<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 September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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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
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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 November 1, 1996 there were 30,113,570 shares of common stock
outstanding.
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<PAGE> 2
ATLANTIC SOUTHEAST AIRLINES, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
Part I-Financial Information
<S> <C>
Item 1. Condensed Consolidated Financial Statements
Balance Sheets - September 30, 1996 and December 31, 1995
Assets 3
Liabilities and Shareholders' Equity 4
Statements of Income - Three months and nine months
ended September 30, 1996 and September 30, 1995 5
Statements of Cash Flows - Nine months ended
September 30, 1996 and September 30, 1995 6
Notes to Condensed 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 16
Signatures 17
Exhibits
10(a) Letter Agreement dated February 19, 1987 from Delta Airlines, Inc.
("Delta) and agreed to and accepted by Atlantic Southeast Airlines,
Inc. ("Airlines") (confidential treatment requested).
10(b) Amendment to the Delta Connection Agreement dated December 17, 1987,
between Delta and Airlines (confidential treatment requested).
10(c) Amendment to the Delta Connection Agreement effective July 1, 1988,
between Delta and Airlines (confidential treatment requested).
10(d) Amendment to the Delta Connection Agreement dated March 4, 1992,
between Delta and Airlines (confidential treatment requested).
10(e) Amendment to the Connection Carrier Agreement dated as of August 1,
1994, between Delta and Airlines (confidential treatment requested).
10(f) Fourth Amendment To Credit Agreement (the "Amendment to December 1986
Credit Agreement") dated September 17, 1996, by and among the
Airlines, ASA Investments, Inc., a Delaware Corporation
("Investments"), Manufacturers Leasing International Corp. ("MHLI"),
Bank of America Illinois [formerly known as Continental Bank N.A. and
Continental Illinois National Bank and Trust Company of Chicago],
NationsBank, N.A. (South) [formerly known as NationsBank of Georgia,
N.A. and Citizens and Southern National Bank], National Bank of
Canada, the Royal Bank of Canada, Canadian Imperial Bank of Commerce
("CIBC"), Kawasaki Leasing, (USA) Inc. as successor in interest to
Kawasaki Leasing International, Inc. [formerly known as Kawasaki Lease
Financing Inc.] ("Kawasaki Leasing"), Southtrust Bank of Georgia, N.A.
[formerly known as First American Bank of Georgia, N.A.] (all of such
financial institutions are hereinafter collectively referred to as the
"December 1986 Credit Agreement Lenders"), amending the Credit
Agreement dated December 24, 1986, among Airlines, Investments and the
December 1986 Credit Agreement Lenders (confidential treatment
requested).
10(g) Termination of Guaranty (the "December 1986 Guaranty Termination
Agreement") dated as of September 17, 1996, by and among
Investments and the December 1986 Credit Agreement Lenders,
terminating the Guaranty dated December 24, 1986, among Investments
and the December 1986 Credit Agreement Lenders.
10(h) Third Amendment To Credit Agreement(the "Amendment to April 1987
Credit Agreement") dated September 17, 1996, by and among
Airlines, Investments, MHLI, Kawasaki Leasing, and Credit Lyonnais,
Cayman Islands Branch (all of such financial institutions are
hereinafter collectively referred to as the "April 1987
Credit Agreement Lenders"), amending the Credit Agreement dated April
23, 1987, among Airlines, Investments and the April 1987 Credit
Agreement Lenders (confidential treatment requested).
10(i) Termination of Guaranty (the "April 1987 Guaranty Termination
Agreement") dated as of September 17, 1996, by and among Investments
and the December 1986 Credit Agreement Lenders, terminating the
Guaranty dated April 23, 1987, among Investments and the April 1987
Credit Agreement Lenders.
10(j) First Amendment To Credit Agreement (the "Amendment to June 1990
Credit Agreement") dated September 13, 1996, between Airlines and Bank
of America National Trust and Savings Association ("Bank of America"),
amending the Credit Agreement dated June 15, 1990, among Airlines and
Bank of America (confidential treatment requested).
10(k) Termination of Guaranty (the "June 1990 Guaranty Termination
Agreement") dated as of September 13, 1996, by and among
Investments and Bank of America, terminating the Guaranty dated June
15, 1990, among Investments and Bank of America.
10(l) Second Amendment To Credit Agreement (the "Amendment to December 1990
Credit Agreement") dated September 13, 1996, between Airlines and
Wachovia Bank of Georgia, N.A. ("Wachovia"), amending the Credit
Agreement dated December 1, 1990, among Airlines and Wachovia
(confidential treatment requested).
10(m) Termination of Guaranty (the "December 1990 Guaranty Termination
Agreement") dated as of September 13, 1996, by and among Investments
and Wachovia, terminating the Guaranty dated December 1, 1990, among
Investments and Wachovia.
10(n) First Amendment To Credit Agreement (the "Amendment to February
1991 Credit Agreement") dated September 13, 1996, between Airlines
and Bank of America, amending the Credit Agreement dated
February 25, 1991, among Airlines and Wachovia (confidential
treatment requested).
10(o) Termination of Guaranty (the "February 1991 Guaranty Termination
Agreement") dated as of September 13, 1996, by and among Investments
and Bank of America, terminating the Guaranty dated February 25, 1991,
among Investments and Bank of America.
10(p) First Amendment To Credit Agreement (the "Amendment to April 1991
Credit Agreement") dated September 13, 1996, between Airlines
and Wachovia, amending the Credit Agreement dated April 19, 1991,
among Airlines and Wachovia (confidential treatment requested).
10(q) Termination of Guaranty (the "April 1991 Guaranty Termination
Agreement") dated as of September 13, 1996, by and among
Investments and Wachovia, terminating the Guaranty dated April 19,
1991, among Investments and Wachovia.
10(r) First Amendment To Credit Agreement (the "Amendment to June 1992
Credit Agreement") dated September 13, 1996, among Airlines, Wachovia,
in both its capacities as Lender and Agent, and the Bank of Tokyo -
Mitsubishi, LTD., Atlanta Agency f/k/a The Bank of Tokyo, Ltd.,
Atlanta Agency ("Bank of Tokyo"), amending the Credit Agreement June
1, 1992, among Airlines, Wachovia and Bank of Tokyo (confidential
treatment requested).
10(s) Termination of Guaranty (the "June 1992 Guaranty Termination
Agreement") dated as of September 13, 1996, by and among Investments
and Wachovia, terminating the Guaranty dated June 1, 1992, among
Investments, Wachovia and Bank of Tokyo.
10(t) First Amendment To Credit Agreement (the "Amendment to April 1994
Credit Agreement") dated September 11, 1996, among Airlines and
SunTrust Bank, Atlanta, f/k/a Trust Company Bank ("SunTrust"),
amending the Credit Agreement April 20, 1994, among Airlines and
SunTrust (confidential treatment requested)..
10(u) Termination of Guaranty (the "April 1994 Guaranty Termination Agreement")
dated as of September 11, 1996, by and among Investments and
Wachovia, terminating the Guaranty dated April 20, 1994, among
Investments and SunTrust.
11 Statement Re: Computation of Per Share Earnings
27 Financial Data Schedule (for SEC use only)
</TABLE>
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<PAGE> 3
Part I - Financial Information
ATLANTIC SOUTHEAST AIRLINES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
(unaudited) (audited)
Assets
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 75,977 $ 66,403
Marketable securities 126,750 121,697
Accounts receivable 10,628 11,715
Expendable parts 8,527 6,440
Other current assets 2,632 4,488
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224,514 210,743
Property and Equipment
Flight equipment 455,713 474,188
Other property and equipment 14,562 8,735
Advance payments on property and equipment 331 88
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470,606 483,011
Less accumulated depreciation and amortization 196,654 190,613
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273,952 292,398
Other Assets
Excess of cost over fair value of
tangible assets acquired 2,786 2,865
Other assets 6,603 6,693
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9,389 9,558
Total Assets $507,855 $ 512,699
======== =========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 4
ATLANTIC SOUTHEAST AIRLINES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share and Per Share Amounts)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- -------------
(unaudited) (audited)
<S> <C> <C>
Liabilities and Shareholders' Equity
Current Liabilities
Current portion of long-term debt $ 26,992 $ 32,390
Accounts payable 21,383 20,946
Air traffic liability 1,023 1,934
Accrued compensation and related expenses 7,685 6,698
Accrued interest payable 2,236 2,941
Other accrued expenses 3,972 4,157
Income taxes payable 4,414 -
----------- -----------
67,705 69,066
Long-Term Debt 101,412 120,210
Other Non-Current Liabilities 1,708 1,369
Deferred Income Taxes 69,716 69,199
Shareholders' Equity
Common stock, $.10 par value; authorized
50,000,000 shares; issued 34,386,670 shares 3,439 3,439
Capital in excess of par value 45,887 45,887
Retained earnings 296,251 258,858
Unrealized holding (loss) gain on investments 58 72
----------- -----------
345,635 308,256
Less treasury stock at cost - 3,698,100 and
2,683,100 shares, respectively 78,321 55,401
----------- -----------
267,314 252,855
Total Liabilities and Shareholders' Equity $ 507,855 $ 512,699
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 5
ATLANTIC SOUTHEAST AIRLINES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
For The Three Months Ended For The Nine Months Ended
September 30, September 30,
-------------------------- -------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Operating Revenues:
Passenger $ 92,657 $ 81,961 $ 281,964 $ 238,063
Other 2,013 2,264 6,349 8,102
----------- ---------- ----------- -----------
Total Operating Revenues 94,670 84,225 288,313 246,165
Operating Expenses:
Flying operations 21,338 17,053 62,683 49,431
Maintenance 14,682 13,925 45,189 40,002
Passenger service 4,727 4,068 14,436 11,750
Aircraft and traffic servicing 11,355 10,074 33,869 28,892
Promotion, sales and advertising 9,811 7,673 30,228 23,169
General and administrative 123 1,345 9,540 11,096
Depreciation, amortization and obsolescence 7,028 6,936 20,546 20,849
Other 144 43 474 199
----------- ---------- ----------- -----------
Total Operating Expenses 69,208 61,117 216,965 185,388
Income from Operations 25,462 23,108 71,348 60,777
Non-Operating (Income) Expenses, net:
Interest income (2,823) (3,284) (8,092) (8,899)
Interest expense 1,438 1,820 4,491 5,874
Other 26 50 (53) 14
----------- ---------- ----------- -----------
(1,359) (1,414) (3,654) (3,011)
Income before Income Taxes 26,821 24,522 75,002 63,788
Income Taxes
Current 9,507 8,583 28,201 22,026
Deferred 765 809 525 2,105
----------- ---------- ----------- -----------
10,272 9,392 28,726 24,131
Net Income $ 16,549 15,130 $ 46,276 $ 39,657
=========== =========== =========== ===========
Net Income per Share $ 0.53 $ 0.46 $ 1.48 $ 1.20
Cash Dividends per Share $ 0.095 $ 0.085 $ 0.285 $ 0.255
Weighted Number of Shares Outstanding 30,974,994 33,107,380 31,262,294 33,100,867
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 6
ATLANTIC SOUTHEAST AIRLINES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
For The Nine Months Ended
September 30,
---------------------------------------
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 46,276 $ 39,657
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation 19,804 20,174
Amortization and provision for obsolescence 742 675
Provision for uncollectible accounts (55) (10)
Amortization of engine overhauls 4,985 5,997
Deferred income taxes 517 2,277
Other (23) (91)
Changes in Operating Assets and Liabilities:
Accounts Receivable 1,142 (5,513)
Expendable parts (2,082) 161
Other assets 1,218 (1,673)
Accounts payable 437 1,310
Other liabilities (1,096) 2,132
Accrued compensation and related liabilities 1,326 3,505
Accrued interest payable (705) (85)
Income taxes payable 4,414 1,873
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 76,900 70,389
INVESTING ACTIVITIES
Purchase of Marketable Securities (189,353) (157,745)
Proceeds from Sale of Marketable Securities 184,277 143,461
Decrease in Restricted Cash 265 265
Proceeds from Disposal of Property and Equipment 4,855 4,726
Purchases of Property and Equipment including
Advance Payments (11,603) (11,548)
Other 233 (667)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (11,326) (21,508)
FINANCING ACTIVITIES
Principal Payments on Long-Term Debt (24,196) (22,046)
Dividends Paid (8,884) (8,428)
Acquisition of Treasury Stock (22,920) (11,674)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (56,000) (42,148)
INCREASE IN CASH AND CASH EQUIVALENTS 9,574 6,733
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 66,403 42,527
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 75,977 $ 49,260
--------- ---------
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 7
ATLANTIC SOUTHEAST AIRLINES, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to
present fairly the financial position as of September 30, 1996 and
results of operations for the nine-month periods ended September 30,
1996 and 1995 and cash flows for the nine-month periods ended
September 30, 1996 and 1995. 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 (SEC) 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 1995 Annual Report on Form 10-K filed by the Company with the SEC
under the Securities Exchange Act of 1934 on April 1, 1996.
2. Results of operations for the nine-month periods ended September 30,
1996 and 1995 are not necessarily indicative of the results to be
expected for the year.
3. Earnings per share are based on the weighted average number of
common and common equivalent shares outstanding.
4. Marketable securities, which consist of investments with maturity
dates longer than three months, are reported at fair market value.
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<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
This Item 2 should be read in conjunction with the unaudited condensed
consolidated financial statements included in Item 1 hereto.
Liquidity and Capital Resources
Working capital increased to $156.8 million with a current ratio of
3.3:1 at September 30, 1996 compared with working capital of $141.7 million
and a current ratio of 3.1:1 at December 31, 1995. The change in working
capital of $15.1 million for the nine months ended September 30, 1996 was
primarily due to $76.9 million in cash from operations and $4.9 million of
proceeds from the disposal of fixed assets offset by an $11.6 million
investment in property and equipment, $24.2 million of debt retirement, $8.9
million of dividends paid and $22.9 million of common stock repurchases.
The Company has an unsecured line of credit totaling $8 million with
one of its banks. As of September 30, 1996, $.7 million of this line was
committed to support a letter of credit. The remainder is available for general
working capital purposes on an as needed basis. As of September 30, 1996, there
were no outstanding amounts against the line of credit.
At September 30, 1996, the Company operated a fleet of 63 owned
aircraft and 17 leased aircraft; and provided service to 36 markets from the
Atlanta hub and to 23 markets from the Dallas/Fort Worth hub. Four of these
markets are served by the Company from both hubs. The Company has announced
plans to terminate service between the Dallas/Fort Worth hub and Abilene and
San Angelo, Texas, effective January 1, 1997. The termination of service to
these markets will not significantly adversely impact the Company. The aircraft
used in providing this service will be redeployed for use in the Company's
Atlanta hub.
Total assets were down by $4.8 million to $507.9 million at September
30, 1996 primarily due to a $13.8 million increase in current assets offset by
an $18.4 million decrease in net property and equipment. An increase of $14.6
million in cash, cash equivalents and marketable securities contributed to the
upward movement in current assets. Flight equipment decreased primarily due to
the sale of Dash-7 and Bandeirante aircraft and engines which had been
previously phased-out of operations. Other property and equipment increased
primarily due to approximately $5 million of costs related to the relocation of
the Company's operations to Concourse C at the Atlanta airport.
The Company is in the process of repainting and refurbishing 37 of its
Brasilia aircraft at a cost of approximately $2 million which will be expensed
as incurred and funded from internal cash. This refurbishment began in March
1996 and should be completed during 1997.
The long-term debt to equity ratio was .38:1 at September 30, 1996
compared with .48:1 at December 31, 1995. Long-term debt decreased to $101.4
million from $120.2 million at the end of 1995. The current portion of
long-term debt decreased by
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<PAGE> 9
$5.4 million from December 31, 1995. Total debt declined by $24.2 million due
to $22.5 million of scheduled debt payments and $1.7 million of accelerated
debt retirement due to the loss of an aircraft. The debt related to this
aircraft loss was paid with insurance proceeds.
Shareholders' equity per share increased to $8.71 at September 30,
1996 from $7.98 at the end of 1995. Net worth increased $14.5 million due to
net income of $46.3 million in the first nine months of 1996 offset primarily
by dividends paid of $8.9 million and common stock repurchases of $22.9
million.
For the third quarter of 1996, the Board of Directors declared a
quarterly cash dividend of 9.5 cents per share compared with 8.5 cents per
share for the similar period of 1995.
Current maturities of long-term debt, future aircraft lease payments,
compliance with FAA directives and other capital expenditures for 1996 will be
funded from the Company's cash reserves and internally generated funds.
In May 1994, the Board of Directors authorized the Company to
repurchase up to $50 million of its common stock on the open market at any time
on or before December 31, 1995 and received special consent from its lenders to
consummate the purchases. The Company repurchased, at December 31, 1995,
approximately $49.3 million of its common stock in conjunction with the
authorization. Another $6.1 million of common stock was purchased through
December 31, 1995 under the then existing provisions of the Company's loan
agreements that limited the amount of stock repurchased and payment of
dividends in the aggregate generally to 30% of average annual earnings. In
November 1995, the Board of Directors authorized the Company to repurchase up
to an additional $50 million of its common stock on the open market during 1996
and received special consent from its lenders to consummate the purchases. As
of September 30, 1996, the Company had repurchased approximately $2.8 million
of its common stock in conjunction with the then existing limitations under the
loan agreements and approximately $20.1 million under the additional $50
million authorization. The stock repurchased will be held as treasury stock
until canceled in connection with the proposed reorganization discussed in the
next paragraph.
In May, 1996, the Board of Directors approved the Company's plans to
proceed with the actions necessary to establish a holding company structure. A
holding company structure is common in the airline industry today and provides
a more flexible corporate organization than the Company's current corporate
structure. The Company determined that, in order to be in a position to take
timely advantage of any future opportunities, it was in the best interests of
the Company and its shareholders to proceed with the proposed reorganization.
The holding company structure will make available to the holding company and
its subsidiaries a greater selection of financing, acquisition and
organizational alternatives. The holding company structure will provide greater
flexibility by permitting the holding company to acquire additional businesses
directly, rather than through the Company, thereby permitting these businesses
to remain independent of the Company's present operations and free from any
direct constraints imposed on the Company by
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<PAGE> 10
financing arrangements, regulatory requirements or otherwise. On September 30,
1996, the Company filed a Registration Statement on S-4 with the Securities
and Exchange Commission ("SEC") and filed Amendment No. 1 to Form S-4 on
November 7, 1996. The Company plans to hold a special meeting of shareholders
on December 19, 1996 at which time the shareholders of the Company, as of the
October 25th record date, will be asked to vote upon a proposal to approve a
corporate reorganization that will include the creation of a parent holding
company, ASA Holdings, Inc. The Company's Board of Directors has unanimously
approved and recommended that the shareholders approve the proposed
reorganization. After completion of the proposed reorganization, the Company
and its wholly owned subsidiary, ASA Investments, Inc., will each become wholly
owned subsidiaries of ASA Holdings. As part of the reorganization, the Company
will dividend all of the shares of ASA Investments' capital stock to ASA
Holdings. This dividend will provide ASA Holdings with approximately $150
million of assets that will be free of the restrictive covenants in the
Company's credit agreements and lease arrangements. The Company's material
lenders and lessors have consented to the reorganization where the credit
agreements and lease arrangements make such consent necessary. Upon
consummation of the reorganization on December 31, 1996, each issued and
outstanding share of the Company's common stock, other than treasury stock held
by the Company, will be automatically converted into one share of ASA Holdings'
common stock, and the current shareholders of the Company will automatically
become shareholders of ASA Holdings. It will not be necessary for the
Company's shareholders to exchange their existing certificates for certificates
representing shares of ASA Holdings' common stock. The shares of the Company's
common stock that the Company has repurchased and held as treasury stock before
the reorganization will be canceled.
On August 21, 1995, the Company suffered a tragic loss when one of its
flights crashed. There were 26 passengers and 3 crew members on board that
flight. Of those individuals, there were 9 fatalities (including 1 crew
member), 12 individuals who either were not hospitalized or were released the
day after the crash with minor injuries, and 8 individuals who were more
seriously injured. No one was injured or killed on the ground. The crash also
caused minor damage to a few trees adjacent to the pasture upon which the plane
came to rest. The Company had the crash site cleaned in accordance with the
Environmental Protection Agency's guidelines and regulations. The Company has
received insurance proceeds from its insurance company related to the loss of
the value of the aircraft hull, and the debt related to this aircraft was paid
with part of these insurance proceeds. A number of claims and lawsuits have
been filed in connection with this matter. The cause of the accident is still
under investigation by the National Transportation Safety Board. However,
management believes and preliminary findings indicate that the accident may
have been caused by a fatigue failure in one of the propellers. The propeller
manufacturer (through its insurer) has agreed to address all claims arising
from this accident without acknowledging fault. Accordingly, management does
not believe that the Company has any liability in this matter, based on the
factual information currently available to it. Therefore, the Company has not
accrued a liability for potential claims. Further, the Company maintains
insurance coverage which it believes, based on the factual information
currently available to it, is sufficient to cover claims associated with this
incident if the Company were found to be at fault.
The Company's pilot and flight attendant work force are represented by
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<PAGE> 11
unions. In 1995, collective bargaining agreements with both of these unions
became amendable and are currently being renegotiated. The Railway Labor Act,
which governs labor relations for these unions, contains detailed procedures
that must be exhausted before work stoppages can occur once a collective
bargaining agreement becomes amendable. Negotiations with both unions are
proceeding under mediation by the National Mediation Board.
In March 1995, the Financial Accounting Standards Board issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of", which requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. Statement 121 also addresses
long-lived assets that are expected to be disposed of in the future. The
adoption of Statement 121 in 1996 had no financial impact on the Company.
In October 1995, the Financial Accounting Standards Board issued
Statement No. 123, "Accounting for Stock-Based Compensation", which encourages
companies to recognize expense for stock-based awards based on their fair
market value on the date of grant. The Company has elected to continue to use
APB No. 25, "Accounting for Stock Issued to Employees" for expense recognition
purposes, but will be required by Statement 123 to show pro forma disclosures
in the Company's 1996 annual financial statements.
Results of Operations
For the three months ended September 30, 1996 and 1995
Total revenues increased 12% to $94.7 million compared with $84.2
million for the third quarter of 1995. Passenger revenue was up 13% to $92.7
million primarily due to a 13% increase in revenue passenger miles ("RPMs")
flown. RPMs were higher due to the number of passengers carried increasing 18%
while the average trip length decreased 4%. In late 1995, the Company replaced
Delta Air Lines' service to several markets with the BAe-146 jet aircraft.
Higher passenger traffic for the third quarter of 1996 was largely attributable
to greater capacity provided by the BAe-146 jet aircraft. The Company's load
factor for the three months ending September 30, 1996 was 49.0% compared with
45.6% for the same period in 1995. The average passenger yield remained
relatively constant in comparision with the same period in 1995. The average
passenger fare decreased by 4% to $99.44 for the third quarter of 1996.
Passenger fare varies based on a number of factors including competition, fare
discounting and economic conditions.
Net income of $16.5 million for the third quarter of 1996 was up 9%
compared with $15.1 million for the similar period of 1995, while net income
per share increased 15% to $.53 per share compared with $.46. Average shares
outstanding during the third quarter of 1996 decreased 6% to 31.0 million
compared with 33.1 million for the similar period of 1995. This decrease was
due to the repurchase of common stock by the Company under the authorized stock
repurchase program. Net income for the third quarters of 1996 and 1995 included
after-tax credits of $1.8 million or $.06 per share and $1.0 million or $.03
per share, respectively, associated
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<PAGE> 12
with the Company's Stock Appreciation Rights Plan ("SARs"). These credits are
due to decreases in the Company's stock price during the quarters. Excluding
SARs, third quarter 1996 net income would have been $14.7 million, or $.47 per
share while 1995 net income would have been $14.1 million or $.43 per share.
Operating expenses increased 13% to $69.2 million for the quarter
ended September 30, 1996. The Company increased capacity (available seat miles
"ASM's") by 5%, and experienced an 8% increase in the cost per ASM flown to
15.3 cents in the third quarter of 1996 compared with 14.2 cents in the third
quarter of 1995. Excluding pre-tax SARs credits of $3.0 million and $1.6
million for the third quarters of 1996 and 1995, operating cost per ASM would
have been approximately 15.9 cents and 14.5 cents, respectively. Operating cost
per ASM is higher primarily due to more expensive jet fuel, higher marketing
related expenses, increased maintenance costs for the E-120 turbo-prop fleet,
and rent on the BAe-146 jet aircraft. These jets are currently being flown over
shorter haul routes, and therefore the BAe-146 rent expense per ASM is higher
than the Company's system average.
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 September 30, 1996 and 1995:
<TABLE>
<CAPTION>
Cost per ASM % Operating Cost
Quarter Ended Quarter Ended
September 30, September 30,
------------------------------------
1996 1995 1996 1995
-----------------------------------
<S> <C> <C> <C> <C>
Labor and related 3.5c. 3.7c. 23% 26%
Fuel 1.9 1.4 12 10
Direct maintenance 2.4 2.4 16 17
Passenger related 2.1 1.7 13 12
Depreciation and aircraft rent 2.4 2.1 16 15
Other 3.0 2.9 20 20
----------------------------------
Total operating expense 15.3c. 14.2c. 100% 100%
</TABLE>
Labor and related costs decreased to $16.0 million for the third
quarter of 1996 compared with $16.2 million for the same period in 1995. The
average number of employees during the quarters grew 9% from 2,236 to 2,433 as
of September 30, 1996. Included in the third quarter of 1996 is a $3.0 million
credit to expense associated with the Company's SARs due to a 22% decrease in
the Company's stock price, while the third quarter of 1995 includes a $1.6
million credit to expense for SARs also due to a 22% decrease in the Company's
stock price. Labor and related costs per ASM without the SARs adjustments would
have been 4.2 cents for the 3 months ending September 30, 1996, and 4.1 cents
for the same quarter in 1995.
Fuel expense increased to 1.9 cents per ASM for the third quarter of
1996 compared with 1.4 cents per ASM for the quarter ended September 30, 1995.
Fuel expense increased $2.6 million spread over a 5% increase in ASMs. The
average price per gallon, including taxes and into plane fees, increased 26% to
76.0 cents from 60.3
-12-
<PAGE> 13
cents primarily due to higher crude oil prices and the additional
transportation fuel tax of 4.3 cents per gallon which began October 1, 1995. In
addition, the number of gallons of fuel used increased 14% primarily due to the
use of the jet aircraft on short-haul trips.
Direct maintenance cost, excluding labor and related expenses,
increased 6% to $10.8 million for the quarter ended September 30, 1996. This
increase was due primarily to a 5% increase in capacity and increased
maintenance inspections and overhauls of time controlled components. The
Company's E-120 turbo-prop fleet is aging and requires more frequent
maintenance, while the leased BAe-146 jet aircraft are maintenance mature
aircraft that are under maintenance plans. Charges are incurred for each hour
that the airframe, engines, landing gear, etc. are flown, and the charges for
these maintenance plans are expensed when paid.
Passenger related expenses, which includes a majority of the expenses
under the caption "Promotion, sales and advertising" on the Company's Income
Statement, increased by $2.1 million for the quarter ended September 30, 1996
compared with the same quarter last year. This increase was primarily
attributable to an increase of $1.7 million in travel agency commissions and
credit card discounts. Higher agency commissions are directly related to the
18% increase in passengers carried in 1996 versus 1995. Beginning October 1,
1995, Delta Air Lines began charging the Company higher credit card fees.
Passenger related fees were 10% of passenger revenue in 1996 and 9% for the
similar period in 1995.
Depreciation and aircraft rent increased 21% to $11.0 million for the
quarter ended September 30, 1996. This increase was due primarily to aircraft
rent associated with the three Brasilia aircraft and four BAe 146 aircraft
leased during the fourth quarter of 1995, as well as the fifth BAe 146 aircraft
leased in January 1996.
Other expenses increased $1.1 million for the quarter ended September
30, 1996 compared with the same quarter last year. The increase was due
primarily to higher airport rent expense, security fees, pilot simulator
training cost, and interrupted trip, denied boarding and baggage claim
expenses.
Interest income decreased by 14% to $2.8 million for the third quarter
of 1996 primarily due to lower interest rates. Interest expense decreased by
21% to $1.4 million for the quarter ended September 30, 1996 compared with the
same quarter last year. This decrease was due to lower floating interest rates
and less debt outstanding.
The break-even load factor increased to 35.1% for the three months
ended September 30, 1996 compared with 32.4% for the same period last year.
This increase was primarily the result of higher operating expenses.
For the nine months ended September 30, 1996 and 1995
Total revenues for the nine months ended September 30, 1996 increased
17% to $288.3 million compared with $246.2 million for the same period of 1995.
Passenger revenue increased 18% to $282.0 million in the first nine months of
1996 primarily
-13-
<PAGE> 14
due to a 16% increase in RPMs flown and a 2% increase in the average yield per
passenger mile. The number of passengers carried was up 21% while the average
passenger trip length decreased 4%. In late 1995, the Company replaced Delta
Air Lines' service to several markets with the BAe-146 jet aircraft. Higher
passenger traffic in 1996 was largely attributable to greater capacity provided
by the BAe-146 jet aircraft. The Company's load factor for the nine months
ending September 30, 1996 was 49.4% compared with 45.0% for the same period in
1995.
The Company's net income for the first nine months of 1996 increased
17% to $46.3 million or $1.48 per share compared with $39.7 million or $1.20
per share for the same period in 1995. Average shares outstanding during the
nine months ending September 30, 1996 decreased 6% to 31.3 million compared
with 33.1 million for the similar period of 1995. This decrease in the number
of shares outstanding was due to the repurchase of common stock by the Company
under the authorized stock repurchase program. Net income for 1996 and 1995
included after-tax accruals of $.4 million or $.01 per share and $1.7 million
or $.05 per share, respectively, associated with the Company's SARs. These
accruals are due to increases in the Company's stock price during the first
nine months of each year. Excluding SARs, net income would have been $46.7
million or $1.49 per share for the first nine months of 1996 compared with
$41.4 million or $1.25 per share for the same period in 1995.
Operating expenses increased 17% during the nine month period ended
September 30, 1996. The Company increased capacity ("ASM's") by 6% and
experienced a 10% increase in the cost per ASM to 16.2 cents from 14.7 cents.
The nine months ending September 30, 1996 included a $.7 million charge to
expense associated with SARs due to a 2% increase in the Company's stock price.
The first nine months of 1995 had a $2.7 million charge for SARs due to a 51%
increase in the stock price. Excluding the effect of SARs for both periods,
operating costs per ASM flown would have been 16.1 cents for 1996 compared with
14.4 cents for 1995. Operating costs per ASM are higher primarily due to more
expensive jet fuel, higher marketing related expenses, increased maintenance
costs for the E-120 turbo-prop fleet, and rent on the BAe-146 jet aircraft.
These jet aircraft are currently being flown over shorter haul routes, and
therefore the BAe-146 rent expense per ASM is higher than the Company's system
average.
The following table compares components of operating cost per ASM and
operating expense as a percentage of total operating expense for the nine month
periods ended September 30, 1996 and 1995:
<TABLE>
<CAPTION>
Cost per ASM % Operating Cost
Year to Date Year to Date
September 30, September 30,
-------------------------------------------------------
1996 1995 1996 1995
-------------------------------------------------------
<S> <C> <C> <C> <C>
Labor and related 4.2c. 4.3c. 26% 29%
Fuel 1.8 1.4 11 9
Direct maintenance 2.5 2.3 15 16
Passenger related 2.1 1.7 13 12
Depreciation and aircraft rent 2.4 2.1 15 14
Other 3.2 2.9 20 20
-------------------------------------------------------
Total operating expense 16.2c. 14.7c. 100% 100%
</TABLE>
-14-
<PAGE> 15
Labor and related costs increased 3% to $56.2 million for the nine
months ended September 30, 1996 from $54.5 million for the nine months ended
September 30, 1995. The average number of employees grew 8% from 2,215 to 2,399
as of September 30, 1996. As previously mentioned, the first nine months of
1996 included a $.7 million charge for SARs expense while the same period of
1995 included a $2.7 million charge to expense. Excluding these adjustments,
the cost per ASM would have been 4.1 cents in 1996 and 1995. Labor and
related expenses as a per cent of total operating costs would have been 26% and
28% for 1996 and 1995, respectively.
Fuel expense increased to 1.8 cents per ASM for the first nine months
of 1996 compared with 1.4 cents per ASM for the same period in 1995. Fuel
expense increased $6.8 million spread over a 6% increase in ASMs. The average
price per gallon, including taxes and into plane fees, increased 24% to 73.8
cents from 59.7 cents primarily due to the increase in crude oil prices during
1996 and the additional 4.3 cent per gallon transportation fuel tax imposed by
the U.S. government beginning October 1, 1995. In addition, the number of
gallons of fuel used increased 13% primarily due to the use of the jet aircraft
on short-haul trips.
Direct maintenance cost, excluding labor and related expenses,
increased 16% to $33.7 million for the nine months ended September 30, 1996.
This increase was due primarily to a 6% increase in capacity and increased
maintenance inspections and overhauls of time controlled components. The
Company's E-120 turbo-prop fleet is aging and requires more frequent
maintenance, while the leased BAe-146 jet aircraft are maintenance mature
aircraft that are under maintenance plans. Charges are incurred for each hour
that the airframe, engines, landing gear, etc. are flown, and the charges for
these maintenance plans are expensed when paid.
Passenger related expenses, which includes a majority of the expenses
under the caption "Promotion, sales and advertising" on the Company's Income
Statement, increased by $6.4 million for the nine months ended September 30,
1996 compared with the same period of 1995. This increase was primarily due to
an increase in travel agency commissions and credit card discounts of $4.8
million and an increase in reservation fees of $1.2 million. These expenses are
directly related to the 21% increase in passenger carried in 1996 versus 1995.
Passenger related fees were 10% of passenger revenue for the first nine months
of 1996 compared with 9% for the similar period in 1995. Delta Air Lines began
charging the Company higher fees for reservation service/systems in April 1995
and higher credit card fees in October 1995.
Depreciation and aircraft rent increased 20% to $32.4 million for the
nine months ended September 30, 1996. This increase was due primarily to
aircraft rent associated with the three Brasilia aircraft and four BAe 146
aircraft leased during the fourth quarter of 1995, as well as the fifth BAe 146
aircraft leased in January 1996.
Other expenses increased $6.6 million for the nine months ended
September 30, 1996 compared with the same months in 1995. The increase was due
primarily to higher passenger liability insurance premiums, pilot simulator
training cost, airport rent expense, security fees, and interrupted trip,
denied boarding and baggage claim expenses.
-15-
<PAGE> 16
Interest income decreased by 9% to $8.1 million due to lower interest
rates. Interest expense decreased by 24% to $4.5 million for the nine months
ending September 30, 1996 compared with the same period of 1995. This decrease
was due to lower floating interest rates and less debt outstanding.
<TABLE>
<CAPTION>
Part II - Other Information
<S> <C>
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) Letter Agreement dated February 19, 1987 from Delta Airlines, Inc.
("Delta) and agreed to and accepted by Atlantic Southeast Airlines,
Inc. ("Airlines") (confidential treatment requested).
10(b) Amendment to the Delta Connection Agreement dated December 17, 1987,
between Delta and Airlines (confidential treatment requested).
10(c) Amendment to the Delta Connection Agreement effective July 1, 1988,
between Delta and Airlines (confidential treatment requested).
10(d) Amendment to the Delta Connection Agreement dated March 4, 1992,
between Delta and Airlines (confidential treatment requested).
10(e) Amendment to the Connection Carrier Agreement dated as of August 1,
1994, between Delta and Airlines (confidential treatment requested).
10(f) Fourth Amendment To Credit Agreement (the "Amendment to December 1986
Credit Agreement") dated September 17, 1996, by and among the
Airlines, ASA Investments, Inc., a Delaware Corporation
("Investments"), Manufacturers Leasing International Corp. ("MHLI"),
Bank of America Illinois [formerly known as Continental Bank N.A. and
Continental Illinois National Bank and Trust Company of Chicago],
NationsBank, N.A. (South) [formerly known as NationsBank of Georgia,
N.A. and Citizens and Southern National Bank], National Bank of
Canada, the Royal Bank of Canada, Canadian Imperial Bank of Commerce
("CIBC"), Kawasaki Leasing, (USA) Inc. as successor in interest to
Kawasaki Leasing International, Inc. [formerly known as Kawasaki Lease
Financing Inc.] ("Kawasaki Leasing"), Southtrust Bank of Georgia, N.A.
[formerly known as First American Bank of Georgia, N.A.] (all of such
financial institutions are hereinafter collectively referred to as the
"December 1986 Credit Agreement Lenders"), amending the Credit
Agreement dated December 24, 1986, among Airlines, Investments and the
December 1986 Credit Agreement Lenders (confidential treatment
requested).
10(g) Termination of Guaranty (the "December 1986 Guaranty Termination
Agreement") dated as of September 17, 1996, by and among
Investments and the December 1986 Credit Agreement Lenders,
terminating the Guaranty dated December 24, 1986, among Investments
and the December 1986 Credit Agreement Lenders.
10(h) Third Amendment To Credit Agreement(the "Amendment to April 1987
Credit Agreement") dated September 17, 1996, by and among
Airlines, Investments, MHLI, Kawasaki Leasing, and Credit Lyonnais,
Cayman Islands Branch (all of such financial institutions are
hereinafter collectively referred to as the "April 1987
Credit Agreement Lenders"), amending the Credit Agreement dated April
23, 1987, among Airlines, Investments and the April 1987 Credit
Agreement Lenders (confidential treatment requested).
10(i) Termination of Guaranty (the "April 1987 Guaranty Termination
Agreement") dated as of September 17, 1996, by and among Investments
and the December 1986 Credit Agreement Lenders, terminating the
Guaranty dated April 23, 1987, among Investments and the April 1987
Credit Agreement Lenders.
10(j) First Amendment To Credit Agreement (the "Amendment to June 1990
Credit Agreement") dated September 13, 1996, between Airlines and Bank
of America National Trust and Savings Association ("Bank of America"),
amending the Credit Agreement dated June 15, 1990, among Airlines and
Bank of America (confidential treatment requested).
10(k) Termination of Guaranty (the "June 1990 Guaranty Termination
Agreement") dated as of September 13, 1996, by and among
Investments and Bank of America, terminating the Guaranty dated June
15, 1990, among Investments and Bank of America.
10(l) Second Amendment To Credit Agreement (the "Amendment to December 1990
Credit Agreement") dated September 13, 1996, between Airlines and
Wachovia Bank of Georgia, N.A. ("Wachovia"), amending the Credit
Agreement dated December 1, 1990, among Airlines and Wachovia
(confidential treatment requested).
10(m) Termination of Guaranty (the "December 1990 Guaranty Termination
Agreement") dated as of September 13, 1996, by and among Investments
and Wachovia, terminating the Guaranty dated December 1, 1990, among
Investments and Wachovia.
10(n) First Amendment To Credit Agreement (the "Amendment to February
1991 Credit Agreement") dated September 13, 1996, between Airlines
and Bank of America, amending the Credit Agreement dated
February 25, 1991, among Airlines and Wachovia (confidential
treatment requested).
10(o) Termination of Guaranty (the "February 1991 Guaranty Termination
Agreement") dated as of September 13, 1996, by and among Investments
and Bank of America, terminating the Guaranty dated February 25, 1991,
among Investments and Bank of America.
10(p) First Amendment To Credit Agreement (the "Amendment to April 1991
Credit Agreement") dated September 13, 1996, between Airlines
and Wachovia, amending the Credit Agreement dated April 19, 1991,
among Airlines and Wachovia (confidential treatment requested).
10(q) Termination of Guaranty (the "April 1991 Guaranty Termination
Agreement") dated as of September 13, 1996, by and among
Investments and Wachovia, terminating the Guaranty dated April 19,
1991, among Investments and Wachovia.
10(r) First Amendment To Credit Agreement (the "Amendment to June 1992
Credit Agreement") dated September 13, 1996, among Airlines, Wachovia,
in both its capacities as Lender and Agent, and the Bank of Tokyo -
Mitsubishi, LTD., Atlanta Agency f/k/a The Bank of Tokyo, Ltd.,
Atlanta Agency ("Bank of Tokyo"), amending the Credit Agreement June
1, 1992, among Airlines, Wachovia and Bank of Tokyo (confidential
treatment requested).
10(s) Termination of Guaranty (the "June 1992 Guaranty Termination
Agreement") dated as of September 13, 1996, by and among Investments
and Wachovia, terminating the Guaranty dated June 1, 1992, among
Investments, Wachovia and Bank of Tokyo.
10(t) First Amendment To Credit Agreement (the "Amendment to April 1994
Credit Agreement") dated September 11, 1996, among Airlines and
SunTrust Bank, Atlanta, f/k/a Trust Company Bank ("SunTrust"),
amending the Credit Agreement April 20, 1994, among Airlines and
SunTrust (confidential treatment requested).
10(u) Termination of Guaranty (the "April 1994 Guaranty Termination Agreement")
dated as of September 11, 1996, by and among Investments and
Wachovia, terminating the Guaranty dated April 20, 1994, among
Investments and SunTrust.
11 Statement Re: Computation of Per Share Earnings
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K - There were no reports on Form 8-K filed
for the quarter ended September 30, 1996.
</TABLE>
-16-
<PAGE> 17
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: November 11, 1996
-17-
<PAGE> 1
Confidential Treatment requested by Atlantic Southeast Airlines, Inc., File No.
0-11097
EXHIBIT 10(a)
Confidential treatment has been applied
for with respect to certain provisions
of this Exhibit, which provisions have
been omitted from this Exhibit, marked
with an asterisk (*) and filed separately
with the SEC
<PAGE> 2
[Delta Air Lines Letterhead]
February 19, 1987
Mr. John Beiser
Senior Vice President - Sales and Service
Atlantic Southeast Airlines, Inc.
General Offices
1688 Phoenix Parkway
College Park, Georgia 30349
RE: Delta Connection Agreement
Dear John:
Our July 1, 1986 Delta Connection Agreement provides [*]
[*]
If this is acceptable, please sign in the space provided below and return one
copy of this letter to me.
Very truly yours,
/s/ W. Whitley Hawkins
-------------------------------
W. Whitley Hawkins
Senior Vice President-Marketing
Agreed to and accepted by
Atlantic Southeast Airlines, Inc.
By: /s/ John W. Beiser
--------------------------------------
Title: Senior Vice President-Sales & Services
<PAGE> 1
Confidential Treatment requested by Atlantic Southeast Airlines, Inc., File No.
0-11097
EXHIBIT 10(b)
Confidential treatment has been applied
for with respect to certain provisions
of this Exhibit, which provisions have
been omitted from this Exhibit, marked
with an asterisk (*) and filed separately
with the SEC
<PAGE> 2
AMENDMENT TO THE DELTA CONNECTION AGREEMENT
This Amendment ("Amendment"), dated this 17th day of December, 1987,
amends the Delta Connection Agreement dated July 1, 1986, ("Agreement") between
Delta Air Lines, Inc. ("Delta"), whose principal office is located at
Hartsfield Atlanta International Airport, Atlanta, Georgia 30320 and Atlantic
Southeast Airlines, Inc. ("ASA") whose principal office is located at 1688
Phoenix Parkway, College Park, Georgia 30349.
WHEREAS, Delta and ASA have entered into a Delta Connection Agreement
and now wish to amend that Agreement;
NOW, THEREFORE, Delta and ASA agree as follows:
1. This Amendment amends the above-referenced Agreement and,
except as expressly modified hereby, the Agreement shall remain in full force
and effect and shall govern the performance, obligations and remedies of the
parties.
2. The following provision is added as Article 3(C)(1) of the
Agreement:
[*]
IN WITNESS WHEREOF, the parties have executed this Amendment by their
undersigned duly authorized representatives.
ATLANTIC SOUTHEAST AIRLINES, INC. DELTA AIR LINES, INC.
By: /s/ John W. Beiser By: /s/ W. Whitley Hawkins
--------------------- ----------------------
Senior Vice President W. Whitney Hawkins
Title: Sales and Service Senior Vice President
--------------------- Marketing
<PAGE> 1
Confidential Treatment requested by Atlantic Southeast Airlines, Inc., File No.
0-11097
EXHIBIT 10(c)
Confidential treatment has been applied for
with respect to certain provisions of this
Exhibit, which provisions have been omitted
from this Exhibit, marked with an asterisk
(*) and filed separately with the SEC
<PAGE> 2
AMENDMENT TO THE DELTA CONNECTION AGREEMENT
This Amendment ("Amendment") effective 01 day of July, 1988, amends
the Delta Connection Agreement ("Agreement") between Delta Air Lines, Inc.
("Delta"), Hartsfield Atlanta International Airport, Atlanta, Georgia 30320 and
Atlantic Southeast Airlines, Inc. ("ASA"), 1688 Phoenix Parkway, College Park,
Georgia 30349.
This Amendment amends the above-referenced Agreement, and except as
expressly modified hereby the Agreement shall remain in full force and effect
and shall govern the performance, obligations and remedies of the parties.
Delta and ASA hereby amend the Agreement as follows:
Article 3 is hereby amended to add the following as Paragraph D:
D. [*]
This Amendment is effective on the date first written above and shall
remain in effect until the Agreement is terminated.
The terms as defined in this Agreement shall have the same meaning as
in this Amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment by their
undersigned duly authorized representatives.
ATLANTIC SOUTHEAST AIRLINES, INC. DELTA AIR LINES, INC.
By: /s/ John W. Beiser By: /s/ W. Whitley Hawkins
--------------------- -----------------------
Senior Vice President W. Whitney Hawkins
Title: Sales and Service Senior Vice President -
--------------------- Marketing
<PAGE> 1
Confidential Treatment requested by Atlantic Southeast Airlines, Inc., File No.
0-11097
EXHIBIT 10(d)
Confidential treatment has been applied for
with respect to certain provisions of this
Exhibit, which provisions have been omitted
from this Exhibit, marked with an asterisk
(*) and filed separately with the SEC
<PAGE> 2
[Delta Air Lines Letterhead]
AMENDMENT TO THE DELTA CONNECTION AGREEMENT
This Amendment ("Amendment") dated this 4th day of March, 1992, amends
the Delta Connection Agreement ("Agreement") dated July 1, 1986, effective
January 1, 1992, between Delta Air Lines, Inc. ("Delta"), whose principal
office is located at Hartsfield Atlanta International Airport, Atlanta, Georgia
30320 and Atlantic Southeast Airlines, Inc. ("ASA"), whose principal office is
located at 1688 Phoenix Parkway, College Park, Georgia 30349.
WHEREAS, Delta and ASA have entered into a Delta Connection Agreement
and now wish to amend that Agreement;
NOW, THEREFORE, Delta and ASA agree as follows:
1. This Amendment amends the above-referenced agreement and,
except as expressly modified hereby, the Agreement shall remain in full force
and effect and shall govern the performance, obligations and remedies of the
parties.
2. The following provision replaces Article 3(A) of the
Agreement:
[*]
IN WITNESS WHEREOF, the parties have executed this amendment by their
undersigned duly authorized representatives.
ATLANTIC SOUTHEAST AIRLINES, INC. DELTA AIR LINES, INC.
By: /s/ John W. Beiser By: /s/ Russ Gariota
--------------------- ----------------------------
John W. Beiser Russ Gariota
Senior Vice President Assistant Vice President
Sales and Service Sales and Marketing Programs
<PAGE> 1
Confidential Treatment requested by Atlantic Southeast Airlines, Inc., File No.
0-11097
EXHIBIT 10(e)
Confidential treatment has been applied for
with respect to certain provisions of this
Exhibit, which provisions have been omitted
from this Exhibit, marked with an asterisk
(*) and filed separately with the SEC
<PAGE> 2
AMENDMENT TO
CONNECTION CARRIER AGREEMENT
THIS AMENDMENT (the "Amendment"), dated as of August 1, 1994, between
DELTA AIR LINES, INC., having its principal place of business located at
Hartsfield Atlanta International Airport, Atlanta, Georgia 30320-6001
("Delta"), and ATLANTIC SOUTHEAST AIRLINES, INC., having its principal place of
business located at 100 Hartsfield Center, Suite 800, Atlanta, Georgia
30354-1356 ("ASA").
W I T N E S E T H:
WHEREAS, Delta and ASA are parties to a certain Delta Connection
Agreement, dated and effective July 1, 1986, as amended by amendments dated
February 19, 1987, December 17, 1987, July 1, 1988 and March 4, 1992 (the Delta
Connection Agreement, as so amended, is hereafter referred to as the
"Agreement"); and
WHEREAS, the Agreement will expire by its terms on [*]; and
WHEREAS, Delta and ASA desire to extend the term of the Agreement as
provided herein;
NOW, THEREFORE, for and in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
amend the Agreement as follows:
1. Extension of Term. [*]
2. No Further Amendment. Except as amended hereby, the Agreement
shall remain in full force and effect in accordance with its terms.
3. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Georgia.
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized representatives as of the day and year
first above written.
DELTA AIR LINES, INC.
By: /s/ Robert W. Coggin
-------------------------------
Robert W. Coggin
Senior Vice President-Marketing
ATLANTIC SOUTHEAST AIRLINES, INC.
By: /s/ John Beiser
-------------------------------
John Beiser
President
2
<PAGE> 1
Confidential Treatment requested by Atlantic Southeast Airlines, Inc., File No.
0-11097
EXHIBIT 10 (f)
Confidential treatment has been applied for with
respect to certain provisions of this Exhibit, which
provisions have been omitted from this Exhibit,
marked with an asterisk (*) and filed separately with
the SEC
<PAGE> 2
FOURTH AMENDMENT TO
CREDIT AGREEMENT
DATED DECEMBER 24, 1986
This Fourth Amendment To Credit Agreement (this "Fourth Amendment") is
made and entered into this 17th day of September, 1996, by and among the
ATLANTIC SOUTHEAST AIRLINES, INC., a Georgia corporation (the "Company"), ASA
INVESTMENTS, INC., a Delaware Corporation ("Investments"), MANUFACTURERS
LEASING INTERNATIONAL CORP. ( "MHLI"), BANK OF AMERICA ILLINOIS [formerly known
as Continental Bank N.A. and Continental Illinois National Bank and Trust
Company of Chicago], NATIONSBANK, N.A. (SOUTH) [formerly known as NationsBank
of Georgia, N.A. and Citizens and Southern National Bank], NATIONAL BANK OF
CANADA, THE ROYAL BANK OF CANADA, CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC"),
KAWASAKI LEASING, (USA) INC. as successor in interest to Kawasaki Leasing
International, Inc. [formerly known as Kawasaki Lease Financing Inc.],
SOUTHTRUST BANK OF GEORGIA, N.A. [formerly known as First American Bank of
Georgia, N.A.] (all of such financial institutions are hereinafter collectively
referred to as the "Lenders").
W I T N E S S E T H:
WHEREAS, the Company is indebted to the Lenders under the terms of
that certain Credit Agreement dated December 24, 1986, originally among the
Company, Investments, MHLI, and the financial institutions parties thereto as
respectively amended on each of February 20, 1987, May 23, 1989, and August 17,
1989 (said Credit Agreement as now or hereafter amended is hereinafter
collectively referred to as the "Credit Agreement"); and
WHEREAS, CIBC has purchased the participation interest of each of
American Security Bank, N.A. ("American"), B.S.F.E. - Banque de la Societe
Financiere Europeenne ("BSFE"), and Barclays Bank, PLC ("Barclays") under the
Credit Agreement; and
WHEREAS, SouthTrust Bank of Georgia, N.A. has succeeded to the
participation interest of First American Bank of Georgia, N.A. under the Credit
Agreement; and
WHEREAS, effective November 30, 1995, Kawasaki Leasing, (USA) Inc. has
succeeded to the participation interest of Kawasaki Leasing International, Inc.
("KLII") under the Credit Agreement; and
WHEREAS, the Company and Investments desire to obtain the approval and
consent of the necessary Lenders to implement a corporate reorganization and an
amendment to the Credit Agreement which will result in (i) each of the Company
and Investments becoming a wholly owned subsidiary of a holding company the
stock of which holding company is owned by the Company's current shareholders
and will be publicly traded, (ii) Investments being removed as a party to the
Credit Agreement and being relieved of its responsibility under any guarantee
thereof,
<PAGE> 3
and (iii) the Company being relieved of certain restrictions imposed under the
Credit Agreement; and
WHEREAS, pursuant to the provisions of Section 11.04 of the Credit
Agreement, the parties desire to amend the Credit Agreement as hereinafter
provided.
NOW, THEREFORE, for and in consideration of each party's agreement to
be bound hereby and other good, valuable and adequate consideration, the
parties hereto do hereby agree as follows:
1. All capitalized terms not otherwise specifically defined
herein shall have the meanings ascribed to them under the provisions of the
Credit Agreement.
2. Investments shall be removed as a party to the Credit
Agreement with all references to "ASA Investments, Inc." and "Investments"
under the Credit Agreement being hereby deleted in their entirety.
Additionally, from and after the date hereof, Investments shall not be
considered a "Subsidiary" (as defined and provided under the Credit Agreement)
of the Company notwithstanding any provision of the Credit Agreement to the
contrary. In connection therewith, all parties agree that that certain
Guaranty dated as of December 24, 1986, delivered by Investments to MHLI in its
capacity as agent for the benefit of all Lenders (the "Guaranty") is hereby
terminated and shall be of no further force or effect it being the express
agreement of all parties that Investments shall have no obligations or
responsibilities to any one or more of the Lenders and that no Lender shall
have any claim or cause of action against Investments under or in connection
with the Credit Agreement, the credit extended to the Company thereunder, the
Basic Documents, or the Guaranty. In addition, the definition of "Guaranty"
and all references to the "Guaranty" contained in the Credit Agreement or the
Basic Documents are hereby deleted.
3. All references to the "Company" or the "Subsidiaries" of the
Company under the Credit Agreement and all determinations required to be made
with respect thereto shall refer to and include solely and exclusively the
Company and its Subsidiaries (as defined in the Credit Agreement as modified by
this Fourth Amendment); provided, that in no event shall the Company's
Subsidiaries include (i) Investments, (ii) any parent or holding company owning
all or substantially all of the capital stock of the Company or (iii) any
Person required to be included in any consolidated financial statement, tax
return or governmental filing covering the Company or under any other
statement prepared or determination made in conformity with GAAP which Person
does not meet the definitional requirements of a "Subsidiary" of the Company
under the Credit Agreement.
4. The definitions of "Indebtedness", "Tangible Net Worth",
"Total Assets" and "Total Liabilities" currently contained under Section 1.01
of the Credit Agreement are hereby amended in their entirety to read as
follows:
2
<PAGE> 4
"Indebtedness" means [*]
"Tangible Net Worth" means as to any Person the Book Net Worth
of such Person minus (i) the amount, if any, of the Total Assets of such Person
and such Person's Subsidiaries which would be treated as intangibles under
GAAP, (ii) any write-up in the book value of any fixed asset resulting from a
revaluation thereof and (iii) the amount, if any, at which shares of capital
stock of such Person appear on the asset side of such Person's balance sheet.
"Total Assets" means as to any Person which is a corporation,
all items considered as assets for purposes of GAAP.
"Total Liabilities" means as to any Person which is a
corporation, all items considered as liabilities for purposes of GAAP.
5. The following definitions shall be added to Section 1.01 of
the Credit Agreement in the appropriate alphabetical order:
"Book Net Worth" means as to any Person the book value of the
Total Assets of such Person and such Person's Subsidiaries (exclusive of any
indebtedness owed to such Person or such Person's Subsidiaries by any affiliate
of such Person) which Total Assets are located within the United States of
America minus the book value of the Total Liabilities of such Person and its
Subsidiaries. For purposes of clarity, marketable securities and commercial
paper issued by a foreign entity but held in the United States of America shall
be considered to be assets located within the United States of America.
"Capitalized Lease" means a capitalized lease of any tangible
real or personal property, as determined pursuant to GAAP.
"Current Maturities of Long Term Debt" means the amounts due,
within any twelve (12) month period following any fiscal quarter end of the
Company, under long-term debt instruments of the Company, as determined
pursuant to GAAP.
[*]
[*]
"GAAP" means generally accepted accounting principles as in
effect in the United States of America and applied on a basis consistent with
that used in the preparation of the Company's audited balance sheet for the
period ending December 31, 1995, and the related results of operation except
for (i) changes therein with which the Company's independent public accountants
concur that are disclosed in the notes to the relevant financial statements and
(ii) any requirements for consolidation inconsistent with the provisions of
Section 3 of the Fourth Amendment to this Agreement.
3
<PAGE> 5
[*]
[*]
[*]
"Recent SEC Filings" means collectively (i) the Company's
annual report on Form 10-K for the year ended December 31, 1995 and (ii) the
Company's quarterly reports on Forms 10-Q for the calendar quarters ending
March 31, 1996 and June 30, 1996.
"Subject Reorganization" means the pending proposed
transaction under which (i) the Company shall form a wholly owned Subsidiary
("Holding Company"), (ii) Holding Company shall form a wholly owned subsidiary
("Second Level Subsidiary"), (iii) Second Level Subsidiary shall merge with and
into the Company with the Company surviving and (a) the Company shareholders
receiving stock in the Holding Company in exchange for the outstanding stock in
the Company, (b) the Holding Company receiving all capital stock in the
Company, and (c) all capital stock in the Holding Company owned by the Company
being canceled, and (iv) the Company's subsequent dividend distribution to the
Holding Company of all capital stock in Investments; all of which transactions
shall result in the Company and Investments becoming wholly owned subsidiaries
of Holding Company.
6. The representations and warranties contained under Sections
5.01 through 5.19 of the Credit Agreement (with all references to "this
Agreement" or "herein" (contained under such Sections to include in particular
the Credit Agreement as amended by this Fourth Amendment) as they pertain to
the Company are hereby re-affirmed or made (as applicable) by the Company as of
the date hereof, provided that, Section 5.10 is being reaffirmed as if "1985"
were "1995" therein. The representations and warranties contained under
Sections 5.04, 5.05, 5.06, 5.11, 5.12, 5.13, 5.15, and 5.18 are hereby amended
and restated in their entirety as follows:
"SECTION 5.04 -- Litigation. [*]
SECTION 5.05 -- Financial Statements. (a) The audited balance
sheet as of December 31, 1995, and the unaudited balance sheet as of June 30,
1996, and the related statement of operations for the year (audited) and
quarters (unaudited) then ended and the statements of reconciliations of the
shareholders' equity of the Company (copies of which have been furnished to
Lenders) 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 Company as of such dates and
the results of the operations of the Company for such periods, and there has
been no material adverse change of the financial condition or operations of the
Company since June 30, 1996.
SECTION 5.06 -- Title to Properties. The Company has good
title to its properties and assets except for defects which do not materially
affect the operation or financial
4
<PAGE> 6
condition of the Company. There are no liens, mortgages, security interests,
or other encumbrances of any of the items constituting Collateral under the
Security Agreements except those granted and held in favor of the Lenders.
SECTION 5.11 -- Status as United States Citizen". The Company
is a "citizen of the United States" as that term is used in 49 U.S.C. Section
40102(a)(15), and is an air carrier holding a valid air carrier operating
certificate issued pursuant to 49 U.S.C. Chapter 447 for aircraft capable of
carrying 10 or more individuals.
SECTION 5.12 -- Indebtedness. The Company has no indebtedness
for money borrowed except as disclosed under the Recent SEC Filings.
SECTION 5.13 -- Contingent Liabilities. The Company has no
contingent liabilities except as disclosed under the Recent SEC Filings.
SECTION 5.15 -- Forms 10-K and 10-Q. The Recent SEC Filings,
as previously delivered to Lenders, correctly describe the principal properties
of the Company and the general nature of the business conducted by the Company.
SECTION 5.18 -- UCC Location. The Company maintains is Chief
Executive Office and principal place of business is located at 100 Hartsfield
Centre Parkway, Suite 800, Atlanta, Georgia 30354-1356".
7. The following representation and warranty is hereby added as a
new Section 5.19:
"SECTION 5.19 -- Subject Reorganization. Upon the
consummation of the Subject Reorganization, the Company shall be and remain in
compliance with all applicable provisions of this Agreement including without
limitation, those covenants contained in Section 6.02, 6.04, 6.05 and 6.06."
8. All representations and warranties contained under Article V
of the Credit Agreement solely as and only to the extent they pertain or apply
to Investments are hereby deleted.
9. Section 6.01 of the Credit Agreement is hereby amended by (i)
deleting Sections 6.01(i)(y) [in both places] and 6.01(i)(z) [in both places],
(ii) deleting Sections 6.01(ii)(y) [in both places] and 6.01(ii)(z) [in both
places], (iii) deleting the phrase "and Investments" as it appears in
6.01(iii)(a), (iv) deleting 6.01(iii)(a)(y), (v) deleting the phrase
"Investments, and immediately upon the filing of any one or more actions or
proceedings against" as it appears in Section 6.01(vii) and (vi) adding the
following phrase after the word "Company" as it appears in Section 6.01 (iv):
"or any parent or holding company of the Company"
5
<PAGE> 7
10. Section 6.02 of the Credit Agreement is hereby amended and
restated in its entirety to read follows:
"SECTION 6.02 -- [*]
11. Section 6.03 of the Credit Agreement is hereby deleted in its
entirety and such Section is hereby reserved for future use.
12. Sections 6.04, 6.05 and 6.06 are hereby amended in their
entirety to read as follows:
"SECTION 6.04 -- [*]
SECTION 6.05 -- [*]
SECTION 6.06 -- [*]
13. Section 6.14 of the Credit Agreement is hereby deleted in its
entirety and such Section is hereby reserved for future use.
14. Sections 7.01 through 7.04 are hereby amended and restated in
their entirety to read as follows:
"SECTION 7.01 -- [*]
SECTION 7.02 -- [*]
SECTION 7.03 -- [*]
SECTION 7.04 -- [*]
15. Section 7.06 is hereby amended and restated in its entirety to
read as follows:
"SECTION 7.06 -- [*]
16. Sections 7.07 and 7.08 of the Credit Agreement are hereby
deleted in their entirety and such Sections are hereby reserved for future use.
17. Sections 9.01(a)(i), 9.01(a)(ii), 9.01(a)(iii), 9.01(a)(iv),
and 9.01(a)(ix) of the Credit Agreement are hereby amended to delete the phrase
"or Investments" where included therein.
6
<PAGE> 8
18. Section 9.01(a)(viii) of the Credit Agreement is hereby
amended to replace the reference to [*] with [*].
19. Section 9.01(a)(x) of the Credit Agreement is hereby amended
to delete the phrase "or the Guaranty," where the same is located therein.
20. Section 9.01(b) of the Credit Agreement is hereby amended to
delete the phrase "and Investments" in the three places such phrase appears
therein.
21. Section 11.01 of the Credit Agreement is hereby amended so as
to delete the phrases "the Guaranty" and "or Investments" in the two places
each such respective phrase appears therein.
22. Section 11.03 of the Credit Agreement is hereby amended so as
to delete the phrases "the Guaranty" and "and Investments" in each and every
place either such respective phrase appears therein.
23. Section 11.04 of the Credit Agreement is hereby amended so as
to delete the phrase "Investments," in the one place such phrase appears
therein.
24. Section 11.05 of the Credit Agreement is hereby amended so as
to delete the phrase "and Investments" in the two places such phrase appears
therein.
25. Section 11.09 of the Credit Agreement is hereby amended so as
to delete the phrase " or Investments" in the one place such phrase appears
therein.
26. Section 11.10 of the Credit Agreement is hereby amended so as
to delete (i) the phrases "or Investments" and "and Investments" and (ii) the
word "Investments" in the one place each such respective phrase or word appears
therein.
27. Section 11.12 of the Credit Agreement is hereby deleted in its
entirety.
28. Each of the undersigned Lenders represents and warrants to the
Company that such undersigned Lender has all requisite power and authority to
execute this Fourth Amendment which shall, upon execution by all of the
undersigned Lenders, constitute the legally binding obligation of all parties
to the Credit Agreement other than the Company and Investments.
29. The undersigned Lenders hereby consent to the implementation
and consummation of the Subject Reorganization (as defined in this Fourth
Amendment) by the Company and Investments and hereby waive (i) the Company's
and Investment's compliance with any other provisions contained under the
Credit Agreement or any other Basic Document which are deemed, interpreted or
construed to prohibit, prevent or restrict the Company's and Investment's
undertaking of the Subject Reorganization or (ii) any default or breach of any
provision of either
7
<PAGE> 9
the Credit Agreement or any Basic Document resulting solely from the
implementation and consummation of the Subject Reorganization by the Company
and Investments provided, that nothing contained under subclause (ii) hereof
shall be deemed, interpreted or construed to constitute a waiver by any Lender
of any default or breach committed by the Company under the Credit Agreement or
any Basic Document (as amended hereby) from and after the consummation of the
Subject Reorganization.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to be executed by their duly authorized officers as of the date first
above written.
ASA Investments, Inc Atlantic Southeast
Airlines, Inc.
<TABLE>
<S> <C>
By: /s/ Ronald V. Sapp By: /s/ Ronald V. Sapp
-------------------------------- ------------------------------------------
Title: Treasurer Title: Vice President-Finance
Bank of America Illinois Manufacturers Hanover Leasing International
Corp., as Agent and as a Lender
By: /s/ Patrick Horan By: /s/ Joseph D. Mellon,
-------------------------------- ------------------------------------------
Title:Senior Vice President Title:Attorney-in-Fact
NationsBank, N.A. (South) National Bank of Canada.
f/k/a NationsBank of Georgia, N.A.
By: /s/ Kathryn W. Robinson By: /s/ William L. Berry
-------------------------------- ------------------------------------------
Title: Senior Vice President Title: Vice President
The Royal Bank of Canada Canadian Imperial Bank of Commerce
By: /s/ Don Calancie By: /s/ Roger Colden
-------------------------------- ------------------------------------------
Title; Senior Manager Title: Authorized Signatory
SouthTrust Bank of Georgia, N.A. Kawasaki Leasing, (USA) Inc
</TABLE>
8
<PAGE> 10
<TABLE>
<S> <C>
By: /s/ Ron Fontenot By: /s/ Shigeru Inada
--------------------------------------- ---------------------------------------
Title: Vice President Title: President
</TABLE>
<PAGE> 1
EXHIBIT 10 (g)
<PAGE> 2
TERMINATION OF GUARANTY
THIS TERMINATION OF GUARANTY (the "Termination Agreement") is made and
entered into as of this 17th day of September, 1996, by and among ASA
INVESTMENTS, INC., a Delaware corporation ("Guarantor"), MANUFACTURERS HANOVER
LEASING INTERNATIONAL CORP. ("MHLI"), BANK OF AMERICA ILLINOIS ("Bank
America"), NATIONSBANK, N.A. (SOUTH) ("NationsBank"), NATIONAL BANK OF CANADA
("National Canada"), THE ROYAL BANK OF CANADA ("Royal Canada"), CANADIAN
IMPERIAL BANK OF COMMERCE ("CIBC"), KAWASAKI LEASING, (USA) INC. ("Kawasaki"),
and SOUTHTRUST BANK OF GEORGIA, N.A. ("SouthTrust") (MHLI, Bank America,
NationsBank, National Canada, Royal Canada, CIBC, Kawasaki, and SouthTrust are
hereinafter sometimes referred to collectively as the Lenders" and
individually as a "Lender").
W I T N E S E T H T H A T
WHEREAS, Guarantor has previously executed and delivered for the
benefit of Lenders that certain Guaranty dated December 24, 1986 (the
"Guaranty") under which Guaranty the Guarantor has guaranteed certain
obligations owed by Atlantic Southeast Airlines, Inc. ("ASA") to the Lenders as
described in the Guaranty (collectively the "Subject Obligations"); and
WHEREAS, notwithstanding that the Subject Obligations shall remain in
existence, pursuant and in accordance with Item 12 of the Guaranty, the Lenders
and the Guarantor desire to terminate the Guaranty so as to relieve the
Guarantor from all further responsibility and liability under the Guaranty.
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, Ten ($10) Dollars in hand paid by Guarantor to each Lender,
and other good and valuable consideration, the receipt, adequacy and
sufficiency of which is hereby acknowledged, the parties hereto do hereby agree
as follows:
1. The parties hereby terminate the Guaranty and agree that the
Guaranty shall be of no further or continuing force or effect. The Lenders
agree that the Guarantor is hereby relieved of all responsibilities,
obligations, and liabilities incurred under or in connection with the Guaranty
and shall have no responsibility whatsoever for all or any part of the Subject
Obligations. Each Lender does hereby for and on behalf of itself and its
respective successors and assigns, release, remise and forever discharge
Guarantor and all of its respective successors and assigns (other than ASA) of
and from any and all debts, claims, causes of action, and other amounts arising
under or in connection with the Guaranty or the Subject Obligations.
2. This Termination Agreement shall be governed by the laws of
the State of Georgia. This Termination Agreement may be executed in one or
more counterparts all of which
<PAGE> 3
together shall constitute one in the same original. This Termination Agreement
shall be binding upon the parties hereto and their respective heirs,
successors, assigns, and legal representatives.
IN WITNESS WHEREOF, the Guarantor and each Lender have each caused
this Termination Agreement to be executed by its duly authorized officers and
its seal to be affixed hereto as of the day and year first above written.
MANUFACTURERS HANOVER ASA INVESTMENTS, INC.
LEASING INTERNATIONAL CORP.
By: /s/ Joseph D. Mellon By: /s/ Ronald V. Sapp
-------------------------------- --------------------------------
Its: Attorney-in-Fact Its: Treasurer
BANK OF AMERICA NATIONSBANK, N.A. (SOUTH)
By: /s/ Patrick Horan By: /s/ Kathryn W. Robinson
-------------------------------- --------------------------------
Its: Senior Vice President Its: Senior Vice President
NATIONAL BANK OF CANADA THE ROYAL BANK OF CANADA
By: /s/ William L. Berry By: /s/ Don Calancie
-------------------------------- --------------------------------
Its: Vice President Its: Senior Manager
CANADIAN IMPERIAL BANK OF KAWASAKI LEASING, (USA)
COMMERCE INC.
By: /s/ Roger Colden By: /s/ Shigeru Inada
-------------------------------- --------------------------------
Its: Authorized Signatory Its: President
SOUTHTRUST BANK OF GEORGIA, N.A.
By: /s/ Ron Fontenot
--------------------------------
Its: Vice President
2
<PAGE> 1
Confidential Treatment requested by Atlantic Southeast Airlines, Inc., File No.
0-11097
EXHIBIT 10 (h)
Confidential treatment has been applied for with
respect to certain provisions of this Exhibit, which
provisions have been omitted from this Exhibit,
marked with an asterisk (*) and filed separately with
the SEC
<PAGE> 2
THIRD AMENDMENT TO
CREDIT AGREEMENT
DATED APRIL 23, 1987
This Third Amendment To Credit Agreement (this "Third Amendment") is
made and entered into this 17th day of September, 1996, by and among the
ATLANTIC SOUTHEAST AIRLINES, INC., a Georgia corporation (the "Company"), ASA
INVESTMENTS, INC., a Delaware Corporation ("Investments"), MANUFACTURERS
LEASING INTERNATIONAL CORP. ("MHLI"), KAWASAKI LEASING, (USA) INC. as successor
in interest to Kawasaki Leasing International, Inc. [formerly known as Kawasaki
Lease Financing Inc.], and CREDIT LYONNAIS, CAYMAN ISLANDS BRANCH (all of such
financial institutions are hereinafter collectively referred to as the
"Lenders").
W I T N E S S E T H:
WHEREAS, the Company is indebted to the Lenders under the terms of
that certain Credit Agreement dated April 23, 1987, originally among the
Company, Investments, MHLI, and the financial institutions parties thereto as
respectively amended on each of May 23, 1989, and October 31, 1989 (said Credit
Agreement as now or hereafter amended is hereinafter collectively referred to
as the "Credit Agreement"); and
WHEREAS, effective November 30, 1995, Kawasaki Leasing, (USA) Inc. has
succeeded to the participation interest of Kawasaki Leasing International, Inc.
("KLII") under the Credit Agreement; and
WHEREAS, the Company and Investments desire to obtain the approval and
consent of the necessary Lenders to implement a corporate reorganization and an
amendment to the Credit Agreement which will result in (i) each of the Company
and Investments becoming a wholly owned subsidiary of a holding company the
stock of which holding company is owned by the Company's current shareholders
and will be publicly traded, (ii) Investments being removed as a party to the
Credit Agreement and being relieved of its responsibility under any guarantee
thereof, and (iii) the Company being relieved of certain restrictions imposed
under the Credit Agreement; and
WHEREAS, pursuant to the provisions of Section 11.04 of the Credit
Agreement, the parties desire to amend the Credit Agreement as hereinafter
provided.
NOW, THEREFORE, for and in consideration of each party's agreement to
be bound hereby and other good, valuable and adequate consideration, the
parties hereto do hereby agree as follows:
1. All capitalized terms not otherwise specifically defined
herein shall have the meanings ascribed to them under the provisions of the
Credit Agreement.
<PAGE> 3
2. Investments shall be removed as a party to the Credit
Agreement with all references to "ASA Investments, Inc." and "Investments"
under the Credit Agreement being hereby deleted in their entirety.
Additionally, from and after the date hereof, Investments shall not be
considered a "Subsidiary" (as defined and provided under the Credit Agreement)
of the Company notwithstanding any provision of the Credit Agreement to the
contrary. In connection therewith, all parties agree that that certain
Guaranty dated as of April 23, 1987, delivered by Investments to MHLI in its
capacity as agent for the benefit of all Lenders (the "Guaranty") is hereby
terminated and shall be of no further force or effect it being the express
agreement of all parties that Investments shall have no obligations or
responsibilities to any one or more of the Lenders and that no Lender shall
have any claim or cause of action against Investments under or in connection
with the Credit Agreement, the credit extended to the Company thereunder, the
Basic Documents, or the Guaranty. In addition, the definition of "Guaranty"
and all references to the "Guaranty" contained in the Credit Agreement or the
Basic Documents are hereby deleted.
3. All references to the "Company" or the "Subsidiaries" of the
Company under the Credit Agreement and all determinations required to be made
with respect thereto shall refer to and include solely and exclusively the
Company and its Subsidiaries (as defined in the Credit Agreement as modified by
this Third Amendment); provided, that in no event shall the Company's
Subsidiaries include (i) Investments, (ii) any parent or holding company owning
all or substantially all of the capital stock of the Company or (iii) any
Person required to be included in any consolidated financial statement, tax
return or governmental filing covering the Company or under any other
statement prepared or determination made in conformity with GAAP which Person
does not meet the definitional requirements of a "Subsidiary" of the Company
under the Credit Agreement.
4. The definitions of "Indebtedness", "Tangible Net Worth",
"Total Assets" and "Total Liabilities" currently contained under Section 1.01
of the Credit Agreement are hereby amended in their entirety to read as
follows:
"Indebtedness" means [*]
"Tangible Net Worth" means as to any Person, the Book Net
Worth of such Person minus (i) the amount, if any, of the Total Assets of such
Person and such Person's Subsidiaries which would be treated as intangibles
under GAAP, (ii) any write-up in the book value of any fixed asset resulting
from a revaluation thereof and (iii) the amount, if any, at which shares of
capital stock of such Person appear on the asset side of such Person's balance
sheet.
"Total Assets" means as to any Person which is a corporation,
all items considered as assets for purposes of GAAP.
"Total Liabilities" means as to any Person which is a
corporation, all items considered as liabilities for purposes of GAAP.
2
<PAGE> 4
5. The following definitions shall be added to Section 1.01 of
the Credit Agreement in the appropriate alphabetical order:
"Book Net Worth" means as to any Person, the book value of the
Total Assets of such Person and such Persons's Subsidiaries (exclusive of any
indebtedness owed to such Person or such Person's Subsidiaries by any affiliate
of such Person) which Total Assets are located within the United States of
America minus the book value of the Total Liabilities of such Person and such
Person's Subsidiaries. For purposes of clarity, marketable securities and
commercial paper issued by a foreign entity but held in the United States of
America shall be considered to be assets located within the United States of
America.
"Capitalized Lease" means a capitalized lease of any tangible
real or personal property, as determined pursuant to GAAP.
"Current Maturities of Long Term Debt" means the amounts due,
within any twelve (12) month period following any fiscal quarter end of the
Company, under long-term debt instruments of the Company, as determined
pursuant to GAAP.
[*]
[*]
"GAAP" means generally accepted accounting principles as in
effect in the United States of America and applied on a basis consistent with
that used in the preparation of the Company's audited balance sheet for the
period ending December 31, 1995, and the related results of operation except
for (i) changes therein with which the Company's independent public accountants
concur that are disclosed in the notes to the relevant financial statements and
(ii) any requirements for consolidation inconsistent with the provisions of
Section 3 of the Third Amendment to this Agreement.
[*]
[*]
[*]
"Recent SEC Filings" means collectively (i) the Company's
annual report on Form 10-K for the year ended December 31, 1995 and (ii) the
Company's quarterly reports on Forms 10-Q for the calendar quarters ending
March 31, 1996 and June 30, 1996.
"Subject Reorganization" means the pending proposed
transaction under which (i) the Company shall form a wholly owned Subsidiary
("Holding Company"), (ii) Holding Company shall form a wholly owned subsidiary
("Second Level Subsidiary"), (iii) Second Level Subsidiary shall merge with and
into the Company with the Company surviving and (a) the Company
3
<PAGE> 5
shareholders receiving stock in the Holding Company in exchange for the
outstanding stock in the Company, (b) the Holding Company receiving all capital
stock in the Company, and (c) all capital stock in the Holding Company owned by
the Company being canceled, and (iv) the Company's subsequent dividend
distribution to the Holding Company of all capital stock in Investments; all of
which transactions shall result in the Company and Investments becoming wholly
owned subsidiaries of Holding Company.
6. The representations and warranties contained under Sections
5.01 through 5.19 of the Credit Agreement (with all references to "this
Agreement" or "herein" (contained under such Sections to include in particular
the Credit Agreement as amended by this Third Amendment) as they pertain to the
Company are hereby re-affirmed or made (as applicable) by the Company as of the
date hereof; provided that Section 5.10 is being reaffirmed as if "1986" were
"1995" therein. The representations and warranties contained under Sections
5.04, 5.05, 5.06, 5.11, 5.12, 5.13, 5.15, and 5.18 are hereby amended and
restated in their entirety as follows:
"SECTION 5.04 -- Litigation. [*]
SECTION 5.05 -- Financial Statements. (a) The audited balance
sheet as of December 31, 1995, and the unaudited balance sheet as of June 30,
1996, and the related statement of operations for the year (audited) and
quarters (unaudited) then ended and the statements of reconciliations of the
shareholders' equity of the Company (copies of which have been furnished to
Lenders) 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 Company as of such dates and
the results of the operations of the Company for such periods, and there has
been no material adverse change of the financial condition or operations of the
Company since June 30, 1996.
SECTION 5.06 -- Title to Properties. The Company has good
title to its properties and assets except for defects which do not materially
affect the operation or financial condition of the Company. There are no
liens, mortgages, security interests, or other encumbrances of any of the items
constituting Collateral under the Security Agreements except those granted and
held in favor of the Lenders.
SECTION 5.11 -- Status as United States Citizen". The Company
is a "citizen of the United States" as that term is used in 49 U.S.C. Section
40102(a)(15), and is an air carrier holding a valid air carrier operating
certificate issued pursuant to 49 U.S.C. Chapter 447 for aircraft capable of
carrying 10 or more individuals.
SECTION 5.12 -- Indebtedness. The Company has no indebtedness
for money borrowed except as disclosed under the Recent SEC Filings.
SECTION 5.13 -- Contingent Liabilities. The Company has no
contingent liabilities except as disclosed under the Recent SEC Filings.
4
<PAGE> 6
SECTION 5.15 -- Forms 10-K and 10-Q. The Recent SEC Filings,
as previously delivered to Lenders, correctly describe the principal properties
of the Company and the general nature of the business conducted by the Company.
SECTION 5.18 -- Location of Offices. The Company maintains is
Chief Executive Office and principal place of business is located at 100
Hartsfield Centre Parkway, Suite 800, Atlanta, Georgia 30354-1356".
7. The following representation and warranty is hereby added as a
new Section 5.19:
"SECTION 5.19 -- Subject Reorganization. Upon the
consummation of the Subject Reorganization, the Company shall be and remain in
compliance with all applicable provisions of this Agreement including without
limitation, those covenants contained in Section 6.02, 6.04, 6.05 and 6.06."
8. All representations and warranties contained under Article V
of the Credit Agreement solely as and only to the extent they pertain or apply
to Investments are hereby deleted.
9. Section 6.01 of the Credit Agreement is hereby amended by (i)
deleting Sections 6.01(i)(y) [in both places] and 6.01(i)(z) [in both places],
(ii) deleting Sections 6.01(ii)(y) [in both places] and 6.01(ii)(z) [in both
places], (iii) deleting the phrase "and Investments" as it appears in
6.01(iii)(a), (iv) deleting 6.01(iii)(a)(y), (v) deleting the phrase
"Investments, and immediately upon the filing of any one or more actions or
proceedings against" as it appears in Section 6.01(vii) and (vi) adding the
following phrase after the word "Company" as it appears in Section 6.01 (iv):
"or any parent or holding company of the Company"
10. Section 6.02 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"SECTION 6.02 -- [*]
11. Section 6.03 of the Credit Agreement is hereby deleted in its
entirety and such Section is hereby reserved for future use.
12. Sections 6.04, 6.05 and 6.06 are hereby amended in their
entirety to read as follows:
"SECTION 6.04 -- [*]
SECTION 6.05 -- [*]
SECTION 6.06 -- [*]
5
<PAGE> 7
13. Section 6.14 of the Credit Agreement is hereby deleted in its
entirety and such Section is hereby reserved for future use.
14. Sections 7.01 through 7.04 are hereby amended and restated in
their entirety to read as follows:
"SECTION 7.01 -- [*]
SECTION 7.02 -- [*]
SECTION 7.03 -- [*]
SECTION 7.04 -- [*]
15. Section 7.06 is hereby amended and restated in its entirety to
read as follows:
"SECTION 7.06 -- [*]
16. Sections 7.07 and 7.08 of the Credit Agreement are hereby
deleted in their entirety and such Sections are hereby reserved for future use.
17. Sections 9.01(a)(i), 9.01(a)(ii), 9.01(a)(iii), 9.01(a)(iv),
and 9.01(a)(ix) of the Credit Agreement are hereby amended to delete the phrase
"or Investments" where included therein.
18. Section 9.01(a)(viii) of the Credit Agreement is hereby
amended to replace the reference to [*] with [*].
19. Section 9.01(a)(x) of the Credit Agreement is hereby amended
to delete the phrase "or the Guaranty," where the same is located therein.
20. Section 9.01(b) of the Credit Agreement is hereby amended to
delete the phrase "and Investments" in the three places such phrase appears
therein.
21. Section 11.01 of the Credit Agreement is hereby amended so as
to delete the phrases "the Guaranty" and "or Investments" in the two places
each such respective phrase appears therein.
22. Section 11.03 of the Credit Agreement is hereby amended so as
to delete the phrases "the Guaranty" and "and Investments" in each and every
place either such respective phrase appears therein.
6
<PAGE> 8
23. Section 11.04 of the Credit Agreement is hereby amended so as
to delete the phrase "Investments," in the one place such phrase appears
therein.
24. Section 11.05 of the Credit Agreement is hereby amended so as
to delete the phrase "and Investments" in the two places such phrase appears
therein.
25. Section 11.09 of the Credit Agreement is hereby amended so as
to delete the phrase " or Investments" in the one place such phrase appears
therein.
26. Section 11.10 of the Credit Agreement is hereby amended so as
to delete (i) the phrases "or Investments" and "and Investments" and (ii) the
word "Investments" in the one place each such respective phrase or word appears
therein.
27. Section 11.12 of the Credit Agreement is hereby deleted in its
entirety.
28. Each of the undersigned Lenders represents and warrants to the
Company that such undersigned Lender has all requisite power and authority to
execute this Third Amendment which shall, upon execution by all of the
undersigned Lenders, constitute the legally binding obligation of such Lender.
29. The undersigned Lenders hereby consent to the implementation
and consummation of the Subject Reorganization (as defined in this Third
Amendment) by the Company and Investments and hereby waive (i) the Company's
and Investment's compliance with any other provisions contained under the
Credit Agreement or any other Basic Document which are deemed, interpreted or
construed to prohibit, prevent or restrict the Company's and Investment's
undertaking of the Subject Reorganization or (ii) any default or breach of any
provision of either the Credit Agreement or any Basic Document resulting solely
from the implementation and consummation of the Subject Reorganization by the
Company and Investments provided, that nothing contained under subclause (ii)
hereof shall be deemed, interpreted or construed to constitute a waiver by any
Lender of any default or breach committed by the Company under the Credit
Agreement or any Basic Document (as amended hereby) from and after the
consummation of the Subject Reorganization.
IN WITNESS WHEREOF, the parties hereto have caused this Third
Amendment to be executed by their duly authorized officers as of the date first
above written.
ASA Investments, Inc Atlantic Southeast Airlines, Inc.
By: /s/ Ronald V. Sapp By: /s/ Ronald V. Sapp
------------------------------ ---------------------------------
Title: Treasurer Title: Vice President - Finance
7
<PAGE> 9
<TABLE>
<S> <C>
Manufacturers Hanover Leasing International Credit Lyonnais, Cayman Islands Branch
Corp., as Agent and as a Lender
By: /s/ Joseph D. Mellon By: /s/ Bertrand Cousin
------------------------------------- ---------------------------------------
Title: Attorney in Fact Title:
Kawasaki Leasing, (USA) Inc
By: /s/ Shigeru Inada
-------------------------------------
Title: President
</TABLE>
8
<PAGE> 1
EXHIBIT 10 (i)
<PAGE> 2
TERMINATION OF GUARANTY
THIS TERMINATION OF GUARANTY (the "Termination Agreement") is made and
entered into as of this 17th day of September, 1996, by and among ASA
INVESTMENTS, INC., a Delaware corporation ("Guarantor"), MANUFACTURERS HANOVER
LEASING INTERNATIONAL CORP. ("MHLI"), KAWASAKI LEASING, (USA) INC.
("Kawasaki"), and CREDIT LYONNAIS, CAYMAN ISLANDS BRANCH ("Credit Lyonnais")
(MHLI, Kawasaki, and Credit Lyonnais are hereinafter sometimes referred to
collectively as the Lenders" and individually as a "Lender").
W I T N E S E T H T H A T
WHEREAS, Guarantor has previously executed and delivered for the
benefit of Lenders that certain Guaranty dated April 23, 1987 (the "Guaranty")
under which Guaranty the Guarantor has guaranteed certain obligations owed by
Atlantic Southeast Airlines, Inc. ("ASA") to the Lenders as described in the
Guaranty (collectively the "Subject Obligations"); and
WHEREAS, notwithstanding that the Subject Obligations shall remain in
existence, pursuant and in accordance with Item 12 of the Guaranty, the Lenders
and the Guarantor desire to terminate the Guaranty so as to relieve the
Guarantor from all further responsibility and liability under the Guaranty.
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, Ten ($10) Dollars in hand paid by Guarantor to each Lender,
and other good and valuable consideration, the receipt, adequacy and
sufficiency of which is hereby acknowledged, the parties hereto do hereby agree
as follows:
1. The parties hereby terminate the Guaranty and agree that the
Guaranty shall be of no further or continuing force or effect. The Lenders
agree that the Guarantor is hereby relieved of all responsibilities,
obligations, and liabilities incurred under or in connection with the Guaranty
and shall have no responsibility whatsoever for all or any part of the Subject
Obligations. Each Lender does hereby for and on behalf of itself and its
respective successors and assigns, release, remise and forever discharge
Guarantor and all of its respective successors and assigns (other than ASA) of
and from any and all debts, claims, causes of action, and other amounts arising
under or in connection with the Guaranty or the Subject Obligations.
2. This Termination Agreement shall be governed by the laws of
the State of Georgia. This Termination Agreement may be executed in one or
more counterparts all of which together shall constitute one in the same
original. This Termination Agreement shall be binding upon the parties hereto
and their respective heirs, successors, assigns, and legal representatives.
<PAGE> 3
IN WITNESS WHEREOF, the Guarantor and each Lender have each caused
this Termination Agreement to be executed by its duly authorized officers and
its seal to be affixed hereto as of the day and year first above written.
MANUFACTURERS HANOVER ASA INVESTMENTS, INC.
LEASING INTERNATIONAL CORP.
By: /s/ Joseph D. Mellon By: /s/ Ronald V. Sapp
------------------------------ ------------------------
Its: Attorney-in-Fact Its: Treasurer
KAWASAKI LEASING, (USA) INC. CREDIT LYONNAIS, CAYMAN
ISLANDS BRANCH
By: /s/ Shigeru Inada By: /s/ Bertrand Cousin
------------------------------ ------------------------
Its: President Its:
--------------------
2
<PAGE> 1
Confidential Treatment requested by Atlantic Southeast Airlines, Inc., File No.
0-11097
EXHIBIT 10 (j)
Confidential treatment has been applied for with
respect to certain provisions of this Exhibit, which
provisions have been omitted from this Exhibit,
marked with an asterisk (*) and filed separately with
the SEC
<PAGE> 2
FIRST AMENDMENT TO
CREDIT AGREEMENT
DATED JUNE 15, 1990
This First Amendment To Credit Agreement (this "First Amendment") is
made and entered into this 13th day of September, 1996, between ATLANTIC
SOUTHEAST AIRLINES, INC., a Georgia corporation ("Borrower") and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("Lender") with the express
understanding that ASA INVESTMENTS, INC., a Delaware Corporation ("ASAI") shall
be a third party beneficiary hereof.
W I T N E S S E T H:
WHEREAS, Borrower is indebted to Lender under the terms of that
certain Credit Agreement dated June 15, 1990 (the "Credit Agreement"); and
WHEREAS, ASAI has undertaken those obligations imposed upon it under
that certain Guarantee dated June 15, 1990 (the "Guarantee") issued by ASAI for
the benefit of Lender and securing Borrower's performance of Borrower's
obligations under the Credit Agreement; and
WHEREAS, the Borrower desires to obtain the approval and consent of
the Lender to implement a corporate reorganization and an amendment to the
Credit Agreement which will result in (i) the Borrower and ASAI each becoming a
wholly owned subsidiary of a holding company, the stock of which holding
company will be owned by the Borrower's current shareholders and will be
publicly traded, (ii) ASAI being relieved of its responsibility under the
Guarantee, (iii) Borrower being relieved of certain restrictions imposed under
the Credit Agreement, and (iv) Borrower undertaking its compliance with
additional covenants imposed under this First Amendment; and
WHEREAS, pursuant to the provisions of Section 11.04 of the Credit
Agreement, the parties desire to amend the Credit Agreement as hereinafter
provided.
NOW, THEREFORE, for and in consideration of each party's agreement to
be bound hereby and other good, valuable and adequate consideration, the
parties hereto do hereby agree as follows:
1. All capitalized terms not otherwise specifically defined
herein shall have the meanings ascribed to them under the provisions of the
Credit Agreement.
2. From and after the date hereof, ASAI shall not be considered a
subsidiary of Borrower for purposes of the application or interpretation of any
provision of the Credit Agreement. In addition, Lender specifically
acknowledges and agrees that the Guarantee is hereby terminated and shall be of
no further force or effect it being the express agreement of all parties that
ASAI shall be relieved of all obligations and responsibilities to Lender and
that Lender
<PAGE> 3
shall not have and hereby waives and releases any claim or cause of
action against ASAI under or in connection with the Credit Agreement, the
credit extended to Borrower thereunder, the Basic Documents, or the Guarantee.
In addition, the definition of "Guarantee" and Exhibit "J" and all references
to the "Guarantee" and Exhibit "J" contained in the Credit Agreement or the
Basic Documents are hereby deleted. All parties specifically agree that ASAI
shall be a third party beneficiary of this Agreement and more specifically the
provisions of this Paragraph 2.
3. All references to the "Borrower" or any "subsidiary" or
"subsidiaries" of the Borrower under the Credit Agreement and all
determinations required to be made with respect thereto shall refer to and
include solely and exclusively the Borrower and any subsidiaries hereinafter
acquired and maintained; provided, that in no event shall the Borrower's
subsidiaries include (i) ASAI, (ii) any parent or holding company owning all or
substantially all of the capital stock of the Borrower, (iii) any Person
utilized in the implementation of the Subject Reorganization (as hereinafter
defined), or (iv) any Person required to be included in any consolidated
financial statement, tax return or governmental filing covering the Borrower or
under any other statement prepared or determination made in conformity with
GAAP which Person does not otherwise constitute a subsidiary of the Borrower
under the provisions of the Credit Agreement.
4. The definitions of "Basic Documents" and "GAAP" contained
uncer Section 1.01 of the Credit Agreement shall be amended and restated in
their entirety as follows:
"Basic Documents": this Agreement, including the First
Amendment and all other amendments hereto, the Purchase Agreement, the Finex
Agreement(s), and the Mortgage; and each Note, Purchase Agreement Assignment,
Consent, and Mortgage Supplement as executed and delivered."
"GAAP": generally accepted accounting principles as in effect
in the United States of America and applied on a basis consistent with that
used in the preparation of the financial statements referred to in Section 5.5
except for (i) changes therein with which Borrower's independent public
accountants concur that are disclosed in the notes to the relevant financial
statements and (ii) any requirements for consolidation inconsistent with the
provisions of Section 3 of the First Amendment to this Credit Agreement."
5. The following definitions shall be added to Section 1.01 of
the Credit Agreement in the appropriate alphabetical order:
"Book Net Worth" : the book value of the Total Assets of
Borrower and its subsidiaries (exclusive of any indebtedness owed to the
Borrower or its subsidiaries by any affiliate of Borrower) which Total Assets
are located within the United States of America minus the book value of the
Total Liabilities of Borrower and its subsidiaries. For purposes of clarity,
marketable securities and commercial paper issued by a foreign entity but held
in the United States of America shall be considered to be assets located within
the United States of America.
2
<PAGE> 4
"Capitalized Lease": a capitalized lease of any tangible real
or personal property, as determined pursuant to GAAP.
"Current Maturities of Long Term Debt": the amounts due,
within any twelve (12) month period following any fiscal quarter end of
Borrower, under long-term debt instruments of Borrower, as determined pursuant
to GAAP.
[*]
[*]
"Indebtedness": [*]
[*]
"1995 10-K": Borrower's annual report on Form 10-K for the
year ended December 31, 1995.
"1996 10-Qs": Borrower's quarterly reports on Form 10-Q for
the quarters ended March 31, 1996 and June 30, 1996.
[*]
[*]
"Recent SEC Filings": the 1995 10-K and 1996-10-Qs.
"Subject Reorganization": the pending proposed transaction
under which (i) Borrower shall form a wholly owned subsidiary ("Holding
Company"), (ii) Holding Company shall form a wholly owned subsidiary ("Second
Level Subsidiary"), (iii) Second Level Subsidiary shall merge with and into
Borrower with Borrower surviving and (a) Borrower's shareholders receiving
stock in the Holding Company in exchange for the outstanding stock in Borrower,
(b) the Holding Company receiving all capital stock in Borrower, and (c) all
capital stock in the Holding Company owned by Borrower being canceled, and (iv)
Borrower's subsequent dividend distribution to the Holding Company of all
capital stock in ASA Investments, Inc.; all of which transactions shall result
in Borrower and ASA Investments, Inc. becoming wholly owned subsidiaries of
Holding Company.
"Tangible Net Worth": the Book Net Worth of Borrower minus (i)
the amount, if any, of the Total Assets of Borrower and its subsidiaries which
would be treated as intangibles under GAAP, (ii) any write-up in the book value
of any fixed asset resulting from a revaluation thereof and (iii) the amount,
if any, at which shares of capital stock of Borrower appear on the asset side
of Borrower's balance sheet.
3
<PAGE> 5
"Total Assets": as to any Person which is a corporation, all
items considered as assets for purposes of GAAP.
"Total Liabilities": as to any Person which is a corporation,
all items considered as liabilities for purposes of GAAP.
6. [*]
7. The representations and warranties contained under Sections
5.01, 5.02, 5.03, 5.06, 5.07, 5.08, 5.09, 5.10, 5.11, 5.12, and 5.14 of the
Credit Agreement are hereby re-affirmed by Borrower as of the date hereof. The
representations and warranties contained under Sections 5.04, 5.05, and 5.13
are hereby amended and restated in their entirety as follows:
"SECTION 5.04 -- Litigation. Except as disclosed in the
Recent SEC Filings, there are no pending or (to the best of Borrower's
knowledge after due inquiry) threatened actions or proceedings before any court
or administrative agency which may be expected to have a materially adverse
effect on Borrower's business or financial condition or which seek to question
or set aside any of the transactions herein contemplated.
SECTION 5.05 -- Financial Statements. The audited balance
sheet as of December 31, 1995, and the unaudited balance sheet as of June 30,
1996, for Borrower and its consolidated subsidiaries, and the related results
of operations for the year and quarter then ended have been prepared in
accordance with GAAP and correctly present Borrower's financial condition as of
such dates and the results of operations for such periods, and since June 30,
1996, there has been no materially adverse change in Borrower's business,
assets, operations or condition (financial or otherwise).
SECTION 5.13 -- [*]
8. Effective as of the date hereof, the following representations
and warranties are hereby added as new Sections 5.15, 5.16 and 5.17 each of
which representations and warranties is hereby made by Borrower as of the date
hereof:
"SECTION 5.15 -- Subject Reorganization. Upon the
consummation of the Subject Reorganization, Borrower shall be and remain in
compliance with all applicable provisions of this Agreement including without
limitation, those covenants contained in Section 6.09 hereof.
SECTION 5.16 -- Insurance. The insurance maintained by
Borrower with respect to the Aircraft shall continue in full force and effect
and and conform to the requirements of the Mortgage for so long as this
Agreement remains in effect.
SECTION 5.17 -- Continued Effectiveness. Except as
specifically modified by any amendments hereto or thereto which amendments are
duly executed in conformity with the
4
<PAGE> 6
provisions hereof and thereof, all of the terms and provisions of this
Agreement and each of the Basic Documents shall continue in full force and
effect and remain binding as against Borrower."
9. Section 6.01 of the Credit Agreement is hereby amended,
effective as of the consummation of the Subject Reorganization, by (i)
replacing the phrase "and Borrower's Form 10-Q" with the phrase "and the Form
10-Q for any parent holding company of Borrower" in the one place in the last
line of Section 6.01(a) where such former phrase appears and (ii) replacing the
phrase "and Borrower's Form 10-K" with the phrase "and the Form 10-K for any
parent holding company of Borrower" in the one place in the last line of
Section 6.01(b) where such former phrase appears.
10. Section 6.04 of the Credit Agreement is hereby amended by
adding the introductory phrase "Except for the implementation by Borrower of
the Subject Reorganization," at the beginning of such Section.
11. [*]
12. A new Section 6.09 is hereby added to the Credit Agreement
which shall read as follows:
"SECTION 6.09 -- Financial Covenants. Borrower shall at all
times comply with the following covenants:
[*]
13. Section 8.01(l) of the Credit Agreement is hereby deleted in
its entirety and reserved for future use.
14. Section 11.04 of the Credit Agreement is hereby amended to
delete the phrase ", the Guarantee," in the one place such phrase appears
therein.
15. The representations and warranties contained under Section
11.06 of the Credit Agreement are hereby re- affirmed by Lender as of the date
hereof.
16. The undersigned Lender hereby consents to and approves the
implementation and consummation of the Subject Reorganization by Borrower and
ASA Investments, Inc. ("ASAI") and hereby waives (i) Borrower's or ASAI's
compliance with any other provisions contained under the Credit Agreement or
any other Basic Document which are deemed, interpreted or construed to
prohibit, prevent or restrict Borrower's or ASAI's undertaking of the Subject
Reorganization or (ii) any default or breach of any provision of either the
Credit Agreement or any Basic Document resulting solely from the implementation
and consummation of the Subject Reorganization by Borrower or ASAI; provided,
that nothing contained under subclause (ii) hereof shall be deemed, interpreted
or construed to constitute a waiver by Lender of any default
5
<PAGE> 7
or breach committed by Borrower under the Credit Agreement or any Basic
Document (as amended hereby) from and after the consummation of the Subject
Reorganization.
17. In accordance with the provisions of Section 11.02 of the
Credit Agreement, Borrower hereby notifies Lender of Borrower's designation of
the following address at which Borrower is to hereafter receive any and all
notices required to be provided Borrower under the Credit Agreement: Atlantic
Southeast Airlines, Inc., 100 Hartsfield Centre Parkway, Suite 800, Atlanta,
Georgia 30354-1356, Attn: Ronald V. Sapp, Vice President - Finance.
18. Except as otherwise specifically provided under this First
Amendment, the terms and provisions of the Credit Agreement and each of the
Basic Documents shall remain in full force and effect.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
6
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed by their duly authorized officers as of the date first
above written.
BANK OF AMERICA NATIONAL ATLANTIC SOUTHEAST AIRLINES, INC.
TRUST AND SAVINGS ASSOCIATION
By: /s/ Patrick Horan By: /s/ Ronald V. Sapp
-------------------------------- --------------------------------
Title: Senior Vice President Title: Vice President-Finance
7
<PAGE> 1
EXHIBIT 10 (k)
<PAGE> 2
TERMINATION OF GUARANTEE
THIS TERMINATION OF GUARANTEE (the "Termination Agreement") is made
and entered into as of this 13th day of September, 1996, by and between ASA
INVESTMENTS, INC., a Delaware corporation ("Guarantor") and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION ("Lender").
W I T N E S E T H T H A T
WHEREAS, Guarantor has previously executed and delivered for the
benefit of Lender that certain Guarantee dated June 15, 1990 (the "Guarantee")
under which Guarantee the Guarantor has guaranteed certain obligations owed by
Atlantic Southeast Airlines, Inc. to the Lender as described in the Guarantee
(collectively the "Subject Obligations"); and
WHEREAS, notwithstanding that the Subject Obligations shall remain in
existence, pursuant and in accordance with Item 11 of the Guarantee, the Lender
and the Guarantor desire to terminate the Guarantee so as to relieve the
Guarantor from all further responsibility and liability under the Guarantee.
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, Ten ($10) Dollars in hand paid by Guarantor to the Lender,
and other good and valuable consideration, the receipt, adequacy and
sufficiency of which is hereby acknowledged, the parties hereto do hereby agree
as follows:
1. The parties hereby terminate the Guarantee and agree that the
Guarantee shall be of no further or continuing force or effect. Lender agrees
that the Guarantor is hereby relieved of all responsibilities, obligations, and
liabilities incurred under or in connection with the Guarantee and shall have
no responsibility whatsoever for all or any part of the Subject Obligations.
Lender does hereby for and on behalf of itself and its respective successors
and assigns, release, remise and forever discharge Guarantor and all of its
respective successors and assigns of and from any and all debts, claims, causes
of action, and other amounts arising under or in connection with the Guarantee
or the Subject Obligations.
2. This Termination Agreement shall be governed by the laws of
the State of Georgia. This Termination Agreement may be executed in one or
more counterparts all of which together shall constitute one in the same
original. This Termination Agreement shall be binding upon the parties hereto
and their respective heirs, successors, assigns, and legal representatives.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
<PAGE> 3
IN WITNESS WHEREOF, the Guarantor and the Lender have each caused this
Termination Agreement to be executed by its duly authorized officers and its
seal to be affixed hereto as of the day and year first above written.
BANK OF AMERICA NATIONAL ASA INVESTMENTS, INC.
TRUST AND SAVINGS ASSOCIATION
By: /s/ Patrick Horan By: /s/ Ronald V. Sapp
-------------------------------- ---------------------------
Its: Senior Vice President Its: Treasurer
2
<PAGE> 1
Confidential Treatment requested by Atlantic Southeast Airlines, Inc., File No.
0-11097
EXHIBIT 10 (l)
Confidential treatment has been applied for with
respect to certain provisions of this Exhibit, which
provisions have been omitted from this Exhibit,
marked with an asterisk (*) and filed separately with
the SEC
<PAGE> 2
SECOND AMENDMENT TO
CREDIT AGREEMENT
DATED DECEMBER 1, 1990
This Second Amendment To Credit Agreement (this "Second Amendment") is
made and entered into this 13th day of September, 1996, between ATLANTIC
SOUTHEAST AIRLINES, INC., a Georgia corporation ("Borrower") and WACHOVIA BANK
OF GEORGIA, N.A. ("Lender") with the express understanding that ASA
INVESTMENTS, INC., a Delaware Corporation ("ASAI") shall be a third party
beneficiary hereof.
W I T N E S S E T H:
WHEREAS, Borrower is indebted to Lender under the terms of that
certain Credit Agreement dated December 1, 1990 as amended by that certain
Amendatory Agreement dated July 6, 1993 (as so amended the "Credit Agreement");
and
WHEREAS, ASAI has undertaken those obligations imposed upon it under
that certain Guarantee dated December 1, 1990 (the "Guarantee") issued by ASAI
for the benefit of Lender and securing Borrower's performance of Borrower's
obligations under the Credit Agreement; and
WHEREAS, the Borrower desires to obtain the approval and consent of
the Lender to implement a corporate reorganization and an amendment to the
Credit Agreement which will result in (i) the Borrower and ASAI each becoming a
wholly owned subsidiary of a holding company, the stock of which holding
company will be owned by the Borrower's current shareholders and will be
publicly traded, (ii) ASAI being relieved of its responsibility under the
Guarantee, and (iii) Borrower being relieved of certain restrictions imposed
under the Credit Agreement;
WHEREAS, pursuant to the provisions of Section 11.04 of the Credit
Agreement, the parties desire to amend the Credit Agreement as hereinafter
provided.
NOW, THEREFORE, for and in consideration of each party's agreement to
be bound hereby and other good, valuable and adequate consideration, the
parties hereto do hereby agree as follows:
1. All capitalized terms not otherwise specifically defined
herein shall have the meanings ascribed to them under the provisions of the
Credit Agreement.
2. From and after the date hereof, ASAI shall not be considered a
subsidiary of Borrower for purposes of the application or interpretation of any
provision of the Credit Agreement. In addition, Lender specifically
acknowledges and agrees that the Guarantee is hereby terminated and shall be of
no further force or effect it being the express agreement of all parties that
ASAI shall be relieved of all obligations and responsibilities to Lender and
that Lender shall not have and hereby waives and releases any claim or cause of
action against ASAI under or
<PAGE> 3
in connection with the Credit Agreement, the credit extended to Borrower
thereunder, the Basic Documents, or the Guarantee. In addition, the definition
of "Guarantee", the definition of "Guarantor", and Exhibit "I" and all
references to the "Guarantee", the "Guarantor", and Exhibit "I" contained in
the Credit Agreement or the Basic Documents are hereby deleted. All parties
specifically agree that ASAI shall be a third party beneficiary of this
Agreement and more specifically the provisions of this Paragraph 2.
3. All references to the "Borrower" or any "subsidiary" or
"subsidiaries" of the Borrower under the Credit Agreement and all
determinations required to be made with respect thereto shall refer to and
include solely and exclusively the Borrower and any subsidiaries hereinafter
acquired and maintained by Borrower; provided, that in no event shall the
Borrower's subsidiaries include (i) ASAI, (ii) any parent or holding company
owning all or substantially all of the capital stock of the Borrower, (iii) any
Person utilized in the implementation of the Subject Reorganization (as
hereinafter defined) which Person, upon consummation of the Subject
Reorganization (as hereinafter defined), does not have substantial assets, or
(iv) any Person required to be included in any consolidated financial
statement, tax return or governmental filing covering the Borrower or under
any other statement prepared or determination made in conformity with GAAP
which Person does not otherwise constitute a subsidiary of the Borrower under
the provisions of the Credit Agreement.
4. The following definitions shall be added to Section 1.01 of
the Credit Agreement in the appropriate alphabetical order:
"1995 10-K": Borrower's annual report on Form 10-K for the
year ended December 31, 1995.
"1996 10-Qs": Borrower's quarterly reports on Form 10-Q for
the quarters ended March 31, 1996 and June 30, 1996.
"Recent SEC Filings": the 1995 10-K and 1996-10-Qs.
"Subject Reorganization": the pending proposed transaction
under which (i) Borrower shall form a wholly owned subsidiary ("Holding
Company"), (ii) Holding Company shall form a wholly owned subsidiary ("Second
Level Subsidiary"), (iii) Second Level Subsidiary shall merge with and into
Borrower with Borrower surviving and (a) Borrower's shareholders receiving
stock in the Holding Company in exchange for the outstanding stock in Borrower,
(b) the Holding Company receiving all capital stock in Borrower, and (c) all
capital stock in the Holding Company owned by Borrower being canceled, and (iv)
Borrower's subsequent dividend distribution to the Holding Company of all
capital stock in ASA Investments, Inc.; all of which transactions shall result
in Borrower and ASA Investments, Inc. becoming wholly owned subsidiaries of
Holding Company.
5. [*]
2
<PAGE> 4
6. The representations and warranties contained under Sections
5.01 through 5.15 of the Credit Agreement (as hereby amended) are hereby made
or re-affirmed (as applicable) by Borrower as of the date hereof. The
representations and warranties contained under Sections 5.04, 5.05, 5.07, and
5.13 are hereby amended and restated in their entirety as follows:
"SECTION 5.04 -- Litigation. Except as disclosed in the
Recent SEC Filings, there are no pending or (to the best of Borrower's
knowledge after due inquiry) threatened actions or proceedings before any court
or administrative agency which may be expected to have a materially adverse
effect on Borrower's business or financial condition or which seek to question
or set aside any of the transactions herein contemplated.
SECTION 5.05 -- Financial Statements. The audited balance
sheet as of December 31, 1995, and the unaudited balance sheet as of June 30,
1996, for Borrower and its consolidated subsidiaries, and the related results
of operations for the year and quarter then ended have been prepared in
accordance with GAAP and correctly present Borrower's financial condition as of
such dates and the results of operations for such periods, and since June 30,
1996, there has been no materially adverse change in Borrower's business,
assets, operations or condition (financial or otherwise).
SECTION 5.07 -- Status as "United States Citizen". Borrower
is a "citizen of the United States" as that term is used in 49 U.S.C. Section
40102(a)(15), and is an air carrier holding a valid air carrier operating
certificate issued pursuant to 49 U.S.C. Chapter 447 for aircraft capable of
carrying 10 or more individuals.
SECTION 5.13 -- [*]
7. The following representation and warranty is hereby added as a
new Section 5.15:
"SECTION 5.15 -- Subject Reorganization. Upon the
consummation of the Subject Reorganization, Borrower shall be and remain in
compliance with all applicable provisions of this Agreement including without
limitation, those covenants contained in Section 6.09 hereof."
8. Section 6.01 of the Credit Agreement is hereby amended,
effective upon the consummation of the Subject Reorganization, by (i) replacing
the phrase "and Borrower's Form 10-Q" with the phrase "and the Form 10-Q for
any parent holding company of Borrower" in the one place under Section 6.01(a)
where such former phrase appears and (ii) replacing the phrase "and Borrower's
Form 10-K" with the phrase "and the Form 10-K for any parent holding company of
Borrower" in the one place under Section 6.01(b) where such former phrase
appears.
9. [*].
10. [*]
11. [*]
3
<PAGE> 5
12. Section 8.01(b), (f), (g), (h), (j) and (l) are hereby amended
to delete all references to any one or more of the phrases "or Guarantor", "or
Guarantor's", "or the Guarantor", or "or Guarantor shall deny any further
liability under the Guarantee" in each and every place any one or more of such
phrases appear therein.
13. In accordance with the provisions of Section 11.02 of the
Credit Agreement, Borrower hereby notifies Lender of Borrower's designation of
the following address at which Borrower is to hereafter receive any and all
notices required to be provided Borrower under the Credit Agreement: Atlantic
Southeast Airlines, Inc., 100 Hartsfield Centre Parkway, Suite 800, Atlanta,
Georgia 30354-1356, Attn: Ronald V. Sapp, Vice President - Finance.
14. Section 11.04 of the Credit Agreement is hereby amended to
delete the phrase ", the Guarantee," in the one place such phrase appears
therein.
15. The undersigned Lender hereby consents to the implementation
and consummation of the Subject Reorganization by Borrower and ASAI and hereby
waives (i) Borrower's or ASAI's compliance with any other provisions contained
under the Credit Agreement or any other Basic Document which are deemed,
interpreted or construed to prohibit, prevent or restrict Borrower's or ASAI's
undertaking of the Subject Reorganization or (ii) any default or breach of any
provision of either the Credit Agreement or any Basic Document resulting solely
from the implementation and consummation of the Subject Reorganization by
Borrower or ASAI; provided, that nothing contained under subclause (ii) hereof
shall be deemed, interpreted or construed to constitute a waiver by Lender of
any default or breach committed by Borrower under the Credit Agreement or any
Basic Document (as amended hereby) from and after the consummation of the
Subject Reorganization.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be executed by their duly authorized officers as of the date first
above written.
WACHOVIA BANK OF GEORGIA, N.A. ATLANTIC SOUTHEAST AIRLINES, INC.
By: /s/ Bradley Marcus By: /s/ Ronald V. Sapp
-------------------------------- -------------------------------
Title: Senior Vice President Title:Vice President-Finance
4
<PAGE> 1
EXHIBIT 10 (m)
<PAGE> 2
TERMINATION OF GUARANTEE
THIS TERMINATION OF GUARANTEE (the "Termination Agreement") is made
and entered into as of this13th day of September, 1996, by and between ASA
INVESTMENTS, INC., a Delaware corporation ("Guarantor") and WACHOVIA BANK OF
GEORGIA, N.A. ("Lender").
W I T N E S E T H T H A T
WHEREAS, Guarantor has previously executed and delivered for the
benefit of Lender that certain Guarantee dated December 1, 1990 (the
"Guarantee") under which Guarantee the Guarantor has guaranteed certain
obligations owed by Atlantic Southeast Airlines, Inc. ("ASA") to the Lender as
described in the Guarantee (collectively the "Subject Obligations"); and
WHEREAS, notwithstanding that the Subject Obligations shall remain in
existence, pursuant and in accordance with Item 11 of the Guarantee, the Lender
and the Guarantor desire to terminate the Guarantee so as to relieve the
Guarantor from all further responsibility and liability under the Guarantee.
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, Ten ($10) Dollars in hand paid by Guarantor to the Lender,
and other good and valuable consideration, the receipt, adequacy and
sufficiency of which is hereby acknowledged, the parties hereto do hereby agree
as follows:
1. The parties hereby terminate the Guarantee and agree that the
Guarantee shall be of no further or continuing force or effect. Lender agrees
that the Guarantor is hereby relieved of all responsibilities, obligations, and
liabilities incurred under or in connection with the Guarantee and shall have
no responsibility whatsoever for all or any part of the Subject Obligations.
Lender does hereby for and on behalf of itself and its respective successors
and assigns, release, remise and forever discharge Guarantor and all of its
respective successors and assigns (other than ASA) of and from any and all
debts, claims, causes of action, and other amounts arising under or in
connection with the Guarantee or the Subject Obligations.
2. This Termination Agreement shall be governed by the laws of
the State of Georgia. This Termination Agreement may be executed in one or
more counterparts all of which together shall constitute one in the same
original. This Termination Agreement shall be binding upon the parties hereto
and their respective heirs, successors, assigns, and legal representatives.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
<PAGE> 3
IN WITNESS WHEREOF, the Guarantor and the Lender have each caused this
Termination Agreement to be executed by its duly authorized officers and its
seal to be affixed hereto as of the day and year first above written.
WACHOVIA BANK OF GEORGIA, N.A. ASA INVESTMENTS, INC.
By: /s/ Bradley Marcus By: /s/ Ronald V. Sapp
---------------------------------- --------------------------
Its: Senior Vice President Its: Treasurer
2
<PAGE> 1
Confidential Treatment requested by Atlantic Southeast Airlines, Inc., File No.
0-11097
EXHIBIT 10 (n)
Confidential treatment has been applied for with
respect to certain provisions of this Exhibit, which
provisions have been omitted from this Exhibit,
marked with an asterisk (*) and filed separately with
the SEC
<PAGE> 2
FIRST AMENDMENT TO
CREDIT AGREEMENT
DATED FEBRUARY 25, 1991
This First Amendment To Credit Agreement (this "First Amendment") is
made and entered into this 13th day of September, 1996, between ATLANTIC
SOUTHEAST AIRLINES, INC., a Georgia corporation ("Borrower") and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("Lender") with the express
understanding that ASA INVESTMENTS, INC., a Delaware Corporation ("ASAI") shall
be a third party beneficiary hereof.
W I T N E S S E T H:
WHEREAS, Borrower is indebted to Lender under the terms of that
certain Credit Agreement dated February 25, 1991 (the "Credit Agreement"); and
WHEREAS, ASAI has undertaken those obligations imposed upon it under
that certain Guarantee dated February 25, 1991 (the "Guarantee") issued by ASAI
for the benefit of Lender and securing Borrower's performance of Borrower's
obligations under the Credit Agreement; and
WHEREAS, the Borrower desires to obtain the approval and consent of
the Lender to implement a corporate reorganization and an amendment to the
Credit Agreement which will result in (i) the Borrower and ASAI each becoming a
wholly owned subsidiary of a holding company, the stock of which holding
company will be owned by the Borrower's current shareholders and will be
publicly traded, (ii) ASAI being relieved of its responsibility under the
Guarantee, (iii) Borrower being relieved of certain restrictions imposed under
the Credit Agreement, and (iv) Borrower undertaking its compliance with
additional covenants imposed under this First Amendment; and
WHEREAS, pursuant to the provisions of Section 11.04 of the Credit
Agreement, the parties desire to amend the Credit Agreement as hereinafter
provided.
NOW, THEREFORE, for and in consideration of each party's agreement to
be bound hereby and other good, valuable and adequate consideration, the
parties hereto do hereby agree as follows:
1. All capitalized terms not otherwise specifically defined
herein shall have the meanings ascribed to them under the provisions of the
Credit Agreement.
2. From and after the date hereof, ASAI shall not be considered a
subsidiary of Borrower for purposes of the application or interpretation of any
provision of the Credit Agreement. In addition, Lender specifically
acknowledges and agrees that the Guarantee is hereby terminated and shall be of
no further force or effect it being the express agreement of all parties that
ASAI shall be relieved of all obligations and responsibilities to Lender and
that Lender
<PAGE> 3
shall not have and hereby waives and releases any claim or cause of action
against ASAI under or in connection with the Credit Agreement, the credit
extended to Borrower thereunder, the Basic Documents, or the Guarantee. In
addition, the definition of "Guarantee" and Exhibit "J" and all references to
the "Guarantee" and Exhibit "J" contained in the Credit Agreement or the Basic
Documents are hereby deleted. All parties specifically agree that ASAI shall
be a third party beneficiary of this Agreement and more specifically the
provisions of this Paragraph 2.
3. All references to the "Borrower" or any "subsidiary" or
"subsidiaries" of the Borrower under the Credit Agreement and all
determinations required to be made with respect thereto shall refer to and
include solely and exclusively the Borrower and any subsidiaries hereinafter
acquired and maintained; provided, that in no event shall the Borrower's
subsidiaries include (i) ASAI, (ii) any parent or holding company owning all or
substantially all of the capital stock of the Borrower, (iii) any Person
utilized in the implementation of the Subject Reorganization (as hereinafter
defined), or (iv) any Person required to be included in any consolidated
financial statement, tax return or governmental filing covering the Borrower or
under any other statement prepared or determination made in conformity with
GAAP which Person does not otherwise constitute a subsidiary of the Borrower
under the provisions of the Credit Agreement.
4. The definitions of "Basic Documents", "Book Net Worth" and
"GAAP" shall be amended and restated in their entirety as follows:
""Basic Documents": this Agreement, including the First
Amendment and all other amendments hereto, the Purchase Agreement, the Finex
Agreement(s), and the Mortgage; and each Note, Purchase Agreement Assignment,
Consent, and Mortgage Supplement as executed and delivered."
"Book Net Worth" : the book value of the Total Assets of
Borrower and its subsidiaries (exclusive of any indebtedness owed to the
Borrower or its subsidiaries by any affiliate of Borrower) which Total Assets
are located within the United States of America minus the book value of the
Total Liabilities of Borrower and its subsidiaries. For purposes of clarity,
marketable securities and commercial paper issued by a foreign entity but held
in the United States of America shall be considered to be assets located within
the United States of America.
"GAAP": generally accepted accounting principles as in effect
in the United States of America and applied on a basis consistent with that
used in the preparation of the financial statements referred to in Section 5.5
except for (i) changes therein with which Borrower's independent public
accountants concur that are disclosed in the notes to the relevant financial
statements and (ii) any requirements for consolidation inconsistent with the
provisions of Section 3 of the First Amendment to this Credit Agreement."
5. The following definitions shall be added to Section 1.01 of
the Credit Agreement in the appropriate alphabetical order:
2
<PAGE> 4
"Current Maturities of Long Term Debt": the amounts due,
within any twelve (12) month period following any fiscal quarter end of
Borrower, under long-term debt instruments of Borrower, as determined pursuant
to GAAP.
[*]
[*]
[*]
"1995 10-K": Borrower's annual report on Form 10-K for the
year ended December 31, 1995.
"1996 10-Qs": Borrower's quarterly reports on Form 10-Q for
the quarters ended March 31, 1996 and June 30, 1996.
[*]
"Recent SEC Filings": the 1995 10-K and 1996-10-Qs.
"Subject Reorganization": the pending proposed transaction
under which (i) Borrower shall form a wholly owned subsidiary ("Holding
Company"), (ii) Holding Company shall form a wholly owned subsidiary ("Second
Level Subsidiary"), (iii) Second Level Subsidiary shall merge with and into
Borrower with Borrower surviving and (a) Borrower's shareholders receiving
stock in the Holding Company in exchange for the outstanding stock in Borrower,
(b) the Holding Company receiving all capital stock in Borrower, and (c) all
capital stock in the Holding Company owned by Borrower being canceled, and (iv)
Borrower's subsequent dividend distribution to the Holding Company of all
capital stock in ASA Investments, Inc.; all of which transactions shall result
in Borrower and ASA Investments, Inc. becoming wholly owned subsidiaries of
Holding Company.
"Tangible Net Worth": the Book Net Worth of Borrower minus (i)
the amount, if any, of the Total Assets of Borrower and its subsidiaries which
would be treated as intangibles under GAAP, (ii) any write-up in the book value
of any fixed asset resulting from a revaluation thereof and (iii) the amount,
if any, at which shares of capital stock of Borrower appear on the asset side
of Borrower's balance sheet.
"Total Assets": as to any Person which is a corporation, all
items considered as assets for purposes of GAAP.
"Total Liabilities": as to any Person which is a corporation,
all items considered as liabilities for purposes of GAAP.
6. [*]
3
<PAGE> 5
7. The representations and warranties contained under Sections
5.01, 5.02, 5.03, 5.06, 5.07, 5.08, 5.09, 5.10, 5.11, 5.12, and 5.14 of the
Credit Agreement are hereby re-affirmed by Borrower as of the date hereof. The
representations and warranties contained under Sections 5.04, 5.05, and 5.13
are hereby amended and restated in their entirety as follows:
"SECTION 5.04 -- Litigation. Except as disclosed in the
Recent SEC Filings, there are no pending or (to the best of Borrower's
knowledge after due inquiry) threatened actions or proceedings before any court
or administrative agency which may be expected to have a materially adverse
effect on Borrower's business or financial condition or which seek to question
or set aside any of the transactions herein contemplated.
SECTION 5.05 -- Financial Statements. The audited balance
sheet as of December 31, 1995, and the unaudited balance sheet as of June 30,
1996, for Borrower and its consolidated subsidiaries, and the related results
of operations for the year and quarter then ended have been prepared in
accordance with GAAP and correctly present Borrower's financial condition as of
such dates and the results of operations for such periods, and since June 30,
1996, there has been no materially adverse change in Borrower's business,
assets, operations or condition (financial or otherwise).
SECTION 5.13 -- [*]
8. Effective as of the date hereof, the following representations
and warranties are hereby added as new Sections 5.15, 5.16 and 5.17 each of
which representations and warranties is hereby made by Borrower as of the date
hereof:
"SECTION 5.15 -- Subject Reorganization. Upon the
consummation of the Subject Reorganization, Borrower shall be and remain in
compliance with all applicable provisions of this Agreement including without
limitation, those covenants contained in Section 6.09 hereof.
SECTION 5.16 -- Insurance. The insurance maintained by
Borrower with respect to the Aircraft shall continue in full force and effect
and and conform to the requirements of the Mortgage for so long as this
Agreement remains in effect.
SECTION 5.17 -- Continued Effectiveness. Except as
specifically modified by any amendments hereto or thereto which amendments are
duly executed in conformity with the provisions hereof and thereof, all of the
terms and provisions of this Agreement and each of the Basic Documents shall
continue in full force and effect and remain binding as against Borrower."
9. Section 6.01 of the Credit Agreement is hereby amended,
effective as of the consummation of the Subject Reorganization, by (i)
replacing the phrase "and Borrower's Form 10-Q" with the phrase "and the Form
10-Q for any parent holding company of Borrower" in the one place in the last
line of Section 6.01(a) where such former phrase appears and (ii) replacing the
phrase "and Borrower's Form 10-K" with the phrase "and the Form 10-K for any
parent
4
<PAGE> 6
holding company of Borrower" in the one place in the last line of Section
6.01(b) where such former phrase appears.
10. Section 6.04 of the Credit Agreement is hereby amended by (i)
adding the introductory phrase "Except for the implementation by Borrower of
the Subject Reorganization," at the beginning of such Section and (ii) deleting
the last sentence contained under such Section 6.04 in its entirety.
11. [*]
12. Section 6.09 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"SECTION 6.09 -- Financial Covenants. Borrower shall at all
times comply with the following covenants:
[*]
13. Section 11.04 of the Credit Agreement is hereby amended to
delete the phrase", the Guarantee," in the one place such phrase appears
therein.
14. The representations and warranties contained under Section
11.06 of the Credit Agreement are hereby re- affirmed by Lender as of the date
hereof.
15. The undersigned Lender hereby consents to and approves the
implementation and consummation of the Subject Reorganization by Borrower and
ASA Investments, Inc. ("ASAI") and hereby waives (i) Borrower's or ASAI's
compliance with any other provisions contained under the Credit Agreement or
any other Basic Document which are deemed, interpreted or construed to
prohibit, prevent or restrict Borrower's or ASAI's undertaking of the Subject
Reorganization or (ii) any default or breach of any provision of either the
Credit Agreement or any Basic Document resulting solely from the implementation
and consummation of the Subject Reorganization by Borrower or ASAI;
provided,that nothing contained under subclause (ii) hereof shall be deemed,
interpreted or construed to constitute a waiver by Lender of any default or
breach committed by Borrower under the Credit Agreement or any Basic Document
(as amended hereby) from and after the consummation of the Subject
Reorganization.
16. In accordance with the provisions of Section 11.02 of the
Credit Agreement, Borrower hereby notifies Lender of Borrower's designation of
the following address at which Borrower is to hereafter receive any and all
notices required to be provided Borrower under the Credit Agreement: Atlantic
Southeast Airlines, Inc., 100 Hartsfield Centre Parkway, Suite 800, Atlanta,
Georgia 30354-1356, Attn: Ronald V. Sapp, Vice President - Finance.
5
<PAGE> 7
17. Except as otherwise specifically provided under this First
Amendment, the terms and provisions of the Credit Agreement and each of the
Basic Documents shall remain and continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed by their duly authorized officers as of the date first
above written.
BANK OF AMERICA NATIONAL ATLANTIC SOUTHEAST AIRLINES, INC.
TRUST AND SAVINGS ASSOCIATION
By: /s/ Patrick Horan By: /s/ Ronald V. Sapp
-------------------------------- ----------------------------------
Title: Senior Vice President Title: Vice President-Finance
6
<PAGE> 1
EXHIBIT 10 (o)
<PAGE> 2
TERMINATION OF GUARANTEE
THIS TERMINATION OF GUARANTEE (the "Termination Agreement") is made
and entered into as of this 13th day of September, 1996, by and between ASA
INVESTMENTS, INC., a Delaware corporation ("Guarantor") and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION ("Lender").
W I T N E S E T H T H A T
WHEREAS, Guarantor has previously executed and delivered for the
benefit of Lender that certain Guarantee dated February 25, 1991 (the
"Guarantee") under which Guarantee the Guarantor has guaranteed certain
obligations owed by Atlantic Southeast Airlines, Inc. to the Lender as
described in the Guarantee (collectively the "Subject Obligations"); and
WHEREAS, notwithstanding that the Subject Obligations shall remain in
existence, pursuant and in accordance with Item 11 of the Guarantee, the Lender
and the Guarantor desire to terminate the Guarantee so as to relieve the
Guarantor from all further responsibility and liability under the Guarantee.
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, Ten ($10) Dollars in hand paid by Guarantor to the Lender,
and other good and valuable consideration, the receipt, adequacy and
sufficiency of which is hereby acknowledged, the parties hereto do hereby agree
as follows:
1. The parties hereby terminate the Guarantee and agree that the
Guarantee shall be of no further or continuing force or effect. Lender agrees
that the Guarantor is hereby relieved of all responsibilities, obligations, and
liabilities incurred under or in connection with the Guarantee and shall have
no responsibility whatsoever for all or any part of the Subject Obligations.
Lender does hereby for and on behalf of itself and its respective successors
and assigns, release, remise and forever discharge Guarantor and all of its
respective successors and assigns of and from any and all debts, claims, causes
of action, and other amounts arising under or in connection with the Guarantee
or the Subject Obligations.
2. This Termination Agreement shall be governed by the laws of
the State of Georgia. This Termination Agreement may be executed in one or
more counterparts all of which together shall constitute one in the same
original. This Termination Agreement shall be binding upon the parties hereto
and their respective heirs, successors, assigns, and legal representatives.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
<PAGE> 3
IN WITNESS WHEREOF, the Guarantor and the Lender have each
caused this Termination Agreement to be executed by its duly
authorized officers and its seal to be affixed hereto as of the day
and year first above written.
BANK OF AMERICA NATIONAL ASA INVESTMENTS, INC.
TRUST AND SAVINGS ASSOCIATION
By: /s/ Patrick Horan By: /s/Ronald V. Sapp
----------------------------- ------------------------
Its: Senior Vice President Its: Treasurer
2
<PAGE> 1
Confidential Treatment requested by Atlantic Southeast Airlines, Inc., File No.
0-11097
EXHIBIT 10 (p)
Confidential treatment has been applied for with
respect to certain provisions of this Exhibit, which
provisions have been omitted from this Exhibit,
marked with an asterisk (*) and filed separately with
the SEC
<PAGE> 2
FIRST AMENDMENT TO
CREDIT AGREEMENT
DATED APRIL 19, 1991
This First Amendment To Credit Agreement (this "First Amendment") is
made and entered into this 13th day of September, 1996, among ATLANTIC
SOUTHEAST AIRLINES, INC., a Georgia corporation ("Borrower"), and WACHOVIA BANK
OF GEORGIA, N.A., in both its capacities as Lender and Agent (in both such
capacities herein referred to as "Lender") with the express understanding that
ASA INVESTMENTS, INC., a Delaware Corporation ("ASAI") shall be a third party
beneficiary hereof.
W I T N E S S E T H:
WHEREAS, Borrower is indebted to Lender under the terms of that
certain Credit Agreement dated April 19, 1991 (as amended from time to time the
"Credit Agreement"); and
WHEREAS, ASAI has undertaken those obligations imposed upon it under
that certain Guarantee dated April 19, 1991 (the "Guarantee") issued by ASAI
for the benefit of Lender and securing Borrower's performance of Borrower's
obligations under the Credit Agreement; and
WHEREAS, the Borrower desires to obtain the approval and consent of
the Lender to implement a corporate reorganization and an amendment to the
Credit Agreement which will result in (i) the Borrower and ASAI each becoming a
wholly owned subsidiary of a holding company, the stock of which holding
company will be owned by the Borrower's current shareholders and will be
publicly traded, (ii) ASAI being relieved of its responsibility under the
Guarantee, (iii) Borrower being relieved of certain restrictions imposed under
the Credit Agreement, (iv) reducing the interest rate charged under the Credit
Agreement, and (v) Borrower undertaking its compliance with additional
covenants imposed under this First Amendment;
WHEREAS, pursuant to the provisions of Section 13.04 of the Credit
Agreement, the parties desire to amend the Credit Agreement as hereinafter
provided.
NOW, THEREFORE, for and in consideration of each party's agreement to
be bound hereby and other good, valuable and adequate consideration, the
parties hereto do hereby agree as follows:
1. All capitalized terms not otherwise specifically defined
herein shall have the meanings ascribed to them under the provisions of the
Credit Agreement.
2. From and after the date hereof, ASAI shall not be considered a
subsidiary of Borrower for purposes of the application or interpretation of any
provision of the Credit Agreement. In addition, Lender specifically
acknowledges and agrees that the Guarantee is hereby terminated and shall be of
no further force or effect it being the express agreement of all parties that
ASAI shall be relieved of all obligations and responsibilities to Lender and
that Lender
<PAGE> 3
shall not have and Lender does hereby waive and release any claim or cause of
action against ASAI under or in connection with the Credit Agreement, the
credit extended to Borrower thereunder, the Basic Documents, or the Guarantee.
In addition, the definition of "Guarantee" and Exhibit "J" and all references
to the "Guarantee" and Exhibit "J" contained in the Credit Agreement or the
Basic Documents are hereby deleted. All parties specifically agree that ASAI
shall be a third party beneficiary of this Agreement and more specifically the
provisions of this Paragraph 2.
3. All references to the "Borrower" or any "subsidiary" or
"subsidiaries" of the Borrower under the Credit Agreement and all
determinations required to be made with respect thereto shall refer to and
include solely and exclusively the Borrower and any subsidiaries hereinafter
acquired and maintained by Borrower; provided, that in no event shall the
Borrower's subsidiaries include (i) ASAI, (ii) any parent or holding company
owning all or substantially all of the capital stock of the Borrower, (iii) any
Person utilized in the implementation of the Subject Reorganization (as
hereinafter defined) which Person, upon consummation of the Subject
Reorganization (as herein defined), does not have substantial assets, or (iv)
any Person required to be included in any consolidated financial statement, tax
return or governmental filing covering the Borrower or under any other
statement prepared or determination made in conformity with GAAP which Person
does not otherwise constitute a subsidiary of the Borrower under the provisions
of the Credit Agreement.
4. The definition of "Borrower Interest Rate" contained under
Section 1.01 of the Credit Agreement is hereby amended effective from and after
the date hereof by substituting [*] for [*] appearing in the one place at the
beginning of subclause "(z)" thereof. In addition, the parties agree that in
the event Borrower shall lose the benefit of or no longer be entitled to receive
the Fine Interest Payments, then from and after the date of the occurrence of
such event, the Borrower Interest Rate shall be further reduced and the
definition of "Borrower Interest Rate" contained in Section 1.01 shall
thereafter be further amended by substituting [*] for [*] at the beginning of
subclause "(z)" thereof. [*]
5. [*]
6. [*]
7. The following definitions shall be added to Section 1.01 of
the Credit Agreement in the appropriate alphabetical order:
"1995 10-K": Borrower's annual report on Form 10-K for the
year ended December 31, 1995.
"1996 10-Qs": Borrower's quarterly reports on Form 10-Q for
the quarters ended March 31, 1996 and June 30, 1996.
"Recent SEC Filings": The 1995 10-K and 1996 10-Qs.
2
<PAGE> 4
"Subject Reorganization": the pending proposed transaction
under which (i) Borrower shall form a wholly owned subsidiary ("Holding
Company"), (ii) Holding Company shall form a wholly owned subsidiary ("Second
Level Subsidiary"), (iii) Second Level Subsidiary shall merge with and into
Borrower with Borrower surviving and (a) Borrower's shareholders receiving
stock in the Holding Company in exchange for the outstanding stock in Borrower,
(b) the Holding Company receiving all capital stock in Borrower, and (c) all
capital stock in the Holding Company owned by Borrower being canceled, and (iv)
Borrower's subsequent dividend distribution to the Holding Company of all
capital stock in ASA Investments, Inc.; all of which transactions shall result
in Borrower and ASA Investments, Inc. becoming wholly owned subsidiaries of
Holding Company.
8. [*]
9. The representations and warranties contained under Sections
5.01 through 5.16 of the Credit Agreement (as hereby amended) are hereby made
or re-affirmed (as applicable) by Borrower as of the date hereof. The
representations and warranties contained under Sections 5.04, 5.05, 5.07, and
5.13 are hereby amended and restated in their entirety as follows:
"SECTION 5.04 -- Litigation. Except as disclosed in the
Recent SEC Filings, there are no pending or (to the best of Borrower's
knowledge after due inquiry) threatened actions or proceedings before any court
or administrative agency which may be expected to have a Materially Adverse
Effect on Borrower's business or financial condition or which seek to question
or set aside any of the transactions herein contemplated.
SECTION 5.05 -- Financial Statements. The audited balance
sheet as of December 31, 1995, and the unaudited balance sheet as of June 30,
1996, for Borrower and its consolidated subsidiaries, and the related results
of operations for the year and quarter then ended have been prepared in
accordance with GAAP and correctly present Borrower's financial condition as of
such dates and the results of operations for such periods, and since June 30,
1996, there has been no Materially Adverse Change.
SECTION 5.07 -- Status as "United States Citizen". Borrower
is a "citizen of the United States" as that term is used in 49 U.S.C. Section
40102(a)(15), and is an air carrier holding a valid air carrier operating
certificate issued pursuant to 49 U.S.C. Chapter 447 for aircraft capable of
carrying 10 or more individuals.
SECTION 5.13 -- [*]
10. The following representation and warranty is hereby added as a
new Section 5.16:
"SECTION 5.16 -- Subject Reorganization. Upon the
consummation of the Subject Reorganization, Borrower shall be and remain in
compliance with all applicable provisions of this Agreement including without
limitation, those covenants contained in Section 6.09 hereof."
3
<PAGE> 5
11. Section 6.01 of the Credit Agreement is hereby amended,
effective upon the consummation of the Subject Reorganization, by (i) replacing
the phrase "and Borrower's Form 10-Q" with the phrase "and the Form 10-Q for
any parent holding company of Borrower" in the one place under Section 6.01(a)
where such former phrase appears and (ii) replacing the phrase "and Borrower's
Form 10-K" with the phrase "and the Form 10-K for any parent holding company of
Borrower" in the one place under Section 6.01(b) where such former phrase
appears.
12. [*]
13. [*]
14. Section 6.09 of the Credit Agreement is hereby amended as
follows:
[*]
15. In accordance with the provisions of Section 13.02 of the
Credit Agreement, Borrower hereby notifies Lender of Borrower's designation of
the following address at which Borrower is to hereafter receive any and all
notices required to be provided Borrower under the Credit Agreement: Atlantic
Southeast Airlines, Inc., 100 Hartsfield Centre Parkway, Suite 800, Atlanta,
Georgia 30354-1356, Attn: Ronald V. Sapp, Vice President - Finance.
16. Section 13.04 of the Credit Agreement is hereby amended to
delete the phrase ", the Guarantee," in the one place such phrase appears
therein.
17. The representations and warranties of Lender contained under
Sections 13.06 of the Credit Agreement are hereby re-affirmed as of the date
hereof.
18. Lender hereby consents to the implementation and consummation
of the Subject Reorganization by Borrower and ASAI and hereby waives (i)
Borrower's or ASAI's compliance with any other provisions contained under the
Credit Agreement or any other Basic Document which are deemed, interpreted or
construed to prohibit, prevent or restrict Borrower's or ASAI's undertaking of
the Subject Reorganization or (ii) any default or breach of any provision of
either the Credit Agreement or any Basic Document resulting solely from the
implementation and consummation of the Subject Reorganization by Borrower or
ASAI; provided, that nothing contained under subclause (ii) hereof shall be
deemed, interpreted or construed to constitute a waiver by Lender of any
default or breach committed by Borrower under the Credit Agreement or any Basic
Document (as amended hereby) from and after the consummation of the Subject
Reorganization.
4
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed by their duly authorized officers as of the date first
above written.
WACHOVIA BANK OF GEORGIA, N.A., ATLANTIC SOUTHEAST AIRLINES, INC.
as both Agent and Lender
By: /s/ Bradley Marcus By: /s/ Ronald V. Sapp
------------------------------- ----------------------------------
Title: Senior Vice President Title: Vice President-Finance
5
<PAGE> 1
EXHIBIT 10 (q)
<PAGE> 2
TERMINATION OF GUARANTEE
THIS TERMINATION OF GUARANTEE (the "Termination Agreement") is made
and entered into as of this 13th day of September, 1996, by and between ASA
INVESTMENTS, INC., a Delaware corporation ("Guarantor") and WACHOVIA BANK OF
GEORGIA, N.A. ("Lender").
W I T N E S E T H T H A T
WHEREAS, Guarantor has previously executed and delivered for the
benefit of Lender that certain Guarantee dated April 19, 1991 (the "Guarantee")
under which Guarantee the Guarantor has guaranteed certain obligations owed by
Atlantic Southeast Airlines, Inc. ("ASA") to the Lender as described in the
Guarantee (collectively the "Subject Obligations"); and
WHEREAS, notwithstanding that the Subject Obligations shall remain in
existence, pursuant and in accordance with Item 11 of the Guarantee, the Lender
and the Guarantor desire to terminate the Guarantee so as to relieve the
Guarantor from all further responsibility and liability under the Guarantee.
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, Ten ($10) Dollars in hand paid by Guarantor to the Lender,
and other good and valuable consideration, the receipt, adequacy and
sufficiency of which is hereby acknowledged, the parties hereto do hereby agree
as follows:
1. The parties hereby terminate the Guarantee and agree that the
Guarantee shall be of no further or continuing force or effect. Lender agrees
that the Guarantor is hereby relieved of all responsibilities, obligations, and
liabilities incurred under or in connection with the Guarantee and shall have
no responsibility whatsoever for all or any part of the Subject Obligations.
Lender does hereby for and on behalf of itself and its respective successors
and assigns, release, remise and forever discharge Guarantor and all of its
respective successors and assigns (other than ASA) of and from any and all
debts, claims, causes of action, and other amounts arising under or in
connection with the Guarantee or the Subject Obligations.
2. This Termination Agreement shall be governed by the laws of
the State of Georgia. This Termination Agreement may be executed in one or
more counterparts all of which together shall constitute one in the same
original. This Termination Agreement shall be binding upon the parties hereto
and their respective heirs, successors, assigns, and legal representatives.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
<PAGE> 3
IN WITNESS WHEREOF, the Guarantor and the Lender have each caused this
Termination Agreement to be executed by its duly authorized officers and its
seal to be affixed hereto as of the day and year first above written.
WACHOVIA BANK OF GEORGIA, N.A. ASA INVESTMENTS, INC.
By: /s/ Bradley Marcus By: /s/ Ronald V. Sapp
----------------------------- --------------------------
Its: Senior Vice President Its: Treasurer
2
<PAGE> 1
Confidential Treatment requested by Atlantic Southeast Airlines, Inc., File No.
0-11097
EXHIBIT 10 (r)
Confidential treatment has been applied for with
respect to certain provisions of this Exhibit, which
provisions have been omitted from this Exhibit,
marked with an asterisk (*) and filed separately with
the SEC
<PAGE> 2
FIRST AMENDMENT TO
CREDIT AGREEMENT
DATED JUNE 1, 1992
This First Amendment To Credit Agreement (this "First Amendment") is
made and entered into this 13th day of September, 1996, among ATLANTIC
SOUTHEAST AIRLINES, INC., a Georgia corporation ("Borrower"), WACHOVIA BANK OF
GEORGIA, N.A., in both its capacities as Lender and Agent (in both such
capacities herein referred to as "Wachovia"), and THE BANK OF TOKYO -
MITSUBISHI, LTD., ATLANTA AGENCY f/k/a The Bank of Tokyo, Ltd., Atlanta Agency
("Bank of Tokyo") (Wachovia, in both said capacities, and Bank of Tokyo are
sometimes hereinafter referred to individually as a "Lender" and collectively
as the "Lenders"), with the express understanding that ASA INVESTMENTS, INC., a
Delaware Corporation ("ASAI") shall be a third party beneficiary hereof.
W I T N E S S E T H:
WHEREAS, Borrower is indebted to Lenders under the terms of that
certain Credit Agreement dated June 1, 1992 (as amended from time to time the
"Credit Agreement"); and
WHEREAS, ASAI has undertaken those obligations imposed upon it under
that certain Guarantee dated June 1, 1992 (the "Guarantee") issued by ASAI for
the benefit of Lenders and securing Borrower's performance of Borrower's
obligations under the Credit Agreement; and
WHEREAS, the Borrower desires to obtain the approval and consent of
the Lenders to implement a corporate reorganization and an amendment to the
Credit Agreement which will result in (i) the Borrower and ASAI each becoming a
wholly owned subsidiary of a holding company, the stock of which holding
company will be owned by the Borrower's current shareholders and will be
publicly traded, (ii) ASAI being relieved of its responsibility under the
Guarantee, and (iii) Borrower being relieved of certain restrictions imposed
under the Credit Agreement;
WHEREAS, pursuant to the provisions of Section 13.04 of the Credit
Agreement, the parties desire to amend the Credit Agreement as hereinafter
provided.
NOW, THEREFORE, for and in consideration of each party's agreement to
be bound hereby and other good, valuable and adequate consideration, the
parties hereto do hereby agree as follows:
1. All capitalized terms not otherwise specifically defined
herein shall have the meanings ascribed to them under the provisions of the
Credit Agreement.
2. From and after the date hereof, ASAI shall not be considered a
subsidiary of Borrower for purposes of the application or interpretation of any
provision of the Credit Agreement. In addition, Lenders specifically
acknowledge and agree that the Guarantee is hereby
<PAGE> 3
terminated and shall be of no further force or effect it being the express
agreement of all parties that ASAI shall be relieved of all obligations and
responsibilities to Lenders and that neither Lender shall have and each Lender
does hereby waive and release any claim or cause of action against ASAI under
or in connection with the Credit Agreement, the credit extended to Borrower
thereunder, the Basic Documents, or the Guarantee. In addition, the definition
of "Guarantee" and Exhibit "J" and all references to the "Guarantee" and
Exhibit "J" contained in the Credit Agreement or the Basic Documents are hereby
deleted. All parties specifically agree that ASAI shall be a third party
beneficiary of this Agreement and more specifically the provisions of this
Paragraph 2.
3. All references to the "Borrower" or any "subsidiary" or
"subsidiaries" of the Borrower under the Credit Agreement and all
determinations required to be made with respect thereto shall refer to and
include solely and exclusively the Borrower and any subsidiaries hereinafter
acquired and maintained by Borrower; provided, that in no event shall the
Borrower's subsidiaries include (i) ASAI, (ii) any parent or holding company
owning all or substantially all of the capital stock of the Borrower, (iii) any
Person utilized in the implementation of the Subject Reorganization (as
hereinafter defined) which Person, upon consummation of the Subject
Reorganization (as hereinafter defined), does not have substantial assets, or
(iv) any Person required to be included in any consolidated financial
statement, tax return or governmental filing covering the Borrower or under
any other statement prepared or determination made in conformity with GAAP
which Person does not otherwise constitute a subsidiary of the Borrower under
the provisions of the Credit Agreement.
4. [*]
5. The following definitions shall be added to Section 1.01 of
the Credit Agreement in the appropriate alphabetical order:
"1995 10-K": Borrower's annual report on Form 10-K for the
year ended December 31, 1995.
"Subject Reorganization": the pending proposed transaction
under which (i) Borrower shall form a wholly owned subsidiary ("Holding
Company"), (ii) Holding Company shall form a wholly owned subsidiary ("Second
Level Subsidiary"), (iii) Second Level Subsidiary shall merge with and into
Borrower with Borrower surviving and (a) Borrower's shareholders receiving
stock in the Holding Company in exchange for the outstanding stock in Borrower,
(b) the Holding Company receiving all capital stock in Borrower, and (c) all
capital stock in the Holding Company owned by Borrower being canceled, and (iv)
Borrower's subsequent dividend distribution to the Holding Company of all
capital stock in ASA Investments, Inc.; all of which transactions shall result
in Borrower and ASA Investments, Inc. becoming wholly owned subsidiaries of
Holding Company.
6. [*]
2
<PAGE> 4
7. The representations and warranties contained under Sections
5.01 through 5.16 of the Credit Agreement (as hereby amended) are hereby made
or re-affirmed (as applicable) by Borrower as of the date hereof. The
representations and warranties contained under Sections 5.04, 5.05, 5.07, and
5.13 are hereby amended and restated in their entirety as follows:
"SECTION 5.04 -- Litigation. Except as disclosed in the 1995
10-K and Borrower's quarterly reports on Forms 10-Q for the calendar quarters
ending March 31, 1996 and June 30, 1996, respectively, there are no pending or
(to the best of Borrower's knowledge after due inquiry) threatened actions or
proceedings before any court or administrative agency which may be expected to
have a Materially Adverse Effect on Borrower's business or financial condition
or which seek to question or set aside any of the transactions herein
contemplated.
SECTION 5.05 -- Financial Statements. The audited balance
sheet as of December 31, 1995, and the unaudited balance sheet as of June 30,
1996, for Borrower and its consolidated subsidiaries, and the related results
of operations for the year and quarter then ended have been prepared in
accordance with GAAP and correctly present Borrower's financial condition as of
such dates and the results of operations for such periods, and since June 30,
1996, there has been no Materially Adverse Change.
SECTION 5.07 -- Status as "United States Citizen". Borrower
is a "citizen of the United States" as that term is used in 49 U.S.C. Section
40102(a)(15), and is an air carrier holding a valid air carrier operating
certificate issued pursuant to 49 U.S.C. Chapter 447 for aircraft capable of
carrying 10 or more individuals.
SECTION 5.13 -- [*]
8. The following representation and warranty is hereby added as a
new Section 5.16:
"SECTION 5.16 -- Subject Reorganization. Upon the
consummation of the Subject Reorganization, Borrower shall be and remain in
compliance with all applicable provisions of this Agreement including without
limitation, those covenants contained in Section 6.09 hereof."
9. [*]
10. [*]
11. [*]
12. In accordance with the provisions of Section 13.02 of the
Credit Agreement, Borrower hereby notifies Lenders of Borrower's designation of
the following address at which Borrower is to hereafter receive any and all
notices required to be provided Borrower under the Credit Agreement: Atlantic
Southeast Airlines, Inc., 100 Hartsfield Centre Parkway, Suite 800, Atlanta,
Georgia 30354-1356, Attn: Ronald V. Sapp, Vice President - Finance.
3
<PAGE> 5
13. Section 13.04 of the Credit Agreement is hereby amended to
delete the phrase ", the Guarantee," in the one place such phrase appears
therein.
14. The representations and warranties of each respective Lender
contained under Sections 13.06 and 13.07 of the Credit Agreement are hereby
re-affirmed as of the date hereof.
15. Each of the undersigned Lenders hereby consents to the
implementation and consummation of the Subject Reorganization by Borrower and
ASAI and hereby waives (i) Borrower's or ASAI's compliance with any other
provisions contained under the Credit Agreement or any other Basic Document
which are deemed, interpreted or construed to prohibit, prevent or restrict
Borrower's or ASAI's undertaking of the Subject Reorganization or (ii) any
default or breach of any provision of either the Credit Agreement or any Basic
Document resulting solely from the implementation and consummation of the
Subject Reorganization by Borrower or ASAI; provided,that nothing contained
under subclause (ii) hereof shall be deemed, interpreted or construed to
constitute a waiver by either Lender of any default or breach committed by
Borrower under the Credit Agreement or any Basic Document (as amended hereby)
from and after the consummation of the Subject Reorganization.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed by their duly authorized officers as of the date first
above written.
WACHOVIA BANK OF GEORGIA, N.A., ATLANTIC SOUTHEAST AIRLINES, INC.
as both Agent and Lender
By: /s/ Bradley Marcus By: /s/ Ronald V. Sapp
-------------------------------- ---------------------------------
Title: Senior Vice President Title: Vice President-Finance
THE BANK OF TOKYO - MITSUBISHI,
LTD., ATLANTA AGENCY
By: /s/ Gary L. England
--------------------------------
Title:Vice President and Manager
4
<PAGE> 1
EXHIBIT 10 (s)
<PAGE> 2
TERMINATION OF GUARANTEE
THIS TERMINATION OF GUARANTEE (the "Termination Agreement") is made
and entered into as of this ____ day of September, 1996, by and among ASA
INVESTMENTS, INC., a Delaware corporation ("Guarantor"), WACHOVIA BANK OF
GEORGIA, N.A. ("Wachovia"), and THE BANK OF TOKYO - MITSUBISHI, LTD., ATLANTA
AGENCY ("Bank of Tokyo") (Wachovia and Bank of Tokyo are hereinafter sometimes
referred to collectively as the Lenders" and individually as a "Lender").
W I T N E S E T H T H A T
WHEREAS, Guarantor has previously executed and delivered for the
benefit of Lenders that certain Guarantee dated June 1, 1992 (the "Guarantee")
under which Guarantee the Guarantor has guaranteed certain obligations owed by
Atlantic Southeast Airlines, Inc. ("ASA") to the Lenders as described in the
Guarantee (collectively the "Subject Obligations"); and
WHEREAS, notwithstanding that the Subject Obligations shall remain in
existence, pursuant and in accordance with Item 11 of the Guarantee, the
Lenders and the Guarantor desire to terminate the Guarantee so as to relieve
the Guarantor from all further responsibility and liability under the
Guarantee.
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, Ten ($10) Dollars in hand paid by Guarantor to each Lender,
and other good and valuable consideration, the receipt, adequacy and
sufficiency of which is hereby acknowledged, the parties hereto do hereby agree
as follows:
1. The parties hereby terminate the Guarantee and agree that the
Guarantee shall be of no further or continuing force or effect. The Lenders
agree that the Guarantor is hereby relieved of all responsibilities,
obligations, and liabilities incurred under or in connection with the Guarantee
and shall have no responsibility whatsoever for all or any part of the Subject
Obligations. Each Lender does hereby for and on behalf of itself and its
respective successors and assigns, release, remise and forever discharge
Guarantor and all of its respective successors and assigns (other than ASA) of
and from any and all debts, claims, causes of action, and other amounts arising
under or in connection with the Guarantee or the Subject Obligations.
2. This Termination Agreement shall be governed by the laws of
the State of Georgia. This Termination Agreement may be executed in one or
more counterparts all of which together shall constitute one in the same
original. This Termination Agreement shall be binding upon the parties hereto
and their respective heirs, successors, assigns, and legal representatives.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
<PAGE> 3
IN WITNESS WHEREOF, the Guarantor and each Lender have each caused
this Termination Agreement to be executed by its duly authorized officers and
its seal to be affixed hereto as of the day and year first above written.
WACHOVIA BANK OF GEORGIA, N.A. ASA INVESTMENTS, INC.
By: /s/ Bradley Marcus By: /s/ Ronald V. Sapp
---------------------------------- -------------------------
Its: Senior Vice President Its: Treasurer
THE BANK OF TOKYO - MITSUBISHI,
LTD., ATLANTA BRANCH
By: /s/ Gary L. England
---------------------------------
Its:Vice President and Manager
2
<PAGE> 1
Confidential Treatment requested by Atlantic Southeast Airlines, Inc., File No.
0-11097
EXHIBIT 10 (t)
Confidential treatment has been applied for with
respect to certain provisions of this Exhibit, which
provisions have been omitted from this Exhibit,
marked with an asterisk (*) and filed separately with
the SEC
<PAGE> 2
FIRST AMENDMENT TO
CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment") is
made and entered into this 11th day of September, 1996, by and between ATLANTIC
SOUTHEAST AIRLINES, INC., a Georgia corporation ("Borrower") and SUNTRUST BANK,
ATLANTA, f/k/a Trust Company Bank (the "Bank"), with the express understanding
that ASA INVESTMENTS, INC., a Delaware Corporation ("ASAI") shall be a third
party beneficiary hereof.
W I T N E S S E T H:
WHEREAS, Borrower is indebted to Bank under the terms of that certain
Credit Agreement dated as of April 20, 1994 (as heretofore amended, modified or
supplemented, the "Credit Agreement"); and
WHEREAS, ASAI has undertaken those obligations imposed upon it under
that certain Subsidiary Guaranty Agreement dated as of April 20, 1994 (the
"Guaranty") issued by ASAI for the benefit of the Bank and securing Borrower's
performance of Borrower's obligations under the Credit Agreement; and
WHEREAS, the Borrower desires (i) to obtain the approval and consent
of the Bank to implement a corporate reorganization which will result in the
Borrower and ASAI each becoming a wholly owned subsidiary of a holding company,
the stock of which holding company will be owned by the Borrower's current
shareholders and will be publicly traded, (ii) to obtain from the Bank a
release of the Guaranty, resulting in ASAI being relieved of its responsibility
under the Guaranty, (iii) to amend the Credit Agreement to relieve the Borrower
of certain restrictions imposed thereunder, and (iv) to further amend the
Credit Agreement to impose certain additional undertakings upon the Borrower,
all as more particularly set forth herein; and
WHEREAS, pursuant to the provisions of Section 9.12 of the Credit
Agreement and Section 9 of the Guaranty, the parties desire to amend the Credit
Agreement as hereinafter provided.
NOW, THEREFORE, for and in consideration of each party's agreement to
be bound hereby and other good, valuable and adequate consideration, the
parties hereto do hereby agree as follows:
1. Definitions. All capitalized terms not otherwise specifically defined
herein shall have the meanings ascribed to them under the provisions
of the Credit Agreement.
2. Release of ASAI. From and after the date of this First Amendment, the
Bank and the Borrower hereby agree that:
<PAGE> 3
(a) ASAI shall not be considered a Subsidiary or a
Restricted Subsidiary of Borrower for purposes of the application or
interpretation of any provision of the Credit Agreement.
(b) The Bank specifically acknowledges and agrees that
the Guaranty is hereby terminated and shall be of no further force or effect,
it being the express agreement of all parties that ASAI shall be relieved of
all obligations and responsibilities to the Bank under or pursuant to the Loan
Documents and that the Bank shall not have, and hereby waives and releases, any
claim or cause of action against ASAI under or in connection with the Credit
Agreement, the credit extended to Borrower thereunder, the Loan Documents, or
the Guaranty.
(c) In furtherance of the foregoing, the definitions of
"Guaranty" and "Guarantor" and all references to the "Guaranty" or "Guarantor"
contained in the Credit Agreement or the Loan Documents are hereby deleted.
(d) All parties specifically agree that ASAI shall be a
third party beneficiary of this First Amendment and more specifically the
provisions of this Section 2.
3. Restrictions on Inclusion of Subsidiaries and Restricted Subsidiaries.
All references to the any "Subsidiary" or "Restricted Subsidiary" of
the Borrower under the Credit Agreement and all determinations
required to be made with respect thereto or with respect to the
Borrower on a consolidated basis shall refer to and include solely and
exclusively the Borrower and any Subsidiary or Restricted Subsidiary
hereafter created, acquired or maintained; provided, that in no event
shall the following entities be deemed to be a "Subsidiary" or
"Restricted Subsidiary" of the Borrower: (i) ASAI, (ii) any parent or
holding company owning all or substantially all of the capital stock of
the Borrower, (iii) any Person utilized in the implementation of the
Subject Reorganization (as hereinafter defined) which does not,
following the consummation of the Subject Reorganization, have
substantial assets, or (iv) any Person required to be included in any
consolidated financial statement, tax return or governmental filing
covering the Borrower or under any other statement prepared or
determination made in conformity with generally accepted accounting
principles which such Person does not otherwise constitute a Subsidiary
or a Restricted Subsidiary of the Borrower under the respective
definitions and provisions of the Credit Agreement.
4. Interpretation of "Generally Accepted Accounting Principles". All
references to "generally accepted accounting principles" as they apply
to any determination concerning Borrower or any Subsidiary, Restricted
Subsidiary, Unrestricted Subsidiary or Affiliate of Borrower shall
refer to those generally accepted accounting principles as in effect
in the United States of America and applied on a basis consistent with
that used in the preparation of the financial statements referred to
in Section 6.01 except for (i) changes therein with which Borrower's
independent public accountants concur that are disclosed in the notes
to
2
<PAGE> 4
the relevant financial statements, and (ii) any requirements for
consolidation inconsistent with the provisions of Section 3 of this
First Amendment.
5. Amendments to Section 1.01 of the Credit Agreement (Definitions).
Section 1.01 of the Credit Agreement is hereby amended as follows:
(a) [*]
(b) The definition of "Debt" is hereby amended by
deleting said definition in its entirety. All other references to "Debt"
contained in the Credit Agreement and the other Loan Documents shall be deemed
to refer to "Indebtedness" except as otherwise provided herein.
(c) [*]
(d) [*]
(e) The definitions of "Book Net Worth", [*] "Restricted
Subsidiary", and [*] are hereby amended and restated in their entirety as
follows:
""Book Net Worth" shall mean the book value, as determined in
accordance with generally accepted accounting principles, of the Total
Assets of Borrower and its Restricted Subsidiaries (exclusive of any
indebtedness owed to the Borrower or its Restricted Subsidiaries by
any Affiliate of Borrower) which Total Assets are located within the
United States of America minus the book value, as determined in
accordance with generally accepted accounting principles, of the Total
Liabilities of Borrower and its Restricted Subsidiaries.
[*]
"Restricted Subsidiary" shall mean any Subsidiary which is not
an Unrestricted Subsidiary.
[*]
(f) The following definitions are hereby added to Section
1.01 in the appropriate alphabetical order:
"Holding Company" shall mean the corporation, whose shares are
publicly traded, owning the stock of the Borrower and ASA Investments,
Inc. following the consummation of the Subject Reorganization.
"Subject Reorganization" shall mean the pending proposed
transaction under which (i) Borrower shall form the Holding Company as
a wholly owned subsidiary of Borrower, (ii) Holding Company shall
form a wholly owned subsidiary ("Second Level
3
<PAGE> 5
Subsidiary"), (iii) Second Level Subsidiary shall merge with and into
Borrower with Borrower surviving and (a) Borrower's shareholders
receiving stock in the Holding Company in exchange for the outstanding
stock in Borrower, (b) the Holding Company receiving all capital stock
in Borrower, and (c) all capital stock in the Holding Company owned by
Borrower being canceled, and (iv) Borrower's subsequent dividend
distribution to the Holding Company of all capital stock in ASA
Investments, Inc.; all of which transactions shall result in Borrower
and ASA Investments, Inc. becoming wholly owned subsidiaries of
Holding Company.
6. Amendments to Article V of the Credit Agreement (Representations and
Warranties). The representations and warranties contained under
Article V of the Credit Agreement are hereby amended in the following
respects: (i) Section 5.02 is amended by deleting the phrase "or the
Guarantor" in the three places it appears therein and deleting the
phrase "the Guaranty" in the one place it appears therein; (ii)
Section 5.03 is hereby amended by deleting the phrase "and the
Guarantor" in the two places it appears therein and deleting the
phrase "the Guaranty" in the two places it appears therein; (iii)
Section 5.04 is amended by adding the phrase "or as set forth under
Borrower's annual report on Form 10-K for the year ended December 31,
1995 or Borrower's quarterly reports on Forms 10-Q for the calendar
quarters ending March 31, 1996 and June 30, 1996" to the end of the
last sentence contained therein immediately prior to the punctuation
ending such sentence; (iv) Section 5.05 is amended by replacing the
phrase "December 31, 1993" with the phrase "December 31, 1995" in the
two places such former phrase appears therein; (v) Section 5.06 is
amended by replacing the phrase "December 31, 1993" with the phrase
"December 31, 1995" in the one place such former phrase appears
therein; (vi) Section 5.14 is amended by replacing the phrase
"December 31, 1993" with the phrase "December 31, 1995" in the one
place such former phrase appears therein; and (vii) Section 5.08 is
hereby amended in its entirety to read as follows:
"SECTION 5.08. [*]
In addition, the following representation and warranty is
hereby added as a new Section 5.18:
"SECTION 5.18-- Subject Reorganization. Upon the consummation
of the Subject Reorganization, Borrower shall be and remain in
compliance with all applicable provisions of this Agreement including
without limitation, those covenants contained in Sections 6.02, 6.03,
6.04, and 6.05 hereof."
7. Amendments to Article VI of the Credit Agreement (Affirmative
Covenants). Article VI of the Credit Agreement is hereby amended as
follows:
(a) Section 6.01 (iv) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
4
<PAGE> 6
"(iv) As soon as practicable, (x) copies of all Forms 10-Q
and 10-K filed by Borrower or the Holding Company with the Securities
and Exchange Commission or any national securities exchange and (y)
copies of all other publicly disclosed financial statements or reports
of such entities."
(b) Section 6.04 of the Credit Agreement is hereby
amended by replacing the reference to [*] with [*] in the one place such amount
appears therein.
8. Amendments to Article VII of the Credit Agreement (Negative
Covenants). Article VII of the Credit Agreement is hereby amended as
follows:
(a) Section 7.01 of the Credit Agreement is hereby amended
and restated in its entirety as follows:
[*]
(b) [*]
9. Amendment to Article VIII of the Credit Agreement (Events of
Default). Article VIII of the Credit Agreement is hereby
amended as follows:
(a) Section 8.01 is hereby amended to (i) delete the
phrase "or the Guarantor" under subsection 8.01(b) in the one place such phrase
appears therein, (ii) delete the phrase "or Guarantor" under subsection 8.01(i)
in the one place such phrase appears therein and (iii) to delete clause 8.01(j)
in its entirety.
10. Amendment to Section 9.13 of the Credit Agreement. [*]
11. Consent to Subject Reorganization. The undersigned Bank hereby
consents to and approves the implementation and consummation of the
Subject Reorganization by Borrower and ASA Investments, Inc. ("ASAI")
and hereby waives (i) Borrower's or ASAI's compliance with any other
provisions contained under the Credit Agreement or any other Loan
Document which are deemed, interpreted or construed to prohibit,
prevent or restrict Borrower's or ASAI's undertaking of the Subject
Reorganization or (ii) any default or breach of any provision of
either the Credit Agreement or any Loan Document resulting from the
implementation and consummation of the Subject Reorganization by
Borrower or ASAI.
12. No Waiver, Etc. Borrower hereby agrees that except as expressly set
forth herein, nothing herein shall constitute a waiver by the Bank of
any Default or Event of Default, whether known or unknown, which may
exist under the Credit Agreement. Borrower hereby further agrees that
no action, inaction or agreement by the Bank, including without
limitation, any indulgence, waiver, consent or agreement altering the
provisions of the Credit Agreement which may have occurred with
respect to the non-payment of
5
<PAGE> 7
any obligation during the terms of the Credit Agreement or any portion
thereof, or any other matter relating to the Credit Agreement, shall
require or imply any future indulgence, waiver, or agreement by the
Bank.
13. Affirmation of Covenants and Representations and Warranties. Borrower
hereby affirms and restates as of the date hereof all covenants set
forth in the Credit Agreement, as amended hereby. All representations
and warranties contained in Sections 5.01 through and including 5.18
of the Credit Agreement, as amended by this First Amendment, and to
the extent applicable solely to the Borrower and its Subsidiaries (as
determined as provided under this First Amendment) are hereby affirmed
and restated as of the date hereof.
14. Ratification of Credit Agreement. Except as expressly amended herein,
all terms, covenants and conditions of the Credit Agreement and the
other Loan Documents shall remain in full force and effect, and the
parties hereto do expressly ratify and confirm the Credit Agreement as
amended herein. All future references to the Credit Agreement shall
be deemed to refer to the Credit Agreement as amended hereby.
15. Binding Nature. This First Amendment shall be binding upon and inure
to the benefit of the parties hereto, their respective heirs,
successors, successors-in-titles, and assigns.
16. Costs and Expenses. Borrower agrees to pay on demand all reasonable
costs and expenses of the Bank in connection with the preparation,
execution and delivery of this First Amendment, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Bank with respect thereto and with respect to advising the
Bank as to its rights and responsibilities hereunder and thereunder. .
17. Governing Law. This First Amendment shall be governed by, and
construed in accordance with, the laws of the State of Georgia.
18. Counterparts. This First Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts
and may be delivered by telecopier. Each counterpart so executed and
delivered shall be deemed an original and all of which taken together
shall constitute but one and the same instrument.
6
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed by their duly authorized officers as of the date first
above written.
SUNTRUST BANK, ATLANTA ATLANTIC SOUTHEAST AIRLINES, INC.
By: /s/ R. Michael Dunlap By: /s/ Ronald V. Sapp
Title: Vice President Title: Vice President- Finance
------------------------------ -----------------------------------
By: /s/ Kevin S. MacDonald
------------------------------
Title: Assistant Vice President
7
<PAGE> 1
EXHIBIT 10 (u)
<PAGE> 2
TERMINATION OF
SUBSIDIARY GUARANTY AGREEMENT
THIS TERMINATION OF SUBSIDIARY GUARANTY AGREEMENT (the "Termination
Agreement") is made and entered into as of this 11th day of September, 1996, by
and between ASA INVESTMENTS, INC., a Delaware corporation ("Guarantor") and
SUNTRUST BANK, ATLANTA, f/k/a Trust Company Bank (the "Bank").
W I T N E S E T H T H A T
WHEREAS, Guarantor has previously executed and delivered to the Bank
that certain Subsidiary Guaranty Agreement dated April 20, 1994 (the
"Guaranty") under which Guaranty the Guarantor has guaranteed certain
obligations owed by Atlantic Southeast Airlines, Inc. to the Bank as described
in the Guaranty (collectively the "Subject Obligations"); and
WHEREAS, notwithstanding that the Subject Obligations shall remain in
existence, pursuant and in accordance with Item 9 of the Guaranty, the Bank and
the Guarantor desire to terminate the Guarantee so as to relieve the Guarantor
from all further responsibility and liability under the Guaranty.
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, Ten ($10) Dollars in hand paid by Guarantor to the Bank, and
other good and valuable consideration, the receipt, adequacy and sufficiency
of which is hereby acknowledged, the parties hereto do hereby agree as follows:
1. The parties hereby terminate the Guaranty and agree that the
Guaranty shall be of no further or continuing force or effect. The Bank agrees
that the Guarantor is hereby relieved of all responsibilities, obligations, and
liabilities incurred under or in connection with the Guaranty and shall have no
responsibility whatsoever for all or any part of the Subject Obligations. The
Bank does hereby for and on behalf of itself and its respective successors and
assigns, release, remise and forever discharge Guarantor and all of its
respective successors and assigns of and from any and all debts, claims, causes
of action, and other amounts arising under or in connection with the Guaranty
or the Subject Obligations.
2. This Termination Agreement shall be governed by the laws of
the State of Georgia. This Termination Agreement may be executed in one or
more counterparts all of which together shall constitute one and the same
original. This Termination Agreement shall be binding upon the parties hereto
and their respective heirs, successors, assigns, and legal representatives.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
<PAGE> 3
IN WITNESS WHEREOF, the Guarantor and the Bank have each caused this
Termination Agreement to be executed by its duly authorized officers and its
seal to be affixed hereto as of the day and year first above written.
SUNTRUST BANK, ATLANTA ASA INVESTMENTS, INC.
f/k/a Trust Company Bank
By: /s/ R. Michael Dunlap By: /s/ Ronald V. Sapp
--------------------------- ----------------------
Its: Vice President Its: Treasurer
By: /s/ Jenna M. Hale
---------------------------
Its: Banking Officer
2
<PAGE> 1
EXHIBIT 11- STATEMENT RE: COMPUTATION OF
PER SHARE EARNINGS
<TABLE>
<CAPTION>
For The Three Months Ended For The Nine Months Ended
September 30, September 30,
-------------------------- -------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Income $16,548,708 $15,130,361 $46,276,085 $39,657,072
Net Income per Share $ 0.53 $ 0.46 $ 1.48 $ 1.20
Weighted Number of Shares Outstanding 30,974,994 33,107,380 31,262,294 33,100,867
</TABLE>
See condensed notes to consolidated financial statements.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 75,977
<SECURITIES> 126,750
<RECEIVABLES> 10,840
<ALLOWANCES> (212)
<INVENTORY> 8,527
<CURRENT-ASSETS> 224,514
<PP&E> 470,606
<DEPRECIATION> 196,654
<TOTAL-ASSETS> 507,855
<CURRENT-LIABILITIES> 67,705
<BONDS> 101,412
3,069<F1>
0
<COMMON> 0
<OTHER-SE> 264,245<F2>
<TOTAL-LIABILITY-AND-EQUITY> 507,855
<SALES> 0
<TOTAL-REVENUES> 288,313
<CGS> 0
<TOTAL-COSTS> 216,965
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (55)
<INTEREST-EXPENSE> 4,491
<INCOME-PRETAX> 75,002
<INCOME-TAX> 28,726
<INCOME-CONTINUING> 46,276
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46,276
<EPS-PRIMARY> 1.48
<EPS-DILUTED> 1.48
<FN>
<F1>REDUCED BY APPROXIMATELY $369,810 ALLOCABLE TO 3,698,100 SHARES OF TREASURY
STOCK.
<F2>REDUCED BY APPROXIMATELY $77,951,000 ALLOCABLE TO 3,698,100 SHARES OF TREASURY
STOCK.
</FN>
</TABLE>
