Exhibit 10.23
LOAN AND SECURITY AGREEMENT
dated as of
September 28, 2001
between
ATLANTIC COAST AIRLINES
and
WACHOVIA BANK, N.A.
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS 1
SECTION 1.01 DEFINITIONS 1
SECTION 1.02 ACCOUNTING TERMS AND DETERMINATIONS 18
SECTION 1.03 REFERENCES 18
SECTION 1.04 USE OF DEFINED TERMS 18
SECTION 1.05 TERMINOLOGY 18
ARTICLE II. THE CREDITS 19
SECTION 2.01 COMMITMENT TO LEND 19
SECTION 2.02 METHOD OF BORROWING 19
SECTION 2.03 CONTINUATION AND CONVERSION ELECTIONS 20
SECTION 2.04 NOTE 20
SECTION 2.03 MATURITY OF LOANS 20
SECTION 2.06 INTEREST RATES 20
SECTION 2.07 COMMITMENT FEE 21
SECTION 2.08 OPTIONAL TERMINATION OR REDUCTION OF COMMITMENT 23
SECTION 2.09 MANDATORY REDUCTION AND TERMINATION OF COMMITMENT 23
SECTION 2.10 OPTIONAL PREPAYMENTS 23
SECTION 2.11 MANDATORY PREPAYMENTS 23
SECTION 2.12 GENERAL PROVISIONS AS TO PAYMENTS 24
SECTION 2.13 COMPUTATION OF INTEREST AND FEES 24
ARTICLE III. CONDITIONS TO BORROWINGS 25
SECTION 3.01 CONDITIONS TO FIRST BORROWING 25
SECTION 3.02 CONDITIONS TO ALL BORROWINGS 26
ARTICLE IV. LETTER OF CREDIT FACILITY 27
SECTION 4.01 OBLIGATION TO ISSUE 27
SECTION 4.02 TYPES AND AMOUNTS 27
SECTION 4.03 CONDITIONS 27
SECTION 4.04 ISSUANCE OF LETTERS OF CREDIT 28
SECTION 4.05 REIMBURSEMENT OBLIGATIONS; DUTIES OF THE LENDER 28
SECTION 4.06 [INTENTIONALLY OMITTED] 29
SECTION 4.07 PAYMENT OF REIMBURSEMENT OBLIGATIONS 29
SECTION 4.08 COMPENSATION FOR LETTERS OF CREDIT AND LENDER 30
REPORTING REQUIREMENTS
SECTION 4.09 INDEMNIFICATION; EXONERATION 30
ARTICLE V. REPRESENTATIONS AND WARRANTIES 31
SECTION 5.01 CORPORATE EXISTENCE AND POWER 31
SECTION 5.02 CORPORATE AND GOVERNMENTAL AUTHORIZATION;
NO CONTRAVENTION 31
SECTION 5.03 BINDING EFFECT 31
SECTION 5.04 FINANCIAL INFORMATION 31
SECTION 5.05 NO LITIGATION 32
SECTION 5.06 COMPLIANCE WITH ERISA 32
SECTION 5.07 COMPLIANCE WITH LAWS; PAYMENT OF TAXES 32
SECTION 5.08 SUBSIDIARIES 32
SECTION 5.09 INVESTMENT COMPANY ACT 33
SECTION 5.10 PUBLIC UTILITY HOLDING COMPANY ACT 33
SECTION 5.11 OWNERSHIP OF PROPERTY; LIENS 33
SECTION 5.12 NO DEFAULT 33
SECTION 5.13 FULL DISCLOSURE 33
SECTION 5.14 ENVIRONMENTAL MATTERS 33
SECTION 5.15 CAPITAL STOCK 34
SECTION 5.16 MARGIN STOCK 34
SECTION 5.17 INSOLVENCY 34
SECTION 5.18 INSURANCE 35
SECTION 5.19 LABOR MATTERS 35
SECTION 5.20 OTHER DEBT 35
ARTICLE VI. AFFIRMATIVE COVENANTS 35
SECTION 6.01 INFORMATION 35
SECTION 6.02 INSPECTION OF PROPERTY, BOOKS AND RECORDS 37
SECTION 6.03 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE 37
SECTION 6.04 COMPLIANCE WITH LAWS; PAYMENT OF TAXES 37
SECTION 6.05 INSURANCE 37
SECTION 6.06 MAINTENANCE OF PROPERTY 37
SECTION 6.07 ENVIRONMENTAL MATTERS 38
SECTION 6.08 NOTICES OF CERTAIN EVENTS 38
ARTICLE VII. NEGATIVE COVENANTS 38
SECTION 7.01 USE OF PROCEEDS 39
SECTION 7.02 CONSOLIDATIONS, MERGERS AND SALES OF ASSETS 39
SECTION 7.03 CHANGE IN FISCAL YEAR 39
SECTION 7.04 LOANS OR ADVANCES 39
SECTION 7.05 RESTRICTED PAYMENTS 39
SECTION 7.06 INVESTMENTS 39
SECTION 7.07 ACQUISITIONS 39
SECTION 7.08 LIMITATION ON LIENS AND SUBSIDIARY DEBT 39
SECTION 7.09 RESTRICTIONS ON ABILITY OF SUBSIDIARIES
TO PAY DIVIDENDS 40
SECTION 7.10 CONSOLIDATED FIXED CHARGES COVERAGE RATIO 40
SECTION 7.11 CONSOLIDATED LEVERAGE RATIO 40
SECTION 7.12 MINIMUM LIQUIDITY 40
SECTION 7.13 CONSOLIDATED SENIOR INDEBTEDNESS/EBITDA RATIO 41
SECTION 7.14 DISSOLUTION 41
ARTICLE VIII. DEFAULTS 41
SECTION 8.01 EVENTS OF DEFAULT 41
ARTICLE IX. CHANGE IN CIRCUMSTANCES 43
SECTION 9.01 BASIS FOR DETERMINING INTEREST RATE
INADEQUATE OR UNFAIR 43
SECTION 9.02 ILLEGALITY 43
SECTION 9.03 INCREASED COST AND REDUCED RETURN 44
SECTION 9.04 BASE RATE LOANS SUBSTITUTED FOR LIBOR RATE LOANS 45
SECTION 9.05 COMPENSATION 45
ARTICLE X. SECURITY AGREEMENT 45
SECTION 10.01 SECURITY INTEREST IN COLLATERAL 45
SECTION 10.02 SECURITY INSTRUMENTS; FURTHER ASSURANCES 46
SECTION 10.03 POWER OF ATTORNEY 46
ARTICLE XI. MISCELLANEOUS 47
SECTION 11.01 NOTICES 47
SECTION 11.02 NO WAIVERS 47
SECTION 11.03 EXPENSES; DOCUMENTARY TAXES 47
SECTION 11.04 INDEMNIFICATION 47
SECTION 11.05 SETOFF; SHARING OF SETOFFS 48
SECTION 11.06 AMENDMENTS AND WAIVERS 48
SECTION 11.07 INDEPENDENCE OF COVENANTS 48
SECTION 11.08 SUCCESSORS AND ASSIGNS 49
SECTION 11.09 CONFIDENTIALITY 50
SECTION 11.10 REPRESENTATION BY LENDER 51
SECTION 11.11 VIRGINIA LAW 51
SECTION 11.12 SEVERABILITY 51
SECTION 11.13 INTEREST 51
SECTION 11.14 INTERPRETATION 52
SECTION 11.15 WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION 52
SECTION 11.16 COUNTERPARTS 52
SECTION 11.17 SOURCE OF FUNDS -- ERISA 52
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF OPINION OF COUNSEL FOR THE BORROWER
EXHIBIT C FORM OF NOTICE OF BORROWING
EXHIBIT D FORM OF NOTICE OF CONTINUATION OR CONVERSION
EXHIBIT E FORM OF COMPLIANCE CERTIFICATE
EXHIBIT F FORM OF CLOSING CERTIFICATE
EXHIBIT G FORM OF OFFICER'S CERTIFICATE
Schedule 4.08 SUBSIDIARIES
Schedule 4.20 OTHER DEBT
1
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is dated
as of September 28, 2001 by and among ATLANTIC COAST AIRLINES
(the "Borrower"), a California corporation, ATLANTIC COAST
AIRLINES HOLDINGS, INC., a Delaware corporation ("Holdings";
Borrower and Holdings being herein collectively called the "Loan
Parties" and, individually, a "Loan Party"), and WACHOVIA BANK,
N.A. (the "Lender").
The parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01 Definitions.
The terms as defined in this Section 1.01 shall, for all
purposes of this Agreement and any amendment hereto (except as
herein otherwise expressly provided or unless the context
otherwise requires), have the meanings set forth herein:
"Account" shall have the meaning ascribed to the term
"account" under the UCC, and shall include, without limitation,
any right to payment for goods sold or leased or for services
rendered which is not evidenced by an Instrument, Document or
Chattel Paper, whether secured or unsecured, and whether or not
earned by performance.
"Account Debtor" means any Person who is or may become
obligated under or on account of an Account.
"Acquisition" means any transaction or series of related
transactions for the purpose of, or resulting in, directly or
indirectly, (a) the acquisition by the Borrower or any Subsidiary
of all or substantially all of the assets of a Person (other than
a Subsidiary) or of any business or division of a Person (other
than a Subsidiary), (b) the acquisition by the Borrower or any
Subsidiary of more than 50% of any class of Voting Stock (or
similar ownership interests) of any Person (provided that
formation or organization of any entity shall not constitute an
"Acquisition" to the extent that the amount of the Investment in
such entity is permitted under Section 6.06), or (c) a merger,
consolidation, amalgamation or other combination by the Borrower
or any Subsidiary with another Person (other than a Subsidiary)
if the Borrower or such Subsidiary is the surviving entity;
provided that in any merger involving the Borrower, the Borrower
must be the surviving entity.
"Affiliate" of any relevant Person means any other Person
(other than a Subsidiary): (i) who directly, or indirectly
through one or more intermediaries controls, or is controlled by,
or is under common control with, the relevant Person; (ii) who
beneficially owns or hold 5% or more of any class of the Voting
Stock of such Person; or (iii) 5% or more of the Voting Stock (
or in the case of a Person which is not a corporation, 5% or more
of the equity interest) of which is beneficially owned or held by
such Person or a Subsidiary of such person. For the purposes of
this Agreement, United shall not be deemed an Affiliate of a Loan
Party.
"Agreement" means this Loan and Security Agreement, as the
same may hereafter be amended, modified, supplemented or
restated from time to time, and all exhibits hereto.
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"Applicable Law" means all laws, rules and regulations
applicable to the Person, conduct, transaction, covenant or Loan
Documents in question, including, but not limited to, all
applicable common law and equitable principles; all provisions of
all applicable stat and federal constitutions, statutes, rules,
regulations and orders of governmental bodies; order, judgment
and decrees of all courts and arbitrators and all Environmental
Laws.
"Applicable Margin" means, for any day, the rate per annum
set forth below opposite the applicable Consolidated Fixed
Charges Coverage Ratio then in effect, it being understood that
the Applicable Margin for (i) Revolving Credit Loans that are
LIBOR Rate Loans shall be the percentage set forth in Table I
under the column Applicable Margin for LIBOR Loans, (ii)
Revolving Credit Loans that are Base Rate Loans shall be the
percentage set forth in Table I under the column Applicable
Margin for Base Rate Loans, (iii) the unused line fee shall be
the percentage set forth in Table I under the column Applicable
Margin for Unused Line Fee; and (iv) the letter of credit fee
shall be the percentage set forth in Table I under the column
Applicable Margin for Letter of Credit Fee:
Table I
Revolving Credit Loans; Unused Line Fee: Letter of Credit Fee
Consolidated Applicable Applicable Applicable Applicable
Fixed Charges Margin for Margin for Margin for Margin for
Coverage Ratio LIBOR Base Rate Letter of Unused
Borrowings Borrowings Credit Fee Line Fee
Less than or 1.375% 0.25% 1.375% 0.375%
equal to 1.8
Greater than 1.8 0.95% 0.125% 0.95% 0.25%
and less than or
equal to 2.25
Greater than 2.25 0.875% 0.0% 0.875% 0.20%
"Assignee" has the meaning set forth in Section 10.08(c).
"Authority" means the Metropolitan Washington Airports
Authority.
"Availability" means the amount of money which Borrower is
entitled to borrow from time to time as Revolving Credit Loans,
such amount being the difference derived when the sum of the
principal amount of Revolving Credit Loans then outstanding
(including any amounts which Lender may have paid for the account
of Borrower pursuant to any of the Loan Documents and which have
not been reimbursed by Borrower) is subtracted from the Borrowing
Base. If the amount outstanding is equal to or greater than the
Borrowing Base, Availability is zero (0).
"Availability Reserve" means, on any date of determination
thereof, an amount equal to the sum of (i) any amounts of past
due rent or other charges (other than project rent as specified
in the Lease) owing at such time by Borrower to the Authority
under the Lease; (ii) any amounts which Borrower is obligated to
pay pursuant to the provisions of the Loan Documents but does not
pay when due and which Lender elects to pay pursuant to any of
the Loan Documents for the account of Borrower; and (iii) the
amount of all Letter of Credit Obligations outstanding at such
date except for those with respect to the Bond Letter of Credit.
3
"Base Rate" means for any Base Rate Loan for any day, the
rate per annum equal to the higher as of such day of (i) the
Prime Rate, or (ii) one-half of one percent above the Federal
Funds Rate. For purposes of determining the Base Rate for any
day, changes in the Prime Rate or the Federal Funds Rate shall be
effective on the date of each such change.
"Base Rate Borrowing" means a Revolving Credit Borrowing if
the advances under such borrowing bear or are to bear interest
calculated by reference to the Base Rate.
"Base Rate Loan" means a Revolving Credit Loan, or portion
thereof, during any period in which it bears interest at a rate
based upon the Base Rate.
"Board of Governors" means the Board of Governors of the
Federal Reserve System of the United States.
"Bond Documents" mean collectively the Bond Loan Agreement,
the Bonds, the Reimbursement Agreement, and all guaranties,
agreements, opinions, certificates or assurances executed in
connection therewith.
"Bond Letter of Credit" means Lender's irrevocable,
transferable direct-pay letter of credit in substantially the
form of Exhibit A to the Reimbursement Agreement in the original
undrawn amount of $12,147,090.41.
"Bond Loan Agreement" means that certain Loan and Trust
Agreement dated as of May 1, 2001 between among Issuer, the
Borrower and the Bond Trustee, pursuant to which the Issuer
issued the Bonds.
"Bond Trustee" means Allfirst Trust Company, National
Association.
"Bonds" mean those certain Issuer's Variable Rate Demand
Revenue Bonds (Atlantic Coast Airlines) Series 2001 in the
aggregate principal amount of $12,345,000.
"Borrower" means Atlantic Coast Airlines, a California
corporation, and its successors and its permitted assigns.
"Borrowing" means a borrowing hereunder consisting of Loans
made to the Borrower pursuant to Article II. A Borrowing is a
"Base Rate Borrowing" if such Loans are Base Rate Loans or a
"LIBOR Rate Borrowing" if such Loans are LIBOR Rate Loans.
"Borrowing Base" means an amount equal to the Rotable Spare
Parts Borrowing Base on the date of determination; minus the
Availability Reserve.
"Borrowing Base Certificate" means a certificate of an
officer of Borrower certifying to Lender the amount and value of
all of Borrower's Rotable Spare Parts, and other information
about the Collateral reasonably requested by Lender, as of a
specific date, such certificate to be in form and detail
reasonably satisfactory to Lender.
"Business Day" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the
Commonwealth of Virginia or is a day on which banking
4
institutions located in the Commonwealth of Virginia are closed,
provided, however, that when used with reference to a LIBOR Rate
Loan (including the making, continuing, prepaying or repaying of
any LIBOR Rate Loan), the term "Business Day" shall also exclude
any day on which banks are not opened for dealings in dollar
deposits on the London interbank market.
"Capital Stock" means any nonredeemable capital stock of
the Borrower or any Consolidated Subsidiary (to the extent issued
to a Person other than the Borrower), whether common or
preferred.
"Cash Collateral" means cash deposited with Lender in
accordance with this Agreement as security for the Obligations to
the extent provided in this Agreement.
"Cash Collateral Account" means an interest-bearing account
established by Lender on its books and to which Lender shall
credit all Cash Collateral deposited with Lender in accordance
with this Agreement.
"Capital Expenditures" means expenditures made or
liabilities incurred for the acquisition of any fixed assets or
improvements, replacements, substitutions or additions thereto
which have a useful life of more than one year, including the
total principal portion of Capitalized Lease Obligations.
"Capitalized Lease Obligations" means any Indebtedness
represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with
GAAP.
"Cash Equivalents" means (i) marketable direct obligations
issued or unconditionally guaranteed by the United States
Government and backed by the full faith and credit of the United
States Government having maturities of not more than three (3)
months from the date of acquisition; (ii) certificates of deposit
and time deposits (including eurodollar time deposits) having
maturities of not more than three (3) months from the date of
acquisition, and banker's acceptances having maturities of not
more than three (3) months from the date of acquisition and
overnight bank deposits, which in each case (unless issued by
Lender) are not subject to offset rights in favor of such bank
arising from any banking relationship with such bank; (iii)
commercial paper having a maturity within three (3) months after
the date of acquisition thereof; (iv) money market mutual funds;
(v) municipal auction rate preferred instruments; (vi) corporate
auction rate preferred instruments; (vii) municipal auction rate
bonds; and (viii) variable rate demand notes.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. 9601 et. seq. and its
implementing regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Inventory System established pursuant
to CERCLA.
"Change of Law" shall have the meaning set forth in
Section 9.02.
"Chattel Paper" shall have the mean ascribed to "chattel
paper" under the UCC.
5
"Claim" means any and all claims, demands, liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature
whatsoever (including reasonable attorneys' fees and expenses),
whether arising under or in connection with the Loan Documents,
under any Applicable Law (including any Environmental Law) or
otherwise.
"Closing Certificate" has the meaning set forth in
Section 3.01(d).
"Closing Date" means September 28, 2001.
"Code" means the Internal Revenue Code of 1986, as amended,
or any successor Federal tax code.
"Collateral" means (i) the Leasehold Interest; (ii) all
Rotable Spare Parts, and all logs, manuals, certificates, data,
and inspection, modification, repair, and overhaul records
required by the FAA to be maintained specific thereto, (iii) all
substitutions and replacements of the property described in (ii)
above, (iv) General Intangibles, documents, instruments, plans,
permits, books and records, and fixtures now or hereafter owned
by the Loan Parties relating to the Leasehold Interest, and (iv)
the proceeds of any of the foregoing items (i) through (iv)
above, including, but not limited to, unearned insurance premiums
and proceeds of insurance covering the Collateral, and any and
all accounts, general intangibles, contract rights, inventory,
equipment, money, drafts, instruments, deposit accounts or other
tangible or intangible property of Borrower resulting from the
sale (authorized or unauthorized) or other disposition of the
Collateral, or any portion thereof, and the proceeds of such
proceeds.
"Commitment" shall have the meaning assigned to such term in
Section 2.01.
"Commitment Letter Agreement" means that certain letter
agreement, dated as of August 20, 2001 between the Loan Parties
and the Lender relating to the structure of the Loans and certain
fees from time to time payable by the Loan Parties to the Lender,
together with all amendments and supplements thereto.
"Compliance Certificate" has the meaning set forth in
Section 6.01(c ).
"Consolidated" means consolidated in accordance with GAAP of
the accounts or other items as to which such term applies.
"Consolidated Adjusted Net Earnings from Operations of
Borrower" for any fiscal period means the net earnings (or Loss)
after provisions for income taxes for such fiscal period of
Borrower as reflected on the financial statements supplied to
Lender as required herein, but excluding:
(i) any gain or loss arising from the sale of capital
assets;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of Borrower accrued
prior to the date it became a Subsidiary;
(iv) earnings of any corporation, substantially all the
assets of which have been acquired in any manner by Borrower,
realized by such corporation prior to
6
the date of such acquisition;
(v) any portion of the net earnings of any Subsidiary of
Borrower which for any
reason is unavailable for payment of dividends to
Borrower;
(vi) the earnings of Borrower to which any assets of
Borrower shall have been sold, transferred or disposed of,
or into which Borrower shall have merged, or been a party
to any to any consolidation or other form of reorganization,
prior to the date of such transaction;
(vii) any gain or loss arising from the acquisition of any Securities
of Borrower; and
(viii) any gain or loss arising from extraordinary or non-recurring
items unless approved by Lender.
"Consolidated EBITDA" means with respect to any Person for
any period, the sum of (i) Consolidated Adjusted Net Earnings
from Operations of such Person for such fiscal period, plus
(ii) interest, taxes, depreciation and amortization expenses of
such Person for such fiscal period which were subtracted from
earnings in calculating Consolidated Adjusted Net Earnings From
Operations of such Person for such fiscal period.
"Consolidated EBITDAR" with respect to any Person for any
fiscal period means the sum of (i) Consolidated EBITDA of such
Person for such fiscal period, plus (ii) rental expenses of such
person for such fiscal period which were subtracted from earnings
in calculating Consolidated Adjusted Net Earnings from Operations
of such Person for such fiscal period.
"Consolidated Fixed Charges", with respect to the Loan
Parties for any period, means the sum of (i) interest expense of
the Loan Parties for such fiscal period in respect of all of its
Indebtedness for Money Borrowed, plus (ii) regularly scheduled
payments of principal on Indebtedness for Money Borrowed required
to be paid by the Loan Parties during such period, plus (iii)
rentals for aircraft, engines and propellers required to be paid
by the Loan Parties during such period, as computed in accordance
with GAAP.
"Consolidated Fixed Charges Coverage Ratio" with respect to
any the Loan Parties on the determination date thereof means at
the end of each Testing Period, the ratio of (i) Consolidated
EBITDAR of the Loan Parties to (ii) Consolidated Fixed Charges
required to be paid by the Loan Parties during such Testing
Period.
"Consolidated Leverage Ratio" means with respect to the Loan
Parties at any date, the ratio of (i) Indebtedness of the Loan
Parties and any other Subsidiaries at such date to (ii)
Consolidated Net Worth of the Loan Parties and any Subsidiaries
at such date.
"Consolidated Net Worth" means with respect to the Loan
Parties at any date, the total stockholder's equity of the Loan
Parties and any Subsidiaries shown on its Consolidated balance
sheet at such date in accordance with GAAP.
"Consolidated Senior Indebtedness/Consolidated EBITDA
Ratio" on the determination thereof with respect to the Loan
Parties at the end of each Testing Period means the ratio of (i)
the aggregate principal balance of all Senior Indebtedness for
Money Borrowed outstanding at the end of such Testing Period to
(ii) Consolidated EBITDA for the Testing Period then ended.
7
"Consolidated Subsidiary" means at any date any Subsidiary
or other entity the accounts of which, in accordance with GAAP,
would be consolidated with those of the Loan Parties in their
consolidated financial statements as of such date.
"Controlled Group" means all members of a controlled group
of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414 of
the Code.
"Daily LIBOR Loan" means a Loan, or any portion thereof,
during any period in which it bears interest at a rate based upon
the Daily LIBOR Rate.
"Daily LIBOR Rate" means for each day that such rate is in
effect under this Agreement, an interest rate per annum equal to
the quotient of (a) the Wachovia, N.A. LIBOR Rate in effect for
such day divided by (b) a percentage (expressed as a decimal)
equal to 100% minus Statutory Reserves.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee
under capital leases, (v) all obligations of such Person to
reimburse any bank or other Person in respect of amounts payable
under a banker's acceptance, (vi) all Redeemable Preferred Stock
of such Person (in the event such Person is a corporation),
(vii) all obligations of such Person to reimburse any bank or
other Person in respect of amounts paid under a letter of credit
or similar instrument, (viii) all Debt of others secured by a
Lien on any asset of such Person, whether or not such Debt is
assumed by such Person, and (ix) all Debt of others Guaranteed by
such Person.
"Deed of Trust" means the Credit Line Leasehold Deed of
Trust and Security Agreement executed by Borrower on or about the
date hereof in favor of the trustee named therein for the benefit
of Lender, as it may be amended, modified, supplemented or
restated from time to time, by which Borrower has granted and
conveyed to the trustee for the benefit of Lender, as security
for $12,345,000 of the Obligations, Liens upon Borrower's
Leasehold Interest in the Realty leased by Borrower from the
Authority pursuant to the Lease.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of
time or both would, unless cured or waived, become an Event of
Default.
"Default Rate" means, with respect to any Loan, on any day,
the sum of the Prime Rate plus 2%.
"Depreciation" means for any period the sum of all
depreciation expenses of the Loan Parties and their Consolidated
Subsidiaries for such period, as determined in accordance with
GAAP.
"Document" shall have the meaning ascribed to the term
"document" under the UCC.
8
"Dollars" or "$" means dollars in lawful currency of the
United States of America.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial lenders in Virginia are
authorized by law to close.
"Environmental Authority" means any foreign, federal, state,
local or regional government that exercises any form of
jurisdiction or authority under any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits,
orders, approvals, notices, registrations or other legal
prerequisites for conducting the business of the Borrower or any
Subsidiary required by any Environmental Requirement.
"Environmental Judgments and Orders" means all judgments,
decrees or orders arising from or in any way associated with any
Environmental Requirements, whether or not entered upon consent,
or written agreements with an Environmental Authority or other
entity arising from or in any way associated with any
Environmental Requirement, whether or not incorporated in a
judgment, decree or order.
"Environmental Laws" means all federal, state and local
laws, rules, regulations, ordinances, programs, permits,
guidance's, orders and consent decrees relating to health, safety
and environmental matters.
"Environmental Liabilities" means any liabilities, whether
accrued, contingent or otherwise, arising from and in any way
associated with any Environmental Requirements.
"Environmental Notices" means notice from any Environmental
Authority or by any other person or entity, of possible or
alleged noncompliance with or liability under any Environmental
Requirement, including without limitation any complaints,
citations, demands or requests from any Environmental Authority
or from any other person or entity for correction of any
violation of any Environmental Requirement or any investigations
concerning any violation of any Environmental Requirement.
"Environmental Proceedings" means any judicial or
administrative proceedings arising from or in any way associated
with any Environmental Requirement.
"Environmental Releases" means releases as defined in CERCLA
or under any applicable state or local environmental law or
regulation.
"Environmental Requirements" means any legal requirement
relating to health, safety or the environment and applicable to
the Borrower, any Subsidiary or the Leasehold Interest, including
but not limited to any such requirement under CERCLA or similar
state legislation and all federal, state and local laws,
ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor law. Any
reference to any provision of ERISA shall also be deemed to be a
reference to any successor provision or provisions thereof.
9
"Eurocurrency Liabilities" shall have the meaning ascribed
thereto in Regulation D issued by the Board of Governors.
"Event of Default" has the meaning set forth in
Section 8.01.
"FAA" means the Federal Aviation Administration, an agency
of the United States Government, or any successor or replacement
administration or governmental agency having the same or similar
authority and responsibilities.
"Facility Amount" means at any date of the determination
thereof, the sum of (i) Twenty-Five Million Dollars
($25,000,000.00), less (ii) the Letter of Credit Amount at such
date.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the next higher 1/100th of 1%)
equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if the day for which
such rate is to be determined is not a Domestic Business Day, the
Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so
published on the next succeeding Domestic Business Day, and
(ii) if such rate is not so published for any day, the Federal
Funds Rate for such day shall be the average rate charged to the
Lender on such day on such transactions, as determined by the
Lender.
"Fiscal Quarter" means any fiscal quarter of the Loan
Parties.
"Fiscal Year" means any fiscal year of the Loan Parties.
"GAAP" means generally accepted accounting principles
applied on a basis consistent with those which, in accordance
with Section 1.02, are to be used in making the calculations for
purposes of determining compliance with the terms of this
Agreement.
"General Intangibles" with respect to the Loan Parties,
means all general intangibles now or hereafter owned by the Loan
Parties relating to the Leasehold Interest, and the proceeds
thereof.
"Guarantor" means Atlantic Coast Airlines Holdings, Inc, a
Delaware corporation, and any other Person who may hereafter
guarantee payment or performance of the whole or any part of the
Obligations.
"Guarantee" by any Person means any obligation, contingent
or otherwise, of such Person directly or indirectly guaranteeing
any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct
or indirect, contingent or otherwise, of such Person (i) to
secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether
arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to
provide collateral security, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of
such Debt or other obligation of the payment thereof or to
protect such obligee against loss in respect
10
thereof (in whole or in part), provided that the term Guarantee
shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Hazardous Materials" includes, without limitation,
(a) solid or hazardous waste, as defined in the Resource
Conservation and Recovery Act of 1980, 42 U.S.C. 6901 et seq.
and its implementing regulations and amendments, or in any
applicable state or local law or regulation, (b) "hazardous
substance", "pollutant", or "contaminant" as defined in CERCLA,
or in any applicable state or local law or regulation,
(c) gasoline, or any other petroleum product or by-product,
including crude oil or any fraction thereof, (d) toxic
substances, as defined in the Toxic Substances Control Act of
1976, or in any applicable state or local law or regulation and
(e) insecticides, fungicides, or rodenticides, as defined in the
Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or
in any applicable state or local law or regulation, as each such
Act, statute or regulation may be amended from time to time.
"Improvements" means the maintenance facility and
associated access roadway, vehicle parking and maneuvering areas
and aircraft paving aprons on the Realty.
"Indebtedness", as applied to a Person, means, without
duplication:
(i) all items which in accordance with GAAP would be
included in determining total liabilities as shown on the
liability side of a balance sheet of such Person as at the
date as of which Indebtedness is to be determined,
including, without limitation, Capitalized Lease Obligations;
(ii) all obligations of other Persons which such Person
has guaranteed; and
(iii) in the case of Borrower (without duplication), the Obligations.
"Instrument" shall have the meaning ascribed to the term
"instrument" under the UCC.
"Investment" means any investment in any Person, whether by
means of (i) purchase or acquisition of all or substantially all
of the assets of such Person (or of a division or line of
business of such Person), (ii) purchase or acquisition of
obligations or securities of such Person, (iii) capital
contribution to such Person, (iv) loan or advance to such Person,
(v) making of a time deposit with such Person, (vi) Guarantee or
assumption of any obligation of such Person or (vii) by any other
means.
"Issuer" means the Industrial Development Authority of
Loudoun County, Virginia.
"Lease" means that certain Ground Lease Agreement, dated as
of June 23, 1997, between the Authority and the Borrower, as
amended.
"Leasehold Interest" means the Borrower's interest in the
Realty and the Improvements under the Lease.
"Lender" means Wachovia Bank, N.A., and its successors and
assigns.
11
"Lender's Expenses" means and includes: (a) all reasonable
costs and expenses which Borrower is required to pay or cause to
be paid under this Agreement or any of the other Loan Documents
and which are paid or advanced by Lender pursuant to the
provisions of this Agreement or any of the other Loan Documents;
(b) all taxes and insurance premiums of every kind and nature
which Borrower is required to pay or cause to be paid under this
Agreement or any of the other Loan Documents and which are paid
or advanced by Lender pursuant to the provisions of this
Agreement or any of the other Loan Documents; (c) all necessary
or advisable filing, recording, publication and search fees paid
or incurred by Lender in connection with the transactions
contemplated by this Agreement; (d) all reasonable costs and
expenses paid or incurred by Lender (with or without suit) to
correct any default or enforce any provisions of this Agreement
or any of the other Loan Documents or in gaining possession of,
maintaining, handling, preserving, storing, refurbishing,
appraising, selling, preparing for sale and advertising to sell
the Collateral, whether or not a sale is consummated; (e) all
reasonable costs and expenses paid or incurred by Lender in
enforcing or defending this Agreement, any of the other Loan
Documents, or any portion of any thereof; and (f) reasonable
attorneys fees and expenses paid or incurred by Lender in
enforcing or defending this Agreement, any of the other Loan
Documents or any provision of any thereof, whether or not suit is
brought, and including any action brought in any bankruptcy or
insolvency proceeding.
"Lending Office" means (i) the Lender's office located at
its address set forth on the signature pages hereof (or
identified on the signature pages hereof as its Lending Office),
or such other office as Lender may hereafter designate as its
Lending Office by notice to the Borrower.
"Letter of Credit" means any letter of credit issued by
Lender or any of Lender's Affiliates for the account of Borrower
pursuant to this Agreement.
"Letter of Credit Amount", at any time, means the aggregate
undrawn face amount of all Letters of Credit then outstanding.
"Letter of Credit Application Agreement" means the Lender's
standard form of letter of credit application, together with all
schedules and exhibits thereto, as such form may be modified from
time to time.
"Letter of Credit Obligations" means that portion of the
Obligations constituting Borrower's obligations to reimburse
Lender for all amounts paid by Lender under or with respect to a
Letter of Credit.
"LIBOR Lending Office", with respect to Lender, means the
office designated as the LIBOR Lending Office for Lender on the
signature pages of this Agreement (or on any Assignment and
Acceptance, in the case of an assignee) and such other office of
Lender or any of its Affiliates that is hereafter designated by
notice to Lender.
LIBOR Rate Loan" means a Loan, or portion thereof, during
any period in which it bears interest at a rate based upon the
applicable Daily LIBOR Rate.
"Lien" means, with respect to any Collateral, any mortgage,
deed to secure debt, deed of trust, lien, pledge, charge,
security interest, security title, preferential arrangement which
has the practical effect of constituting a security interest or
encumbrance, or encumbrance or servitude of
12
any kind in respect of such Collateral to secure or assure
payment of a Debt or a Guarantee, whether by consensual agreement
or by operation of statute or other law, or by any agreement,
contingent or otherwise, to provide any of the foregoing. For
the purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to own subject to a Lien any Collateral which it
has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or
other title retention agreement relating to such asset.
"Liquidity" means Cash and Cash Equivalents.
"Loan" means the Revolving Credit Loan.
"Loan Account" means the loan account established on the
books of Lender pursuant to this Agreement.
"Loan Documents" means this Agreement, the Note and the
Security Documents, as such documents and instruments may be
amended or supplemented from time to time.
"Long Term Debt" means at any date any Debt of the Loan
Parties and any Consolidated Subsidiary determined on a
consolidated basis as of such date which matures (or the maturity
of which may at the option of the Loan Parties or any
Consolidated Subsidiary be extended such that it matures) more
than one year after such date.
"Margin Stock" means "margin stock" as defined in
Regulations T, U or X.
"Material Adverse Effect" means, with respect to any event,
act, condition or occurrence of whatever nature (including any
adverse determination in any litigation, arbitration, or
governmental investigation or proceeding), whether singly or in
conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or
not related, a material adverse change in, or a material adverse
effect upon, any of (a) the financial condition, operations,
business, properties or prospects of the Loan Parties and any
Consolidated Subsidiaries taken as a whole, (b) the rights and
remedies of the Lender under the Loan Documents, or the ability
of the Loan Parties to perform their obligations under the Loan
Documents to which it is a party, as applicable, or (c) the
legality, validity or enforceability of any Loan Document.
"Maximum Rate" means the maximum non-usurious rate of
interest permitted by Applicable Law that at any time, or from
time to time, may be contracted for, taken, reserved, charged or
received on the Indebtedness in question or, to the extent
permitted by Applicable Law, under such Applicable Law that may
hereafter be in effect and which allow a high maximum non-
usurious interest rate than applicable law now allows.
Notwithstanding any other provision hereof, the Maximum Rate
shall be calculated on a daily basis (computed on the actual
number of days elapsed over a year of 365 or 366 days, as the
case may be).
"Moody's" means Xxxxx'x Investor Service, Inc.
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
13
"Net Income", for any period, means the aggregate amount of
net income of the Loan Parties, after taxes, for such period, as
determined in accordance with GAAP.
"Note" means the promissory note of the Borrower,
substantially in the form of Exhibit A, evidencing the obligation
of the Borrower to repay the Loan, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
"Notice of Borrowing" has the meaning set forth in
Section 2.02(a) of this Agreement.
"Notice of Continuation or Conversion" has the meaning set
forth in Section 2.03. of this Agreement.
"Obligations" means the obligations of the Loan Parties
under this Agreement.
"Officer's Certificate" has the meaning set forth in
Section 3.01(e).
"Overadvance" means a Revolving Credit Loan made by Lender
when an Overadvance Condition exists or would result from the
making of such Revolving Credit Loan.
"Overadvance Condition" means, at any date, a condition such
that the principal amount of the Revolving Credit Loans
outstanding to Borrower on such exceeds the lesser of the
Borrowing Base or the Facility Amount on such date.
"Participating Lender" means any financial institution who
shall be granted the right by Lender to participate in the Loan
and who shall have entered into a participation agreement in form
and substance satisfactory to Lender.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" means any Lien of a kind specified in
Section 7.08 of this Agreement.
"Person" means an individual, a corporation, a partnership,
an unincorporated association, a trust or any other entity or
organization, including, but not limited to, a government or
political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code and is either
(i) maintained by a member of the Controlled Group for employees
of any member of the Controlled Group or (ii) maintained pursuant
to a collective bargaining agreement or any other arrangement
under which more than one employer makes contributions and to
which a member of the Controlled Group is then making or accruing
an obligation to make contributions or has within the preceding 5
plan years made contributions.
"Prime Rate" refers to that interest rate so denominated and
set by Wachovia from time to time as an interest rate basis for
borrowings. The Prime Rate is but one of several interest rate
bases used by Wachovia. Wachovia lends at interest rates above
and below the Prime Rate.
14
"Projections" means the Loan Parties' forecasted
Consolidated (i) balance sheets, (ii) profit and loss statements,
and (iii) cash flow statements, all prepared on a consistent
basis with the Loan Parties' historical financial statements,
together with appropriate supporting details and a statement of
underlying assumptions.
"Properly Contested", in the case of any Indebtedness of a
Loan Party or any of its Subsidiaries (including, but not limited
to, any Taxes) means any such Indebtedness that is not paid as
and when due or payable by reason of such Loan Party's or any
Subsidiary's bona fide dispute concerning its liability to pay
the same or concerning the amount thereof, provided, that: (i)
such Indebtedness is being properly contested in good faith by
appropriate proceedings promptly instituted and diligently
conducted; (ii) such Loan Party has established appropriate
reserves as shall be required in conformity with GAAP; (iii) the
non-payment of such Indebtedness will not have a Material Adverse
Effect; (iv) no Lien is imposed upon such Loan Party's or any
Subsidiary's Property with respect to such Indebtedness unless
such Lien is at all time junior and subordinate in priority to
the Liens in favor of Lender (except only with respect to Taxes
that have a priority as a matter of any state's Applicable Laws);
and (v) if such contest is abandoned, settled or determined
adversely to such Loan Party or any of its Subsidiaries, such
Loan Party immediately pays such Indebtedness and all penalties
and interest in connection therewith.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or
intangible, leased or otherwise used or occupied by the Loan
Parties or any Subsidiary, wherever located.
"Purchase Money Indebtedness" means and includes (i)
Indebtedness (other than the Obligations) for payment of all or
any part of the purchase price of any Property, (ii) any
Indebtedness (other than the Obligations) incurred at the time of
or within ten (10) days prior to or after the acquisition of any
Property for the purpose of financing all or any part o the
purchase price thereof, and (iii) any renewals, extensions or
refinancings thereof.
"Realty" means that certain parcel of real property of
approximately 6.96 acres located at Washington Dulles
International Airport in Loudoun County, Virginia leased from the
Authority by the Borrower and on which Borrower's Improvements
are constructed.
"Redeemable Preferred Stock" of any Person means any
preferred stock issued by such Person which is at any time prior
to the Termination Date either (i) mandatorily redeemable (by
sinking fund or similar payments or otherwise) or (ii) redeemable
at the option of the holder thereof.
"Regulation D" means Regulation D of the Board of Governors,
as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation T" means Regulation T of the Board of Governors,
as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors,
as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
15
"Regulation X" means Regulation X of the Board of Governors,
as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Reimbursement Agreement" means that certain Letter of
Credit and Reimbursement Agreement, dated of even date herewith,
among the Lender and the Loan Parties, pursuant to which the
Lender is issuing the Bond Letter of Credit, as amended, modified
supplemented or restated from time to time
"Reimbursement Obligations" means Borrower's obligation to
repay and reimburse Lender for any draws made on any Letters of
Credit, all as more particularly set forth in the Reimbursement
Agreement and in this Agreement.
"Related Fund" means, with respect to any fund that invests
in lender loans, any other fund that invests in lender loans and
is advised or managed by the same investment advisor as Lender.
"Remarketing Agent" shall have the mean ascribed to such
term in the Bond Loan Agreement.
"Reportable Event" means any of the event set forth in
Section 4043(b) of ERISA.
"Restricted Investment" means any investment made in cash or
by delivery of Property to any Person, whether by acquisition of
stock, Indebtedness or other obligation or Security, or by loan,
advance, deposit, capital contribution or otherwise, or in any
Property except the following:
(i) investments in one or more Subsidiaries of a Loan
Party (other than Atlantic Coast Jet, Inc.) to the
extent existing on the Closing Date;
(ii) Property to be used in the ordinary course of
business;
(iii) investments in direct obligations of the United
States of America, or any agency thereof or obligations
guaranteed by the United States of America, provided that
such obligations mature within one year from the date of
acquisition thereof;
(iv) investments in time deposits, demand deposits and
certificates of deposit maturing within one year
from the date of acquisition issued by a bank or trust
company organized under the laws of the United States or
any state thereof having capital surplus and undivided
profits aggregating at least $500,000,000;
(v) investments in commercial paper given the highest
rating by a national credit rating agency and maturing
not more than three hundred sixty four (364) days from the
date of creation thereof;
(vi) tax-free Industrial Revenue Bonds secured by
letters of credit which Bonds are available for sale
at auction not less frequently than weekly;
(vii) cash and Cash Equivalents; and
16
(viii) other investments approved by Lender.
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the Borrower's Capital Stock
(except to Holdings for so long as Holdings is a Loan Party) or
(ii) any payment on account of the purchase, redemption,
retirement or acquisition of (a) any shares of the Borrower's
Capital Stock (except shares acquired upon the conversion thereof
into other shares of its Capital Stock) or (b) any option,
warrant or other right to acquire shares of the Borrower's
Capital Stock.
"Revolving Credit Commitment" means $25,000,000, as such
amount may be reduced from time to time pursuant to Sections
2.09, 2.10 and 2.11.
"Revolving Credit Loan" means a Base Rate Loan or a Libor
Rate Loan made under the Revolving Credit Commitment, and
Revolving Credit Loans means Base Rate Loans or Libor Rate Loans
made under the Revolving Credit Commitment, or any or all of
them, as the context shall so require.
"Rotable Spare Parts" means those Spare Parts which can be
(i) economically restored to a serviceable condition, (ii) in the
normal course of operations, can be repeatedly rehabilitated to a
fully serviceable condition, and (iii) are either serialized or
have the capability to be serialized.
"Rotable Spare Parts Borrowing Base" means sixty percent
(60%) of the value of Borrower's Rotable Spare Parts at such
date, in each case calculated on the basis of original cost less
accumulated depreciation in accordance with GAAP.
"Security" shall have the same meaning as in Section 2(1)
of the Securities Act of 1933, as amended.
"Security Documents" means the this Agreement, the Deed of
Trust, the Guaranty Agreement, and all other instruments and
agreements now or at any time hereafter securing the whole or any
part of the Obligations.
"Senior Indebtedness for Money Borrowed" means all of
Borrower's Indebtedness for Money Borrowed except for
Subordinated Debt.
"Solvent" as to any Person, means such Person (i) owns
Property whose fair market value is greater than the amount
required to pay all of such Person's Indebtedness (including
contingent debts), (ii) is generally able to pay all of its
Indebtedness as such Indebtedness matures and (iii) has capital
sufficient to carry on its business and transactions and all
business and transactions in which it is about to engage.
"Spare Parts" means an accessory, appurtenance or part of
an aircraft, aircraft engine, or propeller, including an
instrument or piece of equipment intended to be attached to an
aircraft (in all cases prior to installation in or incorporation
into such aircraft, aircraft engine or propeller or following
removal from same); provided that Spare Parts shall not include:
(i) aircraft engines; (ii) aircraft propellers; or (iii) items
owned or hereafter acquired by the Loan Parties and removed from
aircraft, aircraft engines or propellers until such time as
replacement items have
17
been installed on the aircraft, aircraft engine or propeller and
the original items have been returned to the Loan Parties'
inventory.
"S&P" means Standard & Poor's Ratings Group, a division of
XxXxxx-Xxxx, Inc.
"Statutory Reserves" means, on any date, the percentage
(expressed as a decimal) established by the Board of Governors
which is the then stated maximum rate for all reserves
(including, but not limited to, any emergency,, supplemental or
other marginal reserve requirements) applicable to any member
bank of the Federal Reserve System in respect to Eurocurrency
Liabilities (or any successor category of liabilities under
Regulation D). Such reserve percentage shall include, without
limitation, those imposed pursuant to said Regulation D. The
Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in such percentage.
"Subordinated Debt" means any Indebtedness of a Loan Party
that is subordinated to the Borrower's obligations under the
Facility in a manner and upon terms satisfactory to Lender.
"Subsidiary" means any corporation of which a Person owns,
directly or indirectly through one or more intermediaries, more
than 50% of the Voting Stock at the time of determination.
Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of the Borrower.
"Taxes" has the meaning set forth in Section 2.12(c).
"Testing Period" means each period of consecutive four
quarters.
"Termination Date" means October 15, 2003.
"Total Unused Revolving Credit Commitment" means at any
date, an amount equal to (A) the aggregate amount of the
Revolving Credit Commitment at such time, less (B) the sum of:
(i) the outstanding principal amount of the Revolving Credit Loan
at such time, plus (ii) the aggregate outstanding amount of the
Letter of Credit Obligations.
"Transferee" has the meaning set forth in Section 11.08(d).
"Type" means the type of Loan, which shall either be a LIBOR
Rate Loan or a Base Rate Loan.
"UCC" means the Uniform Commercial Code as adopted and in
force in the Commonwealth of Virginia, as from time to time in
effect.
"United" means United Airlines, Inc., a Delaware
corporation.
"Unused Revolving Credit Commitment" means, at any date, an
amount equal to $25,000,000 less the average outstanding
principal balance of the Revolving Credit Loan and the aggregate
outstanding amount of the Letter of Credit Obligations for the
prior calendar quarter.
18
"Voting Stock" means securities (as such term is defined in
Section 2(1) of the Securities Act of 1933, as amended) of any
class or classes, the holders of which are ordinarily, in the
absence of contingencies, entitled to elect a majority of the
corporate directors (or Persons performing similar functions).
"Wachovia" means Wachovia Bank, N.A. and its successors.
"Wholly Owned Subsidiary" means any Subsidiary all of the
shares of capital stock or other ownership interests of which
(except directors' qualifying shares) are at the time directly or
indirectly owned by either of the Loan Parties.
SECTION 1.02 Accounting Terms and Determinations.
Unless otherwise specified herein, all terms of an accounting
character used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared,
in accordance with GAAP, applied on a basis consistent (except
for changes concurred in by the Borrower's independent public
accountants or otherwise required by a change in GAAP) with the
most recent audited consolidated financial statements of the
Borrower and its Consolidated Subsidiaries delivered to the
Lender unless with respect to any such change concurred in by the
Borrower's independent public accountants or required by GAAP, in
determining compliance with any of the provisions of this
Agreement or any of the other Loan Documents: (i) the Borrower
shall have objected to determining such compliance on such basis
at the time of delivery of such financial statements, or (ii) the
Lender shall so object in writing within 30 days after the
delivery of such financial statements, in either of which events
such calculations shall be made on a basis consistent with those
used in the preparation of the latest financial statements as to
which such objection shall not have been made (which, if
objection is made in respect of the first financial statements
delivered under Section 5.01 hereof, shall mean the financial
statements referred to in Section 5.04).
SECTION 1.03 References.
Unless otherwise indicated, references in this Agreement to
"Articles", "Exhibits", "Schedules", "Sections" and other
subdivisions are references to articles, exhibits, schedules,
sections and other subdivisions hereof.
SECTION 1.04 Use of Defined Terms.
All terms defined in this Agreement shall have the same defined
meanings when used in any of the other Loan Documents, unless
otherwise defined therein or unless the context shall require
otherwise.
SECTION 1.05 Terminology.
All personal pronouns used in this Agreement, whether used in
the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural, and the plural
shall include the singular. Titles of Articles and Sections in
this Agreement are for convenience only, and neither limit nor
amplify the provisions of this Agreement.
19
ARTICLE II.
THE CREDITS
SECTION 2.01 Commitment to Lend.
The Lender agrees, on the terms and conditions set forth
herein, to make Revolving Credit Loans to the Borrower from time
to time before the Termination Date; provided that, immediately
after each Revolving Credit Loan is made, the maximum aggregate
outstanding principal amount of Revolving Credit Loans by the
Lender, plus the aggregate amount of the Letter of Credit
Obligations shall not exceed at any one time the amount of the
Revolving Credit Commitment, provided further that, subject to
the foregoing limitations, from and after the Closing Date the
aggregate principal amount of all Revolving Credit Loans,
together with the aggregate principal amount of the Letter of
Credit Obligations, at any one time outstanding shall not exceed
the Revolving Credit Commitment. (as such figure may be reduced
from time to time as provided in this Agreement, the
"Commitment"). Each Revolving Credit Borrowing that is a Libor
Rate Borrowing under this Section shall be in an aggregate
principal amount of $500,000 or any larger multiple of $500,000
and each Revolving Credit Borrowing that is a Base Rate Borrowing
under this Section shall be in an aggregate principal amount of
$500,000 or any larger multiple of $500,000 (except that any such
Revolving Credit Borrowing may be in the aggregate amount of the
Total Unused Revolving Credit Commitment). Within the foregoing
limits, the Borrower may borrow under this Section, repay or, to
the extent permitted by Section 2.10, prepay Loans and reborrow
under this Section at any time before the Termination Date in
accordance with this Agreement. Each Revolving Credit Loan
shall, at the option of Borrower, be made or continued as, or
converted into, a Base Rate Loan or a LIBOR Rate Loan upon the
terms set forth herein.
SECTION 2.02 Method of Borrowing.
(a) The Borrower shall give the Lender telephonic notice (a
"Notice of Borrowing"), which notice shall be consistent with the
funds transfer agreement signed by an officer of the Borrower and
on file with the Lender, prior to 11:00 a.m. (McLean, Virginia
time) on the same Business Day of each Borrowing, specifying:
(i) the date of such Borrowing,
(ii) the aggregate amount of such Revolving Credit Borrowing, and
(iii) whether the Revolving Credit Loans comprising such
Borrowing are to be Base Rate Loans or LIBOR Rate Loans.
(b) A Notice of Borrowing, once received by the Lender, shall
not thereafter be revocable by the Borrower.
(c) Not later than 2:00 p.m. (McLean, Virginia time) on the date
of each Borrowing, the Lender shall (except as provided in
paragraph (d) of this Section) credit the amount of such
Borrowing, in Federal or other funds immediately available,
pursuant to the funds transfer agreement signed by an officer of
the Borrower and on file with the Lender, unless the Lender
determines that any applicable condition specified in Article III
has not been satisfied.
20
(d) Notwithstanding anything to the contrary contained in this
Agreement, no LIBOR Rate Borrowing may be made if there
shall have occurred a Default, which Default shall not have
been cured or waived.
(e) In the event that a Notice of Borrowing fails to specify
whether the Revolving Credit Loans comprising such Borrowing
are to be Base Rate Loans or LIBOR Rate Loans, such Loans
shall be made as Base Rate Loans.
SECTION 2.03 Continuation and Conversion Elections.
By giving telephonic notice (a "Notice of Continuation or
Conversion") to the Lender on or before 12:00 p.m., McLean,
Virginia time, on a Business Day, the Borrower may from time to
time irrevocably elect, by notice on the same Business Day, in
the case of Base Rate Loans or 3 Business Days in advance, in the
case of LIBOR Rate Loans, that all, or any portion in an
aggregate principal amount of $500,000 or any larger integral
multiple of $500,000 be, (i) in the case of Base Rate Loans,
converted into LIBOR Rate Loans or (ii) in the case of LIBOR Rate
Loans, converted into Base Rate Loans or continued as LIBOR Rate
Loans (in the absence of delivery of a Notice of Continuation or
Conversion with respect to any LIBOR Rate Loan at least 3
Business Days before the last day of the then current Interest
Period with respect thereto, such LIBOR Rate Loan shall, on such
last day, automatically convert to a Base Rate Loan); provided,
however, that no portion of the outstanding principal amount of
any Loans may be continued as, or be converted into, any LIBOR
Rate Loan when any Default has occurred and is continuing.
SECTION 2.04 Note.
The Revolving Credit Loans shall be evidenced by a single
Revolving Credit Note payable to the order of the Lender for the
account of its Lending Office in an amount equal to the original
principal amount of the Revolving Credit Commitment.
SECTION 2.05 Maturity of Loans.
(a) Each Revolving Credit Loan shall mature, and the principal
amount thereof shall be due and payable on, the Termination Date.
(b) Notwithstanding the foregoing, the outstanding principal
amount of the Loans, if any, together with all accrued but unpaid
interest thereon, if any, shall be due and payable on the
Termination Date; unless the Termination Date is otherwise
extended by the Lender, in its sole and absolute discretion.
Upon the written request of the Borrower, which request shall be
delivered to the Lender no more than 60 days, and no less than 30
days, prior to the then-current Termination Date, the Lender
shall have the option (without any obligations whatsoever so to
do) of extending the Termination Date for an additional 364-day
period. The Lender shall notify the Borrower at least 15 days
prior to the then-current Termination Date whether it chooses to
extend the Termination Date for such an additional 364-day period
(but failure by the Lender to give such notice within such period
shall be deemed to be a denial by the Lender of the Borrower's
request to extend the Termination Date).
SECTION 2.06 Interest Rates.
(a) In determining interest for purposes of this Section 2.06
and fees for purposes of Section 2.07, the Borrower and the
Lender shall refer to Holdings' most recent Consolidated
quarterly and annual (as the case may be) financial statements
delivered pursuant to
21
Section 5.01(a) or (b), as the case may be. If such financial
statements require a change in interest pursuant to this
Section 2.06 or fees pursuant to Section 2.07, the Borrower shall
deliver to the Lender, along with such financial statements, a
notice to that effect, which notice shall set forth in reasonable
detail the calculations supporting the required change. The
"Performance Pricing Determination Date" is the date which is the
first day of the Fiscal Quarter after delivery of such financial
statement. Any such required change in interest and fees shall
become effective on such Performance Pricing Determination Date,
and shall be in effect until the next Performance Pricing
Determination Date, provided that no fees or interest shall be
decreased pursuant to this Section 2.06 or Section 2.07 if a
Default is in existence on the Performance Pricing Determination
Date.
(b) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is
made until it becomes due, at a rate per annum equal to the Base
Rate for such day plus the Applicable Margin. Such interest
shall be payable in arrears on the first day of each month while
such Base Rate Loan is outstanding and on the date such Base Rate
Loan is converted to a LIBOR Rate Loan. Any overdue principal of
and, to the extent permitted by applicable law, overdue interest
on any Base Rate Loan shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the Default
Rate.
(c) Each LIBOR Rate Loan shall bear interest on the outstanding
principal amount thereof, at a rate per annum equal to the sum of
the Daily LIBOR Rate in effective from time to time plus the
Applicable Margin. Such interest shall be payable monthly in
arrears on the first day of each month while such LIBOR Rate Loan
is outstanding. Any overdue principal of and, to the extent
permitted by law, overdue interest on any LIBOR Rate Loan shall
bear interest, payable on demand, for each day until paid at a
rate per annum equal to the Default Rate.
(d) The Lender shall determine each interest rate applicable to
the Loans hereunder. The Lender shall give prompt notice to the
Borrower and the Lender by telecopier of each rate of interest so
determined, and its determination thereof shall be conclusive in
the absence of manifest error. The applicable rate of interest
for all LIBOR Rate Loans shall be increased or decreased, as the
case may be, by an amount equal to any increase or decrease in
the Daily LIBOR Rate, with such adjustments to be effective as of
the opening day of business on the day that any such change in
the Daily LIBOR Rate becomes effective.
(e) After the occurrence and during the continuance of an Event
of Default, the principal amount of the Loans (and, to the extent
permitted by applicable law, all accrued interest thereon) may,
at the election of the Lender, bear interest at the Default Rate.
SECTION 2.07 Commitment Fee.
The Borrower shall pay to the Lender a commitment fee equal to
the product of (i) the aggregate of the daily average amounts of
the Lender's Unused Revolving Credit Commitment during the
applicable period, times (ii) a per annum percentage equal to the
Applicable Commitment Fee Rate. Such commitment fee shall
accrue from and including the Closing Date to and including the
Termination Date. Commitment fees shall be payable quarterly in
arrears on the first Commitment Fee Payment Date following each
Commitment Fee Determination Date and on the Termination Date;
provided that should the Revolving Credit Commitment be
terminated at any time prior to the
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Termination Date for any reason the entire accrued and unpaid
commitment fee through the date of termination shall be paid on
the date of such termination. The "Applicable Commitment Fee
Rate" shall be determined quarterly based upon the Consolidated
Fixed Charges Coverage Ratio for the Loan Parties, collectively
on a combined basis, calculated as of the last day of each Fiscal
Quarter, as follows:
Consolidated Fixed Applicable
Charges Coverage Commitment Fee
Ratio Rate
Less than or equal to .375%
1.8 to 1.0
Less than or equal to .25%
2.25 to 1.0 but
greater than 1.8 to
1.0
Greater than 2.25 to .20%
1.0
The Applicable Commitment Fee Rate shall be determined effective
as of the date (herein, the Commitment Fee Determination Date")
which is 45 days after the last day of the Fiscal Quarter for
which the Consolidated Fixed Charges Coverage Ratio is being
determined, based on the quarterly financial statements for such
Fiscal Quarter, and the Applicable Commitment Fee Rate so
determined shall remain effective from such Commitment Fee
Determination Date until the date which is 45 days after the last
day of the Fiscal Quarter in which such Commitment Fee
Determination Date falls (which latter date shall be a new
Commitment Fee Determination Date); provided that (i) for the
period from and including the Closing Date to but excluding the
Commitment Fee Determination Date next following the Fiscal
Quarter ending December 31, 2001, the Applicable Commitment Fee
Rate shall be 0.375%; (ii) in the case of any Applicable
Commitment Fee Rate determined for the fourth and final Fiscal
Quarter of a Fiscal Year, the Commitment Fee Determination Date
shall be the date which is 90 days after the last day of such
Fiscal Quarter and such Applicable Commitment Fee Rate shall be
determined based upon the consolidated annual audited financial
statements of the Loan Parties for the Fiscal Year ended on the
last day of such final Fiscal Quarter, and (iii) if on any
Commitment Fee Determination Date the Loan Parties shall have
failed to deliver to the Lender the financial statements required
to be delivered pursuant to Sections 6.01(a) or 6.01(b) with
respect to the Fiscal Year or Fiscal Quarter most recently ended
prior to such Commitment Fee Determination Date, then for the
period beginning on such Commitment Fee Determination Date and
ending on the earlier of (A) the date on which the Loan Parties
shall deliver to the Lender the financial statements to be
delivered pursuant to Section 6.01(b) with respect to such Fiscal
Quarter or any subsequent Fiscal Quarter, and (B) the date on
which the Loan Parties shall deliver to the Lender annual
financial statements required to be delivered pursuant to Section
6.01(a) with respect to the Fiscal Year which includes such
Fiscal Quarter or any subsequent Fiscal Year, the Applicable
Commitment Fee Rate shall be determined as if the Consolidated
Fixed Charges Coverage Ratio was less than or equal to 1.8 to 1.0
at all times during such period; provided that the Applicable
Commitment Fee
23
shall not be decreased pursuant to this Section 2.07 if a Default
is in existence on the related Commitment Fee Determination Date,
unless and until such Default shall have been cured or waived in
writing.
SECTION 2.08 Optional Termination or Reduction of Commitment.
The Borrower may, upon at least 3 Business Days' notice to the
Lender, terminate at any time, or proportionately reduce the
Unused Revolving Credit Commitment from time to time by an
aggregate amount of at least $5,000,000 or any larger integral
multiple of $1,000,000. If the Commitment is terminated in its
entirety, all accrued fees (as provided under Section 2.07) shall
be due and payable on the effective date of such termination.
SECTION 2.09 Mandatory Reduction and Termination of Commitment.
(a) The Revolving Credit Commitment shall terminate on the
Termination Date and any Revolving Credit Loans then outstanding
(together with accrued interest thereon) shall be due and payable
on such date.
(b) The Revolving Credit Commitment shall be reduced by the
amount of any mandatory prepayment made pursuant to
Section 2.11(b).
SECTION 2.10 Optional Prepayments.
(a) The Borrower may, upon at least 1 Business Days' notice to
the Lender, prepay any Base Rate Borrowing in whole at any time,
or from time to time in part in amounts aggregating at least
$500,000, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment. Each
such optional prepayment shall be applied to prepay ratably the
Base Rate Loans included in such Base Rate Borrowing.
(b) Subject to any payments required pursuant to the terms of
Article IX for such LIBOR Rate Loan, upon 3 Business Day's prior
written notice, the Borrower may prepay in minimum amounts of
$500,000 (or any lesser amount equal to the outstanding balance
of such Loan) all or any portion of the principal amount of any
LIBOR Rate Loan prior to the maturity thereof.
(c) A notice of prepayment pursuant to this Section 2.10, once
received by the Lender, shall not thereafter be revocable by the
Borrower.
SECTION 2.11 Mandatory Prepayments.
Notwithstanding anything to the contrary contained elsewhere
in this Agreement, if an Overadvance Condition shall exist,
Borrower shall, without the necessity of a demand, either (a)
repay the outstanding Revolving Credit Loans that are Base Rate
Loans or LIBOR Rate Loans in an amount sufficient to reduce the
aggregate unpaid principal amount of all such Loans by an amount
equal to such excess; or (b) deposit with Lender, for application
to any outstanding Revolving Credit Loans as the same become due
and payable, cash in an amount sufficient to cure such
Overadvance Condition, to be held by Lender in the Cash
Collateral Account, pending disbursement of same to Lender, but
subject to Lender's Lien therein and rights of offset with
respect thereto.
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SECTION 2.12 General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of, and
interest on, the Revolving Credit Loans and of Reimbursement
Obligations and commitment fees hereunder, without any setoff,
counterclaim or any deduction whatsoever, not later than 11:00
a.m. (McLean, Virginia time) on the date when due, in Federal or
other funds immediately available in McLean, Virginia, to the
Lender at its address referred to in Section 9.01.
(b) Whenever any payment of principal of, or interest on, the
Base Rate Loans or of fees hereunder shall be due on a day which
is not a Business Day, the date for payment thereof shall be
extended to the next succeeding Business Day. Whenever any
payment of principal of or interest on, the LIBOR Rate Loans
shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next succeeding Business
Day.
(c) All payments of principal, interest and fees and all other
amounts to be made by the Borrower pursuant to this Agreement
with respect to any Revolving Credit Loan, Reimbursement
Obligation or fee relating thereto shall be paid without
deduction for, and free from, any taxes, imposts, levies, duties,
deductions, or withholdings of any nature now or at anytime
hereafter imposed by any governmental authority or by any taxing
authority thereof or therein excluding in the case of the Lender,
taxes imposed on or measured by its net income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which
the Lender is organized or any political subdivision thereof and,
in the case of the Lender, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction of the
Lender's applicable Lending Office or any political subdivision
thereof (all such non-excluded taxes, imposts, levies, duties,
deductions or withholdings of any nature being "Taxes"). In the
event that the Borrower is required by applicable law to make any
such withholding or deduction of Taxes with respect to any Loan
or fee or other amount, the Borrower shall pay such deduction or
withholding to the applicable taxing authority, shall promptly
furnish to the Lender in respect of which such deduction or
withholding is made all receipts and other documents evidencing
such payment and shall pay to the Lender additional amounts as
may be necessary in order that the amount received by the Lender
after the required withholding or other payment shall equal the
amount the Lender would have received had no such withholding or
other payment been made.
In the event the Lender receives a refund of any Taxes paid
by the Borrower pursuant to this Section 2.12(c), it will pay to
the Borrower the amount of such refund promptly upon receipt
thereof; provided that if at any time thereafter it is required
to return such refund, the Borrower shall promptly repay to it
the amount of such refund.
Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the
Borrower and the Lender contained in this Section 2.12(c) shall
constitute a continuing agreement and shall survive the
termination of this Agreement and the payment in full or
cancellation of the Note.
SECTION 2.13 Computation of Interest and Fees.
Interest on Base Rate Loans based on the Prime Rate shall be
computed on the basis of a year of 365 or 366 days, as
applicable, and paid for the actual number of days elapsed
(including the first day but excluding the last day). Interest
on Base Rate Loans based on the Federal Funds Rate and interest
on
25
LIBOR Rate Loans shall be computed on the basis of a year of 360
days and paid for the actual number of days elapsed, calculated
from and including the first day thereof to but excluding the
last day thereof. Facility fees and any other fees payable
hereunder shall be computed on the basis of a year of 360 days
and paid for the actual number of days elapsed (including the
first day but excluding the last day).
ARTICLE III.
CONDITIONS TO BORROWINGS
SECTION 3.01 Conditions to First Borrowing.
The obligation of the Lender to make a Loan on the occasion of
the first Borrowing is subject to the satisfaction of the
conditions set forth in Section 3.02 and receipt by the Lender of
the following:
(a) from each of the parties hereto of either (i) a duly
executed counterpart of this Agreement signed by such party or
(ii) a facsimile transmission of such executed counterpart (with
the original to be sent to the Lender by overnight courier);
(b) a duly executed Note for the account of the Lender, pursuant
to Section 2.04;
(c) an opinion letter of Xxxx Xxxxx Xxxxx & Xxxxxx LLP, counsel
for the Loan Parties, dated as of the Closing Date, substantially
in the form of Exhibit B;
(d) a certificate (the "Closing Certificate") substantially in
the form of Exhibit F), dated as of the Closing Date, signed by a
principal financial officer of the Borrower, to the effect that
(i) no Default has occurred and is continuing on the date of the
first Borrowing and (ii) the representations and warranties of
the Borrower contained in Article V are true on and as of the
date of the first Borrowing hereunder;
(e) all documents which the Lender may reasonably request
relating to the existence of the Loan Parties, the corporate
authority for and the validity of this Agreement and the Note,
and any other matters relevant hereto, all in form and substance
satisfactory to the Lender, including, without limitation, a
certificate of the Loan Parties substantially in the form of
Exhibit G (the "Officer's Certificate"), signed by the Secretary
or an Assistant Secretary of the Borrower and Holdings,
certifying as to the names, true signatures and incumbency of the
officer or officers of the Borrower and Holdings authorized to
execute and deliver the Loan Documents, and certified copies of
the following items: (i) the Borrower's Certificate of
Incorporation, (ii) the Borrower's Bylaws, (iii) the Certificate
of Incorporation of Holdings; (iv) the Bylaws of Holdings, (v) a
certificate of the Secretary of State of the State of California
as to the good standing of the Borrower as a California
corporation, (vi) a certificate of the Secretary of the State of
Delaware as to the good standing of Holdings as a Delaware
corporation, (vii) certificates of good standing with respect to
the Borrower and Holdings from the Virginia State Corporation
Commission, and (iv) the action taken by the Board of Directors
of Holdings authorizing the Loan Parties' execution, delivery and
performance of this Agreement and the other Loan Documents;
(f) a Notice of Borrowing;
26
(g) delivery of the Security Documents duly executed, accepted
and acknowledged by or on behalf of each of the signatories
thereto;
(h) copies of all filing receipts or acknowledgments issued by
any governmental authority (including, without limitation, the
FAA) to evidence any filing or recordation necessary to perfect
the Liens of Lender in the Collateral and evidence in a form
acceptable to Lender that such Liens constitute valid and
perfected first priority security interests and Liens;
(i) a policy of title insurance insuring the lien of the Deed of
Trust as a first lien on the Leasehold Interest; and
(j) payment by Borrower to Lender of the fees referenced in the
Commitment Letter Agreement; and
(k) delivery of such other documents, instruments and
agreements as Lender shall reasonably request in connection with
the foregoing matters.
In addition, if the Borrower desires funding of a LIBOR Rate
Loan on the Closing Date, the Lender shall have received, the
requisite number of days prior to the Closing Date, a funding
indemnification letter satisfactory to it, pursuant to which
(i) the Lender and the Borrower shall have agreed upon the
interest rate and amount of Borrowing for such LIBOR Rate Loan,
and (ii) the Borrower shall indemnify the Lender from any loss or
expense arising from the failure to close on the anticipated
Closing Date identified in such letter or the failure to borrow
such LIBOR Rate Loan on such date.
SECTION 3.02 Conditions to All Borrowings.
The obligation of the Lender to make a Revolving Credit Loan on
the occasion of each Borrowing is subject to the satisfaction of
the following conditions:
(a) receipt by the Lender of a Notice of Borrowing;
(b) the fact that, immediately before and after such Borrowing,
no Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of the Loan
Parties contained in Article V of this Agreement shall be true on
and as of the date of such Borrowing (except to the extent any
such representation or warranty is expressly made as of a prior
date); and
(d) the fact that, immediately after such Borrowing, the
conditions set forth in Section 2.01shall have been satisfied.
Each Borrowing and each Notice of Continuation or Conversion
hereunder shall be deemed to be a representation and warranty by
the Loan Parties on the date of such Borrowing as to the truth
and accuracy of the facts specified in paragraphs (b), (c) and
(d) of this Section; provided, that (i) if such Notice of
Continuation or Conversion is to a LIBOR Rate Loan, such Notice
of Continuation or Conversion shall be deemed to be such a
representation and warranty
27
by the Loan Parties only as to the matters set forth in
paragraphs (b) and (d) above, and (ii) if such Borrowing is a
Base Rate Borrowing or if such Notice of Continuation or
Conversion is to a Base Rate Loan, such Borrowing or Notice of
Continuation or Conversion shall be deemed to be a representation
and warranty by the Loan Parties only as to the matters set forth
in paragraph (d) above.
ARTICLE IV.
LETTER OF CREDIT FACILITY
SECTION 4.01 Obligation to Issue. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations
and warranties of the Borrower herein set forth, Lender shall issue for
the account of Borrower or any Loan Party, one or more Letters of Credit
denominated in Dollars in accordance with this Article IV, from time
to time during the period commencing on the Closing Date and ending
on the Domestic Business Day prior to the Termination Date.
SECTION 4.02 Types and Amounts. Lender shall have no
obligation to issue any Letter of Credit at any time:
(a) if the aggregate maximum amount then available for drawing
under Letters of Credit, after giving effect to the issuance of
the requested Letter of Credit, shall exceed any limit imposed by
law or regulation upon the Lender;
(b) if, after giving effect to the issuance of the requested
Letter of Credit, the aggregate outstanding principal balance of
the Revolving Credit Loan, together with all outstanding Letter
of Credit Obligations (exclusive of the Bond Letter of Credit)
would exceed the Borrowing Base, or;
(c) which has an expiration date (i) more than twenty-four (24)
months after the date of issuance or (ii) after the Termination
Date.
SECTION 4.03 Conditions. In addition to being subject to the
satisfaction of the conditions contained in Article V, the
obligation of the Lender to issue any Letter of Credit is subject
to the satisfaction in full of the following conditions:
(a) the Borrower shall have delivered to the Lender, at such
times and in such manner as the Lender may prescribe, a Letter of
Credit Application Agreement and such other documents and
materials as may be required pursuant to the terms thereof all
satisfactory in form and substance to the Lender, and the terms
of the proposed Letter of Credit shall be satisfactory in form
and substance to the Lender; and
(b) as of the date of issuance no order, judgment or decree of
any court, arbitrator or authority shall purport by its terms to
enjoin or restrain the Lender from issuing the Letter of Credit
and no law, rule or regulation applicable to the Lender and no
request or directive (whether or not having the force of law)
from any governmental body with jurisdiction over the Lender
shall prohibit or request that the Lender refrain from the
issuance of letters of credit generally or the issuance of that
Letter of Credit.
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SECTION 4.04 Issuance of Letters of Credit.
(a) Request for Issuance. At least two Business Days before the
effective date for any Letter of Credit, the Borrower shall give
the Lender a written notice containing the original signature of
an authorized officer or employee of the Borrower. Such notice
shall be irrevocable and shall specify the original face amount
of the Letter of Credit requested, the effective date (which day
shall be a Business Day) of issuance of such requested Letter of
Credit, the date on which such requested Letter of Credit is to
expire, the amount of then outstanding Letter of Credit
Obligations, the purpose for which such Letter of Credit is to be
issued, whether such Letter of Credit may be drawn in single or
partial draws and the person for whose benefit the requested
Letter of Credit is to be issued.
(b) Issuance; Notice of Issuance. If the conditions set forth
in Sections 4.02 and 4.03 are satisfied, the Lender shall issue
the requested Letter of Credit.
(c) No Extension or Amendment. The Lender shall not extend or
amend any Letter of Credit if the issuance of a new Letter of
Credit having the same terms as such Letter of Credit as so
amended or extended would be prohibited by Section 4.02 or
Section 4.03.
SECTION 4.05 Reimbursement Obligations; Duties of the Lender.
(a) Reimbursement. Notwithstanding any provisions to the
contrary in the Reimbursement Agreement or any Letter of Credit
Application Agreement:
(i) the Borrower shall reimburse the Lender for drawings under a
Letter of Credit issued by it no later than the earlier of (A)
the time specified in such Letter of Credit Application
Agreement, or (B) 1 Business Day after the payment by the
Lender;
(ii) any Reimbursement Obligation with respect to any Letter of
Credit shall bear interest from the date of the relevant
drawing under the pertinent Letter of Credit until the date
of payment in full thereof at a rate per annum equal to (A)
prior to the date that is 3 Business Days after the date of
the related payment by the Lender, the Base Rate plus the
Applicable Margin and (B) thereafter, the Default Rate; and
(iii) in order to implement the foregoing, upon the
occurrence of a draw under any Letter of Credit, unless the
Lender is reimbursed in accordance with Subsection (i) above,
the Borrower irrevocably authorizes the Lender to treat such
nonpayment as a Notice of Borrowing in the amount of such
Reimbursement Obligation and the Lender to make a Base Rate
Loan to Borrower in such amount regardless of whether the
conditions precedent to the making of Base Rate Loans
hereunder have been met. The Borrower further authorizes
the Lender to credit the proceeds of such Base Rate Loan so
as to immediately eliminate the liability of the Borrower
for Reimbursement Obligations under such Letter of Credit.
(b) Duties of the Lender. Any action taken or omitted to be
taken by the Lender in connection with any Letter of Credit, if
taken or omitted in the absence of willful misconduct or gross
negligence, shall not put the Lender under any resulting
liability to any Loan Party. In
29
determining whether to pay under any Letter of Credit, the Lender
shall have no obligation relative to any Loan Party, other than
to confirm that any documents required to have been delivered
under such Letter of Credit appear to comply on their face with
the requirements of such Letter of Credit.
SECTION 4.06 [Intentionally Omitted].
SECTION 4.07 Payment of Reimbursement Obligations.
(a) Payments to Lender. The Borrower agrees to pay to the
Lender the amount of all Reimbursement Obligations, interest and
other amounts payable to the Lender under or in connection with
any Letter of Credit issued for the Borrower's or any Loan
Party's account immediately when due, irrespective of:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) the existence of any claim, set-off, defense or
other right which the Borrower or any Loan Party may
have at any time against a beneficiary named in a Letter
of Credit or any transferee of any Letter of Credit (or
any Person for whom any such transferee may be acting),
the Lender, or any other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions;
(iii) any draft, certificate or any other document presented
under the Letter of Credit proves to be forged, fraudulent,
invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of
the Loan Documents;
(v) payment by the Lender under any Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate
in any respect;
(vi) payment by the Lender under any Letter of Credit against
presentation of any draft or certificate that does not comply
with the terms of such Letter of Credit, except payment
resulting from the gross negligence or willful misconduct of
the Lender; or
(vii) any other circumstances or happenings whatsoever,
whether or not similar to any of the foregoing, except
circumstances or happenings resulting from the gross
negligence or willful misconduct of the Lender.
30
SECTION 4.08 Compensation for Letters of Credit and Lender
Reporting Requirements.
(a) Letter of Credit Fees. The Borrower shall pay to the Lender
with respect to each Letter of Credit issued hereunder a letter
of credit fee ("Letter of Credit Fee") equal to a semi-annual
rate based upon the Applicable Margin for Letters of Credit, or
after the occurrence and during the continuance of a Default,
the Default Rate, multiplied by the face amount of such Letter of
Credit, payable on the Business Day on which such Letter of
Credit is issued and every six months thereafter. Letter of
Credit Fees payable hereunder shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).
(b) Lender Charges. The Borrower shall also pay to the Lender
its customary administrative fees in connection with the issuance
and/or renewal of each Letter of Credit.
SECTION 4.09 Indemnification; Exoneration.
(a) Indemnification. In addition to amounts payable as
elsewhere provided in this Article IV, the Borrower shall
protect, indemnify, pay and save the Lender harmless from and
against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable
attorneys' fees) which the Lender may incur or be subject to as a
consequence of the issuance of any Letter of Credit for the
Borrower's account other than as a result of its gross negligence
or willful misconduct, as determined by a court of competent
jurisdiction.
(b) Assumption of Risk by Borrower. As between the Borrower and
the Lender, the Borrower assumes all risks of the acts and
omissions of, or misuse of the Letters of Credit issued for the
Borrower's or any Loan Party's account by, the respective
beneficiaries of such Letters of Credit. In furtherance and not
in limitation of the foregoing, the Lender shall not be
responsible for (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any
party in connection with the application for and issuance of the
Letters of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or
forged, (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason, (iii) failure of the beneficiary of a
Letter of Credit to comply duly with conditions required in order
to draw upon such Letter of Credit, (iv) errors, omissions,
interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher, for errors in interpretation of
technical terms, (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof, (vii) the
misapplication by the beneficiary of a Letter of Credit of the
proceeds of any drawing under such Letter of Credit; and (viii)
any consequences arising from causes beyond the control of the
Lender.
(c) Exoneration. In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth, any
action taken or omitted by the Lender under or in connection with
the Letters of Credit or any related certificates if taken or
omitted in good faith
31
and with reasonable care, shall not put the Lender under any
resulting liability to the Borrower or any Loan Party or relieve
the Borrower of any of its obligations hereunder to any such
Person.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Each of the Loan Parties represents and warrants to the
Lender that:
SECTION 5.01 Corporate Existence and Power.
Each of the Borrower and Holdings is a corporation duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. The Borrower is duly
qualified to transact business in every jurisdiction where, by
the nature of its business, such qualification is necessary, and
has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted, except in each case where such failure
to be so qualified or have such powers, licenses, authorizations,
consents or approvals would not have a Material Adverse Effect.
Borrower is an air carrier holding a certificate issued by the
FAA under 49 U.S.C. 44705.
SECTION 5.02 Corporate and Governmental Authorization; No
Contravention.
The execution, delivery and performance by the Loan Parties of
this Agreement, the Note and each of the other Loan Documents to
which such Loan Party is a party, as applicable, (i) are within
such Loan Party's corporate powers, (ii) have been duly
authorized by all necessary corporate action, (iii) require no
action by or in respect of or filing with, any governmental body,
agency or official, (iv) do not contravene, or constitute a
default under, any provision of applicable law or regulation or
of the certificate of incorporation or by-laws of the Borrower or
of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Borrower or any of its Subsidiaries,
and (v) do not result in the creation or imposition of any Lien
on any asset of the Borrower or any of its Subsidiaries except as
contemplated by the Loan Documents.
SECTION 5.03 Binding Effect.
This Agreement constitutes a valid and binding agreement of the
Borrower enforceable in accordance with its terms, and the Note
and the other Loan Documents, when executed and delivered in
accordance with this Agreement, will constitute valid and binding
obligations of the Borrower enforceable in accordance with their
respective terms, provided that the enforceability hereof and
thereof is subject in each case to general principles of equity
and to bankruptcy, insolvency and similar laws affecting the
enforcement of creditors' rights generally.
SECTION 5.04 Financial Information.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of December 31, 2000 and the related
consolidated statements of income, shareholders' equity and cash
flows for the Fiscal Year then ended, reported on by KPMG,LLP,
copies of which have been delivered to the Lender, and the
unaudited consolidated financial statements of the Borrower for
the interim period ended June 30, 2001 copies of which have been
delivered to the Lender, fairly present, in conformity with GAAP,
the consolidated financial
32
position of the Borrower and its Consolidated Subsidiaries as of
such dates and their consolidated results of operations and cash
flows for such periods stated.
(b) The aftermath of the events of September 11, 2001 will have
a Material Adverse Effect on the commercial aviation industry
generally and on the business and affairs of the Borrower,
including its ability to operate all flights as previously
planned, its relationships with its major airline partners, and
its costs of operations including insurance and security costs.
Otherwise, since June 30, 2001 there has been no event, act,
condition or occurrence having, or which could reasonably be
expected to have, alone or in the aggregate, a Material Adverse
Effect.
SECTION 5.05 No Litigation.
There is no action, suit or proceeding pending, or to the
knowledge of the Loan Parties' threatened, against or affecting
Holdings or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official which,
alone or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or which in any manner draws into
question the validity of or could impair the ability of the Loan
Parties to perform their respective obligations under, this
Agreement, the Note or any of the other Loan Documents.
SECTION 5.06 Compliance with ERISA.
(a) Holdings and Borrower have fulfilled their obligations under
the minimum funding standards of ERISA and the Code with respect
to each Plan and are in compliance in all material respects with
the presently applicable provisions of ERISA and the Code, and
have not incurred any liability to the PBGC or a Plan under Title
IV of ERISA.
(b) Neither Holdings nor Borrower has incurred any withdrawal
liability with respect to any Multiemployer Plan under Title IV
of ERISA, and no such liability is expected to be incurred.
SECTION 5.07 Compliance with Laws; Payment of Taxes.
Holdings and its Subsidiaries are in compliance with all
applicable laws, regulations and similar requirements of
governmental authorities, except where such compliance is being
contested in good faith through appropriate proceedings or where
non-compliance, alone or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect. There have been
filed on behalf of Holdings and its Subsidiaries all Federal,
state, local and foreign income, excise, property and other tax
returns which are required to be filed by them and to the best of
Holdings' knowledge, all taxes due pursuant to such returns or
pursuant to any assessment received by or on behalf of Holdings
or any Subsidiary have been paid. The charges, accruals and
reserves on the books of Holdings and its Subsidiaries in respect
of taxes or other governmental charges are, in the opinion of the
Loan Parties, adequate. The Loan Parties have not given or been
requested to give a waiver of the statute of limitation relating
to the payment of Federal, state, local or foreign taxes.
SECTION 5.08 Subsidiaries.
Schedule 5.08 hereto states (i) the name of each corporate or
joint venture Affiliate of each Loan Party and the nature of the
affiliation, (ii) the number and nature of all outstanding
Securities of each Loan Party, and (ii) the number of
33
authorized, issued and treasury shares of each Loan Party. Each
Loan Party has good title to all of the shares it purports to own
of the stock of each of the Subsidiaries, free and clear in each
case of any Lien other than Permitted Liens. All such shares
have been duly issued and are non-assessable. There are no
outstanding options to purchase, or any rights or warrants to
subscribe for, or any commitments or agreements to issue or sell,
or any Securities or obligations convertible into, or any powers
of attorney relating to, shares of the capital stock of any Loan
Party or any of its respective Subsidiaries, except as listed on
Schedule 6.08. There are no outstanding agreements or
instruments binding upon any Loan Party's shareholders relating
to the ownership of its shares of capital. Borrower is a wholly-
owned Subsidiary of Holdings. Borrower, Atlantic Coast Jet, Inc.
and Atlantic Coast Academy, Inc. are the only Subsidiaries of
Holdings. Borrower has no Subsidiaries other than Atlantic Coast
Airlines, Inc., an inactive Delaware corporation which, as of the
Closing Date, is not conducting any activities and has no
material assets.
SECTION 5.09 Investment Company Act.
Neither Holdings, Borrower nor any of their Subsidiaries is an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended.
SECTION 5.10 Public Utility Holding Company Act.
Neither Holdings, Borrower nor any of their Subsidiaries is a
"holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as
amended.
SECTION 5.11 Ownership of Property; Liens.
Each of the Loan Parties has title to its properties sufficient
for the conduct of its business, and none of such property is
subject to any Lien except as permitted in Section 7.08.
SECTION 5.12 No Default.
Neither of the Loan Parties is in default under or with respect
to any agreement, instrument or undertaking to which it is a
party or by which it or any of its property is bound which, alone
or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
SECTION 5.13 Full Disclosure.
All information heretofore furnished by the Loan Parties to the
Lender for purposes of or in connection with this Agreement or
any transaction contemplated hereby is, and all such information
hereafter furnished by the Loan Parties to the Lender will be,
true, accurate and complete in every material respect or based on
reasonable estimates on the date as of which such information is
stated or certified. The Loan Parties have disclosed to the
Lender in writing any and all facts which, alone or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect.
SECTION 5.14 Environmental Matters.
(a) Neither the Loan Parties nor any Subsidiary is subject to
any Environmental Liability which, alone or in the aggregate,
could reasonably be expected to have a Material Adverse Effect
and neither the Loan Parties nor any Subsidiary has been
designated as a potentially responsible party under CERCLA or
under any state statute similar to CERCLA. To
34
the best of the Loan Parties' knowledge, the Realty has not been
identified on any current or proposed (i) National Priorities
List under 40 C.F.R. 300, (ii) CERCLIS list or (iii) any list
arising from a state statute similar to CERCLA.
(b) No Hazardous Materials have been or are being used,
produced, manufactured, processed, treated, recycled, generated,
stored, disposed of, managed or otherwise handled at, or shipped
or transported to or from the Realty or are otherwise present at,
on, in or under the Realty, or, to the best of the knowledge of
the Loan Parties', at or from any adjacent site or facility,
except for Hazardous Materials used, produced, manufactured,
processed, treated, recycled, generated, stored, disposed of,
managed, or otherwise handled in compliance with all applicable
Environmental Requirements except where non-compliance would not
have a Material Adverse Effect.
(c) The Loan Parties, and each of their Subsidiaries, have
procured all Environmental Authorizations necessary for the
conduct of its business, and is in compliance with all
Environmental Requirements in connection with the operation of
the Realty and the Borrower's and each of its Subsidiary's
respective businesses, except where the failure to procure such
authorizations or the failure to comply with such requirements
would not have a Material Adverse Effect.
SECTION 5.15 Capital Stock.
All Capital Stock, debentures, bonds, notes and all other
securities of the Loan Parties and their Subsidiaries presently
issued and outstanding are validly and properly issued in
accordance with all applicable laws, including, but not limited
to, the "Blue Sky" laws of all applicable states and the federal
securities laws.
SECTION 5.16 Margin Stock.
Neither Holdings, the Borrower nor any of their Subsidiaries is
engaged principally, or as one of its important activities, in
the business of purchasing or carrying any Margin Stock, and no
part of the proceeds of any Loan will be used to purchase or
carry any Margin Stock or to extend credit to others for the
purpose of purchasing or carrying any Margin Stock, or be used
for any purpose which violates, or which is inconsistent with,
the provisions of Regulation T, U or X.
SECTION 5.17 Insolvency.
After giving effect to the execution and delivery of the Loan
Documents and the making of the Loans under this Agreement:
(i) the Loan Parties will not (x) be "insolvent," within the
meaning of such term as used in O.C.G.A. 18-2-22 or as defined
in 101 of the "Bankruptcy Code", or Section 2 of either the
"UFTA" or the "UFCA", or as defined or used in any "Other
Applicable Law" (as those terms are defined below), or (y) be
unable to pay their debts generally as such debts become due
within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA or Section 6 of the UFCA, or (z) have an
unreasonably small capital to engage in any business or
transaction, whether current or contemplated, within the meaning
of Section 548 of the Bankruptcy Code, Section 4 of the UFTA or
Section 5 of the UFCA; and (ii) the obligations of the Loan
Parties under the Loan Documents and with respect to the Loans
will not be rendered avoidable under any Other
35
Applicable Law. For purposes of this Section 4.17, "Bankruptcy
Code" means Title 11 of the United States Code, "UFTA" means the
Uniform Fraudulent Transfer Act, "UFCA" means the Uniform
Fraudulent Conveyance Act, and "Other Applicable Law" means any
other applicable law pertaining to fraudulent transfers or acts
voidable by creditors, in each case as such law may be amended
from time to time.
SECTION 5.18 Insurance.
The Loan Parties and each of their Subsidiaries has (either in
the name of Holdings, the Borrower or in such Subsidiary's own
name), with financially sound and reputable insurance companies,
insurance in at least such amounts and against at least such
risks (including on all its Property, and public liability and
worker's compensation) as are usually insured against in the same
general area by companies of established repute engaged in the
same or similar business.
SECTION 5.19 Labor Matters.
Except as could not reasonably be expected to have, alone or in
the aggregate, a Material Adverse Effect,
(a) there are no strikes or lockouts against the Borrower or any
of its Subsidiaries pending or, to the knowledge of the Loan
Parties or any of their Subsidiaries, threatened;
(b) the hours worked by and payments made to employees of the
Borrower or any of its Subsidiaries have not been in violation of
the Fair Labor Standards Act or any other applicable federal,
state, local or foreign law dealing with such matters; and
(c) all payments due from the Borrower or any of its
Subsidiaries, or for which any claim may be made against the
Borrower or any of its Subsidiaries, on account of wages and
employee health and welfare insurance and other benefits, have
been paid or accrued as a liability on the books of the Borrower
or its Subsidiary, as appropriate.
SECTION 5.20 Other Debt.
Except for the Debt evidenced hereby, Schedule 5.20 sets forth,
as of December 31, 2000 as updated through August 31, 2001, the
name of each lender, the amount of its commitment and the
maturity date of such commitment for each credit facility
pursuant to which the Loan Parties and their Subsidiaries may
create or incur Debt of the type described in clauses (i), (v)
and (vii) of the definition of "Debt" contained herein.
ARTICLE VI.
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as the
Revolving Loan Commitment is in effect hereunder or any amount
payable under this Agreement or any other Loan Document remains
unpaid:
SECTION 6.01 Information.
The Borrower will deliver to the Lender:
(a) as soon as available and in any event within 90 days after
the end of each Fiscal Year, a consolidated balance sheet of the
Loan Parties as of the end of such Fiscal Year and the related
consolidated statements of income, shareholders' equity and cash
flows for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
certified by KPMG, LLP or other independent public accountants of
nationally
36
recognized standing, with such certification to be free of
exceptions and qualifications not acceptable to the Lender;
(b) as soon as available and in any event within 30 days after
the end of each month of each Fiscal Year, internally prepared
monthly consolidated financial statements of the Loan Parties,
all certified as to fairness of presentation, GAAP and
consistency by the chief financial officer or the chief
accounting officer of Holdings;
(c) simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, a
certificate, substantially in the form of Exhibit E (a
"Compliance Certificate"), of the chief financial officer or the
chief accounting officer of Holdings (i) setting forth in
reasonable detail the calculations required to establish whether
the Borrower was in compliance with the requirements of Sections
7.05, 7.06, 7.08, 7.10 and 7.11, on the date of such financial
statements; (ii) stating whether any Default exists on the date
of such certificate and, if any Default then exists, setting
forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto; and
(iii) setting forth the Consolidated Leverage Ratio, Consolidated
Fixed Charges Coverage Ratio, the Liquidity and the Consolidated
Senior Indebtedness/Consolidated EBITDA Ratio as of the most
recent Performance Pricing Determination Date and the Applicable
Margin for LIBOR Rate Loans and Base Rate Loans in effect as a
result thereof;
(d) within 10 Business Days after the Chairman, the Chief
Executive Officer, the President, the Chief Financial Officer,
the Treasurer or the Controller of Holdings or the Borrower
becomes aware of the occurrence of any Default, a certificate of
the chief financial officer or the chief accounting officer of
Holdings or the Borrower setting forth the details thereof and
the action which the Borrower is taking or proposes to take with
respect thereto;
(e) promptly upon the mailing thereof to the shareholders of
Holdings generally, copies of all financial statements, reports
and proxy statements so mailed;
(f) promptly upon the filing thereof, notice of the filing of
and electronic availability of copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and annual, quarterly
or monthly reports which Holdings shall have filed with the
Securities and Exchange Commission;
(g) if and when Borrower or Holdings (i) gives or is required to
give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV
of ERISA, or knows that the plan administrator of any Plan has
given or is required to give notice of any such reportable event,
a copy of the notice of such reportable event given or required
to be given to the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA, a copy of
such notice; or (iii) receives notice from the PBGC under Title
IV of ERISA of an intent to terminate or appoint a trustee to
administer any Plan, a copy of such notice;
(h) prompt written notice of any legal or arbitral proceedings,
or of any proceedings, by or before any governmental or
regulatory authority or agency, and any material development in
respect of such proceedings, affecting the Borrower or Holdings,
if an adverse
37
determination in any such proceeding could reasonably be expected
to have, alone or in the aggregate, a Material Adverse Effect;
and
(i) from time to time such additional information regarding the
financial position or business of the Loan Parties as the Lender
may reasonably request.
SECTION 6.02 Inspection of Property, Books and Records.
The Loan Parties will (i) keep, and cause each Subsidiary to
keep, proper books of record and account in which full, true and
correct entries in conformity with GAAP shall be made of all
dealings and transactions in relation to its business and
activities; and (ii) permit, and cause each Subsidiary to permit,
representatives of the Lender at the Lender's expense prior to
the occurrence of a Default and at the Loan Parties' expense
after the occurrence of a Default to visit and inspect any of
their respective properties, to examine and make abstracts from
any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective
officers, employees and independent public accountants. The Loan
Parties agree to cooperate and assist in such visits and
inspections, in each case at such reasonable times and as often
as may reasonably be desired.
SECTION 6.03 Conduct of Business and Maintenance of Existence.
Each of the Loan Parties shall, and shall cause each Subsidiary
to, maintain its corporate existence and carry on its business in
substantially the same manner and in substantially the same
fields as such business is now carried on and maintained.
SECTION 6.04 Compliance with Laws; Payment of Taxes.
Each of the Loan Parties will, and will cause each of its
Subsidiaries to, comply with applicable laws (including but not
limited to ERISA), regulations and similar requirements of
governmental authorities (including but not limited to PBGC),
except where the necessity of such compliance is being contested
in good faith through appropriate proceedings diligently pursued
or where non-compliance could not, alone or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The
Borrower will, and will cause each of its Subsidiaries to, pay
promptly when due all taxes, assessments, governmental charges,
claims for labor, supplies, rent and other obligations which, if
unpaid, might become a lien against the Property of the Borrower
or any Subsidiary, except liabilities being contested in good
faith and against which the Borrower has set up reserves in
accordance with GAAP.
SECTION 6.05 Insurance.
The Loan Parties will maintain, and will cause each of their
Subsidiaries to maintain (either in the name of the Borrower or
in such Subsidiary's own name), with financially sound and
reputable insurance companies, insurance on all its Property in
at least such amounts and against at least such risks (including
on all its Property, and public liability and worker's
compensation) as are usually insured against in the same general
area by companies of established repute engaged in the same or
similar business.
SECTION 6.06 Maintenance of Property.
The Borrower shall maintain all of its properties and assets in
good condition, repair and working order, ordinary wear and tear
excepted, consistent with industry standards and practices.
38
SECTION 6.07 Environmental Matters.
(a) The Loan Parties shall furnish to the Lender prompt written
notice of all Environmental Liabilities, pending, threatened or
anticipated Environmental Proceedings, Environmental Notices,
Environmental Judgments and Orders, and Environmental Releases
at, on, in, under or in any way affecting the Realty or any
adjacent property, and all facts, events, or conditions that
could lead to any of the foregoing.
(b) The Loan Parties will handle and use all Hazardous Materials
in compliance with all applicable Environmental Requirements.
The Loan Parties agrees that upon the occurrence of an
Environmental Release at or on the Realty it will act immediately
to investigate the extent of, and to take appropriate remedial
action to eliminate, such Environmental Release, in accordance
with all applicable Environmental Requirements.
SECTION 6.08 Notices of Certain Events.
The Loan Parties shall notify Lender in writing (i) of
the occurrence of any event or the existence of any fact which
renders any representation or warranty in this Agreement or any
of the other Loan Documents inaccurate, incomplete or misleading
in any material respect; (ii) promptly after a Loan Party's
learning thereof, of the commencement of any litigation affecting
any Loan Party or the Leasehold Estate and of the institution of
any administrative proceeding which, in either case, if decided
adversely could reasonably be expected to have a Material Adverse
Effect; (iii) promptly after the Borrower enters into any
material modification to the Borrower's agreements with United,
which notice shall contain a summary of such modification; (iv)
promptly after a Loan Party's learning thereof, of any organized
labor dispute of a material nature to which a Loan Party may
become a party or any strikes or walkouts by organized labor
relating to any of its facilities; (v) promptly after a Loan
Party's learning thereof, of any material default by an Loan
Party under any note, indenture, loan agreement, mortgage, lease,
deed, guaranty or other similar agreement relating to any
Indebtedness of such Loan Party exceeding $500,000; (vi) promptly
after the occurrence thereof, of any material Default or Event of
Default; (vii) promptly after the occurrence thereof, of any
material default or event of default by Borrower or United under
any of the Borrower's operating agreements with United; (viii)
promptly after the rendition thereof, of any judgment rendered
against a Loan Party in an amount exceeding $500,000 which is not
fully covered by insurance; and (x) promptly upon any change of
the fiscal year of the Loan Parties.
ARTICLE VII.
NEGATIVE COVENANTS
The Loan Parties covenant and agree that, so long as the
Revolving Credit Commitment is in effect hereunder or any amount
payable under this Agreement or any other Loan Document remains
unpaid:
39
SECTION 7.01 Use of Proceeds.
No portion of the proceeds of the Loans will be used by the
Loan Parties or any Subsidiary (i) in connection with, whether
directly or indirectly, any tender offer for, or other
Acquisition of, stock of any corporation with a view towards
obtaining control of such other corporation, unless such tender
offer or other Acquisition is to be made on a negotiated basis
with the approval of the Board of Directors of the Person to be
acquired, and the provisions of Section 7.06 would not be
violated, (ii) directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any
Margin Stock, except as otherwise permitted under this Agreement,
or (iii) for any purpose in violation of any applicable law or
regulation.
SECTION 7.02 Consolidations, Mergers and Sales of Assets.
The Borrower will not consolidate or merge with or into, or
sell, lease or otherwise transfer all or any substantial part of
its assets to, any other Person, or discontinue or eliminate any
business line or segment.
SECTION 7.03 Change in Fiscal Year.
The Loan Parties will not change their Fiscal Year.
SECTION 7.04 Loans or Advances.
The Loan Parties shall not make loans or advances to any Person
except: (i) short-term loans or advances to officers or employees
of less than $500,000 in the aggregate principal amount
outstanding at any time, in each case made in the ordinary course
of business and consistent with practices existing on September
15, 2001; (ii) transfers in the ordinary course of business; or
(iii) transactions between the Loan Parties.
SECTION 7.05 Restricted Payments.
The Borrower will not declare or make any Restricted Payment
after the Closing Date.
SECTION 7.06 Investments.
The Loan Parties shall not make Investments in any Person except
as permitted in Section 7.04 and except Investments (i) in direct
obligations of the United States Government, or any agency
thereof or obligations guaranteed by the United States
Government, provided that such obligations mature within one year
from the date of acquisition thereof, (ii) Investments in time
deposits, demand deposits and certificates of deposit maturing
within one year from the date of acquisition issued by a bank or
trust company organized under the laws of the United States or
any state thereof having capital surplus and undivided profits
aggregating at least $500,000,000; (iii) Investments in
commercial paper given the highest credit rating by S&P or
Xxxxx'x and in either case maturing not more than 364 days from
the date of creation thereof, (iv) tax-free Industrial Revenue
Bonds secured by letters of credit which Bonds are available for
sale at auction not less frequently than weekly; (v) Cash
Equivalents; and (vi) other investments approved by Lender in
writing.
SECTION 7.07 Acquisitions.
Neither the Borrower nor any of its Subsidiaries shall
consummate, or enter into any agreement providing for the
consummation by the Borrower or any of its Subsidiaries, of, any
Acquisition.
SECTION 7.08 Limitation on Liens and Subsidiary Debt.
Neither the Borrower nor any Subsidiary will create, assume or
suffer to exist any Lien on any Collateral now owned
40
or hereafter acquired by it, and the Borrower shall not permit
any Subsidiary to incur any Debt, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement and listed on Schedule
7.08;
(b) any Lien existing on any specific fixed asset of any
corporation at the time such corporation becomes a Subsidiary and
not created in contemplation of such event;
(c) any Lien on any specific fixed asset securing Debt incurred
or assumed for the purpose of financing all or any part of the
cost of acquiring or constructing such asset, provided that such
Lien attaches to such asset concurrently with or within 90 days
after the acquisition or completion of construction thereof;
(d) Liens securing Debt owing by any Subsidiary to the Borrower;
(e) any Lien arising out of the refinancing, extension, renewal
or refunding of any Debt secured by any Lien permitted by any of
the foregoing paragraphs of this Section, provided that (i) such
Debt is not secured by any additional assets, and (ii) the amount
of such Debt secured by any such Lien is not increased;
(f) Liens incidental to the conduct of its business or the
ownership of its assets which (i) do not secure Debt and (ii) do
not in the aggregate materially detract from the value of its
assets or materially impair the use thereof in the operation of
its business;
(g) Liens securing taxes, assessments or other similar
governmental charges or levies which are not yet delinquent or
which are being contested in good faith.
SECTION 7.09 Restrictions on Ability of Subsidiaries to Pay
Dividends.
The Borrower shall not permit any Subsidiary to, directly or
indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of
any such Subsidiary to (i) pay any dividends or make any other
distributions on its Capital Stock or any other interest or
(ii) make or repay any loans or advances made by the Borrower or
any other Subsidiary to such Subsidiary.
SECTION 7.10 Consolidated Fixed Charges Coverage Ratio.
The Consolidated Fixed Charges Coverage Ratio, as of the end of
any Fiscal Quarter, for the period of four consecutive Fiscal
Quarters most recently ended will not at any time be less than
1.6 to 1.00.
SECTION 7.11 Consolidated Leverage Ratio.
The Loan Parties shall at no time permit their combined
Consolidated Leverage Ratio to be greater than 1.7 to 1.00.
SECTION 7.12 Minimum Liquidity.
41
The Loan Parties shall not permit their combined minimum
Liquidity at any time to be less than $30,000,000.
SECTION 7.13 Consolidated Senior Indebtedness/EBITDA Ratio.
The Loan Parties shall at no time permit their combined
Consolidated Senior Indebtedness/Consolidated EBITDA Ratio to
exceed 2.5 to 1:0.
SECTION 7.14 Dissolution.
The Loan Parties shall not suffer or permit dissolution or
liquidation either in whole or in part.
ARTICLE VIII.
DEFAULTS
SECTION 8.01 Events of Default.
If one or more of the following events ("Events of Default")
shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any
Loan or shall fail to pay any interest on any Loan within 5
Business Days after written notice of such due date, or shall
fail to pay any fee or other amount payable hereunder within 5
Business Days after written notice that such fee or other amount
is due; or
(b) the Loan Parties shall fail to observe or perform any
covenant contained in Section 6.02(ii) or Article VII; or
(c) the Loan Parties shall fail to observe or perform any
covenant or agreement contained or incorporated by reference in
this Agreement (other than those covered by paragraph (a) or (b)
above) or the other Loan Documents and such failure shall not
have been cured within 30 days after the earliest to occur of (i)
written notice thereof has been given to the Borrower by the
Lender or (ii) the Borrower otherwise becomes aware of any such
failure; or
(d) any representation, warranty, certification or statement
made by the Loan Parties in Article V of this Agreement or in any
certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been incorrect or
misleading in any material respect when made (or deemed made); or
(e) the Loan Parties shall default (after the expiration of any
applicable notice and cure periods) on any material contract with
or obligation when due to a third party or default (after the
expiration of any applicable notice and cure period) in the
performance of any obligation to a third party incurred for money
borrowed; or
(f) the Loan Parties or any Subsidiary or United shall commence
a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it
or any
42
substantial part of its Property, or shall consent to any such
relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally, or shall admit in writing its
inability, to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing; or
(g) an involuntary case or other proceeding shall be commenced
against any Loan Party or any Subsidiary or United seeking
liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its Property, and such
involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be
entered against the Borrower or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect; or
(h) one or more judgments or orders for the payment of money in
an aggregate amount in excess of $500,000 shall be rendered
against the Borrower or any Subsidiary and such judgment or order
shall continue unsatisfied and unstayed for a period of 30 days
after entry of the judgment; or
(i) a federal tax lien shall be filed against the Borrower or
any Subsidiary under Section 6323 of the Code or a lien of the
PBGC shall be filed against the Borrower or any Subsidiary under
Section 4068 of ERISA and in either case such lien remains
undischarged for a period of 25 days after the date of filing; or
(j) the termination or breach of, or a material adverse change
in the Borrower's operating agreements with United; or
(k) any Loan Party shall suffer the loss or revocation of any
license or permit now held or hereafter acquired by any Loan
Party which is necessary to the continued or lawful operation of
a material part of its business; or any Loan Party shall be
enjoined, restrained, or otherwise prevented by court,
governmental or administrative order from conducting all or any
material part of its business affairs for a period of more than
30 days; or the Lease or any other material lease or agreement
pursuant to which any Loan Party leases, uses or occupies any
real property shall be cancelled or terminated prior to the
expiration of its stated term; or any Loan Party or United ceases
scheduled air transportation services for a period of more than
30 days; or
(l) any Loan Party shall challenge or contest in any action,
suit or proceeding the validity or enforceability of this
Agreement, or any of the other Loan Documents, the legality or
enforceability of any of the Obligations or the perfection or
priority of any Lien granted to Lender (provided that nothing set
forth herein shall preclude a Loan Party from enforcing its
rights, and Lender's duties and obligations, under this Agreement
and the other Loan Documents); or
(m) if, after the Closing Date, there shall be any change in the
ownership of Borrower;
43
then, and in every such event, (i) the Lender may, by notice to
the Borrower, terminate the Commitment, which shall thereupon
terminate and (ii) the Lender may, by notice to the Borrower,
declare the Note (together with accrued interest thereon), and
all other amounts payable hereunder and under the other Loan
Documents, to be, and the Note (together with accrued interest
thereon), and all other amounts payable hereunder and under the
other Loan Documents shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower,
together with interest at the Default Rate accruing on the
principal amount thereof from and after the date of such Event of
Default; provided that if any Event of Default specified in
paragraph (f) or (g) above occurs with respect to the Borrower,
without any notice to the Borrower or any other act by the
Lender, the Commitment shall thereupon terminate and the Note
(together with accrued interest thereon) and all other amounts
payable hereunder and under the other Loan Documents shall
automatically and without notice become immediately due and
payable without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower,
together with interest thereon at the Default Rate accruing on
the principal amount thereof from and after the date of such
Event of Default. Notwithstanding the foregoing, the Lender
shall have available to it all other remedies at law or equity.
ARTICLE IX.
CHANGE IN CIRCUMSTANCES
SECTION 9.01 Basis for Determining Interest Rate Inadequate or
Unfair.
If on or prior to the first day of any LIBOR Rate Loan:
(a) the Lender determines that deposits in Dollars (in the
applicable amounts) are not being offered in the relevant market,
or
(b) the London Interbank Offered Rate as determined by the
Lender will not adequately and fairly reflect the cost to the
Lender of funding LIBOR Rate Loans,
the Lender shall forthwith give notice thereof to the Borrower,
whereupon until the Lender notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, the
obligation of the Lender to make LIBOR Rate Loans specified in
such notice, or to permit continuations or conversions into LIBOR
Rate Loans, shall be suspended. Unless the Borrower notifies the
Lender at least 2 Business Days before the date of any Borrowing
of LIBOR Rate Loans for which a Notice of Borrowing has
previously been given, or continuation or conversion into such
LIBOR Rate Loans for which a Notice of Continuation or Conversion
has previously been given, that it elects not to borrow or so
continue or convert on such date, such Borrowing shall instead be
made as a Base Rate Borrowing, or such LIBOR Rate Loan shall be
converted to a Base Rate Loan.
SECTION 9.02 Illegality.
If, after the date hereof, the adoption of any applicable law,
rule or regulation, or any change therein or any existing or
future law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof (any such agency being
referred to as an "Governing Authority" and any such event being
referred to as a "Change of Law"), or compliance by the Lender
(or its Lending Office) with any request or
44
directive (whether or not having the force of law) of any
Governing Authority shall make it unlawful or impossible for the
Lender (or its Lending Office) to make, maintain or fund its
LIBOR Rate Loans, the Lender shall forthwith give notice thereof
to the Borrower, whereupon until the Lender notifies the Borrower
that the circumstances giving rise to such suspension no longer
exist, the obligation of the Lender to make or permit
continuations or conversions of LIBOR Rate Loans shall be
suspended. Before giving any notice to the Borrower pursuant to
this Section, the Lender shall designate a different Lending
Office if such designation will avoid the need for giving such
notice and will not, in the judgment of the Lender, be otherwise
disadvantageous to the Lender. If the Lender shall determine
that it may not lawfully continue to maintain and fund any of its
outstanding LIBOR Rate Loans to maturity, and shall so specify in
such notice, the Borrower shall immediately prepay in full the
then outstanding principal amount of each LIBOR Rate Loan of the
Lender, together with accrued interest thereon.
SECTION 9.03 Increased Cost and Reduced Return.
(a) If after the date hereof, a Change of Law or compliance by
the Lender (or its Lending Office) with any request or directive
(whether or not having the force of law) of any Governing
Authority:
(i) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including,
without limitation, any such requirement imposed by
the Board of Governors of the Federal Reserve System,
but excluding with respect to any LIBOR Rate Loan any
such requirement included in an applicable LIBOR
Rate Reserve Percentage) against assets of, deposits with
or for the account of, or credit extended by, the Lender
(or its Lending Office); or
(ii) shall impose on the Lender (or its Lending Office) or on
the London interbank market any other condition affecting its
LIBOR Rate Loans, its Note or its obligation to make LIBOR
Rate Loans; and the result of any of the foregoing is to
increase the cost to the Lender (or its Lending Office) of
making or maintaining the Loan, or to reduce the amount of any
sum received or receivable by the Lender (or its Lending
Office) under this Agreement or under its Note with respect
thereto, by an amount deemed by the Lender to be material, then
the Lender shall give notice thereof to the Borrower within 90
days after the Lender becomes aware of such matters and,
within 15 days after demand by the Lender, the Borrower shall
pay to the Lender such additional amount or amounts as will
compensate the Lender for such increased cost or reduction.
(b) If the Lender shall have determined that after the date
hereof the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof, or compliance by
the Lender (or its Lending Office or the bank holding company of
which the Lender is a subsidiary) with any request or directive
regarding capital adequacy (whether or not having the force of
law) of any Governing Authority, has or would have the effect of
reducing the rate of return on the Lender's (or such bank holding
company's) capital as a consequence of its obligations hereunder
to a level below that which the Lender (or such bank holding
company) could have achieved but for such adoption, change or
compliance (taking into consideration the Lender's (or such bank
holding
45
company's) policies with respect to capital adequacy) by an
amount deemed by the Lender to be material, then from time to
time the Lender shall give notice thereof to the Borrower within
90 days after the Lender becomes aware of such matters and,
within 15 days after demand by the Lender, the Borrower shall pay
to the Lender such additional amount or amounts as will
compensate the Lender (or such bank holding company) for such
reduction.
(c) The Lender will promptly notify the Borrower of any event of
which it has knowledge, occurring after the date hereof, which
will entitle the Lender to compensation pursuant to this Section
and will designate a different Lending Office if such designation
will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of the Lender, be
otherwise disadvantageous to the Lender. A certificate of the
Lender claiming compensation under this Section and setting forth
the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In
determining such amount, the Lender may use any reasonable
averaging and attribution methods.
(d) The provisions of this Section 9.03 shall be applicable with
respect to any Participant, Assignee or other Transferee, and any
calculations required by such provisions shall be made based upon
the circumstances of such Participant, Assignee or other
Transferee. The Lender agrees that it will not seek compensation
or reimbursement provided for in this Section 9.03 unless the
Lender as a matter of policy intends generally to seek comparable
compensation or reimbursement from other borrowers similarly
situated and with similarly documented financial accommodations.
SECTION 9.04 Base Rate Loans Substituted for LIBOR Rate Loans.
If (i) the obligation of the Lender to make or maintain LIBOR
Rate Loans has been suspended pursuant to Section 9.02 or
(ii) the Lender has demanded compensation under Section 9.03, and
the Borrower shall, by at least 5 Business Days' prior notice to
the Lender, have elected that the provisions of this Section
shall apply, then, unless and until the Lender notifies the
Borrower that the circumstances giving rise to such suspension or
demand for compensation no longer apply:
(a) all Loans which would otherwise be made by the Lender as, or
permitted to be continued as or converted into LIBOR Rate Loans
shall instead be made as or converted into Base Rate Loans, and
(b) after each of its LIBOR Rate Loans has been repaid, all
payments of principal which would otherwise be applied to repay
such LIBOR Rate Loans shall be applied to repay its Base Rate
Loans instead.
SECTION 9.05 Compensation.
[Intentionally Omitted]
ARTICLE X.
SECURITY AGREEMENT
SECTION 10.01 Security Interest in Collateral.
In order to secure prompt repayment of any and all Obligations
owed by Borrower to Lender and in order to secure prompt
performance of any and all other Obligations to be performed by
Borrower, Borrower
46
hereby grants to Lender a continuing security interest in and
lien upon the Collateral, whether now owned or existing or at any
time hereafter acquired, arising or created by Borrower, subject
only to Permitted Liens. Lender's security interest in and lien
upon the Collateral shall attached to all of the Collateral upon
the execution and delivery of this Agreement, without further act
being required of either Lender or Borrower.
SECTION 10.02 Security Instruments; Further Assurances.
Lender may file one or more Uniform Commercial Code financing
statements, providing the Lender with a valid first lien on all
Collateral now owned or hereafter acquired by the Borrower and
the Borrower hereby authorizes the Lender to file such financing
statements. Said financing statements may contain a generic
description of collateral that is broader than the collateral
description contained in the security agreement set forth herein
except with respect to Collateral constituting Rotable Spare
Parts. Borrower will perform, or will cause to be performed,
upon the reasonable request of Lender, each and all of the
following:
(a) Record, register and file a chattel mortgage and
security agreement securing the Rotable Spare Parts, as well
as such notices, financing statements and other documents or
instruments as may from time to time be reasonably requested
by Lender to fully carry out the intent of this Agreement,
with the FAA in Oklahoma City, Oklahoma, and such other
administrations or governmental agencies, whether domestic
or foreign, as may be reasonably determined by Lender to be
necessary or advisable in order to perfect, establish,
confirm and maintain the security interest and lien created
hereunder, as a legal, valid and binding security interest
and lien upon the Collateral;
(b) Furnish to Lender evidence of every such
recording, registering and filing; and
(c) Execute and deliver or perform, or cause to be
executed and delivered or performed, such further and other
instruments and acts as Lender reasonably determines are
necessary or required to fully carry out the intent and
purpose of this Agreement or to subject the Collateral to
the security interest and lien created hereunder, including,
without limitation: (i) any and all acts and things which
may be reasonably requested by Lender with respect to
complying with the laws and regulations of the FAA; and (ii)
defending the title of Borrower to the Collateral by means
of negotiation and, if necessary, appropriate legal
proceedings, against each and every Person claiming an
interest therein contrary or adverse to Borrower's title to
same.
SECTION 10.03 Power of Attorney.
Borrower hereby irrevocably appoints Lender as its
attorney-in-fact and agent with full power of substitution and re-
substitution for Borrower and in its name to do, at Lender's
option, any one or more of the following acts, upon the
occurrence and during the continuance of an Event of Default but
not thereafter: (a) to compromise, prosecute or defend any
action, claim or proceeding concerning the Collateral; (b) to do
any and all acts which Borrower is obligated to do under this
Agreement or under any of the other Loan Documents; (c) to
exercise such rights as Borrower might exercise relative to the
Collateral, including, without limitation, the leasing,
chartering or other utilization thereof; (d)to give notice of
Lender's security interest in and the lien upon the Collateral,
including, without limitation, notification to lessees and other
Account Debtors of Lender's security interest in the
47
rents and other payments due to Borrower relative to the
Collateral, and the collection of any such rents or other
payments; and (e) to execute in Borrower's name and file any
notices, financing statements and other documents or instruments
Lender determines are necessary or required to fully carry out
the intent and purpose of this Agreement or to perfect Lender's
security interest and lien in and upon the Collateral. The
appointment of Lender as Borrower's attorney-in-fact, and each
and every one of Lender's rights and powers in connection
therewith, being coupled with any interest, are and shall remain
irrevocable during the continuance of an Event of Default until
all of the Obligations have been paid and performed.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.01 Notices.
All notices, requests and other communications to any party
hereunder shall be in writing (including telecopier or similar
writing) and shall be given to such party at its address or
telecopier number set forth on the signature pages hereof or such
other address or telecopier number as such party may hereafter
specify for the purpose by notice to each other party. Each such
notice, request or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the
telecopier number specified in this Section and the confirmation
is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iii) if given by any other
means, when delivered at the address specified in this Section.
SECTION 11.02 No Waivers.
No failure or delay by the Lender in exercising any right,
power or privilege hereunder or under any Note or other Loan
Document shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided
by law.
SECTION 11.03 Expenses; Documentary Taxes.
The Borrower shall pay (i) all out-of-pocket expenses of the
Lender, including fees and disbursements of special counsel for
the Lender, in connection with the preparation of this Agreement
and the other Loan Documents, any waiver or consent hereunder or
thereunder or any amendment hereof or thereof or any Default or
alleged Default hereunder or thereunder and (ii) if a Default
occurs, all out-of-pocket expenses incurred by the Lender,
including fees and disbursements of counsel, in connection with
such Default and collection and other enforcement proceedings
resulting therefrom, including out-of-pocket expenses incurred in
enforcing this Agreement and the other Loan Documents. The
Borrower shall indemnify the Lender against any transfer taxes,
documentary taxes, assessments or charges made by any Governing
Authority by reason of the execution and delivery of this
Agreement or the other Loan Documents.
SECTION 11.04 Indemnification.
The Borrower shall indemnify the Lender and each Affiliate
thereof and its respective directors, officers and employees
from, and hold each of them harmless against, any and all losses,
liabilities, claims or damages to which any of them may become
subject, insofar as such losses, liabilities, claims or damages
arise out of or result from any transaction contemplated by this
Agreement or any other Loan Document or any actual or proposed
use by the Borrower of the proceeds of any extension of credit by
the Lender
48
hereunder or breach by the Borrower of this Agreement or any
other Loan Document or from any investigation, litigation
(including, without limitation, any actions taken by the Lender
or to enforce this Agreement or any of the other Loan Documents)
or other proceeding (including, without limitation, any
threatened investigation or proceeding) relating to the
foregoing, and the Borrower shall reimburse the Lender, and each
Affiliate thereof and its respective directors, officers, and
employees, upon demand for any expenses (including, without
limitation, legal fees) incurred in connection with any such
investigation or proceeding; but excluding any such losses,
liabilities, claims, damages or expenses which are determined by
a final, non-appealable judgment of a court to have been incurred
by reason of the gross negligence or willful misconduct of the
Person to be indemnified. In the case of any investigation,
litigation or other proceeding to which the indemnity in this
Section applies, such indemnity shall be effective whether or not
such investigation, litigation or proceeding is brought by the
Borrower or any Subsidiary or Affiliate thereof, or any of their
respective directors, shareholders, or creditors or an
Indemnified Party, or any other Person or any Indemnified Party
is otherwise a party thereto and whether or not any transaction
contemplated by this Agreement or any other Loan Document is
consummated.
SECTION 11.05 Setoff; Sharing of Setoffs.
(a) The Borrower hereby grants to the Lender a lien for all
indebtedness and obligations owing to them from the Borrower upon
all deposits or deposit accounts, of any kind, or any interest in
any deposits or deposit accounts thereof, now or hereafter
pledged, mortgaged, transferred or assigned to the Lender or
otherwise in the possession or control of the Lender for any
purpose for the account or benefit of the Borrower and including
any balance of any deposit account or of any credit of the
Borrower with the Lender, whether now existing or hereafter
established, hereby authorizing the Lender at any time or times
with or without prior notice to apply such balances or any part
thereof to such of the indebtedness and obligations owing by the
Borrower to the Lender then past due and in such amounts as they
may elect, and whether or not the Collateral, if any, or the
responsibility of other Persons primarily, secondarily or
otherwise liable may be deemed adequate. For the purposes of
this paragraph, all remittances and property shall be deemed to
be in the possession of the Lender as soon as the same may be put
in transit to it by mail or carrier or by other bailee.
(b) The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a
participation in the Note, whether or not acquired pursuant to
the foregoing arrangements, may exercise rights of setoff or
counterclaim and other rights with respect to such participation
as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
SECTION 11.06 Amendments and Waivers.
Any provision of this Agreement, the Note or any other Loan
Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower
and the Lender.
SECTION 11.07 Independence of Covenants.
All covenants under this Agreement and the other Loan Documents
shall be given independent effect so that if a particular action
or condition is not permitted by any such covenant, the fact that
it would be permitted by an
49
exception to, or would be otherwise allowed by, another covenant
shall not avoid the occurrence of a Default if such action is
taken or such condition exists.
SECTION 11.08 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns; provided that the Borrower may not assign
or otherwise transfer any of its rights or obligations under this
Agreement.
(b) The Lender may at any time sell to one or more financial
institutions (each a "Participant") participating interests in
any Loan owing to the Lender, the Note held by the Lender, the
Commitment hereunder or any other interest of the Lender
hereunder. In the event of any such sale by the Lender of a
participating interest to a Participant, the Lender's obligations
under this Agreement shall remain unchanged, the Lender shall
remain solely responsible for the performance thereof, the Lender
shall remain the holder of the Note for all purposes under this
Agreement, and the Borrower shall continue to deal solely and
directly with the Lender in connection with the Lender's rights
and obligations under this Agreement. The Lender selling a
participating interest to any Participant other than an Affiliate
or Related Fund of the Lender in any Loan, the Note, the
Commitment or other interest under this Agreement shall, within
10 Domestic Business Days of such sale, provide the Borrower with
written notification stating that such sale has occurred and
identifying the Participant and the interest purchased by such
Participant.
(c) The Lender may at any time assign to one or more commercial
banks, finance companies, insurance companies or other financial
institution or fund which, in each case, in the ordinary course
of business extends credit of the type contemplated herein and
whose becoming an assignee would not constitute a prohibited
transaction under Section 4975 of ERISA (each an "Assignee") all
or a proportionate part of its rights and obligations under this
Agreement, the Note and the other Loan Documents, and such
Assignee shall assume all such rights and obligations, pursuant
to an Assignment and Acceptance, executed by such Assignee, the
Lender, subject to clause (iii) below, by the Borrower); provided
that (i) no interest may be sold by the Lender pursuant to this
paragraph (c) unless the Assignee shall agree to assume ratably
equivalent portions of the Commitment, (ii) if the Lender is
assigning only a portion of the Commitment, then, the amount of
the Commitment being assigned (determined as of the effective
date of the assignment) shall be in an amount not less than
$2,000,000 (except that there shall be no such minimum if the
assignment is to any Affiliate or Related Fund of the Lender),
and (iii) no interest may be sold by the Lender pursuant to this
paragraph (c) to any Assignee that is not an Affiliate or Related
Fund of the Lender without the consent of (unless a Default has
occurred and is continuing) the Borrower, which consent shall not
be unreasonably withheld. Upon (A) execution of the Assignment
and Acceptance by the Lender, such Assignee, and (if applicable)
the Borrower, (B) delivery of an executed copy of the Assignment
to the Borrower, and (C) payment by such Assignee to the Lender
of an amount equal to the purchase price agreed between the
Lender and such Assignee, such Assignee shall for all purposes be
a Lender party to this Agreement and shall have all the rights
and obligations of the Lender under this Agreement to the same
extent as if it were an original party hereto with a Commitment
as set forth in such instrument of assumption, and the Lender
shall be released from its obligations
50
hereunder to a corresponding extent, and no further consent or
action by the Borrower or the Lender shall be required. Upon the
consummation of any transfer to an Assignee pursuant to this
Section 11.08(c), the Lender and the Borrower shall make
appropriate arrangements so that, if required, a new Note is
issued to such Assignee.
(d) Subject to the provisions of this Section 11.08, the
Borrower authorizes the Lender to disclose to any Participant,
Assignee or other transferee (each a "Transferee") and any
prospective Transferee which has executed a confidentiality
agreement any and all financial information in the Lender's
possession concerning the Borrower which has been delivered to
the Lender by the Borrower pursuant to this Agreement or which
has been delivered to the Lender by the Borrower in connection
with the Lender's credit evaluation prior to entering into this
Agreement.
(e) No Transferee shall be entitled to receive any greater
payment under Section 8.03 than the transferor Lender would have
been entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 9.02 or 9.03
requiring the Lender to designate a different Lending Office
under certain circumstances or at a time when the circumstances
giving rise to such greater payment did not exist.
(f) Anything in this Section 11.08 to the contrary
notwithstanding, the Lender may assign and pledge all or any
portion of the Loans and/or obligations owing to it to any
Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of Governors of
the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank, provided that any payment in respect
of such assigned Loans and/or obligations made by the Borrower to
the assigning and/or pledging Lender in accordance with the terms
of this Agreement shall satisfy the Borrower's obligations
hereunder in respect of such assigned Loans and/or obligations to
the extent of such payment. No such assignment shall release the
assigning and/or pledging Lender from its obligations hereunder.
SECTION 11.09 Confidentiality.
The Lender agrees to exercise the same standard of care that it
exercises in the handling of its own confidential information to
keep any information delivered or made available by the Loan
Parties to it which is clearly indicated to be confidential
information, confidential from anyone other than persons employed
or retained by the Lender who are or are expected to become
engaged in evaluating, approving, structuring or administering
the Loans; provided that nothing herein shall prevent the Lender
from disclosing such information (i) to an Affiliate of the
Lender, but subject to the same confidentiality obligations,
(ii) upon the order of any court or administrative agency,
(iii) upon the request or demand of any regulatory agency or
authority having jurisdiction over the Lender, (iv) which has
been publicly disclosed, (v) to the extent reasonably required in
connection with the exercise of any remedy hereunder, (vi) to the
Lender's legal counsel and independent auditors, and (vii) to any
actual or proposed Participant, Assignee or other Transferee of
all or part of its rights hereunder; provided that should
disclosure of any such confidential information be required by
virtue of clause (ii) of the immediately preceding sentence, to
the extent permitted by law, the Lender shall promptly notify the
Borrower of same so as to allow the Borrower to seek a protective
order or to take any other appropriate action; provided, further,
that, the Lender shall
51
not be required to delay compliance with any directive to
disclose any such information so as to allow the Borrower to
effect any such action.
SECTION 11.10 Representation by Lender.
The Lender hereby represents that it is a commercial lender or
financial institution which makes loans in the ordinary course of
its business and that it will make its Loans hereunder for its
own account in the ordinary course of such business; provided
that, subject to Section 11.08, the disposition of the Note held
by the Lender shall at all times be within its exclusive control.
SECTION 11.11 Virginia Law.
This Agreement, the Note and all of the other Loan Documents
shall be construed in accordance with and governed by the law of
the Commonwealth of Virginia.
SECTION 11.12 Severability.
In case any one or more of the provisions contained in this
Agreement, the Note or any of the other Loan Documents should be
invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired
thereby and shall be enforced to the greatest extent permitted by
law.
SECTION 11.13 Interest.
In no event shall the amount of interest, and all charges,
amounts or fees contracted for, charged or collected pursuant to
this Agreement, the Note or the other Loan Documents and deemed
to be interest under applicable law (collectively, "Interest")
exceed the highest rate of interest allowed by applicable law
(the "Maximum Rate"), and in the event any such payment is
inadvertently received by the Lender, then the excess sum (the
"Excess") shall be credited as a payment of principal, unless the
Borrower shall notify the Lender in writing that it elects to
have the Excess returned forthwith. It is the express intent
hereof that the Borrower not pay and the Lender not receive,
directly or indirectly in any manner whatsoever, interest in
excess of that which may legally be paid by the Borrower under
applicable law. The right to accelerate maturity of any of the
Loans does not include the right to accelerate any interest that
has not otherwise accrued on the date of such acceleration, and
the Lender does not intend to collect any unearned interest in
the event of any such acceleration. All monies paid to the
Lender hereunder or under any of the Note or the other Loan
Documents, whether at maturity or by prepayment, shall be subject
to rebate of unearned interest as and to the extent required by
applicable law. By the execution of this Agreement, the Borrower
covenants, to the fullest extent permitted by law, that (i) the
credit or return of any Excess shall constitute the acceptance by
the Borrower of such Excess, and (ii) the Borrower shall not seek
or pursue any other remedy, legal or equitable, against the
Lender, based in whole or in part upon contracting for charging
or receiving any Interest in excess of the Maximum Rate. For the
purpose of determining whether or not any Excess has been
contracted for, charged or received by the Lender, all interest
at any time contracted for, charged or received from the Borrower
in connection with this Agreement, the Note or any of the other
Loan Documents shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread in equal parts
throughout the full term of the Commitment. The Borrower and the
Lender shall, to the maximum extent permitted under applicable
law, (i) characterize any non-principal payment as an expense,
fee or premium rather than as Interest and (ii) exclude voluntary
prepayments and the effects thereof. The provisions of this
Section shall be deemed to be incorporated into the Note and each
of the other Loan Documents (whether or not any provision of this
Section is
52
referred to therein). All such Loan Documents and communications
relating to any Interest owed by the Borrower and all figures set
forth therein shall, for the sole purpose of computing the extent
of obligations hereunder and under the Note and the other Loan
Documents be automatically recomputed by the Borrower, and by any
court considering the same, to give effect to the adjustments or
credits required by this Section.
SECTION 11.14 Interpretation.
No provision of this Agreement or any of the other Loan
Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other
governmental or judicial authority by reason of such party having
or being deemed to have structured or dictated such provision.
SECTION 11.15 Waiver of Jury Trial; Consent to Jurisdiction.
The Loan Parties (a) and the Lender irrevocably waive, to the
fullest extent permitted by law, any and all right to trial by
jury in any legal proceeding arising out of this Agreement, any
of the other Loan Documents, or any of the transactions
contemplated hereby or thereby, (b) submit to the nonexclusive
personal jurisdiction in the Commonwealth of Virginia, the courts
thereof and the United States District Courts sitting therein,
for the enforcement of this Agreement, the Note and the other
Loan Documents, (c) waive any and all personal rights under the
law of any jurisdiction to object on any basis (including,
without limitation, inconvenience of forum) to jurisdiction or
venue within the Commonwealth of Virginia for the purpose of
litigation to enforce this Agreement, the Note or the other Loan
Documents, and (d) agree that service of process may be made upon
it at the address set forth in Section 11.01 for the giving of
notice to the Borrower. Nothing herein contained, however, shall
prevent the Lender from bringing any action or exercising any
rights against any security and against the Borrower personally,
and against any assets of the Borrower, within any other state or
jurisdiction.
SECTION 11.16 Counterparts.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
SECTION 11.17 Source of Funds -- ERISA.
The Lender hereby represents to the Borrower that no part of
the funds to be used by the Lender to fund the Loans hereunder
from time to time constitutes (i) assets allocated to any
separate account maintained by the Lender in which any employee
benefit plan (or its related trust) has any interest nor (ii) any
other assets of any employee benefit plan. As used in this
Section, the terms "employee benefit plan" and "separate account"
shall have the respective meanings assigned to such terms in
Section 3 of ERISA.
[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, under seal, by their respective
authorized officers as of the day and year first above written.
BORROWER:
ATLANTIC COAST AIRLINES
By: /s/ (SEAL)
Title: Xxxxxxx X Xxxxxxx,
Senior Vice President & CFO
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx
Senior Vice President and
Chief Financial Officer
Telecopier number:
Confirmation number:
HOLDINGS:
ATLANTIC COAST AIRLINES HOLDINGS,
INC., a Delaware corporation
By: /s/ (SEAL)
Title: Xxxxxxx X Xxxxxxx,
Senior Vice President & CFO
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx
Senior Vice President and
Chief Financial Officer
Telecopier number:
Confirmation number:
SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT
WACHOVIA BANK, N.A.
By: (SEAL)
Name:
Title:
Lending Office
Wachovia Bank, N.A.
0000 Xxxxxxxxxx Xxxxx
0xx Xxxxx
XxXxxx, Xxxxxxxx 00000
Attention:
Telecopier number:
Confirmation number:
EXHIBIT A
NOTE
Fairfax County, Virginia
September 28, 2001
For value received, ATLANTIC COAST AIRLINES, a California
corporation (the "Borrower"), promises to pay to the order of
WACHOVIA BANK, N.A., a national banking association (the
"Lender"), for the account of its Lending Office, the principal
sum of TWENTY-FIVE MILLION AND NO/100 DOLLARS ($25,000,000), or
such lesser amount as shall equal the unpaid principal amount of
each Loan made by the Lender to the Borrower pursuant to the Loan
and Security Agreement referred to below, on the dates and in the
amounts provided in the Loan and Security Agreement. The
Borrower promises to pay interest on the unpaid principal amount
of this Note on the dates and at the rate or rates provided for
in the Loan and Security Agreement. Interest on any overdue
principal of and, to the extent permitted by law, overdue
interest on the principal amount hereof shall bear interest at
the Default Rate, as provided for in the Loan and Security
Agreement. All such payments of principal and interest shall be
made in lawful money of the United States in Federal or other
immediately available funds at the office of Wachovia Bank, N.A.,
0000 Xxxxxxxxxx Xxxxx, 0xx Xxxxx, XxXxxx, Xxxxxxxx 00000, or such
other address as may be specified from time to time pursuant to
the Loan and Security Agreement.
All Loans made by the Lender, the respective maturities
thereof, the interest rates from time to time applicable thereto,
and all repayments of the principal thereof shall be recorded by
the Lender and, prior to any transfer hereof, endorsed by the
Lender on the schedule attached hereto, or on a continuation of
such schedule attached to and made a part hereof; provided that
the failure of the Lender to make any such recordation or
endorsement shall not affect the obligations of the Borrower
hereunder or under the Loan and Security Agreement.
This Note is the Note referred to in the Loan and Security
Agreement dated as of even date herewith between the Borrower and
the Lender (as the same may be amended and modified from time to
time, the "Loan and Security Agreement"). Terms defined in the
Loan and Security Agreement are used herein with the same
meanings. Reference is made to the Loan and Security Agreement
for provisions for the optional and mandatory prepayment and the
repayment hereof and the acceleration of the maturity hereof, as
well as the obligation of the Borrower to pay all costs of
collection, including reasonable attorneys fees, in the event
this Note is collected by law or through an attorney at law.
The Borrower hereby waives presentment, demand, protest,
notice of demand, protest and nonpayment and any other notice
required by law relative hereto, except to the extent as
otherwise may be expressly provided for in the Loan and Security
Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Note to be
duly executed, under seal, by its duly authorized officer as of
the day and year first above written.
BORROWER:
ATLANTIC COAST AIRLINES
a California corporation
By: /s/________________________(SEAL)
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President & CFO
