- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 13E-3/A
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
(Amendment No. 1)
-----------------------
ASA HOLDINGS, INC.
(Name of Issuer)
-----------------------
ASA HOLDINGS, INC.
DELTA AIR LINES, INC.
DELTA AIR LINES HOLDINGS, INC.
DELTA SUB, INC.
(Name of Person(s) Filing Statement)
-----------------------
Common Stock, $0.10 Par Value
(Title of Class of Securities)
-----------------------
04338Q 10 7
(CUSIP Number of Class of Securities)
-----------------------
Robert S. Harkey, Esq. George F. Pickett
Senior Vice President - Chairman of the Board and
General Counsel Chief Executive Officer
Delta Air Lines, Inc. ASA Holdings, Inc.
Hartsfield Atlanta International Airport 100 Hartsfield Centre Parkway,
Atlanta, Georgia 30320 Suite 800
(404) 715-2387 Atlanta, Georgia 30354
(404) 766-1400
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
-----------------------
With Copies to:
Joseph Rinaldi, Esq. Benjamin F. Stapleton III, Esq.
Davis Polk & Wardwell John Evangelakos, Esq.
450 Lexington Avenue Sullivan & Cromwell
New York, New York 10017 125 Broad Street
(212) 450-4000 New York, New York 10004
(212) 558-4000
This statement is filed in connection with (check the appropriate box):
a. |X| The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C or Rule
13e-3(c) under the Securities Exchange Act of 1934.
b. |_| The filing of a registration statement under the Securities Act of 1933.
c. |_| A tender offer.
d. |_| None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: |X|
- -------------------------------------------------------------------------------
<PAGE>
INTRODUCTION
This Amendment No.1 amends and supplements the Transaction Statement on
Schedule 13E-3 (the "Schedule 13E-3") filed by ASA Holdings, Inc., a Georgia
corporation ("ASA"), Delta Air Lines, Inc., a Delaware corporation ("Delta"),
Delta Sub, Inc., a Georgia corporation ("Delta Sub") and an indirect
wholly-owned subsidiary of Delta, and Delta Air Lines Holdings, Inc., a
Delaware corporation ("Delta Holdings") and a direct wholly-owned subsidiary
of Delta, pursuant to Section 13(e) of the Securities Exchange Act of 1934, as
amended, and Rule 13e-3 thereunder, in connection with the Preliminary
Information Statement on Schedule 14C filed by ASA with the Securities and
Exchange Commission (the "SEC") on March 12, 1999, as amended on April 15,
1999 (the "Preliminary Information Statement"), relating to the special ASA
shareholders meeting to be conducted at least 20 days after the mailing to ASA
shareholders of a Definitive Information Statement. At the special meeting,
ASA shareholders will vote to approve the merger (the "Merger") of Delta Sub
with and into ASA pursuant to the terms of the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of February 15, 1999 and amended as of
March 10, 1999, among Delta, Delta Sub and ASA.
Capitalized terms not separately defined herein shall have the meanings
specified in the Schedule 13E-3.
Item 6. Source and Amount of Funds or Other Consideration
Item 6 is hereby amended and supplemented as follows:
(c) As of March 22, 1999, Delta entered into a $500 million loan facility
with The Chase Manhattan Bank, as administrative agent, and various lenders
(the "1999 Credit Agreement"). A summary of the principal terms of the loans
under the 1999 Credit Agreement follows.
The loans are structured to be funded in two drawings. The first drawing
occurred on March 22, 1998 following the consummation of the Offer (the "First
Drawdown Date"). The second drawing will occur in connection with the
consummation of the Merger (the "Second Drawdown Date"). Notwithstanding the
foregoing, all unfunded commitments under the 1999 Credit Agreement shall
automatically terminate on the 120th day after the First Drawdown. All
borrowings will mature on March 22, 2001. All amounts outstanding will bear
interest, at Delta's option, at the base rate plus an applicable margin or at
the Eurodollar rate plus an applicable margin (such Eurodollar borrowings
being available to Delta in interest periods of one, two, three or six
months). Interest payments on base rate borrowings shall be made quarterly in
arrears, whereas interest payments on Eurodollar borrowings shall be made at
the end of the interest period designated by Delta (but not less than once
every three months, in the case of six-month interest periods). The applicable
margin for base rate and Eurodollar borrowings will vary between 0% and 1.00%
(in the case of base rate borrowings) and between .625% and 2.00% (in the case
of Eurodollar borrowings), in each case depending on the rating applicable to
Delta's long term senior unsecured debt as established from time to time by
Standard & Poor's and Moody's Investors Service. If such ratings are below
BBB- (in the case of Standard & Poor's) and Baa3 (in the case of Moody's
Investor Service), then Delta shall be required to maintain as of the last day
of each fiscal quarter a ratio (determined on a rolling four-quarter basis) of
(i) Consolidated EBITDA (as defined in the 1999 Credit Agreement) plus
Consolidated Aircraft Rentals (as defined in the 1999 Credit Agreement) to
(ii) Consolidated Interest Expense (as defined in the 1999 Credit Agreement)
plus Consolidated Aircraft Rentals, of not less than 1.5 to 1.
The banks' obligation to fund Delta on the Second Drawdown Date is
contingent upon the consummation of the Merger (with the aggregate cash
consideration paid to ASA shareholders in the Offer and the Merger not
exceeding $750,000,000) and other customary conditions, including the absence
of any default and the reaffirmation of representations and warranties, except
representations and warranties relating to material adverse change and certain
other matters. Delta may prepay the loans in whole or in part at any time,
subject to payment by Delta of customary "broken funding" costs, if any,
associated with any prepayment of a Eurodollar loan other than at the end of
the applicable interest period. The 1999 Credit Agreement also provides that
Delta shall pay to the banks a commitment fee of 0.20% per annum on all
unfunded commitments for the period beginning March 22, 1999 and ending on the
date on which no unfunded commitments remain in place.
The 1999 Credit Agreement contains certain covenants that restrict
Delta's ability to grant liens, to incur or guarantee debt and to enter into
flight equipment leases. It also provides that upon the occurrence of a Change
of Control of Delta (as defined in the 1999 Credit Agreement), the banks'
obligation to extend credit pursuant to the 1999 Credit Agreement terminates
and any amounts outstanding become immediately due and payable.
As of April 13, 1999, borrowings of $400 million were outstanding under the
1999 Bank Credit Agreement. The foregoing summary of certain provisions of the
1999 Credit Agreement does not purport to be complete and is subject
2
<PAGE>
to, and qualified in its entirety by reference to, the 1999 Credit Agreement,
a copy of which appears as Exhibit (a)(4) hereto.
Item 17. Material to Be Filed as Exhibits
Item 17 is hereby amended and supplemented as follows:
(a)(4) Credit Agreement dated as of March 22, 1999 among Delta,
the Banks (as defined therein), Citibank N.A., in its
capacity as syndication agent and The Chase Manhattan
Bank, in its capacity as administrative agent for the
Banks.
(d)(9) Preliminary Information Statement filed by ASA with the
SEC on March 12, 1999 and amended on the date hereof,
which is hereby incorporated by reference.
3
<PAGE>
After due inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
April 15, 1999
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: Chief Operating Officer
DELTA AIR LINES HOLDINGS, INC.
By: /s/ Leslie P. Klemperer
----------------------------------------
Name: Leslie P. Klemperer
Title: Vice President and Secretary
DELTA SUB, INC.
By: /s/ Dean C. Arvidson
----------------------------------------
Name: Dean C. Arvidson
Title: Secretary
<PAGE>
EXHIBIT INDEX
(a)(4) Credit Agreement dated as of March 22, 1999 among Delta, the
Banks (as defined therein), Citibank N.A., in its capacity as
syndication agent and The Chase Manhattan Bank, in its capacity
as administrative agent for the Banks.
(d)(9) Preliminary Information Statement filed by ASA with the SEC on
March 12, 1999 and amended on the date hereof, which is hereby
incorporated by reference.
EXHIBIT 99(a)(4)
CONFORMED COPY
===============================================================================
CREDIT AGREEMENT
among
DELTA AIR LINES, INC.,
The Several Banks from Time to Time Parties Hereto,
CITIBANK, N.A., as Syndication Agent
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
Dated as of March 22, 1999
CHASE SECURITIES INC., as Lead Arranger and Book Manager
===============================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS........................................................1
Section 1.1. Definitions................................................1
ARTICLE 2. AMOUNT AND TERMS OF CREDIT........................................9
Section 2.1. Commitment.................................................9
Section 2.2. The Banks..................................................9
ARTICLE 3. THE TERM LOANS....................................................9
Section 3.1. Term Loans.................................................9
Section 3.2. Notice and Place of Borrowing for Term Loans...............9
Section 3.3. The Notes.................................................10
Section 3.4. Interest..................................................11
Section 3.5. Place of Payment..........................................11
Section 3.6. Voluntary Prepayment......................................12
Section 3.7. Pro Rata Treatment........................................12
Section 3.8. Initial Determination of Interest Rate and
Conversion of Term Loans Between Eurodollar Rate
and Base Rate.............................................12
Section 3.9. Failure to Borrow.........................................13
Section 3.10. Commitment Fee............................................13
Section 3.11. Termination of Credit Facility............................13
Section 3.12. Maturity of Credit Facility...............................13
Section 3.13. Optional Reduction of Commitments.........................14
Section 3.14. Substitution of Banks.....................................14
Section 3.15. Capital Requirements......................................16
Section 3.16. Mandatory Prepayment Upon Change in Control...............17
Section 3.17. Agent Fees................................................17
ARTICLE 4. CONDITIONS TO EFFECTIVENESS OF AGREEMENT AND FOR BORROWINGS......17
Section 4.1. Effectiveness.............................................17
Section 4.2. Initial and Subsequent Borrowing..........................19
ARTICLE 5. REPRESENTATIONS AND WARRANTIES...................................20
Section 5.1. Organization; Standing, Etc...............................20
Section 5.2. Financial Statements......................................20
Section 5.3. Litigation................................................20
Section 5.4. Business; Status as Air Carrier...........................21
Section 5.5. Funded Debt...............................................21
Section 5.6. Title to Properties, Etc..................................21
Section 5.7. Tax Returns and Payments..................................21
Section 5.8. Compliance With Other Instruments.........................22
Section 5.9. Offering of Notes.........................................22
Section 5.10. Use of Proceeds...........................................22
Section 5.11. Governmental Regulation...................................23
i
<PAGE>
Section 5.12. Subsidiaries.............................................23
Section 5.13. ERISA....................................................23
Section 5.14. Environmental Matters....................................23
Section 5.15. Year 2000 Matters........................................24
ARTICLE 6. AFFIRMATIVE COVENANTS............................................24
Section 6.1. Insurance.................................................24
Section 6.2. Payment of Taxes..........................................24
Section 6.3. Financial Statements......................................24
Section 6.4. Maintenance of Equipment..................................25
Section 6.5. Inspection................................................26
Section 6.6. Security for Notes........................................26
Section 6.7. Notice of Any Default or Event of Default.................26
Section 6.8. ERISA Reporting Requirements..............................26
Section 6.9. Ratings...................................................26
ARTICLE 7. NEGATIVE COVENANTS...............................................27
Section 7.1. Liens.....................................................27
Section 7.2. Debt......................................................27
Section 7.3. Mergers; Disposition of Assets............................28
Section 7.4. Leases....................................................28
Section 7.5. Financial Covenant........................................28
ARTICLE 8. DEFAULTS.........................................................29
Section 8.1. Events of Default.........................................29
ARTICLE 9. YIELD PROTECTION.................................................31
Section 9.1. Increased Cost of Eurodollar Rate Loans...................31
Section 9.2. Change of Law.............................................32
Section 9.3. Funding Losses............................................33
Section 9.4. Mandatory Repayment or Conversion on Certain Events.......33
Section 9.5. Survival..................................................33
ARTICLE 10. THE ADMINISTRATIVE AGENT........................................33
Section 10.1. Authorization and Action.................................33
Section 10.2. Administrative Agent's Reliance, Etc.....................34
Section 10.3. Administrative Agent and Affiliates......................35
Section 10.4. Representations of the Banks.............................35
Section 10.5. Events of Default........................................35
Section 10.6. Right to Indemnity.......................................36
Section 10.7. Indemnification..........................................36
Section 10.8. Successor Administrative Agent...........................36
Section 10.9. Syndication Agent........................................37
ARTICLE 11. MISCELLANEOUS...................................................37
Section 11.1. Rights and Remedies......................................37
Section 11.2. Notices..................................................37
Section 11.3. Expenses, Indemnification, Etc...........................38
Section 11.4. Amendments to this Agreement and the Notes...............40
ii
<PAGE>
Section 11.5. Agreement as to Right of Set-off, Sharing of Losses......40
Section 11.6. Successors and Assigns...................................41
Section 11.7. Holidays.................................................42
Section 11.8. Law Governing............................................42
Section 11.9. Disclosure to Other Persons..............................43
Section 11.10. Execution and Effective Date............................43
Section 11.11. Representation of Banks.................................43
Section 11.12. Severability............................................43
Section 11.13. Entire Agreement........................................44
Section 11.14. Jurisdiction............................................44
Section 11.15. Waivers of Jury Trial...................................44
iii
<PAGE>
Exhibits and Schedules
Exhibit A The Banks on the Effective Date
Exhibit B Form of Term Note
Exhibit C-1 Form of Notice and Agreement Regarding Addition of Bank
Exhibit C-2 Form of Agreement of Existing Bank to Replace Replaced Bank
Exhibit D Form of Assignment and Assumption Agreement
Schedule I Funded Debt and Secured Obligations
Schedule II Subsidiaries
Schedule III Guaranty Liabilities
iv
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of March 22, 1999 (this "Agreement")
by and among DELTA AIR LINES, INC., a corporation organized under the laws of
the State of Delaware (the "Company"), each of the financial institutions
initially a signatory hereto together with those assignees pursuant to Section
11.6 hereof (collectively, the "Banks" and each individually, a "Bank"),
CITIBANK, N.A., in its capacity as syndication agent (the "Syndication Agent"),
and THE CHASE MANHATTAN BANK, in its capacity as administrative agent for the
Banks (the "Administrative Agent").
WHEREAS, the Company, through Delta Sub, Inc., an indirect,
wholly-owned Subsidiary of the Company incorporated under the laws of the State
of Georgia ("Acquisition Subsidiary"), intends to acquire (the "Acquisition")
all of the outstanding common stock of ASA Holdings, Inc., a corporation
incorporated under the laws of the State of Georgia (the "Target");
WHEREAS, the Acquisition will be accomplished by means of (i) a
tender offer (the "Tender Offer") being made by Acquisition Subsidiary for all
of the issued and outstanding shares (the "Shares") of common stock of Target
which, when taken together with Shares owned by the Company or its affiliates,
represent at least a majority of the then issued and outstanding Shares on a
fully diluted basis, and (ii) a merger transaction (the "Merger") after and
subject to completion of the Tender Offer pursuant to which the Target will
become an indirect, wholly-owned Subsidiary of the Company and in connection
with which any remaining Shares shall become entitled only to a per-Share
payment equal to the price per share paid in the Tender Offer;
WHEREAS, in order to provide a portion of the financing of the
Acquisition and to pay related fees and expenses thereof, the Company has
requested the Banks to make available senior unsecured term loans in the
aggregate amount of $500,000,000; and
WHEREAS, the Banks desire to make available to the Company such term
loans on the terms and conditions contained herein;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
ARTICLE 1. DEFINITIONS
Section 1.1. Definitions.
<PAGE>
In addition to terms defined elsewhere herein, the following terms
shall have the following meanings for the purposes of this Agreement:
"Administrative Agent" shall mean The Chase Manhattan Bank, in its
capacity as administrative agent for the Banks; provided, however, that if The
Chase Manhattan Bank shall have resigned or been removed as Administrative
Agent, then "Administrative Agent" shall mean the bank selected as
Administrative Agent pursuant to the provisions of Section 10.8 hereof.
"Applicable Margin" shall mean, as of any date of determination, the
percentage rate set forth below for each type of Term Loan corresponding to the
long term senior unsecured debt rating of the Company, as rated by S&P (the
"S&P Rating") and Moody's (the "Moody's Rating"; each of the S&P Rating and the
Moody's Rating referred to herein as a "Rating"):
- -------------------------------------------------------------------------------
Level Long Term Senior Unsecured Applicable Margin for Applicable Margin
Debt Rating of the Company Eurodollar Rate Loans for Base Rate Loans
(S&P/Moody's)
- -------------------------------------------------------------------------------
1 BBB+ or higher or Baa1 or 0.625% 0%
higher
- -------------------------------------------------------------------------------
2 BBB or Baa2 0.750% 0%
- -------------------------------------------------------------------------------
3 BBB- or Baa3 0.875% 0%
- -------------------------------------------------------------------------------
4 BB+ or Ba1 1.375% 0.375%
- -------------------------------------------------------------------------------
5 BB or lower or Ba2 or lower 2.00% 1.00%
- -------------------------------------------------------------------------------
The Administrative Agent shall determine the Applicable Margin from
time to time in accordance with the above table and notify the Company and the
Banks of such determination from time to time. In the event the S&P Rating and
the Moody's Rating correspond to different levels on the above table resulting
in different Applicable Margin determinations, the following provisions shall
apply. In the event the S&P Rating and the Moody's Rating differ by one level,
the Applicable Margin shall be that corresponding to the higher Rating. For
example, a "BBB+" S&P Rating and a "Baa2" Moody's Rating would result in an
Applicable Margin for Eurodollar Rate Loans equal to 0.625%. In the event the
S&P Rating and the Moody's Rating differ by two levels, the Applicable Margin
shall be that corresponding to that level which is in between the two
applicable levels. For example, a "BBB" S&P Rating and a "Ba1" Moody's Rating
would result in an Applicable Margin for Eurodollar Rate Loans equal to 0.875%.
In the event the S&P Rating and the Moody's Rating differ by three levels, the
Applicable Margin shall be that corresponding to the level immediately below
the higher of such Ratings. For example, a "BBB+" S&P Rating and a "Ba1"
Moody's Rating would result in an Applicable Margin for Eurodollar Rate Loans
equal to 0.750%. In the event the S&P Rating and the Moody's Rating differ by
four levels (i.e. a ratings split between level 1 and level 5), the Applicable
Margin shall be that corresponding to level 4. For example, a "BBB+" S&P Rating
2
<PAGE>
and a "Ba2" Moody's Rating would result in an Applicable Margin for Eurodollar
Rate Loans equal to 1.375%.
In the event only one rating agency exists or continues rating the
Company's long term senior unsecured debt, such agency's rating shall be used
for purposes of the above table. In the event: (i) neither agency exists or
continues rating the Company's long term senior unsecured debt or (ii) the
Company no longer has any outstanding long term senior unsecured debt to be
rated, the Applicable Margin for the first 90 days after such occurrence shall
be the Applicable Margin in effect as determined using the above immediately
prior to such occurrence. During such 90-day period, the Administrative Agent
and the Company shall negotiate in good faith to agree upon a new pricing grid
or other appropriate pricing terms. Any such new grid or pricing terms shall be
approved by the Majority Banks. In the event the Administrative Agent, the
Company and Majority Banks cannot agree upon such new pricing grid or pricing
terms by the end of such 90-day period, the Applicable Margin shall be that
corresponding to level 3 of the above table for the remainder of the term of
the Agreement.
Any necessary adjustment in the Applicable Margin pursuant to the
terms hereof shall become effective immediately upon any change in a Rating.
"Base Rate" shall mean the rate per annum which is the Prime Rate in
effect from time to time at a majority of the Reference Banks (or if no two of
such Banks have the same Prime Rate in effect, the Prime Rate in effect at such
Bank whose Prime Rate is neither the highest nor the lowest) plus the
Applicable Margin.
"Base Rate Loan" shall mean any Term Loan which bears interest at the
Base Rate.
"Business Day" shall mean any day during which the Main Office of the
Administrative Agent is scheduled to be open for the conduct of its banking
business and during which national banking associations located in New York,
New York are open for the conduct of banking business.
"Commitment" shall have the meaning set forth in Section 2.1 hereof.
"Commitment Fee" shall mean the fee required to be paid to the
Administrative Agent, for the account of the Banks, by the Company pursuant to
Section 3.10 hereof.
"Consolidated Aircraft Rentals" shall mean, for any period of four
consecutive fiscal quarters of the Company, the total consolidated aircraft
rent of the Company and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
3
<PAGE>
"Consolidated EBITDA" shall mean, for any period of four consecutive
fiscal quarters of the Company, the consolidated operating income of the
Company and its Subsidiaries for such period plus amortization and depreciation
expenses that were deducted in arriving at the amount of such consolidated
operating income for such period, all as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period of four
consecutive fiscal quarters of the Company, the total interest expense of the
Company and its Subsidiaries for such period, as determined on a consolidated
basis in accordance with GAAP.
"Convertible Subordinated Debt" shall mean any debt of the Company
convertible into shares of any or all classes of stock of the Company and
containing, or issued under agreements or indentures containing, provisions
effectively subordinating the same to the debt created by this Agreement.
"Credit Facility" shall mean the credit facility extended to the
Company by the Banks pursuant hereto.
"Current Debt" shall mean any obligation for borrowed money
(including notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money) payable on demand
or within a period of one year from the date of the creation thereof.
"Default" shall mean any of the events specified in paragraphs (a)
through (i) of Section 8.1 hereof, whether or not there has been satisfied any
requirement for giving of notice, lapse of time or the happening of any other
condition.
"Dollar" and "$" shall mean lawful money of the United States of
America.
"Effective Date" shall mean the date upon which all of the conditions
of Section 4.1 hereof have been satisfied.
"Equity" shall mean the sum of: (i) the par value (or value stated on
the books of the Company) of the capital stock of all classes of the Company
(other than the Company's Series B ESOP Convertible Preferred Stock), (ii) the
amount of additional paid-in capital and reinvested earnings of the Company,
(iii) the amount of taxes deferred and unamortized investment tax credits under
Sections 167 and 168 of the Internal Revenue Code or similar provisions of any
applicable tax law and carried on the balance sheet under those captions, (iv)
the amount of any gain on the sale and leaseback of assets which is deferred
pursuant to generally accepted accounting principles, (v) the principal amount
of any Convertible Subordinated Debt outstanding, (vi) the amount of any
postretirement benefits (other than pensions) of the Company accrued in
accordance with the Statement of Financial Accounting
4
<PAGE>
Standards No. 106 (Financial Accounting Standards Board 1990) and
generally accepted accounting principles and classified as long term
liabilities on the balance sheet of the Company, and (vii) the difference
between (a) the stated and liquidation value of the Company's Series B ESOP
Convertible Preferred Stock and (b) the unearned compensation under the
Company's employee stock ownership plan; minus (viii) the unrealized loss on
noncurrent marketable equity securities, net of any deferred tax benefits, and
minus (ix) treasury stock at cost.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time and any successor statute.
"Eurodollar Business Days" shall mean any day on which banks are
scheduled to be open for business and quoting interest rates for Dollar
deposits on the London interbank market and which is also a Business Day.
"Eurodollar Lending Office" shall mean, with respect to each Bank,
the office of such Bank identified as such from time to time to the
Administrative Agent and the Company as the office of such Bank or of its
affiliate at which the Eurodollar Rate Loans held by such Bank are to be
maintained.
"Eurodollar Rate" shall mean a rate per annum (rounded upward, if
necessary, to the nearest l/100th of 1%) determined by the Administrative Agent
pursuant to the following formula:
Eurodollar Rate = LIBOR plus Applicable Margin.
"LIBOR" shall mean, with respect to any Interest Period for Eurodollar Rate
Loans, the offered rate in the London interbank market for deposits in United
States dollars of amounts equal or comparable to the principal amount of such
Eurodollar Rate Loan offered for a term comparable to such Interest Period, as
currently shown on the Reuters Screen LIBO page as of 11:00 a.m., GMT, two
Eurodollar Business Days prior to the first day of such Interest Period;
provided, however, that (A) if more than one offered rate as described above
appears on the Reuters Screen LIBO page, the rate used to determine LIBOR will
be the arithmetic average (rounded upward, if necessary, to the next higher
1/100 of 1%) of such offered rates, or (B) if no such offered rates appear, the
rate used for such Interest Period will be the arithmetic average (rounded
upward, if necessary, to the next higher 1/100 of 1% ) of rates quoted by the
Reference Banks at approximately 10:00 a.m., New York time, two Eurodollar
Business Days prior to the first day of such Interest Period for deposits in
United States dollars offered to leading European banks for a period comparable
to such Interest Period in an amount comparable to the principal amount of such
Eurodollar Rate Loans. If the Administrative Agent ceases to use the Reuters
Screen LIBO page for determining interest rates based on eurodollar deposit
rates, a comparable internationally recognized interest rate reporting service
shall be used to determine such offered rates.
5
<PAGE>
"Eurodollar Rate Loan" shall mean any Term Loan which bears interest
at the Eurodollar Rate.
"Event of Default" shall mean any one of the events specified in
paragraphs (a) through (i) of Section 8.1 hereof, provided that any requirement
for notice or lapse of time or other condition contained therein has been
satisfied.
"Existing Credit Agreement" shall mean the Credit Agreement, dated as
of May 2, 1997, among the Company, the several financial institutions which are
parties thereto and Nationsbank, N.A. (South), as Agent Bank, as amended,
restated, modified, renewed, refunded, replaced or refinanced (in whole or in
part) from time to time.
"Funded Debt" shall mean any obligation for borrowed money or the
deferred purchase price of property, or any obligation arising under a capital
lease, other than Convertible Subordinated Debt, payable more than one year
from the date of the creation thereof which, under generally accepted
accounting principles in effect from time to time, is shown on the balance
sheet of the obligor as a liability; provided that any obligation shall be
treated as Funded Debt, regardless of its term, if such obligation is renewable
pursuant to the terms thereof or of a revolving credit or similar agreement
effective for more than one (1) year after the date of the creation of such
obligation or may be payable out of the proceeds of a similar obligation
pursuant to the terms of such obligation or of any such agreement.
"GAAP" shall mean the generally accepted accounting principles in the
United States as in effect from time to time.
"Immediate Replacement Event" shall mean a change in any law, rule,
or regulation, or any change in the interpretation or administration thereof,
or, a new law, rule, or regulation, having any of the consequences specified in
Section 9.1 hereof.
"Initial Term Loans" shall have the meaning set forth in Section 3.1
hereof.
"Interest Period" shall mean, for each Eurodollar Rate Loan, the
period beginning on the date of such Term Loan or conversion thereof or on the
last day of an immediately preceding Interest Period for such Term Loan and
ending one, two, three, or six months later, as specified in the notice given
by the Company to the Administrative Agent; provided, however, that if the last
day of any Interest Period would fall on a day which is not a Eurodollar
Business Day that Interest Period shall be extended to the next succeeding day
which is a Eurodollar Business Day, unless the result of such extension should
be to carry such Interest Period to the next succeeding calendar month in which
event such Interest Period shall end on the immediately preceding Eurodollar
Business Day, further provided that any Interest Period that would extend
beyond the Maturity Date shall end on such date.
6
<PAGE>
"Interest Rate" shall mean:
(a) With respect to a Eurodollar Rate Loan, the Eurodollar Rate; and
(b) With respect to a Base Rate Loan, the Base Rate.
"Main Office" of the Administrative Agent shall be The Chase
Manhattan Bank, 270 Park Avenue, New York, New York.
"Majority Banks" shall mean, as of any date, Banks on such date
having Credit Exposures (as defined below) aggregating at least 51% of the
aggregate Credit Exposures of all the Banks on such date. For purposes of the
preceding sentence, the amount of the "Credit Exposure" of each Bank shall be
equal to the aggregate principal amount of the Term Loans owing to such Bank
plus the unutilized amount of such Bank's Commitment.
"Maturity Date" shall mean March 22, 2001 or such earlier date on
which the Term Loans shall become due and payable in accordance with the terms
of this Agreement.
"Merger Date" shall mean the date on which the Merger (as defined in
the recitals hereto) becomes effective.
"Moody's" shall mean Moody's Investors Service, Inc.
"Moody's Rating" shall have the meaning set forth in the definition
of Applicable Margin.
"Notes" shall have the meaning set forth in Section 3.3 hereof.
"Officer's Certificate" shall mean a certificate signed by the
Chairman of the Board, the President, or a principal financial officer of the
Company.
"Orderly Replacement Event" shall mean, as to any Eurodollar Rate
Loan, the determination by the Administrative Agent not later than two (2)
Eurodollar Business Days prior to the first day of any Interest Period that:
(a) for any reason whatsoever rates are not quoted for the offering of Dollars
in the London interbank market for deposit for a period comparable to such
Interest Period; or (b) the quoted rate for purposes of computing the rate of
interest on the Eurodollar Rate Loan does not accurately reflect the funding
cost to the Banks of making or maintaining such Term Loans.
"Person" shall mean and include an individual, a partnership, a joint
venture, an estate, a corporation, a trust, an unincorporated organization, a
limited liability company, and a government or any department or agency or
political subdivision thereof.
7
<PAGE>
"Prime Rate" shall mean, for any day, the rate which is quoted by
each Reference Bank as the respective bank's prime, reference, base, or
alternate base rate, as the case may be. The Company acknowledges that the
Prime Rate of any Reference Bank may not be the lowest or best interest rate
offered by such Reference Bank to its customers.
"Rating" shall have the meaning set forth in the definition of
Applicable Margin.
"Reference Bank" shall mean the Administrative Agent, Citibank, N.A.
and Bank of America NT & SA, and each of their respective successors and
assigns.
"Required Number" shall mean in the case of notices relating to Term
Loans hereunder to the Administrative Agent: (a) relative to borrowings,
prepayments, elections of, and conversions into, the Eurodollar Rate,
selections of Interest Periods and other transactions in respect of Eurodollar
Rate Loans, not less than three (3) Eurodollar Business Days and (b) relative
to all transactions in respect to Base Rate Loans, not less than one (1)
Business Day, provided that for the Term Loans made on the Tender Offer Date
the notice of such borrowing will be sufficient if given no later than 11:00
a.m. New York City time on the Tender Offer Date and such Term Loans may be
made as Eurodollar Rate Loans if the Company had (i) given notice to the
Administrative Agent at least three (3) Eurodollar Business Days prior to the
Tender Offer Date (which may have been given and will be effective for purposes
hereof regardless of whether this Agreement at that time had been executed by
any of the parties hereto) specifying the date, amount and initial Interest
Period for such borrowing and (ii) in connection therewith, delivered to the
Administrative Agent, for the benefit of the Banks to become party hereto, an
undertaking with respect to such borrowing agreeing to indemnify such Banks on
a basis substantially as set forth in Section 3.9.
"S&P" shall mean Standard & Poor's Ratings Services.
"S&P Rating" shall have the meaning set forth in the definition of
Applicable Margin.
"Specified Event of Default" shall mean any default in the observance
or performance of any Specified Restrictive Provision or the occurrence of any
Specified Restrictive Provision structured as an event of default.
"Specified Restrictive Provision" shall have the meaning set forth in
Section 11.4 hereof.
"Subsequent Term Loans" shall have the meaning set forth in Section
3.1 hereof.
"Subsidiary" shall mean any corporation, association or other
business entity, a
8
<PAGE>
majority (by number of votes) of the outstanding stock or other ownership
interest of which is, at the time at which any determination is being made,
owned by the Company either directly or through Subsidiaries (excluding, until
the Tender Offer Date, the Target and its subsidiaries).
"Tender Offer Date" shall mean the date on which the Company is to
deposit with the Depositary for the Tender Offer funds for payment of the
purchase price of Shares accepted for payment in the Tender Offer.
"Term Loan" shall mean, collectively, the Eurodollar Rate Loans and
the Base Rate Loans.
"Termination Date" shall mean the earlier of (a) the Merger Date
(after giving effect to the making of any Term Loans on such date) and (b) the
date which is 120 days after the Effective Date, unless the Credit Facility is
earlier terminated pursuant to the applicable provisions of this Agreement.
"Total Commitments of the Banks" shall have the meaning set forth in
Section 2.l hereof.
ARTICLE 2. AMOUNT AND TERMS OF CREDIT
Section 2.1. Commitment.
Each Bank severally agrees to make Term Loans to the Company on each
of (i) a date on or after the expiry date of the Tender Offer and no earlier
than two Business days before the Tender Offer Date and (ii) the Merger Date in
the manner and upon, and subject to, the terms and conditions hereinafter set
forth up to an amount equal to such Bank's Commitment as set forth in Section
2.2 hereof, as such Commitment on either such date may have been adjusted from
time to time in accordance with the terms of this Agreement. The obligation of
each Bank to make Term Loans to the Company is hereby referred to as the Bank's
"Commitment" and collectively as the "Total Commitments of the Banks". Each
Bank's Commitment shall automatically be permanently reduced on a date on or
after the expiry date of the Tender Offer and no earlier than two Business Days
before the Tender Offer Date by the amount of the Term Loan made by such Bank
on such date.
Section 2.2. The Banks.
See Exhibit A hereto.
ARTICLE 3. THE TERM LOANS
9
<PAGE>
Section 3.1. Term Loans.
Subject to the terms and conditions hereof, on each of (i) a date on
or after the expiry date of the Tender Offer and no earlier than two Business
Days before the Tender Offer Date and (ii) the Merger Date, each Bank severally
and not jointly agrees to make Term Loans to the Company in an aggregate
principal amount up to, but not exceeding, such Bank's Commitment on such date.
Term Loans made in connection with the Tender Offer Date are hereinafter
referred to as the "Initial Term Loans", and Term Loans made on the Merger Date
are hereinafter referred to as the "Subsequent Term Loans".
Section 3.2. Notice and Place of Borrowing for Term Loans.
The Company shall give written, facsimile or telephonic (confirmed
immediately in writing) notice to the Administrative Agent, such notice to be
given not later than 11:00 a.m. New York City time on a Business Day which is
at least the Required Number of days prior to each borrowing of Term Loans and
to contain the date of such borrowing, the amount of such borrowing, the
Interest Rate option selected, and, where applicable, the length of the
Interest Period. Upon receiving notice from the Company, the Administrative
Agent shall promptly give written, facsimile or telegraphic notice to each
Bank, such notice to contain the date of such borrowing, the amount to be
borrowed from such Bank, the Interest Rate option selected, and, where
applicable, the length of the Interest Period. Funds are to be disbursed
pursuant to this Agreement at the Main Office of the Administrative Agent. Not
later than 11:00 a.m.(or, in the case of any permitted same-day notice of
borrowing, 2:00 p.m.) New York City time on the date of borrowing of Term Loans
as specified in the notice from the Administrative Agent to the Banks, each
Bank shall have made available at the Main Office of the Administrative Agent,
in immediately available funds, the amount of Term Loans to be advanced by such
Bank, and the Administrative Agent shall immediately pay such funds to or upon
the order of the Company. Unless the Administrative Agent shall have received
notice from a Bank prior to the date of any such borrowing that such Bank will
not make available to the Administrative Agent such Bank's ratable portion of
such borrowing, the Administrative Agent may assume that such Bank has made
such portion available to the Administrative Agent on the date of such
borrowing in accordance with this Section 3.2, and the Administrative Agent
may, in reliance upon such assumption, make available to the Company on such
date a corresponding amount. If and to the extent such Bank shall not have made
such ratable portion available to the Administrative Agent, such Bank and the
Company severally agree to repay to the Administrative Agent immediately on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Company and until the date
such amount is repaid to the Administrative Agent, at (i) with respect to the
Company, the Interest Rate applicable at the time to the type of Term Loan
comprising such borrowing, or (ii) with respect to the Bank, at the applicable
overnight federal funds rate. If such Bank shall repay to the Administrative
Agent
10
<PAGE>
such corresponding amount, such amount so repaid shall constitute such
Bank's advance as part of such borrowing for purposes of this Agreement.
Section 3.3. The Notes.
The Term Loans made pursuant to this Agreement by each Bank shall be
evidenced by a promissory note executed and delivered by the Company in form
substantially the same as Exhibit B attached hereto and made a part hereof,
each dated the date of this Agreement, each drawn to the order of such Bank in
the amount of such Bank's respective Commitment, and each maturing on the
Maturity Date. Such promissory notes are hereinafter referred to as the "Notes"
and each as a "Note". Each Bank's records with respect to advances and
repayments of Term Loans hereunder shall, absent manifest error, be deemed to
prevail as to the Company's obligations hereunder.
Section 3.4. Interest.
The Company shall pay interest on the outstanding principal amount of
each Term Loan for the period commencing on the date of each such Term Loan
until such Term Loan shall be due and payable at the rates and times set forth
below:
(a) Interest on Eurodollar Rate Loans. Subject to the provisions of
subsection (c) immediately below, interest on each Eurodollar Rate Loan shall
be payable (i) on the last day of each Interest Period with respect thereto,
provided, however, that if such Interest Period is for a period of duration in
excess of three (3) months, then such interest shall also be payable on the
date three (3) months after the first day of such Interest Period, (ii) on the
date of conversion of such Eurodollar Rate Loan to a Base Rate Loan and (iii)
at maturity of such Term Loan (and after maturity of such Term Loan (whether by
acceleration or otherwise) upon demand), at an interest rate per annum during
the Interest Period for such Term Loan equal to the Eurodollar Rate for the
Interest Period in effect for such Eurodollar Rate Loan. Each determination by
the Administrative Agent of an Interest Rate hereunder shall be conclusive and
binding on the Banks and the Company for all purposes, absent manifest error.
(b) Interest on Base Rate Loans. Subject to the provisions of
subsection (c) immediately below, interest on each Base Rate Loan shall be
payable quarterly in arrears on the last day of each March, June, September and
December of each year and at maturity (and after maturity (whether by
acceleration or otherwise) upon demand) at an interest rate per annum equal to
the Base Rate.
(c) Interest Upon Event of Default. Any payment of principal or
interest on any Term Loan which is not paid when due, as herein provided, shall
bear interest (to the extent permitted by law) at that rate which is
one-quarter of one percent (1/4%) above the Base Rate in
11
<PAGE>
effect on each respective day thereafter until paid in full and such
interest shall be payable on demand.
(d) Prepayment. Upon prepayment of any Term Loan hereunder, interest
accrued and unpaid on the amount so prepaid shall become due on the date of
such prepayment.
(e) Computations. Interest on Base Rate Loans shall be computed on
the basis of a year of 365/366 days and an actual day month. Interest on
Eurodollar Rate Loans shall be computed on the basis of a year of 360 days and
an actual day month.
Section 3.5. Place of Payment.
Each payment (whether required or voluntary and whether of principal
or interest or both) on each Note and each payment of fees or other amounts
owing by the Company hereunder shall be payable, on or before 11:00 a.m., New
York City time, on the due date of each payment, in immediately available
funds, to the Administrative Agent at its Main Office at such account as the
Administrative Agent shall from time to time notify the Company in writing. The
Administrative Agent shall then immediately transmit the applicable pro rata
share of such payment so received by the Administrative Agent in immediately
available funds to each Bank entitled thereto in the manner specified by such
Bank. Any required payment which would otherwise be due on a day not a Business
Day shall be made on the immediately succeeding Business Day.
Section 3.6. Voluntary Prepayment.
The Company may voluntarily prepay, at any time and from time to time
prior to maturity on one day's prior notice to the Administrative Agent, any
part or the whole of the principal of the Notes; provided, however, that any
voluntary prepayment shall be in a minimum amount of $25,000,000 and integral
multiples of $5,000,000 in excess thereof. Upon any such prepayment, the
Company shall simultaneously pay all accrued and unpaid interest on the amount
of principal voluntarily prepaid. However, any such prepayment of a Eurodollar
Rate Loan not made on the last day of the Interest Period therefor shall
require the Company also to pay any amounts owing pursuant to Section 9.3. All
voluntary prepayments provided for in this Section 3.6 shall be without premium
or penalty.
Section 3.7. Pro Rata Treatment.
Except for Section 3.14 hereof, and except with respect to payments
to be made to a Bank pursuant to Sections 3.9, 3.15 or 11.3 and any other
indemnity in favor of a Bank or Banks hereunder, (a) each borrowing from, and
utilization of and reduction of the Commitments of, the Banks hereunder shall
be prorated among the Banks according to the respective Commitments of the
Banks as set forth in Section 2.2 hereof, as the same may be adjusted from time
to time under Section 3.13, 3.14 or 3.15 hereof and (b) each payment to the
Banks
12
<PAGE>
hereunder shall be prorated among the Banks according to the respective
Term Loans (or, in the case of Commitment Fees, Commitments) of the Banks.
Except as otherwise provided herein, (i) each payment on account of principal
and interest on any outstanding Term Loans shall be made to the Administrative
Agent for the account of the Banks pro rata in accordance with the aggregate
principal amount of all Term Loans then outstanding, and (ii) all payments to
be made by the Company for the account of each of the Banks on account of
principal, interest and fees, shall be made without set-off or counterclaim.
Section 3.8. Initial Determination of Interest Rate and Conversion of
Term Loans Between Eurodollar Rate and Base Rate.
Prior to the Initial Term Loan or Subsequent Term Loan borrowings,
the Company will specify the Interest Rate to be applicable to such borrowings,
and on any Business Day or Eurodollar Business Day, as applicable, the Company
may convert on a pro rata basis among the Banks any outstanding Base Rate Loans
or Eurodollar Rate Loans into the other type of Term Loans, subject to the
following limitations:
(a) No such conversion of any Eurodollar Rate Loan may be made except
on the last day of an Interest Period with respect thereto; and
(b) The Company shall give the Administrative Agent the Required
Number of days notice for such borrowing or conversion.
If, at the end of an Interest Period of a Eurodollar Rate Loan, the Company has
failed to specify in a timely manner the Interest Rate option applicable to such
Term Loan for the period after the expiration of the then current Interest
Period, the Company shall be deemed to have selected that such Term Loan shall
bear interest at the Base Rate and, at the end of such Interest Period, such
Term Loan shall automatically convert to a Base Rate Loan.
Section 3.9. Failure to Borrow.
The Company shall indemnify and hold harmless each Bank in respect of
any funding costs and/or losses in the event that any borrowing notified to the
Banks pursuant to Section 3.2, relative to Eurodollar Rate Loans, shall not be
consummated because of the Company's failure to satisfy one or more of the
applicable conditions precedent in Article 4 or because the Company fails to
borrow such Term Loans at the specified time.
Section 3.10. Commitment Fee.
The Company shall pay to the Administrative Agent, for the account of
the Banks to be distributed to the Banks pro rata in accordance with their
respective Commitments, a Commitment Fee for each day during the period from
the Effective Date to the Termination Date
13
<PAGE>
on the amount of the Commitments on such day (determined after giving
effect to any reduction in the amount of the Commitments effective on such
day), at the per annum percentage rate of 0.20%. Commitment Fees shall be
computed on the basis of a year of 365/366 days, on an actual-day month.
Accrued Commitment Fees shall be payable in arrears and in immediately
available funds on the last day of each fiscal quarter of the Company
(commencing on June 30, 1999) and on the Termination Date. The Administrative
Agent shall forthwith pay to each Bank its ratable share of each payment of the
Commitment Fee under this Section 3.10 in immediately available funds.
Section 3.11. Termination of Credit Facility.
Unless earlier terminated pursuant to the terms hereof, the
Commitments of the Banks shall terminate on the Termination Date.
Section 3.12. Maturity of Credit Facility.
The Company shall pay the entire outstanding principal amount of, and
all accrued but unpaid interest on, the Term Loans and Notes, together with any
and all other amounts owing by the Company to the Banks and the Administrative
Agent hereunder or under the Notes, on the Maturity Date.
Section 3.13. Optional Reduction of Commitments.
The Company shall have the right at any time or from time to time
upon not less than two (2) Business Days' prior written notice to the
Administrative Agent to reduce the Total Commitments of the Banks, in whole or
in part, provided that each partial reduction shall be in an aggregate amount
of not less than $25,000,000 and an integral multiple of $5,000,000, and shall
reduce the respective Commitments of all the Banks proportionately. The
Administrative Agent shall give prompt written notice to each Bank of each such
reduction. Once the Company voluntarily reduces the Commitments pursuant to
this Section 3.13, the Company may not thereafter increase the Commitments.
Section 3.14. Substitution of Banks.
3.14.1
If any Bank shall default in the performance of its Commitment,
whether in whole or in part, then:
(a) such default shall not relieve any other Bank of its Commitment;
and
14
<PAGE>
(b) the Company may, with the prior written approval of the
Administrative Agent (such approval not to be unreasonably withheld), terminate
the Commitment of such defaulting Bank and arrange for the Commitment of the
defaulting Bank to be taken over by one (1) or more of the other Banks, and to
the extent that such other Banks will not take over such Commitment, arrange
for its assumption by one (1) or more banks which are not at that time parties
hereto, each of which banks shall, except as otherwise provided herein upon
execution and delivery to the Company of a counterpart hereof, become a Bank
hereto to the extent of the Commitment taken over by it; and
(c) the defaulting Bank shall immediately refund to the Company that
portion of all Commitment Fees which have been paid to it by the Company with
respect to the amount of its Commitment not made available to the Company and
shall be liable to the Company for any and all additional costs and expenses
incurred by the Company in connection with arranging, obtaining and funding any
substitute loan or loans and/or substitute commitment or commitments, provided,
however, that neither the payments by a defaulting Bank required by this
subsection, nor any action of the Company pursuant to this Section 3.14, nor
the prepayment of Notes pursuant to Section 3.14.2 hereof shall constitute a
waiver of or release of any right which the Company shall have against the
defaulting Bank for its failure to perform its obligations hereunder.
3.14.2.
Loans previously made hereunder by a defaulting or withdrawing Bank,
or any portion thereof, which are included in the Commitment taken over by any
other Bank or Banks or by a bank or banks not then parties hereto, shall be
prepaid by the Company without penalty or premium but subject to offset of the
amounts due from such withdrawing Bank pursuant to Section 3.14. l(c).
3.14.3.
From time to time, the Company may replace a non-defaulting Bank (the
"Replaced Bank") with another financial institution (or institutions) desiring
to be a Bank hereunder (the "New Bank(s)") and/or with one or more Banks
already a party hereto ("Existing Bank(s)") so long as (a) the Replaced Bank
consents in writing to such replacement and receives all amounts owing to such
Replaced Bank hereunder on the effective date of such replacement, (b) the New
Bank(s) and/or Existing Bank(s), as the case may be, assume(s) all of the
obligations of a Bank hereunder having a Commitment equal to the Replaced
Bank's by executing, in the case of a New Bank(s), a letter agreement in
substantially the form of Exhibit C-1 attached hereto or, in the case of an
Existing Bank(s), a letter agreement in substantially the form of Exhibit C-2
hereto, (c) the Commitment(s) of the New Bank(s), together with the additional
Commitment(s) of the Existing Bank(s) assumed by the Existing Bank(s) pursuant
hereto, is equal to the Commitment of the Replaced Bank and (d) the Company and
the Administrative Agent
15
<PAGE>
acknowledge and consent that the New Bank(s) shall become a Bank hereunder
(and/or that the Existing Bank(s) shall have an additional Commitment hereunder
equal to that of the Replaced Bank) by signing the respective acknowledgments
contained in the appropriate letter agreement referred to in subparagraph (b)
above.
3.14.4.
The respective amounts of the Commitments under Section 2.2 hereof
shall be adjusted from time to time to reflect any changes made pursuant to
this Section 3.14 and notice of such adjustments shall be given by the Company
at the time thereof to each Bank or bank then a party hereto. Such adjusted
amounts of Commitments shall thereupon become the basis for pro rata treatment
under Section 3.7 of this Agreement.
3.14.5.
Upon the termination in whole of the Commitment of any Bank or any
bank which has become a party hereto, and the prepayment of all Loans
previously made under such Commitment, all as provided in this Section 3.14,
such Bank or bank shall cease to be a party to this Agreement except as
otherwise provided herein.
Section 3.15. Capital Requirements.
If, as a result of the adoption after the date of this Agreement, of
any applicable law, rule or regulation affecting capital adequacy or capital
maintenance, or any change after the date of this Agreement in the
interpretation or administration of any law, rule or regulation affecting
capital adequacy or capital maintenance in existence as of the date hereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Bank with any
request or directive affecting capital adequacy or capital maintenance (whether
or not having the force of law) of any such authority, central bank or
comparable agency, any Bank determines that such adoption, change or compliance
has or would have the effect of reducing the rate of return on such Bank's
capital as a consequence of its Commitment or Term Loans to a level below that
which such Bank could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, such Bank shall give
prompt notice to the Company and the Administrative Agent, and then from time
to time, within 15 days after submission by such Bank to the Company (with a
copy to the Administrative Agent) of a written request therefor, the Company
shall pay to such Bank such additional amount or amounts as will compensate
such Bank for such reduction. Any request submitted by a Bank to the Company
pursuant to this Section 3.15 shall contain such calculations of the amounts
requested therein as such Bank shall deem reasonable in view of its customary
practices, and shall be submitted as soon as practicable, but in any event the
initial
16
<PAGE>
such request shall be submitted not more than 90 days after such Bank
becomes aware of the event by reason of which such request is being submitted.
Subsequent requests by such Bank shall be submitted quarterly. If any Bank
requests payment of any amount from the Company pursuant to this Section 3.15,
the Company may, pursuant to arrangements and documentation satisfactory to the
Company and the Administrative Agent, prepay the outstanding Term Loans, fees,
and any other amounts due to such Bank in full and terminate the Commitment of
such Bank and the Company may at its option arrange for all or part of the Term
Loans and Commitment of such Bank to be taken over by one (1) or more of the
other Banks and, to the extent such other Banks do not take over such Term
Loans and Commitment or part thereof, arrange for such Term Loans and
Commitment to be taken over in whole or in part by a bank or banks not a party
hereto, each of which banks shall, except as otherwise provided herein upon
execution and delivery to the Company of a counterpart hereof, become a full
party hereto to the extent of the Term Loans and Commitment taken over by it.
The respective amounts of the Commitments under Section 2.2 hereof shall be
adjusted from time to time to reflect any changes made pursuant to this Section
3.15 and notice of such adjustments shall be given by the Company at the time
thereof to each Bank or bank then a party hereto. Such adjusted amounts of
Commitments shall thereupon become the basis for pro rata treatment under
Section 3.7 hereof. Upon the termination in whole of the Commitment of any Bank
or any bank which has become a party hereto, and the prepayment of all Term
Loans previously made under such Commitment, all as provided in this Section
3.15, such Bank or bank shall cease to be a party to this Agreement except as
otherwise provided herein.
Section 3.16. Mandatory Prepayment Upon Change in Control.
In the event that (i) any Person or two (2) or more Persons acting in
concert shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities and
Exchange Act of 1934, as amended), directly or indirectly, of securities of the
Company (or other securities convertible into such securities) representing
fifty percent (50%) or more of the combined voting power of all securities of
the Company entitled to vote in the election of directors, other than
securities having such power only by reason of the happening of a contingency,
or (ii) during any period of up to twelve (12) consecutive months, commencing
before or after the date of this Agreement, individuals who at the beginning of
such twelve (12) month period were directors of the Company shall cease for any
reason (other than death, mental or physical disability, or retirement) to
constitute a majority of the board of directors of the Company, then: (a) the
Commitments of the Banks to the Company hereunder shall be immediately
terminated and (b) any amounts outstanding under the Notes or under this
Agreement shall, notwithstanding any other provisions of this Agreement or the
Notes, become immediately due and payable.
Section 3.17. Agent Fees.
17
<PAGE>
The Company agrees to pay to the Administrative Agent a fee to
compensate the Administrative Agent for the administration of the Credit
Facility and for other services, such fee to be agreed upon by the
Administrative Agent and the Company.
ARTICLE 4. CONDITIONS TO EFFECTIVENESS OF AGREEMENT AND FOR BORROWINGS
Section 4.1. Effectiveness.
This Agreement shall not become effective until the Administrative
Agent shall have received the following, in form and substance satisfactory to
the Administrative Agent:
(a) The Notes dated as of the date hereof, payable to the order of
each of the Banks in the amounts of their respective Commitments, duly executed
and delivered by the Company; and
(b) An Officer's Certificate dated as of the date hereof stating that
the representations and warranties contained in Article 5 hereof are true on
and as of such date; and
(c) An incumbency certificate dated as of the date hereof for each
officer executing this Agreement and each other person who will sign the Notes
pursuant to this Agreement on behalf of the Company; and
(d) A copy of the Company's Board of Directors' resolutions
authorizing the borrowings under this Agreement, certified by the Secretary or
an Assistant Secretary of the Company as being in full force and effect as of
the date of the Effective Date; and
(e) a favorable opinion dated as of the date hereof from counsel for
the Company stating that:
(i) The Company is a corporation duly organized, existing and in
good standing under the laws of the State of Delaware, and the
execution, delivery and performance of this Agreement and the Notes
are within the Company's corporate powers;
(ii) The Company has the necessary corporate power to carry on
its business as then being conducted;
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which the nature of the business conducted by it makes such
qualification necessary;
18
<PAGE>
(iv) The Company is a duly certificated air carrier and there
are in force all permanent or temporary certificates or other
appropriate legal authority issued by appropriate governmental
authorities to authorize the Company to engage in intrastate,
interstate, overseas and foreign air transportation of persons,
property and mail over the routes then operated by the Company;
(v) The Company has title to all of the flight equipment which
it owns free and clear of all liens and encumbrances except as
permitted by this Agreement;
(vi) All leases of flight equipment to which the Company is a
party are valid and binding upon the lessors;
(vii) No consent of stockholders of the Company to the chattel
mortgage or mortgages referred to in Section 6.6 hereof is required
by law or by the Certificate of Incorporation or Bylaws of the
Company or otherwise;
(viii) All corporate steps necessary to authorize the execution
and delivery of this Agreement and the Notes and the Company's
performance thereunder have been taken and no consent, approval,
authorization, permit or license from any federal, state or other
regulatory authority is required in connection therewith;
(ix) The borrowings hereunder, or the giving of the Notes, will
not violate any provision of the Delaware Corporation Law or the
Company's Certificate of Incorporation or Bylaws or any agreement,
indenture, note or other instrument evidencing any material
indebtedness for money borrowed to which the Company is a party or by
which the Company or its assets is bound; and
(x) This Agreement and the Notes being issued to evidence such
borrowings are legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms, subject,
however, to limitations imposed by law in connection with bankruptcy
and similar proceedings; and
(f) All fees (including reasonable, invoiced fees and expenses of
counsel to the Administrative Agent) and other compensation required to be paid
to the Administrative Agent or the Banks to the extent due on or before the
Effective Date.
Section 4.2. Initial and Subsequent Borrowing.
The Banks shall not be obligated to make any Term Loans, including
the Initial Term Loans, unless at the time thereof the Company shall have
furnished to the Administrative Agent an Officer's Certificate bearing that
date, and stating that:
19
<PAGE>
(a) There exists on that date no Default or Event of Default;
(b) There exists on that date no Event of Default or default under
any instrument evidencing or any agreement given in connection with Funded Debt
of the Company;
(c) Such borrowing will not contravene any agreement, indenture or
instrument to which the Company is a party or by which it may be bound and
which is material to the financial condition of the Company;
(d) The representations and warranties contained in Sections 5.1,
5.3, 5.4, 5.7(a), 5.7(c), 5.8, 5.9, 5.10, 5.11, 5.13, 5.14 and 5.15 hereof are
true on and as of such date;
(e) The extension(s) of credit being made on such date are legal,
valid and binding obligations of the Company, the resolutions of the Board of
Directors of the Company referred to in Section 4.1(d) hereof remain in full
force and effect, and the officers of the Company requesting such advances are
duly authorized and empowered to do so;
(f) (i) In the case of the Initial Term Loans, they are being made on
a date on or after the expiry date of the Tender Offer and no earlier than two
Business Days before the Tender Offer Date and (ii) in the case of the
Subsequent Term Loans, they are being made on the Merger Date; and
(g) The aggregate consideration expended by the Company and its
Subsidiaries to purchase Shares in connection with the Tender Offer and the
Merger does not exceed $750,000,000.
Further, the occurrence of the Tender Offer Date (after the Target
becomes a Subsidiary) and any conversion of a Term Loan from one type to
another as contemplated by Section 3.8 hereof shall be deemed to be a
representation by the Company that the matters referred to in paragraphs (a)
through (e) above continue to be true and correct.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
The Company hereby represents, covenants and warrants to the
Administrative Agent and each of the Banks as follows:
Section 5.1. Organization; Standing, Etc.
20
<PAGE>
The Company is a corporation duly organized and existing under the
laws of the State of Delaware, has the corporate power to own its property and
carry on its business as being conducted, and is duly qualified to do business
as a foreign corporation and is in good standing in every jurisdiction in which
the nature of the business conducted by it makes such qualification necessary.
Section 5.2. Financial Statements.
The Company has furnished the Banks with the following financial
statements, identified by the certificate of a principal financial officer of
the Company: balance sheets of the Company as at June 30, 1998 and December 31,
1998, and income and reinvested earnings statements of the Company for the
fiscal year or fiscal quarter, as the case may be, ended on such dates,
respectively, certified, in the case of financial statements for the fiscal
year ended June 30, 1998, by Arthur Andersen LLP. Such financial statements are
true and correct and have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods involved.
The balance sheets and their accompanying notes present fairly the condition of
the Company as of the dates thereof, and the income and reinvested earnings
statements present fairly the results of the operations of the Company for the
periods indicated. There has been no material adverse change in the condition
or operation of the Company (on a pro forma basis assuming consummation of the
Acquisition) since December 31, 1998.
Section 5.3. Litigation.
There is no action or proceeding pending or threatened against the
Company before any court or administrative agency which, in the reasonable
opinion of the Company, is likely to be determined in a manner which would
result in any material adverse change in the condition or operation of the
Company and the Company is not in default with respect to any order, writ,
injunction or decree of any court or administrative agency, which would have a
material adverse effect on the Company.
Section 5.4. Business; Status as Air Carrier.
(a) The Company is a duly certificated air carrier and there are in
force any certificates or other appropriate authority issued by appropriate
governmental authorities necessary to authorize the Company to engage in
intrastate, interstate, overseas and foreign air transportation of persons,
property and mail over the routes operated by the Company; and
(b) no proceedings are pending or threatened, by or before any public
body, agency or authority, domestic or foreign, including but not limited to
proceedings to alter, amend, modify, suspend or revoke such certificates in
whole or in part, which might seriously
21
<PAGE>
affect adversely the income from, title to, or possession of, any of the
properties of the Company, to an extent which would constitute a material
adverse change in the business or condition of the Company.
Section 5.5. Funded Debt.
The Company does not have outstanding any Funded Debt except as set
forth on Schedule I to this Agreement; and there exists no default under the
provisions of any instrument evidencing such indebtedness or agreement relating
thereto.
Section 5.6. Title to Properties, Etc.
The Company and its Subsidiaries have good and marketable title to
their respective properties and assets, including the properties and assets
reflected in the balance sheets described in Section 5.2 hereof, subject to no
mortgage, pledge, encumbrance, lien or charge of any kind except mortgages,
pledges, encumbrances, liens or charges permitted by Section 7.1 hereof.
Section 5.7. Tax Returns and Payments.
(a) The Company has filed all federal income tax returns which are
required to be filed, and has paid all taxes as shown on said returns and on
all assessments received by it to the extent that such taxes (other than those
which the Company is contesting in good faith by appropriate proceedings being
diligently conducted) have become due;
(b) The federal income tax liability of the Company has been finally
determined by the Internal Revenue Service and satisfied for all fiscal years
prior to and including the fiscal year ended June 30, 1992, except for a
pending refund claim filed by the Company with the Internal Revenue Service
with respect to the fiscal year ended June 30, 1984;
(c) All other tax returns and reports of the Company which are
required to be filed have been duly filed, and all taxes and government charges
(other than those for which payment may be withheld without penalty or those
which the Company is contesting in good faith by appropriate proceedings being
diligently conducted) upon the Company, its assets, income or franchises which
are due and payable have been paid.
22
<PAGE>
Section 5.8. Compliance With Other Instruments.
The Company is not a party to any contract or agreement or subject to
any charter or other corporate restriction which materially and adversely
affects its business, property or assets, or financial condition; neither the
execution nor delivery of this Agreement nor the Notes herein described, nor
fulfillment of nor compliance with the terms and provisions hereof and of the
Notes, nor the consummation of the Acquisition, nor the use of proceeds of the
Term Loans, will conflict with, or result in a breach of the terms, conditions
or provisions of, or constitute a default under, the Certificate of
Incorporation or Bylaws of the Company or of any agreement or instrument to
which the Company is now a party, which breach would have a material adverse
effect on the condition or operation of the Company.
Section 5.9. Offering of Notes.
Neither the Company nor any agent acting on its behalf has offered
the Notes to be issued hereunder for sale to, or solicited any offers to buy
the said Notes from, any Person other than the Banks signatory to this
Agreement, and neither the Company nor any agent acting on its behalf will take
any action which would subject the issuance or sale of the said Notes to the
provisions of Section 5 of the Securities Act of 1933, as amended.
Section 5.10. Use of Proceeds.
The proceeds of the Term Loans shall be used for the purposes
described in the recitals hereto and to pay related fees and expenses. No part
of the proceeds of the Term Loans will be used in a manner that would violate
Regulation T, U or X of the Board of Governors of the Federal Reserve System.
The Company is not engaged, principally or as one of the Company's important
activities, in the business of purchasing or carrying any "margin stock" as
such term is defined in Regulation U of the Board of Governors of the Federal
Reserve System. After giving effect to each use of the proceeds of the Term
Loans, not more than 25% of the value of the assets of the Company and its
Subsidiaries (determined on a consolidated basis) shall be represented by
"margin stock".
Section 5.11. Governmental Regulation.
No consent, approval, authorization, permit or license from any
federal, state or other regulatory authority is required in connection with the
making, delivery or performance of this Agreement or the Notes by the Company,
the consummation of the Acquisition or the use of proceeds of the Term Loans,
except as have been obtained and are in full force and effect or, in the case
of consummation of the Acquisition, except where the failure to have so
obtained any such consent, approval, authorization, permit or license would not
have a material adverse effect on the Company and its Subsidiaries considered
as a whole (on a pro forma basis, assuming consummation of the Acquisition).
23
<PAGE>
Section 5.12. Subsidiaries.
Schedule II is a complete and correct list of all Subsidiaries as of
the date hereof, all of which are corporations duly incorporated, in good
standing and with corporate power to transact the business presently conducted
by them. Except as disclosed in Schedule II, the Company owns, directly or
indirectly through one or more Subsidiaries, all the shares of each of such
Subsidiaries (except directors' qualifying shares, if any), and all such shares
are validly issued, fully paid and non-assessable and are free and clear of all
liens and rights of others whatsoever.
Section 5.13. ERISA.
The Company and each Subsidiary have met their minimum funding
requirements under the Employee Retirement Income Security Act of 1974, as
amended from time to time, with respect to all their employee benefit plans
covered by the minimum funding requirements of said Act, and have not incurred
any material liability to the Pension Benefit Guaranty Corporation (or any
entity succeeding to any or all of said Corporation's functions under said Act)
under said Act in connection with any such plan.
Section 5.14. Environmental Matters.
The Company and its Subsidiaries are in substantial compliance with
all applicable federal, state and local environmental laws, regulations and
ordinances governing their respective business, properties or assets with
respect to discharges into the ground and surface water, emissions into the
ambient air and generation, storage, transportation and disposal of waste
materials or process by-products, except such noncompliances as are not likely
to have a material adverse effect on the property, assets, business, operations
or condition (financial or otherwise) of the Company and its Subsidiaries taken
as a whole. All licenses, permits or registrations required for the business of
the Company and its Subsidiaries under any federal, state or local
environmental laws, regulations or ordinances have been secured, and the
Company and each Subsidiary are in substantial compliance therewith, except
such licenses, permits or registrations the failure to secure or to comply
therewith are not likely to have a material adverse effect on the property,
assets, business, operations or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole.
Section 5.15. Year 2000 Matters.
The Company has reviewed the areas within its consolidated business
and operations that could be adversely affected by, and has developed or is
developing a plan to address on a timely basis, the "Year 2000 Problem" (that
is, the risk that computer applications used by the Company and its
Subsidiaries may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999).
24
<PAGE>
Based on such review and plan, the Company reasonably believes that the
"Year 2000 Problem" will not have a material adverse effect on the consolidated
business or operation of the Company.
ARTICLE 6. AFFIRMATIVE COVENANTS
The Company covenants and agrees that until all of its obligations
hereunder have been discharged and the obligations of the Banks to make
advances terminated, it will:
Section 6.1. Insurance.
Keep adequately insured, by financially sound and reputable insurers,
all property of the character usually insured by corporations engaged in the
same or similar businesses similarly situated, against loss or damage of the
kind customarily insured against by such corporations, and carry adequate
liability insurance and other insurance of a kind generally carried by
corporations engaged in the same or similar businesses similarly situated;
provided, however, that nothing herein contained shall be construed to mean
that a deductibility clause in any such insurance, which, in effect, results in
self-insurance of a level or portion of losses considered reasonable by the
Company's management, shall render such insurance inadequate; and provided,
further, that in the case of a lease to the United States Government or an
agency thereof of any aircraft or other property, indemnity therefrom by the
United States Government will be considered adequate insurance against the
risks that are the subject of any such indemnity.
Section 6.2. Payment of Taxes.
Duly file all federal income tax returns and all other tax returns
and reports which, to the knowledge of the officers of the Company are required
to be filed and pay when due all taxes and governmental charges assessed
against it, its assets, income or franchises, except to the extent and so long
as contested in good faith.
Section 6.3. Financial Statements.
Deliver to each Bank, so long as such Bank shall hold any Note issued
or Term Loan made hereunder or is committed to lend hereunder:
(a) As soon as practicable and in any event within two (2) months
after the end of each quarterly period (other than the last quarterly period in
each fiscal year) an income statement of the Company for the period from the
beginning of the current fiscal year to the end of such quarterly period, and a
balance sheet of the Company as at the end of such quarterly period, setting
forth in each case in comparative form figures for the corresponding period in
the preceding fiscal year, all in reasonable detail and certified by
25
<PAGE>
a principal financial officer of the Company, subject to changes resulting from
year-end adjustments; and a statement as of the end of such quarterly period of
the calculations made by the Company establishing its compliance with the
provisions of Sections 7.1, 7.2, 7.4 and, if applicable, 7.5 hereof, in
sufficient detail to permit the Banks to determine how the conclusions on such
statement were arrived at, certified by a principal financial officer of the
Company as accurate in all material respects;
(b) As soon as practicable and in any event within three (3) months
after the end of each fiscal year, an income statement and a statement of
reinvested earnings of the Company for such year, and a balance sheet of the
Company as at the end of such year, setting forth in each case in comparative
form corresponding figures from the preceding annual audit, all in reasonable
detail and satisfactory in scope to the Banks and certified by independent
certified public accountants of national standing selected by the Company; and
a statement as of the end of such fiscal year of the calculations made by the
Company establishing its compliance with the provisions of Sections 7.1, 7.2,
7.4 and, if applicable, 7.5 hereof, in sufficient detail to permit the Banks to
determine how the conclusions on such statement were arrived at, certified by a
principal financial officer of the Company as accurate in all material
respects;
(c) Copies of all financial statements, reports and returns which it
shall send to its stockholders;
(d) Promptly after the sending or filing thereof, copies of all
periodic reports, if any, which the Company shall have filed with the
Securities and Exchange Commission (or any governmental agency or agencies
substituted therefor) under Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended, or with any national securities exchange; and
(e) With reasonable promptness such other financial data as any Bank
may reasonably request through the Administrative Agent.
Section 6.4. Maintenance of Equipment.
Maintain substantially all of its equipment (except surplus or
obsolete equipment) in good operating order.
Section 6.5. Inspection.
Permit any Person designated by any Bank in writing, to visit and
inspect any of the properties, corporate books and financial records of the
Company and its Subsidiaries at the Bank's expense, and to discuss the affairs,
finances, and accounts of any such corporation with the principal officers of
the Company, all at such reasonable times and as often as such Bank
26
<PAGE>
may reasonably request. This covenant shall be subject to applicable
governmental and industrial security regulations.
Section 6.6. Security for Notes.
In the event the Company secures by mortgage, pledge, encumbrance,
lien or other charge any debt other than as permitted by Section 7.1 hereof,
the Company shall secure equally and ratably the indebtedness incurred
hereunder.
Section 6.7. Notice of Any Default or Event of Default.
As soon as practicable (but in any event not more than five (5) days
after the Chairman of the Board, the President, or a principal financial
officer of the Company obtains knowledge of a Default or an Event of Default as
specified in Article 8 hereof), the Company will deliver to each Bank an
Officer's Certificate specifying the nature thereof, the period of existence
thereof and what action the Company has taken or proposes to take with respect
thereto.
Section 6.8. ERISA Reporting Requirements.
With respect to any employee benefit plan subject to Title IV of
ERISA, the Company shall, if requested by the Administrative Agent, provide the
Administrative Agent with copies of the most recent annual reports or returns
(IRS Form 5500), audited or unaudited financial statements and actuarial
valuations with respect to such plans. In addition, the Company shall provide
the Administrative Agent copies of any notice filed with the Pension Benefit
Guaranty Corporation with respect to any "Reportable Event" as defined in
Section 4043 of ERISA, and the Administrative Agent shall forward copies of any
such notice to the Banks.
Section 6.9. Ratings.
Notify the Administrative Agent promptly after the Company becomes
aware of any public announcement of the occurrence of any change in the S&P
Rating or the Moody's Rating.
ARTICLE 7. NEGATIVE COVENANTS
Until all of its obligations hereunder have been discharged and the
obligations of the Banks to make advances terminated, the Company covenants
that it will not and will not permit any Subsidiary to:
Section 7.1. Liens.
27
<PAGE>
Create, assume or suffer to exist any mortgage, pledge, encumbrance,
lien or charge of any kind upon any of its property or assets, whether now
owned or hereafter acquired, except: (i) mortgages, pledges, encumbrances,
liens or charges where the aggregate indebtedness secured by such mortgages,
pledges, encumbrances, liens or charges at any time does not exceed the sum of
(a) the greater of $1,000,000,000 or fifteen percent (15%) of Equity plus (b)
the amount outstanding under the obligations described on Schedule I hereof as
"Secured"; (ii) liens for taxes not yet due or which are being contested in
good faith; (iii) other liens, charges and encumbrances incidental to the
conduct of its business or the ownership of its property and assets which were
not incurred to secure the repayment of borrowed money or other advances or
credit, and which do not in the aggregate materially detract from the value of
its property or assets or materially impair the use thereof in the operation of
its business; (iv) liens imposed by law, such as carriers',warehousemen's,
mechanics', materialmen's and vendors' liens, for sums not yet due or already
due but the validity of which is being contested in good faith; (v) mortgages,
pledges, encumbrances, liens or other charges on property or assets of a
Subsidiary to secure obligations of such Subsidiary to the Company or another
Subsidiary; and (vi) any mortgage, pledge, encumbrance, lien or other charge
required by Section 6.6 hereof.
Section 7.2. Debt.
Create, incur, assume or suffer to exist, for the Company and the
Subsidiaries taken together, (a) Current Debt in an aggregate principal amount
at any one time outstanding in excess of 100% of all accounts receivable of the
Company and its Subsidiaries outstanding as of the last day of the second
calendar month next preceding the month in which such calculation of Current
Debt is made, all computed in accordance with generally accepted accounting
principles as in effect from time to time; or (b) Convertible Subordinated Debt
in excess of 33.3% of Equity; or (c) Funded Debt, Current Debt (other than
Convertible Subordinated Debt) and all Guaranty Liabilities (as defined below)
in an amount at any one time which exceeds 150% of Equity at such time. For
purposes of this Section 7.2, "Guaranty Liabilities" shall mean all liabilities
of the Company and any Subsidiary of the Company as guarantor, surety,
accommodation endorser or other accommodation party on behalf of any Person
where the underlying obligation of such Person covered by, or the subject of,
such guaranty or contingent undertaking would constitute Current Debt or Funded
Debt, as defined herein, if such Person were the Company; provided, however,
that (x) guarantees or other contingent undertakings by the Company on behalf
of any Subsidiary, by any Subsidiary on behalf of any other Subsidiary, or by
any Subsidiary on behalf of the Company and (y) the contingent undertakings as
set forth on Schedule III hereto, shall not constitute Guaranty Liabilities.
Section 7.3. Mergers; Disposition of Assets.
Merge or consolidate with any corporation or sell, lease or transfer
or otherwise dispose of all or a substantial part of its assets in any
transaction or series of related transactions,
28
<PAGE>
except that (i) any Subsidiary may merge or consolidate with the Company or any
one or more other Subsidiaries; (ii) any Subsidiary may sell, lease, transfer
or otherwise dispose of any of its assets to the Company or another Subsidiary;
(iii) any Subsidiary may sell or otherwise dispose of all or substantially all
of its assets, provided that (a) such sale or other disposition is for a
consideration which represents fair value (as determined in good faith by the
Company) at the time of such sale or disposition, and (b) the assets so
disposed of do not constitute a substantial part of the aggregate assets of the
Company and the Subsidiaries; (iv) the Company may dispose of aircraft in the
ordinary course of its business, provided that such sale or other disposition
is for a consideration which represents fair value (as determined in good faith
by the Company) at the time of such sale or disposition; and (v) the Company
may merge or consolidate with another corporation, provided that (a) the
Company shall be the continuing or surviving corporation, (b) a majority of the
board of directors of the Company for a period of six (6) months after the
effective date of such merger consists of individuals who were directors of the
Company twelve (12) months prior to such effective date, and (c) immediately
after such merger or consolidation there shall exist no Event of Default as
defined in Article 8 hereof.
Section 7.4. Leases.
Enter into or permit to remain in effect any flight equipment lease
agreements which, as of the close of any fiscal year, cause the Company's
Consolidated Aircraft Rentals for such fiscal year to exceed eight percent (8%)
of the Company's consolidated operating revenues for such fiscal year, provided
that any such lease agreements as may be necessary in connection with
interchange agreements between the Company and other airline related businesses
shall not be included in such calculation.
Section 7.5. Financial Covenant.
On any date on which the S&P Rating is less than BBB- and the Moody's
Rating is less than Baa3, permit, as of the last day of the most recent period
of four consecutive fiscal quarters of the Company for which the relevant
financial information is available, the ratio of (a) Consolidated EBITDA for
such period plus Consolidated Aircraft Rentals for such period to (b)
Consolidated Interest Expense for such period plus Consolidated Aircraft
Rentals for such period to be less than 1.50 to 1.0.
ARTICLE 8. DEFAULTS
Section 8.1. Events of Default.
Upon the occurrence of any one of the following Events of Default:
(a) Default in any interest payment or principal payment or mandatory
prepayment on any Note when due and the continuance thereof for five (5) days;
or
29
<PAGE>
(b) Default in the payment of any Commitment Fee, when the same is
due hereunder and the continuance thereof for ten (10) days; or
(c) The Company shall institute a voluntary case seeking liquidation
or reorganization under Chapter 7 or Chapter 11, respectively, of the United
States Bankruptcy Code, or shall consent to the institution of an involuntary
case thereunder against it; or the Company shall otherwise institute any
similar proceeding under any other applicable federal or state law, or shall
consent thereto, or the Company shall apply for, or by consent or acquiescence
there shall be an appointment of, a custodian, receiver, liquidator,
sequestrator, trustee or other officer with similar powers, for the Company, or
for all or a material part of its properties; or the Company shall make an
assignment for the benefit of creditors, or the Company shall have ceased to
pay its debts generally as they become due; or if an involuntary case shall be
commenced seeking the liquidation or reorganization of the Company under
Chapter 7 or Chapter 11, respectively, of the United States Bankruptcy Code or
any similar proceeding shall be commenced against the Company under any other
applicable federal or state law and (i) the petition commencing the involuntary
case is not timely controverted, (ii) the petition commencing the involuntary
case is not dismissed within forty-five (45) days of its filing, (iii) an
interim trustee is appointed to take possession of all or a portion of the
property and/or to operate all or any part of the business of the Company, or
(iv) an order for relief (other than the petition itself) shall have been
issued or entered therein; or a decree or order of a court having jurisdiction
in the premises for the appointment of a custodian, receiver, liquidator,
sequestrator, trustee or other officer having similar powers for the Company or
for all or a part of its properties, shall have been entered; or any other
similar relief shall be granted against the Company under any applicable
federal or state law; or
(d) Default in the observance or performance of any of the
affirmative or negative covenants of the Company hereunder and, where there has
been a default in an affirmative covenant of the Company, such default shall
not have been remedied within thirty (30) days after written notice thereof
shall have been given the Company by any Bank; or
(e) Any representation or warranty made by the Company herein or in
any certificate furnished to the Banks hereunder proves to have been false or
breached in any material respect on the date as of which made or on the date of
any extension of credit hereunder, or any statement or certificate furnished by
the Company pursuant hereto shall prove to have been false in any material
respect at any date as of which the facts therein set forth were stated or
certified; or
(f) Seizure under any legal process of a substantial share of the
assets of the Company if release is not obtained within thirty (30) days of
such seizure; or
30
<PAGE>
(g) Default in any payment of principal or interest on any other
obligation for borrowed money or the deferred purchase price of property beyond
any period of grace provided with respect thereto, or in the payment of any
capital leases, or in the performance or observance of any other agreement,
term or condition contained in any agreement under which any such obligation is
created, if the effect of such default is to cause, or permit the holder or
holders of such obligation (or a trustee acting on behalf of such holder or
holders) to cause, such obligation to become due prior to its stated maturity,
provided such obligations or agreements have aggregate outstanding amounts of
$25,000,000 or more; or
(h) The Company shall have failed to meet its minimum funding
requirements under the Employee Retirement Income Security Act of 1974, as
amended from time to time (including any rules or regulations promulgated
thereunder) with respect to any of its employee benefit plans which are covered
by Title IV of said Act (or to which Section 412 of the Internal Revenue Code
of 1986, as amended, applies), which failure has resulted in a material
liability for excise tax under Section 4971 of said Code, or any of its plans
aforesaid shall be the subject of voluntary or involuntary termination
proceedings which may result in an uninsured payment or repayment liability of
the respective corporation to the Pension Benefit Guaranty Corporation (or any
entity succeeding to any or all of its functions under said Act) in an amount
which is material in relation to the net worth of the Company; or
(i) A Specified Event of Default shall occur;
then, in the event that an Event of Default under (a), (b), or (d) through (i)
above should occur, the Majority Banks (through the Administrative Agent) may,
at their option, by a written notice to the Company, if such Event of Default
be continuing at the time such notice is received by the Company, either: (i)
declare the obligations of the Banks to extend credit to the Company hereunder
to be immediately terminated, whereupon such obligations shall terminate; or
(ii) declare the Term Loans to be forthwith due and payable whereupon the Term
Loans, with accrued interest thereon, shall become forthwith due and payable
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Company; or (iii) all of the
foregoing. In the event that an Event of Default under (c) above should occur,
the Total Commitments of the Banks shall automatically terminate and the
principal of and accrued interest on any Term Loans then outstanding and any
accrued fees shall automatically become due and payable, without protest,
presentment, notice or demand, all of which are expressly waived by the
Company.
ARTICLE 9. YIELD PROTECTION
31
<PAGE>
Section 9.1. Increased Cost of Eurodollar Rate Loans.
(a) If, as a result of any change after the date of this Agreement in
(including the introduction of any new) applicable United States, state or
foreign laws or regulations or the adoption or making of any interpretations,
directives or requests thereof or thereunder by any court or governmental
authority charged with the interpretation or administration thereof, one or
more of the following events occur (herein called "Increased Cost Changes"):
(i) the basis of taxation of payments to any Bank of the
principal of or interest on any Eurodollar Rate Loan or any other
amounts payable under this Agreement in respect thereof (other than
taxes imposed on the aggregate net income of such Bank or of its
Eurodollar Lending Office by the jurisdiction in which the Bank has
its principal office or such Eurodollar Lending Office) is changed;
or
(ii) any reserve, special deposit or similar requirements
against the assets of, deposits with or for the account of, or credit
extended by, any Bank are imposed, modified or deemed applicable; or
(iii) any other condition affecting this Agreement or any
Eurodollar Rate Loan is imposed on any Bank or (in the case of
Eurodollar Rate Loans) the London interbank market;
and a Bank determines that, by reason thereof, the cost to such Bank of making
or maintaining any of the Eurodollar Rate Loans is increased by an amount
reasonably determined by such Bank, or any amount receivable by such Bank
hereunder in respect of any of the Eurodollar Rate Loans is reduced by an amount
reasonably determined by such Bank (such increases in cost and reductions in
amounts receivable being herein called "Increased Costs"), then the Company
shall pay to such Bank on the next interest payment date for the affected
Eurodollar Rate Loans such additional amount or amounts (which shall be set
forth in a notice from such Bank to the Company stating the cause and amount of
such Increased Costs) as will compensate such Bank for such Increased Costs.
Each Bank will immediately notify the Company of any event of which such Bank
has knowledge that will entitle such Bank to compensation pursuant to this
Section 9.1(a) and will exercise reasonable diligence to designate a different
Eurodollar Lending Office, and/or take other measures which will avoid the need
for such compensation for Increased Costs and will not result in material cost
to such Bank, or be otherwise disadvantageous (in such Bank's sole
determination) to such Bank.
(b) Without limiting the effect of the foregoing, the Company shall
pay (without duplication as to amounts paid under Section 9.1(a) hereof) to any
Bank on each interest payment date as to Eurodollar Rate Loans so long as such
Bank may be required to maintain
32
<PAGE>
reserves against "Eurocurrency liabilities" under Regulation D of the Board of
Governors of the Federal Reserve System an additional amount (determined by
such Bank and notified to the Company through Administrative Agent) equal to
the sum of the products of the following for each Eurodollar Rate Loan for each
day on which such Bank is required to maintain such reserves during the
Interest Period for such Term Loan for which interest is being paid:
(i) the principal amount of such Eurodollar Rate Loan
outstanding on such day; times
(ii) the remainder of (x) a fraction the numerator of which is
LIBOR (expressed as a decimal) used to determine the Eurodollar Rate
for such Eurodollar Rate Loan for such Interest Period as provided in
this Agreement and the denominator of which is one minus the
effective rate (expressed as a decimal) at which such reserve
requirements are imposed on such Bank on such day minus (y) such
numerator; times
(iii) 1/360.
(c) Determinations by any Bank for purposes of this Section 9.1 of
the effect of any Increased Cost Change on such Bank's costs of making or
maintaining Eurodollar Rate Loans or on amounts receivable by it in respect of
Eurodollar Rate Loans, and of the additional amounts required to compensate
such Bank in respect thereof, shall be conclusive, provided that such
determinations are made reasonably and in good faith.
(d) If the Company is required to pay additional amounts to any Bank
under paragraph (a) or (b) of this Section 9.1, the Company may (in addition to
paying such additional amounts to such Bank) at the Company's option at any
time, subject to the provisions of Section 9.3 hereof, convert all of the
Eurodollar Rate Loans of such Bank which are affected by such Increased Costs
to Base Rate Loans in accordance with this Agreement.
Section 9.2. Change of Law.
Notwithstanding any other provision herein, in the event that any
change in applicable law, rule or regulation or in the interpretation or
administration thereof (including the issuance of any new law, rule, regulation
or interpretation, or any new administration thereof), of or in any
jurisdiction whatsoever, shall make it unlawful for any Bank to make or
maintain a Eurodollar Rate Loan (or to convert Base Rate Loans into Eurodollar
Rate Loans), or shall materially restrict the authority of any Bank to purchase
or sell, or to take deposits of Eurodollars, then the obligation of such Bank
to make Eurodollar Rate Loans (and the right of the Company to convert Base
Rate Loans into Eurodollar Rate Loans) shall be suspended for the duration of
such illegality or restriction and the Company shall forthwith convert all
Eurodollar Rate Loans of such Bank then outstanding to Base Rate Loans in
accordance with the terms of
33
<PAGE>
this Agreement.
Section 9.3. Funding Losses.
The Company shall indemnify a Bank against, and reimburse such Bank
on demand for, any loss or expense incurred or sustained by such Bank, as
reasonably determined by such Bank, as a result of any payment or prepayment
(whether by reason of a voluntary prepayment by the Company or by reason of a
mandatory prepayment of the Term Loans by reason of an Event of Default,
pursuant to Section 3.16 hereof or other mandatory prepayment provision
relating to all outstanding Term Loans set forth herein) or conversion of a
Eurodollar Rate Loan made by such Bank on a day other than the last day of an
Interest Period for such Term Loan.
Section 9.4. Mandatory Repayment or Conversion on Certain Events.
On the last day of an Interest Period during which any Orderly
Replacement Event occurs (which relates to all Banks) and no later than four
(4) Eurodollar Business Days after any Immediate Replacement Event relating to
one or more Banks, all outstanding Eurodollar Rate Loans of such Banks shall,
at the option of the Company, be either: (a) prepaid in full by the Company,
together with any accrued and unpaid interest thereon, or (b) converted to Base
Rate Loans. Each Bank shall promptly notify the Company and Administrative
Agent of any Immediate Replacement Event and any Orderly Replacement Event
known to such Bank.
Section 9.5. Survival.
The obligations of the Company under Sections 9.1 through 9.3 of this
Agreement shall survive the repayment of the Term Loans and the cancellation of
the Notes.
ARTICLE 10. THE ADMINISTRATIVE AGENT
Section 10.1. Authorization and Action.
Each Bank hereby appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the Notes as are delegated to it as Administrative Agent by the
terms hereof and thereof, together with such powers as are reasonably
incidental thereto, and the Administrative Agent hereby accepts such
authorization and appointment. As to any matters not expressly provided for by
this Agreement and the Notes or provided for with specific reference to this
Section 10.1 (including, without limitation, enforcement or collection of the
Notes), the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from action)
upon the
34
<PAGE>
instructions of the Majority Banks and such instructions shall be binding upon
all Banks and all holders of the Notes; provided, however, that the
Administrative Agent shall not be required to take any action which exposes the
Administrative Agent to liability or which is contrary to this Agreement or the
Notes or applicable law. As to any provisions of this Agreement under which
action may be taken or approval given by the Majority Banks, the action taken
or approval given by the Majority Banks shall be binding upon all Banks to the
same extent and with the same effect as if each Bank had joined therein. The
Administrative Agent shall be entitled to rely upon any note, notice, consent,
certificate, affidavit, letter, telegram, teletype message facsimile
transmission, statement, order or other document believed by it to be genuine
and correct and to have been signed or sent by the proper person or persons
and, in respect of legal matters, upon the opinion of counsel selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof shall have been filed with
the Administrative Agent. Any request, authority or consent of any Person who
at the time of making such request or giving such authority or consent is the
holder of any Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Note or of any note or notes issued in exchange
therefor.
Section 10.2. Administrative Agent's Reliance, Etc.
Neither the Administrative Agent nor any of its directors, officers,
agents or employees shall be liable to any Bank for any action taken or omitted
to be taken by it or by such directors, officers, agents or employees under or
in connection with this Agreement or the Notes, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, the Administrative Agent: (i) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not
be liable to any Bank for any action taken or omitted to be taken in good faith
by it in accordance with the advice of such experts; (ii) makes no warranty or
representation to any Bank and shall not be responsible to any Bank for any
statements, warranties or representations made in or in connection with this
Agreement or the Notes; (iii) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the Notes on the part of the Company or to
inspect the property (including the books and records) of the Company; (iv)
shall not be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the
Notes, or any other instrument or document furnished pursuant thereto; and (v)
shall incur no liability under or in respect to this Agreement or the Notes by
acting upon any notice, consent, certificate or other instrument or writing
(which may be by telegram, facsimile transmission, cable or telex) believed by
it to be genuine and signed or sent by the proper party or parties.
Section 10.3. Administrative Agent and Affiliates.
With respect to its Commitment, the Term Loans made by it and the
Notes issued
35
<PAGE>
to it, the Administrative Agent shall have the same rights and powers under
this Agreement as any other Bank and may exercise the same rights and powers
under this Agreement as any other Bank and may exercise the same as though it
were not the Administrative Agent; and the term "Bank" or "Banks" shall, unless
otherwise expressly indicated, include the Administrative Agent in its
individual capacity. Unrelated to its role as Administrative Agent as set forth
herein, the Administrative Agent and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with, the Company,
and any Person who may do business with or own securities of the Company, all
as if it were not the Administrative Agent and without any duty to account
therefor to the Banks.
Section 10.4. Representations of the Banks.
Each Bank acknowledges that it has, independently and without
reliance upon the Administrative Agent, or any affiliate or subsidiary of the
Administrative Agent, or any other Bank and based on the financial statements
referred to in Section 5.2 hereof and such other documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement; and that each Bank has actively engaged in the negotiation
of all of the terms of this Agreement. Each Bank also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement or the Notes. The Administrative Agent
has no duty or responsibility, either initially or on a continuing basis, to
provide any Bank with any credit or other information with respect to the
Company whether coming into its possession as of the date of this Agreement or
at any time thereafter, or to notify any Bank of any Event of Default except as
provided in Section 10.5 hereof. This Agreement and all instruments or
documents delivered in connection with this Agreement have been reviewed and
approved by each Bank and the Banks have not relied on the Administrative Agent
as to any legal or factual matter in connection therewith or in connection with
the transactions contemplated thereunder.
Section 10.5. Events of Default.
In the event of the occurrence of any Default or Event of Default,
any Bank knowing of such event may (but shall have no duty to), or the Company
pursuant to Section 6.7 hereof shall, give the Administrative Agent written
notice specifying such Event of Default or other event and expressly stating
that such notice is a "notice of default". The Administrative Agent shall not
be deemed to have knowledge of such events unless the Administrative Agent has
received such notice, or unless the Administrative Agent has actual notice of
such Default or Event of Default or other event in its capacity as one (1) of
the Banks or unless the Event of Default consists of a failure of payment of
principal or interest on any of the Notes. In the event that the Administrative
Agent receives such a notice of the occurrence of an Event of Default, or has
actual knowledge thereof, the Administrative Agent shall give written notice
thereof to the
36
<PAGE>
Banks. The Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed in writing by the
Majority Banks; provided, however, that, unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may take
such action, or refrain from taking such action, with respect to such Event of
Default as it shall deem advisable and in the best interest of the Banks.
Section 10.6. Right to Indemnity.
Except for action expressly required of the Administrative Agent
hereunder, the Administrative Agent shall be fully justified in failing or
refusing to take any action hereunder unless it shall first be indemnified to
its satisfaction by the Banks against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action.
Section 10.7. Indemnification.
The Banks hereby agree to indemnify the Administrative Agent (to the
extent not reimbursed by the Company), ratably according to their respective
Commitments, or, after such Commitments have been terminated, ratably according
to their respective Term Loans as most recently in effect prior to the date
indemnification is sought, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement and/or the Notes or any action
taken or omitted by the Administrative Agent under this Agreement and/or the
Notes; provided, however, that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Bank agrees to reimburse the Administrative Agent promptly upon
demand for its ratable share of any out-of-pocket expenses (including counsel
fees) incurred by the Administrative Agent in connection with the
administration, or enforcement of, or the preservation of any rights under,
this Agreement and/or the Notes, to the extent that the Administrative Agent is
not reimbursed for such expenses by the Company.
Section 10.8. Successor Administrative Agent.
The Administrative Agent may resign at any time by giving written
notice thereof to the Banks and the Company and may be removed at any time with
or without cause by the Majority Banks. Upon any such resignation or removal,
the Company shall have the right to appoint a successor Administrative Agent,
subject to confirmation by the Majority Banks. If no successor Administrative
Agent shall have accepted such appointment within 30 days after the retiring
Administrative Agent's giving of notice of resignation or the Majority Banks'
removal of the Administrative Agent the Administrative Agent may, on behalf of
the Banks, appoint a
37
<PAGE>
successor Administrative Agent who shall be willing to accept such appointment.
In any event such successor Administrative Agent shall be a commercial bank
organized under the laws of the United States of America or of any State
thereof and shall have a combined capital and surplus of at least
$1,000,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Administrative Agent, and the
retiring or removed Administrative Agent shall be discharged from its duties
and obligations as agent under this Agreement. After any Administrative Agent's
resignation or removal hereunder as Administrative Agent the provisions of this
Article 10 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement.
Section 10.9. Syndication Agent.
The Syndication Agent shall have no duties or responsibilities
hereunder in its capacity as such.
ARTICLE 11. MISCELLANEOUS
Section 11.1. Rights and Remedies.
No delay or failure of the Banks or the Administrative Agent or any
one of them or of the Company in exercising any rights, powers or privileges
hereunder shall affect such right, power or privilege, nor shall any single or
partial exercise thereof preclude any further exercise thereof, or the exercise
of any other right, power or privilege. The rights and remedies of the Banks
and the Administrative Agent or any one of them and of the Company under this
Agreement are cumulative and not exclusive of any rights or remedies which they
would otherwise have. Failure on the part of any Bank, the Administrative Agent
or the Company to exercise any right, power or privilege given it hereunder
shall not be the breach of any obligation of the Bank or the Company to any
other party to this Agreement or to any other Person.
Section 11.2. Notices.
Except as otherwise expressly provided for herein, notices, which may
be given or are required to be given hereunder, shall be in writing and may be
mailed, postage prepaid, addressed as follows or sent by telex or facsimile:
(a) If to the Company, both to:
"Delta Air Lines, Inc.
Attention: Joan Repetti,
Director - Corporate Finance
38
<PAGE>
Dep't 860
1030 Delta Boulevard
Atlanta, Georgia 30320"
Facsimile: (404) 715-4862
And to:
"Delta Air Lines, Inc.
Attention: Nancy Okeson
Dep't 856
1030 Delta Boulevard
Atlanta, Georgia 30320"
Facsimile: (404) 715-4862
(b) If to Administrative Agent:
"The Chase Manhattan Bank
Attention: Janet Belden
One Chase Manhattan Plaza, 8th Floor
New York, New York 10081"
Facsimile: (212) 552-5658
(c) If to any Bank other than Administrative Agent at that address,
telex number or facsimile number designated in writing to the Company and the
Administrative Agent from time to time.
A party may specify a different address or facsimile number by furnishing such
change in writing to all other parties hereto. Additionally, notice may, in lieu
of being given by mail or facsimile, be delivered personally to any officer of
any party to whose attention it could have been addressed.
Section 11.3. Expenses, Indemnification, Etc.
(a) The Company shall pay all reasonable costs, expenses, taxes and
fees (i) incurred by the Administrative Agent in connection with the
preparation, execution and delivery of this Agreement, the Notes and all other
documents incident hereto or thereto (collectively, the "Loan Documents")
including, without limitation, the costs and professional fees of Simpson
Thacher & Bartlett, New York, New York, whether or not any transaction
contemplated hereby shall be consummated, and any and all stamp, intangible or
other taxes that may be payable or determined in the future to be payable in
connection therewith, (ii) incurred by the Administrative Agent in connection
with the administration of the Term Loans and the Loan Documents in accordance
with the provisions thereof and the preparation, execution and delivery
39
<PAGE>
of any waiver, amendment or consent by the Banks or the Administrative Agent
relating to the Loan Documents including, without limitation, costs and
professional fees of counsel for the Administrative Agent; and (iii) actually
incurred by the Administrative Agent or any of the Banks in enforcing the Loan
Documents including, without limitation, reasonable attorneys' fees of counsel
for the Administrative Agent or the Banks.
(b) The Company shall indemnify the Administrative Agent and each Bank
and hold the Administrative Agent and each Bank (and all directors, officers,
employees and agents of any of the foregoing (the Administrative Agent, the
Banks and such directors, officers, employees and agents each referred to as an
"Indemnified Party")) harmless against, any and all costs, losses, liabilities,
claims, damages or expenses incurred by an Indemnified Party, whether jointly
or severally, and whether or not such Indemnified Party is designated a party
thereto, arising out of or by reason of, or relating directly or indirectly to,
(i) any investigation, litigation or other proceeding, pending or threatened,
regarding any actions or failure to act by the Company involving this Agreement
or any transaction contemplated hereby, (ii) any actual or proposed use by the
Company or any of its Subsidiaries of the proceeds from any borrowing
hereunder, or (iii) the Administrative Agent's, any Bank's or the Company's
entering into and complying with this Agreement or in issuing or delivering the
Notes and including, without limitation, the reasonable fees and disbursements
of such Indemnified Party's separate counsel incurred in connection with any
such investigation, litigation or other proceeding (which shall be advanced by
the Company on request notwithstanding any claim or assertion that the
Indemnified Party is not entitled to indemnification hereunder upon receipt of
an undertaking to reimburse the Company if it is actually and finally
determined by a court of competent jurisdiction that the party is not so
entitled). However, the indemnity of the Company set forth herein shall not
cover the costs, losses, liabilities, claims, damages or expenses (x) incurred
by an Indemnified Party arising out of the bad faith or willful misconduct of
such Indemnified Party (as actually and finally determined by a court of
competent jurisdiction) or (y) incurred by the Administrative Agent in
connection with a suit, claim or cause of action brought against the
Administrative Agent by a Bank pursuant to which such Bank alleges that the
Administrative Agent has failed to perform the ministerial duties of the
Administrative Agent as expressly set forth herein (such as administering the
funding and collection of Term Loans, determining interest rates and the like).
(c) The Administrative Agent and each Bank agree that in the event
that any investigation, litigation, suit, action or proceeding is asserted or
threatened in writing or instituted against it or any other Indemnified Party
for which the Administrative Agent or any Bank may desire indemnity or defense
hereunder, the Administrative Agent or such Bank shall promptly notify the
Company thereof in writing and agree, to the extent appropriate to consult with
the Company with a view to minimizing the cost to the Company of its
obligations under this Section 11.3.
40
<PAGE>
(d) No action taken by legal counsel chosen by an Indemnified Party
in defending against any such investigation litigation, suit, action or
proceeding or requested remedial, removal or response action shall vitiate or
in any way impair the obligations and duties of the Company hereunder to
indemnify and hold harmless each Indemnified Party; provided, however, that if
the Company is required to indemnify any Indemnified Party pursuant hereto,
such Indemnified Party shall not settle or compromise any such investigation
litigation, suit, action or proceeding without the prior written consent of the
Company (which consent shall not be unreasonably withheld or delayed) so long
as the Company has provided evidence reasonably satisfactory to such
Indemnified Party that the Equity of the Company and its Subsidiaries on a
consolidated basis is not less than zero.
(e) The obligations of the Company under this Section 11.3 shall
survive transfer, payment or satisfaction of any Note and any amendment,
supplementation, modification or termination of this Agreement.
Section 11.4. Amendments to this Agreement and the Notes.
Any provisions of this Agreement and the Notes may be amended,
terminated waived or otherwise modified in writing by the Company and the
Majority Banks, and any such amendment, termination, waiver or other
modification shall be binding upon all of the Banks to the same extent and with
the same effect as if each Bank had joined therein, provided, however, that,
notwithstanding the foregoing: (a) any provisions of this Agreement and the
Notes with respect to any (i) extension of the expressed maturity date of the
whole or any principal or interest payable under any Note, (ii) reduction in
the rate of interest payable under any Note (other than any change in the rate
of interest pursuant to the next to last paragraph of the definition of
Applicable Margin), (iii) increase in the amount of any Commitment (except as
permitted in Sections 3.14 and 11.6), (iv) reduction in the amount or extension
of the due date of any fees payable hereunder, (v) extension of the due date of
any principal of, or interest on, any Term Loan or (vi) change in this Section
11.4, may be amended or otherwise modified only in a writing signed by the
Company and each Bank directly affected thereby; and (b) no provisions of
Article 10 shall be amended, modified, or waived without the consent of the
Administrative Agent. The percentage set forth in the definition of "Majority
Banks" as set forth herein shall not be changed without the unanimous written
consent of the Banks.
Notwithstanding the foregoing paragraph, in the event that the
Existing Credit Agreement shall at any time include any negative covenant or
event of default (each, a "Specified Restrictive Provision") that is not
contained in, or is more restrictive than those contained in, this Agreement
then, effective on the date such Specified Restrictive Provision is so
included, this Agreement shall automatically be deemed to have been amended to
include herein such Specified Restrictive Provision. It is understood that any
subsequent waiver, amendment or other modification to any Specified Restrictive
Provision contained in the Existing Credit Agreement
41
<PAGE>
that has the effect of making such provision less restrictive shall not, unless
otherwise agreed by the Majority Banks, affect the terms of such provision as
incorporated herein.
Section 11.5. Agreement as to Right of Set-off, Sharing of Losses.
So long as any Term Loan is outstanding, each Bank agrees that, if it
has payment made to it on any Term Loan, whether by set-off or otherwise,
including, but not limited to, any payment received by such Bank under any
applicable bankruptcy, insolvency or similar laws, in a greater proportion than
payments made on Term Loans held by any other Bank, the Bank so receiving such
greater proportionate payment agrees to purchase a portion of the Term Loans
held by the other Banks, so that after such purchase each Bank will hold an
unpaid balance on its Term Loan bearing the same proportion to the then
outstanding aggregate principal amount of the Term Loans as such Bank's
Commitment bears to the Banks' aggregate Commitments; provided that if any
amount so received by any Bank in payment of the Term Loan held by it shall be,
as a result of the reversal of the exercise of any such right (whether by court
order or voluntary action on the part of such Bank), returned to the Company or
the Subsidiary or paid as directed by such court order by such Bank, then each
other Bank which shall have theretofore received its share of any such payment
pursuant to this Section 11.5 shall, upon demand, promptly repay, without
interest, the amount of such share to such Bank, or, if the Bank exercising
such right shall not have made the purchases provided for in this Section 11.5
prior to such reversal, the other Banks shall have no further rights under this
Section 11.5 in respect to such amount. Except as provided in this Section and
in Sections 10.6 and 10.7, no Bank shall be responsible to any other Bank for
losses or claims which such Bank may incur in connection with the transactions
contemplated by this Agreement. The Company agrees that any Bank so purchasing
a participation from another Bank pursuant to this Section 11.5 may exercise
all its rights of payment (including the right of set-off) with respect to such
participation as fully as if such Bank were the direct creditor of the Company
in the amount of such participation.
Section 11.6. Successors and Assigns.
This Agreement shall be binding upon the Company and the Banks and
their respective successors and assigns, and shall inure to the benefit of the
Company and the Banks and their respective successors and assigns. The Company
may not assign its rights or obligations hereunder, except as permitted by
Section 7.3 hereof. Other than by virtue of operation of law, no Bank shall
assign any portion of its Commitment or Term Loans hereunder unless (a) except
in the case of any assignment to another Bank or to any affiliate of any Bank,
the portion of the Bank's Commitment or Term Loans to be assigned is equal to
or greater than $5,000,000 (or such lesser amount as the Company may approve in
its sole discretion), unless the assigning Bank is assigning the entire amount
of its Commitment and Term Loans, (b) except in the case of any assignment to
another Bank or to any affiliate of any Bank, the assigning Bank has received
the prior written approval of the Company and the Administrative Agent to the
proposed assignment (such approval in each case not to be unreasonably
withheld); (c) the
42
<PAGE>
Administrative Agent has been paid an assignment fee of $3,500 by the assigning
Bank, and (d) the bank which has received the assignment of the Commitment or
Term Loans, the assigning Bank, the Company and the Administrative Agent shall
have executed the Form of Assignment as set forth on Exhibit D hereto. Upon
compliance with the provisions set forth above, such financial institution
shall thereupon and thereafter be deemed to be a Bank for all purposes
hereunder. Other than as provided in the next paragraph, there shall be no sale
by any Bank of any participation in its Commitment or Term Loans; provided,
however, any Bank may pledge its Term Loans and/or Notes hereunder to a Federal
Reserve Bank in support of borrowings made by such Bank from such Federal
Reserve Bank.
Any Bank may, without the consent of the Company, in accordance with
applicable law, at any time sell to one or more banks, financial institutions
or other entities (each, a "Participant") participating interests in any Term
Loan owing to such Bank, any Commitment of such Bank or any other interest of
such Bank hereunder and under the Notes. In the event of any such sale by a
Bank of a participating interest to a Participant, such Bank's obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Term Loan for all
purposes under this Agreement and the Notes, and the Company and the
Administrative Agent shall continue to deal solely and directly with such Bank
in connection with such Bank's rights and obligations under this Agreement and
the Notes. In no event shall any Participant under any such participation have
any right to approve any amendment or waiver of any provision of this Agreement
or any Note, or any consent to any departure by the Company therefrom, except
to the extent that such amendment, waiver or consent would reduce the principal
of, or interest on, the Term Loans or any fees payable hereunder, or postpone
the date of the final maturity of the Term Loans, in each case to the extent
subject to such participation. The Company agrees that if amounts outstanding
under this Agreement and the Notes are due or unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event
of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement and the Notes to
the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement, provided that, in purchasing
such participating interest, such Participant shall be deemed to have agreed to
share with the Banks the proceeds thereof as provided in Section 11.5 as fully
as if it were a Bank hereunder. The Company also agrees that each Participant
shall be entitled to the benefits of Sections 3.15, 9.1, 9.2 and 9.3 with
respect to its participation in the Commitments and the Term Loans outstanding
from time to time as if it was a Bank; provided that no Participant shall be
entitled to receive any greater amount pursuant to any such Section than the
transferor Bank would have been entitled to receive in respect of the amount of
the participation transferred by such transferor Bank to such Participant had
no such transfer occurred.
Section 11.7. Holidays.
43
<PAGE>
When any payment hereunder falls due on a day that is not a Business
Day, such payment shall be made as herein provided on the next succeeding
Business Day. Interest shall continue to accrue on the principal to be paid
until it is paid.
Section 11.8. Law Governing.
This Agreement shall be construed and performance thereof shall be
determined according to the laws of the State of New York.
Section 11.9. Disclosure to Other Persons.
The Company acknowledges that any Bank may deliver copies of any
financial statements and other documents delivered to such Bank, and disclose
any other information disclosed to such Bank, by or on behalf of the Company or
any Subsidiary in connection with or pursuant to this Agreement to (i) such of
the Bank's directors, officers, employees, agents and professional consultants
as may require such information in the performance of their respective duties,
(ii) any Person to which such Bank offers to assign any Commitment or Term Loan
or any part thereof if (a) such disclosure has been previously approved by the
Company, or (b) such disclosure is not of information previously designated by
the Company as "privileged" or "confidential", (iii) any federal or state
regulatory authority having jurisdiction over such Bank, or (iv) any other
Person to which such delivery or disclosure may be necessary or appropriate (a)
in compliance with any law, rule, regulation or order applicable to such Bank,
(b) in response to any subpoena or other legal process or (c) in connection
with any litigation to which such Bank is a party; provided, however, that such
Bank, to the extent legally permitted to do so, will use its best efforts to
notify the Company prior to any disclosure of information contemplated by this
subparagraph (iv) and will use its best efforts to give the Company the
opportunity to object to any such disclosure; provided, further, that the
foregoing proviso shall not require such Bank to withhold such information
where such withholding would subject such Bank to civil or criminal liabilities
or penalties, as determined by such Bank in its discretion.
Section 11.10. Execution and Effective Date.
This Agreement may be executed in any number of counterparts, and any
party hereto may execute the said Agreement by signing any such counterpart.
The Company shall deliver one such executed counterpart to Administrative Agent
and each Bank shall deliver one such executed counterpart to the Administrative
Agent for further delivery to the Company. This Agreement shall be effective as
of the Effective Date.
Section 11.11. Representation of Banks.
Each Bank represents for itself only that it is acquiring the Notes
to be acquired by it hereunder for its own account in the ordinary course of
extending credit as a banking
44
<PAGE>
institution and not with a view to the distribution or resale thereof, subject,
nevertheless, to any requirement of law that the disposition of the property of
a Bank shall at all times be within its control.
Section 11.12. Severability.
Any provision of this Agreement or of the Notes which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 11.13. Entire Agreement.
This Agreement and the Notes express the entire understanding of the
parties with respect to the transactions contemplated hereby. Neither this
Agreement, the Notes nor any term hereof or thereof may be changed, waived,
discharged or terminated orally or in writing, except as provided in Section
11.4 hereof
Section 11.14. Jurisdiction.
The Company hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the Notes, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the United
States for the Southern District of New York, and appellate courts from any
thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or
claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the Company at its
address set forth in Section 11.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto; and
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
Section 11.15. Waivers of Jury Trial.
45
<PAGE>
THE COMPANY, THE ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY NOTE AND FOR ANY COUNTERCLAIM THEREIN.
[Signatures on Following Pages]
46
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed.
THE COMPANY:
DELTA AIR LINES, INC.
By:/s/ Maurice W. Worth
------------------------------------------
Title: Chief Operating Officer
By:/s/ Edward H. Bastian
------------------------------------------
Title: Vice-President Controller
THE ADMINISTRATIVE AGENT:
THE CHASE MANHATTAN BANK,
as Administrative Agent and individually as
a Bank
By:/s/ Marian Schulman
------------------------------------------
Title: Vice President
THE SYNDICATION AGENT:
CITIBANK, N.A., as Syndication Agent and
individually as a Bank
By:/s/ Thomas Boyle
------------------------------------------
Title: Managing Director
47
<PAGE>
BANK OF AMERICA NT & SA
By:/s/ Chas McDonell
------------------------------------------
Title: Vice President
48
<PAGE>
CREDIT LYONNAIS
By:/s/ Phillippe Soustra
------------------------------------------
Title: Senior Vice President
49
<PAGE>
COMMERZBANK AG
By:/s/ Subash Viswanathan
------------------------------------------
Title: Vice President
By:/s/ David Suttles
------------------------------------------
Title: Vice President
50
<PAGE>
DG BANK, DEUTSCHE GENOSSENSCHAFTSBANK AG,
CAYMAN ISLANDS BRANCH
By:/s/ Eric Zimmerman
------------------------------------------
Title: Assistant Treasurer
By:/s/ Kurt A. Morris
------------------------------------------
Title: Vice President
51
<PAGE>
KBC BANK N.V.
By:/s/ Robert Snauffer Marcel Claes
------------------------------------------
Title: First Vice President Deputy General
Manager
52
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By:/s/ Kenneth Kramer
------------------------------------------
Title: Vice President
53
<PAGE>
SUNTRUST BANK, ATLANTA
By:/s/ Deborah Armstrong
------------------------------------------
Title: Vice President
By:/s/ Mary Crawford Owen
------------------------------------------
Title: Officer
54
<PAGE>
WACHOVIA BANK, N.A.
By:/s/ Ann Sayles
------------------------------------------
Title: Vice President
55
<PAGE>
WESTDEUTSCHE LANDESBANK GIROZENTRALE
NEW YORK BRANCH
By:/s/ Alan Bookspan
------------------------------------------
Title: Vice President
By:/s/ Walter T. Duffy III
------------------------------------------
Title: Vice President
56
<PAGE>
ABN AMRO BANK N.V.
By:/s/ Claudia C. Heldring
------------------------------------------
Title: Vice President
By:/s/ John E. Lewis
------------------------------------------
Title: Senior Vice President
57
<PAGE>
BANCA COMMERCIALE ITALIANA
(NEW YORK)
By:/s/ Karen Purelis
------------------------------------------
Title: Vice President
By:/s/ Charles Dougherty
------------------------------------------
Title: Vice President
58
<PAGE>
BAYERISCHE LANDESBANK GIROZENTRALE
CAYMAN ISLANDS BRANCH
By:/s/ Peter Obermann
------------------------------------------
Title: Senior Vice President
By:/s/ Sean O'Sullivan
------------------------------------------
Title: Vice President
59
<PAGE>
BANK OF MONTREAL
By:/s/ Richard J. McClorey
------------------------------------------
Title: Director
60
<PAGE>
DEUTSCHE BANK AG
NEW YORK BRANCH AND/OR CAYMAN
ISLANDS BRANCH
By:/s/ Joel Makowsky Andreas Neumeir
------------------------------------------
Title: Vice President Vice President
61
<PAGE>
DE NATIONALE INVESTERINGS BANK
(THE HAGUE)
By:/s/ Sjoerd Sleeswijk Visser
------------------------------------------
Title: Vice President
62
<PAGE>
BAYERISCHE HYPO-UND VEREINSBANK AG
NEW YORK BRANCH
By:/s/ Marianne Weinzinger
------------------------------------------
Title: Director
By:/s/ Patricia M. Tresnan
------------------------------------------
Title: Director
63
<PAGE>
LANDESBANK SCHLESWIG-HOLSTEIN
GIROZENTRALE
By:/s/ Dr. Bernd Claussen R. Jurgensen
------------------------------------------
Title: Senior Manager Manager
64
<PAGE>
NORDDEUTSCHE LANDESBANK GIROZENTRALE
By:/s/ Stephen K. Hunter Stephanie Finnen
------------------------------------------
Title: Senior Vice President Vice President
65
<PAGE>
THE BANK OF NEW YORK
By:/s/ Ronald R. Reedy
------------------------------------------
Title: Vice President
66
<PAGE>
DAI-ICHI KANGYO BANK LTD, NEW YORK
BRANCH
By:/s/ Matthew G. Murphy
------------------------------------------
Title: Vice President
67
<PAGE>
SANWA BANK LIMITED
By:/s/ Toshishiko Sakai
------------------------------------------
Title: Senior Vice President & Deputy General
Manager
68
<PAGE>
THE SUMITOMO BANK, LIMITED
By:/s/ Gary P. Franke
------------------------------------------
Title: Vice President & Manager
69
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By:/s/ Kazuo Iida
------------------------------------------
Title: General Manager
70
<PAGE>
FIRSTAR BANK, N.A.
By:/s/ Rick Neltner
------------------------------------------
Title: Senior Vice President
71
<PAGE>
EXHIBIT A
Bank Commitment
The Chase Manhattan Bank $ 25,000,000
Citibank, N.A. 23,000,000
Bank of America NT & SA 22,000,000
Credit Lyonnais 22,000,000
Commerzbank AG 22,000,000
DG Bank, Deutsche Genossenschaftsbank AG,
Cayman Islands Branch 22,000,000
KBC Bank N.V. 22,000,000
The First National Bank of Chicago 22,000,000
SunTrust Bank, Atlanta 22,000,000
Wachovia Bank, N.A. 22,000,000
Westdeutsche Landesbank Girozentrale,
New York Branch 22,000,000
ABN AMRO Bank N.V. 18,000,000
Banca Commerciale Italiana (New York) 18,000,000
Bayerische Landesbank Girozentrale,
Cayman Islands Branch 18,000,000
Bank of Montreal 18,000,000
Deutsche Bank AG, New York Branch and/or
Cayman Islands Branch 18,000,000
De Nationale Investerings Bank (The Hague) 18,000,000
Bayerische Hypo-Und Vereinsbank AG, New York Branch 18,000,000
Landesbank Schleswig-Holstein Girozentrale 18,000,000
Norddeutsche Landesbank Girozentrale 18,000,000
The Bank of New York 18,000,000
Dai-Ichi Kangyo Bank Ltd., New York Branch 18,000,000
Sanwa Bank Limited 18,000,000
The Sumitomo Bank, Limited 18,000,000
The Industrial Bank of Japan, Limited 10,000,000
Firstar Bank, N.A. 10,000,000
Total Commitments of the Banks $500,000,000
1
<PAGE>
EXHIBIT B
FORM OF TERM NOTE
$_______________ _______________, ____
FOR VALUE RECEIVED, DELTA AIR LINES, INC., a Delaware corporation
(the "Maker"), promises to pay to the order of __________________________
(together with any successor and assign thereof or any subsequent holder hereof
referred to herein as the "Holder") the lesser of (a) _____________________
Dollars in lawful money of the United States or (b) the aggregate unpaid
principal amount of all Term Loans which are still outstanding and which were
made to the Maker by the Holder pursuant to that certain Credit Agreement dated
as of March [ ], 1999 (as the same may be amended, modified or supplemented
from time to time, the "Credit Agreement", terms used herein and not defined
herein have their respective defined meanings as set forth in the Credit
Agreement) by and among the Maker, the Banks set forth therein, Citibank, N.A.,
as Syndication Agent, and The Chase Manhattan Bank, as Administrative Agent, at
the Main Office of the Administrative Agent or at such other place as is
otherwise specified in the Credit Agreement. The Company shall repay the
principal amount of this Note on the Maturity Date. The outstanding principal
amount hereof shall bear interest at the rates and shall be payable at the
times set forth in the Credit Agreement.
Any payment of principal or interest which is not paid when due, as
herein provided, shall bear interest (to the extent permitted by law) at that
rate which is one-quarter of one percent (1/4%) above the Base Rate in effect
on each respective day thereafter until paid in full and such interest shall be
payable on demand.
This Note is one of the Notes issued pursuant to, and is entitled to
the benefits of, the Credit Agreement. To the extent provided in the Credit
Agreement, this Note is subject to voluntary prepayment, in whole or in part,
without premium or penalty.
Upon the occurrence of an Event of Default, the aggregate unpaid
principal amount of all Term Loans evidenced hereby which are still outstanding
and accrued interest thereon may become due and payable in the manner and with
the effect provided in the Credit Agreement.
Time is of the essence of this Note, and in case this Note is not
paid when due, and is subsequently collected by law or through an attorney at
law, or under advice therefrom, the Maker agrees to pay all costs of collection
incurred by the Holder including, without limitation, the reasonable fees and
disbursements of counsel to the Holder.
1
<PAGE>
The undersigned and all endorsers or other parties to this Note
hereby waive presentment, demand for payment, protest and notice of nonpayment.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Note as of the date first written above.
DELTA AIR LINES, INC.
By:____________________________________
Title:_________________________________
[Reverse of Note]
Advance Payment
------- -------
Date Loan Amount Principal Interest
---- ----------- --------- --------
2
<PAGE>
EXHIBIT C-1
FORM OF NOTICE AND AGREEMENT REGARDING ADDITION OF BANK
[Date]
The Chase Manhattan Bank, as Administrative Agent
270 Park Avenue
New York, New York 10017
Attention: Janet Belden
Delta Air Lines, Inc.
1030 Delta Boulevard
Atlanta, Georgia 30320
Attention: Joan Repetti, Director of Corporate Finance
Dep't 860
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of March
[ ], 1999 (the "Credit Agreement") by and among Delta Air Lines, Inc. (the
"Company"), the Banks party thereto, Citibank, N.A., as Syndication Agent, and
The Chase Manhattan Bank, as Administrative Agent. Terms used herein and not
defined herein have their respective defined meanings as set forth in the
Credit Agreement.
1. Pursuant to Section 3.14.1 of the Credit Agreement, the
undersigned hereby requests that it become a Bank under the Credit Agreement.
The proposed [Commitment] [Term Loans] of the undersigned as a Bank under the
Credit Agreement would equal $________. The undersigned proposes that the
undersigned shall become a Bank under the Credit Agreement on the later of (a)
the date the Administrative Agent and the Company consent thereto and (b)
_____________, ___________ (such later date, the "Effective Date").
2. Upon the Effective Date, the undersigned hereby assumes all of the
obligations of a Bank having [a Commitment] [Term Loans] of $______________
under the Credit Agreement as if the undersigned were an original Bank and
signatory under the Credit Agreement including, but not limited to, the
obligation of a Bank to make advances to the Company thereunder (if applicable)
and to indemnify the Administrative Agent as provided therein. In this
connection, the undersigned hereby represents that it has received and reviewed
a copy of the Credit Agreement and hereby ratifies and approves all of the
terms and conditions of the Credit Agreement and the other documents executed
and delivered in connection therewith.
1
<PAGE>
3. For purposes of delivering any notice to the undersigned as a Bank
under the Credit Agreement, the following sets forth the address of the
undersigned for such purpose:
___________________________
___________________________
___________________________
Telecopy No._______________
Attention:_________________
4. The undersigned acknowledges that it has, independently and
without reliance upon the Administrative Agent, or on any affiliate or
subsidiary thereof, or any other Bank and based on the financial statements
supplied by the Company and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to become a Bank
under the Credit Agreement. The undersigned also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Bank and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement or its respective Note. The Administrative
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide the undersigned with any credit or other information with
respect to the Company or to notify the undersigned of any Event of Default
except as provided in Section 10.5 of the Credit Agreement. The undersigned has
not relied on the Administrative Agent as to any legal or factual matter in
connection therewith or in connection with the transactions contemplated
thereunder.
5. This letter agreement shall not be binding against the undersigned
unless and until the Company and the Administrative Agent have executed their
consent to the foregoing at the space provided below.
6. THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
7. This letter agreement may be executed in any number of
counterparts each of which when taken together, shall constitute one and the
same agreement.
Very truly yours,
[FINANCIAL INSTITUTION]
By:________________________________
Title:_____________________________
2
<PAGE>
The Company hereby agrees that, on the Effective Date, ___________
("___________") shall be a Bank under the Credit Agreement having [a
Commitment] [Term Loans] equal to $____________ pursuant to the terms and
conditions set forth above. The Company agrees that ______________ shall have
all of the rights and remedies of a Bank under the Credit Agreement as if
_______________ were an original Bank and signatory under the Credit Agreement
including, but not limited to, the right of a Bank to receive payments of
principal and interest with respect to the Term Loans made by the Banks and, if
applicable, to receive the commitment fees payable to the Banks as provided in
the Credit Agreement. Further, _______________ shall be entitled to the
indemnification provisions from the Company in favor of the Banks as provided
in the Credit Agreement. The Company further agrees, on the Effective Date, to
execute in favor of ______________________ a promissory note in substantially
the form of Exhibit B to the Credit Agreement in the face amount of
________________'s [Commitment] [Term Loans].
DELTA AIR LINES, INC.
By:________________________________
Title:_____________________________
The Administrative Agent hereby consents to _______________ becoming
a Bank under the Credit Agreement pursuant to the foregoing terms and
conditions.
THE CHASE MANHATTAN BANK, as
Administrative Agent
By:________________________________
Title:_____________________________
3
<PAGE>
EXHIBIT C-2
FORM OF AGREEMENT OF EXISTING BANK
TO REPLACE REPLACED BANK
The Chase Manhattan Bank, as Administrative Agent
270 Park Avenue
New York, New York 10017
Attention: Janet Belden
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of March
[ ], 1999 (the "Credit Agreement") by and among Delta Air Lines, Inc. (the
"Company"), the Banks party thereto, Citibank, N.A., as Syndication Agent, and
The Chase Manhattan Bank, as Administrative Agent. Terms used herein and not
defined herein have their respective defined meanings as set forth in the
Credit Agreement.
Pursuant to Section 3.14.1 of the Credit Agreement, the undersigned
Bank (the "Existing Bank") hereby agrees to assume [$___________] of the
[Commitment] [Term Loans] of ____________ (the "Replaced Bank") under the
Credit Agreement. Accordingly, the [Commitment] [Term Loans] of the Existing
Bank shall be increased from $____________ to $_____________. Except for the
increase in the [Commitment] [Term Loans] contemplated hereby, the Existing
Bank shall continue to have all of the rights, remedies, duties and obligations
of a Bank under the Credit Agreement.
Very truly yours,
[EXISTING BANK]
By:________________________________
Title:_____________________________
The Administrative Agent hereby consents to the above-described
increase in the Commitment of [Insert Bank] under the Credit Agreement.
THE CHASE MANHATTAN BANK, as
Administrative Agent
By:________________________________
Title:_____________________________
1
<PAGE>
EXHIBIT D
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of ______________,
by and among __________ (the "Assignor"), _____________ (the "Assignee") DELTA
AIR LINES, INC. (the "Company") and THE CHASE MANHATTAN BANK, as Administrative
Agent.
WHEREAS, the Assignor is a Bank under that certain Credit Agreement
dated as of March [ ], 1999 (the "Credit Agreement", terms used herein and not
defined herein have their respective defined meanings as set forth in the
Credit Agreement) by and among the Company, the Banks named therein, Citibank,
N.A., as Syndication Agent, and the Administrative Agent;
WHEREAS, the Assignor desires to assign to the Assignee [(a)] [all]
[a portion] of the Term Loans made by the Assignor to the Company under the
Credit Agreement, [and (b) [all] [a portion] of the Assignor's Commitment under
the Credit Agreement, all on the terms and conditions set forth herein];
WHEREAS, the Company and the Administrative Agent consent to such
assignment on the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
1. Subject to the terms and conditions of this Agreement, the
Assignor hereby irrevocably transfers and assigns to the Assignee, without
recourse, [all of the Assignor's right title and interest in and to] [an
undivided ___________ percent interest in] all Term Loans made by the Assignor
to the Company under the Credit Agreement] [a principal amount of Term Loans
made by the Assignor to the Company under the Credit Agreement equal to
$_________] (such Term Loans herein referred to as the "Assigned Loans")
together with all rights of the Assignor to receive all payments of principal
and interest from the Company with respect to such Assigned Loans and all
rights of collection and enforcement the Assignor may have against the Company
with respect to such Assigned Loans. [Further, but subject to the terms and
conditions set forth herein, the Assignor hereby irrevocably transfers and
assigns to the Assignee [all of the Assignor's] [$ _____ of the Assignor's]
Commitment under the Credit Agreement (the "Assigned Commitment").] Such
assignment shall include all voting rights of the Assignor associated with such
amount of [Assigned Loans] [Assigned Commitment][, all rights to receive all
commitment fees with respect to such Assigned Commitment] and other rights of
the Assignor under the Credit Agreement with respect to such amount of
[Assigned Loans] [Assigned Commitment], all
1
<PAGE>
as if the Assignee were an original Bank and signatory under the Credit
Agreement having [a Commitment] [Term Loans] equal to the Assigned [Commitment]
[Loans]. The Assignee, subject to the terms and conditions hereof, hereby
assumes all obligations of the Assignor as if the Assignee were an original
Bank and signatory under the Credit Agreement including, but not limited to,
the obligation of the Assignor to make advances to the Company with respect to
the Assigned Commitment (if applicable) and to indemnify the Administrative
Agent as provided therein. The Assignor shall have no further duties or
obligations with respect to, and shall have no further interest in, the
Assigned [Commitment] [Loans].
2. The Assignor hereby represents and warrants to the Assignee that:
[(a) the Assignor is a Bank under the Credit Agreement having a Commitment
under the Credit Agreement immediately prior to the effectiveness of this
Agreement equal to $________ and the Assignor is not in default of its
obligations under the Credit Agreement and (b)] immediately prior to the
effectiveness of this Agreement, the Assignor held $________ in principal
amount of Term Loans.
3. The Assigned Loans shall be without recourse to the Assignor. The
Assignee acknowledges and agrees that, except as provided in paragraph 2 above,
the Assignor is making no representations or warranties with respect to, and
the Assignee hereby releases and discharges the Assignor for any responsibility
or liability for: (i) the present or future solvency or financial condition of
the Company, (ii) any representations, warranties, statements or information
made or furnished by the Company in connection with the Credit Agreement or
otherwise, (iii) the validity, efficacy, sufficiency, or enforceability of the
Credit Agreement or any document or instrument executed in connection
therewith, or the collectibility of the Assigned Loans, (iv) the perfection,
priority or validity of any lien, security interest or pledge with respect to
any collateral at any time securing the obligations of the Company under the
Credit Agreement or the Assigned Loans under the Notes or the Credit Agreement
and (v) the performance or failure to perform by the Company of any obligation
under the Credit Agreement or any document or instrument executed in connection
therewith.
Further, the Assignee acknowledges that it has, independently and
without reliance upon the Administrative Agent, or on any affiliate or
subsidiary thereof, the Assignor or any other Bank and based on the financial
statements supplied by the Company and such other documents and information as
it has deemed appropriate, made its own credit analysis and decision to become
a Bank under the Credit Agreement. The undersigned also acknowledges that it
will, independently and without reliance upon the Administrative Agent, the
Assignor or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Credit Agreement or its respective
Note(s). The Administrative Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide the Assignee with any credit or
other information with respect to the Company or to notify the Assignee of any
Event of Default except as provided in Section 10.5 of the Credit Agreement.
The Assignee has not relied on the
2
<PAGE>
Administrative Agent, the Assignor or any other Bank as to any legal or factual
matter in connection therewith or in connection with the transactions
contemplated thereunder.
4. Upon the execution and delivery of this Agreement, the Assignee
shall deliver to Assignor by wire transfer of immediately available funds
$__________ [Insert amounts owing with respect to Assigned Loans, etc.] [Other
consideration/adjustments].
5. The Company hereby agrees that the Assignee shall be a Bank under
the Credit Agreement having [a Commitment] [Term Loans] equal to the Assigned
[Commitment] [Loans]. The Company agrees that the Assignee shall have all of
the rights and remedies of a Bank under the Credit Agreement as if the Assignee
were an original Bank and signatory under the Credit Agreement including, but
not limited to, the right of a Bank to receive payments of principal and
interest with respect to the Assigned Loans, if any, and to the Term Loans made
by the Banks after the date hereof and, if applicable, to receive the
commitment fees payable to the Banks as provided in the Credit Agreement.
Further, the Assignee shall be entitled to the indemnification provisions from
the Company in favor of the Banks as provided in the Credit Agreement. The
Company further agrees, upon the execution and delivery of this Agreement, to
execute in favor of the Assignee a promissory note in substantially the form of
Exhibit B to the Credit Agreement in the face amount of the Assigned
Commitment. Further, the Company agrees that, upon the execution and delivery
of this Agreement, the Company shall owe the Assigned Loans to the Assignee as
if the Assignee were the Bank originally making such Term Loans.
6. For purposes of delivering any notice to the Assignee as a Bank
under the Credit Agreement, the following sets forth the address of the
Assignee for such purpose:
___________________________
___________________________
___________________________
Telecopy No._______________
Attention:_________________
7. The Administrative Agent hereby consents to the assignment and
assumption contemplated herein.
8. The Assignor agrees to pay the Administrative Agent a servicing
fee equal to $3,500 immediately upon the execution and delivery of this
Agreement.
9. This Agreement, and the assignment and assumption contemplated
herein, shall not be effective until (a) this Agreement is signed by each of
the Assignor, the Assignee, the Company and the Administrative Agent; (b) the
payment to the Assignor of the amounts owning by the Assignee pursuant to
paragraph 4 hereof; and (c) the payment to the
3
<PAGE>
Administrative Agent of the fee owning to the Administrative Agent pursuant to
paragraph 8 hereof.
10. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
11. This Agreement may be executed in any number of counterparts each
of which, when taken together, shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Assignment and Assumption Agreement as of the date and year first written
above.
THE ASSIGNOR:
____________________________________
By:_________________________________
Title: __________________________
THE ASSIGNEE:
____________________________________
By:_________________________________
Title: __________________________
THE COMPANY:
DELTA AIR LINES, INC.
By:_________________________________
Title: __________________________
4
<PAGE>
THE ADMINISTRATIVE AGENT:
THE CHASE MANHATTAN BANK, as
Administrative Agent
By:_________________________________
Title: __________________________
5
<PAGE>
SCHEDULE I
FUNDED DEBT*
1. 6.65-9.15% Notes with maturities ranging from 1997 to 2007
2. 9.875% Notes due January l, 1998
3. 9.875% Notes due May 15, 2000
4. 8.50% Notes due March 15, 2002
5. 8.10% Guaranteed Serial ESOP Notes, payable in installments between 2002
and 2009
6. 10.l 25% Debentures due May 15, 2010
7. 10.375% Debentures due February 1, 2011
8. 9.00% Debentures due May 15, 2016
9. 9.75% Debentures due May 15, 2021
10. 9.25% Debentures due March 15, 2022
11. 10.375% Debentures due December 15, 2022
12. Development Authority of Fulton County Loan Agreement dated May 1, 1998
13. Development Authority of Fulton County Loan Agreement dated September 1,
1992
14. Development Authority of Clayton County Loan Agreement dated January 1, 1988
15. Capital Leases:
(a) Forty-One B737-200 Aircraft Leases
(b) Nine Western Aircraft Leases (4 B737-200; 3 B737-300 and 2 B727-200)
16. Credit Agreement, dated as of May 2, 1997, among the Company, the
several financial institutions which are parties thereto and
Nationsbank, N.A. (South), as Agent Bank.
1
<PAGE>
17. Credit Agreement, dated as of March 22, 1999, among the Company,
several financial institutions party thereto, The Chase Manhattan Bank
and Citibank, N.A.
*All of which is unsecured except Item 15(b).
SECURED OBLIGATIONS
1. $96,500,000 The Port Authority of NY and NJ Special Projects Bonds, Series I
Delta Air Lines, Inc. Project)
2. Nine Western Air Lines Capital Leases (4 B737-200; 3 B737-300 and
2 B727-200)
3. SATO Guaranty (pledge of Company's government receivables to provide
collateral for SATO credit agreement)
2
<PAGE>
SCHEDULE II
SUBSIDIARIES OF DELTA AIR LINES, INC.
Aero Assurance Ltd.
Crown Rooms, Inc.
Crown Rooms of Texas, Inc.
DAL Foreign Sales, Inc.
DAL Moscow, Inc.
Delta Air Lines and Pan American World Airways
Unterstutzungkasse GmbH
Delta Air Lines Funding Corporation
Delta Air Lines Holdings, Inc.
DeltaTel, Inc.
Delta Air Lines Global Services, Inc.
Delta Ventures III, Inc.
Epsilon Trading, Inc.
Delta Sub, Inc.
Delta Technology, Inc.
TransQuest Holding, Inc.
TransQuest UK Ltd.
Jaison Vermogensuerwaltings GmbH
1
<PAGE>
SCHEDULE III
GUARANTY LIABILITIES
$88,000,000 Regional Airports Improvement Corporation 6 35% Facilities Sublease
Revenue Bonds, Issue of 1996 Delta Air Lines, Inc. (Los Angeles International
Airport)
SATO Guaranty (Company's allocable share of $25 million SATO revolving credit
facility, used by SATO to advance payments to participating airlines on
government receivables)
1
<PAGE>
