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EXHIBIT 10(j)
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CREDIT AGREEMENT
dated as of
February 25, 1991
between
ATLANTIC SOUTHEAST AIRLINES, INC.,
Borrower,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
Lender,
Four Embraer Model EMB-120 Brasilia Aircraft
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS; REFERENCES . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.03 Section and Exhibit References, etc. . . . . . . . . . . . . . . . . 7
ARTICLE II
PURCHASE OF NOTES; PAYMENTS . . . . . . . . . . . . . . . . . . . . . 7
Section 2.01 Purchase of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.02 Procedure for Purchase of Notes . . . . . . . . . . . . . . . . . . . 8
Section 2.03 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.04 Financing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
SECURITY FOR BORROWER'S OBLIGATIONS . . . . . . . . . . . . . . . . . 8
Section 3.01 Security Interest in Collateral . . . . . . . . . . . . . . . . . . . 8
Section 3.02 Set-Off Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
PAYMENTS UNDER THE NOTES AND OTHER
AMOUNTS PAYABLE BY BORROWER . . . . . . . . . . . . . . . . . . . . . 9
Section 4.01 How Payments Are Made . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.02 Right to Prepay . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.03 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.04 Mandatory Purchase . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.05 Amount of Prepayment . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.06 Interest on Past Due Amounts . . . . . . . . . . . . . . . . . . . . 10
Section 4.07 Payment of Accrued Interest Supplements . . . . . . . . . . . . . . . 10
Section 4.08 Reduction in Net Interest Payable . . . . . . . . . . . . . . . . . . 11
ARTICLE V
BORROWER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 11
Section 5.01 Corporate Standing . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.02 Corporate Powers . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.03 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.04 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.05 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.06 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.07 Status as United States Citizen and
Air Carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.08 Location of Offices . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.09 Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.10 Condition of Aircraft . . . . . . . . . . . . . . . . . . . . . . . . 13
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Section 5.11 Absence of ERISA Liability . . . . . . . . . . . . . . . . . . . . . 13
Section 5.12 Delta Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.13 Subsidiaries; Stock Ownership . . . . . . . . . . . . . . . . . . . . 13
Section 5.14 Investment Company Status . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6.02 Inspection of Collateral and Records . . . . . . . . . . . . . . . . 14
Section 6.03 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.04 Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.05 Citizenship and Air Carrier Status . . . . . . . . . . . . . . . . . 16
Section 6.06 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.07 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.08 Performance of Delta Agreement . . . . . . . . . . . . . . . . . . . 17
Section 6.09 Financial Covenant . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII
CONDITIONS PRECEDENT TO THE PURCHASE OF
THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.01 Conditions Precedent to the Purchase
of the Initial Note . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.02 Conditions Precedent to the Purchase
of All Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES . . . . . . . . . . . . . . . . . . . . . 21
Section 8.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 8.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IX
BORROWER'S INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . 23
Section 9.01 General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 9.02 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE X
YIELD PROTECTION . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 10.01 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 10.02 Breakage Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 11.01 No Waivers; Cumulative Remedies . . . . . . . . . . . . . . . . . . . 28
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Section 11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 11.03 Transaction Expenses . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 11.04 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 11.05 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 29
Section 11.06 Lender's Representations and Warranties . . . . . . . . . . . . . . . 29
Section 11.07 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 11.08 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 11.09 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . 29
Section 11.10 Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 11.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 11.12 Finex Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Annex A Procedures for Purchasing Aircraft
and Notes; Documentation
Exhibit A Form of Note
Exhibit B Form of Finex Agreement
Exhibit C Form of Mortgage
Exhibit D Form of Purchase Agreement Assignment
Exhibit E Form of Consent
Exhibit F Form of opinion of Borrower's counsel
Exhibit G Form of opinion of Xxxxx & Xxxxxxx (Aircraft)
Exhibit H Form of opinion of counsel to Embraer
Exhibit I Form of opinion of Xxxxxx Barros Sobral e Xavier
Exhibit J Form of Guarantee
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CREDIT AGREEMENT
This Credit Agreement is entered into as of February
25, 1991 by and between Atlantic Southeast Airlines, Inc. ("Borrower"), a
Georgia corporation, and Bank of America National Trust and Savings Association
("Lender"), a national banking association.
Borrower and Lender agree as follows:
ARTICLE I
DEFINITIONS; REFERENCES
SECTION 1.01 -- Definitions. The following terms,
when capitalized as below, have the following meanings:
"Act": the Federal Aviation Act of 1958, as amended,
or its successor.
"Agreement": this Credit Agreement.
"Alternate LIBO Rate": defined in section 3.02 of the
Finex Agreement.
"Aircraft": up to four Embraer EMB-120 Brasilia
aircraft to be delivered under the Purchase Agreement and in each case
designated by Borrower (by notice to Lender at least three Business Days before
the Purchase Date therefor, and not revoked by notice to Lender on or before
the Purchase Date therefor) as an "Aircraft" to be financed under this
Agreement.
"Bank LIBOR" for any Interest Period: a rate per
annum (calculated on the basis of a 360-day year and the actual number of days
elapsed) equal to the consensus rate at which 180-day deposits in Dollars
appear on the Reuters Screen LIBO Page at approximately 11:00 a.m. London,
England time, on the day that is two Business Days before the first day of that
Interest Period.
"Basic Documents": this Agreement, the Purchase
Agreement, the Finex Agreement(s), the Guarantee, and the Mortgage; and each
Note, Purchase Agreement Assignment, Consent, and Mortgage Supplement as
executed and delivered.
"Book Net Worth": defined in section 6.09.
"Borrower Interest Rate": with respect to any
Interest Period: an interest rate equal to Bank LIBOR for such Interest Period,
plus 0.85% per annum (computed on the basis of a year of 360 days), based on
actual days elapsed.
"Business Day": any day, other than a Saturday or
Sunday, on which commercial banks are open for business in Xxx Xxxx, Xxx Xxxx,
Xxxxxx, Xxxxxxx, Seo Paulo, Brazil, and Atlanta, Georgia, and Lender is open
for business in Los Angeles, California, and if such day is a Purchase Date or
Interest Payment Date or relates to a notice by Borrower with respect to any
Purchase Date, which is also a day on which dealings with Dollar deposits are
carried out in the London interbank market.
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"Capitalized Lease": a capitalized lease of any
tangible real or personal property, as determined pursuant to GAAP.
"Collateral": the "Collateral" under the Mortgage.
"Commitment": Lender's commitment to purchase the
Notes, for an aggregate amount of up to $22,000,000; Borrower may reduce such
amount upon 30 days' prior written notice to Lender.
"Commitment Fee": the fee required to be paid by
Borrower to Lender pursuant to section 2.03.
"Commitment Period": the period from the date of
execution of this Agreement to and including the earliest of (w) July 30, 1991,
(x) the date upon which the fourth Aircraft is delivered to and accepted by
Borrower pursuant to the Purchase Agreement, (y) the date on which the
remaining Commitment is terminated pursuant to section 8.02, and (z) a date set
by Borrower pursuant to a notice sent to Lender at least 30 days prior to such
date.
"Consent": a Consent and Agreement, substantially in
the form of Exhibit E, relating to a Purchase Agreement Assignment and dated
the same date as that Purchase Agreement Assignment.
"Default": any event or condition that would become
an Event of Default upon the giving of notice or lapse of time or both, or any
Event of Default.
"Delta Agreement": that certain agreement between
Delta Air Lines, Inc. and Borrower dated June 1, 1986 and relating to joint
marketing or code sharing for interconnecting flights.
"Dollars": and "$": United States dollars.
"Downpayment": 15% of Equipment Cost for the first
$6,470,588.00 of Equipment Cost, and 100% of Equipment Cost in excess of
$6,470,588.00,for an Equipment Portion, minus any amounts that Borrower paid to
Vendor before the relevant Purchase Date (including deposits applied to such
Equipment Portion), pursuant to the Purchase Agreement, relating to such
Equipment Portion.
"Embraer": Embraer-Empresa Brasileira de Aeronautica
S.A., a Brazilian corporation, and its successors and assigns.
"Equipment Cost": the purchase price for an Equipment
Portion, as set forth in (and as adjusted pursuant to) the Purchase Agreement.
"Equipment Portion": an Aircraft and the Spare Parts
purchased with that Aircraft.
"ERISA": defined in section 5.11.
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"Event of Default": defined in section 8.01.
"Event of Loss": defined in section 1.01 of the
Mortgage.
"FAA": the Federal Aviation Administration of the
United States, or any instrumentality of the United States succeeding to its
function.
"Financed Amount": the amount determined pursuant to
the second sentence of section 2.01.
"Financing Fee": defined in section 2.04.
"Finex Agreement": an agreement substantially in the
form of Exhibit B.
"Finex Bank": MultiBanco S.A. (or any other Person
selected by Borrower to serve as a Finex bank under a Finex Agreement), in its
capacity as Finex bank under the Finex Agreement, and its successors in such
capacity.
"Finex Interest Payments": the Finex Interest
Payments described in section 3.01 of the Finex Agreement.
"Finex Interest Rate" for a Note: a fixed interest
rate equal to the Finex LIBO Rate for its Purchase Date, minus 2% per annum
(computed on the basis of a year of 360 days), based on actual days elapsed, or
such other interest rate as Borrower is actually required to pay on such Note
under the Finex Program.
"Finex LIBOR" or "Finex LIBO Rate" for any Purchase
Date or Interest Period: (x) the interest rate for such Purchase Date or
Interest Period, published by Banco Central do Brasil two Business Days before
that Purchase Date or the beginning of that Interest Period, respectively, as
the 180-day interest rate applicable to transactions under the Finex Program,
or (y) when applicable, the Alternate LIBO Rate for such Interest Period
established pursuant to section 3.02 of the Finex Agreement.
"Finex Program": the export support program (Fundo de
Financiamento a Exportaceo) of the Federative Republic of Brazil, as
established by Resolution No. 509 of January 24, 1979 of Banco Central do
Brasil and in Circular Cacex/Finex No. 10 of the Carteira de Comercio Exterior
(Cacex) of Banco do Brasil S.A., dated September 21, 1982, as from time to time
supplemented or amended.
"GAAP": generally accepted accounting principles as
in effect in the United States and applied on a basis consistent with that used
in the preparation of the financial statements referred to in section 5.05,
except for changes therein with which Borrower's independent public accountant
concur that are disclosed in the notes to the relevant financial statements.
"Guarantee": the document by that name, executed by
ASA Investments, Inc., in substantially the form of Exhibit J.
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"herein", "hereof", "hereunder", etc.: in, of, or
under, etc. this Agreement (and not merely in, of, under, etc. the section or
provision where the reference appears).
"including": containing, embracing, or involving the
enumerated item(s), but not necessarily limited to such item(s).
"Indemnitee": Lender, or any agent (other than Finex
Bank), employee, director, successor, or permitted assign of Lender.
"Indebtedness": (a) total liabilities (as determined
pursuant to GAAP) of Borrower and its subsidiaries on a consolidated basis plus
(b) any debt of a Person that is not included in clause (a) above and that is
guaranteed by Borrower or one or more of its subsidiaries, plus (c) 70% of all
Operating Lease Obligations.
"Interest Payment Date" for a Note: each date
occurring after the Purchase Date for that Note is a "180-day anniversary" of
such Purchase Date; except that, for purposes of payment and of determining the
beginning and end of each Interest Period (but not for the purpose of
determining the following Interest Payment Date), any Interest Payment Date
that falls on a day which is not a Business Day shall instead occur on the
following Business Day. For avoidance of doubt, the "180-day anniversary" of a
date shall be the 180th day after that date.
"Interest Period" for a Note: each period beginning
on the day after an Interest Payment Date for that Note (or, in the case of the
first Interest Period for that Note, beginning on its Purchase Date) and ending
on the following Interest Payment Date for that Note.
"Interest Supplement" for a Note during an Interest
Period: (a) the amount of principal of that Note outstanding during such
Interest Period multiplied by (b) the Borrower Interest Rate for such Interest
Period minus the Finex Interest Rate for that Note multiplied by (c) the actual
number of days in such Interest Period divided by 360; provided that if the
Borrower Interest Rate for such Interest Period is equal to or less than the
Finex Interest Rate for that Note, the Interest Supplement for that Interest
Period shall be zero.
"Liabilities": defined in section 9.01.
"Lien": any mortgage, pledge, assignment,
encumbrance, lien (statutory or other), or other security interest of any kind
or nature whatsoever (including any conditional sale or other title retention
agreement, or any lease in the nature thereof).
"Mortgage": the Security Agreement and Chattel
Mortgage between Borrower and Lender, substantially in the form of Exhibit C.
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"Mortgage Supplement": defined in section 3.01.
"Note": Borrower's promissory note, in the form of
Exhibit A, issued in connection with a designated Aircraft, or a note issued in
exchange or replacement for such a note.
"1988 Purchase Agreement": Purchase Agreement No.
162-COV/88 (including all attachments, exhibits, and letter agreements thereto)
dated November 21, 1988, between Vendor and Borrower.
"1989 10-K": Borrower's annual report on Form 10-K
for the year ended December 31, 1989.
"1990 Purchase Agreement": Purchase Agreement No.
154-DOC/AC/90 (including all attachments, exhibits, and letter agreements
thereto) dated August 27, 1990, between Vendor and Borrower.
"1990 10-Qs": Borrower's quarterly reports on Form
10-Q for the quarters ended March 31, 1990, June 30, 1990, and September 30,
1990.
"Officer's Certificate": a certificate signed in the
name of Borrower (or, with respect to section 6.04(c), of the Successor) by the
chairman of the board, the president, a vice president, or the treasurer of
Borrower (or the Successor).
"Operating Lease": a lease of tangible real or
personal property, other than a Capitalized Lease, involving aggregate payments
of $100,000 or more during the fiscal year of the lessee.
"Operating Lease Obligations": the amount equal to
the aggregate of all scheduled lease payments that will become due under the
terms of all Operating Leases.
"or": at least one, but not necessarily only one, of
the alternatives enumerated.
"Permitted Lessee": defined in the Mortgage.
"Permitted Lien": defined in the Mortgage.
"Person": any individual, corporation, partnership,
joint venture, or other legal or governmental entity.
"Prepayment Event": defined in section 4.04.
"Purchase Agreement": when used in connection with a
specific Aircraft or Equipment Portion, either the 1988 Purchase Agreement or
the 1990 Purchase Agreement, depending on which agreement the Aircraft or
Equipment Portion was purchased under; when otherwise used, the 1988 Purchase
Agreement and 1990 Purchase Agreement, collectively.
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"Purchase Agreement Assignment": a document by that
name, substantially in the form of Exhibit D, executed and delivered on a
Purchase Date with respect to the Aircraft then being delivered.
"Purchase Date": a date on which Borrower purchases
an Aircraft and, simultaneously, Lender purchases the related Note.
"Reference Rate": the rate of interest publicly
announced from time to time by Lender in San Francisco, California, as its
reference rate. It is a rate that Lender sets based upon various factors,
including Lender's costs and desired return, general economic conditions, and
other factors, and is used as a reference point for pricing some loans.
Interest is payable for the actual number of days elapsed computed on the basis
of a 360-day year on the unpaid principal amount. Lender may price loans at,
above, or below its reference rate. Any change in the Reference Rate shall
take effect on the day specified in the public announcement of such change.
"Regulatory Change": any change after the date of
this Agreement in federal, state, or foreign law or regulations or the adoption
or making after such date of any interpretations or directives applying to a
class of banks including Lender of or under any federal, state, or foreign law
or mandatory regulations by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Reuters Screen LIBO Page": the display designated as
page "LIBO" on the Reuter Monitor Money Rates Service (or such other page as
may replace the LIBO Page on that service for the purpose of displaying London
interbank offered rates for Dollar deposits).
"SEC Filings": the 1989 10-K and the 1990 10-Qs.
"Spare Parts": the appliances, spare parts, and other
items of equipment purchased with the Aircraft under the Purchase Agreement.
"Successor": defined in section 6.04(a).
"Tangible Net Worth": defined in section 6.09.
"Taxes": defined in the last sentence of section
9.02(a).
"Taxing Authorities": defined in the first sentence
of section 9.02(a).
"Vendor": Embraer.
SECTION 1.02 -- Use of Defined Terms. Any defined
term used in the plural preceded by "the" encompasses all members of the
relevant class. Any defined term used in the singular
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preceded by "any" indicates any number of the members of the relevant class.
Any agreement or instrument referred to in section 1.01 means such agreement or
instrument as from time to time supplemented and amended.
SECTION 1.03 -- Section and Exhibit References, etc.
References to articles, sections, exhibits, and the like refer to those in or
attached to this Agreement unless otherwise specified.
ARTICLE II
PURCHASE OF NOTES; PAYMENTS
SECTION 2.01 -- Purchase of Notes. Subject to the
satisfaction of the conditions precedent set forth in article VII, and on the
terms and conditions set forth in this article II, on the Purchase Date for
each Aircraft, Borrower shall issue the related Note to Vendor (who will
simultaneously sell that Note to Finex Bank), and Lender shall purchase that
Note from Finex Bank. The Financed Amount for each Aircraft shall be 85% of
the Equipment Cost for the related Equipment Portion, so that such total
Equipment Cost shall be paid 15% by Borrower and 85% by the related Note,
provided, that the Financed Amount for an Aircraft shall not exceed 85% of
$6,470,588.00 and Borrower shall pay 100% of Equipment Cost in excess of
$6,470,588.00 for any Equipment Portion. Each Note shall be purchased by Lender
from Finex Bank for its face amount, which shall equal the Financed Amount for
the related Aircraft. Lender's Commitment to purchase the Notes pursuant to
this Agreement shall expire at 12:00 noon, New York City time, on the last day
of the Commitment Period.
SECTION 2.02 -- Procedure for Purchase of Notes. The
procedure to be followed in the purchase of Notes is described in Annex A. At
Lender's offices at 000 Xxxxx Xxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (or
such other location as the parties hereto agree upon), not later than 12:00
noon (New York City time) on the appropriate Purchase Date, upon fulfillment of
the conditions set forth in article VII and compliance with the procedures set
forth in Annex A, Lender will purchase the related Note from Finex Bank (who
will have purchased that Note simultaneously from Vendor), with general
corporate funds, in each case for a purchase price equal to its face amount (as
determined pursuant to section 2.01).
SECTION 2.03 -- Commitment Fee. In partial consideration of
the Lender's agreement to purchase the Notes, Borrower shall pay to Lender a
Commitment Fee ("Commitment Fee" ) during the Commitment Period, payable in
arrears on the first day of each quarter or partial quarter (for the prior
quarter or partial quarter) after the execution and delivery of this Agreement,
with a final payment on the last day of the Commitment Period, and computed at
a rate per annum (calculated on the basis of a 360-day year and actual days
elapsed) of 0.25% of the average daily unused portion of Lender's Commitment.
The term "quarter" as used in this section shall mean the relevant calendar
quarter ending on one of
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the following dates: March 31, June 30, September 30, or December 31.
SECTION 2.04 -- Financing Fee. In partial consideration of
Lender's agreement to finance the Aircraft pursuant to this Agreement, Borrower
shall pay Lender a fee ("Financing Fee") of $25,000 on the first Purchase Date
and an additional $25,000 on the Purchase Date for the third Aircraft financed
under this Agreement.
ARTICLE III
SECURITY FOR BORROWER'S OBLIGATIONS
SECTION 3.01 -- Security Interest in Collateral. To secure
Borrower's obligations to Lender under each Note and the other Basic Documents
to which Borrower is or becomes a party, Borrower shall execute and deliver to
Lender, on each Purchase Date, a supplement to the Mortgage (a "Mortgage
Supplement"), substantially in the form of Schedule A to the Mortgage, granting
to Lender a perfected purchase money security interest in the Aircraft being
purchased from Vendor on such Purchase Date.
SECTION 3.02 -- Set-Off Rights. If Borrower becomes insolvent,
or any Event of Default occurs, any indebtedness that Lender then owes to
Borrower and any other property of Borrower that Lender then holds may be
offset and applied toward the payment of any obligation of Borrower to Lender
under the Basic Documents, whether or not any such other obligation is then
due.
ARTICLE IV
PAYMENTS UNDER THE NOTES
AND OTHER AMOUNTS PAYABLE BY BORROWER
SECTION 4.01 -- How Payments Are Made. Borrower shall make
its payments and prepayments of principal and interest due on the Notes, all
amounts due as Interest Supplements or as Commitment Fees hereunder, and all
other amounts payable by Borrower to Lender under the Basic Documents, to
Lender (ABA # 000-000-000 S.F.) at 0000 Xxxxxxx Xxxx., Xxxxxxx, Xxxxxxxxxx
00000, Attention: Xxxx Xxxxxxxxx for credit to PSO Account Administration
#5693, Reference: Atlantic Southeast Airlines Note No. 4, 5, 6, or 7 [as
appropriate] (or at such other place as Lender from time to time notifies
Borrower), in immediately available funds and in Dollars, no later than 10:00
a.m. (San Francisco time) on the date when due. Borrower agrees to pay to
Lender, on each Interest Payment Date, the Interest Supplement for each Note
for the Interest Period then ending. Any payment made by Borrower to Lender
after 10:00 a.m. (San Francisco time) on any day shall be deemed to have been
made on the following Business Day. If any payment due under the Basic
Documents comes due on a day which is not a Business Day, such payment shall
instead be made on the following Business Day, and interest, Interest
Supplements, or Commitment Fees, as the case may be, shall accrue at the
applicable rate to the day of payment.
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SECTION 4.02 -- Right to Prepay. Unless a Default exists,
Borrower shall have the right to prepay in full the outstanding principal
amount of the Note issued with respect to any designated Aircraft, without
premium or penalty. Any prepayment under this section 4.02 of the Note issued
with respect to a designated Aircraft shall be made only on an Interest Payment
Date for such Note, and Borrower shall give to Lender at least 60 days' prior
written notice (which notice shall be irrevocable) of such prepayment. Upon any
prepayment of any Note under this section 4.02, Borrower shall pay all accrued
and unpaid interest on the principal of such Note to the date of prepayment,
together with all other amounts payable under section 10.02 with respect to
such prepayment.
SECTION 4.03 -- Mandatary Prepayments. Following the
occurrence of an Event of Loss with respect to any Aircraft, Borrower shall
prepay the Note executed in connection with that Aircraft, in accordance with
section 7.01 of the Mortgage, and shall pay all other amounts payable under
section 10.02 with respect to such prepayment. Upon acceleration of the Notes
pursuant to section 8.02, Borrower shall prepay such Notes, and shall pay all
other amounts payable under section 10.02 with respect to such prepayment.
SECTION 4.04 -- Mandatory Purchase. Upon the occurrence of a
Prepayment Event, Lender shall have the right to require Borrower to purchase
or cause the purchase of the Note for (a) the Note's then-outstanding principal
amount, plus all accrued but unpaid interest on the Note to the date of such
purchase, and (b) all amounts payable under section 10.02 with respect to such
purchase. The payment described in the preceding sentence shall be due 10 days
after Lender notifies Borrower that a Prepayment Event has occurred (if that
Prepayment Event has not been cured by then), and shall be made in the manner
prescribed by section 4.O1. A "Prepayment Event" shall occur if (a) Borrower
fails to keep an Aircraft registered with the FAA, or Lender fails or ceases to
have a perfected first-priority interest in an Aircraft, or a Lien (other than
a Permitted Lien) on an Aircraft exists; or (b) Borrower fails to obtain an FAA
standard airworthiness certificate for an Aircraft within four weeks following
the Purchase Date for such Aircraft.
SECTION 4.05 -- Amount of Prepayment. A Note shall be deemed
satisfied in full upon the prepayment of all principal of such Note, the
payment of the interest due on or with respect to such Note on such prepayment
date, the payment of all past-due interest on or with respect to such Note, and
the payment of all amounts payable under section 10.02 with respect to such
prepayment.
SECTION 4.06 -- Interest on Past Due Amounts. Any amounts past
due (by acceleration or otherwise) and at any time outstanding under any Note
or from Borrower under any other Basic Document shall (to the extent permitted
by law) bear interest, payable on demand, from the due date until payment in
full, at a rate equal to 2% per annum above the Reference Rate.
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SECTION 4.07 -- Payment of Accrued Interest Supplements. Upon
the occurrence of the prepayment or mandatory purchase of a Note under section
4.02, 4.03, or 4.04, Borrower shall pay to Lender all past due Interest
Supplements, and any accrued portion of an Interest Supplement, relating to
such Note, with interest on pastdue Interest Supplements computed in accordance
with section 4.06.
SECTION 4.08 -- Reduction in Net Interest Payable by Borrower.
If the Finex Interest Rate for a Note exceeds the Borrower Interest Rate for an
Interest Period for that Note, the amount of interest due from Borrower under
that Note for such Interest Period shall be automatically reduced by an amount
equal to (a) the amount of principal of that Note outstanding during such
Interest Period multiplied by (b) the Finex Interest Rate for that Note minus
the Borrower Interest Rate for such Interest Period multiplied by (c) the
actual number of days in such Interest Period divided by 360.
ARTICLE V
BORROWER'S REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
SECTION 5.01 -- Corporate Standing. Borrower is a duly
organized corporation existing in good standing under the laws of Georgia, has
the corporate power and legal authority to own or lease its properties and to
carry on its business as now conducted and as now proposed to be conducted, and
is duly qualified to do business in all jurisdictions wherein such
qualification is necessary (except in any jurisdictions in which the failure to
qualify would have no materially adverse effect on its business or on its
ability to carry out its obligations under the Basic Documents to which it is
(or is to become) a party).
SECTION 5.02 -- Corporate Powers. Borrower's execution,
delivery, and performance of the Basic Documents to which it is (or is to
become) a party are within Borrower's corporate powers; and the Basic Documents
to which it is (or is to become) a party have been duly authorized by all
necessary corporate action on Borrower's part, and do not contravene, result in
a breach of, or require any consent under any law, judgment, decree, order, or
contractual restriction binding on Borrower or any agreement or instrument to
which Borrower is a party or to which it or any of its property is subject,
except that the legality and validity of each Purchase Agreement Assignment is
subject to the execution and delivery of the related Consent.
SECTION 5.03 -- Binding Effect. The Basic Documents to which
Borrower is (or is to become) a party are (or will be when executed and
delivered) legal, valid, and binding obligations of Borrower enforceable
against Borrower in accordance with their 4.02 terms, except as may be limited
by bankruptcy, insolvency, or other similar laws affecting enforcement of
creditors' rights generally.
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SECTION 5.04 -- Litigation. Except as disclosed n the SEC
Filings, there are no pending or (to the best of Borrower's knowledge after due
inquiry) threatened actions or proceedings before any court or administrative
agency which may be expected to have a materially adverse effect on Borrower's
business or financial condition or which seek to question or set aside any of
the transactions herein contemplated.
SECTION 5.05 -- Financial Statements. The audited balance
sheet as of December 31, 1989 and unaudited balance sheet as of September 30,
l990 for Borrower and its consolidated subsidiaries, and the related results of
operations for the year and quarter then ended, have been prepared in
accordance with GAAP and correctly present Borrower's financial condition as of
such dates and results of operations for such periods, and since September 30,
1990, there has been no materially adverse change in Borrower's business,
assets, operations, or condition (financial or otherwise).
SECTION 5.06 -- Taxes. Borrower has filed all tax returns
which it is or was required to file, and has paid all taxes shown to be due and
payable on those returns or on any assessment received by it, except such taxes
of Borrower, if any, as are being contested diligently in good faith, and by
appropriate proceedings, and as to which adequate reserves have been provided
in accordance with GAAP.
SECTION 5.07 -- Status as United States Citizen and Air
Carrier. Borrower is a "citizen of the United States" as that term is used in
section 101(16) of the Act, and is a duly certified "air carrier" within the
meaning of the Act.
SECTION 5.08 -- Location of Offices. Borrower's chief
executive office and principal place of business, and the place where Borrower
keeps its financial records concerning the Collateral, is located at its
address referred to in section 11.02.
SECTION 5.09 -- Governmental Consents. Neither the execution,
delivery, and performance of any of the Basic Documents (other than the Finex
Agreement), nor the consummation of any of the transactions contemplated
thereby by Borrower or Vendor (including the importation of the Aircraft into
the United States from Brazil), requires the consent or approval of, giving of
notice to, registration with, or taking of any other action in respect too any
federal, state, or foreign governmental authority or agency (including any
judicial body) except for (a) the filing and recording of the Mortgage, and of
the FAA xxxx of sale, the FAA application for registration, and the Mortgage
Supplement for each Aircraft with the FAA; (b) the filing and recording of
UCC-1 financing statements for each Aircraft with the Superior Court Clerk
Offices in Xxxx, Xxxxxxx, and Xxxxxx County, Georgia, and in the appropriate
places in Texas and Arkansas; (c) the registration of each Aircraft with the
FAA pursuant to the Act; (d) the filing of any necessary documents with customs
officials; and (e) any necessary action with respect to the Finex Program.
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SECTION 5.10 -- Condition of Aircraft. On each Purchase Date,
the Aircraft to be delivered on such Purchase Date shall be in such condition
as is sufficient to enable Borrower to obtain a standard U.S. certificate of
airworthiness for such Aircraft and to enable such airworthiness certificate to
be maintained in good standing; and, to Borrower's knowledge (which shall be
based on acceptance tests by Borrower in accordance with its usual practices,
to the extent permitted under the Purchase Agreement), such Aircraft shall
otherwise conform in all material respects to the specifications for such
Aircraft set forth in the Purchase Agreement.
SECTION 5.11 -- Absence of ERISA Liability. Each employee
pension benefit plan (as defined in section 3(2) of the Employee Retirement
Income Security Act of 1974, as from time to time amended ("ERISA")) of
Borrower is in compliance with the applicable provisions of ERISA and of the
Internal Revenue Code of 1986, as from time to time amended, in all respects,
except to the extent that noncompliance would not be materially adverse to
Borrower's business, assets, financial condition, or ability to perform its
obligations under the Basic Documents.
SECTION 5.12 -- Delta Agreement. The Delta Agreement is (a)
the only agreement between Delta Air Lines, Inc. and Borrower relating to joint
marketing or code sharing for interconnecting flights, and (b) in full force
and effect. There exists no default under the terms of the Delta Agreement and
there has not occurred any event that would ripen into a default upon the
giving of notice or passage of time.
SECTION 5.13 -- Subsidiaries; Stock Ownership. Borrower owns
100% of the outstanding stock of ASA Investments, Inc. and Borrower has no
material stock or other equity investment in any other corporation,
partnership, or other Person.
SECTION 5.14 -- Investment Company Status. The Borrower is not
an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Note, or any amount owed by Borrower under any
other Basic Document, remains outstanding or unpaid or Lender has any
Commitment hereunder:
SECTION 6.01 -- Financial Statements. Borrower shall furnish
to Lender:
(a) within 45 days after the end of each of the first three
quarters in each fiscal year, consolidated statements of operations of
Borrower and its consolidated subsidiaries for the period from the
beginning of the then-current fiscal year to the end of such quarterly
period, and balance sheets of Borrower and its consolidated
subsidiaries, on a consolidated
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basis, as of the end of such quarter prepared in accordance with GAAP
and setting forth in each case in comparative form figures for the
corresponding period in the preceding year, all in reasonable detail
and certified by the Chief Financial Officer of Borrower, subject to
changes resulting from year-end adjustments, and Borrower's Form 10-Q
for such period;
(b) within 90 days after the end of each fiscal year,
consolidated statements of operations of Borrower and its consolidated
subsidiaries, for such year, and the balance sheets of Borrower and
its consolidated subsidiaries, on a consolidated basis, as of the end
of such year, setting forth in each case in comparative form
corresponding figures from the preceding annual audit, all in
reasonable detail, and certified to Borrower by its independent
certified public accountants and to Lender by Borrower's Chief
Financial Officer, as presenting fairly the financial position and
results of operations of Borrower and its consolidated subsidiaries
and as having been prepared in accordance with GAAP, and Borrower's
Form 10-K for such period;
(c) within two Business Days after any officer of Borrower
obtains knowledge of any Default, an Officer's Certificate specifying
its nature, the period of its existence, and what action Borrower
proposes to take with respect to it; and
(d) promptly upon request, such other data or information
(financial or otherwise) regarding Borrower or the Collateral as
Lender from time to time reasonably requests.
SECTION 6.02 -- Inspection of Collateral and Records.
Borrower shall permit any person(s) from time to time designated in writing by
Lender, at Lender's expense (or at Borrower's expense if a Default exists at
the time), to visit and inspect any of the Collateral and Borrower's (or any
Permitted Lessee's) records with respect to the Collateral, at such times as
Lender reasonably requests, and to discuss Borrower's affairs, finances, and
accounts with Borrower's officers. No such inspection shall unreasonably
interfere with Borrower's (or any Permitted Lessee's) operations or
maintenance. Lender shall have no duty to make any such inspection and shall
not incur any liability or obligation by reason of not making any such
inspection. Upon Lender's request, Borrower shall promptly notify Lender of the
maintenance operations then scheduled on the Aircraft for the six-month period
following such request.
SECTION 6.03 -- Corporate Existence. Except as permitted by
section 6.04, Borrower shall maintain its corporate existence in good standing
in the state of its incorporation and in all jurisdictions where qualification
is necessary (except in any jurisdiction in which the failure to qualify would
have no materially adverse effect on its business or on its ability to carry
out its obligations under the Basic Documents to which it is (or is to become)
a party). Borrower shall preserve and renew its rights (charter and statutory),
patents, and franchises, unless Borrower determines in good faith that the
preservation thereof is
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no longer necessary or desirable in the conduct of its business and that the
loss thereof will not adversely affect Lender's rights or Borrower's business,
assets, operations, condition (financial or otherwise).
SECTION 6.04 -- Merger, etc. Borrower shall not consolidate
with or merge into any other corporation, or convey, transfer, or lease all or
substantially all of its assets as an entirety to any person, unless:
(a) the corporation formed by such consolidation or the Person
who acquires by conveyance, transfer, or lease all or Substantially
all of Borrower's assets as an entirety (the "Successor") or, in
the case of a merger, Borrower (as the surviving corporation),
(i) is a corporation organized and existing under the laws of the
United States of America or any state or the District of Columbia,
(ii) is a "citizen of the United States" as defined in section 101(16)
of the Act, and (iii) is an air carrier (within the meaning of section
101(3) of the Act) certificated under section 604(b) of the Act; and,
in the case of such a consolidation, conveyance, transfer or lease,
the Successor: (iv) executes and delivers to Lender an agreement, in
form and substance satisfactory to Lender, containing an assumption by
the Successor of the due and punctual performance and observance of
Borrower's obligations under the Basic Documents to which Borrower is
then a party, and (v) makes such filings and recordings, including any
filing or recording with the FAA pursuant to the Act or any filing
under the UCC, as are necessary to evidence such consolidation,
merger, conveyance, transfer, or lease with or to the Successor;
(b) immediately after giving effect to such transaction, (i)
no Default exists and (ii) Borrower's or the Successor's, as the case
may be, business, assets, operations, condition (financial or
otherwise), and financial and other ability to perform its obligations
under the Basic Documents will not be adversely affected by such
transaction in any material respect; and
(c) Borrower or the Successor delivers to Lender, promptly
upon consummation of such transaction, an Officer's Certificate
stating that the conditions precedent set forth in clause (a) have
been complied with and an opinion of counsel for Borrower or for the
Successor, in form and substance satisfactory to Lender, stating that
the agreements entered into to effect such consolidation, merger,
conveyance, transfer, or lease and such assumption agreements have
been duly authorized, executed, and delivered by the Successor (or in
the case of a merger, by Borrower) and that they (and the Basic
Documents so assumed) constitute legal, valid, and binding obligations
of the Successor (or in the case of a merger, of Borrower),
enforceable in accordance with their terms (to the same extent as the
Basic Documents so assumed were enforceable against Borrower
immediately prior to such transaction); and that all conditions
precedent which are
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legal in nature provided for in this Agreement and relating to such
transaction have been fulfilled.
Upon any such consolidation, conveyance, transfer, or lease,
the Successor shall succeed to, shall be substituted for, and may exercise
every right and power of Borrower under the Basic documents to which Borrower
is a party, with the same effect as if the Successor had been named as Borrower
therein. No such conveyance, transfer, or lease of substantially all Borrower's
assets as an entirety shall have the effect of releasing Borrower (or any
Successor) from its liability under the Basic Documents to which it is a party.
Nothing in this section shall permit any lease, sublease, or other arrangement
for the use, operation, or possession of the Aircraft except in compliance with
the applicable provisions of this Agreement and the Mortgage.
Borrower shall not become a subsidiary of a holding company
without Lender's prior written consent.
SECTION 6.05 -- Citizenship and Air Carrier Status. Borrower
will at all times remain a "citizen of the United States" as defined in section
101(16) of the Act and an "air carrier" within the meaning of the Act.
SECTION 6.06 -- Compliance with ERISA.
(a) Borrower will, at all times, make prompt payment of
contributions that it is required to make to any employee benefit plan
to which it is a party as are necessary to meet the minimum funding
standards for such an employee benefit plan, as required by ERISA.
(b) Within two Business Days after the occurrence of any event
or circumstance, including any event which is classified as a
"Reportable Event" under ERISA, in connection with any employee
benefit plan to which it is a party, that might constitute grounds for
termination of an employee benefit plan to which Borrower is a party
by the Pension Benefit Guaranty Corporation or might result in the
appointment of a trustee by a United States District Court under
section 4042 of ERISA to administer such employee benefit plan;
Borrower will provide Lender with an Officer's Certificate describing
the event or circumstance, stating the reasons for any such action by
the Pension Benefit Guaranty Corporation or a United States District
Court, and specifying the action Borrower proposes to take with
respect thereto.
SECTION 6.07 -- Disposition of Assets. Borrower will not
dispose of any of its assets, other than in the ordinary course of its
business, unless it receives full, fair, and reasonable consideration for such
assets; and Borrower will not during any twelve-month period dispose of assets,
other than in the ordinary course of its business, which have an aggregate book
value in excess of $5,000,000; provided, that Borrower shall have the right to
dispose of any aircraft for at least such aircraft's book value and such sale
of an aircraft for at least book value will not be
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included in the calculation of the $5,000,000 of assets sold in a twelve-month
period. The book value of an aircraft shall be determined in accordance with
GAAP. For avoidance of doubt, the "ordinary course" of Borrower's business
generally shall include (x) acquisitions or dispositions of marketable
securities (other than acquisitions or dispositions exceeding 5% of any class
of "equity security", as defined in the Securities Exchange Act of 1934) and
(y) the disposition of parts of discontinued aircraft, engines, or propellers
not constituting part of a program to reduce Borrower's fleet in any material
respect.
SECTION 6.08 -- Performance of Delta Agreement. Borrower
shall faithfully perform all obligations it has under the Delta Agreement.
SECTION 6.09 -- Financial Covenant. Borrower shall not permit
at any time on a consolidated basis (consolidating Borrower and its
subsidiaries) its ratio of Indebtedness to Tangible Net Worth to exceed 3.25 to
1. "Tangible Net Worth" shall mean Book Net Worth minus (a) the amount, if
any, of Borrower's and its subsidiaries' assets which would be treated as
intangibles under generally accepted accounting principles; (b) any write-up in
the book value of any fixed asset resulting from a revaluation thereof; and (c)
the amount, if any, at which shares of stock of Borrower appear on the asset
side of the Borrower's balance sheet. "Book Net Worth" shall mean the book
value of Borrower's and its subsidiaries' total assets located in the United
States of America (exclusive of any indebtedness owed to Borrower or its
subsidiaries by any affiliate of Borrower) minus Borrower's and its
subsidiaries' total liabilities. For avoidance of doubt, the phrase "total
assets located in the United States of America" shall include marketable
securities and commercial paper issued by a foreign entity but held in the
United States of America by Borrower or any of its subsidiaries.
ARTICLE VII
CONDITIONS PRECEDENT TO THE PURCHASE OF NOTES
SECTION 7.01 -- Conditions Precedent to the Purchase of the
Initial Note. Lender's obligation to purchase the initial Note on the first
Purchase Date is subject to the satisfaction (or Lender's waiver) of the
following conditions precedent and Lender's receipt on or before such initial
Purchase Date of the following, in form and substance satisfactory to Lender:
(a) a certificate of Borrower's secretary, dated the Purchase
Date, certifying attached copies of the resolutions of Borrower's
board of directors evidencing approval of the transactions
contemplated by the Basic Documents to which it is (or is to become) a
party, and showing the names and specimen signature(s) (or copies
thereof) of Borrower's officer(s) authorized to sign this Agreement
and the related documents to which it is (or is to become) a party,
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(b) an executed Finex Agreement,
(c) an executed Mortgage,
(d) an executed Guarantee,
(e) an Officer's Certificate certifying an attached copy of
the 1988 Purchase Agreement, and
(f) copies of the SEC Filings,
In addition, Borrower's obligation to close on the first Purchase Date
is subject to its receipt of an executed letter agreement between Borrower and
Lender, in form and substance satisfactory to each, concerning sections
4.02(d)(i) and 6.05 of the Mortgage, and concerning the availability of the
Finex Program and potential future changes in the terms of the Finex Agreement.
SECTION 7.02 -- Conditions Precedent to the Purchase of All
Notes. Lender's obligation to purchase each Note (including the initial Note)
is subject to the additional conditions precedent that:
(a) Lender shall have received the following, each dated as of
the pertinent Purchase Date, in form and substance satisfactory to
Lender:
(i) the Note for the relevant Aircraft, executed by
Borrower and endorsed by Vendor (without recourse) to the
order of Finex Bank who in turn has endorsed (without
recourse) to the order of Lender,
(ii) an executed Mortgage Supplement with respect to
the relevant Aircraft,
(iii) an executed Purchase Agreement Assignment, with
the related executed Consent, with respect to the relevant
Aircraft,
(iv) an Officer's Certificate to the effect that: (1)
Borrower's representations and warranties in Article V of this
Agreement and section 6 of the relevant Purchase Agreement
Assignment are true and accurate as though made on the
Purchase Date, and (2) no Default exists or will result from
Lender's purchase of such Note,
(v) a certificate of insurance describing the
insurance maintained by Borrower with respect to the Aircraft
being purchased and stating that such policies conform to the
requirements of the Mortgage,
(vi) an opinion from Borrower's counsel substantially
in the form of Exhibit F,
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(vii) an opinion from Xxxxx & Xxxxxxx, special FAA
counsel, substantially in the form of Exhibit G, covering the
Aircraft that is the subject of the Note being purchased,
(viii) an opinion of counsel to Embraer,
substantially in the form of Exhibit H,
(ix) an opinion of Brazilian counsel substantially in
the form of Exhibit I,
(x) such additional opinion(s) (including, if
requested, from Xxxxxxx Xxxxx & Xxxxxx) and document(s) as
Lender requests, and
(xi) as to the first Aircraft financed under this
Agreement that is purchased pursuant to the 1990 Purchase
Agreement, an Officer's Certificate certifying an attached
copy of the 1990 Purchase Agreement;
(b) Lender shall have received copies of the necessary
FAA Application for Aircraft Registration and FAA Xxxx of Sale
pertaining to the Aircraft being purchased;
(c) Borrower's representations and warranties in the
Basic Documents shall be true and accurate as though made on and as of
such Purchase Date;
(d) no Default shall exist or shall result from Lender's
purchase of such Note;
(e) all filings, recordings, and other actions necessary
to establish, protect, preserve, and perfect Lender's interests under
the Mortgage shall have been duly made or taken;
(f) all necessary consents, approvals, licenses, permits,
declarations, or registrations then required in connection with the
execution, delivery, performance, validity, and enforceability of the
Basic Documents and the transactions contemplated thereby shall have
been obtained;
(g) Lender shall have received a copy of the approval of
the application for coverage of the purchase of the Aircraft by the
Finex Program; and
(h) in Lender's reasonable judgment, since September 30,
1990, there shall have occurred no materially adverse change in the
business, financial condition, or operations of Borrower.
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ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
SECTION 8.01 -- Events of Default. Each of the following shall
constitute an "Event of Default":
(a) Borrower fails to make any payment due from Borrower on
any Note or under any other Basic Document (including any Interest
Supplement and any amount due under section 4.04 hereof) when due;
(b) any representation or warranty made by Borrower in the
Basic Documents, or in any certificate or other document that it
furnishes pursuant to the Basic Documents, proves to have been
incorrect in any material respect when made;
(c) Borrower fails to maintain the insurance required by the
terms of the Mortgage;
(d) the Delta Agreement is voluntarily terminated, or is
amended to the detriment of Borrower;
(e) Borrower fails to provide Lender with the Officer's
Certificate required by section 6.01(c) or 6.06(b) within 10 days
after any of Borrower's officers obtains notice of a Default or the
ERISA-related event or circumstance occurs, respectively;
(f) Borrower fails to perform any other material covenant or
agreement in the Basic Documents (including section 6.09 hereof), and
(if remediable) such failure to perform continues for 30 days after
Borrower's receipt of notice of such default from Lender;
(g) Borrower (1) applies for or consents to the appointment
of, or the taking of possession by, a receiver, custodian, trustee, or
liquidator of itself or of all or a majority of its property, (2)
makes a general assignment for the benefit of its creditors, (3)
commences a voluntary case under the federal Bankruptcy Code (as now
or hereafter in effect), (4) files a petition seeking to take
advantage (as debtor) of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or readjustment
of debts, or (5) fails to controvert in a timely manner, or acquiesces
in writing to, any petition filed against it in an involuntary case
under the federal Bankruptcy Code;
(h) a proceeding or case is commenced, without Borrower's
application or consent, in any court of competent jurisdiction,
seeking (l) its liquidation, reorganization, dissolution, or
winding-up, or the composition or readjustment of its debts (2) the
appointment of a trustee, receiver, custodian, liquidator, or the like
of Borrower or of all or a majority of its assets, or (3) similar
relief in respect of Borrower under any law relating to bankruptcy,
insolvency,
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reorganization, winding-up, or composition or adjustment of debts, and
such proceeding or case continues undismissed, or an order, judgment,
or decree approving or ordering any of the foregoing is entered and
continues unstayed and in effect, for a period of 60 days; or an order
for relief against Borrower is entered in an involuntary case under
the federal Bankruptcy Code;
(i) loan, lease, or deferred purchase obligations of Borrower
totaling more than $1 million are in default after the expiration of
any applicable grace period, if the effect of such default is to
permit such obligations to be accelerated or otherwise declared to be
due and payable prior to their stated maturity, or Borrower defaults
in the payment when due of more than $l million of loan, lease, or
deferred purchase obligations;
(j) one or more judgment(s) is/are rendered by one or more
court(s) of competent jurisdiction against Borrower for a total of
more than $1 million and is/are not stayed or discharged, or fully
bonded against, within 60 days of the date or entry;
(k) any "Reportable Event" under ERISA shall have occurred, or
any finding or determination shall be made with respect to an employee
benefit plan to which Borrower is a party under section 4041(c) or (e)
of ERISA, or any fact or circumstance shall occur with respect to an
employee benefit plan to which Borrower is a party, that, in the
opinion of Lender, provides grounds for the commencement of any
proceeding under Section 4042 of ERISA, or any proceeding shall be
commenced under Section 4042 of ERISA with respect to an employee
benefit plan to which Borrower is a party; or
(l) Borrower shall deny any further liability under any Note
or under any other Basic Document.
SECTION 8.02 -- Remedies. If an Event of Default (other than
under section 8.01 (g) or (h)) exists, Lender may declare all Notes to be
immediately due and payable, whereupon (i) all Notes shall become and be
immediately due and payable without presentment, demand, protest, or other
notice of any kind, all of which Borrower hereby waives, (ii) the Interest
Supplement for any partial Interest Period will become immediately due and
payable, and (iii) the Commitment shall terminate. If an Event of Default under
section 8.01(g) or (h) occurs, all Notes automatically shall become immediately
due and payable and the Commitment automatically shall immediately terminate,
without presentment, demand, protest, or notice of any kind, all of which
Borrower hereby waives.
ARTICLE IX
BORROWER'S INDEMNITIES
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SECTION 9.01 -- General Indemnity. Borrower assumes liability
for, and agrees to indemnify each Indemnitee against, and on written demand to
pay, or to reimburse each Indemnitee for the payment of, any and all
liabilities, obligations, losses, damages, penalties, claims (including claims
involving strict liability in tort), suits, actions, costs, expenses, and
disbursements, including legal fees and expenses, of whatsoever kind and nature
(collectively, "Liabilities") imposed on, incurred by, or asserted against any
Indemnitee relating to or arising out of any Basic Document, the enforcement
against Borrower of any of the terms of the Basic Documents, or any lease or
relinquishment of possession of the Aircraft or any part thereof or any action
or inaction of Borrower or of any lessee, assignee, or transferee of Borrower
in connection therewith, the purchase of the Aircraft under the Purchase
Agreement, the ownership of the Aircraft, the acquisition, delivery,
nondelivery, acceptance, nonacceptance, rejection, registration,
deregistration, insuring, storage, manufacture, assembly, transportation,
importation, exportation, maintenance, condition, modification, testing,
repair, fitness for use, merchantability, sale, abandonment, lease, sublease,
assignment, transfer, transfer of title, possession, repossession, use,
operation, return, or other application or disposition of the Aircraft or any
component thereof, the condition upon return thereof after repossession
following the occurrence of an Event of Default or following the exercise of
remedies under the Mortgage, including latent or other defects, whether or not
discoverable, loss of or damage to any property or the environment, death or
injury of any person, and any claim for patent, trademark, copyright, or mask
work infringement and the violation or infringement by Borrower of any laws,
rules, or regulations, or (without limiting any of the foregoing) any breach by
Borrower of, noncompliance by Borrower with, or misrepresentation made or
deemed made by or on behalf of Borrower in, under, or in connection with the
Purchase Agreement or any Purchase Agreement Assignment or any warranty,
certificate, or agreement made or delivered in, under, or in connection with
the Purchase Agreement or any Purchase Agreement Assignment; provided, that
this section shall not require Borrower to pay or indemnify any Indemnitee
under this section (i) for any Liability to the extent resulting from such
Indemnitee's acts of gross negligence or willful misconduct; (ii) for any Taxes
(Borrower's duties in respect of Taxes being set forth in section 9.02) or for
any cost or expense relating to the preparation, execution, delivery, or
enforcement of the Basic Documents (Borrower's duties in respect of such costs
and expenses being set forth in section 11.03); (iii) for any Liability that
such Indemnitee incurs to the extent resulting from its breach of any of its
representations, warranties, or covenants in any Basic Document; (iv) for any
Liability to the extent resulting from a claim against such Indemnitee not
related to any Aircraft, any action or inaction of Borrower or any lessee,
assignee, or transferee of Borrower, or any of the transactions contemplated by
the Basic Documents; (v) for any Liability with respect to transfer taxes or
other expenses payable with respect to the transfer of any Note, other than a
transfer after the occurrence of an Event of Default; or (vi) for any violation
or purported violation of any law relating to usury or the charging or
collecting of excess interest or finance charges. If any Indemnitee obtains
knowledge of
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any claim or liability required to be indemnified against under this section
9.01, such Indemnitee shall promptly notify Borrower, but the failure to do so
shall not relieve Borrower from any liability that it otherwise would have to
such Indemnitee under this section. Upon an Indemnitee's request, the defense
of any Liability for which Borrower would be required to indemnify such
Indemnitee hereunder shall be conducted by Borrower, with counsel selected by
Borrower and satisfactory to Lender. However, if the defense of any such
Liability is conducted by Lender, Lender shall select the counsel to conduct
it, but shall consult with Borrower as to such selection; provided, that the
decision as to which counsel to select shall be and remain Lender's. Borrower
shall be obligated under this section 9.01 irrespective of whether the
Indemnitee is also indemnified with respect to the same matter under any other
Basic Document or other document by any other Person, and the Indemnitee may
proceed directly against Borrower under this section 9.01 without first
resorting to any such rights of indemnification. Upon the payment in full of
any indemnities due and owing under this section 9.01, Borrower shall be
subrogated to any right of the Indemnitee in respect of the matter against
which indemnity has been given. Borrower's indemnities in this section shall
survive expiration or termination of the Mortgage and payment in full of the
Notes.
Any payment or indemnity pursuant to this sect on 9.01 shall
include the amount, if any, necessary to hold the Indemnitee harmless on an
after-tax basis from all taxes required to be paid by such recipient with
respect to such payment or indemnity under laws of any federal, state, or local
government or taxing authority in the United States or by any foreign
government or any political subdivision or taxing authority thereof. The amount
of any payment or indemnity required under this section shall be determined by
the Indemnitee reasonably and in good faith, and that determination shall be
conclusive. Upon Borrower's request and at Borrower's expense, the Indemnitee
will provide Borrower with a summary explanation of the basis for the
Indemnitee's computations.
SECTION 9.02 -- Taxes.
(a) Indemnity. Except as provided in section 9.02(b), Borrower
agrees to indemnify each Indemnitee against, and on written demand to pay or
reimburse each Indemnitee for the payment of, any and all Taxes imposed upon or
asserted against any Indemnitee, any Aircraft or any part thereof or interest
therein, any Basic Document, any lease of any Aircraft or any part thereof, or
the rentals received under such a lease, by any federal, state, or local
government or other taxing authority in the United States (including any
territory or possession of the United States) or by any foreign government or
any political subdivision or taxing authority thereof where any part of an
Aircraft is located, used, or registered ( "Taxing Authorities") upon or with
respect to (i) the construction, mortgaging, financing, refinancing by or at
the request of Borrower, purchase, acquisition, acceptance, nonacceptance,
rejection, delivery, nondelivery, transport, insuring, ownership, registration,
deregistration, assembly, possession, repossession, operation, use, condition,
maintenance, modification, repair, fitness for use, merchantability, testing,
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return, abandonment, storage, manufacture, leasing, subleasing, importation,
exportation, sale, assignment, transfer, transfer of title, or other
application or disposition of, or the imposition of any Lien (other than a
Permitted Lien) or the incurrence of any liability to refund or pay over any
amount as a result of any Lien (other than a Permitted Lien) on any Aircraft or
any part thereof or interest therein, (ii) any amount paid or payable by
Borrower or Finex Bank under the Basic Documents or the receipts or earnings
arising from or received with respect to any Aircraft or any part thereof or
interest therein, (iii) any Aircraft or any part thereof or interest therein,
(iv) any of the Basic Documents and any other documents contemplated thereby or
the execution, sale, delivery, acquisition, or filing of the Basic Documents,
or (v) otherwise with respect to or in connection with the transactions
effected under the Basic Documents. The term "Taxes" shall mean any and all
fees, taxes, levies, imposts, duties, charges, assessments, or withholdings of
any nature whatsoever, together with any and all penalties, fines, additions to
tax, and interest thereon or computed by reference thereto.
(b) Exclusions from Indemnity. The provisions of section
9.02(a) shall not apply to:
(i) any Tax based on, or measured by, net income, capital,
franchise, or net worth (other than sales taxes), including related
surcharges and withholding taxes; provided, that the provisions of
this clause (b)(i) shall not apply to any Taxes imposed in respect of
the receipt or accrual of any indemnity payment made or payable
pursuant to this section 9.02;
(ii) any Tax based on or measured by the value of such
Indemnitee's interest in any Basic Document, except to the extent
imposed without regard to the presence of the Indemnitee, or any Note,
in the jurisdiction of the Taxing Authority imposing that Tax;
(iii) any Tax imposed on the Indemnitee as a result of a
transfer or other disposition, by such Indemnitee or any of its
predecessors in interest, of any interest in the Aircraft or any Basic
Document, unless such transfer or disposition occurs after the
occurrence of an Event of Default; or
(iv) any Tax in the nature of a penalty, an addition to tax,
interest, or fines resulting from the negligence or misconduct of the
Indemnitee in connection with the preparation or filing of (or failure
to prepare or file) tax returns, or the payment of or failure to pay
its taxes, but in each case not if in any way attributable to
Borrower's failure to notify such Indemnitee of its obligations to
prepare and file its returns in respect of Taxes indemnified pursuant
to this section 9.02 or to provide any information necessary for the
preparation or filing of such returns or the conduct of such
proceedings or otherwise to perform its duties and responsibilities
pursuant to the Basic Documents.
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(c) Calculation of General Tax Indemnity Payments. Any payment
which Borrower is required to make to or for the account of any Indemnitee with
respect to any Tax which is subject to indemnification under this section 9.02
shall be made on a net basis, taking into account offsetting credits or
deductions available to such Indemnitee as a result of the payment of such Tax,
and shall include the amount necessary to hold such Indemnitee harmless on an
after-tax basis from the net amount of all Taxes required to be paid by such
Indemnitee as the result of such payment (including any Taxes imposed on such
indemnity payment) pursuant to the laws of any Taxing Authority. The amount of
any payment or indemnity required under this section shall be determined by the
Indemnitee reasonably and in good faith, and that determination shall be
conclusive. Upon Borrower's request and at Borrower's expense, the Indemnitee
will provide Borrower with a summary explanation of the basis for the
Indemnitee's computations.
(d) Records. If Borrower shall timely file any report, return,
or statement required to be filed with respect to any Tax which is subject to
indemnification under this section 9.02, except for any such report, return, or
statement which an Indemnitee has notified Borrower that it intends to file.
Borrower shall file such report, return, or statement and send a copy to Lender
and each Indemnitee affected by such report, return, or statement. Each
Indemnitee shall promptly forward to Borrower any notice, xxxx, or advice
received by it concerning any Tax.
ARTICLE X
YIELD PROTECTION
SECTION 10.01 -- Additional Costs.
(a) Borrower shall pay directly to Lender from time to time
such amounts as are necessary to compensate Lender, on an after-tax basis, for
any costs which are attributable to its purchase of or obligation to purchase
any Note hereunder, or any reduction in any amount receivable by Lender in
respect of such Notes (excluding payments under the Finex Agreement), resulting
from any Regulatory Change which imposes or modifies any reserve, special
deposit, minimum capital, capital ratio, or similar requirements relating to
any extensions of credit or other assets of or any deposits with or other
liabilities of Lender, or the manner in which Lender funds (or allocates funds,
on its books, for) its investments in any of the Notes.
(b) Determinations and allocations for purposes of this
section 10.01 of the effect of any Regulatory Change pursuant to section
10.01(a) on Lender's costs or rate of return of maintaining or its obligations
to purchase any Note, or on amounts receivable by it in respect of any Note,
and of amounts required to compensate Lender under this section 10.01, shall be
made by Lender reasonably and in good faith and shall be conclusive. Upon
Borrower's request
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and at Borrower's expense, Lender will provide Borrower with a summary
explanation of the basis for Lender's computations.
SECTION 10.02 -- Breakage Costs. Borrower shall pay to
Lender, upon Lender's request, such amount as is sufficient, in Lender's
opinion, to compensate it for any loss, cost, or expense which is attributable
to:
(a) any payment, purchase, or conversion of any Note for any
reason (including the acceleration of the maturity of the Notes pursuant to
section 8.02 and the mandatory purchase of the Note pursuant to section 4.04)
on a date other than an Interest Payment Date; or
(b) any failure by Vendor for any reason (including the
failure of any of the conditions precedent specified in article VII to be
satisfied) to endorse and deliver any Note to Finex Bank on the Purchase Date
specified in the relevant notice to Lender given pursuant to section 2.02.
Such amount payable by Borrower (x) shall not include losses, costs, or
expenses attributable to any date more than 180 days after the date of such
payment, purchase, or conversion or such Purchase Date, and (y) shall be
determined by Lender reasonably and in good faith, which determination shall be
conclusive. Upon Borrower's request and at Borrower's expense, Lender will
provide Borrower with a summary explanation of the basis for Lender's
computations.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 -- No Waivers: Cumulative Remedies. No failure
or delay in exercising any power or right under any Basic Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power preclude other or further exercise thereto, or the exercise
of any other right or power under any Basic Document. No notice to or demand on
any party in any case shall, of itself, entitle such party to any other or
further notice or demand in similar or other circumstances.
SECTION 11.02 -- Notices. All communications and notices
provided for under this Agreement shall be in writing (including telex,
telegraph, and telecopy), shall be in English, and shall be mailed by certified
mail (return receipt requested) or otherwise delivered to the parties at the
addresses set forth by their signatures hereto, or, as to each party, at such
other address as it designates by notice to each other party. Each such notice
shall be effective upon delivery.
SECTION 11.03 -- Transaction Expenses. Borrower will pay on
demand all out-of-pocket expenses in connection with the preparation,
execution, delivery, administration, and enforcement of the Basic Documents, or
in connection with any scheduled closing
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that is postponed or cancelled, including (i) all fees and expenses of (x)
Xxxxxxx Xxxxx & Xxxxxx, special counsel to Lender, (y) Castro, Barros, Sobral e
Xavier, special Brazilian counsel, and (z) Xxxxx & Xxxxxxx, special FAA
counsel; (ii) all FAA and UCC filing and lien search fees; (iii) all fees and
expenses (including legal fees and expenses) of Lender in connection with
actual or proposed amendments, waivers, or consents to or under this Agreement
or the other Basic Documents (except for such amendments, waivers, or consents
initiated by Lender); and (iv) all fees and expenses (including legal fees and
expenses) of Lender in connection with the actual or proposed enforcement of
any Basic Document against Borrower during the existence of any Default. The
"legal fees and expenses" of Lender referred to in clauses (iii) and (iv) may
include those of Lender's in-house counsel.
SECTION 11.04 -- Amendments. Any provision of the Basic
Documents, other than the Purchase Agreement, the Guarantee, or the Finex
Agreement, may be amended, terminated, waived, or otherwise modified only in
writing by Borrower and Lender.
SECTION 11.05 -- Successors and Assigns. This Agreement shall
bind and benefit Lender and Borrower and their successors and assigns, except
that Borrower may not assign or transfer its rights under this Agreement
without Lender's prior written consent. Lender may at any time with the
Borrower's consent (which consent shall not be unreasonably withheld) sell,
assign, grant participation(s) in, or otherwise transfer any Note and Lender's
rights (including the right to receive Interest Supplements) relating to such
Note, in whole or in part.
SECTION 11.06 -- Lender's Representations and Warranties.
Lender represents and warrants that:
(a) it is a national banking association duly organized,
validly existing, and in good standing under the laws of the United States, and
has all corporate power, authority, and legal right under the laws of the
United States to execute, deliver, and carry out the terms of each of the Basic
Documents to which it is a party;
(b) it has duly authorized, executed, and delivered this
Agreement and the other Basic Documents to which it is a party; and
(c) neither it nor anyone authorized to act on its behalf has
directly or indirectly offered any beneficial interest in the Notes for sale
to, or solicited any offer to acquire any such interest in the Notes from, any
Person in such a manner as to require any of the Notes to be registered under
the Securities Act of 1933, as amended, or any state securities law; provided,
that the foregoing shall not be deemed to extend any such offer, sale, or
solicitation by or on behalf of Borrower or any other Person.
SECTION 11.07 -- Governing Law. This Agreement shall be
governed by the laws of Georgia.
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SECTION 11.08 -- Headings. Article and section headings used
in this Agreement are for convenience only and are not a substantive part of
this Agreement.
SECTION 11.09 -- Execution in Counterparts. This Agreement may
be executed in separate counterparts.
SECTION 11.10 -- Survival of Representations and Warranties.
All representations and warranties contained in this Agreement or made in
writing in connection with this Agreement shall survive the execution and
delivery of this Agreement and the Mortgage.
SECTION 11.11 -- Severability. If any part of any provision
contained in this Agreement, or any document contemplated hereby, is or becomes
invalid or unenforceable under applicable law, that part shall be ineffective
to the extent of such invalidity only, without in any way affecting the
remaining parts of that provision or the remaining provisions.
SECTION 11.12 -- Finex Agreement. So long as no Default
exists, Lender shall forward any payments that it receives under the Finex
Agreement as Finex Interest Payments, or interest thereon, or as
indemnification or reimbursement under the Finex Agreement and not relating to
any loss or expense suffered by Lender, to Borrower at First American Bank of
Georgia N.A., 0000 XxxxxXxxx Xxxxxxx, Xxxxxxx, Xxxxxxx 00000, Account: Atlantic
Southeast Airlines, Inc. (account #5100130970). Lender shall use its good faith
efforts to forward any such payments to Borrower on the Business Day following
their receipt by Lender. At the cost and expense of Borrower, Lender shall use
its good faith efforts to take such action with respect to the Finex Agreement
as Borrower shall reasonably request, provided that Lender shall not be
required to take any action which adversely affects its interests; provided
that a reduction in the amount of Finex Interest Payments resulting from the
guarantee of such Finex Interest Payments by Finex Bank shall not be considered
an action adversely affecting Lender's interest; provided , further, that any
bank having offices in New York City and in Brazil, and authorized to act as a
Finex agent bank under the Finex Program, shall be presumed to be acceptable to
Lender as to identity. However, all risks associated with the Finex Program are
Borrower's, and Lender shall have no responsibility for any Finex Interest
Payments not actually received by Lender from Finex Bank. So long as no Default
exists, Lender shall not enter into any amendment of the Finex Agreement
without Borrower's consent, such consent not to be unreasonably withheld.
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IN WITNESS WHEREOF, Borrower and Lender have executed this
Credit Agreement.
ATLANTIC SOUTHEAST AIRLINES, INC.
0000 Xxxxxxx Xxxxxxx
Xxxxxxx Xxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxx
Vice President-Finance By: /s/ X.X. Xxxx
and Treasurer -------------------------------
Facsimile No.: (000) 000-0000 Title: Vice President - Finance
--------------------------
BANK OF AMERICA NATIONAL
000 Xxxxx Xxxxxx Xxxxxx TRUST AND SAVINGS ASSOCIATION
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Airline Aerospace #5770
Facsimile No.: (000) 000-0000
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Title: Vice President
-------------------------
with a copy to:
0000 Xxxxxxx Xxxx. #0000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Corporate Service Center
Facsimile No.: (000) 000-0000
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