Mortgage Financing Agreement

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EXHIBIT 10.6


EXECUTION COPY


AMENDED AND RESTATED MORTGAGE AND SECURITY AGREEMENT


DATED AS OF APRIL 27, 2005


MADE BY


WORLD AIR HOLDINGS, INC.,


WORLD AIRWAYS, INC.,


WORLD AIRWAYS PARTS COMPANY, LLC, AND


NORTH AMERICAN AIRLINES, INC.
AS GRANTORS


IN FAVOR OF


CITIBANK, N.A.,
AS COLLATERAL AGENT

 


TABLE OF CONTENTS


PAGE ARTICLE 1 DEFINITIONS .......................................................................... 7


Section 1.01 Definitions .................................................................... 7

ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE GRANTORS ....................................... 17


Section 2.01 Certificated Air Carrier; Maintenance and Location of Spare Parts; Section
1110 ................................................................................ 17
Section 2.02 Title to Collateral; Financing Statements ...................................... 18
Section 2.03 Location of Grantors; UCC Information .......................................... 18
Section 2.04 Perfected First Priority Liens ................................................. 18
Section 2.05 Consents ....................................................................... 19
Section 2.06 Possession of Pledged Equipment ................................................ 19
Section 2.07 Pledged Equity and Pledged Debt ................................................ 19
Section 2.08 Intellectual Property .......................................................... 20
Section 2.09 Deposit and Securities Accounts ................................................ 21

ARTICLE 3 COVENANTS OF THE COMPANY ............................................................. 21


Section 3.01 Maintenance and Operation; Possession; Insignia ................................ 21
Section 3.02 Replacement and Pooling of Parts; Alterations, Modifications and Additions ..... 26
Section 3.03 Use, Possession and Designated Locations of Spare Parts and Pledged
Equipment; Collateral Access Agreement ......................................... 28
Section 3.04 Insurance ...................................................................... 30
Section 3.05 Inspection ..................................................................... 34
Section 3.06 Changes in Locations, Name, etc ................................................ 34
Section 3.07 Pledged Receivables ............................................................ 35
Section 3.08 Pledged Equipment .............................................................. 36
Section 3.09 Delivery and Control of Pledged Equity and Pledged Debt ........................ 36
Section 3.10 Notices ........................................................................ 37
Section 3.11 Intellectual Property Collateral ............................................... 37
Section 3.12 Liens .......................................................................... 39
Section 3.13 Financing Statements ........................................................... 39
Section 3.14 Disposition of Collateral ...................................................... 39
Section 3.15 Further Assurances ............................................................. 39
Section 3.16 Performance .................................................................... 39

ARTICLE 4 EVENT OF LOSS ........................................................................ 40


Section 4.01 Event of Loss; Application of Payments and Proceeds ............................ 40

ARTICLE 5 REMEDIES ............................................................................. 44


Section 5.01 Remedies Available to Collateral Agent ......................................... 44
Section 5.02 Expenses ....................................................................... 46
Section 5.03 Waiver of Claims ............................................................... 47
Section 5.04 Discontinuance of Proceedings................................................... 48

 

ARTICLE 6 TERMINATION SECURITY AGREEMENT ....................................................... 48


Section 6.01 Termination of Security Agreement .............................................. 48

ARTICLE 7 MISCELLANEOUS ........................................................................ 49


Section 7.01 Notices ........................................................................ 49
Section 7.02 Governing Law .................................................................. 49
Section 7.03 Execution in Counterparts ...................................................... 49
Section 7.04 Amendments ..................................................................... 49
Section 7.05 Documentation .................................................................. 49
Section 7.06 Cash Collateral ................................................................ 49

SCHEDULES

Schedule 1.01 - Spare Engines Schedule 2.01 - Designated Locations Schedule 2.03 - UCC Information Schedule 2.05 - Consents Schedule 2.06 - Pledged Equipment Locations Schedule 2.07(a) - Initial Pledged Equity Schedule 2.07(b) - Initial Pledged Debt Schedule 2.08 - Intellectual Property Collateral Schedule 2.09 - Deposit and Securities Accounts Schedule 3. 01 - Countries Authorized for Domicile of Permitted Lessees

EXHIBITS

Exhibit A1 - Form of Mortgage and Security Agreement Supplement (Spare Engine) Exhibit A2 - Form of Mortgage and Security Agreement Supplement (Spare Parts) Exhibit B - Form of Intellectual Property Security Agreement Exhibit C - Form of Intellectual Property Security Agreement Supplement

 


AMENDED AND RESTATED MORTGAGE AND SECURITY AGREEMENT (as amended, modified, restated or otherwise supplemented from time to time in accordance with the terms hereof, the "Security Agreement" or "Agreement") dated as of April 27, 2005 made by WORLD AIR HOLDINGS, INC., a Delaware corporation ("Parent"). WORLD AIRWAYS, INC., a Delaware corporation (the "Company"), WORLD AIRWAYS PARTS COMPANY, LLC, a Delaware limited liability company ("World LLC"), and NORTH AMERICAN AIRLINES, INC., a Delaware corporation ("North American", and together with the Parent, the Company, and World LLC the "Grantors") in favor OF CITIBANK, N.A., acting solely in its capacity as Collateral Agent for the Board, the Lenders and the Supplemental Guarantor (as such terms are defined in the Loan Agreement referred to below) and as directed by the Board and the Lenders (the "Collateral Agent").


WITNESSETH:


WHEREAS, all capitalized terms used and not otherwise defined herein shall have the respective meanings set forth or referred to in Article 1 hereof;


WHEREAS, the Company, Parent (pursuant to the Joinder referenced below), Govco Incorporated, as Primary Tranche A Lender, Citibank, N.A., as Alternate Tranche A Lender and as Agent, Citicorp USA, Inc., as Tranche B Lender, Citicorp North America, Inc., as Govco Administrative Agent, Phoenix American Financial Services, Inc., as Loan Administrator, the Collateral Agent and the Air Transportation Stabilization Board are parties to that certain Loan Agreement dated as of December 30, 2003 (the "Original Loan Agreement"), as amended by that certain Amendment No. 1 and Waiver to Loan Agreement (the "Amendment") of even date herewith (the Amendment together with the Original Loan Agreement, the "Loan Agreement");


WHEREAS, in connection with the Original Loan Agreement, the Company, World LLC and the Collateral Agent executed and delivered that certain Mortgage and Security Agreement dated as of December 30, 2003 (as amended, modified, restated or otherwise supplemented from time to time in accordance with its terms prior to the date hereof, the; "Original Security Agreement"), which was duly recorded pursuant to Subtitle VII of Title 49 of the United States Code on January 12, 2004, and has been assigned Conveyance No. E003336;


WHEREAS, on January 10, 2005, Parent and the Company consummated a restructuring transaction pursuant to which all of the outstanding shares of common stock of the Company were automatically converted into shares of common stock of Parent, which resulted in the Company becoming a wholly-owned subsidiary of Parent, and in connection therewith, Parent executed and delivered, inter alia, that certain Joinder to Mortgage and Security Agreement dated as of January 10, 2005 (the "Joinder") pursuant to which Parent became a Grantor under, and agreed to be bound by the terms and provisions of, the Original Security Agreement;


WHEREAS, pursuant to that certain Stock Purchase Agreement dated as of April 27, 2005 among Parent, North American, and Dan McKinnon, individually and as trustee of the Dan and Janice McKinnon Family Trust dated January 15, 2005, as seller, Parent has acquired all

 

of the outstanding shares (the "Shares") of common stock of North American (the "Acquisition");


WHEREAS, it is a condition precedent to the Amendment that the Grantors shall have executed and delivered to the Collateral Agent this Security Agreement in order to, among other things, add North American as a Grantor;


WHEREAS, this Security Agreement amends and restates the Original Security Agreement;


WHEREAS, the Grantors wish to execute this Security Agreement to satisfy the condition described in the preceding paragraph and to grant certain first priority security interests in the Collateral in favor of the Collateral Agent for the ratable benefit and security of the Board and the Lenders; and


WHEREAS, all things necessary to make this Security Agreement the legal, valid and binding obligation of the Grantors and the Collateral Agent, for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened.


GRANTING CLAUSE


NOW, THEREFORE, THIS MORTGAGE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the principal of, interest on, and all other amounts due with respect to, the Loan, and to secure the performance and observance by each of the Grantors of all the agreements, covenants and provisions contained herein, in the Loan Agreement and in the other Loan Documents, and the prompt payment of any and all amounts from time to time owing hereunder, under the Loan Agreement and the other Loan Documents, and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, each Grantor 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 successors and assigns, for the ratable security and benefit of the Board, the Lenders and the Supplemental Guarantor, a security interest in and mortgage Lien on all estate, right, title and interest of such Grantor in, to and under the following described property, rights, interests and privileges, ownership of which is now held or hereafter acquired by such Grantor, and wherever located (which collectively, including all property hereafter specifically subjected to the Lien of the Security Documents by any instrument supplemental hereto, are herein called the "Collateral"):


(1) its Pledged Equipment;


(2) its Pledged Inventory;


(3) its Pledged Receivables and the Related Contracts;


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(4) its Security Collateral;


(5) its Account Collateral;


(6) its Intellectual Property Collateral and all other General
Intangibles;


(7) its Pledged Real Property;


(8) each Spare Engine (each such Spare Engine having 750 or more
rated take-off horsepower or the equivalent thereof) as the same is now
and will hereafter be constituted, whether now owned or hereafter
acquired, and whether or not any such Spare Engine shall be installed in
or attached to any airframe and all substitutions or replacements
therefor, as provided in this Security Agreement, together with all Parts
of whatever nature which are from time to time incorporated or installed
in or attached to the Spare Engines, whether now owned or hereafter
acquired, and all renewals, substitutions, replacements, additions,
improvements, accessories and accumulations with respect to any of the
foregoing;


(9) all Spare Parts, whether now owned or hereafter acquired by
such Grantor, including any replacements, substitutions or renewals
therefor, and Accessions thereto, including but not limited to those spare
parts located at the Designated Locations described on Schedule 2.01
attached hereto and incorporated herein by reference or any supplement or
amendment thereto supplied hereunder or in any Mortgage and Security
Agreement Supplement (Spare Parts) executed and delivered from time to
time hereunder;


(10) without limiting the generality of the foregoing, all
requisition proceeds (including, without limitation, all payments and
proceeds or other revenues or income under the Civil Reserve Air Fleet
Program) with respect to any Collateral and all insurance proceeds with
respect to any loss of or damage to any Collateral;


(11) the Purchase Agreements and the Warranty Bills of Sale;


(12) the rights of such Grantor under any warranty, indemnity or
agreement, express or implied, regarding title, materials, workmanship,
design or patent infringement or related matters in respect of any
Collateral (other than a warranty, indemnity or other such agreement
which, by its terms, cannot be transferred or encumbered without resulting
in its termination or causing a default or breach thereunder);


(13) all repair, maintenance and inventory records, logs, manuals
and all other documents and materials similar thereto (including, without
limitation, any such records, logs, manuals, documents and materials that
are in electronic format or are computer print-outs) at any time
maintained, created or used by such Grantor (including, without
limitation, all records, logs, documents and other materials required at
any time to be maintained by such Grantor pursuant to the FAA or under the
Federal Aviation Act) ("Records");


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(14) all moneys and securities now or hereafter paid or deposited
or required to be paid or deposited to or with the Collateral Agent by or
for the account of such Grantor pursuant to any term hereof or of any
other Loan Document and held or required to be held by the Collateral
Agent hereunder or thereunder;


(15) all right, title, interest, claims and demands of such Grantor
as lessor in, to and under any lease of any Spare Engines or other
Collateral;


(16) all other real and personal property of every kind and nature
of such Grantor; and


(17) all substitutions, replacements, Accessions, and Proceeds of
any of the foregoing; provided, however, that in no event shall this
Security Agreement create a leasehold mortgage or other security or lien
interest with respect to, and the term "Collateral" shall at all times
exclude, the Excluded Assets.


HABENDUM CLAUSE


TO HAVE AND TO HOLD all and singular the aforesaid property unto the Collateral Agent, its successors and assigns, and for the uses and purposes and subject to the terms and provisions set forth in this Security Agreement.


(1) It is expressly agreed that, anything herein contained to the contrary notwithstanding, each Grantor shall remain liable under each of the contracts and agreements included in the Collateral to which such Grantor is a party to perform all of the obligations assumed by such Grantor thereunder, all in accordance with and pursuant to the terms and provisions thereof, and the Collateral Agent shall have no obligation or liability under any of such contracts and agreements by reason of or arising out of the collateral assignment hereunder, nor shall the Collateral Agent be required or obligated in any manner to perform or fulfill any obligations of such Grantor under any of such contracts and agreements to which such Grantor is a party, or, except as herein expressly provided or as may be required by law, 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 be entitled at any time or times.


(2) Each Grantor does hereby constitute the Collateral Agent as its true and lawful attorney, irrevocably, for good and valuable consideration and coupled with an interest and with full power of substitution (in its name or otherwise) subject to the terms and conditions of this Security Agreement, to ask, require, demand, receive, sue for, compound and give acquittance for any and all moneys and claims for moneys due and to become due to it under or arising out of the Loan Documents, to endorse any checks or other instruments or orders in connection therewith, to file any claims or take any action or institute any proceedings which the Collateral Agent may deem to be necessary or advisable in the premises as fully as such Grantor itself could do; provided that the Collateral Agent shall not exercise any of such rights or take any of such actions except upon the occurrence and during the continuance of an Event of Default.


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(3) Each Grantor hereby authorizes the Collateral Agent to file one or more financing or continuation statements, including, without limitation, a UCC-1 financing statement, and any amendments thereto and continuations thereof, each of which may indicate that such financing statements cover all assets or all personal property (or words of similar effect) of such Grantor other than Excluded Assets, in each case without the signature of such Grantor, and regardless of whether any particular asset described in such financing statements falls within the scope of the UCC or the Granting Clause of this Agreement. Each Grantor ratifies its authorization for the Collateral Agent to have filed such financing statements, continuation statements or amendments prior to the date hereof.


(4) Each Grantor agrees that at any time and from time to time, at its sole cost and expense, upon the written request of the Collateral Agent, it will promptly and duly execute, deliver, file and record (as applicable) any and all such further agreements, certificates, instruments and documents as may be necessary or which the Collateral Agent may reasonably request in order to create, preserve, perfect (or better perfect), confirm or validate the security interests in the Collateral or to enable the Collateral Agent to obtain the full benefits of this Security Agreement and the other Security Documents or to enable the Collateral Agent lawfully to enforce any of its rights, powers, and remedies hereunder or thereunder with respect to any of the Collateral (provided that the Collateral Agent shall not exercise any of such remedies except upon the occurrence and during the continuance of an Event of Default), including, without limitation, to enable the Collateral Agent to comply at any time with the Assignment of Claims Act in respect of an assignment of (i) the Pledged Receivable owing to the Company under the Air Mobility Command Agreement or (ii) any Pledged Receivable owing to North American under a North American AMC Agreement, it being acknowledged and agreed that the Collateral Agent is expressly authorized to unilaterally exercise or cause to be exercised any and all rights of a Secured Party hereunder or under applicable law, including the filing of UCC financing statements (or any amendment thereto) in respect of any of the Collateral. Without limiting the generality of the foregoing, except as otherwise provided in clause (5) of this Habendum Clause, each Grantor will: (i) at the written request of the Collateral Agent during the continuance of a Specified Default or Event of Default, mark conspicuously each document included in Pledged Inventory, each Chattel Paper included in Pledged Receivables, each Related Contract, and each of its records pertaining to such Collateral with a legend, in form and substance reasonably satisfactory to the Collateral Agent, indicating that such document, Chattel Paper, Related Contract, or Collateral is subject to the security interest granted hereby; (ii) execute or authenticate (to the extent required) and file, or authorize the filing of (to the extent authorization is required) such financing or continuation statements, or amendments thereto, and such other instruments or notices, as the Collateral Agent may reasonably request, in order to perfect and preserve the security interest granted or purported to be granted by such Grantor hereunder; (iii) take all action reasonably necessary to ensure that the Collateral Agent has control of Collateral consisting of Deposit Accounts, Securities Accounts, Commodity Accounts, Investment Property, and at the written request of the Collateral Agent during the continuance of a Specified Default or Event of Default, Electronic Chattel Paper and Letter-of-Credit Rights, as provided in Sections 9-104, 9-105, 9-106 and 9-107 of the UCC; (iv) take all action reasonably necessary to ensure that the Collateral Agent's security interest is noted on any Certificate of Title related to any Collateral evidenced by a Certificate of Title; (v) at the written request of the Collateral Agent, cause the Collateral Agent to be the beneficiary under all letters of credit that constitute Collateral, with the exclusive right to make all draws under such letters of credit, and with all


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rights of a transferee under Section 5-114(e) of the UCC; and (vi) deliver to the Collateral Agent evidence that all other action that the Collateral Agent may deem reasonably necessary in order to perfect and protect the security interest created by such Grantor in the Collateral under this Agreement has been taken.


(5) Anything herein to the contrary notwithstanding, unless requested by the Collateral Agent upon the occurrence and during the continuance of a Specified Default or Event of Default, the Grantors shall not be obligated to perfect the security interest of the Collateral Agent in any of the following Collateral: (i) any Deposit Account or Securities Account with respect to which the Grantors are not required to enter into a Control Agreement pursuant to Section 5.17 of the Loan Agreement; (ii) any Pledged Real Property which has a net book value of less than $200,000; and (iii) any Motor Vehicles other than a Motor Vehicle acquired after the date of this Agreement at a cost in excess of $200,000.


(6) It is hereby further agreed that any and all property described or referred to in the Granting Clause hereof which is hereafter acquired by the Grantors shall ipso facto, and without any other conveyance, assignment or act on the part of the Grantors or the Collateral Agent, become and be subject to the Lien herein granted as fully and completely as though specifically described herein.


(7) Anything herein to the contrary notwithstanding, in no event shall the security interest granted under this Security Agreement attach to any (i) Excluded Assets or (ii) any right in any agreement (A) the grant of a security interest in which would violate the agreement under which such right arises if such Grantor has failed to obtain a waiver or other relief from such provision (except to the extent such provision would be rendered ineffective under Sections 9-406, 9-407, 9-408 or 9-409 of the UCC), so long as such Grantor has used commercially reasonable efforts to obtain such waiver or other relief (without obligation to incur more than immaterial costs or expenses in connection with such commercially reasonable efforts) or (B) to the extent that the pledge or assignment of such agreement requires the consent of any third party, unless such third party has consented thereto (except to the extent such consent requirement would be rendered ineffective under Sections 9-406, 9-407, 9-408 or 9-409 of the UCC), so long as such Grantor has used commercially reasonable efforts to obtain such consent (without obligation to incur more than immaterial costs or expenses in connection with such commercially reasonable efforts); provided, however, that such security interest shall attach immediately at such time as the relevant provision or requirement is no longer applicable and, to the extent such agreement is severable, shall attach immediately to any portion of such agreement that does not result in any of the consequences specified in (A) or (B) above.


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IT IS HEREBY FURTHER COVENANTED AND AGREED by and among the parties hereto as follows:


ARTICLE 1


DEFINITIONS


SECTION 1.01 DEFINITIONS.


(a) For all purposes of this Security Agreement, except as otherwise expressly provided or unless the context otherwise requires:


(i) each of the "Company," "World LLC," "Parent," "North
American," and "Collateral Agent," or any other Person includes, without
prejudice to the provisions of any Loan Documents, any successor in
interest to it and any permitted transferee, permitted purchaser or
permitted assignee of it;


(ii) the terms defined in this Article 1 have the meanings
assigned to them in this Article 1, and include the plural as well as the
singular;


(iii) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles in the United States;


(iv) the words "herein," "hereof and "hereunder" and other
words of similar import refer to this Security Agreement as a whole and
not to any particular Article, Section or other subdivision;


(v) all references in this Security Agreement to Articles,
Sections, Schedules and Exhibits refer to Articles, Sections, Schedules
and Exhibits of this Security Agreement; and


(vi) all references in this Security Agreement to Schedules
and Exhibits refer to such Schedules and Exhibits as such Schedules and
Exhibits may be amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof.


(b) The terms "aircraft," "aircraft engine," "appliance" and "cargo" shall have the respective meanings ascribed thereto in Section 40102 of Chapter 401 of Title 49 of the United States Code and the term "engine" shall include an "aircraft engine" as defined therein.


(c) The term "UCC" means the Uniform Commercial Code as in effect on the date hereof in the State of New York; provided, however, that if by reason of mandatory provisions of law, the perfection or the effect of perfection or non-perfection of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, then for purposes of the provisions hereof relating to such perfection or the effect of perfection or non-perfection of any security interest the term "UCC" shall mean the Uniform Commercial Code as in effect in such other jurisdiction. References


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herein to Article 9 of the UCC shall include such Article however numbered in any relevant jurisdiction.


(d) Unless the context otherwise requires, the terms "Accessions," "Account," "Certificate of Title," "Chattel Paper," "Commodity Account," "Commodity Contract," "Deposit Account," "Electronic Chattel Paper," "Equipment," "Fixtures," "General Intangibles," "Goods," "Health-Care Insurance Receivables," "Instruments," "Inventory," "Investment Property," "Letter-of-Credit Right," "Payment Intangibles," "Promissory Note," "Registered Organization," "Secured Party," "Securities Account," "Security Entitlement," "Software" and "Tangible Chattel Paper" shall have the respective meanings ascribed thereto in Article 9 of the UCC.


(e) Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Loan Agreement.


(f) For all purposes of this Security Agreement, the following capitalized terms have the following respective meanings:


"Acceptable Alternate Spare Engine" means an engine of at least the same value, utility and remaining useful life (except for maintenance cycle condition) as the Spare Engine it is replacing assuming such Spare Engine was of the value, utility and remaining useful life (except for maintenance cycle condition) required by the terms of this Security Agreement.


"Account Collateral" means the following property of the Grantors:


(i) the Cash Collateral Account and all Deposit Accounts, Securities Accounts and Commodity Accounts and all funds and financial assets from time to time credited thereto (including, without limitation, all cash equivalents), all interest, dividends, distributions, cash, Instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such funds and financial assets, and all certificates and Instruments, if any, from time to time representing or evidencing such Accounts;


(ii) all certificates of deposit and other Instruments from time to time delivered to or otherwise possessed by the Collateral Agent for or on behalf of any Grantor, including, without limitation, those delivered or possessed in substitution for or in addition to any or all of the then existing Account Collateral; and


(iii) all interest, distributions, cash, Instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Account Collateral.


"Account Debtor" means a Person obligated to pay a Grantor in respect of a Pledged Receivable.


"Acquisition" has the meaning specified in the recitals to this Agreement.


"Additional Insured" means each Lender, the Board, the Collateral Agent, the Agent, the Supplemental Guarantor, the Loan Administrator and each of their respective


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Affiliates, successors and permitted assigns, and the respective directors, officers and employees of each of the foregoing.


"Additional Parts" has the meaning assigned thereto in Section 3.02(c).


"After-Acquired Intellectual Property" has the meaning assigned thereto in Section 3.11(f).


"Amendment" has the meaning specified in the recitals to this Agreement.


"Appliances" means an instrument, Equipment, apparatus, part, appurtenance, or accessory used, capable of being used, or intended to be used in operating or controlling aircraft in flight, including a parachute, communication equipment, and any other mechanism installed in or attached to aircraft during flight, and not part of an aircraft or engine.


"Bankruptcy Default" means any event or condition which is, or upon notice, lapse of time or both would, unless cured or waived, become, an Event of Default under clauses (f), (g), (p) or (q) of Section 7.1 of the Loan Agreement.


"Certificated Air Carrier" means a Person holding an air carrier operating certificate issued by the Secretary of Transportation of the United States pursuant to Chapter 447 of Title 49 of the United States Code or any analogous successor provision of the United States Code, for aircraft capable of carrying ten or more individuals or 6,000 pounds or more of cargo.


"CFC" means a "controlled foreign corporation" under Section 957 of the Internal Revenue Code.


"Citigroup Paper" has the meaning assigned thereto in Section 7.06(i).


"Civil Reserve Air Fleet Program" means the Civil Reserve Air Fleet Program administered by the United States Government pursuant to Executive Order No. 11490, as amended, or any substantially similar program.


"Clearing Agency" has the meaning assigned thereto in Section 7.06(h).


"Collateral" has the meaning assigned thereto in the Granting Clause hereof.


"Collateral Agent" has the meaning assigned thereto in the preamble to this Agreement.


"Company" has the meaning assigned thereto in the preamble to this Agreement.


"Designated Locations" means (i) the locations in the United States designated from time to time by a Grantor at which it may keep Spare Parts (other than Spare parts kept in the Fly Away Kits), which initially shall be the locations set forth on part (a) of Schedule 2.01, and (ii) with respect to Spare Parts which are stored in the Fly Away Kits, (A) the aircraft identified on part (b) of Schedule 2.01 on which such Fly Away Kits may be kept from time to time (it being acknowledged that no claim is being made against any of such aircraft) and (B) the


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airports or other locations in the U.S. identified on part (b) of Schedule 2.01 at which such aircraft are generally located while not in actual flight; and in the case of each of (i) and (ii), the additional locations designated by a Grantor pursuant to Section 3.03(c) hereof.


"Disposition" has the meaning assigned thereto in Section 3.14.


"Equity Interests" means, with respect to any Person, all Capital Stock of such Person, all warrants, options or other rights for the purchase or acquisition from such Person of its Capital Stock, all securities convertible into or exchangeable for such Person's Capital Stock and all of the other ownership or profit interests in such Person.


"Event of Loss" means, with respect to any Collateral, any of the following events with respect to such property (as applicable): (i) the loss of such property or of the use thereof due to the destruction of or damage to such property which renders repair uneconomic or which renders such property permanently unfit for normal use 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 for the lesser of (A) a period in excess of sixty (60) consecutive days, (B) the period to the date when the Net Insurance Proceeds with respect to such property are paid to the Collateral Agent, or (C) the period to the date when a Grantor has confirmed to the Collateral Agent in writing that it cannot recover such property; (iv) the confiscation, condemnation or seizure of, or requisition of, title to such property by any Governmental Authority or purported Governmental Authority; (v) the confiscation, condemnation or seizure of, or requisition of, use of such property by any Governmental Authority or purported Governmental Authority, which shall have resulted in the loss of possession of such property by a Grantor for a period in excess of six months; and (vi) any other event which constitutes an Event of Loss hereunder.


"Excluded Assets" means (i) any of the Company's or any of its Affiliate's interest in any Capital Lease or Operating Lease of Aircraft Related Equipment or in any deposits, reserves or other payments or proceeds thereunde...

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