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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
ASA HOLDINGS, INC.
(Name of Subject Company)
ASA HOLDINGS, INC.
(Name of Person(s) Filing Statement)
Common Stock, Par Value $0.10
(Title of Class of Securities)
04338Q 10 7
(CUSIP Number of Class of Securities)
George F. Pickett
Chairman of the Board and Chief Executive Officer
ASA Holdings, Inc.
100 Hartsfield Centre Parkway, Suite 800
Atlanta, Georgia 30354
(404) 766-1400
(Name, address and telephone number of person authorized to receive notice
and communications on behalf of the person(s) filing statement)
Copy to:
Benjamin F. Stapleton III, Esq.
John Evangelakos, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
(212) 558-4000
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Item 1. Security and Subject Company.
The name of the subject company to which this Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") relates is ASA Holdings,
Inc., a Georgia corporation (the "Company"). The principal executive offices
of the Company are located at 100 Hartsfield Centre Parkway, Suite 800,
Atlanta, Georgia 30354. The class of equity securities to which this statement
relates is the Common Stock, par value $0.10 per share (the "Shares"). The
Shares are traded on NASDAQ under the symbol "ASAI".
Item 2. Tender Offer of the Bidder.
This Schedule 14D-9 relates to a tender offer by Delta Sub, Inc. a Georgia
corporation ("Purchaser") and wholly-owned indirect subsidiary of Delta Air
Lines, Inc. a Delaware corporation ("Delta") and Delta Air Lines Holdings,
Inc., a Delaware corporation and a direct wholly-owned subsidiary of Delta
("Delta Holdings"), to purchase all of the outstanding Shares not owned by
Delta or its affiliates (the "Public Shares"). The offer is being made at a
price of $34.00 per Share, net to the seller in cash (the "Offer Price"), upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated February 22, 1999 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together, with any amendments or supplements thereto,
constitute the "Offer"). According to the Offer to Purchase, immediately prior
to making the Offer, Delta beneficially owned approximately 28% of the
outstanding Shares.
Delta, Purchaser and Delta Holdings filed a Rule 13e-3 Transaction Statement
and a related Tender Offer Statement on Schedule 14D-1 on February 22, 1999.
Purchaser is making the Offer for the purpose of acquiring that number of
Shares (the "Minimum Number") which, together with the Shares already owned by
Delta or its affiliates, would constitute at least a majority of the
outstanding Shares on a fully diluted basis. The consummation of the Offer is
conditioned on, among other things, at least the Minimum Number of Shares
being validly tendered and not withdrawn in the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 15, 1999 (the "Merger Agreement"), among the Company, Delta and
Purchaser. The Merger Agreement provides, among other things, that, upon the
terms and subject to the conditions set forth in the Merger Agreement,
following the purchase of Shares pursuant to the Offer, Purchaser will be
merged with and into the Company (the "Merger"). Following consummation of the
Merger, Purchaser will cease to exist and the Company will continue as the
surviving corporation (the "Surviving Corporation") and a wholly-owned
indirect subsidiary of Delta.
At the effective time of the Merger (the "Effective Time"), each Share
outstanding immediately prior to the Effective Time (other than Shares held by
the Company as treasury stock or owned by Delta or any of its subsidiaries or
Shares as to which dissenters' rights have been exercised under the Georgia
Business Corporation Code ("Excluded Shares")) will be converted automatically
into the right to receive $34.00 in cash, without interest.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including, if required under the Georgia Business
Corporation Code, the adoption of the Merger Agreement by the affirmative vote
of the shareholders of the Company holding a majority of the outstanding
Shares. The Company has agreed to convene a special meeting of its
shareholders as promptly as practicable for such purpose. If such meeting is
held subsequent to the consummation of the Offer and if Purchaser has acquired
(pursuant to the Offer or otherwise) a majority of the outstanding Shares, the
Purchaser will have sufficient voting power to adopt the Merger Agreement
without the vote of any other shareholder.
The Merger Agreement is summarized in the Offer to Purchase under the
caption "SPECIAL FACTORS--Merger Agreement" and the Merger Agreement is also
filed as Exhibit 4 to this Schedule 14D-9 and is incorporated herein by
reference.
The address of the principal executive offices of Purchaser, Delta and Delta
Holdings, as set forth in the Offer to Purchase, is Hartsfield Atlanta
International Airport, 1030 Delta Boulevard, Atlanta, Georgia 30320.
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Item 3. Identity and Background.
(a) The name and business address of the Company, which is the person filing
this Schedule 14D-9, are set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements, or understandings between
the Company and its executive officers, directors or affiliates are described
in the sections entitled "Stock Option/SAR Grants and Related Information",
"Supplemental Executive Retirement Plan", "Employment Contracts, Termination
of Employment and Change-In-Control" and "Proposal to Approve the ASA
Holdings, Inc. 1998 Nonqualified Stock Option Plan For Non-Employee Directors"
in the Company's Proxy Statement for the Annual Meeting of Shareholders held
on May 21, 1998 (the "Proxy Statement"). A copy of the relevant portions of
the Proxy Statement is filed as Exhibit 1 hereto and the portions of such
Proxy Statement referred to above are incorporated herein by reference.
Commercial Arrangements Between Delta and the Company
The information contained under the captions "INTRODUCTION" and "SPECIAL
FACTORS--Merger Agreement" of the Offer to Purchase is incorporated herein by
reference.
Marketing and Code Sharing Arrangements Between the Company and Delta
The Company has operated from a hub in Atlanta since 1984 and a hub in
Dallas/Fort Worth since late 1986 as a "Delta Connection" carrier pursuant to
a marketing agreement with Delta (the "Delta Connection Agreement"). The Delta
Connection Agreement was originally entered into on August 6, 1984 and was
restated or amended several times subsequently. The Delta Connection Agreement
was originally terminable by either party upon 180 days' advance written
notice, however, since December 31, 1994, the Delta Connection Agreement has
been terminable by either party thereto on 30 days' prior written notice.
Under the Delta Connection program, all of the Company's flights are
promoted as part of the Delta route network in computer systems used by travel
agents and in advertising and published timetables, and all Company flights
carry the Delta designator code. Company flights are sold on Delta ticket
stock, and all revenue from Company ticket sales by travel agents are remitted
to Delta. Delta handles the Company's reservations calls. Customer payments
for tickets purchased from agents or at Delta city ticket offices for the
Company's flights are remitted to Delta. The Company and Delta split revenues
(less cost of sales) in accordance with an agreed-upon revenue proration
arrangement. Under this arrangement, the Company is paid all revenue (less
agreed expenses) for tickets sold to passengers not connecting to a Delta-
operated flight (i.e. local traffic). Revenue for passengers traveling on a
ticket with a Company flight connecting to a Delta-operated flight are
prorated between Delta and the Company using a proration methodology that
considers the mileage of the flight segments flown and the relative cost of
the service provided, minus the cost of sales, with adjustments made for
international tickets.
The foregoing description of the Delta Connection Agreement does not purport
to be complete and is qualified in its entirety by reference to the Delta
Connection Agreement, as amended, which is filed as Exhibit 6 hereto and is
incorporated herein by reference.
Delta Ownership of Shares; Stock Agreement
On June 19, 1986, Delta purchased from Atlantic Southeast Airlines, Inc.
2,665,000 Shares pursuant to a stock purchase agreement dated May 28, 1986
(the "Original Stock Agreement") between the two companies. After giving
effect to the issuance of these Shares, Delta's investment represented
approximately 20% of the then outstanding number of Shares. On December 27,
1989, in connection with a corporate reorganization, Delta assigned and
transferred to Delta Holdings all of the Shares then owned by Delta. On March
17, 1997, following the Company's 1996 reorganization, the Company, Atlantic
Southeast Airlines, Inc., Delta and Delta Holdings, entered into an amended
agreement (the "Stock Agreement"), containing terms and conditions which are
substantially the same as those contained in the Original Stock Agreement.
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Pursuant to the Stock Agreement, for so long as Delta beneficially owns at
least 10% of the outstanding Shares, either Delta or Delta Holdings has the
right to cause the Company (i) to include in its slate of nominees for
election to the Company's Board of Directors (the "Board of Directors" or the
"Board") at least two designees of Delta or Delta Holdings who are reasonably
acceptable to the Company, and (ii) to use its reasonable best efforts to
assure that these individuals are elected to the Board. As described in
greater detail in the Offer to Purchase, Delta's only designee to the Board
resigned from that position effective March 31, 1997, and since that time,
notwithstanding its right under the Stock Agreement to nominate two designees
for election to the Board, neither Delta nor any of its affiliates have
nominated any designees to, or had any representatives on, the Board. The
Stock Agreement also grants Delta and Delta Holdings certain demand and
piggyback registration rights and pre-emptive rights, and grants the Company a
right of first refusal in respect of certain sales by Delta or Delta Holdings
of Shares to persons pursuant to a demand registration or in a private sale.
The foregoing description of the Stock Agreement does not purport to be
complete and is qualified in its entirety by reference to the Stock Agreement
which is filed as Exhibit 14 hereto and is incorporated herein by reference.
Confidentiality Agreement
On February 9, 1999, Delta and the Company entered in a confidentiality
agreement (the "Confidentiality Agreement"), under which the Company agreed to
provide certain confidential information relating to its operations to Delta.
Pursuant to the Confidentiality Agreement, Delta agreed that Delta and its
representatives would hold non-public information received from the Company
under the Confidentiality Agreement in confidence, except to the extent that
disclosure is legally mandated or compelled by any court, tribunal or
governmental authority. The Confidentiality Agreement does not limit Delta's
use of any information which (i) was previously known by Delta or its
representatives, (ii) was independently developed by Delta or its
representatives, (iii) was acquired by Delta or its representatives from a
third party which is not obligated not to disclose such information or (iv)
which is or becomes publicly available through no breach by Delta of its
obligations under the Confidentiality Agreement. A copy of the Confidentiality
Agreement is filed as Exhibit 19 hereto and is incorporated herein by
reference, and the foregoing summary of the Confidentiality Agreement is
qualified in its entirety by such reference.
Agreements and Arrangements with Executive Officers and Directors of the
Company
The Company has entered into certain employment agreements, termination of
employment and change in control arrangements with its executive officers,
directors and affiliates, as described in the Information Statement pursuant
to Section 14(f) of the Securities Exchange Act of 1934 and Rule 14f-1
thereunder (the "Information Statement"), which is attached to this Schedule
14D-9 as Schedule I and is incorporated herein by reference.
Employment and Consulting Agreements
On February 15, 1999, the Company and Messrs. George F. Pickett and John W.
Beiser (each an "Executive") agreed pursuant to certain memorandum agreements
(each a "Memorandum Agreement") with the Company to negotiate in good faith to
enter into formal written employment and consulting agreements incorporating
the terms described below, with the intention that such employment and
consulting agreements will be executed prior to the Closing.
Pursuant to the terms of the Memorandum Agreements, Mr. Pickett is to serve
as Chief Executive Officer of the Company and Mr. Beiser is to serve as
President and Secretary of the Company from February 15, 1999 until the
Effective Time or such shorter period as provided by Memorandum Agreements
(the "Employment Term") and each is to serve as a non-employee consultant of
the Company from the Effective Time until the 180th day following the
Effective Time or such shorter period as provided by the Memorandum Agreements
(the "Consulting Term"). During the Employment Term and the Consulting Term,
the Company is to pay Messrs. Pickett and Beiser base salaries at the rate in
effect as of February 15, 1999 and each is to continue to
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earn an annual bonus entitlement equal to 40% of his respective base salary on
the same terms that currently apply to such officer under the Company's annual
bonus plan. As of the 180th day following the Effective Time, the Company
shall pay to Mr. Pickett and to Mr. Beiser a lump sum payment of $427,267 and
$416,896, respectively, (provided, however, that such payment is subject to a
reduction, if necessary, if it would be treated as an "excess parachute
payment" under Section 280G of the Internal Revenue Code, as amended (the
"Code")), as consideration for each officer's agreement to render services and
honor the non-competition covenant in the Memorandum Agreements. Pursuant to
terms of the Memorandum Agreements, from February 15, 1999 until the second
anniversary of the Effective Time, neither Mr. Pickett nor Mr. Beiser may (i)
directly or indirectly provide management or executive services to any person
or entity operating a commuter airline using planes with a capacity of less
than 70 seats in any market in which the Company currently operates or (ii)
solicit or hire any employee of the Company to perform a service on behalf of
a competitor similar to any service performed by such employee on behalf of
the Company. If the Executive's employment or consulting services are
terminated without Cause or because of death or disability during the
Employment Term or Consulting Term, the Executive will receive accrued salary,
a prorata bonus and the Special Payment. "Cause" and "Special Payment" are
defined as set forth in the Memorandum Agreements.
The foregoing description of the Memorandum Agreements for Messrs. Pickett
and Beiser does not purport to be complete and is qualified in its entirety by
reference to the Memorandum Agreements which are filed as Exhibits 7 and 8
hereto, respectively, and are incorporated herein by reference.
Special Severance Plan
On February 15, 1999, the Company adopted the ASA Holdings, Inc. Special
Severance Plan (the "Severance Plan"). Generally, the Severance Plan provides
that if the Company terminates the employment of an eligible executive (which
includes certain senior officers other than Mr. Pickett and Mr. Beiser)
without "Cause" or the executive terminates for "Good Reason" within two years
of a "Change in Control," the executive will receive an amount in cash equal
to either 18 or 24 months of the executive's highest annual rate of base
salary in effect during the twelve-month period immediately prior to
termination, subject to a reduction, if necessary, if the payments thereunder
would be treated as "excess parachute payments" under Section 280G of the
Code. In addition, the executive will also receive continued coverage under
the Company's medical, dental and life insurance plans for the same number of
months. In the event the executive cannot continue to participate in such
plans, the Company will otherwise provide such benefits on the same after-tax
basis as if continued participation had been permitted. "Cause," "Good Reason"
and "Change in Control" are defined as set forth in the Severance Plan. The
consummation of the Offer will constitute a Change in Control under the
Severance Plan.
The foregoing description of the Severance Plan does not purport to be
complete and is qualified in its entirety by reference to the Special
Severance Plan which is filed as Exhibit 9 hereto and is incorporated herein
by reference.
Retention Agreements
The Company intends to enter into retention agreements (each a "Form of
Retention Agreement") with each of Ronald V. Sapp and Edward J. Paquette. Mr.
Sapp's Form of Retention Agreement provides that if Mr. Sapp is still employed
with the Company on the six month anniversary of the closing of the Offer, Mr.
Sapp will receive a lump sum amount equal to approximately three times the
annual base salary payable to Mr. Sapp for the 1999 calendar year (provided,
however, that such payment is subject to a reduction, if necessary, if it
would be treated as an "excess parachute payment" under Section 280G of the
Code). Mr. Paquette's Form of Retention Agreement provides that if Mr.
Paquette is still employed with the Company on the six month anniversary of
the closing of the Offer, Mr. Paquette will receive a lump sum amount equal to
the annual base salary payable to him for the 1999 calendar year. The Form of
Retention Agreement also provides that each respective employee will receive
such amount if the Company terminates the employee's employment without
"Cause" or the employee terminates for "Good Reason" prior to the six month
anniversary of the closing of the Offer. "Cause" and "Good Reason" are defined
as set forth in the Form of Retention Agreement.
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The foregoing description of the Form of Retention Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Form of Retention Agreement for Messrs. Sapp and Paquette which are filed as
Exhibits 10 and 11 hereto respectively and are incorporated herein by
reference.
Amendment to the 1997 Nonqualified Stock Option Plan
The Company has amended the ASA Holdings, Inc. 1997 Nonqualified Stock
Option Plan (the "1997 Plan") to provide that in the event of a Change in
Control, all options granted under the 1997 Plan will become fully vested and
immediately exercisable. "Change in Control" is defined as set forth in the
amendment to the 1997 Plan. Consummation of the Offer will constitute a Change
in Control under the 1997 Plan. The foregoing description of the 1997 Plan
does not purport to be complete and is qualified in its entirety by reference
to the 1997 Plan and the amendment to the 1997 Plan which are filed as Exhibit
12 hereto and are incorporated herein by reference.
Executive Deferred Compensation Plan
Pursuant to the Atlantic Southeast Airlines, Inc. Executive Deferred
Compensation (Retirement) Plan, as amended on February 15, 1999 (the "Deferred
Plan"), each month the Employer (defined as either the Company or Atlantic
Southeast Airlines, Inc.) contributes an amount equal to 15% of the
compensation of a Class A participant (senior executive officer designated by
the Board) and 10% of the compensation of a Class B participant (officer
designated by the Board), to a fund established to receive and invest such
contributions. No employee contributions are allowed. Employees may direct the
investment of their accounts. If a participant's employment is terminated
without Cause or if the participant terminates employment for Good Reason
within two years after a Change in Control, the participant will have a
nonforfeitable vested interest in all benefits accrued under the terms of the
Deferred Plan. "Change in Control," "Cause" and "Good Reason" are defined as
set forth in the Deferred Plan.
The foregoing description of the Deferred Plan does not purport to be
complete and is qualified in its entirety by reference to the Executive
Deferred Compensation (Retirement) Plan which is filed as Exhibit 13 hereto
and is incorporated herein by reference.
Supplemental Executive Retirement Plan
The Company's Supplemental Executive Retirement Plan (the "SERP") is
described under the heading "Supplemental Executive Retirement Plan" in the
Proxy Statement. A copy of the relevant portion of the Proxy Statement is
filed as Exhibit 1 hereto and such portion of the Proxy Statement is
incorporated herein by reference. On February 15, 1999, the SERP was amended
to change the "Change in Control" definition to have the same meaning as in
the Deferred Plan. The foregoing description of the amendment to the SERP does
not purport to be complete and is qualified in its entirety by reference to
the Second Amendment to the SERP which is filed as Exhibit 20 hereto and is
incorporated herein by reference.
Indemnity Agreement of Executive Officer
On February 15, 1999, the Board of Directors authorized the Company to enter
into an Indemnity Agreement (each an "Indemnity Agreement of Executive
Officer") with each of six of its executive officers, including George F.
Pickett, John W. Beiser, Edward J. Paquette, Ronald V. Sapp, R. Mark Bole and
Renee Skinner. The Indemnity Agreement of Executive Officer provides the
Indemnitee with specific contractual assurance that indemnification protection
provided under the Company's Bylaws will be available to Indemnitee regardless
of, among other things, any amendment to or revocation of the Company's
Articles or Bylaws or a Change in Control of the Company. The Indemnity
Agreement of Executive Officer further provides that the Company has purchased
and maintains directors' and officers' insurance consisting of a primary
policy providing $15 million in aggregate coverage and a supplemental policy
providing $15 million in aggregate coverage, and that the Company will
maintain such insurance coverage for so long as Indemnitee shall continue to
serve as an executive officer of the Company or thereafter shall be subject to
any possible Claim or threatened, pending or
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completed litigation. "Indemnitee" and "Change in Control" are defined as set
forth in the form of Indemnity Agreement of Executive Officer.
Indemnity Agreement of Director
On February 15, 1999, the Board of Directors authorized the Company to enter
into an Indemnity Agreement (each an "Indemnity Agreement of Director") with
each of its directors, which include George F. Pickett, John W. Beiser, Jean
A. Mori, Parker H. Petit, Alan M. Voorhees, Ralph M. Voorhees and George
Berry. The terms of the Indemnity Agreement of Director are substantially
similar to the terms of the Indemnity Agreement of Executive Officer described
above.
The foregoing descriptions of the Indemnity Agreement of Executive Officer
and the Indemnity Agreement of Director do not purport to be complete and are
qualified in their entirety by reference to the forms of the Indemnity
Agreement of Executive Officer and the Indemnity Agreement of Director which
are filed as Exhibits 15 and 16 hereto, respectively, and are incorporated
herein by reference.
Amended and Restated Founding Officer Agreement
The Company, Atlantic Southeast Airlines, Inc. and George F. Pickett and
John W. Beiser, respectively, are parties to Amended and Restated Founding
Officer Agreements, each dated April 16, 1997, as further amended on February
15, 1999, pursuant to which in the event Mr. Pickett or Mr. Beiser, as the
case may be, ceases to be an employee of the Company within two years after a
Change in Control, the Company and Atlantic Southeast Airlines, Inc. will pay
Mr. Pickett or Mr. Beiser, as applicable, the lesser of (i) two times gross
compensation accrued in the last twelve months or (ii) the maximum amount
which may be paid to Mr. Pickett or Mr. Beiser, as applicable, which is
deductible to the Company under Section 280G of the Internal Revenue Code.
"Change in Control" is defined as set forth in the Amended and Restated
Founding Officer Agreement.
The foregoing description of the Amended and Restated Founding Officer
Agreements does not purport to be complete and is qualified in its entirety by
reference to the Amended and Restated Founding Officer Agreements for Mr.
Pickett and Mr. Beiser which are filed as Exhibits 17 and 18 hereto,
respectively, and are incorporated herein by reference.
Certain Travel Benefits
On February 15, 1999, in recognition of Mr. Pickett's and Mr. Beiser's
founding the Company and of their service to the Company, the Board granted
lifetime travel privileges to Mr. Pickett and his wife and to Mr. Beiser, his
wife and Mr. Beiser's dependent children, respectively, on all Atlantic
Southeast Airlines flights.
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Stock Options
On January 26, 1999 the Board granted to certain executives options to
purchase Shares under the Company's 1997 Plan as follows:
<TABLE>
<CAPTION>
Outstanding
Options at Exercise
Name Grant Date Price
---- ----------- --------
<S> <C> <C>
George F. Pickett.......................................... 102,000 30.25
John W. Beiser............................................. 102,000 30.25
Ronald V. Sapp............................................. 40,000 30.25
Edward J. Paquette......................................... 40,000 30.25
Samuel J. Watts............................................ 21,000 30.25
John P. McBryan............................................ 10,000 30.25
Charles J. Thibaudeau...................................... 24,000 30.25
John A. Bedson............................................. 22,000 30.25
Mark W. Fischer............................................ 10,000 30.25
Renee H. Skinner........................................... 14,000 30.25
R. Mark Bole............................................... 16,000 30.25
W. Grant Nichols........................................... 13,000 30.25
James J. Cerniglia......................................... 20,000 30.25
</TABLE>
On May 21, 1998 the Board granted to certain non-employee directors options
to purchase Shares under the Company's 1998 Nonqualified Stock Option Plan for
Non-Employee Directors as follows:
<TABLE>
<CAPTION>
Outstanding
Options at Exercise
Name Grant Date Price
---- ----------- --------
<S> <C> <C>
Alan M. Voorhees........................................... 2,500 37.031
Ralph W. Voorhees.......................................... 2,500 37.031
Parker H. Petit............................................ 2,500 37.031
Jean A. Mori............................................... 2,500 37.031
George Berry............................................... 2,500 37.031
</TABLE>
On January 15, 1999 the Board granted to certain non-employee directors
options to purchase Shares under the Company's 1998 Nonqualified Stock Option
Plan for Non-Employee Directors as follows:
<TABLE>
<CAPTION>
Outstanding
Options at Exercise
Name Grant Date Price
---- ----------- --------
<S> <C> <C>
Alan M. Voorhees........................................... 2,500 30.313
Ralph W. Voorhees.......................................... 2,500 30.313
Parker H. Petit............................................ 2,500 30.313
Jean A. Mori............................................... 2,500 30.313
George Berry............................................... 2,500 30.313
</TABLE>
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Item 4. The Solicitation or Recommendation.
(a) Recommendation of the Board of Directors.
AT A MEETING OF THE BOARD OF DIRECTORS ON FEBRUARY 15, 1999, THE BOARD OF
DIRECTORS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY AND DETERMINED THAT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE
FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS (OTHER THAN
DELTA AND ITS AFFILIATES). THE BOARD RECOMMENDS THAT THE COMPANY'S
SHAREHOLDERS ACCEPT THE OFFER, TENDER THEIR SHARES PURSUANT TO THE OFFER AND
APPROVE AND ADOPT THE MERGER AGREEMENT.
The Offer is scheduled to expire at 12:00 midnight, New York City time, on
March 19, 1999, unless Purchaser extends the period of time for which the
Offer is open. A copy of a letter to the Company's shareholders communicating
the Board's recommendation has been filed as Exhibit 5 to this Schedule 14D-9
and is incorporated herein by reference.
(b) Background; Reasons for the Recommendation of the Board of Directors.
Since December 31, 1994, the date on which the Delta Connection Agreement
became terminable on 30 days' notice by either party, Delta and the Company
have had various discussions about aspects of their marketing alliance, and
from time to time have had discussions regarding the renewal of the Delta
Connection Agreement. In March 1995, Delta forwarded drafts of proposed
renewal agreements to each of its connection carriers, including the Company.
The draft agreement forwarded to the Company proposed increases and other
changes to a number of the fees charged by Delta to the Company under the
Delta Connection Agreement. While the Company did not accept this draft
agreement, Delta and the Company subsequently agreed to certain increases in
fees associated with marketing-related activities.
In the spring of 1997, Delta began to reassess its connection carrier
strategy generally. On March 31, 1997, Delta decided to remove its one
remaining designee from the Board. Delta also withdrew its designees from all
of the other connection carriers on which it had the right to board
representation. Delta's decision to withdraw its designees from the boards of
the Company and Delta's other connection carriers was motivated by Delta's
intention to seek modification of the terms of its marketing and other
arrangements with each such carrier, and its desire to minimize the potential
for, or the perception of, any conflict of interest between Delta and such
connection carriers that could otherwise arise in such a context. Since March
31, 1997, notwithstanding its right under the Stock Agreement to nominate two
designees for election to the Board, neither Delta nor any of its affiliates
have nominated any designees to, or had any representatives on, the Board. In
June 1997, Delta representatives met with representatives from its various
connection carriers, including the Company, to inform them that Delta intended
to seek modifications to their respective marketing arrangements.
On September 25, 1997, Bryan LaBrecque, Director of Connection Carriers of
Delta, wrote to John W. Beiser, President of the Company, with a proposal to
revise the companies' arrangements to permit Delta to recover certain of its
costs relating to the Company's operations, and to introduce a royalty fee for
the Company's use of the Delta designator code. In subsequent meetings between
Messrs. LaBrecque and Beiser, Mr. Beiser expressed his dissatisfaction with
these proposals and stated that, on the basis of the revised cost structure
proposed by Delta, it would be uneconomical for the Company to continue
providing service at Delta's Dallas / Fort Worth hub. On November 10, 1997, at
the Company's request, Delta withdrew its proposal, pending further
discussions.
In late 1997, Delta raised with the Company certain concerns about various
customer service issues. These customer service issues were, in part,
attributable to significant attrition among the Company's mechanics and the
difficulties associated with negotiating a new collective bargaining agreement
with the Company's pilots
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union. Discussions were held throughout the spring of 1998 between the Company
and Delta regarding various customer service issues. On July 21, 1998, Maurice
W. Worth, Chief Operating Officer of Delta, met with Mr. Beiser to discuss
Delta's concerns about the Company's service. Mr. Worth informed Mr. Beiser
that if service did not improve significantly within the next 45 days, Delta
would need to reevaluate its alternatives for Delta connection service on
certain routes. On July 27, 1998, Mr. Worth and Leo F. Mullin, President and
Chief Executive Officer of Delta, met with Mr. Beiser and George F. Pickett,
Chairman and Chief Executive Officer of the Company, to continue discussions
regarding the need for improvements in the Company's service. On September 8,
1998, Mr. Worth wrote to Mr. Beiser, acknowledging the Company's significant
progress in addressing its service problems and noting that Delta looked
forward to continued improvement by the Company.
In July and September 1998, the Company's management indicated to Delta that
they were interested in expanding the Company's connecting operations into
several new markets. Although Delta noted that the Company had been making
progress in improving customer service levels, Delta nonetheless rejected
expansion into these new markets in large part on the basis of its continued
concerns over the Company's service. During regular meetings between Delta and
the Company's representatives over the course of the fourth quarter of 1998,
Delta noted the Company's progress in addressing certain service issues, but
also continued to express concern about a number of other service issues.
On January 18, 1999, Mr. LaBrecque wrote to Mr. Beiser, reiterating Delta's
concerns about the Company's customer service and the appropriate sharing of
costs between the two carriers, as well as certain other issues. On January
20, 1999, Mr. Worth met with Messrs. Beiser and Pickett to discuss the
subjects covered in Mr. LaBrecque's January 18 letter. At that meeting, Mr.
Worth repeated Delta's concerns about the Company's customer service. He said
that, as a result, Delta was considering providing another Delta Connection
carrier with code sharing opportunities on certain Atlanta routes. He also
stated that Delta considered the existing revenue allocation arrangement
between Delta and the Company to be inequitable to Delta, and believed that it
needed revisiting. Messrs. Pickett and Beiser acknowledged that the Company
had experienced service problems in the first half of 1998, but reminded Mr.
Worth of the significant progress that the Company had made since agreeing to
a new collective bargaining agreement with its pilots union in July 1998. Mr.
Worth acknowledged this, but noted that there were still significant ongoing
service concerns that needed to be addressed. The parties agreed to meet in
the near future to further discuss these matters and to establish a more
specific agenda for renegotiating the companies' commercial arrangements.
On January 25, 1999, Mr. Beiser called Mr. Worth to ask whether Delta was
still considering bringing another Delta Connection carrier into the Atlanta
market. Mr. Worth replied that no decision had yet been made on that issue.
Later that day, the Company delivered to Delta Mr. Beiser's written response
to Mr. LaBrecque's January 18 letter. In his response, Mr. Beiser clarified
the Company's position with respect to the concerns identified by Mr.
LaBrecque, in particular by stressing the significant improvements in service
achieved by the Company in the second half of 1998. Mr. Beiser reiterated the
Company's desire to meet with Delta to work out satisfactory solutions to all
issues. He also requested an immediate meeting with Mr. Mullin or Frederick W.
Reid, Executive Vice President and Chief Marketing Officer of Delta. Upon
receipt of this letter, Mr. Mullin promptly called Mr. Pickett and suggested
that they meet on January 28.
On January 28, 1999, Mr. Mullin met with Mr. Pickett pursuant to the request
in Mr. Beiser's January 25 letter. Mr. Mullin assured Mr. Pickett that Delta
had made no decision to bring any other Delta Connection carrier into the
Atlanta market. However, he reiterated the concerns raised in Mr. LaBrecque's
letter, and Delta's desire to change the revenue allocation between Delta and
the Company. He stated that it was important to Delta that these issues be
addressed promptly. Mr. Pickett expressed the Company's readiness to explore
all avenues that might improve the Company's relationship with Delta. Mr.
Mullin then asked Mr. Pickett whether the Company would be interested in the
parties exploring the possibility of Delta acquiring the Company. He went on
to say that if the Company believed such an approach to be desirable, Delta
would be receptive to exploring that possibility. Mr. Pickett responded that
he would be interested in exploring this alternative. Mr. Mullin stated that,
while the feasibility of the acquisition alternative was being explored, the
parties should continue the
9
<PAGE>
discussions concerning the renegotiation of their marketing arrangements. The
parties agreed that separate teams from each carrier should meet as soon as
possible to discuss each alternative.
On February 4, 1999, representatives of Delta and the Company met to discuss
and define the possible terms of a new marketing arrangement between the
companies. Delta outlined its proposals, which related primarily to revenue
allocation, cost sharing, financial incentives and penalties tied to the
Company's operational performance, franchise fees, facilities and scheduling
(including the introduction of the Company service into new markets). In a
call to Mr. Beiser later that day, Mr. LaBrecque also outlined Delta's
proposal that it assume responsibility for the Company's revenue management,
with the goal of increasing total revenue for both companies. Mr. Beiser
stated that he did not think that Delta's revenue management proposal would be
beneficial to the Company and therefore rejected it. In response to one of Mr.
Beiser's questions, Mr. LaBrecque then observed that Delta estimated that
Delta's proposals with respect to revenue allocation could have a negative
aggregate impact on the Company's revenues of $40 million to $50 million per
year. Mr. Beiser agreed that further discussions between the companies on
Delta's proposals on matters other than revenue management could be pursued.
On February 5, 1999, Mr. Mullin telephoned Mr. Pickett to inform him that
the Company could contact Warren C. Jenson, Chief Financial Officer of Delta,
to discuss logistics concerning the acquisition discussions. the Company then
contacted Mr. Jenson, who met with Messrs. Pickett and Beiser later that day
to discuss process and timing issues relating to both the renegotiation of the
marketing arrangement and the acquisition alternative. Mr. Jenson emphasized
that Delta was willing to pursue either of these alternatives. The parties
agreed that Delta would need to conduct some preliminary due diligence on the
Company's business and operations, and the Company's executives stated that
the Company would retain lawyers and bankers as soon as possible to assist the
Company in its analysis and exploration of the acquisition alternative.
Over the next several days, Messrs. Pickett and Beiser contacted each of the
other directors of the Company individually and informed them of the
discussions that had occurred with Delta regarding a possible acquisition of
the Company, and the steps that were being taken by the Company in
preparation.
On February 7, 1999, in order to better assess the feasibility of the
acquisition alternative, Delta submitted a due diligence document request list
to the Company, and representatives from each of Delta and the Company had a
preliminary discussion of the mechanics and timing of the due diligence
process.
On February 8, 1999, an informal telephonic meeting was held among all the
directors of the Company except Alan Voorhees. Messrs. Pickett and Beiser
reviewed for the directors participating in this meeting the contacts between
the Company and Delta that had led to the exploration of the acquisition
alternative by Delta and to the discussions relating to the renegotiation of
the marketing arrangements between Delta and the Company. Messrs. Pickett and
Beiser also reviewed for the Board the current status of both tracks. The
directors were informed that the Company was seeking to retain a nationally-
recognized investment bank and legal counsel in connection with its evaluation
of the acquisition alternative.
On February 8, 1999, the Company retained outside legal counsel. On February
9, 1999, the Company retained Morgan Stanley to be its financial advisor and
Delta and the Company entered into the Confidentiality Agreement pursuant to
which Delta agreed to keep the Company Confidential Information (as defined in
the Confidentiality Agreement) confidential, not to use such material to the
detriment of the Company, and to return all such material to the Company
promptly upon the Company's request. Representatives of Delta began to conduct
due diligence on the Company on February 10.
On February 9, 1999, Morgan Stanley called Delta's financial advisor,
Goldman, Sachs, to initiate discussions about an acquisition alternative.
During that call, Goldman, Sachs and Morgan Stanley also discussed briefly the
nature of the commercial relationship between Delta and the Company, as well
as the recent talks between the two companies with respect thereto. A
telephonic meeting of the Board was held on February 10, 1999 to ratify the
selection of Morgan Stanley as the Company's investment banker and Sullivan &
Cromwell as its legal counsel. The Board was also presented with an update on
developments generally.
10
<PAGE>
On February 11, 1999, Goldman, Sachs and Morgan Stanley had a discussion in
which Morgan Stanley indicated that it thought that premiums historically
received in the sale of public companies were a relevant consideration in any
valuation of an acquisition transaction. Goldman, Sachs responded that Delta
was still considering the feasibility of an acquisition and that it was
premature to discuss Delta's estimate of value ranges. Goldman, Sachs did,
however, indicate that the then-current market price of the Shares was not an
appropriate measure of the future value of the Company, taking into account
the fact that the marketing arrangements between Delta and the Company were
being renegotiated. Goldman, Sachs confirmed its understanding that, in the
discussions between Delta and the Company, Delta had told the Company that in
the past, in light of Delta's concerns over the Company's service, Delta had
considered the possibility of having other regional carriers provide
connecting service at Delta's Atlanta hub. Goldman, Sachs also reiterated
Delta's willingness to continue discussions to determine whether a
satisfactory agreement could be reached to modify the companies' existing
commercial arrangements. Later that day, Goldman, Sachs indicated in a call
with Morgan Stanley that if the parties were to proceed with the acquisition
alternative, Delta's current valuation work suggested that any acquisition
would have to be somewhere in the general vicinity of the then-current market
price of the Shares.
Also on February 11, 1999, Mr. Worth met with Messrs. Pickett and Beiser to
discuss the treatment of the Company's management and employees if the
acquisition alternative were to be pursued. Later that day, representatives of
Delta and the Company once again met to continue their discussions concerning
the renegotiation of their existing marketing arrangements. The Company's
representatives asserted that Delta was using an incorrect methodology for
evaluating revenue allocation between the carriers. Delta stated that sampling
differences could lead to different conclusions. The Delta representatives
noted that, irrespective of the methodologies employed, Delta had to consider
the fact that it could enter into arrangements with other carriers to serve
the Atlanta market on a basis more favorable to Delta than the current
arrangements with the Company. The Delta representatives further observed
that, if the Company were to remain competitive, the revenue allocation
between the Company and Delta would have to be modified. The Delta
representatives acknowledged that, as a result of such modification, the
Company would probably experience reduced revenues aggregating $40 million to
$50 million per year.
Later that evening, an informal telephonic meeting was held among all of the
the Company directors except George Berry and Parker Petit. Representatives of
Morgan Stanley and Sullivan & Cromwell were introduced to the directors.
Morgan Stanley informed the directors of its discussions with Goldman, Sachs
and of the valuation range that Goldman, Sachs believed Delta was considering
for the Company. Messrs. Pickett and Beiser informed the directors of
developments of the meeting held earlier that day between Delta and the
Company's representatives regarding the renegotiation of the existing
marketing arrangements with Delta. The directors did not believe that an offer
at a below market price was appropriate and Morgan Stanley was instructed to
return to Goldman, Sachs to establish a that Delta was not contemplating a
below market price, and to negotiate for a higher price that offered the
Company's shareholders a premium.
On February 12, 1999, Morgan Stanley called Goldman, Sachs to clarify
Delta's position on the value of any offer and to inquire whether Goldman,
Sachs could confirm that any offer that Delta might make would be at market
price or above. After consultation with its clients, Goldman, Sachs confirmed
that Delta would probably not present the Company with a below market offer,
but that a premium, if any, would be modest.
A telephonic meeting of the Board was held later in the day on February 12,
1999, during which Morgan Stanley reported on its conversations on the
Company's behalf with Goldman, Sachs. Following, among other things, a
discussion of the alternatives available to the Company, including the
consideration of the effect of the Delta proposal to renegotiate the existing
marketing arrangements with the Company, the Board instructed Morgan Stanley
to propose to Goldman, Sachs a transaction that would permit the Company
shareholders to elect to receive in exchange for their Shares either common
stock of Delta, on a tax-free basis, or cash at a price of $33.00 per Share.
In the evening of February 12, 1999, Morgan Stanley indicated to Goldman,
Sachs that the Board would be prepared to move forward with a transaction at a
price of $33.00 per Share, that would permit the Company's
11
<PAGE>
shareholders to elect to receive merger consideration in the form of Delta
stock on a tax-free basis to such shareholders. After further consultation
with Delta, Goldman, Sachs advised Morgan Stanley that Delta was not
interested in pursuing a stock transaction, but stated that Delta would be
willing to consider a cash transaction at the price the Company had suggested.
On February 13, 1999, Morgan Stanley reported to Goldman, Sachs that it had
reviewed the matter further with representatives of the Board and that the
Company would be prepared to go forward with an all-cash tender offer of
$35.00 per Share, and requested that Delta not insist on preclusive
termination fees or lock-ups. After consultation with Delta management,
Goldman, Sachs responded to Morgan Stanley, informing them that Delta believed
that it could agree to a price at the midpoint of a range between $33.00 and
$35.00 if all of the documentation issues were satisfactorily resolved. After
consultation with its client, Morgan Stanley indicated that, if all the
documentation was satisfactory, a $34.00 offer would be acceptable. That
afternoon, Delta's counsel provided a draft merger agreement to the Company's
counsel. Counsel for Delta and the Company met over the next two days to
negotiate the terms of the transaction, including, among other things, the
conditions to the offer and the Company's right to terminate the Merger
Agreement if a third party were to make a superior proposal.
A telephonic meeting of the Board was held on February 14, 1999, during
which Morgan Stanley reported on its discussions on the Company's behalf with
Goldman, Sachs since the time of the February 12, 1999, Board meeting.
Sullivan & Cromwell then reported on the status of the draft merger agreement
and the negotiations with Delta's legal counsel.
At a meeting on February 14, 1999, Delta's Board of Directors heard
presentations from Delta management regarding the implications of the proposed
transaction for Delta. Management reported that an acquisition of the Company
would enable Delta to realize revenue gains from factors such as more
efficient operations, market growth, better utilization of aircraft at both
airlines and improved business functions. The Delta Board approved the
proposed acquisition on the terms under consideration and authorized a
Committee consisting of Messrs. Mullin and Grinstein to be available to
consider any changes in those terms that might arise as the final issues were
negotiated.
At a meeting held on the afternoon of February 15, 1999, in Atlanta,
Georgia, the Board gave further consideration to the proposed transaction.
Among other things, management reported on the substantial negative impact
that the Delta proposals for renegotiating the Company's marketing arrangement
with Delta would have on the future financial performance of the Company and
Morgan Stanley expressed its view that, as of the date of such opinion and
based on and subject to the matters described therein, the consideration to be
received by the Company's shareholders in the Offer and the Merger was fair,
from a financial point of view, to the Company's shareholders (other than
Delta and its affiliates). The Board unanimously approved the proposed
transaction and the Merger Agreement. The Merger Agreement was signed that
evening and the transaction was announced on the morning of February 16.
In reaching its conclusions with respect to the Offer and the Merger
Agreement, the Board considered a number of factors, including the following:
(1) The familiarity of the Board with the financial condition, results of
operations, business and prospects of the Company (as reflected in the
Company's historical and projected financial information), current economic
and market conditions generally and in the airline industry specifically;
(2) That the Company's financial condition, results of operations,
business and prospects were substantially dependent on the Company's
relationship with Delta and the Company's role as a Delta Connection
carrier and that the Delta Connection Agreement was terminable by Delta
upon 30 days' notice;
(3) That Delta had advised the Company that it was dissatisfied with the
Company's performance and service levels;
12
<PAGE>
(4) That based upon discussions between Delta and the Company's
management with respect to revenue reallocation and cost sharing
arrangements proposed by Delta as part of the negotiation for renewing the
Delta Connection Agreement with the Company would, in management's view, be
likely to reduce the Company's net income approximately $21 million in 1999
and approximately $45-$55 million in each year thereafter from the net
income of the Company previously projected by management, and that
management did not believe it could negotiate terms that would be
materially more favorable to the Company;
(5) That Delta had proposed other changes to its commercial relationship
with the Company, the effect of which management could not readily quantify
at the time but which management believed would adversely affect further
the future financial performance of the Company, including Delta's
proposals to impose upon the Company new charges for the payment of
overrides to travel agents' commissions, to specify markets into which the
Company's regional jets would be deployed, and to impose fees for
passengers not connecting with Delta flights and service performance
penalties;
(6) That the $34.00 per Share in cash to be paid in the Offer and the
Merger would represent a significant premium to the price at which the
Shares would likely trade once the anticipated renegotiated Delta
Connection Agreement provisions became effective and publicly known;
(7) That the Company's relationship with Delta within the Southeastern
United States was not exclusive and that Delta could at any time bring in
other Delta Connection carriers into markets served by the Company;
(8) That Delta had rejected recent proposals for the Company to introduce
service into new markets as a Delta Connection carrier, using Delta's
designator code, which severely restricted the Company's ability to expand
its operations on a profitable basis;
(9) The opinion of the Company's financial advisor, Morgan Stanley & Co.
Incorporated ("Morgan Stanley"), that as of the date of such opinion, the
$34.00 per Share to be offered to the shareholders of the Company pursuant
to the Offer and the Merger is fair from a financial point of view to such
shareholders (other than Delta and its affiliates) (a copy of such opinion
setting forth the assumptions made and matters considered and limitations
set forth by Morgan Stanley is included as Schedule II to this Schedule
14D-9 and shareholders are urged to read such opinion in its entirety);
(10) The fact that the Merger Agreement provides for a first-step cash
tender offer for all outstanding Shares thereby enabling shareholders who
tender their Shares to receive promptly $34.00 per Share in cash, and that
shareholders who do not tender their Shares will receive the same cash
price in the subsequent Merger;
(11) The other terms and conditions of the Offer, the Merger and the
Merger Agreement, including the fact that the Merger Agreement does not
preclude the Board from considering other bids that could reasonably lead
to a Superior Proposal (as defined below). In particular, the Merger
Agreement permits the Board (i) to furnish information to, and engage in
discussions or negotiations with, third parties who make a proposal to
acquire or invest in the Company or engage in any other business
combination or similar transactions with the Company if the Board
reasonably believes in good faith, after consultation with an investment
bank of nationally recognized reputation and outside legal counsel, that
such proposal is bona fide and could reasonably lead to the delivery of a
proposal to acquire at least a majority of the outstanding Shares that the
Board determines in good faith, after consulting with an investment bank of
nationally recognized reputation and its outside legal counsel, would
result in a transaction, if consummated, that is more favorable to the
Company's shareholders (other than Delta and its affiliates), from a
financial point of view (a "Superior Proposal") and that furnishing such
information or engaging in such discussions or negotiations is required for
the Board to comply with its fiduciary duties under applicable law and (ii)
after receipt of a Superior Proposal, to terminate the Merger Agreement and
enter into a binding agreement with respect to such a Superior Proposal
after providing Delta with two business days notice of its intention to do
so, specifying the material terms and conditions of such Superior Proposal
and paying Delta a termination fee of $5,000,000;
13
<PAGE>
(12) A review of possible alternatives to the Offer and the Merger, the
range of possible benefits and risks to the shareholders of such
alternatives, the timing and likelihood of accomplishing any such
alternatives, and the effect of Delta's ownership of approximately 28% of
the Shares and commercial relationship with the Company on the Company's
ability to pursue any of these alternatives;
(13) The likelihood that the Offer and the Merger will be consummated,
including the fact that the obligations of Delta and Delta Sub are not
conditioned upon obtaining any financing.
The foregoing discussion of the information and factors considered and given
weight by the Board is not intended to be exhaustive. In view of the variety
of factors considered in connection with its evaluation of the Offer and the
Merger Agreement, the Board did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors
considered in reaching its determination. In addition, individual members of
the Board may have given different weights to different factors.
Certain Projections for the Company
The following sets forth certain financial information and projections (the
"Projections") for the Company for the fiscal years ending December 31, 1999
through 2003 and includes management's best estimate as to the effect of
Delta's proposed revenue reallocation and cost sharing arrangements upon the
Company's revenues and income during this period. The Company does not in the
ordinary course publicly disclose projections as to future revenues or
earnings and the Projections were not prepared with a view to public
disclosure. These Projections were not prepared in accordance with generally
accepted accounting principles and the Company's independent accountants have
not examined or compiled any of the following Projections or expressed any
conclusion or provided any other form of assurance with respect to such
Projections and accordingly assume no responsibility for such Projections. The
Projections were delivered to Morgan Stanley solely in connection with their
due diligence investigation of the Company in order for them to prepare the
financial analysis described below in connection with the Offer and the
Merger. The Projections were not prepared with a view to compliance with the
guidelines established by the American Institute of Certified Public
Accountants regarding projections, which would require more complete
presentation of data than as shown below.
14
<PAGE>
Adjusted Projected Income Statement
(all amounts in millions of dollars, except for per share data)
<TABLE>
<CAPTION>
1998(A) 1999(E) 2000(E) 2001(E) 2002(E) 2003(E)
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Passenger Revenue(a)...... 400.2 461.2 539.9 591.1 613.5 637.1
Revenue
Reallocation(b)(c)....... (25.0) (58.6) (64.1) (66.6) (69.1)
Other Revenue............. 9.7 7.2 8.4 9.2 9.6 9.9
Adjusted Revenue.......... 409.9 443.4 489.8 536.2 556.5 578.0
Operating Expense......... 313.8 360.5 418.8 461.9 482.8 499.0
Incremental Cost
Sharing(c)............... 8.0 9.4 10.3 10.6 11.1
Adjusted Operating Ex-
pense.................... 313.8 368.5 428.2 472.2 493.4 510.0
Operating Income.......... 96.1 74.8 61.6 64.0 63.0 67.9
Operating Margin.......... 23.4% 15.9% 12.6% 11.9% 11.3% 11.8%
Non-Operating Income...... 10.2 10.5 9.9 12.7 15.3 17.6
Pre-Tax Income............ 106.3 85.3 71.5 76.7 78.3 85.5
Pre-Tax Margin............ 25.9% 19.2% 14.6% 14.3% 14.1% 14.8%
Tax Income Provision...... 40.1 32.2 27.0 28.9 29.6 32.3
Net Income................ 66.1 53.1 44.5 47.7 48.8 53.2
Net Margin................ 16.1% 12.0% 9.1% 8.9% 8.8% 9.2%
Shares Outstanding........ 29.7 28.7 28.7 28.7 28.7 28.7
Adjusted Earnings Per
Share.................... $2.22 $ 1.85 $ 1.55 $ 1.66 $ 1.70 $ 1.86
Unadjusted Earning Per
Share.................... $2.22 $ 2.61 $ 3.12 $ 3.42 $ 3.58 $ 3.85
Difference................ $(0.76) $(1.57) $(1.76) $(1.88) $(1.99)
% Decrease................ -29.1% -50.3% -51.4% -52.5% -51.8%
</TABLE>
- --------
(a) Projections for passenger revenue assume growth in available seat miles
consistent with the Company's projected fleet plan, a constant passenger
load factor of 56.8% and a yield that declines to 33.5 cents per passenger
mile in 2001.
(b) Projections with respect to revenue reallocation were calculated based on
$50 million or 10.85% of passenger revenue for 1999. A pro rata percentage
of 10.85% was used for 2000 through 2003 and a percentage of 5.425% was
used for 1999 since the revenue reallocation was to phase in during 1999.
(c) Of the Delta Connection renegotiation items, only the financial impact of
revenue reallocation and incremental cost sharing (of computer reservation
fees) were included in management's projections. (See number (5) under
"Reasons for the Recommendation of the Board of Directors" for other cost
elements that were not readily quantifiable by management).
Item 5. Persons Retained, Employed or to be Compensated.
The Company has retained Morgan Stanley as the Company's financial advisor
in connection with the evaluation of and response to the Offer, the Merger and
other matters arising in connection therewith. Pursuant to a letter agreement,
dated February 11, 1999 (the "Morgan Stanley Letter Agreement"), the Company
retained Morgan Stanley to provide the Company with financial advice and
assistance in connection with the Offer and the Merger, including advice and
assistance with respect to defining objectives, performing valuation analysis
and structuring, planning and negotiating the proposed Merger.
Pursuant to the Morgan Stanley Letter Agreement, the Company has agreed to
pay Morgan Stanley: (A) if no Merger Agreement is entered into, an "Advisory
Fee" calculated to be approximately $100,000 depending upon the amount of time
spent on assignments, (B) if the Merger Agreement is entered into or the Offer
is
15
<PAGE>
commenced, an "Agreement Fee" equal to $1,500,000 or (C) if the Offer is
consummated, a "Transaction Fee" equal to $5,000,000 against which any
Advisory Fee or Agreement Fee will be credited. The full amount of the
Transaction Fee is to be paid by the Company when control of 50% or more of
the Shares changes hands. In addition to any fees for professional services,
Morgan Stanley will also be reimbursed for expenses incurred in connection
with Morgan Stanley's representation of the Company.
The Company has also agreed to indemnify Morgan Stanley against certain
liabilities related to, arising out of or in connection with the engagement of
Morgan Stanley by the Company.
Morgan Stanley's services to be rendered pursuant to the Morgan Stanley
Letter Agreement may be terminated with or without cause by the Company or by
Morgan Stanley at any time and without liability or continuing obligation to
the Company or to Morgan Stanley (except for any compensation earned and
expenses incurred by Morgan Stanley up to the date of termination and except,
in the case of termination by the Company, for Morgan Stanley's right to fees
pursuant to the Morgan Stanley Letter Agreement for any transaction effected
within eighteen months of such termination).
Item 6. Recent Transactions and Intent with Respect to Securities.
(a) To the best of the Company's knowledge, no transactions in Shares have
been effected during the past 60 days by the Company or by any executive
officer, director, affiliate or subsidiary of the Company, other than the
option grants referred to in Item 3(b) above, a purchase by the Company of
20,000 Shares at $30.63 and that John W. Beiser gifted 200 Shares on January
26, 1999 and Parker H. Petit purchased 100 Shares at $31.125 and 2,900 Shares
at $31.36 on January 19, 1999.
(b) The Company has been advised that all of its directors presently intend
to tender their Shares (if any) pursuant to the Offer. George F. Pickett,
Chairman of the Board and Chief Executive Officer of the Company, and his wife
and John W. Beiser, President and Secretary of the Company, and his wife have
entered into a Shareholders Agreement with Delta, dated as of February 15,
1999 (the "Shareholders Agreement"), pursuant to which they have agreed to
tender outstanding Shares beneficially owned by them pursuant to the Offer. As
of the date of the Shareholders Agreement, Mr. Pickett and his wife
beneficially owned a total of 499,937 outstanding Shares and Mr. Beiser and
his wife beneficially owned a total of 292,147 outstanding Shares.
Item 7. Certain Negotiations and Transactions by the Subject Company.
(a) Except as set forth in Item 4 above, the Company is not engaged in any
negotiation in response to the Offer which relates to or would result in (i)
an extraordinary transaction such as a merger or reorganization, involving the
Company; (ii) a purchase, sale or transfer of a material amount of assets by
the Company; (iii) a tender offer for or other acquisition of securities by or
of the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as described in Item 4 above, there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer which relate to or would result in one or more of the matters referred
to in Item 7(a) above.
Item 8. Additional Information to be Furnished.
Reference is hereby made to the Offer to Purchase and the related Letter of
Transmittal, filed as Exhibits 2 and 3, respectively, and are incorporated
herein by reference.
16
<PAGE>
Item 9. Material to be Filed as Exhibits.
<TABLE>
<C> <S>
Exhibit 1 --Excerpts from the Company's Proxy Statement for the Annual
Meeting of Shareholders held on May 21, 1998.
Exhibit 2 --Offer to Purchase dated February 22, 1999.+
Exhibit 3 --Letter of Transmittal.+
Exhibit 4 --Agreement and Plan of Merger, dated as of February 15, 1999,
among ASA Holdings, Inc., Delta Air Lines, Inc. and Delta Sub,
Inc.
Exhibit 5 --Letter to Shareholders of the Company, dated February 22, 1999.*
Exhibit 6 --Delta Connection Agreement between Delta Air Lines, Inc. and
Atlantic Southeast Airlines, Inc. dated as of July 1, 1986, and
amended as of December 17, 1987, July 1, 1988, March 4, 1992, and
August 1, 1994.
Exhibit 7 --Memorandum Agreement (with respect to employment and consulting),
dated as of February 15, 1999, among George F. Pickett, ASA
Holdings, Inc. and Delta Air Lines, Inc.
Exhibit 8 --Memorandum Agreement (with respect to employment and consulting),
dated as of February 15, 1999, among John W. Beiser, ASA Holdings,
Inc. and Delta Air Lines, Inc.
Exhibit 9 --The Company's Special Severance Plan.
Exhibit 10 --Form of Retention Agreement between the Company and Ronald V.
Sapp dated as of February 15, 1999.
Exhibit 11 --Form of Retention Agreement between the Company and Edward J.
Paquette dated as of February 15, 1999.
Exhibit 12 --Company 1997 Nonqualified Stock Option Plan and amendment
thereto.
Exhibit 13 --Second Restatement and Amendment By the Entirety of and Third
Amendment to the Atlantic Southeast Airlines, Inc. Executive
Deferred Compensation (Retirement) Plan.
Exhibit 14 --Stock Agreement among Delta Air Lines, Inc., Atlantic Southeast
Airlines, Inc. and the Company dated as of March 17, 1997.
Exhibit 15 --Form of Indemnity Agreement of Executive Officer.
Exhibit 16 --Form of Indemnity Agreement of Director.
Exhibit 17 --Amended and Restated Founding Officer Agreement among George F.
Pickett, Atlantic Southeast Airlines, Inc. and the Company dated
as of April 16, 1997 and amended as of February 15, 1999.
Exhibit 18 --Amended and Restated Founding Officer Agreement among John W.
Beiser, Atlantic Southeast Airlines, Inc. and the Company dated as
of April 16, 1997 and amended as of February 15, 1999.
Exhibit 19 --Confidentiality Agreement between Delta and the Company dated as
of February 9, 1999.
Exhibit 20 --Second Amendment to the Company's Supplemental Executive
Retirement Plan.
</TABLE>
- --------
* Included with Schedule 14D-9 mailed to shareholders of the Company.
+ Filed as an exhibit to Delta Sub, Inc.'s Tender Offer Statement on Schedule
14D-1 dated February 22, 1999 and incorporated herein by reference.
17
<PAGE>
This document and the exhibits attached hereto may contain certain
statements that are not strictly historical and are considered forward-looking
statements. Although the Company believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions, it can give no
assurance that its expectations will be realized. Forward-looking statements
involve known and unknown risks which may cause the Company's actual results
and corporate developments to differ materially from those expected. Factors
that could cause results and developments to differ materially from the
Company's expectations include, without limitation, the risks described from
time to time in the Company's reports filed with the Securities and Exchange
Commission including quarterly reports on Form 10-Q, annual reports on Form
10-K and reports on Form 8-K. The safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 with respect to forward-looking
statements are not available to statements made in connection with a tender
offer.
18
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
ASA HOLDINGS, INC.
By: /s/ George F. Pickett
-----------------------------------
Name: George F. Pickett
Title: Chairman of the Board and
Chief Executive Officer
Dated: February 22, 1999
19
<PAGE>
SCHEDULE I
ASA HOLDINGS, INC
100 Hartsfield Centre Parkway, Suite 800
Atlanta, Georgia 30354
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14f-1 THEREUNDER
General
This Information Statement is being mailed on or about February 22, 1999 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of ASA Holdings, Inc. (the "Company"). Capitalized terms
used herein and not otherwise defined shall have the meaning set forth in the
Schedule 14D-9. You are receiving this Information Statement in connection
with the possible election of persons designated (the "Delta Designees") by
Delta Air Lines, Inc. ("Delta") to the Company's Board of Directors (the
"Board"). Pursuant to the terms of the Merger Agreement, Delta will be
entitled to designate the number of directors on the Board that equal the
product of (i) the total number of directors on the Board multiplied by (ii)
the percentage that the number of Shares beneficially owned by Delta
(including Shares accepted for payment) bears to the total number of Shares
outstanding. The Company will take all action necessary to cause the Delta
Designees to be elected or appointed to the Board, including, increasing the
number of directors and seeking and accepting resignations of incumbent
directors. Notwithstanding the foregoing, until the Effective Time of the
Merger, the Company will use its reasonable best efforts to cause at least two
persons who are not employees of the Company or affiliated with Delta to be
members of the Board. This Information Statement is required by Section 14(f)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
Rule 14f-1 promulgated thereunder. You are urged to read this Information
Statement carefully. You are not, however, required to take any action in
connection with this Information Statement.
The Offer commenced on February 22, 1999 and is scheduled to expire at 12:00
midnight New York City time, on March 19, 1999 unless extended upon the terms
set forth in the Offer to Purchase.
The information contained in this Information Statement concerning Delta and
Purchaser has been furnished to the Company by Delta. The Company assumes no
responsibility for the accuracy or completeness of such information.
GENERAL INFORMATION REGARDING THE COMPANY
The Shares constitute the only class of voting securities of the Company
outstanding. Each Share has one vote. As of February 19, 1999, there were
28,523,177 Shares outstanding. The Board currently consists of seven members
with no vacancies. Each director holds office until such director's successor
is elected and qualified or until such director's earlier resignation or
removal.
Shareholders elect the entire Board of Directors for a term of one year and
until their successors are elected and qualified or until their earlier
resignation or removal. The Bylaws of the Company provide that there shall be
not less than three nor more than nine directors and that the exact number may
be fixed from time to time by resolution of the Company's shareholders or by
resolution of the Board of Directors.
DESIGNATION OF DIRECTORS
The Merger Agreement provides that, immediately upon the purchase of and
payment for any Shares by Purchaser or any of its affiliates pursuant to the
Offer, Delta will be entitled to designate such number of directors, rounded
up to the next whole number, on the Board as is equal to the product of the
total number of directors on the Board multiplied by the percentage that the
aggregate number of Shares so accepted for payment
Schedule I--1
<PAGE>
bears to the total number of Shares then outstanding. The Company has agreed,
upon the request of Delta, to increase promptly the size of the Board or
exercise its best efforts to secure the resignations of such number of
directors, or both, as is necessary to enable the Delta Designees to be
appointed to the Board and shall cause the Delta Designees to be so appointed.
The Company has also agreed upon request of Delta to cause directors
designated by Delta to constitute at least the same percentage as such
directors represent on the Board on (i) each committee of the Board, (ii) each
board of directors (or similar body) of each significant subsidiary of the
Company and (iii) each committee (or similar body) of each such board (rounded
up to the next whole number).
Notwithstanding the foregoing, the Merger Agreement provides that, following
the election of the Delta Designees in accordance with the foregoing and prior
to the Effective Time, any amendment or termination of the Merger Agreement by
the Company, any extension or waiver by the Company of the time for the
performance of any of the obligations or other acts of Delta or Purchaser or
waiver of any of the Company's rights thereunder, will require the concurrence
of a majority of those directors of the Company then in office who are neither
affiliated with Delta or employees of the Company.
It is expected that the Delta Designees will assume office promptly
following the purchase by the Purchaser of a majority of the outstanding
shares of Common Stock on a fully diluted basis pursuant to the terms of the
Offer, which purchase cannot be earlier than March 19, 1999, and that, upon
assuming office, the Delta Designees together with the continuing directors of
the Company will thereafter constitute the entire Board.
Proposed Directors
The following table sets forth (i) the name, current business or residence
address and present principal occupation or employment and (ii) material
occupations, positions, offices or employments and business addresses thereof
for the past five years, in each case of each proposed director designated by
Delta to serve as directors on the Board following the Offer and Merger. Each
of the proposed directors of the Company is a citizen of the United States.
Except as otherwise indicated, the business address of each proposed
director is Delta Air Lines, Inc., 1030 Delta Boulevard, Hartsfield Atlanta
International Airport, Atlanta, GA 30320. Except as otherwise indicated, each
occupation set forth opposite a person's name refers to employment with Delta,
Delta Sub or Delta Holdings, respectively. No proposed director beneficially
owns any material amount of outstanding Shares.
Schedule I--2
<PAGE>
PERSONS WHO MAY BE DESIGNATED BY DELTA TO SERVE AS DIRECTORS ON ASA'S BOARD
AFTER THE OFFER AND MERGER.
<TABLE>
<CAPTION>
Name, Citizenship Present Principal Occupation or Employment; Material Positions
and Current Business Address Held During the Past Five Years and Business Addresses Thereof
- ---------------------------- --------------------------------------------------------------
<S> <C>
Maurice W. Worth........ Chief Operating Officer since August 15, 1997.
Mr. Worth served as Acting Chief Executive
Officer from August 1, 1997 through August 15,
1997. Executive Vice President--Customer Service
and Acting Chief Operating Officer, May 1997
through July 31, 1997. Executive Vice
President--Customer Service, September 1995
through May 1997. Senior Vice President--
Personnel, May 1991 through September 1995.
Malcolm B. Armstrong.... Executive Vice President--Operations since
October 1, 1998. Mr. Armstrong was Vice
President--Corporate Safety & Compliance of
Delta from June 1997 until October 1998. He was
Vice President--Corporate Safety and Regulatory
Compliance of US Airways, Inc. from July 1995
until June 1997. Prior to joining US Airways,
Inc., he was a commander, 21st Air Force and Lt.
General in the U.S. Air Force from 1992 until he
retired in 1995.
Vicki B. Escarra........ Executive Vice President--Customer Service since
July 1998. Senior Vice President--Airport
Customer Service, November 1996 through June
1998. Vice President--Airport Customer Service,
August 1996 through November 1996. Vice
President--Reservation Sales and Distribution
Planning, May 1996 through August 1996. Vice
President--Reservation Sales, November 1994 to
May 1996. Director--Reservations Sales, October
1994 to November 1994. Director-In-Flight
Service Operations, May 1992 to October 1994.
Warren C. Jenson........ Executive Vice President and Chief Financial
Officer since April 20, 1998. He was Senior Vice
President and Chief Financial Officer of the
National Broadcasting Company a General Electric
Subsidiary from 1992 to April 1998.
Frederick W. Reid....... Executive Vice President and Chief Marketing
Officer since July 1, 1998. Mr. Reid was an
executive of Lufthansa German Airlines from
April 1991 to June 1998, serving as that
company's President and Chief Operating Officer
from April 1997 to June 1998, as Executive Vice
President Chief Operating Officer from 1995 to
March 1997, and as Senior Vice President, The
Americas, from 1991 to 1996.
</TABLE>
Schedule I--3
<PAGE>
Biographical Information of Current Directors of the Company
The following is a brief description of the business experience of each
director of the Company for at least the past five years:
JOHN W. BEISER. Mr. Beiser (age 58), is the Company's and ASA's President
and a member of the Board of Directors of both companies. He has served as
President of ASA since February 1994 and of the Company since its inception in
September 1996. He has served as Secretary of both companies since their
respective inception. In addition, Mr. Beiser was ASA's Vice President from
its inception until 1985 when he was designated as ASA's Senior Vice
President--Sales and Services. Mr. Beiser has served as the President of ASA
Investments since its inception. Mr. Beiser has been a member of the Board of
Directors of ASA since 1982 and of the Company since its inception.
GEORGE BERRY. Mr. Berry (age 61) has served for the past eight years as
Senior Vice President of Cousins Properties Incorporated, a publicly-held real
estate investment trust. Mr. Berry also serves as a director of Community
Trust Financial Services Corporation. From 1983 to 1990, he served as
Commissioner of Industry, Trade and Tourism for the State of Georgia. From
1962 to 1983, Mr. Berry served in the administration of four mayors of the
City of Atlanta, and was appointed as Chief Administrative Officer under two
mayoral administrations. His responsibilities with the Atlanta administration
included an appointment as Commissioner of Aviation, in which capacity he
supervised a major expansion of Hartsfield Atlanta International Airport.
JEAN A. MORI. Mr. Mori (age 62) has been a member of the Company's Board of
Directors since September 30, 1996, and was a member of ASA's Board of
Directors from 1994 until December 31, 1996. Mr. Mori is a Chairman of the
Board and President of Mori Luggage & Gifts, Inc., a retail chain of 29 stores
throughout the Southeast specializing in luggage, business cases, leather
goods and gifts. He has held this position since the founding of Mori Luggage
& Gifts, Inc. in 1971. Mr. Mori served as the President of the National
Luggage Dealers Association from 1986 to 1988 and has served on its board of
directors since 1980.
PARKER H. PETIT. Mr. Petit (age 59) has been a member of the Company's Board
of Directors since September 30, 1996, and was a member of ASA's Board of
Directors from 1982 until December 31, 1996. Mr. Petit has served as Chairman
of the Board of Directors of Matria Healthcare, Inc. ("Matria"), an
obstetrical homecare services company, since March 1996. He was the founder of
Healthdyne, Inc. and acted as its Chairman of the Board and Chief Executive
Officer from 1970 until Healthdyne and Tokos Medical Corporation (Delaware)
merged with and into Matria in March 1996. Mr. Petit also serves as a director
of Healthdyne Information Enterprises, Inc., Intelligent Systems, Inc.,
Norrell Corporation and Logility, Inc.
GEORGE F. PICKETT. Mr. Pickett (age 57) is the Company's and ASA's Chairman
of the Board and Chief Executive Officer and a member of the Board of
Directors of both companies. He has served as Chairman of the Board and Chief
Executive Officer of ASA since February 1994 and of the Company since its
inception in September 1996. Since ASA's inception in 1979 and until February
1994, he served as ASA's President and Chief Executive Officer. Mr. Pickett
has been a member of the Board of Directors of the Company, ASA and ASA
Investments since their respective inceptions.
ALAN M. VOORHEES. Mr. Voorhees (age 76) has been a member of the Company's
Board of Directors since September 30, 1996, and was a member of ASA's Board
of Directors from 1979 until December 31, 1996. Mr. Voorhees was Chairman of
the Board of ASA from 1979 until February 1994. Mr. Voorhees is Chairman of
the Board of Summit Enterprises, Inc. of Virginia, an investment management
firm organized by Mr. Voorhees in 1979. Mr. Voorhees has served as a director
of Micros Systems, Inc., an electronic cash register manufacturer for the
hospitality industry, since 1982.
RALPH W. VOORHEES. Mr. Voorhees (age 72) has been a member of the Company's
Board of Directors since September 30, 1996, and was a member of ASA's Board
of Directors from 1979 until December 31, 1996. Mr. Voorhees has been Senior
Vice President--Investments with PaineWebber Incorporated, an investment
banking firm, since 1973.
Schedule I--4
<PAGE>
Mr. Beiser is the brother-in-law of Ralph W. Voorhees, who is the brother of
Alan M. Voorhees.
Executive Officers of the Registrant
As of February 18, 1999 the names, offices with the Company, ages and years
of service of all Executive Officers of the Company were as follows:
<TABLE>
<CAPTION>
Years as
Name Office Age Officer*
---- ------ --- --------
<S> <C> <C> <C>
George F. Pickett....... Chairman and Chief Executive Officer 57 20
John W. Beiser.......... President 58 20
Ronald V. Sapp.......... Chief Financial Officer and Senior Vice 54 14
President--Finance
R. Mark Bole............ Assistant Vice President--Treasurer 40 3
Edward J. Paquette...... Senior Vice President--Operations 48 2
Charles J. Thibaudeau... Vice President--Human Resources 52 1
James J. Cerniglia...... Assistant Vice President--Flight Systems 56 1
Controls
Mark W. Fischer......... Vice President--Customer Service 40 2
John P. McBryan......... Vice President--Technical Services 50 2
John A. Bedson.......... Vice President--Operations 43 1
Renee H. Skinner........ Assistant Vice President--Controller 42 5
Samuel J. Watts......... Vice President--Sales and Corporate 51 14
Communications
W. Grant Nichols........ Assistant Vice President--Market 34 2
Development
</TABLE>
- --------
* Includes years at ASA Holdings, Inc. and Atlantic Southeast Airlines, Inc.
GEORGE F. PICKETT. George F. Pickett is the Company's and ASA's Chairman of
the Board and Chief Executive Officer and is a member of the Board of
Directors of both companies. He has served as Chairman of the Board and Chief
Executive Officer of ASA since February 1994 and of the Company since its
inception in September 1996. Since ASA's inception in 1979 and until February
1994, he served as ASA's President and Chief Executive Officer. Mr. Pickett
has been a member of the Board of Directors of the Company, ASA and ASA
Investments since their respective inceptions.
JOHN W. BEISER. John W. Beiser is the Company's and ASA's President and is a
member of the Board of Directors of both companies. He has served as President
of ASA since February 1994 and of the Company since its inception in September
1996. He has served as Secretary of both companies since their respective
inception. In addition, Mr. Beiser was ASA's Vice President from its inception
until 1985 when he was designated as ASA's Senior Vice President--Sales and
Services. Mr. Beiser has been a member of the Board of Directors of ASA since
1982 and of the Company since its inception.
RONALD V. SAPP. Ronald V. Sapp is the Company's and ASA's Senior Vice
President--Finance and Chief Financial Officer. Mr. Sapp was named Senior Vice
President--Finance and Chief Financial Officer in May 1997. Mr. Sapp served as
Vice President--Finance and Chief Financial Officer for ASA from 1985 until
May 1997 and for the Company from the time of the Reorganization until May
1997. He served as ASA's Treasurer from 1985 until February 1997 and as the
Company's Treasurer between September 1996 and February 1997. From 1983 to
1985, Mr. Sapp served as Vice President--Finance and Treasurer of Air Atlanta,
Inc., a scheduled passenger airline. From 1979 to 1983, Mr. Sapp served as
Vice President and Controller of Air California, Inc., a scheduled passenger
airline.
R. MARK BOLE. R. Mark Bole was named the Company's and ASA's Assistant Vice
President--Treasurer in February 1997. He was ASA's Assistant Vice President--
Assistant Treasurer from February 1996 until February 1997 and held the same
positions with the Company from the effective date of the Reorganization until
February 1997. Mr. Bole served as a Vice President of Wachovia Bank of
Georgia, N.A. from May 1991 until February 1996.
Schedule I--5
<PAGE>
EDWARD J. PAQUETTE. Edward J. Paquette was named ASA's Senior Vice
President--Operations in April 1997. From May 1996 until April 1997, he served
as Vice President--Operations of In-Flight Phone Corporation. From November
1994 to May 1996, he served as Vice President--Ground Operations at Ogden
Aviation Services. Mr. Paquette served in various capacities at Trans World
Airlines from 1969 through 1994, including Senior Vice President--Maintenance
and Engineering and Senior Vice President--Operations.
The following information is furnished with respect to other significant
employees of ASA Holdings and ASA as of February 18, 1999:
CHARLES J. THIBAUDEAU. Charles J. Thibaudeau has served as ASA's Vice
President--Human Resources since November 1998. Mr. Thibaudeau has
approximately twenty years of experience in the human resources and employee
relations areas from his tenure at Trans World Airlines.
JAMES J. CERNIGLIA. James J. Cerniglia has served as ASA's Assistant Vice
President--Flight Systems Controls since March 1998. Mr. Cerniglia has held
positions with or served as a consultant to a number of airlines since 1986.
He served as the Director--Flight Control of Trump Shuttle, Inc. ("Trump")
from February 1989 until September 1991 and as Senior Director--Sales and
Marketing of Trump from September 1991 until March 1992. Mr. Cerniglia served
as Vice President--Operations of Jet Express/USAir from March 1992 until July
1993, as an independent airline consultant from July 1993 until May 1996, as
Director--Operations Control of Pan American World Airways, Inc. from May 1996
until September 1997, and as an independent airline consultant from that time
until he joined ASA.
MARK W. FISCHER. Mark W. Fischer has served as the Vice President--Customer
Service of ASA since November 1997. From 1992 until joining ASA, Mr. Fischer
served as the Vice President--Customer Service for Piedmont Airlines, Inc.,
and from 1987 until 1992, he served as Vice President--Customer Service for
Midway Airlines, Inc. Mr. Fischer previously held a number of positions with
Fischer Bros. Aviation, Inc. from 1987 until 1992.
JOHN P. MCBRYAN. John P. McBryan who has served as Vice President--Technical
Services of ASA since December 1997, has 27 years of experience in the
aviation industry. He was Vice President--Maintenance for Air Wisconsin, Inc.
from 1988 until 1992, and served as Director of Maintenance for Allegheny
Airlines, Inc. from 1992 until 1993. Mr. McBryan served as Vice President--
Operations of Dyn-Air Tech, an aircraft repair station, from 1993 until 1994,
and as Manager of Industrial Engineering of The Dee Howard Company, another
repair station, from 1994 through 1996. Prior to joining ASA, he was the
Director--Programs and Planning for Miami Air International.
JOHN A. BEDSON. John A. Bedson has been ASA's Vice President--Flight
Operations since November 1998. From 1994 until 1998, Mr. Bedson was Vice
President--Operations Support for British Aerospace, North America, Inc. Prior
to this, he was Director--Flight Operations for Trans World Express from 1990
to 1994, and held the positions of Director--Flight Operations, Chief Pilot
and Chief Instructor at PanAm Express from 1985 to 1990.
RENEE H. SKINNER. Renee H. Skinner is the Company's and ASA's Assistant Vice
President--Controller. She has held these positions with ASA since 1994 and
with the Company since the Reorganization was effective. Ms. Skinner served as
ASA's Manager of Accounting from 1986 through 1994.
SAMUEL J. WATTS. Samuel J. Watts who has served as Vice President--Sales and
Corporate Communications of ASA since July 1997, has been employed by ASA in
customer service positions since 1983. From 1985 to 1994, he was ASA's Vice
President--Customer Services. In 1994, he was elected as ASA's Vice
President--Sales and Customer Services. Mr. Watts was employed by Southeastern
Airlines, a regional airline, from 1982 to 1983 as its Vice President--
Marketing. From 1972 to 1982, Mr. Watts worked for Eastern Airlines, Inc., a
major airline, in various line and staff positions.
Schedule I--6
<PAGE>
W. GRANT NICHOLS. W. Grant Nichols has served as ASA's Assistant Vice
President--Market Development since 1997. Mr. Nichols previously served as the
Manager of Revenue Control from 1989 until 1997. Prior to 1989, Mr. Nichols
held various positions with ASA from 1985 to 1989.
Security Ownership of Management
The following table sets forth certain information as to the Common Stock
beneficially owned as of February 18, 1999 by each of the Company's directors,
nominees for director, each executive officer, and all directors and executive
officers as a group.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name and Address of Beneficial Owner Ownership of Class(1)
- ------------------------------------ ---------- -----------
<S> <C> <C>
George F. Pickett................................ 810,287(2)(3) 2.8%
John W. Beiser................................... 467,847(3)(4) 1.6%
Ronald V. Sapp................................... 70,439(3) *
R. Mark Bole..................................... 9,800(3) *
Jean A. Mori..................................... 6,124(5)(8) *
Parker H. Petit.................................. 10,000(8) *
Alan M. Voorhees................................. 248,027(6)(8) *
Ralph W. Voorhees................................ 47,000(7)(8) *
George Berry..................................... 6,000(8) *
Edward J. Paquette............................... 45,350(3) *
All directors, nominees and executive officers as
a group (ten persons)........................... 1,720,874(9) 6.0%
</TABLE>
- --------
* Represents holdings of less than 1%.
(1) Information with respect to beneficial ownership is based upon information
furnished by each owner. Percent of Class is based on 28,523,177 shares of
the Company's Common Stock outstanding as of February 18, 1999 (excluding
treasury shares).
(2) Includes 118,650 shares held by the wife of George F. Pickett, as to which
shares Mr. Pickett disclaims any beneficial ownership interest.
(3) Includes shares of the Company's Common Stock that the individual has the
right to acquire, on or before May 29, 1999 (60 days from March 30, 1999),
through the exercise of options granted under the Nonqualified Stock
Option Plan (see "Stock Option/SAR Grants and Related Information") as
follows: George F. Pickett--310,350 shares; John W. Beiser--175,700
shares; Ronald V. Sapp--60,550 shares; Edward J. Paquette--45,350 shares;
and R. Mark Bole--8,600 shares.
(4) Includes 140,000 shares held by the wife of John W. Beiser, as to which
shares Mr. Beiser disclaims any beneficial ownership interest.
(5) Includes 230 shares held by the wife of Jean A. Mori, as to which shares
Mr. Mori disclaims any beneficial ownership interest.
(6) Includes 243,027 shares held by irrevocable trusts created for the benefit
of the adult children of Alan M. Voorhees as to which shares Mr. Voorhees
disclaims any beneficial ownership interest.
(7) Includes 20,000 shares held by the wife of Ralph W. Voorhees, as to which
shares Mr. Voorhees disclaims any beneficial ownership interest.
(8) Includes 5,000 shares of the Company's Common Stock that the individual
has the right to acquire, on or before May 29, 1999 (60 days from March
30, 1999), through the exercise of stock options granted under the
Nonqualified Stock Option Plan for Non-Employee Directors.
(9) Includes an aggregate of 625,550 shares which the directors and executive
officers as a group have the right to acquire as of May 29, 1999 through
the exercise of options.
Schedule I--7
<PAGE>
Security Ownership of Certain Beneficial Holders
The following table sets forth certain information as to the Common Stock of
the Company beneficially owned as of February 18, 1999 by each person, other
than persons whose ownership is reflected under the caption "Security
Ownership of Management," who is known by the Company to own, directly or
indirectly, more than 5% of the outstanding shares of the Company's Common
Stock, and reflects information presented in each such person's Schedule 13D
or Schedule 13G (and amendments, if any, thereto) as filed with the Securities
and Exchange Commission and provided to the Company.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name and Address of Beneficial Owner Ownership of Class(1)
- ------------------------------------ ---------- -----------
<S> <C> <C>
Delta Air Lines Holdings, Inc. (2)...................... 7,995,000 28.0%
1101 North Market Street
Suite 1300
Wilmington, DE 19801
FMR Corporation (3)..................................... 3,003,800 10.53%
82 Devonshire Street
Boston, MA 02109
</TABLE>
- --------
(1) Percent of Class is based on 28,523,177 shares of the Company's Common
Stock outstanding as of February 18, 1999 (excluding treasury shares).
(2) Delta Air Lines Holdings, Inc. is a wholly-owned subsidiary of Delta.
(3) Based upon an amendment to the Schedule 13G filed on February 11, 1999
with the Securities and Exchange Commission by FMR Corp. ("FMR"), Edward
C. Johnson, III and Abigail P. Johnson. Of the shares reported, (a)
2,500,700 shares are owned beneficially by Fidelity Management & Research
Company ("Fidelity"), a wholly-owned subsidiary of FMR and an investment
advisor to various investment companies (the "Funds"), (b) 1,570,000
shares are owned beneficially by Fidelity Low-Priced Stock Fund (the
"Fund"), a registered investment company and, (c) 503,100 shares are owned
beneficially by Fidelity Management Trust Company ("FMTC"), a wholly-owned
subsidiary of FMR. According to the Schedule 13G, as amended, (i) each of
FMR, Fidelity, Mr. Johnson and the Funds has the sole power to dispose of
all 2,500,700 of the shares owned by the Funds, and (ii) the sole power to
vote the shares owned directly by the Funds resides with the Funds' Board
of Trustees. Each of Mr. Johnson and FMR, through its control of FMTC, has
sole dispositive power of 503,100 shares and sole power to vote or direct
the voting of 446,400 shares owned by the above beneficial owners.
Meetings of the Board of Directors and Committees
During 1998, the Company's Board of Directors met seven times. Each
incumbent director attended at least 75% of the aggregate of (1) the total
number of meetings of the Board and (2) the total number of meetings held by
the committees of the Board on which he served, during the period in which he
served as a member of the committee.
The Company has two standing committees, an Audit Committee and a
Compensation Committee. The Company does not have a separate nominating
committee.
The Company's Audit Committee currently consists of Alan M. Voorhees, Ralph
W. Voorhees and George Berry. During 1998, the Audit Committee met once. The
Audit Committee is empowered to (i) recommend to the Board of Directors
(annually or as required) the independent auditors for the Company; (ii)
review and approve the scope and general procedures to be used by both the
internal and independent auditors during the conduct of their examinations;
(iii) discuss audit findings and/or management letter recommendations with
representatives of the independent auditors; (iv) review the Company's
conflict of interest policy and insure that such policy is actively
maintained; (v) review professional services provided by the independent
auditors after
Schedule I--8
<PAGE>
service is performed, including audit and other fees; (vi) review the
independence and objectivity of the internal audit function and the historical
and proposed activities of the internal audit department, and approve the
scope of such plans; (vii) review with the Company's chief financial and
accounting officer and independent auditors their reports, if any, as to the
scope and adequacy of the internal accounting controls and compliance with the
record keeping provisions of the Foreign Corrupt Practices Act; (viii) review
any actual or proposed changes in accounting principles which will have a
material impact on the Company's financial statements; and (ix) direct and
supervise (where appropriate) special investigations into any matters that
raise questions about the accuracy of the Company's financial statements or
the adequacy of the internal accounting controls.
The Company's Compensation Committee currently consists of Jean A. Mori and
Parker H. Petit. During 1998, the Compensation Committee met two times. The
Compensation Committee is empowered to (i) approve compensation levels and
increases for each executive officer who also serves as a member of the Board
of Directors and for any officer or employee having an annual base salary
greater than $90,000, (ii) approve all incentive payments in excess of $5,000
per year and (iii) undertake the administration, at the direction of the
Board, of employee benefit plans.
Compensation of Directors
During 1998, the Company's directors who were employees of the Company and
its subsidiaries received no additional or special remuneration for serving as
members of the Board of Directors. The compensation for each member of the
Company's Board of Directors who was not also an officer or employee of the
Company or its subsidiaries was set at $2,500 per quarter plus $1,000 for each
meeting of the Board of Directors and $500 for each meeting of a committee of
the Board of Directors that he attended. All members of the Company's Board of
Directors were reimbursed for their expenses associated with attendance at
formal Board meetings during 1998.
Pursuant to the Company's 1998 Nonqualified Stock Option Plan for Non-
Employee Directors (the "Directors Plan"), each member of the Board of
Directors who qualifies as an Outside Director (as defined in the Directors
Plan) on December 31st of any year receives an option to purchase 2,500 shares
of the Company's Common Stock. In addition, the Board may grant options on a
discretionary basis under the Directors Plan to Outside Directors. The
following directors are Outside Directors for purposes of the Directors Plan:
George Berry, Jean A. Mori, Parker H. Petit, Alan M. Voorhees and Ralph W.
Voorhees.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following Compensation Committee Report was included in the Company's
proxy statement for the 1998 Annual Meeting of Shareholders held on May 21,
1998. The Compensation Committee of the Board of Directors has not yet
prepared a report on executive compensation for purposes of a subsequent
annual meeting proxy statement.
Compensation Committee Report on Executive Compensation
The Company's compensation policies applicable to its executive officers are
established and administered by the Compensation Committee (the "Committee")
of the Company's Board of Directors, the current members of which are non-
employee directors of the Company. The compensation policies adopted by the
Committee are designed to enhance the overall strength and financial
performance of the Company, both by aligning the financial interests of the
Company's executive officers with those of its shareholders and by retaining
and rewarding talented executives who are critical to the long-term success of
the Company's business. A significant portion of the executive compensation is
directly related to the financial results of the Company, although individual
contributions and accomplishments are also considered in the determination of
compensation.
Schedule I--9
<PAGE>
The Company's executive compensation program as administered by the
Committee consists primarily of (i) annual cash compensation, the components
of which are base salary and an annual variable cash incentive ("bonus"), and
(ii) long-term equity-based incentive compensation, formerly consisting of
stock appreciation rights ("SARs") and now consisting of stock options. In
addition, a retirement program consisting of an investment savings plan, a
deferred executive compensation plan and a supplemental executive retirement
plan is provided.
Each of these compensation elements for the Company's executive officers is
discussed below, with the compensation of the Company's Chairman of the Board
and Chief Executive Officer, George F. Pickett, and the Company's President,
John W. Beiser (Messrs. Pickett and Beiser, collectively, the "Senior
Executive Officers"), set forth separately under the caption "Senior Executive
Officer Compensation."
For clarification purposes, references in the Compensation Committee Report
to executive compensation policies and practices of the Compensation Committee
and management shall mean ASA's Compensation Committee and management
thereafter.
Base Salaries. The base salaries of Company executives and proposed changes
in salaries are reviewed and approved annually by the Committee. In
determining base salaries, the Committee considers, among other factors, the
Company's financial performance in the prior year, the individual's
contributions toward the achievement of corporate goals and objectives, the
individual's job level and experience and current salary compared to market
rates. The Committee bases its decisions on management recommendations for
officers and key employees other than the Senior Executive Officers.
Annual Incentive Compensation. A second major component of executive
compensation is annual incentive compensation which is paid in the form of
cash bonuses. Bonus payments to officers and employees of the Company other
than the Senior Executive Officers are based upon management's recommendations
to the Committee. Maximum bonus award levels are based on factors similar to
those used in determining base salary.
Long-Term Incentive Compensation. Equity-based incentives are designed to
link a portion of executive compensation to increases in shareholder value.
Prior to May 1997, the Company's long-term incentive compensation consisted of
SARs granted pursuant to the Company's Stock Appreciation Rights Plan (the
"SAR Plan"). The methodology and assumptions used by the Committee in
calculating SAR awards to officers and key employees in 1997 and in previous
years were intended to produce, upon the exercise of the SAR award one year
from the date of its grant, an amount equivalent to approximately 50% of the
base pay for the Senior Executive Officers and 35% of the base pay for other
grantees. In May 1997, upon recommendation by the Committee and adoption by
the Board, the Company's shareholders approved the ASA Holdings, Inc. 1997
Nonqualified Stock Option Plan (the "Stock Option Plan") to replace the SAR
Plan. See "Stock Option/SAR Grants and Related Information" herein regarding
the exchange of all outstanding SARs for replacement options.
Other Deferred Compensation Arrangements. The Company has the following
deferred compensation plans which are available to some or all of the
Company's named executive officers: an Investment Savings Plan (the "Savings
Plan"), an Executive Deferred Compensation Plan (the "Deferred Compensation
Plan"), and a Supplemental Executive Retirement Plan (the "SERP"). Both
executive and non-executive employees are eligible to participate in the
Savings Plan, a 401(k) plan, subject to certain legal limitations on
contributions or benefits to highly compensated employees. Under the Deferred
Compensation Plan, which provides for tax deferred contributions by
participating employers (the Company and ASA) that exceed the contribution
levels permitted under the Savings Plan, the participating employers allocate
to each participant's account a specified percentage of his base salary for
the year (15% for the Senior Executive Officer and 10% for the other key
executive employee participants). The amount of the benefit for a participant
other than the Senior Executive Officers is equal to the participant's vested
interest in the accrued benefit percentage of the contributions and earnings
allocated to his account. The Senior Executive Officers have a 100% accrued
benefit percentage under the Deferred Compensation Plan. The SERP is a
nonqualified plan which provides individually tailored supplemental retirement
income for key executive employees selected by the Company. Currently the
Senior
Schedule I--10
<PAGE>
Executive Officers are the only SERP participants. As of the date of this
proxy statement, the benefits payable to each of the Senior Executive Officers
would be $168,540 annually reduced by the applicable amounts of their benefits
under the Savings Plan, the Deferred Compensation Plan and Social Security.
Senior Executive Officer Compensation. The salary levels and cash incentive
bonuses for the Company's Senior Executive Officers are determined annually by
the Committee. Historically, salary increases for the Senior Executive
Officers have been commensurate with the percentage increase given to the
other officers and key employees. The 1997 base salaries of the Senior
Executive Officers represented a 4.5% increase over their 1996 base salaries.
For 1998, the Committee has approved a 4.0% increase over the 1997 base
salaries.
The Committee's bonus arrangements for the Senior Executive Officers for
1997 reflected a continuation of its policy of providing for an annual bonus
to each Senior Executive Officer of up to 50% of his base salary for the year,
with the exact amount of bonus earned to be determined at year end by the
Committee. The Committee approved 1997 bonuses for each of Messrs. Pickett and
Beiser in the amount of 40% of their respective base salaries. The Committee
determines the bonus earned based on the Company's satisfaction of specified
performance-based criteria, such as the Company's maintenance of certain
levels of completion factor and schedule reliability, non-fuel related ASM
cost and passenger/service satisfaction indicators, as well as the
individual's contributions with respect to developing and implementing long-
term business strategies and development of the Company's senior management
structure. No specific weight is assigned to the various bonus factors for
purposes of calculation of the bonus earned.
Deductibility of Executive Compensation. Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), generally disallows a tax
deduction to public companies for compensation of more than $1 million paid in
any year (not including amounts deferred) to a corporation's chief executive
officer and the four other most highly compensated executive officers, unless
certain requirements are met. To the extent that compensation is "performance-
based," as defined by the Code, it is excluded from the calculation of the
amount of deductible compensation. The Company believes that the Stock Option
Plan qualifies as such a performance-based compensation plan that is not
subject to the Section 162(m) limitations, and that all compensation paid in
1997 will be deductible under Section 162(m). In the future, the Committee
intends to try to structure compensation plans to ensure deductibility while
still preserving the Company's ability to attract and retain qualified
executives.
Significant Events Impacting Executive Compensation Since Issuance of the 1998
Compensation Committee Report
While, as indicated above, the Committee has not yet prepared its 1999
report on executive compensation, following is a description of significant
events impacting executive compensation that will be contained in the 1999
report.
Long Term Incentive Compensation. On February 15, 1999, the Board adopted an
amendment to the Stock Option Plan to provide that all options granted
thereunder will become fully vested and immediately exercisable upon the
occurrence of a "Change in Control." "Change in Control" is defined as set
forth in the amendment and conforms to the definition set forth in the Special
Severance Plan described below.
Special Severance Plan. On February 15, 1999, the Board adopted the ASA
Holdings, Inc. Special Severance Plan (the "Severance Plan"). Generally, the
Severance Plan provides that if the Company terminates the employment of an
eligible executive (includes eight senior officers other than Messrs. Pickett
and Beiser) without "Cause" or the executive terminates for "Good Reason"
within two years of a "Change in Control," the executive will be able to
receive an amount in cash equal to either 18 or 24 months of the executive's
highest annual rate of base salary in effect during the twelve-month period
immediately prior to termination, subject to a reduction, if necessary, if the
payments thereunder would be treated as "excess parachute payments" under
Section 280G of the Code. In addition, the executive also receives continued
coverage under the Company's medical, dental and life insurance plans for the
same number of months. In the event the executive cannot
Schedule I--11
<PAGE>
continue to participate in such plans, the Company will otherwise provide such
benefits on the same after-tax basis as if continued participation had been
permitted. "Cause," "Good Reason" and "Change in Control" are defined as set
forth in the Severance Plan.
Retention Agreements. The Company entered into retention agreements (each a
"Form of Retention Agreement") with each of Ronald V. Sapp and Edward J.
Paquette dated February 15, 1999. Mr. Sapp's Form of Retention Agreement
provides that if he is still employed with the Company on the six month
anniversary of the closing of the Offer, he will receive a lump sum amount
equal to his annual base salary payable for the 1999 calendar year as of the
date of the Form of Retention Agreement. Mr. Paquette's Form of Retention
Agreement provides that if he is still employed with the Company on the six
month anniversary of the closing of the Offer, he will receive a lump sum
amount equal to his annual base salary payable for the 1999 calendar year as
of the date of the Form of Retention Agreement. Each Form of Retention
Agreement also provides that Messrs. Sapp and Paquette will each receive such
amount if the Company terminates their respective employment without "Cause"
or if they terminate for "Good Reason" prior to the six month anniversary of
the closing of the Offer. "Cause" and "Good Reason" are defined as set forth
in the Form of Retention Agreements.
Other Deferred Compensation Arrangements. On February 15, 1999, the Board
also adopted amendments to the Executive Deferred Compensation Plan and the
SERP to amend the definition of "Change in Control" generally to conform to
the definition contained in the Severance Plan.
Memorandum Agreements with Messrs. Pickett and Beiser. On February 15, 1999,
the Company and Messrs. George F. Pickett and John W. Beiser (each an
"Executive") agreed pursuant to certain memorandum agreements (each a
"Memorandum Agreement") with the Company to negotiate in good faith to enter
into formal written employment and consulting agreements incorporating the
terms described below, with the intention that such employment and consulting
agreements will be executed prior to the Closing.
Pursuant to the terms of the Memorandum Agreements, Mr. Pickett is to serve
as Chief Executive Officer of the Company and Mr. Beiser is to serve as
President and Secretary of the Company from February 15, 1999 until the
Effective Time or such shorter period as provided by Employment and Consulting
Agreements (the "Employment Term") and each is to serve as a non-employee
consultant of the Company from the Effective Time until the 180th day
following the Effective Time or such shorter period as provided by the
Employment and Consulting Agreements (the "Consulting Term"). During the
Employment Term and the Consulting Term, the Company is to pay Messrs. Pickett
and Beiser base salaries at the rate in effect as of February 15, 1999 and
each is to continue to earn an annual bonus entitlement equal to 40% of his
respective base salary on the same terms that currently apply to such officer
under the Company's annual bonus plan. As of the 180th day following the
Effective Time, the Company shall pay to Mr. Pickett and to Mr. Beiser a lump
sum payment of $427,267 and $416,896, respectively, (provided, however, that
such payment is subject to a reduction, if necessary, if it would be treated
as an "excess parachute payment" under Section 280G of the Code) as
consideration for each officer's agreement to render services and honor the
non-competition covenant in the Memorandum Agreements. Pursuant to terms of
the Memorandum Agreements, from February 15, 1999 until the second anniversary
of the Effective Time, neither Mr. Pickett nor Mr. Beiser may (i) directly or
indirectly provide management or executive services to any person or entity
operating a commuter airline using planes with a capacity of less than 70
seats in an market in which the Company currently operates or (ii) solicit or
hire any employee of the Company to perform a service on behalf of a
competitor similar to any service performed by such employee on behalf of the
Company. If the Executive's employment or consulting services are terminated
without Cause or because of death or disability during the Employment Term or
Consulting Term, the Executive will receive accrued salary, a prorata bonus
and the Special Payment. "Cause" and "Special Payment" are defined as set
forth in the Memorandum Agreements.
Stock Price Performance Graph
The following graph compares the five-year cumulative total shareholder
return on ASA's and the Company's Common Stock with the comparable cumulative
total returns of the Nasdaq Stock Market (U.S. and
Schedule I--12
<PAGE>
Foreign) Index and the Media General Airline Index comprised of the companies
listed below. The graph assumes that the value of the investment in the Common
Stock and each index was $100 on December 31, 1992, and that all dividends
were reinvested. The stock price performance shown on the graph is not
necessarily indicative of future price performance.
The current composition of the Media General Airline index is as follows:
Air Canada (Class A); Air Methods CP; Airlease LTD; Airnet Systems, Inc.;
Airtran Holdings, Inc.; Alaska Air Group Inc.; America West Holdings CP; AMR
Corporation; Amtran Inc.; ASA Holdings, Inc.; Atlantic Coast Airlines; Baltic
International USA Inc.; British Airways PLC ADR; CCAir Inc.; CHC Helicopter CP
(Class A); China Eastern Airlines; China Southern Airlines Co.; Comair
Holdings Inc.; Continental Airlines (Class A & B); Delta Air Lines Inc.;
Frontier Airlines Inc.; Great Lakes Aviation LTD; Hawaiian Airlines Inc.;
Japan Airlines LTD; KLM Royal Dutch Airlines; Linea Aerea Nacional CH; Mesa
Air Group Inc. (NEV); Mesaba Holdings Inc.; Midwest Airlines; Midwest Express
Holdings; Northwest Airlines (Class A); Offshore Logistics Inc.; Pan Am Corp;
Petroleum Helicopter NV; Petroleum Helicopter VTG; PS Group Holdings Inc.;
Reno Air Inc.; Ryanair Holdings; and Skywest Inc.
COMPARISON OF TOTAL CUMULATIVE RETURN
AMONG ASA/ASA HOLDINGS, INC.,
MEDIA GENERAL AIRLINE INDEX
AND NASDAQ STOCK MARKET INDEX
[LINE GRAPH APPEARS HERE]
Schedule I--13
<PAGE>
INDEXED RETURNS OF INITIAL $100 INVESTMENT
<TABLE>
<CAPTION>
12/31/92 12/31/93 12/23/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
ASA/ASA Holdings Common
Stock.................. $100.00 $158.01 $ 72.47 $102.00 $105.41 $139.11
Media General Airline
Index.................. $100.00 $122.93 $117.84 $151.79 $156.95 $193.57
Nasdaq Stock Market In-
dex.................... $100.00 $119.95 $125.94 $163.35 $202.99 $248.30
</TABLE>
COMPARATIVE ANNUAL RETURN PERCENTAGE
<TABLE>
<CAPTION>
12/31/92 12/31/93 12/23/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
ASA/ASA Holdings Common
Stock.................. N/A 58.01% (54.14%) 40.75% 3.34% 31.97%
Media General Airline
Index.................. N/A 22.93% (4.14%) 28.81% 3.40% 23.33%
Nasdaq Stock Market In-
dex.................... N/A 19.95% 4.99% 29.70% 24.27% 22.32%
</TABLE>
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee at the end of 1998 were Messrs.
Mori and Petit. No member of the Compensation Committee was also an officer or
employee of the Company during fiscal 1998.
Summary of Cash and Certain Other Compensation
The following table sets forth certain information concerning the
compensation of the Company's Chief Executive Officer and each of the three
other executive officers of the Company serving as of December 31, 1998 whose
total salary and bonus for 1998 exceeded $100,000 (these four individuals are
referred to collectively as the "named executive officers"). The table
reflects all compensation received by each such executive officer for services
rendered in all capacities to the Company and its subsidiaries that was paid
or accrued during the fiscal years ended December 31, 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term
Compensation
Annual Compensation Awards
------------------------------------- ------------------
Securities
Name and Fiscal Other Annual Underlying All Other
Principal Position Year Salary($) Bonus($) Compensation(#)(1) Options/SARs(#)(2) Compensation($)
- ------------------ ------ --------- -------- ------------------ ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
George F. Pickett ...... 1998 $294,540 $118,000 $1,290 94,300 $44,181(3)
Chairman of the Board
and 1997 283,200 113,000 1,473 132,900 42,480(3)
Chief Executive Officer 1996 271,020 108,000 13,278 40,653(3)
John W. Beiser ......... 1998 287,520 115,000 1,260 92,000 43,128(4)
President and Secretary 1997 276,480 111,000 1,650 129,700 41,472(4)
1996 264,600 106,000 2,617 39,690(4)
Ronald V. Sapp ......... 1998 165,800 65,000 -- 37,100 23,255(5)
Senior Vice President-- 1997 127,800 51,000 -- 42,000 17,230(5)
Finance and 1996 116,160 50,000 -- 15,116(5)
Chief Financial Officer
Edward J. Paquette(6) .. 1998 165,800 65,000 -- 37,100 18,072(7)
Senior Vice President-- 1997 155,000 62,000 -- 53,600 10,810(7)
Operations of ASA
</TABLE>
- --------
(1) At the end of fiscal 1995, ASA's Compensation Committee authorized ASA to
pay to each of Messrs. Pickett and Beiser annually reimbursements to cover
Medicare tax liability with respect to the vested portion of his
respective interest in the SERP. Mr. Pickett and Mr. Beiser received such
reimbursements in 1996,
Schedule I--14
<PAGE>
1997 and 1998. Such reimbursements were disclosed as additional salary in
the Summary Compensation Table in prior years.
(2) Reflects shares underlying SARs granted in the respective year, all of
which were canceled on May 21, 1997 and replaced on a one-for-one basis by
stock options with the same basic terms as the outstanding SARs. See
"Stock Option/SAR Grants and Related Information."
(3) Includes contributions by the Company (or ASA as applicable) of $44,181,
$42,480 and $40,653 to the Deferred Compensation Plan in 1998, 1997 and
1996, respectively.
(4) Includes contributions by the Company (or ASA as applicable) of $43,128,
$41,472 and $39,690 to the Deferred Compensation Plan in 1998, 1997 and
1996, respectively.
(5) Includes contributions by the Company (or ASA as applicable) of $16,580,
$12,780 and $11,616 to the Deferred Compensation Plan, and $6,675, $4,450
and $3,500 by ASA to the Savings Plan in 1998, 1997 and 1996,
respectively.
(6) Mr. Paquette was named as Senior Vice President--Operations of ASA on
April 21, 1997. The Company's Board of Directors designated Mr. Paquette
as an "executive officer" of the Company on May 21, 1997 because he
performs policy-making functions for the Company.
(7) Includes contributions by ASA of $16,580 and $10,810 to the Deferred
Compensation Plan in 1998 and 1997, respectively; and a contribution by
ASA of $1,492 to the Savings Plan in 1998.
Stock Option Grants and Related Information
The following table sets forth information concerning all options granted in
1998 to the named executive officers. No other options were granted to the
named executive officers in 1998.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Option Grants in 1998 Individual Grants Option Term
----------------------------------------- -----------------------
Number of
Securities % of Total
Underlying Option Exercise
Options Granted to or Base
Granted Employees Price Expiration
Name (#)(7) in 1998 ($/sh) Date 5% 10%
---- ---------- ---------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
George F. Pickett....... 94,300 22.8% $40.625 2/11/03 $ 1,058,518 $ 2,339,112
John W. Beiser.......... 92,000 22.2% $40.625 2/11/03 $ 1,032,700 $ 2,282,060
Ronald V. Sapp.......... 37,100 9.0% $40.625 2/11/03 $ 416,448 $ 920,266
Edward J. Paquette...... 37,100 9.0% $40.625 2/11/03 $ 416,448 $ 920,266
</TABLE>
- --------
(1) The options granted become exercisable in two equal annual installments
beginning on the first anniversary of the date of grant. The
exercisability of options may be accelerated upon the optionee's
retirement with consent of the Company, death or material disability. In
addition, options become fully vested and immediately exercisable on the
occurrence of a "Change in Control" as defined in the amendment to the
Stock Option Plan adopted by the Board on February 15, 1999. The exercise
price may be paid with the delivery of already-owned shares or through a
broker-assisted exercise.
Schedule I--15
<PAGE>
The following table sets forth information with respect to the named
executive officers concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year.
AGGREGATE OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options At Options At Fiscal
Acquired on Value Fiscal Year-end (#) Year-end ($)(1)
Exercised Realized ------------------------- -------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George F. Pickett....... -- -- 341,800 94,300 2,822,574 --
John W. Beiser.......... 204,000 3,657,731 129,700 92,000 1,053,813 --
Ronald V. Sapp.......... 38,800 887,675 65,400 37,100 341,250 --
Edward J. Paquette...... 26,800 489,250 -- 63,900 -- 247,900
</TABLE>
- --------
(1) The fair market value of the Common Stock at the close of business on
December 31, 1998, was $30.50 per share based on the closing price per
share as quoted on the Nasdaq National Market.
Supplemental Executive Retirement Plan
The Company maintains a Supplemental Executive Retirement Plan ("SERP") to
provide certain of its key executives with supplemental retirement income.
Currently, Messr. Pickett and Beiser are the only SERP participants. Under the
SERP, after reaching age 55 and after retiring or terminating employment with
the Company and its subsidiaries, participants will be entitled to annual
benefits, paid on a monthly basis, of $150,000 offset by (i) 50% of the
participant's annual Social Security benefits projected as of the last day of
the calendar month of the participant's actual date of retirement or
termination of employment; (ii) the actuarial equivalent, expressed as an
annual benefit for the life of the participant, of 100% of the vested amount
in the participant's Employer Matching Account under the Savings Plan as of
the last day of the calendar month containing the participant's actual date of
retirement or termination; and (iii) the actuarial equivalent, expressed as an
annual benefit for the life of the participant, of 100% of the participant's
vested benefits under the Deferred Compensation Plan as of the last day of the
calendar month containing the participant's actual date of retirement or
termination of employment. For each year that the participant continues to be
employed by the Company and its subsidiaries after reaching age 55 and until
the attainment of age 65, the base amount of his benefits under the SERP is
increased by an additional 6%. As of the date of this proxy statement, the
benefits payable to Mr. Pickett would be $168,540 annually and to Mr. Beiser
would be $178,652 annually, reduced by the applicable amounts of their
benefits under the Savings Plan, the Deferred Compensation Plan and Social
Security. On February 15, 1999, Messrs. Pickett and Beiser each signed a
memorandum agreement with attached term sheet ("Memorandum Agreement")
agreeing to negotiate in good faith to enter into formal written employment
and consulting agreements incorporating the terms set forth on the term sheet.
Under the terms of the Memorandum Agreements, Messrs. Pickett and Beiser each
agreed to waive payment of benefits under the SERP.
Employment Contracts, Termination of Employment and Change-In-Control
Arrangements
Except as described below, during 1998 none of the named executive officers
had an employment contract with the Company, ASA or ASA Investments. In 1990,
ASA entered into Founding Officer Agreements with each of Messrs. Pickett and
Beiser, pursuant to which severance compensation will be paid to each such
officer if his employment terminates within two (2) years after a "change in
control." In connection with the Reorganization, the Company assumed ASA's
obligations under the Founding Officer Agreements and the agreements were
amended and restated to apply to a change in control with respect to the
Company (the "Amended and Restated Founding Officer Agreements"). The Amended
and Restated Founding Officer
Schedule I--16
<PAGE>
Agreements were further amended by the Board on February 15, 1999 to generally
conform the definition of "Change in Control" to the definition set forth in
the Severance Plan. The severance compensation will generally equal two times
the officer's accrued compensation for the preceding 12 months.
On February 15, 1999, the Company and Messrs. George F. Pickett and John W.
Beiser (each an "Executive") agreed pursuant to certain memorandum agreements
(each a "Memorandum Agreement") with the Company to negotiate in good faith to
enter into formal written employment and consulting agreements incorporating
the terms described below, with the intention that such employment and
consulting agreements will be executed prior to the Closing.
Pursuant to the terms of the Memorandum Agreements, Mr. Pickett is to serve
as Chief Executive Officer of the Company and Mr. Beiser is to serve as
President and Secretary of the Company from February 15, 1999 until the
Effective Time or such shorter period as provided by Employment and Consulting
Agreements (the "Employment Term") and each is to serve as a non-employee
consultant of the Company from the Effective Time until the 180th day
following the Effective Time or such shorter period as provided by the
Employment and Consulting Agreements (the "Consulting Term"). During the
Employment Term and the Consulting Term, the Company is to pay Messrs. Pickett
and Beiser base salaries at the rate in effect as of February 15, 1999 and
each is to continue to earn an annual bonus entitlement equal to 40% of his
respective base salary on the same terms that currently apply to such officer
under the Company's annual bonus plan. As of the 180th day following the
Effective Time, the Company shall pay to Mr. Pickett and to Mr. Beiser a lump
sum payment of $427,267 and $416,896, respectively, (provided, however, that
such payment is subject to a reduction, if necessary, if it would be treated
as an "excess parachute payment" under Section 280G of the Code) as
consideration for each officer's agreement to render services and honor the
non-competition covenant in the Memorandum Agreements. Pursuant to terms of
the Memorandum Agreements, from February 15, 1999 until the second anniversary
of the Effective Time, neither Mr. Pickett nor Mr. Beiser may (i) directly or
indirectly provide management or executive services to any person or entity
operating a commuter airline using planes with a capacity of less than 70
seats in any market in which the Company currently operates or (ii) solicit or
hire any employee of the Company to perform a service on behalf of a
competitor similar to any service performed by such employee on behalf of the
Company. If the Executive's employment or consulting services are terminated
without Cause or because of death or disability during the Employment Term or
Consulting Term, the Executive will receive accrued salary, a prorata bonus
and the Special Payment. "Cause" and "Special Payment" are defined as set
forth in the Memorandum Agreements.
As described above, on February 15, 1999, the Board adopted the Severance
Plan. Generally, the Severance Plan provides that if the Company terminates
the employment of an eligible executive (includes eight senior officers other
than Messrs. Pickett and Beiser) without "Cause" or the executive terminates
for "Good Reason" within two years of a "Change in Control," the executive
will be able to receive an amount in cash equal to either 18 or 24 months of
the executive's highest annual rate of base salary in effect during the
twelve-month period immediately prior to termination, subject to a reduction,
if necessary, if the payments thereunder would be treated as "excess parachute
payments" under Section 280G of the Code. In addition, the executive also
receives continued coverage under the Company's medical, dental and life
insurance plans for the same number of months. In the event the executive
cannot continue to participate in such plans, the Company will otherwise
provide such benefits on the same after-tax basis as if continued
participation had been permitted. "Cause," "Good Reason" and "Change in
Control" are defined as set forth in the Severance Plan.
The Company entered into retention agreements (each a "Form of Retention
Agreement") with each of Ronald V. Sapp and Edward J. Paquette dated February
15, 1999. Mr. Sapp's Form of Retention Agreement provides that if he is still
employed with the Company on the six-month anniversary of the closing of the
Offer, he will receive a lump sum amount equal to his annual base salary
payable for the 1999 calendar year as of the date of the Form of Retention
Agreement. Mr. Paquette's Form of Retention Agreement provides that if he is
still employed with the Company on the six-month anniversary of the closing of
the Offer, he will receive a lump sum amount equal to his annual base salary
payable for the 1999 calendar year as of the date of the Form
Schedule I--17
<PAGE>
of Retention Agreement. Each Form of Retention Agreement also provides that
Messrs. Sapp and Paquette will each receive such amount if the Company
terminates their respective employment without "Cause" or if they terminate
for "Good Reason" prior to the six-month anniversary of the closing of the
Offer. "Cause" and "Good Reason" are defined as set forth in the Form of
Retention Agreements.
Certain Relationships and Related Transactions
Since 1984, ASA has operated from the Atlanta and Dallas/Fort Worth hubs as
a "Delta Connection" carrier pursuant to a marketing agreement with Delta. ASA
leases reservation equipment and certain terminal facilities from Delta and
Delta provides certain services to ASA, including reservation and ground
handling services at certain stations. Expenses paid under the joint marketing
agreement during the 1998 fiscal year were approximately $11,812,000. In
addition, at December 31, 1998, Delta owed ASA approximately $225,000 for
various services performed by ASA for Delta and ASA owed Delta approximately
$2,068,000 for various services performed by Delta for ASA, as described
above. During 1998, approximately 80% of ASA's passengers connected with or
from Delta flights at ASA's Atlanta, Georgia and Dallas/Forth Worth, Texas
hubs. As of February 18, 1999, Delta (through its wholly owned subsidiary
Delta Air Lines Holdings, Inc.) beneficially owned approximately 28.0% of the
Company's outstanding Common Stock. See "Security Ownership of Certain
Beneficial Holders."
Schedule I--18
<PAGE>
SCHEDULE II
February 15, 1999
Board of Directors
ASA Holding, Inc.
100 Hartsfield Centre Parkway
Suite 800
Atlanta, GA 30354-1356
Members of the Board
We understand that ASA Holdings, Inc. ("ASA" or the "Company"), Delta Air
Lines, Inc. ("Delta") and Delta Sub, Inc., a wholly owned subsidiary of Delta
("Acquisition Sub"), propose to enter into an Agreement and Plan of Merger
dated as of February 15, 1999 (the "Merger Agreement"), which provides, among
other things, for (i) the commencement by Acquisition Sub of a tender offer
(the "Tender Offer") for all outstanding shares of common stock, par value
$0.10 per share, of ASA (the "Common Stock") for $34.00 per share net to the
seller in cash, and (ii) the subsequent merger (the "Merger") of Acquisition
Sub with and into ASA. Pursuant to the Merger, ASA will become a wholly owned
subsidiary of Delta and each outstanding share of Common Stock of ASA, other
than shares held in treasury or held by Delta or any subsidiary of Delta or as
to which dissenters' rights have been perfected, will be converted into the
right to receive $34.00 per share in cash. The terms and conditions of the
Tender Offer and the Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the consideration to be
received by the holders of shares of Common Stock pursuant to the Merger
Agreement is fair from a financial point of view to such holders (other than
Delta and its affiliates).
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning the Company prepared by the management of the
Company;
(iii) analyzed certain financial projections prepared by the management
of the Company;
(iv) discussed the past and current operations and financial condition
and the prospects of the Company, including the Company's expected future
relationship with Delta, with senior executives of the Company;
(v) reviewed the reported prices and trading activity for the Common
Stock;
(vi) compared the financial performance of the Company and the prices and
trading activity of the Common Stock with that of certain other comparable
publicly-traded companies and their securities;
(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(viii) participated in discussions and negotiations among representatives
of the Company and Delta and their financial and legal advisors;
(ix) reviewed the Merger Agreement and certain related documents;
(x) performed such other analyses and considered such other factors as we
have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes
of this opinion. With respect to the financial projections, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of the
Company. We have assumed that the Tender Offer and the Merger will be
consummated on the terms set forth in the Merger Agreement. We have not made
any
Schedule II--1
<PAGE>
independent valuation or appraisal of the assets or liabilities of the
Company, nor have we been furnished with any such appraisals. Our opinion is
necessarily based on economic, market and other conditions as in effect on,
and the information made available to us as of, the date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party, nor did we have discussions with any party
other than Delta with respect to the acquisition of the Company or any of its
assets.
We have acted as financial advisor to the Board of Directors of the Company
in connection with this transaction and will receive a fee for our services.
In addition, Morgan Stanley provides no advice or recommendation as to whether
or not holders of shares of Common Stock should participate in the Tender
Offer. In the past, Morgan Stanley has provided financial advisory and
financing services for Delta and has received fees for the rendering of these
services.
Based on the foregoing we are of the opinion on the date hereof that the
consideration to be received by the holders of shares of Common Stock pursuant
to the Merger Agreement is fair from a financial point of view to such holders
(other than Delta and its affiliates).
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
Schedule II--2
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
Exhibit 1 --Excerpts from the Company's Proxy Statement for the Annual
Meeting of Shareholders held on May 21, 1998.
Exhibit 2 --Offer to Purchase dated February 22, 1999 and related Letter of
Transmittal.+
Exhibit 3 --Letter of Transmittal.+
Exhibit 4 --Agreement and Plan of Merger, dated as of February 15, 1999,
among ASA Holdings, Inc., Delta Air Lines, Inc. and Delta Sub,
Inc.
Exhibit 5 --Letter to Shareholders of the Company, dated February 22, 1999.*
Exhibit 6 --Delta Connection Agreement between Delta Air Lines, Inc. and
Atlantic Southeast Airlines, Inc., dated as of July 1, 1986, and
amended as of December 17, 1987, July 1, 1988, March 4, 1992, and
August 1, 1994.
Exhibit 7 --Memorandum Agreement (with respect to employment and consulting),
dated as of February 15, 1999, among George F. Pickett, ASA
Holdings, Inc. and Delta Air Lines, Inc.
Exhibit 8 --Memorandum Agreement (with respect to employment and consulting),
dated as of February 15, 1999, among John W. Beiser, ASA Holdings,
Inc. and Delta Air Lines, Inc.
Exhibit 9 --The Company's Special Severance Plan.
Exhibit 10 --Form of Retention Agreement between the Company and Ronald V.
Sapp dated as of February 15, 1999.
Exhibit 11 --Form of Retention Agreement between the Company and Edward J.
Paquette dated as of February 15, 1999.
Exhibit 12 --Company 1997 Nonqualified Stock Option Plan and amendment
thereto.
Exhibit 13 --Second Restatement and Amendment By the Entirety of and Third
Amendment to the Atlantic Southeast Airlines, Inc. Executive
Deferred Compensation (Retirement) Plan.
Exhibit 14 --Stock Agreement among Delta Air Lines, Inc., Atlantic Southeast
Airlines, Inc. and the Company dated as of March 17, 1997.
Exhibit 15 --Form of Indemnity Agreement of Executive Officer.
Exhibit 16 --Form of Indemnity Agreement of Director.
Exhibit 17 --Amended and Restated Founding Officer Agreement among George F.
Pickett, Atlantic Southeast Airlines, Inc. and the Company dated
as of April 16, 1997 and amended as of February 15, 1999.
Exhibit 18 --Amended and Restated Founding Officer Agreement among John W.
Beiser, Atlantic Southeast Airlines, Inc. and the Company dated as
of April 16, 1997 and amended as of February 15, 1999.
Exhibit 19 --Confidentiality Agreement between Delta and the Company dated as
of February 9, 1999.
Exhibit 20 --Second Amendment to the Company's Supplemental Executive
Retirement Plan.
</TABLE>
- --------
* Included in copies mailed to shareholders of the Company.
+ Filed as an exhibit to Delta Sub, Inc.'s Tender Offer Statement on Schedule
14D-1 dated February 22, 1999 and incorporated herein by reference.
1
<PAGE>
EXHIBIT 1
STOCK OPTION/SAR GRANTS AND RELATED INFORMATION
At the Company's annual meeting held on May 21, 1997, the shareholders
approved and adopted the ASA Holdings, Inc. 1997 Nonqualified Stock Option Plan
(the "Stock Option Plan") to replace the Company's existing Stock Appreciation
Rights Plan (the "SAR Plan"). Under the Stock Option Plan, holders of SARs could
exchange their SARs for options, with each SAR being exchangeable on a
one-for-one basis for an option to purchase one share of the Company's Common
Stock. The exercise price of an option granted pursuant to such an exchange
would be the same as the grant price of the SAR, and the expiration date of such
an option would be the same date as the date five years after the SAR was
originally granted to the holder (i.e., the date on which the SAR would
otherwise be automatically exercised). Holders of all outstanding SARs exchanged
their SARs for options under the Stock Option Plan, and the SARs were canceled.
The Company granted SARs under the SAR Plan with respect to an aggregate of
467,700 shares of Common Stock ("1997 SARs") in 1997, which grants were made
prior to the 1997 annual shareholders meeting. As indicated above, all of these
SARs, as well as all SARs granted prior to 1997 ("Previously Granted SARs"),
were exchanged by the holders thereof for replacement options on May 21, 1997.
The following table sets forth information concerning all options granted in
1997 to the named executive officers in replacement of their 1997 SARs.
Information with respect to options granted to the named executive officers in
respect of their Previously Granted SARs is included in footnote 1 to the table.
No other options were granted to the named executive officers in 1997.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN 1997
INDIVIDUAL GRANTS
------------------------------------------
POTENTIAL REALIZABLE
NUMBER OF % OF VALUE AT ASSUMED
ANNUAL
SECURITIES TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS/SARS EXERCISE APPRECIATION FOR OPTION
OPTIONS/SARS GRANTED TO OR BASE TERM
---------------------
GRANTED EMPLOYEES PRICE EXPIRATION
NAME (#) (1) IN 1997 (2) ($/SH) (3) DATE (4) 5% 10%
- ---- ------------ ------------ ---------- ---------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
George F. Pickett........... 132,900 28.4% $22.375 1/29/02 $821,987 $1,816,079
John W. Beiser.............. 129,700 27.7% $22.375 1/29/02 $802,195 $1,772,350
Ronald V. Sapp.............. 42,000 9.0% $22.375 1/29/02 $259,770 $ 573,930
Edward J. Paquette.......... 53,600 11.5% $ 21.25 4/21/02 $314,632 $ 695,192
</TABLE>
(1) Represents shares underlying options granted under the Stock Option Plan
in exchange for the cancellation of an equal number of the holder's 1997 SARs.
In addition to replacement options for their 1997 SARs, the named executive
officers received replacement options under the Stock Option Plan in respect of
their Previously Granted SARs in the following amounts: Mr. Pickett - 275,500
options; Mr. Beiser - 217,400 options; Mr. Sapp - 82,500 options; and Mr.
Paquette - 0 options. Options granted in replacement of Previously Granted SARs
are not presented in the table. The options granted to Messrs. Pickett, Beiser
and Sapp are immediately exercisable. The options granted to Mr. Paquette become
exercisable in two equal annual installments beginning on the first anniversary
of the date of grant. The exercisability of options may be accelerated upon the
optionee's retirement with consent of the Company, death or material disability.
The exercise price may be paid with the delivery of already-owned shares or
through a broker-assisted exercise.
<PAGE>
STOCK OPTION/SAR GRANTS AND RELATED INFORMATION
At the Company's annual meeting held on May 21, 1997, the shareholders
approved and adopted the ASA Holdings, Inc. 1997 Nonqualified Stock Option Plan
(the "Stock Option Plan") to replace the Company's existing Stock Appreciation
Rights Plan (the "SAR Plan"). Under the Stock Option Plan, holders of SARs could
exchange their SARs for options, with each SAR being exchangeable on a
one-for-one basis for an option to purchase one share of the Company's Common
Stock. The exercise price of an option granted pursuant to such an exchange
would be the same as the grant price of the SAR, and the expiration date of such
an option would be the same date as the date five years after the SAR was
originally granted to the holder (i.e., the date on which the SAR would
otherwise be automatically exercised). Holders of all outstanding SARs exchanged
their SARs for options under the Stock Option Plan, and the SARs were canceled.
The Company granted SARs under the SAR Plan with respect to an aggregate of
467,700 shares of Common Stock ("1997 SARs") in 1997, which grants were made
prior to the 1997 annual shareholders meeting. As indicated above, all of these
SARs, as well as all SARs granted prior to 1997 ("Previously Granted SARs"),
were exchanged by the holders thereof for replacement options on May 21, 1997.
The following table sets forth information concerning all options granted in
1997 to the named executive officers in replacement of their 1997 SARs.
Information with respect to options granted to the named executive officers in
respect of their Previously Granted SARs is included in footnote 1 to the table.
No other options were granted to the named executive officers in 1997.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN 1997
INDIVIDUAL GRANTS
------------------------------------------
POTENTIAL REALIZABLE
NUMBER OF % OF VALUE AT ASSUMED
ANNUAL
SECURITIES TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS/SARS EXERCISE APPRECIATION FOR OPTION
OPTIONS/SARS GRANTED TO OR BASE TERM
---------------------
GRANTED EMPLOYEES PRICE EXPIRATION
NAME (#) (1) IN 1997 (2) ($/SH) (3) DATE (4) 5% 10%
- ---- ------------ ------------ ---------- ---------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
George F. Pickett........... 132,900 28.4% $22.375 1/29/02 $821,987 $1,816,079
John W. Beiser.............. 129,700 27.7% $22.375 1/29/02 $802,195 $1,772,350
Ronald V. Sapp.............. 42,000 9.0% $22.375 1/29/02 $259,770 $ 573,930
Edward J. Paquette.......... 53,600 11.5% $ 21.25 4/21/02 $314,632 $ 695,192
</TABLE>
(1) Represents shares underlying options granted under the Stock Option Plan
in exchange for the cancellation of an equal number of the holder's 1997 SARs.
In addition to replacement options for their 1997 SARs, the named executive
officers received replacement options under the Stock Option Plan in respect of
their Previously Granted SARs in the following amounts: Mr. Pickett - 275,500
options; Mr. Beiser - 217,400 options; Mr. Sapp - 82,500 options; and Mr.
Paquette - 0 options. Options granted in replacement of Previously Granted SARs
are not presented in the table. The options granted to Messrs. Pickett, Beiser
and Sapp are immediately exercisable. The options granted to Mr. Paquette become
exercisable in two equal annual installments beginning on the first anniversary
of the date of grant. The exercisability of options may be accelerated upon the
optionee's retirement with consent of the Company, death or material disability.
The exercise price may be paid with the delivery of already-owned shares or
through a broker-assisted exercise.
<PAGE>
(2) Represents the percentage of options granted in replacement of 1997 SARs.
Does not reflect options issued in replacement of Previously Granted SARs.
(3) The exercise price of the replacement options is the same as the grant
price of the 1997 SARs.
(4) The expiration date of the replacement options is the same date on which
the 1997 SARs would have been automatically exercised.
The following table sets forth information with respect to the named
executive officers concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Company maintains a Supplemental Executive Retirement Plan ("SERP") to
provide certain of its key executives with supplemental retirement income.
Currently, Messrs. Pickett and Beiser are the only SERP participants. Under the
SERP, after reaching age 55 and after retiring or terminating employment with
the Company and its subsidiaries, participants will be entitled to annual
benefits, paid on a monthly basis, of $150,000 offset by (i) 50% of the
participant's annual Social Security benefits projected as of the last day of
the calendar month of the participant's actual date of retirement or termination
of employment; (ii) the actuarial equivalent, expressed as an annual benefit for
the life of the participant, of 100% of the vested amount in the participant's
Employer Matching Account under the Savings Plan as of the last day of the
calendar month containing the participant's actual date of retirement or
termination; and (iii) the actuarial equivalent, expressed as an annual benefit
for the life of the participant, of 100% of the participant's vested benefits
under the Deferred Compensation Plan as of the last day of the calendar month
containing the participant's actual date of retirement or termination of
employment. For each year that the participant continues to be employed by the
Company and its subsidiaries after reaching age 55 and until the attainment of
age 65, the base amount of his benefits under the SERP is increased by an
additional 6%. As of the date of this proxy statement, the benefits payable to
each of Messrs. Pickett and Beiser would be $168,540 annually, reduced by the
applicable amounts of their benefits under the Savings Plan, the Deferred
Compensation Plan and Social Security.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Except as described below, during 1997 none of the named executive
officers had an employment contract with the Company, ASA or ASA Investments. In
1990, ASA entered into Founding Officer Agreements with each of Messrs. Pickett
and Beiser, pursuant to which severance compensation will be paid to each such
officer if his employment terminates within two (2) years after a "change in
control." In connection with the Reorganization, the Company assumed ASA's
obligations under the Founding Officer Agreements and the agreements were
amended to apply to a change in control with respect to the Company. A "change
in control" means ownership of more than 50% of the Company's voting stock by
any single entity or group. The severance compensation will generally equal two
times the officer's accrued compensation for the preceding 12 months.
<PAGE>
ITEM 2 -- PROPOSAL TO APPROVE THE ASA HOLDINGS, INC.
1998 NONQUALIFIED STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
On February 11, 1998, the Board of Directors of the Company adopted and
approved, subject to shareholder approval, the 1998 Nonqualified Stock Option
Plan for Non-Employee Directors (the "Plan"). The Plan provides for the grant to
certain directors of options to purchase shares of Common Stock, which options
shall be nonqualified stock options ("NQSOs"). An aggregate of 250,000 shares of
Common Stock may be issued upon exercise of options granted to eligible
directors under the Plan, which number is subject to adjustment as provided in
the Plan.
At the Annual Meeting, shareholders of the Company are being requested to
consider and approve the adoption of the Plan. The essential features of the
Plan are outlined below. The following summary is qualified in its entirety by
reference to the specific provisions of the Plan, the full text of which is
attached hereto as Appendix A.
PURPOSE OF THE PLAN
The purpose of the Plan is to provide the Company with the means to
continue to attract and retain the services of experienced and knowledgeable
individuals to serve as independent members of the Board of Directors, to
provide additional performance incentives to such individuals while serving as
directors and to encourage their continued service on the Board.
MAJOR PROVISIONS OF THE PLAN
The major provisions of the Plan are as follows:
Eligibility. Options may be granted only to directors of the Company who
are not employees of the Company or its affiliates and who have not been
employed by the Company and its affiliates for the preceding 12 month period
("Outside Directors"). As of March 30, 1998, four of the Company's directors
qualified as Outside Directors.
Administration. The Plan is administered by the Board of Directors of the
Company. Pursuant to the Plan, members of the Board of Directors will be
indemnified by the Company against expenses incurred in connection with
defending or settling any claims or actions against them as a result of their
activities in administering the Plan.
Option Grants. The Board of Directors may grant options on a discretionary
basis to any person who is an Outside Director. In addition, each member of the
Board of Directors who qualifies as an Outside Director on December 31 of any
year will receive an option to purchase 2,500 shares of the Company's Common
Stock. The maximum number of shares of Common Stock subject to options under the
Plan for each participant in any one year is 5,000 shares.
Term and Conditions of Options. Each option granted pursuant to the Plan
will be evidenced by an option agreement executed by the Company and the
optionee. The exercise price per share of options granted under the Plan shall
be the fair market value of the Common Stock (which is defined in the Plan as
the closing price of the
<PAGE>
Company's Common Stock on the Nasdaq National Market) on the date of the option
grant. Each option is immediately exercisable and will expire on the tenth
anniversary of the date of the option grant. The closing price of the Common
Stock on the Nasdaq National Market on March 30, 1998 was $35.875.
Exercise and Payment. Options granted under the Plan may be exercised by
filing a written notice with the Company accompanied by (i) payment of cash,
optionee's check acceptable to the Company or other immediately available funds,
(ii) Company Common Stock already owned by the optionee for a period of not less
than six months with an aggregate fair market value equal to the exercise price,
(iii) a broker-assisted exercise in accordance with procedures established by
the Board, or (iv) a combination of the foregoing methods of payment. The
Company may not loan funds to any participant in the Plan for the purchase of
shares pursuant to an exercise of options under the Plan.
Termination of Director Status. If an optionee ceases to be a director
(other than as a result of disability, death, agreed retirement or removal for
cause), he or she may exercise his or her then outstanding options for a period
of four months following termination, subject to the condition that no option is
exercisable after the expiration date of the option. If an optionee is unable to
continue his or her service as a director as a result of retirement with the
consent of the Company or a material disability, or if the optionee dies while a
director or within three months after ceasing to be a director after agreed
retirement or material disability, he or she (or his or her personal
representative) may exercise any outstanding options for a period of twelve
months following such termination or death, subject to the condition that no
option is exercisable after the expiration date of the option. If an optionee is
removed from the Board for cause, any outstanding options must be exercised
prior to the date such person is formally removed.
Transferability of Options. No option shall be transferable by an optionee
other than by operation of law, by will or by the laws of descent or
distribution.
Amendment or Termination of the Plan. The Board of Directors may amend,
suspend or terminate the Plan, subject to any shareholder approvals necessary
for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and other approvals required by law; however no amendment,
suspension or termination of the Plan shall alter or impair any rights or
obligations under any option previously granted under the Plan without the
optionee's consent.
<PAGE>
Exhibit 4
EXECUTION COPY
--------------
AGREEMENT AND PLAN OF MERGER
dated as of
February 15, 1999
among
ASA HOLDINGS, INC.,
DELTA AIR LINES, INC.
and
DELTA SUB, INC.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1
The Offer
Section 1.01. The Offer.................................................... 1
Section 1.02. Company Action............................................... 2
Section 1.03. Directors.................................................... 3
ARTICLE 2
The Merger
Section 2.01. The Merger................................................... 4
Section 2.02. Conversion of Shares......................................... 5
Section 2.03. Surrender and Payment........................................ 5
Section 2.04. Dissenting Shares............................................ 6
Section 2.05. Stock Options................................................ 7
ARTICLE 3
The Surviving Company
Section 3.01. Articles of Incorporation.................................... 8
Section 3.02. Bylaws....................................................... 8
Section 3.03. Directors and Officers....................................... 8
ARTICLE 4
Representations and Warranties of the Company
Section 4.01. Corporate Existence and Power................................ 8
Section 4.02. Corporate Authorization...................................... 9
Section 4.03. Governmental Authorization................................... 9
Section 4.04. Non-Contravention............................................ 10
Section 4.05. Capitalization............................................... 10
Section 4.06. Subsidiaries................................................. 11
Section 4.07. SEC Filings.................................................. 12
Section 4.08. Permits; Compliance.......................................... 13
Section 4.09. Financial Statements......................................... 13
Section 4.10. Disclosure Documents......................................... 13
Section 4.11. Absence of Certain Changes................................... 14
Section 4.12. No Undisclosed Material Liabilities.......................... 16
Section 4.13. Litigation................................................... 16
Section 4.14. Taxes........................................................ 17
<PAGE>
Page
----
Section 4.15. ERISA........................................................ 17
Section 4.16. Compliance with Laws......................................... 18
Section 4.17. Finders' Fees................................................ 19
Section 4.18. Environmental Matters........................................ 19
Section 4.19. Assets....................................................... 20
Section 4.20. Labor Matters................................................ 21
Section 4.21. Material Contracts........................................... 21
Section 4.22. Insurance.................................................... 22
Section 4.23. Year 2000 Compliance......................................... 23
Section 4.24. Anti-takeover Statutes....................................... 23
Section 4.25. No Other Representations or Warranties....................... 23
ARTICLE 5
Representations and Warranties of Buyer
Section 5.01. Corporate Existence and Power................................ 23
Section 5.02. Corporate Authorization...................................... 23
Section 5.03. Governmental Authorization................................... 24
Section 5.04. Non-contravention............................................ 24
Section 5.05. Disclosure Documents......................................... 24
Section 5.06. Finders' Fees................................................ 25
ARTICLE 6
Covenants of the Company
Section 6.01. Conduct of the Company....................................... 25
Section 6.02. Shareholder Meeting; Proxy Material.......................... 29
Section 6.03. Access to Information........................................ 29
Section 6.04. Other Offers................................................. 30
Section 6.05. Notices of Certain Events.................................... 33
ARTICLE 7
Covenants of Buyer
Section 7.01. Obligations of Merger Subsidiary............................. 33
Section 7.02. Voting of Shares............................................. 33
Section 7.03. Director and Officer Liability............................... 33
Section 7.04. Employee Benefits............................................ 34
Section 7.05. Notices of Certain Events.................................... 34
ii
<PAGE>
Page
----
ARTICLE 8
Covenants of Buyer and the Company
Section 8.01. Reasonable Best Efforts...................................... 35
Section 8.02. Certain Filings.............................................. 35
Section 8.03. Public Announcements......................................... 35
Section 8.04. Further Assurances........................................... 35
Section 8.05. Merger Without Meeting of Shareholders....................... 35
ARTICLE 9
Conditions to the Merger
Section 9.01. Conditions to the Obligations of Each Party.................. 36
ARTICLE 10
Termination
Section 10.01. Termination................................................. 36
Section 10.02. Effect of Termination....................................... 38
ARTICLE 11
Miscellaneous
Section 11.01. Notices..................................................... 38
Section 11.02. Survival of Representations and Warranties.................. 39
Section 11.03. Amendments; No Waivers...................................... 39
Section 11.04. Fees and Expenses........................................... 40
Section 11.05. Successors and Assigns...................................... 40
Section 11.06. Governing Law............................................... 40
Section 11.07. Jurisdiction................................................ 41
Section 11.08. Counterparts; Effectiveness................................. 41
Section 11.09. Entire Agreement; Third Party Beneficiaries................. 41
Section 11.10. Definitions................................................. 41
Annex I - Conditions to the Offer
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 15, 1999 among ASA
Holdings, Inc., a Georgia corporation (the "Company"), Delta Air Lines Inc., a
Delaware corporation ("Buyer"), and Delta Sub, Inc., a Georgia corporation and
an indirect, wholly-owned subsidiary of Buyer ("Merger Subsidiary").
WHEREAS, of the shares of common stock, $0.10 par value per share, of the
Company ("Shares") outstanding as of the date hereof, Buyer and its affiliates
own an aggregate of 7,995,000 Shares;
WHEREAS, Buyer and Merger Subsidiary wish to consummate the transactions
contemplated by this Agreement pursuant to which, subject to the terms and
conditions set forth in this Agreement, the Merger Subsidiary will merge with
and into the Company and the Company will become an indirect, wholly-owned
subsidiary of Buyer;
WHEREAS, the Board of Directors of the Company (the "Company's Board") has
unanimously approved this Agreement and the transactions contemplated hereby and
has unanimously determined that each of the Offer and the Merger (each as
defined herein) are fair to, and in the best interests of, the holders of Shares
and recommended the acceptance of the Offer and approval and adoption of this
Agreement by the shareholders of the Company; and
WHEREAS, the Board of Directors of Buyer (on its own behalf and as the
beneficial owner of all of the capital stock of Merger Subsidiary) has
unanimously approved this Agreement and the transactions contemplated hereby,
including the Offer and the Merger;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
The Offer
Section 1.01. The Offer. (a) Provided that nothing shall have occurred
that would result in a failure to satisfy any of the conditions set forth in
Annex I hereto, Merger Subsidiary shall, as promptly as practicable after the
date hereof, but in no event later than five business days following the public
announcement of the terms of this Agreement, commence an offer (the "Offer") to
purchase all of the outstanding Shares of the Company at a price of $34.00 per
Share, net to the seller in cash.
The Offer shall be subject to the condition that there shall have been
tendered a number of Shares which, together with the Shares then owned by Buyer
and its affiliates,
<PAGE>
represents at least a majority of the Shares outstanding on a fully diluted
basis (the "Minimum Condition") and to the other conditions set forth in Annex I
hereto. Merger Subsidiary expressly reserves the right to waive any of the other
conditions to the Offer (other than the Minimum Condition) and to make any
change in the terms or conditions of the Offer; provided that no change may be
made which changes the form of consideration to be paid or decreases the price
per Share or the number of Shares sought in the Offer, which imposes conditions
to the Offer in addition to those set forth in Annex I, amends the terms and
conditions of the Offer in a manner adverse to the Company or, except as
provided in the next two sentences, extends the Offer. Notwithstanding the
foregoing, Merger Subsidiary may, without the consent of the Company (i) extend
the Offer beyond the scheduled expiration date, which shall be 20 business days
following the date of commencement of the Offer, if, at the scheduled expiration
of the Offer, any of the conditions to Merger Subsidiary's obligation to accept
for payment and to pay for the Shares shall not be satisfied or waived, or (ii)
extend the Offer for any period required by any rule, regulation or
interpretation of the Securities and Exchange Commission (the "SEC") or the
staff thereof applicable to the Offer. So long as this Agreement is in effect
and the condition of the Offer set forth in clause (y) of the first paragraph of
Annex I has not been satisfied or waived, Merger Subsidiary shall extend the
Offer from time to time for a period or successive periods not to exceed 10
business days each after the previously scheduled expiration date of the Offer.
(b) As soon as practicable on the date of commencement of the Offer,
Merger Subsidiary shall file with the Securities and Exchange Commission (the
"SEC") a Rule 13E-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-
3") and a Tender Offer Statement on schedule 14D-1 (the "Schedule 14D-1") with
respect to the Offer. The Schedule 13E-3, the Schedule 14D-1 and the related
offer to purchase and letter of transmittal, together with any supplements or
amendments thereto, are collectively referred to herein as the "Offer
Documents". Buyer and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect. Merger
Subsidiary agrees to take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. The Company and its counsel shall be given an opportunity to review and
comment on the Schedule 14D-1 and Schedule 13E-3 prior to their being filed with
the SEC.
Section 1.02. Company Action. (a) The Company hereby consents to the
Offer and represents that the Company's Board, at a meeting duly called and
held, has
(i) unanimously determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (as defined in
Section 2.01), are fair to and in the best interest of the Company's
shareholders,
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(ii) unanimously approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, and
(iii) unanimously resolved to recommend acceptance of the Offer and
approval and adoption of this Agreement and the Merger by its shareholders.
The Company further represents that Morgan Stanley & Co. Incorporated has
delivered to the Company's Board its written opinion that the consideration to
be paid in the Offer and the Merger is fair to the holders of Shares from a
financial point of view (other than Buyer and its affiliates). The Company has
been advised that all of its directors intend to tender their Shares (if any)
pursuant to the Offer and to vote in favor of the Merger.
The Company will promptly furnish Buyer with a list of its shareholders,
mailing labels and any available listing or computer file containing the names
and addresses of all record holders of Shares and lists of securities positions
of Shares held in stock depositories, in each case true and correct as of the
most recent practicable date, and will provide to Buyer such additional
information (including, without limitation, updated lists of shareholders,
mailing labels and lists of securities positions) and such other assistance as
Buyer may reasonably request in connection with the Offer. Buyer will return
such materials promptly if the Offer is not consummated.
(b) As soon as practicable on the day that the Offer is commenced, the
Company will file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") and the Schedule 13E-3, which shall
reflect the recommendations of the Company's Board referred to above. The
Company and Buyer each agree promptly to correct any information provided by it
for use in the Schedule 14D-9 and the Schedule 13E-3 if and to the extent that
it shall have become false or misleading in any material respect. The Company
agrees to take all steps necessary to cause the Schedule 14D-9 or the Schedule
13E-3, as applicable, as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Buyer and its counsel shall be given an
opportunity to review and comment on the Schedule 14D-9 and Schedule 13E-3 prior
to its being filed with the SEC.
Section 1.03. Directors. (a) Effective upon the acceptance for payment
pursuant to the Offer of any Shares, Buyer shall be entitled to designate the
number of directors, rounded up to the next whole number, on the Company's Board
that equals the product of
(i) the total number of directors on the Company's Board (giving effect
to the election of any additional directors pursuant to this Section)
multiplied by
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<PAGE>
(ii) the percentage that the number of Shares beneficially owned by
Buyer (including Shares accepted for payment) bears to the total number of
Shares outstanding;
and the Company shall take all action necessary to cause Buyer's designees
to be elected or appointed to the Company's Board, including, without
limitation, increasing the number of directors and seeking and accepting
resignations of incumbent directors. At such times, the Company will use its
best efforts to cause individuals designated by Buyer to constitute the same
percentage as such individuals represent on the Company's Board of (A) each
committee of the Board and (B) each board of directors (and committee thereof)
of each Subsidiary. Notwithstanding the foregoing, until the Effective Time (as
defined below), the Company shall use its reasonable best efforts to cause at
least two persons who are not employees of the Company or affiliated with Buyer
to be members of the Company's Board (the "Independent Directors") (and such
efforts shall include but not be limited to offering directors on the Company's
Board on the date hereof the opportunity to remain on the Company's Board). For
the purposes of this Agreement, "affiliate" of a specified person means a person
who directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such specified person.
(b) The Company's obligations to appoint designees to the Company's Board
shall be subject to Section 14(f) of the Exchange Act (as defined in Section
4.03) and Rule 14f-1 promulgated thereunder. The Company shall promptly take all
actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section and shall include in the Schedule 14D-9 such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 to fulfill its obligations under
this Section. Buyer will supply to the Company in writing and be solely
responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
ARTICLE 2
The Merger
Section 2.01. The Merger. (a) At the Effective Time (as defined below),
Merger Subsidiary shall be merged (the "Merger") with and into the Company
pursuant to all applicable requirements of the Business Corporation Code of the
State of Georgia ("Georgia Law"), whereupon the separate existence of Merger
Subsidiary shall cease, and the Company shall be the surviving entity (the
"Surviving Company").
(b) As soon as practicable after satisfaction or, to the extent permitted
hereunder, waiver of all conditions to the Merger, the Company and Merger
Subsidiary will file articles of merger ("Articles of Merger") with the
Secretary of State of the State
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<PAGE>
of Georgia and make all other filings or recordings required by Georgia Law in
connection with the Merger. The Merger shall become effective at such time as
the Articles of Merger are duly filed with the Secretary of State of the State
of Georgia (the "Effective Time").
(c) From and after the Effective Time, the Surviving Company shall possess
all the rights, privileges, powers and franchises and be subject to all of the
restrictions, disabilities and duties of the Company and Merger Subsidiary, all
as provided under Section 14-2-1106 of Georgia Law.
Section 2.02. Conversion of Shares. At the Effective Time:
(a) each Share held by the Company as treasury stock or owned by Buyer or
any subsidiary of Buyer immediately prior to the Effective Time shall be
canceled, and no payment shall be made with respect thereto;
(b) each Share outstanding immediately prior to the Effective Time shall,
except as otherwise provided in paragraph (a) hereof or as provided in Section
204 with respect to Shares as to which appraisal rights have been exercised, be
converted into the right to receive $34.00 in cash, without interest (the
"Merger Consideration"); and
(c) each share of common stock of the Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock in the Surviving Company with the same rights, powers and
privileges as the shares so converted and shall constitute the only outstanding
equity of the Surviving Company.
Section 2.03. Surrender and Payment. (a) Prior to the Effective Time,
Buyer shall appoint an agent (the "Exchange Agent") for the purpose of
exchanging certificates representing Shares for the Merger Consideration. Buyer
will make available to the Exchange Agent, in such amounts as may be needed from
time to time, the Merger Consideration to be paid in respect of the Shares.
Promptly after the Effective Time, Buyer will send, or will cause the Exchange
Agent to send, to each holder of Shares at the Effective Time a letter of
transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the certificates representing Shares to the Exchange Agent).
(b) Each holder of Shares that have been converted into a right to receive
the Merger Consideration, upon surrender to the Exchange Agent of a certificate
or certificates representing such Shares, together with a properly completed
letter of transmittal covering such Shares, will be entitled to receive the
Merger Consideration payable in respect of such Shares. From and after the
Effective Time, all Shares which have been so converted shall no longer be
outstanding and shall automatically be
5
<PAGE>
canceled and retired, and each such certificate shall, after the Effective Time,
represent for all purposes, only the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a Person
other than the registered holder of the Shares represented by the certificate or
certificates surrendered in exchange therefor, it shall be a condition to such
payment that the certificate or certificates so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the Person
requesting such payment shall pay to the Exchange Agent any transfer or other
taxes required as a result of such payment to a Person other than the registered
holder of such Shares or establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
For purposes of this Agreement, "Person" means an individual, a
corporation, a limited liability company, a partnership, an association, a trust
or any other entity or organization, including a government or political
subdivision or any agency or instrumentality thereof.
(d) After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, certificates representing
Shares are presented to the Surviving Company, they shall be canceled and
exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article 2.
(e) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.03(a) that remains unclaimed by the holders of
Shares six months after the Effective Time shall be returned to Buyer, upon
demand, and any such holder who has not exchanged Shares for the Merger
Consideration in accordance with this Section 2.03 prior to that time shall
thereafter look only to Buyer for payment of the Merger Consideration in respect
of Shares. Notwithstanding the foregoing, Buyer shall not be liable to any
holder of Shares for any amount paid to a public official pursuant to applicable
abandoned property laws. Any amounts remaining unclaimed by holders of Shares
two years after the Effective Time (or such earlier date immediately prior to
such time as such amounts would otherwise escheat to or become property of any
governmental entity) shall, to the extent permitted by applicable law, become
the property of Buyer free and clear of any claims or interest of any Person
previously entitled thereto.
(f) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.03(a) to pay for Shares for which appraisal rights
have been perfected shall be returned to Buyer, upon demand.
Section 2.04. Dissenting Shares. (a) Notwithstanding Section 2.02,
Shares outstanding immediately prior to the Effective Time and that are held by
any shareholder who has delivered to the Company, prior to the Company
Shareholders Meeting (as defined below), a written notice in accordance with
Article 13 of the Georgia Law of such shareholder's intent to demand payment for
such shareholder's Shares if the Merger is
6
<PAGE>
effected and who shall not have voted such Shares in favor of the approval and
adoption of this Agreement (collectively, the "Dissenting Shares") shall not be
converted into the right to receive the Merger Consideration. Holders of such
Dissenting Shares shall be entitled to payment of the fair value of such
Dissenting Shares in accordance with the provisions of Article 13 of the Georgia
Law; provided, however, that if such shareholder waives such shareholder's right
to demand payment under Article 13 of the Georgia Law or a court of competent
jurisdiction determines that such shareholder is not entitled to the relief
provided by said Article 13, then the right of such holder of Dissenting Shares
to be paid the fair value of such shareholder's Dissenting Shares shall cease
and such Dissenting Shares shall thereupon be deemed to have been converted
into, as of the Effective Time, the right to receive the Merger Consideration,
without any interest thereon.
(b) The Company shall give Buyer and Merger Subsidiary (i) prompt notice
of any notices or other instruments received by the Company pursuant to Article
13 of the Georgia Law and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for payment for Dissenting Shares. The
Company shall not, except with the prior written consent of Buyer and Merger
Subsidiary, voluntarily offer to make or make any payment with respect to any
demands for payment for Dissenting Shares or settle or offer to settle any such
demands.
(c) Dissenting Shares, if any, shall be canceled after payments of fair
value in respect thereto have been made to dissenting shareholders of the
Company pursuant to the Georgia Law.
Section 2.05. Stock Options. (a) At the Effective Time, each option to
purchase Shares under each of (x) the ASA Holdings, Inc. 1997 Nonqualified Stock
Option Plan and (y) the ASA Holdings, Inc. 1998 Nonqualified Stock Option Plan
for Non-Employee Directors (the "Company Stock Option Plans") that is vested and
exercisable (including any option that becomes vested and exercisable by its
terms as a result of the transactions contemplated hereby) shall be canceled,
and Buyer shall pay each such holder in cash at the Effective Time for each such
option an amount determined by multiplying (A) the excess, if any, of the Merger
Consideration over the applicable exercise price per Share of such option by (B)
the number of Shares to which such option relates.
(b) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of the Company Stock Option
Plans) that are necessary to give effect to the transactions contemplated by
Sections 2.05(a).
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<PAGE>
ARTICLE 3
The Surviving Company
Section 3.01. Articles of Incorporation. (a) The Articles of
Incorporation of the Surviving Company shall be amended pursuant to the
Certificate of Merger to read in its entirety as set forth in the Certificate of
Incorporation of Merger Subsidiary, except that the name of the Surviving
Company shall be "ASA Holdings, Inc."
(b) The Surviving Company shall initially be authorized to issue up to
1,000 shares of its common stock, par value $.01 per share.
Section 3.02. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Company until amended in
accordance with applicable law.
Section 3.03. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (a) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Company and (b) the officers of the
Company at the Effective Time shall be the officers of the Surviving Company.
ARTICLE 4
Representations and Warranties of the Company
The Company represents and warrants to Buyer that, except as set forth in a
correspondingly numbered schedule in the Disclosure Schedule to this Agreement
delivered to Buyer on the date hereof:
Section 4.01. Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of
Georgia and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted other than those that would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect. The Company
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary,
except for those jurisdictions where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect. The Company
has heretofore delivered or made available to Buyer true and complete copies of
the Company's Articles of Incorporation and bylaws as currently in effect.
8
<PAGE>
For purposes of this Agreement, "Material Adverse Effect" means a material
adverse effect on the financial condition, business, operations, assets,
liabilities, results of operations or prospects of the Company and the
Subsidiaries taken as a whole, except that an effect resulting primarily from
either of the following shall not be considered when determining if a Material
Adverse Effect has occurred:
(x) any change in (i) economic, business, or financial market conditions
generally, (ii) the air transportation industry or market specifically,
(iii) the economic, business or financial market conditions with respect to
the Southeastern United States or (iv) any change affecting the commuter or
regional air transportation industry or market generally; provided that
nothing in clauses (i) through (iv) shall include any change which
disproportionately affects the Company, including any change that is
disproportionate as a result of the type of aircraft operated by the
Company; or
(y) any action or inaction on the part of Buyer or any affiliate thereof,
including in connection with the currently existing commercial arrangements
between such persons and the Company.
Section 4.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate
powers and, except as set forth in the following sentence, have been duly
authorized by all necessary corporate action. The affirmative vote of the
holders of a majority of the outstanding Shares, if necessary, is the only vote
of the holders of the Company's capital stock necessary to approve the
transactions contemplated by this Agreement. This Agreement constitutes a valid
and binding agreement of the Company.
Section 4.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
by the Company require no action by or in respect of, or filing with, or
procurement of any material permit, authorization, consent or approval of, any
governmental or regulatory body, agency, official or authority other than
(i) the filing of a Certificate of Merger in accordance with
Georgia Law;
(ii) compliance with any applicable requirements of the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"); and
(iii) compliance with any applicable requirements of the
Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder (the "Exchange Act").
9
<PAGE>
Section 4.04. Non-Contravention. The execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not
(a) contravene or conflict with the Articles of Incorporation or bylaws
of the Company or any Subsidiary;
(b) assuming compliance with the matters referred to in Section 4.03,
contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Company or any Subsidiary or any of their respective
properties or assets;
(c) result in a violation or a breach of, or (with or without due notice
or a lapse of time or both) constitute a default or require any consent
under or give rise to a right of termination, cancellation or acceleration
of any right or obligation of the Company or any Subsidiary or any of their
respective properties or assets or to a loss of any benefit to which the
Company or any Subsidiary is entitled under any provision of any note,
bond, mortgage, indenture, lease, agreement, contract, obligation or other
instrument to which the Company or any Subsidiary is bound, or by which any
of their respective properties or assets are bound, or any license,
franchise, permit or other similar authorization held by the Company or any
Subsidiary;
(d) assuming compliance with the matters referred to in Section 403,
require any consent or other action by any person under, or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of the Company or any of its Subsidiaries or to a loss of any
benefit to which the Company or any of its Subsidiaries is entitled under,
any Collective Bargaining Agreement binding upon the Company or any of its
Subsidiaries; or
(e) result in the creation or imposition of any Lien on any asset of the
Company or any Subsidiary
except, in the case of clauses (c) and (e), for such matters as would not,
individually or in the aggregate, have a Material Adverse Effect or materially
impair or delay the ability of the Company to consummate the transactions
contemplated by this Agreement.
For purposes of this Agreement, "Lien" means, with respect to any asset,
any mortgage, lien, pledge, charge, security interest or encumbrance of any kind
in respect of such asset.
Section 4.05. Capitalization. The authorized capital stock of the Company
consists of 150,000,000 Shares. As of February 13, 1999, there were outstanding
28,523,177 Shares, and stock options to purchase an aggregate of 1,353,200
Shares (of
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which options to purchase an aggregate of 676,700 Shares were vested). All
outstanding shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. All Shares issuable upon
exercise of outstanding stock options have been duly authorized and, upon
issuance following payment of the exercise price therefor, will have been
validly issued and will be fully paid and nonassessable. Except as set forth in
this Section and except for changes since February 13, 1999 resulting from the
exercise of stock options outstanding on such date, there are outstanding
(a) no shares of capital stock or other voting securities of the
Company,
(b) no securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company and
(c) no options or other rights to acquire from the Company, and no
obligation of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company
(the items in clauses (a), (b) and (c) being referred to collectively as the
"Company Securities"). There are no outstanding obligations of the Company or
any Subsidiary to repurchase, redeem or otherwise acquire any Company
Securities.
Section 4.06. Subsidiaries. (a) Each Subsidiary is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, has all powers and all governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted other
than those that could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Each Subsidiary is duly qualified to do
business and is in good standing in each jurisdiction where the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where failure to be so
qualified would not, individually or in the aggregate, have a Material Adverse
Effect. All Subsidiaries and their respective jurisdictions of organization are
identified in the Company's annual report on Form 10-K for the fiscal year ended
December 31, 1997 (the "Company 1997 10-K").
For purposes of this Agreement, "Subsidiary" means any corporation or other
entity of which the Company owns, directly or indirectly, stock, securities or
other ownership interests having ordinary voting power sufficient to elect a
majority of the board of directors or other persons performing similar
functions.
(b) All of the outstanding capital stock of, or other voting securities or
ownership interests in, each Subsidiary, is owned by the Company, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any
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restriction on the right to vote, sell or otherwise dispose of such stock or
other securities or ownership interests). There are no outstanding
(i) securities of the Company or any Subsidiary convertible into or
exchangeable for shares of capital stock or other voting securities or
ownership interests in any Subsidiary or
(ii) options or other rights to acquire from the Company or any
Subsidiary, or other obligation of the Company or any Subsidiary to issue,
any capital stock, voting securities or other ownership interests in, or
any securities convertible into or exchangeable for any capital stock,
voting securities or ownership interests in, any Subsidiary
(the items in clauses (i) and (ii) being referred to collectively as the
"Subsidiary Securities"). There are no outstanding obligations of the Company
or any Subsidiary to repurchase, redeem or otherwise acquire any outstanding
Subsidiary Securities.
Section 4.07. SEC Filings. (a) The Company has delivered or made
available to Buyer
(i) the Company's annual reports on Form 10-K for its fiscal years
ended December 31, 1997, 1996, and 1995 (each, a "Company 10-K");
(ii) its quarterly reports on Form 10-Q for its fiscal quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998 (each, a "Company
10-Q");
(iii) its proxy or information statements relating to meetings of, or
actions taken without a meeting by, the shareholders of the Company held
since December 31, 1997; and
(iv) all of its other reports, statements, schedules and registration
statements filed with the SEC since December 31, 1997.
(b) As of its filing date, each such report or statement filed pursuant to
the Exchange Act did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(c) Each such registration statement, as amended or supplemented, if
applicable, filed pursuant to the Securities Act of 1933 as of the date such
statement or amendment became effective did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
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Section 4.08. Permits; Compliance. (a) Except as would not individually
or in the aggregate, (x) have a Material Adverse Effect or (y) prevent or
materially delay the performance of this Agreement by the Company, the Company
and each of its Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals, takeoff and landing authorizations (including "slots"
at United States airports), clearances and orders of any governmental entity
necessary for the Company or such Subsidiary to operate scheduled domestic air
transportation, to own, lease and operate its properties and to carry on its
respective businesses substantially in the manner described in the Company 10-Ks
and as it is now being conducted (the "Company Permits").
(b) All of the Company Permits are valid, and in full force and effect,
except where the failure to have, or the suspension or cancellation of, any of
the Company Permits would neither, individually or in the aggregate, (a) have a
Material Adverse Effect nor (b) prevent or materially delay the performance of
this Agreement by the Company. As of the date hereof, no suspension or
cancellation of any of the Company Permits is pending or, to the knowledge of
the Company, threatened, except where the failure to have, or the suspension or
cancellation of, any of the Company Permits would neither, individually or in
the aggregate, (x) have a Material Adverse Effect nor (y) prevent or materially
delay the performance of this Agreement by the Company.
(c) Neither the Company nor any of its Subsidiaries is in default or
violation of, (i) any law applicable to the Company or any of its Subsidiaries
or by which any property, asset or operation of the Company or any of its
Subsidiaries is bound or affected or (ii) any Company Permits, except for any
such defaults or violations that would neither, individually or in the
aggregate, (x) have a Material Adverse Effect nor (y) prevent or materially
delay the performance of this Agreement by the Company.
Section 4.09. Financial Statements. (a) The audited consolidated
financial statements and unaudited consolidated interim financial statements of
the Company included in the Company 10-Ks and in each of the Company 10-Qs
fairly present, in conformity with generally accepted accounting principles
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial statements).
For purposes of this Agreement, "Balance Sheet" means the consolidated
balance sheet of the Company as of December 31, 1997 set forth in the Company
1997 10-K and "Balance Sheet Date" means December 31, 1997.
Section 4.10. Disclosure Documents. (a) Each document required to be
filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "Company Disclosure Documents"), including,
without limitation, the
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Schedule 13E-3, the Schedule 14D-9, the proxy or information statement of the
Company (the "Company Proxy Statement"), if any, to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act.
(b) At the time the Company Proxy Statement, if one is required, or any
amendment or supplement thereto is first mailed to shareholders of the Company
and at the time such shareholders vote on adoption of this Agreement, the
Company Proxy Statement, as supplemented or amended, if applicable, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. At the time of the
filing of any Company Disclosure Document other than the Company Proxy
Statement, at the time of any distribution thereof and at the time of
consummation of the Offer, such Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The representations and warranties
contained in this Subsection 410 will not apply to statements or omissions
included in the Company Disclosure Documents based upon information furnished to
the Company in writing by Buyer specifically for use therein.
(c) The information with respect to the Company or any Subsidiary that the
Company furnishes to Buyer in writing specifically for use in the Offer
Documents will not, at the time of the filing thereof, at the time of any
distribution thereof and at the time of the consummation of the Offer, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
Section 4.11. Absence of Certain Changes. Since the Balance Sheet Date,
the Company and Subsidiaries have conducted their business in the ordinary
course consistent with past practice and there has not been:
(a) any event, occurrence or development or state of circumstances or
facts which has had or could reasonably be expected to have a Material Adverse
Effect;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any Subsidiary of
any outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or any Subsidiary, other than regular,
quarterly cash dividends on the Shares not in excess of $0.115 per Share per
quarter and having customary record and payment dates;
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(c) any amendment of any material term of any outstanding security of the
Company or any Subsidiary;
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money, or any foreign currency,
hedging, financial derivative or similar transactions, other than in the
ordinary course of business and in amounts and on terms consistent with past
practices;
(e) any creation or assumption by the Company or any Subsidiary of any
Lien on any material asset other than in the ordinary course of business
consistent with past practices;
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions to
or investments in wholly-owned Subsidiaries made in the ordinary course of
business consistent with past practices or any amendment of the terms of any
loan to executive officers or directors;
(g) any damage, destruction or other casualty loss (whether or not covered
by insurance) affecting the business or assets of the Company or any Subsidiary
which, individually or in the aggregate, has had or could reasonably be expected
to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any Subsidiary relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of any contract or other right,
in either case, material to the Company and the Subsidiaries taken as a whole
(including any right relating to any gates at Hartsfield Atlanta International
Airport), other than transactions and commitments in the ordinary course of
business consistent with past practice and those contemplated by this Agreement;
(i) any change in any method of accounting or accounting practice by the
Company or any Subsidiary, except for any such change required by reason of a
concurrent change in generally accepted accounting principles or in Regulation
S-X promulgated under the Exchange Act;
(j) any tax election, other than those consistent with past practice, not
required by law or any settlement or compromise of any tax liability in either
case that is material to the Company and the Subsidiaries;
(k) any (i) grant of any severance or termination pay to any director,
officer or employee of the Company or any Subsidiary, (ii) increase in benefits
payable under any existing severance or termination pay policies or employment
agreements, (iii) entering into of any employment, deferred compensation or
other similar agreement (or any
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amendment to any such existing agreement) with any director, officer or employee
of the Company or any Subsidiary or (iv) increase in compensation, bonus or
other benefits payable to directors, officers or employees of the Company or any
Subsidiary, other than any such increases payable to employees other than
directors or officers in the ordinary course of business consistent with past
practice;
(l) any labor dispute that has not been resolved as of the date of this
Agreement, other than routine individual grievances, or any activity or
proceeding by a labor union or representative thereof to organize any employees
of the Company or any Subsidiary, which employees were not subject to a
Collective Bargaining Agreement at the Balance Sheet Date, or any lockouts,
strikes, slowdowns, labor actions, work stoppages or threats thereof by or with
respect to such employees; or
(m) any cancellation of any licenses, sublicenses, franchises, permits,
takeoff or landing authorization, "slots" or agreements to which the Company or
any Subsidiary is a party, or any notification to the Company or any Subsidiary
that any party to any such arrangements intends to cancel or not renew such
arrangements beyond their expiration date as in effect on the date hereof, which
cancellation or notification, individually or in the aggregate, has had or
reasonably could be expected to have a Material Adverse Effect.
Section 4.12. No Undisclosed Material Liabilities. There are no material
liabilities or obligations of the Company or any Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
which could reasonably be expected to result in such a liability or obligation,
other than:
(a) liabilities or obligations disclosed or provided for in the Balance
Sheet;
(b) liabilities or obligations incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date;
(c) liabilities or obligations under this Agreement. and
(d) liabilities or obligations which are not material.
Section 4.13. Litigation. Except as set forth in the Company 10-K, there
is no action, suit, investigation or proceeding pending, or to the knowledge of
the Company, threatened (and, to the knowledge of the Company, there are no
circumstances which are imminently likely to give rise to any such proceedings)
against or affecting the Company or any Subsidiary or any of their respective
properties or any of their respective officers or directors in their capacity as
officers or directors of the Company (or any basis therefor) before any court or
arbitrator or before or by any governmental body, agency or official (x) as of
the date hereof, and (y) which could reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
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Section 4.14. Taxes. The Company has filed all material tax returns,
statements, reports and forms required to be filed with any tax authority when
due and in accordance with all applicable laws, and all taxes shown as due and
payable thereon have been timely paid, or withheld and remitted, to the
appropriate taxing authority. No deficiency in payment of any taxes for any
period has been asserted by any taxing authority which remains unsettled at the
date hereof except for deficiencies which would not have a Material Adverse
Effect. The Company and Subsidiaries do not own any interest in real property
in the State of New York or in any other jurisdiction in which a tax is imposed
on the transfer of a controlling interest in an entity that owns any interest in
real property.
Section 4.15. ERISA. (a) Schedule 4.15(a) contains a correct and complete
list identifying each "employee benefit plan", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), each employment,
severance or similar contract, plan, arrangement or policy and each other plan
or arrangement (written or oral) providing for compensation, bonuses, profit-
sharing, stock option or other stock related rights or other forms of incentive
or deferred compensation (whether or not such plan or arrangement is qualified
under Section 401(a) of the Code), vacation benefits, insurance coverage
(including any self-insured arrangements), health or medical benefits, employee
assistance program, disability or sick leave benefits, workers' compensation,
supplemental unemployment benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension, health, medical or life
insurance benefits) which is maintained, administered or contributed to by the
Company or any of its employees or any ERISA Affiliate and covers any employee
or former employee of the Company or any Subsidiary, or with respect to which
the Company or any Subsidiary has any liability. Copies of such plans (and, if
applicable, related trust or funding agreements or insurance policies) and all
amendments thereto and written interpretations thereof have been furnished to
Buyer together with the most recent annual report (Form 5500 including, if
applicable, Schedule B thereto) and tax return (Form 990) prepared in connection
with any such plan or trust. Such plans are referred to collectively herein as
the "Employee Plans".
For purposes of this Section, "ERISA Affiliate" of any Person means any
other Person which, together with such Person, would be treated as a single
employer under Section 414 of the Code.
(b) Neither the Company nor any ERISA Affiliate nor any predecessor thereof
presently nor has in the past sponsored, maintained or contributed to, or agreed
to sponsor, maintain or contribute to, any Employee Plan subject to Title IV.
(c) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code or designated to qualify as tax exempt under Section
501(c)(9) of the Code is so qualified and has been so qualified during the
period from its adoption to date, and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. The Company has
furnished to the Buyer copies of the most recent Internal Revenue
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Service determination or tax exemption letters with respect to each such Plan.
Each Employee Plan has been maintained in compliance in all material respects
with its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations, including but not limited to ERISA and the Code,
which are applicable to such Employee Plan. No events have occurred with respect
to any Employee Plan that could result in payment or assessment of any material
excise taxes under Sections 4972, 4975, 4976, 4977, 4979, 4980B, 4980D, 4980E or
5000 of the Code.
(d) The consummation of the transactions contemplated by this Agreement
will not (either alone or together with any other event) entitle any employee or
director of the Company or any Subsidiary to severance pay or accelerate the
time of payment or vesting or trigger any payment or funding (through a grantor
trust or otherwise) of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any Employee Plan.
There is no contract, agreement, plan or arrangement covering any employee or
former employee of the Company or any affiliate that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Sections 162(m) or 280G of the Code.
(e) Neither the Company nor any Subsidiary has any liability in respect of
post-retirement health, medical or life insurance benefits for retired, former
or current employees of the Company or its Subsidiaries except as required to
avoid excise tax under Section 4980B of the Code.
(f) There has been no amendment to, written interpretation or announcement
(whether or not written) by the Company or any of its affiliates relating to, or
change in employee participation or coverage under, any Employee Plan which
would increase materially the expense of maintaining such Employee Plan above
the level of the expense incurred in respect thereof for the fiscal year ended
December 31, 1998.
(g) All contributions and payments accrued under each Employee Plan,
determined in accordance with prior funding and accrual practices, as adjusted
to include proportional accruals for the period ending prior to the date hereof,
have been discharged and paid on or prior to the date hereof except to the
extent reflected as a liability on the Company's financial statements.
(h) Except as could not reasonably be expected to have a Material Adverse
Effect, there is no action, suit, investigation, audit or proceeding pending
against or involving, or to the knowledge of the Company threatened against or
involving, any Employee Plan before any court or arbitrator or any state,
federal or local governmental body, agency or official.
Section 4.16. Compliance with Laws. Neither the Company nor any
Subsidiary is in violation of, or has violated, any applicable provisions of any
laws, statutes, ordinances or regulations, except for any such violation that,
individually or in the
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aggregate, has not had since the Balance Sheet Date and could not reasonably be
expected to have a Material Adverse Effect.
Section 4.17. Finders' Fees. Except for Morgan Stanley & Co.
Incorporated, the material terms of whose engagement agreement have been
disclosed to Buyer, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf, of
the Company or any Subsidiary who might be entitled to any fee or commission
from Buyer or any of its affiliates upon consummation of the transactions
contemplated by this Agreement.
Section 4.18. Environmental Matters. (a) Except as would not have a
Material Adverse Effect:
(i) no written notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review is pending or, to the knowledge of the Company or any
Subsidiary, is threatened by any governmental entity or other Person
against the Company or any Subsidiary and relating to any Environmental
Law;
(ii) the Company and its Subsidiaries are and have been in compliance
with all Environmental Laws and have obtained and are in compliance with
all permits, licenses, franchises, certificates, approvals and other
similar authorizations of governmental authorities required by
Environmental Laws and affecting the business of the Company or any of its
Subsidiaries;
(iii) there are no liabilities of or relating to the Company or any
Subsidiary, of any kind whatsoever, whether contingent or fixed, actual or
potential, known or unknown, arising under or relating to any Environmental
Law, and there are no facts, conditions, situations or set of circumstances
that would reasonably be expected to result in or be the basis for any such
liability; and
(iv) there has been no environmental investigation, study, or audit
conducted of which the Company has knowledge in relation to the current or
prior business of the Company or any Subsidiary or any property or facility
now or previously owned or leased by the Company or any Subsidiary.
(b) For purposes of this Section 4.18, the following terms shall have the
meanings set forth below:
"Company" and "Subsidiary" shall include any entity which is a legal
predecessor of the Company or any Subsidiary;
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"Environmental Laws" means any and all federal, state, local and foreign
laws, judicial decisions, regulations, rules, judgments, orders, decrees,
injunctions, permits, licenses, agreements and governmental restrictions or
any agreement or contract with any governmental authority, relating to
human health as it relates to hazardous materials, the environment or
employee safety, or to pollutants, contaminants, wastes or chemicals or any
toxic, radioactive, ignitable, corrosive or reactive or otherwise hazardous
substances, wastes or materials.
Section 4.19. Assets. (a) Except as would not, individually or in the
aggregate, have a Material Adverse Effect, the assets, properties, rights and
contracts, including (as applicable) title or leasehold thereto, of the Company
and its Subsidiaries, taken as a whole, are sufficient to permit the Company and
its Subsidiaries to conduct their business as currently being conducted. All
material real property owned or leased by the Company and its Subsidiaries is
owned or leased free and clear of all Liens, except for (i) Liens reflected or
reserved against in the Company Balance Sheet or disclosed in the notes thereto,
(ii) taxes and general and special assessments not in default and payable
without penalty or interest or (iii) Liens that do not materially adversely
interfere with any present use of such property.
(b) All aircraft, engines, spare engines and spare parts owned, leased or
in the possession or control of the Company or any of its Subsidiaries are in
sound operating condition, normal wear and tear excepted, except for those
engines, spare engines and spare parts under repair or overhaul pursuant to the
Company's FAA approved maintenance programs. A certificate of airworthiness for
each aircraft of the Company has been duly issued pursuant to relevant federal
aviation laws and is in full force and effect (except for the period of time any
aircraft may be out of service and such certificate is suspended in connection
therewith). Each aircraft owned by the Company is duly registered in the name
of the Company in accordance with federal aviation laws, and is not registered
under the laws of any other country. Each aircraft used by the Company but
owned by a third party is duly registered in the name of such third party in
accordance with all applicable federal aviation laws and the Company is
authorized to use such aircraft under all applicable federal aviation laws.
(c) Schedule 4.19 hereto sets forth a list of all owned and leased
aircraft, or aircraft under contract for future purchase or lease, a description
of the type and aircraft number of each such aircraft, the date the Company
placed such aircraft in service or proposes to place such aircraft in service,
the lease expiration date of such aircraft, and a notation as to whether the
aircraft (i) is owned or leased; (ii) complies with Stage 3 noise level
requirements of the Airport Noise and Capacity Act of 1990; and (iii) requires
refitting or repair to bring it into compliance with any outstanding FAA
aircraft requirements mandated by certain airworthiness directives promulgated
by the FAA.
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Schedule 4.19 hereto also contains a list of all airline slots owned or
leased by the Company or any of its Subsidiaries. No event has occurred which
would subject any of such slots to recall by the FAA.
Section 4.20. Labor Matters. (a) Schedule 4.20(a) identifies all
collective bargaining agreements (including any side letter, supplemental
agreement or memorandum of understanding) covering employees of the Company or
its Subsidiaries (collectively, the "Collective Bargaining Agreements"). The
Company has made available to Buyer copies of all such Collective Bargaining
Agreements. The Company has informed Buyer of all material current proposals of
the Company or any of its Subsidiaries in all ongoing negotiations with
representatives of any unions representing pilots, flight attendants, or
dispatchers, and all matters on which any tentative agreements have been reached
in the course of such negotiations.
(b) (i) There are no controversies pending or, to the best knowledge of
the Company, threatened between the Company and any of its employees, which
controversies have or could have a Material Adverse Effect;
(ii) the Company has not breached or otherwise failed to comply in any
material respect with any provision of any Collective Bargaining Agreement
or other labor union contract applicable to persons employed by the
Company, and there are no material grievances outstanding against the
Company under any such agreement or contract;
(iii) to the best knowledge of the Company, there is no petition
pending before the National Mediation Board seeking certification of a
labor representative with respect to any craft or class of employees of the
Company of any of its Subsidiaries; and
(iv) there is no strike, slowdown, work stoppage, labor action or
lockout, or, to the best knowledge of the Company, threat thereof, by or
with respect to any employees of the Company.
(c) The consent of the labor unions which are a party to the Collective
Bargaining Agreements is not required to consummate the Offer or the Merger.
Section 4.21. Material Contracts. (a) From January 1, 1998 through the
date hereof neither the Company nor any of its Subsidiaries has entered into any
contract which, if entered into prior to January 1, 1998, would have been
required to be disclosed in the Company 1997 10-K and which is material to the
business or operations of the Company or its Subsidiaries or which has had a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries nor,
to the knowledge of the Company, any other party, is in breach of or default
under any such contract or any contract filed as an exhibit (or incorporated by
reference as an exhibit) to the Company 1997 10-K which is currently
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in effect (the "Material Contracts"), except for such breaches and defaults
which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries is a party to or bound
by any non-competition agreement or any other agreement or binding obligation
which purports to limit in any material respect the manner in which, or the
localities in which, the Company or any such Subsidiary is entitled to provide
scheduled air transportation service.
(c) As of the date hereof, the Company and its Subsidiaries have on firm
order 38 undelivered aircraft. Since entering into the contract dated April 27,
1997, as amended on September 3, 1998, between the Company and Bombardier, Inc.,
the Company and its Subsidiaries have not exercised any of the options to
acquire additional aircraft that are contained therein.
(d) The CPTC Lease between the City of Atlanta and the Company, as amended
by the letter agreement dated as of January 26, 1996, among the City of Atlanta,
the Company and Valujet Airlines, pursuant to which the Company leases, among
other things, thirteen gates on Concourse C at Hartsfield Atlanta International
Airport for a term that does not expire before September 21, 2010 (x) is a valid
and binding agreement of the parties thereto and (y) has not been amended or
supplemented since January 26, 1996.
Section 4.22. Insurance. Schedule 4.22 sets forth a complete and correct
list of all material insurance policies (including premiums, policy limits,
deductibles, type of coverage and similar information) providing coverage in
favor of the Company or any of its Subsidiaries or any of their respective
properties (including "all risk" and hull insurance policies). Except as could
not reasonably be expected to have a Material Adverse Effect,
(i) all premiums (other than premiums paid or adjusted on a
retrospective basis) with respect to such policies covering all periods up
to and including the date hereof have been paid, no written notice of
termination, cancellation or reservation of rights has been received with
respect to any such policy and, to the knowledge of the Company, each such
policy is in full force and effect;
(ii) since the Balance Sheet Date, each of the Company and its
Subsidiaries, as the case may be, has timely filed claims under such
insurance policies with respect to all material matters and occurrences for
which it believes it has coverage thereunder; and
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(iii) the Company and its Subsidiaries have complied with the terms of
such policies in all material respects.
Section 4.23. Year 2000 Compliance. The Company has conducted a review of
each System used in the conduct of its business and operations to determine
whether such System is Year 2000 Compliant, and is currently implementing a
compliance plan that is intended to result in each System being Year 2000
Compliant in all material respects no later than January 1, 2000. Each action
to have been taken prior to the date of this Agreement under such plan has been
substantially completed and, as of the date of this Agreement, the Company has
no knowledge indicating that any action to be taken under such plan after the
date of this Agreement will be materially delayed or will fail to accomplish its
purpose under the plan. "System" shall mean software, hardware, computers and
devices with embedded electronics. A system is "Year 2000 Compliant" if it is
able to accurately process date and time data from, into and between the years
1999 and 2000, and any other year in the 20th and 21st centuries.
Section 4.24. Anti-takeover Statutes. Neither Section 14-2-1132 nor
Section 14-2-1111 of the Georgia Law nor any other "fair price", "moratorium",
"control share acquisition", "interested shareholder" or other similar
antitakeover statute or regulation enacted under Georgia Law applicable to the
Company or any of its Subsidiaries is applicable to the Merger or the other
transactions contemplated hereby.
Section 4.25. No Other Representations or Warranties. Except for the
representations and warranties contained in this Article 4, neither the Company,
either of its Subsidiaries nor any other Person has made or makes any other
express or implied representation or warranty, either written or oral, on behalf
of the Company or either of its Subsidiaries.
ARTICLE 5
Representations and Warranties of Buyer
Buyer represents and warrants to the Company that:
Section 5.01. Corporate Existence and Power. Each of Buyer and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all powers
and all material governmental licenses, authorizations, consents and approvals
required to carry on its business in all material respects as now conducted.
Since the date of its organization, Merger Subsidiary has not engaged in any
activities other than in connection with or as contemplated by this Agreement or
in connection with arranging any financing required to consummate the
transactions contemplated hereby.
Section 5.02. Corporate Authorization. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation
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by Buyer and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Buyer and Merger Subsidiary and have
been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of each of Buyer and Merger
Subsidiary.
Section 5.03. Governmental Authorization. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated by
this Agreement require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than
(i) the filing of a Certificate of Merger in accordance with Georgia
Law;
(ii) compliance with any applicable requirements of the HSR Act; and
(iii) compliance with any applicable requirements of the Exchange Act.
Section 5.04. Non-contravention. The execution, delivery and performance
by Buyer and Merger Subsidiary of this Agreement and the consummation by Buyer
and Merger Subsidiary of the transactions contemplated hereby do not and will
not
(a) contravene or conflict with the Certificate of Incorporation or
bylaws of Buyer or Merger Subsidiary,
(b) assuming compliance with the matters referred to in Section 503,
contravene or conflict with any provision of law, regulation, judgment,
order or decree binding upon Buyer or Merger Subsidiary, or
(c) constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or obligation of
Buyer or Merger Subsidiary or to a loss of any benefit to which Buyer or
Merger Subsidiary is entitled under any agreement, contract or other
instrument binding upon Buyer or Merger Subsidiary other than any such
termination, cancellation, acceleration or loss which, individually or in
the aggregate, would not reasonably be expected to have a material adverse
effect on Buyer or Merger Subsidiary.
Section 5.05. Disclosure Documents. (a) The information with respect to
Buyer and its subsidiaries that Buyer furnishes to the Company in writing
specifically for use in any Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (i) in the case of the Company Proxy
Statement (if applicable), at the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to shareholders of the Company
and at the time the shareholders vote on adoption of this Agreement (if
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applicable), and (ii) in the case of any Company Disclosure Document other than
the Company Proxy Statement, at the time of the filing thereof, at the time of
any distribution thereof, and at the time of consummation of the Offer.
(b) The Offer Documents, when filed, will comply as to form in all
material respects with the applicable requirements of the Exchange Act and will
not at the time of the filing thereof, at the time of any distribution thereof
or at the time of consummation of the Offer, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, provided, that this representation and warranty will not
apply to statements or omissions in the Offer Documents based upon information
furnished to Buyer or Merger Subsidiary in writing by the Company specifically
for use therein.
Section 5.06. Finders' Fees. Except for Goldman, Sachs & Co., whose fees
will be paid by Buyer, there is no investment banker, broker, finder or other
intermediary who might be entitled to any fee or commission from the Company or
any of its affiliates upon consummation of the transactions contemplated by this
Agreement.
ARTICLE 6
Covenants of the Company
Section 6.01. Conduct of the Company. From the date hereof until the
earlier of (x) the time designees of Buyer constitute a majority of the
Company's Board and (y) the Effective Time, the Company and the Subsidiaries
shall
(i) conduct their business in the ordinary course consistent with past
practice and shall use reasonable best efforts to preserve intact their
business organizations and relationships with third parties and to keep
available the services of their present officers and employees;
(ii) use all reasonable efforts to keep all material property and
equipment useful and necessary in their business in good working order and
condition,
(iii) continue, in respect of all aircraft, engines and spare parts
intended for use in its operations, their maintenance programs consistent
with past practice (except as required or permitted by applicable law),
including using reasonable best efforts to keep all such aircraft in such
condition as may be necessary to enable the airworthiness certification of
such aircraft under the Federal Aviation Act to be maintained in good
standing at all times, and
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(iv) at all times up to and including the Effective Time, except to the
extent not available on commercially reasonable terms, maintain their
existing insurance coverage of all types, including (but not limited to)
"all risk", hull and property damage, in effect or procure substantially
similar substitute insurance policies with financially sound and reputable
insurance companies in at least such amounts and against such risks as are
currently covered by such policies.
Without limiting the generality of the foregoing, from the date hereof until the
earlier of (x) the time designees of Buyer constitute a majority of the
Company's Board and (y) the Effective Time, the Company will not, and will cause
its Subsidiaries not to, in either case without Buyer's prior written consent,
which consent shall not be unreasonably withheld:
(a) adopt or propose any change in their respective organizational
documents (including bylaws);
(b) except pursuant to existing agreements or arrangements
(i) acquire (by merger, consolidation or acquisition of stock or
assets) any material corporation, partnership or other business
organization or division thereof, or sell, lease or otherwise dispose of a
material subsidiary or a material amount of assets or securities;
(ii) other than in the ordinary course of business, consistent with
past practice, make any investment in an amount in excess of $250,000 in
the aggregate whether by purchase of stock or securities, contributions to
capital (other than contributions to capital of a wholly-owned Subsidiary)
or any property transfer, or purchase for an amount in excess of $250,000
in the aggregate, any property or assets of any other individual or entity;
(iii) waive, release, grant or transfer any rights of material value,
including any routes or slots to which the Company has a right on the date
hereof;
(iv) license (as licensor), dispose of, assign, transfer or encumber
any intellectual property;
(v) modify or change in any material respect any existing material
license, lease, contract, or other document;
(vi) enter into any material agreement;
(vii) except to refund or refinance commercial paper, incur, assume
or prepay an amount of long-term or short-term debt (including leases,
financings,
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general airport revenue bonds, special revenue bonds and special facility
bonds) in excess of $2,000,000 in the aggregate;
(viii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person which are in excess of $250,000 in the
aggregate;
(ix) make any loans to any other person which are in excess of
$250,000 in the aggregate; or
(x) authorize any capital expenditures which individually are in
excess of $500,000 or in the aggregate are in excess of $10,000,000, in
either case other than ordinary course capital expenditures in connection
with (A) engine overhauls; (B) the Company's Hartsfield Atlanta
International Airport Concourse C renovations, provided that
representatives of Buyer and the Company will meet as soon as practicable
after the date hereof (1) to review the status of the renovations and the
remaining work to be done in order to complete the renovations and (2) to
consider whether alterations to such renovations are appropriate, taking
into account the Company's operational needs and contractual obligations;
(C) increases in inventory in connection with additions to the Company's
regional jet fleet and (D) momentary acquisitions of equity interests in
regional jet aircraft pursuant to sale-leaseback transactions on terms
consistent with past practice;
(c) (i) acquire or lease any aircraft other than pursuant to contracts or
agreements in effect as of the date hereof, (ii) exercise any options to acquire
any additional aircraft under contracts and agreements in effect as of the date
hereof; (iii) enter into, or commit to enter into, any new contract or agreement
with respect to the acquisition or lease of additional aircraft, or (iv) except
as otherwise disclosed on Schedule 6.01(c)(iv), agree or commit to accelerate
the delivery of, or agree to materially delay or defer the delivery of, aircraft
for which contracts or commitments exist, or exercise any right of substitution
of different aircraft models under any contract or arrangement or (v) operate
any aircraft configured with in excess of 70 passenger seats;
(d) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock (other than
(x) regular quarterly dividends not in excess of $0.115 per Share, and (y) cash
dividends and distributions by a wholly owned Subsidiary of the Company to the
Company or to a Subsidiary all of the capital stock which is owned directly or
indirectly by the Company) or redeem, repurchase or otherwise acquire or offer
to redeem, repurchase, or otherwise acquire any of its securities or any
securities of its Subsidiaries;
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(e) enter into any agreement or arrangement that limits or otherwise
restricts the Company, any Subsidiary or any of their respective affiliates or
any successor thereto or that could, after the Effective Time, limit or restrict
the Surviving Company, any Subsidiary thereof or any of their affiliates, from
engaging or competing in any line of business or in any location, which
agreement or arrangement would be material to the business of the Company and
its Subsidiaries or the business of Buyer or any of Buyer's subsidiaries
(assuming the Merger had taken place), in either case taken as a whole;
(f) except as otherwise disclosed on Schedule 6.01(f), adopt or amend any
bonus, profit sharing, compensation, severance, termination, stock option,
pension, retirement, deferred compensation, employment or employee benefit plan,
agreement, trust, plan, fund or other arrangement for the benefit and welfare of
any director, officer or employee, or (except for normal increases in the
ordinary course of business that are consistent with past practices and that, in
the aggregate (excluding increases arising pursuant to the Collective Bargaining
Agreements) do not result in a material increase in benefits or compensation
expense to the Company) increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not required by
any existing plan or arrangement (including, without limitation, the granting of
stock options or stock appreciation rights or the removal of existing
restrictions in any benefit plans or agreements);
(g) revalue in any material respect any of its assets, including, without
limitation, writing down the value of inventory in any material manner or write-
off of notes or accounts receivable in any material manner;
(h) pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent or
otherwise) other than the payment, discharge or satisfaction in the ordinary
course of business, consistent with past practices, of liabilities reflected or
reserved against in the consolidated financial statements of the Company or
incurred in the ordinary course of business, consistent with past practices;
(i) make any federal or material state tax election or settle or
compromise any material income tax liability controversy;
(j) take any action other than in the ordinary course of business and
consistent with past practices with respect to accounting policies or procedures
or except as required by generally accepted accounting principles or Regulation
S-X under the Exchange Act;
(k) except as previously approved by the Buyer, enter into any new or
amended contract, agreement, side letter or memorandum of understanding with any
unions representing employees of the Company or its Subsidiaries;
(l) agree or commit to do any of the foregoing; or
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(m) take or agree or commit to take any action that would make any
representation and warranty of the Company hereunder inaccurate in any material
respect at, or as of any time prior to, the Effective Time.
Section 6.02. Shareholder Meeting; Proxy Material. (a) Unless a vote
shall not be required under Georgia Law, the Company shall cause a meeting of
its shareholders (the "Company Shareholder Meeting") to be duly called and held
as soon as reasonably practicable following the consummation of the Offer for
the purpose of voting on the approval and adoption of this Agreement and the
Merger.
In connection with such meeting, the Company (i) will promptly prepare and
file with the SEC, will use its reasonable best efforts to have cleared by the
SEC and will thereafter mail to its shareholders as promptly as practicable the
Company Proxy Statement and all other proxy materials for such meeting, (ii)
will use its reasonable best efforts to obtain the necessary approvals by its
stockholders of this Agreement and the transactions contemplated hereby (subject
to fiduciary duties under applicable law) and (iii) will otherwise comply with
all legal requirements applicable to such meeting.
(b) The Company's Board shall recommend approval and adoption of this
Agreement and the Merger by the Company's shareholders (the "Recommendation"),
and neither the Company's Board nor any committee thereof shall amend, modify,
withdraw, condition or qualify the Recommendation in a manner adverse to Buyer
or take any action or make any statement inconsistent with the Recommendation
unless
(i) the Company's Board determines in good faith, after consultation
with outside legal counsel, that it must take such action(s) to comply with
its fiduciary duties under applicable law;
(ii) a Superior Proposal is pending at the time the Company's Board
determines to take any such action(s); and
(iii) the Company has provided reasonable prior notice advising Buyer
that it intends to take such action.
(c) Nothing contained in this Agreement shall prevent the Company's Board
from complying with Rule 14e-2 under the Exchange Act with respect to any
Acquisition Proposal.
Section 6.03. Access to Information. (a) From the date hereof until the
Effective Time, the Company will, upon reasonable advance notice and at
reasonable times, give Buyer, its counsel, financial advisors, auditors and
other authorized representatives full access to the offices, properties, books
and records of the Company and its Subsidiaries and such financial and operating
data and other information as such
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Persons may reasonably request and will instruct the Company's employees,
counsel and financial advisors to cooperate with Buyer in its investigation of
the business of the Company and its Subsidiaries; provided that no investigation
pursuant to this Section 6.03, shall affect any representation or warranty given
by the Company to Buyer hereunder.
(b) Information obtained by Buyer pursuant to this Section 6.03 shall be
subject to the provisions of the confidentiality agreement between the Company
and Buyer, dated February 9, 1999 (the "Confidentiality Agreement"), which
remains in full force and effect, but shall terminate upon the acceptance by
Buyer for payment pursuant to the Offer of Shares in sufficient number to
satisfy the Minimum Condition.
Section 6.04. Other Offers. (a) Neither the Company nor any of its
Subsidiaries shall (whether directly or indirectly through advisors, agents or
other intermediaries), nor shall the Company or any of its Subsidiaries
authorize or permit any of its or their officers, directors, agents,
representatives, advisors or Subsidiaries to
(i) solicit, initiate or take any action knowingly to facilitate the
submission of inquiries, proposals or offers from any Third Party (as
defined below) which constitutes or could reasonably be expected to lead to
(A) any acquisition or purchase of 20% or more of the
consolidated assets of the Company and its Subsidiaries or of over 20%
of any class of equity securities of the Company or any of its
Subsidiaries,
(B) any tender offer (including a self tender offer) or exchange
offer that if consummated would result in any Third Party beneficially
owning 20% or more of any class of equity securities of the Company or
any of its Subsidiaries,
(C) any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its
Subsidiaries whose assets, individually or in the aggregate,
constitute more than 20% of the consolidated assets of the Company
other than the transactions contemplated by this Agreement, or
(D) any other transaction the consummation of which would or
could reasonably be expected to interfere with, prevent or materially
delay the Merger or which would or could reasonably be expected to
materially dilute the benefits to Buyer of the transactions
contemplated hereby
(collectively, "Acquisition Proposals");
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(ii) enter into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any Third Party in connection
with an Acquisition Proposal any information with respect to its business,
properties or assets or any of the foregoing, or otherwise cooperate in any
way with, or knowingly assist or participate in, facilitate or encourage,
any effort or attempt by any Third Party (other than Buyer) to do or seek
any of the foregoing;
(iii) grant any waiver or release under any standstill or similar
agreement with respect to any class of equity securities of the Company or
any of its Subsidiaries;
except that the foregoing shall not prohibit the Company (either directly or
indirectly through advisors, agents or other intermediaries) from
(x) furnishing information pursuant to an appropriate confidentiality
letter (which the Company shall use all reasonable efforts to ensure will
not be less favorable to the Company in any material respect than the
Confidentiality Agreement) concerning the Company and its businesses,
properties or assets to a Third Party who has made or is seeking to
initiate discussions with respect to an Acquisition Proposal, and/or
(y) engaging in discussions or negotiations with such a Third Party
who has made a bona fide Acquisition Proposal,
but, in either case, only to the extent the Company's Board reasonably believes
in good faith, after consultation with an investment bank of nationally
recognized reputation and outside legal counsel, that the Acquisition Proposal
is bona fide and could reasonably lead to the delivery of a Superior Proposal
and that such action by the Company's Board is required in order for it to
comply with its fiduciary duties under applicable law.
The Company will direct each of its officers, directors, investment
bankers, attorneys, accountants, agents and other advisors and representatives
and use its reasonable best efforts to cause them to comply with the terms of
this Section 6.04(a).
(b) The Company shall notify Buyer promptly (but in no event later than 24
hours) after receipt by the Company or any Subsidiary (or any of their
respective directors, officers, agents or advisors), of any Acquisition
Proposal, which notice shall be made orally and in writing, and shall indicate
the identity of the offeror and the material terms and conditions of such
Acquisition Proposal. The Company shall keep Buyer informed, on a reasonably
current basis, of the status and material terms of any such Acquisition Proposal
or request and the status of any negotiations or discussions.
(c) Subject to the conditions described below in this Section 6.04(c),
either the Company or Buyer may terminate this Agreement if the Company's Board
shall have
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determined to approve or recommend an Acquisition Proposal after concluding
that such Acquisition Proposal constitutes a Superior Proposal.
However, the Company may not exercise its right to terminate under this
Section 6.04(c) (and may not enter into a binding written agreement with respect
to such an Acquisition Proposal) unless
(1) the Company shall have provided to Buyer at least two business days'
prior written notice that the Company's Board intends to terminate this
Agreement pursuant to this Section 6.04(c), specifying the material terms
and conditions of such Acquisition Proposal, and
(2) on or prior to such termination, the Company shall have paid to Buyer
the Termination Fee (as defined below).
Buyer may exercise its right to terminate under this Section 6.04(c) two
business days after receiving the notice contemplated by this Section 6.04(c).
In connection with the foregoing, the Company agrees that it will
(x) not enter into a binding agreement with respect to an Acquisition
Proposal until at least the third business day after it has provided the
notice to Buyer required hereby,
(y) consider in good faith any offer made by Buyer during that period and
(z) notify Buyer promptly if its intention to enter into such an agreement
shall change at any time after such notification.
(d) As used in this Section, the following terms have the following
meanings:
"Third Party" means any person, corporation, entity or "group," as defined
in Section 13(d) of the Exchange Act, other than Buyer or any of its
affiliates.
"Superior Proposal" means a bona fide, written Acquisition Proposal for at
least a majority of the outstanding Shares of the Company that is on terms
that a majority of the Company's Board determines in good faith, after
consulting with an investment bank of nationally recognized reputation and
its outside legal counsel, would result in a transaction, if consummated,
that is more favorable to the Company's shareholders (in their capacities
as shareholders) (other than Buyer and its affiliates), from a financial
point of view.
(e) The Company will immediately cease and cause its advisors, agents and
other intermediaries to cease any and all existing activities, discussions or
negotiations
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with any parties conducted heretofore with respect to any of the foregoing, and
shall use its reasonable best efforts to cause any such parties in possession of
confidential information about the Company that was furnished by or on behalf of
the Company in connection with any of the foregoing to return or destroy all
such information in the possession of any such party or in the possession of any
agent or advisor of any such party.
Section 6.05. Notices of Certain Events. The Company shall promptly
notify Buyer of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(b) any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced
or, to the best of its knowledge threatened against, relating to or involving or
otherwise affecting the Company or any Subsidiary which, if pending on the date
of this Agreement, would have been required to have been disclosed pursuant to
Section 4.13 or which relate to the consummation of the transactions
contemplated by this Agreement.
ARTICLE 7
Covenants of Buyer
Section 7.01. Obligations of Merger Subsidiary. Buyer will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
Section 7.02. Voting of Shares. Buyer agrees to vote all Shares
beneficially owned by it in favor of adoption of this Agreement at the Company
Shareholder Meeting.
Section 7.03. Director and Officer Liability. (a) For six years after the
Effective Time, and for so long thereafter as any claim asserted prior to such
date has not been fully adjudicated, Buyer will cause the Surviving Company to
indemnify and hold harmless the present and former officers and directors of the
Company in respect of acts or omissions occurring prior to the Effective Time to
the extent provided under the Articles of Incorporation and Bylaws of Merger
Subsidiary in effect on the date hereof (which shall become the Articles of
Incorporation
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and Bylaws of the Surviving Corporation pursuant to the Merger) and Buyer agrees
to cause the provisions of such Articles of Incorporation and Bylaws, insofar as
they relate to such matters, to continue in full force and effect for such
period of time without any amendment thereof; provided that such indemnification
and such obligation shall be subject to any limitation imposed from time to time
under applicable law. Buyer guarantees irrevocably and unconditionally the
obligations of the Surviving Corporation under this paragraph (a) and such
Articles of Incorporation and Bylaws.
(b) For six years after the Effective Time, and for so long thereafter as
any claim asserted prior to such date has not been fully adjudicated, Buyer will
cause the Surviving Company to use its best efforts to provide officers' and
directors' liability insurance in respect of acts or omissions occurring prior
to the Effective Time covering each such Person currently covered by the
Company's officers' and directors' liability insurance policies on terms with
respect to coverage and amount no less favorable than the aggregate coverage and
amounts of such policies in effect on the date hereof.
(c) In the event the Company or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, or at Buyer's option, Buyer, shall
assume the obligations set forth in this Section 7.03 and all obligations under
indemnity agreements with directors and executive officers of the Company. If
such obligations are assumed by any such successors or assigns, Buyer will
guarantee irrevocably and unconditionally the obligations of such successors and
assigns under this Section 7.03 and such indemnity agreements.
Section 7.04. Employee Benefits. During the period commencing on the
Effective Time and ending on the second anniversary thereof, Buyer shall provide
or cause to be provided to employees of the Company and its Subsidiaries salary
and benefits no less favorable, in the aggregate, to the salary and benefits
provided such employees immediately prior to the Effective Time (disregarding
for this purpose any stock options or other equity-based compensation provided
such employees prior to the Effective Time).
Section 7.05. Notices of Certain Events. Buyer shall promptly notify the
Company of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement; and
(b) any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement.
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ARTICLE 8
Covenants of Buyer and the Company
Section 8.01. Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement; provided that
nothing in this Agreement shall oblige Buyer or the Company or any of its
affiliates to agree to dispose of, agree to cease operating or agree to hold
separate any business, properties or assets which are material to the business
or operations, as such business or operations are currently conducted, of the
Company and its Subsidiaries or of Buyer and its subsidiaries (including, in
either case, without limitation, any gates at Hartsfield Atlanta International
Airport).
Section 8.02. Certain Filings. The Company and Buyer shall cooperate with
one another (a) in connection with the preparation of the Company Disclosure
Documents and the Offer Documents, (b) in determining whether any action by or
in respect of, or filing with, any governmental body, agency or official, or
authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this Agreement and (c)
in seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Company Disclosure Documents or the Offer Documents and seeking timely to obtain
any such actions, consents, approvals or waivers.
Section 8.03. Public Announcements. Buyer and the Company will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement and the transactions contemplated hereby.
Section 8.04. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Company will be authorized to execute
and deliver, in the name and on behalf of the Company or Merger Subsidiary, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Subsidiary, any other actions and things
to vest, perfect or confirm of record or otherwise in the Surviving Company any
and all right, title and interest in, to and under any of the rights, properties
or assets of the Company acquired or to be acquired by the Surviving Company as
a result of, or in connection with, the Merger.
Section 8.05. Merger Without Meeting of Shareholders. If Buyer and its
affiliates acquire at least 90% of the outstanding Shares pursuant to the Offer
or otherwise, then the parties hereto agree, at the request of Buyer, if then
permitted under
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Georgia Law, to take all necessary and appropriate action to cause the Merger to
be effective as soon as practicable after the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer without a meeting of
shareholders of the Company.
ARTICLE 9
Conditions to the Merger
Section 9.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Buyer and Merger Subsidiary to consummate the Merger
are subject to the satisfaction of the following conditions:
(a) if required by Georgia Law, this Agreement shall have been adopted by
the shareholders of the Company in accordance with such law;
(b) any applicable waiting period under the HSR Act relating to the Merger
shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger; and
(d) Buyer or its affiliates shall have purchased Shares pursuant to the
Offer in sufficient number to satisfy the Minimum Condition.
ARTICLE 10
Termination
Section 10.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the shareholders of the Company):
(a) by mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer,
(i) if Buyer shall not have purchased Shares pursuant to the Offer by
August 31, 1999 (the "Expiration Date"); provided that (x) the right to
terminate
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this Agreement under this Section 10.01(b)(i) shall not be available to any
party whose breach of any provision of this Agreement has been the cause of, or
resulted in, the failure of such purchase to be made on or before the Expiration
Date or (y) if the waiting period (and any extension thereof) applicable to the
consummation of the Offer under the HSR Act shall expire or terminate less than
ten business days prior to the Expiration Date, the right to terminate this
Agreement pursuant to this Section 10.01(b)(i) shall not become effective until
the tenth business day following the Expiration Date; or
(ii) if there shall be any law or regulation that makes consummation
of the Offer or the Merger illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Buyer, Merger Subsidiary or the Company
from consummating the Offer or the Merger is entered and such judgment,
injunction, order or decree shall become final and unappealable;
(c) by Buyer,
(i) in accordance with Section 6.04(c);
(ii) if the Company's Board shall or shall resolve to (x) not recommend, or
withdraw its approval or recommendation of, the Offer, the Merger, this
Agreement or any of the transactions contemplated thereby, (y) modify such
approval or recommendation in a manner adverse to Buyer or Merger Subsidiary, or
(z) approve, recommend or fail to take a position that is adverse to any
proposed Acquisition Proposal;
(iii) if the Company shall breach any of its obligations under Section
6.04; or
(iv) if Buyer shall have terminated the Offer without purchasing any Shares
thereunder or failed to purchase any Shares prior to the Expiration Date in
accordance with the terms of this Agreement, in either case due to any event or
circumstance that would result in a failure to satisfy any of the Offer
conditions set forth in Annex I hereto; or
(d) by the Company,
(i) in accordance with Section 6.04(c);
(ii) if Buyer shall have failed to commence the Offer in accordance with
the terms of this Agreement; or
(iii) if Buyer shall have terminated the Offer without purchasing any Shares
due to any event or circumstance, unless such termination shall have been
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caused by or resulted from the failure of the Company to perform in any
material respect any material obligation contained in this Agreement.
The party desiring to terminate this Agreement pursuant to clauses (b), (c) or
(d) shall give written notice of such termination to the other party in
accordance with Section 11.01.
Section 10.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.01, this Agreement shall become void and of no effect
with no liability on the part of any party hereto, except that termination of
this Agreement shall be without prejudice to any rights any party may have
hereunder against any other party for wilful breach of this Agreement. The
agreements contained in Sections 6.03(b), 7.01, 7.03, 10.02, 11.04, 11.06, 11.07
and 11.09 shall survive the termination hereof.
ARTICLE 11
Miscellaneous
Section 11.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be given,
if to Buyer or Merger
Subsidiary to: Delta Air Lines, Inc.
1030 Delta Boulevard
Hartsfield Atlanta International Airport
Atlanta, GA 30320-6001
Facsimile: (404) 715-2106
Att: Robert S. Harkey
with copies to: Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Facsimile: (212) 450-4800
Att: Joseph Rinaldi
if to the Company, to: ASA Holdings, Inc.
100 Hartsfield Centre Parkway
Suite 800
Atlanta, GA 30354-1356
Facsimile: 404-209-1829
Att: George F. Pickett
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with copies to: Sullivan & Cromwell
125 Broad Street
New York, NY 10004
U.S.A.
Facsimile: (212) 558-3588
Att: John Evangelakos
and Altman, Kritzer & Levick, P.C.
6400 Powers Ferry Road, N.W.
Suite 224
Atlanta, GA 30339
Facsimile: (770) 303-1135
Att: Craig H. Kritzer, Esq.
or such other address or telecopy number as such party may hereafter
specify for the purpose by notice to the other parties hereto. Each such
notice, request or other communication shall be effective (a) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section and the appropriate telecopy confirmation is received or (b) if
given by any other means, when delivered at the address specified in this
Section.
Section 11.02. Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time.
Section 11.03. Amendments; No Waivers. (a) Any provision of this Agreement
may be amended or waived prior to the Effective Time if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company, Buyer and Merger Subsidiary or in the case of a waiver, by the
party against whom the waiver is to be effective; provided that (1) after such
time that designees of Buyer constitute a majority of the Company's Board, such
amendment or waiver shall be approved by a majority of the Independent Directors
(if any Independent Directors are on the Company's Board at such time) and (2)
after the adoption of this Agreement and approval of the Merger by the
shareholders of the Company, no such amendment or waiver shall, without the
further approval of such shareholders, alter or change (i) the amount or kind of
consideration to be received in exchange for any shares of capital stock of the
Company, (ii) any term of the Articles of Incorporation of the Surviving Company
or (iii) any of the terms or conditions of this Agreement if such alteration or
change would adversely affect the holders of any shares of capital stock of the
Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or
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privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
Section 11.04. Fees and Expenses. (a) Except as provided in this
Section, all costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.
(b) The Company agrees to pay Buyer in immediately available funds a
termination fee of $5,000,000 (the "Termination Fee") if:
(i) this Agreement is terminated by Buyer pursuant to clause
(i), (ii) or (iii) of Section 10.01(c);
(ii) this Agreement is terminated by the Company pursuant to
clause (i) of Section 10.01(d);
(iii) within 6 months after termination of this Agreement
pursuant to Section 10.01(b)(i), the Company enters into an agreement to
consummate an Acquisition Proposal with any Third Party and such
Acquisition Proposal shall subsequently be consummated.
(c) The Company acknowledges that the agreements contained in this
Section are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Buyer would not enter into this Agreement.
Accordingly, if the Company fails to promptly pay any amount due pursuant to
this Section and, in order to obtain such payment, the other party commences a
suit which results in a judgment against the Company for the fee or fees and
expenses set forth in this Section, the Company shall also pay to Buyer its
costs and expenses incurred in connection with such litigation.
Section 11.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto except that Buyer may transfer
or assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase Shares pursuant to the Offer, but any such
transfer or assignment will not relieve Buyer of its obligations hereunder or
prejudice the rights of tendering shareholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer. Any other
purported assignment, delegation or transfer shall be null and void.
Section 11.06. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Georgia, except the
conflicts of laws provisions thereof.
40
<PAGE>
Section 11.07. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in
any federal court located in the State of Georgia or in any Georgia state court
located in Fulton County, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient form. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing,
each party agrees that service of process on such party as provided in Section
11.01 shall be deemed effective service of process on such party.
Section 11.08. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
Section 11.09. Entire Agreement; Third Party Beneficiaries. This Agreement
(including the Disclosure Schedules and the Confidentiality Agreement constitute
the entire agreement among Buyer, Merger Subsidiary and the Company with respect
to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among Buyer, Merger Subsidiary and the
Company with respect to the subject matter hereof. Except as set forth in
Section 703, no provision of this Agreement is intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
Section 11.10. Definitions. Each of the following terms is defined in the
Section set forth opposite such term:
Term Section
Acquisition Proposal 6.04(a)
affiliate 1.03(a)
Articles of Merger 2.01(b)
Balance Sheet 4.09(a)
Balance Sheet Date 4.09(a)
Buyer Recitals
Collective Bargaining Agreements 4.20(a)
Company Recitals
41
<PAGE>
Term Section
Company Disclosure Documents 4.10(a)
Company Permits 4.08(a)
Company Proxy Statement 4.10(a)
Company Securities 4.05
Company Shareholder Meeting 6.02(a)
Company Stock Option Plan 2.05(a)
Company 10-K 4.07(a)
Company 1997 10-K 4.06(a)
Company 10-Q 4.07(a)
Company's Board Recitals
Confidentiality Agreement 6.03(b)
Dissenting Shares 2.04(a)
Effective Time 2.01(b)
Employee Plans 4.15(a)
Environmental Laws 4.18(b)
ERISA Affiliate 4.15(a)
ERISA 4.15(a)
Exchange Act 4.03
Exchange Agent 2.03(a)
Expiration Date 10.01(b)
FAA 4.03
Georgia Law 2.01(a)
HSR Act 4.03
Independent Directors 1.03(a)
Lien 4.04(e)
Material Adverse Effect 4.01
Material Contracts 6.03
Merger 2.01(a)
Merger Consideration 2.02(b)
Merger Subsidiary Recitals
Minimum Condition 1.01(a)
Offer 1.01(a)
Offer Documents 1.01(b)
Person 2.03(c)
Recommendation 6.02(b)
Schedule 13E-3 1.01(b)
Schedule 14D-1 1.01(b)
Schedule 14D-9 1.02(b)
SEC 1.01(a)
Shares Recitals
Subsidiary 4.06(a)
Subsidiary Securities 4.06(b)
42
<PAGE>
Term Section
Superior Proposal 6.04(c)
Surviving Company 2.01(a)
Termination Fee 11.04(b)
Third Party 6.04(c)
43
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
ASA HOLDINGS, INC.
By: /s/ George F. Pickett
-----------------------------
Name: George F. Pickett
Title: Chairman and Chief Executive Officer
DELTA AIR LINES, INC.
By: /s/ Maurice W. Worth
-----------------------------
Name: Maurice W. Worth
Title:
DELTA SUB, INC.
By: /s/ [NAME ILLEGIBLE]
-----------------------------
Name:
Title:
<PAGE>
ANNEX I
Notwithstanding any other provision of the Offer, Buyer and Merger
Subsidiary shall not be required to accept for payment or pay for any Shares,
and may terminate the Offer, if
(x) the Minimum Condition (as defined in the Merger Agreement) has not been
satisfied by August 31, 1999,
(y) the applicable waiting period under the HSR Act shall not have expired
or been terminated by the expiration date of the Offer, or
(z) at any time on or after the date of the Merger Agreement and prior to
the acceptance for payment or payment of Shares, any of the following conditions
exist:
(a) there shall be instituted or pending any action, suit, investigation or
proceeding by any government or governmental authority or agency, domestic or
foreign, before any court or governmental authority or agency, domestic or
foreign,
(i) challenging or seeking to make illegal, to delay materially or
otherwise directly or indirectly to restrain or prohibit the making of the
Offer, the acceptance for payment of or payment for some of or all the
Shares pursuant to the Offer or the consummation of the Merger, seeking to
obtain material damages in connection with the transactions contemplated by
the Offer or the Merger,
(ii) seeking to restrain, prohibit or terminate the Company's or, as a
result of the transactions contemplated by this Agreement, Buyer's
ownership, operation or lease (or that of their respective subsidiaries or
affiliates) of any business, properties or assets which are material to the
business or operations, as such business or operations are currently
conducted, of the Company and its Subsidiaries or of Buyer and its
subsidiaries (including, in either case, without limitation, any gates at
Hartsfield Atlanta International Airport), as the case may be, or to compel
the Company or, as a result of the transactions contemplated by this
Agreement, Buyer or any of their respective subsidiaries or affiliates to
dispose of, cease operating or hold separate any business, properties or
assets which are material to the business or operations, as such business
or operations are currently conducted, of the Company and the Subsidiaries
or of Buyer and its subsidiaries (including, in either case, without
limitation, any gates at Hartsfield Atlanta International Airport), as the
case may be,
(iii) seeking to impose limitations on the ability of Buyer or any of
its subsidiaries or affiliates effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
any Shares acquired or
<PAGE>
owned by Buyer or any of its subsidiaries or affiliates on all matters
properly presented to the Company's shareholders, or
(iv) seeking to require divestiture by Buyer or any of its
subsidiaries or affiliates of any Shares, or
(v) that otherwise, in the judgment of Buyer, is likely to have a
Material Adverse Effect (as defined in the Merger Agreement); or
(b) there shall be in effect any judgment, decree or order of any court or
governmental authority or agency, domestic or foreign, or any other legal
restraint,
(i) which makes illegal, delays materially or otherwise restrains or
prohibits the Offer, the acceptance for payment of or payment for some or all
of the Shares pursuant to the Offer or the consummation of the Merger, or
imposes material damages in connection with the transactions contemplated by
the Offer or the Merger,
(ii) which restrains, prohibits or terminates the Company's or, as a
result of the transactions contemplated by this Agreement, Buyer's ownership,
operation or lease (or that of their respective subsidiaries or affiliates) of
any business, properties or assets which are material to the business or
operations, as such business or operations are currently conducted, of the
Company and its Subsidiaries or of Buyer and its subsidiaries (including, in
either case, without limitation, any gates at Hartsfield Atlanta International
Airport), as the case may be, or which compels the Company or, as a result of
the transactions contemplated by this Agreement, Buyer or any of their
respective subsidiaries or affiliates to dispose of, cease operating or hold
separate any business, properties or assets which are material to the business
or operations, as such business or operations are currently conducted, of the
Company and the Subsidiaries or of Buyer and its subsidiaries (including, in
either case, without limitation, any gates at Hartsfield Atlanta International
Airport), as the case may be,
(iii) imposes limitations on the ability of Buyer or any of its
subsidiaries or affiliates effectively to exercise full rights of ownership of
the Shares, including, without limitation, the right to vote any Shares
acquired or owned by Buyer or any of its subsidiaries or affiliates on all
matters properly presented to the Company's shareholders,
(iv) requires divestiture by Buyer or any of its subsidiaries or
affiliates of any Shares,
(v) that otherwise, in the judgment of Buyer, is likely to have a
Material Adverse Effect; or
2
<PAGE>
(c) there shall be any statute, rule, regulation, injunction, order or
decree enacted, enforced, promulgated, issued or deemed applicable to the
Offer or the Merger, by any court, government or governmental authority or
agency, domestic or foreign, other than the application of the waiting period
provisions of the HSR Act to the Offer or the Merger that, in the judgment of
Buyer, is reasonably likely, directly or indirectly, to result in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
or
(d) there has been any event, occurrence or development or state of
circumstances or facts which has had or could reasonably be expected to have a
Material Adverse Effect (as defined in the Merger Agreement); or
(e) the Company shall have breached or failed to perform or comply with in
any material respect any of its covenants or agreements under the Merger
Agreement, or any of the representations or warranties of the Company set
forth in the Merger Agreement shall not be true in any material respect when
made or at any time prior to consummation of the Offer as if made at and as of
such time (except as to any representation or warranty which speaks as of a
specific date, which must be untrue in any material respect as of such date);
or
(f) the Company shall have entered into, or shall have publicly announced
its intention to enter into, an agreement or an agreement in principle with
respect to any Acquisition Proposal; or
(g) the Company's Board shall or shall resolve to (x) not recommend, or
withdraw its approval or recommendation of, the Offer, the Merger, the Merger
Agreement or any of the transactions contemplated thereby, (y) modify such
approval or recommendation in a manner adverse to Buyer or Merger Subsidiary,
or (z) approve, recommend or fail to take a position that is adverse to any
proposed Acquisition Proposal; or
(h) a tender or exchange offer for more than 20% of the Shares shall have
been made by a Third Party, or it shall have been publicly disclosed or Buyer
shall have otherwise learned that
(i) any person or "group" (as defined in Section 13(d)(3) of the
Exchange Act) shall have acquired or made a bona fide proposal to acquire
beneficial ownership of more than 20% of any class or series of capital
stock of the Company (including the Shares), through the acquisition of
stock, the formation of a group or otherwise, or shall have been granted
any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 20% of any class or series of capital
stock of the Company (including the Shares) other than acquisitions for
bona fide arbitrage purposes only and other than as
3
<PAGE>
disclosed in a Schedule 13D or 13G on file with the Commission on the
date of the Merger Agreement, or
(ii) any such person or group which, prior to the date of the Merger
Agreement, had filed such a Schedule with the Commission shall have
acquired or proposed to acquire beneficial ownership of additional shares
of any class or series of capital stock of the Company (including the
Shares), through the acquisition of stock, the formation of a group or
otherwise, constituting 10% or more of any such class or series, or shall
have been granted any option, right or warrant, conditional or otherwise,
to acquire beneficial ownership of additional shares of any class or series
of capital stock of the Company (including the Shares) constituting 10% or
more of any such class or series or
(iii) any person or group shall have entered into a definitive agreement
or an agreement in principle with respect to a merger, consolidation or
other business combination with the Company; or
(i) the Merger Agreement shall have been terminated in accordance with its
terms;
which, in the reasonable judgment of Buyer in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Buyer and Merger
Subsidiary and may, subject to the terms of the Agreement, be waived by Buyer
and Merger Subsidiary in whole or in part at any time and from time to time in
their discretion. The failure by Buyer or Merger Subsidiary at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time prior to the Effective Time.
4
<PAGE>
EXHIBIT 5
LOGO of ASA HOLDINGS, INC.
February 22, 1999
To the Shareholders of ASA Holdings, Inc.:
On February 15, 1999, ASA Holdings, Inc. (the "Company") entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Delta Air Lines,
Inc., a Delaware corporation ("Delta"), and its wholly-owned indirect subsidiary
Delta Sub, Inc., a Georgia corporation ("Purchaser"), that provides for the
acquisition of all of the common stock, par value $0.10 per share, of the
Company (the "Shares" or, individually, a "Share") by Purchaser at a price of
$34.00 per Share net to the seller in cash. Under the terms of the proposed
transaction, Purchaser has commenced a tender offer (the "Offer") for all
outstanding Shares at a price of $34.00 per Share net to the seller in cash.
The Offer is currently scheduled to expire at 12:00 midnight, Eastern Standard
Time, on March 19, 1999, unless extended.
Following the successful completion of the Offer and upon approval by the
affirmative vote of holders of a majority of the Shares, if required, Purchaser
will be merged with and into the Company (the "Merger") and all Shares not
purchased in the Offer, other than Shares held by the Company as treasury stock
or owned by Delta or any of its subsidiaries or Shares as to which appraisal
rights have been exercised will be converted into the right to receive, without
interest, an amount in cash equal to $34.00 per Share.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY AND DETERMINED THAT THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER,
ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS (OTHER THAN
DELTA AND ITS AFFILIATES). THE BOARD RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS
ACCEPT THE OFFER, TENDER THEIR SHARES PURSUANT TO THE OFFER AND APPROVE AND
ADOPT THE MERGER AGREEMENT.
Accompanying this letter is a copy of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 filed by the Company
with the Securities and Exchange Commission. The Board of Directors of the
Company has received an opinion of Morgan Stanley Dean Witter, financial advisor
to the Company, that, as of the date of such opinion and based on and subject to
the matters stated in such opinion, the $34.00 per Share cash consideration to
be received by holders of Shares in the Offer and the Merger is fair, from a
financial point of view, to such holders.
Please refer to the Offer to Purchase and related materials of Purchaser,
including a Letter of Transmittal sent to you under separate cover, for use in
tendering Shares. These documents set forth the terms and conditions of the
Offer and provide instructions as to how to tender your Shares.
WE URGE YOU TO READ THE ENCLOSED DOCUMENTS CAREFULLY.
The management and directors of the Company thank you for the support you
have given the Company.
Sincerely,
/s/ George F. Pickett
George F. Pickett
Chairman of the Board and Chief Executive Officer
<PAGE>
EXHIBIT 6
DELTA CONNECTION
AGREEMENT
---------
This Agreement ("Agreement"), dated and effective the 1st of July,
1986, is between Delta Air Lines, Inc., Hartsfield Atlanta International
Airport, Atlanta, Georgia 30320 ("Delta"), and Atlantic Southeast Airlines,
Inc., 1688 Phoenix Parkway, College Park, Georgia 30349 ("ASA").
WHEREAS, Delta operates the Delta Connection program;
WHEREAS, ASA desires to have Delta perform and provide various
marketing, schedule and fare related, and other services for ASA in connection
with the Delta Connection program;
WHEREAS, Delta is willing to perform and provide various marketing,
scheduling and fare related, and other services for ASA in connection with the
Delta Connection program; and
WHEREAS, this Agreement will enhance the ability of ASA and Delta to
serve the public and the communities which they serve or may choose to serve;
<PAGE>
WHEREAS, Delta and ASA currently are parties to a Delta Connection
Agreement dated August 6, 1984, as amended on October 5, 1985, and now wish to
reconstitute that Agreement:
Delta and ASA agree to the following:
ARTICLE 1. FARES AND RULES PUBLICATION.
- ---------------------------------------
A. As agent for ASA, Delta will instruct appropriate publishing agents to
publish ASA's fares, rules and related matters, and ASA hereby authorizes Delta
to undertake such activities. Delta will use its best efforts to instruct such
publishing agents of such information within twenty-four (24) hours of receipt
of written or telex notification of the fares, rules, or other information which
ASA desires to have published. Delta will advise ASA of the format in which
fare, rule and other information must be submitted to Delta .
B. Delta is not responsible for determining or reviewing the accuracy of any
information provided to Delta by ASA, and ASA is solely responsible for the
accuracy of such information.
C. The selection of publishing agents for ASA's fare, rule, and related
information will be in Delta's sole discretion, but Delta
-2-
<PAGE>
will apply criteria for the selection of ASA's publishing agents similar to the
criteria that Delta applies to itself.
D. Delta will pay all routine expenses associated with instructing publishing
agents to publish ASA's fares, rules, and related information as set forth
herein.
ARTICLE 2. SCHEDULES PUBLICATION.
- ---------------------------------
A. As agent for ASA, Delta will furnish ASA's schedules and related
information to appropriate publishers, and ASA hereby authorizes Delta to
undertake such activities. Delta will notify ASA when any schedule and related
information that ASA desires to have published must be submitted to Delta, and
Delta will furnish to publishers all such information which is received in a
timely manner by Delta. ASA agrees and understands that if ASA desires to have
its schedule and related information submitted by Delta to appropriate
publishers, ASA will be required to submit said information to Delta in writing
approximately six (6) weeks in advance of the scheduled publication date so that
information can be properly disseminated to marketers of air transportation and
the public. Delta will specify the formats in which the schedule and related
information must be submitted to Delta.
-3-
<PAGE>
B. Delta will pay all routine expenses associated with furnishing ASA's
schedules and related information to publishers as set forth herein.
C. To avoid confusing or misleading the public and marketers of air
transportation, ASA agrees to use only the flight numbers assigned by Delta and
agrees not to list ASA's flights under other flight numbers unless otherwise
agreed to by Delta.
D. The selection of publishers for ASA's schedule and related information will
be in Delta's sole discretion, but Delta will apply criteria for the selection
of ASA's publishers similar to the criteria that Delta applies to itself.
Nothing in this Article or this Agreement prevents ASA from publishing its own
schedule and related information at any time or in any way that ASA deems
desirable, provided that any such information published by ASA must be the same
as or consistent with the information which ASA provides to Delta
E. If any schedule publishers selected by Delta permit airlines to list
connecting services in addition to the connecting services ordinarily listed by
that publisher, Delta will request and pay for such additional listings if
Delta, in its sole discretion, determines that such additional listings would be
beneficial to the travelling public; provided, in determining whether any such
additional listings for ASA should be published,
-4-
<PAGE>
Delta will use criteria similar to the criteria used by Delta for listing
Delta's paid connections.
F. Delta will publish and pay for ASA's schedules in Delta's Quick Reference
Schedules and System Timetables; the format and nature of such Schedules and
Timetables will be in the sole discretion of Delta, Delta will publish and pay
for Quick Reference Schedules solely including ASA in cities served by ASA but
not served by Delta; the format and nature for such Quick Reference Schedules
will be in Delta's sole discretion.
ARTICLE 3. ACCOUNTING PROVISIONS.
- ---------------------------------
A. ASA will process all passenger air transportation billings involving Delta
through the Airlines' Clearing House ("ACH"). Unless otherwise agreed to by the
parties in writing, the pricing of all ASA issued Traffic Documents and all
flight coupons issued by Delta or validated on Delta and honored by ASA will be
in accordance with the terms and procedures set forth in the ACH Interline
Sampling Agreement as outlined in Section D of the ACH Procedures Manual. Any
deviation from these terms and procedures must be agreed to in writing by both
parties.
B. When ASA bills Delta for sales on ASA involving Traffic Documents and/or
Delta issued/plated tickets for which travel agents and/or SATO, Inc. or others
have been or will be
-5-
<PAGE>
compensated, ASA will reimburse Delta, at Delta's applicable agency and/or SATO,
Inc. or other compensation rate at the time of the billing, for the compensation
paid by Delta based on ASA's portion of said Traffic Documents or tickets. The
amount of such reimbursement will be determined by using the ACH sampling
procedures referred to in Article 3(A).
C. If a flight operated by ASA is shown on the first leg of any itinerary of
any ticket and Delta is not shown in the itinerary on that ticket (including
tickets where ASA is the only airline), ASA will reimburse Delta for any credit
card discount charges and dishonored or invalid checks associated with such
tickets; provided, ASA will use the same procedures that Delta uses for its own
passengers to verify the validity of credit cards and the identity of persons
writing checks. As between ASA and Delta, Delta will pay for credit card
discount charges on tickets involving itineraries including flights operated by
ASA and Delta.
ARTICLE 4. AIRPORT RELATED AND TICKETING SERVICES.
- --------------------------------------------------
A. ASA will provide its own ticketing services; provided, Delta will provide
supplemental ticketing services for ASA at Delta's ticketing locations and will
use Delta ticket stock for such purposes.
-6-
<PAGE>
B. Delta will design, provide, and pay for appropriate airport and other
signage to reflect the Delta Connection and the relationship between ASA and
Delta. The nature and type of such signage will be in the sole discretion of
Delta, subject to any airport or governmental restraints. Delta will be
responsible for installing and maintaining all such signage, but the parties
will mutually determine which party will obtain any necessary formal or informal
approvals from appropriate airport or other authorities to install such signage.
The parties will fully cooperate with each other in all endeavors relating to
such signage and any necessary approvals.
ARTICLE 5. CUSTOMER SERVICES.
- ----------------------------
A. ASA will handle all customer related services in a professional,
businesslike, and courteous manner. In order to insure a high level of customer
satisfaction, ASA will:
1. Establish and maintain customer handling procedures and policies which
are similar to those utilized by Delta; and
2. Establish, maintain, and enforce employee conduct, appearance and
training standards and policies which are similar to those utilized by
Delta.
-7-
<PAGE>
B. ASA and Delta will periodically meet to discuss and review ASA's customer
handling procedures and policies and ASA's employee conduct, appearance, and
training standards and policies to insure compliance with this Article 5.
ARTICLE 6. TRAFFIC DOCUMENTS AND RELATED PROCEDURES.
- ---------------------------------------------------
A. Pursuant to mutually acceptable procedures, Delta will periodically provide
ASA with Delta machine and manual ticket stock, miscellaneous charges orders,
credit card refund drafts, credit card refund vouchers and other related
documents (collectively referred to as "Traffic Documents"). Delta will maintain
a supply of Traffic Documents at Delta's General Offices in Atlanta and, upon
written request from ASA, will supply ASA with appropriate supplies of Traffic
Documents.
B. Unless otherwise agreed to by Delta in writing, Traffic Documents may be
used, completed, validated, and issued only by ASA.
C. ASA will promptly surrender and return all Traffic Documents to Delta upon
Delta's written request.
D. ASA will maintain records of the Traffic Documents in a manner and format
acceptable to Delta. ASA will acknowledge
-8-
<PAGE>
receipt in writing of all Traffic Documents in the manner prescribed by Delta.
E. ASA will conform with and abide by all of Delta's rules and regulations
regarding the Traffic Documents.
F. Reporting and Remitting With Respect to Traffic Documents.
---------------------------------------------------------
1. On a daily basis, ASA will provide Delta with a report for each ASA
ticketing location of all ticketing and related transactions on Traffic
Documents for the prior day. Said report will be in a format determined by Delta
and will include without limitation all credit card transactions, including
supporting documentation.
2. ASA will accumulate all monies with respect to all transactions on
Traffic Documents (other than credit card transactions) on a weekly basis ending
at the close of business each Sunday. Not later than the second Monday following
the weekly period to which said transactions are applicable, ASA will remit to
Delta for all transactions on Traffic Documents (other than credit card
transactions) during the applicable weekly period.
3. ASA will issue all Traffic Documents, and will collect appropriate
charges, in accordance with the tariffs, fares,
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<PAGE>
rates, rules and regulations of applicable carriers. ASA is responsible for all
undercharges and incorrect fares, rates, and charges on Traffic Documents issued
by or for ASA, and Delta may deduct from sums due ASA all amounts resulting from
any such undercharges or incorrect fares, rates, and charges. The amount of such
undercharges will be determined by utilizing the ACH sampling procedures
referred to in Article 3(A) for passenger tickets and on a direct billing basis
for baggage/cargo related items.
4. ASA will reimburse Delta a rate of 2.5 percent for all credit card
charges set forth in Article 3(C) (other than sales on UATP) made by ASA on
Traffic Documents in accordance with the ACH sampling procedures in Article
3(A). ASA will reimburse Delta at the ACH rate for the non-Delta portion of all
UATP credit card sales, or at such other rate as the parties may mutually agree
upon in writing.
G. Responsibility for Traffic Documents.
------------------------------------
ASA will take all reasonable and necessary measures to safeguard the
Traffic Documents as of the time of receipt and thereafter. ASA will maintain
the Traffic Documents in accordance with mutually agreed upon security
procedures and facilities. ASA is responsible for all risk of loss, misuse,
-10-
<PAGE>
misappropriation, and theft of Traffic Documents as of the time ASA takes
possession of the Traffic Documents.
H. Denied Boarding Compensation Vouchers.
-------------------------------------
Delta will use its best efforts to observe ASA's rules and regulations
regarding procedures for denied boarding. ASA is responsible for notifying Delta
of ASA's denied boarding rules and immediately notifying Delta of all changes to
such rules. Delta is not responsible for, and ASA will indemnify Delta for, any
claims, damages, or liabilities which result from ASA's failure to give such
notice, from Delta's payment, failure to pay, or incorrect payment of denied
boarding compensation, or from Delta's failure to adhere to ASA's denied
boarding compensation rules. Delta shall use ASA denied boarding compensation
vouchers which will be provided to Delta by ASA, at ASA's expense, and Delta is
hereby expressly authorized to issue ASA denied boarding compensation vouchers
on ASA's behalf.
I. Refund Vouchers.
---------------
1. Delta will use Delta refund vouchers for refunds for all transactions
handled by Delta involving ASA.
2. ASA will use ASA refund vouchers for all transactions hereunder, other
than credit card sales refunds. ASA will use
-11-
<PAGE>
Delta credit card refund vouchers for credit card sales refunds and will comply
with Delta's rules and regulations for handling and processing such refunds.
Delta will supply ASA with an appropriate supply of credit card refund vouchers.
J. Inconvenienced Passengers.
-------------------------
Delta is authorized, but not obligated, to undertake on behalf of ASA
the following actions, to execute the following documents, and otherwise to take
all reasonable measures in Delta's sole discretion, to accommodate ASA
passengers who may be inconvenienced as a result of any action or inaction taken
by ASA, any action or inaction taken by Delta while acting on ASA's behalf, or
as a result of any happening or occurrence which is beyond the control of either
ASA or Delta:
1. Expense Vouchers - ASA shall provide Delta, at ASA's expense, with ASA
----------------
expense vouchers which Delta is authorized to issue on ASA's behalf to
ASA customers who incur ground transportation, hotel, meal or other
similar expenses as a result of an ASA flight cancellation, diversion,
delay, or similar incident. ASA will promptly provide Delta with
instructions for issuing such expense vouchers.
-12-
<PAGE>
2. Expense Checks - Delta may issue Delta's expense checks to ASA
--------------
customers in accordance with the rules and regulations established by
ASA and provided to Delta by ASA. Delta will periodically invoice ASA
for the amounts involved in such expense checks.
3. Petty Cash Disbursements - Delta may make petty cash disbursements to
------------------------
ASA customers in accordance with the rules and regulations established
by ASA and provided to Delta by ASA. Delta will periodically invoice
ASA for the amounts involved in such petty cash disbursements.
4. ASA Swift and Baggage Forwarding Expenses - Delta may
-----------------------------------------
contract on ASA's behalf to have ASA customers' baggage
and ASA Swift packages forwarded to their appropriate
destination in the event that either is detained,
delayed, misshipped, or not shipped. Delta may either
incur such expenses itself and be reimbursed by ASA, or
arrange for ASA to be invoiced directly.
-13-
<PAGE>
ARTICLE 7. TERM.
- ---------------
A. This Agreement is effective on the date first written above and will
continue thereafter until August 9, 1994 unless terminated by either party on
not less than one-hundred, eighty (180) days' advance written notice.
B. Either party may terminate this Agreement immediately if the other party
files a voluntary petition in bankruptcy, makes an assignment for the benefit of
creditors of all or substantially all of its assets, fails to secure dismissal
of any involuntary petition in bankruptcy within sixty (60) days after the
filing thereof, or petitions for reorganization, liquidation, or dissolution
under any federal or state bankruptcy law or similar law, or if any such actions
are imminent.
C. Delta may, in Delta's sole discretion, terminate this Agreement if ASA
agrees to merge into or with any entity, agrees to be acquired by any entity, or
enters into a letter of intent either to merge into or with any entity or to be
acquired by any entity; provided, the foregoing shall not apply if ASA is the
acquiring or surviving entity.
D. Termination of this Agreement for any reason shall not relieve either party
of rights or obligations incurred prior to the effective date of termination.
-14-
<PAGE>
ARTICLE 8. FEES AND CHARGES.
- ---------------------------
A. Unless otherwise agreed to by the parties in writing, ASA will pay all
fees, rentals, charges, costs, and other expenses in any way connected with or
related to this Agreement or ASA's operations including but not limited to
terminal fees and rentals, landing fees, and other airport charges, unless Delta
has expressly agreed herein to pay for such fees, charges, costs, rentals, or
other expenses. ASA agrees that notice of any such fees, rentals, charges,
costs, other expenses, taxes, fees, and assessments may be served directly on
ASA.
B. Effective May 1, 1984, ASA will pay Delta $20,000 per month for costs and
expenses incurred by Delta at locations of Scheduled Airlines Traffic Office,
Inc. involving ASA transportation. The parties will periodically review this
amount and adjust it upwards or downwards, as appropriate, to account for
schedule and route changes and for increased or decreased costs and expenses
incurred by Delta.
C. ASA will reimburse Delta and otherwise pay for all taxes, fees, and other
assessments (other than income taxes on the net income of Delta) which are
imposed by any governmental or administrative entity and which are connected
with this Agreement or any services, materials, goods, or other benefits
furnished hereunder.
-15-
<PAGE>
D. Delta will periodically invoice ASA for any amounts due under this
Agreement, and ASA will pay all such invoices within ten (10) days of receipt.
ARTICLE 9. LIABILITY PROVISIONS.
- -------------------------------
A. ASA shall be liable for and hereby agrees fully to defend, release,
discharge, indemnify, and hold harmless Delta, its directors, officers,
employees, and agents from and against any and all claims, demands, damages,
liabilities, actions, causes of actions, losses, costs, and expenses of any
nature whatsoever (including investigation and witness costs and expenses and
attorneys' fees and expenses) in any manner arising out of, connected with, or
attributable to this Agreement, the performance, improper performance, or non-
performance of any and all services to be undertaken by ASA pursuant to this
Agreement, the loss, theft, use, or issuance of Traffic Documents, or the
operation, non-operation, or improper operation of ASA's aircraft, equipment, or
facilities at any location, excluding only claims, demands, damages,
liabilities, actions, causes of action, losses, costs, and expenses resulting
from the gross negligence or willful misconduct of Delta, its directors,
officers, agents, or employees. ASA will do all things necessary to cause and
assure, and will cause and assure, that ASA will at all times be and remain in
custody and control of any aircraft, equipment, and facilities of ASA, and
Delta, its directors,
-16-
<PAGE>
officers, employees, and agents shall not, for any reason, be deemed to be in
the custody or control, or a bailee, of ASA's aircraft, equipment, or
facilities.
B. Delta shall be liable for and hereby agrees fully to defend, release,
discharge, indemnify, and hold harmless ASA, its directors, officers, employees,
and agents from and against any and all claims, demands, damages, liabilities,
actions, causes of actions, losses, costs, and expenses of any nature whatsoever
(including investigation and witness costs and expenses and attorneys' fees and
expenses) in any manner arising out of, connected with, or attributable to this
Agreement, the performance, improper performance, or non-performance of any and
all services to be undertaken by Delta pursuant to this Agreement, or the
operation, non-operation, or improper operation of Delta's aircraft, equipment,
or facilities at any location, excluding only claims, demands, damages,
liabilities, actions, causes of action, losses, costs, and expenses resulting
from the gross negligence or willful misconduct of ASA, its directors, officers,
agents, or employees. Delta will do all things necessary to cause and assure,
and will cause and assure, that Delta will at all times be and remain in custody
and control of any aircraft, equipment, and facilities of Delta, and ASA, its
directors, officers, employees, and agents shall not, for any reason, be deemed
to be in the custody or control, or a bailee, of Delta's aircraft, equipment, or
facilities.
-17-
<PAGE>
C. ASA and Delta agree to comply with all rules, regulations, directives, and
similar instructions of appropriate governmental, judicial, and administrative
entities, including but not limited to airport authorities, the Federal Aviation
Administration, and the Civil Aeronautics Board (and its successor agencies).
D. OTHER THAN ANY WARRANTIES SPECIFICALLY CONTAINED IN THIS AGREEMENT, DELTA
DISCLAIMS AND ASA HEREBY WAIVES ANY WARRANTIES, EXPRESS OR IMPLIED, ORAL OR
WRITTEN, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR INTENDED USE RELATING TO ANY EQUIPMENT, DATA, INFORMATION, OR SERVICES
FURNISHED HEREUNDER. ASA AGREES THAT DELTA IS NOT LIABLE TO ASA OR ANY OTHER
PERSONS FOR CONSEQUENTIAL, PUNITIVE, OR SPECIAL DAMAGES UNDER ANY CIRCUMSTANCES
IN CONNECTION WITH MATTERS ARISING OUT OF THIS AGREEMENT.
ARTICLE 10. WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE PROVISIONS.
- -------------------------------------------------------------------------------
A. The employees, agents, and independent contractors of Delta are the
employees, agents, and independent contractors of Delta for all purposes, and
shall under no circumstances be deemed to be, or shall be, employees, agents, or
independent contractors of ASA.
B. The employees, agents, and independent contractors of ASA are the
employees, agents, and independent contractors of ASA for
-18-
<PAGE>
all purposes and under no circumstances shall be deemed to be, or shall be, the
employees, agents, or independent contractors of Delta.
C. Each party assumes full responsibility for any and all liability to its own
employees on account of injury, or death resulting therefrom, sustained in the
course of their employment. Each party, with respect to its own employees,
accepts full and exclusive liability for the payment of Workers' Compensation or
Employers' Liability for insurance premiums with respect to such employees, and
for the payment of all taxes, contributions or other payments for unemployment
compensation or old age benefits, pensions, annuities, or other similar benefits
now or hereafter imposed upon employers by any government or agency thereof
having jurisdiction in respect of such employee measured by the wages, salaries,
compensation or other remuneration paid to such employees; each party also
agrees to make such payments and to make and file all reports and returns and to
do everything necessary to comply with the laws imposing such taxes,
contributions, or payments.
ARTICLE 11. INSURANCE PROVISIONS.
- --------------------------------
A. ASA shall procure and maintain in full force and effect during the term of
this Agreement policies of insurance of the
-19-
<PAGE>
types of coverage in the minimum amounts in companies and under terms and
conditions satisfactory to Delta as follows:
1. All risk hull insurance on an agreed value basis, not to exceed
replacement value.
2. Comprehensive general liability (premises, products, completed
operations and contractual) covering personal and bodily injury and
property damage in the amount not less than $200,000,000 per
occurrence.
3. Workers' compensation for statutory limits per accident.
4. Employer's liability in an amount not less than $500,000 per accident.
5. Baggage liability in an amount not less than $100,000 per occurrence.
6. Cargo liability in an amount not less than $100,000 per loss, casualty
or disaster.
7. Automobile liability of not less than $5,000,000.00.
-20-
<PAGE>
B. ASA shall cause the policies of insurance described in this Agreement to be
duly and properly endorsed by ASA's insurance underwriters as follows:
1. As to policies of insurance described in Article 11 (A)(1), (A)(2),
(A)(3), (A)(4), (A)(5), (A)(6) and (A)(7): (a) to provide that any
waiver of rights of subrogation against other parties by ASA will not
affect the coverage provided hereunder with respect to Delta; and (b)
to provide that ASA's underwriters shall waive all subrogation rights
arising out of this Agreement against Delta, its directors, officers,
employees and agents without regard to any breach of warranty on the
part of ASA.
2. As to policies of insurance described in Article 11 (A)(2), (A)(5),
(A)(6), and (A)(7): (a) to provide that Delta, its directors,
officers, employees and agents shall be endorsed as named insured
parties thereunder; and (b) to provide that said insurance shall be
primary insurance.
3. As to policies of insurance described in Article 11 (A)(2): (a) to
provide a cross-liability clause as though separate policies were
issued for Delta and ASA and their respective directors, officers,
employees and
-21-
<PAGE>
agents; and (b) to provide contractual liability insurance coverage
for liability assumed by ASA under this Agreement.
4. As to any insurance obtained from foreign underwriters, to provide
that Delta may maintain against said underwriters a direct action in
the United States upon said insurance policies and to this end provide
a standard service of suit clause designating a United States attorney
in Washington, D.C., or New York, New York.
5. All insurance policies shall provide that the insurance shall not be
invalidated by any action or inaction of ASA.
C. ASA shall cause each of the insurance policies to be duly and properly
endorsed to provide that said policy or policies or any part or parts thereof
shall not be cancelled, terminated or materially altered, changed or amended by
ASA's insurance underwriters, until after sixty (60) days' written notice to
Delta which sixty (60) days' notice shall commence to run from the date such
notice is actually received by Delta.
D. Not later than the effective date of this Agreement, and from time to time
thereafter upon request by Delta, ASA shall
-22-
<PAGE>
furnish Delta evidence satisfactory to Delta of the aforesaid insurance
coverages and endorsements, including certificates certifying that the aforesaid
insurance policy or policies with the aforesaid limits are duly and properly
endorsed as aforesaid and are in full force and effect. Initially, this evidence
shall be certificates of the policies required hereunder.
E. In the event ASA fails to maintain in full force and effect any of the
insurance and endorsements, Delta shall have the right (but not the obligation)
to procure and maintain such insurance or any part thereof. The cost of such
insurance shall be payable by ASA to Delta upon demand by Delta. The procurement
of such insurance or any part thereof by Delta does not discharge or excuse
ASA's obligation to comply with the provisions set out herein. ASA agrees not to
cancel, terminate or materially alter, change or amend any of the policies until
after providing sixty (60) days' advance written notice to Delta of ASA's intent
to so cancel, terminate or materially alter, change or amend said policies of
insurance, which sixty (60) day notice period shall commence to run from the
date notice is actually received by Delta.
F. During the effectiveness of this Agreement, ASA agrees to maintain on
deposit with the Department of Transportation a signed counterpart of the
interim "Montreal Agreement" (Agreement CAB 18900) which has the effect of
increasing the limits of
-23-
<PAGE>
liability under the Warsaw Convention to seventy-five thousand dollars
($75,000.00) ASA further agrees to be bound by Agreement CAB 18900 and any
subsequent amendment thereto or any subsequent order of the Department of
Transportation or protocol ratified by the United States Government which
relates to and modifies the limit of liability under the Warsaw Convention.
G. With respect to all personal and property claims against ASA but not
against Delta, whether or not covered by the insurance policies set forth in
this Article or otherwise, Delta is responsible only for filing an initial
report and has no other obligations with respect to such claims, and ASA is
fully responsible for handling all adjustments, settlements, negotiations,
litigation, and similar activities in any way related to or connected with such
claims.
H. The parties hereby agree that from time to time during the effectiveness of
this Agreement, Delta may require ASA to have and maintain amounts of insurance
coverages in excess of the minimum amounts set forth should the circumstances
and conditions of ASA's operations under this Agreement be deemed, in Delta's
sole discretion, to require reasonable increases in any or all of the foregoing
minimum insurance coverages.
-24-
<PAGE>
ARTICLE 12. OPERATIONS OF ASA AS A DELTA CONNECTION CARRIER.
-----------------------------------------------
Nothing in this Agreement confers any rights for either party to restrict the
other party's ability: (1) to maintain or change rates, fares, tariffs, markets,
schedules, equipment, services, distribution and marketing methods, competitive
strategies, or similar matters; (2) to engage in vigorous and full competition
with other entities; or (3) to do business, or choose not to do business, with
other entities. Notwithstanding the foregoing, ASA acknowledges and agrees that
participation in the Delta Connection program obligates ASA to offer and
maintain a quality and professional level of service in terms of schedules,
customer service, and the like. Accordingly, not less than once each year of
this Agreement, the parties will: (a) meet to review and discuss the services,
operations, and plans of ASA as a Delta Connection Carrier; and (b) jointly
develop a written business plan for the operations and services of ASA. ASA will
comply with said business plan and all reasonable recommendations of Delta in
this area.
ARTICLE 13. CONTRACT INTERPRETATION.
- -----------------------------------
A. This Agreement is subject to, and will be interpreted in accordance with,
the laws of the United States and more specifically, the laws of the State of
Georgia.
-25-
<PAGE>
B. The captions in this Agreement are for convenience only, confer no rights
or obligations on either party, and do not alter any terms of this Agreement.
C. Time is of the essence in this Agreement.
D. The terms and conditions enumerated in this Agreement constitute the entire
agreement between the parties and supersede those of any previous agreement or
communications with respect to the subject matter hereof, including without
limitation the Delta Connection Agreement between the parties dated August 6,
1984, as amended on October 5, 1985.
F. If any provision of this Agreement is rendered inoperative, void, or
illegal by operation of law or otherwise, the other and remaining provisions
contained in this Agreement will remain in full force and effect.
ARTICLE 14. CIRCUMSTANCES BEYOND THE PARTIES' CONTROL.
- -----------------------------------------------------
With the exception of outstanding rights and obligations, each party will be
relieved of its obligations under this Agreement in the event and to the extent
that performance is delayed or prevented by any causes reasonably beyond that
party's control, including without limitation acts of God and force majeure.
-26-
<PAGE>
ARTICLE 15. NO LICENSE GRANTED.
- ------------------------------
This Agreement is not, and shall not be construed to be, a license for either
party to use the trade names, trademarks, service marks, or logos of the other
party, except as expressly authorized in writing in advance by such party.
ARTICLE 16. MODIFICATION AND WAIVER.
- -----------------------------------
This Agreement may not be modified, altered, or amended in any way except by
another document signed by authorized representatives of both parties.
B. No waiver of any provision or any breach of this Agreement will constitute,
or be deemed to constitute, a waiver of any other provision hereof or a waiver
of any other breach of this Agreement.
ARTICLE 17. NOTICES.
- -------------------
A. All notices or other communications required or called for hereunder must
be in writing and will be deemed to have been duly served if sent by United
States mail or telegraph, postage prepaid.
-27-
<PAGE>
B. Notices and communications to be served by ASA on Delta shall be sent to:
Mr. W. Whitley Hawkins
Senior Vice President-Marketing
Delta Air Lines, Inc.
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320
C. Notices and communications to be served by Delta on ASA shall be sent to:
Mr. John Beiser
Senior Vice President-Sales and Services
Atlantic Southeast Airlines, Inc.
General Offices
1688 Phoenix Parkway
College Park, Georgia 30349
ARTICLE 16. ASSIGNMENT.
- ----------------------
Neither party may assign or transfer this Agreement or any portion of it to any
entity without the express written consent of the other party. If this Agreement
is assigned or transferred, by operation of law or otherwise, without such
consent, the non-assigning or non-transferring party may immediately terminate
this Agreement and the assigning or transferring party will be liable, without
limitation, for all outstanding obligations and liabilities of or made by the
assigning or transferring party and the assignee, attempted assignee,
transferee, or attempted transferee.
-28-
<PAGE>
* * *
IN WITNESS WHEREOF, the parties have executed this Agreement by their
undersigned duly authorized representatives:
ATLANTIC SOUTHEAST AIRLINES, INC. DELTA AIR LINES, INC.
By: /s/ John Beiser /s/ W. Whitley Hawkins
---------------------- ------------------------------
John Beiser W. Whitley Hawkins
Senior Vice President- Senior Vice President-Marketing
Sales and Services
-29-
<PAGE>
AMENDMENT TO THE DELTA CONNECTION AGREEMENT
This Amendment ("Amendment"), dated this 17th day of December, 1987, amends
the Delta Connection Agreement dated July 1, 1986, ("Agreement") between Delta
Air Lines, Inc. ("Delta"), whose principal office is located at Hartsfield
Atlanta International Airport, Atlanta, Georgia 30320 and Atlantic Southeast
Airlines, Inc. ("ASA") whose principal office is located at 1688 Phoenix
Parkway, College Park, Georgia 30349.
WHEREAS, Delta and ASA have entered into a Delta Connection Agreement and
now wish to amend that Agreement;
NOW, THEREFORE, Delta and ASA agree as follows:
1. This Amendment amends the above-referenced Agreement and, except as
expressly modified hereby, the Agreement shall remain in full force and effect
and shall govern the performance, obligations and remedies of the parties.
2. The following provision is added as Article 3(C)(1) of the Agreement:
If a flight operated by Delta is shown on any leg
in the itinerary of any traffic document issued
and sold at any ASA office, Delta will reimburse
ASA for invalid checks associated with such
traffic documents and tickets; provided, ASA has
conformed with Delta's check acceptance procedures
and has exhausted all means of obtaining monies
owed. ASA hereby assigns to Delta its rights to
recover any amounts due based on the invalid
checks described herein, once it has exhausted all
means of obtaining monies owed, and authorizes
Delta to take whatever actions it may deem
necessary to recover the monies owed.
IN WITNESS WHEREOF, the parties have executed this Amendment by their
undersigned duly authorized representatives.
ATLANTIC SOUTHEAST AIRLINES, INC. DELTA AIR LINES, INC.
By:(Proper officer-signature illegible) By: /s/ W. Whitley Hawkins
------------------------------------ ------------------------
Senior Vice President W. Whitley Hawkins
Title: Sales & Services Senior Vice President
Marketing
-30-
<PAGE>
AMENDMENT TO THE DELTA CONNECTION AGREEMENT
-------------------------------------------
This Amendment ("Amendment") effective 01 day of July, 1988, amends the
Delta Connection Agreement ("Agreement") between Delta Air Lines, Inc.
("Delta"), Hartsfield Atlanta International Airport, Atlanta, Georgia 30320 and
Atlantic Southeast Airlines, Inc. ("ASA"), 1688 Phoenix Parkway, College Park,
Georgia 30349.
This Amendment amends the above-referenced Agreement, and except as
expressly modified hereby the Agreement shall remain in full force and effect
and shall govern the performance, obligations and remedies of the parties.
Delta and ASA hereby amend the Agreement as follows:
Article 3 is hereby amended to add the following as Paragraph D:
- ---------
D. ASA will pay Delta for all amounts paid by Delta to vendors of computerized
reservations systems ("CRS's") attributable to passengers booked on ASA flights
who do not connect to/from a Delta flight. For purposes of computing the amount
---
of this payment, the number of ASA passengers who do not connect to/from Delta
---
in a given month will be divided by the total number of ASA passengers, and the
quotient will be multiplied times the amount of the payment made to each CRS
vendor for the applicable month. Payments due hereunder are applicable only to
those CRS vendors which now or in the future provide Delta with a breakdown of
ASA passengers booked.
This Amendment is effective on the date first written above and shall
remain in effect until the Agreement is terminated.
The terms as defined in the Agreement shall have the same meaning as in
this Amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment by their
undersigned duly authorized representatives:
ATLANTIC SOUTHEAST AIRLINES, INC. DELTA AIR LINES, INC.
By: (Proper officer-signature illegible) By: /s/ W. Whitley Hawkins
------------------------------------ ----------------------
Senior Vice President W. Whitley Hawkins
Title: Sales and Services Senior Vice President
Marketing
-31-
<PAGE>
Percent of Each
Percent of Passengers Computerized Reservations
Connected to Delta Systems (CRS) to be Paid
--------------------- -------------------------
0 - 15 85
16 - 20 80
21 - 25 75
26 - 30 70
31 - 35 65
36 - 40 60
41 - 45 55
46 - 50 50
51 - 55 45
56 - 60 40
61 - 65 35
66 - 70 30
71 - 75 25
76 - 80 20
81 - 85 15
86 - 90 10
91 - 95 5
96+ 0
-32-
<PAGE>
[DELTA AIR LINES, INC. LETTERHEAD]
AMENDMENT TO THE DELTA CONNECTION AGREEMENT
This Amendment ("Amendment"), dated this 4th day of March, 1992, amends the
Delta Connection Agreement ("Agreement") dated July 1, 1986, effective January
1, 1992, between Delta Air Lines, Inc. ("Delta"), whose principal office is
located at Hartsfield Atlanta International Airport, Atlanta, Georgia 30320 and
Atlantic Southeast Airlines, Inc. ("ASA"), whose principal office is located at
1688 Phoenix Parkway, College Park, Georgia 30349.
WHEREAS, Delta and ASA have entered into a Delta Connection Agreement and
now wish to amend that Agreement;
NOW, THEREFORE, Delta and ASA agree as follows:
1. This Amendment amends the above-referenced agreement and, except as
expressly modified hereby, the Agreement shall remain in full force and effect
and shall govern the performance, obligations and remedies of the parties.
2. The following provision replaces Article 3(A) of the Agreement:
Subject to the provisions of Article 6(F) of this agreement, ASA will
price and process all passenger air transportation and air freight
billings involving Delta through the Airlines Clearing House ("ACH")
in accordance with the procedures set forth from time to time in the
ACH Manual of Procedure (the "Manual") or as set forth by Delta after
30 days written notification and consultation with ASA. Without
limiting the generality of the foregoing, unless otherwise agreed to
by the parties in writing, all Delta flight coupons of source types
010 (Lifts) and 020 (Exchanges) issued by ASA and all flight coupons
of source types 010 and 020 issued by or validated on Delta and
honored by ASA, will be priced in accordance with the procedures set
forth in the ACH sampling procedures (the "sampling procedures")
outlined in Section D of the Manual. Any deviation from the sampling
procedures shall be agreed to in writing by the parties.
-33-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this amendment by their
undersigned duly authorized representatives.
ATLANTIC SOUTHEAST AIRLINES, INC. DELTA AIR LINES, INC.
By: /s/ John Beiser By: /s/ Russ Garrota
------------------------ ----------------------------
John Beiser Russ Garrota
Senior Vice President Assistant Vice President
Sales and Services Sales and Marketing Programs
-34-
<PAGE>
AMENDMENT TO
CONNECTION CARRIER AGREEMENT
THIS AMENDMENT (this "Amendment") dated as of August 1, 1994, between DELTA
AIR LINES, INC., having its principal place of business located at Hartsfield
Atlanta International Airport, Atlanta, Georgia 30320-6001 ("Delta"), and
ATLANTIC SOUTHEAST AIRLINES, INC., having its principal place of business
located at 100 Hartsfield Centre, Suite 800, Atlanta, Georgia 30354-1356
("ASA").
W I T N E S S E T H:
WHEREAS, Delta and ASA are parties to a certain Delta Connection Agreement,
dated and effective July 1, 1986, as amended by amendments dated February 19,
1987, December 17, 1987, July 1, 1988 and March 4, 1992 (the Delta Connection
Agreement, as so amended, is hereafter referred to as the "Agreement"); and
WHEREAS, the Agreement will expire by its terms on August 9, 1994; and
WHEREAS, Delta and ASA desire to extend the term of the Agreement as
provided herein;
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby amend
the Agreement as follows:
1. Extension of Term. The fixed term of the Agreement is hereby extended
-----------------
until December 31, 1994. Thereafter, the Agreement shall continue in full force
and effect until terminated by either party on thirty (30) days' advance written
notice to the other party or earlier terminated in accordance with the
provisions of Article 7.
2. No Further Amendment. Except as amended hereby, the Agreement shall
--------------------
remain in full force and effect in accordance with its terms.
3. Governing Law. This Amendment shall be governed by and construed in
-------------
accordance with the laws of the State of Georgia.
-35-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized representatives as of the day and year first
above written.
DELTA AIR LINES, INC.
By: /s/ Robert W. Coggin
----------------------------
Robert W. Coggin
Senior Vice President -
Marketing
ATLANTIC SOUTHEAST AIRLINES, INC.
By: /s/ John Beiser
----------------------------
John Beiser
President
-36-
<PAGE>
EXHIBIT 7
ASA HOLDINGS, INC.
TO: George F. Pickett
FROM: ASA Holdings. Inc.
DATE: February 15, 1999
ASA Holdings, Inc. (the "Company") has entered into an Agreement and Plan
of Merger among the Company, Delta Air Lines, Inc. ("Delta") and Delta Sub, Inc.
as of the date hereof (the "Merger Agreement"), pursuant to which the Company
will become an indirect wholly owned subsidiary of Delta effective as of the
Effective Time, as defined in the Merger Agreement (the "Effective Time"). The
Company and Delta have acknowledged that you possess extensive knowledge and
experience critical to the operations of the Company. Accordingly, the Company
has agreed to continue your service on the terms set forth in the attached Term
Sheet, which is incorporated herein by reference (the "Term Sheet"). In
consideration of the promises and benefits provided by the Company, you have
agreed to remain in the employment of the Company and honor the terms set forth
in the Term Sheet. You and the Company have agreed to negotiate in good faith to
enter into a formal written Employment and Consulting Agreement incorporating
the terms set forth in the Term Sheet, with the intention that such Employment
and Consulting Agreement will be executed prior to the Closing Date; provided,
however, that this letter agreement will remain effective and will be fully
binding upon you and the Company unless and until such Employment and Consulting
Agreement is executed and approved in writing by Delta. In addition, Delta has
agreed to execute this letter agreement and the Employment and Consulting
Agreement to evidence its agreement to guarantee payment of your benefit under
the Company SERP as set forth in the Term Sheet.
You have acknowledged that your agreement to the terms set forth in the
Term Sheet was a critical inducement for the Company and Delta to enter into the
Merger Agreement, and you have agreed to fully honor those terms.
Notwithstanding the foregoing, this letter agreement shall be null and void
if the Offer (as defined in the Merger Agreement) is not consummated for any
reason.
If the foregoing fully and accurately reflects our agreement regarding the
matters addressed, please indicate your acknowledgment and agreement by signing
in the space provided.
ASA Holdings, Inc.
By:_________________________
<PAGE>
As evidence of the agreement of Delta to provisions of this letter
agreement and the Term Sheet relating to its guarantee of the benefit payments
to be made to you under the terms of the Company SERP, Delta has caused this
letter agreement to be executed by a duly authorized officer of Delta.
Delta Air Lines Inc.
By:_________________________
<PAGE>
I, George F. Pickett, hereby acknowledge and agree to the terms set forth in
this letter and the attached Term Sheet and agree to be bound by those terms.
Acknowledged and Agreed:
_________________________
<PAGE>
TERM SHEET
Definitions: Except as otherwise provided, defined terms used herein
shall have the meaning set forth in the accompanying letter
agreement.
Position/Duties: George F. Pickett (the "Executive") shall serve as Chief
Executive Officer of the Company from the date hereof until
the Effective Time, or such shorter period as provided
hereunder (the "Employment Term"). The Executive shall serve
as a non-employee consultant of the Company from the
Effective Time until the 180th day following the Effective
Time or such shorter period as provided hereunder (the
"Consulting Term"). During the Employment Term and the
Consulting Term the Executive shall devote his efforts and
attention to the business of the Company on a full time
basis (or such lesser amount of time as required by the
Company) and shall perform such duties as shall reasonably
be agreed between the Executive and the Board of Directors
of the Company; provided, however, that such duties shall be
reasonably related to, and consistent with, the duties
performed by the Executive as of the date hereof.
Compensation: During the Employment Term the Company shall pay the
Executive a base salary at the rate in effect for the
Executive as of the date hereof (the "Base Salary"). During
the Consulting Term, the Company shall pay the Executive a
consulting fee at same rate as the base salary rate in
effect for the Executive as of the date hereof (the
"Consulting Fee").
Bonus: During the Employment Term and the Consulting Term the
Executive shall continue to earn an annual bonus entitlement
equal to 40% of the Executive's Base Salary on the same
terms that currently apply to the Executive for 1999 annual
bonus period under the Company's annual bonus plan (the
"Bonus"), payable on a pro rata basis upon the termination
of the Consulting Period, as provided herein.
Special
Consideration: As of the 180th day following the Effective Time, the
Company shall pay to the Executive a lump sum payment equal
to $427,267, provided, however, that although the parties
believe and intend that this payment shall constitute
reasonable consideration for the Executive's agreement to
render the services and honor the non-competition covenant
as provided herein, the amount of this payment shall be
reduced to the extent necessary so that no portion of the
amount paid will be non-deductible under Section 280G of the
Internal Revenue Code (the "Special Consideration").
Benefits: During the Employment Term and the Consulting the Executive
shall receive benefits comparable to the benefits provided
to similarly situated senior executives of the Company.
Following any termination of the Executive's services
hereunder for any reason other than Cause (including the
expiration
<PAGE>
of the term hereof), the Executive, his spouse and his
dependent children under age 18 (or under age 23 if a full-
time student) shall be entitled to (i) "positive space"
privileges on the flights of Delta and its subsidiaries
world-wide ("Delta Service") for a period of one year and
(ii) "space available" privileges on Delta Service for the
duration of the Executive's natural life thereafter.
Termination: Upon a termination of the Executive's employment during the
Employment Term or a termination of Executive's consulting
services during the Consulting Term, in either case, by the
Company without Cause, the Executive shall be entitled to:
(i) accrued but unpaid Base Salary and Consulting Fees in
respect of service prior to such termination
("Accrued Compensation")
(ii) a pro rata portion of the Bonus in respect of the
period prior to such termination ("Pro Rata Bonus")
(iii) the Special Consideration, payable as of the 180th
day following the Effective Time
Upon a termination of the Executive's employment during the
Employment Term or a termination of Executive's consulting
services during the Consulting Term, in either case, due to
death or disability, the Executive shall be entitled to:
(i) Accrued Compensation
(ii) Pro Rata Bonus
(iii) The Special Consideration, payable within 30 days
after the Executive's last day of employment (but in
no event later than the 180th day following the
Effective Time)
Upon a termination of the Executive's employment during the
Employment Term or a termination of Executive's consulting
services during the Consulting Term, in either case, by the
Company for Cause or by the Executive for any reason, the
Executive shall be entitled to:
(i) Accrued Compensation
(ii) Pro Rata Bonus
No portion of the Special Consideration will be paid
For purposes of this Term Sheet, "Cause" means (i) the
Executive's gross, willful and continued failure to
reasonably perform his essential duties hereunder after
written demand is delivered by the Company to the Executive
specifying manner in which the Executive has failed to
perform such duties; (ii) the Executive's misappropriation
of any assets or opportunities of the Company which are more
than de minimus; (iii) conduct by the Executive which is
grossly and demonstrably injurious to the business
2
<PAGE>
of the Company; (iv) the Executive conviction of a felony or
a crime of moral turpitude which is materially and
demonstrably injurious to the business or reputation of the
Company; or (v) the Executive's breach of the Restrictive
Covenants below.
Restrictive
Covenants: For the period commencing on the date hereof and ending on
the second anniversary of the Effective Time, the Executive
shall not (i) directly or indirectly provide management or
executive services (whether as a consultant, advisor,
officer or director) to any person or entity operating or
seeking to operate a consumer airline using planes with a
capacity of less than 70 seats in any market in which the
Company currently operates (a "Competitor"); or (ii) solicit
or hire any employee of the Company to perform a service or
function on behalf of a Competitior similar to any service
or function performed by such employee on behalf of the
Company. At no time shall the Executive divulge any secret
or confidential information, knowledge or data relating to
the Company or any of its affiliates which the Executive has
obtained in connection with his employment or services on
behalf of the Company and which has not have become public
knowledge (other than by the Executive's violation of the
foregoing). The foregoing Restrictive Covenants shall be
enforceable by injunction, it being agreed that the damages
suffered by the Company from any breach or threatened breach
of these Restrictive Covenants could not be adequately
remedied by monetary damages alone.
SERP: Notwithstanding the existing provisions of the ASA
Supplemental Executive Retirement Plan (the "SERP"), the
Executive and the Company agree that neither ASA nor any
other party shall be required to contribute any amounts to
any trust or other funding vehicle for the funding or
payment of any benefit accrued by the Executive under the
SERP and, accordingly, in calculating the amounts that must
be contributed to the ASA grantor trust under the terms of
the SERP the SERP benefit accrued by the Executive shall be
excluded, it being intended that any SERP benefit payable to
the Executive under the SERP in accordance with its terms
shall be payable from the general assets of ASA or its
successor, provided, however, that Delta shall guarantee
full payment of the Executive's SERP benefit in accordance
with the benefit payment terms of SERP.
The terms of the SERP shall be deemed to be amended, and
shall be amended, in accordance with the foregoing.
Founder
Agreement: The Amended and Restated Founding Officer Agreement between
the Company and the Executive dated April 16, 1997 shall
remain in effect and shall continue to apply in accordance
with its terms.
3
<PAGE>
EXHIBIT 8
ASA HOLDINGS, INC.
TO: John W. Beiser
FROM: ASA Holdings. Inc.
DATE: February 15, 1999
- --------------------------------------------------------------------------------
ASA Holdings, Inc. (the "Company") has entered into an Agreement and Plan
of Merger among the Company, Delta Air Lines, Inc. ("Delta") and Delta Sub, Inc.
as of the date hereof (the "Merger Agreement"), pursuant to which the Company
will become an indirect wholly owned subsidiary of Delta effective as of the
Effective Time, as defined in the Merger Agreement (the "Effective Time"). The
Company and Delta have acknowledged that you possess extensive knowledge and
experience critical to the operations of the Company. Accordingly, the Company
has agreed to continue your service on the terms set forth in the attached Term
Sheet, which is incorporated herein by reference (the "Term Sheet"). In
consideration of the promises and benefits provided by the Company, you have
agreed to remain in the employment of the Company and honor the terms set forth
in the Term Sheet. You and the Company have agreed to negotiate in good faith to
enter into a formal written Employment and Consulting Agreement incorporating
the terms set forth in the Term Sheet, with the intention that such Employment
and Consulting Agreement will be executed prior to the Closing Date; provided,
however, that this letter agreement will remain effective and will be fully
binding upon you and the Company unless and until such Employment and Consulting
Agreement is executed and approved in writing by Delta. In addition, Delta has
agreed to execute this letter agreement and the Employment and Consulting
Agreement to evidence its agreement to guarantee payment of your benefit under
the Company SERP as set forth in the Term Sheet.
You have acknowledged that your agreement to the terms set forth in the
Term Sheet was a critical inducement for the Company and Delta to enter into the
Merger Agreement, and you have agreed to fully honor those terms.
Notwithstanding the foregoing, this letter agreement shall be null and void
if the Offer (as defined in the Merger Agreement) is not consummated for any
reason.
If the foregoing fully and accurately reflects our agreement regarding the
matters addressed, please indicate your acknowledgment and agreement by signing
in the space provided.
ASA Holdings, Inc.
By:_________________________
<PAGE>
As evidence of the agreement of Delta to provisions of this letter
agreement and the Term Sheet relating to its guarantee of the benefit payments
to be made to you under the terms of the Company SERP, Delta has caused this
letter agreement to be executed by a duly authorized officer of Delta.
Delta Air Lines Inc.
By:_________________________
<PAGE>
I, John W. Beiser, hereby acknowledge and agree to the terms set forth in this
letter and the attached Term Sheet and agree to be bound by those terms.
Acknowledged and Agreed:
________________________
<PAGE>
TERM SHEET
Definitions: Except as otherwise provided, defined terms used herein
shall have the meaning set forth in the accompanying letter
agreement.
Position/Duties: John W. Beiser (the "Executive") shall serve as President &
Secretary of the Company from the date hereof until the
Effective Time, or such shorter period as provided hereunder
(the "Employment Term"). The Executive shall serve as a non-
employee consultant of the Company from the Effective Time
until the 180th day following the Effective Time or such
shorter period as provided hereunder (the "Consulting
Term"). During the Employment Term and the Consulting Term
the Executive shall devote his efforts and attention to the
business of the Company on a full time basis (or such lesser
amount of time as required by the Company) and shall perform
such duties as shall reasonably be agreed between the
Executive and the Board of Directors of the Company;
provided, however, that such duties shall be reasonably
related to, and consistent with, the duties performed by the
Executive as of the date hereof.
Compensation: During the Employment Term the Company shall pay the
Executive a base salary at the rate in effect for the
Executive as of the date hereof (the "Base Salary"). During
the Consulting Term, the Company shall pay the Executive a
consulting fee at same rate as the base salary rate in
effect for the Executive as of the date hereof (the
"Consulting Fee").
Bonus: During the Employment Term and the Consulting Term the
Executive shall continue to earn an annual bonus entitlement
equal to 40% of the Executive's Base Salary on the same
terms that currently apply to the Executive for 1999 annual
bonus period under the Company's annual bonus plan (the
"Bonus"), payable on a pro rata basis upon the termination
of the Consulting Period, as provided herein.
Special
Consideration: As of the 180th day following the Effective Time, the
Company shall pay to the Executive a lump sum payment equal
to $416,896, provided, however, that although the parties
believe and intend that this payment shall constitute
reasonable consideration for the Executive's agreement to
render the services and honor the non-competition covenant
as provided herein, the amount of this payment shall be
reduced to the extent necessary so that no portion of the
amount paid will be non-deductible under Section 280G of the
Internal Revenue Code (the "Special Consideration").
Benefits: During the Employment Term and the Consulting the Executive
shall receive benefits comparable to the benefits provided
to similarly situated senior executives of the Company.
Following any termination of the Executive's services
hereunder for any reason other than Cause (including the
expiration
<PAGE>
of the term hereof), the Executive, his spouse and his
dependent children under age 18 (or under age 23 if a full-
time student) shall be entitled to (i) "positive space"
privileges on the flights of Delta and its subsidiaries
world-wide ("Delta Service") for a period of one year and
(ii) "space available" privileges on Delta Service for the
duration of the Executive's natural life thereafter.
Termination: Upon a termination of the Executive's employment during the
Employment Term or a termination of Executive's consulting
services during the Consulting Term, in either case, by the
Company without Cause, the Executive shall be entitled to:
(i) accrued but unpaid Base Salary and Consulting Fees in
respect of service prior to such termination
("Accrued Compensation")
(ii) a pro rata portion of the Bonus in respect of the
period prior to such termination ("Pro Rata Bonus")
(iii) the Special Consideration, payable as of the 180th
day following the Effective Time
Upon a termination of the Executive's employment during the
Employment Term or a termination of Executive's consulting
services during the Consulting Term, in either case, due to
death or disability, the Executive shall be entitled to:
(i) Accrued Compensation
(ii) Pro Rata Bonus
(iii) The Special Consideration, payable within 30 days
after the Executive's last day of employment (but in
no event later than the 180th day following the
Effective Time)
Upon a termination of the Executive's employment during the
Employment Term or a termination of Executive's consulting
services during the Consulting Term, in either case, by the
Company for Cause or by the Executive for any reason, the
Executive shall be entitled to:
(i) Accrued Compensation
(ii) Pro Rata Bonus
No portion of the Special Consideration will be paid
For purposes of this Term Sheet, "Cause" means (i) the
Executive's gross, willful and continued failure to
reasonably perform his essential duties hereunder after
written demand is delivered by the Company to the Executive
specifying manner in which the Executive has failed to
perform such duties; (ii) the Executive's misappropriation
of any assets or opportunities of the Company which are more
than de minimus; (iii) conduct by the Executive which is
grossly and demonstrably injurious to the business
2
<PAGE>
of the Company; (iv) the Executive conviction of a felony or
a crime of moral turpitude which is materially and
demonstrably injurious to the business or reputation of the
Company; or (v) the Executive's breach of the Restrictive
Covenants below.
Restrictive
Covenants: For the period commencing on the date hereof and ending on
the second anniversary of the Effective Time, the Executive
shall not (i) directly or indirectly provide management or
executive services (whether as a consultant, advisor,
officer or director) to any person or entity operating or
seeking to operate a consumer airline using planes with a
capacity of less than 70 seats in any market in which the
Company currently operates (a "Competitor"); or (ii) solicit
or hire any employee of the Company to perform a service or
function on behalf of a Competitor similar to any service or
function performed by such employee on behalf of the
Company. At no time shall the Executive divulge any secret
or confidential information, knowledge or data relating to
the Company or any of its affiliates which the Executive has
obtained in connection with his employment or services on
behalf of the Company and which has not have become public
knowledge (other than by the Executive's violation of the
foregoing). The foregoing Restrictive Covenants shall be
enforceable by injunction, it being agreed that the damages
suffered by the Company from any breach or threatened breach
of these Restrictive Covenants could not be adequately
remedied by monetary damages alone.
SERP: Notwithstanding the existing provisions of the ASA
Supplemental Executive Retirement Plan (the "SERP"), the
Executive and the Company agree that neither ASA nor any
other party shall be required to contribute any amounts to
any trust or other funding vehicle for the funding or
payment of any benefit accrued by the Executive under the
SERP and, accordingly, in calculating the amounts that must
be contributed to the ASA grantor trust under the terms of
the SERP the SERP benefit accrued by the Executive shall be
excluded, it being intended that any SERP benefit payable to
the Executive under the SERP in accordance with its terms
shall be payable from the general assets of ASA or its
successor, provided, however, that Delta shall guarantee
full payment of the Executive's SERP benefit in accordance
with the benefit payment terms of SERP.
The terms of the SERP shall be deemed to be amended, and
shall be amended, in accordance with the foregoing.
Founder Agreement: The Amended and Restated Founding Officer Agreement between
the Company and the Executive dated April 16, 1997 shall
remain in effect and shall continue to apply in accordance
with its terms.
3
<PAGE>
EXHIBIT 9
ASA HOLDINGS, INC.
SPECIAL SEVERANCE PLAN
1. Purpose. The purpose of the ASA Holdings, Inc. Special Severance
-------
Plan (the "Plan") is to secure the continued services of certain executives of
the Employers and their continued dedication to their duties in the event of any
threat or occurrence of a Change in Control.
2. Definitions. The following definitions are applicable for
-----------
purposes of the Plan:
"Board" shall mean the Board of Directors of the Company.
"Cause" means (a) a demonstrably willful and deliberate act or failure
to act by the Participant (other than as a result of incapacity due to physical
or mental illness) which is committed in bad faith, without reasonable belief
that such action or inaction is in the best interests of the Employer, and which
act or inaction is not remedied within fifteen (15) business days of written
notice from the Employer, or (b) the Participant's conviction for committing an
act of fraud, embezzlement, theft, or any other act constituting a felony
involving moral turpitude, which is materially and demonstrably injurious to the
Employer.
"Change in Control" means the first to occur of the following events:
(i) acquisition of at least twenty-five percent (25%) of the voting stock of the
Company by any single entity or group other than Delta Air Lines, Inc. or a
subsidiary thereof, the Company, a subsidiary or an employee benefit plan (or
trust forming a part thereof)
<PAGE>
maintained by the Employer or a subsidiary, (ii) ownership of more than fifty
percent (50%) of the voting stock of the Company by Delta Air Lines, Inc. or a
subsidiary thereof, (iii) individuals who constitute the Board on the effective
date of the Plan (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the effective date whose election or nomination for election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board (either by a specific vote or by approval of the proxy statement
of the Company in which such person is named as a nominee for director, without
objection to such nomination) shall be, for purpose of this clause, considered
as though such person were a member of the Incumbent Board; provided, however,
-------- -------
that no individual initially elected or nominated as a director of the Company
as a result of an actual or threatened election contest with respect to
directors of any other actual or threatened solicitation of proxies or consents
by or on behalf of any person other than the Board shall be deemed to be a
member of the Incumbent Board, (iv) the sale or disposition of all or
substantially all of the assets of the Company, or (v) consummation of a
reorganization, merger or consolidation or similar form of corporate transaction
involving the Company, unless, immediately following such transaction more than
50% of the total voting power of the publicly traded corporation resulting from
such transaction eligible to elect directors of such corporation would be
represented by shares that were Company voting stock immediately prior to such
transaction, and such voting
-2-
<PAGE>
power would be in substantially the same proportion as the voting power of such
Company voting stock immediately prior to the transaction.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any person acquires beneficial ownership of more than
25% of the Company voting stock as a result of the acquisition of Company voting
stock by the Company which reduces the number of Company voting stock
outstanding; provided, that if after such acquisition by the Company such person
-------- ----
becomes the beneficial owner of additional Company voting stock that increases
the percentage of outstanding Company voting stock beneficially owned by such
person, a Change in Control of the Company shall then occur.
"Company" means ASA Holdings, Inc.
"Employer" means each of the Company and Atlantic Southeast Airlines,
Inc.
"Good Reason" means the occurrence of any one or more of the
following, unless the Participant has expressly consented in writing thereto:
(a) the assignment to Participant of duties inconsistent with the Participant's
authorities, duties, responsibilities and status as an officer of the Company or
a reduction or alteration in the nature or status of the Participant's
authorities, duties or responsibilities, from those in effect as of the Change
in Control, other than an insubstantial and inadvertent act that is remedied by
the Company promptly after receipt of notice thereof given by the Participant;
(b) the Company's requiring the Participant to be based at a location in excess
of 50 miles from
-3-
<PAGE>
the Participant's principal job location or office as of the Change in Control
except for required travel on the Company's business to an extent consistent
with the Participant's business travel obligations as of the Change in Control;
(c) a reduction by the Company of the Participant's base salary as in effect as
of the Change in Control; or a reduction in the Participant's incentive
compensation opportunities under the executive incentive compensation plans of
the Company for which the Participant is eligible as in effect as of the Change
in Control; (d) the failure by the Company to keep in effect compensation,
retirement, health and welfare benefits, or perquisite programs under which the
Participant receives benefits substantially similar, in the aggregate, to the
benefits under such programs as exist as of the Change in Control, or the
failure of the Company to meet the funding requirements, if any, of any such
programs; (e) any material breach by the Company of the obligations under this
Plan.
"Participant" means each of the executives of Employer identified on
Schedules A and B.
3. Eligibility. Each Participant shall be eligible for the
-----------
severance benefits provided by Section 4 if, within two years after a Change in
Control, the Participant's employment is terminated (i) by the Employer without
Cause or (ii) by the Participant for Good Reason.
4. Benefits. A Participant who is eligible for benefits under the
--------
Plan pursuant to Section 3 shall be entitled to the following upon termination
of employment:
-4-
<PAGE>
(a) payment from the Company of a lump severance benefit, which shall
be paid within five days following the Participant's termination of
employment, equal to the result of multiplying (i) one-twelfth of the sum
of (A) the Participant's highest annual rate of base salary during the
twelve-month period immediately prior to the Participant's termination of
employment and (B) the average of the annual bonus earned by the
Participant during each of the last two completed fiscal years of the
Employer prior to the Participant's termination of employment, by (ii) the
number of months set forth on Schedules A and B (the "Severance
Multiple"); and
(b) continued coverage under those of the Employer's medical, dental
and life insurance plans in which such Participant participated on the date
employment terminated, on substantially the same terms and conditions as
then in effect (including required Participant contributions, if any) for
the number of months set forth on Schedules A and B (the "Benefit
Multiple"); provided, that, if the Participant cannot continue to
-------- ----
participate in the Employer plans providing such benefits, the Company
shall otherwise provide such benefits on the same after-tax basis as if
continued participation had been permitted; provided further, that,
---------------- ----
notwithstanding the foregoing, in the event the Participant becomes
reemployed with another employer and becomes eligible to receive medical,
dental or life insurance benefits from such employer, the benefits under
the plans of the Employer described above shall be secondary to such
benefits during the period of
-5-
<PAGE>
the Participant's eligibility, but only to the extent that the Company
reimburses the Participant for any increased cost and provides any
additional benefits necessary to provide the Participant the benefits
described above.
Any period during which coverage continues under the Employer's medical and
dental plans will be treated as satisfying the Employer's obligations for
continuation coverage under Section 4980B of the Internal Revenue Code (the
"Code") and Part 6 of Title I of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
Notwithstanding anything contained herein to the contrary, if as
provided in Appendix A, the Participant would be subject to the excise tax
imposed under Section 4999 of the Code, the lump sum severance benefit in
paragraph (a) shall be reduced in accordance with the provisions of Appendix A.
5. Withholding. The Company shall have the right to deduct from all
-----------
payments hereunder any taxes required by applicable federal, state or local law
to be withheld therefrom.
6. No Right to Employment. Nothing in this Plan shall be construed
----------------------
as giving a Participant the right to be retained in the employment of the
Employer, nor shall it affect the right of the Employer to dismiss a Participant
without any liability except as provided in the Plan.
7. Resolution of Disputes. Any dispute or controversy arising under
----------------------
or in connection with a Participant's entitlement to any payment, benefit or
right under this Plan after a Change in Control shall be settled exclusively by
arbitration in Atlanta,
-6-
<PAGE>
Georgia by three arbitrators in accordance with the commercial arbitration rules
of the American Arbitration Association then in effect. Judgment may be entered
on the arbitrators' award in any court having jurisdiction. The Company shall
bear all costs and expenses arising in connection with any arbitration
proceeding pursuant to this Section.
8. Legal Fees. The Company shall reimburse the Participant on a
----------
current basis for all reasonable legal fees and related expenses incurred by the
Participant in seeking to obtain or enforce any payment, benefit or right
provided by this Plan after a Change in Control regardless of whether the
Participant's claim is upheld by a court of competent jurisdiction or an
arbitration panel; provided, however, the Participant shall be required to repay
any such amounts to the Company to the extent that a court or an arbitration
panel issues a final and non-appealable order setting forth the determination
that the position taken by the Participant was substantially without merit or
advanced by the Participant in bad faith.
9. Full Settlement. The Company's obligation to make any payments
---------------
provided for in this Plan and otherwise to perform its obligations hereunder
shall be in lieu and in full settlement of all other severance payments to the
Participant under any other severance or employment agreement between the
Participant and the Employer, and any severance plan of the Employer. The
Company's obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Employer may have against the Participant or others. In no event shall the
Participant be obligated to seek other employment or take other action by way of
-7-
<PAGE>
mitigation of the amounts payable to the Participant under any of the provisions
of this Plan and, except as provided in Section 4, such amounts shall not be
reduced if the Participant obtains other employment.
10. Amendment and Termination. The Board may amend or terminate the
-------------------------
Plan at any time prior to a Change in Control. After a Change in Control, the
Plan may be amended or terminated by the Board only with the consent of a
majority of the Participants as of the date of a Change in Control.
11. Governing Law. The Plan shall be governed by, and construed in
-------------
accordance with, the laws of the State of Georgia, without reference to
principles of conflict of laws.
12. Nonassignability. Benefits under the Plan may not be assigned by
----------------
the Participant. The terms and conditions of the Plan shall be binding on the
successors and assigns of the Company.
13. Effective Date. The Plan shall be effective as of February 14,
--------------
1999.
-8-
<PAGE>
SCHEDULE A
Participants
- ------------
Ronald V. Sapp
Edward J. Paquette
Severance Multiple: 24 months.
- ------------------
Benefit Multiple: 24 months.
- ----------------
<PAGE>
SCHEDULE B
Participants
- ------------
Drew Bedson
Grant Nichols
Renee Skinner
Mark Bole
Sam Watts
Charles Thibaudeau
Severance Multiple: 18 months.
- ------------------
Benefit Multiple: 18 months.
- ----------------
<PAGE>
APPENDIX A
BENEFIT REDUCED TO MAXIMUM ALLOWED UNDER SECTION 280G
-----------------------------------------------------
In the event it shall be determined that any payment, award, benefit
or distribution (or any acceleration of any payment, award, benefit or
distribution) by the Employer (or any of its affiliated entities) or any entity
which effectuates a Change in Control (or any of its affiliated entities) to or
for the benefit of the Participant (whether pursuant to the terms of this Plan
or otherwise, (the "Payments") would be subject to the excise tax imposed by
Section 4999 of the Code, or any interest or penalties are incurred by the
Participant with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the amounts payable to the Participant under this Plan shall
be reduced (but not below zero) to the maximum amount that could be paid to the
Participant without giving rise to the Excise Tax (the "Safe Harbor Cap"). The
reduction of the amounts payable hereunder, if applicable, shall be made by
reducing first the payments under Section 4(a), unless an alternative method of
reduction is elected by the Participant.
All determinations required to be made under this Appendix A,
including the reduction of the Payments to the Safe Harbor Cap and the
assumptions to be utilized in arriving at such determinations, shall be made by
the public accounting firm that is retained by the Company as of the date
immediately prior to the Change in Control (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the Participant
within fifteen (15) business days of the receipt of notice from the Company or
the Participant that there has been a Payment, or such earlier time as is
requested by the Company (collectively, the "Determination"). In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, the Participant may appoint
another nationally recognized public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and
<PAGE>
expenses of the Accounting Firm shall be borne solely by the Company and the
Company shall enter into any agreement requested by the Accounting Firm in
connection with the performance of the services hereunder. The Determination by
the Accounting Firm shall be binding upon the Company and the Participant.
If it is established pursuant to a final determination of a court or
an Internal Revenue Service (the "IRS") proceeding which has been finally and
conclusively resolved, that Payments have been made to, or provided for the
benefit of, the Participant by the Company, which are in excess of the
limitations provided in this Appendix A (hereinafter referred to as an "Excess
Payment"), such Excess Payment shall be deemed for all purposes to be a loan to
the Participant made on the date Participant received the Excess Payment and
Participant shall repay the Excess Payment to the Company on demand, together
with interest on the Excess Payment at the applicable federal rate (as defined
in Section 1274(d) of the Code) from the date of Participant's receipt of such
Excess Payment until the date of such repayment. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the determination,
it is possible that Payments which will not have been made by the Company should
have been made (an "Underpayment"), consistent with the calculations required to
be made under this Appendix A. In the event that it is determined (1) by the
Accounting Firm, the Company (which shall include the position taken by the
Company, or together with its consolidated group, on its federal income tax
return) or the IRS or (2) pursuant to a determination by a court, that an
Underpayment has occurred, the Company shall pay an amount equal to such
Underpayment to Participant within ten (10) days of such determination together
with interest on such amount at the applicable federal rate from the date such
amount would have been paid to Participant until the date of payment.
-2-
<PAGE>
EXHIBIT 10
RETENTION AGREEMENT
RETENTION AGREEMENT, dated as of February 15, 1999 by and between ASA
Holdings, Inc., a Georgia corporation ("Company") and Ronald V. Sapp (the
"Employee").
WHEREAS, the Employee is a key employee of Company; and
WHEREAS, Company, Delta Air Lines Inc., a Delaware corporation
("Buyer"), and ___________________________, a Georgia corporation and an
indirect, wholly-owned subsidiary of Buyer ("Merger Subsidiary") have entered
into an Agreement and Plan of Merger, dated as of February ___, 1999 (the
"Merger Agreement") pursuant to which Company will merge with and into Merger
Subsidiary (the "Merger"); and
WHEREAS, Company desires to provide incentives for the Employee to
remain employed by Company and its subsidiaries following the closing of the
Offer as defined in the Merger Agreement (the "Closing").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Employee's Duties. Employee shall perform his duties with
-----------------
Company and its subsidiaries diligently and to the best of his ability and shall
remain in employment with Company and its subsidiaries until at least the six
<PAGE>
month anniversary of the Closing. Employee shall use his best efforts to assist
Company in the integration of the businesses of Company and Buyer and the
continued operation of the business of Company.
Company agrees that following the Closing, Employee will continue to
have the same position, duties and responsibilities as existed prior to the
Closing, other than any changes thereto which are a direct result of the Merger,
except as otherwise agreed by Employee. If, with the consent of Employee, the
employment of Employee is transferred to Buyer, all references to "Company" in
this Agreement (other than in the recitals at the beginning thereof) shall be
understood to refer to "Buyer" except where otherwise required by the context.
2. Incentive Payment. If Employee remains employed by Company and
-----------------
its subsidiaries on the six month anniversary of the Closing, then Company shall
pay to Employee in a lump sum within five (5) business days thereafter, an
amount equal to the annual base salary payable to Employee for the 1999 calendar
year as of the date of this Agreement (prior to any reductions under any
employee benefit plan or deferred compensation plan of Company or any
subsidiary).
-2-
<PAGE>
3. Termination Prior to
Six Month Anniversary of Closing.
--------------------------------
(a) If Company and its subsidiaries terminate the employment of
Employee for Cause (as such term is defined in paragraph (c) of this Section)
prior to the six month anniversary of the Closing, or if Employee terminates
employment with Company and its subsidiaries prior to the six month anniversary
of the Closing for any reason other than Good Reason, then the Employee will not
be eligible for any payment under this Agreement.
(b) If Company and its subsidiaries terminate the employment of
Employee without Cause after the Closing and prior to the six month anniversary
of the Closing, or if Employee terminates employment with Company and its
subsidiaries prior to the six month anniversary of the Closing for Good Reason,
then the Employee will be entitled to the Incentive Payment provided in Section
2, which will be made in a lump sum within five (5) business days after such
termination of employment.
(c) For purposes of this Agreement, "Cause" means (a) the willful and
continued failure by the Employee to substantially perform his duties with the
Company and its subsidiaries after a written demand for substantial performance
is delivered to the Employee by the Company which specifically identifies the
manner in which the Company believes that the Employee has not substantially
-3-
<PAGE>
performed his duties or (b) the willful engaging by the Employee in illegal
conduct or misconduct which is materially and demonstrably injurious to the
Company and its subsidiaries.
(d) For purposes of this Agreement, "Good Reason" means termination of
employment with the Company and its subsidiaries by an Employee if: (i) duties
are assigned to such Employee that are materially inconsistent with previous
duties in any adverse respect; (ii) duties and responsibilities of such Employee
are substantially reduced; provided, however, that Good Reason shall not be
-------- -------
deemed to occur upon a change in duties or responsibilities (other than
reporting responsibilities) that is solely and directly a result of the Company
no longer being a publicly traded entity and does not involve any other event
set forth in this definition; (iii) base compensation of such Employee is
reduced; (iv) such Employee's participation under the compensation and employee
benefit plans or arrangement generally made available to similarly situated
employees of the Company is limited or denied without such Employee's consent;
or (v) Company requires the Employee to be based anywhere more than 50 miles
from where his principal place of employment is located immediately prior to the
Change in Control.
-4-
<PAGE>
4. No Effect on Severance Benefits. This Agreement shall have no
-------------------------------
effect on any entitlement of Employee to severance benefits under any change in
control agreement or employment agreement with Company or under any severance
plan or policy of the Company and its subsidiaries.
5. No Alienation. Employee shall not have any right to pledge,
-------------
hypothecate, anticipate or in any way create a lien upon the benefits provided
under this Agreement, and such benefits shall not be assignable in anticipation
of payment whether by voluntary or involuntary acts, or by operation of law.
6. Non-Competition; Non-Solicitation. If Employee's employment with
---------------------------------
Company and its subsidiaries terminates after the Closing but prior to the six
month anniversary thereof by Employee for Good Reason or by the Company without
Cause, then until the six month anniversary of the Closing:
(i) Employee hereby covenants and agrees that he will not directly or
indirectly provide management or executive services (whether as a
consultant, advisor, officer or director) to any person or entity operating
or seeking to operate a consumer airline using planes with a capacity of
less than 70 seats in any market in which the Company currently operates (a
"Competitor").
-5-
<PAGE>
(ii) Employee hereby covenants and agrees that he will not solicit or
hire any employee of the Company to perform a service or function on behalf
of a Competitor similar to any service or function performed by such
employee on behalf of the Company.
It is the intention of the parties hereto that the restrictions
contained in this Section 6 be enforceable to the fullest extent permitted by
applicable law. Therefore, to the extent any court of competent jurisdiction
shall determine that any portion of the foregoing restrictions is excessive,
such provision shall not be entirely void, but rather shall be limited or
revised only to the extent necessary to make it enforceable. Specifically, if
any court of competent jurisdiction should hold that any portion of the
foregoing description is overly broad as to one or more states of the United
States, then that state or states shall be eliminated from the territory to
which the restrictions of paragraph (a) of this Section applies and the
restrictions shall remain applicable in all other states of the United States.
7. Unfunded Obligations. All amounts payable under this Agreement
--------------------
are unfunded and unsecured and are payable out of the general funds of Company.
8. Withholding. Company may withhold from any amount payable under
-----------
this Agreement any taxes required to be withheld under applicable federal, state
or local law.
-6-
<PAGE>
9. Separability. If any provision of this Agreement is found, held,
------------
or deemed to be void, unlawful, or unenforceable under any applicable statute or
other controlling law, the remainder of this Agreement shall continue in full
force and effect.
10. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Georgia, without regard
to principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ASA HOLDINGS, INC.
By: _________________________
Name:
Title:
_________________________
Ronald V. Sapp
-7-
<PAGE>
EXHIBIT 11
RETENTION AGREEMENT
RETENTION AGREEMENT, dated as of February 15, 1999 by and between ASA
Holdings, Inc., a Georgia corporation ("Company") and Edward J. Paquette (the
"Employee").
WHEREAS, the Employee is a key employee of Company; and
WHEREAS, Company, Delta Air Lines, Inc., a Delaware corporation
("Buyer"), and _______________, a Georgia corporation and an indirect, wholly-
owned subsidiary of Buyer ("Merger Subsidiary") have entered into an Agreement
and Plan of Merger, dated as of February ___, 1999 (the "Merger Agreement")
pursuant to which Company will merge with and into Merger Subsidiary (the
"Merger"); and
WHEREAS, Company desires to provide incentives for the Employee to
remain employed by Company and its subsidiaries following the closing of the
Offer as defined in the Merger Agreement (the "Closing").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Employee's Duties. Employee shall perform his duties with
-----------------
Company and its subsidiaries diligently and to the best of his ability and shall
remain in employment with Company and its subsidiaries until at least the six
<PAGE>
month anniversary of the Closing. Employee shall use his best efforts to assist
Company in the integration of the businesses of Company and Buyer and the
continued operation of the business of Company.
Company agrees that following the Closing, Employee will continue to
have the same position, duties and responsibilities as existed prior to the
Closing, other than any changes thereto which are a direct result of the Merger,
except as otherwise agreed by Employee. If, with the consent of Employee, the
employment of Employee is transferred to Buyer, all references to "Company" in
this Agreement (other than in the recitals at the beginning thereof) shall be
understood to refer to "Buyer" except where otherwise required by the context.
2. Incentive Payment. If Employee remains employed by Company and
-----------------
its subsidiaries on the six month anniversary of the Closing, then Company shall
pay to Employee in a lump sum within five (5) business days thereafter, an
amount equal to the annual base salary payable to Employee for the 1999 calendar
year as of the date of this Agreement (prior to any reductions under any
employee benefit plan or deferred compensation plan of Company or any
subsidiary).
-2-
<PAGE>
3. Termination Prior to
Six Month Anniversary of Closing.
--------------------------------
(a) If Company and its subsidiaries terminate the employment of
Employee for Cause (as such term is defined in paragraph (c) of this Section)
prior to the six month anniversary of the Closing, or if Employee terminates
employment with Company and its subsidiaries prior to the six month anniversary
of the Closing for any reason other than Good Reason, then the Employee will not
be eligible for any payment under this Agreement.
(b) If Company and its subsidiaries terminate the employment of
Employee without Cause after the Closing and prior to the six month anniversary
of the Closing, or if Employee terminates employment with Company and its
subsidiaries prior to the six month anniversary of the Closing for Good Reason,
then the Employee will be entitled to the Incentive Payment provided in Section
2, which will be made in a lump sum within five (5) business days after such
termination of employment.
(c) For purposes of this Agreement, "Cause" means (a) the willful and
continued failure by the Employee to substantially perform his duties with the
Company and its subsidiaries after a written demand for substantial performance
is delivered to the Employee by the Company which specifically identifies the
manner in which the Company believes that the Employee has not substantially
-3-
<PAGE>
performed his duties or (b) the willful engaging by the Employee in illegal
conduct or misconduct which is materially and demonstrably injurious to the
Company and its subsidiaries.
(d) For purposes of this Agreement, "Good Reason" means termination of
employment with the Company and its subsidiaries by an Employee if: (i) duties
are assigned to such Employee that are materially inconsistent with previous
duties in any adverse respect; (ii) duties and responsibilities of such Employee
are substantially reduced; provided, however, that Good Reason shall not be
-------- -------
deemed to occur upon a change in duties or responsibilities (other than
reporting responsibilities) that is solely and directly a result of the Company
no longer being a publicly traded entity and does not involve any other event
set forth in this definition; (iii) base compensation of such Employee is
reduced; (iv) such Employee's participation under the compensation and employee
benefit plans or arrangement generally made available to similarly situated
employees of the Company is limited or denied without such Employee's consent;
or (v) Company requires the Employee to be based anywhere more than 50 miles
from where his principal place of employment is located immediately prior to the
Change in Control.
-4-
<PAGE>
4. No Effect on Severance Benefits. This Agreement shall have no
-------------------------------
effect on any entitlement of Employee to severance benefits under any change in
control agreement or employment agreement with Company or under any severance
plan or policy of the Company and its subsidiaries.
5. No Alienation. Employee shall not have any right to pledge,
-------------
hypothecate, anticipate or in any way create a lien upon the benefits provided
under this Agreement, and such benefits shall not be assignable in anticipation
of payment whether by voluntary or involuntary acts, or by operation of law.
6. Non-Competition; Non-Solicitation. If Employee's employment with
---------------------------------
Company and its subsidiaries terminates after the Closing but prior to the six
month anniversary thereof by Employee for Good Reason or by the Company without
Cause, then until the six month anniversary of the Closing:
(i) Employee hereby covenants and agrees that he will not directly or
indirectly provide management or executive services (whether as a
consultant, advisor, officer or director) to any person or entity operating
or seeking to operate a consumer airline using planes with a capacity of
less than 70 seats in any market in which the Company currently operates (a
"Competitor").
-5-
<PAGE>
(ii) Employee hereby covenants and agrees that he will not solicit or
hire any employee of the Company to perform a service or function on behalf
of a Competitor similar to any service or function performed by such
employee on behalf of the Company.
It is the intention of the parties hereto that the restrictions
contained in this Section 6 be enforceable to the fullest extent permitted by
applicable law. Therefore, to the extent any court of competent jurisdiction
shall determine that any portion of the foregoing restrictions is excessive,
such provision shall not be entirely void, but rather shall be limited or
revised only to the extent necessary to make it enforceable. Specifically, if
any court of competent jurisdiction should hold that any portion of the
foregoing description is overly broad as to one or more states of the United
States, then that state or states shall be eliminated from the territory to
which the restrictions of paragraph (a) of this Section applies and the
restrictions shall remain applicable in all other states of the United States.
7. Unfunded Obligations. All amounts payable under this Agreement
--------------------
are unfunded and unsecured and are payable out of the general funds of Company.
8. Withholding. Company may withhold from any amount payable under
-----------
this Agreement any taxes required to be withheld under applicable federal, state
or local law.
-6-
<PAGE>
9. Separability. If any provision of this Agreement is found, held,
------------
or deemed to be void, unlawful, or unenforceable under any applicable statute or
other controlling law, the remainder of this Agreement shall continue in full
force and effect.
10. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Georgia, without regard
to principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ASA HOLDINGS, INC.
By: _________________________
Name:
Title:
______________________________
Edward J. Paquette
-7-
<PAGE>
EXHIBIT 12
ASA HOLDINGS, INC.
1997 NONQUALIFIED STOCK OPTION PLAN
-----------------------------------
1. Purpose. The purpose of the ASA Holdings, Inc. 1997 Nonqualified Stock
-------
Option Plan (the "PLAN") is to (i) advance the interests of ASA Holdings, Inc. a
Georgia corporation ("ASA HOLDINGS"), and its Subsidiaries, and (ii) enhance the
Company's ability to attract, retain and motivate officers and key employees of
the Company by providing to such persons incentives and rewards for performance.
The stock options granted pursuant to this Plan are non-qualified stock options
and shall not be incentive stock options, as defined in Code Section 422.
2. Definitions: As used in the Plan, the following terms have the
-----------
following meanings:
(a) "AGREEMENT" shall have the meaning set forth in Paragraph 5 of the
Plan.
(b) "AWARD" means an Option.
(c) "BOARD" means the Board of Directors of ASA Holdings.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a committee of the Board consisting of at
least two directors selected by the Board and meeting the requirements of
Paragraph 3(a) of the Plan.
(f) "COMMON STOCK" means shares of Common Stock, $.10 par value per
share, of ASA Holdings.
(g) "COMPANY" means ASA Holdings and its Subsidiaries.
(h) "DATE OF GRANT" means the date specified by the Committee on which
an Award shall become effective, which date shall be the date concurrently with
or a date following the date of the Committee action approving the Option grant.
(i) "EFFECTIVE DATE" means the date of the approval of the Plan by the
affirmative vote of the holders of a majority of the outstanding shares of the
Common Stock present, in person or by proxy at a meeting of the shareholders of
ASA Holdings.
(j) "EXERCISE PRICE" means the purchase price per share of Common
Stock payable on exercise of an Option, as set forth in the applicable
Agreement.
-1-
<PAGE>
(k) "EXPIRATION DATE" means the date established by the Committee and
set forth in an Agreement as the date after which the Options described in the
Agreement that have not previously been exercised shall terminate, become null
and void and no longer be of any force and effect.
(1) "FAIR MARKET VALUE" of a share of Common Stock on a given date
means the closing price of a share of Common Stock on such date (or the most
recent trading date prior thereto if such date is not a trading date) on the
Nasdaq/National Market of The Nasdaq Stock Market, or such national exchange, if
any, as may be designated by the Board.
(m) "OPTION" means the right to purchase one or more shares of Common
Stock upon exercise of a nonqualified stock option granted pursuant to the Plan.
Except as otherwise specifically provided herein or required by the context, the
term Option as used in this Plan shall include Reload Options granted hereunder.
(n) "OPTION SHARES" means the shares of Common Stock purchased
pursuant to the exercise of Options.
(o) "PARTICIPANT" means a person to whom an Award has been made by the
Committee.
(p) "RELOAD OPTION RIGHTS" and "RELOAD OPTIONS" shall have the meaning
set forth in Paragraph 7 of the Plan.
(q) "RULE 16B-3" means Rule 16b-3 under the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder.
(r) "SAR PLAN" means the ASA Holdings, Inc. Stock Appreciation Rights
Plan. The terms "AWARD AGREEMENT" and "GRANT PRICE" shall have the meanings
ascribed to such terms in the SAR Plan.
(s) "SUBSIDIARY" means any corporation (other than ASA Holdings) in an
unbroken chain of corporations beginning with ASA Holdings where each of the
corporations in the unbroken chain other than the last corporation owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
(t) "TERM OF THE PLAN" means the period from the Effective Date
through and including the 31st day of March, 2007, except that Reload Options
may be granted pursuant to Reload Option Rights then outstanding.
(u) "TERM OF THE OPTION" means the period commencing with the Date of
Grant through the date which is one day prior to the Expiration Date.
-2-
<PAGE>
3. Administration of the Plan.
-------------- -- --------
(a) The Plan shall be administered, and Awards shall be granted
hereunder, by the Committee. Each member of the Committee shall be a member of
the Board who satisfies the requirements of Rule 16b-3 and of Section 162(m) of
the Code. A majority of the Committee shall constitute a quorum, and the actions
of the members of the Committee present at any meeting at which a quorum is
present, or acts unanimously approved in writing, shall be the acts of the
Committee. In the event that the Committee consists of two directors, a
"majority" shall mean two.
(b) The interpretation and construction by the Committee of any
provision of the Plan or of any Agreement, and any determination by the
Committee pursuant to any provision of the Plan or of any Agreement shall be
final and conclusive. No member of the Committee shall be liable for any such
action or determination made in good faith.
4. Shares Available Under the Plan. The maximum number of shares of
-------------------------------
Common Stock which may be issued upon the exercise of Options granted under the
Plan is 2,500,000. ASA Holdings shall reserve 2,500,000 shares of Common Stock
for Options granted under the Plan, subject to adjustment as provided in
Paragraph 9. Such shares may be shares of original issuance or treasury shares
or any combination of the foregoing. Any shares of Common Stock which are
subject to Options which expire or which have been surrendered, canceled or
terminated without being exercised in full shall again be available for issuance
under this Plan. Any shares of Common Stock surrendered to ASA Holdings by the
Participant as payment of the Exercise Price upon the exercise of an Option may
not be the subject of a subsequent Option. For purposes of calculating the
maximum number of shares of Common Stock which may be issued under the Plan: (a)
all the shares issued shall be counted when cash, immediately available funds or
a check is used as full payment for shares issued upon exercise of an Option;
and (b) only the net shares issued shall be counted when shares of Common Stock
are used as full or partial payment for shares issued upon exercise of an
Option.
5. Grant, Terms and Conditions of Options. The terms and conditions of
---------------------------------------
the grant of each Option shall be embodied in a written agreement (the
"AGREEMENT"), in a form approved by the Committee which shall contain terms and
conditions not inconsistent with the Plan, and which shall incorporate the Plan
by reference. Options may be granted at any time and from time to time during
the Term of the Plan to a person who at the time of the Award is an officer or
key employee of the Company, or has agreed to commence serving in such capacity
within ninety (90) days after the Date of Grant. The maximum number of shares of
Common Stock which are the subject of Options which may be granted to any
Participant in any one year is the sum of(i) 200,000 shares, plus (ii) a number
----
of shares of Common
Stock which are the subject of Options that arc exchanged for stock appreciation
rights pursuant to Paragraph 6 of the Plan during such year. The terms and
conditions of the grant of Options under the Plan need not be the same or
identical with respect to each optionee or with respect to each Option, but
shall comply with the following terms and conditions:
-3-
<PAGE>
(a) Each Agreement shall specify the number of shares of Common Stock
for which Options have been granted.
(b) Each Agreement shall specify the Exercise Price. With the sole
exception of an exchange of stock appreciation rights held under the SAR Plan
for an Option under the Plan pursuant to Paragraph 6 of the Plan, in no event
shall the Exercise Price be less than the Fair Market Value of the Common Stock
on the Date of Grant.
(c) Each Agreement shall specify that the Exercise Price shall be
payable in cash or other immediately available funds or by check acceptable to
the Company. Each Agreement may also provide, at the discretion of the
Committee, that the Exercise Price may be payable (i) by the delivery or deemed
delivery (based on an attestation to the ownership thereof) to ASA Holdings of
shares of Common Stock already owned by the Participant that have been owned for
a period of not less than six (6) months and that have an aggregate Fair Market
Value on the date of exercise equal to the aggregate Exercise Price, (ii) by a
broker-assisted exercise pursuant to procedures the Committee may, in its sole
discretion, establish from time to time, or (iii) by a combination of some or
all of such methods of payment. The Company shall not loan any monies to any
Participant for the purchase of any Option Shares.
(d) The Committee shall also have the authority, in its discretion,
to award reload option rights ("RELOAD OPTION RIGHTS") in conjunction with the
grant of Options with the effect described in Paragraph 7. Reload Option Rights
must be awarded at the time an Option is granted.
(e) Successive grants may be made to the same Participant whether or
not any Options previously granted to such Participant remain unexercised.
(f) Each Option shall be exercisable in such manner and at such
times, including, if applicable, the specification of a vesting schedule, as the
Committee shall determine. Each Agreement shall specify an Expiration Date which
shall be not later than ten (10) years after the Date of Grant.
(g) In the event that a Participant shall cease to be employed by the
Company for any reason other than his death, a material disability or retirement
with the consent of the Company, all Options held by him pursuant to the Plan
and not previously exercised at the date of such termination shall terminate and
become null and void and no longer of any force or effect four (4) months
following such termination, subject to the condition that no Option shall be
exercisable after the Expiration Date.
(h) If the termination is due to a material disability or retirement
with the consent of the Company, such disabled or retiring Participant shall
have the right to exercise his or her Options which have not previously been
exercised at the date of such termination of employment at any time within
twelve (12) months after such termination, subject to the condition that no
Option shall be exercisable after the Expiration Date. Whether termination of
employment is due to a
-4-
<PAGE>
material disability or is to be considered a retirement with the consent of the
Company shall be determined by the Committee. Any disability to be considered
"material" must result in a permanent and total disability of an employee as
defined in Code Section 22(e)(3), as amended, or if such Section is no longer of
any force or effect, the Participant shall be deemed to be permanently and
totally disabled if he is unable to engage in any substantial gainful employment
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than twelve (12) months.
(i) If the Participant shall die while in the employ of the Company
or within a period of three (3) months after the termination of his employment
as a result of a material disability or retirement with the consent of the
Company as determined in subparagraph (g) above, such Participant's Options may
be exercised in whole or in part at any time within twelve (12) months after the
Participant's death, by the executor or administrators of the Participant's
estate or by any person or persons who shall have acquired the Options directly
from the Participant by bequest or inheritance, subject to the condition that no
Option shall be exercisable after the Expiration Date.
(j) No Option shall be transferable by a Participant other than by
will or the intestacy laws of descent and distribution. Options shall be
exercisable during the Participant's lifetime only by the Participant or, in the
event of the death or material disability of a Participant, by the Participant's
legal representative or heir of the Participant.
(k) Each Option granted under the Plan shall be subject to such
additional terms and conditions, not inconsistent with the Plan, which are
prescribed by the Committee and set forth in the applicable Agreement.
(1) If the Committee reasonably believes that a Participant has
committed an act of misconduct as described in this subparagraph, the Committee
may suspend the Participant's rights to exercise any option pending a
determination by the Committee.
If the Committee determines a Participant has committed an act of
embezzlement, fraud, dishonesty, nonpayment of any obligation owed to the
Company, breach of fiduciary duty or deliberate disregard of the Company's rules
resulting in loss, damage or injury to the Company, or if a Participant makes an
unauthorized disclosure of any Company trade secret or confidential information,
or engages in any conduct constituting unfair competition, neither the
Participant nor his or her estate or heirs shall be entitled to exercise any
option whatsoever. In making such determination, the Committee shall give the
Participant an opportunity to appear and present evidence on his or her behalf
at a hearing before the Committee.
6. Exchange of Stock Appreciation Rights for Options. Any holder (the
-------------------------------------------------
"SAR HOLDER") of stock appreciation rights under the SAR Plan may exchange such
stock appreciation rights granted pursuant to the SAR Plan for an Option under
the Plan in accordance with the procedures outlined below and such other
conditions and procedures required by the Committee:
-5-
<PAGE>
(a) The SAR Holder shall notify the Company not less than seven (7)
days prior to the desired exchange date of the number of stock appreciation
rights the SAR Holder desires to exchange for Options.
(b) Each stock appreciation right shall be exchanged on a one-for-one
basis for an Option to purchase one share of Common Stock under the Plan.
(c) The Expiration Date of an Option granted pursuant to an exchange
of a stock appreciation right shall be the same date as the date that is five
years after the date the exchanged stock appreciation right was originally
granted pursuant to the applicable Award Agreement.
(d) The Exercise Price of an Option granted pursuant to an exchange
of a stock appreciation right shall be the same as the Grant Price of such
exchanged stock appreciation right.
(e) If an exchange shall occur under this Paragraph 6, the Award
Agreement entered into between the SAR Holder and the Company concerning the
exchanged stock appreciation rights shall, along with the exchanged stock
appreciation rights, be surrendered by the SAR Holder and canceled by the
Company concurrently with the execution of an Agreement for the grant of Options
for the exchanged stock appreciation rights.
7. Reload Option Rights. Reload Option Rights if awarded with respect
--------------------
to an Option shall entitle the Participant exercising the Option (and unless
otherwise determined by the Committee, in its discretion, only such original
Participant), upon exercise of the Option or any portion thereof through
delivery of shares of Common Stock, automatically to be granted on the date of
such an exercise an additional Option (a "RELOAD OPTION") (i) for that number of
shares of Common Stock equal to the number of shares used by the Participant to
exercise the underlying Option, (ii) having an option price not less than 100%
of the Fair Market Value of the Common Stock covered by the Reload Option on the
Date of Grant of such Reload Option, (iii) having an Expiration Date not later
than the Expiration Date of the original Option so exercised and (iv) otherwise
having terms permissible for the grant of an Option under the Plan. The grant of
a Reload Option will be effected only upon the exercise of underlying Options
through the use of shares of Common Stock held by the Participant for at least
six (6) months. Each Reload Option shall be fully exercisable six months from
the effective date of grant. Subject to the preceding sentences of this
Paragraph and the other provisions of the Plan, Reload Options Rights and Reload
Options shall have such terms and be subject to such restrictions and
conditions, if any, as shall be determined, in its discretion, by the Committee.
Unless otherwise determined by the Committee, in its discretion, in connection
with the grant of the underlying Options, Reload Option Rights shall entitle the
Participant to be granted Reload Options only if the underlying Option to which
they relate is exercised by the Participant during employment with the Company
or any of its subsidiaries.
Each Agreement shall state whether the Committee has authorized Reload
Options with respect to the underlying Options. Upon the exercise of an
underlying Option, the Reload Option
-6-
<PAGE>
will be evidenced by an amendment to the underlying Agreement. No Reload Option
may provide for the grant, when exercised, of subsequent Reload Options.
8. Issuance of Certificates. Subject to Paragraph 11 below, as soon as
------------------------
practicable following the exercise of any Options, a certificate evidencing the
number of shares of Common Stock to be issued in connection with such exercise
shall be issued in the name of the Participant.
9. Adjustments. The Committee may make or provide for such adjustments
-----------
(a) in the maximum number of shares of Common Stock specified in Paragraph 4,
(b) in the number of shares of Common Stock covered by outstanding Options
granted hereunder, or (c) in the Exercise Price applicable to such Options as
the Committee in its sole discretion, may determine is equitably required to
prevent dilution or enlargement of the rights of Participants that otherwise
would result from any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of ASA Holdings, or
from any merger, consolidation, spin-off, reorganization, partial or complete
liquidation, issuance of rights or warrants to purchase securities or any other
corporate transaction or other event having an effect similar to any of the
foregoing.
10. Fractional Shares. ASA Holdings shall not be required to issue any
-----------------
fractional shares of Common Stock pursuant to the Plan. The Committee may
provide for the elimination of fractional shares or for the settlement of
fractional shares in cash.
11. Withholding Taxes. The Company shall have the right to require any
-----------------
individual entitled to receive Option Shares to remit to the Company, prior to
the delivery of any certificates evidencing such Option Shares; any amount
sufficient to satisfy any federal, state, or local tax withholding requirements.
12. Registration Restrictions. No Option shall be exercisable unless and
-------------------------
until (i) a registration statement under the Securities Act of 1933, as amended,
has been duly filed and declared effective pertaining to such Option Shares,
such Option Shares shall have been qualified under applicable state "blue sky"
laws and all regulations of any securities exchange on which the Common Stock
may be listed (including, without limitation for such purposes, The Nasdaq Stock
Market) shall have been fully complied with and satisfied, or (ii) the Committee
in its sole discretion determines that such registration, qualification and
compliance are not required as a result of the availability of an exemption from
such registration, qualification, or compliance under such laws.
13. Stockholder Rights. A Participant shall have no rights as a
------------------
stockholder with respect to any shares of Common Stock issuable upon exercise of
an Option until a certificate or certificates evidencing such shares shall have
been issued to such Participant, and no adjustment shall be made for dividends
or distributions or other rights in respect of any share of capital stock of the
Company for which the record date is prior to the date upon which the
Participant shall become the holder of record thereof.
-7-
<PAGE>
14. Indemnification of Committee. In addition to such other rights of
----------------------------
indemnification as they may have as directors or members of the Committee, the
members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees actually and necessarily incurred
in connection with the defense of any proceeding, or in connection with any
appeal therein, to which they or any of them may be a party by reason of any
action taken or failure to act under or in connection with the Plan or any
Option granted thereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such proceeding, except in relation to matters as to which it shall be adjudged
in such action, suit or proceeding that such Committee member is liable for
gross negligence or misconduct in the performance of his or her duties; provided
that within sixty (60) days after institution of any such action, suit or
proceeding, a Committee member shall in writing offer the Company the
opportunity at its own expense, to handle and defend the same.
15. Amendments: Termination; Limitation in Participants Rights.
----------------------------------------------------------
(a) The Board may, at any time and from time to time, alter, amend,
suspend or terminate the Plan in whole or in part; provided, however, that
-------- -------
amendments shall be subject to (x) the approval of a majority of the shares of
the Company's voting common stock entitled to vote if the Committee determines
that such approval is necessary in order for the Company to rely on the
exemptive relief provided under Rule 16b-3 or Code Section 162(m) and (y) all
other approvals which are required by law, whether regulatory, stockholder or
otherwise. No amendment or termination or modification of the Plan shall in any
manner affect any Option granted prior to the date of the amendment without the
consent of the Participant holding the Option, except that the Committee may
amend or modify the Plan in a manner that (a) does affect Options granted prior
to the date of the amendment if the Committee determines that such amendment or
modification is necessary to retain the benefits of Rule 16b-3 or Code Section
162(m), or (b) does not adversely affect the rights of the Participant holding
the Option.
(b) The Plan shall not confer upon any Participant any right with
respect to continuance of employment or other service with the Company, nor will
it interfere in any way with any right the Company would otherwise have to
terminate such Participant's employment or other service at any time.
16. Governing Law. The Plan and all rights hereunder shall be construed in
-------------
accordance with and governed by the laws of the State of Georgia.
-8-
<PAGE>
FIRST AMENDMENT TO THE
ASA HOLDINGS, INC.
1997 NONQUALIFIED STOCK OPTION PLAN
THIS FIRST AMENDMENT TO THE ASA HOLDINGS, INC. 1997 NONQUALIFIED STOCK
OPTION PLAN (the "Plan") is made and entered into by ASA Holdings, Inc. (the
"Company").
WITNESSETH:
WHEREAS, Section 15 of the Plan permits the Company's Board of
Directors to amend the Plan from time to time; and
WHEREAS, the Company's Board of Directors has approved this amendment
of the Plan and has authorized this amendment to be executed by any proper
officer of the Company.
NOW, THEREFORE, the Plan is hereby amended as follows:
Section 5 of the Plan is hereby amended by adding a new subsection (m)
which shall read as follows:
(m) In the event of the occurrence of a Change in Control, all
Options (other than Reload Option Rights) granted hereunder shall
become fully vested and shall be immediately exercisable. For purposes
of this subsection (m), "Change in Control" shall mean the occurrence
of any one or more of the following events: (i) acquisition of at
least twenty-five percent (25%) of the voting stock of the Company by
any single entity or group other than Delta Air Lines, Inc. or a
subsidiary thereof, the Company, a subsidiary or an employee benefit
plan (or trust forming a part thereof) maintained by the Company or a
subsidiary, (ii) ownership of more than fifty percent (50%) of the
voting stock of the Company by Delta Air Lines, Inc. or a subsidiary
thereof, (iii) individuals who constitute the Board on February 14,
1999 (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a
<PAGE>
director subsequent to February 14, 1999, whose election or nomination
for election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board (either by a specific vote or
by approval of the proxy statement of the Company in which such person
is named as a nominee for director, without objection to such
nomination) shall be, for purpose of this clause, considered as though
such person were a member of the Incumbent Board; provided, however,
-------- -------
that no individual initially elected or nominated as a director of the
Company as a result of an actual or threatened election contest with
respect to directors of any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the Board
shall be deemed to be a member of the Incumbent Board, (iv) the sale
or disposition of all or substantially all of the assets of the
Company, or (v) consummation of a reorganization, merger or
consolidation or similar form of corporate transaction involving the
Company, unless, immediately following such transaction more than 50%
of the total voting power of the publicly traded corporation resulting
from such transaction eligible to elect directors of such corporation
would be represented by shares that were Company voting stock
immediately prior to such transaction, and such voting power would be
in substantially the same proportion as the voting power of such
Company voting stock immediately prior to the transaction.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any person acquires beneficial ownership of
more than 25% of the Company voting stock as a result of the
acquisition of Company voting stock by the Company which reduces the
number of Company voting stock outstanding; provided, that if after
-------- ----
such acquisition by the Company such person becomes the beneficial
owner of additional Company voting stock that increases the percentage
of outstanding Company voting stock beneficially owned by such person,
a Change in Control of the Company shall then occur.
IN WITNESS WHEREOF, ASA Holdings, Inc. has caused this First Amendment
to the Plan to be executed by its duly authorized officer this ____ day of
February 1999.
EMPLOYER:
ASA HOLDINGS, INC.
By: _______________________
Title: _______________________
-2-
<PAGE>
EXHIBIT 13
SECOND RESTATEMENT AND AMENDMENT BY THE ENTIRETY
OF THE
ATLANTIC SOUTHEAST AIRLINES, INC.
EXECUTIVE DEFERRED COMPENSATION (RETIREMENT) PLAN
Plan Effective January 1, 1990
Amendment Effective as of 11:59 p.m. December 31, 1996
<PAGE>
INDEX
-----
ARTICLE I DEFINITION OF TERMS..................................... 1
1.1 "Accrued Benefit"..................................... 2
1.2 "Act"................................................. 2
1.3 "Age"................................................. 2
1.3A "ASA Holdings"........................................ 2
1.4 "Beneficiary"......................................... 2
1.5 "Benefit Starting Date"............................... 2
1.6 "Board"............................................... 2
1.7 "Cause"............................................... 2
1.8 "Change in Control"................................... 2
1.9 "Class A Participants"................................ 2
1.10 "Class B Participants"................................ 3
1.11 "Code"................................................ 3
1.13 "Company"............................................. 3
1.14 "Employer Contribution Account"....................... 3
1.15 "Compensation"........................................ 3
1.16 "Compensation Committee".............................. 3
1.17 "Contract"............................................ 3
1.18 "Effective Date"...................................... 4
1.19 "Employee"............................................ 4
1.19A "Employer"............................................ 4
1.20 "Forfeitures"......................................... 4
1.21 "Fund"................................................ 4
1.22 "Good Reason"......................................... 4
1.23 "Normal Retirement Date".............................. 4
1.24 "Participant"......................................... 4
1.25 "Plan"................................................ 4
1.26 "Plan Administrator".................................. 4
1.27 "Plan Year"........................................... 4
1.28 "Retired Participant"................................. 4
1.29 "Terminated Participant".............................. 5
1.30 "Valuation Date"...................................... 5
1.31 "Year of Service"..................................... 5
ARTICLE II PARTICIPATION.......................................... 5
2.1 Employees Eligible to Participate..................... 5
2.2 Commencement of Participation......................... 5
2.3 Termination of Participation.......................... 5
2.4 Employer Right To Terminate Participation............. 5
ARTICLE III CONTRIBUTIONS TO THE TRUST............................ 5
3.1 Employer Contributions................................ 5
3.2 No Voluntary Employee Contributions................... 6
ARTICLE IV ALLOCATION............................................. 6
4.1 Separate Accounts..................................... 6
4.2 Employer Contributions................................ 6
4.3 Certification of Allocations.......................... 6
4.4 Income and Loss....................................... 6
i
<PAGE>
<TABLE>
<S> <C>
4.5 Appreciation and Depreciation............................................................ 6
4.6 Forfeitures.............................................................................. 7
4.7 Discretionary Investments of Contributions............................................... 7
ARTICLE V DISTRBUTION OF BENEFITS....................................................................... 7
5.1 Employer Contribution Account............................................................ 7
A. Distribution on Termination Prior to Retirement..................................... 7
1. Distribution................................................................... 7
2. Nonforfeitable Vested Interest................................................. 7
3. Forfeitures.................................................................... 8
B. Distribution on Retirement at Normal Retirement Date................................ 8
C. Distribution on Retirement after Normal Retirement Date............................. 8
D. Distribution on Death............................................................... 9
E. Distribution on Disability.......................................................... 9
F. Distribution on Termination After a Change in Control............................... 10
5.2 Method of Distribution................................................................... 10
ARTICLE VI AMENDMENT OF PLAN............................................................................ 11
6.1 Right to Amend........................................................................... 11
6.2 Limitations upon Right to Amend.......................................................... 11
ARTICLE VII TERMINATION OF PLAN......................................................................... 11
7.1 Right to Terminate....................................................................... 11
7.2 Adoption of Plan by Successor............................................................ 11
ARTICLE VIII ADMINISTRATION............................................................................. 12
8.1 Appointment of the Administrative Committee.............................................. 12
8.2 Notification to Participants............................................................. 12
A. Account Balances.................................................................... 12
B. Notification Prior to Termination Date.............................................. 12
C. Claims Procedure.................................................................... 12
8.3 Records and Reports...................................................................... 12
8.4 Other Administrative Committee Powers and Duties......................................... 13
8.5 Administrative Committee Procedures...................................................... 13
8.6 Benefit Checks........................................................................... 13
ARTICLE IX GUARANTEES AND LIABILITIES................................................................... 14
9.1 Nonguarantee of Employment............................................................... 14
9.2 Rights to Fund Assets.................................................................... 14
9.3 Nonalienation of Benefits................................................................ 14
9.4 Allocation of Responsibility Among Each Employer and the Administrative Committee........ 14
ARTICLE X MISCELLANEOUS................................................................................. 15
10.1 Governing Laws........................................................................... 15
10.2 Corporate Action......................................................................... 15
10.3 Alternative Acts......................................................................... 15
10.4 Interpretation........................................................................... 15
10.5 Gender and Tense......................................................................... 15
10.6 Title Headings........................................................................... 15
</TABLE>
ii
<PAGE>
SECOND RESTATEMENT AND AMENDMENT BY THE ENTIRETY OF THE
ATLANTIC SOUTHEAST AIRLINES, INC.
EXECUTIVE DEFERRED COMPENSATION (RETIREMENT) PLAN
THIS IS THE SECOND RESTATEMENT AND AMENDMENT BY THE ENTIRETY OF THE
EXECUTIVE DEFERRED COMPENSATION (RETIREMENT) PLAN as adopted by ATLANTIC
SOUTHEAST AIRLINES, INC., a Georgia corporation (hereinafter referred to as
the "Company").
WITNESSETH:
WHEREAS, the Company has established and maintains an Executive Deferred
Compensation (Retirement) Plan for the sole and exclusive benefit of its
eligible employees who are selected to be Participants hereunder, and their
Beneficiaries, in order that there may be secured and established for such
Employees financial benefits against the contingencies of old age and death; and
WHEREAS, Section 6.1 of the Executive Deferred Compensation (Retirement)
Plan provides for the right of the Company to amend the plan; and
WHEREAS, the Executive Deferred Compensation (Retirement) Plan was restated
and amended in its entirety effective as of January 1, 1992 by a document
entitled "Restatement and Amendment by the Entirety of the Atlantic Southeast
Airlines, Inc. Executive Deferred Compensation (Retirement) Plan" dated
December 31, 1992; and
WHEREAS, the Company now desires to amend the Executive Deferred
Compensation (Retirement) Plan, as amended and restated, to make certain changes
in connection with the Merger, as defined in the Amended and Restated Agreement
and Plan of Merger dated November 6, 1996 by and among the Company, ASA
Holdings, Inc., a Georgia corporation, and Atlantic Southeast Merging Co., a
Georgia corporation (the "Merger Agreement") and the adoption by ASA Holdings,
Inc. of the Executive Deferred Compensation (Retirement) Plan as a participating
employer.
NOW, THEREFORE, in accordance with the terms of such Executive Deferred
Compensation (Retirement) Plan, effective as of the Effective Time (as defined
in the Merger Agreement), the Plan is hereby restated and amended in its
entirety to read as follows:
ARTICLE I DEFINITION OF TERMS
The following words and terms, as used in this Plan, shall have the
meanings set forth below, unless a different meaning is clearly required by the
context:
<PAGE>
1.1 "Accrued Benefit": For Class A Participants, the amount standing to the
----------------
credit of such a Participant in his Employer Contribution Account. For
Class B Participants, the product of (i) the amount standing to the credit
of such a Participant in his Employer Contribution Account, multiplied by
(ii) a fraction the numerator of which is the Participant's Years of
Service and the denominator of which is the number of Years of Service such
Participant would have had with the Employer if such Participant had
continued in the employment of the Employer until his Normal Retirement
Date; provided, however, that such fraction shall be deemed to be 100% if
such Participant's employment with the Employer is terminated prior to his
Normal Retirement Date either (i) as a result of death or disability, (ii)
by the Employer without Cause within two (2) years after a Change in
Control, or (iii) by such Participant for Good Reason within two (2) years
after a Change in Control.
1.2 "Act": The Employee Retirement Income Security Act of 1974, as amended from
---
time to time.
1.3 "Age": The age of an Employee on his last birthday.
---
1.3A "ASA Holdings": ASA Holdings, Inc., a Georgia corporation.
-------------
1.4 "Beneficiary: Any person or persons designated as provided in ARTICLE V to
-----------
receive benefits under this Plan in the event of the death of a
Participant, Retired Participant or Terminated Participant.
1.5 "Benefit Starting Date": The first day on which an amount is payable to a
---------------------
Participant, Retired Participant or Terminated Participant in accordance
with the terms of the Plan.
1.6 "Board": The Board of Directors of ASA Holdings or the Compensation
-----
Committee.
1.7 "Cause": Termination of employment of a Participant by an Employer as a
-----
result of either (i) willful failure to perform prescribed duties other
than as a result of disability, or (ii) the willful engaging in misconduct
significantly detrimental to the Employer.
1.8 "Change in Control": Any one or more of the following events: (i)
-----------------
acquisition of at least twenty-five percent (25%) of the voting stock of
ASA Holdings by any single entity or group other than Delta Air Lines, Inc.
or subsidiary thereof, (ii) ownership of more than fifty percent (50%) of
the voting stock of ASA Holdings by Delta Air Lines, Inc. or a subsidiary
thereof, (iii) approval by the Board of any tender offer for shares of
voting stock of ASA Holdings, or (iv) if individuals constituting the Board
as of the Effective Date (or the successors of any such individuals
resigning or declining to be nominated to the Board) cease to constitute a
majority of the Board.
1.9 "Class A Participants": Those Participants who are senior executive
--------------------
officers of an Employer and who are designated as Class A Participants by
the Board.
2
<PAGE>
1.10 "Class B Participants": Those Participants who are officers, other than
--------------------
the senior executive officers; of an Employer and who are designated as
Class B Participants by the Board.
1.11 "Code": The Internal Revenue Code of 1986, as amended.
----
1.12 "Administrative Committee": The Administrative Committee appointed by the
------------------------
Board of Directors of ASA Holdings and acting in accordance with the terms
hereof. The initial members of the Administrative Committee shall be
George F. Pickett, John W. Beiser and Ronald V. Sapp.
1.13 "Company": ATLANTIC SOUTHEAST AIRLINES, INC., or any successors by merger,
-------
consolidation, purchase or otherwise, and any other corporation,
association or business organization that assumes the obligations of this
Plan.
1.14 "Employer Contribution Account": That account containing the portion of
-----------------------------
the Fund contributed by an. Employer attributable to each Participant.
1.15 "Compensation": Basic pay or salary paid or accrued by an Employer during
------------
any calendar month, but exclusive of commissions, bonuses, overtime pay
and any other extra compensation, and also exclusive of the following: (i)
maintenance and reimbursement of expenses, (ii) amounts contributed by the
Employer to this Plan, any other pension, profit sharing or simplified
pension plan and any employee welfare or health insurance plan or
arrangement, (iii) amounts contributed by the Employer to any other plan
of deferred compensation to the extent that the contributions are not
includable in the gross income of the Employee for the taxable year in
which contributed, (iv) any distributions from a plan of deferred
compensation, whether or not includable in the gross income of the
Employee when distributed, except for amounts received by an Emp1oyee
pursuant to an unfunded non-qualified plan of deferred compensation in the
year includable in the gross income of the Employee, (v) amounts realized
from the exercise of a non-qualified stock option, (vi) amounts realized
when restricted stock or property held by an Employee either becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture, (vii) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option, (viii) other
amounts which receive special tax benefits such as premiums for group term
life insurance (but only to the extent that the premiums are not
includable in the gross income of the Employee), or contributions made by
an Employer towards the purchase of an annuity contract described in Code
Section 403(b) (whether or not such contributions are excludable from the
gross income of the Employee), and (ix) amounts paid for services as a
Director or other independent contractor.
1.16 "Compensation Committee": The Compensation Committee of the Board.
-----------------------
1.17 "Contracts": An annuity contract issued for the benefit of a Participant,
----------
unless otherwise stated. Any such contract shall be non-transferable,
shall be issued by a legal reserve life insurance company which is
authorized to do business within the State of Georgia and may contain such
3
<PAGE>
provisions for death and other benefits as the Administrative Committee
may determine to be in accordance with the terms of the Plan.
1.18 "Effective Date": January 1, 1990.
---------------
1.19 "Employee": Any person who is employed by an Employer in a capacity other
--------
than solely as a Director or other independent contractor.
1.19A "Employer": The Company and ASA Holdings and any other subsidiary of ASA
--------
Holdings which has adopted the Plan as a participating employer.
1.20 "Forfeitures": The portion of a Employer Contribution Account of a
-----------
Terminated Participant whose employment with an Employer is terminated
that is not payable to such Terminated Participant or his Beneficiary.
1.21 "Fund" The account or accounts established to receive and invest
----
contributions made under this Plan and from which benefits are paid.
1.22 "Good Reason": Termination of employment with an Employer by a Participant
-----------
if (i) duties are assigned to such Participant that are materially
inconsistent with previous duties; (ii) duties and responsibilities of
such Participant are substantially reduced; (iii) base compensation of
such Participant is reduced not as part of an across the board reduction
for similarly situated employees of the Employer, or (iv) such
Participant's participation under compensation plans or arrangements
generally made available to similarly situated employees of the Employer
is limited or denied without such Participant's consent.
1.23 "Normal Retirement Date": The later of (i) attainment by the Participant
----------------------
of age sixty-five (65) or (ii) the completion by the Participant of
fifteen (15) Years of Service.
1.24 "Participant": Any Employee who is eligible to be and becomes a
-----------
Participant as provided in ARTICLE II hereof, not including a Retired
Participant or a Terminated Participant.
1.25 "Plan": This entire instrument, and all amendments thereto, which shall be
----
known as the "ATLANTIC SOUTHEAST AIRLINES, INC. EXECUTIVE DEFERRED
COMPENSATION PLAN."
1.26 "Plan Administrator": The Administrative Committee or any duly appointed
------------------
successor Plan Administrator.
1.27 "Plan Year": The calendar year.
---------
1.28 "Retired Participant": A person who shall have been a Participant but who
-------------------
upon retirement shall have become entitled to benefits as hereinafter
provided.
4
<PAGE>
1.29 "Terminated Participant": As provided in Section 2.3, a person who shall
-----------------------
have been a Participant but whose employment with an Employer is
terminated or a person who shall have been a Participant but whose
participation in the Plan has been suspended or terminated pursuant to
Section 2.4.
1.30 "Valuation Date": The date of the mandatory annual valuation of the Fund
--------------
by the Administrative Committee as of the last day of the Plan Year or the
date of any other valuation of the accounts under the Plan.
1.31 "Year of Service": For all purposes of the Plan, a Year of Service means a
----------------
Plan Year, inclusive of Plan Years prior to the Effective Date, during
which the Participant is employed by an Employer for at least six (6)
months, and also inclusive of Plan Years after the date of a
Participant's termination of participation in the Plan in accordance with
Section 2.3.
ARTICLE II PARTICIPATION
2.1 Employees Eligible to Participate. Every present or future Employee
---------------------------------
who shall have been selected to participate in the Plan by formal action of the
Board shall be eligible to participate.
2.2 Commencement of Participation. An Employee shall be deemed to
-----------------------------
commence participation in the Plan as of the first day of the first calendar
month beginning on or after the date on which such Employee is selected to
participate in the Plan in accordance with Section 2.1 or as of such
retroactive date as may be determined by the Board. The Board shall designate
each Participant in the Plan as either a Class A Participant or Class B
Participant.
2.3 Termination of Participation. A Participant's participation in the
-----------------------------
Plan shall terminate as of the earlier of (i) the date his employment with an
Employer is terminated or (ii) the effective date that his participation in the
Plan has been suspended or terminated by action of the Board in accordance with
Section 2.4.
2.4 Employer Right To Terminate Participation. The Board shall, in its
-----------------------------------------
discretion, have the right to suspend or terminate the participation in the Plan
of any Participant at any time, regardless of whether the Terminated Participant
remains employed by an Employer. The Board shall provide to such Participant
notice of his termination of participation in the Plan.
ARTICLE III CONTRIBUTIONS TO THE TRUST
3.1 Employer Contributions.
----------------------
A. Each month during the Plan Year each Employer shall contribute to
the Fund an amount equal to (i) fifteen percent (15%) of the Compensation of all
Class A Participants, plus (ii) ten
5
<PAGE>
percent (10%) of the Compensation of all Class B Participants. The percentage
contribution for each Participant shall be subject to change by formal action of
the Board at any time. In such event, the percentage contribution established
for a Participant by action of the Board shall remain in effect until
subsequently changed by the Board pursuant to this Section 3.1A or until the
Participant's participation in the Plan is suspended or terminated pursuant to
Section 2.4.
B. The contributions to be made under the Plan shall be paid to the
Fund monthly.
C. Payments on account of the contributions due from each Employer
for any month may be made in cash or in kind.
D. Contributions made by each Employer shall be allocated to the
Participants as provided in Section 4.2.
3.2 No Voluntary Employee Contributions. Contributions from Participants
-----------------------------------
are neither required nor permitted.
ARTICLE IV ALLOCATION
4.1 Separate Accounts. The Administrative Committee shall establish and
-----------------
maintain for each Participant until his termination of participation a "Employer
Contribution Account" (sometimes called "account"). Each such account shall be
credited or debited to the extent required by the following Sections of this
ARTICLE IV.
4.2 Employer Contributions. As of the end of each month during the Plan
----------------------
Year, the contributions paid or accrued by each Employer for each Participant
pursuant to Section 3.lA hereof; irrespective of when actually paid to the Fund,
shall be allocated to the Employer Contribution Account of such
Participant.
4.3 Certification of Allocations. Following each Valuation Date, the
----------------------------
Administrative Committee shall certify the names of the Participants and the
amount so allocable to the accounts of each of them during the Plan Year, and
shall maintain records of the amount allocated to each Participant and all
transactions with respect to the accounts of each Participant.
4.4 Income and Loss. As of any Valuation Date, the Administrative
---------------
Committee shall adjust each of the Participant's accounts for the amount of net
income or net losses earned or incurred by the investments of such Participant's
accounts since the last Valuation Date.
4.5 Appreciation and Depreciation. The accounts of each Participant
-----------------------------
shall be adjusted as of each Valuation Date for any net appreciation or net
depreciation in the value of the investments of such Participant's accounts
since the last Valuation Date. Assets of the Fund shall always be valued at
their fair market value.
6
<PAGE>
4.6 Forfeitures. Any Forfeitures arising pursuant to Section 5.1A3 shall
-----------
inure to the benefit of the Employer that made the contribution.
4.7 Discretionary Investments of Contributions. Each Participant or
-----------------------------------------
Terminated Participant, while in the employ of an Employer, shall have the
right, exercisable pursuant to such administrative procedures as the
Administrative Committee may adopt, to direct the Administrative Committee to
invest his respective accounts in such investments selected by him provided that
such investments are approved by the Administrative Committee. Investments in
life insurance contracts shall be prohibited. To the extent the Administrative
Committee does not receive individual investment directions for a Participant or
Terminated Participant, the Administrative Committee shall invest all accounts
in money market accounts, certificates of deposit or treasury bills selected in
the sole and absolute discretion of the Administrative Committee. Any
administrative expenses such as commissions and brokerage fees incurred in
connection with or as a result of any Participant's exercise of individual
investment discretion pursuant to this Section shall be charged against the
respective account of such Participant.
ARTICLE V DISTRIBUTION OF BENEFITS
5.1 Employer Contribution Account. The amounts credited or debited to
------------------------------
Employer Contribution Accounts shall include only amounts theretofore allocated
by the Administrative Committee pursuant to Article IV hereof. The net credit to
an account shall be reduced by amounts distributed in accordance with the
provisions of this ARTICLE V.
A. Distribution on Termination Prior to Retirement.
------------------------------------------------
1. Distribution. If a Participant's employment with an Employer
------------
is terminated (except on or after his Normal Retirement Date, death, upon
----
disability (as defined in Section 5.1E), or after a Change in Control) such
Participant's nonforfeitable vested interest in his Accrued Benefit shall be
distributed in accordance with Section 5.2. Such distribution shall be commenced
(a) not earlier than the later of (i) the attainment by the Terminated
Participant of age 55, or (ii) the end of the Plan Year in which the Terminated
Participant terminated employment and (b) shall commence no later than thirty
(30) days after the Valuation Date with respect to the last day of the Plan Year
in which the event described in (a) above occurred.
2. Nonforfeitable Vested Interest. As of any time prior to a
------------------------------
Participant's Normal Retirement Date, other than at death, upon disability (as
defined in Section 5.1E) or upon termination of employment of the Participant
with an Employer at any time after a Change in Control (in each case as provided
below), the Participant shall have a nonforfeitable vested interest in his
Accrued Benefit equal to the percentage thereof as shown in detail below for the
number of Years of Service with the Employer as follows:
7
<PAGE>
Years Vested-
of Nonforfeitable
Service Percentage
------- ----------
Less than 5 0%
5 25%
6 30%
7 35%
8 40%
9 45%
10 50%
11 60%
12 70%
13 80%
14 90%
15 or more 100%
A Participant shall have a 100% vested and nonforfeitable interest in his
Accrued Benefit if (i) his Normal Retirement Date occurs while in the
employ of the Employer, (ii) the Participant's employment is terminated due
to death or disability (as defined in Section 5.lE), (iii) the
Participant's employment is terminated by the Employer without Cause within
two (2) years after a Change in Control, or (iv) the Participant's
employment is terminated by the Participant for Good Reason within two (2)
years after a Change in Control.
3. Forfeitures. If any Participant's employment with an Employer is
-----------
terminated and at such time or as a result thereof he is not entitled to
100% of his Employer Contribution Account, the portion of his Employer
Contribution Account that is not included in his Accrued Benefit and/or the
portion of his Accrued Benefit which is not 100% nonforfeitable shall be
treated as a Forfeiture pursuant to Section 4.6 as of the date on which his
employment is terminated.
B. Distribution on Retirement After Normal Retirement Date. Any
-------------------------------------------------------
Participant shall be entitled to retire from service at any time on or after his
Normal Retirement Date. If a Participant retires on or after his Normal
Retirement Date, his Accrued Benefit shall be 100% nonforfeitable. Such amount
shall become distributable at the Retired Participant's election in accordance
with Section 5.2, but in no event shall distribution thereof begin later than
thirty (30) days after the Valuation Date with respect to the last day of the
Plan Year in which his Normal Retirement Date occurs.
C. Distribution on Retirement After Normal Retirement Date. If a
-------------------------------------------------------
Participant continues in the employ of an Employer after his Normal Retirement
Date, he shall be treated in all respects as any other Participant until his
actual retirement. Such Participant's Accrued Benefit shall be 100%
nonforfeitable and at the time of his actual retirement shall become
distributable to such Retired Participant at such Retired Participant's election
in accordance with Section 5.2, but in no event shall
8
<PAGE>
distribution thereof begin later than thirty (30) days after the Valuation Date
with respect to the last day of the Plan Year in which the effective date of his
actual retirement occurs.
D. Distribution on Death.
---------------------
1. If a Participant dies before his Benefit Starting Date, his
Accrued Benefit as of the date of his death shall be 100% nonforfeitable
and shall be distributed in accordance with Section 5.2 to his designated
Beneficiary, provided, however, that if a Participant has not designated a
Beneficiary or if no Beneficiary survives the Participant, then
distribution shall be made to the Participant's executor or administrator.
2. If a Retired or Terminated Participant dies on or after his
Benefit Starting Date, the death benefit provided under the form of benefit
selected by the Retired or Terminated Participant shall be distributed to
his designated Beneficiary, or if no Beneficiary has been designated or
survives such Participant, then to such Participant's executor or
administrator.
3. Such death benefits shall become distributable at the
election of the Beneficiary or the Participant's executor or administrator,
as the case may be, but in no event shall distribution thereof begin later
than (a) if a beneficiary has been designated, thirty (30) days after the
Valuation Date with respect to the last day of the Plan Year in which the
Participant's Employer is notified of his death or (b) if no beneficiary
has been designated or survives the Participant, thirty (30) days after the
Valuation Date with respect to the last day of the Plan Year in which the
Participant's Employer is notified of the appointment of an executor or
administrator.
4. The Administrative Committee may require such proper proof
of death and such evidence of the right of any person to receive payment of
benefits attributable to a deceased Participant, as the Administrative
Committee may deem desirable. The Administrative Committee's determination
of death and of the right of any person to receive payment shall be
conclusive; subject, however, to the adjudication of any claim of any such
person pursuant to Section 8.2C.
5. If a Participant's designated Beneficiary is his spouse,
then in the event the Participant and such spouse are divorced after the
date of such Participant's last designation of beneficiary form, the
Participant's designation of such spouse as his designated Beneficiary
shall be automatically revoked upon such divorce.
E. Distribution on Disability, If a Participant shall incur, prior
--------------------------
to his Normal Retirement Date, a medically determinable physical or mental
impairment which, in the opinion of a physician selected by the
Administrative Committee, may be expected to result in death or to be of
long-continued and indefinite duration, and which renders him incapable of
performing his duties, and if his employment is terminated, his Accrued
Benefit shall be 100% nonforfeitable and shall be distributed to such
Participant in accordance with Section 5.2, provided that in no event shall
such physical or
9
<PAGE>
mental impairment include a condition resulting from the habitual use of or
addiction to alcohol or narcotics, self-inflicted injury, or injury incurred
while committing an illegal act. Such distribution shall be commenced at the
election of the Participant or his legal representative but in no event shall
distribution thereof begin later than thirty (30) days after the Valuation Date
with respect to the last day of the Plan Year in which the effective date of the
termination of his employment occurs. Any election under Section 5.2 must be
made by the Participant or his legal representative within a reasonable time
after notice from the Administrative Committee that the Participant's employment
is terminated due to such medically determinable physical or mental impairment
(said notice to include reference to the right of the Participant to elect the
manner of distribution).
F. Distribution on Termination After a Change in Control. If a
-----------------------------------------------------
Participant's employment with an Employer is terminated either (i) by the
Employer without Cause within two (2) years after a Change in Control, or (ii)
by the Participant for Good Reason within two (2) years after a Change in
Control, such Participant's Accrued Benefit as of the date of such termination
shall be 100% nonforfeitable and shall become distributable at such Terminated
Participant's election in accordance with Section 5.2, but in no event shall
distribution thereof begin later than thirty (30) days after the Valuation Date
with respect to the last day of the Plan Year in which the effective date of the
termination of his employment occurs.
5.2 Method of Distribution.
----------------------
A. All amounts distributable to a Participant under this ARTICLE V
shall be paid in one of the following forms selected by the Participant (or by
his legal representative):
1. in a life annuity; or
2. in an annuity with guaranteed payments over a period of not
less than twenty (20) years; or
3. in a joint and survivor annuity with guaranteed payments for
a period of years; or
4. in a straight life annuity with guaranteed payments for a
period of years; or
5. such other method of payment approved by the Administrative
Committee.
B. In order to accomplish a distribution in equal annual
installments or a distribution over the remaining life of a Participant, or a
distribution under any other approved plan of life and annual payments, the
Administrative Committee shall use the amount standing to the credit of a
Participant to purchase an annuity Contract in the name of the Participant, in
which event, the insurance company shall
10
<PAGE>
be instructed to make payment of the cash value to the Participant by utilizing
a mode of settlement which will result in the required annual or life or
combination distribution.
ARTICLE VI AMENDMENT OF PLAN
6.1 Right to Amend. The Employers, acting together, shall have the right
--------------
to amend any of the provisions of this Plan at any time.
6.2 Limitations upon Right to Amend. Notwithstanding the foregoing, the
-------------------------------
Employers shall not have the right to amend the Plan in any way which will:
A. Diminish any right or benefit under the Plan which shall have the
effect of depriving any Participant, Retired Participant or Terminated
Participant or any Beneficiary of any portion of his Accrued Benefit;
B. Alter the basic purpose of the Plan;
C. Alter the duties or liabilities of the Administrative Committee
without their prior written consent; or
D. After a Change in Control, alter the rights of any Participant to
benefits under the Plan without such Participant's prior written consent.
ARTICLE VII TERMINATION OF PLAN
7.1 Right to Terminate. It is the present intention of the Employers to
------------------
maintain the Plan for an indefinite period of time. Nevertheless, the Employers,
acting together, reserve the right, at any time, to terminate the Plan or to
temporarily suspend contributions for a fixed or indeterminate period of time
upon giving to the Administrative Committee notice in writing of its intention
so to do. In the event of the termination of this Plan, the liability or any
obligation of each Employer to make contributions to the Fund hereunder shall
cease but all other terms of the Plan shall remain in full force and effect.
7.2 Adoption of Plan by Successor. In the event of the merger or
-----------------------------
consolidation of any Employer, or the transfer of the assets of any Employer to
another corporation, association, or business organization, or a Change in
Control, the Plan may be adopted by the surviving corporation, association or
other business organization which employs a substantial number of the
Participants of the Plan. Such adoption of the Plan shall be expressed in an
agreement between such surviving or other corporation, association or business
organization and the Administrative Committee under which such other
corporation, association or business organization adopts the Plan with respect
to the Participants employed by it. If, pursuant to the terms hereof, the Plan
is adopted by any other corporation, association or business organization, such
other corporation, association or business organization shall
11
<PAGE>
be deemed to succeed to the position under the Plan of the Employer of which
such corporation, association or business organization is the successor.
ARTICLE VIII ADMINISTRATION
8.1 Appointment of the Administrative Committee. The Plan shall be
-------------------------------------------
administered by the Administrative Committee. The Administrative Committee,
consisting of at least two persons, shall be appointed by and serve at the
pleasure of the Board of Directors of ASA Holdings to assist in the
administration of the Plan. The initial members of the Administrative Committee
shall be George F. Pickett, Jr., John W. Beiser and Ronald V. Sapp. All usual
and reasonable expenses of the Administrative Committee shall be paid by the
Employers.
8.2 Notification to Participants. The Administrative Committee shall be
----------------------------
responsible for the following:
A. Account Balances. Within a reasonable time after the close of
----------------
each Plan Year, the Administrative Committee shall furnish each Participant and
Beneficiary with an individual report disclosing the amounts in such
Participant's account, and the Participant's Accrued Benefit and vested
percentage.
B. Notification Prior to Termination Date. Within a reasonable
--------------------------------------
period before the date a Participant is entitled to receive benefits under the
Plan, the Administrative Committee shall supply the Participant with a written
explanation of the nature, form and amount of the benefit to which he is
entitled. Reference to the methods of payment that are available under the Plan
shall be included in the written explanation; and upon the request of the
Participant, the Administrative Committee shall furnish him with a written
explanation of the features of and amounts applicable to such Participant's
accounts under any such option.
C. Claims Procedure. The Administrative Committee shall make a
----------------
determination as to the right of any person to a benefit, and shall afford any
person dissatisfied with such determination the right to a hearing thereon. Any
denial by the Administrative Committee of the claim for benefits under the Plan
by a Participant or Beneficiary shall be stated in writing by the Administrative
Committee and delivered or mailed to the Participant or Beneficiary and such
notice shall set forth the specific reasons for the denial, written to the best
of the Administrative Committee's ability in a manner that may be understood
without legal or actuarial counsel. In addition, the Administrative Committee
shall afford a reasonable opportunity to any Participant whose claim for
benefits has been denied for a full and fair review by the Board of the decision
denying the claim.
8.3 Records and Reports. Each Employer shall delegate to the
-------------------
Administrative Committee such responsibilities as it deems appropriate in order
to comply with the record keeping and reporting requirements of any governmental
agency including the State of Georgia and the Internal Revenue Service.
12
<PAGE>
8.4 Other Administrative Committee Powers and Duties. The Administrative
------------------------------------------------
Committee shall have such other duties and powers as may be necessary to
discharge its duties hereunder, including, but not limited to, the following:
A. To receive from each Employer and from Participants such
information as shall be necessary for the proper administration of the Plan;
B. To furnish each Employer, upon request, such reports with respect
to the administration of the Plan as are reasonable and appropriate;
C. To receive and review reports of the receipts, disbursements and
investments of the Fund;
D. To appoint or employ individuals to assist in the administration
of the Plan and any other agents it deems advisable, including legal and
actuarial counsel.
The Administrative Committee shall have no power to add to, subtract from or
modify any of the terms of the Plan, or to change or add to any benefits
provided by the Plan, or to waive or fail to apply any requirements of
eligibility for benefits under the Plan. However, in reviewing claims, the
Administrative Committee has the discretion to accept or deny claims for
benefits based on its good faith interpretation of the terms of the Plan.
8.5 Administrative Committee Procedures. The Administrative Committee may
-----------------------------------
act at a meeting or in writing without a meeting. The Administrative Committee
shall elect one of its members as chairman and another as secretary. The
secretary shall keep a record of all meetings. The Administrative Committee may
adopt such bylaws and regulations as it deems desirable for the conduct of its
affairs. All decisions of the Administrative Committee shall be made by majority
vote. The Administrative Committee may adopt such rules as it deems necessary or
desirable. The Administrative Committee shall be entitled to rely upon
information furnished by each Employer and the legal or actuarial counsel of
each Employer.
8.6 Benefit Checks. If, in the Administrative Committee's judgment, any
-------------
person to whom benefits are payable is unable to care for his affairs because of
illness, accident or other incapacity, the Administrative Committee may
authorize his benefits to be paid to any person who, or institution which, in
the Administrative Committee's judgment, is responsible for caring for the
person entitled to such benefit. If an amount becomes distributable to a minor
or a person under legal disability, the Administrative Committee may direct that
such distribution may be made to such person without the intervention of any
legal guardian or conservator, or to a relative of such person for the benefit
of such person, or to the legal guardian or conservator of such person. Any such
distribution shall constitute a full discharge with respect to the
Administrative Committee, and the Administrative Committee shall not be required
to see to the application of any distribution so made.
13
<PAGE>
ARTICLE IX GUARANTEES AND LIABILITIES
9.1 Nonguarantee of Employment. Nothing contained in this Plan shall be
--------------------------
construed as a contract of employment between an Employer and any Employee, or
as a right of any Employee to be continued in the employment of an Employer or
as a limitation of the right of an Employer to discharge any of its Employees
with or without cause.
9.2 Rights to Fund Assets. This Plan constitutes a mere promise by the
---------------------
Employers to make benefit payments in the future. No Participant, Retired
Participant, Terminated Participant or Beneficiary shall have any right to, or
interest in, any part of the Fund upon termination of employment or otherwise,
except as specifically provided herein. All assets in the Fund shall be subject
to the rights of creditors of the Employers. All Participants, Retired
Participants, Terminated Participants and Beneficiaries shall have the status of
general unsecured creditors of the Employers.
9.3 Nonalienation of Benefits. Except as otherwise provided by law, the
-------------------------
rights of Participants, Retired Participants, Terminated Participants and
Beneficiaries to benefits payable under this Plan shall not be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, attachment, garnishment, execution or levy of any kind
(including, without limitation, by their respective creditors), either voluntary
or involuntary, prior to actually being received by the person entitled to the
benefit under the terms of the Plan, and any attempt to anticipate, alienate,
sell, transfer, assign, pledge, encumber, attach, garnish, charge or otherwise
dispose of any right to benefits payable hereunder shall be void. The Fund shall
not in any manner be liable for, or subject to, the debts, contracts,
liabilities, engagements or torts of any person entitled to benefits hereunder.
9.4 Allocation of Responsibility Among Each Employer and the
--------------------------------------------------------
Administrative Committee. The Administrative Committee and the Employers
- ------------------------
(hereinafter for purposes of this Section referred to as the "Fiduciaries")
shall have only those specific powers, duties, responsibilities and obligations
as are specifically given them under this Plan. In general, each Employer shall
have the sole responsibility for making the contributions provided for under
Section 3.1; and the Administrative Committee shall have the sole responsibility
for reviewing Participant or Beneficiary claims as provided under Section 8.2C.
The Employers, acting together, shall have the responsibility to amend or
terminate, in whole or in part, this Plan. In addition, the Administrative
Committee shall have the sole responsibility for the administration of this
Plan, which responsibility is specifically described in this Plan. Each
Fiduciary warrants that any directions given, information furnished or action
taken by it shall be in accordance with the provisions of this Plan authorizing
or providing for such direction, information or action. Furthermore, each
Fiduciary may rely upon any such direction information or action of another
Fiduciary as being proper under this Plan and is not required under this Plan
to inquire into the propriety of any such direction, information or action. It
is intended under this Plan that each Fiduciary shall be responsible for the
proper exercise of its own powers, duties, responsibilities and obligations
under this Plan and shall not be responsible for any act or failure to act of
another Fiduciary. No Fiduciary guarantees the Fund in any manner against
investment loss or depreciation in asset value.
14
<PAGE>
ARTICLE X MISCELLANEOUS
10.1 Governing Laws. This Plan shall be construed and enforced under the
--------------
Act and the laws of the State of Georgia and all provisions hereof shall be
administered according to the laws of the State of Georgia.
10.2 Corporate Action. Whenever ASA Holdings, under the terms of this
----------------
Plan, is permitted or required to do or perform any act, it shall be done and
performed by the Board, and shall be evidenced by proper resolutions certified
by the Secretary of ASA Holdings.
10.3 Alternative Acts. In the event it becomes impossible for ASA Holdings
----------------
or the Administrative Committee to perform any act required by this Plan, then
ASA Holdings or the Administrative Committee may perform such alternative act
which most nearly carries out the intent and purpose of this Plan.
10.4 Interpretation. This Plan has been executed for the exclusive
--------------
benefit of the Participants and their Beneficiaries. So far as possible, this
Plan shall be interpreted and administered in a manner consistent with this
intent.
10.5 Gender and Tense. All pronouns and all variations thereof shall be
----------------
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person, persons or entity may require.
10.6 Title Headings. The headings in this Plan are solely for the
--------------
convenience of reference and shall not affect its interpretation.
15
<PAGE>
IN WITNESS WHEREOF, this Amendment and Restatement of the Executive
Deferred Compensation (Retirement) Plan is signed by the Company on the 16th day
of April, 1997, effective as of the Effective Time.
ATLANTIC SOUTHEAST AIRLINES, INC.
By: /s/ George F. Pickett
------------------------------
George F. Pickett
Chairman of the Board
Attest:
By: /s/ John W. Beiser
------------------------------
John W. Beiser
Secretary
(CORPORATE SEAL)
The foregoing Second Restatement and Amendment by the Entirety of the Executive
Deferred Compensation (Retirement) Plan is hereby adopted by ASA Holdings on the
16th day of April, 1997, effective as of the Effective Time.
ASA HOLDINGS, INC.
By: /s/ George F. Pickett
-----------------------------
George F. Pickett
Chairman of the Board
Attest:
By: /s/ John W. Beiser
-----------------------------
John W. Beiser
Secretary
(CORPORATE SEAL)
16
<PAGE>
AMENDMENT TO THE
ATLANTIC SOUTHEAST AIRLINES, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
THIS THIRD AMENDMENT TO THE ATLANTIC SOUTHEAST AIRLINES, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN (the "Plan") is made and entered into by
ASA Holdings, Inc. and Atlantic Southeast Airlines, Inc. (the "Company").
WITNESSETH:
WHEREAS, Section 6.1 of the Plan provides for the right of the
Company to amend the Plan from time to time; and
WHEREAS, the Company's Board of Directors has approved this
amendment of the Plan and has authorized this amendment to be executed by any
proper officer of the Company.
NOW, THEREFORE, the Plan is hereby amended as follows:
Section 1.8 of the Plan is hereby amended in its entirety to
read as follows:
1.8 "Change in Control": Any one or more of the following
-------------------
events: (i) acquisition of at least twenty-five percent (25%)
of the voting stock of the Company by any single entity or
group other than Delta Air Lines, Inc. or a subsidiary
thereof, the Company, a subsidiary or an employee benefit plan
(or trust forming a part thereof) maintained by the Company or
a subsidiary, (ii) ownership of more than fifty percent (50%)
of the voting stock of the Company by Delta Air Lines, Inc. or
a subsidiary thereof, (iii) individuals who constitute the
Board on February 14, 1999 (the "Incumbent Board") cease for
any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to February 14,
1999, whose election or nomination for election was approved
by a vote of at least three-quarters of the directors
comprising the Incumbent Board (either by a specific vote or
by approval of the proxy statement of the Company in
-1-
<PAGE>
which such person is named as a nominee for director, without
objection to such nomination) shall be, for purpose of this
clause, considered as though such person were a member of the
Incumbent Board; provided, however, that no individual
initially elected or nominated as a director of the Company as
a result of an actual or threatened election contest with
respect to directors of any other actual or threatened
solicitation of proxies or consents by or on behalf of any
person other than the Board shall be deemed to be a member of
the Incumbent Board, (iv) the sale or disposition of all or
substantially all of the assets of the Company, (v)
consummation of a reorganization, merger or consolidation or
similar form of corporate transaction involving the Company,
unless, immediately following such transaction more than 50%
of the total voting power of the publicly traded corporation
resulting from such transaction eligible to elect directors of
such corporation would be represented by shares that were
Company voting stock immediately prior to such transaction,
and such voting power would be in substantially the same
proportion as the voting power of such Company voting stock
immediately prior to the transaction, or (vi) approval by the
Board of any tender offer for shares of voting stock of the
Company. Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any person
acquires beneficial ownership of more than 25% of the Company
voting stock as a result of the acquisition of Company voting
stock by the Company which reduces the number of Company
voting stock outstanding; provided, that if after such
-------- ----
acquisition by the Company such person becomes the beneficial
owner of additional Company voting stock that increases the
percentage of outstanding Company voting stock beneficially
owned by such person, a Change in Control of the Company shall
then occur.
-2-
<PAGE>
IN WITNESS WHEREOF, ASA Holdings, Inc. and Atlantic Southeast
Airlines, Inc. have caused this Amendment to the Plan to be executed by its duly
authorized officer this ____ day of February 1999.
EMPLOYER:
ASA HOLDINGS, INC.
By: /s/ Authorized Officer
-----------------------------
Title: (Signature illegible)
-----------------------------
Atlantic Southeast Airlines, Inc.
By: /s/ Authorized Officer
-----------------------------
Title: (Signature illegible)
-----------------------------
-3-
<PAGE>
EXHIBIT 14
STOCK AGREEMENT
THIS STOCK AGREEMENT (the "Agreement") is made and executed this 17th
day of March, 1997, by and among DELTA AIR LINES, INC., a Delaware corporation
("Delta"), DELTA AIR LINES HOLDINGS, INC., a Delaware corporation ("Delta
Holdings"), ATLANTIC SOUTHEAST AIRLINES, INC., a Georgia corporation
("Airlines), and ASA HOLDINGS, INC., a Georgia corporation ("ASA Holdings").
WHEREAS, Delta previously acquired capital stock in Airlines pursuant
to that certain Stock Purchase Agreement dated May 28, 1986, between Delta and
Airlines (the "Purchase Agreement");
WHEREAS, Delta has previously assigned all its right, title and
interest in and to any and all capital stock owned by Delta in Airlines to Delta
Holdings, whereupon Delta ceased to be a shareholder of record of Airlines and
currently is not a shareholder of record of any capital stock in or to Airlines
or ASA Holdings; and
WHEREAS, effective 11:59 p.m. E.S.T. on December 31, 1996, Airlines
undertook a reorganization transaction (the "Subject Transaction") pursuant to
which Airlines has become a wholly owned subsidiary of ASA Holdings; and
WHEREAS, under the Subject Transaction, all capital stock owned of
record by Delta Holdings in Airlines was automatically converted to the same
number of shares of capital stock in ASA Holdings, whereupon Delta Holdings
ceased to own of record any capital stock in Airlines; and
WHEREAS, the parties desire to (i) set forth herein the applicable
terms, conditions and other provisions originally contained under the Purchase
Agreement which shall apply as between Delta and Delta Holdings, as applicable,
on the one hand, and ASA Holdings, on the other, with respect to all capital
stock now owned or hereafter acquired by Delta Holdings in ASA Holdings (the
"Subject Stock") and (ii) except as noted in subclause (i), terminate in its
entirety the Purchase Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
I. RECITALS.
All parties acknowledge and agree that all of the foregoing recitals are
true and correct.
<PAGE>
II. TERMINATION.
In accordance with Section 7.8 of the Purchase Agreement, the parties
acknowledge and agree that the Purchase Agreement is hereby amended in its
entirety as hereinafter provided.
III COVENANTS.
3.1 ASA Holdings' Board of Directors. ASA Holdings agrees that, if Delta
or Delta Holdings shall so request, (i) as promptly as practicable, ASA Holdings
will take such action as may be necessary to cause the election to ASA Holdings'
Board of Directors of two designees selected by Delta or Delta Holdings and
reasonably acceptable to ASA Holdings and (ii) for as long as Delta or Delta
Holdings owns at least 10% of the outstanding common stock of ASA Holdings, ASA
Holdings will include at least two designees of Delta or Delta Holdings
reasonably acceptable to ASA Holdings on the slate of nominees for election as
directors nominated by the ASA Holdings' Board of Directors and will use its
reasonable best efforts to assure that such individuals are elected to ASA
Holdings' Board of Directors (including, without limitation, by soliciting
proxies in favor of their election).
3.2 Equity Accounting. ASA Holdings will furnish to Delta and Delta
Holdings all information that is required by generally accepted accounting
principles to enable Delta and Delta Holdings to account for its investment in
ASA Holdings pursuant to the equity method if Delta or Delta Holdings elects or
is required by generally accepted accounting principles to do so. To the extent
reasonably requested by Delta or Delta Holdings, ASA Holdings will, and will
cause its employees, independent public accountants and other representatives
to, provide information regarding ASA Holdings to, and otherwise cooperate with,
Delta and Delta Holdings so as to enable Delta and Delta Holdings to prepare
financial statements in accordance with generally accepted accounting principles
and to comply with its reporting requirements and other disclosure obligations
under applicable federal securities laws and regulations.
3.3 Registration Rights.
(a) Demand Rights. If, at any time Delta Holdings shall desire to sell
any or all of the Subject Stock, or any "New Securities" (as defined in Section
3.4 hereof) acquired by Delta Holdings pursuant to Section 3.4 hereof (for
purposes of this Section 3.3, the "Subject Stock" shall include such New
Securities), under circumstances requiring registration under the Securities Act
of 1933, as amended (the "Securities Act"), and shall so advise ASA Holdings by
written notice (which notice shall specify the number of shares of the Subject
Stock proposed to be sold, describe the method of proposed sale and contain an
undertaking by Delta Holdings to provide all such information and to take all
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such action as may be required in order to permit ASA Holdings to comply with
all applicable requirements of the Securities and Exchange Commission (the
"SEC") and to obtain acceleration of the effective date of such registration
statement), ASA Holdings shall promptly prepare and file a registration
statement with the SEC relating to such Subject Stock designated in such notice
and use its reasonable best efforts to cause such registration statement to
become effective and remain effective for a period of not less than six months
(or such lesser period as the parties may agree); provided, however, that ASA
Holdings shall not be obligated to effect more than three such registrations. If
the plan of distribution specified by Delta Holdings with respect to any such
registration involves the selection of a managing underwriter or underwriters,
such managing underwriter or underwriters shall be chosen by Delta Holdings,
subject to the reasonable approval of ASA Holdings. In connection with any such
registration, ASA Holdings will make such filings, and will use its reasonable
best efforts to cause such filings to become effective, so that the Subject
Stock proposed to be sold shall be registered or qualified for sale under the
securities or Blue Sky laws of such jurisdictions as shall be reasonably
appropriate for the distribution of the Subject Stock covered by the
registration statement; provided, however, that ASA Holdings shall not be
required to register as a broker or dealer in any jurisdiction where it is not
then so registered or to qualify to do business as a foreign corporation in any
jurisdiction where it is not then so qualified or to file any general consent to
service of process.
(b) Piggyback Rights. If, at any time ASA Holdings shall propose the
registration under the Securities Act of an underwritten offering of shares of
capital stock, ASA Holdings shall give written notice to Delta and Delta
Holdings of such proposed registration and will use its reasonable best efforts
to include in such registration such number of shares of the Subject Stock as
Delta Holdings shall request in writing within 15 days after receipt of ASA
Holdings' notice and to cause such Subject Stock to be offered to the public on
the same terms (including the method of distribution and, in the case of shares
of the same class of stock, the offering price) applicable to the other shares
of capital stock to be included in such offering; provided, however, that if the
managing underwriter or underwriters of such offering shall determine in good
faith and so advise ASA Holdings in writing that the number of shares of capital
stock proposed to be sold in such offering (including the shares of the Subject
Stock proposed to be sold by Delta Holdings) exceeds the number which can be
sold in such offering, ASA Holdings shall be required to include in such
offering only such number of shares of the Subject Stock, which, when added to
the number of shares of capital stock proposed to be sold by ASA Holdings in
such offering, can, in the good faith judgment of the managing underwriter or
underwriters, be sold without adversely affecting the success of the offering
(it being understood, however, that if other holders of capital stock of ASA
Holdings shall have requested the inclusion of their shares in such
registration, the number of shares held by Delta Holdings and the number of
shares of capital stock of ASA Holdings held by such other holders to be
included in such offering shall be determined on a pro-rata basis).
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(c) Expenses. ASA Holdings shall pay all fees and expenses in connection
with any registration effected pursuant to this Section 3.3, except for
underwriting discounts and commissions to brokers or dealers attributable to the
Subject Stock being sold by Delta Holdings and the fees and disbursements of any
counsel and accountants retained by Delta Holdings in connection with such
registration.
(d) Indemnification. In the case of any registration effected pursuant to
this Section 3.3, ASA Holdings and Delta Holdings will each provide the other
and any underwriter retained in connection therewith with customary indemnities.
3.4 Preemptive Rights.
(a) For so long as Delta Holdings owns at least 10% of the outstanding
common stock of ASA Holdings, if ASA Holdings proposes to issue any shares of
any class of its voting securities (such securities, together with any voting
securities which Delta Holdings has the right to acquire under this Section
3.4(a) upon the exercise of any employee stock options or upon the issuance of
any voting securities for consideration other than cash, hereinafter
collectively referred to as the "New Securities"), ASA Holdings shall promptly
advise Delta and Delta Holdings in writing of the terms on which the New
Securities are to be issued. Delta Holdings shall have the right, which may be
exercised at any time within 30 days following such notice, to acquire on the
same terms and conditions as such proposed issuance (or, in the case of the
issuance of any New Securities upon the exercise of any employee stock options,
at the market price of such securities on the date of exercise, or in the case
of the issuance of any New Securities for consideration other than cash, at a
cash price equal to the fair market value of such non-cash consideration on the
date the ASA Holdings first agrees to issue such New Securities) its pro rata
share of the New Securities. Delta Holdings' pro rata share of the New
Securities shall be determined by multiplying the total number of New Securities
by a fraction, the numerator of which is the total number of votes represented
by the voting securities then owned by Delta Holdings and the denominator of
which is the total number of votes represented by all of the then outstanding
voting securities.
(b) Notwithstanding the foregoing, ASA Holdings need not notify Delta and
Delta Holdings of the issuance of New Securities upon the exercise of employee
stock options or of any other issuances of New Securities which in the aggregate
represent less than 1% of the total number of votes represented by all then
outstanding voting securities, but shall notify Delta and Delta Holdings within
15 days after the end of each fiscal quarter of ASA Holdings (or more frequently
if requested by Delta Holdings) as to the number of shares of New Securities so
issued during such quarter. Delta Holdings' right under this Section 3.4 to
purchase its pro rata share of New Securities may, at the election of Delta
Holdings, be exercised at any time within 30 days following the notice given
pursuant to this Section 3.4(b) or such right to purchase New Securities after a
notice
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given pursuant to this Section 3.4(b) shall cumulate and may be carried forward
and exercised by Delta Holdings at the time of and together with the subsequent
purchase of additional New Securities by Delta Holdings pursuant to the next
notice received by Delta Holdings pursuant to Subsection (a) of this Section
3.4.
(c) For purposes of this Section 3.4, (i) the term "voting securities"
shall mean any securities of ASA Holdings entitled to vote generally in the
election of directors; (ii) the term "current market price" of any voting
securities shall mean, on the day in question, the last reported sale price
(regular way) on the principal national securities exchange on which such
securities are listed or admitted to trading, or if they are not listed or
admitted to trading on any national securities exchange, the average of the
closing bid and asked prices of such securities as reported through the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or any
comparable system, or if price quotations for such securities are not reported
through NASDAQ or a comparable system, the average of the closing bid and asked
prices of such securities as furnished by two members of the National
Association of Securities Dealers, selected from time to time by ASA Holdings
for that purpose; and (iii) the term "fair market value" of any non-cash
consideration on the date in question shall mean the fair market value of such
consideration as mutually agreed by ASA Holdings and Delta Holdings, or if such
parties are unable to agree, as determined by an investment banking firm
mutually agreeable to both parties. In the event that the parties are unable to
agree on an investment banking firm, then each party shall name its own
investment banking firm and such firms shall select a third investment banking
firm to determine the "fair market value" of any non-cash consideration. The
fees and expenses of such third investment banking firm shall be borne equally
by ASA Holdings and Delta Holdings.
3.5 Right of First Refusal. If at a time when Delta Holdings owns at
least 5% of the outstanding common stock of ASA Holdings, Delta Holdings
proposes to sell any voting securities (as described in Section 3.4(c)) then
owned by it either (i) to five or fewer persons pursuant to a registration
statement prepared as a result of Delta Holdings' exercise of its demand rights
under Section 3.3(a), or (ii) in a private sale without registration under the
Securities Act, Delta Holdings shall promptly advise ASA Holdings in writing of
the price and terms on which such voting securities are to be sold and, if
known, the intended purchaser of such voting securities. ASA Holdings shall
have the right, which may be exercised at any time within 30 days following such
notice, to acquire all, but not less than all, of the voting securities
proposed to be sold at the same price and on the same terms as such proposed
sale; provided, however, that if such price is payable in whole or in part in
consideration other than cash, the price payable by ASA Holdings shall be
payable in cash and shall be equal to the fair market value of such non-cash
consideration on the date Delta Holdings first agrees to sell such voting
securities, determined as provided in Section 3.4(c). If ASA Holdings does not
exercise its right to purchase the voting securities proposed to be sold, Delta
Holdings shall be free to sell
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<PAGE>
such voting securities at the same price and on the same terms contained in
Delta Holdings' written notice to ASA Holdings within the one hundred twenty
(120) day period following the expiration of ASA Holdings' thirty (30) day
exercise period.
3.6 Covenant to Satisfy Conditions. Each of the parties hereto will use
their respective reasonable best efforts, and cooperate with the other, to
ensure that the conditions set forth in Article III hereof are satisfied as
promptly as practicable.
IV. MISCELLANEOUS.
4.1 Brokers. ASA Holdings and Delta Holdings each represent and warrant
to the other that neither has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby. Delta Holdings and ASA Holdings each
agrees to indemnify and hold the other harmless from and against any and all
claims, liabilities or obligations with respect to any such fees or commissions
asserted by any person on the basis of any act or statement alleged to have been
made by such party.
4.2 Expenses. Each party shall pay its own expenses incurred in
connection with this Agreement and the transactions contemplated hereby.
4.3 Survival of Representations. All representations, warranties and
agreements made by ASA Holdings and Delta Holdings in this Agreement shall
survive the execution of this Agreement and the consummation of any transaction
contemplated herein and any investigation at any time made by or on behalf of
any party hereto.
4.4 Adjustments. In the event of any change in the common stock of ASA
Holdings by reason of stock dividend, split-up, recapitalization, combination,
exchange of shares or the like, the number and kind of shares subject to this
Agreement shall be appropriately adjusted.
4.5 Legend. The certificates representing the Subject Stock shall bear a
legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT OR (ii) AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT, AND IN COMPLIANCE WITH THE APPLICABLE LAWS
OF ANY STATE OR OTHER JURISDICTION. THE SALE, TRANSFER
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OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS ALSO SUBJECT TO RESTRICTIONS CONTAINED IN A
STOCK AGREEMENT DATED MARCH 17, 1997, AMONG DELTA AIR
LINES, INC., DELTA AIR LINES HOLDINGS, INC., ATLANTIC
SOUTHEAST AIRLINES, INC. AND ASA HOLDINGS, INC., A COPY OF
WHICH IS ON FILE AT THE OFFICE OF THE SECRETARY OF ASA
HOLDINGS, INC.
4.6 Entire Agreement. This Agreement contains the entire understanding
of the parties hereto with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings with
respect to the subject matter hereof other than those expressly set forth
herein. This Agreement supersedes all prior agreements and understandings
between all or any number of the parties with respect to its subject matter.
4.7 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
4.8 Amendment; Waiver. This Agreement may be amended only by a written
instrument duly executed by each of ASA Holdings, Airlines, Delta, and Delta
Holdings. To the extent permitted by law, any condition to a party's obligations
hereunder may be waived in writing by such party.
4.9 Parties in Interest. This Agreement will be binding upon, inure to
the benefit of and be enforceable by ASA Holdings, Airlines, Delta and Delta
Holdings and their respective successors and assigns. This Agreement may not be
assigned by the parties hereto, except that Delta Holdings may assign its rights
hereunder to Delta or to any directly or indirectly wholly owned subsidiary or
parent of Delta or Delta Holdings; provided, however, that no such assignment
shall relieve Delta Holdings of any of its obligations hereunder.
4.10 Specific Performance. ASA Holdings acknowledges and agrees that
Delta Holdings would not have an adequate remedy at law and would be irreparably
harmed in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that Delta Holdings shall be entitled to injunctive relief
to prevent breaches of this Agreement and to specifically enforce the terms and
provisions hereof, in addition to any other remedy to which it may be entitled,
at law or in equity.
4.11 Notices. All notices, claims, certificates, requests, demands and
other communications hereunder ("notices") will be given in writing and will be
deemed to
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have been duly given when hand-delivered or, if mailed, three days after being
mailed (registered or certified mail, postage prepaid, return receipt requested)
addressed as follows:
(a) If to Delta Holdings to:
Delta Air Lines Holdings, Inc.
Suite 1305
1105 North Market Street
Wilmington, Delaware 19801
Attention: Secretary
(b) If to Delta to:
Delta Air Lines, Inc.
Hartsfield Atlanta International Airport
1030 Delta Boulevard
Atlanta, Georgia 30320
Attention: Chief Executive Officer
copy to:
Senior Vice President-General Counsel & Secretary
Delta Air Lines, Inc.
Hartsfield Atlanta International Airport
1030 Delta Boulevard
Atlanta, Georgia 30320
(c) If to Airlines or ASA Holdings:
ASA Holdings, Inc.
100 Hartsfield Centre Parkway, Suite 800
Atlanta, Georgia 30354
Attn: John W. Beiser, President
copy to:
Altman, Kritzer & Levick, P.C.
6400 Powers Ferry Road
Suite 224
Atlanta, Georgia 30339
Attn: Craig H. Kritzer, Esq.
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<PAGE>
or, in either case, such other address as the person to whom notice is to be
given may have previously furnished to the others in the manner set forth above.
4.12 Governing Law. This Agreement will be governed by and construed
in accordance with the internal laws of the State of Georgia, without regard to
the principles of conflicts of law.
4.13 Counterparts. This Agreement may be executed simultaneously in
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same instrument.
(THE REMAINDER OF THIS IS INTENTIONALLY LEFT BLANK)
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
DELTA AIR LINES, INC.
By: /s/ Thomas J. Roeck, Jr.
---------------------------------
Title: Senior Vice President-Finance and
Chief Financial Officer
DELTA AIR LINES HOLDINGS, INC.
By: /s/ [SIGNATURE ILLEGIBLE]^^
---------------------------------
Title: Treasurer
ATLANTIC SOUTHEAST AIRLINES, INC.
By: /s/ John W. Beiser.
---------------------------------
Title: President
ASA HOLDINGS, INC.
By: /s/ John W. Beiser
---------------------------------
Title: President
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<PAGE>
EXHIBIT 15
FORM OF INDEMNITY AGREEMENT OF EXECUTIVE OFFICER
AGREEMENT, effective as of February ___, 1999, between ASA HOLDINGS, INC.,
a Georgia corporation (the "Company"), and ____________________ (the
"Indemnitee"), whose principal residence address is ___________________________.
WHEREAS, it is essential to the Company to retain and attract as officers
the most capable persons available; and
WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other Claims being asserted against officers of public companies
in today's environment; and
WHEREAS, damages sought by class action plaintiffs in some cases amount to
tens of millions of dollars and, whether or not the case is meritorious, the
cost of defending them is enormous with few individual officers having the
resources to sustain such legal costs, not to mention the risk of a judgment
running into millions even in cases where the defendant was neither culpable
nor profited personally to the detriment of the corporation; and
WHEREAS, Section 14-2-857 of the Georgia Business Corporation Code, under
which the Company is organized, empowers corporation to indemnify persons
serving as officers, employees or agents of the corporation, who are not
directors of the corporation, to the extent, consistent with public policy, that
may be provided by its Articles of Incorporation, Bylaws, general or specific
action of its board of directors, or contract; and
WHEREAS, the Bylaws of the Company require the Company to indemnify any
person who was or is a party or is threatened to made a party to a proceeding
by reason of the fact that he is or was a director or officer of the Company to
the maximum extent permitted by, and in the manner provided by, the Georgia
Business Corporation Code; and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's service to the
Company in an effective manner, the increasing difficulty in obtaining
satisfactory directors' and officers' liability insurance coverage, and in part
to provide Indemnitee with specific contractual assurance that indemnification
protection provided under the Company's Bylaws will be available to Indemnitee
(regardless of, among other things, any amendment to or revocation of the
Articles of Incorporation ("Articles") or Bylaws ("Bylaws") of the Company or
any change in the composition of the Company's Board of Directors or acquisition
transaction relating to the Company), the Company wishes to provide in this
Agreement for the indemnification of and the advancing of expenses to
Indemnitee to the full extent (whether partial or complete) authorized or
permitted by law and as set forth in this Agreement, and for the continued
coverage of Indemnitee under the Company's directors' and officers' liability
insurance policies; and
<PAGE>
WHEREAS, in order to induce Indemnitee to serve or continue to serve as an
executive officer, the Company has agreed to provide Indemnitee with the
benefits contemplated by this Agreement; and
WHEREAS, the Board of Directors is making no determination by this
Agreement that indemnification of Indemnitee for any particular act or omission
giving rise to a proceeding is permissible;
NOW, THEREFORE, in consideration of the premises and of Indemnitee agreeing
to serve or to continue to serve the Company directly or, at its request,
another enterprise, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Basic Indemnification Arrangement.
---------------------------------
a) In the event Indemnitee was, is, or becomes a party to or witness or
other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the full extent authorized or permitted by law as soon
as practicable but in any event no later than thirty (30) days after
written demand is presented to the Company, against any and all
Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable
in connection with or in respect of such Expenses, judgments, fines,
penalties or amounts paid in settlement) of such Claim; provided,
however, that, except for proceedings to enforce rights to
indemnification, the Company shall not be obligated to indemnify
Indemnitee in connection with a proceeding (or part thereof) initiated
by Indemnitee unless such proceeding (or part thereof) was authorized
in advance, or unanimously consented to, by the Board of Directors of
the Company; and provided further that the Company shall not be
obligated to indemnify Indemnitee hereunder for an Indemnifiable Event
which is not (i) authorized by the Company's Board of Directors or
(ii) otherwise within the authority of the Indemnitee. If so requested
by Indemnitee, the Company shall advance (within two (2) business days
of such request) any and all Expenses to Indemnitee (an "Expense
Advance").
b) Notwithstanding the foregoing, (i) the obligations of the Company
under Section 1(a) shall be subject to the condition that the
Reviewing Party shall not have determined (in a written opinion, in
any case in which the Independent Legal Counsel referred to in Section
2 hereof is involved) that Indemnitee would not be permitted to be
indemnified under applicable law, and (ii) the obligation of the
Company to make an Expense Advance pursuant to Section 1(a) shall be
subject to the condition that, if, when and to the extent that the
Reviewing Party determines that Indemnitee would not be permitted to
be so indemnified under applicable law, the Company shall be entitled
to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced or thereafter commences legal
proceedings in a court of competent jurisdiction to secure a
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<PAGE>
determination that Indemnitee should be indemnified under applicable
law, any determination made by the Reviewing Party that Indemnitee
would not be permitted to be indemnified under applicable law shall
not be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial determination
is made with respect thereto (as to which all rights of appeal
therefrom have been exhausted or lapsed). If there has not been a
Change in Control, the Reviewing Party shall be selected by the
Company's Board of Directors, and if there has been such a Change in
Control, the Reviewing Party shall be the Independent Legal Counsel
referred to in Section 2 hereof. If there has been no determination by
the Reviewing Party or if the Reviewing Party determines that
Indemnitee substantively would not be permitted to be indemnified in
whole or in part under applicable law, Indemnitee shall have the right
to commence litigation in any court in the State of Georgia having
subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof, including
the legal or factual bases therefor, and the Company hereby consents
to service of process and to appear in any such proceeding. Any
determination by the Reviewing Party otherwise shall be conclusive and
binding on the Company and Indemnitee.
c) No change in the Company's Article or Bylaws or in the Georgia
Business Corporation Code subsequent to the date of this Agreement
shall have the effect of limiting or eliminating the indemnification
available under this Agreement as to any act, omission or capacity for
which this Agreement provides indemnification at the time of such act,
omission or capacity. If any change after the date of this Agreement
in any applicable law, statute or rule expands the power of the
Company to indemnify the Indemnitee, such change shall to the same
extent expand the Indemnitee's rights and the Company's obligations
under this Agreement. If any change in any applicable law, statute or
rule diminishes the power of the Company to Indemnify the Indemnitee,
such change, except to the extent otherwise required by law, statute
or rule to be applied to this Agreement, shall have no effect on this
Agreement or the parties' rights and obligations hereunder.
2. Change in Control. The Company agrees that if there is a Change in Control
-----------------
of the Company, then with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnity payments and Expense Advances under this
Agreement or any other agreement, or any Article or Bylaw provision now or
hereinafter in effect relating to Claims for Indemnifiable Events, the Company
shall seek legal advice only from Independent Legal Counsel selected by
Indemnitee and approved by the Company (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall render its written opinion to
the Company and Indemnitee as to whether and to what extent the Indemnitee would
be permitted to be indemnified under applicable law. The Company agrees to pay
the reasonable fees of the Independent Legal Counsel referred to above and to
fully indemnify such counsel against any and all expenses (including attorneys'
fees), claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
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<PAGE>
3. Indemnification for Additional Expenses. The Company shall indemnify
---------------------------------------
Indemnitee against any and all expenses (including attorneys' fees) and, if
requested by Indemnitee, shall (within two (2) business days of such request)
advance such expenses to Indemnitee, which are incurred by Indemnitee in
connection with any action brought by Indemnitee for (i) indemnification or
advance payment of Expenses by the Company under this Agreement or any other
agreement, or any Article or Bylaw provision now or hereafter in effect relating
to Claims Indemnifiable Events and/or (ii) recovery under any directors' and
officers' liability insurance policies maintained by the Company, provided,
however, that if there is a final judicial determination (as to which all rights
of appeal therefrom have been exhausted or lapsed) that Indemnitee is not
entitled to such indemnification, advance payment of expenses or insurance
recovery, Indemnitee shall reimburse the Company for all such expenses
theretofore paid under this Section 3.
4. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of
----------------------
this Agreement to indemnification by the Company for some or a portion of the
Expenses, judgments, fines, penalties and amounts paid in settlement of a Claim
but not, however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is
entitled. Moreover, notwithstanding any other provision of this Agreement, to
the extent that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including dismissal without
prejudice, Indemnitee shall be indemnified against all Expenses incurred in
connection with such Claims as to which Indemnitee has been successful.
5. Burden of Proof. In connection with any determination by the Reviewing
---------------
Party or otherwise as to whether Indemnitee is entitled to be indemnified
hereunder, the burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.
6. No Presumptions. For purposes of this Agreement, the termination of any
---------------
claim, action, suit or proceeding by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law. In addition,
neither the failure of the Reviewing Party to have made a determination as to
whether Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by a Reviewing Party that
Indemnitee has not met such standard of conduct or did not have such belief,
prior to the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified under applicable
law shall be a defense to Indemnitee's claim or create a presumption that
Indemnitee has not met any particular standard of conduct or did not have any
particular belief.
7. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in
-------------------
addition to any other rights Indemnitee may have under the Articles, Bylaws or
the Georgia Business Corporation Code or otherwise. To the extent that a change
in the Georgia Business Corporation Code (whether by statute or judicial
decision) permits greater indemnification by agreement than would be afforded
currently under
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<PAGE>
the Articles, Bylaws and this Agreement, it is the intent of the parties hereto
that Indemnitee shall enjoy by this Agreement the greater benefits so afforded
by such change.
8. Liability Insurance.
-------------------
a) The Company hereby represented and warrants that the Company has
purchased and maintains directors' and officers' liability insurance
consisting of a primary policy issued by Federal Insurance Company
through Chubb Group of Insurance Companies under existing policy
number 8152-98-71 EPP providing $15,000,000.00 in aggregate coverage
and an excess directors' and officers' liability insurance consisting
of a supplemental policy issued by American Casualty Company of
Reading, PA, through CNA Insurance Companies under existing policy
number 169550701 providing $15,000,000.00 in aggregate coverage (the
"D&O Insurance").
b) The Company hereby covenants and agrees that, so long as Indemnitee
shall continue to serve as an executive officer of the Company and
thereafter so long as Indemnitee shall be subject to any possible
Claim or threatened, pending or completed action, suit or proceeding,
whether civil, criminal or investigative, by reason of the fact that
Indemnitee was an executive officer of the Company, the Company shall
maintain in full force and effect the D&O Insurance, or substantially
equivalent insurance coverage.
c) In all policies of D&O Insurance, Indemnitees shall be named as an
insured in such manner as to provide Indemnitee the same rights and
benefits, subject to the same limitations, as are accorded to the
Company's directors or officers most favorably insured by such policy.
9. Period of Limitations. No legal action shall be brought and no cause of
---------------------
action shall be asserted by or in the right of the Company against Indemnitee,
Indemnitee's spouse, heirs, executors or personal or legal representatives after
the expiration of two (2) years from the date of accrual of such cause of
action, and any Claim or cause of action of the Company shall be extinguished
and deemed released unless asserted by the timely filing of a legal action
within such two (2) year period; provided, however, that if any shorter period
of limitations is otherwise applicable to any such cause of action such shorter
period shall govern.
10. Notices
-------
a) The Indemnitee shall give to the Company notice in writing as soon as
practicable of any Claim made against him for which indemnification
will or could be sought under this Agreement. Failure to give such
notice shall not be cause for the Company not to indemnify
Indemnitee or advance Expenses unless the Company can demonstrate that
it was prejudiced by such failure.
-5-
<PAGE>
b) Notices shall be in writing and shall be either personally delivered
or sent by Federal Express or other reputable overnight courier for
next business day delivery, or sent by certified mail, return receipt
requested, addressed as follows:
If to the Company: ASA Holdings, Inc.
100 Hartsfield Centre Parkway
Suite 800
Atlanta, Georgia 30354
Attn: Chief Executive Officer
If to the Indemnitee: at Indemnitee's address stated above
or at such other address as from time to time designated by written notice
delivered in accordance herewith. Any notice personally served shall be deemed
delivered on the date of such service. Any notice sent by overnight courier as
provided above shall be deemed delivered on the first business day after the
date such notice was actually delivered by such overnight courier or refused.
Any notice sent by mail as provided above shall be deemed delivered on the date
of actual receipt or refusal thereof.
11. Amendments, Etc. No supplement, modification or amendment of this Agreement
----------------
shall be binding unless executed in writing by both of the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any othe provisions hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement, the Company
-----------
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
13. No Duplication of Payments. The Company shall not be liable under this
--------------------------
Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, the Articles, Bylaws or otherwise) of the amounts
otherwise indemnifiable hereunder.
14. Binding Effect, Etc. This Agreement shall be binding upon and inure to the
--------------------
benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company, spouses, heirs, executors and personal and legal
representatives. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an executive officer of the Company.
15. Severability. The provisions of this Agreement shall be severable in the
------------
event that any of the provisions hereof (including any provision within a single
section, paragraph or sentence) is held by a
-6-
<PAGE>
court of competent jurisdiction to be invalid, void or otherwise unenforceable
in any respect, and the validity and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any
way impaired and shall remain enforceable to the full extent permitted by law.
16. Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of Georgia applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws.
17. Certain Definitions.
-------------------
a) Change in Control. For purposes of this Agreement, a Change in Control
-----------------
shall mean the occurrence of any one or more of the following events:
(i) acquisition of at least twenty-five percent (25%) of the voting
stock of the Company by any single entity or group other than Delta
Air Lines, Inc. or a subsidiary thereof, the Company, a subsidiary or
an employee benefit plan (or trust forming a part hereof or a trustee
thereof acting solely in its capacity as trustee) maintained by the
Company or a subsidiary, (ii) ownership of more than fifty percent
(50%) of the voting stock of the Company by Delta Air Lines, Inc. or a
subsidiary thereof, (iii) individuals who constitute the Board on
February 14, 1999 (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof; provided that any person
becoming a director subsequent to February 14, 1999, whose election or
nomination for election was approved by a vote of at least three-
quarters of the directors comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statements of the Company in
which such person is named as a nominee for director, without
objection to such nomination) shall be, for purposes of this clause,
considered as though such person were a member of the incumbent Board;
provided, however, that no individual initially elected or nominated
-------- -------
as a director of the Company as a result of an actual or threatened
election contest with respect to directors of any other actual or
threatened solicitation of proxies or consents by or on behalf of any
person other than the board shall be deemed to be a member of the
incumbent Board, (iv) the sale or disposition of all or substantially
all of the assets of the Company, or (v) consummation of a
reorganization, merger or consolidation or similar form of corporate
transaction involving the Company, unless, immediately following such
transaction more than 50% of the total voting power of the publicly
traded corporation resulting from such transaction eligible to elect
directors of such corporation would be represented by shares that were
Company voting stock immediately prior to such transaction, and such
voting power would be in substantially the same proportion as the
voting power of such Company voting stock immediately prior to the
transaction. Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur solely because any person acquires beneficial
ownership of more than 25% of the Company voting stock as a result of
the acquisition of the Company voting stock by the Company which
reduces the number of Company voting stock outstanding; provided, that
-------- ----
if after such acquisition by the
-7-
<PAGE>
Company such person becomes the beneficial owner of additional Company
voting stock that increases the percentage of outstanding Company voting
stock beneficially owned by such person, a Change in Control of the Company
shall then occur.
b) Claim: any threatened, pending or completed action, suit or proceeding, or
-----
any inquiry or investigation, whether instituted by or in the right of the
Company or any other party, that Indemnitee in good faith believes might
lead to the institution of any such action, suit or proceeding, whether
civil, criminal, administrative, investigative or other, arising in
connection with an Indemnifiable Event.
c) Expenses: include attorneys' fees and all other costs, expenses and
--------
obligations paid or incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal), or preparing
to defend, be a witness in or participate in any Claim relating to any
Indemnifiable Event.
d) Indemnifiable Event: any event or occurrence related to the fact that
-------------------
Indemnitee is or was an executive officer of the Company, or is or was
serving at the request of the Company as a director, officer, or trustee of
another corporation, trust or other enterprise, or by reason of anything
done or not done by Indemnitee in any such capacity.
e) Independent Legal Counsel: an attorney or firm of attorneys, selected in
-------------------------
accordance with the provisions of Section 2, who shall not have otherwise
performed services for the Company or Indemnitee within the last five (5)
years.
f) Reviewing Party: any appropriate person or body consisting of a member of
---------------
members of the Company's Board of Directors or any other person or body
appointed by the Board who is not a party to the particular Claim for which
Indemnitee is seeking indemnification, or Independent Legal Counsel.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
_____ day of ____________, 1999.
ASA HOLDINGS, INC.
By: ____________________________________
Name:
Title:
___________________________________
Indemnitee
-9-
<PAGE>
EXHIBIT 16
FORM OF INDEMNITY AGREEMENT OF DIRECTOR
AGREEMENT, effective as of February ___, 1999, between ASA HOLDINGS, INC.,
a Georgia corporation (the "Company"), and ________________ (the "Indemnitee"),
whose principal residence address is __________________________________________.
WHEREAS, it is essential to the Company to retain and attract as directors
the most capable persons available; and
WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other Claims being asserted against directors of public companies
in today's environment; and
WHEREAS, damages sought by class action plaintiffs in some cases amount to
tens of millions of dollars and, whether or not the case is meritorious, the
cost of defending them is enormous with few individual directors having the
resources to sustain such legal costs, not to mention the risk of a judgment
running into millions even in cases where the defendant was neither culpable nor
profited personally to the detriment of the corporation; and
WHEREAS, Section 14-2-851 of the Georgia Business Corporation Code, under
which the Company is organized, empowers corporations to indemnify persons
serving as a director of the corporation or a person who serves at the request
of the corporation as a director, trustee, officer, partner, employee or agent
of another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise; and
WHEREAS, the Bylaws of the Company require the Company to indemnify any
person who was or is a party or is threatened to made a party to a proceeding by
reason of the fact that he is or was a director or officer of the Company to the
maximum extent permitted by, and in the manner provided by, the Georgia Business
Corporation Code; and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's service to the
Company in an effective manner, the increasing difficulty in obtaining
satisfactory directors' and officers' liability insurance coverage, and in part
to provide Indemnitee with specific contractual assurance that indemnification
protection provided under the Company's Bylaws will be available to Indemnitee
(regardless of, among other things, any amendment to or revocation of the
Articles of Incorporation ("Articles") or Bylaws ("Bylaws") of the Company or
any change in the composition of the Company's Board of Directors or acquisition
transaction relating to the Company), the Company wishes to provide in this
Agreement for the indemnification of and the advancing of expenses to Indemnitee
to the full extent (whether partial or complete) authorized or permitted by law
and as set forth in this Agreement, and for the continued coverage of Indemnitee
under the Company's directors' and officers' liability insurance policies; and
<PAGE>
WHEREAS, in order to induce Indemnitee to serve or continue to serve as a
director, the Company has agreed to provide Indemnitee with the benefits
contemplated by this Agreement; and
WHEREAS, the Board of Directors is making no determination by this
Agreement that indemnification of Indemnitee for any particular act or omission
giving rise to a proceeding is permissible because Indemnitee has met the
relevant standard of conduct set forth in Section 14-2-851 of the Georgia
Business Corporation Code;
NOW, THEREFORE, in consideration of the premises and of Indemnitee agreeing
to serve or to continue to serve the Company directly or, at its request,
another enterprise, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Basic Indemnification Arrangement.
---------------------------------
a) In the event Indemnitee was, is, or becomes a party to or witness or
other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the full extent authorized or permitted by law as soon
as practicable but in any event no later than thirty (30) days after
written demand is presented to the Company, against any and all
Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable
in connection with or in respect of such Expenses, judgments, fines,
penalties or amounts paid in settlement) of such Claim; provided,
however, that, except for proceedings to enforce rights to
indemnification, the Company shall not be obligated to indemnify
Indemnitee in connection with a proceeding (or part thereof) initiated
by Indemnitee unless such proceeding (or part thereof) was authorized
in advance, or unanimously consented to, by the Board of Directors of
the Company. If so requested by Indemnitee, the Company shall advance
(within two (2) business days of such request) any and all Expenses to
Indemnitee (an "Expense Advance").
b) Notwithstanding the foregoing, (i) the obligations of the Company
under Section 1(a) shall be subject to the condition that the
Reviewing Party shall not have determined (in a written opinion, in
any case in which the Independent Legal Counsel referred to in Section
2 hereof is involved) that Indemnitee would not be permitted to be
indemnified under applicable law, and (ii) the obligation of the
Company to make an Expense Advance pursuant to Section 1(a) shall be
subject to the condition that, if, when and to the extent that the
Reviewing Party determines that Indemnitee would not be permitted to
be so indemnified under applicable law, the Company shall be entitled
to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced or thereafter commences legal
proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable
law, any
-2-
<PAGE>
determination made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect thereto
(as to which all rights of appeal therefrom have been exhausted or lapsed).
If there has not been a Change in Control, the Reviewing Party shall be
selected by the Company's Board of Directors, and if there has been such a
Change in Control, the Reviewing Party shall be the Independent Legal
Counsel referred to in Section 2 hereof. If there has been no determination
by the Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or in part
under applicable law, Indemnitee shall have the right to commence
litigation in any court in the State of Georgia having subject matter
jurisdiction thereof and in which venue is proper seeking an initial
determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of process and to
appear in any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and Indemnitee.
c) No change in the Company's Articles or Bylaws or in the Georgia Business
Corporation Code subsequent to the date of this Agreement shall have the
effect of limiting or eliminating the indemnification available under this
Agreement as to any act, omission or capacity for which this Agreement
provides indemnification at the time of such act, omission or capacity.
d) Any change in the Company's Articles or Bylaws subsequent to the date of
this Agreement which expands the power of the Company to indemnify its
directors shall to the same extent expand the Indemnitee's rights and the
Company's obligations under this Agreement.
e) If the Articles of Incorporation or Bylaws of any corporation which is a
successor to the Company provide more extensive power to such corporation
to indemnify the directors of the Company, then the provisions of such
successor corporation's Articles of Incorporation or Bylaws shall expand
the Indemnitee's rights and the Company's obligations under this Agreement.
f) If any change after the date of this Agreement in any applicable law,
statute or rule expands the power of the Company to indemnify the
Indemnitee, such change shall to the same extent expand the Indemnitee's
rights and the Company's obligations under this Agreement.
g) If any change in any applicable law, statute or rule diminishes the power
of the Company to indemnify the Indemnitee, such change, except to the
extent otherwise
-3-
<PAGE>
required by law, statute or rule to be applied to this Agreement,
shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
2. Change in Control. The Company agrees that if there is a Change in Control
-----------------
of the Company, then with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnity payments and Expense Advances under this
Agreement or any other agreement, or any Article or Bylaw provision now or
hereinafter in effect relating to Claims for Indemnifiable Events, the Company
shall seek legal advice only from Independent Legal Counsel selected by
Indemnitee and approved by the Company (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall render its written opinion to
the Company and Indemnitee as to whether and to what extent the Indemnitee would
be permitted to be indemnified under applicable law. The Company agrees to pay
the reasonable fees of the Independent Legal Counsel referred to above and to
fully indemnify such counsel against any and all expenses (including attorneys'
fees), claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
3. Indemnification for Additional Expenses. The Company shall indemnify
---------------------------------------
Indemnitee against any and all expenses (including attorneys' fees) and, if
requested by Indemnitee, shall (within two (2) business days of such request)
advance such expenses to Indemnitee, which are incurred by Indemnitee in
connection with any action brought by Indemnitee for (i) indemnification or
advance payment of Expenses by the Company under this Agreement or any other
agreement, or any Article or Bylaw provision now or hereafter in effect relating
to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and
officers' liability insurance policies maintained by the Company; provided,
however, that if there is a final judicial determination (as to which all rights
of appeal therefrom have been exhausted or lapsed) that Indemnitee is not
entitled to such indemnification, advance payment of expenses or insurance
recovery, Indemnitee shall reimburse the Company for all such expenses
theretofore paid under this Section 3.
4. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of
----------------------
this Agreement to indemnification by the Company for some or a portion of the
Expenses, judgments, fines, penalties and amounts paid in settlement of a
Claim but not, however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is
entitled. Moreover, notwithstanding any other provision of this Agreement, to
the extent that Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an Indemnifiable
Event or in defense of any issue or matter therein, including dismissal without
prejudice, Indemnitee shall be indemnified against all Expenses incurred in
connection with such Claims as to which Indemnitee has been successful.
5. Burden of Proof. In connection with any determination by the Reviewing
---------------
Party or otherwise as to whether Indemnitee is entitled to be indemnified
hereunder, the burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.
-4-
<PAGE>
6. No Presumptions. For purposes of this Agreement, the termination of any
---------------
claim, action, suit or proceeding by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law. In addition,
neither the failure of the Reviewing Party to have made a determination as to
whether Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by a Reviewing Party that
Indemnitee has not met such standard of conduct or did not have such belief,
prior to the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified under applicable
law shall be a defense to Indemnitee's claim or create a presumption that
Indemnitee has not met any particular standard of conduct or did not have any
particular belief.
7. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in
--------------------
addition to any other rights Indemnitee may have under the Articles, Bylaws or
the Georgia Business Corporation Code or otherwise. To the extent that a change
in the Georgia Business Corporation Code (whether by statute or judicial
decision) permits greater indemnification by agreement than would be afforded
currently under the Articles, Bylaws and this Agreement, it is the intent of the
parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change.
8. Liability Insurance.
-------------------
a) The Company hereby represents and warrants that the Company has
purchased and maintains directors' and officers' liability insurance
consisting of a primary policy issued by Federal Insurance Company
through Chubb Group of Insurance Companies under existing policy
number 8152-98-71 EPP providing $15,000,000.00 in aggregate coverage
and an excess directors' and officers' liability insurance consisting
of a supplemental policy issued by American Casualty Company of
Reading, PA, through CNA Insurance Companies under existing policy
number 169550701 providing $15,000,000.00 in aggregate coverage (the
"D&O Insurance").
b) The Company hereby covenants and agrees that, so long as Indemnitee
shall continue to serve as a director of the Company and thereafter so
long as Indemnitee shall be subject to any possible Claim or
threatened, pending or completed action, suit or proceeding, whether
civil, criminal or investigative, by reason of the fact that
Indemnitee was a director of the Company, the Company shall maintain
in full force and effect the D&O Insurance, or substantially
equivalent insurance coverage.
c) In all policies of D&O Insurance, Indemnitee shall be named as an
insured in such manner as to provide Indemnitee the same rights and
benefits, subject to the same limitations, as are accorded to the
Company's directors or officers most favorably insured by such policy.
-5-
<PAGE>
9. Period of Limitations. No legal action shall be brought and no cause of
---------------------
action shall be asserted by or in the right of the Company against Indemnitee,
Indemnitee's spouse, heirs, executors or personal or legal representatives after
the expiration of two (2) years from the date of accrual of such cause of
action, and any Claim or cause of action of the Company shall be extinguished
and deemed released unless asserted by the timely filing of a legal action
within such two (2) year period; provided, however, that if any shorter period
of limitations is otherwise applicable to any such cause of action such shorter
period shall govern.
10. Notices
-------
a) The Indemnitee shall give to the Company notice in writing as soon as
practicable of any Claim made against him for which indemnification
will or could be sought under this Agreement. Failure to give such
notice shall not be cause for the Company not to indemnify
Indemnitee or advance Expenses unless the Company can demonstrate that
it was prejudiced by such failure.
b) Notices shall be in writing and shall be either personally delivered
or sent by Federal Express or other reputable overnight courier for
next business day delivery, or sent by certified mail, return receipt
requested, addressed as follows:
If to be the Company: ASA Holdings, Inc.
100 Hartsfield Centre Parkway
Suite 800
Atlanta, Georgia 30354-1356
Attn: Chief Executive Officer
If to the Indemnitee: at Indemnitee's address stated above
or at such other address as from time to time designated by written notice
delivered in accordance herewith. Any notice personally served shall be deemed
delivered on the date of such service. Any notice sent by overnight courier as
provided above shall be deemed delivered on the first business day after the
date such notice was actually delivered by such overnight courier or refused.
Any notice sent by mail as provided above shall be deemed delivered on
the date of actual receipt or refusal thereof.
11. Amendments, Etc. No supplement, modification or amendment of this Agreement
----------------
shall be binding unless executed in writing by both of the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement, the Company
-----------
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers
-6-
<PAGE>
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Company
effectively to bring suit to enforce such rights.
13. No Duplication of Payments. The Company shall not be liable under this
--------------------------
Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, the Articles, Bylaws or otherwise) of the amounts
otherwise indemnifiable hereunder.
14. Binding Effect Etc. This Agreement shall be binding upon and inure to the
------------------
benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company, spouses, heirs, executors and personal and legal
representatives. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as a director of the Company.
15. Severability. The provisions of this Agreement shall be severable in the
------------
event that any of the provisions hereof (including any provision within a single
section, paragraph or sentence) is held by a court of competent jurisdiction to
be invalid, void or otherwise unenforceable in any respect, and the validity and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired and shall remain enforceable
to the full extent permitted by law.
16. Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of Georgia applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws.
17. Certain Definitions.
-------------------
a) Change in Control: shall mean the occurrence of any one or more of the
-----------------
following events: (i) acquisition of at least twenty-five percent
(25%) of the voting stock of the Company by any single entity or group
other than Delta Air Lines, Inc. or a subsidiary thereof, the Company,
a subsidiary or an employee benefit plan (or trust forming a part
hereof or a trustee thereof acting solely in its capacity as trustee)
maintained by the Company or a subsidiary, (ii) ownership of more than
fifty percent (50%) of the voting stock of the Company by Delta Air
Lines, Inc. or a subsidiary thereof, (iii) individuals who constitute
the Board on February 14, 1999 (the "Incumbent Board") cease for any
reason to constitute at least a majority thereof, provided that any
person becoming a director subsequent to February 14, 1999, whose
election or nomination for election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board (either
by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for director,
without objection to such nomination) shall be, for purposes of this
clause, considered as though such person were a member of the
incumbent Board; provided, however, that no individual initially
-------- -------
elected or nominated as a director of the Company as a result of an
actual or threatened election
-7-
<PAGE>
contest with respect to directors of any other actual or threatened
solicitation of proxies or consents by or on behalf of any person other
than the board shall be deemed to be a member of the incumbent Board, (iv)
the sale or disposition of all or substantially all of the assets of the
Company, or (v) consummation of a reorganization, merger or consolidation
or similar form of corporate transaction involving the Company, unless,
immediately following such transaction more than 50% of the total voting
power of the publicly traded corporation resulting from such transaction
eligible to elect directors of such corporation would be represented by
shares that were Company voting stock immediately prior to such
transaction, and such voting power would be in substantially the same
proportion as the voting power of such Company voting stock immediately
prior to the transaction. Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur solely because any person acquires
beneficial ownership of more than 25% of the Company voting stock as a
result of the acquisition of the Company voting stock by the Company which
reduces the number of Company voting stock outstanding; provided, that if
-------- ----
after such acquisition by the Company such person becomes the beneficial
owner of additional Company voting stock that increases the percentage of
outstanding Company voting stock beneficially owned by such person, a
Change in Control of the Company shall then occur.
b) Claim: any threatened, pending or completed action, suit or proceeding,
-----
or any inquiry or investigation, whether instituted by or in the right of
the Company or any other party, that Indemnitee in good faith believes
might lead to the institution of any such action, suit or proceeding,
whether civil, criminal, administrative, investigative or other.
c) Expenses: include attorneys' fees and all other costs, expenses and
--------
obligations paid or incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal), or preparing
to defend, be a witness in or participate in any Claim relating to any
Indemnifiable Event.
d) Indemnifiable Event: any event or occurrence related to the fact that
-------------------
Indemnitee is or was a director of the Company, or is or was serving at the
request of the Company as a director, officer, or trustee of another
corporation, trust or other enterprise, or by reason of anything done or
not done by Indemnitee in any such capacity.
e) Independent Legal Counsel: an attorney or firm of attorneys, selected in
-------------------------
accordance with the provisions of Section 2, who shall not have otherwise
performed services for the Company or Indemnitee within the last five (5)
years.
f) Reviewing Party: any appropriate person or body consisting of a member or
---------------
members of the Company's Board of Directors or any other person or body
appointed by the Board who is not a party to the particular Claim for which
Indemnitee is seeking indemnification, or Independent Legal Counsel.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective the day and year first above written.
ASA HOLDINGS, INC.
By: ____________________________________
Name:
Title:
___________________________________
Indemnitee
-9-
<PAGE>
EXHIBIT 17
AMENDED AND RESTATED
FOUNDING OFFICER AGREEMENT
--------------------------
THIS AMENDED AND RESTATED FOUNDING OFFICER AGREEMENT (the "AGREEMENT") is
made and entered into by and between ASA HOLDINGS, INC., a Georgia corporation,
("ASA HOLDINGS"), ATLANTIC SOUTHEAST AIRLINES, INC., a Georgia corporation
("ASA"), and GEORGE F. PICKETT ("PICKETT") this 16th day of April, 1997,
effective as of the Effective Time (as defined in the Amended and Restated
Agreement and Plan of Merger dated November 6, 1996 by and among ASA, ASA
Holdings, Inc. and Atlantic Southeast Merging Co.).
WITNESSETH:
----------
WHEREAS, Pickett was a founding shareholder of ASA and an executive officer
of ASA since its inception; and
WHEREAS, ASA recognized that Pickett, in his years as an officer of ASA,
helped to build ASA into a successful and prosperous corporation; and
WHEREAS, ASA wished to provide for compensation to Pickett in the event
his employment with ASA was terminated after a change in control of ASA; and
WHEREAS, ASA and Pickett entered into a Founding Officer Agreement dated
June 27, 1990 (the "ASA AGREEMENT") as part of a total compensation package
agreed to by Pickett and ASA in consideration for Pickett's continued employment
with ASA; and
WHEREAS, ASA Holdings became the parent company of ASA in a holding company
reorganization that was effective at the Effective Time (the "REORGANIZATION"),
and as part of the Reorganization each issued and outstanding share of ASA's
voting stock was automatically converted into a share of ASA Holdings' voting
stock;
WHEREAS, ASA Holdings, ASA and Pickett wish to amend the ASA Agreement to
provide to Pickett essentially the same compensation with respect to ASA
Holdings in the event of a change of control as he had with respect to ASA prior
to the Reorganization.
NOW, THEREFORE, the parties, for and in consideration of Pickett's
continued employment with ASA Holdings and ASA and other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, to
contract and agree as follows:
1. EFFECTIVE DATE. The effective date of the ASA Agreement was June 27,
--------------
1990. The effective date (the "EFFECTIVE DATE") of this amendment of the ASA
Agreement shall be the Effective Time.
<PAGE>
2. CHANGE IN CONTROL. For the purposes of this Agreement, a "CHANGE IN
-----------------
CONTROL" shall mean ownership of more than fifty percent (50%) of the shares of
ASA Holdings' voting stock by any single entity or group.
3. COMPENSATION. In the event Pickett ceases to be an employee of ASA
------------
Holdings within two (2) years after a Change in Control, ASA Holdings and ASA
hereby agree to pay to Pickett upon such termination of employment (whether by
resignation, discharge with or without cause or otherwise) severance
compensation in an amount equal to the lesser of: (i) an amount equal to two (2)
multiplied by Pickett's gross compensation from ASA Holdings and its
subsidiaries accrued with respect to the twelve (12) month period ending on the
last day of the last calendar month ending on or before the date of the Change
in Control, or (ii) the maximum amount which may be paid to Pickett which is
deductible to ASA Holdings on a consolidated basis under Section 280G of the
Internal Revenue Code of 1986, as now or hereafter amended.
4. AMENDMENT. This Agreement may not be changed orally but only by and
---------
agreement in writing signed by ASA Holdings, ASA and Pickett.
5. BINDING EFFECT. All the terms of this Agreement shall be binding upon
--------------
an inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns.
6. CAPTIONS AND SECTION HEADINGS. Captions and section headings used
-----------------------------
herein are for convenience only and are not a part of this Agreement and shall
not be used in construing it.
7. GOVERNING LAW. This Agreement and the rights of the parties hereto
-------------
shall be governed by and construed or enforced in accordance with the laws of
the State of Georgia.
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed by the parties hereto on the
date first written above.
/s/ George F. Pickett (SEAL)
------------------------------
GEORGE F. PICKETT
ASA HOLDINGS, INC.
By: /s/ George F. Pickett
--------------------------
George F. Pickett
Chairman of the Board and
Chief Executive Officer
ATTEST:
By: /s/ John W. Beiser
--------------------------
John W. Beiser
Secretary
(CORPORATE SEAL)
ATLANTIC SOUTHEAST AIRLINES, INC.
By: /s/ George F. Pickett
--------------------------
George F. Pickett
Chairman of the Board and
Chief Executive Officer
ATTEST:
By: /s/ John W. Beiser
--------------------------
John W. Beiser
Secretary
(CORPORATE SEAL)
<PAGE>
AMENDMENT TO THE
AMENDED AND RESTATED
FOUNDING OFFICER AGREEMENT
THIS SECOND AMENDMENT TO THE AMENDED AND RESTATED FOUNDING
OFFICER AGREEMENT (the "Agreement") is made and entered into by and between ASA
Holdings, Inc. ("Holdings"), Atlantic Southeast Airlines, Inc. ("ASA"), and
GEORGE F. PICKETT ("Pickett") this 15th day of February, 1999.
WITNESSETH:
WHEREAS, the Agreement provides that it may be amended in
writing signed by ASA, Holding and Pickett; and
WHEREAS, Holdings, ASA and Pickett wish to amend this
agreement.
NOW, THEREFORE, the Parties agree as follows:
The definition of "Change in Control" in Section 2 of the
Agreement is hereby amended in its entirety to read as follows:
"Change in Control" shall mean the occurrence of any
one or more of the following events: (i) acquisition of at
least twenty-five percent (25%) of the voting stock of the
Company by any single entity or group other than Delta Air
Lines, Inc. or a subsidiary thereof, the Company, a subsidiary
or an employee benefit plan (or trust forming a part thereof)
maintained by the Company or a subsidiary, (ii) ownership of
more than fifty percent (50%) of the voting stock of the
Company by Delta Air Lines, Inc. or a subsidiary thereof,
(iii) individuals who constitute the Board on February 14,
1999 (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any
person becoming a director subsequent to February 14, 1999,
whose election or nomination for election was approved by a
vote of at least three-quarters of the directors comprising
the Incumbent Board (either by a specific vote or by approval
of the proxy statement of the Company in which such person is
named as a nominee for director, without objection to such
nomination) shall be, for purpose of this clause, considered
as though such person were a member of the Incumbent Board;
<PAGE>
provided, however, that no individual initially elected or
-------- -------
nominated as a director of the Company as a result of an
actual or threatened election contest with respect to
directors of any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than
the Board shall be deemed to be a member of the Incumbent
Board, (iv) the sale or disposition of all or substantially
all of the assets of the Company, (v) consummation of a
reorganization, merger or consolidation or similar form of
corporate transaction involving the Company, unless,
immediately following such transaction more than 50% of the
total voting power of the publicly traded corporation
resulting from such transaction eligible to elect directors of
such corporation would be represented by shares that were
Company voting stock immediately prior to such transaction,
and such voting power would be in substantially the same
proportion as the voting power of such Company voting stock
immediately prior to the transaction, or (vi) approval by the
Board of any tender offer for shares of voting stock of the
Company. Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any person
acquires beneficial ownership of more than 25% of the Company
voting stock as a result of the acquisition of Company voting
stock by the Company which reduces the number of Company
voting stock outstanding; provided, that if after such
-------- ----
acquisition by the Company such person becomes the beneficial
owner of additional Company voting stock that increases the
percentage of outstanding Company voting stock beneficially
owned by such person, a Change in Control of the Company shall
then occur.
-2-
<PAGE>
IN WITNESS WHEREOF, ASA Holdings, Inc. has caused this Second
Amendment to the Plan to be executed by its duly authorized officer this ____
day of February 1999.
EMPLOYER:
ASA HOLDINGS, INC.
By: /s/ Authorized Officer
------------------------------
Title: (signature illegible)
---------------------------
ATLANTIC SOUTHEAST AIRLINES, INC.
By: /s/ Authorized Officer
------------------------------
Title: (signature illegible)
---------------------------
---------------------------
George F. Pickett
-3-
<PAGE>
EXHIBIT 18
AMENDED AND RESTATED
FOUNDING OFFICER AGREEMENT
--------------------------
THIS AMENDED AND RESTATED FOUNDING OFFICER AGREEMENT (the "AGREEMENT") is
made and entered into by and between ASA HOLDINGS, INC., a Georgia corporation,
("ASA HOLDINGS"), ATLANTIC SOUTHEAST AIRLINES, INC., a Georgia corporation
("ASA"), and JOHN W. BEISER ("BEISER") this 16th day of April, 1997, effective
as of the Effective Time (as defined in the Amended and Restated Agreement and
Plan of Merger dated November 6, 1996 by and among ASA, ASA Holdings, Inc. and
Atlantic Southeast Merging Co.).
WITNESSETH:
----------
WHEREAS, Beiser was a founding shareholder of ASA and an executive officer
of ASA since its inception; and
WHEREAS, ASA recognized that Beiser, in his years as an officer of ASA,
helped to build ASA into a successful and prosperous corporation; and
WHEREAS, ASA wished to provide for compensation to Beiser in the event his
employment with ASA was terminated after a change in control of ASA; and
WHEREAS, ASA and Beiser entered into a Founding Officer Agreement dated
June 27, 1990 (the "ASA AGREEMENT") as part of a total compensation package
agreed to by Beiser and ASA in consideration for Beiser's continued employment
with ASA; and
WHEREAS, ASA Holdings became the parent company of ASA in a holding company
reorganization that was effective at the Effective Time (the "REORGANIZATION"),
and as part of the Reorganization each issued and outstanding share of ASA's
voting stock was automatically converted into a share of ASA Holdings' voting
stock;
WHEREAS, ASA Holdings, ASA and Beiser wish to amend the ASA Agreement to
provide to Beiser essentially the same compensation with respect to ASA Holdings
in the event of a change of control as he had with respect to ASA prior to the
Reorganization.
NOW, THEREFORE, the parties, for and in consideration of Beiser's continued
employment with ASA Holdings and ASA and other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, to contract and
agree as follows:
1. EFFECTIVE DATE. The effective date of the ASA Agreement was June 27,
--------------
1990. The effective date (the "EFFECTIVE DATE") of this amendment of the ASA
Agreement shall be the Effective Time.
<PAGE>
2. CHANGE IN CONTROL. For the purposes of this Agreement, a "CHANGE IN
-----------------
CONTROL" shall mean ownership of more than fifty percent (50%) of the shares of
ASA Holdings' voting stock by any single entity or group.
3. COMPENSATION. In the event Beiser ceases to be an employee of ASA
------------
Holdings within two (2) years after a Change in Control, ASA Holdings and ASA
hereby agree to pay Beiser upon such termination of employment (whether by
resignation, discharge with or without cause or otherwise) severance
compensation in an amount equal to the lesser of: (i) an amount equal to two (2)
multiplied by Beiser's gross compensation from ASA Holdings and its subsidiaries
accrued with respect to the twelve (12) month period ending on the last day of
the last calendar month ending on or before the date of the Change in Control,
or (ii) the maximum amount which may be paid to Beiser which is deductible to
ASA Holdings on a consolidated basis under Section 280G of the Internal Revenue
Code of 1986, as now or hereafter amended.
4. AMENDMENT. This Agreement may not be changed orally but only by and
---------
agreement in writing signed by ASA Holdings, ASA and Beiser.
5. BINDING EFFECT. All the terms of this Agreement shall be binding upon
--------------
an inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns.
6. CAPTIONS AND SECTION HEADINGS. Captions and section headings used
------------------------------
herein are for convenience only and are not a part of this Agreement and shall
not be used in construing it.
7. GOVERNING LAW. This Agreement and the rights of the parties hereto
-------------
shall be governed by and construed or enforced in accordance with the laws of
the State of Georgia.
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed by the parties hereto on the
date first written above.
/s/ John W. Beiser (SEAL)
------------------------------
JOHN W. BEISER
ASA HOLDINGS, INC.
By: /s/ George F. Pickett
--------------------------
George F. Pickett
Chairman of the Board and
Chief Executive Officer
ATTEST:
By: /s/ John W. Beiser
--------------------------
John W. Beiser
Secretary
(CORPORATE SEAL)
ATLANTIC SOUTHEAST AIRLINES, INC.
By: /s/ George F. Pickett
--------------------------
George F. Pickett
Chairman of the Board and
Chief Executive Officer
ATTEST:
By: /s/ John W. Beiser
--------------------------
John W. Beiser
Secretary
(CORPORATE SEAL)
<PAGE>
AMENDMENT TO THE
AMENDED AND RESTATED
FOUNDING OFFICER AGREEMENT
THIS SECOND AMENDMENT TO THE AMENDED AND RESTATED FOUNDING
OFFICER AGREEMENT (the "Agreement") is made and entered into by and between ASA
Holdings, Inc. ("Holdings"), Atlantic Southeast Airlines, Inc. ("ASA"), and JOHN
W. BEISER ("Beiser") this 15th day of February, 1999.
WITNESSETH:
WHEREAS, the Agreement provides that it may be amended in
writing signed by ASA, Holding and Beiser; and
WHEREAS, Holdings, ASA and Beiser wish to amend this
agreement.
NOW, THEREFORE, the Parties agree as follows:
The definition of "Change in Control" in Section 2 of the
Agreement is hereby amended in its entirety to read as follows:
"Change in Control" shall mean the occurrence of any
one or more of the following events: (i) acquisition of at
least twenty-five percent (25%) of the voting stock of the
Company by any single entity or group other than Delta Air
Lines, Inc. or a subsidiary thereof, the Company, a subsidiary
or an employee benefit plan (or trust forming a part thereof)
maintained by the Company or a subsidiary, (ii) ownership of
more than fifty percent (50%) of the voting stock of the
Company by Delta Air Lines, Inc. or a subsidiary thereof,
(iii) individuals who constitute the Board on February 14,
1999 (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any
person becoming a director subsequent to February 14, 1999,
whose election or nomination for election was approved by a
vote of at least three-quarters of the directors comprising
the Incumbent Board (either by a specific vote or by approval
of the proxy statement of the Company in which such person is
named as a nominee for director, without objection to such
nomination) shall be, for purpose of this clause,
-1-
<PAGE>
considered as though such person were a member of the
Incumbent Board; provided, however, that no individual
-------- -------
initially elected or nominated as a director of the Company as
a result of an actual or threatened election contest with
respect to directors of any other actual or threatened
solicitation of proxies or consents by or on behalf of any
person other than the Board shall be deemed to be a member of
the Incumbent Board, (iv) the sale or disposition of all or
substantially all of the assets of the Company, (v)
consummation of a reorganization, merger or consolidation or
similar form of corporate transaction involving the Company,
unless, immediately following such transaction more than 50%
of the total voting power of the publicly traded corporation
resulting from such transaction eligible to elect directors of
such corporation would be represented by shares that were
Company voting stock immediately prior to such transaction,
and such voting power would be in substantially the same
proportion as the voting power of such Company voting stock
immediately prior to the transaction, or (vi) approval by the
Board of any tender offer for shares of voting stock of the
Company. Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any person
acquires beneficial ownership of more than 25% of the Company
voting stock as a result of the acquisition of Company voting
stock by the Company which reduces the number of Company
voting stock outstanding; provided, that if after such
acquisition by the Company such person becomes the beneficial
owner of additional Company voting stock that increases the
percentage of outstanding Company voting stock beneficially
owned by such person, a Change in Control of the Company shall
then occur.
-2-
<PAGE>
IN WITNESS WHEREOF, ASA Holdings, Inc. has caused this Second
Amendment to the Plan to be executed by its duly authorized officer this 15th
day of February 1999.
EMPLOYER:
ASA HOLDINGS, INC.
By: Authorized Officer
------------------------------
Title: (signature illegible)
---------------------------
ATLANTIC SOUTHEAST AIRLINES, INC.
By: /s/ John W. Beiser
------------------------------
Title:
---------------------------
---------------------------
John W. Beiser
-3-
<PAGE>
Exhibit 19
CONFIDENTIALITY AGREEMENT
-------------------------
THIS CONFIDENTIALITY AGREEMENT (the "Agreement") is made and entered
into this 9th day of February, 1999, by and between ASA HOLDINGS, INC., a
Georgia corporation ("Holdings") and DELTA AIR LINES, INC., a Delaware
corporation ("DAL").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, each of Holdings, through its wholly owned subsidiary,
Atlantic Southeast Airlines, Inc., a Georgia corporation ("Airlines"), and DAL
conducts an airline business providing commercial air transportation services to
the public; and
WHEREAS, Holdings and DAL intend to engage in discussions and
negotiations with each other regarding a possible business transaction under
which DAL would acquire stock and/or assets of Holdings (the "Possible
Transaction"); and
WHEREAS, in connection with the foregoing discussions and negotiations,
DAL, on behalf of itself and all of its employees, agents, representatives,
directors, officers, advisors, counsel, successors, assigns and affiliates
(collectively referred to herein as "Delta" and each individually referred to
herein as a "Delta Party") will now and hereafter obtain from Holdings,
Airlines, ASA Investments, Inc., a Delaware corporation, and their respective
employees, agents, representatives, directors, officers, advisors, counsel,
successors, assigns and affiliates (collectively referred to herein as "ASA" and
each individually referred to herein as an "ASA Party") detailed proprietary and
otherwise confidential information (collectively the "ASA Information")
belonging to ASA concerning ASA's industry, business, relationships and
operations, all of which ASA Information is proprietary and confidential to ASA;
and
WHEREAS, all documents, lists, schedules, accumulations, compilations,
summaries, analyses, projections, work product and other tangible or intangible
manifestations including all copies, computer discs, files or tapes, media or
other repositories of the ASA Information hereafter provided by any ASA Party to
any Delta Party in connection with the Possible Transaction (but excluding all
materials provided to any Delta Party in connection with the Delta Connection
program which materials shall remain subject to the confidentiality provisions,
if any, contained under such Delta Connection program) is hereinafter
collectively referred to as the "ASA Confidential Information"; and
WHEREAS, the parties agree that the use and disclosure of the ASA
Confidential Information must be carefully and continuously controlled by DAL
and each and every other Delta Party to safeguard ASA's exclusive and
proprietary rights therein.
NOW, THEREFORE, in consideration of ASA's provision of the ASA
Confidential Information to DAL and any other Delta Party and other good and
valuable consideration, the
-1-
<PAGE>
receipt, adequacy and sufficiency of which is hereby acknowledged, the parties,
intending to be legally bound, do hereby agree as follows:
1. DAL agrees to inform each and every Delta Party that the ASA
Confidential Information is confidential in accordance with the terms of this
Agreement and to take actions to ensure that each Delta Party treats the ASA
Confidential Information in accordance with the provisions of this Agreement.
2. Without the prior written consent of either Holding's Board of
Directors, Chief Executive Officer, or President, DAL on behalf of itself and
each and every other Delta Party agrees that neither DAL nor any other Delta
Party shall
(i) publish, disseminate, divulge or otherwise disclose any ASA
Confidential Information to any person or entity other than a Delta
Party which must (a) receive such ASA Confidential Information for the
sole purpose of evaluating the same for or on behalf of DAL and (b) be
informed as to the confidential nature of said ASA Confidential
Information;
(ii) utilize, apply or otherwise use any ASA Confidential
Information to either (a) obtain or derive on its own behalf or bestow
upon any third party any economic benefits or opportunities or other
competitive advantage, or (b) impose any economic detriment or
competitive disadvantage upon ASA; or
(iii) utilize, apply or otherwise use any ASA Confidential
Information to induce or solicit any supplier, customer, licensor,
licensee, agent, or other business contact of ASA to terminate or
diminish his, her or its relationship with ASA.
DAL shall be responsible for its failure and the failure of any Delta
Party to comply with the provisions of this Agreement.
3. Immediately upon receipt of any ASA Party's request, DAL agrees to
obtain from each Delta Party and compile all ASA Confidential Information
(including all copies thereof) and thereafter surrender and return to Holdings
or such ASA Party requesting the same all of the ASA Confidential Information
including without limitation all computer, electronic, magnetic or similar forms
of media serving as repositories thereof. Alternatively, at the request and
option of an ASA Party, DAL shall destroy all ASA Confidential Information
(including all copies thereof) provided to DAL or any Delta Party which
destruction shall be confirmed in writing by a duly authorized officer of DAL.
Notwithstanding DAL's return of any ASA Confidential Information hereunder, DAL
and each Delta Party shall remain subject to all duties and obligations of
confidentiality owed to ASA and imposed under this Agreement with respect to ASA
Confidential Information.
4. Nothing in this Agreement shall prohibit or limit DAL's or any other
Delta Party's use of information (including but not limited to, ideas, concepts,
know-how, techniques and
-2-
<PAGE>
methodologies) which (i) was previously known to DAL or such other Delta Party
other than through a confidentiality obligation owed to any ASA Party, (ii) was
independently developed by DAL or such other Delta Party outside of the scope of
its or their relationship with ASA, (iii) was acquired by DAL or such other
Delta Party from a third party which is not, to DAL's or such other Delta
Party's knowledge, under an obligation to ASA not to disclose such information,
or (iv) which is or becomes publicly available through no breach by DAL or such
other Delta Party of its obligations under this Agreement and such information
so described in clauses (i) through (iv) hereof shall not constitute ASA
Confidential Information.
5. In the event DAL or any other Delta Party is legally mandated or
compelled by any court, tribunal or governmental authority to disclose any ASA
Confidential Information, DAL or such other Delta Party shall provide prompt
notice to Holdings of such mandate and, at the request of any ASA Party, will
cooperate with any action by any ASA Party to obtain protective measures with
respect to the ASA Confidential Information. Thereafter, DAL and each other
Delta Party shall be entitled to comply with such subpoena or other process to
the extent required by law; provided, that in all events, DAL or such other
Delta Party shall disclose only that portion of the ASA Confidential Information
which DAL or such other Delta Party is advised by its legal counsel as being
required to so disclose.
6. DAL acknowledges and agrees that the breach of all or any part of
this Agreement by DAL, any Delta Party, or their respective advisors will result
in irreparable and continuing damage to one or more ASA Party and therefore, in
addition to any other remedy or damages which may be afforded by law, upon any
breach or threatened breach of this Agreement by DAL or any other Delta Party or
its or their respective advisors, each ASA Party shall have the right as a
matter of law and under this Agreement to seek and obtain specific performance
hereof by injunction or any other equitable remedies of any court of competent
jurisdiction and neither DAL nor any Delta Party shall contest such specific
performance on the basis that there exists an adequate remedy at law. DAL on
behalf of itself and each other Delta Party, hereby waives any requirement that
any ASA Party post any bond or demonstrate any irreparable damage or similar
circumstance as a condition to such ASA Party's seeking specific performance by
injunction hereunder. The rights, remedies and benefits provided herein are
cumulative and not exclusive of any rights, remedies or benefits which any ASA
Party may otherwise have, all of which rights or remedies at law, in equity or
otherwise, are expressly reserved.
7. The parties specifically acknowledge and agree that neither this
Agreement nor any provision contained herein shall be construed as granting or
conferring upon DAL or any other Delta Party or its respective advisors any
rights by license or otherwise in any ASA Confidential Information.
8. The invalidity of any one or more of the clauses or words contained
in this Agreement shall not affect the enforceability of the remaining portions
of this Agreement, all of which are inserted conditionally on being valid in
law; and in the event that one or more of the words or clauses
-3-
<PAGE>
contained herein shall be invalid, this instrument shall be construed as if such
invalid words or clauses had not been inserted. In the event that any part of
this Agreement shall be held to be unenforceable or invalid, the remaining parts
of this Agreement shall nevertheless continue to be valid and enforceable as
though the invalid portions have not been a part hereof.
9. This Agreement shall be binding upon the parties hereto and upon
their respective executors, administrators, representatives, agents, employees,
successors and assigns.
10. This Agreement shall be governed by the laws of the State of
Georgia. This Agreement may be signed in one or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument. Each of the undersigned individuals represents and warrants
to each other party hereto that such individual is the duly authorized
representative of the party on whose behalf said individual is signing below and
that such individual has all requisite power and authority to legally bind the
party on whose behalf said individual is signing below. This Agreement contains
the entire understanding of the parties with respect to the matters described
herein. This Agreement supersedes all prior and/or contemporaneous agreements
and understandings between the parties, written or oral, with respect to the
matters described herein. No covenant or condition of this Agreement can be
waived or amended except by the written consent of the parties.
11. Although Holdings has endeavored to include in the ASA Confidential
Information information known to it which it believes to be relevant for the
purpose of DAL's investigation, DAL understands that neither Holdings nor any
ASA Party makes any representation or warranty as to the accuracy or
completeness of the ASA Confidential Information. DAL agrees that neither
Holdings nor any ASA Party shall have any liability to any DAL or any Delta
Party resulting from the use of the ASA Confidential Information.
12. Nothing contained in this Agreement shall be deemed, interpreted or
construed to constitute or require any party to consummate or implement any
potential or contemplated transaction or relationship with any other party
hereto it being the parties intention that any such potential or contemplated
relationship (other than the duty of confidentiality imposed hereunder) or
transaction shall be evidenced only by a written agreement executed by the
parties to be bound thereby.
13. The parties agree that any action or proceeding brought or
initiated by either party as against the other in respect of this Agreement may
be brought or initiated in the United States District Court for the Northern
District of Georgia or in the Superior Court of Fulton County, Georgia, and each
of the undersigned consents to the exercise of subject matter and personal
jurisdiction and the placement of venue in any of such courts, or in any
jurisdiction allowed by law, in any such action or proceeding and further
consents that service of process may be effected in any such action or
proceeding in the manner provided in Official Code of Ga. Ann. Section 9-10-94
or in such other manner as may be permitted by law.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
ASA HOLDINGS, INC.
By: /s/ John W. Beiser
-----------------------------
Its: President
DELTA AIR LINES, INC
By: /s/ Proper Authorized Office
-----------------------------
Its: (signature illegible)
------------------------
-5-
<PAGE>
Exhibit 20
SECOND AMENDMENT TO THE
ASA HOLDINGS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
THIS SECOND AMENDMENT TO THE ASA HOLDINGS, INC.
SUPPLEMENTAL RETIREMENT PLAN (the "Plan") is made and entered into by ASA
Holdings, Inc. (the "Company").
WITNESSETH:
WHEREAS, Section 7.6 of the Plan provides for the right of the
Company to amend the Plan from time to time; and
WHEREAS, the Company's Board of Directors has approved this
amendment of the Plan and has authorized this amendment to be executed by any
proper officer of the Company.
NOW, THEREFORE, the Plan is hereby amended as follows:
The third paragraph of Section 6.1 of the Plan is hereby
amended in its entirety to read as follows:
For purposes of this Plan, "Change in Control" means any one
or more of the following events:
(i) acquisition of at least twenty-five percent (25%) of the
voting stock of the Company by any single entity or group
other than Delta Air Lines, Inc. or a subsidiary thereof, the
Company, a subsidiary or an employee benefit plan (or trust
forming a part thereof) maintained by the Company or a
subsidiary,
(ii) ownership of more than fifty percent (50%) of the voting
stock of the Company by Delta Air Lines, Inc. or a subsidiary
thereof,
(iii) individuals who constitute the Board on February 14,
1999 (the "Incumbent Board") cease for any reason to
constitute at least a majority
-1-
<PAGE>
thereof, provided that any person becoming a director
subsequent to February 14, 1999, whose election or nomination
for election was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for
director, without objection to such nomination) shall be, for
purpose of this clause, considered as though such person were
a member of the Incumbent Board; provided, however, that no
-------- -------
individual initially elected or nominated as a director of the
Company as a result of an actual or threatened election
contest with respect to directors of any other actual or
threatened solicitation of proxies or consents by or on behalf
of any person other than the Board shall be deemed to be a
member of the Incumbent Board,
(iv) the sale or disposition of all or substantially all of
the assets of the Company,
(v) consummation of a reorganization, merger or consolidation
or similar form of corporate transaction involving the
Company, unless, immediately following such transaction more
than 50% of the total voting power of the publicly traded
corporation resulting from such transaction eligible to elect
directors of such corporation would be represented by shares
that were Company voting stock immediately prior to such
transaction, and such voting power would be in substantially
the same proportion as the voting power of such Company voting
stock immediately prior to the transaction, or
(vi) approval by the Board of any tender offer for shares of
voting stock of the Company.
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any person acquires
beneficial ownership of more than 25% of the Company voting
stock as a result of the acquisition of Company voting stock
by the Company which reduces the number of Company voting
stock outstanding; provided, that if after such acquisition by
-------- ----
the Company such person becomes the beneficial owner of
additional Company voting stock that increases the percentage
of outstanding Company voting stock beneficially owned by such
person, a Change in Control of the Company shall then occur.
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<PAGE>
IN WITNESS WHEREOF, ASA Holdings, Inc. has caused this Second
Amendment to the Plan to be executed by its duly authorized officer this ____
day of February 1999.
EMPLOYER:
ASA HOLDINGS, INC.
By: /s/ Authorized Officer
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Title: (signature illegible)
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