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Confidential Treatment requested by Atlantic Southeast Airlines, Inc., File No.
0-11097
EXHIBIT 10 (j)
Confidential treatment has been applied for with
respect to certain provisions of this Exhibit, which
provisions have been omitted from this Exhibit,
marked with an asterisk (*) and filed separately with
the SEC
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FIRST AMENDMENT TO
CREDIT AGREEMENT
DATED JUNE 15, 1990
This First Amendment To Credit Agreement (this "First Amendment") is
made and entered into this 13th day of September, 1996, between ATLANTIC
SOUTHEAST AIRLINES, INC., a Georgia corporation ("Borrower") and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("Lender") with the express
understanding that ASA INVESTMENTS, INC., a Delaware Corporation ("ASAI") shall
be a third party beneficiary hereof.
W I T N E S S E T H:
WHEREAS, Borrower is indebted to Lender under the terms of that
certain Credit Agreement dated June 15, 1990 (the "Credit Agreement"); and
WHEREAS, ASAI has undertaken those obligations imposed upon it under
that certain Guarantee dated June 15, 1990 (the "Guarantee") issued by ASAI for
the benefit of Lender and securing Borrower's performance of Borrower's
obligations under the Credit Agreement; and
WHEREAS, the Borrower desires to obtain the approval and consent of
the Lender to implement a corporate reorganization and an amendment to the
Credit Agreement which will result in (i) the Borrower and ASAI each becoming a
wholly owned subsidiary of a holding company, the stock of which holding
company will be owned by the Borrower's current shareholders and will be
publicly traded, (ii) ASAI being relieved of its responsibility under the
Guarantee, (iii) Borrower being relieved of certain restrictions imposed under
the Credit Agreement, and (iv) Borrower undertaking its compliance with
additional covenants imposed under this First Amendment; and
WHEREAS, pursuant to the provisions of Section 11.04 of the Credit
Agreement, the parties desire to amend the Credit Agreement as hereinafter
provided.
NOW, THEREFORE, for and in consideration of each party's agreement to
be bound hereby and other good, valuable and adequate consideration, the
parties hereto do hereby agree as follows:
1. All capitalized terms not otherwise specifically defined
herein shall have the meanings ascribed to them under the provisions of the
Credit Agreement.
2. From and after the date hereof, ASAI shall not be considered a
subsidiary of Borrower for purposes of the application or interpretation of any
provision of the Credit Agreement. In addition, Lender specifically
acknowledges and agrees that the Guarantee is hereby terminated and shall be of
no further force or effect it being the express agreement of all parties that
ASAI shall be relieved of all obligations and responsibilities to Lender and
that Lender
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shall not have and hereby waives and releases any claim or cause of
action against ASAI under or in connection with the Credit Agreement, the
credit extended to Borrower thereunder, the Basic Documents, or the Guarantee.
In addition, the definition of "Guarantee" and Exhibit "J" and all references
to the "Guarantee" and Exhibit "J" contained in the Credit Agreement or the
Basic Documents are hereby deleted. All parties specifically agree that ASAI
shall be a third party beneficiary of this Agreement and more specifically the
provisions of this Paragraph 2.
3. All references to the "Borrower" or any "subsidiary" or
"subsidiaries" of the Borrower under the Credit Agreement and all
determinations required to be made with respect thereto shall refer to and
include solely and exclusively the Borrower and any subsidiaries hereinafter
acquired and maintained; provided, that in no event shall the Borrower's
subsidiaries include (i) ASAI, (ii) any parent or holding company owning all or
substantially all of the capital stock of the Borrower, (iii) any Person
utilized in the implementation of the Subject Reorganization (as hereinafter
defined), or (iv) any Person required to be included in any consolidated
financial statement, tax return or governmental filing covering the Borrower or
under any other statement prepared or determination made in conformity with
GAAP which Person does not otherwise constitute a subsidiary of the Borrower
under the provisions of the Credit Agreement.
4. The definitions of "Basic Documents" and "GAAP" contained
uncer Section 1.01 of the Credit Agreement shall be amended and restated in
their entirety as follows:
"Basic Documents": this Agreement, including the First
Amendment and all other amendments hereto, the Purchase Agreement, the Finex
Agreement(s), and the Mortgage; and each Note, Purchase Agreement Assignment,
Consent, and Mortgage Supplement as executed and delivered."
"GAAP": generally accepted accounting principles as in effect
in the United States of America and applied on a basis consistent with that
used in the preparation of the financial statements referred to in Section 5.5
except for (i) changes therein with which Borrower's independent public
accountants concur that are disclosed in the notes to the relevant financial
statements and (ii) any requirements for consolidation inconsistent with the
provisions of Section 3 of the First Amendment to this Credit Agreement."
5. The following definitions shall be added to Section 1.01 of
the Credit Agreement in the appropriate alphabetical order:
"Book Net Worth" : the book value of the Total Assets of
Borrower and its subsidiaries (exclusive of any indebtedness owed to the
Borrower or its subsidiaries by any affiliate of Borrower) which Total Assets
are located within the United States of America minus the book value of the
Total Liabilities of Borrower and its subsidiaries. For purposes of clarity,
marketable securities and commercial paper issued by a foreign entity but held
in the United States of America shall be considered to be assets located within
the United States of America.
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"Capitalized Lease": a capitalized lease of any tangible real
or personal property, as determined pursuant to GAAP.
"Current Maturities of Long Term Debt": the amounts due,
within any twelve (12) month period following any fiscal quarter end of
Borrower, under long-term debt instruments of Borrower, as determined pursuant
to GAAP.
[*]
[*]
"Indebtedness": [*]
[*]
"1995 10-K": Borrower's annual report on Form 10-K for the
year ended December 31, 1995.
"1996 10-Qs": Borrower's quarterly reports on Form 10-Q for
the quarters ended March 31, 1996 and June 30, 1996.
[*]
[*]
"Recent SEC Filings": the 1995 10-K and 1996-10-Qs.
"Subject Reorganization": the pending proposed transaction
under which (i) Borrower shall form a wholly owned subsidiary ("Holding
Company"), (ii) Holding Company shall form a wholly owned subsidiary ("Second
Level Subsidiary"), (iii) Second Level Subsidiary shall merge with and into
Borrower with Borrower surviving and (a) Borrower's shareholders receiving
stock in the Holding Company in exchange for the outstanding stock in Borrower,
(b) the Holding Company receiving all capital stock in Borrower, and (c) all
capital stock in the Holding Company owned by Borrower being canceled, and (iv)
Borrower's subsequent dividend distribution to the Holding Company of all
capital stock in ASA Investments, Inc.; all of which transactions shall result
in Borrower and ASA Investments, Inc. becoming wholly owned subsidiaries of
Holding Company.
"Tangible Net Worth": the Book Net Worth of Borrower minus (i)
the amount, if any, of the Total Assets of Borrower and its subsidiaries which
would be treated as intangibles under GAAP, (ii) any write-up in the book value
of any fixed asset resulting from a revaluation thereof and (iii) the amount,
if any, at which shares of capital stock of Borrower appear on the asset side
of Borrower's balance sheet.
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"Total Assets": as to any Person which is a corporation, all
items considered as assets for purposes of GAAP.
"Total Liabilities": as to any Person which is a corporation,
all items considered as liabilities for purposes of GAAP.
6. [*]
7. The representations and warranties contained under Sections
5.01, 5.02, 5.03, 5.06, 5.07, 5.08, 5.09, 5.10, 5.11, 5.12, and 5.14 of the
Credit Agreement are hereby re-affirmed by Borrower as of the date hereof. The
representations and warranties contained under Sections 5.04, 5.05, and 5.13
are hereby amended and restated in their entirety as follows:
"SECTION 5.04 -- Litigation. Except as disclosed in the
Recent SEC Filings, there are no pending or (to the best of Borrower's
knowledge after due inquiry) threatened actions or proceedings before any court
or administrative agency which may be expected to have a materially adverse
effect on Borrower's business or financial condition or which seek to question
or set aside any of the transactions herein contemplated.
SECTION 5.05 -- Financial Statements. The audited balance
sheet as of December 31, 1995, and the unaudited balance sheet as of June 30,
1996, for Borrower and its consolidated subsidiaries, and the related results
of operations for the year and quarter then ended have been prepared in
accordance with GAAP and correctly present Borrower's financial condition as of
such dates and the results of operations for such periods, and since June 30,
1996, there has been no materially adverse change in Borrower's business,
assets, operations or condition (financial or otherwise).
SECTION 5.13 -- [*]
8. Effective as of the date hereof, the following representations
and warranties are hereby added as new Sections 5.15, 5.16 and 5.17 each of
which representations and warranties is hereby made by Borrower as of the date
hereof:
"SECTION 5.15 -- Subject Reorganization. Upon the
consummation of the Subject Reorganization, Borrower shall be and remain in
compliance with all applicable provisions of this Agreement including without
limitation, those covenants contained in Section 6.09 hereof.
SECTION 5.16 -- Insurance. The insurance maintained by
Borrower with respect to the Aircraft shall continue in full force and effect
and and conform to the requirements of the Mortgage for so long as this
Agreement remains in effect.
SECTION 5.17 -- Continued Effectiveness. Except as
specifically modified by any amendments hereto or thereto which amendments are
duly executed in conformity with the
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provisions hereof and thereof, all of the terms and provisions of this
Agreement and each of the Basic Documents shall continue in full force and
effect and remain binding as against Borrower."
9. Section 6.01 of the Credit Agreement is hereby amended,
effective as of the consummation of the Subject Reorganization, by (i)
replacing the phrase "and Borrower's Form 10-Q" with the phrase "and the Form
10-Q for any parent holding company of Borrower" in the one place in the last
line of Section 6.01(a) where such former phrase appears and (ii) replacing the
phrase "and Borrower's Form 10-K" with the phrase "and the Form 10-K for any
parent holding company of Borrower" in the one place in the last line of
Section 6.01(b) where such former phrase appears.
10. Section 6.04 of the Credit Agreement is hereby amended by
adding the introductory phrase "Except for the implementation by Borrower of
the Subject Reorganization," at the beginning of such Section.
11. [*]
12. A new Section 6.09 is hereby added to the Credit Agreement
which shall read as follows:
"SECTION 6.09 -- Financial Covenants. Borrower shall at all
times comply with the following covenants:
[*]
13. Section 8.01(l) of the Credit Agreement is hereby deleted in
its entirety and reserved for future use.
14. Section 11.04 of the Credit Agreement is hereby amended to
delete the phrase ", the Guarantee," in the one place such phrase appears
therein.
15. The representations and warranties contained under Section
11.06 of the Credit Agreement are hereby re- affirmed by Lender as of the date
hereof.
16. The undersigned Lender hereby consents to and approves the
implementation and consummation of the Subject Reorganization by Borrower and
ASA Investments, Inc. ("ASAI") and hereby waives (i) Borrower's or ASAI's
compliance with any other provisions contained under the Credit Agreement or
any other Basic Document which are deemed, interpreted or construed to
prohibit, prevent or restrict Borrower's or ASAI's undertaking of the Subject
Reorganization or (ii) any default or breach of any provision of either the
Credit Agreement or any Basic Document resulting solely from the implementation
and consummation of the Subject Reorganization by Borrower or ASAI; provided,
that nothing contained under subclause (ii) hereof shall be deemed, interpreted
or construed to constitute a waiver by Lender of any default
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or breach committed by Borrower under the Credit Agreement or any Basic
Document (as amended hereby) from and after the consummation of the Subject
Reorganization.
17. In accordance with the provisions of Section 11.02 of the
Credit Agreement, Borrower hereby notifies Lender of Borrower's designation of
the following address at which Borrower is to hereafter receive any and all
notices required to be provided Borrower under the Credit Agreement: Atlantic
Southeast Airlines, Inc., 000 Xxxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxx 00000-0000, Attn: Xxxxxx X. Xxxx, Vice President - Finance.
18. Except as otherwise specifically provided under this First
Amendment, the terms and provisions of the Credit Agreement and each of the
Basic Documents shall remain in full force and effect.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed by their duly authorized officers as of the date first
above written.
BANK OF AMERICA NATIONAL ATLANTIC SOUTHEAST AIRLINES, INC.
TRUST AND SAVINGS ASSOCIATION
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxxxx X. Xxxx
-------------------------------- --------------------------------
Title: Senior Vice President Title: Vice President-Finance
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