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EXHIBIT 10.67
SECURITY AGREEMENT AND CHATTEL MORTGAGE
(AIRCRAFT NO. N507MC)
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
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benefit of Lenders, and their respective successors and assigns, a first
priority security interest 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
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whether or not identified in a Supplemental Chattel Mortgage
(collectively referred to herein as "Parts"); and
(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;
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(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 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
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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 Xxxxx & Xxxxxxx 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 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 Xxxxx 00, Xxxxxx Xxxxxx 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.
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"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.
"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
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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.
(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.
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(i) The chief place of business and the chief executive office of
Company is located at 000 Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000.
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 Aircraft 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
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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
Airframe (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 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
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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 under 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 Execu-
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tive 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 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 les-
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sor, 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 possessing 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
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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 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
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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 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
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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 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
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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:
(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;
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(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) xxxx 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
xxxx 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 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:
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(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, and
(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.
(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
provided 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
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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 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.
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(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 exercise of control of the Aircraft or crew in flight
(including any attempt at
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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
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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 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 adequate 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 ex-
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piration 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 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.
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(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 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.
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(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 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
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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 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.
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(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 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
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Default (i) to ask, demand, collect, xxx 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 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 de-
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livery 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 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.
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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 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.
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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.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Treasury and
Secretary
BANKERS TRUST COMPANY,
as Agent
By:
---------------------------------
Name:
Title:
Notice Address:
Bankers Trust Company
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
33
SCHEDULE I
to Security Agreement
and Chattel Mortgage
AIRFRAME
================================================================================
Manufacturer Manufacturer's Serial United States
Model Number Registry No.
--------------------------------------------------------------------------------
Boeing 747-200F 21380 N507MC
================================================================================
34
SCHEDULE II
to Security Agreement
and Chattel Mortgage
ENGINES
================================================================================
Manufacturer's
Manufacturer Model Serial Number
--------------------------------------------------------------------------------
General Electric CF6-50E2 517284
--------------------------------------------------------------------------------
General Electric CF6-50E2 530320
--------------------------------------------------------------------------------
General Electric CF6-50E2 517767
--------------------------------------------------------------------------------
General Electric CF6-50E2 530288
================================================================================
Each such engine having 750 or more rated takeoff horsepower or the equivalent
thereof.
35
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.
36
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]
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37
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.
000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Treasurer and Secretary
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EXHIBIT A
Page 4
BANKERS TRUST COMPANY,
as Agent
By:
--------------------------------
Name
Title
Notice Address:
Bankers Trust Company
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
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39
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
