<PAGE> 1
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission File Number 0-11097
Atlantic Southeast Airlines, Inc.
---------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1354495
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number )
100 Hartsfield Centre Parkway, Suite 800, Atlanta, Georgia 30354
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (404) 766-1400
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months ( or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days
Yes X No
--- ---
As of May 6, 1994 there were 34,348,991 shares of common stock outstanding.
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ATLANTIC SOUTHEAST AIRLINES, INC.
INDEX
Page No.
Part I-Financial Information
Item 1. Consolidated Financial Statements
Balance Sheets- March 31, 1994 and December 31, 1993
Assets 3
Liabilities and Shareholders' Equity 4
Statements of Income- Three months ended
March 31, 1994 and March 31, 1993 5
Statements of Cash Flows- Three months ended
March 31, 1994 and March 31, 1993 6
Condensed Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II-Other Information
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
Exhibits
10(a) Credit Agreement with Trust Company Bank dated
as of April 20, 1994
10(b) Collateral Assignment of Purchase Agreement with
Trust Company Bank dated as of April 20, 1994 with
respect to ATR72 Purchase Agreement between the
Company and Avions de Transport Regional dated
February 10, 1993 and related letter agreements
11 Statement Re: Computation of Per Share Earnings
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Part I- Financial Information
Item 1. Consolidated Financial Statements
<TABLE>
<CAPTION>
ATLANTIC SOUTHEAST AIRLINES, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
March 31, December 31,
1994 1993
------------ ------------
(unaudited) (audited)
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $78,244 $52,835
Marketable securities 90,894 113,094
Accounts receivable 9,266 6,945
Expendable parts 5,942 6,362
Other current assets 3,011 3,092
------------ -------------
187,357 182,328
Property and Equipment
Flight equipment 414,041 412,125
Other property and equipment 7,188 7,126
Advance payments on property and equipment 7,567 598
------------ -------------
428,796 419,849
Less accumulated depreciation and
amortization 144,211 137,514
------------ -------------
284,585 282,335
Other Assets
Excess of cost over fair value of
tangible assets acquired 3,049 3,075
Other assets 6,748 6,861
------------ -------------
9,797 9,936
Total Assets $481,739 $474,599
============ =============
</TABLE>
See condensed notes to consolidated financial statements.
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<TABLE>
<CAPTION>
ATLANTIC SOUTHEAST AIRLINES, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
March 31, December 31,
1994 1993
-------------- ------------
(unaudited) (audited)
<S> <C> <C>
Liabilities and Shareholders' Equity
Current Liabilities
Current portion of long-term debt $26,035 $25,981
Accounts payable 11,298 11,710
Air traffic liability 251 1,723
Accrued payroll and related expenses 8,252 9,465
Accrued interest payable 1,943 1,642
Other accrued expenses 1,430 591
Income taxes payable 7,583 4,241
------------- ------------
56,792 55,353
Long-Term Debt 130,362 135,963
Noncurrent Liabilities 450 409
Deferred Income Taxes 59,095 57,787
Shareholders' Equity
Common Stock, $.10 par value; authorized
50,000,000 shares; issued 1994 - 34,348,991
shares; 1993- 34,339,772 shares 3,435 3,434
Capital in Excess of Par Value 44,808 44,458
Retained Earnings 186,797 177,195
------------- ------------
235,040 225,087
Total Liabilities and Shareholders' Equity $481,739 $474,599
============= ============
</TABLE>
See condensed notes to consolidated financial statements.
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<TABLE>
<CAPTION>
ATLANTIC SOUTHEAST AIRLINES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars Except Per Share Amounts)
(Unaudited)
For The Three Months Ended
March 31,
----------------------------------------
1994 1993
<S> <C> <C>
Operating revenues:
Passenger $73,530 $63,233
Other 1,488 1,236
Total operating revenues 75,018 64,469
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Operating expenses:
Flying operations 15,842 11,572
Maintenance 12,320 8,806
Passenger service 3,224 2,374
Aircraft and traffic servicing 8,952 6,901
Promotion, sales and advertising 6,795 5,909
General and administrative 1,706 11,473
Depreciation, amortization and obsolescence 6,257 5,804
Other 81 59
----------- ----------
Total operating expenses 55,177 52,898
Income from operations 19,841 11,571
Non-operating (income) expenses, net:
Interest income (1,415) (1,152)
Interest expense 1,127 1,408
Other 14 (4)
----------- ----------
(274) 252
Income before income taxes and cumulative
effect of change in accounting for
income taxes 20,115 11,319
Income taxes: Note 3
Current 6,457 3,613
Deferred 1,308 632
----------- ----------
7,765 4,245
Income before cumulative effect of
accounting change 12,350 7,074
Cumulative effect of change in method of
accounting for income taxes-Note 3 - 4,212
----------- ----------
Net income $12,350 $11,286
Earnings per share:
Income before cumulative effect of
accounting change $0.36 $0.21
Cumulative effect of accounting change - $0.12
Net income $0.36 $0.33
Cash dividends per common share $0.08 $0.07
Weighted number of common shares outstanding 34,434,190 34,301,567
</TABLE>
See condensed notes to consolidated financial statements.
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<TABLE>
<CAPTION>
ATLANTIC SOUTHEAST AIRLINES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
For The Three Months Ended
March 31,
-----------------------------------
1994 1993
<S> <C> <C>
OPERATING ACTIVITIES
Net income $12,350 $11,286
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 5,985 5,616
Amortization and provision for obsolescence 272 188
Provision for uncollectible accounts 30 (270)
Increase in allowance for maintenance 1,421 1,096
Deferred income taxes 1,308 (3,580)
Other 376 849
Changes in operating assets and liabilities:
Accounts receivable (2,351) 264
Expendable parts 290 81
Other assets 106 (1,667)
Accounts payable (412) 2,615
Other liabilities (633) 1,129
Payroll and related liabilities (1,172) 9,031
Accrued interest payable 301 193
Income taxes payable 3,342 2,702
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 21,213 29,533
INVESTING ACTIVITIES
Purchase of marketable securities (26,760) (33,274)
Proceeds from sale of marketable securities 48,960 40,113
Proceeds from disposal of property and
equipment 11 8
Purchases of property and equipment including
advance payments (9,691) (8,749)
Other (29) 8
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES 12,491 (1,894)
FINANCING ACTIVITIES
Proceeds from long-term debt 0 5,490
Principal payments on long-term debt (5,547) (12,586)
Dividends paid (2,748) (2,395)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (8,295) (9,491)
INCREASE IN CASH AND CASH EQUIVALENTS 25,409 18,148
Cash and cash equivalents at beginning
of period 52,835 58,122
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $78,244 $76,270
========= =========
</TABLE>
See condensed notes to consolidated financial statements.
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ATLANTIC SOUTHEAST AIRLINES, INC.
Condensed Notes to Consolidated Financial Statements
(Unaudited)
1. In the opinion of management, the accompanying condensed (unaudited)
consolidated financial statements contain all adjustments necessary to
present fairly the financial position as of March 31, 1994 and results
of operations for the three-month periods ended March 31, 1994 and
1993 and cash flows for the three-month periods ended March 31, 1994
and 1993. The accounting adjustments contained in the financial
statements are of a normal recurring nature. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission for Form 10-Q. It is
suggested that these unaudited condensed consolidated financial
statements be read in conjunction with the audited consolidated
financial statements and the notes thereto included in the 1993 Annual
Report on Form 10-K filed by the Company under the Securities Exchange
Act of 1934 on March 30, 1994.
2. Results of operations for the three-month periods ended March 31,
1994 and 1993 are not necessarily indicative of the results to be
expected for the year.
3. The provisions for income taxes were computed at the estimated
annualized effective tax rates. Effective January 1, 1993, the
Company adopted FASB Statement No. 109, "Accounting for Income
Taxes." Under Statement 109, the liability method is used in
accounting for income taxes. Under this method, deferred tax assets
and liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates. As permitted by Statement 109, the
Company elected not to restate the financial statements of any prior
years. The cumulative effect of the change increased net income by
$4,212,300 or $.12 per share for the three months ended March 31,
1993.
4. Earnings per share are based on the weighted average number of common
shares and common stock equivalents outstanding.
5. Marketable securities, which consist of investments with maturity
dates longer than three months, are stated at the lower of cost or
market value.
6. Certain amounts as previously reported have been reclassified to
conform to current year presentation.
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
The Company increased cash, cash equivalents and investments in
marketable securities by $3.2 million during the first three months of 1994.
Cash generated from operating activities was $21.2 million. The Company
purchased $2.7 million of property and equipment, paid $7.1 million in advance
payments on four ATR72 aircraft to be purchased, retired $5.5 million of debt
and paid $2.7 million in dividends. Working capital was $130.6 million with a
current ratio of 3.3:1 at March 31, 1994, which compares to working capital of
$127.0 million and the same current ratio of 3.3:1 at December 31, 1993. The
Company has available a $3 million unsecured line of credit with one of its
banks. As of March 31, 1994, a letter of credit for $895,000 was outstanding
against this line of credit.
In February 1994 the Company, through an amendment to a February
1993 Purchase Agreement, exercised its option to purchase four ATR72 aircraft
from the manufacturer. These four aircraft will be delivered during the second
quarter of 1994. These aircraft will be used to enter a new market, replace two
Dehavilland DHC-7 aircraft that are being retired and increase capacity in
existing markets. In April 1994, the Company entered into a credit agreement
with one of its banks to provide financing for approximately $43 million,
which is a majority of the purchase price of these four aircraft. This debt
will be repaid over twelve years in semi-annual installments. All other
property and equipment purchases during the first quarter of 1994 were funded
from the Company's cash reserves and internally generated funds. Current
maturities of long-term debt and other capital expenditures for 1994 will be
funded from the Company's cash reserves and will not require the use of
additional external funds.
The long-term debt to equity ratio was .55:1 at March 31, 1994
compared with .6:1 at December 31, 1993. Long-term debt was $130.4 million at
March 31, 1994 compared to $136.0 million at the end of 1993. This decrease
was the result of $5.5 million in scheduled debt payments.
Net worth increased $10.0 million primarily due to earnings in the
first quarter of 1994 of $12.3 million, net of $2.7 million in dividends.
In the first quarter of 1994, the Company declared a quarterly cash
dividend of $.08 per share as compared to $.07 per share for the similar period
of 1993.
Results of Operations
The Company set first quarter records in total revenues, net income
and the number of passengers carried. Revenues were $75.0 million for the
three months ended March 31, 1994 compared to $64.5 million in 1993, an
increase
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<PAGE> 9
of 16 percent. The Company's net income was $12.3 million or $.36 per share in
the first three months of 1994 compared to $7.1 million or $.21, before giving
effect to the accounting change, in the same period of 1993. Including the
additional income of $4.2 million due to the cumulative effect of the change in
accounting principle as required by the adoption of Statement of Financial
Standards No. 109 "Accounting for Income Taxes", first quarter 1993 net
income was $11.3 million or $.33 per share.
The number of passengers carried increased 27 percent and the
average passenger trip length increased seven percent for a 36 percent increase
in revenue passengers miles ("RPM's") flown. This increase in RPM's, offset
by a 14 percent decrease in the average passenger mile yield to $.416,
resulted in a 16 percent increase in passenger revenue to $73.5 million for the
quarter ended March 31, 1994.
Operating expenses increased four percent to $55.2 million for the
quarter ended March 31, 1994. The Company increased capacity (available seat
miles "ASM's") by 37 percent and experienced a 24 percent decrease in the cost
per ASM flown to $.141 in the first quarter of 1994 compared to $.185 in the
first quarter of 1993. The following table compares components of operating
cost per ASM and operating expense as a percentage of total operating expense
for the three month periods ended March 31, 1994 and 1993:
<TABLE>
<CAPTION>
Cost per ASM % Operating Cost
Quarter Ended Quarter Ended
March 31, March 31,
-------------------------------------------------------
1994 1993 1994 1993
-------------------------------------------------------
<S> <C> <C> <C> <C>
Labor and related $.037 $.080 27% 43%
Fuel .015 .018 10 10
Direct maintenance .023 .024 16 13
Passenger related .017 .019 12 10
Depreciation and aircraft rent .022 .020 15 11
Other .027 .024 20 13
-----------------------------------------------------
Total operating expense $.141 $.185 100% 100%
</TABLE>
Labor and related costs decreased to $14.7 million for the first
quarter of 1994 compared to $22.8 million for the same period in 1993. The
number of employees grew 19 percent from 1,786 to 2,125 as of March 31, 1994.
In conjunction with this, salary and related expense increased $2.7 million or
21 percent in the first quarter of 1994. Included in the first quarter of 1993
is a $9.8 million expense accrual associated with the Company's stock
appreciation rights ("SARs") plan. The unusual size of the SARs accrual was due
to a 50 percent rise in the Company's stock price during the first quarter of
1993.
Fuel expense decreased to $.015 per ASM for the first three months of
1994 compared to $.018 per ASM for the same period in 1993. Fuel expense
went up $.5 million spread over a 37 percent increase in ASM's. The
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<PAGE> 10
average price per gallon decreased 11 percent to $.622 from $.701 while
total fuel consumption increased 24 percent.
Direct maintenance cost, excluding labor and related expenses,
increased 30 percent to $9.0 million in the first quarter of 1994. The increase
was due primarily to a 37 percent increase in capacity and the timing for
scheduled maintenance inspections and overhauls of time controlled components.
Depreciation and aircraft rent increased 48 percent to $8.4 million
for the quarter ended March 31, 1994. This increase was due primarily to rent
expense associated with eight ATR72 aircraft which were acquired in the
second and third quarters of 1993.
The Company's break-even load factor decreased to 33% for the first
quarter of 1994 compared to 37.6 % for the same period a year ago. This
decrease was primarily the result of lower ASM cost as discussed above.
Part II-Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report. The
exhibit number refers to Item 601 of Regulation S-K.
10(a) Credit Agreement with Trust Company Bank dated as of April 20,
1994
10(b) Collateral Assignment of Purchase Agreement with Trust
Company Bank dated as of April 20, 1994 with respect to ATR72
Purchase Agreement between the Company and Avions de
Transport Regional dated February 10, 1993 and related letter
agreements
11 Statement Re: Computation of Per Share Earnings
(b) Reports on Form 8-K. There were no reports on Form 8-K
filed for the quarter ended March 31, 1994.
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<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Atlantic Southeast Airlines, Inc.
/s/ Ronald V. Sapp
---------------------------------
Ronald V. Sapp
V.P. Finance, Treasurer and
Chief Financial Officer
Date: May 13, 1994
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<PAGE> 1
EXHIBIT 10(a)
Confidential treatment has been applied for with respect to certain
provisions of this Exhibit 10(a), which provisions have been omitted from
Exhibit 10(a), marked with an asterik (*) and filed separately with the SEC.
<PAGE> 2
EXECUTION COUNTERPART
CREDIT AGREEMENT
Dated as of April 20, 1994
By and Between
ATLANTIC SOUTHEAST AIRLINES, INC.
AND
TRUST COMPANY BANK
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE I DEFINITIONS 1
1.01 Definitions 1
1.02 Accounting Terms 9
ARTICLE II AMOUNT AND TERMS OF LOANS 9
2.01 Commitment 9
2.02 Interest on Notes 10
2.03 Method of Borrowing Under the Commitment 10
2.04 Termination of Commitment 10
2.05 Repayment of Notes 10
2.06 Prepayment of Notes 11
2.07 Use of Proceeds 11
2.08 Closing Fee 11
2.09 Illegality 12
2.10 Making of Payments 12
2.11 Yield Protection 12
2.12 Default Rate of Interest 14
2.13 Calculation of Interest 14
ARTICLE III CONDITIONS TO BORROWINGS 14
3.01 Conditions Precedent to Initial Borrowing 14
3.02 Conditions Precedent to Each Borrowing 15
</TABLE>
Table of Contents - Page i
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<TABLE>
<S> <C> <C>
ARTICLE IV SECURITY FOR THE BORROWER'S OBLIGATIONS 17
4.01 Security Interest in Collateral 17
4.02 Release of Collateral 17
ARTICLE V REPRESENTATIONS AND WARRANTIES 17
5.01 Corporate Standing 17
5.02 Corporate Powers 17
5.03 Binding Effect 18
5.04 Litigation 18
5.05 Financial Statements 18
5.06 Title to Properties 18
5.07 Taxes 19
5.08 Subsidiaries, Stock Ownership 19
5.09 Investment Company Status 19
5.10 Status As "United States Citizen" 19
5.11 Indebtedness of the Borrower 19
5.12 Contingent Liabilities 19
5.13 Compliance with Law 20
5.14 Form 10-K 20
5.15 Full Disclosure 20
5.16 Delta Connection Agreement 20
5.17 ERISA 20
ARTICLE VI AFFIRMATIVE COVENANTS 21
6.01 Financial Statements 21
6.02 Current Ratio 23
</TABLE>
Table of Contents - Page ii
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<TABLE>
<S> <C> <C>
6.03 Ratio of Indebtedness to Tangible Net Worth 23
6.04 Minimum Tangible Net Worth 23
6.05 Fixed Charge Coverage Ratio 24
6.06 Inspection of Property and Records 24
6.07 Maintenance of Insurance 24
6.08 Corporate Existence and Status 24
6.09 ERISA 24
6.10 Compliance with Laws 25
6.11 Notice of Event of Default 25
6.12 Performance of Delta Connection Agreement 25
ARTICLE VII NEGATIVE COVENANTS 25
7.01 Disposition of Assets 25
7.02 Mergers 26
7.03 Delta Connection Agreement 27
7.04 Status As "United States Citizen" 27
7.05 Purchase Agreement 27
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES 27
8.01 Events of Default 27
8.02 Remedies on Defaults 29
ARTICLE IX MISCELLANEOUS 30
9.01 No Waiver 30
9.02 Notices 30
9.03 Governing Law 31
</TABLE>
Table of Contents - Page iii
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<TABLE>
<S> <C> <C>
9.04 Survival of Representations and Warranties 31
9.05 Descriptive Headings 31
9.06 Severability 31
9.07 Time is of the Essence 32
9.08 Counterparts 32
9.09 Payment of Costs 32
9.10 Successors and Assigns 32
9.11 Cumulative Remedies; No Waiver 33
9.12 Amendments; Consents 33
9.13 Set-Off 33
9.14 Indemnity 33
9.15 Usury 33
9.16 Jurisdiction and Venue 34
9.17 Construction 34
9.18 Entire Agreement 34
9.19 Interest Rate Agreements 34
Exhibit A - Form of Term Note
Exhibit B - Aircraft Security Agreement
Exhibit C - Opinion of Counsel to Borrower
Exhibit D - Supplementary Opinion of Counsel to Borrower
Exhibit E - Opinion of FAA Counsel
Exhibit F - Closing Certificate
</TABLE>
Table of Contents - Page iv
<PAGE> 7
EXECUTION COUNTERPART
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of April 20, 1994 (the "Agreement"), by
and between ATLANTIC SOUTHEAST AIRLINES, INC., a corporation organized and
existing under the laws of the State of Georgia (the "Borrower"), and TRUST
COMPANY BANK, a banking corporation organized and existing under the laws of the
State of Georgia (the "Bank").
W I T N E S S E T H :
WHEREAS, the Borrower has entered into an agreement with Avions De
Transport Regional, a "Groupement d'Interet Economique" governed by the laws of
France (the "Seller") for the purchase of four ATR 72-210 aircraft on certain
dates specified therein;
WHEREAS, the Borrower has requested and the Bank has agreed, on the
terms and subject to the conditions set forth herein to finance *
; and
WHEREAS, the parties wish to enter into this Agreement to evidence their
mutual understanding;
NOW THEREFORE, for and in consideration of the sum of $10.00 in hand
paid by the Bank to the Borrower, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. In addition to the other terms defined
herein, the following terms used herein shall have the meanings herein specified
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Affiliate" shall mean, with respect to any Person, a Person
directly or indirectly controlling or controlled by, or under
direct or indirect common control with, such Person, other than a
Subsidiary of such Person. A Person
1
<PAGE> 8
shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the
power to direct or cause the direction of the
management and policies of such corporation, whether
through the ownership of voting securities, by contract
or otherwise.
"Agreement" shall mean this Credit Agreement,
either as originally executed or as it may be from time
to time supplemented, amended, renewed or extended.
"Aircraft" shall mean, collectively, those four
ATR 72-212 aircraft numbered N640 AS, N641 AS, N642 AS
and N643 AS.
"Applicable Margin" shall mean, with respect to
any Borrowing hereunder, the percentage determined by
reference to the following subparagraphs (x) or (y),
whichever is applicable:
*
The Applicable Margin on the date hereof is .50% and
shall remain in effect from the date hereof until and
unless adjusted as hereinafter provided. Commencing
with the Borrower's fiscal quarter ending March 31,
1994, and continuing thereafter for each fiscal
quarter that any Note delivered pursuant to this
Agreement is outstanding, the "Applicable Margin" shall
be determined based upon subparagraphs (x) or (y) above
based upon the Consolidated Funded Debt to Total
Capitalization of the Borrower on the last day of each
such fiscal quarter. Any change of the "Applicable
Margin" shall occur on the first day of the Interest
Period next following the earlier to occur of (i) the
delivery to the Bank of the financial reports described
in Section 6.1 hereof for the preceding fiscal quarter
or (ii) the forty-fifth (45th) day after the end of
such preceding fiscal quarter for the first three
fiscal quarters and the one hundred twentieth (120th)
day after the end of such preceding fiscal quarter for
the last fiscal quarter of each Fiscal Year.
"Assignment of Purchase Agreement" shall
meanthat certain Collateral Assignment of Purchase
Agreement dated as of even date herewith made by
Borrower in favor of the Bank and acknowledged by the
Seller.
2
<PAGE> 9
"Book Net Worth" shall mean the book value,
as determined in accordance with generally accepted
accounting principles, of the total assets of the
Borrower and its Restrictive Subsidiaries (exclusive
of any Debt owed to the Borrower or its Restrictive
Subsidiaries by any Affiliate of the Borrower) minus
Total Liabilities.
"Borrowing" shall mean a borrowing under the
Commitment made on any Purchase Date.
"Business Day" shall mean a day of the year
on which commercial banks are not required or
authorized to close in the city in the United States
in which the Bank maintains its principal place of
business and, if the applicable Business Day relates
to any Eurodollar Borrowing, on which dealings are
carried on in the London interbank market.
"Change in Control" means the acquisition by
any Person (other than Delta Air Lines, Inc.,
directly or indirectly) or group (within the meaning
of Rule 13d-5 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act
of 1934), or by two or more Persons acting in
concert, of beneficial ownership (within the meaning
of Rule 13d-3 promulgated by the Securities and
Exchange Commission under the Securities and Exchange
Act of 1934) of either (i) 33 1/3% or more of the
outstanding shares of voting stock of the Borrower,
or (ii) the power to direct or cause the direction of
the management and policies of the Borrower, whether
through the ownership of voting securities, by
contract, or otherwise. A reorganization of the
Borrower into a holding company structure, in which
the Borrower's shareholders' beneficial ownership (as
defined within the meaning of Rule 13d-3 referenced
above) of the Borrower and its Affiliates immediately
after the reorganization is identical to such
beneficial ownership immediately before the
reorganization and the Borrower continues to own
substantially all of its assets, shall not by itself
be a "Change in Control" for purposes of this
definition.
"Closing Date" shall mean the date of the
execution and delivery of this Agreement by the
parties hereto.
"Closing Fee" shall have the meaning set
forth in Section 2.08.
"Code" means the Internal Revenue Code of
1986, as amended from time to time, and the
regulations promulgated and the rulings issued
thereunder.
"Commitment" shall mean the amount set forth
in Section 2.01 hereof.
3
<PAGE> 10
"Commitment Termination Date" shall mean the
earlier of (i) the fourth Purchase Date hereunder, or
(ii) September 30, 1994.
"Consolidated Funded Debt" shall mean the
aggregate of all Debt of the Borrower and its
Restricted Subsidiaries which would, in accordance
with generally accepted accounting principles, be
classified as "funded debt" on a balance sheet of the
Borrower, calculated on a consolidated basis.
"Current Maturities of Long Term Debt" shall
mean the amounts due, within the twelve month period
following any fiscal quarter end of the Borrower,
under long term debt instruments of the Borrower and
its Restricted Subsidiaries, as is determined
pursuant to generally accepted accounting principles
on a consolidated basis.
"Debt" shall mean (i) indebtedness for
borrowed money or for the deferred purchase price of
property or services (other than trade accounts
payable on customary terms in the ordinary course of
business), (ii) financial obligations evidenced by
bonds, debentures, notes or other similar
instruments, (iii) financial obligations as lessee
under leases which shall have been or should be, in
accordance with generally accepted accounting
principles, recorded as capital leases, and (iv)
obligations under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise)
to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of,
indebtedness or financial obligations of others of
the kinds referred to in clauses (i) through (iii)
above.
"Default" shall mean any event that, with
notice or lapse of time or both, would constitute an
Event of Default.
"Delta Connection Agreement" shall mean that
certain Delta Connection Agreement between the
Borrower and Delta Airlines, Inc. dated June 1, 1986,
as amended.
"Depreciation and Amortization Expense" shall
mean the total expenses for depreciation and
amortization incurred by the Borrower and its
Restricted Subsidiaries on a consolidated basis in
the twelve month period preceding the most recent
fiscal quarter end of the Borrower, determined on a
consolidated basis pursuant to generally accepted
accounting principles.
"Dollar" and the sign "$" shall mean lawful
money of the United States of America.
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<PAGE> 11
"Earnings Before Taxes" shall mean the total
earnings of the Borrower and its Restricted
Subsidiaries from all sources, excluding
extraordinary items, during the twelve month period
ending on the most recent fiscal quarter end of the
Borrower, prior to any deduction for federal and
state income taxes, as determined, on a consolidated
basis, pursuant to generally accepted accounting
principles.
"ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended from time to
time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" shall mean, as of any date,
any trade or business (whether or not incorporated)
which together with the Borrower or a Subsidiary is
treated as a single employer under Section 414(b),
(c), (m) or (o) of the Code.
"Eurodollar Borrowing" shall mean any
Borrowing hereunder which bears interest based on
LIBOR.
"Event of Default" shall have the meaning set
forth in Article VIII.
"Fixed Charge Coverage Ratio" shall mean the
ratio of the sum of (i) Earnings Before Tax, plus
Interest Expense,plus Depreciation and Amortization
Expense, plus Operating Lease Obligations (for the
twelve month period ending on the most recently
fiscal quarter end of the Borrower), to the sum of
(ii) Interest Expense, plus Current Maturities of Long
Term Debt, plus Operating Lease Obligations.
"Guarantor" shall mean ASA Investments, Inc.,
a Delaware corporation and a wholly-owned Subsidiary
of Borrower.
"Guaranty" shall mean that certain Guaranty
Agreement dated as of even date herewith made by the
Guarantor in favor of the Bank with respect to the
obligations of the Borrower pursuant to the Loan
Documents, either as originally executed or as
hereafter amended, modified or supplemented.
"Indebtedness" shall mean, as of any date of
determination, the sum of (i) Total Liabilities plus
(ii) any Debt of a Person that is not included in
clause (i) above that is guaranteed by the Borrower
or one or more of its Restricted Subsidiaries, plus
(iii) 70% of all Operating Lease Obligations coming
due in the next twelve months, each determined on a
consolidated basis in accordance with generally
accepted accounting principles.
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<PAGE> 12
"Installment Date" shall mean, with respect
to any Borrowing, the last day of each Interest
Period applicable thereto.
"Interest Expense" shall mean amounts paid by
or due from the Borrower or its Restricted
Subsidiaries for interest accrued on Debt of the
Borrower or its Restricted Subsidiaries during the
twelve month period ending on the most recent fiscal
quarter end of the Borrower, as determined, on a
consolidated basis, in accordance with generally
accepted accounting principles.
"Interest Period" shall mean, with respect to
any Eurodollar Borrowing, a period of 180 days.
"LIBOR" shall mean, with respect to any
Interest Period for any Eurodollar Borrowing, the
rate per annum equal to the quotient of (i) the
consensus of the LIBOR settings as of 11:00 a.m.
(London time) on the second Business Day preceding
the first day of such Interest Period as shown on
page 3750 of Telerate Service or as published by a
comparable service selected by the Bank for deposits
in immediately available funds in Dollars for
delivery on the first day of such Interest Period in
an amount substantially equal to the principal amount
of such Eurodollar Borrowing and for a period
approximately equal to such Interest Period, divided
by (ii) a number equal to 1.00 minus the Reserve
Percentage, the rate so determined to be rounded
upward to the nearest whole multiple of 1/100 of 1%.
As of the date hereof, the number described in
subclause (ii) immediately above is equal to 1.00.
"Lien" shall mean any mortgage, pledge,
security interest, encumbrance, lien or charge of any
kind (including any written agreement to give any of
the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof,
and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any
jurisdiction.)
"Loan Documents" shall mean and include, as
the context requires, this Agreement, the Notes, the
Guaranty, the Security Agreements, the Assignment of
Purchase Agreement and any and all other instruments,
agreements, documents and writings contemplated
hereby or executed in connection herewith.
"Maturity Date" shall mean, with respect to
each Note, the earlier of (i) the twelfth anniversary
of the Purchase Date with respect thereto, and (ii)
the date of the acceleration of the Notes in
accordance with Article VIII hereof.
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<PAGE> 13
"Multiemployer Plan" shall mean a
"multiemployer plan" as defined in section 4001(a)(3)
of ERISA.
"Note" or "Notes" shall mean a promissory
note of the Borrower payable to the order of the
Bank, in substantially the form of Exhibit A hereto,
evidencing the maximum principal indebtedness of the
Borrower to the Bank with respect to a Borrowing
hereunder, either as originally executed or as it may
be from time to time supplemented, modified, amended,
renewed or extended.
"Operating Lease Obligations" shall mean, as
of any dated of determination, an amount equal to the
aggregate of all scheduled lease payments under the
terms of all of the leases of the Borrower or its
Restricted Subsidiaries (other than capitalized
leases as determined under generally accepted
accounting principles) of tangible, real or personal
property requiring aggregate payments of $100,000 or
more during any fiscal year of the Borrower or its
Restricted Subsidiaries, determined on a consolidated
basis.
"PBGC" shall mean the Pension Benefit
Guaranty Corporation and any successor thereto.
"Person" shall mean an individual,
partnership, corporation (including a business
trust), joint stock company, trust, unincorporated
association, joint venture or other entity, or a
government or any political subdivision or agency
thereof.
"Plan" shall mean any "employee benefit
plan", as defined in Section 3(3) of ERISA,
maintained by or on behalf of the Borrower or any
ERISA Affiliate , including, but not limited to, any
defined benefit pension plan, profit sharing plan,
money purchase pension plan, savings or thrift plan,
stock bonus plan, employee stock ownership plan,
Multiemployer Plan, or any plan, fund, program,
arrangement or practice providing for medical
(including post-retirement medical), hospitalization,
accident, sickness, disability, or life insurance
benefits.
"Prime Rate" shall mean the per annum rate of
interest designated from time to time by the Bank to
be its prime rate, with any change in the rate of
interest resulting from a change in the Prime Rate to
be effective as of the opening of business of the
Bank on the day of such change. On the date of this
Agreement, the Prime Rate is six and 25/100 percent
(6.25%) per annum. The Prime Rate is not necessarily
the lowest corporate rate of the Bank.
"Prime Rate Borrowing" shall mean any
Borrowing hereunder that bears interest based upon
the Prime Rate.
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<PAGE> 14
"Purchase Agreement" shall mean that certain
Purchase Agreement between Borrower and Seller dated
February 10, 1993 as amended by Amendment No. 1
thereto dated February 21, 1994.
"Purchase Dates" shall mean the respective
dates on which Borrowings are made pursuant to the
Commitment.
"Reportable Event" shall have the meaning set
forth in ERISA.
"Reserve Percentage" shall mean, for any day,
the stated maximum rate (expressed as a decimal) of
all reserves required to be maintained with respect
to liabilities or assets consisting of or including
"Eurocurrency liabilities," as prescribed by
Regulation D of the Board of Governors of the Federal
Reserve System (or by any other governmental body
having jurisdiction with respect thereto), including,
without limitation, any basic, marginal, emergency,
supplemental, special, transitional or other
reserves, the rate so determined to be rounded upward
to the nearest whole multiple of 1/100 of 1%.
"Restricted Subsidiary" shall mean the
Guarantor and any other Subsidiary which is not an
Unrestricted Subsidiary.
"Security Agreements" shall mean those
certain Aircraft Security Agreements in substantially
the form of Exhibit B dated as of each Purchase Date
hereunder, made by the Borrower in favor of the Bank,
granting to the Bank a first priority security
interest in the Aircraft purchased with such
Borrowing and certain related collateral, either as
originally executed or as hereafter amended or
modified from time to time.
"Seller" shall have the meaning set forth in
the first recital hereto.
"Subsidiary" shall mean any corporation or
other entity of which securities or other ownership
interests having ordinary voting power to elect a
majority of the board of directors or other persons
performing similar functions are at the time directly
or indirectly owned by the Borrower.
"Tangible Net Worth" shall mean with respect
to the Borrower (i) Book Net Worth minus (ii)
intangible assets, minus (iii) any write-up in the
book value of any fixed asset of the Borrower or its
Restricted Subsidiaries resulting from revaluation
thereof, minus (iv) and the amount of any shares of
stock of the Borrower appearing in the asset side of
the Borrower's balance sheet, as
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<PAGE> 15
determined, in each case, in accordance with
generally accepted accounting principles.
"Title IV Plan" shall mean any Plan that is
covered by Title IV of ERISA other than a
Multiemployer Plan.
"Total Assets" shall mean that amount shown
as total assets on any balance sheet of the Borrower
as determined with respect to the Borrower and its
Restricted Subsidiaries on a consolidated basis in
accordance with generally accepted accounting
principles.
"Total Capitalization" shall have the meaning
afforded such term under generally accepted
accounting principles, calculated with respect to the
Borrower and its Restricted Subsidiaries on a
consolidated basis.
"Total Liabilities" shall mean that amount
shown as total liabilities on any balance sheet of
the Borrower as determined with respect to the
Borrower and its Restricted Subsidiaries on a
consolidated basis in accordance with generally
accepted accounting principles.
"Unrestricted Subsidiary" shall mean any
Subsidiary of the Borrower which is organized or
acquired after the Closing Date and not designated in
writing by the Borrower to the Bank as a Restricted
Subsidiary within thirty (30) days' of its
organization or acquisition and any Restricted
Subsidiary which is designated in writing by the
Borrower as an Unrestricted Subsidiary with the prior
written consent of the Bank.
SECTION 1.02. Accounting Terms. All accounting terms not specifically
defined herein shall be construed as having the respective meanings customary
under generally accepted accounting principles consistently applied from and
after the date of the initial Borrowing.
ARTICLE II
AMOUNT AND TERMS OF COMMITMENT
SECTION 2.01. Commitment. Subject to and upon the terms and conditions
set forth in this Agreement, the Bank establishes until the Commitment
Termination Date a term loan commitment in favor of the Borrower in aggregate
principal amount equal to FORTY-FIVE MILLION AND NO/100 DOLLARS ($45,000,000)
(the "Commitment"). Within the limits of the Commitment, the Borrower may make
no more than four (4) Borrowings under the terms of this Agreement; provided,
however, that the Borrower may not borrow hereunder should there exist a Default
or an Event of Default.
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<PAGE> 16
Each Borrowing under the Commitment shall be evidenced by a separate Note
payable to the Bank in the form of Exhibit A attached hereto with appropriate
insertions. Each Note shall be dated the Purchase Date with respect to the
relevant Borrowing, shall be payable to the order of the Bank in a principal
amount equal to
*
, shall bear interest as hereinafter
provided and shall mature on the Maturity Date applicable thereto. The Bank
shall not have any obligation to advance funds in excess of the amount of the
Commitment. On the Commitment Termination Date, any unused portion of the
Commitment shall terminate. Once repaid, no Borrowing may be reborrowed
hereunder.
SECTION 2.02. Interest on Notes. Interest shall accrue on the unpaid
principal amount of each Note at LIBOR for the Interest Period applicable
thereto plus the Applicable Margin. The Bank shall notify the Borrower of the
applicable interest rate on the first day of each Interest Period.
SECTION 2.03. Method of Borrowing Under the Commitment. The Borrower
shall give the Bank five (5) Business Days' written or telephonic notice
(promptly confirmed in writing) of any requested Borrowing under the Commitment
(a "Notice of Borrowing") specifying (i) the amount of the Borrowing, (ii) the
Purchase Date on which the proposed Borrowing is to be made (which shall be a
Business Day), and (iii) the purchase price of the Aircraft to be purchased with
the proceeds of such Borrowing. The Bank shall be entitled to rely on any
telephonic Notice of Borrowing which it believes in good faith to have been
given by a duly authorized officer or employee of the Borrower.
SECTION 2.04. Termination of Commitment. In addition to the automatic
termination of the unused portion of the Commitment on the Commitment
Termination Date, the Borrower shall have the right to terminate the unused
portion of the Commitment, in whole at any time or in part from time to time,
without penalty provided that (i) the Borrower gives the Bank at least ten (10)
Business Days' prior written notice of such termination, specifying the date
such termination will occur and the amount of the unused Commitment to be
terminated and (ii) each partial termination shall be in an amount of at least
$2,000,000 and in integral multiples of $500,000 (with the understanding that
any full termination of the Commitment shall be the amount of the unused
Commitment on the date of termination).
SECTION 2.05. Repayment of Notes. Principal and interest with respect
to each Note shall be payable in twenty-four (24) consecutive "mortgage-style"
semi-annual installments commencing on the Installment Date which is 180 days
following the Purchase Date applicable thereto and continuing on each
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<PAGE> 17
applicable Installment Date up to and through the applicable Maturity Date when
all principal and accrued and unpaid interest shall be due and payable in
full. In determining the amount of each installment, the Bank, utilizing the
applicable interest rate on the first day of each Interest Period, shall
amortize the amount of such Borrowing for the remaining term thereof assuming
level, semi-annual payments of principal and interest, to determine the
payment amount due and owing on the next Installment Date. Following payment
and application thereof on such Installment Date in accordance with such
amortization schedule, the Bank shall repeat the calculation described above
for the new interest rate, amount of principal outstanding and remaining term
to determine the payment amount due on the next Installment Date.
SECTION 2.06. Prepayment of Notes. The Borrower shall have the right
to prepay the indebtedness represented by the Notes, in whole at any time or in
part from time to time, without premium or penalty but with accrued interest on
the principal amount prepaid to the date of such prepayment above, provided that
(i) the Borrower gives the Bank two Business Days' prior written notice thereof
specifying the Note to be prepaid and the amount of such prepayment, (ii) each
partial prepayment shall be in the amount of $2,000,000 and in integral
multiples of $500,000, and (iii) such prepayment is made on an Installment Date
with respect to such Note. Any partial prepayment of any Note shall be applied
to the next scheduled payments applicable to such Note; provided that, if such
application would result in prepayment of more than the four next scheduled
payments, any amount in excess of such four payments shall be applied to
installments of principal with respect to such Note in the inverse order of
their maturity.
Notwithstanding the foregoing, the Borrower may elect to prepay in whole
or in part any Note on a date other than an Installment Date subject to the
provisions of this Section 2.07 other than (iii) above and to payment of any
loss, cost or expense sustained or incurred by the Bank as a consequence of such
prepayment by the Borrower other than on an Installment Date, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by the Bank to fund such
Borrowing for the Interest Period. The Bank shall certify the amount of its
loss or expense to the Borrower, and such certification shall be conclusive
absent manifest error.
SECTION 2.07. Use of Proceeds. The proceeds of each Borrowing under
the Commitment will be used by the Borrower solely for the payment of * percent
(* %) of the purchase price of the Aircraft to be obtained by the Borrower on
the Purchase Date.
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<PAGE> 18
SECTION 2.08. Closing Fee. On the Closing Date, the Borrower shall pay
to the Bank a closing fee equal to * (the "Closing Fee"). The Closing
Fee will be fully earned and non-refundable as of the Closing Date.
SECTION 2.09. Illegality. Notwithstanding any other provisions of this
Agreement, if any change in any applicable law, regulation or directive, or in
the interpretation or application thereof shall make it unlawful or impractical
for the Bank to make or maintain any Eurodollar Borrowing or to maintain
Eurodollar deposits in the London interbank market, the obligation of the Bank
hereunder to advance or maintain Eurodollar Borrowings shall forthwith be
cancelled and the Borrower shall, if any Eurodollar Borrowings are then
outstanding, promptly upon request from the Bank, either, at the option of the
Borrower, pay all such Eurodollar Borrowings or convert such Eurodollar
Borrowings to Prime Rate Borrowings. If any such payment or conversion of
Eurodollar Borrowings is made on a day that is not the last day of the then
current Interest Period applicable to such Eurodollar Borrowings, the Borrower
shall promptly pay, upon demand of the Bank such amount or amounts as may be
necessary to compensate the Bank for any actual loss or expense sustained or
incurred by the Bank as a result of such payment or conversion following
reasonable steps by the Bank to minimize the loss or expense sustained or
incurred by the Bank.
SECTION 2.10. Making of Payments. The Closing Fee and all payments of
principal of, or interest on, the Notes shall be made in immediately available
funds to the Bank, without set-off, deduction or counterclaim, at its principal
office in Atlanta, Georgia. All such payments shall be made not later than 2:00
P.M. (Atlanta, Georgia time) and funds received after that hour shall be deemed
to have been received by the Bank on the next following Business Day.
SECTION 2.11. Yield Protection.
(a) If, after the date hereof, the Bank shall have determined that the
adoption of any applicable law, rule or regulation, or any change therein,
including Regulation D of the Board of Governors of the Federal Reserve System,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency,
(i) shall subject the Bank to any tax (except for
taxes on the overall net income of the Bank), duty or other charge
with respect to the Notes or any right to make
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<PAGE> 19
purchases, or shall change the basis of the taxation of payments to
the Bank or any other amounts due under this Agreement in respect
of its rights to make purchases; or
(ii) shall impose, modify or deem applicable any
reserve requirement (including, without limitation, any reserve
requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding any reserve requirement, if any,
included in the Reserve Percentage), special deposit or similar
requirement against assets of, deposits with or for the account of,
or credit extended by the Bank; or
(iii) shall impose any other condition affecting the
Notes or any Eurodollar interbank market which affects the
purchasing or maintaining by the Bank of Eurodollar Borrowings;
and the result of any of the foregoing is (A) to increase the cost to, or, in
the case of Regulation D referred to above, to impose a cost on the Bank for
funding any Eurodollar Borrowing, or (B) to reduce the amount of any sum
received or receivable by the Bank under this Agreement with respect thereto,
then within thirty (30) Business Days after demand by the Bank (which demand
shall be accompanied by a statement setting forth the basis for and
calculations establishing in reasonable detail, the amount of such demand),
Borrower shall pay to the Bank such additional amount or amounts as will
compensate the Bank for such additional or increased cost incurred or such
reduction suffered.
(b) If the Bank shall reasonably determine that the adoption of any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change in or phase-in of any applicable law, rule, regulation, directive or
guideline in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the capital of the Bank as a consequence of its
obligations hereunder or arising in connection herewith to a level below that
which the Bank could have achieved but for such adoption, change, or compliance
(and which result from changes applicable to the banking industry or segment of
the banking industry in which the Bank operates as a whole and not from a change
in the Bank's capital position) by an amount deemed by the Bank to be material,
then the Borrower shall pay to the Bank upon demand such additional amount or
amounts as will compensate the Bank for such reduction.
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<PAGE> 20
(c) In determining any amount provided for in Section 2.11, the Bank
may use any reasonable averaging and attribution methods and any calculations
presented hereunder or pursuant to Section 2.09 shall be conclusive absent
manifest error. The Borrower's obligations shall survive the payment of all
sums due hereunder and the termination of this Agreement.
SECTION 2.12. Default Rate of Interest. If the Borrower shall fail to
pay on the due date therefor, whether by acceleration or otherwise, any
principal owing under the Note, then interest shall accrue on such unpaid
principal from the due date until and including the date on which such principal
is paid in full at a rate of interest equal to the Prime Rate plus an additional
two percent (2.0%) per annum.
SECTION 2.13. Calculation of Interest. Interest payable on the Note
shall be calculated on the basis of a year of 360 days and paid for the actual
number of days elapsed.
ARTICLE III
CONDITIONS TO BORROWINGS
The obligation of the Bank to allow the Borrower to make a Borrowing
hereunder is subject to the satisfaction of the following conditions:
SECTION 3.01. Conditions Precedent to Initial Borrowing. The
obligation of the Bank to make the initial Borrowing is subject to the
conditions precedent that the Bank shall have received on or before the initial
Purchase Date all of the following, in form and substance reasonably
satisfactory to the Bank and King & Spalding, counsel for the Bank:
(a) Copies of the organizational papers of the
Borrower, certified as true and correct by the Secretary of State
of the State of the Borrower's incorporation, and certificates from
the Secretaries of State of the State of Borrower's incorporation
and of those States in which the Borrower is legally required to
qualify to transact business as a foreign corporation, certifying
the Borrower's good standing as a corporation in such States.
(b) Certified copies of the by-laws of the Borrower,
of resolutions of the Board of Directors of the Borrower approving
transactions contemplated hereunder, and of all documents
evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement, the Notes and
the other Loan Documents.
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<PAGE> 21
(c) A certificate of the Secretary or Assistant
Secretary of the Borrower certifying the names and true signatures
of the officers of the Borrower authorized to execute this
Agreement and the Note and the other Loan Documents to be delivered
hereunder.
(d) Copies of the organizational papers of the
Guarantor, certified as true and correct by the Secretary of State
of the State of the Guarantor's incorporation, and certificates
from the Secretaries of State of the State of Guarantor's
incorporation and of those States in which the Guarantor is legally
required to qualify to transact business as a foreign corporation,
certifying the Guarantor's good standing as a corporation in such
States.
(e) Certified copies of the by-laws of the
Guarantor, of resolutions of the Board of Directors of the
Guarantor approving the Guaranty and of all documents evidencing
other necessary corporate action and governmental approvals, if
any, with respect to the Guaranty.
(f) A certificate of the Secretary or Assistant
Secretary of the Guarantor certifying the names and true signatures
of the officers of the Guarantor authorized to execute the
Guaranty.
(g) A certified copy of the Purchase Agreement.
(h) A duly executed Assignment of Purchase Agreement,
acknowledged by the Seller.
(i) A duly executed Guaranty.
(j) All corporate and other proceedings taken or to
be taken in connection with the transactions contemplated hereby
and all Loan Documents and other documents incident thereto or
delivered in connection therewith shall be reasonably satisfactory
in form and substance to the Bank.
SECTION 3.02. Conditions Precedent to Each Borrowing. - The
obligations of the Bank to extend each Borrowing hereunder (including the
initial Borrowing) shall be subject to the additional conditions precedent that
the Bank shall have received on or before each Purchase Date all of the
following, each dated such date, in form and substance reasonably satisfactory
to the Bank and King & Spalding, counsel to the Bank:
(a) The Note evidencing such Borrowing duly
executed by the Borrower;
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<PAGE> 22
(b) A duly executed Security Agreement granting to
the Bank a first priority security interest in the Aircraft to be
purchased with the proceeds of such Borrowing;
(c) An Officer's Certificate from the Borrower to
the effect that:
(i) The representations and warranties
contained in Article V hereof are true and accurate
as though made on the Purchase Date; and
(ii) No event shall have occurred and be
continuing, or shall result from such Borrowing,
which constitutes a Default or an Event of Default
under this Agreement; and
(iii) Since the Closing Date, there shall
have occurred no material adverse change in the
business, financial condition or results of operation
of the Borrower or any Subsidiary;
(d) A certificate of insurance setting forth in
detail satisfactory to the Bank the policies of insurance
maintained by the Borrower covering the Aircraft being purchased
and as required by the Security Agreement together with appropriate
certificates naming the Bank as loss payee and/or additional
insured thereunder;
(e) An opinion from the Borrower's legal counsel,
Altman, Kritzer & Levick, P.C., substantially in the form attached
hereto as Exhibit C (for the initial Borrowing) and Exhibit D (for
all subsequent Borrowings);
(f) An opinion from Messrs. Crowe & Dunlevy, special
FAA counsel to the Bank, substantially in the form attached hereto
as Exhibit E covering the Aircraft to be purchased with the
proceeds of the Borrowing;
(g) Duly executed Uniform Commercial Code financing
statements in form satisfactory to the Bank with respect to the
collateral described in the Security Agreements together with
appropriate Uniform Commercial Code searches evidencing the fact
that no prior Liens exist with respect to such collateral;
(h) Evidence satisfactory to the Bank that all
requisite approvals and authorizations to export the Aircraft have
been obtained from the government of France;
(i) Such supplemental opinions and documents as the
Bank may reasonably request; and
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<PAGE> 23
(j) A certificate executed by an officer of the
Borrower that the amount of the Borrowing does not exceed * % of
the purchase price of the Aircraft being purchased.
ARTICLE IV
SECURITY FOR THE BORROWER'S OBLIGATIONS
SECTION 4.01. Security Interest in Collateral. To secure the payment
to the Bank of each Note and to secure the payment and performance of the
Borrower's other obligations to the Bank hereunder, the Borrower shall execute
and deliver to the Bank on each Purchase Date a Security Agreement, granting to
the Bank a first, perfected security interest in the Aircraft and related
collateral as is being purchased from Seller on that Purchase Date (the
"Collateral"). The Collateral shall be subject to no other Liens.
SECTION 4.02. Release of Collateral. Upon payment in full of any Note
in accordance with the terms of this Agreement, provided that no Default or
Event of Default exists hereunder, the Bank shall release the Aircraft purchased
with the proceeds of such Note from its Lien pursuant to the relevant Security
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
SECTION 5.01. Corporate Standing. The Borrower and its Subsidiaries
are duly organized corporations existing and in good standing under the laws of
the state of their incorporation, and have the corporate power and legal
authority to own their properties and to carry on their businesses as now being
conducted and are duly qualified to do business in all jurisdictions in which
such qualification is necessary.
SECTION 5.02. Corporate Powers. The making, execution, delivery and
performance of this Agreement is, and the making, execution, delivery and
performance of the Security Agreements and the Notes and the Assignment of the
Purchase Contract, will be at the time of their execution, delivery and
performance, within the Borrower's or the Guarantor's corporate powers, as
applicable; the Agreement, the Assignment of Purchase Contract, Security
Agreements, the Guaranty and Notes have been duly authorized by all necessary
corporate action, do not (and in the case of the Security Agreements and Notes
will not at the
17
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time of their execution and delivery) require any consent, approval or
authorization of, or declaration to be filed with any governmental or any
regulatory authority on the part of the Borrower or the Guarantor and do not
contravene any law, judgment, decree, or order, or any contractual restrictions
binding on the Borrower or the Guarantor.
SECTION 5.03. Binding Effect. This Agreement, the Security Agreements,
the Assignment of Purchase Contract, the Guaranty and the Notes are, or will be
when executed and delivered, legal, valid and binding obligations of the
Borrower and the Guarantor, as applicable, enforceable against the Borrower and
the Guarantor, as applicable, in accordance with their respective terms, except
as the enforcement of the terms of this Agreement, the Security Agreements, the
Assignment of Purchase Contract, the Guaranty or the Notes may be limited by
bankruptcy, insolvency or other laws affecting enforcement of creditors' rights
generally.
SECTION 5.04. Litigation. There are no pending or (to the knowledge of
the Borrower or any Subsidiary) threatened actions or proceedings before any
court or administrative agency which may materially and adversely affect the
financial condition or the present or proposed operations of the Borrower or any
Subsidiary or which, to the knowledge of the officers of the Borrower or any
Subsidiary, seek to question or set aside any of the transactions herein
contemplated. The Borrower or any Subsidiary is not in default with respect to
any judgment, suit, injunction, decree, rule or regulation which would have a
material adverse effect on the financial condition or operations of the Borrower
or any Subsidiary. All material pending actions or proceedings against the
Borrower and its Subsidiaries are set forth in the financial statements
referenced in Section 5.05.
SECTION 5.05. Financial Statements. The audited balance sheet as of
December 31, 1993 and the audited related statements of operations for the year
then ended and the statements of reconciliation of shareholders' equity of the
Borrower (copies of which have been furnished to the Bank) have been prepared in
accordance with generally accepted accounting principles on a consistent basis
with prior years and fairly present the correct and complete financial condition
of the Borrower as of such date and the results of the operations for such
periods, and there has been no material adverse change in the financial
condition or operations of the Borrower or any Subsidiary since December 31,
1993.
SECTION 5.06. Title to Properties. The Borrower and its Subsidiaries
have good title to their properties and assets shown on the December 31, 1993
balance sheets except for defects in title to properties and assets which do not
materially affect the operation or financial condition of the Borrower and its
Sub-
18
<PAGE> 25
sidiaries, and there are no material liens, mortgages, security interests or
other encumbrances on any of their properties or assets except as noted in the
financial statements referenced in Section 5.05.
SECTION 5.07. Taxes. The Borrower and its Subsidiaries have filed all
federal tax returns and all state and municipal tax returns which are required
to be filed (or have obtained appropriate extensions with respect thereto), and
have paid (or as required for said extensions have made provision for the
payment of) all taxes which have become due pursuant to said returns or pursuant
to any assessment received by the Borrower or any Subsidiary, except such taxes,
if any, as are being contested in good faith and as to which adequate reserves
have been provided. The federal income tax returns of the Borrower have been
examined by the Internal Revenue Service or closed by applicable statute and
satisfied for all taxable years up to and including the taxable year ending
December 31, 1986.
SECTION 5.08. Subsidiaries, Stock Ownership. (a) The Borrower has no
stock or other equity investment in any other corporation, partnership, or other
Person other than those Subsidiaries named in subparagraph 5.08(b) hereof.
(b) The Borrower has the following Subsidiaries and no others:
Jurisdiction of Jurisdictions of
Subsidiary Incorporation Qualification
---------- --------------- ----------------
ASA Investments, Inc. Delaware Delaware
SECTION 5.09. Investment Company Status. Neither the Borrower nor any
Subsidiary is not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 5.10. Status As "United States Citizen." The Borrower is a
"United States Citizen" as that term is used in Section 101(16) of the Federal
Aviation Act of 1958, as amended (the "Act"), is a duly certified "air carrier"
within the meaning of the Act, and has a Certificate of Public Convenience and
Necessity from the United States Department of Transportation.
SECTION 5.11. Indebtedness of the Borrower. The Borrower and its
Subsidiaries, on a consolidated basis, have no Debt except as set forth in the
financial statements referenced in Section 5.05.
SECTION 5.12. Contingent Liabilities. The Borrower and its
Subsidiaries, on a consolidated basis, have no material
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contingent liabilities except as set forth in the financial statements
referenced in Section 5.05.
SECTION 5.13. Compliance with Law. The Borrower and its Subsidiaries
have complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof, having jurisdiction over the conduct of their businesses or the
ownership of their properties the violation of which would have a material
adverse effect on the operations or financial condition of the Borrower or any
Subsidiary.
SECTION 5.14. Form 10-K. The Borrower's Annual Reports on Form 10-K
for the fiscal year ended December 31, 1993, filed by the Borrower with the
Securities and Exchange Commission and previously delivered to the Bank,
correctly describe the principal properties of the Borrower and the general
nature of the business conducted and presently proposed to be conducted by it.
SECTION 5.15. Full Disclosure. The financial statements previously
furnished to the Bank do not, nor does this Agreement, or any written statement
furnished by the Borrower or any Subsidiary to the Bank in connection with the
negotiation of this Agreement and the documents contemplated hereunder, contain
any untrue statement of a material fact or omit a material fact necessary to
make the statements contained therein or herein not misleading. There is no
existing fact which the Borrower or any Subsidiary has not disclosed to the Bank
in writing which materially and adversely affects nor, so far as the Borrower
and its Subsidiaries can now foresee, is reasonably likely to prove to affect
materially and adversely the business, operations, properties, prospects,
profits or condition (financial or otherwise) of the Borrower or any Subsidiary
or the ability of the Borrower to perform this Agreement and the documents
contemplated hereunder.
SECTION 5.16. Delta Connection Agreement. The Delta Connection
Agreement and all other material contracts affecting the business of the
Borrower and its Subsidiaries are in full force and effect; the Borrower and its
Subsidiaries are not in default under any of the foregoing nor has there
occurred any event that would ripen into a default upon giving of notice or
passage of time nor, insofar as is known to the Borrower and its Subsidiaries,
is the other party to any such agreement in default.
SECTION 5.17. ERISA. Except as disclosed in the Borrower's financial
statements referenced in Section 5.05 hereof:
(a) Identification of Plans. Neither the Borrower
nor any ERISA Affiliate maintains, contributes to or is
20
<PAGE> 27
obligated to contribute to, or has maintained, contributed to
or been obligated to contribute to, any Title IV Plan or
Multiemployer Plan.
(b) Liabilities. Neither the Borrower nor any
Subsidiary is currently or will become subject to any
liability (other than routine Plan expenses or contributions,
if timely paid), tax or penalty whatsoever to any person
whomsoever, which liability, tax or penalty is directly or
indirectly related to any Plan including, but not limited to,
any penalty or liability arising under Title I or Title IV of
ERISA, any tax or penalty resulting from a loss of deduction
under Sections 404 or 419 of the Code, or any tax or penalty
under Chapter 43 of the Code, except such liabilities, taxes,
or penalties (when taken as a whole) as will not have a
material adverse effect on the Borrower and its Subsidiaries
taken as a whole, or upon their financial condition, assets,
business, operations, liabilities or prospects; and
(c) Funding. The Borrower and each ERISA Affiliate
has made full and timely payment of all amounts (i) required
to be contributed under the terms of each Plan and applicable
law and (ii) required to be paid as expenses of each Plan. No
Title IV Plan would have an "amount of unfunded benefit
liabilities" (as defined in Section 4001(a)(18) of ERISA) if
such Plan were terminated as of the date on which this
representation and warranty is made which could have a
material adverse effect on the financial condition or
operations of the Borrower or any Restricted Subsidiary.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Note shall remain unpaid or the Bank shall have any
Commitment hereunder, the Borrower will, unless the Bank shall otherwise consent
in writing:
SECTION 6.01. Financial Statements. Furnish and shall cause each
Restricted Subsidiary to furnish to the Bank:
(i) Within forty-five (45) days after the end of
each quarterly period (other than the last quarterly period)
in each fiscal year, statements of income, paid-in surplus and
retained earnings of the Borrower on a consolidated basis
(including its Subsidiaries in accordance with generally
accepted accounting principles) for the period from the
beginning of the then current fiscal year to the end of such
quarterly period, and a balance sheet of the Borrower on a
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<PAGE> 28
consolidated basis (including its Subsidiaries in accordance
with generally accepted accounting principles) as of the end
of such quarterly period, prepared in accordance with
generally accepted accounting principles applied on a
consistent basis with prior periods (except for any changes
with which the Borrower's independent auditors concur) and
setting forth in the statements in comparative form figures
for the corresponding period in the preceding year, all in
reasonable detail and certified by the chief financial officer
of the Borrower, subject to changes resulting from year-end
adjustments;
(ii) Within one hundred twenty (120) days after
the end of each fiscal year, statements of income, paid-in
surplus and retained earnings of the Borrower on a
consolidated basis (including its Subsidiaries in accordance
with generally accepted accounting principles) for such year,
and a balance sheet of the Borrower on a consolidated basis
(including its Subsidiaries in accordance with generally
accepted accounting principles) as of 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 certified to the Borrower by Ernst & Young or by
another independent certified public accountant of recognized
standing, satisfactory to the Bank and selected by the
Borrower, and by the chief financial officer or treasurer or
Vice-President-Finance of the Borrower, as presenting fairly
the financial position of the Borrower on a consolidated basis
(including its Subsidiaries in accordance with generally
accepted accounting principles) and as having been prepared in
accordance with generally accepted accounting principles
applied on a consistent basis with prior years (except for any
changes with which the Borrower's independent auditors
concur);
(iii) Along with the financial statements delivered
pursuant to clauses (i) and (ii) above, (a) a certificate of
the chief financial officer or Treasurer of the Borrower as to
the compliance by the Borrower with the provisions of Sections
6.02, 6.03, 6.04, 6.05 and 6.06 hereof, attaching financial
computations evidencing such compliance and providing such
supporting information required to enable the Bank to
eliminate Unrestricted Subsidiaries from the accompanying
financial statements, and (b) an Officer's Certificate to the
effect that there exists no Default or Event of Default;
(iv) As soon as practicable, copies of all proxy
materials, financial statements and reports as the Borrower or
any Subsidiary shall send to its stockholders, and such other
information filed with the Securities and Exchange Commission
and any national securities exchange;
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<PAGE> 29
(v) Immediately after the commencement thereof,
notice in writing of all actions, suits and proceedings before
any court, tribunal or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign,
materially affecting the Borrower or any Subsidiary or any of
their operations or properties;
(vi) Immediately after the occurrence of a
material adverse change in the business, properties,
conditions or operations, financial or otherwise, of the
Borrower or any Restricted Subsidiary, a statement of the
chief executive or financial officer of the Borrower or the
Restricted Subsidiary setting forth details of such material
adverse change and the action which the Borrower or the
Restricted Subsidiary proposes to take with respect thereto;
(vii) Immediately upon the filing of any action or
proceeding against the Borrower or any Restricted Subsidiary
in which the damages sought are $1,000,000 or more and which
is not covered by insurance, notice of such action or
proceeding and a description thereof; and
(viii) With reasonable promptness, such other
financial data as the Bank may from time to time reasonably
request.
Together with each delivery of financial statements required by clause
(ii) above, the Borrower will deliver a certificate of the certified public
accountants referred to in such clause (ii) above, stating that, in making the
audit necessary to the certification of such financial statements, they have
obtained no knowledge of any Event of Default or Default, or if they have
knowledge that any such Event of Default or Default exists, specifying the
nature and period of existence thereof. Upon any officer of the Borrower or any
Restricted Subsidiary obtaining knowledge of any Event of Default or Default,
the Borrower and its Restricted Subsidiaries will forthwith deliver to the Bank
an Officer's Certificate specifying the nature thereof, the period of existence
thereof, and what action the Borrower or the Restricted Subsidiary proposes to
take with respect thereto.
SECTION 6.02. Current Ratio. Maintain at all times a ratio of current
assets to current liabilities, each determined in accordance with generally
accepted accounting principles of not less than * to * for the Borrower
and all Restricted Subsidiaries on a consolidated basis.
SECTION 6.03. Ratio of Indebtedness to Tangible Net Worth. Maintain at
all times a ratio of Indebtedness to Tangible Net Worth not greater than *
to * .
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<PAGE> 30
SECTION 6.04. Minimum Tangible Net Worth. Maintain at all times a
minimum Tangible Net Worth of $ * .
SECTION 6.05. Fixed Charge Coverage Ratio. Maintain at all times a
Fixed Charge Coverage Ratio of not less than * to * .
SECTION 6.06. Inspection of Property and Records. Permit and shall
cause each Subsidiary to permit any person designated in writing by the Bank, at
the expense of the Bank, to visit and inspect any of the properties of the
Borrower or any Subsidiary and to inspect financial records of the Borrower or
any Subsidiary, and to discuss the affairs, finances and accounts with the
principal officers of the Borrower or any Subsidiary, all at such reasonable
times and as often as the Bank may reasonably request.
SECTION 6.07. Maintenance of Insurance. Keep and shall cause each
Subsidiary to keep all properties of the Borrower and its Subsidiaries which are
of an insurable character insured by financially sound and reputable insurance
companies against loss or damage by fire and other risks and maintain
comprehensive liability insurance, all to the extent and in the manner customary
for operators of similar businesses; provided, however, the Borrower may provide
deductibles to such insurance requirements or provide self-insurance in an
aggregate amount of up to $ * .
SECTION 6.08. Corporate Existence and Status. Maintain and shall cause
each Restricted Subsidiary to maintain its corporate existence in good standing
in the state of its incorporation and the respective qualifications and good
standing as foreign corporations in all jurisdictions where qualification is
necessary. The Borrower and its Restricted Subsidiaries will at all times do or
cause to be done all things necessary to maintain, preserve and renew their
corporate existence and their rights, patents and franchises, and comply with
all related laws applicable to the Borrower and its Restricted Subsidiaries in
such manner as counsel shall advise; provided, however, that nothing contained
in this paragraph shall (a) require the Borrower or any Restricted Subsidiary to
maintain, preserve or renew any right, patent or franchise not necessary or
desirable in the conduct of the business of the Borrower or any Restricted
Subsidiary, as the case may be, or (b) require the Borrower or any Restricted
Subsidiary to comply with any law so long as the validity or applicability
thereof shall be contested in good faith by appropriate proceedings.
SECTION 6.09. ERISA.
(a) At all times, make and shall cause each Subsidiary and ERISA
Affiliate to make prompt payment of contributions
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<PAGE> 31
required under each Title IV Plan and Multiemployer Plan and the other
requirements of Section 6.10 hereof;
(b) Notify and shall cause each Subsidiary to notify the Bank
immediately of any fact including, without limitation, any Reportable Event
arising in connection with any Title IV Plans that might constitute grounds for
termination thereof by the PBGC or for the appointment by the appropriate United
States District Court of a trustee to administer such Title IV Plan, or any
other condition causing the representations of Section 5.17 hereof to not be
presently true together with a statement, if requested by the Bank, as to the
reasons therefor and the action, if any, that the Borrower or the Subsidiary
proposes to take with respect thereto; and
(c) Furnish and shall cause each Subsidiary to furnish to the Bank,
upon request, such additional information concerning any of their Plans as may
be reasonably requested.
SECTION 6.10. Compliance With Laws. Comply and shall cause each
Subsidiary to comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority, non-compliance with which
would materially adversely affect the businesses or operations of the Borrower
or any of its Restricted Subsidiaries.
SECTION 6.11. Notice of Event of Default. Immediately notify and shall
cause each Restricted Subsidiary to immediately notify the Bank of any Default
or Event of Default.
SECTION 6.12. Performance of Delta Connection Agreement. Faithfully
perform all obligations it has under the Delta Connection Agreement.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Note shall remain unpaid or the Bank shall have any
Commitment hereunder, the Borrower will not, without the prior written consent
of the Bank:
SECTION 7.01. Disposition of Assets. Dispose and shall not permit any
Restricted Subsidiary to dispose of any of their assets except for full, fair
and reasonable consideration; and during any fiscal year, dispose of assets
other than in the ordinary course of business in the aggregate with a book value
in excess of $ * ; provided that the disposition of any aircraft by the
Borrower or any Restricted Subsidiary must be for an amount not less than book
value and shall not be included in the calculation of the $ * .
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SECTION 7.02. Mergers. The Borrower shall not consolidate with or
merge into any other corporation, or convey, transfer, or lease all or
substantially all of its assets as an entirety to any Person, nor shall the
Borrower permit or suffer any Change in Control to occur unless:
(a) the corporation formed by such consolidation or
the Person who acquires by conveyance, transfer, or lease all
or substantially all of the Borrower's assets as an entirety
(the "Successor") or the Borrower, as applicable, (i) is a
corporation organized and existing under the laws of the
United States of America or any state or the District of
Columbia; (ii) is a "citizen of the United States" as defined
in Section 101(16) of the Act; and, in the case of such
consolidation, conveyance, transfer, or lease, the Successor
(x) executes and delivers to Bank an agreement, in form and
substance satisfactory to Bank, containing an assumption by
the Successor of the due and punctual performance and
observance of the Borrower's obligations under the Loan
Documents, and (y) makes such filings and recordings,
including any filing and or recording with the United Stated
Department of Transportation pursuant to the Act or any filing
under the Uniform Commercial Code of the applicable
jurisdiction, as are necessary to evidence such consolidation,
merger, conveyance, transfer, or lease with or to the
Successor and to continue the perfection of the Bank in the
collateral described in the Security Agreements;
(b) immediately after giving effect to such
transaction, (i) no Default or Event of Default exists, and
(ii) the Borrower's or the Successor's (as applicable)
business, assets, operations, condition (financial or
otherwise), and financial and other ability to perform its
obligations under the Loan Documents will not be adversely
affected by such transaction in any material respect;
(c) without limiting the obligations of the Borrower
or the Successor pursuant to Section 6.04 hereof, immediately
after giving effect to such transaction and for at least
ninety (90) days thereafter, Borrower or the Successor (as
applicable) shall maintain a Tangible Net Worth of not less
than $ * ; and
(d) the Borrower or the Successor (as applicable)
delivers to Bank, upon consummation of such transaction, an
officer's certificate stating that the conditions precedent
set forth in clause(s) (a), (b), and (c) above have been
complied with (except as to future maintenance of Tangible Net
Worth) and, if applicable, an opinion of counsel for the
Successor, in form and substance satisfactory to Bank, stating
that the agreements entered into to effect such consolidation,
merger, conveyance, transfer, or lease and
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<PAGE> 33
such assumption agreements have been duly authorized,
executed, and delivered by the Successor and that such
agreements (and the Loan Documents so assumed) constitute
legal, valid and binding obligations of the Successor,
enforceable in accordance with their respective terms (to no
lesser extent than the Loan Documents so assumed were
enforceable against the Borrower immediately before such
transaction) and that all conditions precedent which are legal
in nature provided for in the Loan Documents and related to
such transaction have been fulfilled.
Upon any such consolidation, conveyance, transfer or lease, the Successor shall
succeed to, shall be substituted for, and may exercise every right and power of
the Borrower under the Loan Documents to which the Borrower is a party, with
the same effect as if the Successor had been named as the Borrower therein. No
such conveyance, transfer, or release shall have the effect of releasing the
Borrower (or any Successor) from its liability under the Loan Documents to
which it is a party.
SECTION 7.03. Delta Connection Agreement. Voluntarily terminate or
materially amend to the detriment of the Borrower, the Delta Connection
Agreement.
SECTION 7.04. Status As "United States Citizen." Fail to maintain its
status as a "United States Citizen" as that term is used in Section 101(16) of
the Act and as a duly certified "air carrier" within the meaning of the Act.
SECTION 7.05. Purchase Agreement. Materially amended to the detriment
of the Bank, the Purchase Agreement.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01. Events of Default. Any one or more of the following
shall constitute an Event of Default hereunder:
(a) The Borrower fails to pay when due any payment
of principal or interest due on any Note or any other sum
payable hereunder or under any other Loan Document and such
failure shall continue for five (5) days after the Borrower's
receipt of written notice from the Bank thereof; or
(b) Any representation or warranty contained herein
or deemed to have been made hereunder or made by or furnished
on behalf of the Borrower or the Guarantor in connection
herewith shall be false or misleading in any material respect
as of the date made or deemed to have been made; or
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<PAGE> 34
(c) The Borrower fails to maintain the insurance
required by Section 6.07 hereof or the insurance with respect
to the Aircraft required by the terms of the Security
Agreements; or
(d) The Borrower voluntarily terminates the Delta
Connection Agreement; or
(e) The Borrower or any Restricted Subsidiary (i)
defaults in any payment of principal or interest on, or the
performance of any obligation set forth in, any other
obligation for money borrowed (or any obligation under a
capital lease, any obligation under a conditional sale or
other title retention agreement, any obligation issued or
assumed as full or partial payment for property whether or not
secured by a purchase money mortgage, or any obligation under
notes payable or drafts accepted representing extensions of
credit) totalling more than $ *
beyond any period of grace, notice or cure provided with
respect thereto, or (ii) defaults in the payment of any amount
when due under the terms of any financing with the Bank and
the Borrower or such Restricted Subsidiary fails to cure such
default before the expiration of any applicable grace or
notice and cure period, provided that such financing was, at
any time, for any amount in excess of $ * ; or
(f) The Borrower or any Restricted Subsidiary shall
make or take any action to make an assignment for the benefit
of creditors, petition or take any action to petition any
tribunal for the appointment of a custodian, receiver or any
trustee for it or a substantial part of its assets, or shall
commence or take any action to commence any proceeding under
any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution, liquidation or debtor relief law or statute
of any jurisdiction, whether now or hereafter in effect
including, without limitation, the Bankruptcy Code; or, if
there shall have been filed any such petition or application,
or any such proceeding shall have been commenced against it,
in which an order for relief is entered or which remains
unstayed and in effect for more than sixty (60) days; or the
Borrower or any Restricted Subsidiary by any act or omission
shall indicate its consent to, approval of or acquiescence in
any such petition, application or proceeding or order for
relief or the appointment of a custodian, receiver or any
trustee for it or any substantial part of any of its
properties, or shall suffer to exist any such custodianship,
receivership or trusteeship; or any corporate action is taken
by the Borrower or any Restricted Subsidiary for the purpose
of effecting any of the foregoing; or
28
<PAGE> 35
(g) One or more judgments or order for the payment
of money in an aggregate amount in excess of $ * is
rendered against the Borrower or any Restricted Subsidiary and
shall not be stayed or discharged or fully bonded against
within sixty (60) days of the date of entry; or
(h) A prohibited Change of Control shall occur
(whether or not the Borrower acquiesces thereto) and such
change of control is not rescinded or brought into compliance
with the terms of this Agreement within thirty (30) days; or
(i) Borrower or Guarantor fails to perform any other
material covenant or agreement set forth herein or in the Loan
Documents and such failure to perform continues for thirty
(30) days after the Borrower's receipt of written notice of
such default from the Bank or an Event of Default occurs
pursuant to any Security Agreement (as such term is defined
therein); or
(j) the Guarantor ceases to be a Subsidiary of the
Borrower (other than pursuant to reorganization referenced
herein).
SECTION 8.02. Remedies on Default.
(a) Upon the occurrence and during the continuation of an Event of
Default (other than an Event of Default described in Section 8.01(f)), the Bank
shall (i) terminate all obligations of the Bank to the Borrower, including,
without limitation, all obligations to advance Borrowings under this Agreement,
(ii) declare the Notes, including, without limitation, principal, accrued
interest and costs of collection (including, without limitation, reasonable
attorneys' fees if collected by or through an attorney at law or in bankruptcy,
receivership or other judicial proceedings) immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
expressly waived.
(b) Upon the occurrence of an Event of Default under Section 8.01(f),
(i) all obligations of the Bank to the Borrower, including, without limitation,
all obligations to advance Borrowings under this Agreement, shall terminate
automatically and (ii) the Notes, including, without limitation, principal,
accrued interest and costs of collection (including, without limitation,
reasonable attorneys' fees if collected by or through an attorney at law or in
bankruptcy, receivership or other judicial proceed ings) shall be immediately
due and payable, without presentment, demand, protest, or any other notice of
any kind, all of which are expressly waived.
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<PAGE> 36
(c) Upon the occurrence of an Event of Default and acceleration of the
Notes as provided in (a) or (b) above, the Bank may pursue any remedy available
under this Agreement, under the Notes, or under any other Loan Document, or
available at law or in equity, all of which shall be cumulative. The order and
manner in which the rights and remedies of the Bank under the Loan Documents and
otherwise may be exercised shall be determined by the Bank.
(d) All payments with respect to this Agreement received by the Bank
after the occurrence of an Event of Default and acceleration of the Notes shall
be applied first, to the costs and expenses incurred by the Bank, second, to the
payment of accrued and unpaid fees of the Bank, third, to the payment of accrued
and unpaid interest on the Notes, pro rata, to and including the date of such
application, fourth, to the unpaid principal of the Notes, pro rata, and fifth,
to the payment of all other amounts then owing to the Bank under the Loan
Documents. No application of the payments will cure any Event of Default or
prevent acceleration, or continued acceleration, of amounts payable under the
Loan Documents or prevent the exercise, or continued exercise, of rights or
remedies of the Bank hereunder or under applicable law.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. No Waiver. No delay or failure on the part of the Bank
or any holder of the Note in the exercise of any right, power or privilege
granted under this Agreement, under any other Loan Document, or available at law
or in equity, shall impair any such right, power or privilege or be construed as
a waiver of any Event of Default or any acquiescence therein. No single or
partial exercise of any such right, power or privilege shall preclude the
further exercise of such right, power or privilege. No waiver shall be valid
against the Bank unless made in writing and signed by the Bank, and then only to
the extent expressly specified therein.
SECTION 9.02. Notices. Unless otherwise provided herein, all notices,
requests and other communications provided for hereunder shall be in writing
(including bank wire, telex, telecopy or similar teletransmission or writing)
and shall be given at the following addresses:
(1) If to the Bank, Trust Company Bank
Trust Company Tower
25 Park Place
Atlanta, Georgia 30303
30
<PAGE> 37
Attention: Willem Hattink
Telephone: (404) 588-8055
Telecopy: (404) 588-8833
(2) If to Borrower, Atlantic Southeast Airlines,
Inc.
Suite 800
100 Hartsfield Centre Parkway
Atlanta, Georgia 30354-1356
Attention: Mr. Ronald V. Sapp
Telephone: (404) 766-1400
Telecopy: (404) 209-0162
Any such notice, request or other communication shall be effective (i) if given
by telecopy, when such telecopy is transmitted to the telecopy number specified
above and the appropriate answerback is received, (ii) if given by mail, upon
the earlier of receipt or the third Business Day after such communication is
deposited in the United States mails, registered or certified, with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means
(including, without limitation, by air courier), when delivered at the address
specified herein. The Borrower or the Bank may change its address for notice
purposes by notice to the other parties in the manner provided herein.
SECTION 9.03. Governing Law. This Agreement and all other Loan
Documents shall be governed by and interpreted in accordance with the laws of
the State of Georgia.
SECTION 9.04. Survival of Representations and Warranties. All
representations and warranties contained herein or made by or furnished on
behalf of the Borrower in connection herewith shall survive the execution and
delivery of this Agreement and all other Loan Documents.
SECTION 9.05. Descriptive Headings. The descriptive headings of the
several sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
SECTION 9.06. Severability. If any part of any provision contained in
this Agreement or in any other Loan Document shall be invalid or unenforceable
under applicable law, said part shall be ineffective to the extent of such
invalidity only, with out in any way affecting the remaining parts of said
provision or the remaining provisions.
SECTION 9.07. Time is of the Essence. Time is of the essence in
interpreting and performing this Agreement and all other Loan Documents.
31
<PAGE> 38
SECTION 9.08. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which, taken together, shall constitute one and the same instrument.
SECTION 9.09. Payment of Costs. The Borrower shall pay all costs,
expenses, taxes and fees (i) incurred by the Bank in connection with the
preparation, execution and delivery of this Agreement and all other Loan
Documents including, without limitation, the costs and professional fees of
counsel for the Bank, Messrs. King & Spalding in an aggregate amount not to
exceed $30,000, whether or not the 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 Bank in connection with the preparation, execution and delivery
of any waiver, amendment or consent by the Bank relating to the Loan Documents
(other than such an amendment initiated by the Bank where the Bank shall bear
such expense), including, without limitation, the reasonable costs and
professional fees of counsel for the Bank; and (iii) incurred by the Bank in
enforcing the Loan Documents, including, without limitation, attorneys' fees and
expenses of counsel for the Bank.
SECTION 9.10. Successors and Assigns. This Agreement shall bind and
inure to the benefit of the Borrower and the Bank, and their respective
successors and assigns; provided, however, the Borrower shall have no right to
assign its rights or obligations hereunder to any Person. Notwithstanding
anything in this Agreement to the contrary, the Bank shall have the right, but
shall not be obligated, to sell participations in the loans made pursuant hereto
to affiliates of the Bank, other banks and financial institutions consented to
in writing by the Borrower (such consent not to be unreasonably withheld);
provided that, the aggregate amount of such participation or participations at
any one time outstanding does not exceed $ * and further provided
that such participation agreement shall not grant the participant thereunder the
right to prevent the Bank from agreeing to any amendment or waiver of the terms
of this Agreement without the consent of such participant other than amendments
or modifications (i) increasing the Commitment or term thereof, (ii) reducing
the principal of, or interest on, the Notes or any fees hereunder, (iii)
postponing any date fixed for the payment in respect of principal of, or
interest on, the Notes or any fees hereunder, (iv) changing the aggregate unpaid
principal amount of the Notes, or (v) agreeing to release any collateral pledged
pursuant to the Security Agreements, other than in accordance with the terms
hereof.
SECTION 9.11. Cumulative Remedies; No Waiver. The rights, powers, and
remedies of the Bank provided herein or in
32
<PAGE> 39
any other Loan Document are cumulative and not exclusive of any right, power,
or remedy provided by law or equity.
SECTION 9.12. Amendments; Consents. No amendment, modification,
supplement, termination, or waiver of any provision of this Agreement or any
other Loan Document, and no consent to any departure by the Borrower or any
Subsidiary therefrom, may in any event be effective unless in writing signed by
the Bank, and then only in the specific instance and for the specific purpose
given.
SECTION 9.13. Set-Off. Upon the occurrence and during the continuation
of an Event of Default, the Borrower authorizes the Bank, without notice or
demand, to apply any indebtedness due or to become due to the Borrower from the
Bank in satisfaction of any of the indebtedness, liabilities or obligations of
the Borrower under this Agreement or under any other Loan Document, including,
without limitation, the right to set-off against any deposits or other cash
collateral of the Borrower held by the Bank.
SECTION 9.14. Indemnity. The Borrower agrees to protect, indemnify and
save harmless the Bank, and all directors, officers, employees and agents of the
Bank, from and against any and all (i) claims, demands and causes of action of
any nature whatsoever brought by any Person not a party to this Agreement and
arising from or related or incident to the Borrower's execution or delivery of
this Agreement or any other Loan Document or the Borrower's action or inaction
thereunder or the exercise or inexercise by the Bank of its rights and remedies
pursuant thereto, (ii) costs and expenses incident to the defense of such
claims, demands and causes of action, including, without limitation, reasonable
attorneys' fees, and (iii) liabilities, judgments, settlements, penalties and
assessments arising from such claims, demands and causes of action, provided
such claims, costs and liabilities are not proximately caused by the Bank's
negligence or willful misconduct or breach of this Agreement. The indemnity
contained in this section shall survive the termination of this Agreement.
SECTION 9.15. Usury. It is the intent of the parties hereto not to
violate any federal or state law, rule or regulation pertaining either to usury
or to the contracting for or charging or collecting of interest, and the
Borrower and the Bank agree that, should any provision of this Agreement or of
the Note, or any act performed hereunder or thereunder, violate any such law,
rule or regulation, then the excess of interest contracted for or charged or
collected over the maximum lawful rate of interest shall be applied to the
outstanding principal indebtedness due to the Bank by the Borrower under this
Agreement.
33
<PAGE> 40
SECTION 9.16. Jurisdiction and Venue. The Borrower agrees, without
power of revocation, that any civil suit or action brought against it as a
result of any of its obligations under this Agreement or under any other Loan
Document may be brought against it either in the Superior Court of Fulton
County, Georgia, or in the United States District Court for the Northern
District of Georgia, and the Borrower hereby irrevocably submits to the
jurisdiction of such courts and irrevocably waives, to the fullest extent
permitted by law, any objections that it may now or hereafter have to the laying
of the venue of such civil suit or action and any claim that such civil suit or
action has been brought in an inconvenient forum, and the Borrower agrees that
final judgment in any such civil suit or action shall be conclusive and binding
upon it and shall be enforceable against it by suit upon such judgment in any
court of competent jurisdiction.
SECTION 9.17. Construction. Should any provision of this Agreement
require judicial interpretation, the parties hereto agree that the court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against one party by reason of the rule
of construction that a document is to be more strictly construed against the
party that itself or through its agents prepared the same, it being agreed that
the Borrower and its respective agents have participated in the preparation
hereof.
SECTION 9.18. Entire Agreement. This Agreement and the other Loan
Documents executed and delivered contemporaneously herewith, together with the
exhibits and schedules attached hereto and thereto, constitute the entire
understanding of the parties with respect to the subject matter hereof, and any
other prior or contemporaneous agreements, whether written or oral, with respect
thereto including, without limitation, any loan commitment from the Bank to the
Borrower, are expressly superseded hereby. The execution of this Agreement and
the other Loan Documents by the Borrower was not based upon any facts or
materials provided by the Bank, nor was the Borrower induced to execute this
Agreement or any other Loan Document by any representation, statement or
analysis made by the Bank.
SECTION 9.19. Interest Rate Agreements. The Bank agrees to cooperate
with the Borrower to effect an interest rate "swap" to provide the Borrower with
an effective fixed rate of interest with respect to all or any portion of the
Notes.
34
<PAGE> 41
WITNESS the hand and seal of the parties hereto through their duly
authorized officers, as of the date first above written, this 20th day of April,
1994.
BORROWER:
ATLANTIC SOUTHEAST AIRLINES, INC.
By: /s/ Ronald V. Sapp
-----------------
Ronald V. Sapp,
Chief Financial Officer
[CORPORATE SEAL]
BANK:
TRUST COMPANY BANK
By: /s/ Willem Hattink
-------------------
Its: First Vice President
By: /s/ K. Scott Bazemore
---------------------
Its: Vice President
[BANK SEAL]
35
<PAGE> 1
EXHIBIT 10(b)
<PAGE> 2
EXECUTION COUNTERPART
COLLATERAL ASSIGNMENT OF PURCHASE AGREEMENT
COLLATERAL ASSIGNMENT OF PURCHASE AGREEMENT (this "Assignment"), dated as of
April 20, 1994, between ATLANTIC SOUTHEAST AIRLINES, INC., a Georgia
corporation (the "Assignor"), and TRUST COMPANY BANK, a Georgia banking
corporation (the "Lender")
W I T N E S S E T H
WHEREAS, the Assignor and ATR (as hereinafter defined) are parties to
the Purchase Agreement (as hereinafter defined), providing, among other things,
for the delivery by ATR to the Assignor of certain aircraft, engines and
related equipment, including the Aircraft (as hereinafter defined) covered by
the Security Agreements (as hereinafter defined); and
WHEREAS, pursuant to the Credit Agreement (as hereinafter defined), the
Lender will extend loans to the Assignor for the purchase of the Aircraft; and
WHEREAS, on the terms and conditions hereof and of the Consent and
Agreement (as hereinafter defined), the Assignor desires to assign to the
Lender the Assignor's rights, title and interest under the Purchase Agreement
as it relates to the Aircraft, as security for Assignor's obligations to Lender
pursuant to the Credit Agreement;
WHEREAS, ATR is willing to execute and deliver its Consent and
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Defined Terms. For all purposes of this Assignment, except as
otherwise expressly provided or unless the context otherwise requires, the
following terms shall have the following meanings:
"Aircraft" shall mean the ATR 72-212 aircraft, bearing manufacturer's
serial numbers 405, 387, 395 and 413, delivered under the Purchase
Agreement, including the two Pratt Whitney Model 127 engines and the
Hamilton Standard
<PAGE> 3
propellers installed on such aircraft on the date of delivery thereof
pursuant to the Purchase Agreement.
"ATR" shall mean Avions De Transport Regional, a French groupement
d'interet economique, and its successors and assigns.
"Consent and Agreement" shall mean the Consent and Agreement of ATR
attached hereto, as amended, modified or supplemented from time to time.
"Bill of Sale" shall mean the bill of sale for the Aircraft to be
delivered by ATR.
"Credit Agreement" shall mean the Credit Agreement, dated as of April
20, 1994, between the Lender and Assignor, as amended, modified or
supplemented from time to time.
"Event of Default" shall mean an "Event of Default" as defined in the
Credit Agreement.
"Notes" shall have the meaning ascribed thereto in the Credit
Agreement.
"Security Agreements" shall mean the Security Agreements delivered to
the Lender pursuant to the terms of the Credit Agreement with respect to
the Aircraft, as amended, modified or supplemented from time to time.
"Purchase Agreement" shall mean the ATR 72 Purchase Agreement, dated
as of February 10, 1993, between the Assignor and ATR, together with all
exhibits, appendices and letter agreements thereto and all amendments,
waivers and consents granted thereunder.
All other terms used herein in capitalized form that are defined in
the Credit Agreement shall, when used herein, have the meanings specified
in the Credit Agreement.
2. Assignment. (a) Generally. As collateral security for its
obligations pursuant to the Credit Agreement, the Notes and the Security
Agreements, subject to the terms and conditions of this Assignment, the
Assignor does hereby sell, assign, transfer, pledge and set over unto the
Lender all of the Assignor's right, title and interest in and to the Purchase
Agreement, as and to the extent that the same relates to the Aircraft and the
operation thereof, including, without limitation, in such assignment to the
Lender (A) all claims for damages in respect of such Aircraft arising as a
result of any default by ATR under the Purchase Agreement including, without
limitation, all warranty, service life policy and indemnity provisions in the
Purchase Agreement in respect of the Aircraft
2
<PAGE> 4
and all claims thereunder and (B) any and all rights of the Assignor to compel
performance of the terms of the Purchase Agreement in respect of the Aircraft,
including all warranty and indemnification provisions in the Purchase Agreement
and claims thereunder with respect to the Aircraft; reserving to the Assignor,
however, (1) all the Assignor's rights and interests in and to the Purchase
Agreement as and to the extent that the Purchase Agreement relates to aircraft
other than the Aircraft and the purchase and operation of such aircraft and to
the extent that the Purchase Agreement relates to any other matters not
directly pertaining to the Aircraft, (2) all the Assignor's rights and
interests in or arising out of any payments, advance payments or deposits made
or to be made by the Assignor in respect of the Aircraft under the Purchase
Agreement or amounts credited or to be credited or paid or to be paid by ATR to
the Assignor in respect of the Aircraft or otherwise (other than warranty or
indemnification or service life claims), (3) the rights to demand, accept and
retain all rights in and to all property, data and service that ATR is
obligated to provide or does provide pursuant to the Purchase Agreement (other
than the Aircraft and property data and service with respect to the Aircraft),
and (4) the right to maintain plant representatives at ATR's plant pursuant to
the Purchase Agreement.
(b) Assignment of Rights. Following the occurrence and during the
continuation of an Event of Default, the Lender may, to the exclusion of the
Assignor, subject to the exclusions of subparagraphs (1), (2), (3) and (4) of
paragraph (a) above, exercise in its own or the Assignor's name all rights and
powers of the "Buyer" under the Purchase Agreement and may retain any recovery
or benefit resulting from the enforcement of any warranty or indemnity in
respect of the Aircraft. Any payments or amounts that, pursuant to the
preceding sentence, would have been required to be paid to the Assignor by ATR
but for the existence of an Event of Default (and which have been paid to the
Lender by ATR) may be held by the Lender and may be applied by the Lender as
provided in the Credit Agreement and shall, at such time as there shall not be
existing any Event of Default and to the extent not used to cure any Event of
Default, be paid over to the Assignor.
(c) Acceptance of Assignment. Subject to the terms hereof, the
Lender accepts the assignment contained in Section 2 hereof.
(d) Requirement of Notice to ATR. For all purposes of this Assignment,
ATR shall not be deemed to have knowledge of and need not recognize any Event
of Default or the remedy thereof unless and until ATR shall have received
written notice thereof from the Lender addressed to its head office at 1, Allee
Pierre Nadot, 31712 Blagnac Cedex, France and, in acting in accordance with the
terms of the Purchase Agreement and this Assignment, ATR
3
<PAGE> 5
may act with acquittance and conclusively rely upon any such notice. Promptly
after all Events of Default have been remedied, the Lender shall so notify ATR.
3. Certain Rights and Obligations of the Parties. (a) Assignor
Remains Liable. It is expressly agreed that, anything herein contained to the
contrary notwithstanding: (a) the Assignor shall at all times remain liable to
ATR under the Purchase Agreement to perform all the duties and obligations of
the "Buyer" thereunder to the same extent as if this Assignment had not been
executed; (b) the exercise by the Lender of any of the rights assigned
hereunder shall not release the Assignor from any of its duties or obligations
to ATR under the Purchase Agreement except to the extent that such exercise by
the Lender shall constitute performance of such duties and obligations; and (c)
except as provided in the next succeeding paragraph, the Lender shall not have
any obligation or liability under the Purchase Agreement by reason of, or
arising out of, this Assignment or be obligated to perform any of the
obligations or duties of the Assignor under the Purchase Agreement or to make
any payment or to make any inquiry as to the sufficiency of any payment
received by any of them or to present or file any claim or to take any other
action to collect or enforce any claim for any payment assigned hereunder.
(b) Lender Bound by Purchase Agreement. Without in any way releasing
the Assignor from any of its duties or obligations under the Purchase
Agreement, the Lender confirms for the benefit of ATR that, insofar as the
provisions of the Purchase Agreement relate to the Aircraft, in exercising any
rights under the Purchase Agreement, or in making any claim with respect to the
Aircraft or other goods and services delivered or to be delivered pursuant to
the Purchase Agreement, the terms and conditions of the Purchase Agreement
shall apply to, and be binding upon, the Lender to the extent of its respective
interests assigned hereunder to the same extent as the Assignor.
(c) Limit of Effect of this Assignment. Nothing contained herein shall
(i) subject ATR to any liability to which it would not otherwise be subject
under the Purchase Agreement or (ii) modify in any respect the contract rights
of ATR thereunder (except as provided in the attached Consent and Agreement) or
(iii) require ATR to divest itself of title to or possession of an Aircraft
until delivery thereof and full payment therefore as provided in the Purchase
Agreement.
(d) Appointment as Attorney-in-Fact. The Assignor does hereby
constitute, effective at any time after the Lender has declared the Credit
Agreement to be in default (or the Credit Agreement shall be deemed to be
declared in default pursuant to the terms thereof) and thereafter so long as
any Event of Default shall be continuing, the Lender and its successors and
assigns,
4
<PAGE> 6
the Assignor's true and lawful attorney, irrevocably, with full power (in the
name of the Assignor or otherwise) to ask, require, demand, receive, compound
and give acquittance for any and all monies and claims for monies due and to
become due under, or arising out of, the Purchase Agreement in respect of the
Aircraft, to the extent that the same have been assigned as provided in this
Assignment and, for such period as the Lender, its successors and assigns, may
exercise rights with respect thereto under this Assignment, to endorse any
checks or other instruments or orders in connection therewith and to file any
claims or take any action or institute (or, if previously commenced, assume
control of) any proceedings and to obtain any recovery in connection therewith
which the Lender, its successors and assigns, may deem to be necessary or
advisable in the premises.
4. Further Assurances. The Assignor and the Lender each agree that at
any time and from time to time, upon the written request of any other party
hereto, it will promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as the other may
reasonably request in order to obtain the full benefits of this Assignment and
of the rights and powers herein granted.
5. Assignor's Representations. Warranties and Covenants. The Assignor
does hereby represent and warrant that (a) the Purchase Agreement, insofar as
it relates to the Aircraft, is in full force and effect and is enforceable
against the Assignor in accordance with its terms and the Assignor is not in
default thereunder and (b) the Assignor has not assigned or pledged, and hereby
covenants that it will not assign or pledge, so long as this Assignment shall
remain in effect, the whole or any part of the rights hereby assigned or any of
its rights with respect to the Aircraft under the Purchase Agreement not
assigned hereby, to anyone other than the Lender.
6. No Amendment of Purchase Agreement. The Assignor agrees that it
shall not enter into any agreement that would amend, modify, supplement,
rescind, cancel or terminate the Purchase Agreement to the detriment of the
Lender in any material respect, without the prior written consent of the
Lender.
7. Execution of Assignment. This Assignment is executed by the
Assignor and the Lender concurrently with the execution and delivery of the
Credit Agreement.
8. Confidentiality. The Lender shall hold all non-public information
furnished by or on behalf of the Assignor or ATR with respect to the Purchase
Agreement or this Assignment in accordance with its customary procedure for
handling confidential information of this nature and in accordance with safe
and sound banking practices and in any event may make disclosure reasonably
5
<PAGE> 7
required by any potential transferee or participant in connection with the
contemplated transfer of any Borrowings or participations therein or as
required or requested by any governmental agency or representative thereof or
pursuant to legal process or to the attorneys or independent auditors of the
Lender or with the consent of the Assignor and ATR.
9. Counterparts. This Assignment may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
10. GOVERNING LAW. THIS ASSIGNMENT SHALL IN ALL RESPECTS BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
11. Successors and Assigns. This Assignment shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
12. Notices. All notices with respect to the matters contained herein
shall be delivered in the manner and to the addresses provided in Section 9.02
of the Credit Agreement.
13. No Oral Amendments. Neither this Assignment nor any of the terms
hereof may be terminated, amended, supplemented, waived or modified orally, but
only by an instrument in writing signed by the party against whom the
enforcement of such termination, amendment, supplement, waiver or modification
is sought.
14. Termination of Assignment. In the event of the termination of the
Commitment and the repayment in full of all outstanding obligations of the
Assignor pursuant to the Loan Documents, this Assignment shall terminate and be
of no further force or effect. Furthermore, to the extent that the purchase of
any of the Aircraft is not financed by the Lender pursuant to a draw under the
Commitment or is released from the lien of the Lender following a repayment of
the Note relating thereto, such Aircraft shall no longer be included in the
definition of "Aircraft" set forth herein; provided, however, for purposes of
the Consent and Agreement, ATR shall presume that such financing has occurred
and that such lien is continuing until such time as it receives written notice
from the Lender to the contrary.
6
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to
be duly executed as of the day and year first above written.
ASSIGNOR:
ATLANTIC SOUTHEAST AIRLINES, INC.
By: /s/ Ronald V. Sapp
------------------
Ronald V. Sapp
Chief Financial Officer
[CORPORATE SEAL]
LENDER:
TRUST COMPANY BANK
By: /s/ Willem Hattink
-------------------
Willem Hattink
First Vice President
By: /s/ K. Scott Bazemore
---------------------
Name: K. Scott Bazemore
Title: Vice President
7
<PAGE> 1
<TABLE>
<CAPTION>
EXHIBIT 11
STATEMENT RE: COMPUTATION OF
PER SHARE EARNINGS
For The Three Months Ended
March 31,
-------------------------------------
1994 1993
<S> <C> <C>
Income before cumulative effect of accounting $12,350,331 $7,073,755
change
Cumulative effect of change in method of
accounting for income taxes-Note 3 - $4,212,300
Net income $12,350,331 $11,286,055
Earnings per share:
Income before cumulative effect of accounting $0.36 $0.21
change
Cumulative effect of accounting change - $0.12
Net income $0.36 $0.33
Weighted number of common shares outstanding 34,434,190 34,301,567
</TABLE>
