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EXHIBIT 99.2
ADDITIONAL INFORMATION REGARDING CONDITIONS IN COMMITMENT LETTER
AS DESCRIBED IN ITEM 8.01 OF THE FORM 8-K TO WHICH THIS EXHIBIT 99.2 IS
ATTACHED, EACH PREPAYMENT INSTALLMENT BY AMEX TO DELTA UNDER THE COMMITMENT
LETTER ENTERED INTO BETWEEN AMEX AND DELTA IS SUBJECT TO SIGNIFICANT CONDITIONS
PRECEDENT. THESE CONDITIONS ARE AS FOLLOWS:
CONDITIONS TO INITIAL INSTALLMENT: The obligation of Amex to pay the initial
prepayment installment (the "Initial Installment") shall be subject to the
satisfaction of the following conditions and other conditions reasonably
required by Amex:
(i) if Delta or any of its subsidiaries (the "Delta Companies") is
subject to a proceeding under the Bankruptcy Code (as
hereinafter defined), then all Delta Companies (other than the
two Delta Companies that are captive insurance companies,
Guardant, Inc. and non-United States subsidiaries) shall be
subject to a proceeding under the Bankruptcy Code and shall have
satisfied the applicable conditions described in "Treatment of
Prepayment Transaction in Bankruptcy" below.
(ii) if no Delta Company is subject to a proceeding under the
Bankruptcy Code: (A) (x) completion of the exchange offer with
respect to the issuance of certain 9.5% Senior Secured Notes due
2008 on substantially the terms set forth in the current
offering memorandum related thereto or on other terms reasonably
satsisfactory to Amex, and (y) with respect to the Third Party
Loan Facility, (i) the term loan thereunder shall have been
fully drawn upon by Delta pursuant to the terms thereof, (ii)
the full amount of the revolving loan thereunder shall be
available to be drawn upon by Delta (subject to any liquidation,
maintenance or other reserve required under the Third Party Loan
Facility), and (iii) no default or event of default thereunder
shall have occurred and be continuing or would result from the
making of the Initial Installment, and (B) Delta shall have
delivered a certificate of its chief financial officer that
Delta has determined that there are anticipated annual benefits
sufficient for the Delta Companies to achieve financial
viability by way of an out-of-court restructuring, including
reduction of pilot costs (before employee reward programs) of at
least $1 billion annually by 2006 and achievement of other
benefits of at least $1.7 billion annually by 2006 (in addition
to the $2.3 billion of annual benefits expected to be achieved
by the end of 2004 through previously implemented profit
improvement initiatives).
(iii) continued effectiveness in accordance with their terms, of
extensions of, and amendments of, the Co-Brand Agreement, the
Membership Rewards Agreement, and the Card Service Agreement,
and all other material agreements related thereto, each in a
manner acceptable to Amex in its sole discretion.
(iv) evidence reasonably satisfactory to Amex of approval by the
board of directors of Delta, Delta Loyalty Management Services,
Inc. ("Delta Loyalty") and each other guarantor of the
obligations of Delta under the definitive agreement (the
"Guarantors") and all other necessary approval of Delta, Delta
Loyalty and each other Guarantor of the prepayment transaction;
(v) satisfaction of Amex, acting reasonably and in good faith, with
the nature, priority and amount of collateral security provided
by Delta and the Delta subsidiaries with respect to Delta's
obligations under the prepayment transaction (the
"Obligations"), solely to the extent that information relating
to such nature, priority and amount has not been received,
reviewed and approved by Amex acting reasonably and in good
faith on or before the date of the Commitment Letter, and that
the aggregate liens against the collateral shall secure only the
Obligations, the Third Party Loan Facility (which liens shall be
prior to or subordinate to the liens securing the Obligations as
more specifically set forth herein), and other third party
obligations reasonably acceptable to Amex (which liens shall be
subordinate to the liens securing the Obligations);
(vi) there shall have been (i) no material adverse change in the
business or financial condition of the Delta Companies taken as
a whole from that shown in Delta's last filed 10-K, as updated
by Delta's subsequent public filings delivered by a Delta
Company to Amex prior to the date of the
Commitment Letter, (ii) no litigation commenced which would
reasonably be expected to have a material adverse impact on the
ability of the Delta Companies to repay the advance payments or
which challenges the legality or enforceability of the
prepayment transactions, and (iii) absence of material
inaccuracy in material information (other than projections,
which shall have been prepared in good faith based upon
assumptions that are believed by the Delta Companies to be
reasonable at the time made) taken as a whole furnished by Delta
and/or Delta subsidiaries to Amex in connection with the
prepayment transaction and not corrected prior to the making of
the Initial Installment by subsequent information provided to
Amex; provided that a "material adverse change" shall not be
deemed to have occurred solely by virtue of (x) the fact that
one or more Delta Companies is a debtor under the Bankruptcy
Code so long as the Delta Companies have complied with the
provisions described in "Treatment of the prepayment transaction
in Bankruptcy" below, or (y) the occurrence of any event, change
or condition that has been reflected in the then current
business plan that is acceptable to Amex.
(vii) to the extent that Delta or the Delta Companies make any change
in the business plan of Delta or the Delta Companies after the
date of the Commitment Letter that differs (in Amex's reasonable
judgment) materially and adversely from the current business
plan of Delta and the Delta Companies, Delta shall deliver
information reasonably requested by Amex with respect to such
change (including, without limitation, information with respect
to the effect of such change on the Delta Companies' debt
restructuring program) and Amex shall be reasonably satisfied
therewith.
(viii) execution and delivery of the prepayment transaction documents
and all documents and instruments ancillary thereto (including
such other agreements, collateral instruments and documents,
opinions, and certifications), and delivery of such information
in each case, as Amex may require in its reasonable judgment
with respect to the prepayment transaction and the Amex/Delta
Agreements and the Card Service Agreement.
CONDITIONS TO FINAL INSTALLMENT: The obligation of Amex to pay the final
prepayment installment (the "Final Installment") shall be subject to the
satisfaction as of the date of the Final Installment of the conditions in
clauses (i), (iii) and (vii) above to payment of the Initial Installment and the
satisfaction of the following additional conditions:
(i) no material default to be mutually agreed to by the parties to
the prepayment transaction documents and no event of default (in
each case other than a bankruptcy default or event of default so
long as all of the Delta Companies (other than the two Delta
Companies that are captive insurance companies, Guardant and
non-United States subsidiaries) are subject to a proceeding
under the Bankruptcy Code and complied with the provisions
described in "Treatment of the prepayment transaction in
Bankruptcy" below) shall have occurred and be continuing under
the prepayment transaction or any other indebtedness or other
liabilities or contract material to the Delta Companies taken as
a whole.
(ii) all of the representations and warranties made by the Delta
Companies in the prepayment transaction documentation shall be
true and correct in all material respects as of the date of the
making of the Final Installment (other than representations and
warranties made as of a specified date, which shall be true and
correct as of such date).
(iii) there shall have been (i) no material adverse change in the
business or financial condition of the Delta Companies taken as
a whole from the date of the Initial Installment, (ii) no
litigation commenced which would reasonably be expected to have
a material adverse impact on the ability of the Delta Companies
to repay the advance payments or which challenges the legality
or enforceability of the prepayment transactions, and (iii)
absence of material inaccuracy in material information (other
than projections, which shall have been prepared in good faith
based upon assumptions that are believed by the Delta Companies
to be reasonable at the time made) taken as a whole, furnished
by Delta and/or Delta subsidiaries to Amex in connection with
the prepayment transaction and not corrected prior to the making
of the Initial Installment by subsequent information provided to
Amex; provided that a "material adverse change" shall not be
deemed to have occurred solely by virtue of (x) the fact that
one or more Delta Companies is a debtor under
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the Bankruptcy Code so long as the Delta Companies have complied
with the provisions described in "Treatment of the prepayment
transaction in Bankruptcy" below, or (y) the occurrence of any
event, change or condition that has been reflected in the then
current business plan that is acceptable to Amex.
(iv) Delta Companies shall be in compliance as of the last day of the
month immediately preceding the proposed payment date for the
Final Installment with the financial covenants.
TREATMENT OF PREPAYMENT TRANSACTION IN BANKRUPTCY:
(A) In the event that the Delta Companies (other than the two Delta
Companies that are captive insurance companies, Guardant and non-United
States subsidiaries) shall become the subject of proceedings (the
"Bankruptcy Cases") for reorganization pursuant to Chapter 11 of Title
11, United States Code (the "Bankruptcy Code") prior to the date on
which Amex has made all advance payments to Seller required pursuant to
the prepayment transaction, then:
(i) the following shall be additional conditions precedent to the
making of any additional advance payments:
(a) the Delta Companies shall obtain interim (the "Interim
Approval Order") and/or final (the "Final Approval
Order", and collectively with the Interim Approval
Order, the "Approval Order") orders, in form and
substance reasonably acceptable to Amex, from the
bankruptcy court having jurisdiction over the Bankruptcy
Cases (the "Bankruptcy Court"):
(I) authorizing and approving the prepayment
transaction and the incurring of secured
indebtedness by the Delta Companies thereunder
pursuant to Bankruptcy Code ss. 364;
(II) approving the Delta Companies' assumption
pursuant to Bankruptcy Code ss. 365(a) (to the
extent not previously assumed pursuant to order
of the Bankruptcy Court) of the Card Service
Agreement (as amended by the "Chapter 11
Addendum" thereto in such form and substance as
shall have been agreed upon by Amex and Seller
as of the initial closing of the prepayment
transaction), other agreements pursuant to which
Amex (x) acts in its capacity as travel agent,
tour operator or similarly related capacity on
behalf of Delta or (y) issues commercial card
products to the Delta Companies' employees to
charge business-related travel and entertainment
expenses, as well as procurement items such as
office supplies, which are used in the ordinary
course of the operation of the Delta Companies'
business and which commercial card accounts are
an integral part of the Delta Companies' cash
management and accounting functions
(collectively, with the Airline Card Services
Agreement, the "TRS Agreements") and the
Amex/Delta Agreements;
(III) granting super-priority administrative expense
status to the post-petition advance payments,
post-petition Obligations arising under the Card
Service Agreement and in respect of adequate
protection of Amex' interests in the collateral,
pursuant to Bankruptcy Code ss.ss. 363(e) and
364(c)(1), senior to all expenses and claims
against the Delta Companies and their respective
estates, and subject only to such carve-outs as
are usual and customary (the "Carve-Out");
provided, however, that with respect to the
super-priority claims of Amex and the
super-priority claims granted with respect to
such amount of the Third Party Loan Facility as
was accrued and/or outstanding prior to the
commencement of the Bankruptcy Cases (the "Third
Party Pre-Petition Facility") and the Third
Party DIP Facility (as hereinafter defined), the
following order of super-priority shall apply,
and which order of super-priority shall also be
memorialized (if
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necessary) in intercreditor agreements between
Amex and the respective agents and/or lenders
under the Third Party Pre-Petition Facility and
the Third Party DIP Facility: FIRST,
super-priority claims for incremental liquidity
provided pursuant to the Third Party DIP
Facility; second, super-priority claims for
post-petition advance payments and
super-priority claims for post-petition
Obligations arising under the Card Service
Agreement, as allocated by Amex in its
discretion; THIRD, super-priority claims for
adequate protection of pre-petition advance
payments and pre-petition Obligations arising
under the Card Service Agreement, and
super-priority claims for adequate protection of
the Delta Companies' pre-petition indebtedness
and obligations under the Third Party
Pre-Petition Facility, pari passu;
(IV) confirming that, pursuant to Bankruptcy Code ss.
364(c), the collateral and all liens, offset
rights, recoupment rights and/or security
interests therein, are security for any and all
Obligations and for Amex' adequate protection
claims with respect to the pre-petition
Obligations, subject to the Carve-Out and having
priorities consistent with these provisions and
Intercreditor Agreements;
(V) providing that any debtor-in-possession credit
facility, including without limitation one
rolling over and/or refinancing the Third Party
Pre-Petition Facility (a "Third Party DIP
Facility"), shall not encumber the collateral in
any manner inconsistent with these provisions
and any Intercreditor Agreements;
(VI) providing that other than with respect to the
Third Party DIP Facility, the Bankruptcy Court
shall not encumber the collateral with any lien
or security interest which is equal or senior in
priority to the liens and security interests
therein granted to Amex pursuant thereto;
(VII) containing protections with respect to the
post-petition advance payments and post-petition
Obligations under the Card Service Agreement
that are commensurate with the protections
afforded to the agents and lenders under such
debtor-in-possession financing orders as are
entered with respect to any Third Party DIP
Facility, and granting Amex junior liens on any
assets of the Delta Companies' estates
encumbered as security for the Third Party DIP
Facility that were not encumbered as security
for the Third Party Loan Facility as of the
commencement of the Bankruptcy Cases; and
(VIII) containing such other provisions as are usual
and customary with respect to
debtor-in-possession credit facilities extended
to borrowers similar to the Delta Companies;
(b) the terms and conditions of any Third Party DIP Facility
and/or any other debtor-in-possession credit facility
and any Bankruptcy Court orders approving and
authorizing same, including without limitation the
cross-default, intercreditor and/or subordination
provisions thereof, shall be consistent with these
provisions and any Intercreditor Agreements, and
otherwise in form and substance acceptable to Amex in
its discretion;
(c) the Delta Companies' post-petition business plan
(including any financing component thereof) shall be
acceptable to Amex in its discretion;
(d) contemporaneous with the filing of any application,
motion or other pleading by the Delta Companies that
contemplates the public filing of any of the Amex/Delta
Agreements, the Card Service Agreement or any other of
the TRS Agreements that Amex reasonably requests be
protected and/or kept confidential, the Delta Companies
shall use best efforts to obtain a protective order with
respect thereto similar to the "Order Authorizing The
Filing Of Certain Documents Under Seal" dated December
11, 2002 entered in IN RE UAL
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CORPORATION, ET AL., DEBTORS, U.S. Bankruptcy Court for
the Northern District of Illinois, case no. 02-B-48191.
(e) all "first-day" and related orders entered by the
Bankruptcy Court shall be in form and substance
reasonably acceptable to Amex;
(ii) clauses (ii) and (vii) of "Conditions to Initial Installment" as
set forth above shall be without force or effect, and clause
(ii) of the "Conditions to Final Installment" as set forth above
shall be without force or effect to the extent that the
Bankruptcy Cases or the conditions that led to the Bankruptcy
Court proceedings of the applicable Delta Companies cause the
conditions in such clauses not to be satisfied. The existence of
bankruptcy litigation, the failure to make payments or otherwise
perform under agreements with third parties (i.e., persons other
than Amex and its affiliates) based upon the existence of the
automatic stay resulting from the Bankruptcy Case will not
affect the conditions set forth in "Conditions to Initial
Installment" and "Conditions to Final Installment" above so long
as the existence of such litigation and such failures to pay
and/or perform do not adversely affect Amex;
(iii) the following shall be additional events of default: (a) the
conversion or dismissal of the Bankruptcy Cases, (b) the
appointment of a Chapter 11 trustee or examiner with expanded
powers and/or powers of a Chapter 11 trustee in the Bankruptcy
Cases, (c) confirmation of plan of reorganization which is not
acceptable to Amex with respect to the treatment of Amex's
claims and liens, and is not otherwise reasonably acceptable to
Amex, and (d) the Approval Order or any other Bankruptcy Court
order authorizing the assumption of the Amex/Delta Agreements
and/or the TRS Agreements is reversed, vacated or stayed or, in
a manner material and adverse to Amex, amended, supplemented or
otherwise modified; and
(iv) subject to the satisfaction of the conditions set forth in
clauses (i), (ii) and (iii) above, the commencement of the
Bankruptcy Cases shall not be an event of default, nor shall any
Delta Company's rejection of or resulting or deemed default
under an executory contract or lease, or its attempted
recharacterization of a lease as a financing transaction, or
contested matters, adversary proceedings or similar litigation
to which Amex is a party in interest, so long as such actions do
not adversely affect Amex.
(B) In the event that the Delta Companies shall become the subject of
Bankruptcy Cases on or after the date on which Amex has made all advance
payments to Seller required pursuant to the prepayment transaction,
then:
(i) the Delta Companies shall obtain interim (the "Interim Adequate
Protection Order") and/or final (the "Final Adequate Protection
Order", and collectively, the "Adequate Protection Order")
orders from the Bankruptcy Court providing adequate protection
of Amex' interests in the collateral and otherwise protecting
Amex' rights with respect to the Delta Companies, which orders,
as presented to the Bankruptcy Court for approval, shall be in
such form and substance as shall have been agreed upon by Amex
and Seller as of the commencement of the Bankruptcy Cases and
which shall, among other things:
(a) approve the Delta Companies' assumption pursuant to
Bankruptcy Code ss. 365(a) (to the extent not previously
assumed pursuant to order of the Bankruptcy Court) of
the TRS Agreements (the Card Service Agreement being
assumed as amended by the "Chapter 11 Addendum" thereto
in such form and substance as shall have been agreed
upon by Amex and Seller as of the initial closing of the
prepayment transaction) and the Amex/Delta Agreements;
(b) grant, as adequate protection of Amex' interests in the
collateral, super-priority administrative expense
status, as set forth in clause "(A)(i)(a)(III)" above;
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(c) grant, as adequate protection of Amex' interests in the
collateral, replacement and additional liens, offset
rights, recoupment rights and/or security interests in
and with respect to the collateral, subject to the
Carve-Out and having priorities consistent with these
provisions and any Intercreditor Agreements, as security
for such adequate protection claim;
(d) provide that any interests in the collateral granted by
the Bankruptcy Court pursuant to any adequate protection
orders entered with respect to the Third Party
Pre-Petition Facility or pursuant to any Third Party DIP
Facility shall not encumber the collateral in any manner
inconsistent with these provisions and any Intercreditor
Agreements;
(e) provide that other than with respect to the Third Party
DIP Facility, the Bankruptcy Court shall not encumber
the collateral with any lien or security interest which
is equal or senior in priority to the liens and security
interests therein granted to Amex pursuant thereto;
(f) contain protections with respect to the advance payments
and Obligations under the Card Service Agreement no less
favorable to Amex than the protections afforded to the
agents and lenders under such adequate protection orders
as are entered with respect to the Third Party
Pre-Petition Facility, and grant Amex junior liens on
any assets of the Delta Companies' estates encumbered as
adequate protection for the Third Party Pre-Petition
Facility that were not encumbered as security for the
Third Party Pre-Petition Facility as of the commencement
of the Bankruptcy Cases;
(g) provide that the terms and conditions of any Third Party
DIP Facility and/or any other debtor-in-possession
credit facility and any Bankruptcy Court orders
approving and authorizing same, including without
limitation the cross-default, intercreditor and/or
subordination provisions thereof, shall be consistent
with these provisions and any Intercreditor Agreements,
and otherwise in form and substance acceptable to Amex
in its discretion;
(h) the Delta Companies' post-petition business plan
(including any financing component thereof) shall be
acceptable to Amex in its discretion; and
(i) contain such other provisions as are usual and customary
with respect to adequate protection orders entered in
Chapter 11 cases of borrowers similar to such Delta
Companies;
(ii) contemporaneous with the filing of any application, motion or
other pleading by the Delta Companies that contemplates the
public filing of any of the Amex/Delta Agreements, the Card
Service Agreement or any other of the TRS Agreements that Amex
reasonably requests be protected and/or kept confidential, the
Delta Companies shall use best efforts to obtain a protective
order with respect thereto similar to the "Order Authorizing The
Filing Of Certain Documents Under Seal" dated December 11, 2002
entered in IN RE UAL CORPORATION, ET AL., DEBTORS, U.S.
Bankruptcy Court for the Northern District of Illinois, case no.
02-B-48191.
(iii) subject to the satisfaction of the conditions set forth in
clause (i) above, the commencement of the Bankruptcy Cases shall
not be an event of default.
DELTA HAS NOT RECEIVED A COMMITMENT WITH RESPECT TO THE THIRD PARTY LOAN
FACILITY OR THE THIRD PARTY DIP FACILITY DESCRIBED ABOVE. ANY NEW NOTES ISSUED
IN CONNECTION WITH THE EXCHANGE OFFER WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR
SOLD IN THE UNITED STATES ABSENT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES LAWS.
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