Viewing page 83 of 116

This transcription has been completed. Contact us with corrections.

THIRTEENTH. Colonial represents that on the date of the Agreement it is not in default under any provision hereof.

FOURTEENTH. Colonial reserves the right to establish for its employees a retirement plan which, in the opinion of COLONIAL's Board of Directors, is generally comparable to any employees' retirement plan which has been, or may be, established by PURCHASER for its employees, such plan to contain a proviso accepted by all COLONIAL employees who participate therein that such retirement plan shall terminate and become null and void upon the approval of this Agreement by the Civil Aeronautics Board (and the President) and that said employees will accept in lieu thereof any retirement plan which PURCHASER may have in effect at the time of such Governmental approval. And further reserves the right to establish for its employees a stock purchase plan which in the opinion of COLONIAL's Board of Directors and PURCHASER's management is generally comparable to any employees' stock purchase plan which may be established by the PURCHASER between the date of this Agreement and the Governmental approval date, providing that such stock purchase plan contains a proviso accepted by all COLONIAL employees who participate therein that such plan shall terminate and become null and void upon the approval of this Agreement by the Civil Aeronautics Board, and that said employees will accept in lieu thereof a participation in the comparable plan established by the PURCHASER as aforesaid under the same eligibility rules and having the same rights and privileges as though said employees had been employed by PURCHASER at the time PURCHASER's plan was established.

FIFTEENTH. PURCHASER represents that is is a corporation duly organized and existing in good standing under the laws of the State of Delaware with an authorized capital stock of 5,000,000 shares of Common Stock each with a par value of $1.00 of which 2,485,718 shares as of December 20, 1954 are presently issued and outstanding all of which are fully paid and non-assessable. PURCHASER has no other stock liabilities except as described in Article Eighteenth.

SIXTEENTH. PURCHASER represents that except to the extent reflected or reserved against in PURCHASER's most recent balance sheet, PURCHASER has no liabilities, absolute or contingent, due or to become due, not fully insured against, other than liabilities under executory contracts for materials and/or services or under executory leases or the like, and PURCHASER has from the date of said balance sheet to the date of this Agreement incurred no such liability except such resulting from the ordinary course of business, and PURCHASER has entered into the following agreements for the purchase of aircraft under the terms and conditions indicated:

Agreement with Douglas Aircraft Company, Inc., dated November 5, 1953, for 12 Douglas DC-7 aircraft at basic price of $1,851,166 per airplane, subject to adjustments for increased or decreased costs resulting from change orders or changes in cost of major component parts, and subject to increase to cover certain taxes and storage costs, and to increase (not exceeding 5% of the purchase price) to compensate for Seller's increased cost of manufacture. Deliveries are to take place April-September, 1955. Installments in the total amount of $5,553,492.00 have been paid with respect to said airplanes, and further installments will be paid prior to delivery. The agreements contains usual terms and conditions governing such purchases.

SEVENTEENTH. PURCHASER represents that its financial condition is substantially as set forth in its most recent balance sheet, dated October 31, 1954 except for changes resulting from the ordinary course of business.

EIGHTEENTH. PURCHASER represents that there are no outstanding options, warrants or other rights to acquire shares of its stock, except as follows:

The Purchaser, by appropriate action of its Board of Directors on March 5, 1954, approved by its Stockholderrs on April 27, 1954, has established, effective June 11, 1954, the 1954 Eastern Air Lines Management Stock Purchase Plan. Under the terms and conditions of that Plan, stock options have been granted to approximately 1,000 of Eastern's management personnel to purchase stock of Purchaser. The Purchaser registered 200,000 shares to cover such options. The options granted under the 1954 Plan may be exercised by the individual option holders over a period of five years from June 11, 1954. The option price is $22.75 which was the closing price on June 11, 1954.

-3-