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EXHIBIT 10(i)
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CREDIT AGREEMENT
dated as of
December 1, 1990
between
ATLANTIC SOUTHEAST AIRLINES, INC.,
Borrower
and
BARCLAYS BANK PLC,
Lender.
Two Embraer Model EMB-120 Brasilia Aircraft
and Spare Parts
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; REFERENCES
SECTION 1.01 -- Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02 -- Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.03 -- Section and Exhibit References, etc. . . . . . . . . . . . . . . . 7
ARTICLE II
PURCHASE AND EXCHANGE OF FINEX NOTES; PAYMENTS 7
SECTION 2.01 -- Purchase and Exchange of Finex Notes . . . . . . . . . . . . . . . 7
SECTION 2.02 -- Procedure for Purchase and Exchange
of Finex Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.03 -- Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.04 -- Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
SECURITY FOR BORROWER'S OBLIGATIONS
SECTION 3.01 -- Security Interest in Collateral . . . . . . . . . . . . . . . 8
SECTION 3.02 -- Set-Off Rights . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV
PAYMENTS UNDER THE NOTES
AND OTHER AMOUNTS PAYABLE BY BORROWER
SECTION 4.01 -- How Payments Are Made . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.02 -- Right to Prepay . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.03 -- Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.04 -- Mandatory Purchase . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.05 -- Amount of Prepayment . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.06 -- Interest on Past Due Amounts . . . . . . . . . . . . . . . . . . . 10
ARTICLE V
BORROWER'S REPRESENTATIONS AND WARRANTIES
SECTION 5.01 -- Corporate Standing . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.02 -- Corporate Powers . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.03 -- Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.04 -- Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.05 -- Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.06 -- Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.07 -- Status as United States Citizen and Air
Carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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SECTION 5.08 -- Location of Offices . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.09 -- Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.10 -- Condition of Aircraft . . . . . . . . . . . . . . . . . . . . . . . 13
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
SECTION 6.01 -- Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.02 -- Inspection of Collateral and Records . . . . . . . . . . . . . . . 14
SECTION 6.03 -- Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.04 -- Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.05 -- Citizenship and Air Carrier Status . . . . . . . . . . . . . . . . 17
SECTION 6.06 -- Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.07 -- Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.08 -- Performance of Delta Agreement . . . . . . . . . . . . . . . . . . 18
ARTICLE VII
CONDTIONS PRECEDENT TO THE PURCHASE
AND EXCHANGE OF FINEX NOTES
SECTION 7.01 -- Conditions Precedent to the Purchase and
Exchange of the Initial Finex
Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.02 -- Conditions Precedent to the Purchase
and Exchange of All Finex Notes . . . . . . . . . . . . . . . . 18
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
SECTION 8.01 -- Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 8.02 -- Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IX
BORROWER'S INDEMNITIES
SECTION 9.01 -- General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.02 -- Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE X
ILLEGALITY AND YIELD PROTECTION
SECTION 10.01 -- Illegality and Increased Costs . . . . . . . . . . . . . . . . . . . 30
SECTION 10.02 -- Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01 -- No Waivers; Cumulative Remedies . . . . . . . . . . . . . . . . . . 32
SECTION 11.02 -- Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 11.03 -- Transaction Expenses . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 11.04 -- Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 11.05 -- Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 11.06 -- Lender's Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 11.07 -- Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.08 -- Judicial Proceedings . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.09 -- Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.10 -- Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.11 -- Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.12 -- Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.13 -- Finex Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Annex A Procedures for Purchasing Aircraft
and Notes; Documentation
Exhibit A-1 Form of Finex Note
Exhibit A-2 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
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 December 1, 1990
by and between Atlantic Southeast Airlines, Inc. ("Borrower"), a Georgia
corporation, and Barclays Bank PLC ("Lender"), an English banking corporation.
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": two 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 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
appears on the Reuters Screen LIBO Page at approximately 11:00 a.m. London,
England time, on the day that is two London business days preceding the
commencement of that Interest Period; provided, however, that if Bank LIBOR as
defined above, cannot be determined by reference to the Reuters Screen LIBO
Page, then Bank LIBOR shall be determined by reference to the date offered by
the principal London office of Barclays Bank PLC.
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"Basic Documents": this Agreement, the Purchase Agreement,
the Finex Agreement, the Guarantee, and the Mortgage; and each Note, Purchase
Agreement Assignment, Consent, and Mortgage Supplement as executed and
delivered.
"Borrower Interest Rate" for any Note with respect to any
Interest Period: an interest rate equal to Bank LIBOR for such Interest Period,
plus 87.5 basis points 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 New York, New York, Atlanta,
Georgia and London, England, 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.
"Commitment": Lender's commitment to purchase and exchange
the Finex Notes for an aggregate amount of the lesser of $11,000,000 and 85% of
Equipment Cost for both Equipment Portions; Borrower may reduce such amount
upon 30 days prior written notice to Lender. Upon the delivery of the second
Aircraft, any remaining commitment amount shall expire.
"Commitment Fee": the fee required to be paid to Lender
pursuant to section 2.03.
"Commitment Period": the period from the date of execution
of this Agreement to and including the earliest of (w) June 30, 1991, (x) the
date upon which the second Aircraft is delivered to and accepted by Borrower
pursuant to the Purchase Agreement, (y) the date on which the remaining
Commitment is terminated pursuant to section 8.02 or section 10.01, and (z) a
date set by Borrower pursuant to a notice sent to Lender at least 30 days prior
to such date.
"Consent": a Consent and Agreement, substantially in the
form of Exhibit E, relating to a Purchase Agreement Assignment and dated the
same date as that Purchase Agreement Assignment.
"Default": any event or condition that would become an Event
of Default upon the giving of notice or lapse of time or both, or any Event of
Default.
"Delta Agreement": that certain agreement between Delta Air
Lines, Inc. and Borrower dated June 1,
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1986 and relating to joint marketing or code sharing for interconnecting
flights.
"Dollars": and "$": United States dollars.
"Downpayment": for each Equipment Portion, the difference
between the Equipment Cost and the Financed Amount for such Equipment Portion,
provided that the Financed Amount shall be no more than 85% of such Equipment
Cost.
"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.
In no event will the total Equipment Cost for both Equipment Portions include
the invoice price of any Spare Parts in excess of 5% of the invoice price of
both Aircraft.
"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.
"Facility Fee": the fee required to be paid to Lender
pursuant to section 2.04.
"Financed Amount": the face amount of the Note for an Aircraft
being purcahsed on a Purchase Date.
"Finex Agreement": an agreement by that name, substantially
in the form of Exhibit B.
"Finex Bank": Banco de Credito Nacional S.A., New York Branch,
a New York Branch of Banco de Credito Nacional S.A., a banking corporation
organized under the laws of the Federative Republic of Brazil (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": defined in section 3.03 of the
Finex Agreement.
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"Finex Note": Borrower's promissory note, in the form of
Exhibit A-1, issued in connection with a designated Equipment Portion.
"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 or any materially similar successor of such export
support program.
"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
charges 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
Guarantor, in substantially the form of Exhibit I.
"Guarantor": ASA Investments, Inc.
"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 (determined without counting any Purchase
Date or previous Interest Payment 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, unless such Business Day falls in another
calendar month, in which case such Interest Payment Date shall occur on the
preceding Business Day.
"Interest Period" for a Note: each period beginning on the
day after an Interest Payment Date for
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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-2, issued in connection with a designated Equipment Portion, 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 September 30, 1990.
"Officer's Certificate": a certificate signed in the name of
Borrower (or, with respect to section 6.04(b), 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.
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"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.
"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-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(b).
"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
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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 AND EXCHANGE OF FINEX NOTES; PAYMENTS
SECTION 2.01 -- Purchase and Exchange of Finex 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 Finex Note from Finex Bank
and Borrower will exchange with Lender a Note for such Finex Note. The
Financed Amount for each Aircraft shall be the Equipment Cost for the related
Equipment Portion less the Downpayment for such Equipment Portion, but in no
event shall the combined Financed Amount for both Equipment Portions exceed the
Commitment. Each Finex Note shall be purchased for its face amount and each
Note exchanged for such Finex Note shall have the same face amount as such
Finex Note. Lender's Commitment to purchase the Finex 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 and Exchange of Finex
Notes. The procedure to be followed in the purchase and exchange of Finex
Notes is described in Annex A. At Lender's offices at 00 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 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 in
compliance with the procedures set forth in Annex A, Lender will purchase the
related Finex Note from Finex Bank (who will have purchased that Finex 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).
Concurrently therewith, Borrower will exchange with Lender a Note for such
Finex Note, such Note to have the same face amount as the related Finex Note.
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SECTION 2.03 -- Commitment Fee. In partial consideration of
the Lender's agreement to purchase and exchange the Finex Notes, Borrower shall
pay to Lender a Commitment Fee (""Commitment Fee") for 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 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 1/8 of 1% 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.
SECTION 2.04 -- Facility Fee. In partial consideration of the
Lender's agreement to purchase and exchange the Finex Notes, Borrower shall pay
to Lender a Facility Fee ("Facility Fee") on each Purchase Date in the amount
of 3/8 of 1% of the Financed Amount relating to such Purchase Date.
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 Equipment Portion
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 obligations 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 and Facility Fees hereunder, and all other
amounts payable by Borrower to Lender under the Basic Documents, to Lender at
the Federal Reserve Bank of New York, 0 Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx,
Account: Barclays Bank PLC (ABA#02-600-2574), Reference: CLAD Account Xx. 000
00000-0, Xxxxxxxxx: Aerospace Industries Unit/Atlantic Southeast Airlines Note
No. 1 or 2 [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 1:00 p.m. (New York City time) on the date when due. Any payment made by
Borrower to Lender after 1:00 p.m. (New York City 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, unless such
Business Day falls in another calendar month, in which case such payment shall
be made on the preceding 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 Equipment Portion,
without premium or penalty. Borrower shall give to Lender at least 30 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 -- 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
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right to require Borrower to purchase or cause the purchase of the relevant Note
for its then-outstanding principal amount, plus all accrued but unpaid interest
on such Note to the date of such purchase, together with all other amounts
payable under section 10.02 with respect to such prepayment. The payment
described in the preceding sentence shall be due 10 days after 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 (b) Borrower fails to obtain an FAA standard airworthiness certificate for an
Aircraft within twenty days 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
and the payment of all other 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 Borrower Interest Rate.
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
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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.
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 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 September 30,
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 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
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concerning the Collateral, is located at its address referred to in section
11.02. The Spare Parts shall be located as set forth in Annex A to each
Mortgage Supplement, unless otherwise specified pursuant to section 4.05 of the
Mortgage.
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 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 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; 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 ususal 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 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 to which the Borrower is a party 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
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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 Guarantor 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
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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 it 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:
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(a) the Borrower is the surviving corporation;
or
(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 States" 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 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; 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
of 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
20
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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.
21
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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 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. Borrower will not
dispose of any Aircraft unless the Note issued in connection with such Aircraft
has been paid in full.
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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
AND EXCHANGE OF FINEX NOTES
SECTION 7.01 -- Conditions Precedent to the Purchase and
Exchange of the Initial Finex Notes. 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) an executed Finex Agreement,
(b) an executed Mortgage,
(c) an executed Guarantee,
(d) an Officer's Certificate certifying an attached copy
of the Purchase Agreement,
(e) copies of the SEC Filings, and
(f) evidence of authority of the Finex Bank's
representatives executing the Finex Agreement, together with their
specimen signatures.
SECTION 7.02 -- Conditions Precedent to the Purchase and
Exchange of All Finex 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 Equipment Portion,
executed by Borrower, along with a copy of the related Finex Note,
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 Equipment Portion,
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-19-
(iii) an executed Purchase Agreement Assignment, with
the related executed Consent, with respect to the relevant Equipment
Portion,
(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 Equipment Portion
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 Xxxxx & Xxxxxxx, special FAA
counsel, substantially in the form of Exhibit G, covering the
Equipment Portion 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 special Brazilian counsel,
substantially in the form of Annex B to the Finex Agreement,
(x) a Full Warranty Xxxx of Sale from Vendor to
Borrower with respect to the relevant Aircraft,
(xi) A Certificate of Acceptance and Transfer of
Title and Risk of Borrower with respect to the relevant Aircraft,
(xii) a certificate of Embraer stating that the
relevant Aircraft is fully equipped to operate in commercial passenger
service,
(xiii) a certificate of an officer of Embraer as to
the authority of Embraer's representatives executing the documents
required by this Section 7.02, together with specimen signatures,
(xiv) a certificate of Borrower's secretary, dated
the Purchase Date, certifying attached copies of the Certificate of
Incorporation and By-Laws of Borrower, the resolutions of Borrower's
board of directors evidencing approval of the transactions
contemplated by the Basic Documents to which it is
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(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,
(xv) a Power of Attorney to Borrower empowering
one or more designated individuals to accept the relevant Aircraft on
behalf of Borrower, and
(xvi) such additional opinion(s) and document(s) as
Lender requests;
(b) Lender shall have received copies of the necessary
FAA Application for Aircraft Registration, FAA Xxxx of Sale and
Brazilian Export Certificate of Airworthiness 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 invoices from Vendor, each
countersigned by Borrower, specifying the purchase price of the
Equipment Portion, any payments theretofore made and the balance due
and owing;
(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 September 30,
1990, there shall have occurred no materially adverse change in the
business, financial condition, or operations of Borrower.
ARTICLE VIII
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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 or
Guarantor in the Basic Documents, or in any certificate or other
document that borrower or Guarantor 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 or Guarantor 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 or Guarantor's receipt of notice of such default from
Lender;
(g) either of the Borrower or the Guarantor (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 the
application or consent of Borrower or Guarantor, as the case may be,
in any court of competent jurisdiction, seeking (1) the liquidation,
26
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reorganization, dissolution, or winding-up, or the composition or
readjustment of the debts of Borrower or Guarantor, (2) the
appointment of a trustee, receiver, custodian, liquidator, or the like
of Borrower or Guarantor or of all or a majority of the assets of
Borrower or Guarantor, or (3) similar relief in respect of Borrower or
Guarantor 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 or Guarantor is entered in an
involuntary case under the federal Bankruptcy Code;
(i) loan, lease, or deferred purchase obligations of
Borrower or Guarantor totalling more than $5 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 or Guarantor defaults in the payment when due of
more
than $5 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 or Guarantor
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) Borrower shall deny any further liability under any
Note or under any other Basic Document or Guarantor shall deny any
further liability under the Guarantee; or
(m) 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.
27
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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 terminate, without
presentment, demand, protest, or notice of any kind, all of which Borrower
hereby waives.
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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 Liability
with respect to Taxes (Borrower's duties in respect of Taxes being set forth in
section 9.02) or for any cost or expenses 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
29
-25-
section 9.02) or for any cost or expenses 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 Liability with respect to 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 reporting 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
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Indemnitee will provide Borrower with a summary explanation of the basis for the
Indemnitee's computations.
SECTION 9.02 -- Taxes.
(a) Indemnity. All payments by Borrower under this
Agreement and under any Note shall be free of withholdings of any nature
whatsoever (and at the time that Borrower is required to make any payment upon
which any withholding is required, Borrower shall pay an additional amount such
that the net amount actually received by the person entitled to receive such a
payment will, after such withholding, equal the full amount of the payment then
due) and shall be free of expense to each Indemnitee for collection or other
charges. In addition, except as provided in section 9.02(b), Borrower agrees
to indemnify each Indemnitee on a net after-tax basis against, and on written
demand to pay or reimburse each Indemnitee for the payment of, and shall
promptly pay and discharge when due except to the extent duly contested, 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 otherwise upon or with respect to or measured
by (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,
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, (v) any rentals or other payments made or received by Borrower under
any lease or sublease of any Aircraft or any part thereof or (vi) 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, now or hereafter imposed, assessed or asserted by any federal,
state, local or foreign government or taxing authority
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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) Taxes (other than sales, use or rental taxes
imposed as a result of any Indemnitee's interest in any Equipment
Portion or the Basic Documents) which are United States federal net
income taxes;
(ii) Taxes (other than sales, use or rental taxes
imposed as a result of any Indemnitee's interest in any Equipment
Portion or the Basic Documents) which are net income, capital, net
worth, franchise, or similar conduct of business taxes which are
imposed on an Indemnitee by the state or local government or taxing
authority in which such Indemnitee conducts any business other than
the transactions contemplated in the Basic Documents;
(iii) Taxes (other than sales, use or rental taxes
imposed as a result of any Indemnitee's interest in any Equipment
Portion of the Basic Documents) which are imposed by any foreign
government or taxing authority upon an Indemnitee if such Indemnitee
is otherwise subject to such taxes in such jurisdiction as a result of
activities or transactions unrelated to those contemplated by the
Basic Documents;
(iv) 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 at the request of Borrower;
(v) Taxes imposed on an Indemnitee as a direct
and primary result of such Indemnitee's gross negligence or willful
misconduct;
(vi) any Tax based on or measured by the value of
such Indemnitee's interest in any Basic Document (except for any such
Tax (1) imposed without regard to the existence or extent of the
Indemnitee's presence or activities, or the presence of a Note, in the
jurisdiction imposing such Tax or (2) imposed solely as a result of
the Indemnitee's execution of, or enforcement of rights under, the
Basic Documents); or
(vii) any Tax in the nature of a penalty, an
addition to tax, interest, or fine resulting from the negligence or
misconduct of the
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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 an any way
attributable to reports and returns for which Borrower is responsible
pursuant to section 9.02(e) Borrower's failure to provide to any
Indemnitee 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.
(c) Certain Tax Payments. Notwithstanding anything to
the contrary in this section 9.02, if an Indemnitee pays or becomes liable for
any Tax that Borrower has agreed to pay under this section 9.02, Borrower shall
pay to such Indemnitee such amount or from time to time such amounts as, after
subtraction of all Taxes required to be paid by such Indemnitee in respect of
the receipt of such amounts from Borrower under this Section 9.02 and taking
into account any tax benefit or detriment actually realized (or to be realized)
by such Indemnitee as a result of such Indemnitee's receipt of such payment, is
equal to the sum of such Taxes payable by such Indemnitee from time to time.
All Taxes shall be paid when due and payable and all amounts payable as
indemnities pursuant to section 9.02(a) shall be payable in accordance with
this section 9.02(c), to the extent not theretofore paid, on written demand by
the appropriate Indemnitee. 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) Refund of Withholding Taxes to Borrower. If,
pursuant to the first sentence of section 9.02(a) hereof, Borrower has withheld
any amount from any payment in respect of any withholding tax with respect to a
Tax not indemnifiable by Borrower pursuant to section 9.02(a) and Borrower has
paid over such withheld amount to the proper taxing authority for the account
of such Indemnitee, Borrower shall notify such Indemnitee of the amount of such
withholding and provide to such Indemnitee a receipt or other documentation
evidencing payment of the withheld amount. Upon receipt of the notice
described in the preceding sentence, such Indemnitee shall promptly repay to
Borrower, the amount withheld together with interest thereon from the date of
receipt of the notice to the date of repayment at the then current rate set by
the taxing jurisdiction for overpayments of such Tax.
(e) Reports. Borrower will, at its own expense, duly
prepare and file all required reports and returns
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respecting all Taxes for which Borrower is responsible pursuant to section
9.02(a) to the extent it is required by law to do so. With regard to any
reports and returns required to be filed by any Indemnitee covering any Taxes
for which Borrower is responsible pursuant to section 9.02(a), Borrower shall
upon request furnish such Indemnitee with such information and records (to the
extent Borrower has possession thereof or may obtain possession thereof upon
Borrower's exercise of reasonable efforts) relating thereto as is reasonably
required by Indemnitee to make such filing and funds in the amount required to
be submitted as reflected on such report or return. Borrower shall hold each
Indemnitee harmless from and against any liabilities, obligations, losses,
damages, penalties, claims, actions, suits and reasonable costs arising out of
any insufficiency or inaccuracy contained in any report or return (i) prepared
and filed by Borrower (but only to the extent not attributable to the
information provided to Borrower by such Indemnitee) or (ii) prepared and filed
by any Indemnitee (but only to the extent attributable to information provided
to such Indemnitee by Borrower). If, as a result of an audit, an Indemnitee
reasonably requests additional information, Borrower shall make available such
other information and records as it maintains in the ordinary course of
business.
ARTICLE X
ILLEGALITY AND YIELD PROTECTION
SECTION 10.01 -- Illegality and Increased Costs.
(a) Illegality. If, after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation, administration or enforcement thereof by
any governmental authority, central bank or other comparable authority or
compliance by Lender with any request, guideline or directive (whether or not
having the force of law) of any governmental authority, central bank or other
comparable authority shall, in the reasonable determination of Lender, make it
unlawful or impossible for Lender to issue, maintain or fund any Note or to
perform any obligation under this Agreement or any other Basic Document, Lender
shall so notify Borrower and, subject to the provision of section 10.01(c)
hereof, on the next Interest Payment Date (or such earlier date as Lender shall
specify in such notice after which it may not lawfully continue to maintain
such Note or its obligations under this Agreement), Borrower shall prepay such
Note, plus accrued interest thereon and the remaining Commitment, if any, of
Lender shall terminate.
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(b) Increased Cost. If, after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation, administration or
enforcement thereof by any governmental authority, central bank or other
comparable authority or compliance by Lender with any request, guideline or
directive (whether or not having the force of law, but with respect to which
Lender customarily complies and which is applied by Lender to all other loans
of similar type) of any governmental authority, central bank or other
comparable authority shall, in the reasonable determination of Lender:
(i) impose, modify or deem applicable any capital
adequacy, reserve, special deposit or similar requirement (including,
without limitation, a request or requirement which affects the manner
in which Lender allocates capital resources to its commitments,
including its obligations under this Agreement); or
(ii) impose on Lender any other condition or requirement
with respect to its issuing, maintaining
or funding any Note or its obligations under this Agreement;
and the result of any of the foregoing is to:
(x) increase the funding cost to Lender of making,
maintaining or funding or performing its obligations under this
Agreement; or
(y) reduce the amount of any payment (whether of
principal, interest or otherwise) received or receivable by Lender
hereunder; or
(z) reduce the rate of return to be earned by Lender with
respect to any Note;
Borrower shall pay to Lender within 15 days after demand such additional amount
or amounts as will compensate Lender for such increased cost or reduction. A
certificate of Lender as to any such additional amount or amounts, in the
absence of manifest error, shall be final and conclusive. In determining such
amount, Lender shall use any reasonable averaging and attribution methods.
Lender will promptly notify Borrower after Lender obtains knowledge of the
occurrence of an event which would entitle Lender to compensation hereunder.
(c) Change of Lending Office, Etc.
(a) If an event occurs which makes the provisions of
section 10.01(a) or 10.01(b) applicable, Lender will, if requested by
Borrower, use reasonable
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efforts to transfer the affected Notes and its obligations hereunder
with respect to such Notes to another branch or office of Lender to
which such event would not be applicable, provided that such transfer
would not, in the sole judgment of Lender, be disadvantageous to
Lender or contrary to Lender's policies.
(b) Lender may at any time and from time to time transfer
any Note or its obligations under this Agreement with respect to such
Note to another branch or office of Lender and shall give notice of
any such transfer to Borrower. Except in the case of a transfer made
at the request of Borrower, no such trasnfer shall make operable the
provisions of section 10.01(a) or entitle Lender to make a claim
under section 10.01(b) if the operability of such clause or such
claim results solely from such transfer and not
from subsequent change of the type referred to therein.
SECTION 10.02 -- Funding Losses. Borrower shall pay to
Lender, upon request, such amount or amounts as Lender determines are necessary
to compensate it for any loss, cost or expense incurred by it as a result of
(a) any payment or prepayment of any Note on a date other than the last day of
an Interest Period for such Note or (b) a Note for any reason not being
purchased on the date therefor determined in accordance with the applicable
provisions of this Agreement. Such amount payable by Borrower shall not
include any loss, cost or expense attributable to any date more than 180 days
after the date of such payment, prepayment or failure to purchase any Note. A
certificate of Lender as to the amount of such loss, cost or expense shall be
final and conclusive in the absence of manifest error.
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
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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 teach 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 that is postponed or canceled,
including (i) all fees and expenses of, (x) Winthrop,
Stimson, Xxxxxx & Xxxxxxx, 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, provided that such legal fees and expenses
do not result from efforts which are duplicative of those of special counsel to
Lender.
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 an English banking corporation duly organized,
validly existing, and in good standing under the laws of England, and has all
corporate power, authority, and legal right under the laws of England to
execute, deliver, and carry out the terms of each of the Basic Documents to
which it is a party;
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(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 to any such offer, sale, or solicitation by or on
behalf of Borrower or any other Person.
SECTION 11.07 -- Governing Law. THIS AGREEMENT AND THE NOTES
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK, EXCLUDING THOSE APPLICABLE TO CHOICE OF LAW BUT INCLUDING THOSE
APPLICABLE TO MAXIMUM ALLOWABLE RATES OF INTEREST (INCLUDING, FOR THIS
PURPOSE, AS AN "ALLOWABLE" RATE OF INTEREST ONE AS TO WHICH THE BORROWER MAY
NOT INTERPOSE THE DEFENSE OF USURY).
SECTION 11.08 -- Judicial Proceedings. BORROWER AND LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE BOTH
PARTIES INVOLVING DIRECTLY OR INDIRECTLY, ANY MANNER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT, THE MORTGAGE, THE NOTES OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
SECTION 11.09 -- Headings. Article and section headings used
in this Agreement are for convenience only and not a substantive part of this
Agreement.
SECTION 11.10 -- Execution in Counterparts. This Agreement
may be executed in separate counterparts.
SECTION 11.11 -- 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 11.12 -- 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 11.13 -- Finex Agreement. So long as no Event of
Default exists, all payments, if any, received
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under the Finex Agreement by Lender as Finex Interest Payments or interest
thereon, or as indemnification
payments for amounts which Lender has previously been indemnified by Borrower,
shall be forwarded 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 under the Finex
Agreement. 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 Event of Default
exists, Lender shall not amend the Finex Agreement without the consent of the
Borrower, 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
Att: Xxxxxx X. Xxxx
Vice President-Finance By: /s/ Xxxxxx X. Xxxx
and Treasurer ---------------------------------
Facsimile No.: (000) 000-0000 Name: Xxxxxx X. Xxxx
Title: Vice President-Finance
& Treasurer
BARCLAYS BANK PLC
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: Aerospace Industry Unit By: /s/ Xxx Xxx
Facsimile No.: (000) 000-0000 ----------------------------------
Name: Xxx Xxx
Title: Vice President
