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AIRCRAFT MORTGAGE AND SECURITY AGREEMENT
DATED AS OF MAY 12, 1998
BETWEEN
NORTHWEST AIRLINES, INC.
AND
THE CHASE MANHATTAN BANK,
AS COLLATERAL AGENT
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AIRCRAFT MORTGAGE AND SECURITY AGREEMENT
This AIRCRAFT MORTGAGE AND SECURITY AGREEMENT (as amended, modified
or supplemented from time to time, the "Mortgage"), dated as of May 12, 1998,
between NORTHWEST AIRLINES, INC., a Minnesota corporation (together with its
successors and permitted assigns, the "COMPANY"), and THE CHASE MANHATTAN
BANK, as Collateral Agent (the "COLLATERAL AGENT"), for the benefit of the
Banks and the Agent under, and any other lender from time to time party to
the Credit Agreement hereinafter referred to (the Banks, the Agent and the
other lenders, if any, are hereinafter called the "SECURED CREDITORS");
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions set forth in
the Credit Agreement, the Banks have agreed to make available the Loans to
the Company provided for therein;
WHEREAS, it is a condition precedent to the above-described
extension of credit that the Company shall have executed and delivered to the
Collateral Agent this Mortgage; and
WHEREAS, the Company desires to execute the Mortgage to satisfy the
condition described in the preceding paragraph.
NOW, THEREFORE, to secure the due and punctual payment of the
Obligations, it is hereby covenanted and agreed by and between the parties
hereto as follows:
ARTICLE 1.
DEFINITIONS
Section 1.1. CERTAIN DEFINITIONS.
Unless otherwise defined herein or the context requires otherwise,
capitalized terms used herein shall have the meanings set forth in APPENDIX A
hereto.
ARTICLE 2.
SECURITY
Section 2.1. GRANT OF SECURITY INTEREST.
The Company, in order to secure (i) the prompt payment when due of
all the Obligations and (ii) the performance and observance by the Company
and the Guarantors of all agreements, covenants and provisions contained
herein and in the other Credit Documents, and in consideration of the
premises and of the covenants herein contained, and of other good and
valuable consideration, the receipt of which is hereby acknowledged, has
granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged
and confirmed and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm unto the Collateral Agent, its permitted
successors and assigns, for the security and benefit of the Secured
Creditors, forever, a continuing security interest in, and mortgage lien on,
all estate, right, title and interest of the Company in, to and under the
following described properties, rights, interests and privileges (which,
collectively, including all property hereafter specifically subjected to the
lien of this Mortgage by any instrument supplemental hereto, are referred to
herein as the "COLLATERAL"):
(a) the Airframes described in Schedule I hereto and the Engines
described in Schedule II hereto, each of which Engines is a 750 or more
rated take-off horsepower or the equivalent of such horsepower, and in
the case of such Engines, whether or not such Engines shall be installed
in or attached to the Airframes described in this clause or any other
airframes, together with all accessories, equipment, parts and
appurtenances appertaining or attached to the Airframes (other than jet
aircraft engines not constituting Engines) or the Engines, whether now
owned or hereafter acquired, and all substitutions, renewals and
replacements of and additions, improvements, accessions and
accumulations to the Airframe and Engines and all records, logs and
other documents at any time maintained with respect to the foregoing;
(b) the Contract Rights;
(c) all proceeds with respect to the requisition of title to or
use of the Aircraft, or any part thereof, all insurance proceeds with
respect to the Aircraft or any part thereof, and any other proceeds of
any kind resulting from an Event of Loss, but excluding any insurance
maintained by the Company and not required under Section 3.6 hereof;
(d) all moneys and securities now or hereafter paid or deposited
or required to be paid or deposited to or with the Collateral Agent in
pledge hereunder and held or required to be held by the Collateral Agent
hereunder;
(e) any and all property that may, from time to time hereafter, in
accordance with the provisions of this Mortgage, by delivery or by
Mortgage Supplement or by other writing of any kind, for the purposes
hereof be in any way subjected to the lien and security interest hereof
or be expressly conveyed, mortgaged, assigned, transferred, deposited,
in which a security interest may be granted by the Company and/or
pledged by the Company, or by any Person authorized to so do on its
behalf or with its consent, to and with the Collateral Agent, who is
hereby authorized to receive the same at any and all times as and for
additional security hereunder; and
(f) all proceeds of the foregoing.
PROVIDED, HOWEVER, that notwithstanding any of the foregoing
provisions of this Section 2.1, so long as no Event of Default shall have
occurred and be continuing, (i) the Company shall have the right, to the
exclusion of the Collateral Agent, to quiet enjoyment of the
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Airframe and Engines, and to possess, use, retain and control the Airframe
and Engines and all revenues, income and profits derived therefrom and (ii)
the Collateral Agent, acting on behalf of the Secured Creditors, (A) shall
not, through it own actions or inactions, interfere with, or suffer to exist
with respect to any Aircraft any Lien attributable to the Collateral Agent
which might interfere with, the Company's (or any Lessee's) continued
possession, use and operation of, and quiet enjoyment (including, without
limitation, administrative quiet enjoyment) of, the Aircraft during the term
of this Mortgage in accordance with the terms of the Credit Documents so long
as no Event of Default shall have occurred and be continuing, (B) shall not
suffer to exist a default in any of its obligations pursuant to this Mortgage
that does not correspond to or result from an Event of Default or Default and
(C) neither the Collateral Agent nor any Secured Creditor shall assign this
Mortgage for security purposes without the prior written consent of the
Company, which may be granted or withheld in its sole discretion (such
consent, if granted, to be conveyed by the Company in writing).
TO HAVE AND TO HOLD the Collateral unto the Collateral Agent, its
permitted successors and assigns, forever, upon the terms herein set forth,
in trust for the benefit, security and protection of the Secured Creditors,
without any priority of any one Secured Creditor over any other, and for the
uses and purposes and subject to the terms and provisions set forth in this
Mortgage.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Company and the Guarantors shall remain liable
under each of the Credit Documents to which they are party to perform all of
the obligations assumed by them thereunder, all in accordance with and
pursuant to the terms and provisions thereof, and neither the Agent, the
Collateral Agent nor the Banks shall have any obligation or liability under
any of the Credit Documents to which the Company or the Guarantors is a party
by reason of or arising out of the assignment hereunder, nor shall the Agent,
the Collateral Agent or the Banks be required or obligated in any manner to
perform or fulfill any obligations of the Company or the Guarantors under any
of the Credit Documents to which the Company or the Guarantors is a party,
or, except as herein expressly provided, to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by it, or
present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may
entitled at any time or times.
The Company does hereby irrevocably constitute and appoint the
Collateral Agent the true and lawful attorney of the Company (which
appointment is coupled with an interest) with full power (in the name of the
Company or otherwise) to ask, require, demand, receive, compound and give
acquittance for any and all moneys and claims for moneys (in each case
including insurance and requisition proceeds) and all other property which
now or hereafter constitutes part of the Collateral, to endorse any checks or
other instruments or orders in connection therewith and to file any claims or
to take any action or to institute any proceeding which the Collateral Agent
may deem to be necessary or advisable in the premises; PROVIDED that the
Collateral Agent shall not exercise any such rights except upon the
occurrence and during the continuance of an Event of Default.
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The Company agrees that at any time and from time to time, upon the
written request of the Collateral Agent, the Company will promptly and duly
execute and deliver or cause to be duly executed and delivered any and all
such further instruments and documents as the Collateral Agent may reasonably
deem desirable in obtaining the full benefits of the assignment hereunder and
of the rights and powers herein granted.
The 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 the Collateral Agent.
ARTICLE 3.
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1. GENERAL.
The Company represents, warrants and covenants, which representations,
warranties and covenants shall survive execution and delivery of this Mortgage,
as follows:
(a) NECESSARY FILINGS.
All filings, registrations and recordings necessary to create,
preserve, protect and perfect the security interest granted by the Company to
the Collateral Agent hereby in respect of the Collateral have been
accomplished and the security interest granted to the Collateral Agent
pursuant to this Mortgage in and to the Collateral constitutes a perfected
security interest therein prior to the rights of all other Persons therein
and subject to no other Liens (other than Permitted Liens) and is entitled to
all the rights, priorities and benefits afforded by the Federal Aviation Act
and other relevant law as enacted in any relevant jurisdiction to perfected
security interests.
(b) NO LIENS.
The Company is, and as to Collateral acquired by it from time to
time after the date hereof the Company will be, the owner of all Collateral
free from any Lien, security interest, encumbrance or other right, title or
interest of any Person (other than Permitted Liens), and the Company shall
defend the Collateral against all claims and demands of all Persons (other
than Persons claiming by, through or under the Collateral Agent) at any time
claiming the same or any interest therein adverse to the Collateral Agent.
(c) OTHER FINANCING STATEMENTS.
There is no financing statement (or similar statement or instrument
of registration under the law of any jurisdiction) covering or purporting to
cover any interest of any kind in the Collateral (other than Permitted
Liens), and so long as the Total Loan Commitment has not been terminated or
any Note remains outstanding or any of the Obligations remain unpaid, the
Company will not execute or authorize to be filed in any public office any
financing statement (or
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similar statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Collateral, except financing
statements filed or to be filed in respect of and covering the security
interests granted hereby by the Company.
(d) CHIEF EXECUTIVE OFFICE; RECORDS.
The chief executive office of the Company is located at 0000 Xxxx
Xxx Xxxxxxx, Xxxxx, Xxxxxxxxx 00000. The Company will not move its chief
executive office except to such new location as the Company may establish in
accordance with the last sentence of this Section 3.1(d). The Company shall
not establish a new location for such office until (i) it shall have given to
the Collateral Agent not less than 30 days' prior written notice of its
intention to do so, clearly describing such new location and providing such
other information in connection therewith as the Collateral Agent may
request, (ii) with respect to such new location, it shall have taken all
action, satisfactory to the Collateral Agent, to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted
hereby at all times fully perfected and in full force and effect, (iii) at
the request of the Collateral Agent, it shall have furnished an opinion of
counsel acceptable to the Collateral Agent to the effect that all financing
or continuation statements and amendments or supplements thereto have been
filed in the appropriate filing office or offices, and (iv) the Collateral
Agent shall have received evidence that all other actions (including, without
limitation, the payment of all filing fees and taxes, if any, payable in
connection with such filings) have been taken, in order to perfect (and
maintain the perfection and priority of) the security interest granted hereby.
(e) RECOURSE.
This Mortgage is made with full recourse to the Company and
pursuant to and upon all the warranties, representations, covenants and
agreements on the part of the Company contained herein, in the other Credit
Documents and otherwise in writing in connection herewith or therewith.
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Section 3.2. POSSESSION, OPERATION AND USE, MAINTENANCE AND
REGISTRATION.
(a) POSSESSION.
The Company shall not, without the prior written consent of the
Collateral Agent, lease or otherwise in any manner deliver, transfer or
relinquish possession of any Airframe, Engine or Part, install or permit any
Engine to be installed in any airframe other than the Airframes or enter into
any Wet Lease; PROVIDED that so long as no Default of the type referred to in
Sections 8.01 or 8.05 of the Credit Agreement or Event of Default shall have
occurred and be continuing at the time of such lease, delivery, transfer or
relinquishment of possession or installation or such Wet Lease, so long as
the action to be taken shall not deprive the Collateral Agent of the first
priority Lien (subject to Permitted Liens) of this Mortgage on the Collateral
and so long as the Company (or any Lessee) shall comply with the provisions
of Sections 3.2(c) and 3.6 hereof, the Company may, without the prior written
consent of the Collateral Agent:
(i) subject any Airframe or Engine or engines installed on an
Airframe to normal interchange agreements or any Engine to normal
pooling or similar arrangements, in each case customary in the airline
industry and entered into by the Company (or any Lessee) in the ordinary
course of its business; PROVIDED that (A) no such agreement or
arrangement contemplates or requires the transfer of title to any
Airframe, (B) if the Company's title to any Engine shall be divested
under any such agreement or arrangement, such divestiture shall be
deemed to be an Event of Loss with respect to such Engine and the
Company shall (or shall cause Lessee to) comply with Section 3.4(e)
hereof in respect thereof, and (C) any interchange agreement to which
the Airframes may be subject shall be with a U.S. Air Carrier or a
Foreign Air Carrier;
(ii) deliver possession of any Airframe or Engine to the
manufacturer thereof (or for delivery thereto) or to any organization
(or for delivery thereto) for testing, service, repair, maintenance or
overhaul work on such Airframe or Engine or any part thereof or for
alterations or modifications in or additions to such Airframe or Engine
to the extent required or permitted by the terms of Section 3.4(d)
hereof;
(iii) install any Engine on an airframe which is owned by the
Company (or any Lessee) free and clear of all Liens, except: (A)
Permitted Liens and those which apply only to the engines (other than
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), (B) the rights of
third parties under interchange agreements which would be permitted
under clause (i) above PROVIDED that the Company's title to any such
Engine and the first priority Lien of this Mortgage shall not be
divested or impaired as a result thereof and (C) mortgage liens or other
security interests, PROVIDED that (as regards this subclause (C)) such
mortgage liens or other security interests effectively provide that such
Engine shall not become subject to such mortgage or security interest,
notwithstanding the installation thereof on such airframe;
(iv) install any Engine on an airframe which is leased to the
Company (or any Lessee) or purchased by the Company (or any Lessee)
subject to a conditional sale or
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other security agreement, PROVIDED that (x) such airframe is free and
clear of all Liens, except: (A) the rights of the parties to the lease
or conditional sale or other security agreement covering such airframe,
or their assignees, and (B) Liens of the type permitted by clause (iii)
of this Section 3.2(a) and (y) such lease, conditional sale or other
security agreement effectively provides that such Engine shall not
become subject to the lien of such lease, conditional sale or other
security agreement, notwithstanding the installation thereof on such
airframe;
(v) install any Engine on an airframe owned by the Company (or
any Lessee), leased to the Company (or any Lessee) or purchased by the
Company (or any Lessee) which is subject to a conditional sale or other
security agreement under circumstances where neither clause (iii) nor
clause (iv) of this Section 3.2(a) is applicable, PROVIDED that such
installation shall be deemed an Event of Loss with respect to such
Engine and that the Company shall (or shall cause any Lessee to) comply
with Section 3.4(e) hereof in respect thereof, the Collateral Agent not
intending hereby to waive any right or interest it may have to or in
such Engine under applicable law until compliance by the Company with
such Section 3.4(e);
(vi) to the extent permitted by Section 3.4(c) hereof, subject
any appliances, Parts or other equipment owned by the Company and
removed from any Airframe or Engine to any pooling arrangement referred
to in such Section;
(vii) subject (or permit any Lessee to subject) any Airframe or
Engine to the Civil Reserve Air Fleet Program and transfer (or permit
any Lessee to transfer) possession of any Airframe or Engine to the
United States of America or any instrumentality or agency thereof
pursuant to the Civil Reserve Air Fleet Program, so long as the Company
(or any Lessee) shall (A) promptly notify the Collateral Agent upon
subjecting such Airframe or Engine to the Civil Reserve Air Fleet
Program in any contract year and provide the Collateral Agent with the
name and address of the Contracting Office Representative for the Air
Mobility Command of the United States Air Force to whom notice must be
given pursuant to Section 4.2 hereof, and (B) promptly notify the
Collateral Agent upon transferring possession of the Airframe or any
Engine to the United States of America or any agency or instrumentality
thereof pursuant to such program;
(viii) enter into a Wet Lease for any Airframe or engines then
installed thereon with any third party, PROVIDED that if the Company (or
any Lessee) shall enter into any Wet Lease for a period of more than one
year (including renewal options) the Company shall provide to the
Collateral Agent written notice of such Wet Lease (such notice to be
given prior to entering into such Wet Lease, if practicable, but in any
event promptly after entering into such Wet Lease);
(ix) transfer possession of any Airframe or Engine to the United
States of America or any instrumentality or agency thereof pursuant to a
contract, a copy of which shall be provided to the Collateral Agent; or
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(x) the Company may, at any time, enter into any lease of any
Airframe or Engine or with (A) a U.S. Air Carrier, (B) any Person
approved in writing by the Collateral Agent (with the approval of the
Required Banks), (C) any Permitted Lessee; or (D) any airline alliance
partner of the Company that otherwise meets the requirement of (A), (B)
or (C) above or has been previously approved in writing by the
Collateral Agent, in any such case, if (1) the lessee under such lease
is not subject to a proceeding or final order under applicable
bankruptcy, insolvency or reorganization laws on the date such lease is
entered into, (2) in the event that the lessee under such lease is a
Foreign Air Carrier (other than a Foreign Air Carrier principally based
in Taiwan), the United States maintains diplomatic relations with the
country in which such Foreign Air Carrier is principally based at the
time such lease is entered into (or, in the case of a lease to a lessee
principally based in Taiwan, maintains diplomatic relations at least as
good as those in effect on the Effective Date) and (3) in the event that
the lessee under such lease is a Foreign Air Carrier, the Collateral
Agent shall receive at the time such lease is entered into an opinion of
counsel (in form and substance reasonably satisfactory to the Collateral
Agent) to the Company to the effect that (I) the terms of the proposed
lease will be legal, valid, binding and (subject to customary exceptions
in foreign opinions generally) enforceable against the proposed lessee
in the country in which the proposed lessee is principally based, (II)
there exist no possessory rights in favor of the lessee under such lease
under the laws of such lessee's country of domicile that would, upon
bankruptcy or insolvency of or other default by the Company and assuming
at such time such lessee is not insolvent or bankrupt, prevent the
return or repossession of the Aircraft in accordance with the terms of
this Mortgage, (III) the laws of such lessee's country of domicile
require fair compensation by the government of such jurisdiction payable
in currency freely convertible into Dollars for the loss of use of the
Aircraft in the event of the requisition by such government of such use,
and (IV) the laws of such lessee's country of domicile would give
recognition to the Company's title to the Aircraft, to the registry of
the Aircraft in the name of the Company (or the proposed lessee, as
"lessee", as appropriate), and to the Lien of this Mortgage.
The rights of any Lessee or other transferee who receives
possession by reason of a transfer permitted by this Section 3.2(a) (other
than the transfer of an Engine which is deemed an Event of Loss) shall be
effectively subject and subordinate to, and any lease permitted by this
Section 3.2(a) shall be expressly subject and subordinate to, all the terms
of this Mortgage and to the Lien of this Mortgage, including, without
limitation, the covenants contained in this Section 3.2 and the Collateral
Agent's rights to foreclosure and possession pursuant to Section 4.2 hereof
and to avoid such lease upon such repossession, and the Company shall remain
primarily liable hereunder for the performance of all of the terms of this
Mortgage to the same extent as if such lease or transfer had not occurred,
and, except as otherwise provided herein, the terms of any such lease shall
not permit any Lessee to take any action not permitted to be taken by the
Company in this Mortgage with respect to the Aircraft. No pooling agreement,
lease or other relinquishment of possession of any Airframe or Engine, or Wet
Lease shall in any way discharge or diminish any of the Company's obligations
to the Collateral Agent hereunder or constitute a waiver of the Collateral
Agent's rights or remedies hereunder. Any lease permitted under this Section
3.2(a) shall expressly prohibit any further sublease by the Lessee. The
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Collateral Agent agrees, for the benefit of the Company (and any Lessee) and
for the benefit of any mortgagee or other holder of a security interest in
any engine (other than an Engine) owned by the Company (or any Lessee), any
lessor of any engine (other than an Engine) leased to the Company (or any
Lessee) and any conditional vendor of any engine (other than an Engine)
purchased by the Company (or any Lessee) subject to a conditional sale
agreement or any other security agreement, that no interest shall be created
hereunder in any engine so owned, leased or purchased and that neither the
Collateral Agent nor its successors or assigns will acquire or claim, as
against the Company (or any Lessee) or any such mortgagee, lessor or
conditional vendor or other holder of a security interest or any successor or
assignee of any thereof, any right, title or interest in such engine as the
result of such engine being installed on the Airframes; PROVIDED, HOWEVER,
that such agreement of the Collateral Agent shall not be for the benefit of
any lessor or secured party of any airframe (other than the Airframes) leased
to the Company (or any Lessee) or purchased by the Company (or any Lessee)
subject to a conditional sale or other security agreement or for the benefit
of any mortgagee of or any other holder of a security interest in an airframe
owned by the Company (or any Lessee), unless such lessor, conditional vendor,
other secured party or mortgagee has expressly agreed (which agreement may be
contained in such lease, conditional sale or other security agreement or
mortgage) that neither it nor its successors or assigns will acquire, as
against the Collateral Agent, any right, title or interest in an Engine as a
result of such Engine being installed on such airframe. The Company shall
provide to the Collateral Agent (i) written notice of any lease hereunder
(such notice to be given not later than five days prior to entering into such
lease) and (ii) a copy of each lease which has a term of more than three
months.
(b) OPERATION AND USE.
The Company will not maintain, use, service, repair, overhaul or
operate the Aircraft (or permit any Lessee or other Person to maintain, use,
service, repair, overhaul or operate the Aircraft) in violation of any law or
any rule, regulation, order or certificate of any government or governmental
authority (domestic or foreign) having jurisdiction, or in violation of any
airworthiness certificate, license or registration relating to the Aircraft
issued by any such authority, except to the extent that the Company (or any
Lessee) is contesting in good faith the validity or application of any such
law, rule, regulation or order in any reasonable manner which does not
adversely affect the first priority Lien (subject to Permitted Liens) of this
Mortgage and does not involve any material risk of sale, forfeiture or loss
of the Aircraft.
The Company shall not operate the Aircraft, or permit any Lessee to
operate the Aircraft, in any area excluded from coverage by any insurance
required by the terms of Section 3.6 hereof; PROVIDED, HOWEVER, that the
failure of the Company to comply with the provisions of this sentence shall
not give rise to an Event of Default hereunder where such failure is
attributable to causes beyond the reasonable control of the Company (or any
Lessee) or to extraordinary circumstances involving an isolated occurrence or
series of incidents not in the ordinary course of the regular operations of
the Company (or any Lessee) and in each case the Company (or such Lessee, as
the case may be) is taking all reasonable steps to remedy such failure as
soon as is reasonably practicable.
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(c) MAINTENANCE.
The Company, at its own cost and expense, shall (or shall cause any
Lessee to) maintain, service, repair and overhaul (or cause to be maintained,
serviced, repaired and overhauled) the Aircraft so as to keep the Aircraft in
as good an operating condition as when initially subjected to the Lien
hereof, ordinary wear and tear excepted, and as may be necessary to enable
the applicable airworthiness certification for the Aircraft to be maintained
in good standing at all times (other than temporary periods of storage in
accordance with applicable regulations or during maintenance or modification
permitted hereunder) under the Federal Aviation Act, except when all Aircraft
powered by engines of the same type as those with which such Aircraft shall
be equipped at the time of such grounding and registered in the United States
have been grounded by the FAA (although such certification need actually be
maintained only during such period as an Aircraft is registered in the United
States), or the applicable laws of any other jurisdiction in which an
Aircraft may then be registered from time to time in accordance with the
terms hereof, utilizing, except during any period that a Lease is in effect,
the same manner and standard of maintenance, service, repair or overhaul used
by the Company with respect to similar aircraft operated by the Company in
similar circumstances and utilizing, during any period that a Lease is in
effect, the same manner and standard of maintenance, service, repair or
overhaul used by the Lessee with respect to similar aircraft operated by the
Lessee in similar circumstances; PROVIDED, HOWEVER, that in all circumstances
the Aircraft shall be maintained by the Company (or any Lessee) in accordance
with maintenance standards required by, or substantially equivalent to those
required by, the FAA or the central civil aviation authority of Canada,
France, Germany, Japan, the Netherlands or the United Kingdom. The Company
shall maintain or cause to be maintained all records, logs and other
materials required to be maintained in respect of the Aircraft by the FAA or
the applicable regulatory agency or body of any other jurisdiction in which
the Aircraft may then be registered.
(d) IDENTIFICATION OF COLLATERAL AGENT'S INTEREST.
On or prior to the date of the Credit Agreement, or as soon as
practicable thereafter, the Company agrees to fix and maintain (or cause to
be fixed and maintained), at its expense, in the cockpit of the Airframes
adjacent to the airworthiness certificate therein and on each Engine a
nameplate bearing the inscription:
"SUBJECT TO AN AIRCRAFT MORTGAGE AND SECURITY AGREEMENT IN FAVOR OF
THE CHASE MANHATTAN BANK, AS COLLATERAL AGENT"
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Collateral Agent). Except as above provided, the
Company will not allow the name of any Person (other than the Company) to be
placed on the Airframes or the Engines as a designation that might be
interpreted as a claim of security interest or ownership; PROVIDED that
nothing herein contained shall prohibit the Company (or any Lessee) from
placing its customary colors and insignia on the Airframes or the Engines.
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(e) REGISTRATION.
The Company, at its own expense, will (or will cause any Lessee to)
cause the Aircraft to be duly registered, and at all times to remain duly
registered, in the name of the Company under the Federal Aviation Act,
PROVIDED, HOWEVER, that the Company may elect to effect a change in the
registration of the Aircraft, at the Company's expense, with the prior
written consent of the Collateral Agent (which shall not be unreasonably
withheld).
Section 3.3. INSPECTION.
At reasonable times and, so long as no Event of Default shall have
occurred and be continuing, on at least 15 days prior written notice to the
Company, the Collateral Agent or its authorized representatives may (not more
than once every calendar year (unless an Event of Default has occurred and is
continuing)) inspect the Aircraft and inspect and make copies (at the
Collateral Agent's expense) of the books and records of the Company relating
to the maintenance of the Aircraft; any such inspection of the Aircraft shall
be limited to a visual, walk-around inspection and shall not include opening
any panels, bays or the like without the express consent of the Company;
PROVIDED that no exercise of such inspection rights shall interfere with the
normal operation or maintenance of the Aircraft by, or the business of, the
Company or any Lessee. The Collateral Agent shall not have any duty to make
any such inspection and shall not incur any liability or obligation by reason
of not making any such inspection.
Section 3.4. REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS AND ADDITIONS; SUBSTITUTION OF ENGINES.
(a) REPLACEMENT OF PARTS.
The Company, at its own cost and expense, will so long as any
Airframe or Engine is subject to the Lien of this Mortgage promptly replace
or cause to be replaced all Parts which may from time to time be incorporated
or installed in or attached to such Airframe or 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, except as otherwise provided in Section 3.4(d) hereof or if any
Airframe or any Engine to which a Part relates has suffered an Event of Loss.
In addition, the Company (or any Lessee) may, at its own cost and expense,
remove in the ordinary course of maintenance, service, repair, overhaul or
testing, any Parts, whether or not worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use,
PROVIDED that the Company (or such Lessee), except as otherwise provided in
Section 3.4(d) hereof, will, at its own cost and expense, replace such Parts
as promptly as practicable. All replacement Parts shall be free and clear of
all Liens (except Permitted Liens and pooling arrangements to the extent
permitted by Section 3.4(c) and except in the case of replacement property
temporarily installed on an emergency basis) 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 replaced Parts were in the condition and
repair required to be maintained by the terms hereof.
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(b) PARTS.
Except as otherwise provided in Section 3.4(d) hereof, all Parts at
any time removed from any Airframe or Engine shall remain subject to the Lien of
this Mortgage, no matter where located, until such time as such Parts shall be
replaced by parts that have been incorporated or installed in or attached to
such Airframe or Engine and which meet the requirements for replacement parts
specified in Section 3.4(a) hereof. Immediately upon any replacement part
becoming incorporated or installed in or attached to any Airframe or Engine as
provided in Section 3.4(a) hereof, without further act (subject only to
Permitted Liens and any pooling arrangement to the extent permitted by Section
3.4(c) hereof and except in the case of replacement property temporarily
installed on an emergency basis), (i) title to such replacement Part shall be
owned by the Company, (ii) the replaced Part shall thereupon be free and clear
of all rights of the Collateral Agent and the replacement part shall be deemed a
Part hereunder; and (iii) such replacement Part shall become subject to the Lien
of this Mortgage and be deemed part of such Airframe or Engine, as the case may
be, for all purposes hereof to the same extent as the Parts originally
incorporated or installed in or attached to such Airframe or Engine.
(c) POOLING OF PARTS.
Any Part removed from any Airframe or Engine as provided in Section
3.4(a) hereof may be subjected by the Company (or any Lessee) to a normal
pooling arrangement customary in the airline industry of which the Company (or
any Lessee) is a party entered into in the ordinary course of the Company's (or
such Lessee's) business; PROVIDED that the Part replacing such removed Part
shall be incorporated or installed in or attached to such Airframe or Engine in
accordance with Sections 3.4(a) and 3.4(b) hereof as promptly as practicable
after the removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to any Airframe or any Engine in
accordance with Section 3.4(a) hereof may be owned by any third party subject to
such a normal pooling arrangement, PROVIDED that the Company (or any Lessee), at
its expense, as promptly thereafter as practicable, either (i) causes such
replacement Part to become subject to the Lien of this Mortgage, free and clear
of all Liens except Permitted Liens (other than pooling arrangements), at which
time such temporary replacement Part shall become a Part or (ii) replaces such
replacement Part by incorporating or installing in or attaching to such Airframe
or Engine a further replacement Part which is subject to the Lien of this
Mortgage, free and clear of all Liens except Permitted Liens (other than pooling
arrangements).
(d) ALTERATIONS; MODIFICATIONS AND ADDITIONS.
The Company, at its own expense, will make (or cause to be made) such
alterations and modifications in and additions to any Airframe or Engine as may
be required to be made from time to time to meet the applicable standards of the
FAA or any applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered as permitted by Section 3.2(e) hereof;
PROVIDED, HOWEVER, that the Company (or any Lessee) may, in good faith, contest
the validity or application of any such law, rule, regulation or order in any
reasonable manner which does not adversely affect the Collateral Agent. In
addition, the
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Company (or any Lessee), at its own expense, may from time to time
add further parts or accessories and make such alterations and modifications in
and additions to any Airframe or Engine as the Company (or such Lessee) may deem
desirable in the proper conduct of its business, including, without limitation,
removal of Parts which the Company (or such Lessee) has determined in its
reasonable judgment to be obsolete or no longer suitable or appropriate for use
on such Airframe or Engine (such parts, "OBSOLETE PARTS"); PROVIDED that no such
alteration, modification or addition shall materially diminish the value,
utility or remaining useful life of such Airframe or Engine below the value,
utility or remaining useful life thereof immediately prior to such alteration,
modification or addition, assuming such Airframe or Engine was then in the
condition required to be maintained by the terms of this Mortgage, except that
the value (but not the utility or remaining useful life) of any Airframe or
Engine may be reduced by the value of Obsolete Parts which have been removed so
long as the aggregate value of all Obsolete Parts that shall have been removed
and not replaced with respect to any Aircraft shall not exceed an amount equal
to 1.5% of the Appraised Value of such Aircraft. All Parts incorporated or
installed in or attached or added to the Airframes or the Engines as the result
of such alteration, modification or addition (the "ADDITIONAL PARTS") shall
become subject to the Lien of this Mortgage. Notwithstanding the foregoing
sentence, the Company (or any Lessee) may remove or suffer to be removed any
Additional Part, PROVIDED that such Additional Part (i) is in addition to, and
not in replacement of or in substitution for, any Part originally incorporated
or installed in or attached to such Airframe or Engine at the time of delivery
thereof hereunder or any Part in replacement of, or in substitution for, any
such Part, (ii) is not required to be incorporated or installed in or attached
or added to such Airframe or Engine pursuant to the terms of Section 3.2(a) or
(c) hereof or the first sentence of this Section 3.4(d), and (iii) can be
removed from such Airframe or Engine without diminishing or impairing the value,
utility or remaining useful life which such Airframe or Engine would have had at
the time of removal had such alteration, modification or addition not occurred,
assuming that such Airframe or Engine was in the condition and repair required
to be maintained by the terms hereof. Upon the removal by the Company (or any
Lessee) of any such part as above provided, such part shall, without further
act, be free and clear of all rights of the Collateral Agent and such Part shall
not be deemed a Part hereunder.
(e) SUBSTITUTION OF ENGINES.
The Company shall have the right at its option at any time, on at
least twenty (20) days' prior written notice to the Collateral Agent, to
substitute, and if an Event of Loss shall have occurred with respect to an
Engine (not involving an Event of Loss with respect to the Airframe to which
such Engine is attached with respect to which the Company makes the prepayment
required by Section 3.02(d) of the Credit Agreement or the substitution
permitted by Section 3.5(a) hereof), shall within thirty (30) days after the
occurrence of such Event of Loss substitute, a Replacement Engine of the same
make and model. In such event, immediately upon the effectiveness of such
substitution on the date set forth in such notice and without further act, (i)
the replaced Engine shall thereupon be free and clear of all rights of the
Collateral Agent and shall no longer be deemed an Engine hereunder, and (ii)
such Replacement Engine shall become subject to the Lien of this Mortgage, free
and clear of all Liens except Permitted Liens, and be deemed part of the
relevant Aircraft for all purposes hereof to the same extent as the Engine
originally installed on or attached to the Airframe. The Company's right to
make a replacement
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hereunder shall be subject to the fulfillment of the following conditions
precedent at the Company's sole cost and expense:
(i) The following documents shall have been duly authorized, executed
and delivered by the respective party or parties thereto and shall be in
full force and effect, and an executed counterpart of each shall have been
delivered to the Collateral Agent:
(A) a Mortgage Supplement covering the Replacement Engine (filed
for recording pursuant to the Federal Aviation Act, or the applicable
laws, rules and regulations of any other jurisdiction in which the
relevant Aircraft may then be registered as permitted hereby);
(B) an Officer's Certificate of the Company stating (i) that the
Replacement Engine is of at least equal value, utility and remaining
useful life as the Engine it replaces assuming such Engine had been
maintained in the condition required hereunder and (ii) each of the
conditions specified in this paragraph (e) with respect to such
Replacement Engine, and any comparable provisions of any Lease
permitted hereby to which such Engine is subject, have been satisfied;
(C) such Uniform Commercial Code financing statements covering
the Lien created by this Mortgage as deemed necessary or desirable by
counsel for the Collateral Agent to protect the security interests of
the Collateral Agent in the Replacement Engine; and
(D) a certificate, reasonably acceptable to the Collateral Agent
in form and substance, of an aircraft engineer or qualified
independent aircraft appraiser certifying, with respect to such
Replacement Engine, to the effect specified in Section 3.4(e)(i)(B)
hereof;
(ii) Upon request by the Collateral Agent, the Company shall furnish
the Collateral Agent with (A) an opinion addressed to the Collateral Agent,
reasonably satisfactory in form and substance to the Collateral Agent, of
the Company's counsel, which may be the Company's General Counsel or an
Associate General Counsel, to the effect that such documents reasonably
requested by the Collateral Agent are sufficient to cause such Replacement
Engine to be subject to the Lien of this Mortgage, (B) upon recordation, an
opinion of qualified FAA counsel, or if applicable, qualified counsel in
the jurisdiction of the relevant Aircraft's registration addressed to the
Collateral Agent, in either case satisfactory in form and substance to the
Collateral Agent as to the due recordation of the Mortgage Supplement as a
first priority Lien on the Replacement Engine, registration of the
ownership of the Replacement Engine and the freedom from Liens of record
(except Permitted Liens), and (C) such evidence of compliance with the
insurance provisions of Section 3.6 hereof with respect to such Replacement
Engine as the Collateral Agent may reasonably request; and
(iii) The Company shall have delivered to the Collateral Agent (A)
a copy of the xxxx of sale respecting such Replacement Engine or other
evidence of the Company's
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ownership of such Replacement Engine, reasonably satisfactory to the
Collateral Agent and (B) appropriate instruments assigning to the
Collateral Agent the benefits, if any, of all manufacturer's and vendor's
warranties generally available and permitted to be assigned by the Company
with respect to such Replacement Engine.
Upon such substitution, (x) the Collateral Agent shall execute and
deliver to the Company such documents and instruments, prepared at the Company's
expense, as the Company shall reasonably request, to evidence the release of
such replaced Engine from the Lien of this Mortgage; (y) the Collateral Agent
shall assign to the Company all claims it may have against any other Person
relating to an Event of Loss of such replaced Engine giving rise to such
substitution; and (z) the Company shall receive all insurance proceeds and
proceeds in respect of any Event of Loss of such replaced Engine giving rise to
such replacement to the extent not previously applied to the purchase price of
the Replacement Engine as provided in Sections 3.6(b)(I), second paragraph, and
3.5(d)(ii) hereof.
Section 3.5. LOSS, DESTRUCTION OR REQUISITION.
(a) EVENT OF LOSS WITH RESPECT TO AIRFRAMES.
Upon the occurrence of an Event of Loss with respect to an Airframe or
an Engine, the Company shall forthwith (and in any event within ten (10) days
after such occurrence) give the Collateral Agent written notice of such Event of
Loss. The Company shall, within twenty (20) days after the occurrence of an
Event of Loss with respect to such Airframe give the Collateral Agent written
notice of its election to perform one of the following options (it being agreed
that, if the Company shall not have given notice of such election within such 20
day period, the Company shall be required to make the prepayment required by
Section 3.02(d) of the Credit Agreement). The Company may elect either to (i)
make the prepayment required by Section 3.02(d) of the Credit Agreement or (ii)
cause to be subjected to the Lien of this Mortgage in replacement thereof not
later than the Business Day next succeeding the 30th day following the
occurrence of such Event of Loss, a Replacement Airframe (together with the same
number of Replacement Engines as the number of Engines, if any, installed on
such Airframe at the time such Event of Loss occurred), such Replacement
Airframe and Replacement Engines to be free and clear of all Liens except
Permitted Liens, to have a value, utility and remaining useful life at least
equal to, and to be of a comparable or improved model as, such Airframe and
Engines, if any, so replaced, as of the date of the Event of Loss (assuming such
Airframes and Engines were in the condition required by the terms hereof);
PROVIDED that if the Company does not perform its obligation to effect such
replacement in accordance with this Section 3.5(a) during the period of time
provided herein, then the Company shall make the prepayment required by Section
3.02(d) of the Credit Agreement on the Business Day next succeeding the 30th day
following the occurrence of such Event of Loss.
(b) EFFECT OF REPLACEMENT.
Upon the Company having provided a Replacement Aircraft as provided
for in Section 3.5(a) above, (x) the Lien of this Mortgage shall continue with
respect to such Replacement Aircraft as though no Event of Loss had occurred;
the Collateral Agent shall, at the
-15-
cost and expense of the Company, release from the Lien of this Mortgage the
replaced Airframe and Engines or engines, if any, attached to such Airframe
upon the occurrence of the Event of Loss by executing and delivering to the
Company such documents and instruments, prepared at the Company's expense, as
the Company may reasonably request to evidence such release; and (y) the
Collateral Agent shall assign to the Company all claims it may have against
any other Person arising from the Event of Loss and the Company shall receive
all insurance proceeds and proceeds from any award in respect of
condemnation, confiscation, seizure or requisition, including any investment
interest thereon, to the extent not previously applied to the purchase price
of the Replacement Aircraft as provided in Sections 3.5(d)(i) and 3.6 hereof.
(c) CONDITIONS TO AIRFRAME REPLACEMENT.
(i) The Company's right to make a replacement under Section 3.5(a)
hereof shall be subject to the fulfillment, at the Company's sole cost and
expense and in addition to the conditions contained in such Section 3.5(a), of
the following conditions precedent:
(1) On the date that the Replacement Aircraft is delivered, which
date shall be not later than the Business Day next succeeding the 30th day
following the Event of Loss leading to such replacement (hereinafter
referred to as the "REPLACEMENT CLOSING DATE"), no Event of Default shall
have occurred and be continuing;
(2) On the Replacement Closing Date, the following documents shall
have been duly authorized, executed and delivered by the respective party
or parties thereto and shall be in full force and effect, and an executed
counterpart of each thereof shall have been delivered to the Collateral
Agent:
(A) a Mortgage Supplement covering the Replacement Aircraft
(filed for recording pursuant to the Federal Aviation Act, or the
applicable laws, rules and regulations of any other jurisdiction in
which the Aircraft to be replaced may then be registered as permitted
hereby);
(B) such Uniform Commercial Code financing statements covering
the Lien created by this Mortgage as deemed necessary or desirable by
counsel for the Collateral Agent to protect the security interests of
the Collateral Agent in the Replacement Aircraft; and
(C) a certificate, reasonably acceptable to the Collateral Agent
in form and substance, of an aircraft engineer or qualified
independent aircraft appraiser certifying (I) that the Replacement
Airframe is the same model as the Airframe to be replaced (or an
improved model, as the case may be) and has a value, utility and
remaining useful life at least equal to the Airframe to be replaced,
assuming such Airframe had been maintained in the condition required
hereunder and (II) with respect to the Replacement Engines
constituting part of such Replacement Aircraft to the effect specified
in Section 3.4(e)(i)(B) hereof.
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(3) On or before the Replacement Closing Date, the Collateral Agent
shall have received from the Company such documents and evidence with
respect to the Company as the Collateral Agent may reasonably request in
order to establish the consummation of the transactions contemplated by
this Section 3.5(c), evidence of taking of all necessary corporate action
in connection therewith and compliance with the conditions set forth in
this Section 3.5(c), in each case in form and substance reasonably
satisfactory to the Collateral Agent;
(4) The Collateral Agent shall have received evidence satisfactory to
the Collateral Agent as to the due compliance with Section 3.6 hereof with
respect to the Replacement Aircraft;
(5) On the Replacement Closing Date, (A) the Company shall cause the
Replacement Aircraft to be subject to the Lien of this Mortgage, free and
clear of Liens (other than Permitted Liens), (B) the Replacement Aircraft
shall have been duly certified by the FAA or the relevant body or agency of
the jurisdiction then applicable to the registration of the Airframe to be
replaced as to type and airworthiness in accordance with the terms of this
Mortgage, and the registration of the Replacement Aircraft in the name of
the Company (or any Lessee as lessee if the Aircraft to be replaced had
been so registered immediately prior to the occurrence of the Event of Loss
with respect thereto) shall have been duly made with the FAA or the
relevant body or agency of the jurisdiction then applicable to the
registration of the Airframe to be replaced and (C) the Collateral Agent
shall have received evidence satisfactory to it with respect to the matters
covered by this subparagraph (5);
(6) On the Replacement Closing Date, the following statements shall
be true and the Collateral Agent shall have received an Officer's
Certificate of the Company, dated the Replacement Closing Date, stating
that (A) the matters set forth in subparagraph (1) above are confirmed, (B)
no Event of Default will result from the Company acquiring its interest in
the Replacement Aircraft and (C) each of the conditions specified in this
paragraph (c) with respect to such Replacement Airframe, and any comparable
provisions of any lease permitted hereby to which such Airframe is subject,
have been satisfied;
(7) The Collateral Agent shall, at the expense of the Company, have
received (A) an opinion addressed to the Collateral Agent, reasonably
satisfactory in form and substance to the Collateral Agent, from
Cadwalader, Xxxxxxxxxx & Xxxx or other counsel selected by the Company and
reasonably satisfactory to the Collateral Agent to the effect that (i) the
Replacement Airframe and Replacement Engines, if any, has or have been made
subject to the Lien of this Mortgage and (ii) all required action has been
taken in order to maintain, and such action shall maintain, the
effectiveness and priority of the interests in the Collateral which the
Mortgage purports to create and (B) an opinion of qualified FAA counsel or,
if applicable, qualified local counsel in the jurisdiction where the
Aircraft to be replaced is registered, in either case addressed to the
Collateral Agent and in form and substance satisfactory to the Collateral
Agent, respecting the due recordation of the Mortgage Supplement as a first
priority Lien respecting such
-17-
Replacement Aircraft, the registration of the ownership thereof and freedom
from Liens of record (other than Permitted Liens); and
(8) The Company shall have delivered to the Collateral Agent (A) a
copy of the original xxxx of sale respecting such Replacement Airframe and
Replacement Engines, if any, and (B) appropriate instruments assigning to
the Collateral Agent the benefits, if any, of all manufacturer's and
vendor's warranties generally available and permitted to be assigned by the
Company with respect to such Replacement Airframe and/or Replacement
Engine.
(d) NON-INSURANCE PAYMENTS RECEIVED ON ACCOUNT OF AN EVENT OF LOSS.
As between the Collateral Agent and the 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 3.6 hereof, or elsewhere in this
Mortgage, as the case may be, or payments in respect of damage to the business
or property, of the Company) with respect to any Airframe, Engine or Part
received at any time by the Collateral Agent or by the Company from any
governmental authority or other Person will be applied as follows:
(i) if such payments are received with respect to an Event of Loss as
to any Aircraft, and the relevant Airframe or the relevant Airframe and
Engines or engines installed thereon are being replaced by the Company
pursuant to Section 3.5(a) hereof, such payments shall be paid over to, or
retained by, the Collateral Agent as security and upon completion of such
replacement (or upon the closing therefor) and compliance with the
provisions of Sections 3.5(a) and (c) with respect to the Event of Loss for
which such payments are made, paid over to or retained by the Company;
(ii) if such payments are received with respect to an Event of Loss to
an Engine or Part (not involving an Event of Loss as to an Airframe) that
has been or is being replaced by the Company pursuant to Section 3.4(e)
hereof, such payments shall be paid over to, or retained by, the Company;
and
(iii) if such payments are received with respect to an Event of
Loss as to an Aircraft, if the relevant Airframe or the relevant Airframe
and Engines or engines installed thereon has not or have not been and will
not be replaced as contemplated by Section 3.5(a) hereof, such payments
shall be applied to the prepayment required pursuant to Section 3.02(d) of
the Credit Agreement and the payment of any other Obligations then due and
payable and thereafter, the balance, if any, of such payment shall be
promptly paid over to, or retained by, the Company.
-18-
(e) REQUISITION OF USE.
In the event of a requisition for use by any government, so long as it
does not constitute an Event of Loss, of any Airframe and the Engines or engines
installed on such Airframe so long as any Airframe or Engine is subject to the
Lien of this Mortgage, the Company shall promptly notify the Collateral Agent of
such requisition and all of the Company's obligations under this Mortgage shall
continue to the same extent as if such requisition had not occurred. So long as
no Event of Default shall have occurred and be continuing, any payments received
by the Collateral Agent or the Company from such government with respect to such
requisition of use shall be paid over to, or retained by, the Company. In the
event of an Event of Loss of an Engine resulting from the requisition for use by
a government of such Engine (but not an Airframe), the Company will replace such
Engine hereunder by complying with the terms of Section 3.4(e) hereof and any
payments received by the Collateral Agent or the Company from such government
with respect to such requisition shall be paid over to, or retained by, the
Company.
(f) APPLICATION OF PAYMENTS DURING EXISTENCE OF EVENT OF DEFAULT.
Any amount referred to in this Section 3.5 which is payable to the
Company (or any Lessee) shall not be paid to or retained by the Company (or such
Lessee), if at the time of such payment or retention an Event of Default shall
have occurred and be continuing, but shall be held by or paid over to the
Collateral Agent as security for the Obligations and, if the aggregate unpaid
principal amounts of the Notes shall be declared to be due and payable pursuant
to the Credit Agreement, applied against the Obligations as and when due. Upon
the earlier of (a) such time as there shall not be continuing any such Event of
Default or (b) the termination of this Mortgage in accordance with Section 8.1,
such amount, and any interest realized thereon pursuant to Section 6.1 hereof,
shall be paid over to the Company (or such Lessee) to the extent not previously
applied in accordance with the preceding sentence.
Section 3.6. INSURANCE.
(a) PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE.
(I) Except as provided in clause (II) of this Section 3.6(a), the
Company will carry or cause to be carried at its or any Lessee's expense (i)
aircraft public liability (including, without limitation, passenger legal
liability) (and including aircraft war risk and hijacking insurance, if and to
the extent the same is maintained by the Company (or any Lessee) with respect to
other aircraft owned or leased, and operated by the Company (or such Lessee) on
the same routes) insurance and property damage insurance (exclusive of
manufacturer's product liability insurance) with respect to all the Aircraft, in
an amount not less than the greater of (x) with respect to each Aircraft of any
type, the amount of public liability and property damage insurance from time to
time applicable to aircraft owned or operated by the Company of the same type
and (y) the amount of public liability and property damage maintained by the
Company on the Effective Date and (ii) cargo liability insurance, in the case of
both clause (i) and clause (ii), (A) with respect to Aircraft of any type, of
the type and covering the same risks as from time to time applicable to aircraft
operated by the Company of the same type as the Aircraft and (B) which is
maintained in effect with insurers of recognized responsibility. Any policies of
insurance carried
-19-
in accordance with this paragraph (a) and any policies taken out in
substitution or replacement for any of such policies (A) shall be amended to
name the Secured Creditors (but without imposing on any such party liability
to pay the premiums for such insurance) (and, if any Lease shall be in
effect, the Company in its capacity as lessor under the Lease) as additional
insureds as their interest may appear, (B) shall provide that in respect of
the interest of the Secured Creditors (and, if any Lease shall be in effect,
the Company in its capacity as lessor under the Lease) in such policies the
insurance shall not be invalidated by any action or inaction of the Company
(or, if any Lease is then in effect, any Lessee) or any other Person and
shall insure the Secured Creditors (and, if any Lease shall be in effect, the
Company in its capacity as lessor under the Lease) regardless of any breach
or violation of any warranty, declaration or condition contained in such
policies by the Company (or, if any Lease is then in effect, any Lessee), (C)
may provide for self-insurance to the extent permitted by Section 3.6(d) and
(D) shall provide that if the insurers cancel such insurance for any reason
whatever or if any material change is made in such insurance which adversely
affects the interest of the Secured Creditors (or, if any Lease shall be in
effect, the Company in its capacity as lessor under the Lease), or such
insurance shall lapse for non-payment of premium, such cancellation, lapse or
change shall not be effective as to the Secured Creditors (or, if any Lease
shall be in effect, the Company in its capacity as lessor under the Lease)
for thirty (30) days (seven (7) days in the case of war risk and allied
perils coverage) after issuance to the Collateral Agent of written notice by
such insurers of such cancellation, lapse or change; PROVIDED, HOWEVER, that
if any notice period specified above is not reasonably obtainable, such
policies shall provide for as long a period of prior notice as shall then be
reasonably obtainable. Each liability policy (1) shall be primary without
right of contribution from any other insurance which is carried by the
Secured Creditors (or, if any Lease shall be in effect, the Company in its
capacity as lessor under the Lease), (2) shall expressly provide that all of
the provisions thereof, except the limits of liability, shall operate in the
same manner as if there were a separate policy covering each insured, and (3)
shall waive any right of the insurers to any set-off or counterclaim or any
other deduction, whether by attachment or otherwise, in respect of any
liability of the Secured Creditors (or, if any Lease shall be in effect, the
Company in its capacity as lessor under the Lease) to the extent of any
moneys due to the Secured Creditors (or, if any Lease shall be in effect, the
Company in its capacity as lessor under the Lease).
(II) During any period that an Aircraft is on the ground and not in
operation, the Company may, in relation to such Aircraft, carry or cause to be
carried, in lieu of the insurance required by clause (I) above, insurance
otherwise conforming with the provisions of said clause (I) except that (A) the
amounts of coverage shall not be required to exceed the amounts of public
liability and property damage insurance from time to time applicable to aircraft
owned or operated by the Company of the same type as such Aircraft and which are
on the ground and not in operation; and (B) the scope of the risks covered and
the type of insurance shall be the same as from time to time shall be applicable
to aircraft owned or operated by the Company of the same type which are on the
ground and not in operation.
-20-
(b) INSURANCE AGAINST LOSS OR DAMAGE TO THE AIRCRAFT.
(I) Except as provided in clause (II) of this Section 3.6(b), the
Company shall maintain or cause to be maintained in effect, at its or any
Lessee's expense, with insurers of recognized responsibility, all-risk ground
and flight aircraft hull insurance covering the Aircraft and all-risk ground and
flight coverage of Engines and Parts while temporarily removed from the Aircraft
and not replaced by similar components (including, without limitation, war risk
and governmental confiscation and expropriation (other than by the government of
registry of the relevant Aircraft) and hijacking insurance, if and to the extent
the same is maintained by the Company (or, if a Lease is then in effect, any
Lessee) with respect to other of the same type aircraft owned or operated by the
Company (or such Lessee) on the same routes, except that the Company (or such
Lessee) shall maintain war risk and governmental confiscation and expropriation
(other than by the government of registry of the relevant Aircraft) and
hijacking insurance if the Aircraft are operated on routes where the custom is
for major international air carriers flying comparable routes to carry such
insurance) which is of the type as from time to time applicable to aircraft
owned or operated by the Company of the same type as the Aircraft; PROVIDED that
such insurance shall at all times while the Aircraft are subject to this
Mortgage be for an amount (subject to self-insurance to the extent permitted by
Section 3.6(d)) not less than the amount of insurance of the same type
maintained by the Company on the Effective Date with respect to the Aircraft.
Any policies carried in accordance with this paragraph (b) covering the Aircraft
and any policies taken out in substitution or replacement for any such policies
(i) shall be amended to name the Collateral Agent as a loss payee, as its
interest may appear (but without imposing on any such party liability to pay
premiums with respect to such insurance), (ii) may provide for self-insurance to
the extent permitted in Section 3.6(d), (iii) shall provide that (A) in the
event of a loss involving proceeds in excess of an amount equal to 13.5% of the
Appraised Value of the Aircraft subject to such event of loss, the proceeds in
respect of such loss up to an amount equal to the amount of the prepayment
required by Section 3.02(d) of the Credit Agreement with respect to such loss
(the "BALANCE DUE"), shall be payable to the Collateral Agent (except in the
case of a loss with respect to an Engine installed on an airframe other than an
Airframe, in which case the Company (or any Lessee) shall arrange for any
payment of insurance proceeds in respect of such loss to be held for the account
of the Collateral Agent whether such payment is made to the Company (or any
Lessee) or any third party), it being understood and agreed that in the case of
any payment to the Collateral Agent otherwise than in respect of an Event of
Loss, the Collateral Agent shall, upon receipt of evidence satisfactory to it
that the damage giving rise to such payment shall have been repaired or that
such payment shall then be required to pay for repairs then being made, pay the
amount of such payment to the Company or its order, and (B) the entire amount of
any loss involving total proceeds equal to the amount set forth in clause (A)
above or less or the amount of any proceeds of any loss in excess of the Balance
Due shall be paid to the Company or its order unless an Event of Default shall
have occurred and be continuing and the insurers shall have been notified
thereof by the Collateral Agent, (iv) shall provide that if the insurers cancel
such insurance for any reason whatever, or such insurance lapses for non-payment
of premium or if any material change is made in the insurance which adversely
affects the interest of the Collateral Agent, such cancellation, lapse or change
shall not be effective as to the Collateral Agent (or, if any Lease shall be in
effect, the Company in its capacity as lessor under the Lease) for thirty (30)
days (seven (7) days in case of
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hull war risk and allied perils coverage) after issuance to the Collateral
Agent (or, if any Lease is in effect, the Company in its capacity as lessor
under the Lease) of written notice by such insurers of such cancellation,
lapse or change; PROVIDED, HOWEVER, that if any notice period specified above
is not generally obtainable, such policies shall provide for as long a period
of prior notice as shall then be generally obtainable, (v) shall provide that
in respect of the interest of the Collateral Agent (and, if any Lease shall
be in effect, the Company in its capacity as lessor under the Lease) in such
policies the insurance shall not be invalidated by any action or inaction of
the Company (or, if a Lease is then in effect, any Lessee) or any other
Person and shall insure the Collateral Agent (and, if any Lease shall be in
effect, the Company in its capacity as lessor under the Lease) regardless of
any breach or violation of any warranty, declaration or condition contained
in such policies by the Company (or, if a Lease is then in effect, any
Lessee), (vi) shall be primary without any right of contribution from any
other insurance which is carried by the Secured Creditors (or, if any Lease
shall be in effect, the Company in its capacity as lessor under the Lease),
(vii) shall waive any right of subrogation of the insurers against the
Secured Creditors (and if any Lease shall be in effect, the Company in its
capacity as lessor under the Lease), and (viii) shall waive any right of the
insurers to set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of the Secured Creditors
or the Company (or any Lessee) to the extent of any moneys due to the
Collateral Agent. In the case of a loss with respect to an engine (other
than an Engine) installed on an Airframe, the Collateral Agent shall hold any
payment to it of any insurance proceeds in respect of such loss for the
account of the Company or any other third party that is entitled to receive
such proceeds.
As between the Collateral Agent and the Company, it is agreed that all
insurance payments received as the result of the occurrence of an Event of Loss
will be applied as follows:
(w) if such payment is received as the result of an Event of Loss
with respect to an Airframe (the Airframe and any Engines installed
thereon) that has been or is being replaced by the Company as contemplated
by Section 3.5(a) hereof, such payments shall be paid over to, or retained
by, the Collateral Agent and upon completion of such replacement be paid
over to the Company;
(x) if such payments are received with respect to an Airframe (or the
Airframe and the Engines installed thereon) that has not been or is not
being replaced by the Company as contemplated by Section 3.5(a) hereof, so
much of such payments remaining, after reimbursement of the Collateral
Agent for reasonable costs and expenses, as shall not exceed the Balance
Due shall be applied in reduction of the Company's obligation to pay the
Balance Due in accordance with Section 3.02(d) of the Credit Agreement, if
not already paid by the Company, or, if already paid by the Company, shall
be applied to reimburse the Company for its payment of such Balance Due,
and the balance, if any, of such payments remaining thereafter will be paid
over to, or retained by, the Company (or if directed by the Company, any
Lessee); and
(y) if such payments are received with respect to an Engine under the
circumstances contemplated by Section 3.4(e) hereof, so much of such
payments remaining, after reimbursement of the Collateral Agent for
reasonable costs and expenses, shall be
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paid over to, or retained by, the Company (or if directed by the Company,
any Lessee); PROVIDED that the Company shall have fully performed or,
concurrently therewith, will fully perform, the terms of Section 3.4(e)
hereof with respect to the Event of Loss for which such payments are made.
As between the Collateral Agent and the Company, the insurance
payments for any property damage or loss to any Airframe or Engine not
constituting an Event of Loss with respect thereto will be applied in payment
for repairs or for replacement property in accordance with the terms of Sections
3.2(c) and 3.4 hereof, if not already paid for by the Company (or any Lessee),
and any balance (or if already paid for by the Company (or any Lessee), all such
insurance proceeds) remaining after compliance with such Sections with respect
to such loss shall be paid to the Company (or any Lessee if directed by the
Company).
(II) During any period that an Aircraft is on the ground and not in
operation, the Company may, in relation to such Aircraft, carry or cause to be
carried, in lieu of the insurance required by clause (b) (I) above, insurance
otherwise conforming with the provisions of said clause (b) (I) except that the
scope of the risks and the type of insurance shall be the same as from time to
time applicable to aircraft owned by the Company of the same type similarly on
the ground and not in operation; PROVIDED that the Company shall maintain
insurance against risk of loss or damage to such Aircraft in an amount at least
equal to the amount of insurance of such type maintained by the Company on the
Effective Date with respect to such Aircraft during such period that such
Aircraft is on the ground and not in operation.
(c) REPORTS, ETC.
The Company will furnish, or cause to be furnished, to the Collateral
Agent, on or before the Effective Date and on or before July 1, in each year
thereafter commencing July 1, 1999 a report, signed by Aon Risk Services, Inc.
of Minnesota, Xxxxx & XxXxxxxx, Incorporated or any other independent firm of
insurance brokers reasonably acceptable to the Collateral Agent (the "INSURANCE
BROKERS"), describing in reasonable detail the insurance and reinsurance then
carried and maintained with respect to the Aircraft and stating the opinion of
such firm that the insurance then carried and maintained with respect to the
Aircraft complies with the terms hereof; PROVIDED, HOWEVER, that all information
contained in the foregoing report shall not be made available by the Secured
Creditors to anyone except (A) to permitted transferees of the interest of the
Secured Creditors who agree to hold such information confidential, (B) to the
Secured Creditors' counsels or independent public accountants or independent
insurance advisors who agree to hold such information confidential or (C) as may
be required by any statute, court or administrative order or decree or
governmental ruling or regulation. The Company will cause such Insurance
Brokers to agree to advise the Collateral Agent in writing of any default in the
payment of any premium and of any other act or omission on the part of the
Company of which it has knowledge and which might invalidate or render
unenforceable, in whole or in part, any insurance on the Aircraft. To the
extent such agreement is reasonably obtainable, the Company will also cause such
Insurance Brokers to agree to advise the Collateral Agent in writing at least
thirty (30) days (seven (7) days in the case of war risk and allied perils
coverage) prior to the expiration or termination date of any insurance carried
and
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maintained on the Aircraft pursuant to this Section 3.6. In addition, the
Company will also cause such Insurance Brokers to deliver to the Collateral
Agent, on or prior to the date of expiration of any insurance policy
referenced in a previously delivered certificate of insurance, a new
certificate of insurance, substantially in the same form as delivered by the
Company to the Collateral Agent on the Effective Date. In the event that the
Company or any Lessee shall fail to maintain or cause to be maintained
insurance as herein provided, the Collateral Agent may at its sole option
provide such insurance and, in such event, the Company shall, upon demand,
reimburse the Collateral Agent for the cost thereof to the Collateral Agent,
without waiver of any other rights the Collateral Agent may have.
(d) SELF-INSURANCE.
The Company may self-insure by way of deductible, premium
adjustment or franchise provisions or otherwise (including, with respect to
insurance maintained pursuant to Section 3.6(b), insuring for maximum amounts
which are less than the amounts required by such Section) in the insurance
covering the risks required to be insured against pursuant to this Section
3.6 under a program applicable to all the aircraft in the Company's fleet,
but in no case shall the aggregate amount of self-insurance in regard to
Section 3.6(a) and Section 3.6(b) exceed during any policy year, with respect
to all of the aircraft in the Company's fleet (including, without limitation,
the Aircraft), the lesser of (a) 50% of the largest replacement value of any
single aircraft in the Company's fleet or (b) 1-1/2% of the average aggregate
insurable value (during the preceding policy year) of all aircraft
(including, without limitation, the Aircraft) on which the Company carries
insurance. In addition, the Company (and any Lessee) may self-insure to the
extent of any applicable mandatory minimum per aircraft (or, if applicable,
per annum or other period) hull or liability insurance deductible imposed by
the aircraft hull or liability insurers.
(e) ADDITIONAL INSURANCE BY THE COLLATERAL AGENT AND THE COMPANY.
The Company (and any Lessee) 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 3.6, so long as such excess
insurance is not in conflict with the insurance otherwise required hereunder.
(f) INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE.
Notwithstanding any provisions of this Section 3.6 requiring
insurance, the Collateral Agent agrees to accept, in lieu of insurance
against any risk with respect to an Aircraft, indemnification from, or
insurance provided by, the United States Government or any agency or
instrumentality thereof or, upon the written consent of the Collateral Agent,
other government of registry of such Aircraft or any agency or
instrumentality thereof, against such risk in an amount which, when added to
the amount of insurance against such risk maintained by the Company (or any
Lessee) with respect to the Aircraft (including permitted self-insurance)
shall be at least equal to the amount of insurance against such risk
otherwise required by this Section 3.6.
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(g) APPLICATION OF PAYMENTS DURING EXISTENCE OF AN EVENT OF DEFAULT.
Any amount referred to in paragraph (b) of this Section 3.6 which
is payable to or retainable by the Company (or any Lessee) shall not be paid
to or retained by the Company (or any Lessee) if at the time of such payment
or retention an Event of Default shall have occurred and be continuing, but
shall be held by or paid over to the Collateral Agent as security for the
Obligations and, if the aggregate unpaid principal amount of the Notes shall
be declared to be due and payable pursuant to the Credit Agreement, applied
against the Obligations as and when due. Upon the earlier of (a) such time as
there shall not be continuing any such Event of Default or (b) the
termination of this Mortgage in accordance with Section 8.1, such amount, and
any interest realized thereon pursuant to Section 6.1 hereof, shall be paid
to the Company (or such Lessee) to the extent not previously applied in
accordance with the preceding sentence.
Section 3.7. FILINGS.
The Company will take, or cause to be taken, at the Company's cost
and expense, such action with respect to the recording, filing, re-recording
and re-filing of this Mortgage in the office of the Federal Aviation
Administration, pursuant to the Federal Aviation Act, and in such other
places as may be required under any applicable law or regulation, each
Mortgage Supplement and any financing statements or other instruments as are
necessary, or reasonably requested by the Collateral Agent and appropriate,
to maintain, so long as this Mortgage is in effect, the perfection and
preservation of the Lien created by this Mortgage, or will furnish to the
Collateral Agent timely notice of the necessity of such action, together with
such instruments, in execution form, and such other information as may be
required to enable the Collateral Agent to take such action.
ARTICLE 4.
REMEDIES OF THE COLLATERAL AGENT
UPON AN EVENT OF DEFAULT
Section 4.1. EVENT OF DEFAULT. It shall be an Event of Default
hereunder if under the Credit Agreement an "Event of Default" (as such term
is defined in the Credit Agreement) shall occur; PROVIDED, that if the
Company shall have undertaken to cure any failure which arises under Section
3.2(c) hereof, or under the first sentence of Section 3.2(b) hereof as it
relates to maintenance, service, repair or overhaul or under Section 3.4(a),
(b), (c) or (d) hereof and, notwithstanding the diligence of the Company in
attempting to cure such failure, such failure is not cured within 30 days but
is curable with future due diligence, there shall exist no Event of Default
so long as the Company is proceeding with due diligence to cure such failure
and such failure is remedied not later than one hundred eighty (180) days
after receipt by the Company of notice from the Collateral Agent of such
failure; and PROVIDED FURTHER, that any failure of the Company to perform or
observe any covenant, condition, agreement or any error in a representation
or warranty shall not constitute an Event of Default if such failure or error
is caused solely by reason of an event that constitutes an Event of Loss so
long as the Company is continuing to comply with all of the terms of Section
3.5 hereof.
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Section 4.2. REMEDIES WITH RESPECT TO COLLATERAL.
(a) REMEDIES AVAILABLE.
Upon (i) the occurrence and continuance of any Event of Default,
the Collateral Agent (in accordance with the provisions of Article 5 hereof)
may, and upon the written instructions of the Required Banks, the Collateral
Agent shall, do one or more of the following; PROVIDED, HOWEVER, that during
any period that an Aircraft is subject to the Civil Reserve Air Fleet Program
in accordance with the provisions of Section 3.2(a) hereof and in possession
of the United States government or an agency or instrumentality of the United
States, the Collateral Agent shall not, on account of any Event of Default,
be entitled to exercise any of the remedies specified in the following
clauses (A), (B) and (C) in relation to such Aircraft in such manner as to
limit the Company's control under this Mortgage of the relevant Airframe, or
any Engines installed thereon, unless at least sixty (60) days' (or such
lesser period as may then be applicable under the Air Mobility Command
program of the United States Air Force) written notice of default hereunder
shall have been given by the Collateral Agent by registered or certified mail
to the Company (and any Lessee) with a copy addressed to the Contracting
Office Representative for the Air Mobility Command of the United States Air
Force under any contract with the Company (or any Lessee) relating to such
Aircraft:
(A) cause the Company, upon the written demand of the Collateral
Agent, at the Company's expense, to deliver promptly, and the Company
shall deliver promptly, all or such part of the Airframes, the Engines
or other Collateral as the Collateral Agent may so demand to the
Collateral Agent or its order, or the Collateral Agent, at its option,
may enter upon the premises where all or any part of the Airframes, the
Engines or other Collateral are located and take immediate possession
(to the exclusion of the Company and all Persons claiming under or
through the Company) of and remove the same by summary proceedings or
otherwise together with any engine which is not an Engine but which is
installed on an Airframe, subject to all of the rights of the owner,
lessor, lien or secured party of such engine; PROVIDED that an Airframe
with an engine (which is not an Engine) installed thereon may be flown
or returned only to a location within the continental United States, and
such engine shall be held for the account of any such owner, lessor,
lienor or secured party or, if owned by the Company, may at the option
of the Collateral Agent, be exchanged with the Company for an Engine in
accordance with the provisions of Section 3.4(e) hereof;
(B) sell all or any part of the Airframes, Engines or other
Collateral at public or private sale, whether or not the Collateral
Agent shall at the time have possession thereof, as the Collateral Agent
may determine, or lease or otherwise dispose of all or any part of the
Airframes, the Engines or other Collateral as the Collateral Agent, in
its sole discretion, may determine, all free and clear of any rights or
claims of whatsoever kind of the Company; PROVIDED, HOWEVER, that the
Company shall be entitled at any time prior to any such disposition to
redeem the Collateral by paying in full all of the Obligations; or
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(C) exercise any or all of the rights and powers and pursue any
and all remedies of a secured party under the Uniform Commercial Code of
the State of New York.
Upon every taking of possession of Collateral under this Section
4.2, the Collateral Agent may, from time to time, at the expense of the
Collateral Agent, make all such expenditures for maintenance, insurance,
repairs, replacements, alterations, additions and improvements to and of the
Collateral, as it may deem proper. In each such case, the Collateral Agent
shall have the right to maintain, store, lease, control or manage the
Collateral and to exercise all rights and powers of the Company relating to
the Collateral in connection therewith, as the Collateral Agent shall deem
best, including the right to enter into any and all such agreements with
respect to the maintenance, insurance, storage, leasing, control, management
or disposition of the Collateral or any part thereof as the Collateral Agent
may determine; and the Collateral Agent shall be entitled to collect and
receive directly all tolls, rents, revenues, issues, income, products and
profits of the Collateral and every part thereof, without prejudice, however,
to the right of the Collateral Agent under any provision of this Mortgage to
collect and receive all cash held by, or required to be deposited with, the
Collateral Agent hereunder. Such tolls, rents, revenues, issues, income,
products and profits shall be applied to pay the expenses of storage,
leasing, control, management or disposition of the Collateral, and of all
maintenance, repairs, replacements, alterations, additions and improvements,
and to make all payments which the Collateral Agent may be required or may
elect to make, if any, for taxes, assessments, insurance or other proper
charges upon the Collateral or any part thereof (including the employment of
engineers and accountants to examine, inspect and make reports upon the
properties and books and records of the Company), and all other payments
which the Collateral 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 the Collateral Agent, and of all Persons properly engaged and
employed by the Collateral Agent.
In addition, the Company shall be liable for all legal fees and
other costs and expenses incurred by reason of the occurrence of any Event of
Default or the exercise of the Collateral Agent's remedies with respect
thereto, including all costs and expenses incurred in connection with the
retaking or return of any Airframe or Engines in accordance with the terms
hereof or under the Uniform Commercial Code of the State of New York, which
amounts shall, until paid, be secured by the Lien of this Mortgage.
If an Event of Default shall have occurred and the Notes shall have
been accelerated at the request of the Collateral Agent the Company shall
promptly execute and deliver to the Collateral Agent such instruments of
title and other documents as the Collateral Agent may deem necessary or
advisable to enable the Collateral Agent or an agent or representative
designated by the Collateral Agent, at such time or times and place or places
as the Collateral Agent may specify, to obtain possession of all or any part
of the Collateral to which the Collateral Agent shall at the time be entitled
hereunder. If the Company shall for any reason fail to execute and deliver
such instruments and documents after such request by the Collateral Agent,
the Collateral Agent may obtain a judgment conferring on the Collateral Agent
the right to immediate possession and requiring the Company to execute and
deliver such instruments and
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documents to the Collateral Agent, to the entry of which judgment the Company
hereby specifically consents to the fullest extent it may lawfully do so.
Nothing in the foregoing shall affect the right of each Secured
Creditor to receive all payments of principal of, and interest on, the
Obligations held by such Secured Creditor and all other amounts owing to such
Secured Creditor as and when the same may be due.
(b) NOTICE OF SALE.
The Collateral Agent shall give the Company at least fifteen (15)
days' prior written notice of the date fixed for any public sale of any
Airframe or Engine or the date on or after which any private sale will be
held, which notice the Company hereby agrees is reasonable notice, and any
such public sale shall be conducted in general so as to afford the Company
(and any Lessee) a reasonable opportunity to bid.
(c) RECEIVER.
If any Event of Default shall occur and be continuing, to the
extent permitted by law, the Collateral Agent shall be entitled, as a matter
of right as against the Company, without notice or demand and without regard
to the adequacy of the security for the Obligations or the solvency of the
Company, upon the commencement of judicial proceedings by it to enforce any
right under this Mortgage, to the appointment of a receiver of the Collateral
and of the tolls, rents, revenues, issues, income, products and profits
thereof.
(d) CONCERNING SALES.
At any sale under this Article, any Secured Creditor may bid for
and purchase the property offered for sale, may make payment on account
thereof as herein provided, and, upon compliance with the terms of sale, may
hold, retain and dispose of such property without further accountability
therefor. Any purchaser shall be entitled, for the purpose of making payment
for the property purchased, to deliver any of the Notes or other Obligations
in lieu of cash in the amount which shall be payable thereon as principal or
interest. Said Notes and other Obligations, in case the amount so payable to
the holders thereof shall be less than the amounts due thereon, shall be
returned to the holders thereof after being stamped or endorsed to show
partial payment.
Section 4.3. WAIVER OF APPRAISEMENT, ETC., LAWS.
To the full extent that it may lawfully so agree, the Company
agrees that it will not at any time insist upon, plead, claim or take the
benefit or advantage of, any appraisement, valuation, stay, extension, 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 Collateral, or any
part thereof, or the possession thereof by any purchaser at any sale under
this Article; but the Company, for itself and all who may claim under it, so
far as it or they now or hereafter lawfully may, hereby waives the benefit of
all such laws. The Company, for itself and all who may claim under it,
waives, to the extent that it lawfully may, all right to have the property in
the Collateral
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marshalled upon any foreclosure hereof, and agrees that any court having
jurisdiction to foreclosure this Mortgage may order the sale of the
Collateral as an entirety.
Section 4.4. APPLICATION OF PROCEEDS.
(a) All moneys collected by the Collateral Agent upon any sale or
other disposition of the Collateral shall be applied as follows:
(i) first, to the payment of all Obligations owing the
Collateral Agent of the type provided in clauses (ii) and (iii) of the
definition of Obligations;
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Obligations shall be paid to the Secured Creditors, with each Secured
Creditor receiving an amount equal to its outstanding Obligations or, if
the proceeds are insufficient to pay in full all such Obligations, its
Pro Rata Share of the amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii) and following the
termination of this Mortgage pursuant to Section 7.12 hereof, to the
Company or as required by applicable law.
(b) For purposes of this Mortgage "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Obligations and
the denominator of which is the then outstanding amount of all Obligations.
(c) If any payment to any Secured Creditor of its Pro Rata Share
of any distribution would result in overpayment to such Secured Creditor,
such excess amount shall instead be distributed in respect of the unpaid
Obligations of the other Secured Creditors, with each Secured Creditor whose
Obligations have not been paid in full to receive an amount equal to such
excess amount multiplied by a fraction the numerator of which is the unpaid
Obligations of such Secured Creditor and the denominator of which is the
unpaid Obligations of all Secured Creditors entitled to such distribution.
(d) It is understood that the Company shall remain liable to the
extent of any deficiency between the amount of the proceeds of the Collateral
and the aggregate amount of the sums referred to in clauses (i) and (ii) of
Section 4.4(a).
Section 4.5. REMEDIES CUMULATIVE.
Each and every right, power and remedy hereby specifically given to
the Collateral Agent or otherwise in this Mortgage shall be cumulative and
shall be in addition to every other right, power and remedy specifically
given under this Mortgage or the other Credit Documents or now or hereafter
existing at law, in equity or by statute and each and every right, power and
remedy whether specifically herein given or otherwise existing may be
exercised from
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time to time or simultaneously and as often and in such order as may be
deemed expedient by the Collateral Agent. All such rights, powers and
remedies shall be cumulative and the exercise or the beginning of the
exercise of one shall not be deemed a waiver of the right to exercise any
other or others. No delay or omission of the Collateral Agent in the
exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair any such right, power or remedy or shall
be construed to be a waiver of any Default or Event of Default or an
acquiescence therein. No notice to or demand on the Company in any case
shall entitle it to any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the Collateral
Agent to any other or further action in any circumstances. In the event that
the Collateral Agent shall bring any suit to enforce any of its rights
hereunder and shall be entitled to judgment, then in such suit the Collateral
Agent may recover reasonable expenses, including attorneys' fees, and the
amounts thereof shall be included in such judgment.
Section 4.6. DISCONTINUANCE OF PROCEEDINGS.
In case the Collateral Agent shall have instituted any proceeding
to enforce any right, power or remedy under this Mortgage by foreclosure,
sale, entry or otherwise, and such proceeding shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Collateral Agent, then and in every such case the Company, the Collateral
Agent and each holder of any of the Obligations shall be restored to their
former positions and rights hereunder with respect to the Collateral subject
to the security interest created under this Mortgage, and all rights,
remedies and powers of the Collateral Agent shall continue as if no such
proceeding had been instituted (but otherwise without prejudice).
ARTICLE 5.
INDEMNITY
Section 5.1. INDEMNITY.
(a) The Company agrees to indemnify, reimburse and hold the
Collateral Agent, each Secured Creditor and their successors, permitted
assigns, employees, agents and servants (hereinafter in this Section 5.1
referred to as "Indemnitees") harmless from any and all liabilities,
obligations, damages, injuries, penalties, claims, demands, actions, suits,
judgments and any and all reasonable costs, expenses or disbursements
(including reasonable attorneys' fees and expenses) (for the purposes of this
Section 5.1 the foregoing are collectively, called "expenses") of whatsoever
kind and nature imposed on, asserted against or incurred by any of the
Indemnitees in any way relating to or arising out of this Mortgage, any other
Credit Document or any other document executed in connection herewith or
therewith or in any other way connected with the administration of the
transactions contemplated hereby or thereby or the enforcement of any of the
terms of, or the preservation of any rights under any thereof, or in any way
relating to or arising out of the manufacture, ownership, ordering, purchase,
delivery, control, acceptance, lease, financing, possession, operation,
condition, sale, return or other disposition, or use of the Collateral
(including, without limitation, latent or other defects, whether or not
discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort
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(including, without limitation, claims arising or imposed under the doctrine
of strict liability, or for or on account of injury to or the death of any
Person (including any Indemnitee), or property damage); provided that no
Indemnitee shall be indemnified pursuant to this Section 5.1(a) for losses,
damages or liabilities to the extent caused by the gross negligence or
willful misconduct of such Indemnitee. The Company agrees that upon written
notice by any Indemnitee of the assertion of such a liability, obligation,
damage, injury, penalty, claim, demand, action, suit or judgment, the Company
shall assume full responsibility for the defense thereof. Indemnitees agree
to use their best efforts to promptly notify the Company of any such
assertion of which such Indemnitees have knowledge.
(b) Without limiting the application of Section 5.1(a), the
Company agrees to pay, or reimburse the Collateral Agent for any and all
reasonable fees, costs and expenses of whatever kind or nature incurred in
connection with the creation, preservation or protection of the Collateral
Agent's Liens on, and security interest in, the Collateral, including,
without limitation, all fees and taxes in connection with the recording or
filing of instruments and documents in public offices, payment or discharge
of any taxes or Liens upon or in respect of the Collateral, premiums for
insurance with respect to the Collateral and all other reasonable fees, costs
and expenses in connection with protecting, maintaining or preserving the
Collateral and the Collateral Agent's interest therein, whether through
judicial proceedings or otherwise, or in defending or prosecuting any
actions, suits or proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 5.1(a) or (b), the
Company agrees to pay, indemnify and hold the Indemnitees harmless from and
against any loss, costs, damages and expenses which the Indemnitees may
suffer, expend or incur in consequence of or growing out of any
misrepresentation by the Company in this Mortgage, or any other Credit
Document or in any writing contemplated by or made or delivered pursuant to
or in connection with this Mortgage, or any other Credit Document.
(d) If and to the extent that the obligations of the Company under
this Section 5.1 are unenforceable for any reason, the Company hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
Section 5.2. INDEMNITY OBLIGATIONS SECURED BY COLLATERAL; SURVIVAL.
Any amounts paid by any Indemnitee as to which such Indemnitee has
the right to reimbursement shall constitute Obligations secured by the
Collateral until the Termination Date. The indemnity obligations of the
Company contained in this Section 5 shall continue in full force and effect
notwithstanding the full payment of all the Notes issued under the Credit
Agreement and the payment of all other Obligations and notwithstanding the
discharge thereof.
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ARTICLE 6.
INVESTMENT OF SECURITY FUNDS
Section 6.1. INVESTMENT OF SECURITY FUNDS.
Any monies paid to or retained by the Collateral Agent which are
required to be paid to the Company or applied for the benefit of the Company
(including, without limitation, amounts payable to the Company under Sections
3.5(d), 3.5(f), 3.6(b) and 3.6(g) hereof), but which the Collateral Agent is
entitled to hold under the terms hereof pending the occurrence of some event
or the performance of some act (including, without limitation, the remedying
of an Event of Default), shall, until paid to the Company or applied as
provided herein, be invested by the Collateral Agent at the written
authorization and direction of the Company from time to time at the sole
expense and risk of the Company in Permitted Investments. After the
occurrence and during the continuance of an Event of Default, Permitted
Investments will be selected by the Collateral Agent at its discretion. At
the time of such payment or application, there shall be remitted to the
Company any gain (including interest received) realized as the result of any
such investment (net of any fees, commissions, other expenses or losses, if
any, incurred in connection with such investment) unless an Event of Default
shall have occurred and be continuing. The Collateral Agent shall not be
liable for any loss relating to a Permitted Investment made pursuant to this
Article 6. The Company will promptly pay to the Collateral Agent, on demand,
the amount of any loss (net of any gains, including interest received)
realized as the result of any such investment (together with any fees,
commissions and other expenses, if any, incurred in connection with such
investment).
ARTICLE 7.
MISCELLANEOUS
Section 7.1. NO LEGAL TITLE TO COLLATERAL IN NOTEHOLDER.
No Secured Creditor shall have legal title to any part of the
Collateral. No transfer, by operation of law or otherwise, of a Note or
other right, title and interest of a Secured Creditor in and to the
Collateral or this Mortgage shall operate to terminate this Mortgage or
entitle any successor or transferee of such Secured Creditor to an accounting
or to the transfer to it of legal title to any part of the Collateral.
Section 7.2. SALE OF THE AIRCRAFT BY COLLATERAL AGENT IS BINDING.
Any sale or other conveyance of the Aircraft, the Airframe, any
Engine or any interest therein by the Collateral Agent made pursuant to the
terms of this Mortgage shall bind the Secured Creditors and the Company, and
shall be effective to transfer or convey all right, title and interest of the
Collateral Agent, the Company, and the Secured Creditors in and to the
Aircraft, the Airframe, any Engine or any interest therein. No purchaser or
other grantee shall be required to inquire as to the authorization,
necessity, expediency or regularity of such sale or
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conveyance or as to the application of any sale or other proceeds with
respect thereto by the Collateral Agent;
Section 7.3. BENEFIT OF MORTGAGE.
Nothing in this Mortgage, whether express or implied, shall be
construed to give to any Person other than the Company, the Collateral Agent,
and the Secured Creditors any legal or equitable right, remedy or claim under
or in respect of this Mortgage or any Note.
Section 7.4. NOTICES.
Except as otherwise specified herein, all notices, requests,
demands or other communications to or upon the respective parties hereto
shall be in writing (including telegraphic, telex, facsimile transmission or
cable communication) and shall be delivered, mailed, telegraphed, telexed,
facsimile transmitted or cabled, addressed:
(a) if to the Company, at its office at:
0000 Xxxx Xxx Xxxxxxx
Xxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Senior Vice President -
Finance and Treasurer
(b) if to the Collateral Agent:
One Chase Manhattan Plaza
Loan and Agency Services Group
0xx Xxxxx
Xxx Xxxx , Xxx Xxxx 00000
Telecopy (000) 000-0000
Attention: Xxxxx Xxxx
with a copy to:
Xxxxxxx Xxxxxx
Aerospace Group
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy (000) 000-0000
(c) if to any Secured Creditor, either (x) to the Agent, at the
address of the Agent specified in the Credit Agreement or (y) at such
address as such Secured Creditor shall have specified in the Credit
Agreement;
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or at such other address as shall have been furnished in writing by any
Person described above to the party required to give notice hereunder. All
such notices and communications shall, when mailed, telegraphed, telexed,
facsimile transmitted or cabled or sent by overnight courier, be effective on
the third Business Day following deposit in the U.S. mails, certified, return
receipt requested, when delivered to the telegraph company, cable company or
on the day following delivery to an overnight courier, as the case may be, or
when sent by telex or facsimile device, except that notices and
communications to the Collateral Agent shall not be effective until received
by the Collateral Agent.
Section 7.5. WAIVER; AMENDMENT.
None of the terms and conditions of this Mortgage may be changed,
waived, modified or varied in any manner whatsoever unless in writing duly
signed by the Company and the Collateral Agent (with the consent of the
Required Banks or, to the extent required by Section 11.12 of the Credit
Agreement, all of the Banks).
Section 7.6. OBLIGATIONS ABSOLUTE.
The obligations of the Company hereunder shall remain in full force
and effect without regard to, and shall not be impaired by, (a) any
bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of the Company, except to the extent
that the enforceability thereof may be limited by any such event; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Mortgage or any other Credit Document,
except as specifically set forth in a waiver granted pursuant to Section 7.5;
or (c) any amendment to or modification of any Credit Document or any
security for any of the Obligations; whether or not the Company shall have
notice or knowledge of any of the foregoing, except as specifically set forth
in an amendment or modification executed pursuant to Section 7.5.
Section 7.7. SUCCESSORS AND ASSIGNS.
This Mortgage shall be binding upon each Assignor and its
successors and assigns and shall inure to the benefit of the Collateral Agent
and each Secured Creditor and their respective successors and assigns;
PROVIDED, that the Company may not transfer or assign any or all of its
rights or obligations hereunder without the prior written consent of the
Collateral Agent. All agreements, statements, representations and warranties
made by the Company herein or in any certificate or other instrument
delivered by the Company or on its behalf under this Mortgage shall be
considered to have been relied upon by the Secured Creditors and shall
survive the execution and delivery of this Mortgage and the other Credit
Documents regardless of any investigation made by the Secured Creditors or on
their behalf.
Section 7.8. HEADINGS DESCRIPTIVE.
The headings of the several sections of this Mortgage are inserted
for convenience only and shall not in any way affect the meaning or
construction of any provision of this Mortgage.
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Section 7.9. SEVERABILITY.
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.
Section 7.10. GOVERNING LAW.
THIS MORTGAGE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND BE CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW
PRINCIPLES THAT WOULD DICTATE THE APPLICATION OF THE LAW OF ANOTHER
JURISDICTION.
Section 7.11. COMPANY'S DUTIES.
It is expressly agreed, anything herein contained to the contrary
notwithstanding, that the Company shall remain liable to perform all of the
obligations, if any, assumed by it with respect to the Collateral and the
Collateral Agent shall not have any obligations or liabilities with respect
to any Collateral by reason of or arising out of this Mortgage, nor shall the
Collateral Agent be required or obligated in any manner to perform or fulfill
any of the obligations of the Company under or with respect to any Collateral.
Section 7.12. TERMINATION; RELEASE.
(a) After the Termination Date, this Agreement shall terminate
(provided that all indemnities set forth herein including, without
limitation, in Section 5.1 hereof shall survive such termination) and the
Collateral Agent, at the request and expense of the Company, will promptly
execute and deliver to the Company a proper instrument or instruments
(including Uniform Commercial Code termination statements on form UCC-3)
acknowledging the satisfaction and termination of this Mortgage, and will
duly assign, transfer and deliver to the Company (without recourse and
without any representation or warranty) such of its Collateral as may be in
the possession of the Collateral Agent and as has not theretofore been sold
or otherwise applied or released pursuant to this Mortgage. As used in this
Mortgage, "Termination Date" shall mean the date upon which the Total Loan
Commitment has been terminated, no Note is outstanding (and all Loans have
been paid in full), and all other Obligations then owing have been paid in
full.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by the Credit Agreement or is otherwise
released at the direction of the Required Banks (or all the Banks if required
by Section 11.12 of the Credit Agreement) and the proceeds of such sale or
sales or from such release are applied in accordance with the terms of the
Credit
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Agreement, such Collateral will be sold free and clear of the Liens created
by this Mortgage and the Collateral Agent, at the request and expense of the
Company, will duly assign, transfer and deliver to the Company (without
recourse and without any representation or warranty) such of the Collateral
of the Company as is then being (or has been) so sold or released and as may
be in the possession of the Collateral Agent and has not theretofore been
released pursuant to this Mortgage.
(c) At any time that the Company desires that Collateral be
released as provided in the foregoing Section 7.12(a) or (b), it shall
deliver to the Collateral Agent a certificate signed by its chief financial
officer or another authorized senior officer stating that the release of the
respective Collateral is permitted pursuant to Section 7.12(a) or (b). If
requested by the Collateral Agent (although the Collateral Agent shall have
no obligation to make any such request), the Company shall furnish
appropriate legal opinions (from counsel, which may be in-house counsel,
acceptable to the Collateral Agent) to the effect set forth in the
immediately preceding sentence. The Collateral Agent shall have no liability
whatsoever to any Secured Creditor as the result of any release of Collateral
by it as permitted by this Section 7.
Section 7.13. COUNTERPARTS.
This Mortgage may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by
all the parties hereto shall be lodged with the Company and the Collateral
Agent.
Section 7.14. THE COLLATERAL AGENT.
The Collateral Agent will hold in accordance with this Mortgage all
items of the Collateral at any time received under this Mortgage. It is
expressly understood and agreed by the parties hereto and each Secured
Creditor, by accepting the benefits of this Mortgage, acknowledges and agrees
that the obligations of the Collateral Agent as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Mortgage, are only those expressly set forth in this Mortgage.
The Collateral Agent shall act hereunder on the terms and conditions set
forth in Section 10 of the Credit Agreement.
Section 7.15. LIMITED OBLIGATIONS.
It is the desire and intent of the Company, the Collateral Agent
and the Secured Creditors that this Mortgage shall be enforced against the
Company to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. If and to the
extent that the obligations of the Company under this Mortgage shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers, which laws would determine the solvency
of the Company by reference to the full amount of the Obligations at the time
of the execution and delivery of this Mortgage), then the amount of the
Obligations of
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the Company shall be deemed to be reduced and the Company shall pay the
maximum amount of the Obligations which would be permissible under the
applicable law.
-37-
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to
be duly executed by their respective officers, as the case may be, there unto
duly authorized, as of the day and year first above written.
NORTHWEST AIRLINES, INC.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Title: Vice President - Finance
and Chief Accounting Officer
THE CHASE MANHATTAN BANK,
as Collateral Agent
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Title: Managing Director
APPENDIX A
DEFINITIONS RELATING TO THE
AIRCRAFT MORTGAGE AGREEMENT
Unless otherwise defined herein, terms used in the Mortgage shall
have the meaning provided thereto in the "Credit Agreement" as defined
herein. The definitions stated herein shall apply equally to both the
singular and plural forms of the terms defined.
"ADDITIONAL PARTS" has the meaning given such term in Section
3.4(d) of the Mortgage.
"AGENT" has the meaning given to such term in the Credit Agreement.
"AIRCRAFT" means each of the Airframes (or any Replacement
Airframes substituted therefor pursuant to Section 3.5 of the Mortgage)
together with the Engines (if any) installed thereon (or any Replacement
Engines substituted for said Engines pursuant to Section 3.4 of the
Mortgage), whether or not any of such initial or substitute Engines may from
time to time be installed on such Airframe or may be installed on any other
airframe or on any other aircraft.
"AIRFRAMES" means each of the airframes described in Section 2.1(a)
of the Mortgage, and any Replacement Airframe that may from time to time be
replaced pursuant to Section 3.5 of the Mortgage, for such Airframe, together
with any and all Parts (other than Engines or engines) so long as the same
shall be incorporated or installed in or attached thereto.
"APPRAISAL" means the appraisal of the Collateral required under
Section 4A.11 of the Credit Agreement.
"APPRAISED VALUE" means the value of the Aircraft as of the
Effective Date as set forth in the Appraisal.
"BALANCE DUE" has the meaning given such term in Section 3.6(b) of
the Mortgage.
"BANKRUPTCY CODE" means Title 11 of the United States Code, as
amended from time to time, and any successor provisions thereof.
"BANKS" has the meaning provided such term in the Credit Agreement.
"CERTIFICATED AIR CARRIER" means a Citizen of the United States
holding a carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49, United States Code, for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more
of cargo.
"CITIZEN OF THE UNITED STATES" has the meaning specified in Section
40102(a)(15) of Title 49 of the United States Code.
"CIVIL RESERVE AIR FLEET PROGRAM" means the Civil Reserve Air Fleet
Program, currently administered by the United States Air Force Military
Command pursuant to Executive Order No. 11490, as amended, or any
substantially similar program.
"COLLATERAL" has the meaning given to such term in Section 2.1 of
the Mortgage.
"COLLATERAL AGENT" has the meaning specified in the preamble to the
Mortgage.
"COMPANY" has the meaning specified in the preamble to the Mortgage.
"CONTRACT RIGHTS" means all of the Company's right, title and
interest in and to any purchase agreement, modification agreement and
buyer-furnished equipment agreement, as and to the extent that the same
relates to any Aircraft and the operation thereof, including, without
limitation, (a) all claims for damages in respect of any Aircraft arising as
a result of any default by the manufacturer or the seller under any purchase
agreement, modification agreement and buyer-furnished equipment agreement, in
respect of such Aircraft, including, without limitation, all warranty,
service life policy, aircraft performance guarantee and indemnity provisions
in such agreements in respect of any Aircraft and all claims thereunder and
(b) any and all rights of the Company to compel performance of the terms of
any purchase agreement, modification agreement and buyer-furnished equipment
agreement, in respect of any Aircraft.
"CREDIT AGREEMENT" means the Credit Agreement, dated as of May 12,
1998, among Northwest Airlines Corporation, NWA Inc., the Company, the
lenders from time to time party thereto and The Chase Manhattan Bank, as
agent, as amended, modified and/or supplemented from time to time.
"DEFAULT" means an event which, with the giving of notice, lapse of
time or both would become an Event of Default.
"DOLLARS" and "$" means the lawful currency of the United States of
America.
"ENGINES" means each of the engines described in Section 2.1(a) of
the Mortgage whether or not from time to time installed on any Airframe or on
any other aircraft, and any Replacement Engine that may from time to time be
substituted, pursuant to Section 3.4 of the Mortgage, for such Engine;
together in each case with any and all Parts incorporated or installed in or
attached thereto.
"EVENT OF DEFAULT" has the meaning given such term in Section 4.1
of the Mortgage.
"EVENT OF LOSS" with respect to the Aircraft, the Airframes, or the
Engines means any of the following events with respect to such property:
(i) the loss of such property or the use thereof due to the
destruction of or damage to such property which renders repair uneconomic
or which renders such property
-2-
permanently unfit for normal use by the Company for any reason whatsoever;
(ii) any damage to such property which results in an insurance
settlement with respect to such property on the basis of a total loss, or a
constructive or compromised total loss;
(iii) the theft or disappearance of such property, or the
confiscation, condemnation. or seizure of, or requisition of title to, or
use of, such property by any governmental or purported governmental
authority (other than a requisition for use by the United States government
or any other government of registry of an Aircraft, or any agency or
instrumentality of any thereof which in the case of any event referred to
in this clause (iii) (other than a requisition of title) shall have
resulted in the loss of possession of such property by the Company for a
period in excess of 180 consecutive days or, in the case of a requisition
of title, the requisition of title shall not have been reversed within 90
days from the date of such requisition of title;
(iv) as a result of any law, rule, regulation, order or other action
by the Federal Aviation Administration or other governmental body of the
government of registry of an Aircraft having jurisdiction, the use of such
property in the normal course of the business of air transportation shall
have been prohibited for a period of 180 consecutive days; and
(v) any divestiture of title to an Engine treated as an Event of Loss
pursuant to Section 3.2(a) of the Mortgage. An Event of Loss with respect
to an Aircraft shall be deemed to have occurred if an Event of Loss occurs
with respect to the relevant Airframe.
"FEDERAL AVIATION ACT" means that portion of the United States Code
comprising those provisions formerly referred to as the Federal Aviation Act of
1958, as amended, or any subsequent legislation that amends, supplements or
supersedes such provisions.
"FEDERAL AVIATION ADMINISTRATION" and "FAA" mean the United States
Federal Aviation Administration, and any agency or instrumentality of the United
States government succeeding to its functions.
"FOREIGN AIR CARRIER" means any air carrier which is not a U.S. Air
Carrier and which performs maintenance, preventative maintenance and inspections
for an Aircraft, an Airframe, the Parts and/or the related Engines or engines to
standards which are approved by, or which are substantially equivalent to those
required by, the Federal Aviation Administration, the Civil Aviation Authority
of United Kingdom, the Direction Generale de l'Aviation Civile of the French
Republic, the Luftfahrt Bundesamt of the Federal Republic of Germany, the
Rijflauchtraatdienst of the Kingdom of the Netherlands, the Ministry of
Transportation of Japan or the Federal Ministry of Transport of Canada (or any
agency or instrumentality of the applicable government succeeding to the
jurisdiction of the foregoing entities).
"GUARANTOR" or "GUARANTORS" has the meaning provided in the Credit
Agreement.
-3-
"LEASE" means any lease permitted by the terms of Section 3.2(a)(x) of
the Mortgage.
"LESSEE" means any lessee permitted by the terms of Section 3.2(a)(x)
of the Mortgage.
"LIEN" shall mean any mortgage, pledge, hypothecation, assignment,
security deposit arrangement, encumbrance, lien (statutory or other) or other
security agreement or lien of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or any other
similar recording or notice statute, and any capital lease having substantially
the same economic effect as any of the foregoing).
"LOANS" means "Revolving Loans" as defined in the Credit Agreement.
"MORTGAGE" means the Aircraft Mortgage and Security Agreement covering
the Collateral, dated as of May 12, 1998, between the Company and the Collateral
Agent, as the same may be amended, modified or supplemented from time to time.
"MORTGAGE SUPPLEMENT" means any Mortgage and Security Agreement
Supplement substantially in the form of EXHIBIT A to the Mortgage, and any other
supplement to the Mortgage, from time to time executed and delivered.
"NOTES" means "Revolving Notes" as defined in the Credit Agreement.
"OBLIGATIONS" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations and indebtedness (including, without limitation, indemnities, fees
and interest thereon) of the Company and each Guarantor owing to the Secured
Creditors, now existing or hereafter incurred under, arising out of or in
connection with any Credit Document and the due performance and compliance by
the Company and each Guarantor with the terms of each such Credit Document;
(ii) any and all sums advanced by the Collateral Agent in order to preserve the
Collateral or preserve its security interest in the Collateral and (iii) in the
event of any proceeding for the collection or enforcement of any indebtedness,
obligations, or liabilities referred to in clauses (i) and (ii) above, after an
Event of Default shall have occurred and be continuing, the reasonable expenses
of re-taking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by the
Collateral Agent of its rights hereunder, together with reasonable attorneys'
fees and court costs.
"OBSOLETE PARTS" has the meaning given such term in Section 3.4(d) of
the Mortgage.
-4-
"OFFICER'S CERTIFICATE" means, as to any Person, a certificate signed
by the Chairman, the Vice Chairman, the President, any Executive Vice President,
any Director, any Senior Vice President, any Vice President, any Assistant Vice
President, the Treasurer or any Assistant Treasurer, the Secretary, or any
Assistant Secretary of such Person.
"PARTS" means any and all appliances, parts, instruments,
appurtenances, accessories, furnishings, seats, buyer furnished equipment, and
other equipment of whatever nature (other than (a) complete Engines or engines,
(b) items leased by the Company from a third party and (c) cargo containers)
which may from time to time be incorporated or installed in or attached to any
Airframe or any Engine.
"PERMITTED INVESTMENTS" means (i) direct obligations of the United
States of America and agencies guaranteed by the United States government having
a final maturity of 90 days or less from date of purchase thereof; (ii)
certificates of deposit issued by, bankers' acceptances of, or time deposits
with, any bank, trust company or national banking association incorporated under
the laws of the United States of America or one of the states thereof having
combined capital and surplus and retained earnings as of its last report of
condition of at least $500,000,000 and having a rating of Aa or better by
Xxxxx'x Investors Service, Inc. ("MOODY'S") or AA or better by Standard & Poor's
Corporation ("S&P") and having a final maturity of 90 days or less from date of
purchase thereof; and (iii) commercial paper of any holding company of a bank,
trust company or national banking association described in (ii) and commercial
paper of any corporation or finance company incorporated or doing business under
the laws of the United States of America or any state thereof having a rating
assigned to such commercial paper of Al by S&P or P1 by Moody's and having a
final maturity of 90 days or less from the date of purchase thereof; provided
that the aggregate amount at any one time so invested in certificates of deposit
issued by any one bank shall not be in excess of 5% of such bank's capital and
surplus.
"PERMITTED LESSEE" means any air carrier domiciled in a country listed
in SCHEDULE III to the Mortgage.
"PERSON" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"REPLACEMENT AIRCRAFT" means any Aircraft of which a Replacement
Airframe is part.
"REPLACEMENT AIRFRAME" means an aircraft (except Engines or engines
from time to time installed thereon), which shall have been made subject to the
Lien of the Mortgage pursuant to Section 3.5 thereof.
"REPLACEMENT CLOSING DATE" has the meaning given such term in Section
3.5(c) of the Mortgage.
"REPLACEMENT ENGINE" means an aircraft engine suitable for
installation and use
-5-
on the relevant Airframe and which has a value, utility and remaining useful
life (except for maintenance cycle condition) at least equal to the Engine
which it is replacing, assuming such Engine was of the value, utility and
remaining useful life (except for maintenance cycle condition) required by
the terms of the Mortgage, and which shall have been made subject to the Lien
of the Mortgage pursuant to Section 3.4 or 3.5 of the Mortgage.
"REQUIRED BANKS" has the meaning given such term in the Credit
Agreement.
"SECURED CREDITORS" has the meaning given such term in the preamble to
the Mortgage.
"TERMINATION DATE" has the meaning given to such term in Section 7.12
of the Mortgage.
"TOTAL LOAN COMMITMENT" means "Total Revolving Loan Commitment" as
defined in the Credit Agreement.
"U.S. AIR CARRIER" means any Certificated Air Carrier as to which
there is in force an air carrier operating certificate issued pursuant to Part
121 of the regulations under the Federal Aviation Act, or which may operate as
an air carrier by certification or otherwise under any successor or substitute
provisions therefor or in the absence thereof.
"WET LEASE" means any arrangement whereby the Company (or any Lessee)
agrees to furnish any Airframe and the Engines or engines installed thereon to a
third party pursuant to which such Airframe and Engines or engines (i) shall be
operated solely by regular employees of the Company (or any Lessee) possessing
all current certificates and licenses that would be required under the Federal
Aviation Act or, if the Aircraft is not registered in the United States, all
certificates and licenses required by the laws of the jurisdiction of registry,
for the performance by such employees of similar functions within the United
States of America or such other jurisdiction of registry (it is understood that
cabin attendants need not be regular employees of the Company (or any Lessee)
and (ii) shall be maintained by the Company (or any Lessee) in accordance with
its normal maintenance practices.
-6-
EXHIBIT A
FORM OF AIRCRAFT MORTGAGE AND SECURITY
AGREEMENT SUPPLEMENT NO.___
Aircraft Mortgage and Security Agreement Supplement No._______dated
___________ ("MORTGAGE SUPPLEMENT") of NORTHWEST AIRLINES, INC. (the "COMPANY").
W I T N E S S E T H:
WHEREAS, the Aircraft and Security Mortgage Agreement, dated as of May
12, (the "MORTGAGE"), between the Company and The Chase Manhattan Bank, as
Collateral Agent (the "COLLATERAL AGENT"), provides for the execution and
delivery of supplements thereto substantially in the form hereof which shall
particularly describe the Aircraft (such term and other defined terms in the
Mortgage being used herein with the same meanings), and shall specifically grant
a security interest in the Aircraft to the Collateral Agent; and
WHEREAS, the Company has, as provided in the Mortgage, heretofore
executed and delivered to the Collateral Agent _ Mortgage Supplement(s) for the
purpose of specifically subjecting to the Lien of the Mortgage certain airframes
and/or engines therein described, which Mortgage Supplement(s) is/are dated and
has/have been duly recorded with the FAA as set forth below, to wit:
DATE RECORDATION DATE FAA DOCUMENT NUMBER
NOW, THEREFORE, in order to secure the prompt payment of the
Obligations, subject to the terms and conditions of the Mortgage, and in
consideration of the premises and of the covenants contained in the Mortgage,
and of other good and valuable consideration given to the Company at or before
the delivery hereof, the receipt whereof is hereby acknowledged, the Company has
mortgaged, assigned, pledged, hypothecated and granted, and does hereby
mortgage, assign, pledge, hypothecate and grant, a continuing security interest
in, and mortgage lien on, the property comprising all its right, title and
interest in and to the Airframes and Engines described in Annex A attached
hereto, whether or not such Engines shall be installed in or attached to the
Airframes or any other aircraft, to the Collateral Agent, its successors and
assigns, for the benefit and security of the Secured Creditors;
To have and to hold all and singular the aforesaid property unto the
Collateral Agent, its successors and assigns, for the benefit and security of
the Secured Creditors and for the uses and purposes and subject to the terms and
provisions set forth in the Mortgage.
This Mortgage Supplement 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 and terms not
otherwise defined herein shall have the meaning provided in the Mortgage.
EXHIBIT A
Page 2
THIS MORTGAGE SUPPLEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK
AND SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES THAT WOULD
DICTATE THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION.
EXHIBIT A
Page 3
IN WITNESS WHEREOF, the Company has caused this Supplement No. _ to be
duly executed by one of its duly authorized officers, as of the day and year
first above written.
NORTHWEST AIRLINES, INC.
By:__________________________
Title:
ANNEX A
TO MORTGAGE
SUPPLEMENT NO. ______
DESCRIPTION OF AIRFRAME AND ENGINES
AIRFRAME
SCHEDULE I
to
MORTGAGE
--------
SCHEDULE OF AIRFRAMES AS PART OF THE COLLATERAL
-----------------------------------------------
Manufacturer's
Manufacturer Model Registration No. Serial No.
------------- ----- ---------------- --------------
XxXxxxxxx Xxxxxxx DC-9-31 N8929E 00000
XxXxxxxxx Xxxxxxx DC-9-31 N8928E 00000
XxXxxxxxx Xxxxxxx DC-9-15 N9348 45787
XxXxxxxxx Xxxxxxx DC-9-14 N948L 47049
XxXxxxxxx Xxxxxxx DC-9-14 N930RC 45729
XxXxxxxxx Xxxxxxx DC-9-14 N8908E 45749
XxXxxxxxx Xxxxxxx DC-9-14 N8909E 45770
XxXxxxxxx Xxxxxxx DC-9-14 N8911E 45825
XxXxxxxxx Xxxxxxx DC-9-14 N8912E 00000
XxXxxxxxx Xxxxxxx DC-9-41 N750NW 47114
XxXxxxxxx Xxxxxxx DC-9-41 N751NW 47115
XxXxxxxxx Xxxxxxx DC-9-41 N752NW 47116
XxXxxxxxx Xxxxxxx DC-9-41 N753NW 47117
XxXxxxxxx Xxxxxxx DC-9-41 N754NW 47178
XxXxxxxxx Xxxxxxx DC-9-41 N755NW 47179
XxXxxxxxx Xxxxxxx DC-9-41 N756NW 47180
XxXxxxxxx Xxxxxxx DC-9-41 N758NW 47286
XxXxxxxxx Xxxxxxx DC-9-41 N759NW 47287
XxXxxxxxx Xxxxxxx DC-9-41 N760NW 47288
XxXxxxxxx Xxxxxxx DC-9-41 N762NW 47395
XxXxxxxxx Xxxxxxx DC-9-41 N763NW 47396
XxXxxxxxx Xxxxxxx DC-9-51 N760NC 47708
XxXxxxxxx Xxxxxxx DC-9-51 N761NC 47709
XxXxxxxxx Xxxxxxx DC-9-51 N762NC 47710
XxXxxxxxx Xxxxxxx DC-9-51 N763NC 47716
XxXxxxxxx Xxxxxxx DC-9-51 N764NC 47717
XxXxxxxxx Xxxxxxx DC-9-51 N765NC 47718
XxXxxxxxx Xxxxxxx DC-9-51 N766NC 47739
XxXxxxxxx Xxxxxxx DC-9-51 N767NC 47724
XxXxxxxxx Xxxxxxx DC-9-51 N768NC 47729
XxXxxxxxx Xxxxxxx DC-9-51 N775NC 47785
XxXxxxxxx Xxxxxxx DC-9-51 N776NC 47786
XxXxxxxxx Xxxxxxx DC-9-51 N777NC 47787
XxXxxxxxx Xxxxxxx DC-9-51 N787NC 48149
XxXxxxxxx Xxxxxxx DC-9-51 N600TR 47783
Boeing 727-251 N201US 22154
Boeing 727-251 N202US 22155
Boeing 727-251 N203US 22543
Boeing 727-251 N204US 22544
Boeing 727-251 N275US 21154
SCHEDULE I
Page 2
Manufacturer's
Manufacturer Model Registration No. Serial No.
------------- ----- ---------------- --------------
Boeing 727-251 N284US 21323
Boeing 727-251 N285US 21324
Boeing 727-251 N286US 21325
Boeing 727-251 N287US 21375
Boeing 727-251 N288US 21376
Boeing 727-251 N289US 21377
Boeing 727-251 N290US 21378
Boeing 727-251 N291US 21379
Boeing 727-251 N295US 21506
Boeing 727-251 N296US 21788
Boeing 727-251 N297US 21789
Boeing 727-251 N298US 22152
Boeing 727-251 N299US 22153
Boeing 727-2S7 N716RC 22021
Boeing 727-2S7 N718RC 22344
Boeing 727-2S7 N719RC 22490
Boeing 727-2S7 N720RC 22491
Boeing 727-2S7 N721RC 22492
Boeing 727-2M7 N722RW 21201
Boeing 727-2M7 N728RW 21741
Boeing 727-2M7 N729RW 21742
SCHEDULE II
to
MORTGAGE
--------
SCHEDULE OF ENGINES AS PART OF THE COLLATERAL
---------------------------------------------
Manufacturer Model Manufacturer's Manufacturer Model Manufacturer's
Serial No. Serial No.
------------ ----- -------------- ------------ ----- --------------
Xxxxx & Whitney JT8D-7B (H) 653816 Xxxxx & Xxxxxxx JT8D-7B (H) 655396
Xxxxx & Whitney JT8D-7B (H) 655450 Xxxxx & Xxxxxxx JT8D-7B (H) 655397
Xxxxx & Whitney JT8D-7B 653510 Xxxxx & Xxxxxxx JT8D-7B 653679
Xxxxx & Whitney JT8D-7B 655129 Xxxxx & Xxxxxxx JT8D-7B 654107
Xxxxx & Whitney JT8D-7B 655302 Xxxxx & Xxxxxxx JT8D-7B 649539
Xxxxx & Whitney JT8D-7B 653658 Xxxxx & Xxxxxxx JT8D-7B 653642
Xxxxx & Whitney JT8D-7B (H) 649121 Xxxxx & Xxxxxxx JT8D-7B (H) 657535
Xxxxx & Whitney JT8D-7B 657626 Xxxxx & Xxxxxxx JT8D-7B 648879
Xxxxx & Whitney JT8D-7B 649545 Xxxxx & Xxxxxxx JT8D-7B 649472
Xxxxx & Whitney JT8D-11 666740 Xxxxx & Xxxxxxx JT8D-11 676171
Xxxxx & Whitney JT8D-11 (H) 666744 Xxxxx & Xxxxxxx JT8D-11 (H) 676154
Xxxxx & Whitney JT8D-11 666657 Xxxxx & Xxxxxxx JT8D-11 676250
Xxxxx & Whitney JT8D-11 666670 Xxxxx & Xxxxxxx JT8D-11 666694
Xxxxx & Whitney JT8D-11 676185 Xxxxx & Xxxxxxx JT8D-11 676179
Xxxxx & Whitney JT8D-11 676192 Xxxxx & Xxxxxxx JT8D-11 676199
Xxxxx & Whitney JT8D-11 (H) 676228 Xxxxx & Xxxxxxx JT8D-11 (H) 676170
Xxxxx & Whitney JT8D-11 676224 Xxxxx & Xxxxxxx JT8D-11 676209
Xxxxx & Whitney JT8D-11 676231 Xxxxx & Xxxxxxx JT8D-11 676239
Xxxxx & Whitney JT8D-11 676245 Xxxxx & Xxxxxxx JT8D-11 676244
Xxxxx & Whitney JT8D-11 676256 Xxxxx & Xxxxxxx JT8D-11 676258
Xxxxx & Whitney JT8D-11 (H) 676230 Xxxxx & Xxxxxxx JT8D-11 (H) 676246
Xxxxx & Whitney JT8D-17 688206 Xxxxx & Xxxxxxx JT8D-17 688211
Xxxxx & Whitney JT8D-17 688231 Xxxxx & Xxxxxxx JT8D-17 688212
Xxxxx & Whitney JT8D-17 688232 Xxxxx & Xxxxxxx JT8D-17 688249
Xxxxx & Whitney JT8D-17 688295 Xxxxx & Xxxxxxx JT8D-17 688294
Xxxxx & Whitney JT8D-17 688299 Xxxxx & Xxxxxxx JT8D-17 688716
Xxxxx & Whitney JT8D-17 688764 Xxxxx & Xxxxxxx JT8D-17 688760
Xxxxx & Whitney JT8D-17 688767 Xxxxx & Xxxxxxx JT8D-17 688772
Xxxxx & Whitney JT8D-17 688776 Xxxxx & Xxxxxxx JT8D-17 688773
Xxxxx & Whitney JT8D-17 688777 Xxxxx & Xxxxxxx JT8D-17 688784
Xxxxx & Whitney JT8D-17 688792 Xxxxx & Xxxxxxx JT8D-17 688785
Xxxxx & Whitney JT8D-17 688793 Xxxxx & Xxxxxxx JT8D-17 688796
Xxxxx & Whitney JT8D-17 688827 Xxxxx & Xxxxxxx JT8D-17 688816
Xxxxx & Whitney JT8D-17 688828 Xxxxx & Xxxxxxx JT8D-17 688830
Xxxxx & Whitney JT8D-17 688832 Xxxxx & Xxxxxxx JT8D-17 688831
Xxxxx & Whitney JT8D-7B (H) 649094 Xxxxx & Xxxxxxx JT8D-7B (H) 657672
Xxxxx & Whitney JT8D-7B (H) 654825
Xxxxx & Xxxxxxx JT8D-15 649511
SCHEDULE II
Page 2
Manufacturer Model Manufacturer's Manufacturer Model Manufacturer's
Serial No. Serial No.
------------ ----- -------------- ------------ ----- --------------
Xxxxx & Whitney JT8D-15 648910 Xxxxx & Xxxxxxx JT8D-15 700413
Xxxxx & Whitney JT8D-15 653605 Xxxxx & Xxxxxxx JT8D-15 653863
Xxxxx & Whitney JT8D-15 700419 Xxxxx & Xxxxxxx JT8D-15 654302
Xxxxx & Whitney JT8D-15 654024 Xxxxx & Xxxxxxx JT8D-15 700421
Xxxxx & Whitney JT8D-15 654676 Xxxxx & Xxxxxxx JT8D-15 654702
Xxxxx & Whitney JT8D-15 700519 Xxxxx & Xxxxxxx JT8D-15 655124
Xxxxx & Whitney JT8D-15 654918 Xxxxx & Xxxxxxx JT8D-15 700796
Xxxxx & Whitney JT8D-15 656885 Xxxxx & Xxxxxxx JT8D-15 656928
Xxxxx & Whitney JT8D-15 655874 Xxxxx & Xxxxxxx JT8D-15 656984
Xxxxx & Whitney JT8D-15 656971 Xxxxx & Xxxxxxx JT8D-15 657142
Xxxxx & Whitney JT8D-15 657054 Xxxxx & Xxxxxxx JT8D-15 657077
Xxxxx & Whitney JT8D-15 695254 Xxxxx & Xxxxxxx JT8D-15 657151
Xxxxx & Whitney JT8D-15 657143 Xxxxx & Xxxxxxx JT8D-15 656110
Xxxxx & Whitney JT8D-15 657207 Xxxxx & Xxxxxxx JT8D-15 657278
Xxxxx & Whitney JT8D-15 657072 Xxxxx & Xxxxxxx JT8D-15 657428
Xxxxx & Whitney JT8D-15 657301 Xxxxx & Xxxxxxx JT8D-15 657283
Xxxxx & Whitney JT8D-15 657510 Xxxxx & Xxxxxxx JT8D-15 657513
Xxxxx & Whitney JT8D-15 667143 Xxxxx & Xxxxxxx JT8D-15 657545
Xxxxx & Whitney JT8D-15 657531 Xxxxx & Xxxxxxx JT8D-15 695245
Xxxxx & Whitney JT8D-15 657695 Xxxxx & Xxxxxxx JT8D-15 665600
Xxxxx & Whitney JT8D-15 695251 Xxxxx & Xxxxxxx JT8D-15 695204
Xxxxx & Whitney JT8D-15 674407 Xxxxx & Xxxxxxx JT8D-15 695252
Xxxxx & Whitney JT8D-15 695303 Xxxxx & Xxxxxxx JT8D-15 696466
Xxxxx & Whitney JT8D-15 695258 Xxxxx & Xxxxxxx JT8D-15 696495
Xxxxx & Whitney JT8D-15 696475 Xxxxx & Xxxxxxx JT8D-15 695289
Xxxxx & Whitney JT8D-17 655285 Xxxxx & Xxxxxxx JT8D-17 688207
Xxxxx & Whitney JT8D-17 688833 Xxxxx & Xxxxxxx JT8D-17 688230
Xxxxx & Whitney JT8D-17 688216 Xxxxx & Xxxxxxx JT8D-17 688846
Xxxxx & Whitney JT8D-17 688251 Xxxxx & Xxxxxxx JT8D-17 688298
Xxxxx & Whitney JT8D-17 695275 Xxxxx & Xxxxxxx JT8D-17 688761
Xxxxx & Whitney JT8D-17 688719 Xxxxx & Xxxxxxx JT8D-17 696530
Xxxxx & Whitney JT8D-17 696773 Xxxxx & Xxxxxxx JT8D-17 707902
Xxxxx & Whitney JT8D-17 696664
Xxxxx & Xxxxxxx JT8D-17R 689862 Xxxxx & Whitney JT8D-17R 689858
Xxxxx & Xxxxxxx JT8D-17R 689871 Xxxxx & Whitney JT8D-17R 689864
Xxxxx & Xxxxxxx JT8D-17R 689866 Xxxxx & Whitney JT8D-17R 689872
Xxxxx & Xxxxxxx JT8D-17R 689870 Xxxxx & Whitney JT8D-17R 689868
Xxxxx & Xxxxxxx JT8D-17R 689937
Schedule III
to
MORTGAGE
--------
SCHEDULE OF COUNTRIES FOR PERMITTED LESSEES
-------------------------------------------
Argentina Switzerland
Australia Thailand
Austria Tobago
Bahamas Trinidad
Belgium United Kingdom
Brazil Venezuela
Canada
Chile
Denmark
Egypt
Finland
France
Germany
Greece
Hungary
Iceland
India
Indonesia
Ireland
Italy
Japan
Luxembourg
Malaysia
Mexico
Malta
Morocco
Netherlands
New Zealand
Norway
Paraguay
People's Republic of China
Philippines
Portugal
Republic of China (Taiwan)
Singapore
South Africa
South Korea
Spain
Sweden
TABLE OF CONTENTS
Page
ARTICLE 1.
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2.
SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.1. Grant of Security Interest . . . . . . . . . . . . . . . . . . 1
ARTICLE 3.
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . . . . 4
Section 3.1. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Necessary Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) No Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Other Financing Statements. . . . . . . . . . . . . . . . . . . . . . . 4
(d) Chief Executive Office; Records . . . . . . . . . . . . . . . . . . . . 5
(e) Recourse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.2. Possession, Operation and Use, Maintenance and Registration. . 6
(a) POSSESSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) OPERATION AND USE. . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) MAINTENANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(d) IDENTIFICATION OF COLLATERAL AGENT'S INTEREST. . . . . . . . . . . . 10
(e) REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.3. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.4. Replacement and Pooling of Parts; Alterations, Modifications
and Additions; Substitution of Engines . . . . . . . . . . 11
(a) REPLACEMENT OF PARTS . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) PARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(c) POOLING OF PARTS . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) ALTERATIONS; MODIFICATIONS AND ADDITIONS . . . . . . . . . . . . . . 12
(e) SUBSTITUTION OF ENGINES. . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.5. Loss, Destruction or Requisition . . . . . . . . . . . . . . . 15
(i)
Page
----
(a) EVENT OF LOSS WITH RESPECT TO AIRFRAMES. . . . . . . . . . . . . . .15
(b) EFFECT OF REPLACEMENT. . . . . . . . . . . . . . . . . . . . . . . .15
(c) CONDITIONS TO AIRFRAME REPLACEMENT . . . . . . . . . . . . . . . . .16
(d) NON-iNSURANCE PAYMENTS RECEIVED ON ACCOUNT OF AN EVENT OF LOSS . . .18
(e) REQUISITION OF USE . . . . . . . . . . . . . . . . . . . . . . . . .19
(f) APPLICATION OF PAYMENTS DURING EXISTENCE OF EVENT OF DEFAULT . . . .19
Section 3.6. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . .19
(a) PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE . . . . . . . . . . .19
(b) INSURANCE AGAINST LOSS OR DAMAGE TO THE AIRCRAFT . . . . . . . . . .21
(c) REPORTS, ETC.. . . . . . . . . . . . . . . . . . . . . . . . . . . .23
(d) SELF-INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . .24
(e) ADDITIONAL INSURANCE BY THE COLLATERAL AGENT AND THE COMPANY . . . .24
(f) INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE . . . . . . . . .24
(g) APPLICATION OF PAYMENTS DURING EXISTENCE OF AN EVENT OF DEFAULT. . .25
Section 3.7. Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . .25
ARTICLE 4.
REMEDIES OF THE COLLATERAL AGENT
UPON AN EVENT OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . .25
Section 4.1. Event of Default . . . . . . . . . . . . . . . . . . . . . . .25
Section 4.2. Remedies with Respect to Collateral. . . . . . . . . . . . . .26
(a) REMEDIES AVAILABLE . . . . . . . . . . . . . . . . . . . . . . . . .26
(b) NOTICE OF SALE . . . . . . . . . . . . . . . . . . . . . . . . . . .28
(c) RECEIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
(d) CONCERNING SALES . . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 4.3. Waiver of Appraisement, etc., Laws . . . . . . . . . . . . . .28
Section 4.4. Application of Proceeds. . . . . . . . . . . . . . . . . . . .29
Section 4.5. Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . .29
Section 4.6. Discontinuance of Proceedings. . . . . . . . . . . . . . . . .30
ARTICLE 5.
INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Section 5.1. Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . .30
Section 5.2. Indemnity Obligations Secured by Collateral; Survival. . . . .31
ARTICLE 6.
INVESTMENT OF SECURITY FUNDS . . . . . . . . . . . . . . . . . . . . . . . .32
(ii)
Page
----
Section 6.1. Investment of Security Funds . . . . . . . . . . . . . . . . .32
ARTICLE 7.
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Section 7.1. No Legal Title to Collateral in Noteholder . . . . . . . . . .32
Section 7.2. Sale of the Aircraft by Collateral Agent is Binding. . . . . .32
Section 7.3. Benefit of Mortgage. . . . . . . . . . . . . . . . . . . . . .33
Section 7.4. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Section 7.5. Waiver; Amendment. . . . . . . . . . . . . . . . . . . . . . .34
Section 7.6. Obligations Absolute . . . . . . . . . . . . . . . . . . . . .34
Section 7.7. Successors and Assigns . . . . . . . . . . . . . . . . . . . .34
Section 7.8. Headings Descriptive . . . . . . . . . . . . . . . . . . . . .34
Section 7.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . .35
Section 7.10. Governing Law . . . . . . . . . . . . . . . . . . . . . . . .35
Section 7.11. Company's Duties. . . . . . . . . . . . . . . . . . . . . . .35
Section 7.12. Termination; Release. . . . . . . . . . . . . . . . . . . . .35
Section 7.13. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . .36
Section 7.14. The Collateral Agent. . . . . . . . . . . . . . . . . . . . .36
Section 7.15. Limited Obligations . . . . . . . . . . . . . . . . . . . . .36
(iii)
Page
----
Appendix A Definitions
Exhibit A Form of Aircraft Mortgage and Security Agreement
Supplement
Schedule I Schedule of Airframes as part of the Collateral
Schedule II Schedule of Engines as part of the Collateral
Schedule III Schedule of Countries for Permitted Lessees
(iv)
