<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 of 15(d) of the Securities
Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[ ] Transition Report Pursuant to Section 13 of 15(d) of the Securities
Exchange Act of 1934 For the transition period from ____________ to
______________
Commission File No: 0-26432
AIRWAYS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 59-3315474
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
6280 HAZELTINE NATIONAL DRIVE
ORLANDO, FLORIDA 32822
(407) 859-1579
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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
----- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of November 1, 1997
----- ----------------------------------
Common stock
Par value $.01 per share 9,097,237
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AIRWAYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
1997
-------------------------
ASSETS SEPTEMBER 30, MARCH 31,
------ ------------- ---------
(UNAUDITED) (AUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 5,170 $ 2,354
Restricted cash 10,048 12,670
Accounts receivable, net 4,510 4,212
Inventory, expendable parts and supplies 923 1,034
Prepaid expenses 3,598 4,020
Deferred income taxes 4,449 8,376
-------- --------
TOTAL CURRENT ASSETS 28,698 32,666
-------- --------
PROPERTY AND EQUIPMENT:
Flight equipment 38,150 34,485
Other property and equipment 10,305 9,405
Less: Accumulated depreciation (9,589) (6,192)
-------- --------
38,866 37,698
-------- --------
OTHER ASSETS:
Deferred income taxes, net 4,166 --
Goodwill, net 1,677 1,749
Lease and equipment deposits 1,845 1,244
Other assets, net 518 591
-------- --------
TOTAL ASSETS $ 75,770 $ 73,948
======== ========
</TABLE>
See accompanying notes to consolidated financial statements. (Continued)
1
<PAGE> 3
AIRWAYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
1997
------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY SEPTEMBER 30, MARCH 31,
------------------------------------ ------------- ---------
(UNAUDITED) (AUDITED)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts Payable $ 4,932 $ 3,877
Air traffic liability 15,942 16,198
Accrued liabilities 14,968 15,053
Short term notes payable 12,700 --
Current portion of long-term debt 2,489 3,157
Current portion of maintenance reserves 284 1,525
-------- --------
TOTAL CURRENT LIABILITIES 51,315 39,810
Long-term debt, less current portion 6,891 10,539
Maintenance Reserves 2,620 3,186
Deferred income taxes 2,794 2,772
-------- --------
TOTAL LIABILITIES 63,620 56,307
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value per share, 1,000,000 shares
authorized, no shares issued or outstanding -- --
Common stock, $.01 par value per share, 19,000,000 shares
authorized, 9,094,937 and 9,067,937 shares issued and
outstanding at September 30 and March 31, 1997, respectively 91 91
Additional paid-in capital 26,696 26,618
Accumulated deficit (14,637) (9,068)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 12,150 17,641
-------- --------
Commitments and contingencies -- --
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 75,770 $ 73,948
======== ========
</TABLE>
2
<PAGE> 4
AIRWAYS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share information)
<TABLE>
<CAPTION>
FOR THE QUARTERS FOR THE SIX MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Passenger $ 22,854 $ 22,289 $ 48,404 $ 50,846
Charter 68 66 630 89
General aviation and other 700 631 1,640 1,063
-------- -------- -------- --------
TOTAL OPERATING REVENUES 23,622 22,986 50,674 51,998
-------- -------- -------- --------
OPERATING EXPENSES:
Flight operations 10,536 11,741 21,017 23,522
Maintenance 6,417 7,389 11,863 13,881
Aircraft and traffic servicing 3,689 4,247 7,598 8,257
Reservations, sales and marketing 4,143 4,167 8,494 9,356
General and administrative 1,637 1,720 3,039 2,639
Depreciation and amortization 2,101 1,088 3,738 2,191
-------- -------- -------- --------
TOTAL OPERATING EXPENSES 28,523 30,352 55,749 59,846
-------- -------- -------- --------
OPERATING LOSS (4,901) (7,366) (5,075) (7,848)
Interest income and other 191 264 375 621
Interest expense (687) (393) (1,087) (782)
-------- -------- -------- --------
LOSS BEFORE INCOME TAXES (5,397) (7,495) (5,787) (8,009)
Income tax benefit -- (3,373) (218) (3,604)
-------- -------- -------- --------
NET LOSS $ (5,397) $ (4,122) $ (5,569) $ (4,405)
======== ======== ======== ========
NET LOSS PER SHARE $ (0.59) $ (0.46) $ (0.61) $ (0.49)
======== ======== ======== ========
Weighted average shares outstanding 9,073 9,004 9,071 8,989
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
AIRWAYS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED SEPTEMBER 30,
-------------------
1997 1996
------- -------
<S> <C> <C>
Operating activities:
NET LOSS $(5,569) $(4,405)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
USED FOR OPERATING ACTIVITIES:
Depreciation and amortization 3,738 2,190
Maintenance Reserves 329 1,167
Deferred income taxes (218) (3,546)
CHANGES IN CURRENT OPERATING ITEMS:
Restricted cash 2,622 3,589
Accounts receivable, net (298) 1,609
Inventory, expendable parts and supplies 111 417
Prepaid expenses and deposits 421 (514)
Accounts payable and accrued liabilities (1,075) 3,497
Air traffic liability (256) (4,115)
Income tax payable -- (533)
------- -------
NET CASH FLOWS USED FOR OPERATING ACTIVITIES (195) (644)
INVESTING ACTIVITIES:
Purchases of property and equipment (4,760) (2,905)
Decrease in other assets (601) 106
------- -------
NET CASH FLOWS USED FOR INVESTING ACTIVITIES (5,361) (2,799)
</TABLE>
See accompanying notes to consolidated financial statements. (Continued)
4
<PAGE> 6
AIRWAYS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED SEPTEMBER 30,
-------------------------
1997 1996
-------- --------
<S> <C> <C>
FINANCING ACTIVITIES:
Proceeds from long-term debt and short term notes 14,300 --
Repayments of long-term debt (6,007) (1,748)
Proceeds from issuance of common stock 79 153
-------- --------
NET CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES 8,372 (1,595)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,816 (5,038)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,354 16,437
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,170 $ 11,399
======== ========
Supplemental disclosures of cash flow activities:
Cash paid for interest $ 855 $ 752
======== ========
Cash paid for income taxes $ -- $ 475
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 7
AIRWAYS CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
The financial statements included herein have been prepared by Airways
Corporation (the Company), without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. The information furnished in the
financial statements includes normal recurring adjustments and reflects all
adjustments which are, in the opinion of management, necessary for a fair
presentation of such financial statements. The Company's business is seasonal
and, accordingly, interim results are not indicative of results for a full
year. 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 such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
financial statements be read in conjunction with the financial statements for
the year ended March 31, 1997, and the notes thereto, included in the Company's
Form 10-K and the Company's Form 10-K/A (File No. 0-26432) filed with the
Securities and Exchange Commission.
(1) SPIN-OFF TRANSACTION
In March 1995, AirTran Corporation ("AirTran"), parent of the Company,
Mesaba Aviation, Inc. and Northwest Airlines, Inc. ("Northwest") entered
into an agreement to spin-off AirTran's Orlando-based jet carrier and
fixed-base operations ("FBO") in Grand Rapids, Minnesota. On April 7,
1995, AirTran established the Company as a wholly owned subsidiary to
consolidate the above operations in order to facilitate the spin-off.
The spin-off, in the form of a one-for-one dividend of all of the
outstanding shares of the Company to the shareholders of AirTran (other
than Northwest), was approved by AirTran's shareholders on August 29,
1995. The distribution was made on September 7, 1995 to shareholders of
record (other than Northwest) on August 31, 1995.
AirTran Airways, Inc., which operates the Orlando-based jet carrier, was
previously a subsidiary of AirTran. The FBO had historically been a
division of AirTran. The following financial statements present the
results of the combined entities whereby significant intercompany
accounts and transactions are eliminated.
(2) NET LOSS PER SHARE
Net loss per share information for the periods ended September 30, 1997
and 1996 were based on 9,072,741 and 9,003,611 shares outstanding,
respectively, calculated using the treasury stock method, fully-diluted
basis. Pursuant to the rules promulgated by the Financial Accounting
Standards Board, no common stock equivalents were included in the
computation of loss per share amounts in either period in order to
ensure that the reported loss per share would not be inadvertently
minimized through their inclusion.
6
<PAGE> 8
AIRWAYS CORPORATION
NOTES TO FINANCIAL STATEMENTS
(3) AIRCRAFT
The Company's fleet, at September 30, 1997, consisted of seven leased
and four owned Boeing 737 with average capacities of 126 passengers. The
Company's eleventh aircraft, leased from a major aircraft lessor, was
delivered to the Company on August 8, 1997.
(4) ROUTE MATTERS
During the three months ended September 30, 1997, the Company added
service from Orlando to MacArthur Airport in Islip on Long Island making
the sixth airport in New York State that the Company serves. The Company
also started service from Boston's Logan Airport to Allentown and Islip.
(5) LETTERS OF CREDIT
The Company's bank has issued nine letters of credit totaling $826,000.
In the event advances under the facility are drawn, the borrowings would
bear interest at the bank's prime rate plus 1-1/4%. One of the holders
drew on one letter of credit for $36,000 during the period. Apart from
the one letter which was drawn, the balance of which was immediately
paid to the bank, no other advances were outstanding during the quarters
ended September 30, 1997 or March 31, 1997.
(6) LITIGATION
The Company is a party to ongoing legal proceedings arising in the
ordinary course of business. In the opinion of management, the
resolution of these matters will not have a material adverse effect on
the Company's financial position, results of operations, or its cash
flows.
(7) RECLASSIFICATION
Certain amounts in the September 30, 1996 consolidated financial
statements have been reclassified to conform with the presentation in
this period.
(8) INCOME TAX ACCOUNTING
During the second quarter of fiscal 1998, the Company determined that
the tax benefit recovery period was uncertain and no income tax benefit
was recorded.
7
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
At September 30, 1997, the Company provided non-stop and direct scheduled
passenger air service between Orlando and 22 cities and between Boston and two
cities, all of which are principally in the eastern half of the United States.
The following table shows the expansion of the Company's route system. All
flights are to and from Orlando unless otherwise noted.
<TABLE>
<CAPTION>
AS OF TOTAL NUMBER DEPARTURES
MONTH END OF AIRCRAFT PER MONTH SCHEDULED CITIES ADDED
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
FISCAL YEAR 1997:
April 10 1,209 -
May 10 1,135 -
June 10 1,106 Greensboro
July 10 1,315 -
August 10 1,280 -
September 10 963 -
October 10 1,045 Chattanooga [*]
November 10 1,020 Toledo
December 10 1,034 Bloomington/Normal
January 10 1,060 -
February 10 1,075 Harrisburg[*], Charleston[*] and
Columbia[*]
March 10 1,437 DesMoines and Moline
FISCAL YEAR 1998:
April 10 1,357 -
May 10 1,290 -
June 10 1,284 -
July 10 1,284 -
August 11 1,197 -
September 11 1,365 New Boston service to Long Island and
Allentown
</TABLE>
[*] Service was discontinued.
In addition to the above service, the Company initiated service between
selected markets to facilitate a reduction in capacity.
8
<PAGE> 10
Airways generated operating losses of $4,901,000 and $7,367,000 for the
quarters ended September 30, 1997 and 1996 respectively, a decrease in
operating loss of $2,466,000. Pre-tax loss, as a percentage of total revenues,
was 22.8% and 32.6% for the two quarters, respectively.
Airways generated operating losses of $5,075,000 and $7,848,000 for the six
months ended September 30, 1997 and 1996 respectively, a decrease in operating
loss of $2,773,000. Pre-tax loss, as a percentage of total revenues, was 11.4%
and 15.4% for the two six month periods, respectively.
SELECTED OPERATING DATA
The table below sets forth selected operating data for the quarters ended
September 30, 1997 and 1996.
<TABLE>
<CAPTION>
QUARTERS ENDED
-------------------------------------------------------------
SEPTEMBER 30, SEPTEMBER 30, PERCENTAGE
1997 1996 CHANGE
-------------------- -------------------- ----------------
<S> <C> <C> <C>
Available seat miles (1) 345,341,000 380,846,000 -9.3%
Revenue passenger miles (2) 234,880,000 232,609,000 1.0%
Load factor (3) 68.0% 61.1% 6.9
Yield per revenue passenger mile (4) $0.097 $0.096 1.5%
Passenger enplanements 272,125 270,149 .7%
Departures 3,846 3,558 8.1%
Miles 2,725,821 3,029,864 -10.0%
Block Hours (5) 7,627 8,073 -5.5%
Average stage length (miles) (6) 709 852 -16.8%
Average daily aircraft utilization (hours) 8.0 8.8 -8.6%
Aircraft (end of period) 11 10 10.0%
Full-time equivalent employees (end of period) 587 516 13.8%
</TABLE>
The table below sets forth the same data for the six months ended September 30,
1997 and 1996.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------------------------------------------------
SEPTEMBER 30, SEPTEMBER 30, PERCENTAGE
1997 1996 CHANGE
-------------------- -------------------- ----------------
<S> <C> <C> <C>
Available seat miles (1) 705,534,000 753,048,000 -6.3%
Revenue passenger miles (2) 480,029,000 497,099,000 -3.4%
Load factor (3) 68.0% 66.0% 2.0
Yield per revenue passenger mile (4) $0.101 $0.102 -1.4%
Passenger enplanements 559,841 573,257 -2.3%
Departures 7,777 6,864 13.3%
Miles 5,584,495 5,981,377 -6.6%
Block Hours (5) 15,456 15,965 -3.2%
Average stage length (miles) (6) 718 871 -17.6%
Average daily aircraft utilization (hours) 7.5 8.7 -13.9%
Aircraft (end of period) 11 10 10.0%
Full-time equivalent employees (end of period) 587 516 13.8%
</TABLE>
9
<PAGE> 11
(1) The number of seats available for passengers multiplied by the number of
scheduled miles those seats are flown.
(2) The number of scheduled miles flown by revenue passengers.
(3) Revenue passenger miles divided by available seat miles. Year over year
percent change is measured only as percentage points difference.
(4) Passenger revenue divided by revenue passenger miles.
(5) The number of hours aircraft were flown as measured from the time of
pushback from the gate to the time of arrival at the next airport's gate.
(6) The average length of the routes flown on AirTran's scheduled route
system.
The table below sets forth the major components of operating revenue and
expenses per ASM for the Company.
<TABLE>
<CAPTION>
FOR THE QUARTER FOR THE SIX MONTHS
ENDED SEPTEMBER ENDED SEPTEMBER
----------------------------------- ----------------------------------
1997 1996 1997 1996
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Operating Revenue:
Passenger $ .066 $ .058 $ .069 $ .068
Charter .000 .000 .001 .000
Other .002 .002 .002 .001
------- ------- -------- -------
Total operating revenue .068 .060 .072 .069
------- ------- -------- -------
Operating expenses:
Flight operations .031 .031 .030 .031
Maintenance .019 .019 .017 .018
Aircraft and traffic servicing .011 .011 .011 .011
Reservations, sales, and marketing .012 .011 .012 .012
General and administrative .005 .005 .004 .004
Depreciation and amortization .006 .003 .005 .003
------- -------- -------- -------
Total operating expense .083 .080 .079 .079
======= ======== ======== =======
Operating loss $ (.014) $ (.019) $ (.007) $ (.010)
======= ======== ======== =======
======= ======== ======== =======
======= ======== ======== =======
</TABLE>
RESULTS OF OPERATIONS FOR THE QUARTERLY AND SIX MONTH PERIODS ENDED SEPTEMBER
30, 1997 AND 1996
OPERATING REVENUES
Total passenger revenues were $22,854,000 and $22,289,000 for the quarters
ended September 30, 1997 and 1996, respectively, an increase of 565,000 or
2.5%. The increase is due to a combination of 1% growth in revenue passenger
miles flown and 1% in the yield on each revenue passenger mile earned.
Total passenger revenues were $48,404,000 and $50,846,000 for the six months
ended September 30, 1997 and 1996, respectively, a decrease of $2,442,000 or
4.8%. The decrease is due to the fact that the Easter Holidays fell in the
fourth quarter of the fiscal year 1996 when it normally falls in April or the
first quarter of each fiscal year.
ASMs were 345,341,000 and 380,846,000 for the quarters ended September 30, 1997
and 1996, respectively, a decrease of 35,505,000 or 9.3%. This was principally
the result of the Company's rescheduling of the aircraft to make one available
at all times to serve as a spare to maintain the Company's completion factors
and reliability performance. Revenue Passenger Miles ("RPM"s)
10
<PAGE> 12
were 234,880,000 and 232,609,000 for the quarters ended September 30, 1997 and
1996, respectively, an increase of 2,271,000 or 1.0%. This was caused by
sharply higher load factors offset by the reduced capacity. Load factors were
68.0% and 61.1% for the quarters ended September 30, 1997 and 1996,
respectively, a increase of 6.9 percentage points.
AirTran also had charter revenue which is derived from making its airplanes
available to charter operators when they would otherwise not be efficiently
used. Charter revenues were $68,000 and $66,000 for the quarters ended
September 30, 1997 and 1996, respectively, an increase of $2,000 or 3.0%.
Charter Revenues were $630,000 and $89,000 during the six months ended
September 30, 1997 and 1996 respectively, an increase of $541,000 or 607.8%
primarily due to increased charter demand to Nassau, Bahama.
In addition, the consolidated operations include other revenues, principally
cancellation revenue, change fees, liquor sales and the sales of the FBO which,
collectively, were $700,000 and $631,000 for the quarters ended September 30,
1997 and 1996, respectively, an increase of $69,000 or 10.9%.
Other revenues were $1,640,000 and $1,063,000 for the six months ended September
30, 1997 and 1996 an increase of $577,000 or 54.3%.
OPERATING EXPENSES
Flight operations expense includes expenses related directly to the operation
of aircraft except for depreciation and amortization of aircraft and aircraft
improvements. Expenses for hull and liability insurance, crew salaries and
their overnight expenses, aircraft fuel and flight operations administration
are all included in flight operations. Flight operations expenses were
$10,536,000 and $11,741,000 for the quarters ended September 30, 1997
and 1996, respectively, a decrease of $1,205,000 or 10.3%. The decrease in
expense was principally due to $1,100,000 of rent expense for aircraft leased
by the Company, on a short term basis, during last year's second quarter to
ensure the reliability of its schedule. In addition, total block hours
decreased by 5.5%, fuel prices were down year over year while payroll and
insurance costs increased over last year's second quarter.
Flight operations expenses were $21,017,000 and $23,522,000 for the six months
ended September 30, 1997 and 1996, respectively, a decrease of $2,505,000 or
10.7%. The decrease in expense was due to $1,700,000 of rent expense for short
term aircraft leases last year. Block hours decreased by 3.2%, accounting for
the remaining reduction in expense.
Maintenance expense includes all expenses related to the upkeep of aircraft.
Such expenses include labor, parts, supplies and contract maintenance. The
direct costs of airframe and engine overhauls are generally expensed and, for
leased aircraft, paid monthly to the lessors in the form of reserves. For owned
aircraft, AirTran reserves on a per flight hour basis for future maintenance
that becomes due in the ordinary course. These reserves are recorded on
AirTran's balance sheet each month as the aircraft are flown. The reserves are
then available for major overhauls when they occur. When aircraft are first
delivered to the Company, and shortly thereafter, the cost of overhauls of
engines and airframes that may be required to render them fully serviceable is
capitalized and amortized over the period remaining until the next scheduled
overhaul. Maintenance expenses were $6,417,000 and $7,389,000 for the quarters
ended September 30, 1997 and 1996, respectively, a decrease of $972,000 or
13.2%. The decrease is the result of several factors, some increasing expense
and some decreasing:
- - The Company spent $1,175,000 more last year in connection with the
extensive reviews conducted on the aircraft and maintenance records by
independent consultants.
11
<PAGE> 13
- - Block hours (which normally are a cost driver for maintenance) were down
446 hours or 5.5% resulting in further decrease in maintenance expense.
- - The Company also invested heavily in engines, airframes and related
equipment during last year's second quarter and charged those costs to
expense.
- - On the other hand, in this year's second quarter, the Company recorded
$600,000 of additional reserve expense related to heavy maintenance not
provided for by reserves on the balance sheet.
Maintenance expenses were $11,863,000 and $13,881,000 for the six months ended
September 30, 1997 and 1996, respectively, a decrease of $2,018,000 or 14.5%.
The decrease is the result of several factors, some increasing expense and some
decreasing:
- - The Company spent $1,400,000 more last year on the aircraft and record
reviews.
- - Block hours were down 509 hours or 3.2%.
- - The Company also invested heavily in engines, airframes and related
equipment during last year's second quarter and charged those costs to
expense.
- - The Company recorded $ 600,000 of additional reserve expense.
Aircraft and traffic servicing expense includes all expenses incurred at
airports, including landing fees, facilities rental, station labor, ground
handling services and catering expenses. Aircraft and traffic servicing
expenses were $3,689,000 and $4,247,000 for the quarters ended September 30,
1997 and 1996, respectively, a decrease of $558,000 or 13.1%. Although the
Company had 8.1% more flights during this year's second quarter, which drove
some expenses higher, the cost of interrupted trips for the Company's
passengers dropped by $587,000 or 85.1% from the prior year. The significant
decrease is largely a consequence of the Company's improved operating
performance, having completed over 99% of flights in this year's second
quarter. Last year, the extensive internal reviews and renovations of aircraft
that were taking place caused the interruptions.
Aircraft and traffic servicing expenses were $7,598,000 and $8,257,000 for the
six months ended September 30, 1997 and 1996, respectively, a decrease of
$659,000 or 8.0%. Although the Company had 13.3% more flights during this
year's the six months, the cost of interrupted trips for the Company's
passengers dropped by $1,506,000 or 89.1% from the prior year.
Reservations, sales and marketing expense includes those departments' wages and
salaries, computer reservation system costs, communication expenses and travel
agency commissions. Reservations, sales and marketing expenses were $4,143,000
and $4,167,000 for the quarters ended September 30, 1997 and 1996, relatively
unchanged from last year's second quarter.
Reservations, sales and marketing expenses were $8,494,000 and $9,356,000 for
the six months ended September 30, 1997 and 1996, respectively a decrease of
$862,000 or 9.2%. This decrease was principally driven by a shift in the mix of
the Company's business toward more direct reservations being made on AirTran's
1-800-AIR-TRAN number as opposed to through travel agencies. That shift reduces
travel agency commissions and their charges for computer reservation services.
Additionally, the Company's marketing dollars are significantly more targeted
this year and have been augmented by cooperative advertising programs initiated
this year. Offsetting some
12
<PAGE> 14
of these decreases is a significant increase in staffing costs in the
reservations center to accommodate the increased demand.
General and administrative expense includes the wages and benefits for both
companies' executive officers and administrative personnel as well as costs for
the headquarters office, legal, accounting and miscellaneous expenses. General
and administrative expenses were $1,637,000 and $1,720,000 for the quarters
ended September 30, 1997 and 1996, respectively, a decrease of $83,000 or 4.8%.
General and administrative expenses were $3,039,000 and $2,639,000 for the six
months ended September 30, 1997 and 1996, respectively, an increase of $400,000
or 15.1%. The Company established a procurement function since the prior year,
charged to general and administrative expenses, which, together with bringing
legal counsel in-house, caused a sharp rise in administrative salary expense.
This was partially offset by lower outside legal fees and also lower salary
costs in Maintenance as many of the procurement staffpersons were transferred
to General and administrative from Maintenance.
Depreciation and amortization expense includes depreciation on equipment,
airframes, engines and aircraft modifications and amortization of leasehold
improvements, goodwill and loan acquisition costs. Depreciation and
amortization expense were $2,101,000 and $1,088,000 for the quarters ended
September 30, 1997 and 1996, respectively, an increase of $1,013,000 or 92.9%.
The increase is primarily due to the capitalization of portions of engine
overhaul costs incurred after an engine was acquired between overhaul
intervals. Property and Equipment at September 30, 1997 and 1996, respectively,
were $48,455,000 and $43,890,000, an increase of $4,565,000 or 10.4%. More of
the fixed assets added during the past year have shorter useful lives. Largely,
they represent capitalized improvements to aircraft and engines which will
benefit the Company until the next scheduled overhaul causing depreciation
expense to increase more rapidly than the underlying fixed assets.
Depreciation and amortization expense were $3,738,000 and $2,191,000 for the
six months ended September 30, 1997 and 1996, respectively, an increase of
$1,547,000 or 70.6% caused by the same additions to fixed assets.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $5,170,000 and $2,354,000 at September 30, 1997
and March 31, 1997, respectively, an increase of $ 2,816,000 or 119.6%. The use
of cash and cash equivalents from operating activities was $195,000. The
principal sources of cash and cash equivalents were $14,300,000 of new short
term notes and $ 79,000 from the sale of common stock. The principal uses of
cash and cash equivalents were for purchases of property and equipment of
$4,760,000 and payments on long-term debt of $6,007,000.
Restricted cash were $10,048,000 and $12,670,000 at September 30, 1997 and
March 31, 1997, respectively, a decrease of $2,622,000 or 26.1%. The decrease
in restricted cash related to the seasonal decline in advance bookings since
the end of June combined with a small impact from the Company's change in
reservation bookings which took place late in September 1997. Concurrent with
the change in reservation systems which took place in September and the
codeshare agreement
13
<PAGE> 15
reached with ValuJet Airlines, Inc., the Company no longer processed its credit
card transactions through First Bank and, therefore, no longer had restricted
cash requirements on those sales.
Airways' consolidated current ratio was 0.56 and 0.82 to 1.0 at September 30,
1997 and March 31, 1997, respectively. The decrease in the ratio at September
30, 1997 was due to the reclassification of $3,077,000 of deferred tax asset
from current to long term during the quarter and the refinancing of certain
loans, which were longer term in nature, with short term notes totaling
$12,700,000.
During the quarter ended September 30, 1997, AirTran entered into the following
financing arrangements:
- - On July 3, 1997, the Company refinanced one of its aircraft with
$7,000,000 from ValuJet, Inc. and repaid a major commercial lender
approximately $3,200,000. The new loan is secured by one of the Company's
owned aircraft and matures in December 1997.
- - On September 3, 1997, the Company refinanced its maintenance hanger with
$5,700,000 from ValuJet, Inc. and repaid a bank approximately $1,500,000.
The new loan is secured by [ ? ] the Company's maintenance hangers and
matures in December 1997 unless the proposed merger between the Company and
ValuJet, Inc. is not consummated by November 30, 1997 in which case the
terms of this loan and the $7,000,000 loan secured by the aircraft are
extended to March 1998.
On July 10, 1997, the Company announced that it had reached an agreement to
merge with and into ValuJet, Inc., the parent company of AirTran Airlines, Inc.
(formerly ValuJet Airlines, Inc.). Upon consummation of the merger, the
corporate existence of the Company will cease, and AirTran Airways, Inc. will
become a wholly owned subsidiary of ValuJet, Inc. In that connection, the
Company's shareholders will receive one share of ValuJet, Inc. stock in exchange
for each share of the Company's Common Stock. The merger is subject to the
approval of the stockholders of the Company and of ValuJet, Inc., which will be
sought at special meetings to be held on November 17, 1997. The Company believes
that all regulatory approvals for the completion of the merger have been
obtained, and that the merger will become effective at 11:59 p.m. on November
17, 1997, provided that all of the other conditions to the merger have been
satisfied or waived. There can be no assurance, however, that the merger will
occur on a timely basis, if at all.
Airways had consolidated current assets of $29,351,000 and $32,666,000 as of
September 30, 1997 and March 31, 1997, respectively. During fiscal 1997 and
1998, the Company invested heavily in its aircraft and engines. Much of this
investment was paid for from funds generated the year before or from the
Company's working capital. As a consequence, the Company's working capital
position has been seriously weakened. Management believes that the Company's
current assets, along with internally generated funds, will satisfy projected
operating and capital needs until the date of the proposed merger of the Company
with ValuJet, Inc. If the merger is not consummated and AirTran increases its
rate of growth over current projections, acquires another company, purchases or
leases more aircraft than is presently planned, sustains further losses, or
otherwise requires additional capital, other sources of funds will need to be
secured and there is no assurance that such funds will be secured.
The effect of inflation on either company is not considered material.
PART II - OTHER INFORMATION
14
<PAGE> 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
10.24 Loan agreement between ValuJet Inc. and AirTran Airways Inc.
dated July 3, 1997 secured by an aircraft and aircraft
equipment.
10.25 Loan agreement between ValuJet Inc. and AirTran Airways
Inc. dated September 8, 1997 secured by the Company's
maintenance hangar.
11 Statement regarding computation of per share earnings.
27 Financial Data Schedule (for SEC use only).
(B) REPORTS ON FORM 8-K
The Company filed the following reports on Form 8-K during the
quarter ended September 30, 1997:
(i) Form 8-K dated July 10, 1997, reporting the Plan of
Reorganization and Agreement of Merger with ValuJet, Inc.
(ii) Form 8-K dated September 23, 1997, reporting the Code
Share Agreement between AirTran Airways, Inc. and ValuJet Airlines,
Inc.
15
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AIRWAYS CORPORATION
Date: November 10, 1997
/s/ Mark B. Rinder
-------------------------
Mark B. Rinder
Vice President, Finance and
Chief Financial Officer
16
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
<S> <C>
10.24 Loan agreement between ValuJet Inc. and AirTran
Airways Inc. dated July 3, 1997 secured by an
aircraft and aircraft equipment.
10.25 Loan agreement between ValuJet Inc. and AirTran
Airways Inc. dated September 8, 1997 secured by
the Company's maintenance hangar.
11 Statement regarding computation of per share
earnings.
27 Financial Data Schedule (for SEC use only)
</TABLE>
17
<PAGE> 1
EXHIBIT 10.24
LOAN AGREEMENT
This Loan Agreement (the "Agreement") is made and entered into this 3rd day of
July, 1997, by and between AirTran Airways, Inc. a corporation organized under
the laws of the State of Delaware ("Borrower") and ValuJet, Inc., a corporation
organized under the laws of the State of Nevada (the "Lender").
WHEREAS, Borrower desires to borrow from Lender, subject to the terms and
conditions herein set forth, an aggregate principal amount of Seven Million and
no/100 Dollars ($7,000,000), which Borrower shall use for repayment of certain
secured indebtedness and general corporate purposes; and
WHEREAS, Lender is willing to loan to Borrower, subject to the terms and
conditions herein set forth (including, without limitation, subject to granting
to Lender a first priority security interest in the Collateral) an aggregate
principal amount of Seven Million and no/100 Dollars ($7,000,000).
NOW THEREFORE, in consideration of the premises and agreements herein contained,
Borrower and Lender hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used herein, the following terms shall have
the following meanings, all other capitalized terms used
herein but not defined shall be as defined in the Security
Agreement:
"Aircraft" means that certain Boeing 737-2L9 aircraft, United States
Registration Number N465AT Manufacturer's serial number 21528, and its
two Pratt & Whitney Model JT8D-17 engines, ESN 688423 and ESN 688419,
and including all parts, accessories, additions equipment and records
required for operation thereof, more fully described and defined in the
Security Agreement.
"Agreement" means this Loan Agreement, as the same may be modified,
amended or supplemented from time to time.
"Business Day" shall have the meaning set forth in the
Security Agreement.
"Closing Date" means the date of the Note.
"Collateral" shall have the meaning set forth in the Security
Agreement.
<PAGE> 2
"Finova" means Finova Capital Corporation, a Delaware
corporation.
"Finova Loan" means the purchase money loan made by Finova to Borrower
for purchase of the Aircraft pursuant to that certain Secured Loan
Agreement dated as of December 21, 1995 between Finova and Borrower,
relating to the Aircraft.
"Guarantor" means Airways Corporation, a Delaware corporation, which
shall unconditionally guarantee the obligations of Borrower to Lender
under the Note.
"Guaranty" means the agreement of Guaranty substantially the form of
Exhibit B hereto, delivered by Guarantor with respect to the Note on
the Closing Date.
"Lien" has the meaning set forth in the Security Agreement.
"Loan" has the meaning set forth in Section 2.1 of this Agreement.
"Loan Rate" has the meaning set forth in Section 2.2 of this Agreement.
"Maturity Date" means the calendar date five months after the Closing
Date.
"month" means a period commencing on one day in a calendar month and
ending on the day in the next succeeding calendar month the date of
which numerically corresponds to the date of such first day, provided
that if there is no numerically corresponding date in the next calendar
month, such period shall end on the last day of the next succeeding
calendar month.
"Note" has the meaning set forth in Section 2.2 of this
Agreement.
"Operative Documents" means this Agreement, the Note, the Security
Agreement, the Guaranty, each, as may be amended or supplemented from
time to time and including all exhibits and attachments thereto, and
any other agreement, document, instrument, or certificate required to
be delivered under this Agreement or such documents.
"Security Agreement" has the meaning set forth in Section 3 hereof and
any other security agreement covering the Aircraft entered into by
Lender and Borrower in accordance with the Operative Documents and
applicable law.
-2-
<PAGE> 3
SECTION 2. AMOUNT AND TERMS OF LOAN
2.1 The Loan. Subject to and upon the terms and conditions set forth in
this Agreement, Lender agree to lend to Borrower on the Closing Date,
an aggregate principal amount of Seven Million and no/100 Dollars
($7,000,000) (such amount actually loaned to Borrower being referred to
as the "Loan").
2.2 Terms of Note. The Loan shall be evidenced by a promissory
note (the "Note") duly executed and delivered by Borrower on
the Closing Date substantially in the form of Exhibit A
hereto. The Note shall, (i) have a principal amount of
$7,000,000; (ii) bear interest from and including the Closing
Date through the Maturity Date on the unpaid principal amount
under the Note at an interest rate per annum of 10% (the "Loan
Rate") and (iii) mature on the Maturity Date.
The entire principal amount of the Note shall be due and
payable on the Maturity Date;
Accrued interest on the Note shall be due and payable monthly
commencing on the calendar date corresponding to the Closing Date in
the first calendar month succeeding the calendar month of the Closing
Date ("Payment Commencement Date") and shall be due thereafter on the
same numerical day of each month thereafter as Closing Date. Interest
shall be computed on the basis of a thirty (30) day month. The first
payment of accrued interest to be made on the Payment Commencement Date
shall be the accrued interest from and after the Closing Date through
and including the Payment Commencement Date.
Lender shall record on its books and records or on a schedule to the
Note, the amount of all payments of principal and interest on the Note.
The record of such information, whether shown on Lender' books and
records or on the schedule to the Note, shall be prima facie evidence
as to all such amounts; provided, however, the failure of Lender to
record any of the foregoing shall not limit or otherwise affect the
obligation of Borrower to repay the Loan, together with accrued
interest thereon.
2.3 Prepayment. Borrower shall have the right at any time, without advance
notice to Lender, to prepay all or any portion of the principal balance
of the Note without penalty; provided that any prepayment shall be
accompanied by the payment of interest accrued on the amount being
prepaid on the date of such prepayment.
2.4 Payment. All payments of principal, interest or any premiums
or penalties due thereunder shall be made by payment in
immediately available funds, no later than 12:00
-3-
<PAGE> 4
o'clock noon Atlanta, Georgia time, to Lender at its address set forth
in Section 8.8 hereof, irrespective of, and without deduction for, any
set off or counterclaims. Whenever any payment of principal, interest,
premium or penalty to be made hereunder shall fall due on a Saturday,
Sunday or public holiday under the laws of the State of Georgia, such
payment shall be made on the next succeeding Business Day, but interest
shall continue to accrue on such payment until made. Whenever any
payment of principal, interest, premium or penalty is not paid when due
such amount due shall bear interest at the Default Interest Rate (as
defined in the Note) until paid, notwithstanding whether or not such
failure to pay when due constitutes an Event of Default under this
Agreement or whether there is granted hereunder a grace period for
payment.
SECTION 3. SECURITY
3.1 Guaranty. In order to induce Lender to make the Loan, and as
security for the payment in full by Borrower of all amounts
due under the Operative Documents and under the Note, Borrower
hereby agrees that it shall procure the delivery to Lender
contemporaneously with the making of the Loan, the
unconditional guaranty of the Guarantor, which guaranty
agreement shall be substantially in the form of Exhibit B
hereto.
3.2 Grant of Security Interest in the Aircraft. On the Closing
Date, Borrower shall execute and deliver to Lender an Aircraft
Chattel Mortgage and Security Agreement substantially in the
form of Exhibit C hereto (the "Security Agreement") pursuant
to which Borrower shall assign, grant and set over unto
Lender, a perfected first priority security interest in the
Aircraft and the Collateral, all as further described and
defined in the Security Agreement. Lender's security interest
in the Aircraft and the Collateral shall be registered,
recorded and perfected under and in accordance with the laws
of the United States and the State of Georgia; provided,
however, the Security Agreement and the release of all of the
interests of Finova under the Finova Loan shall not be filed
with the Federal Aviation ("FAA") Registry in Oklahoma City,
Oklahoma until the earlier of, (i) the announcement of an
agreement of merger between Guarantor and ValuJet, Inc. and
(ii) July 10, 1997. Notwithstanding such delay in filing such
agreements with the FAA, on the Closing Date, Borrower shall
deliver over to Lender all originally executed agreements
associated with the Loan, including the Security Agreement and
financing statements (and fees associated with the filings
thereof) and the release by Finova, for filing at the
discretion of the Lender. Promptly upon filing of the
Security Agreement and the release of the lien of Finova with
the FAA, Borrower
-4-
<PAGE> 5
shall ensure that Lender shall receive an opinion of special FAA
counsel that the security interest of Lender is perfected under all
applicable law, having first priority over all other interests or
claims of any other party. Borrower shall bear all reasonable costs and
expenses of Lender in securing counsel opinions and Lender's rights and
security interest in and to the Aircraft, including, without
limitation, the payment of Lender's FAA counsel fees associated
therewith.
3.3 Further Assurances. Borrower will, and will procure that, at
its own expense, at all times make, execute, acknowledge and
deliver, and file and record in the proper filing and
recording offices, all such further and additional instruments
and documents, including, but not limited to, UCC-1 financing
statements, and additional security agreements or mortgages as
may be necessary under the applicable law, as may be
necessary, or as Lender or its counsel may reasonably request
from time to time, in order to preserve and perfect Lender'
rights and interests hereunder and under the Security
Agreement.
SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into this Agreement and to make the Loan as provided
for herein, Borrower makes the following representations and warranties, which
shall survive the execution and delivery of this Agreement, and all Operative
Documents and which shall continue in full force and effect until payment in
full by Borrower of all amounts due hereunder.
4.1 Corporate Organization and Standing. Borrower is, and will
continue to be, a duly organized and validly existing
corporation in good standing under the laws of the State of
Delaware.
4.2 Corporate Power and Authority. Borrower has all requisite
corporate power and authority to execute, deliver, and carry
out the terms and provisions of this Agreement, and all other
Operative Documents and has duly and properly taken all
necessary corporate and other action (including, without
limitation, any consent of directors or stockholders required
by law or by its charter or by-laws) to permit and authorize
the execution, delivery and performance of this Agreement, and
all of the Operative Documents. This Agreement and all of the
Operative Documents have been, or will be, duly authorized,
executed and delivered by Borrower and each constitutes, or
will constitute, a legal,valid and binding obligation of
Borrower, enforceable against it in accordance with their
respective terms.
4.3 Compliance with Other Instruments. The Borrower is not in
-5-
<PAGE> 6
violation of, or default under, any term of its charter or by-
laws or any agreement or instrument to which it is a party or
by which it is bound or to which any of its properties or
assets are subject or of any judgment, decree, order, statute,
rule or governmental regulation applicable to it. The
execution, delivery and performance by Borrower of this
Agreement and all of the Operative Documents, and any document
required to be delivered hereunder or thereunder, the
consummation of the transactions contemplated herein or
therein and the compliance with the terms and provisions
hereof or thereof will not contravene any provision of law,
statute, rule or regulation to which Borrower is subject or
any judgment, decree, franchise, order, governmental
regulation or permit applicable to Borrower and will not
violate, conflict with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute
of default under any agreement to which Borrower is a party,
or result (except as contemplated by this Agreement and the
Security Agreement) in the creation or imposition of any lien,
mortgage, pledge or encumbrance upon any of the property or
assets of Borrower pursuant to the terms of Borrower's
charter, management agreement, by-laws or any indenture,
mortgage, deed of trust, agreement or other instrument to
which Borrower is a party or by which it or its properties is
bound or may be subject, and will not violate or be in
conflict with any provision of the charter or by-laws of
Borrower.
4.4 No Liens. On the Closing Date, the Aircraft shall be free and
clear of all liens, charges and encumbrances except for the
interests of Lender under the Security Agreement.
4.5 Survival of Representations and Warranties. All representations and
warranties made herein and the Security Agreement shall be true and
correct as of the date of the Closing Date and shall survive the
execution and delivery of this Agreement and all of the Operative
Documents.
SECTION 5. COVENANTS OF BORROWER
Borrower covenants and agrees that from the date hereof and until payment in
full of the principal of and interest on the Note and of all other amounts due
hereunder, unless Lender shall otherwise consent in writing, such consent not to
be unreasonably withheld, Borrower shall:
5.1 Business and Existence. Perform all things necessary to
preserve and keep in full force and effect the corporate
existence and rights of Borrower; comply with all laws
applicable to it; and conduct and operate its business
substantially as conducted and operated as of the date
-6-
<PAGE> 7
hereof.
5.2 Maintenance of Property. Maintain, preserve and protect its
trade names and assets and properties and the Aircraft and
keep the same in good repair, working order and condition and
from time to time make, or cause to be made, all needed and
proper repairs, renewals, replacements and improvements
thereto so that its business carried on in connection
therewith may be properly conducted at all times.
5.3 Insurance on Properties. At all times keep and maintain in
force: (i) insurance upon its assets and properties which are
of an insurable nature, real and personal, tangible and
intangible, including, but not limited to, the Aircraft (for
and in an amount equal to no less than Nine Million and no/100
Dollars ($9,000,000)), and against loss or damage from such
hazards and risks as are reasonable and proper in accordance
with the Security Agreement and sound business practice and as
is customarily carried by persons owning similar properties
and conducting similar business (including, without
limitation, Borrower shall comply with the insurance
requirements of the Security Agreement); (ii) liability
insurance in such amount and for such coverage as are
reasonable and proper in accordance with sound business
practices and as is customarily carried by persons conducting
similar business, of similar size and similarly situated and
in the amounts and with the coverages required by the Security
Agreement; and (iii) such other insurance as may be required
by law or reasonably requested in writing by Lender. All such
insurance shall be with responsible and reputable insurance
companies, shall name Lender as an additional insured on all
liability policies and shall be cancelable or materially
changed only after thirty (30) days' prior written notice
thereof to Lender.
5.4 Payment of Obligations and Expenses. Pay and discharge all of its
indebtedness, obligations and expenses promptly in accordance with
normal terms and practices of its business, before the same shall
become in default, as well as all lawful claims for labor, materials
and supplies which otherwise, if unpaid, might become a lien or charge
upon its properties, assets or any part thereof provided, however,
Borrower shall be entitled to contest such indebtedness, obligations
and expenses so long as there is no material risk of the lien or charge
upon its properties, or the Collateral.
5.5 Notice of Event of Default. At the time of Borrower's first knowledge
of an Event of Default (as hereinafter defined) or any condition which
could mature into an Event of Default, furnish Lender with written
notice of the occurrence of any such event or the existence of any such
condition which constitutes or upon written notice or lapse of time
would
-7-
<PAGE> 8
constitute an Event of Default.
5.6 Additional Information. Furnish such other information regarding the
operations, business affairs and financial condition of Borrower or its
property or assets or regarding the financial condition of the
Guarantor as Lender may reasonably request from time to time,
including, but not limited to, true and complete copies of its books of
account and tax returns, current financial statements, maintenance
status of the Aircraft and usage reports, and all information furnished
to shareholders, or any governmental authority.
5.7 Right of Inspection. Permit (and cause to permit) any person designated
by Lender, at Lender's expense, to visit and inspect any of the
properties, corporate books and financial reports of Borrower and
Guarantor and to discuss its respective affairs, finances and accounts
with its principal officers (as applicable), all at such reasonable
times and as often as Lender may reasonably request.
5.8 Assistance in Perfection of Security Interest. Join with Lender in
taking all steps necessary to perfect Lender's security interest in the
Aircraft, including, but not limited to, the filing or recording of any
security agreement, assignment, financing statements, notice or other
writing. Costs incurred in performing under this paragraph shall be
paid by Borrower.
5.9 Liens. Not contract, create, incur, assume or permit to exist any Liens
except for the interests of Lender under this Agreement and the
Operative Documents.
5.10 Compliance with Laws. Comply with such laws, rules, and regulations and
maintain such permits and licenses under applicable law with respect to
the business of Borrower and with respect to the operation, ownership
and maintenance of the Aircraft at all times during the term hereof.
5.11 Indemnification. The Borrower agrees to indemnify, reimburse, and hold
harmless Lender from and against all claims, damages, losses,
liabilities, demands, suits, judgments, causes of action, civil and
criminal legal proceedings, penalties, fines, and other sanctions, and
any attorney fees and other reasonable costs and expenses, arising or
imposed with or without the Lender's fault or negligence or under the
doctrine of strict liability (collectively, "Claims"), relating to or
arising in any manner out of:
(a) This Agreement or any of the Operative Documents, or the breach of
any representation, warranty, or covenant made by the Borrower (or the
Guarantor) thereunder;
-8-
<PAGE> 9
(b) Manufacture, purchase, lease, delivery, nondelivery, acceptance,
rejection, ownership, possession, use, operation, return, registration,
deregistration or re-registration or disposition of the Aircraft;
(c) The condition of the Aircraft or any discoverable or
nondiscoverable defect in it arising from its design, testing, or
construction; any article used in the Aircraft; or any maintenance,
service or repair, whether or not the Aircraft is in the Borrower's
possession and regardless of where the Aircraft is located; or
(d) Any transaction, approval, or document contemplated by this
Agreement and any of the Operative Documents.
The Borrower waives and releases Lender from any existing or future
Claims in any way connected with injury to or death of the Borrower's personnel,
loss or damage of the Borrower's property, or loss of use of any property, which
may:
(e) Result from or arise in any manner out of this Agreement
and any of the Operative Agreements, condition, use or
operation of the Aircraft; or
(f) Be caused by any defect in the Aircraft; its design, testing, or
construction; any article used in the Aircraft; or any maintenance,
service, or repair, whether or not the Aircraft is in the Borrower's
possession and regardless of where the Aircraft is located.
The indemnities described in this Section will continue in full force
and effect notwithstanding the expiration or other termination of this Agreement
or the Security Agreement and are expressly made for the benefit of and will be
enforceable by the Lender.
5.12 Merger, Consolidation. Not merge with or into or consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in
one transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired) to any
entity, without the prior written consent of Lender, which Lender may
provide or withhold in its sole discretion.
SECTION 6. DEFAULT
6.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default" under this Agreement:
(a) Payment of Principal Balance. Nonpayment of the full
-9-
<PAGE> 10
principal balance of the Note (plus accrued interest and
unpaid premiums or penalties) in accordance with the Note
and this Agreement on or prior to the Maturity Date;
(b) Payment of Installments of Principal and Interest. Nonpayment
when due of any installment payment of interest on the Note
(and any premium or penalty based thereon) and the same shall
continue for a period of two (2) consecutive days after the
date when due;
(c) Representations and Warranties. Any representation or warranty
made by Borrower under this Agreement or any of the Operative
Documents or any report, certificate or statement made to
Lender pursuant hereto or in connection herewith shall prove
to be false, misleading, incomplete or untrue in any material
respect as of the date on which such representation or
warranty is made;
(d) Covenants. Any breach by Borrower of any other covenant, term,
agreement or condition contained herein, (other than payment)
in the Note or in the Security Agreement or in any other
Operative Document and the same shall continue unremedied for
a period of fifteen (15) days after written notice from
Lender; or
(e) Bankruptcy or Insolvency. Borrower or the Guarantor (i)
files a petition in bankruptcy or for the approval of a
plan of reorganization or arrangement under the
Bankruptcy Reform Act of 1978, or an involuntary petition
in bankruptcy or plan of reorganization is filed against
Borrower or Guarantor, or an admission seeking the relief
therein provided and such proceeding shall not be
dismissed within thirty (30) days after the date of
filing; (ii) is unable, or admits in writing its
inability, to pay its debts as they become due; (iii)
makes an assignment for the benefit of creditors; (iv)
files a petition or applies to any tribunal for the
appointment of a custodian, receiver or any trustee for
all or a substantial part of its assets; (v) by any act
or omission indicates its consent, approval of, or
acquiescence in the appointment of a receiver, custodian
or trustee for all or a substantial part of its property;
(vi) is adjudicated a bankrupt or insolvent; (vii)
becomes insolvent however otherwise evidenced; or (viii)
ceases doing business as a going concern; or
(f) Default of other Indebtedness. Any indebtedness of Borrower
for borrowed money (other than the indebtedness owed to Lender
hereunder) shall become due and payable prior to the stated
maturity thereof resulting from a default thereunder, or if
such indebtedness shall not be paid at the maturity thereof
-10-
<PAGE> 11
resulting from a defaulth therunder, or if such indebtedness
shall not be paid at the maturity thereof or any guaranty or
similar obligation of Borrower is not discharged at maturity
or when due and called or if Borrower shall otherwise be in
material breach or default under any agreement pursuant to
which such indebtedness was incurred, and Borrower fails to
cure such default within (i) thirty (30) days after written
notice thereof, or (ii) any cure period provided for under the
agreement pursuant to which the default occurred, whichever is
less, and the aggregate amount of all such indebtedness at the
time exceeds five hundred thousand Dollars ($500,000); or
(g) Failure of Effectivity. If this Agreement or any other
Operative Document shall at any time after its respective
execution and delivery and for any reason cease to be in full
force and effect or any certificate, instrument or documents
issued and executed pursuant hereto or thereto shall for any
reason cease to be effective to constitute a valid and
perfected first priority Lien and security interest in and to
the Collateral; or
(h) Failure to Maintain Insurance. If there shall occur any lapse
of, or failure to maintain, insurance coverage on the
Collateral required to be maintained under the Security
Agreement; or
(i) Sale, Transfer or Lease of the Aircraft. If the Aircraft or
any part thereof shall be sold, transferred, assigned, leased
or otherwise disposed of by Borrower without the Lender's
prior written consent.
6.2 Effect of Event of Default. If any Event of Default described in
Section 6.1 hereof (other than as described in Section 6.1 (e) hereto)
shall occur, Lender may at its option, by written notice to Borrower,
declare the entire unpaid principal balance of the Note, as applicable,
all interest accrued and unpaid thereon and all other amounts payable
under this Agreement and all of the Operative Documents, immediately
due and payable, without presentment, demand, protest or further notice
of any kind, all of which are expressly waived by Borrower. Upon the
occurrence of an Event of Default described in Section 6.1(e) hereof,
the entire unpaid principal balance of the Note, all interest accrued
and unpaid thereon and all other amounts payable under this Agreement
and the Operative Documents shall automatically become immediately due
and payable with all additional interest accrued thereon and without
presentment, demand, protest or other notice of any kind. Lender may
also exercise any or all of the rights and remedies with respect to the
Aircraft as provided to Lender pursuant to
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<PAGE> 12
the Security Agreement and the Note, as applicable and those rights and
remedies permitted by law, whether at law or in equity. In addition, if
any Event of Default shall have occurred, the Loan Rate on the unpaid
principal amount of the Note shall be increased to fifteen percent
(15%) per annum compounded monthly after the occurrence of the Event of
Default until the Event of Default is cured or the unpaid principal
amount is paid, whether or not the Lender accelerates payment.
SECTION 7. CONDITIONS PRECEDENT
7.1 Making Loan. The obligation of the Lender to make the Loan to Borrower
hereunder is subject to the following conditions precedent:
(a) The Note. There shall have been delivered to Lender, the Note,
duly executed by Borrower, in form and substance satisfactory
to Lender and otherwise in accordance with Section 2 hereof.
(b) Security. Borrower shall have delivered to the Lender a duly
executed Guaranty from the Guarantor and Borrower shall have
delivered to Lender duly executed original copies of the
Security Agreement and such other documents, including, but
not limited to, financing statements, that Lender shall deem
necessary to secure payment in full of all amounts due
hereunder or under the Note.
(c) Certified Resolutions and Charter. Borrower shall have
delivered to Lender certified copies of (i) the resolutions of
the Board of Directors of Borrower authorizing the execution,
delivery and performance of this Agreement and all of the
Operative Documents and certified copies of all documents
evidencing other corporate action of Borrower, if any, with
respect to this Agreement and the Operative Documents,
including a certificate of the corporate secretary of Borrower
attesting to the incumbency of the officers executing all
agreements hereunder, and (ii) the current charter and by-laws
of Borrower.
(d) Insurance. Borrower shall have delivered to Lender a
Certificate of Insurance evidencing compliance with this
Agreement and the Security Agreement in form and substance
satisfactory to Lender.
(f) No Default. As of the Closing Date, there shall exist no Event
of Default under this Agreement or any Operative Document.
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<PAGE> 13
(g) Report of Liens and Release of Finova Lien. Borrower
shall have delivered to Lender reasonably satisfactory
evidence from special FAA counsel that on the Closing Date,
the Aircraft is free of all liens, charges and encumbrances,
except the Lien of Finova under the Finova Loan, the release
of lien for which (in form and substance satisfactory to
Lender) shall be pre-positioned in escrow with special FAA
counsel and delivered to Lender's control for filing with the
FAA upon the payment to Finova of amounts necessary to pay off
the indebtedness of Finova with respect to the Collateral.
(h) Representations and Warranties. As of the Closing Date, all
representation and warranties of Borrower hereunder shall be
true and correct with the same force and effect as though made
on the Closing Date.
(i) Documents Acceptable. All documents, instruments and
certificates relating to the making of the Loan and all
proceedings in connection with the transactions contemplated
by this Agreement or any Operative Document shall be
satisfactory in form and substance to Lender.
In the event that Lender, in its sole and absolute discretion, waives
satisfaction of any condition set forth in this Section, such waiver shall
constitute a waiver only as to the time for satisfaction of such condition, and
Borrower shall be obligated to comply with such condition as soon as practicable
after the Closing Date, and in any event, within thirty (30) days thereafter.
SECTION 8. MISCELLANEOUS
8.1 Fees and Expenses. Borrower shall, on the Closing Date (or at any time
thereafter, at the election of Lender) reimburse Lender and Finova for
all reasonable out-of-pocket expenses incurred in connection with this
Agreement and the transactions contemplated hereby and thereby,
including, without limitation, all recordation fees and legal fees and
disbursements of Lender's counsel, including special FAA counsel, and
in connection with all professional services rendered and disbursements
incurred by said counsel with respect to all transactions relevant to
the subject matter hereof. Borrower shall pay to Lender, on demand, any
expenses or other costs (including, without limitation, attorney's
fees, disbursements, expert witness fees, and all travel, hotel
telephone, postage, accounting, appraisal, inspection and consulting
expenses) incurred by Lender in connection with (i) the enforcement and
collection against Borrower or any other party (other than Lender) to
any of the Operative Documents of any provision thereof or
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<PAGE> 14
indebtedness contemplated hereby, (ii) any actual or threatened
litigation, investigation or proceeding relating to the Operative
Documents, whether or not suit is instituted, relating to any of the
Operative Documents or the indebtedness contemplated thereby; (iii) any
proceeding or enforcement in any state of federal bankruptcy or
reorganization proceeding, and (iv) any actual or proposed amendment of
the Operative Documents or any of them or modification of the
indebtedness contemplated thereby.
8.1 Amendments. The provisions of this Agreement and any of the Operative
Documents may from time to time be amended, modified or waived with the
consent of Borrower and Lender, if such amendment or modification is in
writing and signed by all parties thereto.
8.2 Waivers. Lender shall not be deemed to have waived any of their rights
or remedies hereunder or under the Note, or the Security Agreement
unless such waiver is in writing and signed jointly by Lender and then
only to the extent specifically recited. No failure to exercise and no
delay or omission in exercising any right, remedy or recourse on the
part of Lender shall operate or be deemed as a waiver of such right,
remedy or recourse or any other right, remedy or recourse, nor shall
any single or partial exercise or any right, remedy or recourse
hereunder or thereunder preclude any other or further exercise thereof.
A waiver or release on any one occasion shall not be construed as
continuing, as a bar to, or as a waiver or release of any subsequent
right, remedy or recourse on any subsequent occasion. All rights and
remedies of Lender, whether pursuant to this Agreement or any of the
Operative Documents, or any other instrument, shall be cumulative and
concurrent and may be exercised singularly, successively or
concurrently, at the sole discretion of Lender and may be exercised as
often as occasion therefor may exist. The rights of Lender hereunder,
under the Security Agreement and under the Note, shall be in addition
to all other rights and remedies provided at law or in equity.
8.3 Transferability of Aircraft and Agreement. Borrower may not transfer or
assign any or all of its rights and/or obligations hereunder or under
the Security Agreement, or the Note without the prior written consent
of Lender. Borrower may not transfer all or part of any of its interest
in, to or under the Aircraft without the prior written consent of
Lender.
8.4 Governing Law. This Agreement and all of the Operative Documents are be
governed by the internal laws of the State of Georgia.
8.5 Enforceability of Agreement. Should any one or more of the
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<PAGE> 15
provisions of this Agreement or any of the Operative Documents be
determined to be illegal or unenforceable, all other provisions,
nevertheless, shall remain effective and binding on the parties hereto.
It is the intention of Borrower and Lender to contract in strict
compliance with applicable usury laws; and accordingly, in no event and
upon no contingency shall Lender ever be entitled to receive, collect
or apply as interest any interest, fees or other payment equivalent to
interest, in excess of the maximum rate which Lender may lawfully
charge; and, in the event that Lender ever receives, collects or
applies as interest any such excess, such amount which would be
excessive interest shall be applied to the reduction of the principal
amount of the indebtedness owed Lender, and if all principal and
interest thereon is paid in full, any remaining excess shall forthwith
be paid to Borrower, or such other party lawfully entitled thereto. In
determining whether or not the interest paid or payable, under the
specific contingency, exceeds the highest lawful rate, Borrower and
Lender shall, to the maximum extent permitted under applicable law,
characterize any non-principal payment as a reasonable loan charge
rather than as interest. Any provision hereof, or of any other
agreement between Borrower and Lender, that operates to bind, obligate
or compel Borrower to pay interest in excess of such maximum lawful
rate, permitted to be charged form time to time, shall be construed to
require the payment of the maximum rate only. The provisions of this
Section 8.5 shall be given precedence over any other provision
contained herein or in any other agreement between Lender and Borrower
hereof that is in conflict with the provisions of this Section.
8.6 Titles. Titles of the Sections of this Agreement are merely for
convenience in reading and shall not be construed to alter, modify or
interpret the meaning of the provisions under said titles.
8.7 Definitions. All accounting terms used in this Agreement, if any, shall
have the meanings ascribed to them by generally accepted accounting
principles.
8.8 Notice. Any notice, request or demand to or upon the parties hereto
must be given in writing and shall be deemed received when transmitted
to the addressee. Notices shall be sent certified, postage prepaid and
shall be addressed to the party to receive the same as follows or to
such other addressee as may be hereafter designated in writing by the
respective parties hereto:
To Lender: ValuJet, Inc.
1800 Phoenix Blvd. Suite 126
Atlanta, GA 30349
Attn: Stephen C. Nevin, CFO
Telephone: 770 907 5431
Telecopier: 770 907 2586
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<PAGE> 16
To Borrower: AirTran Airways, Inc.
6280 Hazeltine National Drive
Suite 100
Orlando, Florida 32822
Attn: Senior Vice President-Finance
Telephone: 407 859 1579 Ext. 298
Telecopier: 407 888 9693
8.10 Entire Agreement. This Agreement (including all Exhibits hereto), the
Operative Documents and all other documents delivered pursuant hereto
shall constitute the full and entire understanding and agreement of the
parties hereto and there are no further or other agreements or
undertakings, written or oral, in effect between the parties relating
to the subject matter hereof unless expressly referred to herein. All
prior negotiations and agreements concerning the subject matter hereof
between the parties hereto are superseded by this Agreement and the
Operative Documents.
8.11 Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall
constitute one and the same instrument.
THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY
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<PAGE> 17
IN WITNESS WHEREOF, Borrower and Lender have each caused this Loan Agreement to
be duly executed as of the date and year first above written.
AIRTRAN AIRWAYS, INC.
Borrower
By: /s/ Lawrencett Brinker
---------------------------------
Title: General Counsel and Secretary
---------------------------- -------------------------------
VALUJET, INC.
Lender
By: /s/ Stephen C. Nevin
---------------------------------
Title: Vice President, Finance And
---------------------------- -------------------------------
Chief Financial Officer
-------------------------------
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<PAGE> 18
EXHIBIT A
Date: July 3, 1997 PROMISSORY NOTE Amount: $7,000,000
------------ ---------------
1. PROMISE TO PAY. FOR VALUE RECEIVED, the undersigned (hereinafter
collectively referred to as "Borrower") promise(s) to pay to the order of
ValuJet, Inc., 1800 Phoenix Blvd. Suite 126, Atlanta, Georgia 30349 (hereinafter
referred to as "Lender"), by wire transfer to such United States Bank as Lender
shall so direct in writing, the principal sum of Seven Million and no/100
dollars ($7,000,000) (the "Loan"), together with interest from the date hereof
as specified below, until paid in full. The Loan is made to Borrower pursuant to
the terms of the Loan Agreement dated as of July 3, 1997, between Borrower and
Lender (the "Loan Agreement")
2. RATE OF INTEREST. Borrower agrees to pay to Lender interest
on the unpaid principal balance hereunder, as follows:
The rate of interest during the term of this Loan shall be Ten percent
(10%) per annum (the "Loan Rate").
3. PAYMENT SCHEDULE. Payment of accrued interest at the Loan Rate in
accordance with paragraph 2 above, shall be made monthly, commencing on the
calendar date corresponding to the date of this Promissory Note in the first
calendar month succeeding the calendar month of the date of this Promissory Note
("Payment Commencement Date") and shall be due thereafter on the same numerical
day of each month as the date of this Promissory Note. Interest shall be
computed on the basis of a thirty (30) day month. The first payment of accrued
interest to be made on the Payment Commencement Date shall be the accrued
interest from and after the date of this Promissory Note through and including
the Payment Commencement Date. The principal balance shall be paid in full on or
before December 3, 1997 (the "Maturity Date"). During the period Borrower
is in default in payment of any installment or payment hereunder, when and as
due, the rate of interest on the unpaid principal balance hereunder shall be
increased to Fifteen percent (15%) per annum compounded monthly (the "Default
Interest Rate"). All payments received by Lender hereunder shall be first
credited to accrued interest and then to Principal.
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<PAGE> 19
4. PAYMENT OF LOAN PROCEEDS. Borrower hereby directs Lender to
pay the loan proceeds in accordance with the following:
5. PREPAYMENT AND APPLICATIONS OF PAYMENTS. Borrower may prepay
this obligation in part or in full at any time. Any payment in respect of the
Loan shall be (i) first applied to any other amount payable to Lender (other
than the principal hereof and interest at the Loan Rate and the Default Interest
Rate) pursuant to the terms of this Note or the Loan Agreement, (ii) then the
remainder, if any, to payment of outstanding and unpaid interest at the Loan
Rate and the Default Rate, as applicable; and (iii) the remainder, if any, to
payment of principal hereof.
6. SECURITY. To secure the payment of the indebtedness evidenced by this
Promissory Note and any renewals, extensions or changes hereof Borrower has
contemporaneously herewith delivered the unconditional Guaranty of Airways
Corporation, a Delaware corporation, the "Guarantor"). In addition, Borrower has
granted Lender a first priority security interest in the Aircraft and other
collateral (the "Collateral") more fully described in the Security Agreement
entered into between Lender and Borrower of even date herewith (the "Security
Agreement").
7. PURPOSE OF LOAN. Borrower warrants and represents to Lender that
this Loan is for business and commercial purposes and not for personal, family,
household or agricultural purposes.
8. PRINCIPALS AND WAIVERS. All signers, makers, guarantors, endorsers and
sureties hereof are to be regarded as principals, jointly and severally. Every
maker, endorser, guarantor and surety hereof hereby waives presentment, notice,
protest and impairment of collateral, and consents to all extensions, deferrals,
partial payments and refinancings hereof before or after maturity.
9. DEFAULT. Upon Borrower's failure to make any payment required under
this Promissory Note, or upon the occurrence of an Event of Default under the
terms of the Loan Agreement, Lender may employ all remedies allowed by law
including, where permissible, declaring all indebtedness due under this
Promissory Note, as well as any other indebtedness or liability of Borrower to
Lender, immediately due and payable.
10. WAIVER OF DEFAULT. No waiver by Lender of any default shall
be effective unless in writing, nor operate as a waiver of any other default or
of the same default in the future.
11. TIME OF THE ESSENCE. Time is of the essence of this Promissory Note
and each provision hereof.
12. CHANGE OF ADDRESS. Borrower will immediately notify Lender in
writing of any change of address from that shown herein.
13. GOVERNING LAW AND CHOICE OF FORUM. THIS AGREEMENT WAS MADE
AND ENTERED INTO IN THE STATE OF GEORGIA AND THE LAW GOVERNING THIS TRANSACTION
SHALL BE THAT OF THE STATE OF GEORGIA AS IT MAY FROM TIME TO TIME EXIST.
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<PAGE> 20
14. ENFORCEABILITY. The unenforceability of any provision
hereof shall not affect the validity of any other provision hereof.
15. BINDING AGREEMENT. All obligations of Borrower hereunder shall bind
the successors and assigns of Borrower. All rights of Lender hereunder shall
inure to the benefit of its successors and assigns.
16. ASSIGNMENT. Borrower shall not sell, assign, transfer, encumber or
convey any of its interests, rights or obligations in to and under this
Promissory Note without the prior written consent of Lender.
17. ENTIRE AGREEMENT. This Promissory Note, the Loan Agreement, the
Security Agreement, and the Guaranty constitute the entire agreement between and
among the parties with respect to the subject matter hereof. There are no verbal
understandings, agreements, representations or warranties not expressly set
forth herein. Neither the Loan Agreement, this Promissory Note, nor the Security
Agreement shall be changed orally, but only by writing signed by the parties
hereto.
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<PAGE> 21
BORROWER HEREIN ACKNOWLEDGES THAT IT HAS READ AND FULLY UNDERSTANDS ALL OF THE
TERMS AND CONDITIONS OF THIS PROMISSORY NOTE.
Executed this 3rd day of July, 1997, at Orlando, Florida.
Borrower: AirTran Airways, Inc.
By: Lawrence H. Brinker
------------------------------
Title: General Counsel and Secreatary
------------------------------
Address: 6280 Hazeltine National Drive
Suite 100
Orlando, Florida 32822
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<PAGE> 22
EXHIBIT B
GUARANTY
This Guaranty is made and given as of the 3rd day of July, 1997 by
the undersigned, Airways Corporation ("Guarantor"), a corporation organized
under the laws of the State of Delaware, to and for the benefit of ValuJet, Inc.
a corporation organized under the laws of the State of Nevada ("Lender"), in
connection with a loan of even date herewith made by Lender to AirTran Airways,
Inc., a corporation organized under the laws of the State of Delaware
("Borrower") which loan was made pursuant to the terms of the Loan Agreement
between Borrower and Lender dated as of July 3, 1997 (the "Loan Agreement")
whereunder on the date hereof, Borrower executed and delivered to Lender a
Promissory Note (in the amount of the loan) in the principal amount of
$7,000,000 (the "Note") and secured by the terms of an Aircraft Chattel Mortgage
and Security Agreement (the "Security Agreement"), each of even date herewith
(collectively, the Loan Agreement, the Note and the Security Agreement, the
"Loan Agreements").
For purposes of this Guaranty, all capitalized terms used herein but not defined
herein shall be as defined in the Loan Agreements.
For purposes of this Guaranty, the term "Obligations" shall mean, (a) (i) the
full and prompt payment when due of principal, interest and other amounts owing
by the Borrower under the Loan Agreements and the Operative Documents and all
other obligations and indebtedness (including, without limitation, indemnities,
fees and interest thereon) of the Borrower now existing or hereafter incurred
under, arising out of or in connection with the Loan Agreements, and (ii) the
due performance and compliance with terms of the Loan Agreement and the
Operative Documents by the Borrower, and (b) (i) any and all sums advanced by
the Lender in accordance with the Loan Agreements and Operative Documents in
order to preserve the Collateral or preserve its security interest in the
Collateral, and (ii) in the event of any proceedings for the collection or
enforcement of any indebtedness, obligations or liabilities of the Borrower
referred to in clause (a) or (b), after an Event of Default shall have occurred
and be continuing, the reasonable expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the Collateral,
or of any exercise by the Lender of its rights under the Security Agreement or
the other Operative Documents, together
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<PAGE> 23
unconditionally, absolutely and irrevocably guarantees to the Lender, its
successors and assigns, the full, prompt and punctual payment of all amounts
when due, including, without limitation, amounts due on default, of any nature
whatsoever from time to time payable by the Borrower to the Lender pursuant to
the terms of the Loan Agreements and the full, prompt and punctual performance
and observance by the Borrower of all of the Obligations.
Additionally, Guarantor hereby agrees to pay Lender' costs and expenses
incurred in enforcement of this Guaranty, including Lender's attorney fees.
The Guaranty hereunder shall be a continuing guaranty of payment and
performance as aforesaid and shall remain in full force and effect until each
and all of the obligations of the Borrower shall have been fully and
satisfactorily discharged in accordance with the terms and provisions of the
Loan Agreements and the Guarantor shall have fully and satisfactorily discharged
all of its obligations under this Guaranty. Irrespective of the lack of notice
to or consent of Guarantor with respect to the following items, its obligations
hereunder shall not be discharged or impaired in any manner whatsoever by any:
(a) new agreements or obligations of Borrower with or to Lender
(including any security agreement in favor of Lender) or any amendments,
assignments, extensions, modifications, renewals or waivers of default with
respect to the Loan Agreements;
(b) adjustments, compromises or releases of any obligations of Borrower
or any other guarantor or other parties, or exchanges, releases or sales of any
security of Borrower, Guarantor or any other guarantor or other parties;
(c) claim which Borrower, or Guarantor has or might have
against Lender, or any other party;
(d) bankruptcy, compositions, extensions, moratoria or other relief
granted to Borrower, or to any other guarantor pursuant to any statute presently
in force or hereafter enacted; or
(e) interruptions or changes in the business relations between
Guarantor and Borrower including any sale by the Guarantor (to the extent such
Guarantor owns such shares) of all or part of the shares of the Borrower or the
assets of the Borrower, any change in the relationship between the Guarantor and
Borrower.
Guarantor agrees not to accept from Borrower any disbursements or
payment of any kind, so long as any indebtedness is outstanding between Borrower
and Lender.
Guarantor agrees that any payment received by Guarantor in
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<PAGE> 24
violation of this provision will be deemed held in constructive trust for
Lender.
The Guarantor agrees that its obligations hereunder shall be absolute,
unconditional and shall be irrevocable without regard to the validity,
enforceability or legality of the Loan Agreements, any agreement referred to
therein or the Obligations; the waiver or consent by the Lender with respect to
any provision of the Loan Agreements; or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of the Guarantor,
and shall not be subject to any defense, set off or counterclaim whatsoever,
irrespective of the validity or legality of the same.
The Guarantor expressly agrees that it shall not be necessary, as a
condition to enforce this Guaranty, that suit be first instituted against
Borrower, or any other person whatsoever, or that any rights or remedies against
Borrower, or any other person be first exhausted, it being understood and agreed
that the liability of the Guarantor hereunder shall be primary, direct, and in
all respects unconditional and independent of the obligations of Borrower.
The Guarantor hereby expressly waives acceptance, diligence,
presentment, demand of payment, protest, notice of acceptance of this Guaranty,
notice of liability to which it may apply, notice of Default under the Loan
Agreements, notice of dishonor or nonpayment or non-satisfaction of any such
liabilities, suit or taking other action or making any demand against Borrower
or any other party liable with respect hereto including the undersigned, filing
of claims with a court in the event of merger or bankruptcy of the Borrower, any
requirement to proceed against Borrower or any successor in interest to
Borrower, and all other notices and demands whatsoever.
No delay on the part of Lender in exercising any of its options, powers
or rights hereunder or under the Loan Agreements, or partial or single exercise
thereof, shall constitute a waiver thereof. The Lender may grant extensions of
time, of performance, or of payment or any other indulgence to Borrower, without
notice to or consent of Guarantor, and such action shall not affect, impair or
discharge the liability of the Guarantor hereunder.
If and to the extent that Guarantor makes any payment hereunder, any
claim which the Guarantor may have by reason thereof shall be subject and
subordinate to the prior payment by the Borrower to the Lender of all amounts
due under the Loan Agreements, the performance in full by Borrower of all of its
obligations thereunder, and the performance in full by the Guarantor all of its
other obligations hereunder.
The obligations hereunder of Guarantor shall be binding upon its
successors and assigns.
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<PAGE> 25
This Guaranty shall be construed liberally in favor of Lender and shall
inure to the benefit of Lender's successors and assigns. The rights and remedies
herein granted to Lender are cumulative and not alternative.
This Guaranty is being delivered in the State of Georgia, United States
of America, and will in all respects be governed by and construed in accordance
with the laws of the State of Georgia (notwithstanding the conflict laws of the
State of Georgia), United States of America.
Guarantor hereby consents to the non-exclusive jurisdiction of the
Federal District Court for the District of Georgia or the State of Georgia
courts in Atlanta, Georgia, United States of America. Nothing herein will
prevent Lender from bringing suit in any other appropriate jurisdiction.
Guarantor hereby agrees to furnish the Lender during the time that any
of the Obligations are outstanding, such financial information concerning the
Guarantor as the Lender may reasonably request.
The undersigned Guarantor represents and warrants that (a) the
financial statements heretofore delivered to Lender fairly present the financial
position of the Guarantor on and as of the date thereof for the period or
periods covered thereby; (b) since the date of the balance sheet included within
said financial statements, there has been no materially adverse change in the
financial condition of Guarantor; (c) Guarantor has its principal place of
business at the address shown below and (d) this Guaranty, when executed by
Guarantor, is a valid and binding obligation of Guarantor, enforceable in
accordance with its terms. Additionally, Guarantor acknowledges and agrees that
its execution of this Guaranty was a necessary condition and inducement for
Lender to enter into the Loan Agreements with Borrower.
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<PAGE> 26
IN WITNESS WHEREOF, the Guarantor, has executed and delivered this
Guaranty as of the date first above written.
AIRWAYS CORPORATION
By: Lawrence H. Brinker
-------------------------------
Title: General Counsel & Secretary
----------------------------
Address: 6280 Hazeltine National Drive
Suite 100
Orlando, Florida 32822
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<PAGE> 27
EXHIBIT C
SECURITY AGREEMENT
AIRCRAFT CHATTEL MORTGAGE AND SECURITY AGREEMENT
dated as of
July 3, 1997
made by
AIRTRAN AIRWAYS, INC., AS BORROWER
in favor of
VALUJET, INC., AS LENDER
- -------------------------------------------------------------------------------
One Boeing 737 Aircraft
- -------------------------------------------------------------------------------
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<PAGE> 28
AIRCRAFT CHATTEL MORTGAGE AND SECURITY AGREEMENT (the "Security
Agreement") dated as of July 3, 1997, made by Airtran Airways, Inc., a
Delaware corporation (the "Borrower"), to ValuJet, Inc., a Nevada corporation
(the "Lender").
PRELIMINARY STATEMENTS
WHEREAS, Lender and Borrower have entered into a Loan Agreement dated
July 3, 1997 (the "Loan Agreement") pursuant to which Lender has this date made
the Loan to Borrower;
WHEREAS, it is a condition to the making of the Loan by the Lender that
this Security Agreement be executed and delivered by the Borrower; and
WHEREAS, the Borrower desires to execute this Security Agreement to
satisfy the condition described in the preceding paragraph; and
WHEREAS, the Borrower wishes to grant certain security interests in
favor of the Lender; and
NOW, THEREFORE, in consideration of the benefits accruing to the
Borrower, the receipt and sufficiency of which are hereby acknowledged, the
PARTIES HERETO AGREE:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01. Definitions. The capitalized terms used herein shall have
the meanings specified in Exhibit A to this Security Agreement unless the
context otherwise requires. Such definitions shall be equally applicable to the
singular and plural of the terms defined.
ARTICLE II
GRANTING CLAUSES; REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Security Agreement and Grant of Security Interest. The
Borrower hereby mortgages to the Lender, its successors and assigns, and hereby
grants to the Lender, its successors and assigns, a continuing perfected
security interest in and Lien upon the following property (collectively, the
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<PAGE> 29
adjustments shall be with the Lender), "Collateral") as security for the due
and prompt payment and performance of the Obligations:
(a) the Airframe and Engines described in Schedule I hereto;
(b) any Airframe or Engines described in Schedule I to any
Supplement from time to time hereafter executed and delivered by the
Borrower pursuant to Section 2.02 hereof;
(c) the Aircraft Records;
(d) any lease (authorized or unauthorized) relating to an
Aircraft that is subject to the Lien created by this Security
Agreement, including (without limitation) (i) the right to receive all
rent and other monies whatsoever payable to the Borrower under such
lease, including all insurance proceeds and the benefit of any
assignment by a lessee to the Borrower of its right, title and interest
in and to all insurances effected pursuant to such lease, any
compensation paid in respect of any requisition for use or hire of the
leased property any sums payable to the Borrower in respect of the
lessee's obligations to repair or restore the leased property to the
condition specified under the lease and all claims for damages in
respect of any breach by the lessee of such lease, and (ii) the right
to exercise the rights and remedies of the Borrower under any such
lease, including without limitation the right to declare an "event of
default" under the lease and repossess the leased property as a
consequence thereof;
(e) all Proceeds of the Airframe or Engines;
(f) all issues from and income and interest on Proceeds,
products, title, interest and claims whatsoever, at law, as well as in
equity, now or hereafter existing, in or to any of the foregoing;
(g) [Intentionally Omitted];
(h) [Intentionally Omitted];
(i) all right, title and interest of the Borrower to and in
all aircraft purchase agreements covering the Airframe and Aircraft
subject to the Lien hereof, and all engine purchase agreements covering
the Engines subject to the Lien hereof, including all warranties
(whether express or implied), service policies, product agreements and
patent indemnities of any manufacturer, vendor or maintenance and
overhaul agency, and any subcontractor or supplier or vendor thereof;
and
(j) to the extent not included in the foregoing, all and any
proceeds of any and all of the foregoing Collateral, including (without
limitation) proceeds of insurance covering the Airframe and Engines
and/or any other portion of the Collateral;
TO HAVE AND TO HOLD the Collateral as security as
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aforesaid; IN TRUST NEVERTHELESS, upon the terms and in trust as hereinafter set
forth, for the benefit, security and protection of the Lender by securing the
Note outstanding under the Loan Agreement.
The parties hereto agree that any lease of the Aircraft shall
be subject and subordinate to all of the provisions of the Loan Agreement and
this Security Agreement.
The Lender's security interest in, Lien upon, and rights under
the Collateral shall attach to all of the Collateral upon the execution and
delivery of this Security Agreement and upon the acquisition of rights thereon
by the Borrower, without further act being required on the part of either the
Lender or the Borrower.
SECTION 2.02. Intentionally Omitted.
SECTION 2.03. Representations and Warranties of the Borrower. The
Borrower represents and warrants that, in the case of the Aircraft, Airframe and
each Engine initially or subsequently mortgaged hereunder, on the date such
Airframe or Engine is mortgaged hereunder:
(i) The execution, delivery and performance by the Borrower
of this Security Agreement or this Security Agreement as supplemented
by any Supplement are within the Borrower's corporate power, have been
duly authorized by all necessary corporate action, and do not
contravene (1) the Borrower's articles of incorporation or by-laws or
(2) any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award or any contractual restriction binding
on or affecting the Borrower or any of its properties and do not result
in or require the creation of any Lien, security interest or other
charge or encumbrance (other than pursuant to the Operative Documents)
upon or with respect to any of its properties other than that created
hereunder.
(ii) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
is required for the due execution and delivery by the Borrower of this
Security Agreement or this Security Agreement as supplemented by any
Supplement, other than as have been duly obtained, taken, given or made
(certified copies of which shall have been delivered to the Lender).
(iii) The Borrower shall have good title to such Airframe or
Engines, free and clear of all Liens, except the Lien of the Lender
thereon.
(iv) The Borrower has duly executed and delivered this
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Security Agreement which Security Agreement (as so
supplemented, as the case may be) constitutes the legal, valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms.
ARTICLE III
REGISTRATION AND MAINTENANCE; OPERATION;
POSSESSION AND LEASES; INSIGNIA
SECTION 3.01. Registration and Maintenance. The Borrower, at
its own expense, shall:
(1) maintain the registration of the Aircraft in the name of
the Borrower and maintain the registration of the Aircraft in the
United States in the name of the Borrower under the Federal Aviation
Act;
(2) maintain, service, repair and overhaul (or cause to be
maintained, serviced, repaired, and overhauled) the Aircraft (and any
engine which is not an Engine but which is installed on the Aircraft),
the Airframe, each Engine and each Part
(a) so as to keep the Aircraft (and any such engine),
the Airframe, each Engine and each Part (i) in good operating
condition and (ii) ordinary wear and tear excepted, in as good
condition as when delivered to the Borrower on the Delivery
Date and so as to keep the Aircraft in such condition as may
be necessary to enable the airworthiness certification for the
Aircraft to be maintained in good standing at all times;
(b) in accordance with the Borrower's FAA-approved
maintenance program for the Aircraft and Engines, which
program shall be approved by the FAA; and
(c) in a manner which will not discriminate against
the Aircraft with respect to other aircraft of the same type
(whether owned or leased) in the Borrower's fleet.
(3) maintain or cause to be maintained all Aircraft Records
required to be maintained in respect of the Aircraft by the FAA;
(4) comply with all applicable airworthiness directives of the
FAA and maintain an FAA certificate of airworthiness in relation to the
Aircraft;
(5) be and shall remain a Citizen of the United
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States;
(6) be and shall remain a Certificated Air Carrier and is and
shall continue to be a holder of all certificates, licenses and
authority necessary to operate the Aircraft under Part 121 of the
Federal Aviation Regulations in scheduled passenger service. The
Borrower will comply with, or cause to be complied with, at all times
and in all respects, all statutes, laws, ordinances, rules and
regulations of the United States (including, without limitation, the
FAA) and of all other domestic or foreign governmental, regulatory, or
judicial bodies applicable to the use, operation, registration,
maintenance, overhauling, or condition of the Aircraft, or any part
thereof, and with all requirements under any licenses, permits or
certificates relating to the registration, use, operation or control of
the Aircraft which are issued to the Borrower or to any other person
having operational control of the Aircraft; and
(7) file, record and take such other action as shall be
reasonably necessary to preserve and protect the perfected Lien of this
Security Agreement on the Collateral, including filing UCC continuation
statements.
SECTION 3.02. Operation; Reregistration. (a) The Borrower will not
maintain, use, service, repair, overhaul or operate the Aircraft in violation of
any law, rule, regulation, treaty or order of any government or governmental
authority (domestic or foreign) having jurisdiction, or in violation of any
airworthiness certificate, license or registration relating to the Aircraft
issued by any such authority except the Borrower may contest in good faith the
validity or application of any such law, rule, regulation, treaty, order,
certificate, license or registration, after providing written notice to the
Lender, provided that there is no material adverse effect on the rights of the
Lender, the Lien under the Security Agreement or the priority thereof, or the
value or utility of the Collateral. The Borrower will at all times maintain the
Aircraft in passenger configuration.
(b) The Borrower will not operate or locate the Aircraft: (i)
in or to any area excluded from coverage by any insurance required to be
maintained by the terms of Article VI hereof, and (ii) any areas of actual or
threatened armed hostilities.
SECTION 3.03. Possession and Leases. (a) The Borrower will not, without
the prior written consent of the Lender, lease or otherwise in any manner
deliver, transfer or relinquish title to, interest in, or possession of the
Airframe or any Engine or install or permit any Engine to be installed on any
airframe other than the Airframe; provided that, so long as (i) no Default or
Event of Default exists at the time of such lease, delivery,
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transfer or relinquishment of possession or installation, (ii) the Borrower
shall continue to comply with Article VI hereof, (iii) all airworthiness
approvals required for such purposes have been obtained, and (iv) the actions to
be taken shall not deprive the Lender of the security interest of this Security
Agreement on such Aircraft, Airframe or Engine, the Borrower may, without the
prior written consent of the Lender:
(1) subject the Engines or engines then installed on the
Airframe or Parts to normal interchange agreements or normal pooling or
similar arrangements, in each case customary in the airline industry
and entered into by the Borrower in the ordinary course of its business
with a Certificated Air Carrier; provided that (i) no such agreement or
arrangement contemplates or requires the transfer of title to any
Engine and (ii) if the Borrower's title to any Engine shall be divested
under any such agreement or arrangement, such divestiture shall be
deemed to be an Event of Loss with respect to such Engine and the
Borrower shall comply with Section 5.02 hereof in respect thereof; or
(2) deliver possession of the Airframe or any Engine to the
Airframe manufacturer or Engine manufacturer or to any qualified
FAA-approved Person for testing, service, repair, maintenance or
overhaul work on the Airframe or any Engine or any part thereof or for
alterations or modifications in or additions to the Airframe or
Engine(s) to the extent required or permitted by the terms hereof.
(b) The rights of transferee who receives possession by reason
of a transfer permitted by this Section 3.03 (other than the transfer of an
Engine which is deemed an Event of Loss upon satisfaction of the replacement
thereof pursuant to Section 5.02 hereof) shall be subject and subordinate to all
the terms of this Security Agreement.
No pooling agreement, lease or other relinquishment of
possession of any Airframe or any Engine or wet lease shall in any way discharge
or diminish any of the Borrower's obligations to the Lender hereunder or
constitute a waiver of the Lender's rights or remedies hereunder.
(c) Any wet lease or similar arrangement under which the
Borrower maintains operational control of the Aircraft subject thereto shall not
constitute a delivery, transfer or relinquishment of possession for purposes of
this Section 3.03.
SECTION 3.04. Insignia. On or before the date hereof, or as
soon thereafter as practicable, the Borrower agrees to affix and
maintain (or cause to be affixed and maintained) on the Aircraft:
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(a) in the cockpit of the Airframe and on each Engine
thereof a nameplate bearing the inscription:
This Aircraft/Engine is Mortgaged To
ValuJet, Inc., as Lender
such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lender permitted hereunder; and
(b) on board and in a conspicuous location, a valid and
current certificate of airworthiness issued by the FAA or the then government or
registry as permitted hereby. Except as otherwise herein provided, the Borrower
will not allow the name of any Person to be placed on any Aircraft or any Engine
as a designation that might be interpreted as a claim of ownership (other than
by the Borrower) or as a claim of a security interest.
ARTICLE IV
REPLACEMENT AND POOLING OF PARTS;
ALTERATIONS, MODIFICATIONS AND ADDITIONS
SECTION 4.01. Replacement of Parts. The Borrower, at its own cost and
expense, will promptly replace or cause to be replaced all Parts which may from
time to time become worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use for any reason
whatsoever, except as otherwise provided in Section 4.03. All replacement Parts
(other than replacement parts temporarily installed as provided in Section 4.02)
shall be free and clear of all Liens (except Permitted Liens), and shall be in
as good an operating condition, and shall have a value and utility substantially
equal to or greater than, the Parts replaced assuming such replaced Parts were
in the condition and repair required to be maintained by the terms of this
Security Agreement. All Parts at any time removed from the Airframe or any
Engine shall remain the property of the Borrower and subject to this Security
Agreement, no matter where located, until such time as such Parts shall be
replaced by parts which have been incorporated in or installed in or attached to
the Airframe or Engine and meet the requirements for replacement Parts specified
above. Upon any replacement part becoming incorporated or installed in or
attached to the Airframe or any Engine, without further act (subject only to
Permitted Liens and except for any arrangement or temporary installation
permitted by Section 4.02), (i) such replacement part shall become subject to
this Security Agreement covering the Airframe or Engine and be deemed a Part
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for all purposes hereof to the same extent as the Parts originally incorporated
or installed in or attached to the Airframe or Engine and (ii) the replaced Part
shall no longer be deemed a Part under the Security Agreement.
SECTION 4.02. Pooling of Parts; Temporary Replacement Parts. Any Part
removed from the Airframe or any Engine as provided in Section 4.01 may be
subjected by the Borrower to a pooling arrangement of the type which is
permitted by Section 3.03(a)(1) hereof; provided, that the Part replacing such
removed Part shall be incorporated or installed in or attached to the Airframe
or Engine in accordance with Section 4.01 as promptly as practicable after the
removal of such removed Part. In addition, the Borrower may use temporary parts
or pooled parts on the Aircraft as temporary replacements for Parts, provided
that the Borrower at its expense, as promptly thereafter as practicable, either
(1) causes such pooled or replacement Part to become the property of the
Borrower free and clear of all Liens other than Permitted Liens or (2) replaces
such replacement Part with a further replacement part owned by the Borrower
which meets the requirements of Section 4.01, free and clear of all Liens other
than Permitted Liens.
SECTION 4.03. Alterations, Modifications and Additions. The Borrower,
at its own expense, will make (or cause to be made) such alterations,
modifications and additions to the Airframe and each Engine as may be required
to meet the applicable standards of the FAA and to maintain the certificate of
airworthiness for the Aircraft, regardless of upon whom such requirements are,
by their terms, nominally imposed, provided, however, that the Borrower may in
good faith, contest the validity or application of any such law, rule,
regulation or order in any reasonable manner which does not adversely affect the
Lender. In addition, the Borrower, at its own expense, may from time to time
make such alterations and modifications in and additions to the Airframe or any
Engine as the Borrower may deem desirable in the proper conduct of its business,
including removal of Parts which the Borrower deems to be obsolete or no longer
suitable or appropriate for use on the Airframe or Engine (such Parts are
hereinafter referred to as "Obsolete Parts"); provided that no such alteration,
modification, removal or addition singularly or in the aggregate (x) impairs the
condition or airworthiness of the Airframe or Engine or (y) diminishes the value
or utility of the Airframe or Engine below the value or utility thereof
immediately prior to such alteration, modification, removal or addition assuming
(i) the Airframe or Engine was then in the condition and airworthiness required
to be maintained by the terms of this Security Agreement and (ii) that the
Obsolete Parts so removed include all Obsolete Parts removed to the date of
determination, and in any event, no alteration, modification, removal or
addition is permitted without consent of the Lender if the purpose is to convert
the Aircraft for use as a cargo transport. All parts incorporated or installed
in or attached or
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added to the Airframe or any Engine as the result of such alteration,
modification or addition (except those parts which the Borrower has leased from
others and parts which may be removed by the Borrower pursuant to the next
sentence) (each, an "Additional Part" or, collectively, "Additional Parts")
shall, without further act, become subject to this Security Agreement.
Notwithstanding the foregoing, the Borrower may, at any time, so long as no
Default or Event of Default shall have occurred and be continuing, remove or
suffer to be removed any Additional Part, provided that such Additional Part (i)
is in addition to, and not in replacement of or substitution for, any Part
originally incorporated or installed in or attached to the Airframe or any
Engine at the time of delivery thereof hereunder or any Part in replacement of
or substitution for any such Part, (ii) is not required to be incorporated or
installed in or attached or added to the Airframe or any Engine pursuant to the
terms of Article III hereof or the first sentence of this Section 4.03, and
(iii) can be removed from the Airframe or Engine without impairing the
airworthiness of the Airframe or Engine or diminishing the value or utility of
the Airframe or Engine which the Airframe or Engine would have had at such time
had such removal, alteration, modification or addition not occurred. Upon the
removal thereof as provided above, such Additional Parts shall no longer be
deemed part of the Airframe or the Engine from which it was removed and shall be
free of the Lien of this Security Agreement.
ARTICLE V
LOSS, DESTRUCTION, REQUISITION, ETC.
SECTION 5.01. Event of Loss With Respect to an Aircraft. Upon the
occurrence of an Event of Loss with respect to the Airframe or the Airframe and
the Engines and/or engines then installed thereon, the Borrower shall forthwith
give the Lender written notice of such Event of Loss. Not later than the earlier
of (x) the thirtieth day following the occurrence of such Event of Loss or (y)
the third Business Day following the receipt of the insurance proceeds in
respect to such Event of Loss, the Borrower shall prepay the entire outstanding
principal amount of the Note together with accrued interest thereon to the date
of prepayment, and all other amounts payable to the Lender under the Loan
Agreement, the Note, this Security Agreement and all other Operative Documents.
SECTION 5.02. Event of Loss With Respect to an Engine. Upon the
occurrence of an Event of Loss with respect to an Engine under circumstances in
which there has not occurred an Event of Loss with respect to the Airframe, the
Borrower shall forthwith give the Lender written notice thereof and shall,
within 60 days after the occurrence of such Event of Loss, as replacement for
the Engine with respect to which such Event of Loss occurred, cause to be
subjected to the Lien of this Security Agreement
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another Pratt & Whitney JT8D-17_ engine, fully Stage III compliant (or an
equivalent or an improved model and suitable for installation and use on the
Airframe), free and clear of all Liens (other than Permitted Liens) and having a
value and utility at least equal to, and being in as good an operating condition
as, the Engine subject to such Event of Loss, assuming that said Engine had been
maintained in accordance with the terms hereof. Prior to or at the time of any
such substitution, the Borrower, at its own expense, will
(i) cause a Supplemental Security Agreement with respect to
such replacement engine to be duly executed by the Borrower and filed
for recording pursuant to the Federal Aviation Act, or the applicable
laws, rules and regulations of any other jurisdiction in which the
related Airframe may then be registered,
(ii) furnish the Lender with such evidence of the Borrower's
title to such replacement engine and of compliance with the insurance
provisions of Article VI hereof with respect to such replacement engine
as the Lender may reasonably request, and
(iii) furnish the Lender with a written certificate of the
Borrower, signed by a vice president of the Borrower and an aircraft
engineer from the engine manufacturer or, if not available, a
comparable engineer, certifying that such replacement engine is a Pratt
& Whitney JT8D-17 engine (or an equivalent or an improved model and
suitable for installation and use on the Airframe fully compliant with
Stage 3), free and clear of all Liens (other than Permitted Liens) and
has a value and utility at least equal to, and is in as good operating
condition as, the Engine subject to such Event of Loss (assuming it had
been maintained in the condition required hereby), and specifying the
number of hours and cycles that such replacement engine then has.
Upon compliance by the Borrower with all of the terms of this Section 5.02, the
Engine with respect to which such Event of Loss occurred shall thereupon cease
to be an Engine hereunder. For all purposes hereof, each such replacement engine
shall, after such substitution, be deemed an "Engine" hereunder, and the Lender
shall execute any documents requested by the Borrower to release such replaced
Engine from the Lien of this Security Agreement.
SECTION 5.03. Application of Payments From Government Authorities for
Requisition of Title, Etc. Any payments (other than insurance proceeds the
application of which are provided for in Article VI hereof) received at any time
by the Lender or by the Borrower from any governmental authority or other Person
with respect to an Event of Loss other than a requisition for use by the United
States or other government of registry of the Aircraft
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or any instrumentality or agency thereof not constituting an Event of Loss, will
be applied as follows:
1. If payments are received with respect to any
Airframe (or any Airframe or any Engines or engines then
installed thereon), unless the same are replaced pursuant to Section
5.01, after reimbursement of the Lender for reasonable costs and
expenses, so much of such payments remaining as shall not exceed the
aggregate required to be paid by the Borrower pursuant to Section 5.01
hereof shall be applied in reduction of the Borrower's obligation to
pay such amount, if not already paid by the Borrower, or, if the full
amount payable under Section 5.01 hereof has been paid by the Borrower,
shall be applied to reimburse the Borrower for its payment of such
amount, and following the foregoing application, the balance, if any,
of such payments shall be paid over to or retained by the Borrower; and
2. If such payments are received with respect to an
Engine under circumstances contemplated by Section 5.02, so much of
such payments remaining after reimbursement of the Lender for
reasonable costs and expenses shall be paid over to, or retained by,
the Borrower, provided that the Borrower shall have fully performed the
terms of Section 5.02 with respect to the Event of Loss for which such
payments are made.
SECTION 5.04. Requisition for Use of the Aircraft by the United States
Government or the Government of Registry of the Aircraft. In the event of the
requisition for use of the Airframe and the Engines or engines installed on the
Airframe by the United States Government or any other government of registry of
the Aircraft or any instrumentality or agency of any thereof not constituting an
Event of Loss, or a CRAF activation, the Borrower shall promptly notify the
Lender of such requisition or activation, and all of the Borrower's obligations
under the Loan Agreement with respect to the Aircraft of which such Airframe,
Engines or engines are a part shall continue to the same extent as if such
requisition or activation had not occurred. All payments received by the
Borrower or the Lender from such government for the use of such Airframe and
Engines or engines shall be paid over to, or retained by, the Borrower unless
such payments are made in advance and shall cover more than two months of rent,
in which case such amounts representing that portion of such rents in excess of
two months, shall be paid over to or retained by the Lender as security for the
obligations of the Borrower hereunder; provided, that upon return of such
Airframe and Engine or engines, any such rents retained by Lender shall, so long
as no Event of Default shall have occurred and be continuing, be returned to
Borrower.
SECTION 5.05. Requisition for Use of an Engine by the United States or
the Government of Registry of the Aircraft. In
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the even of the requisition for use of an Engine by the United States
Government or any other government of registry of the Aircraft or any agency or
instrumentality of any thereof (other than in the circumstances contemplated by
Section 5.04), such Engine shall be deemed to have suffered an Event of Loss and
Section 5.02 hereof shall apply.
SECTION 5.06. Intentionally Omitted.
SECTION 5.07. Application of Payments During Existence of Defaults or
Events of Default. Any amount referred to in this Security Agreement which is
payable to or retainable by the Borrower shall not be paid to or retained by the
Borrower if at the time of such payment or retention an Event of Default shall
have occurred and be continuing, but shall be subject to the Lien hereof and
shall be held by or paid over to the Lender as security for the obligations of
the Borrower under the Loan Agreement, the Note and this Security Agreement and,
if the Lender declares the Loan to be due pursuant to Section 8.01 hereof,
applied against the Borrower's obligations under the Loan Agreement, the Note
and this Security Agreement as and when due. At such time as there shall not be
continuing any Event of Default, such amount shall be paid to the Borrower to
the extent not previously applied in accordance with the preceding sentence.
ARTICLE VI
INSURANCE
SECTION 6.01. Public Liability and Property Damage Insurance. Except as
provided in paragraph (b) of this Section 6.01, the Borrower will at all times
carry or cause to be carried at its expense (i) aircraft liability insurance
including, without limitation, passenger legal liability, property damage
liability and contractual liability insurance (exclusive of manufacturer's
product liability insurance) with respect to the Aircraft, in an amount not less
than the greater of (x) the amounts of public liability and property damage
insurance from time to time applicable to aircraft owned or operated by the
Borrower of the same type as the Aircraft which comprise Borrower's fleet and
(y) $350,000,000 combined single limit, and (ii) cargo liability insurance. In
both clauses (i) and (ii) above, the insurance shall be of the type and covering
the same risks as customarily carried by airlines of comparable fleet size and
composition engaged in the same or similar business similarly situated with the
Borrower and owning or operating similar aircraft and engines and, to the extent
more comprehensive than that covered by such airlines, as from time to time
applicable to aircraft owned by the Borrower of the same type which comprised
the Borrower's fleet and which is maintained in effect with insurers of
recognized responsibility.
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SECTION 6.02. Insurance Against Loss or Damage to the Aircraft. (a) the
Borrower shall at all times maintain or cause to be maintained in effect, at its
expense, with insurers of recognized responsibility, "all-risk" aircraft hull
insurance covering the Aircraft and "all-risk" coverage of Engines and Parts
while temporarily removed from the Aircraft and not replaced by similar
components, including, without limitation, war risk and
governmental confiscation and expropriation and hijacking insurance, (if and to
the extent that the Aircraft is operated outside the United States or Canada in
an area where war risk insurance is customarily maintained by commercial
operators), and fire, transit and extended coverage with respect to any Engines
or Parts while removed from the Aircraft; provided, that such insurance shall at
all times be for an amount not less than $9,000,000. In the case of a loss with
respect to an engine (other than an Engine) installed on the Airframe, the
Lender shall hold any payment received by it of any insurance proceeds in
respect of such loss for the account of the Borrower or any other third party
that is entitled to receive such proceeds.
Except during a period a Default or an Event of Default has
occurred and is continuing, all losses will be adjusted with the insurers by the
Borrower (giving due regard to the interests of the Lender). As between the
Borrower and the Lender, it is agreed that all insurance payments received as a
result of the occurrence of an Event of Loss will be applied as follows:
(1) if such payments are received with respect to the Airframe
(or the Airframe and the Engines installed thereon), payments as shall
not exceed the aggregate amount required to be paid by the Borrower
pursuant to Section 5.01 shall be applied in reduction of the
Borrower's obligation to pay such amount, if not already paid by the
Borrower, or, if already paid by the Borrower, shall be applied to
reimburse the Borrower for its payment of such amount, and the balance,
if any, of such payments remaining thereafter will be paid over to the
Borrower; and
(2) if such payments are received with respect to an Engine
under the circumstances contemplated by Section 5.02, such payments
shall be paid over to the Borrower, provided that the Borrower shall
have fully performed or, concurrently therewith, will fully perform the
terms of Section 5.02 with respect to the Event of Loss for which such
payments are made.
As between the Borrower and the Lender, the insurance payments for any
property damage loss to any Airframe or any Engine not constituting an Event of
Loss with respect thereto or with respect to an Event of Loss of an Engine shall
be paid as follows:
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in the event that insurance proceeds received with
respect to an event not constituting an Event of Loss do not
exceed $250,000, the full amount thereof shall be paid to the
Borrower, and if such insurance proceeds exceed $250,000, the
full amount shall be paid to the Lender, to be held in trust
for the account of the Borrower subject to the Lien of the
Security Agreement covering the Aircraft of which such
Airframe or Engine is a part, to reimburse the Borrower for
accomplishing repairs and/or replacements as required, or to
pay suppliers directly for such repairs and/or replacements.
SECTION 6.03. Reports, Etc. The Borrower will furnish, or cause to be
furnished, to the Lender on or before the Delivery Date and annually on the
renewal dates of the Borrower's relevant insurance policies, a report, signed by
its industry recognized independent firm of insurance brokers (the "Insurance
Brokers"), describing in reasonable detail the hull and liability insurance (and
property insurance for detached engines and parts) then carried and maintained
with respect to the Aircraft and stating the opinion of such firm that such
insurance complies with the terms hereof. The Borrower will cause such Insurance
Brokers to agree to advise the Lender in writing (i) of any default in the
payment of any premium which default might invalidate or render unenforceable,
in whole or in part, any insurance on the Aircraft or Engines, and (ii) at least
30 days (seven days in the case of war risk and allied perils coverage) prior to
the cancellation (but not scheduled expiration) or material adverse change of
any insurance maintained pursuant to this Article VI. In the event that the
Borrower shall fail to maintain or cause to be maintained insurance as herein
provided, the Lender may at its option provide such insurance and, in such
event, the Borrower shall, upon demand, reimburse the Lender for the cost
thereof. No such payment, performance or compliance shall be deemed to cure any
Event of Default or otherwise relieve the Borrower of its obligations under the
Operative Documents.
SECTION 6.04. [INTENTIONALLY LEFT BLANK]
SECTION 6.05. Additional Insurance by the Borrower and the Lender. The
Borrower may at its own expense carry insurance with respect to its interest in
the Aircraft in amounts in excess of that required to be maintained by this
Article VI. The Lender may carry for its account at its cost and expense
insurance with respect to their interests in the Aircraft.
SECTION 6.06. Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Article VI requiring insurance, the
Lender agrees to accept, in lieu of insurance against any risk with respect to
the Aircraft and Engines, indemnification from, or insurance provided by, the
United States Government or any agency or instrumentality thereof
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the obligations of which are supported by the full faith and credit of the
United States Government, against such risk in an amount which, when added to
the amount of insurance against such risk maintained by the Borrower shall be at
least equal to the amount of insurance against such risk otherwise required by
this Article VI.
SECTION 6.07. Application of Payments During Existence of a Default or
an Event of Default. Any amount referred to in this Article VI which is payable
to or retainable by the Borrower shall not be paid to or retained by the
Borrower if at the time of such payment or retention an Event of Default shall
have occurred and be continuing, but shall be subject to the Lien of this
Security Agreement and held by or paid over to the Lender as security for the
obligations of the Borrower under the Loan Agreement, the Note and this Security
Agreement and, if the Lender declares the Loan to due pursuant to Section 8.01
hereof, applied against the Borrower's obligations under the Loan Agreement, the
Note and this Security Agreement as and when due. At such time as there shall
not be continuing any such Event of Default, such amount shall be paid to the
Borrower to the extent not previously applied in accordance with the preceding
sentence.
SECTION 6.08. Terms of Insurance Policies. Any policies carried in
accordance with Sections 6.01 and 6.02 hereof covering the Aircraft, and any
policies taken out in substitution or replacement for any such policies, (1)
shall name the Lender as an Additional Insured (but without imposing on such
party liability to pay premiums with respect to such insurance), and with
respect to Section 6.02, shall name the Lender as sole loss payee for any Event
of Loss in respect of the Aircraft, (2) shall have deductibles in amounts not
exceeding $250,000, (3) shall provide that if the insurers cancel such insurance
for any reason whatsoever, or if any material change is made in the insurance
which adversely affects the interest of the Additional Insured, or such
insurance shall lapse for non-payment of premium, such cancellation, lapse, or
change shall not be effective as to the Additional Insured for 30 days after
receipt (seven days after sending such notice in the case of war risk and allied
perils coverage) by the Additional Insured of written notice by such insurers of
such cancellation or change, (4) shall provide that in respect of the Additional
Insured's interests in such policies the insurance shall not be invalidated by
any action or inaction of the Borrower and shall insure the interests of the
Additional Insured regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the Borrower, (5) shall
be primary without any right of contribution from any other insurance which is
carried by the Borrower or the Additional Insured, (6) shall expressly provide
that all of the provisions thereof, except the limits of liability, shall
operate in the same manner as if there were a separate policy covering each
insured, (7) shall provide that the insurers waive (i) any right to set-off or
counterclaim or any other deduction, whether
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by attachment or otherwise, in respect of any liability of the Borrower or the
Additional Insured to the extent of any money owed to the Borrower or the
Additional Insured and (ii) any right to subrogation, (8) shall provide that
losses shall be adjusted with the Borrower, unless and until the insurers have
received written notice of an Event of Default which is continuing (in which
case adjustments shall be with the Lender), (9) shall contain a 50/50 clause per
AVS 103 or its equivalent, and (10) shall provide that (i) in the event of a
loss not constituting an Event of Loss with respect to the Aircraft and
involving proceeds in excess of $250,000, the proceeds in respect of such loss
shall be payable to the Lender to be held by the Lender whether such payment is
made to the Borrower or any third party, it being understood and agreed that,
except as provided in Section 6.07 hereof, in the case of any payment to the
Lender other than in respect of an Event of Loss of the Aircraft, the Lender
shall, upon receipt of evidence reasonably satisfactory to it that the damage
giving rise to such payment shall have been repaired or that such payment shall
then be required to pay for repairs then being made or the replacement of the
Engine suffering the Event of Loss, pay the amount of such payment, and any
interest or income earned thereon, to the Borrower or its order, (ii) if
insurance proceeds are $250,000 or less in respect of a loss not constituting an
Event of Loss with respect to the Aircraft (regardless of the total amount of
proceeds resulting from such loss) they shall be paid to the Borrower or its
order unless an Event of Default shall have occurred and be continuing and the
insurers have been notified thereof by the Lender, and (iii) in the event of a
loss constituting an Event of Loss with respect to the Aircraft, the proceeds in
respect of such loss shall be payable to the Lender to be held by the Lender,
even if, contrary to the terms hereof, such payment is made to the Borrower or
any third party; provided, that (and subject to Section 6.02) the Lender shall
immediately pay to Borrower any amount of such proceeds which exceeds 110% of
the then outstanding principal of the Note and other amounts due under the Loan
Agreement, this Security Agreement so long as no Event of Default shall be
continuing. The Borrower shall give prompt written notice to the Lender of any
loss or damage to the Aircraft or any Engine for which the cost of repairs could
exceed $50,000.
SECTION 6.09. Self-Insurance. Except as expressly permitted by Section
6.08(2) hereof, all risks identified by Sections 6.01 and 6.02 hereof shall be
subject to third party insurance, and may not be subject to self-insurance.
ARTICLE VII
OTHER COVENANTS
SECTION 7.01. Liens. The Borrower will not directly or indirectly
create, incur, assume or suffer to exist any Lien on or with respect to the
Aircraft, the Airframe or the Engines, title thereto or any interest therein,
except:
(i) the Lien of the Security Agreement covering the
Collateral;
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(ii) Liens for a Tax or Taxes of the Borrower either not yet
due or being contested in good faith by appropriate proceedings (and
for the payment of which adequate reserves have been provided to the
extent required by GAAP), so long as such proceedings do not materially
adversely affect the first priority Lien of this Security Agreement or
involve any material risk of the sale, forfeiture or loss of the
Airframe or any Engine or any interest therein;
(iii) material suppliers', mechanics', workers', repairers',
employees' or other like liens arising in the ordinary course of the
Borrower's business securing obligations that are not overdue for a
period of more than 30 days or are being contested in good faith by
appropriate proceedings (and for the payment of which adequate reserves
have been provided to the extent required by GAAP), so long as during
such 30 day period there is not, or such proceedings do not, materially
adversely affect the first priority Lien of this Security Agreement or
involve any material risk of the sale, forfeiture or loss of the
Airframe or any Engine or any interest therein;
(iv) Liens arising out of any judgment or award against the
Borrower not arising out of any failure by the Borrower to perform any
of its obligations under the Operative Documents, unless such Liens
materially adversely affect the priority of the Lien of this Security
Agreement or result in a material risk of the sale, forfeiture or loss
of the Aircraft or the Airframe or any Engine which are a part of the
Aircraft, or the judgment secured shall not, within 30 days after the
entry thereof, have been discharged, vacated, reversed or execution
thereof stayed pending appeal or shall not have been discharged,
vacated or reversed within 30 days after the expiration of such stay;
(v) the rights of others under agreements or arrangements
to the extent expressly permitted by the terms hereof; and
(vi) any other involuntary Lien with respect to which the
Borrower shall have provided a bond or other security in an amount and
under terms reasonably satisfactory to the Lender.
The Borrower will promptly, at its own expense, take (or cause to be taken) such
actions as may be necessary duly to discharge any Lien not excepted above if the
same arise at any time.
SECTION 7.02. Inspection. At reasonable times and (unless an Event of
Default shall have occurred and is continuing) upon not less than 5 Business
Days prior notice to the Borrower, the Lender or its authorized representative
may, at the expense of the Lender (or, if a Default or Event of Default shall be
continuing, at the expense of the Borrower), inspect the Collateral.
SECTION 7.03. Taxes. The Borrower will pay, and the Borrower hereby
indemnifies the Lender on an After-Tax Basis from and against, any and all Taxes
which may from time to time be imposed on or asserted against the Collateral or
the Aircraft or any interest therein by any Federal, state or local government
or other taxing authority in the United States or by any foreign government or
subdivision thereof or by any foreign taxing authority upon or with respect to:
(i) the Aircraft or any interest therein, (ii) the manufacture, delivery,
purchase, ownership, operation, mortgaging, lease, sublease, use, storage,
maintenance, modification, repair, overhaul, testing, licensing, registration,
re-registration, storage, sale or other disposition of the Aircraft, (iii) any
rentals or other earnings payable in
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respect of the Aircraft or arising therefrom or the income or other proceeds
received with respect thereto, or (iv) this Security Agreement or the Loan
Agreement; provided, however, that the Borrower shall not be required to pay or
discharge any such Tax in respect of the overall net income, capital, net worth,
franchise, gross income or receipts or profit (if in lieu of net income) or
capital gains of the Lender, or any Tax in lieu of the foregoing, provided that
Taxes in the nature of withholding, sales, use, property or value added taxes
shall not be excluded from the Borrower's indemnity obligations hereunder.
If a written claim is made against the Lender for Taxes for
which an indemnity is provided hereunder, such party shall promptly notify the
Borrower and at Borrower's prompt written request and sole cost and expense
contest such Tax, or permit Borrower to contest such Tax.
SECTION 7.04. Lender's Right to Perform for the Borrower. Upon the
occurrence and continuance of a Default or an Event of Default, if the Borrower
fails to perform or comply with any of its agreements contained herein, the
Lender may perform or comply with such agreement, and the amount of the costs
and expenses incurred in connection with the performance of or compliance with
such agreement shall be payable by the Borrower on demand and shall be secured
by the Lien of this Security Agreement. The Lender agrees to provide the
Borrower with notice of any performance by the Lender taken pursuant to this
Section 7.04; provided, that the failure to give such notice shall not affect
the validity or effectiveness of such performance nor create any liability on
the part of the Lender.
SECTION 7.05. Further Assurances. The Borrower shall: at its expense
promptly and duly execute and deliver such documents and assurances and take
such action as the Lender reasonably determines may be necessary or desirable,
in order to carry out the intent and purpose of this Security Agreement and to
establish, protect and perfect the rights, remedies and security interests
created or intended to be created in favor of the Lender hereunder including
without limitation: any and all acts or things which may be reasonably requested
by the Lender with respect to complying with or remaining subject to the laws
and regulations of the United States with regard to the maintenance of the
Collateral; defending the title of the Borrower to the Collateral by means of
negotiation and, if necessary, appropriate legal proceedings, against each and
every party claiming an interest therein contrary or adverse to the Borrower's
title to same; keeping accurate and complete logs, manuals, books and all other
Aircraft Records relating to the Collateral and required by the FAA or the
applicable governmental or airworthiness authority of any other jurisdiction in
which the Aircraft may then be registered and promptly provide the Lender with
information relating to the Collateral as the Lender may reasonably require from
time to time; and except upon the prior written consent of
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the Lender or as otherwise provided in this Security Agreement, the Borrower
shall not sell or otherwise dispose of or transfer the Collateral, or alter the
registration particulars of the Aircraft, or any right or interest of the
Borrower therein.
SECTION 7.06. Recordation and Filing; Opinions of Counsel. (a) The
Borrower will, at its cost and expense, cause this Security Agreement and any
and all additional instruments (other than UCC financing or continuation
statements, or amendments thereto, which are covered under Section 7.06(b)
hereof) which shall be executed pursuant to the terms hereof, so far as
permitted by applicable law or regulations, to be kept, filed and recorded and
to be re- executed, refiled and re-recorded at all times in the office of the
Federal Aviation Administration, pursuant to the Act, and in such other places
as is necessary or as the Lender may reasonably request, in order to perfect and
preserve the Lien and security interest of this Security Agreement and to
protect the security and the rights of the Lender, and will furnish to the
Lender an opinion of counsel reasonably satisfactory to the Lender or other
evidence reasonably satisfactory to the Lender to the effect that such filing or
refiling and such recordation or re-recordation has been duly accomplished and
as to any Liens of record against the Aircraft or any Engine in the office where
such filing or refiling or recordation or re-recordation has been accomplished.
(b) At its own expense, the Borrower will execute and file
such financing statements in each jurisdiction as may be necessary or, in the
opinion of the Lender, desirable or required to perfect the security interest
and Lien hereunder in favor of the Lender and the Borrower will conduct, or
will cause to be conducted, a search of such financing statements previously on
file to ensure priority of such security interest and Lien. After the Delivery
Date, the Borrower will execute such financing or continuation statements, or
amendments thereto, as may be required with respect to any financing statements
as have been filed and as may be requested and furnished from time to time by
the Lender, and shall return such statements or amendments in a timely manner,
to the Lender for filing by the Lender, the costs of such filing to be
reimbursed by the Borrower to the Lender upon request of the Lender. The
Borrower hereby authorizes the Lender, with notice to the Borrower, to file
such statements without signature of the Borrower to the extent permitted by
Applicable Law.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01. Events of Default. Upon the occurrence of any
of the following specified events (each an "Event of Default"):
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(a) The Borrower shall default in the payment when due of any
principal or interest on the Loan or under the Note and such default shall
continue unremedied for two (2) Business Days, or default in the payment when
due of any other amounts owing hereunder or under the Operative Documents
(whether upon redemption, final maturity, acceleration or otherwise) and such
default shall continue unremedied for five (5) days after receipt of written
notice by the Borrower); or
(b) The Borrower shall fail to observe or perform any other
covenant or obligation contained in the Loan Agreement or the Security Agreement
or there shall occur an Event of Default under the Loan Agreement; or
(c) Any representation, warranty or statement made by or on
behalf of the Borrower herein or in any other Operative Document or in any
certificate delivered pursuant hereto or thereto shall prove to be untrue in any
material respect on the date as of which made or deemed made; or
(e) Intentionally Omitted.
(f) The Borrower or the Guarantor shall become insolvent or
generally fails to pay or admits in writing its inability to pay, its debts as
they become due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; or voluntarily ceases to conduct its business in the
ordinary course; or shall commence a voluntary bankruptcy case concerning itself
under Title 11 of the United States Code as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code") or under any other federal or state
bankruptcy statute; or an involuntary bankruptcy case is commenced against the
Borrower or the Guarantor and the petition is not dismissed within 60 days,
after commencement of the case; or a receiver, trustee, liquidator or custodian
is appointed for, or takes charge of, all or substantially all of the property
of the Borrower or the Guarantor or the Borrower commences any other proceeding
under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Borrower or the Guarantor or
there is commenced against the Borrower or the Guarantor any such proceeding
which remains undismissed for a period of 60 days, or the Borrower or the
Guarantor is adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or the Borrower or
Guarantor suffers any appointment of any receiver, trustee, liquidator or
custodian or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or the Borrower or Guarantor
makes a general assignment or plan or other arrangement for the benefit of
creditors; or
(g) Intentionally Omitted.
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(h) The Lien of this Security Agreement shall cease to
constitute a valid and first priority perfected Lien on the
Collateral; or
(i) Any of the Operative Documents shall for any reason cease
to be in full force and effect or shall become unenforceable in accordance with
its terms, other than as a result of bankruptcy or insolvency or similar laws;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Lender may, by written notice to the Borrower,
take any or all of the following actions to the fullest extent permitted by, and
subject to compliance with any mandatory requirements of, law, all of which are
hereby authorized by the Borrower, without prejudice to the rights of the Lender
to enforce its claims against the Borrower (provided, that, if an Event of
Default specified in Section 8.01(f) shall occur with respect to the Borrower or
Guarantor, the result which would occur upon the giving of written notice by the
Lender to the Borrower as specified in clause (i) below shall occur
automatically without the giving of any such notice): (i) declare the principal
of and any accrued interest in respect of the Loan and the Note and all
obligations owing hereunder, thereunder and under the other Operative Documents
to be, whereupon the same shall become, forthwith due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower, and (ii) proceed to exercise each and every
remedy under the Security Agreement, the Loan Agreement and any other Operative
Document or otherwise available under Applicable Law.
SECTION 8.02. Remedies; Obtaining the Aircraft Upon Default. The
Borrower agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, subject to any mandatory requirements
of Applicable Law then in effect, the Lender, in addition to any rights now or
hereafter existing under Applicable Law, shall have all rights as a secured
creditor under the UCC in all relevant jurisdictions and may:
(a) personally, or by agents or attorneys, immediately (i)
take possession of the Collateral or any part thereof, from the
Borrower with or without notice or process of law, and for that purpose
may enter upon the Borrower's premises where all or any part of the
Collateral is located and remove the same and use in connection with
such removal any and all services, supplies, aids and other facilities
of the Borrower, and hold, store and/or use, operate, manage and
control the Collateral, and collect and receive all rents, revenues,
issues and profits of the Collateral and every part thereof;
(b) instruct the obligor or obligors on any agreement,
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instrument or other obligation relating to the Aircraft to make any
payment required by the terms of such instrument or agreement directly
to the Lender;
(c) sell, assign or otherwise liquidate, or direct the
Borrower to sell, assign or otherwise liquidate, the Aircraft or any
part thereof, and take possession of the proceeds of any such sale or
liquidation;
(d) take possession of the Collateral or any part thereof, by
directing the Borrower in writing to deliver the same to the Lender at
any place or places designated by the Lender, in which event the
Borrower shall at its own expense:
(i) forthwith fly or cause to be flown all or any
part of the Aircraft to such airport or airports in the United
States so designated by the Lender and there deliver the
Aircraft to the Lender in the condition required by the terms
and conditions of this Security Agreement,
(ii) store and keep all or any part of the Aircraft
so delivered to the Lender at such place or places pending
further action by the Lender as provided in Section 8.03,
(iii) deliver, produce or cause to be delivered or
produced any Engines not attached to the Airframe that are
subject to this Security Agreement, all Aircraft Records, all
Proceeds held by the Borrower and any other Collateral to a
place within the continental United States reasonably
designated by the Lender,
(iv) while all or any part of the Aircraft shall be
so stored and kept, provide such guards and maintenance
services as shall be necessary to protect the same and to
preserve and maintain them in good condition,
it being understood that the Borrower's obligation so to
deliver the Aircraft or any part thereof is of the essence of
this Security Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Lender shall be entitled to a
decree requiring specific performance by the Borrower of said
obligation.
(e) grant extensions and compromise claims with respect to the
Collateral, and settle claims with respect to the Collateral for less
than face value on commercially reasonable terms, all without prior
notice to the Borrower;
(f) with or without taking possession of the
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Collateral, take legal proceedings for:
(i) the specific performance of any covenant or
agreement contained herein, or the execution of any right
or power herein granted;
(ii) foreclosure hereunder;
(iii) the sale, under the judgment or decree of any
court of competent jurisdiction, of all or any part of
the Collateral;
(iv) the appointment of a receiver or receivers of
all or part of the Collateral pending any foreclosure
hereunder or the sale of all of the Collateral, by any court
of competent jurisdiction or under executory or other legal
process;
(v) the recovery of the unpaid balance of the
Obligations; or
(vi) the enforcement of any other appropriate
remedy, whether under this Security Agreement, under any
other Operative Document, or otherwise;
(g) with respect to any lease of the Collateral (permitted or
otherwise), the Lender may exercise any and all rights of the Borrower
thereunder, including the declaration of an event of default and
enforcement of any remedies available thereunder against the lessee and
may ask, require, demand and receive any and all moneys and claims for
moneys due and to become due under or arising out of the leases,
endorse any checks or other instruments or orders in connection
therewith and file any claims or take any action or institute any
proceedings, which the Lender may deem to be necessary or advisable in
the exercise of its rights and remedies hereunder; and
(h) exercise any and all other rights and remedies of a
secured party under the Uniform Commercial Code in the applicable
jurisdictions and other Applicable Law.
All costs and expenses incurred by the Lender in connection
with the enforcement and/or exercise of any of its rights or remedies herein
shall be immediately payable by the Borrower, upon demand, and shall constitute
Obligations hereunder, whether or not suit is commenced.
SECTION 8.03. Remedies; Disposition of the Aircraft. The Collateral, or
any part thereof whether or not repossessed by the Lender under or pursuant to
Section 8.02, may be retained in full satisfaction of the Obligations secured
thereby as permitted by the UCC in effect in the applicable jurisdiction, or
sold,
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assigned, leased or otherwise disposed of under one or more contracts or as an
entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Lender may, in compliance with any
mandatory requirements of Applicable Law, determine to be commercially
reasonable. The Lender may, but shall not be required to, assemble, process,
repair or recondition, maintain, store, refurbish, have appraised, or otherwise
prepare the Collateral for disposition. Any such disposition which shall be a
private sale or other private proceedings permitted by such requirements shall
be made upon not less than 10 days' written notice to the Borrower. The
requirements of reasonable notice shall be met as follows: (a) the Lender shall
give the Borrower and each holder of a security interest in the Collateral who
has filed with the Lender a written request for notice, a notice in writing of
the time and place of public sale, or, if the sale is a private sale or if some
other disposition other than a public sale is to be made of the Collateral, the
time on or after which the private sale or other disposition is to be made; and
(b) the notice shall be personally delivered or mailed, postage prepaid, to the
Borrower's address appearing in this Security Agreement (or at such other
address as the Borrower advises the Lender of in writing), at least ten (10)
Business Days before the date fixed for the sale, or at least ten (10) Business
Days before the date on or after which the private sale or other disposition is
to be made. Notice to persons other than the Borrower claiming an interest in
Collateral shall be sent to such addresses as they have furnished to the Lender.
Any such disposition which shall be a public sale permitted by such requirements
shall be by public auction (which may, at the Lender's option, be subject to
reserve), after publication of notice in accordance with clauses (a) and (b)
above in two newspapers in general circulation in The City of New York. To the
extent permitted by any such requirement of law, the Lender may bid for and
become the purchaser of the Aircraft or any part thereof, offered for sale in
accordance with this Section without accountability to the Borrower (except to
the extent of surplus money received as provided in Section 8.05). If, under
mandatory requirements of Applicable Law, the Lender shall be required to make
disposition of the Aircraft or any part thereof within a period of time which
does not permit the giving of notice to the Borrower as hereinabove specified,
the Lender need give the Borrower only such notices of disposition as shall be
reasonably practicable in view of such mandatory requirements of Applicable Law.
SECTION 8.04. Waiver of Claims. Except as otherwise provided in this
Security Agreement, THE BORROWER HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE Lender'S
TAKING POSSESSION OR THE LENDER'S DISPOSITION OF THE COLLATERAL FOLLOWING THE
OCCURRENCE OF AN EVENT OF DEFAULT OR PRIOR TO THE EXERCISE OF THE LENDER'S RIGHT
OF SET-OFF AS PROVIDED HEREIN, INCLUDING, WITHOUT
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LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR
REMEDIES AND ANY SUCH RIGHT WHICH THE BORROWER WOULD OTHERWISE HAVE UNDER THE
CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and, except as
otherwise provided in this Security Agreement) the Borrower hereby further
waives, to the extent permitted by law:
(a) all damages occasioned by such taking of possession
except any damages which are the direct result of the Lender's
negligence or willful misconduct;
(b) all other requirements as to the time, place and
terms of sale or other requirements with respect to the
enforcement of the Lender's rights hereunder; and
(c) all rights of redemption, appraisement, valuation,
stay, extension or moratorium now or hereafter in force under any
applicable law in order to prevent or delay the enforcement of this
Security Agreement or the absolute sale of the Aircraft or any part
thereof, and the Borrower for itself and all who may claim under it,
insofar as it or they now or hereafter lawfully may, hereby waives the
benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
the Collateral or any part thereof shall operate to divest all right, title,
interest, claim and demand, either at law or in equity, of the Borrower therein
and thereto, and shall be a perpetual bar both at law and in equity against the
Borrower and against any and all Persons claiming or attempting to claim the
Aircraft so sold, optioned or realized upon, or any part thereof, from, through
and under the Borrower.
SECTION 8.05. Application of Proceeds. (a) The proceeds of the
Collateral and the net earnings of any lease or other agreement relative to use
of the Collateral or any part thereof obtained pursuant to Section 8.02 or
disposed of pursuant to Section 8.03 shall be applied as follows:
(i) first, to the payment of the Obligations of the
Borrower hereunder, relating to any and all expenses and fees
(including reasonable attorneys' fees and expenses) incurred by the
Lender in inspecting, obtaining, taking possession of, removing,
insuring, repairing, storing and disposing of the Aircraft and any and
all costs incurred by the Lender in connection therewith;
(ii) second, to the extent proceeds remain after the
application pursuant to preceding clause (i), to the Obligations of
Borrower under the Operative Documents, including, without limitation,
the outstanding amount of the Note, which proceeds shall be paid to the
Lender for application to the amounts outstanding under the Note; and
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(iii) third, if all remaining Obligations have been
satisfied in full and no other Obligation of the Borrower to the Lender
is outstanding, any surplus then remaining shall be paid to Borrower,
unless prohibited by law.
(b) It is understood that the Borrower shall remain
liable to the extent of any deficiency between the amount of the proceeds of the
Collateral or any part thereof and the aggregate amount of the Obligations under
the Operative Documents required to be paid to the Lender.
SECTION 8.06. Remedies Cumulative. Each and every right, power and
remedy hereby specifically given to the Lender shall be in addition to every
other right, power and remedy specifically given under this Security Agreement
or the Loan Agreement or any other Operative Document or now or hereafter
existing at law or in equity, or by statute and each and every right, power and
remedy whether specifically herein given or otherwise existing may be exercised
from time to time or simultaneously and as often and in such order as may be
deemed expedient by the Lender. All such rights, powers and remedies shall be
cumulative and the exercise or the beginning of exercise of one shall not be
deemed a waiver of the right to exercise of any other or others. No failure,
delay or omission of the Lender in the exercise of any such right, power or
remedy and no renewal or extension of any of the Obligations shall impair any
such right, power or remedy or shall be construed to be a waiver of any Event of
Default or an acquiescence therein. In the event that the Lender shall bring any
suit to enforce any of its rights hereunder and shall be entitled to judgment,
then in such suit the Lender may recover reasonable expenses, including
reasonable attorneys' fees, and the amounts thereof shall be included in such
judgment.
SECTION 8.07. Discontinuance of Proceedings. In case the Lender shall
have instituted any proceeding to enforce any right, power or remedy under this
Security Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Lender, then and in every such case the
Borrower and the Lender shall be restored to their former positions and rights
hereunder with respect to the Aircraft subject to the security interest created
under this Security Agreement, and all rights, remedies and powers of the Lender
shall continue as if no such proceeding had been instituted.
SECTION 8.08. Right of Set-Off. The Borrower agrees that the Lender may
exercise a right of set-off with respect to any amounts owed to the Lender in
the same manner as if the amounts owed were unsecured.
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ARTICLE IX
Intentionally Omitted.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendments, Etc. No amendment, modification or waiver of
any provision of this Security Agreement nor consent to any departure by the
Borrower herefrom, shall in any event be effective unless the same shall be in
writing and signed by all the parties hereto, and then such amendment,
modification, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 10.02. Notices. All notices and other communications provided
for hereunder shall be addressed and furnished in the manner provided in the
Loan Agreement.
SECTION 10.03. Continuing Lien and Security Interest. This Security
Agreement shall create a continuing Lien and security interest in the Aircraft
and shall (a) remain in full force and effect until the occurrence of the full
release of the Collateral to the Borrower, (b) be binding upon the Borrower and
its successors, transferees and assigns, and (c) inure, together with the rights
and remedies of the Lender hereunder and under the Loan Agreement and other
Operative Documents, to the benefit of the Lender and its successors,
transferees and assigns. Upon full repayment of all amounts owed and performance
of all Obligations under the Operative Documents, including but not limited to,
payments, performances, agreements and covenants under the terms hereof, then
the security interest and Lien of the Lender in the Collateral shall thereupon
terminate and the Lender will, at the Borrower's expense, execute and deliver to
the Borrower such documents as the Borrower shall reasonably request to evidence
such termination.
SECTION 10.04. Governing Law. The construction, validity, enforcement
and interpretation of this Security Agreement shall be governed by and in
accordance with the internal laws of the State of Georgia, without regard to the
principles of conflicts of laws, provided, that the Act shall govern the
validity and priority of the Lien of this Security Agreement. This Security
Agreement is being delivered in the State of Georgia.
SECTION 10.05. Action by Lender. The Lender will hold in accordance
with this Security Agreement all items of the Collateral at any time received
under this Security Agreement. It is expressly understood and agreed that the
obligations of the Lender as holder of the Collateral and interests therein and
with respect to the disposition thereof, and otherwise under this Security
Agreement, are only those expressly set forth in this Security Agreement.
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SECTION 10.06. Severability. The invalidity, illegality or
unenforceability of any one or more of the provisions of this Security Agreement
or of any Supplement shall not affect the validity, legality or enforceability
of the remaining provisions of this Security Agreement or of any Supplement. In
the event that one or more of the provisions of this Security Agreement or any
Supplement should be held by any court of law to be invalid, illegal or
unenforceable or should operate to render this Security Agreement or any
Supplement invalid, illegal or unenforceable or to impair the Lien of this
Security Agreement or any Supplement on all or the major portion of the property
intended to be mortgaged hereunder, this Security Agreement and all Supplements
shall be construed as if such provisions had not been contained therein.
SECTION 10.07. Counterparts. This Security Agreement may be executed in
counterparts, and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same Security Agreement.
SECTION 10.08. Power of Attorney. The Borrower hereby constitutes and
appoints the Lender its true and lawful attorney, irrevocably, with full power
after the occurrence of and during the continuance of an Event of Default (in
the name of the Borrower or otherwise) to do, at the Lender's option, any one or
more of the following acts, upon the occurrence and during the continuance of an
Event of Default: (i) to endorse the name of the Borrower on any checks or other
instruments or evidences of payment or other documents, drafts, or other
instruments arising in connection with or pertaining to the Collateral, to the
extent that any such items come into the possession of the Lender; (ii) to
compromise, prosecute or defend any action, claim, or proceeding concerning the
Collateral and to ask, require, demand, receive, compound and give acquittance
for any and all monies and claims for monies (in each case including insurance
and requisition proceeds) due and to become due hereunder or in respect of the
Collateral; (iii) to do any and all acts which the Borrower is obligated to do
under this Security Agreement; (iv) to exercise such rights as the Borrower
might exercise relative to the Collateral, including, without limitation,
altering the particulars of registration with the FAA, the leasing, chartering,
or other utilization thereof (and whether or not a separate Power of Attorney
has been executed and delivered); (v) to give notice of the Lender's security
interest in and Lien upon the Collateral, including, without limitation,
notification to lessees and/or other account debtors of the Lender's security
interest in the rents and other payments due to Borrower relative to the
Collateral, and the collection of any such rents or other payments; and (vi) to
execute in the Borrower's name and file any notices, financing statements, and
other documents or instruments the Lender reasonably determines are necessary or
required to
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fully carry out the intent and purpose of this Security Agreement or
to perfect the Lender's security interest and Lien in and upon the Collateral.
The Borrower hereby ratifies and approves all that the Lender shall do or cause
to be done by virtue of the Power of Attorney granted in this Section 10.08 and
agrees that neither the Lender, nor any of its employees, agents, officers, or
its attorneys, will be liable for any acts or for any error of judgment or
mistake of fact or law made while acting pursuant to the provisions of this
Section 10.08 and in good faith and without gross negligence. The appointment of
the Lender as the Borrower's attorney-in-fact, and each and every one of the
Lender's rights and powers in connection therewith, being coupled with an
interest, are and shall remain irrevocable until all of the Borrower's
Obligations have been fully paid and performed.
SECTION 10.09. Benefit of Security Agreement. This Security Agreement
shall be binding upon and inure to the benefit of each party hereto and its
successors and permitted assigns.
SECTION 10.10. Entire Agreement. This Security Agreement and the other
Operative Documents embody the entire agreement between and among the parties
hereto and supersede all prior agreements, representations and understandings,
if any, relating to the subject matter hereof.
SECTION 10.11. Service of Process and Jurisdiction. (a) The Borrower
(i) hereby irrevocably submits itself to the nonexclusive jurisdiction of the
state courts of the State of Georgia and to the nonexclusive jurisdiction of the
United States District Court for the District covering Atlanta, Georgia, for the
purposes of any suit, action or other proceeding arising out of this Security
Agreement or any other Operative Document, the subject matter thereof or any of
the transactions contemplated thereby brought by any party hereto or any of its
respective successors and assigns and (ii) to the extent permitted by Applicable
Law, hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Security Agreement or the subject
matter thereof or any of the transactions contemplated thereby may not be
enforced in or by such courts.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this
Aircraft Chattel Mortgage and Security Agreement to be duly executed on the day
and year first above written.
AIRTRAN AIRWAYS, INC.
By: Lawrence H. Brinker
-------------------------------------
Title: General Counsel & Secretary
VALUJET, INC.
By: Stephen C. Nevin
-------------------------------------
Title: SVP Finance & CFO
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IN WITNESS WHEREOF, Borrower and Lender have each caused this Loan
Agreement to be duly executed as of the date and year first above written
AIRTRAN AIRWAYS, INC.
Borrower
By: Lawrence H. Brinker
-------------------------------------
- ------------------------------- Title: General Counsel & Secretary
VALUJET, INC.
Lender
By: Stephen C. Nevin
- ------------------------------- -------------------------------------
Title: SVP Finance & CFO
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<PAGE> 59
SCHEDULE I
to Security Agreement
The following aircraft and the aircraft engines listed below, which aircraft,
together with the engines listed therewith below, shall constitute a single
"Aircraft" as said term is defined in the Security Agreement to which this
Schedule I is attached and made a part thereof:
Airframe
Boeing Model 737-2L9 aircraft bearing Manufacturer's
Serial Number 21528 and United States Registration Number
N465AT.
Engines
Two Pratt & Whitney Model JT8D-17 engines bearing
Manufacturer's Serial Numbers 688423 and 688419, respectively.
The above-described engines each have 750 or more rated
takeoff horsepower or the equivalent thereof.
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<PAGE> 60
EXHIBIT A
to
Security Agreement
DEFINITIONS
"ACT" or "FEDERAL AVIATION ACT" shall mean the sections of
Title 49 of the United States Code relating to aviation, as in effect on the
date of the Agreement or as subsequently amended, or any successor or
substituted legislation at the time in effect and applicable, and the
regulations promulgated pursuant thereto.
"ADDITIONAL INSURED" shall mean the Lender its officers,
directors and employees.
"ADDITIONAL PART" shall have the meaning specified in Section
4.03 of the Security Agreement.
"AFTER-TAX BASIS" shall mean a basis such that any payment
received or deemed to have been received by a Person shall be supplemented by a
further payment to such Person so that the sum of the two payments, after
deduction (whether by withholding or otherwise) of all Taxes resulting from the
receipt or accrual of such payments and after taking into account any Tax
benefits realized by such Person in connection with such payments, shall be
equal to the payment which was originally to be received or deemed to have been
received absent any such deduction of Taxes.
"AIRCRAFT" shall mean the Airframe together with the Engines,
whether or not such Engines are installed on the Airframe or any other airframe,
any spare parts delivered with the Aircraft, and all Aircraft Records.
"AIRCRAFT RECORDS" shall mean all records, logs, manuals,
technical data, catalogs, drawings, inspection records, check sheets and other
similar materials received by the Borrower upon acquisition of the Aircraft or
otherwise maintained by the Borrower relating to the operation and maintenance
of the Aircraft and the Engines and any Part thereof, including, but not limited
to the records required to be maintained by the FAA or government of registry,
as applicable.
"AIRFRAME" shall mean (i) the Boeing 737 aircraft manufactured
by the Boeing Company (excluding Engines or engines from time to time installed
thereon) specified by United States Registration Number and manufacturer's
serial number in Schedule I to the Security Agreement fully modified to comply
with Stage 3 noise requirements; (ii) any and all Parts which are from time to
time incorporated or installed in or attached to such airframe or, so long as
such Parts are subject to the Security Agreement covering such airframe, after
removal from such airframe; and (iii) any replacement airframe which may from
time to time be substituted for such airframe pursuant to Section 5.01 of the
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Security Agreement.
"APPLICABLE LAW" shall mean all applicable laws, treaties,
judgments, decrees, injunctions, writs and orders of any court, governmental
agency or authority and all applicable rules, regulations, orders, directives,
licenses and permits of any governmental body, instrumentality, agency or
authority in any relevant jurisdiction.
"BORROWER" shall have the meaning provided in the first
paragraph of the Security Agreement.
"BUSINESS DAY" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday or any day which
shall be in Atlanta, Georgia, a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, the Loan, any day which is a
Business Day described in clause (i) above.
"CERTIFICATED AIR CARRIER" means a Citizen of the United
States holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49, United States Code, for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo.
"CITIZEN OF THE UNITED STATES" has the meaning given such term
in Section 40102(a)(15) of Title 49 of the United States Code.
"CIVIL RESERVE AIR FLEET PROGRAM" or "CRAF" shall mean the
Civil Reserve Air Fleet Program administered by the United States Government
pursuant to Executive Order No. 11490, as amended or any substantially similar
program.
"CODE" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
"COLLATERAL" shall have the meaning specified in Section 2.01
of this Security Agreement.
"CYCLE" shall mean one take-off and one landing of an
aircraft.
"DEFAULT" shall mean any event which with the giving of notice
or the lapse of time or both would become an Event of Default.
"DELIVERY DATE" shall mean the date of the Note
"DOLLARS" and "$" shall mean the lawful currency of the
United States.
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<PAGE> 62
"ENGINE" shall mean (i) each of the Pratt & Whitney Model
JT8D-17 engines listed by manufacturer's serial numbers in Schedule I to the
Security Agreement, whether or not from time to time installed on the Airframe
or any other airframe fully modified to comply with Stage 3 noise requirements;
(ii) any replacement engine which may from time to time be substituted for any
Engine pursuant to the terms of the Agreement or Security Agreement; and (iii)
in either case, any and all Parts which are from time to time incorporated or
installed in or attached to any such engine or, so long as such Parts are
subject to such mortgage, after removal from any such engine. Except as
otherwise set forth in the Agreement or Security Agreement, at such time as a
replacement engine shall be substituted for an Engine, such replaced Engine
shall cease to be an Engine thereunder.
"EVENT OF DEFAULT" shall have the meaning specified in Article
VIII of the Security Agreement.
"EVENT OF LOSS" shall mean any of the following events with
respect to the Aircraft and the Airframe or an Engine:
(i) the loss of such property or of the use thereof due
to the destruction of or damage to such property
which renders repair uneconomic or which renders such
property permanently unfit for normal use by the
Borrower for any reason whatsoever;
(ii) damage to such property which results in the receipt
of insurance proceeds with respect to such property
on the basis of a total loss, or a constructive or
compromised total loss;
(iii) the theft, hijacking or disappearance of such
property for a period in excess of thirty days;
(iv) (A) the confiscation, condemnation, or seizure of,
or requisition of title to, such property by any
Government Body which results in the loss of title
or (B) the confiscation, condemnation, or seizure
of, or requisition of use of, such property by any
Government Body (other than a requisition for use
by the United States Government or any agency or
instrumentality thereof) which results in the loss
of possession of such property by the Borrower for
a period in excess of 30 consecutive days;
(v) as a result of any law, rule, regulation, order or
other action by the FAA or other Government Body of
the government of registry of the Aircraft having
jurisdiction, use of such property in the normal
course of the business of air
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<PAGE> 63
transportation is prohibited; and
(vi) any divestiture of title to the Aircraft, an Engine
or the Airframe.
An Event of Loss with respect to the Aircraft shall be deemed
to have occurred if an Event of Loss occurs with respect to the Airframe of such
Aircraft. An Event of Loss in respect of the Engine shall not be an Event of
Loss in respect of an Airframe.
"EXPENSE" or "EXPENSES" shall mean any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, judgments, out
of pocket costs, expenses and disbursements (including reasonable legal fees and
expenses) of whatever kind and nature, including documentation fees, stamp
Taxes, governmental fees, registration fees, court costs, filing fees and other
similar governmental duties and impositions, but not including Taxes other than
those described in this definition unless imposed as a result of, or in
connection with, expenses otherwise indemnifiable pursuant to the General
Indemnity set forth in Section 5.11 of the Loan Agreement.
"FEDERAL AVIATION ADMINISTRATION" or "FAA" shall mean the
United States Federal Aviation Administration and any successor
agency or agencies thereto.
"FEDERAL AVIATION REGULATIONS" shall mean the regulations
promulgated pursuant to the Act and in effect on the Delivery Date, or as
subsequently amended, or any successor or substituted regulations thereunder at
the time in effect or applicable.
"FINOVA" means Finova Capital Corporation, a Delaware
corporation.
"FINOVA LOAN AGREEMENT" means that certain Secured Loan
Agreement between Finova and Borrower dated as of December 21, 1995, as amended,
as it relates to the Aircraft and all exhibits, agreements and documents
relating to the Aircraft.
"GOVERNMENT BODY" shall mean (i) any government or political
subdivision thereof, whether foreign or domestic, national, state, county,
municipal or regional, (ii) any agency or instrumentality of any such
government, political subdivision or other government entity (including any
central bank or comparable agency), (iii) any court, arbitral tribunal or
arbitrator, and (iv) any non-government regulating body, to the extent that the
rules, regulations or orders of such body have the force of law, and in each
case the orders, judgments, decree, writs, decisions, regulations, rules, or
laws of which are applicable to the Borrower or the Aircraft in any material
respect.
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<PAGE> 64
"GUARANTOR" means Airways Corporation, a Delaware
corporation.
"INDEMNIFIED PARTY" or "INDEMNITEES" shall mean the Lender and
its affiliates, successors, permitted assigns, directors, officers, employees,
servants and agents.
"LENDER" shall have the meaning provided in the first
paragraph of the Security Agreement.
"LIEN" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the UCC or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing). "Liens" shall be
construed accordingly.
"LOAN" shall have the meaning specified in the definitions of
the Loan Agreement.
"LOAN AGREEMENT" shall mean the Loan Agreement dated as of
July 3, 1997 between Lender and Borrower, as modified, supplemented or amended
from time to time.
"NOTE" shall have the meaning specified in the Loan
Agreement.
"OBLIGATIONS" shall mean (a) (i) the full and prompt payment
when due of principal, interest and other amounts owing by the Borrower under
the Loan Agreement and the Note and all other obligations and indebtedness
(including, without limitation, indemnities, fees and interest thereon) of the
Borrower now existing or hereafter incurred under, arising out of or in
connection with the Loan Agreement and the other Operative Documents, and (ii)
the due performance and compliance with terms of the Operative Documents by the
Borrower, and (b) (i) any and all sums advanced by the Lender in accordance with
the Operative Documents in order to preserve the Collateral or preserve its
security interest in the Collateral, and (ii) in the event of any proceedings
for the collection or enforcement of any indebtedness, obligations or
liabilities of the Borrower referred to in clause (a) or (b), after an Event of
Default shall have occurred and be continuing, the reasonable expenses of
retaking, holding, preparing for sale or lease, selling or otherwise disposing
of or realizing on the Collateral, or of any exercise by the Lender of its
rights under the Security Agreement or the other Operative Documents, together
with reasonable attorneys' fees and court costs.
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<PAGE> 65
"OBSOLETE PARTS" shall have the meaning specified in Section
4.03 of the Security Agreement.
"OPERATIVE DOCUMENTS" shall have the meaning set forth in
the Loan Agreement.
"PARTS" shall mean all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete Engines or engines), that may from time to time be
incorporated or installed in or attached to the Airframe or Engines and, so long
as such items remain subject to the Lien of the Security Agreement, all such
items which subsequently are removed therefrom.
"PERMITTED LIEN" shall mean any Lien permitted under Section
7.01 of the Security Agreement.
"PERSON" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"PRATT & WHITNEY" shall mean Pratt & Whitney Division of
United Technologies Corporation.
"PROCEEDS" shall mean whatever is receivable or received when
the Airframe, any Engine and/or the Aircraft Records is sold, exchanged,
collected, leased or otherwise disposed of, including, without limitation, all
amounts payable or paid under insurance, requisition or other payments as the
result of any loss (including an Event of Loss) or damage to the Airframe or
Engine.
"REPLACEMENT ENGINE" shall mean an engine which shall have
been mortgaged under any Security Agreement pursuant to Section 2.02 and Article
V of the Security Agreement, together with all Parts relating to such engine.
"SECURITY AGREEMENT" shall mean this Aircraft Chattel Mortgage
and Security Agreement dated as of July 3, 1997 made by the Borrower to the
Lender pursuant to the Loan Agreement and any replacement or supplemental
mortgage entered into pursuant thereto and otherwise as from time to time in
effect.
"SUPPLEMENT" or "SUPPLEMENTAL SECURITY AGREEMENT" shall mean
any supplement to the Security Agreement, in such form as the Lender shall
reasonably require.
"TAX" or "TAXES" means all taxes (including, without
limitation, income (either gross or net), gross or net receipts, sales, use,
value added, franchise, business, transfer, capital, property (tangible and
intangible), excise and stamp taxes), levies, imposts, duties, charges,
assessments or withholdings, together with any penalties, fines or interest
thereon or
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additions thereof, imposed by any federal, state or local taxing authority
within the United States or by any international taxing authority or by any
taxing authority or governmental agency or subdivision of or within any
governmental body or political jurisdiction outside the United States.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the relevant jurisdiction.
"UNITED STATES" shall mean the United States of America.
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EXHIBIT 10.25
LOAN AGREEMENT
This Loan Agreement (the "Agreement") is made and entered into this 8th day of
September, 1997, by and between AirTran Airways, Inc., a corporation organized
under the laws of the State of Delaware and Airways Corporation, a corporation
organized under the laws of the State of Delaware (jointly and severally, the
"Borrower" and each a "Co-Borrower") and ValuJet, Inc., a corporation organized
under the laws of the State of Nevada (the "Lender").
WHEREAS, Borrower desires to borrow from Lender, subject to the terms and
conditions herein set forth, an aggregate principal amount of Five Million Seven
Hundred Thousand and no/100 Dollars ($5,700,000); and
WHEREAS, Lender is willing to loan to Borrower, subject to the terms and
conditions herein set forth (including, without limitation, subject to granting
to Lender a first priority security interest in the Mortgaged Property) an
aggregate principal amount of Five Million Seven Hundred Thousand and no/100
Dollars ($5,700,000).
NOW THEREFORE, in consideration of the premises and agreements herein contained,
Borrower and Lender hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used herein, the following terms shall have the
following meanings, all other capitalized terms used herein but not
defined shall be as defined in the Leasehold Mortgage:
"Agreement" means this Loan Agreement, as the same may be modified,
amended or supplemented from time to time.
"Closing Date" means the date of the Note.
"Environmental Agreement" means the Environmental Indemnification
Agreement of even date with the Note and Leasehold Mortgage in the form
of Exhibit C attached hereto.
"Loan" has the meaning set forth in Section 2.1 of this Agreement.
"Loan Documents" means this Agreement, the Note, the
<PAGE> 2
Leasehold Mortgage, the Environmental Agreement, each, as may be
amended or supplemented from time to time and including all exhibits
and attachments thereto, and any other agreement, document, instrument,
or certificate required to be delivered under this Agreement or such
documents.
"Leasehold Mortgage" has the meaning set forth in Section 3 hereof and
any other security agreement covering the Mortgaged Property entered
into by Lender and Borrower in accordance with the Loan Documents and
applicable law.
"Loan Rate" has the meaning set forth in Section 2.2 of this Agreement.
"Maturity Date" means December 3, 1997, unless extended an additional
ninety (90) days pursuant to this Agreement.
"Mortgaged Property" shall have the meaning set forth in the Leasehold
Mortgage.
"month" means a period commencing on one day in a calendar month and
ending on the day in the next succeeding calendar month the date of
which numerically corresponds to the date of such first day, provided
that if there is no numerically corresponding date in the next calendar
month, such period shall end on the last day of the next succeeding
calendar month.
"Note" has the meaning set forth in Section 2.2 of this Agreement.
"SunTrust" means SunTrust Bank, Central Florida, National Association.
SECTION 2. AMOUNT AND TERMS OF LOAN
2.1 The Loan. Subject to and upon the terms and conditions set forth in
this Agreement, Lender agrees to lend to Borrower on the Closing Date,
an aggregate principal amount of Five Million Seven Hundred Thousand
and no/100 Dollars ($5,700,000) (such amount actually loaned to
Borrower being referred to as the "Loan").
2.2 Terms of Note. The Loan shall be evidenced by a promissory note (the
"Note") duly executed and delivered by Borrower on the Closing Date
substantially in the form of Exhibit A hereto. The Note shall, (i) have
a principal amount of $5,700,000; (ii) bear interest from and including
the Closing Date through the Maturity Date on the unpaid principal
amount under the Note at an interest rate per annum of 12% (the
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<PAGE> 3
"Loan Rate") and (iii) mature on the Maturity Date.
The entire principal amount of the Note shall be due and payable on the
Maturity Date;
Accrued interest on the Note shall be due and payable monthly
commencing on the calendar date corresponding to the Closing Date in
the first calendar month succeeding the calendar month of the Closing
Date (the "Payment Commencement Date") and shall be due thereafter on
the same numerical day of each month thereafter as Closing Date.
Interest shall be computed on the basis of a thirty (30) day month. The
first payment of accrued interest to be made on the Payment
Commencement Date shall be the accrued interest from and after the
Closing Date through and including the Payment Commencement Date.
Lender shall record on its books and records or on a schedule to the
Note, the amount of all payments of principal and interest on the Note.
The record of such information, whether shown on Lender's books and
records or on the schedule to the Note, shall be prima facie evidence
as to all such amounts; provided, however, the failure of Lender to
record any of the foregoing shall not limit or otherwise affect the
obligation of Borrower to repay the Loan, together with accrued
interest thereon.
2.3 Prepayment. Borrower shall have the right at any time, without advance
notice to Lender, to prepay all or any portion of the principal balance
of the Note without penalty; provided that any prepayment shall be
accompanied by the payment of interest accrued on the amount being
prepaid on the date of such prepayment.
2.4 Payment. All payments of principal, interest or any premiums or
penalties due thereunder shall be made by payment in immediately
available funds, no later than 12:00 o'clock noon Atlanta, Georgia
time, to Lender at its address set forth in Section 8.8 hereof,
irrespective of, and without deduction for, any set off or
counterclaims. Whenever any payment of principal, interest, premium or
penalty to be made hereunder shall fall due on a Saturday, Sunday or
public holiday under the laws of the State of Georgia, such payment
shall be made on the next succeeding Business Day, but interest shall
continue to accrue on such payment until made. Whenever any payment of
principal, interest, premium or penalty is not paid when due such
amount due shall bear interest at the Default Interest Rate (as defined
in the Note) until paid, notwithstanding whether or not such failure to
pay when due constitutes an Event of Default under this Agreement or
whether there is granted hereunder a grace period for payment.
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<PAGE> 4
2.5 Extension of Maturity Date. In the event that the merger of
Airways Corporation and ValuJet, Inc. has not been
consummated on or before November 30, 1997, the Maturity Date
shall be deemed extended to March 3, 1998.
SECTION 3. SECURITY
3.1 Grant of Security Interest in the Mortgaged Property. On the Closing
Date, Borrower shall execute and deliver to Lender a Leasehold Mortgage
and Security Agreement substantially in the form of Exhibit B hereto
(the "Leasehold Mortgage") pursuant to which Borrower shall assign,
grant and set over unto Lender, a perfected first priority security
interest in the Mortgaged Property, all as further described and
defined in the Leasehold Mortgage. Lender's security interest in the
Mortgaged Property shall be registered, recorded and perfected under
and in accordance with the laws of the United States and the State of
Florida. Promptly upon filing of the Leasehold Mortgage and the release
of the lien of SunTrust with respect to the Mortgaged Property, Lender
shall receive an opinion of counsel to Borrower that the security
interest of Lender is perfected under all applicable law, having first
priority over all other interests or claims of any other party with
respect to the Mortgaged Property. Borrower shall bear all reasonable
costs and expenses of Lender in securing counsel opinions and Lender's
rights and security interest in and to the Mortgaged Property,
including, without limitation, the payment of Lender's counsel fees
associated therewith.
3.2 Further Assurances. Borrower will, and will procure that, at its own
expense, at all times make, execute, acknowledge and deliver, and file
and record in the proper filing and recording offices, all such further
and additional instruments and documents, including, but not limited
to, UCC-1 financing statements, and additional security agreements or
mortgages as may be necessary under the applicable law, as may be
necessary, or as Lender or its counsel may reasonably request from time
to time, in order to preserve and perfect Lender' rights and interests
hereunder and under the Leasehold Mortgage.
SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into this Agreement and to make the Loan as provided
for herein, Borrower makes the following representations and warranties, which
shall survive the execution and delivery of this Agreement, and all Loan
Documents and which shall continue in full force and effect until payment in
full by Borrower of all amounts due hereunder.
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<PAGE> 5
4.1 Corporate Organization and Standing. Borrower is, and will continue to
be, a duly organized and validly existing corporation in good standing
under the laws of the State of Delaware.
4.2 Corporate Power and Authority. Borrower has all requisite corporate
power and authority to execute, deliver, and carry out the terms and
provisions of this Agreement, and all other Loan Documents and has duly
and properly taken all necessary corporate and other action (including,
without limitation, any consent of directors or stockholders required
by law or by its charter or by-laws) to permit and authorize the
execution, delivery and performance of this Agreement and all of the
Loan Documents. This Agreement and all of the Loan Documents have been,
or will be, duly authorized, executed and delivered by Borrower and
each constitutes, or will constitute, a legal,valid and binding
obligation of Borrower, enforceable against it in accordance with their
respective terms.
4.3 Compliance with Other Instruments. The Borrower is not in violation of,
or default under, any term of its charter or by-laws or any agreement
or instrument to which it is a party or by which it is bound or to
which any of its properties or assets are subject or of any judgment,
decree, order, statute, rule or governmental regulation applicable to
it. The execution, delivery and performance by Borrower of this
Agreement and all of the Loan Documents, and any document required to
be delivered hereunder or thereunder, the consummation of the
transactions contemplated herein or therein and the compliance with the
terms and provisions hereof or thereof will not contravene any
provision of law, statute, rule or regulation to which Borrower is
subject or any judgment, decree, franchise, order, governmental
regulation or permit applicable to Borrower and will not violate,
conflict with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute of default under any
agreement to which Borrower is a party, or result (except as
contemplated by this Agreement and the Leasehold Mortgage) in the
creation or imposition of any lien, mortgage, pledge or encumbrance
upon any of the property or assets of Borrower pursuant to the terms of
Borrower's charter, management agreement, by-laws or any indenture,
mortgage, deed of trust, agreement or other instrument to which
Borrower is a party or by which it or its properties is bound or may be
subject, and will not violate or be in conflict with any provision of
the charter or by-laws of Borrower.
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<PAGE> 6
4.4 No Liens. On the Closing Date, the Mortgaged Property shall be free and
clear of all liens, charges and encumbrances except for the interests
of Lender under the Leasehold Mortgage.
4.5 Survival of Representations and Warranties. All representations and
warranties made herein and the Leasehold Mortgage shall be true and
correct as of the date of the Closing Date and shall survive the
execution and delivery of this Agreement and all of the Loan Documents.
SECTION 5. COVENANTS OF BORROWER
Borrower covenants and agrees that from the date hereof and until payment in
full of the principal of and interest on the Note and of all other amounts due
hereunder, unless Lender shall otherwise consent in writing, such consent not to
be unreasonably withheld, Borrower shall:
5.1 Business and Existence. Perform all things necessary to preserve and
keep in full force and effect the corporate existence and rights of
Borrower; comply with all laws applicable to it; and conduct and
operate its business substantially as conducted and operated as of the
date hereof.
5.2 Maintenance of Property. Maintain, preserve and protect its trade names
and assets and properties and the Mortgaged Property and keep the same
in good repair, working order and condition and from time to time make,
or cause to be made, all needed and proper repairs, renewals,
replacements and improvements thereto so that its business carried on
in connection therewith may be properly conducted at all times.
5.3 Insurance on Properties. At all times keep and maintain in force: (i)
insurance upon its assets and properties which are of an insurable
nature, real and personal, tangible and intangible, including, but not
limited to, the Mortgaged Property (for and in an amount equal to no
less than Seven Million One Hundred Thousand and no/100 Dollars
($7,100,000), and against loss or damage from such hazards and risks as
are reasonable and proper in accordance with the Leasehold Mortgage and
sound business practice and as is customarily carried by persons owning
similar properties and conducting similar business (including, without
limitation, Borrower shall comply with the insurance requirements of
the Leasehold Mortgage); (ii) liability insurance in such amount and
for such coverage as are reasonable and proper in accordance with sound
business practices and as is customarily carried by persons conducting
similar business, of similar size and
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<PAGE> 7
similarly situated and in the amounts and with the coverages required
by the Leasehold Mortgage; and (iii) such other insurance as may be
required by law or reasonably requested in writing by Lender. All such
insurance shall be with responsible and reputable insurance companies,
shall name Lender as an additional insured on all liability policies
and shall be cancelable or materially changed only after thirty (30)
days' prior written notice thereof to Lender.
5.4 Payment of Obligations and Expenses. Pay and discharge all of its
indebtedness, obligations and expenses promptly in accordance with
normal terms and practices of its business, before the same shall
become in default, as well as all lawful claims for labor, materials
and supplies which otherwise, if unpaid, might become a lien or charge
upon its properties, assets or any part thereof provided, however,
Borrower shall be entitled to contest such indebtedness, obligations
and expenses so long as there is no material risk of the lien or charge
upon its properties, or the Mortgaged Property.
5.5 Notice of Event of Default. At the time of Borrower's first knowledge
of an Event of Default (as hereinafter defined) or any condition which
could mature into an Event of Default, furnish Lender with written
notice of the occurrence of any such event or the existence of any such
condition which constitutes or upon written notice or lapse of time
would constitute an Event of Default.
5.6 Additional Information. Furnish such other information regarding the
operations, business affairs and financial condition of Borrower or its
property or assets as Lender may reasonably request from time to time,
including, but not limited to, true and complete copies of its books of
account and tax returns, current financial statements, maintenance
status of the Mortgaged Property and usage reports, and all information
furnished to shareholders, or any governmental authority.
5.7 Right of Inspection. Permit (and cause to permit) any person designated
by Lender, at Lender's expense, to visit and inspect any of the
properties, corporate books and financial reports of Borrower and to
discuss its respective affairs, finances and accounts with its
principal officers (as applicable), all at such reasonable times and as
often as Lender may reasonably request.
5.8 Assistance in Perfection of Security Interest. Join with Lender in
taking all steps necessary to perfect Lender's security interest in the
Mortgaged Property, including, but not limited to, the filing or
recording of any security
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<PAGE> 8
agreement, assignment, financing statements, notice or other writing.
Costs incurred in performing under this paragraph shall be paid by
Borrower.
5.9 Liens. Not contract, create, incur, assume or permit to exist any Liens
except for the interests of Lender under this Agreement and the Loan
Documents.
5.10 Compliance with Laws. Comply with such laws, rules, and regulations and
maintain such permits and licenses under applicable law with respect to
the business of Borrower and with respect to the operation, ownership
and maintenance of the Mortgaged Property at all times during the term
hereof.
5.11 Indemnification. The Borrower agrees to indemnify, reimburse, and hold
harmless Lender from and against all claims, damages, losses,
liabilities, demands, suits, judgments, causes of action, civil and
criminal legal proceedings, penalties, fines, and other sanctions, and
any attorney fees and other reasonable costs and expenses, arising or
imposed with or without the Lender's fault or negligence or under the
doctrine of strict liability (collectively, "Claims"), relating to or
arising in any manner out of:
(a) This Agreement or any of the Loan Documents, or the breach of any
representation, warranty, or covenant made by the Borrower thereunder;
(b) Manufacture, purchase, lease, delivery, nondelivery, acceptance,
rejection, ownership, possession, use, or disposition of the Mortgaged
Property;
(c) The condition of the Mortgaged Property or any discoverable or
nondiscoverable defect in it arising from its design, or construction;
any article used in the Mortgaged Property; or any maintenance, service
or repair, whether or not the Mortgaged Property is in the Borrower's
possession ; or
(d) Any transaction, approval, or document contemplated by this
Agreement and any of the Loan Documents.
The Borrower waives and releases Lender from any existing or future
Claims in any way connected with injury to or death of the Borrower's personnel,
loss or damage of the Borrower's property, or loss of use of any property, which
may:
(e) Result from or arise in any manner out of this Agreement and any of
the Loan Agreements, condition, or use of the Mortgaged Property; or
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<PAGE> 9
(f) Be caused by any defect in the Mortgaged Property; its design, or
construction; any article used in the Mortgaged Property; or any
maintenance, service, or repair, whether or not the Mortgaged Property
is in the Borrower's possession.
The indemnities described in this Section will continue in full force
and effect notwithstanding the expiration or other termination of this Agreement
or the Leasehold Mortgage and are expressly made for the benefit of and will be
enforceable by the Lender.
5.12 Merger, Consolidation. Except for the merger between Airways
Corporation and ValuJet, Inc. pursuant to agreement dated July 10,
1997, not merge with or into or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets
(whether now owned or hereafter acquired) to any entity, without the
prior written consent of Lender, which Lender may provide or withhold
in its sole discretion.
SECTION 6. DEFAULT
6.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default" under this Agreement:
(a) Payment of Principal Balance. Nonpayment of the full principal
balance of the Note (plus accrued interest and unpaid premiums
or penalties) in accordance with the Note and this Agreement
on or prior to the Maturity Date;
(b) Payment of Installments of Interest. Nonpayment when due of
any installment payment of interest on the Note (and any
premium or penalty based thereon) when due;
(c) Representations and Warranties. Any representation or warranty
made by Borrower under this Agreement or any of the Loan
Documents or any report, certificate or statement made to
Lender pursuant hereto or in connection herewith shall prove
to be false, misleading, incomplete or untrue in any material
respect as of the date on which such representation or
warranty is made;
(d) Covenants. Any breach by Borrower of any other covenant, term,
agreement or condition contained herein, (other than payment)
in the Note or in the
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<PAGE> 10
Leasehold Mortgage or in any other Loan Document and the same
shall continue unremedied for a period of fifteen (15) days
after written notice from Lender; or
(e) Bankruptcy or Insolvency. Borrower (i) files a petition in
bankruptcy or for the approval of a plan of reorganization or
arrangement under the Bankruptcy Reform Act of 1978, or an
involuntary petition in bankruptcy or plan of reorganization
is filed against Borrower, or an admission seeking the relief
therein provided and such proceeding shall not be dismissed
within thirty (30) days after the date of filing; (ii) is
unable, or admits in writing its inability, to pay its debts
as they become due; (iii) makes an assignment for the benefit
of creditors; (iv) files a petition or applies to any tribunal
for the appointment of a custodian, receiver or any trustee
for all or a substantial part of its assets; (v) by any act or
omission indicates its consent, approval of, or acquiescence
in the appointment of a receiver, custodian or trustee for all
or a substantial part of its property; (vi) is adjudicated a
bankrupt or insolvent; (vii) becomes insolvent however
otherwise evidenced; or (viii) ceases doing business as a
going concern; or
(f) Default of Other Indebtedness. Any indebtedness of Borrower
for borrowed money (other than the indebtedness owed to Lender
hereunder) shall become due and payable prior to the stated
maturity thereof resulting from a default thereunder, or if
such indebtedness shall not be paid at the maturity thereof or
any guaranty or similar obligation of Borrower is not
discharged at maturity or when due and called or if Borrower
shall otherwise be in material breach or default under any
agreement pursuant to which such indebtedness was incurred,
and Borrower fails to cure such default within (i) thirty (30)
days after written notice thereof, or (ii) any cure period
provided for under the agreement pursuant to which the default
occurred, whichever is less, and the aggregate amount of all
such indebtedness at the time exceeds five hundred thousand
Dollars ($500,000); or
(g) Failure of Effectivity. If this Agreement or any other Loan
Document shall at any time after its respective execution and
delivery and for any reason cease to be in full force and
effect or any certificate, instrument or documents issued and
executed pursuant hereto or thereto shall for any reason cease
to be effective to constitute a valid and perfected first
priority Lien
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<PAGE> 11
and security interest in and to the Mortgaged Property; or
(h) Failure to Maintain Insurance. If there shall occur any lapse
of, or failure to maintain, insurance coverage on the
Mortgaged Property required to be maintained under the
Leasehold Mortgage;
(i) Sale, Transfer or Lease of the Mortgaged Property. If the
Mortgaged Property or any part thereof shall be sold,
transferred, assigned, leased or otherwise disposed of by
Borrower without the Lender's prior written consent; or
(j) Cross Default. There shall occur an event of default under any
other agreement between Borrower and Lender.
6.2 Effect of Event of Default. If any Event of Default described in
Section 6.1 hereof (other than as described in Section 6.1 (e) hereto)
shall occur, Lender may at its option, by written notice to Borrower,
declare the entire unpaid principal balance of the Note, as applicable,
all interest accrued and unpaid thereon and all other amounts payable
under this Agreement and all of the Loan Documents, immediately due and
payable, without presentment, demand, protest or further notice of any
kind, all of which are expressly waived by Borrower. Upon the
occurrence of an Event of Default described in Section 6.1(e) hereof,
the entire unpaid principal balance of the Note, all interest accrued
and unpaid thereon and all other amounts payable under this Agreement
and the Loan Documents shall automatically become immediately due and
payable with all additional interest accrued thereon and without
presentment, demand, protest or other notice of any kind. Lender may
also exercise any or all of the rights and remedies with respect to the
Mortgaged Property as provided to Lender pursuant to the Leasehold
Mortgage and the Note, as applicable and those rights and remedies
permitted by law, whether at law or in equity. In addition, if any
Event of Default shall have occurred, the Loan Rate on the unpaid
principal amount of the Note shall be increased to the lesser of, (i)
fifteen percent (15%) per annum or (ii) the highest lawful rate of
interest per annum permitted under the laws of the State of Florida
after the occurrence of the Event of Default until the Event of Default
is cured or the unpaid principal amount is paid, whether or not the
Lender accelerates payment.
SECTION 7. CONDITIONS PRECEDENT
7.1 Making Loan. The obligation of the Lender to make the Loan to
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<PAGE> 12
Borrower hereunder is subject to the following conditions precedent:
(a) The Note. There shall have been delivered to Lender, the Note,
duly executed by Borrower, in form and substance satisfactory
to Lender and otherwise in accordance with Section 2 hereof.
(b) Security. Borrower shall have delivered to the Lender a duly
executed original copies of the Leasehold Mortgage and such
other documents, including, but not limited to, financing
statements, that Lender shall deem necessary to secure payment
in full of all amounts due hereunder or under the Note.
(c) Environmental Agreement. Borrower shall have executed and
delivered the Environmental Agreement.
(d) Certified Resolutions and Charter. Borrower shall have
delivered to Lender certified copies of (i) the resolutions of
the Board of Directors of Borrower authorizing the execution,
delivery and performance of this Agreement and all of the Loan
Documents and certified copies of all documents evidencing
other corporate action of Borrower, if any, with respect to
this Agreement and the Loan Documents, including a certificate
of the corporate secretary of Borrower attesting to the
incumbency of the officers executing all agreements hereunder,
and (ii) the current charter and by-laws of Borrower.
(e) Insurance. Borrower shall have delivered to Lender a
Certificate of Insurance evidencing compliance with this
Agreement and the Leasehold Mortgage in form and substance
satisfactory to Lender.
(f) No Default. As of the Closing Date, there shall exist no Event
of Default under this Agreement or any Loan Document.
(g) Release of SunTrust Lien and Title Insurance. Borrower shall
have delivered to Lender reasonably satisfactory evidence that
on the Closing Date, all interests of SunTrust in the
Mortgagees Property shall have been released the Mortgaged
Property is free of all liens, charges and encumbrances,
except the lien of the Leasehold Mortgage and Borrower shall
have delivered to Lender a policy of title insurance in form
and substance satisfactory to Lender, in its sole discretion.
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<PAGE> 13
(h) Representations and Warranties. As of the Closing Date, all
representation and warranties of Borrower hereunder shall be
true and correct with the same force and effect as though made
on the Closing Date.
(i) Documents Acceptable. All documents, instruments and
certificates relating to the making of the Loan and all
proceedings in connection with the transactions contemplated
by this Agreement or any Loan Document shall be satisfactory
in form and substance to Lender.
In the event that Lender, in its sole and absolute discretion, waives
satisfaction of any condition set forth in this Section, such waiver shall
constitute a waiver only as to the time for
satisfaction of such condition, and Borrower shall be obligated to comply with
such condition as soon as practicable after the Closing Date, and in any event,
within thirty (30) days thereafter.
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<PAGE> 14
SECTION 8. MISCELLANEOUS
8.1 Fees and Expenses. Borrower shall, on the Closing Date (or at any time
thereafter, at the election of Lender) reimburse Lender for all
reasonable out-of-pocket expenses incurred in connection with this
Agreement and the transactions contemplated hereby and thereby,
including, without limitation, all recordation fees and legal fees and
disbursements of Lender's counsel, and in connection with all
professional services rendered and disbursements incurred by said
counsel with respect to all transactions relevant to the subject matter
hereof. Borrower shall pay to Lender, on demand, any expenses or other
costs (including, without limitation, attorney's fees, disbursements,
expert witness fees, and all travel, hotel telephone, postage,
accounting, appraisal, inspection and consulting expenses) incurred by
Lender in connection with (i) the enforcement and collection against
Borrower or any other party (other than Lender) to any of the Loan
Documents of any provision thereof or indebtedness contemplated hereby,
(ii) any actual or threatened litigation, investigation or proceeding
relating to the Loan Documents, whether or not suit is instituted,
relating to any of the Loan Documents or the indebtedness contemplated
thereby; (iii) any proceeding or enforcement in any state of federal
bankruptcy or reorganization proceeding, and (iv) any actual or
proposed amendment of the Loan Documents or any of them or modification
of the indebtedness contemplated thereby.
8.1 Amendments. The provisions of this Agreement and any of the Loan
Documents may from time to time be amended, modified or waived with the
consent of Borrower and Lender, if such amendment or modification is in
writing and signed by all parties thereto.
8.2 Waivers. Lender shall not be deemed to have waived any of their rights
or remedies hereunder or under the Note, or the Leasehold Mortgage
unless such waiver is in writing and signed jointly by Lender and then
only to the extent specifically recited. No failure to exercise and no
delay or omission in exercising any right, remedy or recourse on the
part of Lender shall operate or be deemed as a waiver of such right,
remedy or recourse or any other right, remedy or recourse, nor shall
any single or partial exercise or any right, remedy or recourse
hereunder or thereunder preclude any other or further exercise thereof.
A waiver or release on any one occasion shall not be construed as
continuing, as a bar to, or as a waiver or release of any subsequent
right, remedy or recourse on any subsequent occasion. All rights and
remedies of Lender, whether pursuant to this Agreement or any of the
Loan Documents, or any other instrument, shall be
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<PAGE> 15
cumulative and concurrent and may be exercised singularly, successively
or concurrently, at the sole discretion of Lender and may be exercised
as often as occasion therefor may exist. The rights of Lender
hereunder, under the Leasehold Mortgage and under the Note, shall be in
addition to all other rights and remedies provided at law or in equity.
8.3 Transferability of Mortgaged Property and Agreement. Borrower may not
transfer or assign any or all of its rights and/or obligations
hereunder or under the Leasehold Mortgage, or the Note without the
prior written consent of Lender. Borrower may not transfer all or part
of any of its interest in, to or under the Mortgaged Property without
the prior written consent of Lender.
8.4 Governing Law. This Agreement and all of the Loan Documents are be
governed by the internal laws of the State of Florida.
8.5 Enforceability of Agreement. Should any one or more of the provisions
of this Agreement or any of the Loan Documents be determined to be
illegal or unenforceable, all other provisions, nevertheless, shall
remain effective and binding on the parties hereto. It is the intention
of Borrower and Lender to contract in strict compliance with applicable
usury laws; and accordingly, in no event and upon no contingency shall
Lender ever be entitled to receive, collect or apply as interest any
interest, fees or other payment equivalent to interest, in excess of
the maximum rate which Lender may lawfully charge; and, in the event
that Lender ever receives, collects or applies as interest any such
excess, such amount which would be excessive interest shall be applied
to the reduction of the principal amount of the indebtedness owed
Lender, and if all principal and interest thereon is paid in full, any
remaining excess shall forthwith be paid to Borrower, or such other
party lawfully entitled thereto. In determining whether or not the
interest paid or payable, under the specific contingency, exceeds the
highest lawful rate, Borrower and Lender shall, to the maximum extent
permitted under applicable law, characterize any non- principal payment
as a reasonable loan charge rather than as interest. Any provision
hereof, or of any other agreement between Borrower and Lender, that
operates to bind, obligate or compel Borrower to pay interest in excess
of such maximum lawful rate, permitted to be charged form time to time,
shall be construed to require the payment of the maximum rate only. The
provisions of this Section 8.5 shall be given precedence over any other
provision contained herein or in any other agreement between Lender and
Borrower hereof that is in conflict with the provisions of this
Section.
8.6 Titles. Titles of the Sections of this Agreement are merely
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<PAGE> 16
for convenience in reading and shall not be construed to alter, modify
or interpret the meaning of the provisions under said titles.
8.7 Definitions. All accounting terms used in this Agreement, if any, shall
have the meanings ascribed to them by generally accepted accounting
principles.
8.8 Notice. Notices shall be sent certified, postage prepaid return receipt
requested, by prepaid telex or telecopier, reputable overnight courier,
freight prepaid, or delivered by hand and shall be addressed to the
party to receive the same as follows or to such other addressee as may
be hereafter designated in writing by the respective parties hereto:
To Lender: ValuJet, Inc.
1800 Phoenix Blvd. Suite 126
Atlanta, GA 30349
Attn: Stephen C. Nevin, CFO
Telephone: 770 907 5431
Telecopier: 770 907 2586
To Borrower: AirTran Airways, Inc.
6280 Hazeltine National Drive
Suite 100
Orlando, Florida 32822
Attn: Senior Vice President-Finance
Telephone: 407 859 1579 Ext. 298
Telecopier: 407 888 9693
8.10 Entire Agreement. This Agreement (including all Exhibits hereto), the
Loan Documents and all other documents delivered pursuant hereto shall
constitute the full and entire understanding and agreement of the
parties hereto and there are no further or other agreements or
undertakings, written or oral, in effect between the parties relating
to the subject matter hereof unless expressly referred to herein. All
prior negotiations and agreements concerning the subject matter hereof
between the parties hereto are superseded by this Agreement and the
Loan Documents.
8.11 Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall
constitute one and the same instrument.
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<PAGE> 17
IN WITNESS WHEREOF, Borrower and Lender have each caused this Loan Agreement to
be duly executed as of the date and year first above written.
AIRWAYS CORPORATION
Co-Borrower
By: /s/ M. B. Rinder
-------------------------------
Title: VICE PRESIDENT, FINANCE
-----------------------------
AND CHIEF FINANCIAL OFFICER
-----------------------------
AIRTRAN AIRWAYS, INC.
Co-Borrower
By: /s/ M. B. Rinder
-------------------------------
Title: VICE PRESIDENT, FINANCE
-----------------------------
AND CHIEF FINANCIAL OFFICER
-----------------------------
VALUJET, INC.
Lender
By: /s/ Stephen C. Nevin
-------------------------------
Title: VICE PRESIDENT, FINANCE
-----------------------------
AND CHIEF FINANCIAL OFFICER
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<PAGE> 18
EXHIBIT A
PROMISSORY NOTE
DATE OF NOTE: September 8, 1997
PRINCIPAL AMOUNT: $5,700,000
MATURITY DATE: December 3, 1997, unless accelerated earlier
pursuant to paragraph 2 hereof or extended as
set forth in the Loan Agreement.
INTEREST RATE: Twelve percent (12%) per annum
MAKER: Jointly and severally, AirTran Airways, Inc.
and Airways Corporation
MAKER'S ADDRESS: 6280 Hazeltine National Drive
Orlando, Florida 32822
PAYEE: ValuJet, Inc.
PAYEE'S ADDRESS: 1800 Phoenix Blvd., Suite 126
Atlanta, Georgia 30349
FOR VALUE RECEIVED, the undersigned corporations (collectively, the
"Maker") do hereby jointly and severally covenant and promise to pay to the
order of the Payee or to its successors and assigns, at the Payee's Address or
at such other place as the Payee may designate to the Maker in writing from time
to time, in legal tender of the United States, the Principal Amount with
interest from the date hereof computed at the Interest Rate on the unpaid
balance of the Principal Amount at the times and in the amounts set forth
herein.
This Promissory Note is made and delivered pursuant to the terms of the Loan
Agreement between Maker and Payee dated as of 9/8, 1997 (the "Loan Agreement").
1. REQUIRED PAYMENTS. During the term hereof, payments will be
made as follows:
(a) INTEREST PAYMENTS. During the term of this Note,
the Maker shall pay interest monthly in arrears at the
Interest Rate, on the day of each month corresponding to the
date of this Note (the "Due Date")
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<PAGE> 19
commencing on October 8, 1997 until the Maturity Date, at
which time the entire remaining unpaid principal balance and
all accrued but unpaid interest shall be due and payable in
full.
(b) PAYMENTS OF PRINCIPAL, MATURITY DATE. The Maker
shall pay, the Principal Amount (plus accrued interest) on or
before and no later than the Maturity Date, at which time the
entire remaining unpaid principal balance and all accrued but
unpaid interest shall be due and payable in full.
(c) MATURITY DATE. On the Maturity Date, the entire
remaining unpaid principal balance together with accrued but
unpaid interest shall be due and payable in full.
2. DEFAULT. The occurrence of any one or more of the following
conditions shall each and all constitute a condition of default under this Note:
(a) If any payment as set forth herein is not made
on this Note when due (i.e. the Due Date).
(b) If any condition of default whatsoever occurs
under the Leasehold Mortgage (as hereinafter defined) or any
other agreement whatsoever relating to any collateral that may
have been given for the payment of this Note and such default
remains uncured after any applicable cure periods.
(c) A default occurs under the terms and conditions
of any other agreement (including, without limitation, the
Loan Agreement or the Leasehold Mortgage) relating to the
obligation evidenced by this Note and such default remains
uncured after any applicable cure periods.
If any one or more of the foregoing conditions should occur, then the
entire principal balance and accrued and unpaid interest thereon shall become
due and payable at once or thereafter, at the option of the Payee, without
notice to or demand upon the Maker, or the Payee may exercise any and all other
rights available to it under applicable law or any other loan document, each of
which remedy shall be cumulative. Failure to exercise these options shall not
constitute a waiver of the right to exercise the same in the event of any
subsequent default.
3. LATE PAYMENT FEE, ETC. If any payment is not made within two
(2) days after the Due Date, then, in that event, there shall
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also be paid to the Payee, a late charge equal to five percent (5%) of the
payment that is due on the Due Date and not paid. The purpose of such late
charge shall be to reimburse the Payee for its costs and expenses in connection
with servicing a delinquent account. A payment which is not received on the due
date shall be deemed late. Further, if any payment shall not be paid when due,
then the entire principal balance and accrued and unpaid interest thereon shall
become due and payable at once or thereafter, at the option of the holder of
this Note, without notice to or demand upon the Maker. Failure to exercise these
options shall not constitute a waiver of the right to exercise the same in the
event of any subsequent default.
4. COSTS OF COLLECTION.The Maker agrees that they shall, jointly
and severally, pay all costs, expenses and reasonable attorneys' fees, incurred
by the Payee in connection with any aspect of this Note, including any default
as well as any proceedings which may involve this Note or any other loan
document relating hereto including, but not limited to, arbitration, litigation
bankruptcy proceedings, etc. The undersigned specifically agree that the event
of any bankruptcy of the Maker, the Payee shall be entitled to recover all its
expenses and reasonable attorneys, fees incurred by the Payee in regard to any
bankruptcy proceeding.
5. INTEREST/DEFAULT INTEREST, ETC. Interest under this Note is
computed on the basis of a 360 day year period, based on the actual number of
days elapsed. This Note and all sums due hereunder shall bear interest at the
lesser of (a) fifteen percent (15%) per annum or (b) the highest lawful rate of
interest per annum permitted under the laws of the State of Florida from the
date of a default hereunder. Notwithstanding any term, condition, obligation or
provision herein to the contrary, it is the expressed intent of the Payee that
no interest, consideration or charge in excess of that permitted in the State of
Florida may be accrued, charged or taken or become payable hereunder. In the
event it is hereafter determined that the Payee of this Note has taken, charged
or reserved interest in excess of that permitted under Florida law, whether due
to prepayment, acceleration or otherwise, such excess shall be refunded to the
Maker or credited against the sums due the Payee hereunder.
6. COLLATERAL. This Note is secured, inter alia, by a Leasehold
Mortgage and Security Agreement (the "Leasehold Mortgage") dated of even date
herewith from the Maker to the Payee, encumbering the Maker's leasehold interest
in certain real property situated in the State of Florida, and to which
reference is hereby made for a description of said real property, the nature and
extent of the security, the rights of the Payee in respect thereof and the terms
and conditions upon which this Note is
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<PAGE> 21
issued. The Maker agrees that it shall be bound by any agreement extending the
time or modifying the above terms of payment made by the Payee and the owner of
the real property interest affected by the Leasehold Mortgage, whether with or
without notice to the Maker, and the Maker shall continue to be liable to pay
the amount due hereunder, but with interest at a rate no greater than the
Interest Rate according to the terms of any such agreement of extension or
modification. The unpaid balance of the Principal Amount, plus accrued interest,
shall become due and payable at the option of the Payee under the happening of
an event by which said balance shall or may become due and payable under the
terms of the Leasehold Mortgage or any other loan document relating to the Note,
the Leasehold Mortgage and the expiration of any applicable cure periods.
7. AMENDMENTS TO NOTE. This Note may not be changed orally, but
only by an agreement in writing, signed by the party against whom enforcement of
any waiver, change, modification or discharge is sought.
8. WAIVER OF PRESENTMENT, ETC. All parties to this Note, whether
Maker, endorser, surety, or guarantor, hereby waive presentment for payment,
demand, protest, notice of protest and notice of dishonor, and expressly agree
jointly and severally to remain and continue bound for the payment of the
principal and interest provided for by the terms of this Note, notwithstanding
any extension or extensions of the time of, or for the payment of said principal
or interest, or any change or the changes in the amount or amounts agreed to be
paid under or by virtue of the obligation to pay provided for in this Note, or
any changes or changes by way of release or surrender or substitution of any
real property and collateral or either, held as security for this Note, and
waive all and every kind of notice of such extension or extensions, change or
changes, and agree that the same may be made without the joinder of the Maker.
9. NOTICE. Written notices provided herein shall be sent by
registered or certified mail, postage pre-paid, return receipt requested, by
pre-paid telex or telecopier, reputable overnight courier, freight pre-paid, or
delivered by hand.
10. LAW GOVERNING. The provisions of this Note shall be construed
and interpreted in accordance with, and all rights and obligations of the
parties hereunder governed by, the laws of the state of Florida.
11. RESOLUTION OF DISPUTES/VENUE/ETC. The exclusive venue for any
proceeding shall be in the county where the Maker is located and, further, in
regard to any judicial proceeding, each party expressly waives any right to a
jury trial.
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12. PREPAYMENT. This Note may be prepaid in whole or in part at
any time without penalty.
ATTEST: AIRTRAN AIRWAYS, INC.
By: /s/ Lawrence H. Brinker By: /s/ M. B. Rinder
------------------------------- --------------------------------
Lawrence Brinker Mark Rinder
Company Secretary Vice President Finance and
Chief Financial Officer
ATTEST: AIRWAYS CORPORATION
By: /s/ Lawrence H. Brinker By: /s/ M. B. Rinder
------------------------------- --------------------------------
Lawrence Brinker Mark Rinder
Company Secretary Vice President Finance and
Chief Financial Officer
Documentary stamp taxes in the amount of $19,950.00 have been affixed to the
Leasehold Mortgage and Security Agreement securing this Note.
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EXHIBIT B
LEASEHOLD MORTGAGE AND SECURITY AGREEMENT
THIS LEASEHOLD MORTGAGE AND SECURITY AGREEMENT (the "Mortgage" or the
"Leasehold Mortgage") executed and delivered as of the 8th day of September,
1997, by:
AIRTRAN AIRWAYS, INC., a Delaware corporation, whose address is 6280
Hazeltine National Drive, Orlando, Florida 32822 (hereinafter referred to as the
"Mortgagor"),
to
VALUJET, INC., a corporation organized under the laws of Nevada whose
address is 1800 Phoenix Blvd, Suite 126, Atlanta, Georgia 30349 (hereinafter
referred to as the "Mortgagee");
WITNESSETH:
That in consideration of the premises and in order to secure
(collectively, the "Obligations"):
A. The payment of:
(i) The principal, interest and any other sums
whatsoever payable at any time on that certain Promissory Note
dated of even date herewith from the Mortgagor and Airways
Corporation, a Delaware corporation (hereinafter individually,
the "Borrower" and collectively, the "Borrowers") to the
Mortgagee in the face amount of $5,700,000.00, as said note
may be amended, changed, modified, renewed or substituted for
from time to time (the "Note"),
(ii) All of the other obligations due the
Mortgagee under this Leasehold Mortgage,
(iii) All other obligations due the Mortgagee
under the Loan Agreement, the Note, this Leasehold Mortgage,
the Environmental Agreement, each as may be amended or
supplemented from time to time and including all exhibits and
attachments thereto any other document or agreement executed
in connection with such documents, the Note and
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<PAGE> 24
THIS LEASEHOLD MORTGAGE AND SECURITY AGREEMENT IS EXEMPT FROM THE INCURRENCE OF
INTANGIBLE TAX BECAUSE IT IS A LEASEHOLD MORTGAGE AND NOT A FEE MORTGAGE. the
loan evidenced thereby and secured hereby (the "Loan Documents"); and
B. The performance and observance of:
(i) All the provisions of this Leasehold Mortgage,
(ii) All the provisions of the Note,
(iii) All the provisions of each other Loan Document, and
the Mortgagor hereby grants, sells, warrants, conveys, assigns, transfers,
mortgages and sets over and confirms unto the Mortgagee, all of the Mortgagor's
estate, right, title and interest in and to:
A. The Mortgagor's leasehold estate (the "Leasehold Interest") in
the real property (the "Real Property") situate in Orange County, Florida, and
more particularly described on Exhibit A attached hereto pursuant to and by
virtue of that certain Orlando Tradeport Maintenance Hangar Lease Agreement
dated December 11, 1989 by and between the Greater Orlando Aviation Authority
("GOAA") and Page Avjet Corporation ("PAC") as amended by Amendment No. 1 dated
June 22, 1990 by and between GOAA and PAC and as assigned to Mortgagor by
instrument dated February 29, 1996 by and among Mortgagor, PAC and Page Avjet
Holding Corporation, and as amended by Agreement and Second Amendment dated
January 25, 1996 by and between GOAA and Mortgagor (collectively, the "Lease").
The Lease is referenced in Memorandum of Lease Recorded in OR Book 4194 pg.
2005; Memorandum of Assignment recorded in OR Book 5028 pg. 1146, and Memorandum
of Amendment recorded in OR Book 5028 pg. 1152.
B. Together with the following (collectively, the "Additional
Property")
(i) The Mortgagor's Leasehold Interest in all buildings,
structures and improvements now or hereafter located on said Real
Property and all fixtures, equipment (excluding aircraft), machinery,
electrical and plumbing fixtures and lines, air conditioning and
heating equipment, now or hereafter located and situate therein and
leased to the Mortgagor by virtue of the Lease, and any replacements
thereof; and
(ii) All furnishings, furniture, goods, machinery,
apparatus, equipment, fittings, dies, motors, parts (including spare
parts and repair parts) and tools, together with all fittings,
accessories, accessions, additions,
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<PAGE> 25
modifications, improvements, equipment and special tools now or
hereafter affixed to any or any part of the foregoing or used in
connection with any part of the foregoing and all replacements of any
part thereof, and to the extent owned by Mortgagor, any tangible
personal property (excluding aircraft) of every kind and nature
whatsoever of the Mortgagor now or hereafter located or situate on the
Real Property or in any buildings or improvements located upon the Real
Property, or any part thereof, or used or usable or intended to be used
in connection therewith, or with the operation of the Real Property,
all additions, improvements and betterments thereto or thereof, all
substitutions and replacements therefor and all products and Proceeds
of any of the foregoing, and any and all tenements, hereditaments,
easements, and appurtenances there unto belonging or in any way
appertaining, and all claims and demands, in law or in equity, of the
Mortgagor in and to any of the foregoing; and
(iii) All deposits made with, or other security given to,
utility companies by the Mortgagor or any other person on behalf of the
Mortgagor with respect to the Real Property, all of the Mortgagor's
rights relating to the Real Property or the operation thereof, or used
in connection therewith, including without limitation, all rights to
any permits, licenses, authorizations and approvals granted to or
otherwise held by the Mortgagor in regard to the Real Property, all
rights of the Mortgagor to any contracts relating to the Real Property
and all engineering, architectural and other plans, drawings and
specifications in connection therewith, and all other intangible rights
of the Mortgagor relating to the Real Property or used or usable in
connection therewith, the foregoing Leasehold Interest and Additional
Property hereinafter referred to collectively as the "Mortgaged
Property". To the extent any of the Mortgaged Property is deemed to be
personal property or fixture's under the Florida Uniform Commercial
Code, the Mortgagor does hereby grant to the mortgagee a security
interest in all of said personal property and fixtures.
TO HAVE AND TO HOLD the Mortgaged Property, together with all and
singular the tenements, hereditaments and appurtenances there unto belonging or
in anywise appertaining, with the reversion and reversions thereof, and all the
estate, right, title, interest, homestead, possession, claim and demand
whatsoever, as well in law as in equity, of the Mortgagor and unto the same, and
every part thereof, with the appurtenances of the Mortgagor in and to the same,
and every part and parcel thereof unto the Mortgagee.
The Mortgagor warrants that the Mortgagor has a good and marketable
title to and indefeasible fee estate in the Mortgaged Property subject to no
lien, mortgage, security interest or any other encumbrance of any nature
whatsoever except for the
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<PAGE> 26
permitted encumbrances (the "Permitted Encumbrances") defined below, and the
Mortgagor covenants that this Mortgage is and will remain a valid and
enforceable mortgage on the Mortgaged Property subject only to the Permitted
Encumbrances. The Mortgagor has full power and lawful authority to mortgage the
Mortgaged Property in the manner and form herein done or intended hereafter to
be done. The Mortgagor will preserve such title and will forever warrant and
defend the same to Mortgagee and will forever warrant and defend the validity
and priority of the lien hereof against the claims of all persons whomsoever.
The Mortgagor will, at the cost of the Mortgagor, and without expense
to the Mortgagee, do, execute, acknowledge and deliver all and every one of such
further acts, deeds, conveyances, mortgages, assignments, notices of assignment,
transfers and assurances as the Mortgagee shall from time to time require in
order to preserve the priority of the lien of this Mortgage or to facilitate the
performance of the terms hereof.
PROVIDED, HOWEVER, that if the Mortgagor shall pay or cause to be paid
to Mortgagee the indebtedness in the principal sum of $5,700,000.00 as evidenced
by the Note, from which the Mortgagor has directly benefitted, executed by the
Mortgagor and payable to the order of the Mortgagee, with interest and upon the
terms as provided therein, together with all other sums advanced by the
Mortgagee to or on behalf of the Mortgagor pursuant to the Note, any other Loan
Documents or this Mortgage, or otherwise due and owing by the Mortgagor to the
Mortgagee at any time, and all of the other obligations as set forth above and
secured hereby, and shall perform all other covenants and conditions of the
Note, all of the terms of which Note are incorporated herein by reference as
though set forth fully herein, and of any renewal, extension or modification
thereof, and of this Mortgage, the other Loan Documents and such other
obligations, then this Mortgage and the estate hereby created shall cease and
terminate.
The Mortgagor further covenants and agrees with the Mortgagee as
follows:
1. PAYMENT OF NOTE. The Mortgagor shall pay all sums,
including interest secured hereby, when due as provided for in the Note and any
renewal, extension or modification thereof and in this Mortgage, all such sums
to be payable in lawful money of the United States of America at the Mortgagee's
aforesaid principal office or at such other place as the Mortgagee may designate
from time to time in writing. As set forth above, the term "Note" means and
includes any and all amendments, changes, modifications, renewals, replacements
and substitutions of or to said Note.
2. PAYMENT OF TAXES AND FEES ON OR RELATED TO MORTGAGED
PROPERTY. The Mortgagor shall pay when due, and before any delinquency or
default shall occur, and without requiring any
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notice from the Mortgagee, all taxes, assessments, dues, charges (including
utility charge), fees, levies, fines, impositions, liabilities, obligations and
encumbrances of any type or nature and other charges levied or assessed against
the Mortgaged Property or any part thereof or this Mortgage or the indebtedness,
or other sums secured hereby, or upon or against the interest of Mortgagee in
the Mortgaged Property and, in each case shall produce receipts therefor upon
demand.
3. PAYMENT OF ENCUMBRANCES. The Mortgagor shall immediately pay
and discharge (or transfer in full to a bond) any lien (except for Permitted
Encumbrances) against the Mortgaged Property which may be or become superior to
this Mortgage including, without limitation, any mechanic's lien arising from or
relating back to the "Commencement Notice" set forth in the title commitment
referenced in Section 32(b) hereof, and shall not permit any default or
delinquency on any other lien, against the Mortgaged Property (including
Permitted Encumbrances). In regard to any Permitted Encumbrances, the Mortgagor
shall at all times keep current and not default under any Permitted Encumbrance.
4. MONTHLY DEPOSITS FOR TAXES AND INSURANCE. If required by the
Mortgagee, the Mortgagor shall make monthly deposits with the Mortgagee, in a
non-interest bearing account, together with and in addition to payments of
interest and Principal due under the Note, of a sum equal to one-twelfth of the
yearly taxes and assessments which may be levied against the Mortgaged Property
and for which the Mortgagor is or may be liable, if any, and (if so required)
one-twelfth of the yearly premiums for insurance thereon. The amount of such
taxes, assessments and premiums, when unknown, shall be estimated by Mortgagee.
Such deposits shall be used by the Mortgagee to pay such taxes, assessments and
premiums when due. Any insufficiency of such account to pay such charges when
due shall be paid by the Mortgagor to the Mortgagee on demand. If, by reason of
any default by the Mortgagor under any provision of this Mortgage, the Mortgagee
declares all sums secured hereby to be due and payable, the Mortgagee may then
apply any funds in said account against the entire indebtedness secured hereby.
The enforceability of the covenants relating to taxes, assessments and insurance
premiums herein otherwise provided shall not be affected except insofar as those
obligations have been met by compliance with this paragraph. The Mortgagee may
from time to time at its option waive, and after any such waiver reinstate, any
or all provisions hereof requiring such deposits, by notice to the Mortgagor in
writing. While any such waiver is in effect, the Mortgagor shall pay taxes,
assessments and insurance premiums as herein elsewhere provided.
5. PAYMENT OF TAXES AND ASSESSMENTS ON MORTGAGE. The Mortgagor
shall promptly pay all taxes and assessments assessed or levied under and by
virtue of any state, federal or municipal law or regulation hereafter passed
against the Mortgagee upon this
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Mortgage or the debt hereby secured, or upon its interest under this Mortgage,
provided however, that in the event of the passage of any such law or regulation
imposing a tax or assessment against the Mortgagee upon this Mortgage or the
debt secured hereby, that the entire indebtedness secured by this Mortgage shall
thereupon become immediately due and payable at the option of the Mortgagee.
6. INSURANCE. The Mortgagor shall keep the Mortgaged Property
insured against loss or damage by fire, and all perils insured against by an
extended coverage endorsement, and such other risks and perils as the Mortgagee
in its discretion may require, and shall comply, at all times, with all
insurance requirements. The policy or policies of such insurance shall be in the
form in general use from time to time in the locality in which the Mortgaged
Property is situated, shall be in such amount as the Mortgagee may reasonably
require, shall be issued by a company or companies licensed in the State of
Florida and rated "A" or better according to the current Best's Key Rating
Guide, shall contain a standard mortgagee clause with loss payable to the
Mortgagee by New York Standard or Union Standard long form endorsements and
shall specifically provide that the same shall not be canceled or modified
adversely to the interest of the Mortgagee without thirty (30) days prior
written notice to the Mortgagee by the insurer. Whenever required by the
Mortgagee, such policies shall be delivered immediately to and held by the
Mortgagee. Any and all amounts received by Mortgagee under any such policies may
be applied by the Mortgagee on the indebtedness secured hereby in such manner as
the Mortgagee may, in its sole discretion, elect or, at the option of the
Mortgagee, the entire amount so received or any part thereof may be released.
Neither the application nor the release of any such amounts shall cure or waive
any default under this Mortgage. Upon exercise of the power of sale given in
this Mortgage or other acquisition of the Mortgaged Property or any part thereof
by the Mortgagee, such policies shall become the absolute property of the
Mortgagee.
7. ZONING. The Mortgagor hereby represents, covenants and
warrants that all applicable zoning laws, ordinances and regulations affecting
the Real Property and the buildings, structures and improvements located thereto
permit the use and occupancy thereof as an aircraft maintenance hangar facility.
8. CONSENT TO CHANGES IN MORTGAGED PROPERTY AND THE LEASE. The
Mortgagor shall first obtain the written consent of the Mortgagee, which consent
shall not be unreasonably withheld before: (a) removing or demolishing any
building now or hereafter erected on the Mortgaged Property; (b) altering the
arrangement, design or structural character thereof; (c) making any repairs
which involve the removal of structural parts or the exposure of the interior of
such building to the elements; (d) removing or exchanging any tangible personal
property which is part of the Mortgaged Property; or (e) entering into any
amendments, modifications, supplements, renewals or replacements of the Lease.
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9. MAINTENANCE OF MORTGAGED PROPERTY. The Mortgagor shall
maintain the Mortgaged Property in good condition and repair, including, but not
limited, to the making of such repairs as the Mortgagee may from time to time
determine to be necessary for the preservation of the Mortgaged Property, and
shall not commit or permit any waste thereof. The Mortgagee shall have the right
to inspect the Mortgaged Property on reasonable notice to the Mortgagor.
10. COMPLIANCE WITH LAWS, THE LEASE, ETC. The Mortgagor shall
comply with all laws, statutes, ordinances, regulations, covenants, conditions
and restrictions affecting the Mortgaged Property, including, without
limitation, to the extent applicable, The Americans With Disabilities Act of
1990 (42 U.S.C. Section 12101 et seq) and the Florida Americans With
Disabilities Accessibility Implementation Act, and all rules and regulations
promulgated thereunder, as such laws, rules and regulations may from time to
time be amended or modified, all Environmental Laws (as defined in the
Environmental Indemnification Agreement (the "Environmental Agreement") by and
between the Mortgagor and the Mortgagee of even date herewith) and all
easements, restrictive covenants and conditions that may be applicable to the
Mortgaged Property and shall not cause or permit any violation thereof. The
Mortgagor shall comply with all of the terms and conditions of the Lease and
timely perform its obligations thereunder, including payment of all lease
payments required thereby and shall promptly provide Mortgagee with notice of
any default or claim of default under the Lease on the part of either party
thereto.
11. FAILURE TO PAY ENCUMBRANCES/MAINTAIN PROPERTY. If the
Mortgagor fails (i) to pay any claim, lien or encumbrance on the Mortgaged
Property, regardless of whether it is superior or junior to this Mortgage,
(provided, however, this clause shall not by itself authorize or permit any
placement of a junior encumbrance on the Mortgaged Property), (ii) to pay when
due, any tax or assessment or insurance premium, (iii) to keep and maintain the
Mortgaged Property in repair, or shall commit or permit waste, then the
Mortgagee, may at its option, may, but is not required to, pay said claim, lien,
encumbrance, tax, assessment or premium, with right of subrogation thereunder,
may make such repairs and take such steps as it deems advisable to prevent or
cure such waste, and take such action therein as the Mortgagee deems advisable,
and for any of such purposes the Mortgagee may advance such sums of money,
including all costs, reasonable attorneys, fees and other items of expense as it
deems necessary and all of such sums of money shall be secured by the lien of
this Mortgage. The Mortgagee shall be the sole judge of the legality, validity
and priority of any such claim, lien, encumbrance, tax, assessment and premium
and of the amount necessary to be paid in satisfaction thereof. The Mortgagee
shall not be held accountable for any
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delay in making any such payment, which delay may result in any additional
interest, costs, charges, expenses or otherwise.
12. PAYMENT OF ADVANCES. The Mortgagor will pay to the Mortgagee,
immediately and without demand, all sums of money advanced by the Mortgagee to
protect the security hereof pursuant to this Mortgage, including without
limitation all costs reasonably incurred by the Mortgagee in evaluating or
correcting dangerous, harmful or unlawful conditions found to exist on or about
the Mortgaged Property, reasonable attorneys' fees and other items of expense,
together with interest on each such advance at the rate of interest otherwise
provided herein, and all such sums and interest thereon shall be secured hereby.
13. AMOUNTS ABSOLUTELY DUE. The Mortgagor shall pay all sums of
money secured hereby without any relief whatever from any valuation or
appraisement laws.
14. SPECIAL CONDITIONS. During the term of this Mortgage and the
obligations secured hereby, the Mortgagor shall comply with the following
additional special conditions:
(a) In the event of default or an Event of Default
hereunder or under any of the obligations secured hereby, the
Mortgagee shall have the option, in its sole discretion, of
requiring the Mortgagor and Airways Corporation to provide
cash collateral in the amount of the outstanding balance from
time to time of the Note. In the event the Mortgagee elects to
require such additional cash collateral, such additional
collateral shall be deposited with the Mortgagee within five
(5) days of the request therefor by the Mortgagee and
Mortgagor and Airways Corporation shall execute any documents
considered necessary by Mortgagee or its counsel in connection
therewith.
15. EVENTS OF DEFAULT. Each and all of the following shall each
constitute an event of default (an "Event of Default") hereunder:
(a) A default occurs under the Note.
(b) A default occurs under paragraphs 6, 12 or 14 of
this Mortgage.
(c) A default occurs under any other term or
condition of this Mortgage and, if capable of being remedied,
such default shall remain unremedied for 30 days after the
earlier of (i) Borrowers obtaining knowledge thereof, and (ii)
written notice thereof shall have been given to Borrowers by
Mortgagee.
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(d) A default occurs under the terms and conditions
of the Leasehold Mortgage or any other Loan Document.
(e) The occurrence of a default under the Lease which
is not cured within any applicable cure period.
(f) The Lease is terminated or not renewed for any
reason whatsoever.
(g) If the Federal Aviation Administration shall at
any time during the term of this Mortgage restrict the ability
of the Mortgagor to fly its regularly scheduled routes on a
regular basis or otherwise restrict the Mortgagor's ability to
operate its business as presently conducted.
16. REMEDIES UPON DEFAULT. Upon the happening and during the
continuance of any Event of Default, the Mortgagor may exercise to any one or
more of the following remedies, each of which shall be cumulative:
(a) All of the indebtedness secured hereby shall
become and be immediately due and payable at the option of the
Mortgagee, without notice or demand which are hereby expressly
waived, in which event the Mortgagee may (but shall be under
no duty or obligation to) avail itself of all rights and
remedies, at law or in equity, including without limitation,
those available to a secured party upon default under the
Florida Uniform Commercial Code;
(b) This Mortgage may be foreclosed with all rights
and remedies afforded by the laws of the State of Florida and
the failure to make any landlords party defendant to any such
foreclosure proceedings and to foreclose their rights will not
be, nor be asserted by Mortgagor to be, a defense to any
proceedings instituted by Mortgagee to collect the sums
secured hereby;
(c) Any other remedies provided by law or under any
other loan document including the Note or any other Loan
Documents.
In connection with the exercise of any such remedies, the Mortgagor shall pay
all costs and expenses incurred by the Mortgagee in (i) enforcing this Mortgage,
(ii) preserving, securing or protecting the Mortgaged Property, (iii) evaluating
any conditions on or about the Mortgage Property, including environmental
assessments, surveys or studies, (iv) realizing upon the Mortgaged Property or
any part thereof, and (v) collecting any
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of the indebtedness secured hereby, including without limitation reasonable
attorneys' fees whether suit is brought or not and whether incurred in
connection with collection, at trial, on rehearing, retrial or appeal, in
bankruptcy or otherwise.
17. DEFAULT INTEREST/LATE CHARGES/INTEREST ON ADVANCES. The
Mortgagor further agrees to pay as follows:
(a) Upon the occurrence of any default, the
indebtedness secured hereby shall bear interest without notice
or demand at the default rate of interest set forth in the
Note, from and after the date of any such default of the
Mortgagor.
(b) If the Note provides for installment payments,
the Mortgagee may at its option, collect a late charge as may
be provided for in the Note, to reimburse the Mortgagee for
expenses in collecting and servicing such installment
payments.
(c) If the Mortgagee should extend any advances for
or in behalf of the Mortgagor, the Mortgaged Property, or
otherwise as permitted under this Mortgage.
18. RIGHT TO RECEIVER ON DEFAULT. Upon the happening and during
the continuance of any Event of Default:
(a) The Mortgagee is authorized at any time, without
notice, in its sole discretion to enter upon and take
possession of the Mortgaged Property or any part thereof,
subject to the Lease, and to exclude Mortgagor and its agents
and employees wholly therefrom and may have joint access with
Mortgagor to the books, papers, records and accounts of
Mortgagor and to perform any acts the Mortgagee deems
necessary or proper to conserve the security; and
(b) Upon such entering upon or taking of possession,
Mortgagee may hold, store, use, operate, manage and control
the Mortgaged Property and conduct the business thereof, and
from time to time, make all necessary and proper maintenance,
repairs, renewals, replacements, additions, betterments and
improvements thereto and thereon and purchase or otherwise
acquire additional fixtures, personalty and other property,
insure or keep the Mortgaged Property insured, manage and
operate the Mortgaged Property and exercise all rights and
powers of Mortgagor in its name or otherwise with respect to
the same and enter into agreements with others to exercise the
powers herein granted Mortgagee, all as Mortgagee in its
reasonable judgment from time
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<PAGE> 33
to time may determine; and Mortgagee may collect and receive
all the income, revenues, rents, issues and profits of the
same, including those past due as well as those accruing
thereafter; and
(c) The Mortgagee shall be entitled, as a matter of
strict right, without notice and ex parte, and without regard
to the value or occupancy of the security, or the solvency of
the Mortgagor, or the adequacy of the Mortgaged Property as
security for the Note, to have a receiver appointed to enter
upon and take possession of and operate the Mortgaged
Property, collect the income, revenues, rents, issues and
profits therefrom and apply the same as the court may direct,
such receiver to have all the rights and powers permitted
under the laws of Florida.
In either such case, the Mortgagee or the receiver may also take possession of,
and for these purposes use, any and all personal property which is a part of the
Mortgaged Property and used by the Mortgagor in or arising from the sale, rental
or leasing thereof or any part thereof. The expense (including receiver's fees,
counsel fees, costs and agent's compensation) incurred pursuant to the powers
herein contained shall be secured hereby. The Mortgagee shall (after payment of
all costs and expenses incurred) apply such income, revenues, rents, issues,
proceeds and profits received by it on the indebtedness secured hereby in such
order as the Mortgagee determines. The right to enter and take possession of the
Mortgaged Property, to manage and operate the same, and to collect the income,
revenues, rents, issues, proceeds and profits thereof, whether by a receiver or
otherwise, shall be cumulative to any other right or remedy hereunder or
afforded by law, and may be exercised concurrently therewith or independently
thereof. The Mortgagee shall be liable to account only for such income,
revenues, rents, issues, proceeds and profits actually received by the
Mortgagee.
19. CUMULATIVE RIGHTS ON DEFAULT. If the indebtedness secured
hereby is now or hereafter further secured by mortgages, security interests,
financing statements, pledges, contracts of guaranty, assignments of leases or
other securities, or if the Mortgaged Property hereby encumbered consists of
more than one parcel of real property, the Mortgagee may, at its option, exhaust
any one or more of said securities and security hereunder, or such parcels of
the security hereunder, either concurrently or independently, and in such order
as it may determine. All such remedies may be exercised by the Mortgagee without
any marshalling of assets, which marshalling of assets the Mortgagor does hereby
expressly waive.
20. FUTURE ADVANCES. This Mortgage shall secure not only existing
indebtedness, but also such future advances, whether such
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<PAGE> 34
advances are obligatory or to be made at the option of the Mortgagee or
otherwise, as are made within twenty (20) years from the date hereof, to the
same extent as if such future advances were made on the date of the execution of
this Mortgage, but such secured indebtedness shall not exceed at any time the
maximum principal amount of two times the amount of the Note, plus interest
thereon, and any-disbursements made for the payment of taxes, levies or
insurance on the Mortgaged Property with interest on such disbursements. Any
such future advances, whether obligatory or to be made at the option of the
Mortgagee or otherwise, may be made either prior to or after the due date of the
Note or any other obligations secured by this Mortgage. This Mortgage is given
for the specific purpose of securing any and all indebtedness by the Mortgagor
to the Mortgagee (but in no event shall the secured indebtedness exceed at any
time the maximum principal amount set forth in this paragraph) in whatever
manner this indebtedness may be evidenced or represented until this Mortgage-is
satisfied of record. All covenants and agreements contained in this Mortgage
shall be applicable to all further advances made by the Mortgagee to the
Mortgagor under this future advance clause. The Mortgagor agrees that it will
not without the consent of the Mortgagee, execute and record any notice limiting
the right of the Mortgagee to make or the Mortgagor to accept future advances
hereunder.
21. NO WAIVER. No delay by the Mortgagee in exercising any right
or remedy hereunder, or otherwise afforded by law, shall operate as a waiver
thereof or preclude the exercise thereof during the continuance of any Event of
Default hereunder. No waiver by the Mortgagee of any Event of Default shall
constitute a waiver of or consent to subsequent Events of Default. No failure of
the Mortgagee to exercise any option herein given to accelerate maturity of the
debt hereby secured; no forbearance by the Mortgagee before or after the
exercise of such option and no withdrawal or abandonment of foreclosure
proceedings by the Mortgagee shall be taken or construed as a waiver of its
right to exercise such option or to accelerate the maturity of the debt hereby
secured by reason of any past, present or future default on the part of the
Mortgagor; and, in like manner, the procurement of insurance or the payment of
taxes or other Liens or encumbrances by the Mortgagee shall not be taken or
construed as a waiver of its right to accelerate the maturity of the debt hereby
secured.
22. RELEASE RIGHTS OF MORTGAGEE. Without affecting the liability
of the Mortgagor or any other person (except any person expressly released in
writing) for payment of any indebtedness secured hereby or for performance of
any obligation contained herein, and without affecting the rights of the
Mortgagee with respect to any security not expressly released in writing, the
Mortgagee may, at any time and from time to time, either before or after the
maturity of the Note, and without notice or consent:
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<PAGE> 35
(a) Release any person liable for payment of all or
any part of the indebtedness evidenced by the Note or for
performance of any of the other obligations;
(b) Make any agreement extending the time or
otherwise altering the terms of payment of all or any part of
the indebtedness evidenced by the Note, or modifying or
waiving any of the other obligations, or subordinating,
modifying or otherwise dealing with the lien or charge hereof;
(c) Exercise or refrain from exercising or waive
any right the Mortgagee may have;
(d) Accept additional security of any kind; and
(e) Release or otherwise deal with any property, real
or personal, securing the indebtedness, including all or any
part of the Mortgaged Property.
23. NO FURTHER LIENS OR ENCUMBRANCES. The Mortgagor shall not,
without the Mortgagee's consent, grant to any other person whatsoever any lien,
mortgage or any other encumbrance whatsoever on any of the Mortgaged Property.
Any attempt by the Mortgagor to do so shall constitute a default hereunder.
Further, any such mortgage or encumbrance shall be invalid and shall not
constitute any lien on the Mortgaged Property. Included within the term
"Mortgaged Property" is the express right of the Mortgagor to grant to any third
party any further interest or right in the Mortgaged Property, whether by virtue
of any junior encumbrance, easement, etc.
24. PRIORITY OVER FUTURE LIENS OR ENCUMBRANCES. Any amendment or
modification of this Mortgage hereafter made by the Mortgagor and the Mortgagee
pursuant to this Mortgage shall be superior to the rights of the holder of any
Lien on the Mortgaged Property arising subsequent to the date of this Mortgage
(provided, however, that this clause shall not by itself authorize or permit any
subsequent liens or encumbrances on the Mortgaged Property which are otherwise
prohibited under the terms of this Mortgage).
25. CONDEMNATION. In the event of condemnation proceedings of the
Mortgaged Property or any part thereof, the award or compensation payable
thereunder is hereby assigned to and shall be paid to the Mortgagee. The
mortgagee shall be under no obligation to question the amount of any such award
or compensation and may accept the same in the amount in which the same shall be
paid. In any such condemnation proceedings, the Mortgagee may be represented by
counsel selected by the Mortgagee. The proceeds of any award or compensation so
received shall, at the option of the Mortgagee, either be applied to the
prepayment of the Note and at
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<PAGE> 36
the rate of interest provided therein, regardless of the rate of interest
payable on the award by the condemning authority, or at the option of the
Mortgagee, such award shall be paid over to the Mortgagor for restoration of the
Mortgaged Property.
26. DUE ON SALE. The loan evidenced by the Note and secured by
this Mortgage is personal to the Mortgagor and the Mortgagee made the loan to
the Mortgagor based upon the credit of the Mortgagor and the Mortgagee's
judgment of the ability of the Mortgagor to repay all sums due under this
Mortgage, and therefore this Mortgage may not be assumed by any subsequent
holder of an interest in the Mortgaged Property. If all or any part of the
Mortgaged Property or any interest therein, is sold, conveyed, transferred
(including a transfer by agreement for deed or land contract), abandoned or
further encumbered by the Mortgagor or if the Mortgagor shall cease operating an
aircraft maintenance hangar facility on the Real Property, without the
Mortgagee's prior written consent, excluding partial releases of portions of the
Mortgaged Property as provided herein, then in that event the Mortgagee may
declare all sums secured by this Mortgage immediately due and payable.
27. SEVERABILITY. In the event any one or more of the provisions
contained in this Mortgage or in the Note shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall, at the option of the Mortgagee, not affect any other
provisions of this Mortgage, and this Mortgage shall then be construed as if
such invalid, illegal or unenforceable provision had never been contained herein
or therein. The total interest payable pursuant to the Note or this mortgage
shall not in any one year exceed the highest lawful rate of interest allowed by
the law of the State of Florida.
28. SUCCESSORS AND ASSIGNS. The covenants and agreements herein
contained shall bind, and the benefits and advantages shall inure to the
respective heirs, executors, administrators, successors and assigns of the
parties hereto; provided, however, that this paragraph shall not of itself
authorize the Mortgagor to sell or transfer the Mortgaged Property.
29. MISCELLANEOUS. Wherever used, the singular number shall
include the plural, the plural the singular and the use of any gender shall be
applicable to all genders. If more than one Mortgagor executes this Mortgage,
the term "Mortgagor" includes each of the mortgagors, and all covenants,
agreements and ,undertakings hereunder shall be joint and several. Time is of
the essence of this Mortgage. The captions set forth to the paragraphs in this
Mortgage are for convenience only and do not limit, expand or define the terms
and conditions of this Mortgage.
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<PAGE> 37
30. FINANCIAL STATEMENTS OF THE MORTGAGOR. During the term of this
Mortgage, each Borrower shall furnish the Mortgagee (a) annually, (i) within
ninety (90) days of the expiration of its fiscal year, an Audited financial
statement of such Borrower, containing the unqualified opinion of a Certified
Public Accountant acceptable to the Mortgagee, together with (A) a certification
of the Chief Financial officer of the Borrowers that no default exists under the
loan documents or any other obligations of such Borrower to the Mortgagee and
(B) a certificate confirming the Borrowers, compliance with all financial
covenants and ratios, in form and substance acceptable to the Mortgagee and
certified to the Mortgagee by an authorized financial officer of such Borrower,
(ii) promptly upon receipt thereof, a copy of any management letters submitted
to either Borrower by its independent Certified Public Accountant, and (iii)
within thirty (30) days after their filing, copies of such Borrower's Federal
Income Tax Return; (b) on a quarterly basis, an internally prepared Form 10Q
filed with the Securities and Exchange Commission within forty-five (45) days of
the end of each calendar quarter, certified to the Mortgagee by an authorized
financial officer of such Borrower; and (c) with reasonable promptness, such
other financial information as the Mortgagee may request.
31. GOOD STANDING OF THE MORTGAGOR. The Mortgagor represents and
warrants that it is now and will be during the term of this Mortgage a duly
formed and validly existing corporation in the state of its incorporation, and
is fully qualified to do business in the State of Florida, with full power and
authority to consummate the loan secured hereby.
32. PERMITTED ENCUMBRANCES. The Mortgage granted hereby is not
subject to any encumbrance, mortgage, security interest or any other lien of any
nature whatsoever on the Mortgaged Property except for the following Permitted
Encumbrances;
(a) Taxes and assessments occurring subsequent to
December 31, 1996 (provided, however, this shall not relieve
the Mortgagor of its obligation to pay said taxes and
assessments as set forth herein).
(b) Matters as set forth in that certain First
American Title Insurance Company title commitment issued on
September 5, 1997 under Commitment No. FA-CC-95.03899.
33. ADDITIONAL AMOUNTS SECURED BY MORTGAGE. This Mortgage secures,
in addition to amounts due under the Note and as otherwise set forth in this
Mortgage, any and all amounts which may be expended or incurred by the Mortgagee
in connection with the Mortgaged Property including, but not limited to, the
costs for any appraisals, title updates or searches, environmental audits or
reviews including, but not limited to, any matters under
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<PAGE> 38
the Environmental Agreement, all regardless of whether or not any default has
occurred.
34. WAIVER OF JURY TRIAL. THE MORTGAGOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY, AFTER CAREFUL CONSIDERATION AND AN OPPORTUNITY TO
SEEK LEGAL ADVICE, WAIVES ITS RIGHT TO HAVE A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF OR IN ANY WAY CONNECTED WITH ANY OF THE PROVISIONS OF
THIS MORTGAGE, THE NOTE, THE LOAN DOCUMENTS, OR ANY OTHER DOCUMENTS EXECUTED IN
CONJUNCTION WITH THE LOAN SECURED BY THIS MORTGAGE.
35. COMPLETE AGREEMENT. This Mortgage constitutes the complete
agreement between the parties hereto and it may not be amended, changed or
modified except by a writing signed by the party to be charged by said
amendment, change or modification.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
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<PAGE> 39
IN WITNESS WHEREOF, the Mortgagor has duly executed this Mortgage as of
the day and year first above written.
Signed and delivered
in the presence of: AIRTRAN AIRWAYS, INC.
/s/ Peter J. Fides, II By: /s/ M. B. Rinder
- --------------------------- -------------------------------
(Signature of Witness) Vice President Finance and Chief
Financial Officer
Peter J. Fides, II
- ---------------------------
(Print Name of Witness)
/s/ Shirley Bruening
- ---------------------------
(Signature of Witness)
Shirley Bruening
- ---------------------------
(Print Name of Witness)
As to the "Mortgagor"
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 8th day of
September, 1997 by Mark Rinder, as Vice President Finance and Chief Financial
Officer of Airtran Airways, Inc., a Delaware corporation, on behalf of the
corporation.
/s/ Peter J. Fides, II
--------------------------------------
Signature of Notary Public - State of
Florida
Peter J. Fides, II
My commission CC569828 --------------------------------------
Expires July 16, 2000 Print, type or stamp commissioned name
of Notary Personally known X OR
Produced Identification ____
Type of Identification Produced:
- ----------------
(NOTARIAL SEAL)
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<PAGE> 40
JOINDER BY CO-BORROWER
The undersigned, being the Co-Borrower under the loan made pursuant to
that certain Loan Agreement dated as of _______________, 1997 between and among
AirTran Airways, Inc. and Airways Corporation as Co-Borrowers and ValuJet, Inc.,
as Lender (the "Loan Agreement") and co-Maker of the Note delivered under the
Loan Agreement, does hereby absolutely and unconditionally agree to be bound by
and to comply with the terms, conditions and obligations of the foregoing
Leasehold Mortgage and Security Agreement. The obligation of the undersigned Co-
Borrower shall, as set forth above, survive any repayment of the loan made under
the Loan Agreement, and this obligation may not be canceled in any way
whatsoever by the Co-Borrower.
Dated this 8th day of September, 1997.
Signed and delivered
in the presence of: AIRTRAN AIRWAYS, INC.
/s/ Peter J. Fides, II By: /s/ M. B. Rinder
- ------------------------------ -------------------------------
(Signature of Witness) Vice President Finance and Chief
Financial Officer
Peter J. Fides, II
- ------------------------------
(Print Name of Witness)
/s/ Shirley Bruening
- ------------------------------
(Signature of Witness)
Shirley Bruening
- ------------------------------
(Print Name of Witness)
As to the "Mortgagor"
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 8th day of
September, 1997, by Mark Rinder, as Vice President Finance and Chief Financial
Officer of Airtran Airways, Inc., a Delaware corporation, on behalf of the
corporation.
/s/ Peter J. Fides, II
--------------------------------------
Signature of Notary Public - State of
Florida
Peter J. Fides, II
My commission CC569828 --------------------------------------
Expires July 16, 2000 Print, type or stamp commissioned name of
Notary Personally known X OR
Produced Identification ____
Type of Identification Produced:
- ----------------
(NOTARIAL SEAL)
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<PAGE> 41
EXHIBIT "A"
LEGAL DESCRIPTION
A part of Section 8, Township 24 South, Range 30 East, Orange County,
Florida, being more particularly described as follows:
Commence at the Southeast corner of said Section 8, Township 24 South,
Range 30 East, (Bearings are based on the Florida Coordinate System, East Zone);
thence North 89 (degree) 22'42" West along the South line of said Section 8 for
986.48 feet; thence North 00 (degree) 25'23" West for 1108.89 feet to a line
being 150.00 feet Southeasterly of and parallel with the centerline of Taxiway
No. 2; thence South, 54 (degree) 38'04" West along said line for 121.99 feet to
the Point of Beginning; thence continue South 54 (degree) 38'04" West along
said line for 774.06 feet; thence South 35 (degree) 21'56" East for 660.00
feet; thence North 54 (degree) 38'04" East for 312.91 feet; thence North 00
(degree) 25'23" West for 805.14 feet to the Point of Beginning.
AND that certain parcel more particularly described as follows:
Commence at the Southeast corner of Section 8, Township 24 South, Range
30 East, Orange County, Florida (bearings are based on the Florida Coordinate
System, East Zone); thence North 89 (degree) 22'42" West along the South line of
said Section 8 for 986.48 feet; thence North 00 (degree) 25'23" West for 1108.89
feet to line being 150.00 feet Southeasterly of and parallel with the centerline
of Taxiway No. 2; thence South 54 (degree) 38'04" West for 121.99 feet; thence
South 00 (degree) 25'23" East along said line for 686.73 feet to the Point of
Beginning, thence continue North 55 (degree) 00'19" East along said line for
91.00 feet; thence North 34 (degree) 59'41" West for 19 feet; thence North 55
(degree) 00'19" East for 85 feet; thence South 34 (degree) 59'41" East for 25
feet; thence' North 55 (degree) 00'19" East for 55 feet; thence South 34
(degree) 59'41" East for 42 feet; thence South 55 (degree) 00'19" West for 55
feet; thence South 34 (degree) 59'41" East for 25 feet; thence South 55 (degree)
00'19" West for 45 feet; thence North 88 (degree) 07'29" West for 50 feet;
thence North 34 (degree) 59'41" West for 23 feet; thence South 55 (degree)
00'19" West for 104.78 feet; thence North 00 (degree) 25'23" West for 24.29 feet
to the Point of Beginning.
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<PAGE> 42
EXHIBIT C
ENVIRONMENTAL INDEMNIFICATION AGREEMENT
This Environmental Indemnification Agreement (the "Agreement") made and entered
into this 8th day of September, 1997 by and between
AirTran Airways, Inc., a Delaware corporation, 6280 Hazeltine National
Drive, Orlando, Florida 32822 (the "Mortgagor")
and
ValuJet, Inc., a Nevada corporation, 1800 Phoenix Blvd., Suite 126,
Atlanta, Georgia 30349 (the "Mortgagee").
W I T N E S S E T H:
WHEREAS, The Mortgagor has applied to the Mortgagee for a loan (the "Loan") in
the amount of $5,700,000.00, and which Loan is to be secured by a Leasehold
Mortgage on the Mortgagor's leasehold interest in certain real property (the
"Property") situate, lying and being in Orange County, Florida, the legal
description of which Property is attached hereto as Exhibit "A"; and
WHEREAS, the Mortgagee has entered into with Mortgagor that certain Loan
Agreement (the "Loan Agreement") dated September 8, 1997 pursuant to which
the Mortgagee has agreed to extend the Loan (as defined in the Loan Agreement)
to the Mortgagor provided certain conditions as set forth in the Loan Agreement
are met; and
WHEREAS, it is a condition for the Mortgagee to make the Loan that Mortgagor
agrees to:
A. Represent and warrant to the Mortgagee that to the best of the
Mortgagor's knowledge the Property has never contained, does not
presently contain and will not in the future contain any Hazardous
Substances (as hereinafter defined except as permitted by this
Agreement and in accordance with all applicable Environmental Laws; and
B. Subject to the provisions of this Agreement, indemnify and hold the
Mortgagee harmless from and against all claims, damages, expenses
(including reasonable attorneys' fees), liabilities and all other
obligations which may arise as a result of the Property at any time
containing, discharging or otherwise giving rise to any Hazardous
Substances; and
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<PAGE> 43
C. Obtain at the request or the Mortgagee in the event the Mortgagee
has reason to believe that there are environmental concerns with
respect to the Property and Environmental Report (as hereinafter
defined) from an Environmental Professional (as hereinafter defined)
provider reasonably acceptable to the Mortgagee setting forth in
acceptable form a report as to the status of the Property and its
environmental condition; and
D. Clean-up any Hazardous Substances associated with the Property.
WHEREAS, the Mortgagee is unwilling to make the Loan unless the Mortgagor
executes and delivers this Agreement to the Mortgagee.
NOW, THEREFORE, in consideration and mutual premises herein contained, the
parties do hereby agree as follows:
1. DEFINITIONS. For the purposes of this Agreement, the following definitions
shall apply:
<TABLE>
<CAPTION>
TERM DEFINITION
- ---- ----------
<S> <C>
"ENVIRONMENTAL ACTION" shall mean any action, proceeding or
investigation, claim complaint, letter,
document or any other writing whatsoever by
any governmental agency or any other third
person of any nature whatsoever in which
there is raised a claim, inquiry or question
regarding the Property, including, but not
limited to, any alleged or actual violation
of any Environmental Law with respect to the
Property, any business conducted on the
Property, whether or not there are any
Hazardous Substances stored, treated,
disposed or released on the Property, and
whether the Property or actions conducted on
the Property are in compliance with all
Environmental Laws.
"ENVIRONMENTAL REPORT" shall mean an audit, assessment or report
prepared with respect to the Property and
meeting the following conditions or
requirements:
</TABLE>
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<PAGE> 44
A. The Report shall be prepared by an
Environmental Professional
acceptable to the Mortgagee, which
Professional shall be experienced
in providing environmental audits,
assessments or reports in the area
where the Property is located.
B. The Report shall disclose any and
all Hazardous Substances located
on, impacting or in any other way
affecting the Property as well as
any other environmental matters on
which the Mortgagee may request
that a report be furnished.
C. The Report shall be directed to the
Mortgagee and shall, to the extent
obtainable, contain no limitations
of liability on the part of the
provider in the case of the
Mortgagee.
"ENVIRONMENTAL LAWS" shall mean all environmental laws, rules and
regulations whether Federal, state or local
including, without limitation, the Resource
Conservation and Recovery Act, as amended
(RCRA), 42 USC ss.6901 et -- seq., and the
Comprehensive --- Environmental Response
Compensation and Liability Act of 1980, as
amended (CERCLA), 42 USC ss.6901 et -- seq.,
and all amendments and --- supplements
thereto.
"ENVIRONMENTAL PROFESSIONAL" shall mean a person possessing sufficient
training and experience necessary to conduct
a site reconnaissance, interviews, and other
activities in determining whether the
Property and its use complies with all
Environmental Laws, the existence of any
Hazardous Substances on the Property, and
any required Remedial
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<PAGE> 45
Work, and from the information generated by
such activities, having the ability to
develop conclusions regarding recognized
environmental conditions in connection with
the Property. An individual's status as an
environmental professional may be limited to
the type of assessment to be performed or to
specific segments of the assessment for
which the professional is responsible. The
person may be an independent contractor or
an employee of the user.
"EXISTING ENVIRONMENTAL
REPORT" shall mean that certain Phase I/II
Environmental Site Assessment report dated
February 29, 1996 of the Property by Nodarse
Environmental Services, Inc. Project No.
96E-0148.
"HAZARDOUS SUBSTANCES" shall mean all hazardous and toxic
substances, wastes or materials, all
pollutants or contaminants, asbestos, or
other similar substances, and all raw
materials containing such substances which
are regulated under any Environmental Law,
including, but not limited to, all petroleum
based substances such as gasoline and oil
based products. As such, reference to
"Hazardous Substances" is not limited to
substances which necessarily are "hazardous
or toxic" but includes any substances
regulated under any local, state or federal
law whether or not those substances are
"hazardous or toxic".
"LOAN DOCUMENTS" shall mean any and all documents whatsoever
relating to the Loan including, but not
limited to, any promissory or mortgage note
evidencing the Loan and all Mortgage
Documents.
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<PAGE> 46
"MORTGAGE DOCUMENTS" shall mean all documents granting to the
Mortgagee any lien, mortgage, security
interest or other encumbrance of any nature
whatsoever on the Property and includes, but
is not limited to, any mortgage.
"PERMITTED USE" shall mean all lawful uses and purposes
incidental to the ownership and operation of
one or more passenger airlines, cargo
airlines, and airline and aircraft
operations, maintenance, refurbishment and
support businesses.
"RELEASE" shall mean any spilling, leaking migrating,
pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching,
dumping, or disposing into the environment
of any Hazardous Substances.
"REMEDIAL WORK" shall mean any work required under any
Environmental Law, by any agreement, by any
final judicial order, or by any final order
of any governmental entity as it relates to
the Property.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS IN REGARD TO THE PROPERTY.
Mortgagor hereby represents and warrants to and covenants with, the Mortgagee as
follows:
(a) That to the best of Mortgagor's knowledge after due inquiry and
investigation, and except as expressly set forth in paragraph 3 below,
and except as set forth in the Existing Environmental Report, none of
the Property has ever been used by the Mortgagor or any of Mortgagor's
predecessors in title, nor by anyone else (including, by way of
illustration and not limitation, any tenants which may occupy any
portion of the Property), to generate, manufacture, refine, transport,
treat, store, handle or dispose of Hazardous Substances, nor have any
Hazardous Substances ever been present on the Property, except in
compliance with all applicable Environmental Laws.
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<PAGE> 47
(b) That the Mortgagor has not received any notice, whether oral or
written, of any Environmental Action, nor does the Mortgagor have any
reason to believe that any Environmental Action is pending or
threatened.
(c) That the use and operation of the Property complies, and shall
continue to comply, with all Environmental Laws.
(d) Any Hazardous Substances located, stored, used and generated upon
or at the Property shall be in full compliance with all applicable
Environmental Laws, and shall be consistent with the Permitted Use.
(e) That except as set forth in paragraph 8 below, the Property does
not contain any underground or aboveground tanks storing Hazardous
Substances.
The provisions of this paragraph, and the representations, and warranties and
covenants contained herein, are absolute and unconditional and do not depend in
any way whatsoever on any knowledge or notice which the Mortgagor may have with
respect to the matters set forth in this paragraph. Thus, for example, even if
the Mortgagor after due diligence and investigation is of the knowledge that
there are no Hazardous Substances located on the Property, the provisions of
this paragraph shall nevertheless obligate the Mortgagor hereunder if any
Hazardous Substances are located at any time upon the Property, and the fact
that the Mortgagor had no such knowledge shall not in any way whatsoever relieve
the Mortgagor of any of its duties and obligations under this Agreement.
3. PERMITTED USE OF HAZARDOUS SUBSTANCES. The Property has previously been used,
is currently being used, and will continue to be used for the Permitted Use. In
that regard:
(a) Said Permitted Use shall not be in violation of this Agreement
provided that said Permitted Use is otherwise in full compliance with
this Agreement and all Environmental Laws.
(b) In any event, the provisions of paragraphs 2 above and 5 below
shall continue to apply and, in that regard, the Mortgagor shall
indemnify and hold the Mortgagee harmless in regard to said Permitted
Use and the presence on the Property of any Hazardous Substances
arising out of any Permitted Use.
4. ENVIRONMENTAL REPORT IN THE EVENT OF RELEASE OF HAZARDOUS SUBSTANCES. In the
event the Mortgagee shall have reason to believe that there are environmental
concerns with respect to the
-47-
<PAGE> 48
Property or any Release has occurred in connection with or upon the Property,
the Mortgagor shall, at the request of the Mortgagee, obtain at his own expense
an Environmental Report under the following conditions:
(a) The cost for the Report shall be paid for by the Mortgagor.
(b) The Report may be required from time to time by the Mortgagee, and
the fact that such a report has not been required from time to time by
the Mortgagee shall not constitute a waiver as to the right of the
Mortgagee hereunder to require that said Reports be furnished from time
to time.
In the event said Report should disclose any Hazardous Substances located,
treated, stored, disposed or released on the Property or if said Report should
otherwise recommend any actions, including any Remedial Work, to be taken in
regard to any Hazardous Substances, the Mortgagor shall promptly, at his
expense, remove and/or respond to said Hazardous Substances and comply with such
recommendations.
Should the Mortgagor fail to obtain such a Report within thirty (30) days after
the Mortgagee's request, the Mortgagee shall have the right to retain an
Environmental Professional to perform such a Report and the Environmental
Professional retained by the Mortgagee shall have a right of access to the
Property to perform such work as deemed necessary by the Environmental
Professional to complete the Environmental Report, including, but not limited
to, the collection of air, groundwater, surface water, sediment, soil and
building material samples.
5. INDEMNIFICATION FOR HAZARDOUS SUBSTANCES. The Mortgagor does hereby indemnify
and agree to hold the Mortgagee harmless from and against all claims, damages,
expenses (including reasonable attorneys' fees), liabilities and all other
obligations (including, without limitation, third party claims for personal
injury or real or personal property damage) which the Mortgagee may incur or be
exposed to as a result of any one or more of the following:
(a) The breach of any representation, warranty, covenant, term or
condition contained in this Agreement.
(b) Any damages arising out of the Permitted Use as set forth above.
(c) The breach by the Mortgagor of any of its obligations to furnish an
Environmental Report as set forth above.
-48-
<PAGE> 49
(d) The presence, suspected presence, threat of release, release or
suspected release of any Hazardous Substance in, on or into the air,
soil, surface water, groundwater or soil vapor at, on, about, under,
within or from the Property, or any portion thereof, including, without
limitation, any Hazardous Substance identified by the Mortgagor or
Mortgagee.
(e) In the event the Mortgagor fails to undertake Remedial Work in
accordance with this Agreement, any costs or expenses which may be
incurred by the Mortgagee in performing Remedial Work in connection
with removing any Hazardous Substances from the Property; provided,
however, nothing contained in this Agreement or in any other Loan
Document shall impose any duty or obligation whatsoever upon the
Mortgagee to so clean up the Property.
(f) Any Environmental Action connected in any way with the Property.
(g) Any act of the Mortgagor, tenants, or other users of the Property,
or their respective agents or employees, in arranging for transport,
disposal or treatment, or arranging with a transporter for transport,
disposal or treatment, of Hazardous Substances owned or possessed by
Mortgagor by any other party or entity, at any facility or incineration
vessel owned or operated by another party or entity and containing such
or similar Hazardous Substances.
(h) Any acts of the Mortgagor, tenants or other users of the Property,
or their respective agents or employees, who accept or accepted any
Hazardous Substances for transport to disposal or treatment facilities,
incineration vessels or sites selected by Mortgagor from which there is
a Release, or a threatened Release which causes the incurrence of
remediation costs of a Hazardous Substance.
6. NOTICE OF ENVIRONMENTAL ACTION. If the Mortgagor receives any notice of:
(a) The occurrence of any release on the Property, whether or not the
same occurred in connection with the operations thereon of the
Mortgagor, tenants or other users of the Property; or
(b) Any Environmental Action,
then the Mortgagor immediately shall notify Mortgagee orally and immediately
thereafter in writing of said Release or Action. In
-49-
<PAGE> 50
the event it is determined that any Remedial Work must be taken with regard to
the presence, whether past, present or future, of any such Hazardous Substances
on the Property, the Mortgagor covenants and agrees to take all such Remedial
Work necessary to promptly bring the Property into compliance with all
Environmental Laws, regardless of whether or not the Mortgagor caused said
Release or Action.
7. REMEDIAL WORK. In the event any Remedial Work is required under any
applicable federal, state or local law or regulation, including, but not limited
to, any Release, by any final judicial order, or by any final order of
governmental entity, or as required by any Environmental Report, the Mortgagor
shall:
(a) Perform or cause to be performed the Remedial Work all in
compliance with all Environmental Laws.
(b) Agrees that all Remedial Work shall be performed by one or more
qualified consultants or contractors selected by the Mortgagor and
approved in advance in writing by the Mortgagee.
(c) Agrees that all costs and expenses of such Remedial Work shall be
paid by the Mortgagor, including, without limitation, the charges of
such consultants and contractors, the Mortgagee's reasonable attorney's
and paralegal's fees and costs (which may, at the Mortgagee's option,
include consultants and contractors hired by the Mortgagee to monitor
the Remedial Work) incurred in connection with monitoring or review of
such Remedial Work.
(d) Agrees that in the event the Mortgagor shall fail to timely
commence, or cause to be commenced, or fail to diligently prosecute to
completion such Remedial Work, the Mortgagee may, but shall not be
required to, cause such Remedial Work to be performed after providing
written notice to the Mortgagor, and shall have the right to access to
the Property for the Environmental Professional retained by Mortgagee
to conduct such Remedial Work. All costs and expenses thereof, or
incurred in connection therewith. All such costs and expenses shall be
due and payable upon demand therefor by the Mortgagee, and shall be
secured by the Mortgage Documents.
8. STORAGE TANKS. The Mortgagor represents and warrants that the Property
currently does not contain any underground or above- ground tanks storing
Hazardous Substances except:
Four (4) 500-gallon diesel fuel above-ground storage tanks ("AST")
associated with the emergency fire deluge pumps on the property, these
ASTs being in secondary containment.
-50-
<PAGE> 51
Two (2) 10,000-gallon ASTs and one (1) 10,000-gallon underground
storage tank associated with the existing floor drain collection
system.
In regard to such tanks and any other tanks which may at any time be located
upon the Property, the Mortgagor represents and warrants that:
(a) The operation, use and maintenance of all such tanks used to store
and disburse Hazardous Substances which are presently or in the future
installed at the Property, shall in all respects comply with all
Environmental Laws;
(b) The Mortgagor will enroll in and will remain enrolled in the
Florida Petroleum Liability Insurance and Restoration Program (if
applicable); and
(c) That said tanks will be operated and maintained in accordance with
all Environmental Laws.
9. MORTGAGEE'S RESERVED RIGHTS. In the event of receipt of notice of
Environmental Action, the Mortgagee shall have the right, but not the obligation
(and without limitation of Mortgagee's rights under this Agreement) to enter
onto the Property or to take such other actions as it shall deem necessary or
advisable to clean up, remove, resolve or minimize the impact of, or otherwise
deal with, any such Hazardous Substances or Environmental Action following
receipt of any notice from amy person or entity having jurisdiction asserting
the existence of any Hazardous Substances or an Environmental Action pertaining
to the Property or any part thereof which, if true, could result in an order,
suit or other action against the Mortgagor and/or which, in the Mortgagee's sole
opinion, could jeopardize its security under the Mortgagee. All costs and
expenses, including reasonable attorneys' fees, incurred by the Mortgagee in the
exercise of any such rights shall be secured by the Mortgage Documents and shall
be payable to the Mortgagee by the Mortgagor upon demand.
10. DEFAULT UNDER LOAN DOCUMENTS. The (i) breach of any representations,
warranties or covenants contained in this Agreement, or (ii) failure of the
Mortgagor to comply with any of the terms or conditions contained in this
Agreement shall each be and constitute a default under each and all of the Loan
Documents. In such event, the Mortgagee shall be entitled at its option to
immediately accelerate and declare the Loan as being due and owing in full, and
the Mortgagee shall be entitled to exercise any and all rights available to the
Mortgagee under all Loan Documents and applicable law.
-51-
<PAGE> 52
11. COSTS TO BE SECURED BY MORTGAGE DOCUMENTS. Any costs or expenses, including
any reasonable fees due any attorneys or any Environmental Professional, which
may be incurred by the Mortgagee under this Agreement, including, but not
limited to, any costs incurred for any Environmental Report or Remedial Work,
shall be secured by all the Mortgage Documents.
12. SURVIVAL OF AGREEMENT. This Agreement is separate and apart from each and
every other Loan Document relating to the Loan, and the provisions of this
Agreement and the obligations of the Mortgagor hereunder, shall survive (i) the
payment of the Loan, (ii) any action which the Mortgagee may take in regard to
the Property such as, but not limited to, the foreclosure action or any
acceptance by Mortgagee of any deed in lieu of foreclosure (provided, however,
nothing contained herein shall obligate the Mortgagee to accept any deed of lieu
of foreclosure), and (iii) any other term or provisions of the Loan.
13. JOINT AND SEVERAL LIABILITY. In the event the Mortgagor is more than one,
the obligations of all such persons under this Agreement shall be joint and
several.
-52-
<PAGE> 53
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written.
Signed and delivered AirTran Airways, Inc.
in the presence of:
/s/ Peter J. Fides, II By: /s/ M. B. Rinder
- --------------------------- ------------------------------
(Signature of Witness) Title: Vice President Finance and
---------------------------
Peter J. Fides, II Chief Financial Officer
- ---------------------------
(Print Name of Witness)
/s/ Shirley Bruening
- ---------------------------
(Signature of Witness)
Shirley Bruening
- ---------------------------
(Print Name of Witness)
As to the "Mortgagor"
ValuJet, Inc.
By: /s/ Stephen C. Nevin
- --------------------------- -----------------------------
(Signature of Witness)
Title:
- --------------------------- --------------------------
(Print Name of Witness)
- ---------------------------
(Signature of Witness)
- ---------------------------
(Print Name of Witness)
As to the "Mortgagee"
-53-
<PAGE> 54
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 8th day of September,
1997, by Mark Rinder as Vice President Finance and Chief Financial Officer of
AirTran Airways, Inc., a Delaware corporation, on behalf of the corporation.
/s/ Peter J. Fides, II
------------------------------
Signature of Notary Public
State of Florida
Peter J. Fides, II ------------------------------
My commission CC569828 Print, type or stamp
Expires July 16, 2000 commissioned name of Notary
Personally known X or
Produced Identification ___
Type of Identification
Produced: _____________
(Notarial Seal)
STATE OF GA
COUNTY OF CLAYTON
The foregoing instrument was acknowledged before me this 5th day of September,
1997, by __________________, as ____________ of ValuJet, Inc.,
a Nevada corporation, on behalf of the corporation.
/s/ Leslie A. Head
-------------------------------------
Signature of Notary Public
State of Georgia
Notary Public, Fulton County, Georgia
-------------------------------------
My commission expires June 21, 1999
Print, type or stamp
commissioned name of Notary
Personally known ___ or
Produced Identification ___
Type of Identification
Produced: _____________
(Notarial Seal)
-54-
<PAGE> 55
JOINDER BY CO-BORROWER
The undersigned, being the Co-Borrower under the Loan, does hereby absolutely
and unconditionally agree to be bound by the obligations of the Mortgagor under
this Environmental Indemnification Agreement and to guaranty payment and
performance of same. The obligation of the undersigned Co-Borrower shall, as set
forth above, survive any repayment of the Loan, and this obligation may not be
canceled in any way whatsoever by the Co-Borrower.
Dated this 8th day of September, 1997.
Signed and delivered Airways Corporation
in the presence of:
/s/ Peter J. Fides, II By: /s/ M. B. Rinder
- --------------------------- ------------------------------
(Signature of Witness)
Title: Vice President, Finance
Peter J. Fides, II ---------------------------
- --------------------------- and Chief Financial Officer
(Print Name of Witness)
/s/ Shirley Bruening
- ---------------------------
(Signature of Witness)
Shirley Bruening
- ---------------------------
(Print Name of Witness)
As to the "Co-Borrower"
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 8th day of September,
1997, by Mark Rinder as VP Finance & CFO Airways Corporation, a Delaware
corporation on behalf of the corporation.
/s/ Peter J. Fides, II
------------------------------
Signature of Notary Public
State of Florida
Peter J. Fides, II ------------------------------
My commission CC569828 Print, type or stamp
Expires July 16, 2000 commissioned name of Notary
Personally known X or
Produced Identification ___
Type of Identification
Produced: _____________
(Notarial Seal)
-55-
<PAGE> 56
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
A part of Section 8, Township 24 South, Range 30 East, Orange County,
Florida, being more particularly described as follows:
Commence at the Southeast corner of said Section 8, Township 24 South,
Range 30 East, (Bearings are based on the Florida Coordinate System, East Zone);
thence North 89 (degree) 22'42" West along the South line of said Section 8 for
986.48 feet; thence North 00 (degree) 25'23" West for 1108.89 feet to a line
being 150.00 feet Southeasterly of and parallel with the centerline of Taxiway
No. 2; thence South, 54 (degree) 38'04" West along said line for 121.99 feet to
the Point of Beginning; thence continue South 54 (degree) 38'04" West along said
line for 774.06 feet; thence South 35 (degree) 21'56" East foR 660.00 feet;
thence North 54 (degree) 38'04" East for 312.91 feet; thencE North 00 (degree)
25'23" West for 805.14 feet to the Point of Beginning.
AND that certain parcel more particularly described as follows:
Commence at the Southeast corner of Section 8, Township 24 South, Range
30 East, Orange County, Florida (bearings are based on the Florida Coordinate
System, East Zone); thence North 89 (degree) 22'42" West along the South line of
said Section 8 for 986.48 feet; thence North 00 (degree) 25'23" West for 1108.89
feet to line being 150.00 feet Southeasterly of and parallel with the centerline
of Taxiway No. 2; thence South 54 (degree) 38'04" West for 121.99 feet; thence
South 00 (degree) 25'23" East along said line for 686.73 feet to the Point of
Beginning, thence continue North 55 (degree) 00'19" East along said line for
91.00 feet; thence North 34 (degree) 59'41" West for 19 feet; thence North 55
(degree) 00'19" East for 85 feet; thence South 34 (degree) 59'41" East for 25
feet; thence' North 55 (degree) 00'19" East For 55 feet; thence South 34
(degree) 59'41" East for 42 feet; thence South 55 (degree) 00'19" West for 55
feet; thence South 34 (degree) 59'41" East FOr 25 feet; thence South 55 (degree)
00'19" West for 45 feet; thence North 88 (degree) 07'29" West for 50 feet;
thence North 34 (degree) 59'41" West For 23 feet; thence South 55 (degree)
00'19" West for 104.78 feet; thence North 00 (degree) 25'23" West for 24.29 feet
to the Point of Beginning.
-56-
<PAGE> 57
[GREENBERG TRAURIG LETTERHEAD]
Julie L. Fisher, Paralegal
Direct Line: (407) 418-2381
September 24, 1997
VIA CERTIFIED MAIL -
RETURN RECEIPT REQUESTED
- ------------------------
Mr. Mark B. Rinder
Vice President, Finance & Chief Financial Officer
AIRTRAN AIRWAYS, INC.
6280 Hazeltine National Drive, Suite 1100
Orlando, Florida 32822
Re: AIRTRAN AIRWAYS, INC. AND AIRWAYS CORPORATION LOAN FROM VALUJET, INC.
Dear Mr. Rinder:
Enclosed for your safekeeping are the following documents and/or items in
connection with the captioned transaction:
1. Original Satisfaction of Mortgage and Release of Other Documents
recorded on September 9, 1997, in Official Records Book 5323, Page
4615, Public Records of Orange County, Florida;
2. Original acknowledgment copy of the UCC-3 Termination filed with the
Florida Secretary of State on September 11, 1997, under File
No. 970000205255--9;
3. Original Loan Agreement;
4. Original Payoff Letter from SunTrust Bank, Central Florida, N.A.,
acknowledging payment in full of Loan No. 0104855966-18 in the amount
of $1,553,272.23;
5. Original Environmental Indemnification Agreement; and
6. Closing Binder containing photocopies of all closing documents.
Please call if you should have any questions.
Sincerely,
GREENBERG TRAURIG
/s/ Julie L. Fisher
----------------------
Julie L. Fisher
Paralegal
enclosures
cc: Ms. Ovaline Hatcher (w/o encls. via U.S. Mail)
<PAGE> 58
GREENBERG TRAURIG Orange Co. FL 1997-0326873
111 North Orange Avenue 090997 03:13:53pm
20th Floor OR Bk 5323 Pg 4613
Orlando, FL 32801 Rec 10.50
THIS DOCUMENT PREPARED BY:
Peter J. Fides, II, Esquire
GREENBERG TRAURIG HOFFMAN
LIPOFF ROSEN & QUENTEL, P.A.
111 North Orange Avenue
Suite 2050
Orlando, Florida 32801
SATISFACTION OF MORTGAGE AND RELEASE OF OTHER DOCUMENTS
KNOW ALL MEN BY THESE PRESENTS, that SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, the owner and holder of those certain loan documents
recorded in the Official Records of Orange County, Florida, more particularly
described as follows:
1. Leasehold Mortgage and Security Agreement executed by AIRTRAN
AIRWAYS, INC., a Delaware corporation, in favor of SUNTRUST BANK, CENTRAL
FLORIDA, NATIONAL ASSOCIATION, recorded March 18, 1996, in Official Records
Book 5028, Page 1158; modified by Mortgage Modification recorded June 27, 1997
in Official Records Book 5281, Page 4665, of the Public Records of Orange
County, Florida.
2. Financing Statement (Form UCC-1) reflecting AIRTRAN AIRWAYS, INC.,
a Delaware corporation, as DEBTOR, and SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION, as SECURED PARTY, recorded March 18, 1996, in Official Records
Book 5028, Page 1179, of the Public Records of Orange County, Florida.
3. Unrecorded Letter of Credit Facility Agreement dated March 7, 1996,
executed by AirTran Airways, Inc. and Airways Corporation in favor of SunTrust
Bank, Central Florida, National Association.
4. Unrecorded Security Agreement dated March 7, 1996, executed by
AirTran Airways, Inc. and Airways Corporation in favor of SunTrust Bank,
Central Florida, National Association.
which loan documents encumber the property as described therein, does hereby
acknowledge full payment and satisfaction of said Mortgage, and all
indebtedness secured thereby, including, but not limited to, that certain
Promissory Note in the original principal amount of $2,000,000.00, and
surrender the same as canceled, and does hereby authorize and direct the Clerk
of the Circuit Court of Orange County, Florida to cancel said Mortgage and
UCC-1 Financing Statement of record.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed in its corporate name by its officers thereunto duly authorized and
its corporate seal to be hereunto affixed this 5th day of September, 1997.
Signed, sealed and delivered SUNTRUST BANK, CENTRAL FLORIDA,
in the presence of: NATIONAL ASSOCIATION
/s/ Ellen Vendegerghe By:/s/ W. John Wendler
- --------------------------------- -----------------------------
Print Name: Ellen Vandegerghe Name: W. John Wendler
---------------------- ---------------------------
/s/ Mary E. Torres-Ramos Title: First Vice President
- --------------------------------- --------------------------
Print Name: Mary E. Torres-Ramos 200 South Orange Avenue
---------------------- Orlando, Florida 32801
<PAGE> 59
OR Bk 5323 Pg 4616
Orange Co FL 1997-????
Recorded-Martha D. Haynie
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 5th day of
September, 1997, by W. John Wendler, as Vice President of SUNTRUST BANK,
CENTRAL FLORIDA, NATIONAL ASSOCIATION, a national banking association, on
behalf of said association. He/she is personally known to me (X) or has
produced ___________________________ as identification.
/s/ M.E. Torres
------------------------------------
NOTARY PUBLIC
Print Name: Mary E. Torres
-------------------------
My Commission Expires:
[SEAL]
MARY E. TORRES
My Commission CC383030
Expires Apr. 01, 1998
Bonded by ANB
800-852-5878
<PAGE> 60
<TABLE>
<CAPTION>
STATE OF FLORIDA
UNIFORM COMMERCIAL CODE STATEMENT OF CHANGE FORM UCC-3 (REV. 1993)
This Statement of Change is presented to a filing officer pursuant to the Uniform Commercial Code:
<S> <C>
1. DEBTOR (LAST NAME FIRST IF AN INDIVIDUAL) 1a. DATE OF BIRTH OR FEI#
AirTran Airways, Inc.
___________________________________________________________________________________________________________________________________
1b. MAILING ADDRESS 1c. CITY, STATE 1d. ZIP CODE
6280 Hazeltine National Drive Orlando, Florida 32822
___________________________________________________________________________________________________________________________________
2. ADDITIONAL DEBTOR OR TRADE NAME (LAST NAME FIRST IF AN INDIVIDUAL) 2a. DATE OF BIRTH OR FEI#
Airways Corporation
___________________________________________________________________________________________________________________________________
2b. MAILING ADDRESS 2c. CITY, STATE 2d. ZIP CODE
6280 Hazeltine National Drive Orlando, Florida 32822
___________________________________________________________________________________________________________________________________
3. SECURED PARTY (LAST NAME FIRST IF AN INDIVIDUAL)
SunTrust Bank, Central Florida, National Association
___________________________________________________________________________________________________________________________________
3a. MAILING ADDRESS 3b. CITY, STATE 3c. ZIP CODE
Post Office Box 2806 Orlando, Florida 32802-2806
___________________________________________________________________________________________________________________________________
4. ADDITIONAL SECURED PARTY (LAST NAME FIRST IF AN INDIVIDUAL)
___________________________________________________________________________________________________________________________________
4a. MAILING ADDRESS 4b. CITY, STATE 4c. ZIP CODE
___________________________________________________________________________________________________________________________________
5. THIS STATEMENT REFERS TO ORIGINAL FINANCING STATEMENT BEARING FILE NUMBER: 960000049779 filed on 3/12/96
6.
A. [ ] Continuation - The original Financing Statement between the Debtor and Secured Party bearing the file number shown
above is continued.
B. [ ] Release - The Secured Party releases the collateral described in Block 7 below from the Financing Statement
bearing the file number shown above. RELEASE DOES NOT TERMINATE LIEN AGAINST DEBTOR.
C. [ ] Full Assignment - All of the Secured Party's rights under the Financing Statement have been assigned to the assignee
whose name and address is shown in Block 7 below.
D. [ ] Partial Assignment - Some of Secured Party's rights under the Financing Statement have been assigned to the assignee whose
name and address is shown in Block 7. A description of the collateral subject to the assignment is
also shown in Block 7.
E. [ ] Amendment - The Financing Statement bearing the file number shown above is amended as set forth in Block 7. (See
instructions for signature requirements.)
F. [ ] Termination - The Secured Party no longer claims an interest under the Financing Statement bearing the file number
shown above.
G. [ ] Other - ______________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
7. DESCRIPTION OF COLLATERAL RELEASED OR ASSIGNED, ASSIGNEE NAME AND ADDRESS, OR AMENDMENT. USE ADDITIONAL SHEET(S) IF NECESSARY.
______________________________________________________________
THIS SPACE FOR USE OF FILING OFFICER
8. SIGNATURE(S) OF DEBTOR(S): (ONLY IF AMENDMENT - SEE INSTRUCTIONS)
____________________________________________________________________
____________________________________________________________________
9. SIGNATURE(S) OF SECURED PARTY(IES):
SunTrust Bank, Central Florida, National Association
____________________________________________________________________
By: /s/ W. John Wendler
____________________________________________________________________
Print Name: W. John Wendler Title: FVP
____________________________________________________________________
10. NUMBER OF ADDITIONAL SHEETS PRESENTED _______________
____________________________________________________________________
11. RETURN COPY TO:
Name Peter J. Fides, Esq.
Address Greenberg Traurig
111 N. Orange Ave.
Address Suite 2050
City, State, Zip Orlando, FL 32801
___________________________________________________________________________________________________________________________________
ACKNOWLEDGEMENT COPY STANDARD FORM - FORM UCC-3 Approved by Secretary of State, State of Florida
</TABLE>
<PAGE> 61
INSTRUCTIONS
1. Please type this form using black typewriter ribbon.
2. If the space provided for any item is inadequate, please use
additional 8 1/2" x 11" sheets. Be sure to indicate the total number of
attached pages in Block 10. There is an additional fee for attached
pages.
3. Processing fees are set by the Florida Legislature, are non-refundable
and are subject to change. To verify processing fees contact the
Department of State, UCC Filing Section at (904) 487-6055. Make checks
payable to the Department of State.
4. Send the two-part form to the Department of State at the following
address:
1ST CLASS MAIL: OVERNIGHT COURIER SERVICE:
--------------- --------------------------
Florida Department of State Florida Department of State
UCC Filing Section UCC Filing Section
P.O. Box 5588 409 E. Gaines Street
Tallahassee, FL 32314 Tallahassee, FL 32399
5. All fees submitted for filing UCC documents are processing fees and are
non-refundable in accordance with s.15.091, F.S.
6. The acknowledgment copy will be stamped with the date, time and place
of filing and show the filing number assigned to the UCC-3 document.
It will be returned to the address indicated in Block 11. A self
addressed envelope may be sent for the return of the acknowledgment
copy.
BLOCKS 1-2: Enter the Debtor business or personal name (as it was
originally filed or subsequently amended), mailing address, city,
state, and zip code in Blocks 1-2. Include date of birth of FEI
number in the appropriate space. Disclosure of date of birth or
FEI number is optional for filing of this statement. It will be
used to correctly identify individuals with same or similar
names.
BLOCKS 3-4: Enter the Secured Party business or personal name (as it was
originally filed or subsequently amended), mailing address,
city, state, and zip code in Blocks 3-4. If Secured Party has
previously assigned its interest in the collateral to an assignee,
enter the assignee's name and address in Block 3.
BLOCK 5: Enter the filing information relating to the original UCC-1
Financing Statement in the space provided. Please be sure the
original file number and date are entered correctly.
BLOCK 6.: Mark the appropriate Block A through G to indicate the change to be
made to the original Financing Statement.
(A) CONTINUATION - A continuation statement may be filed by the Secured
Party or assignee of the Secured Party within six months prior to
expiration. The effectiveness of the original financing statement is
continued for 5 years from the original date filed and in 5 year
increments thereof. The Secured Party of record must sign at
Block 9.
(B) RELEASE - When a release of collateral is filed, whether full or
partial, a statement of the collateral being released must be shown in
Block 7. A full release of collateral does not terminate the filing.
The Secured Party of record must sign at Block 9.
(C) FULL ASSIGNMENT - Indicate in Block 7 the full name and address of the
party the assignment is made to. It is not necessary to list the
collateral to be assigned. The Secured Party of record must sign at
Block 9.
(D) PARTIAL ASSIGNMENT - Indicate in Block 7 the full name and address of
the party the partial assignment is made to A statement listing the
specific collateral being assigned must be entered in Block 7. The
Secured Party of record must sign at Block 9.
(E) AMENDMENT - List in Block 7 the statement of amendment. If the
amendment changes only the name of the Secured Party or the required
address of either the Secured Party or the Debtor, the UCC-3 need only
be signed by the Secured Party of record. All other amendments
must be signed by both the Debtor and Secured Party in Blocks 8 and 9.
(F) TERMINATION - A statement of termination ends the total security
interest claims on the UCC-1. The fee for a termination of a UCC-1
filed on or after October 1, 1992, was paid for when the UCC-1 was
filed. Current fees apply to termination statements filed on UCC-1's
which were filed prior to October 1, 1992. If Financing Statement has
been partially assigned, do not terminate lien until all Secured
Parties no longer claim an interest in any of the collateral. All
Secured Parties must sign in Block 9.
(G) Use this space for filing types not covered in A through F.
BLOCK 7: Use this space to indicate collateral being assigned or
released, for the name of the assignee, or any amendment
information. If additional sheets are needed, use 8 1/2" x 11"
sheets of paper. There is an additional charge for attached pages.
BLOCK 8: Debtor must sign if Block 6(E) was checked off unless amendment
changes only the name of the Secured Party or the address of either
the Secured Party or Debtor.
BLOCK 9: Secured Party of record must sign at Block 9.
BLOCK 10: Enter the number of additional pages attached to the UCC-3 form. If
Secured Party wants a copy of the attached pages returned with the
acknowledgment copy, a duplicate set of attachments must be
submitted and marked "copy."
BLOCK 11: Enter the name and complete address of the party to whom the filed
acknowledgement copy is to be returned.
NOTE: IF USING THIS FORM TO FILE WITH A FLORIDA CLERK'S OFFICE,
CHECK WITH THE APPROPRIATE OFFICE FOR FEE AND FILING INFORMATION.
<PAGE> 1
EXHIBIT 11
AIRWAYS CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
FOR THE QUARTERS ENDED
SEPTEMBER 30,
------------------------------------
1997 1996
------------------------------------
<S> <C> <C>
PRIMARY COMPUTATION:
Net loss $ (5,397) $ (4,123)
Weighted average number of common shares
outstanding 9,073 9,004
-----------------------------------
Net loss per common share $ (.59) $ (.46)
===================================
FULLY DILUTED COMPUTATION:
Net loss $ (5,397) $ (4,123)
Weighted average number of common shares
outstanding 9,073 9,004
===================================
Net loss per common share
$ (.59) $ (.46)
===================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 5,170
<SECURITIES> 0
<RECEIVABLES> 4,510
<ALLOWANCES> 0
<INVENTORY> 923
<CURRENT-ASSETS> 28,698
<PP&E> 48,455
<DEPRECIATION> 9,589
<TOTAL-ASSETS> 75,770
<CURRENT-LIABILITIES> 51,315
<BONDS> 0
0
0
<COMMON> 91
<OTHER-SE> 26,696
<TOTAL-LIABILITY-AND-EQUITY> 75,770
<SALES> 22,854
<TOTAL-REVENUES> 23,622
<CGS> 0
<TOTAL-COSTS> 28,523
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 496
<INCOME-PRETAX> 5,397
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,397
<EPS-PRIMARY> .59
<EPS-DILUTED> .59
</TABLE>
