all rights of Agent
hereunder and shall no longer be deemed a Part hereunder.
(ii) Any Part removed from the Airframe or any Engine as provided
in Section 4(e)(i) may be subjected by Company or Lessee to a normal
pooling arrangement of the type customary in the airline industry
entered into by Lessee in the ordinary course of its business and
entered into with Domestic Air Carriers that are not the subject of
any bankruptcy, insolvency, or similar proceeding, voluntary or
involuntary, provided the Part replacing such removed Part shall be
incorporated or installed in or attached to the Airframe or such
Engine in accordance with Section 4(e)(i) as promptly as possible
after the removal of such removed part. In addition, any replacement
Part when incorporated or installed in or attached to the Airframe or
any Engine in accordance with Section 4(e)(i) may be owned subject to
such a pooling arrangement, provided Company, at its expense, as
promptly thereafter as possible, either (A) causes such replacement
Part to become subject to the lien and security interest of this
Mortgage in accordance with Section 4(e)(i) by Company's acquiring
title thereto for the benefit of Agent free and
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clear of all Liens (except Permitted Encumbrances and the Lease) or
(B) replaces such replacement Part by incorporating or installing in
or attaching to the Airframe or such Engine a further replacement Part
owned by Company free and clear of all Liens (except Permitted
Encumbrances and the Lease).
(iii) Company, at its own cost and expense, shall make or cause
to be made such alterations and modifications in and additions to the
Airframe and the Engines as may be required from time to time to meet
the standards of the FAA or other governmental authority having
jurisdiction; provided that Company may, in good faith, contest the
validity or application of any such standard in any reasonable matter
that shall not adversely affect the Lien of this Mortgage or Lenders'
interests therein. Company also agrees, at its own cost and expense,
to make or cause to be made such alterations and modifications in and
additions to the Airframe and the Engines as may be required from time
to time to meet the standards or requirements of any directive issued
by a manufacturer relating to the Airframe or any Engine. In addition
so long as no Potential Event of Default or Event of Default shall
have occurred and be continuing, Company, at its own cost and expense,
may from time to time make such alterations and modifications in and
additions to the Airframe and any Engine as Company may deem desirable
in the proper conduct of its business or to accommodate the business
of Lessee, provided no such alteration, modification or addition
diminishes the value or utility or impairs the condition or
airworthiness of the Airframe or such Engine below the value, utility,
condition or airworthiness thereof immediately prior to such
alteration, modification or addition assuming the Airframe or such
Engine were then in the condition and airworthiness required to be
maintained by the terms of this Mortgage.
(iv) All Parts incorporated or installed in or attached to or
added to the Airframe or any Engine as the result of such alteration,
modification or addition shall, without further act, become the
property of, and title to such parts shall vest in Company and shall
be subject to the lien and security interest of this Mortgage;
provided, that, so long as no Potential Event of Default or Event of
Default shall have occurred and be continuing, Company may remove and
not replace any such Part if it (A) is in addition to, and not in
replacement of or in substitution for, any Part incorporated or
installed in or attached to the Airframe or such Engine on the date
hereof, on the date the Engine first becomes subject to the lien of
this Mortgage, or any Part in replacement of or substitution for any
such Part, (B) is not required to be incorporated or installed in or
attached or added to the Airframe or such Engine pursuant to the
terms of Section 4(c) hereof or any other provision of this Mortgage
and (C) can be removed from the Airframe or such Engine without
diminishing or impairing the value, utility or airworthiness which
the
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Airframe or such Engine would have had at such time had such
alteration, modification or addition not occurred, assuming the
Aircraft Collateral was otherwise in the condition required by this
Mortgage. Upon the removal by Company of any such Part, as above
provided, title thereto shall, without further act, be free and clear
of all rights of the Agent hereunder and such Part shall no longer be
deemed a Part hereunder.
(v) Pursuant to the terms of the Leases, all obligations of
Company pursuant to this Section 4(e) shall be performed by the
Lessee, at the Lessee's own cost and expense, and all Parts and
alterations, improvements or modifications in and additions to the
Aircraft shall become subject to the Lien of this Mortgage and shall
be leased to the Lessee under the applicable Lease. In no event shall
the Lessor bear any liability or cost whatsoever for (i) any
alteration or modification of, or addition to, the Airframe or any
Engine, (ii) any grounding of the Aircraft, (iii) suspension of
certification of the Aircraft, or (iv) loss of revenue suffered by the
Company for any reason whatsoever.
(f) Event of Loss.
(i) If an Event of Loss shall occur with respect to an Airframe
or an Engine, Company will promptly notify Agent thereof in writing
(in any event within five (5) days of such occurrence) and will, not
later than 180 days after the receipt of Proceeds in connection with
such Event of Loss, mortgage hereunder, by complying with all of the
terms of subsection (ii) below and otherwise taking all necessary
actions to provide that Company (and the Agent upon foreclosure of
Company's interest in the Lease) will continue to be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to the
replacement airframe or engine referred to below, an Acceptable
Alternate Airframe or Acceptable Alternate Engine free of all Liens
(other than Permitted Encumbrances and the Lease). Upon compliance
with the preceding sentence within such 180-day period, Agent will
execute and deliver to Company a partial release, in recordable form,
releasing the lien of this Mortgage to the extent that it covers such
Airframe or Engine with respect to which such Event of Loss has
occurred. Such Acceptable Alternate Airframe or Acceptable Alternate
Engine shall thereupon constitute an "Airframe" or an "Engine", as
the case may be, for all purposes hereof and shall be deemed to
constitute part of the Aircraft.
(ii) Whenever Company shall subject any Airframe or Engine to the
lien and security interest of this Mortgage (as contemplated by
paragraph (i) above), Company will on or prior thereto:
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(A) deliver to Agent and duly file for recording under the
Act, a Supplemental Chattel Mortgage substantially in the form of
Exhibit A hereto duly executed by Company appropriately
describing such engine to be subjected to the lien and security
interest of this Mortgage;
(B) deliver to Agent for filing financing statements under
Article 9 of the Uniform Commercial Code of the States of
Colorado and New York (or such other States as may be required at
such time) covering the security interest created by this
Mortgage to perfect the security interest of Agent in the
Airframe or Engine to be subjected to the lien and security
interest of this Mortgage;
(C) deliver to Agent an Officers' Certificate dated the date
of execution of said Supplemental Chattel Mortgage, stating:
(I) that the representations and warranties contained
in Section 3 hereof are true and correct on and as of such
date of execution with respect to such Airframe or Engine
and Company;
(II) that, upon consummation of the terms of this
Section 4(f), no Potential Event of Default or Event of
Default will exist; and
(III) that all conditions precedent contemplated in
this Section 4(f)(iii) have been complied with.
(D) furnish Agent with evidence of compliance with the
insurance provisions of Section 4(g) hereof with respect to such
Airframe or Engine as Agent may reasonably request;
(E) furnish Agent with a warranty (as to title) ▇▇▇▇ of
sale, in form and substance reasonably satisfactory to Agent with
respect to such Airframe or Engine;
(F) furnish Agent with such evidence of title such as the
▇▇▇▇ of sale as Agent may reasonably request concerning such
Airframe or Engine;
(G) cause to be delivered to Agent an appraisal by the
Approved Appraisers relating to the Airframe or Engine to be
subjected to the lien and the security interest of this Mortgage
stating that it has a value and utility at least equal to, and in
as good operating condition
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as the Airframe or Engine subject to such Event of Loss
immediately prior to such Event of Loss, assuming compliance by
Company with all the terms of this Mortgage with respect to
such Airframe or Engine; and
(H) cause to be delivered to Agent an opinion or opinions of
counsel dated the date of execution of such Supplemental Chattel
Mortgage, stating:
(I) that the Airframe or Engine specifically described
in said Supplemental Chattel Mortgage, is free and clear of
all recorded Liens,
(II) that said Supplemental Chattel Mortgage (1) has
been duly authorized, executed and delivered by Company, and
(2) creates a valid, perfected and first priority security
interest in and to the Airframe or Engine described in said
Supplemental Chattel Mortgage, enforceable against all third
parties and securing the payment of all obligations
purported to be secured thereby and that all action required
to perfect fully such security interest has been taken and
completed,
(III) that said Supplemental Chattel Mortgage has been
duly filed for recordation in accordance with the provisions
of the Act to continue the perfection and priority of the
security interest intended to be created by the Mortgage,
(IV) that Company (and the Agent upon succeeding to
Company's interest in the Lease) will continue to be
entitled to the benefits of Section 1110 of the Bankruptcy
Code with respect to the lease of the Airframe or Engine
described in said Supplemental Chattel Mortgage, and
(V) as to such other matters as Agent may reasonably
request. Promptly upon the recording of each Supplemental
Chattel Mortgage under the Act, Company will cause to be
delivered to Agent an opinion of counsel for Company as to
the due recording of such Supplemental Chattel Mortgage in
accordance with the Act.
(iii) With respect to the Airframe or any Engine, as between
the Agent and Company, any payments on account of an Event of
Loss (other than insurance proceeds or other payments the
application of which is pro-
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vided for in Section 4(g) below and under the terms of the
Credit Agreement) received from any government authority or
other person shall be applied as follows:
(A) if such payments are received with respect to an
Event of Loss to an Airframe or Engine that has been or is
being replaced by Company pursuant to the terms hereof, so
long as there shall exist no Event of Default or Potential
Event of Default, such payment shall be paid over to or
retained by Company or Lessee upon satisfaction of the
conditions for replacement contained in paragraph (ii) above
and until such time shall be held by Agent in accordance
with the provisions hereof as security for the Secured
Obligations; and
(B) if such payments are received with respect to an
Event of Loss with respect to which no replacement is being
effected, such payments shall be applied to the prepayment
of the Notes required pursuant to the terms of the Credit
Agreement and shall be held pursuant to the terms of this
Mortgage, and the balance, if any, shall be paid over to or
retained by Company.
(iv) In the event of a requisition for use by the United
States Government of the Airframe or any Engine, Company shall
promptly notify Agent of such requisition and all of Company's
obligations under this Mortgage shall continue to the same extent
as if such requisition had not occurred. Any payments received by
Agent or Company from the United States Government for the use of
the Airframe or such Engine, shall be paid over to, or retained
by, Company.
(v) Any amount referred to in paragraph (iii) or (iv) of
this Section 4(f) which is payable to or retained by Company
shall not be paid to Company or retained by Company, if at the
time of such payment or retention any Event of Default or a
Potential Event of Default shall have occurred and be continuing,
but shall be held by or paid over to Agent as security for the
obligations of Company under this Mortgage and the other Loan
Documents, and, if Agent shall declare the Credit Agreement to be
in default, shall be applied against Company's obligations
hereunder and thereunder as and when due. At such time as there
shall not be continuing any such Event of Default or Potential
Event of Default, such amount shall be paid to Company to the
extent not previously applied in accordance with the preceding
sentence. In addition, and whether or not there shall exist an
Event of Default or Potential Event of Default, until such time
as Company shall request to be paid any amount referred to in
paragraph (iii) or (iv) in order to effect the mortgaging
hereunder of a replacement Airframe or Engine, any amounts
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referred to in paragraphs (iii) or (iv) of this Section
4(f) shall be held by the Agent as security for the obligations
of Company under this Mortgage and the other Loan Documents.
(g) Insurance.
(i) Company will cause Lessee at all times to carry and maintain
on or with respect to the Aircraft, at Lessee's own cost and expense,
public liability (including without limitation, contractual liability,
cargo liability, passenger legal liability, bodily injury and product
liability, but excluding manufacturer's product liability) and
property damage insurance with insurers of recognized responsibility
and reputation in amounts, of the type and covering the risks
customarily carried with respect to similar aircraft by corporations
engaged in the same or similar business and similarly situated with
Lessee but in no event in an amount less than $500,000,000 per
occurrence (which shall include war risk, governmental confiscation
and expropriation and allied perils coverage). During any period when
the Aircraft is on the ground and not in operation, Lessee may carry
or cause to be carried, in lieu of insurance required by this Section,
insurance otherwise conforming with the provisions of this Section
except that the amounts of coverage shall not be required to exceed
the amounts of comprehensive airline liability insurance, and the
scope of risk covered and type of insurance shall be the same, as are
customarily carried with respect to similar aircraft on the ground by
corporations engaged in the same or similar business and similarly
situated with Lessee. Any policies of insurance carried in accordance
with this Section 4(g) and any policies taken out in substitution or
replacement of any such policies (A) shall be amended to name Agent
and Lenders as additional named insureds, (B) shall be primary without
right of contribution from any other insurance which is carried by
Lessee, (C) shall expressly provide that all provisions thereof,
except the limits of the liability, shall operate in the same manner
as if there were a separate policy covering each insured, and
(D) shall provide that the insurer shall waive any right of
subrogation against Agent or Lenders.
(ii) Company will cause Lessee at all times to carry and
maintain with insurers of recognized responsibility and
reputation on or with respect to the Aircraft, at Lessee's own
cost and expense, aircraft ground and flight all-risk hull
insurance as well as fire and extended coverage insurance on
Engines and other equipment while removed from the Airframe
(which shall include war risk, governmental confiscation and
expropriation (other than by the United States Government) and
allied perils including (A) strikes, riots, civil commotions or
labor disturbances, (B) any malicious act or act of sabotage and
(C) hijacking (air piracy) or any unlawful seizure or wrongful
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exercise of control of the Aircraft or crew in flight (including
any attempt at such seizure or control) made by any person or
persons aboard the Aircraft acting without the consent of the
insured, if and to the extent the same shall be maintained by
Lessee with respect to similar aircraft owned or operated by
Lessee on the same routes or if the Aircraft is operated on
routes where the custom is for Domestic Carriers similarly
situated with Lessee flying comparable routes with similar
aircraft to carry such insurance, of the type usually carried by
corporations engaged in the same or similar business and
similarly situated with Lessee; provided that such insurance
(including any self-insurance to the extent permitted below)
shall at all times be for an amount not less than the greater of
the amount required by the applicable Lease and $50,000,000.
During any period when the Aircraft is on the ground and not in
operation Lessee may carry or cause to be carried, in lieu of the
insurance required by this Section, insurance otherwise
conforming hereto except that the scope of risk covered and type
of insurance shall be the same as are from time to time
customarily carried with respect to similar aircraft by
corporations engaged in the same or similar business and
similarly situated with Lessee for aircraft on the ground in an
amount at least equal to the applicable amount provided above.
All such insurance shall name Agent and Lenders as additional
insureds and loss payees to the extent their interest may appear
and shall provide that any loss to the Airframe or an Engine in
excess of $2,000,000 (and, if a Potential Event of Default or
Event of Default has occurred and is continuing, any such loss)
shall be payable to Agent for the benefit of Lenders; and shall
be primary without right of contribution from any other insurance
which is carried by Agent with respect to its interest therein.
Lessee may self-insure, by way of deductible or equivalent
provisions in insurance policies, the risks required to be
insured against pursuant to this Section 4(g)(ii) in such
reasonable amounts as are then applicable to other similar
aircraft in Lessee's fleet which are of a value comparable to the
Aircraft and as are not substantially greater than amounts
self-insured by corporations engaged in the same or similar
business and similarly situated with Lessee; provided, however,
that Company shall not permit Lessee to self-insure in an amount
in excess of $1,000,000 without the prior written consent of
Agent.
(iii) Any policies of insurance required pursuant to either
paragraph (i) or paragraph (ii) above shall: (A) be amended to
name Agent and Lenders as additional named insureds, but without
Agent or Lenders being thereby liable for premiums; (B) provide
that in respect of the interest of Agent or Lenders in such
policies the insurance shall not be invalidated by any action or
inaction of Lessee and shall insure the interests of Agent and
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Lenders regardless of any breach or violation by Lessee or any
Person (other than Agent) of any warranty, declaration, condition
or exclusion from coverage contained in such policies; (C)
provide that if such insurance is cancelled, or if any material
change is made in the coverage which affects the interest of
Agent or any Lender, or if such insurance is allowed to lapse for
nonpayment of premium, such cancellation, change or lapse shall
not be effective as to Agent for thirty (30) days (seven (7)
days, or such shorter or longer period as may from time to time
be customarily available in the industry, in the case of any war
risk and allied perils coverage) after receipt by Agent of
written notice from such insurers of such cancellation, change or
lapse; (D) be in full force and effect throughout any
geographical areas at any time traversed by the Aircraft and
shall be payable in U.S. dollars; (E) waive any right of the
insurers to any setoff or counterclaim or any other deduction,
whether by attachment or otherwise in respect of any liability of
Agent; and (F) waive all rights of subrogation against Agent.
(iv) In the case of a lease or contract with the United
States or any agency or instrumentality thereof in respect of the
Airframe or any Engine, a valid agreement by the United States or
such agency or instrumentality to indemnify Lessee against the
same risks against which Lessee is required hereunder to insure
shall be considered adequate insurance with respect to the
Airframe or such Engine to the extent of the risks and in the
amounts that are the subject of any such agreement to indemnify.
(v) On or prior to the date hereof, and annually thereafter
on or prior to January 21, Company will cause the Lessee to
furnish to Agent (A) a report signed by a firm of independent
aircraft insurance brokers, appointed by Lessee and not objected
to by Agent, describing in reasonable detail acceptable to Agent
the insurance then carried and maintained on or with respect to
the Aircraft and the Engines and stating that in the opinion of
such firm such insurance complies with the terms of this Section
4(g) and is ▇▇▇ ▇▇▇▇▇ to protect the interests of Lessee, Company
and Agent, and (B) certificates of the insurer or insurers
evidencing the insurance covered by the report. Lessee will cause
such brokers to advise Agent in writing (x) promptly of any
default in the payment of any premium and of any other act or
omission on the part of Lessee of which such firm has knowledge
and which might invalidate or render unenforceable, in whole or
in part, any insurance on the Aircraft or any Engine and (y) at
least thirty (30) days prior to the expiration or termination
date, or date of effectiveness of any material change, of any
insurance carried and maintained on the Aircraft hereunder.
(vi) All insurance payments and other payments received by
Agent or Company from insurance referred to in paragraph (ii)
above shall be, if
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received by Company, immediately paid to Agent and shall be held
by Agent as security for the Secured Obligations and all other
obligations required to be paid in accordance with the terms of
this Mortgage and the Credit Agreement and such payments shall be
paid to Company upon compliance by Company with the terms of
Subsection 4(f) with respect to the replacement of an airframe or
an engine, as the case may be, provided that no Potential Event
of Default or Event of Default shall have occurred and be
continuing.
All insurance payments and other payments received by Agent or
Company from insurance referred to in paragraph (ii) above and
paid other than as a result of an Event of Loss shall be paid by
Agent to or be retained by Company, and promptly applied by
Company to the extent necessary to repair the damage to the
Airframe or the Engine for which such insurance was paid,
provided that Agent shall not be required to make any such
payment to Company if a Potential Event of Default or Event of
Default has occurred and is continuing, but shall be held or paid
over to Agent as security for the obligations of Company under
this Mortgage and the other Loan Documents, and, if Agent shall
declare the Credit Agreement to be in default, shall be applied
against Company's obligations hereunder and thereunder as and
when due. Retention by Agent of any amounts pursuant to the
preceding sentence shall not relieve Company of its obligations
to make promptly all repairs and replacements required by
Sections 4(c) and (e) hereof and to pay for the same with
Company's funds or cause payment of the same under the Lease by
the Lessee.
(vii) Nothing in this Section 4(g) shall prohibit Agent, or
any Lender from obtaining insurance with respect to the Aircraft
for its own account. Company may, at its own expense, carry
insurance with respect to its interest in the Aircraft in amounts
in excess of that required to be maintained by this Section 4(g).
No insurance maintained by Agent or any Lender shall prevent
Company from causing Lessee to carry the insurance required or
permitted by this Section or adversely affect such insurance or
the cost thereof. Proceeds of any such insurance carried by Agent
or Lender shall be paid as provided in the insurance policy
relating thereto and Agent shall have no duty to obtain any such
insurance.
(h) Inspection. Company will permit, and cause Lessee to permit,
any officers, employees or authorized representatives of Agent to inspect,
at Lessee's cost and expense under the Lease, the Aircraft Collateral and
Aircraft Related Collateral. or any part thereof, and to examine, copy or
make extracts from, any and all books, records and documents in the
possession of Company relating to such Collateral or any part thereof and
performance of this Mortgage, all at such reasonable times and as often as
may be requested. Agent shall have no duty to make any such inspection
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or examination and shall not incur any liability or obligation by reason of
making or not making any such inspection or examination.
(i) Insignia. Company shall, at its own cost and expense, or
pursuant to the Lease, cause the Airframe and each Engine included in
the Aircraft Collateral to be legibly marked (in a reasonably
prominent location, which in the case of the Airframe shall be
adjacent to the airworthiness certificate) with such a plate, disk, or
other marking of customary size, and bearing the legend "Owned by
Atlas Freighter Leasing, Inc. and Mortgaged to Bankers Trust Company,
as Agent" or such other legend, as shall in the opinion of Agent be
appropriate or desirable to evidence the fact that it is subject to
the lien and security interest created by this Mortgage. Company shall
not remove or deface, or permit to be removed or defaced, any such
plate, disk, or other marking or the identifying manufacturer's serial
number, and, in the event of such removal or defacement, shall
promptly cause such plate, disk, or other marking or serial number to
be promptly replaced. Except as provided above, Company shall not
allow the name of any person, association or corporation to be placed
on the Airframe or any Engine as a designation that might be
interpreted as a claim of ownership or of any security interest
therein, except that any permitted lessee may place its customary
colors and insignia or the insignia of the manufacturer on the
Airframe or any Engine.
SECTION 5. Remedies.
(a) If any Event of Default shall occur and be continuing, then Agent
may, without notice of any kind to Company, exercise in respect of the
Aircraft Collateral and Aircraft Related Collateral, (i) all the rights and
remedies of a secured party on default under the Uniform Commercial Code as
in effect at the time in any applicable jurisdiction (whether or not the
Uniform Commercial Code applies to the affected Aircraft Collateral), (ii)
any and all remedies under the Leases and all of the rights and remedies of
the Lessor under the Lease, (iii) all the rights and remedies provided for
in this Mortgage, the Credit Agreement and any other Loan Document,
and in any other agreement between Company and Agent, and (iv) such other
rights and remedies as may be provided by law or otherwise.
(b) After an Event of Default has occurred and is continuing, Agent
may, without notice, take possession of the Aircraft Collateral or any part
thereof and may exclude Company and Lessee, and all persons claiming under
Company or Lessee, wholly or partly therefrom. At the request of Agent,
Company shall promptly deliver or cause Lessee to deliver to Agent or to
whomsoever Agent shall designate, at such time or times and place or places
as Agent may specify, and fly or cause to be flown to such airport or
airports in the United States as Agent may specify, without risk or expense
to Agent, the Aircraft Collateral or any part thereof. In addition, Company
will provide, or cause Lessee to provide, without cost or expense to
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Agent, storage facilities for the Aircraft Collateral. If Company or Lessee
shall for any reason fail to deliver the Aircraft Collateral or any part
thereof after demand by Agent, Agent may, without being responsible for
loss or damage, (i) obtain a judgment conferring on Agent the right to
immediate possession or requiring Company and Lessee to deliver immediate
possession of the Aircraft Collateral or any part thereof to Agent, the
entry of which judgment Company hereby specifically consents and the
Lessor's consent to which will be obtained by Company under the Lease, or
(ii) with or without such judgment, pursue the Aircraft Collateral or any
part thereof wherever it may be found and may enter any of the premises of
Company and Lessee where the Aircraft Collateral may be and search for the
Aircraft Collateral and take possession of and remove the same. Company
agrees to pay to Agent, upon demand, all expenses incurred in taking any
such action; and all such expenses shall, until paid, be secured by the
lien of this Mortgage. Upon every such taking of possession, Agent may,
from time to time, make all such reasonable expenditures for maintenance,
insurance, repairs, replacements, alterations, additions and improvements
to and of the Aircraft Collateral, as it may deem proper. In each such
case, Agent shall have the right to maintain, use, operate, store, lease,
control or manage the Aircraft Collateral or any part thereof and to carry
on the business and exercise all rights and powers of Company relating to
the Aircraft Collateral, as Agent shall deem best, including the right to
enter into any and all such agreements with respect to the maintenance,
use, operation, storage, leasing, control, management or disposition of the
Aircraft Collateral or any part thereof as Agent may determine. Further,
after the occurrence and during the continuation of an Event of Default,
Agent shall be entitled to collect and receive directly all tolls, rents,
revenues, issues, income, products and profits of the Aircraft Collateral
or any part thereof, including without limitation, all payments under any
of the Leases. Such tolls, rents, revenues, issues, income, products and
profits shall be applied to pay the expenses of the use, operation,
storage, leasing, control, management or disposition of the Aircraft
Collateral, and of all maintenance, insurance, repairs, replacements,
alterations, additions and improvements, and to make all payments which
Agent may be required or may elect to make, if any, for taxes, assessments,
or other proper charges upon the Aircraft Collateral and all other payments
which Agent may be required or authorized to make under any provision of
this Mortgage, as well as just and reasonable compensation for the services
of Agent and of all persons properly engaged and employed for such purposes
by Agent.
(c) Agent, with or without taking possession of the Aircraft
Collateral, may, without notice:
(i) to the extent permitted by law, sell at one or more sales, as
an entirety or in separate lots or parcels, the Aircraft Collateral or
any part thereof, at public or private sale, at such place or places
and at such time or times and upon such terms, including terms of
credit (which may include the
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retention of title by Agent to the property so sold), as Agent may
determine, whether or not the Aircraft Collateral shall be at the
place of sale; and
(ii) proceed to protect and enforce its rights under this
Mortgage by suit, whether for specific performance of any covenant
herein contained or in aid of the exercise of any power herein granted
or for the foreclosure of this Mortgage and the sale of the Aircraft
Collateral under the judgment or decree of a court of competent
jurisdiction or for the enforcement of any other right.
(d) After an Event of Default has occurred and is continuing, Company
agrees to the fullest extent that it lawfully may, that it and Lessee will
not (and hereby irrevocably waives its right to) at any time plead, or
claim the benefit or advantage of, any appraisement, valuation, stay,
extension, moratorium, or redemption law now or hereafter in force, in
order to prevent or hinder the enforcement of this Mortgage or the absolute
sale of the Aircraft Collateral. Company, for itself and all who may claim
under it, waives, to the extent that it lawfully may, all right to have all
or any portion of the Aircraft Collateral marshalled upon any foreclosure
hereof.
(e) Each and every remedy of Agent shall be cumulative and shall not
be exclusive of any other remedies provided now or hereafter at law, in
equity or otherwise. Company shall reimburse Agent, upon demand, for all
fees and other expenses paid or incurred by Agent in exercising any rights,
powers or remedies granted hereby. All such fees and expenses shall, until
paid, be secured by the lien of this Mortgage.
(f) Notwithstanding anything to the contrary contained in this
Mortgage or the Lease, the Agent shall at all times have the right, to the
exclusion of Company, to declare the Lease in default in accordance with
its terms and to exercise all remedies set forth in the Leases.
SECTION 6. Application of Proceeds.
The proceeds of amounts received pursuant to the Lease (including, without
limitation, amounts received in connection with the exercise by Lessee of any
purchase option or Event of Loss) and the proceeds of any sale, lease or other
disposition of all or any of the Aircraft Collateral or Aircraft Related
Collateral under this Mortgage and all other sums realized by Agent pursuant to
this Mortgage or any proceedings hereunder shall be applied in the following
order of priority:
First: To the payment of the costs and expenses of such sale, lease,
disposition or other realization, including reasonable compensation to
Agent's agents and counsel, and all expenses, liabilities and advances made
or incurred by Agent in connection therewith, including, without
limitation, taxes upon or with respect to the
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sale, lease, disposition or realization and the payment of taxes and Liens,
if any, prior to the lien and security interest of this Mortgage (except
any taxes or Liens to which the respective sale, lease, disposition or
realization shall have been subject) and to the payment of expenses and the
reimbursement of payments incurred or made by Agent pursuant to Section 9
hereof;
Second: To the ratable payment of interest accrued and unpaid on the
Notes to and including the date of such application;
Third: To the ratable payment of principal of the Notes, which payment
shall be applied to the principal installments of the Notes in the manner
specified by the Credit Agreement; and
Fourth: To the payment of all other amounts payable by Company under
the Credit Agreement, this Mortgage or any other Loan Document, and
otherwise to Company or to such other Person(s) as may lawfully be
entitled, or as any court of competent jurisdiction may direct, the
remainder.
SECTION 7. Agent as Attorney.
Company hereby irrevocably appoints Agent the true and lawful attorney of
Company (with full power of substitution) in the name, place and stead of, and
at the expense of, Company at any time after the occurrence and during the
continuation of an Event of Default (i) to ask, demand, collect, ▇▇▇ for,
recover, compound, receive and give acquittance and receipts for moneys due and
to become due under or in respect of any of the Aircraft Collateral and Aircraft
Related Collateral, (ii) to make all necessary transfers of all or any part of
the Aircraft Collateral and Aircraft Related Collateral in connection with any
sale, lease or other disposition made pursuant hereto, (iii) to execute and
deliver for value all necessary or appropriate bills of sale, assignments and
other instruments in connection with any such sale, lease or other disposition,
and (iv) generally to do, at Agent's option and Company's cost and expense, at
any time, or from time to time, all acts and things that Agent deems necessary
to protect, preserve or realize upon the Aircraft Collateral and Aircraft
Related Collateral and Agent's security interest therein, in order to effect the
intent of this Mortgage, all as fully and effectively as Company might do,
Company hereby ratifying and confirming all that its said attorney (or any
substitute) shall lawfully do hereunder and pursuant hereto.
SECTION 8. Cash Collateral.
All monies received by Agent to be held and applied under this Section, and
all monies if any, required to be paid to Agent hereunder, which disposition is
not elsewhere herein otherwise specifically provided for, shall be held by Agent
and applied from time to time as provided herein and in the Credit Agreement and
the other Loan Documents and
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shall be held in an account in the name of Agent and invested in Cash
Equivalents for the benefit and at the risk of Company.
SECTION 9. Agent's Right to Perform.
If Company fails to make any payment required to be made by it hereunder or
fails to perform or comply with any of its agreements contained herein, Agent
may itself make such payment or perform or comply with such agreement
(including, without limitation, the agreement of Company to maintain insurance
pursuant to Section 4(g) hereof), and the amount of such payment and the amount
of the reasonable expenses of Agent incurred in connection with such payment or
the performance of or compliance with such agreement, as the case may be,
together with interest thereon at the rate specified in the Credit Agreement
from time to time, shall be payable by Company to Agent on demand and shall
constitute additional indebtedness secured by the lien and security interest of
this Mortgage.
SECTION 10. Further Assurances.
Company at its expense will promptly and duly execute and deliver such
documents and assurances and take such action as may be necessary or desirable,
or as Agent may from time to time request, in order to correct any defect, error
or omission which may at any time hereafter be discovered in the contents of
this Mortgage or in the execution or delivery hereof, and/or in order to more
effectively carry out the intent and purpose of this Mortgage and to establish,
protect and perfect the rights, remedies and security interests created or
intended to be created in favor of Agent hereunder, including, without
limitation, the execution, delivery and filing of any instruments with the FAA
and of any Uniform Commercial Code financing and continuation statements with
respect to the security interests created hereby, in form and substance
satisfactory to Agent, in such jurisdictions as Agent may reasonably request.
Company hereby authorizes Agent to file any such statements without the
signature of Company to the extent permitted by applicable law.
SECTION 11. Continuing Security Interest.
This Mortgage shall create a continuing security interest in the Aircraft
Collateral and Aircraft Related Collateral and shall (a) remain in full force
and effect until the indefeasible payment in full of the Secured Obligations,
(b) be binding upon Company, its successors and assigns and (c) inure, together
with the rights and remedies of Agent hereunder, to the benefit of Agent and its
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), Agent or any Lender may, subject to any restrictions
contained in the Credit Agreement, assign or otherwise transfer any of its
interests in the Credit Agreement or in any Note to any other person or entity,
and such other benefits in respect thereof granted to Agent or any Lender herein
or otherwise. Upon the indefeasible payment in full of the Secured Obligations,
the security interest granted hereby shall terminate and all rights to the
Aircraft Collateral and Aircraft Related Collateral shall revert to Company.
Upon any such termination. Agent will execute and deliver to Company, at
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Company's expense, such instruments of release and termination as Company may
reasonably request to evidence such termination.
SECTION 12. Miscellaneous.
Any provision of this Mortgage which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, Company hereby
waives any provision of law which renders any provision hereof prohibited or
unenforceable in any respect. No term or provision of this Mortgage may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by Company and Agent. The captions and headings in this Mortgage
are for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.
SECTION 13. Consent to Jurisdiction and Service of Process.
All judicial proceedings brought against Company with respect to this
Mortgage may be brought in any state or federal court of competent jurisdiction
in the State of New York or Colorado and by execution and delivery of this
Mortgage Company accepts for itself and in connection with the Aircraft
Collateral and Aircraft Related Collateral, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Mortgage. Company
hereby agrees that service of process in any such proceeding in any such court
may be made by registered or certified mail return receipt requested to Company
at its address provided on the signature pages of the Mortgage, such service
being hereby acknowledged by Company to be effective and binding service in
every respect. A copy of any such process so served shall be mailed by
registered mail to Company, at its address specified in Section 15 hereof,
except that unless otherwise provided by applicable law, any failure to mail
such copy shall not affect the validity of service of process. If any agent
appointed by Company refuses to accept service, Company hereby agrees that
service upon it by mail shall constitute sufficient notice. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of Agent to bring proceedings against Company in the courts of
any other jurisdiction.
SECTION 14. GOVERNING LAW; TERMS.
THIS MORTGAGE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY
PROVISION OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
AIRCRAFT COLLATERAL ARE GOVERNED BY THE LAWS OF A
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JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Credit Agreement, terms used in Article 9 of the Uniform Commercial
Code in the State of New York are used herein as therein defined.
SECTION 15. Addresses for Notices.
All notices and other communications provided for hereunder shall be in
writing (including facsimile communication) and mailed or telecopied or
delivered to Company or Agent, as the case may be, addressed to it at the
address of such party specified on the signature page hereof, or as to either
party at such other address as shall be designated by such party in a written
notice to each other party complying as to delivery with the terms of this
Section 15. All such notices and other communications shall, when mailed, be
effective when deposited in the mails, addressed as aforesaid.
SECTION 16. Counterparts.
This Mortgage may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same Mortgage.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, Company and Agent have caused this Mortgage to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
ATLAS FREIGHTER LEASING, INC.
By:
-----------------------------
Name:
Title:
Notice Address:
Atlas Freighter Leasing, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Treasury and
Secretary
BANKERS TRUST COMPANY,
as Agent
By:
---------------------------------
Name:
Title:
Notice Address:
Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
31
SCHEDULE I
to Security Agreement
and Chattel Mortgage
AIRFRAME
Manufacturer Manufacturer's Serial United States
Model Number Registry No.
------------ ----- ------ ------------
Boeing 747-200F 21221 N509MC
32
SCHEDULE II
to Security Agreement
and Chattel Mortgage
ENGINES
Manufacturer's
Manufacturer Model Serial Number
------------ ----- -------------
General Electric CF6-50E2 530283
General Electric CF6-50E2 530304
General Electric CF6-50E2 517207
General Electric CF6-50E2 530318
Each such engine having 750 or more rated takeoff horsepower or the equivalent
thereof.
33
EXHIBIT A
to Security Agreement
and Chattel Mortgage
SUPPLEMENTAL CHATTEL MORTGAGE NO.____
THIS SUPPLEMENTAL CHATTEL MORTGAGE is dated ________, 199[ ] between Atlas
Freighter Leasing, Inc., a Delaware corporation (the "Company"), and Bankers
Trust Company, as agent for and representative of (in such capacity, "Agent")
the financial institutions ("Lenders") party to the Credit Agreement dated as of
May 29, 1997 among Company, the Lenders and Agent.
Company and Mortgagee have heretofore entered into a Security Agreement and
Chattel Mortgage dated ______________, 1997 (the "Mortgage") and the terms
defined therein and not otherwise defined herein are used herein as therein
defined. The Mortgage provides for the execution and delivery of supplements
thereto substantially in the form hereof, for the purpose of particularly
describing each Engine subjected to the lien of the Mortgage pursuant to Section
4(f) thereof, and shall specifically mortgage such Engine to Agent.
The Mortgage relates to the Engine(s) described below and a counterpart of
the Mortgage has been recorded by the Federal Aviation Administration on
__________, 1997, and has been assigned Conveyance No. _____.
NOW, THEREFORE, that, to secure the due and punctual payment and
performance of the Secured Obligations and in consideration of the premises and
of the covenants contained in the Mortgage, Company hereby mortgages to Agent,
its successors and assigns, and grants and assigns to Agent, its successors and
assigns, a first priority purchase money security interest in all estate, right,
title and interest of Company in and to the property described in Schedule I
annexed hereto (whether or not such Engine shall be installed on or attached to
the Airframe), and the proceeds thereof.
This Supplemental Chattel Mortgage shall be construed as supplemental to
the Mortgage and shall form a part thereof, and the Mortgage is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
THIS SUPPLEMENTAL CHATTEL MORTGAGE IS INTENDED TO BE DELIVERED IN THE STATE
OF NEW YORK AND SHALL BE GOVERNED BY THE INTERNAL LAWS OF THAT STATE.
34
EXHIBIT A
Page 2
This Supplemental Chattel Mortgage may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same Supplemental Chattel Mortgage.
[Balance of page intentionally left blank]
35
EXHIBIT A
Page 3
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Chattel Mortgage to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
ATLAS FREIGHTER LEASING, INC.
By:
-----------------------------
Name:
Title:
Notice Address:
Atlas Freighter Leasing, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Treasury and
Secretary
36
EXHIBIT A
Page 4
BANKERS TRUST COMPANY,
as Agent
By:
---------------------------------
Name:
Title:
Notice Address:
Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
37
SCHEDULE I
to Supplemental
Chattel Mortgage
SCHEDULE OF ENGINES
Manufacturer's United States
Manufacturer Model Serial Number Registry No.
------------ ----- ------------- ------------
Such engine having 750 or more rated takeoff horsepower or the equivalent
thereof