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Aircraft Mortgage And Security Agreement

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Sectors: Transportation
Governing Law: New York, View New York State Laws
Effective Date: September 21, 2005
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AIRCRAFT MORTGAGE AND SECURITY AGREEMENT





Dated as of September 21, 2005





between





SKYWEST AIRLINES, INC.,

as Borrower





and





C.I.T. LEASING CORPORATION,

Security Trustee










Four Bombardier Regional Jet Model CL-600-2B19 Aircraft

U.S. Registration Numbers: N698BR, N699BR, N709BR and N710BR

Corresponding Manufacturer92s Serial Numbers: 7799, 7801, 7850, 7852













TABLE OF CONTENTS



ARTICLE I
ARTICLE II
SECTION 2.01. Notes
SECTION 2.02. Terms of Notes
SECTION 2.04. Method of Payment
SECTION 2.05. Application of Payments
SECTION 2.06. Termination of Interest in Indenture Estate
SECTION 2.07. Registration, Transfer and Exchange of Notes
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Notes
SECTION 2.09. Payment of Expenses on Transfer
SECTION 2.10. Prepayment
SECTION 2.11. Provisions Relating to Prepayment
SECTION 2.12. Notes in Respect of Replacement Aircraft
SECTION 2.13. Increased Regulatory Costs; Illegality
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE INDENTURE ESTATE
SECTION 3.01. Principal and Interest Distribution
SECTION 3.02. Prepayment, Event of Loss and Replacement, Insurance Proceeds
SECTION 3.03. Payment After Event of Default, etc.
SECTION 3.04. Certain Payments
SECTION 3.05. Other Payments
SECTION 3.06. Payments to Borrower
SECTION 3.07. Investment of Amounts Held by Security Trustee
ARTICLE IV COVENANTS; EVENTS OF DEFAULT; REMEDIES OF SECURITY TRUSTEE
SECTION 4.01. Covenants of Borrower
SECTION 4.02. Event of Default
SECTION 4.03. Remedies
SECTION 4.04. Remedies Cumulative
SECTION 4.05. Discontinuance of Proceedings
SECTION 4.06. Waiver of Past Defaults
SECTION 4.07. Engine Warranties and Aircraft Warranties
ARTICLE V DUTIES OF SECURITY TRUSTEE
SECTION 5.01. Notices
SECTION 5.02. Action Upon Instructions
SECTION 5.03. Indemnification
SECTION 5.04 No Duties Except as Specified in Indenture or Instructions
SECTION 5.05. No Action Except Under Operative Documents or Instructions
SECTION 5.06. Replacement Airframes and Replacement Engines
SECTION 5.07. Indenture Supplements for Replacements
SECTION 5.08. Effect of Replacement
ARTICLE VI SECURITY TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties
SECTION 6.02. Absence of Duties
SECTION 6.03. No Representations or Warranties as to Aircraft or Documents
SECTION 6.04. No Segregation of Monies; No Interest
SECTION 6.05. Reliance; Agents; Advice of Counsel
SECTION 6.06. Capacity in Which Acting
SECTION 6.07. Compensation
SECTION 6.08. May Become Certificate Holder
SECTION 6.09. Further Assurances; Financing Statements
ARTICLE VII SUCCESSOR TRUSTEES; SEPARATE TRUSTEES









SECTION 7.01. Resignation of Security Trustee; Appointment of Successor
SECTION 7.02. Appointment of Separate Trustees
ARTICLE VIII SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS
SECTION 8.01. Instructions of Majority; Limitations
SECTION 8.02. Trustees Protected
SECTION 8.03. Documents Mailed to Certificate Holders
SECTION 8.04. No Request Necessary for Indenture Supplement
ARTICLE IX MISCELLANEOUS
SECTION 9.01. Termination of Indenture
SECTION 9.02. No Legal Title to Indenture Estate in Certificate Holders
SECTION 9.03. Sale of Aircraft by Security Trustee is Binding
SECTION 9.04. Indenture for Benefit of Security Trustee, Borrower and Certificate Holders
SECTION 9.05. Quiet Enjoyment
SECTION 9.06. Notices
SECTION 9.07. Severability
SECTION 9.08. No Oral Modifications or Continuing Waivers
SECTION 9.09. Successors and Assigns
SECTION 9.10. Headings
SECTION 9.11. Governing Law
SECTION 9.12. Counterpart Form
SECTION 9.13. Entire Agreement
SECTION 9.14. Waiver Of Jury Trial
SECTION 9.15. Submission to Jurisdiction
SECTION 9.16. Payment in Dollars

Appendix A 96 Definitions









AIRCRAFT MORTGAGE AND SECURITY AGREEMENT



THIS AIRCRAFT MORTGAGE AND SECURITY AGREEMENT (this " Agreement " or this " Mortgage "), dated as of September , 2005, between SkyWest Airlines, Inc., a Utah corporation (" Borrower "), and C.I.T. Leasing Corporation, in its individual capacity only as expressly provided herein and otherwise as Security Trustee (the "Security Trustee").





W I T N E S S E T H :



WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof;



WHEREAS, Borrower desires by this Mortgage, among other things, (i) to provide for the issuance by Borrower to Lender of Notes evidencing the Loan for the Aircraft as provided in the Loan Agreement, and (ii) to provide for the assignment, mortgage and pledge by Borrower to Security Trustee, as part of the Mortgage Estate hereunder, among other things, of certain of Borrower92s right, title and interest in and to the Aircraft and the Borrower Documents and the payments and other amounts received thereunder or in respect thereof in accordance with the terms hereof, as security for, among other things, Borrower92 s obligations to the Note Holders, and for the benefit and security of the Note Holders;



WHEREAS, all things have been done to make the Notes, when executed by Borrower and authenticated, issued and delivered hereunder, the valid obligations of Borrower; and



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





GRANTING CLAUSE



NOW, THEREFORE, THIS AIRCRAFT MORTGAGE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment when due of the principal of and the Breakage Amount (if any) and interest on, and all other amounts due with respect to, all Notes from time to time outstanding hereunder and the performance and observance by Borrower of all the agreements, covenants and provisions for the benefit of the Note Holders herein and in the Loan Agreement and the Notes contained, and the prompt payment and performance of any and all obligations from time to time owing hereunder and under the Loan Agreement and the other Operative Documents by Borrower to the Note Holders (collectively referred to herein as, the " Secured Obligations "), 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 the acceptance of the Notes by the Note Holders, and of the sum of $1 and other valuable consideration paid to Borrower by Security Trustee at or before the delivery hereof, the receipt whereof is hereby acknowledged, Borrower 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 Security Trustee and its successors and assigns, for the security and benefit of the Note Holders, as aforesaid, a security interest in and mortgage Lien upon, all right, title and interest of Borrower in, to and under the following described property, rights and privileges and subject to the rights of Borrower set forth herein (which collectively, including all property hereafter specifically subjected to the Lien of this Mortgage by a Mortgage Supplement or any other mortgage supplemental hereto, shall constitute the " Mortgage Estate "), to wit:



1. the Aircraft (including the Airframe and the Engines) and all replacements thereof and substitutions therefor to which Borrower shall from time to time acquire title as








provided herein, all as more particularly described in the Mortgage Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Mortgage, and all records, logs and other documents at any time maintained with respect to the foregoing property;



2. the Warranties;



3. all tolls, rents, issues, profits, revenues and other income of the property subjected or required to be subjected to the Lien of this Mortgage;



4. all insurance and requisition proceeds and all other payments of any kind with respect to the Aircraft, including but not limited to the insurance required under Section 4.01(e) hereof;



5. all monies and securities deposited or required to be deposited with Security Trustee pursuant to any term of this Mortgage or required to be held by Security Trustee hereunder; and



6. all proceeds of the foregoing.





All property referred to in this Granting Clause, whenever acquired by Borrower, shall secure all Secured Obligations. Any and all properties referred to in this Granting Clause which are hereafter acquired by Borrower, shall, without further conveyance, assignment or act by Borrower or Security Trustee thereby become and be subject to the security interest hereby granted as fully and completely as though specifically described herein.



HABENDUM CLAUSE



TO HAVE AND TO HOLD all and singular the aforesaid property unto Security Trustee, its successors and assigns, in trust for the benefit and security of the Note Holders, 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, Borrower shall remain liable under the Borrower Documents to perform all of the obligations assumed by it thereunder, all in accordance with and pursuant to the terms and provisions thereof, and Security Trustee and the Note Holders shall have no obligation or liability under any thereof by reason of or arising out of the assignment hereunder, nor shall the Security Trustee or Note Holders be required or obligated in any manner to perform or fulfill any obligations of Borrower under or pursuant to any of the Borrower Documents, except as therein or 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 be entitled at any time or times.



Borrower hereby constitutes Security Trustee the true and lawful attorney of Borrower, irrevocably, with full power (in the name of Borrower or otherwise) to ask, require, demand, receive, compound and give acquittance for any and all monies and claims for monies (in each case including insurance and requisition proceeds) due and to become due under or arising out of the Borrower Documents and all other property which now or hereafter constitutes part of the Mortgage Estate, 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 proceedings which Security Trustee may deem to be necessary or advisable in the premises. Borrower agrees that promptly on receipt thereof, it will transfer to Security Trustee any










and all monies from time to time received by it constituting part of the Mortgage Estate, for distribution by Security Trustee pursuant to this Mortgage.



Borrower does hereby warrant and represent that (except as permitted herein) it has not assigned or pledged any of its right, title, and interest hereby assigned to anyone other than Security Trustee.



Borrower does hereby ratify and confirm the Borrower Documents and does hereby agree that (except as permitted herein) it will not take or omit to take any action, the taking or omission of which would result in an alteration or impairment of any of the Borrower Documents or of any of the rights created by any thereof or the assignment hereunder.



Borrower agrees that at any time and from time to time, upon the written request of Security Trustee, Borrower will promptly and duly execute and deliver any and all such further instruments and documents as Security Trustee may deem desirable in obtaining the full benefits of this assignment and of the rights and powers herein granted.



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





ARTICLE I

DEFINITIONS



For all purposes of this Mortgage, terms defined in the heading and recitals of this Mortgage are used as so defined and capitalized terms used herein shall have the respective meanings set forth in Appendix A hereto for all purposes of this Mortgage (such definitions to be equally applicable to both the singular and plural forms of the terms defined). Any agreement referred to below shall mean such agreement as amended, supplemented and modified from time to time in accordance with the applicable provisions thereof and of the other Operative Documents. Unless otherwise specified, Section and Article references are to Sections and Articles of this Mortgage. Appendix A and each of Exhibits A through F attached hereto are hereby incorporated herein by this reference.





ARTICLE II

THE NOTES



SECTION 2.01. Notes . The Notes and Security Trustee92s form of certificate of authentication to appear on the Notes shall each be substantially in the form set forth on Exhibit B . On the Closing Date, Borrower shall issue a Note to Lender in an aggregate original principal amount in Dollars equal to the Loan. Such Note shall be subject to the terms and conditions set forth in this Article II.



SECTION 2.02. Terms of Notes .



(a) Interest Rate . The Notes shall bear interest at the Floating Rate.



(b) [intentionally omitted]



(c) Floating Rate Loan . The following terms shall apply to a Floating Rate Loan:



(i) Each Note shall bear interest on the unpaid principal amount thereof from time to time outstanding from and including the date thereof until such principal amount is paid in full at the Floating Rate applicable to each Interest Period in effect with respect thereto. Such interest on the Note shall accrue with respect to each Interest Period at the Applicable Rate in effect for such Interest Period and shall be due and payable in arrears on each Payment Date noted in Annex A to each Note.










The Floating Rate in respect of each Interest Period shall be determined by the Security Trustee by reference to the definition of Floating Rate. Security Trustee shall provide written notice to the Borrower of the amount of interest due on each Payment Date no fewer than five (5) business days prior to that Payment Date (and if such notice is not timely received, Borrower shall be deemed to have paid the amount of interest due for the applicable Interest Period if it, at its election, (i) pays an amount equal to the interest payment for the prior Interest Period, or (ii) pays an amount equal to the interest due for the applicable Interest Period as reasonably calculated by Borrower in good faith). Notwithstanding the foregoing, the final payment on the Notes shall be an amount sufficient to discharge in full the unpaid principal amount, all accrued and unpaid interest and all other amounts due and owing to all Note Holders under the Operative Documents.



(ii) [intentionally omitted]



(iii) Interest shall be calculated on the basis of a year of 360 days and the actual number of days elapsed.



(d) Each Note shall bear interest at the Past Due Rate on any principal thereof and interest and other amounts due thereunder, hereunder and under the other Operative Documents, not paid when due (whether at stated maturity, by acceleration or otherwise), for any period during which the same shall be overdue, payable on demand by the Note Holder given through Security Trustee. Interest on past-due amounts shall be calculated on the basis of a year of 360 days and the actual days elapsed. In the event the principal of or interest on a Note or other amount payable thereunder or hereunder is not paid in full when due (whether at stated maturity, by acceleration or otherwise), the period applicable to the Past Due Rate shall be either (i) a period commencing on the due date of such principal, interest or other amount and ending on the next succeeding Business Day and thereafter each period commencing on the last day of the preceding period and ending on the next succeeding Business Day, or (ii) such other period or periods (not greater than six months) as the Security Trustee may, at any time and from time to time during the period the same remains past-due, select in its sole discretion for the purpose of determining the Past Due Rate therefor.



(e) The Notes shall be executed on behalf of Borrower by one of its authorized officers. Notes bearing the signatures of individuals who were at any time the proper officers of Borrower shall bind Borrower, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the respective dates of such Notes. No Notes shall be issued hereunder except those provided for in Section 2.01 and any Notes issued in exchange or replacement therefor pursuant to the terms of this Mortgage. Each Note issued under Section 2.01 , Section 2.07 or Section 2.08 shall be dated the Closing Date. No Note shall be secured by or entitled to any benefit under this Mortgage or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication in the form provided for herein executed by Security Trustee by the manual signature of one of its authorized officers and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder.



SECTION 2.03. [intentionally omitted]



SECTION 2.04. Method of Payment . Principal and interest and other amounts due hereunder or under the Notes or in respect hereof or thereof shall be payable in Dollars in immediately available funds prior to 11:15 A.M., New York City time, on the due date thereof, to Security Trustee at such account or accounts at such financial institution or institutions as the Note Holders shall have designated to Security Trustee in writing, in immediately available funds for distribution to the relevant Note Holders, such payment to be made, in the case of any such designated account in New York City, New York, prior to








2:00 P.M., New York City time, on the due date thereof. If Security Trustee, through negligence or willful misconduct, shall fail to make any such payment as provided in the preceding sentence after its receipt of funds at the place and prior to the time specified above, Security Trustee, in its individual capacity and not as trustee, agrees to compensate the Note Holders for loss of use of funds in a commercially reasonable manner, and Borrower shall have no liability for and the Mortgage Estate shall not secure any such loss or any overdue interest on the Notes in connection with any such failure of Security Trustee to timely distribute funds. All such payments by Borrower and Security Trustee shall be made free and clear of and without reduction for account of all wire and other like charges. Prior to the due presentment for registration of transfer of any Note, Borrower and Security Trustee may deem and treat the Person in whose name any Note is registered on the Note Register as the absolute owner of such Note for the purpose of receiving payment of all amounts payable with respect to such Note and for all other purposes whether or not such Note shall be overdue, and neither Borrower nor Security Trustee shall be affected by any notice to the contrary. If any sum payable under the Notes or under this Mortgage falls due on a day which is not a Business Day, then such sum shall be payable on the next succeeding Business Day together with interest thereon at the Applicable Rate from and including the scheduled due date to but excluding such next succeeding Business Day; provided , that if such succeeding Business Day falls into the next calendar month, such payment shall be made on the preceding Business Day.



SECTION 2.05. Application of Payments . Each payment of principal and interest or other amounts due in respect of each Note shall, except as otherwise expressly provided herein, be applied, first , to the payment of any amount (other than the principal of or the Breakage Amount, if any, or interest on such Note) due in respect of such Note, second , to the payment of the Breakage Amount, if any, and interest on such Note (as well as any interest on overdue principal and, to the extent permitted by law, interest and other amounts payable thereunder) due thereunder, third , to the payment of the principal of such Note then due and fourth , the balance, if any, remaining thereafter, to the payment of the principal of such Note remaining unpaid ( provided that such Note shall not be subject to prepayment or purchase without the consent of the affected Note Holder except as permitted by Sections 2.10 and 2.11 ).



SECTION 2.06. Termination of Interest in Mortgage Estate . A Note Holder shall not, as such, have any further interest in, or other right with respect to, the Mortgage Estate when and if the principal amount of and the Breakage Amount, if any, and interest on and other amounts due under all Notes held by such Note Holder and all other sums due to such Note Holder hereunder and under the other Operative Documents shall have been paid in full.



SECTION 2.07. Registration, Transfer and Exchange of Notes . Security Trustee agrees with Borrower that Security Trustee shall keep a register (herein sometimes referred to as the " Note Register ") in which provisions shall be made for the registration of Notes and the registration of transfers of Notes. The Note Register shall be kept at the offices of Security Trustee or at the office of any successor Security Trustee, and Security Trustee is hereby appointed " Note Registrar " for the purpose of registering Notes and transfers of Notes as herein provided. Upon surrender for registration of transfer of any Note at the offices, Borrower shall execute, and Security Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of a like aggregate principal amount. At the option of the Note Holder, its Notes may be exchanged for other Notes of any authorized denominations, of a like aggregate principal amount, upon surrender of the Notes to be exchanged at the offices. Each new Note issued upon transfer or exchange shall be in a principal amount of at least $1,000,000 (except as may be necessary to evidence the entire outstanding principal amount of a Note) and dated the Closing Date. Whenever any Notes are so surrendered for exchange, Borrower shall execute, and Security Trustee shall authenticate and deliver, the Notes which the Note Holder making the exchange is entitled to receive. All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of Borrower evidencing the same respective obligations, and entitled to the same security and










benefits under this Mortgage, as the Notes surrendered upon such registration of transfer or exchange. Every Note presented or surrendered for registration of transfer or exchange, shall (if so required by Security Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to Security Trustee duly executed by the Note Holder thereof or his attorney duly authorized in writing, and Security Trustee may require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act. Security Trustee shall make a notation on each new Note or Notes of the amount of all payments of principal previously made on the old Note or Notes with respect to which such new Note is issued and the date to which interest accrued on such old Note or Notes has been paid. Security Trustee shall not be required to register the transfer of or exchange any surrendered Notes as above provided during the ten calendar day period preceding the due date of any payment on such Notes.



Borrower and Security Trustee shall treat the Person in whose name each Note is registered on the Note Register as the Note Holder with respect thereto for all purposes hereof until due presentment for registration of transfer as provided in this Section 2.07 . Security Trustee shall give Borrower and each Note Holder prompt notice of such transfer of a Note under this Section 2.07 . Each Note Holder, by its acceptance of a Note, agrees that any transfer of any Note acquired by it hereunder shall not be effected unless the transferee shall have delivered to Borrower and Security Trustee (1) a written representation as to the matters specified in Section 7(b) and 7(d) of the Loan Agreement and, notwithstanding the above, such transferee by its acceptance of a Note shall be deemed to have made such a representation and (2) an agreement to be bound by and comply with the provisions of the Loan Agreement and this Mortgage binding on a "Lender" or "Note Holder" and, notwithstanding the above, such transferee by its acceptance of a Note shall be deemed to have made such agreement.



SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Notes . If any Note shall become mutilated, destroyed, lost or stolen, Borrower shall, upon the written request of the affected Note Holder, execute, and Security Trustee shall authenticate and deliver in replacement thereof, a new Note in the same principal amount, dated the date of such Note and designated as issued under this Mortgage. If the Note being replaced has become mutilated, such Note shall be surrendered to Security Trustee and a photocopy thereof shall be furnished to Borrower by Security Trustee. If the Note being replaced has been destroyed, lost or stolen, the affected Note Holder shall furnish to Borrower and Security Trustee such security or indemnity as may be reasonably required by them to hold Borrower and Security Trustee harmless and evidence satisfactory to Borrower and Security Trustee of the destruction, loss or theft of such Note and of the ownership thereof; provided , however , that if the affected Note Holder is an original party to the Loan Agreement or an Affiliate thereof, the written notice of such destruction, loss or theft and such ownership and the written undertaking of such Note Holder delivered to Borrower and Security Trustee to hold harmless Borrower and Security Trustee in respect of the execution,
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