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EXHIBIT 10(h)
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CREDIT AGREEMENT
dated as of
June 15, 1990
between
ATLANTIC SOUTHEAST AIRLINES, INC.,
Borrower,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
Lender.
Three Embraer Model EMB-120 Brasilia Aircraft
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS; REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.03 Section and Exhibit References, etc. . . . . . . . . . . . . . . . . . . 6
ARTICLE II
PURCHASE OF NOTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.01 Purchase of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.02 Procedure for Purchase of Notes . . . . . . . . . . . . . . . . . . . . . 6
Section 2.03 Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
SECURITY FOR BORROWER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . 7
Section 3.01 Security Interest in Collateral . . . . . . . . . . . . . . . . . . . . . 7
Section 3.02 Set-Off Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV
PAYMENTS UNDER THE NOTES AND OTHER
AMOUNTS PAYABLE BY BORROWER . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.01 How Payments are Made . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.02 Right to Prepay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.03 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.04 Mandatory Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.05 Amount of Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.06 Interest on Past Due Amounts . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.07 Reduction In Net Interest Payable by
Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE V
BORROWER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 9
Section 5.01 Corporate Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.02 Corporate Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.03 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.04 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.05 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.06 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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Section 5.07 Status as United States Citizen and
Air Carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.08 Location of Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.09 Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.10 Condition of Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.11 Absence of ERISA Liability . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.12 Delta Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.13 Subsidiaries; Stock Ownership . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.14 Investment Company Status . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VI
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.01 financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.02 Inspection of Collateral and Records . . . . . . . . . . . . . . . . . . 13
Section 6.03 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.04 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.05 Citizenship and Air Carrier Status . . . . . . . . . . . . . . . . . . . 15
Section 6.06 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.07 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.08 Performance of Delta Agreement . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII
CONDITIONS PRECEDENT TO THE PURCHASE OF THE
NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.01 Conditions Precedent to the Purchase
of the Initial Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.02 Conditions Precedent to the Purchase
of All Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IX
BORROWER'S INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 9.01 General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 9.02 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE X
YIELD PROTECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 10.01 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 10.02 Breakage Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 11.01 No Waivers; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . 26
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Section 11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 11.03 Transaction Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 11.04 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 11.05 Succesors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 11.06 Lender's Representations and Warranites . . . . . . . . . . . . . . . . . 27
Section 11.07 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 11.08 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 11.09 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 11.10 Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 11.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 11.12 Finex Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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 ▇▇▇▇▇ & ▇▇▇▇▇▇▇ (Aircraft)
Exhibit H Form of opinion of counsel to Embraer
Exhibit I Form of Guarantee
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CREDIT AGREEMENT
This Credit Agreement is entered into as of June 15, 1990 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.
"Aircraft": three 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) as an "Aircraft" to be financed under this Agreement.
"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.
"Borrower 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.
"Borrower's Rebate": defined in Section 4.07.
"Business Day": any day, other than a Saturday or Sunday, on
which commercial banks are open for business in New York, New York, and London,
England, 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 in Dollar deposits are carried out in the London interbank market.
"Collateral": the "Collateral" under the Mortgage.
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"Commitment": Lender's commitment to purchase the Notes for an
aggregate amount of $17,500,000; Borrower may reduce such amount upon 30 days
prior written notice to Lender.
"Commitment Fee": the fee required to be paid to Lender
pursuant to section 2.03.
"Commitment Period": the period from the date of execution of
this Agreement to and including the earliest of (w) December 31, 1990, (x) the
date upon which the third Aircraft is delivered to and accepted by Borrower
pursuant to the Purchase Agreement, (y) the date on which the remaining
Commitment is terminated pursuant to section 8.02, and (z) a date set by
Borrower pursuant to a notice sent to Lender at least 30 days prior to such
date.
"Consent": a Consent and Agreement, substantially in the form
of Exhibit E, relating to a Purchase Agreement Assignment and dated the same
date as that Purchase Agreement Assignment.
"Default": any event or condition that would become an Event
of Default upon the giving of notice or lapse of time or both, or any Event of
Default.
"Delta Agreement": that certain agreement between Delta Air
Lines, Inc. and Borrower dated June 1, 1986 and relating to joint marketing or
code sharing for interconnecting flights.
"Dollars" and "$": United States dollars.
"Downpayment": 15% of Equipment Cost for the first
$6,862,745.00 of Equipment Cost, and 100% of Equipment Cost in excess of
$6,862,745.00, 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 (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.
"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.
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"Financed Amount": the face amount of the Note for an Aircraft
being purchased on a Purchase Date.
"Finex Agreement": an agreement by that name, substantially in
the form of Exhibit B.
"Finex Bank": Multi-Banco Internacional de Investimentos S.A.
(or any other Person serving 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 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 accountants 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 I.
"herein", "hereof", "hereunder", etc.: in, of, or under, etc.
this Agreement (and not merely in, of, under, etc. the section or provision
where that 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.
"Interest Payment Date" for a Note: each "180-day anniversary"
of the Purchase Date for that Note; 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
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falls on a day which is not a Business Day shall instead occur on the following
Business Day.
"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.
"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.
"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.
"1989 10-K": Borrower's annual report on Form 10-K for the
year ended December 31, 1989.
"1990 10-Q": Borrower's quarterly report on Form 10-Q for the
quarter ended March 31, 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).
"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.
"Purchase Agreement": Purchase Agreement No. 162-COV/88
(including all attachments, exhibits, and letter agreements thereto) dated
November 21, 1988, between Vendor and Borrower.
"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
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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.
"SEC Filings": the 1989 10-K and the 1990 10-Q.
"Spare Parts": the appliances, spare parts, and other items of
equipment purchased with Aircraft under the Purchase Agreement.
"Successor": defined in section 6.04(a).
"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 terms used
in the plural preceded by "the" encompasses all members of the relevant class.
Any defined term used in the singular 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, Lender shall purchase the related Note from Finex Bank. The
Financed Amount for each
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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 $6,862,745.00, and Borrower shall pay 100% of Equipment Cost in
excess of $6,862,745.00 for any Equipment Portion. Each Note shall be
purchased for its face amount. 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 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (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
set forth in 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") for the Commitment Period, payable in arrears
son the first day of each quarter or partial quarter (for the prior quarter or
partial quarter) after the execution and delivery of this Agreement during the
Commitment Period, 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 the following dates: March 31, June
30, September 30, or December 31.
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 it 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.
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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 Commitment Fees hereunder, and all other amounts payable by
Borrower to Lender under the Basic Documents, to Lender (ABA # ▇▇▇-▇▇▇-▇▇▇
S.F.) at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇
▇▇▇▇▇▇▇▇▇ for credit to PSO Account Administration #5693, Reference: Atlantic
Southeast Airlines Note No. 1, 2, or 3 [as appropriate]or at such other
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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. 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 come due on a day
which is not a Business Day, such payment shall instead be made on the
following Business Day, and interest or Commitment Fees, as the case may be,
shall accrue at the applicable rate to the day of payment.
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) or 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 -- Mandatory 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(b) 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 its then-outstanding principal amount,
plus all accrued but unpaid interest on the Note to the date of 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 4.01. 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, and the payment of all past-due interest on or with respect to such Note.
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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.
SECTION 4.07 -- Reduction in Net Interest Payable by Borrower.
In consideration of this transaction's being classified as a "supplier's
credit" by Cacex and of the total benefits receivable by Lender and its
affiliates under the Finex Program as a result of Borrower's purchase and
financing of the Aircraft under the Basic Documents, Lender agrees that the
amount of interest that Borrower owes under each Note shall be automatically
reduced by 0.65% per annum of the principal from time to time outstanding under
the terms of that Note, and that Borrower shall not be responsible for or
otherwise obligated to pay any interest under that Note which is attributable
to that reduction for purposes of this Agreement or any of the other Basic
Documents. For example, if a Note carries a stated interest rate of 6.5% per
annum, Borrower actually shall pay interest on that Note based on a 5.85% per
annum rate for timely payments. All per annum rates in this section are based
on a 360-day year and actual days elapsed.
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
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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.
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 terms, except as may be limited by
bankruptcy, insolvency, or other similar laws affecting enforcement of
creditors' rights generally.
SECTION 5.04 -- Litigation. Except as disclosed in 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 March 31, 1990
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 March 31,
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
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to, registration with, or taking of any other action in respect of 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
▇▇▇▇ 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 ▇▇▇▇,
▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ County, Georgia, and in the appropriate places in Texas and
Arkansas; and (c) the registration of each Aircraft with the FAA pursuant to
the Act, and except for any necessary action with respect to the Finex Program.
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.
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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 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;
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(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 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. 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 Borrower is the surviving corporation;
(b) the corporation formed by such consolidation or merger or
the Person who acquires by conveyance, transfer, or lease all or
substantially all of Borrower's assets as an entirety (the
"Successor") (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 State" as defined in
section 101(16) of the Act, (iii) is an air carrier (within the
meaning of section 101(3) of the Act) certificated under section
604(b) of the Act, (iv) executes and delivers to Lender an agreement,
in form and substance satisfactory to Lender, containing an assumption
by
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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;
(c) immediately after giving effect to such transaction, (i)
no Default exists and (ii) Borrower's 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
(d) 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 clauses (a) and (b)
have been complied with and an opinion of counsel to Borrower or 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 and
that they (and the Basic Documents so assumed) constitute legal,
valid, and binding obligations of the Successor, enforceable in
accordance with their terms (to the same extent as the Basic Documents
so assumed were enforceable against Borrower); and that all conditions
precedent which are legal in nature provided for in this Agreement and
relating to such transactions have been fulfilled.
Upon any such consolidation, merger, 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.
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.
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(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 Guaranty Benefit 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 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.
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 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
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officer(s) authorized to sign this Agreement and the related documents
to which it is (or is to become) a party,
(b) an executed Finex Agreement,
(c) an executed Mortgage,
(d) an executed Guarantee,
(e) an Officer's Certificate certifying an attached copy
of the 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.
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:
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(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,
(vii) an opinion from ▇▇▇▇▇ & ▇▇▇▇▇▇▇, 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, and
(ix) such additional opinion(s) (including, if
requested, from ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇) and document(s) as
Lender requests;
(b) Lender shall have received copies of the necessary FAA
Application for Aircraft Registration and FAA ▇▇▇▇ 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
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with the execution, delivery, performance, validity, and
enforceability of the Basic Documents and the transactions
contemplated thereby shall have been obtained;
(g) no change in the Finex Program shall have occurred or have
been officially proposed in writing by Banco Central do Brasil or
Cacex (or such other authority as, at the time, is competent to make
official proposals of changes to the Finex Program) after the date of
this Agreement if such change, if effective, could adversely affect
the economic benefits available to Lender or Finex Bank in connection
with the transactions contemplated by the Basic Documents (provided,
that this condition shall be excused if (x) Borrower substitutes for
the Note for that Aircraft a promissory note that is substantially
identical to Exhibit A except that the interest rate shall be a
floating rate, reset for each Interest Period, based on the six-month
LIBO rate that Lender from time to time establishes, plus 0.85% per
annum (based on a 360-day year and actual days elapsed), and (y) such
other changes are made to the Basic Documents, at Borrower's expense,
as Lender deems necessary to convert the financing hereunder to a
non-Finex basis (and Lender agrees that such changes shall include
appropriate provisions for Lender to use reasonable good faith efforts
to seek and to make available (including reasonable good faith efforts
to cause Finex Bank to seek and make available) to Borrower, promptly
after receipt, any Finex interest subsidies that Lender or Finex Bank
may become entitled to after the Purchase Date for that Aircraft, and
that the Finex Bank for that Aircraft shall be reasonably satisfactory
to Borrower));
(h) a copy of the approval of the application for coverage of
the purchase of the Aircraft by the Finex Program; and
(i) in Lender's reasonable judgment, since March 31, 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 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, 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 competentjurisdiction, seeking
(1) its liquidation,reorganization, dissolution, or winding-up, or the
composition or readjustment of its debts,
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(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, 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
totalling 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 $1 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 of 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;
(l) one or more events, occurrences, or circumstances occur(s)
or exist(s) that, in Lender's reasonable good faith opinion (after
good faith consultation with Borrower), has or had a materially
adverse effect on the financial condition of Borrower and on the
ability of Borrower to perform any of its obligations under the Basic
Documents; or
(m) 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, and (ii) 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
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terminate, without presentment, demand, protest, or notice of any kind, all of
which Borrower hereby waives.
ARTICLE IX
BORROWER'S INDEMNITIES
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 its 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
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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 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 section 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)
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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,
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 Taxes (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
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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.
(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) Reports. 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, ▇▇▇▇, 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 any of such Notes (including payments under the Finex Agreement),
resulting from (i) 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, or (ii) any tax
payable to any government or governmental authority outside the United States
and imposed with respect to, or withheld from, payments due to Lender from
Finex Bank or otherwise under the Finex Program (except to the extent that the
amounts withheld are applied or are to be applied to Lender's obligations
unrelated to the transactions contemplated by the Basic Documents).
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(b) Determinations and allocations for purposes of this
section 10.01 of the effect of any Regulatory Change pursuant to section
l0.01(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 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 thereof 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
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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 that is postponed or cancelled,
including (i) all fees and expenses of (x) ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇, special
counsel to Lender, (y) Castro, Barros, Sobral e Xavier, special Brazilian
counsel, and (z) ▇▇▇▇▇ & ▇▇▇▇▇▇▇, 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, 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.
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SECTION 11.07 -- Governing Law. This Agreement shall be
governed by the laws of Georgia.
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. Except to the extent
otherwise provided in article X and section 7.02(g), all risks and benefits of
the Finex Agreement are Lender's, not Borrower's. Except as so provided,
Borrower shall not have any responsibility for payments owed to Lender under
the Finex Agreement, regardless of whether or when they are paid, and Borrower
shall have no right to any such payments, regardless of any payment or
prepayment of any Note (including after an Event of Default or Event of Loss)
or any purchase of any Note by any Person.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Borrower and Lender have executed this Credit Agreement.
ATLANTIC SOUTHEAST AIRLINES, INC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Vice President-Finance
and Treasurer By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ ------------------------------------
Title: Vice President-Finance
-------------------------------
BANK OF AMERICA NATIONAL
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ TRUST AND SAVINGS
ASSOCIATION
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Airline Aerospace #5770
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Title: Vice President
-------------------------------
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇. #▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Service Center
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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