LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 12th day of October,
1995, by and between SHAWMUT CAPITAL CORPORATION ("Lender"), a Connecticut
corporation with an office at 6060 J. A. Jones Drive, Suite 200, Charlotte,
North Carolina 28287; and ATLANTIC COAST AIRLINES ("Borrower"), a California
corporation with its chief executive office and principal place of business at
1 Export Drive, Sterling, Virginia 20164; and ATLANTIC COAST AIRLINES, INC.
("Parent"; Borrower and Parent being herein collectively called the "Loan
Parties" and, individually, a "Loan Party"), a Delaware corporation with its
chief executive office and principal place of business at 1 Export Drive,
Sterling, Virginia 20164. Capitalized terms used in this Agreement have the
meanings assigned to them in Appendix A, General Definitions.
0. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a total credit facility of up to the amount of
the Revolver Loan Facility available upon Borrower's request therefor, as
follows:
0 . Loans. Lender agrees, for so long as no Default or Event of
Default exists and subject to the provisions of Section 9 below, to make
Revolver Loans to Borrower from time to time, as requested by Borrower in the
manner set forth in subsection 3.1 hereof, up to a maximum principal amount at
any time outstanding equal to the Borrowing Base at such time.
1 . Use of Proceeds of Revolver Loans. The Borrower shall use the
proceeds of the Revolver Loans as follows:
(i) On the Closing Date, the proceeds of the initial
Revolver Loan shall be used solely for the purposes of (i) paying and
satisfying in full Borrower's Indebtedness owing to Congress, and (ii) paying
the costs associated with the closing of the transactions contemplated by this
Agreement; and
(ii) All other Revolver Loans made on or after the
Closing Date shall be used solely for Borrower's general working capital needs
in a manner consistent with the provisions of this Agreement and Applicable Law
and for any other purposes not inconsistent with this Agreement.
2 . Reduction of Revolver Loan Facility. Borrower shall have the right
from time to time, upon not less than ninety (90) days written notice to
Lender, to reduce permanently the amount of the Revolver Loan Facility. Each
such reduction of the Revolver Loan Facility shall be in the amount of
$1,000,000 or such amount which is in an integral multiple of $1,000,000 in
excess thereof, or such lesser amount as shall constitute the entire Revolver
Loan Facility then existing as a result of any one or more previous reductions
thereof. Each reduction of the Revolver Loan Facility shall be accompanied by
payment of the Revolver Loans to the extent that the aggregate principal amount
of the Revolver Loans then outstanding exceeds the Borrowing Base after giving
effect to such reduction.
1. INTEREST, FEES AND CHARGES
0 . Interest.
.0 . Rate of Interest. Subject to the provisions of subsections
2.1.3 and 2.1.5 of this Agreement, Borrower agrees to pay interest on the
unpaid principal amount of the Loans outstanding from the respective dates such
principal amounts are advanced until paid (whether at stated maturity, on
acceleration, or otherwise) at a variable rate per annum equal to the Base Rate
in effect from time to time plus one and one-half percent (1.5%) (the
"Specified Percentage").
.1 . Computation of Interest.
( ) Interest shall be calculated on a daily basis
(computed on the actual number of days elapsed over a year of 360 days) on the
principal balance of the Loans outstanding at any time or from time to time.
The calculation of interest on the basis of a 360-day year, as opposed to a
year of 365 days, results in a higher effective rate of interest hereunder.
The applicable rates of interest shall be increased or decreased, as the case
may be, by an amount equal to any increase or decrease in the Base Rate, with
such adjustments to be effective as of the opening of business on the day that
any such change in the Base Rate becomes effective.
(i) Interest on each Loan shall accrue from and
including the date of such Loan to but excluding the date of any repayment
thereof; provided, however, that if a Loan is repaid on the same day made, one
day's interest shall be paid on such Loan. Accrued interest on all Loans shall
be paid upon the earliest of (1) the first day of each month (for the
immediately preceding month), computed through the last calendar day of the
preceding month, (2) the occurrence of an Event of Default in consequence of
which Lender elects to accelerate the maturity and payment of the Obligations,
or (3) the Expiration Date.
.2 . Default Rate of Interest. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, the principal amount of
all Loans shall bear interest at a rate per annum equal to two percent (2%)
above the interest rate otherwise applicable thereto (the "Default Rate").
.3 . Maximum Interest. Regardless of any provision contained in this
Agreement or any of the other Loan Documents, in no contingency or event
whatsoever shall the aggregate of all amounts that are contracted for, charged
or collected pursuant to the terms of this Agreement or any of the other Loan
Documents and that are deemed interest under Applicable Law exceed the highest
rate permissible under any Applicable Law. No agreements, conditions,
provisions or stipulations contained in this Agreement or any of the other Loan
Documents, or the exercise by Lender of the right to accelerate the payment or
the maturity of all or any portion of the Obligations, or the exercise of any
option whatsoever contained in any of the Loan Documents, or the prepayment by
Borrower of any of the Obligations, or the occurrence of any contingency
whatsoever, shall entitle Lender to charge or receive in any event, interest or
any charges, amounts, premiums or fees deemed interest by Applicable Law (such
interest, charges, amounts, premiums and fees referred to herein collectively
as "Interest") in excess of the Maximum Rate and in no event shall Borrower be
obligated to pay Interest exceeding such Maximum Rate, and all agreements,
conditions or stipulations, if any, which may in any event or contingency
whatsoever operate to bind, obligate or compel Borrower to pay Interest
exceeding the Maximum Rate shall be without binding force or effect, at law or
in equity, to the extent only of the excess of Interest over such Maximum Rate.
If any Interest is charged or received in excess of the Maximum Rate
("Excess"), Borrower acknowledges and stipulates that any such charge or
receipt shall be the result of an accident and bona fide error, and such
Excess, to the extent received, shall be applied first to reduce the principal
Obligations and the balance, if any, returned to Borrower, it being the intent
of the parties hereto not to enter into a usurious or otherwise illegal
relationship. The right to accelerate the maturity of any of the Obligations
does not include the right to accelerate any interest that has not otherwise
accrued on the date of such acceleration, and Lender does not intend to collect
any unearned interest in the event of any such acceleration. Borrower
recognizes that, with fluctuations in the rate of interest set forth in
subsection 2.1.1 of this Agreement, and in the Maximum Rate, such an
unintentional result could inadvertently occur. All monies paid to Lender
hereunder or under any of the other Loan Documents, whether at maturity or by
prepayment, shall be subject to any rebate of unearned interest as and to the
extent required by Applicable Law. By the execution of this Agreement,
Borrower covenants that (i) the credit or return of any Excess shall constitute
the acceptance by Borrower of such Excess, and (ii) Borrower shall not seek or
pursue any other remedy, legal or equitable, against 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 Lender, all interest at any time
contracted for, charged or received from Borrower in connection with any of the
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
Obligations. Borrower and 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 every Loan Document (whether or not any provision of this
Section is referred to therein). All such Loan Documents and communications
relating to any Interest owed by Borrower and all figures set forth therein
shall, for the sole purpose of computing the extent of Obligations, be
automatically recomputed by Borrower, and by any court considering the same, to
give effect to the adjustments or credits required by this subsection.
2.1.5. Adjustment in Rate of Interest. Provided no Default or Event of
Default then exists, the Specified Percentage shall be decreased by one quarter
of one percent (0.25%) if, for the fiscal year of the Loan Parties ending
December 31, 1995, the Consolidated Adjusted Net Earnings From Operations
exceed $4,800,000 and the Consolidated Debt Service Coverage Ratio is not less
than 1.4 to 1.0 as reflected on the audited financial statements of the Loan
Parties required to be delivered to Lender pursuant to Section 8.1.3(i) hereof,
and an additional one quarter of one percent (0.25%) if, for the fiscal year of
the Loan Parties ending December 31, 1996, Consolidated Adjusted Net Earnings
From Operations exceed $7,200,000 and the Consolidated Debt Service Coverage
Ratio is not less than 2.3 to 1.0, as reflected on such audited financial
statements. Any decrease in the Specified Percentage pursuant to this
subsection 2.1.5 shall become effective on the first day of the calendar month
next following the month in which Lender receives the audited financial
statements of the Loan Parties required to be submitted to Lender pursuant to
Section 8.1.3(i) hereof.
1 Fees.
.0 . Closing Fee. Borrower shall pay to Lender a closing fee of
$75,000, one half of which shall be paid concurrently with the initial Revolver
Loan hereunder and the balance payable upon the sooner to occur of (i) ninety
(90) days after the Closing Date or (ii) the Expiration Date. The entire
amount of the closing fee shall be fully earned upon Lender's making of the
initial Revolver Loan hereunder.
.1 . Unused Line Fee. Borrower shall pay to Lender a fee equal to
one-half of one percent (0.5%) per annum of the amount by which seventy-five
percent (75%) of the Revolver Loan Facility exceeds the Average Monthly Loan
Balance. The unused line fee shall begin to accrue on the Closing Date and
shall be payable monthly in arrears on the first day of each calendar month
hereafter and upon the Expiration Date.
2 . Computation of Interest and Fees. Interest, fees and collection
charges hereunder shall be calculated daily and shall be computed on the actual
number of days elapsed over a year of 360 days. For the purpose of computing
interest hereunder, all items of payment received by Lender shall be deemed
applied by Lender on account of the Obligations (subject to final payment of
such items) on the first (1st) Business Day after receipt by Lender of such
items in immediately available funds in Lender's account located at Harris
Trust & Savings Bank in Chicago, Illinois, and Lender shall be deemed to have
received such item of payment on the date specified in Section 3.3 hereof.
3 . Audit and Appraisal Fees and Expenses. Additionally, Borrower
shall pay to Lender all reasonable out-of-pocket expenses from time to time
incurred by Lender in connection with audits and appraisals of Borrower's books
and records and of the Collateral and such other matters related thereto as
Lender shall deem appropriate; provided, however, for so long as no Default or
Event of Default exists, the maximum amount of such audit and appraisal
expenses for which Borrower shall be obligated to pay Lender for any Loan Year
shall not exceed the sum of $8,000.
4 . Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists (except as otherwise set forth
below), Lender incurs legal or accounting expenses or any other costs or
out-of-pocket expenses in connection with (i) subject to the provisions of the
last sentence of this Section 2.5, the preparation, negotiation, execution and
delivery of this Agreement or any of the other Loan Documents, any amendment of
or modification of this Agreement or any of the other Loan Documents, (ii)
reasonable charges for Persons whom Lender may engage from time to time during
the existence of an Event of Default to render opinions concerning the books,
records and financial condition of Borrower and the condition and value of the
Collateral; (iii) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Lender, Borrower or any other Person) in any way
relating to the Collateral, this Agreement or any of the other Loan Documents
or Borrower's affairs; provided, however, Borrower shall not be obligated for
the expenses and costs of Lender set forth in this Section 2.5(iii) in
connection with any litigation, contest, dispute, suit, proceeding or action
initiated by Lender or Borrower in which Borrower is ultimately the prevailing
party; (iv) any attempt to enforce any rights of Lender against Borrower or any
other Person which may be obligated to Lender by virtue of this Agreement or
any of the other Loan Documents, including, without limitation, the Account
Debtors; (v) any attempt to inspect, verify, protect, preserve, restore,
collect, sell, liquidate or otherwise dispose of or realize upon the Collateral
after the occurrence and during the continuance of an Event of Default; or (vi)
the filing and recording of the financing statements and all other documents
required by Lender to perfect Lender's Lien in the Collateral, including,
without limitation, any documentary stamp tax or any other taxes incurred
because of such filing or recording, and the conducting of searches in all
filing offices at such intervals as Lender may determine to confirm the
priority of Lender's Lien in the Collateral; then all such reasonable legal and
accounting expenses and other reasonable costs and out of pocket expenses of
Lender shall be charged to Borrower. All amounts chargeable to Borrower under
this Section 2.5 shall be Obligations secured by all of the Collateral, shall
be payable on demand to Lender, and shall bear interest from the date such
demand is made until paid in full at the rate applicable to Revolver Loans from
time to time. Borrower shall also reimburse Lender for expenses incurred by
Lender in its administration of the Collateral to the extent and in the manner
provided in Section 6 hereof. Notwithstanding the provisions of the foregoing
Section 2.5(i), Borrower shall be responsible for paying or reimbursing Lender
for no more than $35,000 of reasonable legal fees and expenses incurred by
Lender in connection with the preparation, negotiation, execution and delivery
of this Agreement and the other Loan Documents for which Borrower shall be
supplied with a reasonably detailed and itemized statement.
5 . Bank Charges. Borrower shall pay to Lender, on demand, any and all
fees, costs or expenses which Lender pays to a bank or other similar
institution arising out of or in connection with (i) the forwarding to Borrower
or any other Person on behalf of Borrower by Lender of proceeds of Loans made
by Lender to Borrower pursuant to this Agreement and (ii) the depositing for
collection, by Lender, of any check or item of payment received or delivered to
Lender on account of the Obligations.
6 . Capital Adequacy. If after the date hereof Lender determines that
(a) the adoption of any Applicable Law, rule or regulation regarding capital
requirements for banks or bank holding companies or the subsidiaries thereof,
(b) any change in the interpretation or administration of any such law, rule or
regulation by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or (c) compliance by
Lender or its holding company with any request or directive of any such
governmental authority, central bank or comparable agency regarding capital
adequacy (whether or not having the force of law), has the effect of reducing
the return on Lender's capital to a level below that which Lender could have
achieved (taking into consideration Lender's and its holding company's policies
with respect to capital adequacy immediately before such adoption, change or
compliance and assuming that Lender's capital was fully utilized prior to such
adoption, change or compliance) but for such adoption, change or compliance as
a consequence of Lender's commitment to make the Loans pursuant hereto by any
amount deemed by Lender to be material:
(i) Lender shall promptly, after Lender's
determination of such occurrence, give notice thereof to Borrower; and
(ii) Commencing ninety (90) days after Lender's
giving notice to Borrower as set forth in clause (i) above, Borrower shall pay
to Lender, as an additional fee from time to time, on demand, such amount as
Lender certifies to be the amount that will compensate Lender for such
reduction.
A certificate of Lender claiming entitlement to compensation as set forth
above will be conclusive in the absence of manifest error. Such certificate
will set forth the nature of the occurrence giving rise to such compensation,
the additional amount or amounts to be paid to Lender, and the method by which
such amounts were determined. In determining such amount, Lender may use any
reasonable averaging and attribution method. For purposes of this Section 2.7
all references to Lender shall be deemed to include any bank holding company or
bank parent of Lender.
2. LOAN ADMINISTRATION.
0 . Manner of Borrowing Loans and Disbursements. Borrowings of Loans
shall be made and funded as follows:
.0 . Loan Requests.
( ) Whenever Borrower desires to borrow pursuant to
this Agreement, Borrower shall give Lender prior written notice (or telephonic
notice promptly confirmed in writing) of such borrowing request (a "Notice of
Borrowing"). Such Notice of Borrowing shall be given by Borrower no later
than 12:00 noon Charlotte, North Carolina time at the office of Lender
designated by Lender from time to time on the Business Day of the requested
date of such borrowing. Notices received after 12:00 noon shall be deemed
received on the next Business Day. Each Notice of Borrowing shall specify (i)
the principal amount of the borrowing and (ii) the date of borrowing (which
shall be a Business Day).
(i) Unless payment is otherwise timely made by
Borrower, the becoming due of any amount required to be paid under this
Agreement or any of the other Loan Documents as principal, accrued interest,
fees or other charges shall be deemed irrevocably to be a request by Borrower
for a Revolver Loan on the due date of, and in an aggregate amount required to
pay, such principal, accrued interest, fees or other charges, and the proceeds
of each such Revolver Loan may be disbursed by Lender by way of direct payment
of the relevant Obligation. Within a reasonable time after the payment by
Lender of any fees or other charges that are not of a routine or administrative
nature, Lender shall give Borrower notice thereof and send to Borrower (if
available to Lender) any invoice or other supporting documentation for such fee
or other charge.
(ii) As an accommodation to Borrower, Lender may
permit telephonic requests for borrowings and electronic transmittal of
instructions, authorizations, agreements or reports to Lender by Borrower.
Unless Borrower specifically directs Lender in writing not to accept or act
upon telephonic or electronic communications from Borrower, Lender shall have
no liability to Borrower for any loss or damage suffered by Borrower as a
result of Lender's honoring of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to it
telephonically or electronically and purporting to have been sent to Lender by
Borrower and Lender shall have no duty to verify the origin of any such
communication or the authority of the person sending it.
.1 . Disbursement. Borrower hereby irrevocably authorizes Lender to
disburse the proceeds of each Revolver Loan requested by Borrower, or deemed to
be requested, pursuant to subsection 3.1.1 as follows: (i) the proceeds of
each Revolver Loan requested under subsection 3.1.1(i) shall be disbursed by
Lender in lawful money of the United States of America in immediately available
funds, in the case of the initial borrowing, in accordance with the terms of
the written disbursement letter from Borrower, and in the case of each
subsequent borrowing, by wire transfer to such bank account as may be agreed
upon by Borrower and Lender from time to time or elsewhere if pursuant to a
written direction from Borrower; and (ii) the proceeds of each Revolver Loan
requested under subsection 3.1.1(ii) shall be disbursed by Lender by way of
direct payment of the relevant interest or other Obligation.
1 . Payments. Except where evidenced by notes or other instruments
issued or made by Borrower to Lender specifically containing payment provisions
which are in conflict with this Section 3.2 (in which event the conflicting
provisions of said notes or other instruments shall govern and control), the
Obligations shall be payable as follows:
.0 . Repayment of Revolver Loans. Borrower's obligation to pay the
principal of, and interest on, the Revolver Loans shall be evidenced by the
Loan Account (a statement of which shall be furnished monthly to Borrower
pursuant to Section 3.6 hereof) and all outstanding principal amounts and
accrued interest with respect to the Revolver Loans shall be due and payable as
follows:
( ) The Revolver Loans shall be paid by Borrower to
Lender immediately upon the earliest of (1) the receipt by Lender or Borrower
of any proceeds of any of the Collateral, to the extent of such proceeds, (2)
the occurrence of an Event of Default in consequence of which Lender elects to
accelerate the maturity and payment of such Revolver Loans, or (3) the
Expiration Date. Interest accrued on the principal amount of Revolver Loans
shall be calculated and paid as provided in Section 2.1 hereof.
(i) Notwithstanding anything to the contrary
contained elsewhere in this Agreement, if an Overadvance Condition shall exist,
Borrower shall, without the necessity of a demand, repay the outstanding
Revolver Loans in an amount sufficient to reduce the aggregate unpaid principal
amount of all such Revolver Loans by an amount equal to such excess.
.1 . Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
Section 2 hereof, to Lender or to any other Person designated by Lender in
writing.
.2 . Other Obligations. The balance of the Obligations requiring the
payment of money, if any, shall be payable by Borrower to Lender as and when
provided in this Agreement, the Other Agreements or the Security Documents, or,
if no date of payment is otherwise specified in the Loan Documents, on demand.
2 . Application of Payments and Collections. All items of payment
received by Lender by 1:00 p.m., Charlotte, North Carolina time, on any
Business Day shall be deemed received on that Business Day. All items of
payment received after 1:00 p.m., Charlotte, North Carolina time, on any
Business Day shall be deemed received on the following Business Day. Borrower
irrevocably waives the right to direct the application of any and all payments
and collections at any time or times hereafter received by Lender from or on
behalf of Borrower, and Borrower does hereby irrevocably agree that Lender
shall have the continuing exclusive right to apply and reapply any and all such
payments and collections received at any time or times hereafter by Lender or
its agent against the Obligations, in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records, provided
such application of payments and collections is made in a manner consistent
with this Agreement and the other Loan Documents. If as the result of the
clearance and collection of all Accounts of Borrower through ACH and the direct
payment of all funds credited to Borrower's Clearing Bank Account to Lender for
application to the Obligations, all as provided in subsections 6.2.5 and 6.2.6
hereof, a credit balance exists in the Loan Account, such credit balance shall
not accrue interest in favor of Borrower, but shall be available to Borrower at
any time or times for so long as no Default or Event of Default exists. Lender
may, at its option, offset such credit balance against any of the Obligations
upon and after the occurrence of an Event of Default.
3 . All Loans to Constitute One Obligation. The Loans shall constitute
one general Obligation of Borrower and shall be secured by Lender's Lien in all
of the Collateral.
4 . Loan Account. Lender shall enter all Revolver Loans as debits to
Borrower's Loan Account and shall also record in the Loan Account all payments
made by Borrower on the Revolver Loans and all proceeds of Collateral which are
finally paid to Lender, and may record therein other debits and credits,
including interest and all charges and expenses, properly chargeable to
Borrower under this Agreement and the other Loan Documents.
5 . Statements of Account. Lender will account to Borrower monthly
with a statement of Loans, charges and payments made pursuant to this
Agreement, and such account rendered by Lender shall be deemed final, binding
and conclusive upon Borrower unless Lender is notified by Borrower in writing
to the contrary within 30 days after the date on which such accounting is
deemed to have been sent pursuant to section 11.8. Such notice shall only be
deemed an objection to those items specifically objected to therein.
3. TERM AND TERMINATION
0 . Term of Agreement. Subject to Lender's right to cease making Loans
to Borrower upon or after the occurrence of any Default or Event of Default,
this Agreement shall be in effect for a period of three (3) years from the last
day of the month hereof, through and including September 30, 1998 (the
"Original Term"), and this Agreement shall automatically renew itself for one
(1) year periods thereafter (each a "Renewal Term"), unless earlier terminated
as provided in Section 4.2 hereof.
1 . Termination.
.0 Termination by Lender. Upon at least ninety (90) days prior
written notice to Borrower, Lender may terminate this Agreement as of the last
day of the Original Term or the then current Renewal Term and Lender may
terminate this Agreement without notice upon or after the occurrence of an
Event of Default.
.1 Termination by Borrower. Upon at least ninety (90) days prior
written notice to Lender, Borrower may, at its option, terminate this
Agreement; provided, however, no such termination shall be effective until
Borrower has paid all of the Obligations in immediately available funds. Any
notice of termination given by Borrower shall be irrevocable unless Lender
otherwise agrees in writing, and Lender shall have no obligation to make any
Loans on or after the termination date stated in such notice.
.2 Termination Upon Expiration of United Express Operating
Agreement. This Agreement shall, at Lender's option, automatically terminate
three (3) months before the United Express Termination Date.
.3 Termination Charges. At the effective date of termination of
this Agreement for any reason, Borrower shall pay to Lender (in addition to the
then outstanding principal, accrued interest and other charges owing under the
terms of this Agreement and any of the other Loan Documents) as liquidated
damages for the loss of the bargain and not as a penalty, an amount equal to
the product obtained by multiplying the highest of the Average Monthly Loan
Balance during the immediately preceding 12-month period ending with the month
immediately preceding the date of such termination (or shorter period of time
this Agreement is in effect), times two percent (2%) if termination occurs
during the First Loan Year; and one percent (1%) if termination occurs during
either the Second or Third Loan Year or during any Renewal Term in the event
that Borrower pays any amounts to Lender pursuant to Section 2.7 of this
Agreement as a result of a determination by Lender that such payment is
required thereunder, Borrower may, within ninety (90) days after Lender's
giving Borrower written demand for payment of any such amount, terminate this
Agreement without the payment of any termination fee. If termination occurs on
the last day of the Original Term or any Renewal Term, no termination charge
shall be payable.
.4 Effect of Termination. Upon the Expiration Date, all of the
Obligations shall be immediately due and payable. All undertakings,
agreements, covenants, warranties and representations of Borrower contained in
the Loan Documents shall survive any such termination and Lender shall retain
its Liens in the Collateral and all of its rights and remedies under the Loan
Documents notwithstanding such termination until Borrower has paid the
Obligations to Lender, in full, in immediately available funds, together with
the applicable termination charge, if any. Notwithstanding the payment in full
of the Obligations, Lender shall not be required to terminate its security
interests in the Collateral unless, with respect to any loss or damage Lender
may incur as a result of dishonored checks or other items of payment
constituting uncollected funds received by Lender from Borrower or any Account
Debtor and applied to the Obligations before final collection, Lender shall, at
its option, (i) have received a written agreement, executed by Borrower and by
any Person whose loans or other advances to Borrower are used in whole or in
part to satisfy the Obligations, indemnifying Lender from any such loss or
damage; or (ii) have retained such monetary reserves and Liens on the
Collateral for such period of time as Lender, in its reasonable discretion, may
deem reasonably necessary to protect Lender from any such loss or damage.
4. SECURITY INTERESTS
0 . Security Interest in Collateral. To secure the prompt payment and
performance to Lender of the Obligations, Borrower hereby grants to Lender a
continuing Lien upon all of the following Property and interests in Property of
Borrower, whether now owned or existing or hereafter created, acquired or
arising and wheresoever located:
( ) All Accounts;
(i) All General Intangibles;
(ii) All Documents;
(iii) All Instruments;
(iv) All Chattel Paper;
(v) All tickets, exchange orders and other billing
documents for the air transportation of passengers and property, whether
processed or unprocessed;
(vi) All right, title and interest of Borrower in and to the
settlement accounts maintained with the Clearing Bank and all sums now or
hereafter in, payable to or withdrawable from such accounts;
(vii) All monies and other Property of any kind now or at any
time or times hereafter in the possession or under the control of Lender or a
bailee or Affiliate of Lender;
(viii) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (i) through (viii)
above, including, without limitation, proceeds of and unearned premiums with
respect to insurance policies insuring any of the Collateral; and
(ix) All books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and other computer
materials and records) of Borrower pertaining to any of (i) through (ix) above.
1 . Lien Perfection; Further Assurances. At Lender's request, Borrower
shall execute such UCC-1 financing statements as are required by the Code and
such other instruments, assignments or documents as are necessary to perfect
Lender's Lien upon any of the Collateral and, at Lender's request, shall take
such other action as may be directed by Lender to perfect or to continue the
perfection of Lender's Lien upon the Collateral. Unless prohibited by
Applicable Law, Borrower hereby authorizes Lender to execute and file any such
financing statement on Borrower's behalf. The parties agree that a carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement and may be filed in any appropriate office in lieu thereof.
At Lender's request, Borrower shall also promptly execute or cause to be
executed and shall deliver to Lender any and all documents, instruments and
agreements deemed necessary by Lender to give effect to or carry out the terms
or intent of the Loan Documents.
5. COLLATERAL ADMINISTRATION
0 . General
.0 Location of Collateral. All Collateral will at all times be kept
by Borrower at its chief executive office set forth in Exhibit B hereto and
shall not, without the prior written approval of Lender, be moved therefrom
except, prior to an Event of Default and Lender's acceleration of the maturity
of the Obligations in consequence thereof, for a relocation of Borrower's chief
executive office to another location within the continental United States if
(i) Borrower gives Lender written notice of such new location at least 60 days
prior to moving the Collateral to such new location, and (ii) Lender's Lien in
the Collateral is and continues to be a duly perfected Lien thereon (and
Borrower shall have taken such action as may be required pursuant to Section
5.2 hereof to perfect Lender's Lien thereon) subject to no other Lien thereon
except for Permitted Liens.
.1 Protection of Collateral. All expenses of protecting, storing,
handling and maintaining the Collateral, any and all excise, property, sales,
and use taxes imposed by any state, federal, or local authority on any of the
Collateral or in respect of the collection thereof shall be borne and paid by
Borrower. If Borrower fails to promptly pay any portion thereof when due,
Lender may, at its option, but shall not be required to, pay the same and
charge Borrower therefor. Lender shall not be liable or responsible in any way
for the safekeeping of any of the Collateral or for any loss or damage thereto
(except for reasonable care in the custody thereof while any Collateral is in
Lender's possession) or for any diminution in the value thereof, but the same
shall be at Borrower's sole risk.
1 . Administration of Accounts.
.0 Records, Schedules and Assignments of Accounts. Borrower shall
keep accurate and complete records in accordance with standard air carrier
industry practice of its Accounts and all payments and collections thereon and
shall submit to Lender:
(i) On such periodic basis as Lender shall request, but no
less frequently than weekly, a Borrowing Base Certificate;
(ii) Copies of each recap sheet submitted to the ACH under
the ACH Procedure Manual concurrently with the sending thereof to ACH;
(iii) Copies of each monthly settlement sheet received from
ACH pursuant to the ACH Procedure Manual, no later than the third (3rd)
Business Day after the receipt thereof; and
(iv) Upon Lender's request therefor, copies of all interline
invoices submitted to, or received from, ACH under the ACH Procedure Manual,
and such other matters and information relating to the Accounts of Borrower
included on any Borrowing Base Certificate as Lender shall from time to time
reasonably request.
In addition, if Accounts owing by any Account Debtor to Borrower in an
aggregate amount in excess of $25,000 become ineligible because they fall
within one of the specified categories of ineligibility set forth in the
definition of Eligible Accounts or otherwise established by Lender, Borrower
shall notify Lender of such occurrence no later than the second (2d) Business
Day following such occurrence and the Borrowing Base shall thereupon be
adjusted to reflect such occurrence.
.1 Discounts, Allowances, Disputes. If Borrower grants any
discounts or allowances that are not reflected in the calculation of the face
value of each Account involved, Borrower shall report such discounts or
allowances to Lender as part of the next required Borrowing Base Certificate.
In the event any amounts due and owing in excess of $25,000 are in dispute
between Borrower and any Account Debtor, Borrower shall provide Lender with
written notice thereof at the time of submission of the next Borrowing Base
Certificate, explaining in detail the reason for the dispute, all claims
related thereto and the amount in controversy.
.2 Taxes. If an Account of Borrower includes a charge for any tax
payable to any governmental taxing authority, Lender is authorized, in its sole
discretion, to pay the amount thereof to the proper taxing authority for the
account of Borrower and to charge Borrower therefor, provided, however that
Lender shall not be liable for any taxes to any governmental taxing authority
that may be due by Borrower.
.3 Account Verification. Whether or not a Default or an Event of
Default has occurred, any of Lender's officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Lender, any designee
of Lender or Borrower, to take reasonable steps to verify the validity, amount
or any other matter relating to any Accounts of Borrower by verbal or written
communications. Borrower shall cooperate fully with Lender in an effort to
facilitate and promptly conclude any such verification process.
.4 Transmission of Funds. Borrower shall cause all funds credited
to its Clearing Bank Account to be sent by federal funds wire transfer to the
account of Lender referred to in Section 2.3 of this Agreement.
6.2.6 Collection of Accounts and Other Proceeds of
Collateral. All Eligible Accounts of Borrower shall be cleared and collected
for payment by ACH pursuant to the ACH Procedure Manual. After the occurrence
of an Event of Default, all funds, items of payment or other remittances
received by Borrower on account of, or with respect to, its Accounts or the
proceeds of any other Collateral shall be held as Lender's property by Borrower
as trustee of an express trust for Lender's benefit and, no later than the
first (1st) Business Day after receipt, Borrower shall immediately forward the
same in kind to Lender for application to the Obligations. All funds credited
to the Clearing Bank Account shall immediately become the property of Lender,
and Borrower shall obtain the agreement by the Clearing Bank in favor of Lender
to waive any offset rights the Clearing Bank may otherwise have against the
funds so credited. Lender assumes no responsibility for the Clearing Bank
Account or its maintenance or operation, including, without limitation, any
claim of accord and satisfaction or release with respect to deposits made by
the Clearing Bank thereto.
2 . Payment of Charges. All amounts chargeable to Borrower under
Section 6 hereof shall be Obligations secured by all of the Collateral, shall
be payable on demand and shall bear interest from the date such advance was
made until paid in full at the rate applicable to Revolver Loans from time to
time.
6. REPRESENTATIONS AND WARRANTIES
0 . General Representations and Warranties. To induce Lender to enter
into this Agreement and to make Loans hereunder, each Loan Party warrants,
represents and covenants to Lender that:
.0 Organization and Qualification. Each Loan Party is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Loan Party is duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
each state or jurisdiction listed on Exhibit C hereto and in all other states
and jurisdictions where the character of its Properties or the nature of its
activities make such qualification necessary or in which the failure of such
Loan Party or its respective Subsidiaries to be so qualified would have a
Material Adverse Effect.
.1 Corporate Power and Authority. Each Loan Party is duly
authorized and empowered to enter into, execute, deliver and perform this
Agreement and each of the other Loan Documents to which it is a party. The
execution, delivery and performance of this Agreement and each of the other
Loan Documents by each Loan Party have been duly authorized by all necessary
corporate action and do not and will not (i) require any consent or approval of
the shareholders of such Loan Party; (ii) contravene such Loan Party's charter,
articles or certificate of incorporation or by-laws; (iii) violate, or cause
such Loan Party to be in default under, any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
in effect having applicability such Loan Party; (iv) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which such Loan Party is a party or by
which it or its Properties may be bound or affected; or (v) result in, or
require, the creation or imposition of any Lien (other than Permitted Liens)
upon or with respect to any of the Properties now owned or hereafter acquired
by such Loan Party.
.2 Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, a legal,
valid and binding obligation of each Loan Party enforceable against it in
accordance with its respective terms.
.3 Capital Structure. Exhibit D hereto states (i) the name of each
corporate or joint venture Affiliates of each Loan Party and the nature of the
affiliation, (ii) the number, nature and holder of all outstanding Securities
of each Loan Party, and (iii) the number of 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 its Subsidiaries, free and clear in
each case of any Lien other than Permitted Liens. All such shares have been
duly issued and are fully paid and 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 its respective Subsidiaries, except as listed on
Exhibit D. 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 Parent and is the only Subsidiary of
Parent. Borrower has no Subsidiaries.
.4 Corporate Names. No Loan Party has been known as or used any
corporate, fictitious or trade names except those listed on Exhibit E hereto.
Except as set forth on Exhibit E, no Loan Party has been the surviving
corporation of a merger or consolidation or acquired all or substantially all
of the assets of any Person.
.5 Chief Executive Office. Each Loan Party's chief executive
office is as listed on Exhibit B hereto.
.6 Title to Properties; Priority of Liens. Each Loan Party has
good, indefeasible and marketable title to and fee simple ownership of, or
valid and subsisting leasehold interests in, all of its real Property, and good
title to all of the Collateral and all of its other Property, and, in the case
of the Collateral, free and clear of all Liens except Permitted Liens. Each
Loan Party has paid or discharged all lawful claims which, if unpaid, might
become a Lien against any of such Loan Party's Properties that is not a
Permitted Lien. The Liens granted to Lender under Section 5 hereof are first
priority Liens, subject only to those Permitted Liens that are expressly stated
to have priority over the Liens of Lender.
.7 Accounts. Lender may rely, in determining which Accounts of
Borrower are Eligible Accounts, on all statements and representations made by
Borrower with respect to any Account or Accounts. Unless otherwise indicated
in writing to Lender, with respect to each Account listed on a Borrowing Base
Certificate:
( ) It is genuine and in all respects what it
purports to be, and it is not evidenced by a judgment;
(i) It arises out of a completed, bona fide
rendition of air transportation services by Borrower in the ordinary course of
its business and in accordance with the terms and conditions of all contracts
or other documents relating thereto and forming a part of the contract between
Borrower and the Account Debtor;
(ii) It is for a liquidated amount maturing as stated
in the duplicate invoice covering such service, a copy of which has been
furnished or is available to Lender;
(iii) To the best knowledge of Borrower, such Account,
and Lender's Lien therein, is not, and will not (by voluntary act or omission
of Borrower) be in the future, subject to any offset, deduction, defense,
dispute, counterclaim or any other adverse condition except for, in the case of
Accounts owing by United, United's right of setoff for current amounts owing
under the United Express Agreements, and in the case of all other Accounts,
offsets arising in the ordinary course of business for settlement through the
ACH under the ACH Agreement in accordance with the ACH Procedure Manual, and
each such Account is absolutely owing to Borrower and is not contingent in any
respect or for any reason;
(iv) Borrower has made no agreement with any Account
Debtor thereunder for any extension, compromise, settlement or modification of
any such Account or any deduction therefrom, except for, in the case of
Accounts owing by United, United's right of setoff for amounts owing under the
United Express Agreements, and except for discounts or allowances reported to
Lender pursuant to Section 6.2.2 hereof;
(v) To the best knowledge of Borrower, there are no
facts, events or occurrences which in any way impair the validity or
enforceability of any Accounts or tend to reduce the amount payable thereunder
from the face amount of the invoice and statements delivered to Lender with
respect thereto;
(vi) To the best of Borrower's knowledge, the Account
Debtor thereunder (1) had the capacity to contract at the time any contract or
other document giving rise to the Account was executed and (2) such Account
Debtor is Solvent; and
(vii) To the best of Borrower's knowledge, there are
no proceedings or actions which are threatened or pending against any Account
Debtor thereunder which might result in any material adverse change in such
Account Debtor's financial condition or the collectibility of such Account.
.8 Financial Statements; Fiscal Year.
( ) The Consolidated and consolidating balance
sheets of the Loan Parties and such other Persons described therein (including
the accounts of all Subsidiaries of each Loan Party for the respective periods
during which a Subsidiary relationship existed) as of December 31, 1992,
December 31, 1993, December 31, 1994 and June 30, 1995, and the related
statements of income, changes in stockholder's equity, and changes in financial
position for the periods ended on such dates, have been prepared in accordance
with GAAP, and present fairly the financial position of the Loan Parties and
such Persons as of such dates and the results of the Loan Parties' operations
for such periods. Since June 30, 1995, there has been no material change in
the condition, financial or otherwise, of any Loan Party and such other Persons
as shown on the Consolidated balance sheet as of such date;
(i) The Consolidated and consolidating balances
sheets of the Loan Parties and such other Persons described therein, and the
related statements of income, changes in stockholder's equity, and changes in
financial position, which are from time to time delivered to Lender pursuant to
Section 8.1.3 of this Agreement fairly present the financial position of the
Loan Parties and such Persons at such dates and the results of the operations
of the Loan Parties and such Persons for the periods set forth therein; and
(iii) The
fiscal year of each Loan Party ends on December 31 of each year.
.9 Full Disclosure. The financial statements referred to in
subsection 7.1.9 hereof do not, nor does this Agreement or any other written
statement of any Loan Party or its respective Subsidiaries to Lender, contain
any untrue statement of a material fact or omit a material fact necessary to
make the statements contained therein or herein not misleading. There is no
fact known to any Loan Party which such Loan Party has failed to disclose to
Lender in writing which materially affects adversely or, so far as can now be
foreseen, will materially affect adversely the Properties, business, prospects,
profits or condition (financial or otherwise) of a Loan Party or the ability
of a Loan Party to perform this Agreement or the other Loan Documents.
.10 Solvent Financial Condition. The Loan Parties are now and,
after giving effect to the Loans to be made hereunder, at all times will be,
Solvent on a Consolidated basis.
.11 Surety Obligations. No Loan Party is obligated as surety or
indemnitor under any surety or similar bond or other contract issued or entered
into any agreement to assure payment, performance or completion of performance
of any undertaking or obligation of any Person other than the other Loan Party.
.12 Taxes. The federal tax identification number of each Loan Party
is shown on Exhibit F hereto. Each Loan Party has filed all federal, state
and local tax returns and other reports it is required by law to file and has
paid, or made provision for the payment of, all taxes, assessments, fees,
levies and other governmental charges upon it, its income and Properties as and
when such taxes, assessments, fees, levies and charges that are due and
payable, except to the extent being Properly Contested. The provision for
taxes on the books of each Loan Party is adequate for all years not closed by
applicable statutes, and for its current fiscal year.
.13 Brokers. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the transactions
contemplated by this Agreement.
.14 Patents, Trademarks, Copyrights and Licenses. Each Loan Party
owns or possesses all the patents, trademarks, service marks, trade names,
copyrights and licenses necessary for the present and planned future conduct of
its business, without any known conflict with the rights of others. All such
patents, trademarks, service marks, tradenames, copyrights, licenses and other
similar rights are listed on Exhibit G hereto.
.15 Governmental Consents. Each Loan Party has, and is in good
standing with respect to, all governmental consents, approvals, licenses,
authorizations, permits, certificates, inspections and franchises necessary to
continue to conduct its business as heretofore or proposed to be conducted by
it and to own or lease and operate its Properties as now owned or leased by it.
.16 Compliance with Laws. Each Loan Party has duly complied with,
and its Properties, business operations and leaseholds are in compliance in all
material respects with, the provisions of all Applicable Law and there have
been no citations, notices or orders of noncompliance issued to any Loan Party
or any of its respective Subsidiaries under any such law, rule or regulation
where such non-compliance could reasonably be expected to have a Material
Adverse Effect. Each Loan Party and its respective Subsidiaries has
established and maintains an adequate monitoring system to insure that it
remains in compliance with all federal, state and local laws, rules and
regulations applicable to it.
.17 Restrictions. No Loan Party is a party or subject to any
contract, agreement, or charter or other corporate restriction, which
materially and adversely affects its business or the use or ownership of any of
its Properties. No Loan Party is a party or subject to any contract or
agreement which restricts its right or ability to incur Indebtedness, other
than as set forth on Exhibit H hereto, none of which prohibit the execution of
or compliance with this Agreement or the other Loan Documents by any Loan Party
or any of its respective Subsidiaries, as applicable.
.18 Litigation. Except as set forth on Exhibit I hereto, there are
no actions, suits, proceedings or investigations pending or threatened against
or affecting any Loan Party, or the business, operations, Properties,
prospects, profits or condition of any Loan Party, and no such action, suit or
proceeding will, if decided adversely, have a Material Adverse Effect. No Loan
Party is in default with respect to any order, writ, injunction, judgment,
decree or rule of any court, governmental authority or arbitration board or
tribunal.
.19 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or any
Loan Party's performance hereunder, constitute a Default or an Event of
Default. No Loan Party is in default, and no event has occurred and no
condition exists which constitutes, or which with the passage of time or the
giving of notice or both would constitute, a default in the payment of any
Indebtedness to any Person for Money Borrowed.
.20 Leases. Each Loan Party is in compliance in all material
respects with all of the terms of each of its respective capitalized and
operating leases.
.21 Pension Plans. Except as disclosed on Exhibit J hereto, no Loan
Party has any Plan. Each Loan Party is in full compliance with the
requirements of ERISA and the regulations promulgated thereunder with respect
to each Plan. No fact or situation that could result in a Material Adverse
Effect exists in connection with any Plan. No Loan Party has any withdrawal
liability in connection with a Multiemployer Plan.
.22 Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between any Loan Party and any customer or any group
of customers whose purchases individually or in the aggregate are material to
the business of any Loan Party, or with any material supplier, and there
exists no present condition or state of facts or circumstances which would
materially affect adversely any Loan Party or prevent any Loan Party from
conducting such business after the consummation of the transactions
contemplated by this Agreement in substantially the same manner in which it has
heretofore been conducted.
.23 Labor Relations. Except as described on Exhibit K hereto, no
Loan Party is a party to any collective bargaining agreement. There are no
material grievances, disputes or controversies with any union or any other
organization of any Loan Party's or any of its respective Subsidiaries'
employees, or threats of strikes, work stoppages or any asserted pending
demands for collective bargaining by any union or organization.
1 . Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of a Loan Party's business or operations that would
render the information in any exhibit attached hereto either inaccurate,
incomplete or misleading, so long as Lender has consented to such changes or
such changes are not expressly prohibited by this Agreement or the other Loan
Documents.
2 . Survival of Representations and Warranties. All representations
and warranties of each Loan Party contained in this Agreement or any of the
other Loan Documents shall survive the execution, delivery and acceptance
thereof by Lender and the parties thereto and the closing of the transactions
described therein or related thereto.
7. COVENANTS AND CONTINUING AGREEMENTS
0 . Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, each Loan Party
covenants that, unless otherwise consented to by Lender in writing, it shall:
.0 Visits and Inspections. Permit representatives of Lender, from
time to time, as often as may be reasonably requested, but only during normal
business hours upon reasonable advance notice, to visit and inspect the
Properties of each Loan Party, inspect, audit and make extracts from its books
and records, and discuss with its officers, its employees and its independent
accountants, each Loan Party's business, assets, liabilities, financial
condition, business prospects and results of operations.
.1 . Notices. 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 any
of its Properties, whether or not the claim is considered by such Loan Party to
be covered by insurance, 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 execution
of any amendment or modification to the United Express Operating Agreement that
would extend the United Express Termination Date and send to Lender a copy
thereof; (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,
any strikes or walkouts by organized labor relating to any of its facilities,
and the final expiration of any collective bargaining agreement to which it is
a party or by which it is bound; (v) promptly after a Loan Party's learning
thereof, of any material default by any 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 $200,000; (vi)
promptly after the occurrence thereof, of any Default or Event of Default;
(vii) promptly after the occurrence thereof, of any default or event of default
by Borrower or United under any of the United Express Agreements; (viii)
promptly after the rendition thereof, of any judgment rendered against a Loan
Party in an amount exceeding $200,000 which is not fully covered by insurance;
and (ix) of the ordering of any services from United under the United Express
Emergency Response Agreement, and give Lender full particulars of the services
ordered and the estimated costs thereof.
.2 Financial Statements. Keep adequate records and books of account
with respect to its business activities in which proper entries are made in
accordance with GAAP reflecting all its financial transactions; and cause to be
prepared and furnished to Lender the following (all to be prepared in
accordance with GAAP applied on a consistent basis, unless Borrower's certified
public accountants concur in any change therein and such change is disclosed to
Lender and is consistent with GAAP):
( ) not later than 91 days after the close of
each fiscal year of the Loan Parties, audited financial statements of the Loan
Parties as of the end of such year, on a Consolidated and consolidating basis,
certified by BDO Seidman or other firm of independent certified public
accountants of recognized standing selected by the Loan Parties but acceptable
to Lender (except for a qualification for a change in accounting principles
with which the accountant concurs);
(i) not later than 60 days after the end of
the months of January, February and December in each fiscal year of the Loan
Parties, and 45 days after the end of each other month in each fiscal year of
the Loan Parties, unaudited interim financial statements of the Loan Parties as
of the end of such month and of the portion of the Loan Parties' financial year
then elapsed, on a Consolidated and consolidating basis, certified by a
financial officer of the Loan Parties as prepared in accordance with GAAP and
fairly presenting the Consolidated financial position and results of operations
of the Loan Parties for such month and period subject only to changes from
audit and year-end adjustments and except that such statements need not contain
notes;
(ii) promptly after the sending or filing
thereof, as the case may be, copies of any proxy statements, financial
statements or reports which each Loan Party has made available to its
shareholders and copies of any regular, periodic and special reports or
registration statements which each Loan Party files with the Securities and
Exchange Commission or any governmental authority which may be substituted
therefor, or any national securities exchange;
(iii) currently with the delivery of the monthly
financial statements described in clause (ii) of this subsection 8.1.3, an
accurate and complete report of the accounts payable of the Loan Parties, in
form and substance satisfactory to Lender;
(iv) promptly after the filing thereof, copies
of any annual report to be filed with ERISA in connection with each Plan; and
(v) such other data and information (financial
and otherwise) maintained by the Loan Parties as Lender, from time to time, may
reasonably request, bearing upon or related to the Collateral or each Loan
Party's financial condition or results of operations.
Concurrently with the delivery of the financial statements
described in clause (i) of this subsection 8.1.3, the Loan Parties shall cause
to be prepared and shall furnish to Lender a certificate of the aforesaid
certified public accountants certifying to Lender that, based upon their
examination of the financial statements of the Loan Parties performed in
connection with their examination of said financial statements, they are not
aware of any Default or Event of Default, or, if they are aware of such Default
or Event of Default, specifying the nature thereof, and acknowledging, in a
manner satisfactory to Lender, that they are aware that Lender is relying on
such financial statements in making its decisions with respect to the Loans.
No later than ten days after receipt of the accountants' letter to the
management of the Loan Parties that is prepared in connection with the
financial statements described in clause (i) of this subsection 8.1.3, but in
no event later than 150 days after the end of each fiscal year, the Loan
Parties shall forward to Lender a copy of such accountants' letter.
Concurrently with the delivery of the financial statements described in clause
(i) of this subsection 8.1.3 and those financial statements described in clause
(ii) of this subsection 8.1.3 which are for the last month in a fiscal quarter
of the Loan Parties, the Loan Parties shall cause to be prepared and furnished
to Lender a Compliance Certificate in the form of Exhibit L hereto executed by
a financial officer of the Loan Parties.
.3 Projections. No later than 45 days after the end of each fiscal
year of the Loan Parties, deliver to Lender Projections of the Loan Parties for
the forthcoming fiscal year, month by month.
.4 Taxes and Liens. Pay and discharge all taxes prior to the date
on which such taxes become delinquent or penalties attach thereto, except and
only to the extent that such taxes are being Properly Contested. Each Loan
Party shall also pay, discharge or provide a bond with respect to, any lawful
claims which, if unpaid or unbonded, might become a Lien against any Property
of any Loan Party except for Permitted Liens.
.5 Tax Returns. File all federal, state and local tax returns and
other reports any Loan Party is required by law to file and maintain adequate
reserves for the payment of all taxes, assessments, governmental charges and
levies imposed upon it, its income or its profits, or upon any Property
belonging to it.
.6 Compliance with Applicable Laws. Comply with all Applicable
Laws, and obtain and keep in force any and all licenses, permits, franchises or
other governmental authorizations necessary to the ownership of its Property or
to the conduct of its business, which violation or failure to obtain might have
a Material Adverse Effect.
8.1.8 Insurance. Maintain, with financially sound and
reputable insurers, insurance with respect to its Properties and business
against such casualties and contingencies of such type (including general
liability) and in such amounts as is customary in the business of Borrower or
as otherwise reasonably required by Lender.
1 . Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, each Loan Party
covenants that, unless Lender has first consented thereto in writing, it will
not:
.0 Mergers; Consolidations; Acquisitions. Merge or consolidate with
any Person or acquire all or any substantial part of the Properties of any
Person; provided, however, the foregoing restriction shall not apply to (i) a
merger by Parent with and into Borrower with Borrower as the surviving
corporation or (ii) a merger by Borrower with and into Parent with Parent as
the surviving corporation, provided, in the case of a merger pursuant to clause
(ii) hereof, the following conditions are first satisfied by the Loan Parties:
(a) Borrower shall have given Lender not less than fifteen (15) days prior
written notice of the effective date of such merger, (b) Lender shall have
received, in form and substance satisfactory to Lender and its counsel, an
assumption agreement as of the effective date of the merger, duly executed by
Parent, pursuant to which Parent shall assume, adopt, ratify and confirm all of
the Obligations of Borrower under this Agreement and the other Loan Documents,
together with such other documents as Lender or its counsel may reasonably
require, (c) Lender shall have received copies of all agreements, documents and
instruments relating to the merger as executed by the parties thereto,
including the certificates of merger as issued and certified by the Secretary
of States of the jurisdictions of incorporation of each Loan Party, (d)
Lender's Lien in the Collateral is and continues to be a duly perfected Lien
thereon (and each Loan Party shall have taken such action as may be required
pursuant to Section 5.2 hereof to perfect Lender's Lien thereon) subject to no
other Lien thereon except for Permitted Liens, and (e) no Default or Event of
Default shall exist immediately before or after giving effect to such merger.
.1 Loans. Make any loans or other advances of money (other than for
salary, travel advances, advances against commissions and other similar
advances in the ordinary course of business) to any Person.
.2 Affiliate Transactions. Enter into, or be a party to any
transaction with any Affiliate of a Loan Party or stockholder, except in the
ordinary course of and pursuant to the reasonable requirements of such Loan
Party's business and upon fair and reasonable terms which are fully disclosed
to Lender and are no less favorable to such Loan Party than would obtain in a
comparable arm's length transaction with a Person not an Affiliate of such Loan
Party.
.3 Limitation on Liens. Create or suffer to exist any Lien upon any
of the Collateral, whether now owned or hereafter acquired, except:
( ) Liens at any time granted in favor of
Lender;
(i) Liens for taxes (excluding any Lien
imposed pursuant to any of the provisions of ERISA) not yet due or that are
being Properly Contested;
(ii) statutory Liens arising in the ordinary
course of such Loan Party's business by operation of law or regulation, but
only if payment in respect of any such Lien is not at the time required or such
Liens are being Properly Contested and do not, in the aggregate, materially
detract from the value of the Collateral or materially impair the use thereof
in the operation of such Loan Party's business; and
(iv) Liens of JSX in the Collateral, provided
that such Liens are at all times junior and subordinate to the Lien of Lender
in the Collateral and are subject to the JSX Intercreditor Agreement; and
(v) such other Liens as Lender may hereafter
approve in writing.
.4 Distributions. Declare or make any Distributions, except that,
commencing on March 31, 1997, Borrower may make Distributions to Parent for
substantially contemporaneous Distributions by Parent on its Series A
Cumulative Convertible Preferred Stock, as in existence on the Closing Date, if
and only to the extent that (i) no Default or Event of Default then exists or,
after giving effect to such Distribution, will exist, and (ii) such
Distribution has been duly authorized by all necessary corporate action and is
permitted by Applicable Law.
.5 Disposition of Collateral. Sell, lease or otherwise dispose of
any of the Collateral.
.6 Restricted Investment. Make or have any Restricted Investment.
.7 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary of a
Loan Party.
.8 Fiscal Year. Change its fiscal year from that described in
subsection 7.1.9(iii).
8.2.10 Guaranties. Become liable upon the obligations of any
Person other than the other Loan Party, by assumption, endorsement or guaranty
thereof or otherwise (other than to Lender), except the endorsement of checks
in the ordinary course of business.
8.2.11 United Express Agreements. Enter into, or agree to,
any amendment, modification, supplement or termination of any United Express
Agreement subsequent to the date of this Agreement if the effect of such
amendment, modification, supplement or termination would (i) shorten the period
during which the United Express Operating Agreement is in effect or (ii)
increase, or could reasonably be expected to increase, the amount of any fees,
charges or other Indebtedness owing by Borrower to United which, pursuant to
the United Non-Offset Agreement, United is permitted to offset against the
Accounts of Borrower owing by United.
8.2.12 ACH Membership. Withdraw from being an associate
member of the ACH.
8.2.13 Subsidiaries. Hereafter create any Subsidiary or
divest itself of any material assets by transferring them to any Subsidiary to
whose existence Lender has consented.
2 . Specific Financial Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Lender, each Loan
Party covenants that, unless otherwise consented to by Lender in writing, it
shall comply with the following financial covenants:
.0 Consolidated Adjusted Tangible Net Worth. The Consolidated
Adjusted Tangible Net Worth of the Loan Parties shall be not less than the
amount shown below as of the date and for the period set forth below:
Consolidated Adjusted
Date or Period Tangible Net Worth
Fiscal year ended December 31, 1995 $ 3,750,000
Fiscal quarter ended March 31, 1996 $ 100,000
Fiscal quarter ended June 30, 1996 $ 5,100,000
Fiscal quarter ended September 30, 1996 $ 8,650,000
Fiscal year ended December 31, 1996 $10,500,000
Fiscal quarter ended March 31, 1997 $ 7,100,000
Fiscal quarter ended June 30, 1997 $12,600,000
Fiscal quarter ended September 30, 1997 $16,500,000
Fiscal year ended December 31, 1997 $18,100,000
and at all times thereafter
.1 Profitability. The Consolidated Adjusted Net Earnings From
Operations of the Loan Parties shall be not less than the amount shown below
for the period corresponding thereto:
Consolidated Adjusted Net
Period Earnings From Operations
Fiscal quarter ended December 31, 1995 $ 900,000
Fiscal quarter ended March 31, 1996 ($3,900,000)
First two fiscal quarters ended June 30, 1996
$1,275,000
Consolidated Adjusted Net
Period Earnings From Operations
First three fiscal quarters ended $4,500,000
September 30, 1996
Fiscal year ended December 31, 1996 $6,400,000
First fiscal quarter ended March 31, 1997
($2,800,000)
and first fiscal quarter ended of each fiscal
year thereafter
First two fiscal quarters ended $2,700,000
June 30, 1997 and the first two fiscal
quarters of each fiscal year thereafter
First three fiscal quarters ended
$6,950,000
September 30, 1997 and the first three
fiscal quarters of each fiscal year thereafter
Fiscal year ended December 31, 1997 and
$8,300,000
each fiscal year thereafter
.2 Consolidated Debt Service Coverage Ratio. The Consolidated Debt
Service Coverage Ratio of the Loan Parties shall be not less than the ratio
shown below for the period corresponding thereto:
Consolidated Debt Service
Period Coverage Ratio
Fiscal quarter ended December 31, 1995 1.8 to 1.0
Fiscal quarter ended March 31, 1996 -5.9 to 1.0
First two fiscal quarters ended 1.0 to 1.0
June 30, 1996
First three fiscal quarters 1.75 to 1.0
ended September 30, 1996
Fiscal year ended December 31, 1996 2.0 to 1.0
First fiscal quarter ended March 31, 1997 -7.1 to 1.0
and the first fiscal quarter of each fiscal
year thereafter
First two fiscal quarters ended June 30, .75 to 1.0
1997 and the first two fiscal quarters
of each fiscal year thereafter
Consolidated Debt Service
Period Coverage Ratio
First three fiscal quarters ended 2.2 to 1.0
September 30, 1997 and the first
three fiscal quarters of each
fiscal year thereafter
Fiscal year ended December 31, 1997 2.0 to 1.0
and each fiscal year thereafter
.3 Capital Expenditures. The Loan Parties shall not make Capital
Expenditures (including, without limitation, by way of capitalized leases)
which, in the aggregate exceed the amount shown below for the period
corresponding thereto:
Period Capital Expenditures
Fiscal quarter ended December 31, 1995 $3,700,000
Fiscal year ended December 31, 1996 $7,900,000
Fiscal year ended December 31, 1997 $4,150,000
and each fiscal year thereafter
CONDITIONS PRECEDENT
0 . Conditions Precedent to Initial Revolver Loan on Closing Date.
Notwithstanding any other provision of this Agreement or any of the other Loan
Documents, and without affecting in any manner the rights of Lender under the
other sections of this Agreement, it is understood and agreed that Lender will
have no obligation to make the initial Revolver Loan under Section 1 of this
Agreement on the Closing Date unless and until, in addition to each of the
conditions set forth in Section 9.2 hereof, each of the following conditions
has been satisfied:
.0 Documentation. Lender shall have received the following
documents, each to be in form and substance satisfactory to Lender and its
counsel:
( ) Copies of all filing receipts or acknowledgments
issued by any governmental authority 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, subject only to those Permitted Liens
which are expressly stated to have priority over the Liens of Lender;
(i) Copies of the Articles or Certificate of
Incorporation of each Loan Party, and all amendments thereto, certified by the
Secretary of State or other appropriate official of its respective jurisdiction
of incorporation;
(ii) Good standing certificates for each Loan Party
issued by the Secretary of State or other appropriate official of such Loan
Party's jurisdiction of incorporation and each jurisdiction where the conduct
of such Loan Party's business activities necessitates qualification and in
which the failure of such Loan Party to be so qualified would have a Material
Adverse Effect;
(iii) A closing certificate signed by the chief
executive or financial officer of each Loan Party, dated as of the Closing
Date, stating that (a) the representations and warranties set forth in Section
7 hereof are true and correct in all material respects on and as of such date,
(b) each Loan Party is on such date in compliance in all material respects with
all the terms and provisions set forth in this Agreement and the other Loan
Documents and (c) on such date no Default or Event of Default has occurred and
is continuing;
(iv) The Security Documents duly executed, accepted
and acknowledged by or on behalf of each of the signatories thereto;
(v) The Other Agreements duly executed and delivered
by Borrower;
(vi) The favorable, written opinion of counsel to
each Loan Party as to the transactions contemplated by this Agreement and the
other Loan Documents;
(vii) Written instructions from Borrower directing the
application of proceeds of the initial Revolver Loan made to Borrower pursuant
to this Agreement on the Closing Date;
(viii) Certificates of the Secretary or an Assistant
Secretary of each Loan Party certifying (a) that attached thereto is a true and
complete copy of the Bylaws of such Loan Party, as in effect on the date of
such certification, (b) that attached thereto is a true and complete copy of
the resolutions adopted by the Board of Directors of such Loan Party,
authorizing the execution, delivery and performance of this Agreement and the
other Loan Documents to which such Loan Party is a party and the consummation
of the transactions contemplated hereby and thereby, and (c) as to the
incumbency and genuineness of the signature of each officer of each Loan Party
executing this Agreement or any of the Loan Documents;
(x) Agreement duly executed by Borrower and the
Clearing Bank providing irrevocable instructions for the wire transfer by the
Clearing Bank to Lender of all funds credited to the Clearing Bank Account, in
form and substance satisfactory to Lender, together with the termination duly
executed by Congress of any payment instructions to the contrary;
(xi) Written confirmations from Congress of the
balance due on the Indebtedness owed to it as of the Closing Date and that
simultaneously with the receipt thereof Congress will execute and deliver to
Lender such releases and terminations as may be necessary to release and cancel
of record its Liens in any Collateral;
(xii) The duly executed JSX Intercreditor Agreement;
(xiii) The duly executed United Non-Offset Agreement;
(xiv) Evidence satisfactory to Lender and Lender's
counsel that United has waived all defaults and events of default which may
exist under any of the United Express Agreements as of the Closing Date; and
(xv) Such other documents, instruments and agreements
as Lender shall reasonably request in connection with the foregoing matters.
.1 No Injunction, etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain
or prohibit, or to obtain damages in respect of, or which is related to or
arises out of this Agreement or the Loan Documents or the consummation of the
transactions contemplated hereby or which, in Lender's reasonable judgment,
would make it inadvisable to consummate the transactions contemplated by this
Agreement or any of the other Loan Documents.
.2 Consents. All approvals, licenses, consents and filings
necessary to permit the transactions contemplated by this Agreement shall have
been obtained and made.
.3 Material Adverse Change. There shall not have occurred any
material adverse change in the financial condition, results of operations or
business of Borrower or the value of the Collateral from June 30, 1995 to the
Closing Date, or any event, condition or state of facts which would reasonably
be expected to have a Material Adverse Effect, as reasonably determined by
Lender.
.4 No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing.
.5 Liens. Lender shall be satisfied that this Agreement and the
other Loan Documents create or will create, as security for the Obligations, a
valid and enforceable perfected first priority security interest in and Lien
upon all of the Collateral in favor of Lender, subject to no other Liens other
than Permitted Liens which are expressly stated to have priority over the Liens
of Lender.
9.1.7 Closing Date. The Closing Date shall not be after
thirty (30) days from the execution of this Agreement by Borrower to Lender.
1 . Conditions Precedent to All Revolver Loans. Notwithstanding any of
the provisions of this Agreement or the other Loan Documents, and without
affecting in any manner the rights of Lender under the other sections of this
Agreement, it is understood and agreed that Lender will have no obligation to
make any Revolver Loan (including the initial Revolver Loan) unless and until,
in addition to the conditions set forth in Section 9.1, each of the following
conditions has been and continues to be satisfied:
.0 Events of Default. No Default, Event of Default or Overadvance
Condition shall exist.
.1 Delivery of Documents. Lender shall have received copies of all
documents, reports and information required to be delivered to Lender
hereunder.
.2 Representations and Warranties. The representations and
warranties contained in Section 7 of this Agreement and in the Loan Documents
shall be true and correct in all material respects except for changes in the
nature of a Loan Party's business or operations that would render the
information contained in any Exhibit attached hereto either inaccurate,
incomplete or misleading, so long as Lender has consented to such changes or
such changes are not expressly prohibited by this Agreement or the other Loan
Documents.
2 . Waiver of Conditions Precedent. If Lender makes any Revolver Loan
prior to the fulfillment of any of the conditions precedent set forth in
Sections 9.1 and 9.2 hereof, unless Lender shall have waived in writing the
fulfillment of such condition, the making of such Revolver Loan shall
constitute only an extension of time for the fulfillment of such condition and
not a waiver thereof, and each Loan Party shall thereafter use its best efforts
to fulfill such condition promptly.
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
0 . Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
.0 Payment of Loans. Borrower shall fail to make any payment of
principal, interest or premium, if any, owing on the Loans within two (2)
Business Days of the due date thereof (whether due at stated maturity, on
demand, upon acceleration or otherwise).
.1 Payment of Other Obligations. Borrower shall fail to pay any of
the other Obligations (other than those dealt with specifically in Section
10.1.1 hereof) on the due date thereof (whether due at stated maturity, on
demand, upon acceleration or otherwise) and such failure shall continue for a
period of three (3) Business Days after Lender's giving Borrower written notice
thereof.
.2 Misrepresentations. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of any Loan Party or any
Subsidiary of any Loan Party in this Agreement, any of the other Loan Documents
or any instrument, certificate or financial statement furnished in compliance
with or in reference thereto proves to have been false or misleading in any
material respect when made or furnished or when reaffirmed pursuant to Section
7.2 hereof.
.3 Breach of Specific Covenants. Any Loan Party shall fail or
neglect to perform, keep or observe any covenant contained in Sections 5.2,
6.1.1, 6.2, 8.1.1, 8.1.3, 8.2 or 8.3 hereof on the date that such Loan Party is
required to perform, keep or observe such covenant.
.4 Breach of Other Covenants/Other Agreements. Any Loan Party shall
fail or neglect to perform, keep or observe any covenant contained in this
Agreement (other than a covenant which is dealt with specifically elsewhere in
Section 10.1 hereof) or the Other Agreements and the breach of such other
covenant or the Other Agreements is not cured to Lender's satisfaction within
fifteen (15) days after the sooner to occur of such Loan Party's receipt of
notice of such breach from Lender or the date on which such failure or neglect
first becomes known to any officer of such Loan Party.
.5 Default Under Security Documents. Any event of default shall
occur under, or any Loan Party shall default in the performance or observance
of any term, covenant, condition or agreement contained in, any of the Security
Documents and such default shall continue beyond any applicable grace period.
.6 Other Defaults. There shall occur any default or event of
default on the part of any Loan Party under any agreement, document or
instrument to which such Loan Party is a party or by which such Loan Party or
any of its Property is bound, creating or relating to any Indebtedness for
Money Borrowed in excess of $200,000 in the aggregate (other than the
Obligations) and such default or event of default shall continue and remain
uncured beyond the applicable notice and grace period with respect thereto, if
any.
.7 Insolvency and Related Proceedings. Any Loan Party shall cease
to be Solvent; or United or any Loan Party shall suffer the appointment of a
receiver, trustee, custodian or similar fiduciary, or shall make an assignment
for the benefit of creditors, or any petition for an order for relief shall be
filed by or against any Loan Party or United under the Bankruptcy Code (if
against a Loan Party or United, the continuation of such proceeding for more
than 60 days); or any Loan Party shall make any offer of settlement, extension
or composition to their respective unsecured creditors generally.
.8 Business Disruption. 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 permanently prevented by court, governmental or administrative order
from conducting all or any material part of its business affairs; or any
material lease or agreement pursuant to which any Loan Party leases, uses or
occupies any Property shall be canceled or terminated prior to the expiration
of its stated term; or any Loan Party or United ceases scheduled air
transportation services other than on a temporary basis.
.9 Change of Ownership. Parent shall cease to own and control,
beneficially and of record, all of the issued and outstanding stock of
Borrower.
.10 ERISA. If any Plan is terminated by the Pension Benefit
Guaranty Corporation or a trustee is appointed by the United States district
court for any Plan, or if any Loan Party is in "default" (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan
resulting from such Loan Party's complete or partial withdrawal from such
Plan.
.11 Challenge to Agreement. Any Loan Party or any Affiliate of any
of them, 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. 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.
.12 Criminal Forfeiture. Any Loan Party or any Subsidiary of any
Loan Party shall be criminally indicted or convicted under any law that could
lead to a forfeiture of any Property of any Loan Party or any Subsidiary of any
Loan Party.
.13 Judgments. One or more money judgments, writs of attachment or
similar process is filed against any Loan Party or any Subsidiary of any Loan
Party or any of their respective Property involving liability of $200,000 or
more in the aggregate (to the extent not paid or fully covered by insurance
provided by a carrier who has acknowledged coverage), and the same is not
released, discharged or bonded within thirty (30) days after the entry thereof.
.14 Repudiation of or Default Under Guaranty Agreement. Any
Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof.
.15 ACH Procedure Manual. Borrower shall cease scheduled air
transportation services other than on a temporary basis for a work stoppage
and, in consequence thereof, ACH shall have directed the Clearing Bank to
withhold twenty-five percent (25%) of the net funds due Borrower in any
subsequent settlement in which Borrower is a net creditor, pursuant to
paragraph 8 of the settlement regulations set forth in Section B of the ACH
Procedure Manual.
.16 Withdrawal as Member. Borrower shall give notice of withdrawal
from the ACH Agreement.
.17 Termination or Breach of the United Express Operating Agreement
or the United Express Agreements. The termination for any reason of the United
Express Operating Agreement by Borrower without the prior written consent of
Lender as required by Section 8.2.11 hereof or by United; or Borrower shall
default in the payment (beyond the applicable grace period with respect
thereto, if any) with respect to any Indebtedness owing under any of the United
Express Agreements or fail to perform or observe any term, covenant or
agreement on its part to be performed or observed pursuant to any of the United
Express Agreements, the effect of which failure is to cause, or permit, United
to terminate any of the United Express Agreements.
1 . Acceleration of the Obligations. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with Section 3.2 hereof, upon or at any time after the
occurrence of an Event of Default, all or any portion of the Obligations shall,
at the option of Lender and without presentment, demand, protest or further
notice by Lender, become at once due and payable and Borrower shall forthwith
pay to Lender the full amount of such Obligations, provided, that upon the
occurrence of an Event of Default specified in subsection 10.1.8 hereof, all of
the Obligations shall become automatically due and payable without declaration,
notice or demand by Lender.
2 . Other Remedies. Upon and after the occurrence of an Event of
Default, Lender shall have and may exercise from time to time the following
rights and remedies:
.0 All of the rights and remedies of a secured party under the Code
or under other applicable law, and all other legal and equitable rights to
which Lender may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained
in this Agreement or any of the other Loan Documents, and none of which shall
be exclusive.
.1 The right to terminate this Agreement as provided in Section
4.2.1 hereof.
.2 The right to notify Account Debtors to make remittance to Lender
of all sums due on Accounts of Borrower, collect such Accounts directly from
the Account Debtors, and take such other and further action with respect
thereto as set forth in Section 11.1.2 hereof.
.3 The right to take immediate possession of the Collateral, and to
(i) require Borrower to assemble the Collateral, at Borrower's expense, and
make it available to Lender at Borrower's chief executive office, and (ii)
enter any premises where any of the Collateral shall be located and to keep and
store the Collateral on said premises until sold (and if said premises be the
Property of Borrower, Borrower agrees not to charge Lender for storage
thereof).
.4 The right to sell or otherwise dispose of all or any Collateral
in a commercially reasonable manner, at public or private sale or sales, with
such notice as may be required by law, in lots or in bulk, for cash or on
credit, all as Lender, in its sole discretion, may deem advisable. Borrower
agrees that 10 days written notice to Borrower of any public or private sale or
other disposition of Collateral shall be reasonable notice thereof, and such
sale shall be at such locations as Lender may designate in said notice. Lender
shall have the right to conduct such sales on Borrower's premises, without
charge therefor, and such sales may be adjourned from time to time in
accordance with applicable law. Lender shall have the right to sell, lease or
otherwise dispose of the Collateral, or any part thereof, for cash, credit or
any combination thereof, and Lender may purchase all or any part of the
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Obligations. The proceeds realized from the sale of any Collateral
may be applied, after allowing 2 Business Days for collection, first to the
reasonable costs, expenses and attorneys' fees incurred by Lender in collecting
the Obligations, in enforcing the rights of Lender under the Loan Documents and
in collecting, retaking, completing, protecting, removing, storing, advertising
for sale, selling and delivering any Collateral, second to the interest due
upon any of the Obligations; and third, to the principal of the Obligations.
If any deficiency shall arise, Borrower shall remain liable to Lender therefor.
If there shall be any surplus, Lender shall remit such surplus to Borrower or
other Person entitled thereto.
3 . Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of any
Loan Party contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule or contained in any other agreement between Lender and any
Loan Party, heretofore, concurrently, or hereafter entered into, shall be
deemed cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements herein contained. The failure or delay of
Lender to require strict performance by any Loan Party of any provision of this
Agreement or to exercise or enforce any rights, Liens, powers, or remedies
hereunder or under any of the aforesaid agreements or other documents or
security or Collateral shall not operate as a waiver of such performance,
Liens, rights, powers and remedies, but all such requirements, Liens, rights,
powers, and remedies shall continue in full force and effect until all Loans
and all other Obligations owing or to become owing from Borrower to Lender
shall have been fully satisfied. None of the undertakings, agreements,
warranties, covenants and representations of any Loan Party contained in this
Agreement or any of the other Loan Documents and no Event of Default by any
Loan Party under this Agreement or any other Loan Documents shall be deemed to
have been suspended or waived by Lender, unless such suspension or waiver is by
an instrument in writing specifying such suspension or waiver and is signed by
a duly authorized representative of Lender and directed to the Loan Parties.
10. MISCELLANEOUS
0 . Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower and in Borrower's or Lender's name, but
at the cost and expense of Borrower:
.0 At such time or times as Lender or its agent, in its sole
discretion, may determine, endorse Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or proceeds
of the Collateral which come into the possession of Lender or under Lender's
control.
.1 At such time or times during the existence of an Event of Default
as Lender or its agent, in its sole discretion, may determine: (i) demand
payment of the Accounts of Borrower from the Account Debtors, enforce payment
of such Accounts by legal proceedings or otherwise, and generally exercise all
of Borrower's rights and remedies with respect to the collection of its
Accounts; (ii) in a commercially reasonable manner settle, adjust, compromise,
discharge or release any of Borrower's Accounts or other Collateral or any
legal proceedings brought to collect any of such Accounts or other Collateral;
(iii) sell or assign any of Borrower's Accounts and other Collateral upon and
for such commercially reasonable terms and amounts and at such time or times as
Lender deems advisable; (iv) take control, in any manner, of any item of
payment or proceeds relating to any Collateral; (v) prepare, file and sign
Borrower's name to a proof of claim in bankruptcy or similar document against
any Account Debtor or to any notice of lien, assignment or satisfaction of lien
or similar document in connection with any of the Collateral; (vi) receive,
open and dispose of all mail addressed to Borrower and to notify postal
authorities to change the address for delivery thereof to such address as
Lender may designate; (vii) endorse the name of Borrower upon any of the items
of payment or proceeds relating to any Collateral and deposit the same to the
account of Lender on account of the Obligations; (viii) endorse the name of
Borrower upon any Chattel Paper, Document, Instrument, invoice, freight bill,
bill of lading or similar document or agreement relating to Borrower's Accounts
and any other Collateral; (ix) use Borrower's stationery for the purpose of,
and sign the name of Borrower to, verifications of its Accounts and notices
thereof to Account Debtors; (x) use the information recorded on or contained in
any data processing equipment and computer hardware and software relating to
Borrower's Accounts and any other Collateral; and (xi) do all other acts and
things necessary, in Lender's determination, to fulfill Borrower's obligations
under this Agreement.
11.1.3 The power of attorney granted pursuant to this Section
11.1, being coupled with an interest, shall be irrevocable by Borrower until
all of the Obligations are paid and satisfied in full.
1 . Indemnity. Borrower hereby agrees to indemnify Lender and hold
Lender harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by Lender (including reasonable attorneys
fees and legal expenses) on account of, or as the result of, a claim made,
asserted or initiated by any Person other than a Loan Party that any Loan
Party has failed to observe, perform or discharge such Loan Party's duties
hereunder or under any of the Loan Documents. In addition, Borrower shall
defend Lender against and save it harmless from all claims of any Person with
respect to the Collateral. Additionally, if any taxes (excluding taxes imposed
upon or measured by the net income of Lender, but including, without
limitation, any intangibles tax, stamp tax, recording tax or franchise tax)
shall be payable by Lender or any Loan Party on account of the execution or
delivery of this Agreement, or the execution, delivery, issuance or recording
of any of the other Loan Documents, or the creation of any of the Obligations,
by reason of any existing or hereafter enacted federal, state, foreign or local
statute, rule or regulation, Borrower will pay (or will promptly reimburse
Lender for the payment of) all such taxes, including, without limitation, any
interest and penalties thereon, and will indemnify and hold Lender harmless
from and against all liability in connection therewith. Notwithstanding any
contrary provision in this Agreement, the obligation of Borrower under this
Section 11.2 shall survive the payment in full of the Obligations and the
termination of this Agreement.
2 . Modification of Agreement; Sale of Interest. This Agreement may
not be modified, altered or amended, except by an agreement in writing signed
by each Loan Party and Lender. No Loan Party may sell, assign or transfer any
interest in this Agreement, any of the other Loan Documents, or any of the
Obligations, or any portion thereof, including, without limitation, such Loan
Party's rights, title, interests, remedies, powers, and duties hereunder or
thereunder. Each Loan Party hereby consents to Lender's participation, sale,
assignment, transfer or other disposition, at any time or times hereafter, of
this Agreement and any of the other Loan Documents, or of any portion hereof or
thereof, including, without limitation, Lender's rights, title, interests,
remedies, powers, and duties hereunder or thereunder; provided, however, no
such sale, assignment, participation, transfer or other disposition by Lender
will result in any diminution of the rights and obligations of the Loan Parties
under this Agreement and the other Loan Documents. In the case of an
assignment, the assignee shall have, to the extent of such assignment, the same
rights, benefits and obligations as it would if it were "Lender" hereunder and
Lender shall be relieved of all obligations hereunder upon any such
assignments. Each Loan Party agrees that it will use its best efforts to
assist and cooperate with Lender in any manner reasonably requested by Lender
to effect the sale of participations in or assignments of any of the Loan
Documents or any portion thereof or interest therein, including, without
limitation, assisting in the preparation of appropriate disclosure documents;
provided, however, Borrower shall not be responsible for reimbursing Lender for
any fees or expenses incurred by Lender in connection with any such sale,
participation or assignment. Each Loan Party further agrees that Lender may
disclose credit information regarding such Loan Party and its Subsidiaries to
any potential participant or assignee.
3 . Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
4 . Successors and Assigns. This Agreement, the Other Agreements and
the Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of each Loan Party and Lender permitted under Section
11.3 hereof.
5 . Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2
hereof and except as otherwise provided in any of the other Loan Documents by
specific reference to the applicable provision of this Agreement, if any
provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
6 . Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which counterparts taken together shall constitute
but one and the same instrument.
7 . Notice. All notices, requests and demands to or upon a party
hereto, to be effective, shall be in writing and shall be sent by certified or
registered mail, return receipt requested, by personal delivery against
receipt, by overnight courier or by facsimile and, unless otherwise expressly
provided herein, shall be deemed to have been validly served, given or
delivered immediately when delivered against receipt, three Business Day after
deposit in the mail, postage prepaid, or one (1) Business Day after deposit
with an overnight courier, addressed as follows:
If to Lender: Shawmut Capital Corporation
6060 J. A. Jones Drive, Suite 200
Charlotte, North Carolina 28287
Attention: Southeast Loan Administration
With a copy to: Carruthers & Roth, P.A.
235 North Edgeworth Street
Greensboro, North Carolina 27401
Attention: Kenneth M. Greene, Esq.
If to Borrower: Atlantic Coast Airlines
1 Export Drive
Sterling, Virginia 20164
Attention: Director of Treasury Management
If to Parent: Atlantic Coast Airlines, Inc.
1 Export Drive
Sterling, Virginia 20164
Attention: Senior Vice-President and General Counsel
With a copy to: Bagileo, Silverberg & Goldman, L.L.P.
Georgetown Place, Suite 120
1101 30th Street, Northwest
Washington, D.C. 20007
Attention: Robert P. Silverberg, Esq.
or to such other address as each party may designate for itself by notice
given
in accordance with this Section 11.8; provided, however, that any notice,
request or demand to or upon Lender pursuant to subsection 3.1.1 or 4.2.2
hereof shall not be effective until received by Lender. Any written notice or
demand that is not sent in conformity with the provisions hereof shall
nevertheless be effective on the date that such notice is actually received by
the noticed party.
8 . Credit Inquiries. Each Loan Party hereby authorizes and permits
Lender, at its discretion and without any obligation to do so, to respond to
credit inquiries from third parties concerning a Loan Party or any of its
Subsidiaries.
9 . Time of Essence. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
10 . Entire Agreement; Appendix A and Exhibits. This Agreement and the
other Loan Documents, together with all other instruments, agreements and
certificates executed by the parties in connection therewith or with reference
thereto, embody the entire understanding and agreement between the parties
hereto and thereto with respect to the subject matter hereof and thereof and
supersede all prior agreements, understandings and inducements, whether express
or implied, oral or written, including, without limitation, the letter from
Lender to Borrower dated July 17, 1995. Appendix A and each of the exhibits
attached hereto are incorporated into this Agreement and by this reference made
a part hereof.
11 . 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.
12 . GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE
BEEN MADE IN THE STATE OF NORTH CAROLINA. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NORTH CAROLINA: PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL
SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NORTH CAROLINA, THE
LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND
PROCEDURE FOR FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND
THE ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT OF SUCH
COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE
DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF NORTH CAROLINA. AS
PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF
ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY
LOAN PARTY OR LENDER, EACH LOAN PARTY HEREBY CONSENTS AND AGREES THAT
THE SUPERIOR COURT OF MECKLENBURG COUNTY, NORTH CAROLINA, OR, AT
LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF NORTH CAROLINA, CHARLOTTE DIVISION, SHALL HAVE NON-EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
SUCH LOAN PARTY AND LENDER PERTAINING TO THIS AGREEMENT OR TO ANY
MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH LOAN PARTY
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH LOAN PARTY
HEREBY WAIVES ANY OBJECTION WHICH SUCH LOAN PARTY MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH LOAN PARTY
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE
OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH LOAN PARTY AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL
BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT
THEREOF OR 3 DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF
ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY
ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE
FORUM OR JURISDICTION.
13 . WAIVERS BY LOAN PARTIES. EACH LOAN PARTY WAIVES (i) TO THE
FULLEST EXTENT PROVIDED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY
JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEED-
ING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY
OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) EXCEPT
AS OTHERWISE EXPRESSLY PROVIDED HEREIN, PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT AND ALL OTHER
NOTICES REQUIRED BY LAW; (iii) NOTICE PRIOR TO TAKING POSSESSION OR
CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE
REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND
EXEMPTION LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. EACH LOAN PARTY
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO
LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING
UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH THE LOAN
PARTIES. EACH LOAN PARTY WARRANTS AND REPRESENTS THAT IT HAS REVIEWED
THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH
LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14
IN WITNESS WHEREOF, this Agreement has been duly executed under seal
on the day and year specified at the beginning of this Agreement.
ATTEST: ATLANTIC COAST AIRLINES
("Borrower")
_________________________________________ By:_________________________________
Secretary Title:___________________________
[CORPORATE SEAL]
ATTEST: ATLANTIC COAST AIRLINES, INC.
("Parent")
_________________________________________ By:_________________________________
Secretary Title:___________________________
[CORPORATE SEAL]
Accepted in Charlotte, North Carolina
SHAWMUT CAPITAL CORPORATION
("Lender")
By:_______________________________
Title:_________________________
SCC\ATLANTIC\ATLANTIC.LSA
3/HAB/10-10-95
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement, dated of even date
herewith, by and between Shawmut Capital Corporation and Atlantic Coast
Airlines and Atlantic Coast Airlines, Inc., the following terms shall have the
following meanings (terms defined in the singular to have the same meaning when
used in the plural and vice versa):
ACH - Airline Clearing House, Inc., a Delaware corporation.
ACH Agreement - the Associate Membership Agreement, dated January
3, 1992, which incorporates by reference the Agreement Relating to the
Settlement of Interline Accounts through Airlines Clearing House, Inc. dated as
of February 1, 1948, as amended from time to time, each among ACH, certain air
carriers that are and may become party thereto, and Borrower.
ACH Procedure Manual - the Manual of Procedure for the clearing and
settlement functions of ACH as in effect from time to time.
Account - 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 - any Person who is or may become obligated under or
on account of an Account.
Adjusted Tangible Assets - with respect to any Person, all assets
of such Person except: (i) any surplus resulting from any write-up of assets
subsequent to the Closing Date; (ii) deferred assets, other than prepaid
insurance and prepaid taxes; (iii) patents, copyrights, trademarks, trade
names, non-compete agreements, franchises and other similar intangibles; (iv)
goodwill, including any amounts, however designated on a Consolidated balance
sheet of such Person or its Subsidiaries, representing the excess of the
purchase price paid for assets or stock over the value assigned thereto on the
books of such Person; (v) Restricted Investments; (vi) unamortized debt
discount and expense; (vii) assets located and notes due from obligors outside
of the United States of America; and (viii) Accounts, notes and other
receivables due from Affiliates or employees.
Affiliate - as to any Person, any other Person (other than a
Subsidiary): (i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
such Person; (ii) which beneficially owns or holds 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 the Agreement, United shall not be deemed
an Affiliate of a Loan Party.
Agreement - the Loan and Security Agreement referred to in the
first sentence of this Appendix A, as the same may hereafter be amended,
modified, supplemented or restated from time to time, all exhibits hereto and
this Appendix A.
Applicable Law - 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 state and federal constitutions,
statutes, rules, regulations and orders of governmental bodies; orders,
judgments and decrees of all courts and arbitrators; and all Environmental
Laws.
Availability - the amount of money which Borrower is entitled to
borrow from time to time as Revolver Loans, such amount being the difference
derived when the sum of the principal amount of Revolver 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 - on any date of determination thereof, an
amount equal to the sum of (i) 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 (ii)the estimated cost of services ordered by Borrower
from United under the United Express Emergency Response Agreement; and (iii)
such reserves established by Lender in such amounts, and with respect to such
matters, events, conditions or contingencies as to which Lender, in its credit
judgment based upon its usual and customary credit and collateral
considerations, determines reserves should be established from time to time,
including, without limitation, with respect to (1) improper billings, other
billing and settlement errors which occur from time to time under the ACH
Procedures Manual, and (2) other sums chargeable against Borrower's Loan
Account as Revolver Loans under any section of the Agreement.
Average Monthly Loan Balance - the amount obtained by adding the
aggregate unpaid balance of all Loans owing by Borrower to Lender at the end of
each day during the month in question and by dividing that sum by the number of
days in such month.
Bank - Shawmut Bank Connecticut, N.A.
Base Rate - the rate of interest announced or quoted by Bank from
time to time as its prime rate for commercial loans, whether or not such rate
is the lowest rate charged by Bank to its most preferred borrowers; and, if
such prime rate for commercial loans is discontinued by Bank as a standard, a
comparable reference rate designated by Bank as a substitute therefor shall be
the Base Rate.
Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(i) the amount of the Revolver Loan Facility; or
(ii) the sum of:
(a) sixty-five percent (65%) of the net amount
of Eligible Accounts outstanding at such date;
MINUS
(b) the Availability Reserve.
For purposes hereof, the net amount of Eligible Accounts at any
time shall be the face amount of such Eligible Accounts less any and all
returns, rebates, discounts (which may, at Lender's option, be calculated on
shortest terms), sales taxes, credits, allowances or excise taxes of any nature
at any time issued, owing, claimed by Account Debtors, granted, outstanding or
payable in connection with such Accounts at such time (including current
amounts owing by Borrower to United under the United Express Agreements).
Borrowing Base Certificate - a certificate submitted by Borrower
certifying to Lender the amount of Borrower's Eligible Accounts as of a
specific date, and rendition of air transportation services and Accounts of
Borrower collected since the date of the previous Borrowing Base Certificate,
such certificate to be in form and detail satisfactory to Lender.
Business Day - any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of North Carolina or the State
of Illinois or is a day on which banking institutions located in such states
are closed.
Capital Expenditures - 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 Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
Chattel Paper - shall have the meaning ascribed to "chattel paper"
under the Code.
Clearing Bank - The Chase Manhattan Bank, N.A., and any successor
clearing bank under the ACH Procedure Manual.
Clearing Bank Account - The account maintained by Borrower at the
Clearing Bank in which, pursuant to the ACH Procedure Manual, all funds due and
payable to Borrower are credited.
Closing Date - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the initial Revolver Loan is made
under the Agreement.
Code - the Uniform Commercial Code as adopted and in force in the
State of North Carolina, as from time to time in effect.
Collateral - all of the Property and interests in Property of
Borrower described in Section 5 of the Agreement, and all other Property and
interests in Property that now or hereafter secure the payment and performance
of any of the Obligations.
Congress - Congress Financial Corporation.
Consolidated - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
Consolidated Adjusted Net Earnings From Operations - with respect
to any Person for any fiscal period, means the net earnings (or loss) after
provision for income taxes for such fiscal period of such Person and its
Subsidiaries, as reflected on the financial statements of such Person supplied
to Lender pursuant to subsection 8.1.3 of the Agreement, but excluding:
(i) any gains arising from the sale of capital assets
during such fiscal period which are, in the aggregate for all such gains, in
excess of 100,000;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of any such Person
accrued prior to the date it became a Subsidiary of such Person;
(iv) earnings of any corporation, substantially all
the assets of which have been acquired in any manner by such Person, realized
by such corporation prior to the date of such acquisition;
(v) any portion of the net earnings of any
Subsidiary of such Person which for any reason is unavailable for payment of
dividends to such Person;
(vi) the earnings of any Person to which any assets
of such Person shall have been sold, transferred or disposed of, or into which
such Person shall have merged, or been a party to any consolidation or other
form of reorganization, prior to the date of such transaction;
(viii) any gain arising from the acquisition of any
Securities of such Person; and
(ix) any gain arising from extraordinary or
non-recurring items.
Consolidated Adjusted Tangible Net Worth - with respect to any
Person, at any date means a sum equal to:
(i) the net book value (after deducting related
depreciation, obsolescence, amortization, valuation, and other proper reserves)
at which the Adjusted Tangible Assets of such Person and its Subsidiaries would
be shown on a Consolidated balance sheet at such date in accordance with GAAP,
minus
(ii) the amount at which the liabilities of such
Person and its Subsidiaries (other than capital stock and surplus) would be
shown on such Consolidated balance sheet in accordance with GAAP, and including
as liabilities all reserves for contingencies and other potential liabilities.
Consolidated Cash Flow - with respect to any Person for any fiscal
period, the sum of (i) Consolidated Adjusted Net Earnings From Operations of
such Person for such fiscal period, plus (ii) depreciation and amortization
expense of such Person for such fiscal period which were subtracted from
earnings in calculating Consolidated Adjusted Earnings From Operations of such
Person for such fiscal period, minus (iii) Capital Expenditures not financed by
Permitted Purchase Money Indebtedness which are incurred by such Person during
such fiscal period, minus (iv) Distributions paid by such Person during such
fiscal period.
Consolidated Current Assets - with respect to any Person at any
date means the amount at which all of the Consolidated current assets of such
Person would be properly classified as Consolidated current assets shown on a
Consolidated balance sheet of such Person at such date in accordance with GAAP
except that amounts due from Affiliates and investments in Affiliates shall be
excluded therefrom.
Consolidated Current Liabilities - with respect to any Person at
any date means the amount at which all of the Consolidated current liabilities
of such Person would be properly classified as Consolidated current liabilities
on a Consolidated balance sheet of such Person at such date in accordance with
GAAP.
Consolidated Debt Service Coverage Ratio - with respect to any
Person for any period of determination, the ratio of (i) Consolidated Cash Flow
of such Person for such period to (ii) payments of principal on Indebtedness
for Money Borrowed required to be paid by such Person during such period
Default - an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - as defined in subsection 2.1.3 of the Agreement.
Distribution - in respect of any corporation means and includes:
(i) the payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities (or any warrant or option for the purchase of any
such Securities) unless made contemporaneously from the net proceeds of the
sale of Securities.
Document - shall have the meaning ascribed to "document" under the
Code.
Dollars - and the sign $ shall refer to currency of the United
States of America.
Eligible Account - an inter-airline Account of Borrower arising and
created in the ordinary course of Borrower's business from the rendition of air
transportation and related services which Lender, in its sole credit judgment,
based upon its usual and customary credit and collateral considerations, deems
to be an Eligible Account. To be an Eligible Account, such Account must be
subject to Lender's perfected Lien and no other Lien other than a Permitted
Lien, must be cleared and collected through the Clearing Bank pursuant to the
ACH Procedure Manual, and must be billed monthly by a recap sheet submitted to
ACH, no later than the nineteenth (19th) day of each month, for all air
transportation and related services rendered and revenues earned during the
preceding month. Without limiting the generality of the foregoing, no Account
of Borrower shall be an Eligible Account if:
(i) it arises out of air transportation and related
services rendered by Borrower to a Subsidiary, or an Affiliate of Borrower, or
to a Person controlled by an Affiliate of Borrower; or
(ii) payment of such Account is not received from the
ACH within fifteen (15) days after the Settlement Date for such Account; or
(iii) any covenant, representation or warranty
contained in the Agreement with respect to such Account has been breached; or
(iv) in the case of Accounts owing by United, are
subject to any right of offset other than United's right of setoff for amounts
owing under the United Express Agreements, and, in the case of all other
Accounts, the Account Debtor is also Borrower's creditor or supplier, or the
Account Debtor has disputed liability with respect to such Account, or the
Account Debtor has made any claim with respect to any other Account due from
such Account Debtor to Borrower, or the Account otherwise is subject to any
right of setoff by the Account Debtor; or
(v) the Account Debtor has commenced a voluntary
case under the federal bankruptcy laws, as now constituted or hereafter
amended, or made an assignment for the benefit of creditors, or a decree or
order for relief has been entered by a court having jurisdiction in the
premises in respect of the Account Debtor in an involuntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or any other
petition or other application for relief under the federal bankruptcy laws has
been filed against the Account Debtor, or if the Account Debtor has failed,
suspended business, ceased to be Solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it or for all or
a significant portion of its assets or affairs; or
(vi) the Account is evidenced by Chattel Paper or an
Instrument of any kind, or has been reduced to judgment; or
(vii) the Account is contingent in any respect or for
any reason; or
(viii) the Account Debtor is the United States of
America or any department, agency or instrumentality thereof, unless Borrower
assigns its right to payment of such Account to Lender, in a manner
satisfactory to Lender, so as to comply with the Assignment of Claims Act of
1940 (31 U.S.C. S203 et seq., as amended); or
(ix) the Account is subject to a Lien other than a
Permitted Lien; or
(x) the air transportation and related services
giving rise to such Account have not been performed by Borrower or the Account
otherwise does not represent a final sale; or
(xi) Borrower has made any agreement with the Account
Debtor for any deduction therefrom, except, in the case of Accounts owing by
United, United's right of setoff for amounts owing under the United Express
Agreements; or
(xii) Borrower has made an agreement with the
Account Debtor to extend the time of payment thereof; or
(xiii) Borrower has failed to comply with the
provisions of Section 6.2.1 with respect to such Account and the Account Debtor
obligated thereon; or
(xiv) It is not based upon or evidenced by passenger
tickets, exchange orders or other passenger billing documents which have been
separated and put into batches in accordance with the requirements of the ACH
Procedure Manual.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated
thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
Expiration Date - the date on which the Agreement is terminated
pursuant to Section 4.1 or 4.2 thereof.
GAAP - generally accepted accounting principles in the United
States of America in effect from time to time.
General Intangibles - with respect to any Person, all general
intangibles of Borrower, including, without limitation, all choses in action,
causes of action, corporate or other business records, deposit accounts,
inventions, blueprints, designs, patents, patent applications, trademarks,
trademark applications, trade names, trade secrets, service marks, goodwill,
brand names, copyrights, registrations, licenses, franchises, customer lists,
tax refund claims, computer programs, operational manuals, all claims under
guaranties, security interests or other security held by or granted to such
Person to secure payment of any of the Accounts by an Account Debtor, all
rights to indemnification and all other intangible property of every kind and
nature (other than Accounts).
Guarantor - Parent and any other Person who may hereafter guarantee
payment or performance of the whole or any part of the Obligations.
Guaranty Agreement - the Guaranty Agreement executed by each
Guarantor in form and substance satisfactory to Lender.
IATA - International Air Transport Association.
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,
(iii) all reimbursement obligations in connection with
letters of credit or letter of credit guaranties issued for the account of such
Person, and
(iv) in the case of Borrower (without duplication),
the Obligations.
Instrument - shall have the meaning ascribed to "instrument" under
the Code.
JSX - JSX Capital Corporation, a Delaware corporation, and its
successors and assigns.
JSX Intercreditor Agreement - the intercreditor agreement to be
executed on or about the Closing Date between Lender and JSX, and to be
acknowledged by the Loan Parties, setting forth Lender's and JSX's relative
rights and interests in Indebtedness and Property of Borrower, all in form and
substance satisfactory to Lender.
Lien - any interest in Property securing an obligation owed to, or
a claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract. The term "Lien" shall
also include reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the purpose of the Agreement, Borrower
shall be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement or other arrangement pursuant to which
title to the Property has been retained by or vested in some other Person for
security purposes.
Loan - a Revolver Loan or all or any of them as the context may
require.
Loan Account - the loan account established on the books of Lender
pursuant to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the
Security Documents.
Loan Year - the twelve-month period commencing on November 1 of
each year and ending on October 31 of the following year, except that the First
Loan Year shall commence on the Closing Date and end on October 31, 1996.
References to a numerical Loan Year shown below shall mean the period
corresponding thereto:
Loan Year Period
First Loan Year Closing Date through October 31,
1996
Second Loan Year November 1, 1996 through October 31, 1997
Third Loan Year November 1, 1997 through October 31,
1998
Material Adverse Effect - the effect of any event or condition
which, alone or when taken together with other events or conditions occurring
or existing concurrently therewith, (i) has or may be reasonably expected to
have a material adverse effect upon the business, operations, Properties,
condition (financial or otherwise) of the Loan Parties and their respective
Subsidiaries taken as a whole; (ii) has or may be reasonably expected to have
any material adverse effect whatsoever upon the validity or enforceability of
the Agreement or any of the other Loan Documents; (iii) has or may be
reasonably expected to have any material adverse effect upon the Collateral,
the Liens of Lender with respect to the Collateral or the priority of such
Liens; or (iv) materially impairs the ability of the Loan Parties and their
respective Subsidiaries or any Guarantor to perform their respective
obligations under the Agreement, any Guaranty Agreement or any of the other
Loan Documents or of Lender to enforce or collect the Obligations or realize
upon any of the Collateral in accordance with the Loan Documents and Applicable
Law.
Maximum Rate - 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 higher 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).
Money Borrowed - with respect to any Person means (i) Indebtedness
arising from the lending of money by any other Person to such Person; (ii)
Indebtedness, whether or not in any such case arising from the lending by any
other Person of money to such Person, (a) which is represented by notes payable
or drafts accepted that evidence extensions of credit, (b) which constitutes
obligations evidenced by bonds, debentures, notes or similar instruments, or
(c) upon which interest charges are customarily paid (other than accounts
payable) or that was issued or assumed as full or partial payment for Property;
(iii) Indebtedness that constitutes a Capitalized Lease Obligation; (iv)
reimbursement obligations with respect to letters of credit or guaranties of
letters of credit and (v) Indebtedness of such Person under any guaranty of
obligations that would constitute Indebtedness for Money Borrowed under clauses
(i) through (iii) hereof, if owed directly by such Person.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
Notice of Borrowing - as defined in Section 3.1.1(i) of the
Agreement.
Obligations - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and other
charges thereon, owing, arising, due or payable from the Loan Parties or any of
them to Lender of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, whether arising under the
Agreement or any of the other Loan Documents or otherwise, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising
and however acquired.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - any and all agreements, instruments and
documents (other than the Agreement and the Security Documents), heretofore,
now or hereafter executed by a Loan Party, any Subsidiary of a Loan Party or
any other third party and delivered to Lender in respect of the transactions
contemplated by the Agreement.
Overadvance - a Revolver Loan made by Lender when an Overadvance
Condition exists or would result from the making of such Revolver Loan.
Overadvance Condition - at any date, a condition such that the
principal amount of the Revolver Loans outstanding to Borrower on such date
exceeds the Borrowing Base on such date.
Permitted Liens - any Lien of a kind specified in subsection 8.2.4
of the Agreement.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, unincorporated
organization, or a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for
employees of a Loan Party that is covered by Title IV of ERISA.
Projections - The Loan Parties' forecasted Consolidated and
consolidating (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 any Loan
Party or any of its Subsidiaries (including, but not limited to, any taxes or
other governmental charges) 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 same or concerning the amount thereof, 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 times junior and subordinate in priority to the Liens in favor of Lender
(except only with respect to taxes that have 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 forthwith pays such Indebtedness and all penalties and interest in
connection therewith.
Property - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
Related United Express Agreements - those agreements between United
and Borrower described on Exhibit A attached hereto, as the same may be
amended, modified, supplemented or restated from time to time.
Renewal Term - as defined in Section 4.1 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(b)
of ERISA.
Restricted Investment - 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 or capital contribution, or
otherwise, or in any Property except the following:
(i) investments in one or more Subsidiaries of a Loan
Party to the extent existing on the Closing Date;
(ii) Property to be used in the ordinary course of
business;
(iii) Consolidated Current Assets arising from the
sale of goods and services in the ordinary course of business of a Loan Party
and its Subsidiaries;
(iv) 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;
(v) investments in certificates of deposit maturing
within one year from the date of acquisition issued by (a) 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 $100,000,000,
or (b) for a period of six (6) months after the Closing Date, Riggs National
Bank;
(vi) investments in commercial paper given a rating
of A or better by a national credit rating agency and maturing not more than
270 days from the date of creation thereof; and
(vii) investments in certificates of deposit (a) issued
by a bank which issues a letter of credit for the account of a Loan Party, (b)
securing the reimbursement obligations of a Loan Party with respect to such
letter of credit, and (c) maturing on a date corresponding to the expiration
date of such letter of credit.
Revolver Loan - a Loan made by Lender as provided in Section 1.1 of
the Agreement.
Revolver Loan Facility - $20,000,000, as reduced from time to time
pursuant to Section 1.3 of the Agreement; provided, however, that, for all
purposes of the Agreement except for the calculation of the unused line fee
payable by Borrower to Lender pursuant to Section 2.2.2 of the Agreement, the
Revolver Loan Facility shall not exceed $17,000,000 until such time as Lender
shall have received an amendment to the JSX Intercreditor Agreement, duly
executed by JSX and acknowledged by Borrower in a form satisfactory to Lender,
increasing the maximum principal amount of the Obligations permitted to be
secured by Lender's first priority Lien in the Collateral from the sum of
$17,000,000 to the sum of $20,000,000.
Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Security Documents - each Guaranty Agreement, and all other
instruments and agreements now or at any time hereafter securing the whole or
any part of the Obligations.
Settlement Date - in the case of ACH transactions between Borrower
and an Account Debtor, the twenty-eighth (28th) calendar day of the month
following the month in which the air transportation services are rendered and
revenues earned, and, in the case of IATA transactions between Borrower and an
Account Debtor, the fifteenth (15th) calendar day of the second month following
the month in which the air transportation services are rendered and revenues
earned, and, if such calendar day falls on a Saturday, Sunday or legal holiday
observed by the Clearing Bank, the Settlement Date shall be the next working
day.
Solvent - as to any Person, such Person (i) owns Property whose
fair saleable 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.
Specified Percentage - as defined in Section 2.1.1 of the
Agreement.
Subsidiary - 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.
United - United Airlines, Inc., a Delaware corporation.
United Express Agreements - the United Express Operating Agreement
and the Related United Express Agreements or any one or more of them as the
context may require.
United Express Emergency Response Agreement - the Emergency
Response Services Agreement between United and Borrower dated June 23, 1995,
which constitutes one of the United Express Related Agreements.
United Express Operating Agreement - the United Express Agreement
between United and Borrower, dated October 1, 1991, as the same is amended,
modified, supplemented or restated from time to time, pursuant to which, among
other things, Borrower has acquired a non-exclusive license to use trademarks,
service marks, trade names, and logos and related intellectual property rights
in the operations of Borrower's business.
United Express Termination Date - the termination date of the
United Express Operating Agreement as that date may be modified pursuant to the
terms of the United Express Operating Agreement and as may be permitted by the
terms of the Agreement.
United Non-Offset Agreement - the non-offset agreement to be
executed by Lender and United on or about the Closing Date pursuant to which
United agrees to limit its right of setoff against Borrower to current amounts
owing by Borrower to United under the United Express Agreements, all in form
and substance satisfactory to Lender.
Voting Stock - Securities of any class or classes of a corporation
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).
Other Terms. All other terms contained in the Agreement shall
have, when the context so indicates, the meanings provided for by the Code to
the extent the same are used or defined therein. Accounting terms not
otherwise specifically defined herein shall be construed in accordance with
GAAP consistently applied.
Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Whenever in the
Agreement the word "including" is used, it is understood to mean "including,
without limitation". Any pronoun used shall be deemed to cover all genders.
The section titles, table of contents and list of exhibits appear as a matter
of convenience only and shall not affect the interpretation of the Agreement.
All references to statutes and related regulations shall include any amendments
of same and any successor statutes and regulations. All references to any of
the Loan Documents shall include any and all modifications thereto and any and
all extensions or renewals thereof.
IN WITNESS WHEREOF, the parties have caused this Appendix to be duly
executed by their duly authorized officers on October __, 1995.
ATTEST: ATLANTIC COAST AIRLINES
("Borrower")
_________________________________________ By:_________________________________
Secretary Title:___________________________
[CORPORATE SEAL]
ATTEST: ATLANTIC COAST AIRLINES, INC.
("Parent")
_________________________________________ By:_________________________________
Secretary Title:___________________________
[CORPORATE SEAL]
Accepted in Charlotte, North Carolina
SHAWMUT CAPITAL CORPORATION
("Lender")
By:__________________________________
Title:______________________________
LIST OF EXHIBITS
Exhibit A Related United Express Agreements
Exhibit B Each Loan Party's Chief Executive Office and Business
Locations
Exhibit C Jurisdictions in which each Loan Party is Authorized to
do Business
Exhibit D Capital Structure of Each Loan Party
Exhibit E Corporate Names
Exhibit F Tax Identification Numbers of Subsidiaries
Exhibit G Patents, Trademarks, Copyrights and Licenses
Exhibit H Contracts Restricting Borrower's Right to Incur Debts
Exhibit I Litigation
Exhibit J Pension Plans
Exhibit K Labor Contracts
Exhibit L Compliance Certificate
EXHIBIT A
RELATED UNITED EXPRESS AGREEMENTS
EXHIBIT B
CHIEF EXECUTIVE OFFICES
1. Borrower currently has the following chief executive office:
2. Parent currently has the following chief executive office:
3. Borrower maintains its books and records relating to Accounts and General
Intangibles at:
4. Parent maintains its books and records relating to Accounts and General
Intangibles at:
EXHIBIT C
JURISDICTIONS IN WHICH THE LOAN PARTIES
ARE AUTHORIZED TO DO BUSINESS
Name of Entity
Jurisdictions
Borrower California, Virginia,
Georgia, Connecticut, Kentucky, Maine, Maryland, Massachusetts, New Hampshire,
New Jersey, New York, North Carolina, Ohio, Rhode Island, South Carolina,
Tennessee, Vermont and West Virginia
Parent Delaware and Virginia
EXHIBIT D
CAPITAL STRUCTURE
1. The name of each Loan Party's corporate or joint venture Affiliates and
the nature of the affiliation are as follows:
Borrower: NONE
Parent: NONE
2. The classes and number of authorized shares of each Loan Party and the
record owner of such shares are as follows:
Borrower:
Class of Stock
Number of Shares
Issued and Outstanding
Number of Shares
Authorized but Unissued
Common
All owned by Parent
Parent: The common stock of Parent is publicly traded. All of
the preferred shares of Parent are currently held by JSX Capital Corporation.
Class of Stock
Number of Shares
Issued/ Outstanding
Number of Shares
Authorized but Unissued
Common
8,347,524/8,335,024
8,652,476
Preferred
3,825/3,825
4,175
The above information is as of June 30, 1995.
3. The number, nature and holder of all other outstanding Securities of each
Loan Party are as follows:
There are no other Securities of the Loan Parties than those set forth in
items 2 & 3 above.
EXHIBIT E
CORPORATE NAMES
1. Borrower's correct corporate name, as registered with the Secretary of
State of the State of California, is:
Atlantic Coast Airlines
2. Parent's correct corporate name, as registered with the Secretary of
State of the State of Delaware, is:
Atlantic Coast Airlines, Inc.
3. In the conduct of its business, Borrower has used the following names:
4. In the conduct of its business, Parent has used the following names:
EXHIBIT F
TAX IDENTIFICATION NUMBERS OF EACH LOAN PARTY
Entity Number
Borrower 77-0291749
Parent 13-3621051
EXHIBIT G
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
With the exception of computer software licenses, neither Borrower nor
Parent has any patents, trademarks, copyrights, service marks, tradenames,
licenses and other similar rights other than those licensed from United under
the United Express Agreements.
EXHIBIT H
CONTRACTS RESTRICTING LOAN PARTY'S RIGHT TO INCUR DEBTS
1. Contracts that restrict the right of Borrower to incur Indebtedness:
Title of Contract
Identity of
Parties
Nature of
Restriction
Term of Contract
2. Contracts that restrict the right of Parent to incur Indebtedness:
Title of Contract
Identity of
Parties
Nature of
Restriction
Term of Contract
EXHIBIT I
LITIGATION
1. Actions, suits, proceedings and investigations pending against any Loan
Party:
Title of Action
Nature of Action
Complaining
Parties
Jurisdiction or
Tribunal
NONE
2. The only threatened actions, suits, proceedings or investigations of
which any Loan Party is aware are as follows:
NONE
EXHIBIT J
PENSION PLANS
The Loan Parties have the following Plans:
Party
Type of Plan
Atlantic Coast Airlines, Inc.
Employees Stock Ownership Plan
Employee Stock Ownership Plan
Atlantic Coast Airlines 401(k) Plan
401(k) Plan
Atlantic Coast Airlines Pilot 401(k)
Plan
401(k) Plan
EXHIBIT K
COLLECTIVE BARGAINING AGREEMENTS; LABOR CONTROVERSIES
1. The Loan Parties are parties to the following collective bargaining
agreements:
Type of Agreement
Parties
Term of Agreement
Collective Bargaining
Agreement
ACA-Association of
Flight Attendants, AFL-
CIO
May 1, 1994 - April 30,
1997
Collective Bargaining
Agreement
ACAI-Airlines Pilot
Assoc. Int.
*
2. Material grievances, disputes of controversies with employees are as
follows:
Parties Involved
Nature of Grievance, Dispute or
Controversy
NONE
3. Threatened strikes, work stoppages and asserted pending demands for
collective bargaining are as follows:
Parties Involved
Nature of Matter
ACA-Aircraft Mechanic Fraternal
Assoc. (Borrower has no labor
agreement with the Association)
**
* This agreement terminates March 31, 1996 unless notice to Borrower is given
120 days prior to the termination date in which case the agreement is
automatically renewed subject to the right to amend the agreement.
** The Association has threatened to take a strike vote. Borrower has brought
litigation questioning the association's right to do so. Even if the
litigation is unsuccessful, the NMB will not, as required, likely declare an
impass, which is a condition precedent to a strike.
EXHIBIT L
COMPLIANCE CERTIFICATE
[Letterhead of Parent]
__________________, 19__
Shawmut Capital Corporation
6060 J. A. Jones Drive
Suite 200
Charlotte, North Carolina 28287
The undersigned, a financial officer of Atlantic Coast Airlines,
Inc., a Delaware corporation ("Parent"), gives this certificate to Shawmut
Capital Corporation ("Lender") in accordance with the requirements of
subsection 8.1.3 of that certain Loan and Security Agreement dated October 12,
1995, between Parent and its Subsidiary Atlantic Coast Airlines and Lender
("Loan Agreement"). Capitalized terms used in this Certificate, unless
otherwise defined herein, shall have the meanings ascribed to them in the Loan
Agreement.
1. Based upon my review of the Consolidated balance sheets
and statements of income of the Loan Parties for the [fiscal year] [quarterly
period] ending __________________, 19__, copies of which are attached hereto, I
hereby certify that:
(a) Consolidated Adjusted Tangible Net Worth for the period
is $_______________;
(b) Consolidated Adjusted Earnings From Operations for the
period is $_______________;
(c) Consolidated Debt Service Coverage Ratio for the period
is ____ to 1.0; and
(d) Capital Expenditures during the period and for the
fiscal year to date total $__________ and $__________, respectively.
2. No Default exists on the date hereof, other than:
__________________ _______________________________________________ [if none, so
state]; and
3. No Event of Default exists on the date hereof, other
than __________________ _________________________________________ [if none, so
state].
Very truly yours,
_______________________________
A Financial Officer
__________________________________________________
ATLANTIC COAST AIRLINES, INC.
ATLANTIC COAST AIRLINES
__________________________________________________
__________________________________________________
__________________________________________________
LOAN AND SECURITY AGREEMENT
Dated: October 12, 1995
$20,000,000
__________________________________________________
__________________________________________________
__________________________________________________
SHAWMUT CAPITAL CORPORATION
__________________________________________________
TABLE OF CONTENTS
Page
SECTION 1. CREDIT FACILITY -1-
1.1. Loans -1-
1.2. Use of Proceeds of Revolver Loans -1-
1.3. Reduction of Revolver Loan Facility -1-
SECTION 2. INTEREST, FEES AND CHARGES -1-
2.1. Interest -1-
2.2 Fees. -3-
2.3. Computation of Interest and Fees -3-
2.4. Audit and Appraisal Fees and Expenses -3-
2.5. Reimbursement of Expenses -3-
2.6. Bank Charges -4-
2.7. Capital Adequacy -4-
SECTION 3. LOAN ADMINISTRATION -4-
3.1. Manner of Borrowing Loans and Disbursements -4-
3.2. Payments -5-
3.3. Application of Payments and Collections -6-
3.4. All Loans to Constitute One Obligation -6-
3.5. Loan Account -6-
3.6. Statements of Account -6-
SECTION 4. TERM AND TERMINATION -6-
4.1. Term of Agreement -6-
4.2. Termination -6-
SECTION 5. SECURITY INTERESTS -7-
5.1. Security Interest in Collateral -7-
5.2. Lien Perfection; Further Assurances -8-
SECTION 6. COLLATERAL ADMINISTRATION -8-
6.1. General -8-
6.2. Administration of Accounts -8-
6.3. Payment of Charges -9-
SECTION 7. REPRESENTATIONS AND WARRANTIES -10-
7.1. General Representations and Warranties -10-
7.2. Continuous Nature of Representations and Warranties -13-
7.3. Survival of Representations and Warranties -13-
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS -13-
8.1. Affirmative Covenants -13-
8.2. Negative Covenants -15-
8.3. Specific Financial Covenants -17-
SECTION 9. CONDITIONS PRECEDENT -19-
9.1. Conditions Precedent to Initial Revolver Loan on Closing Date -19-
9.2. Conditions Precedent to All Revolver Loans -21-
9.3. Waiver of Conditions Precedent -21-
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT -21-
10.1. Events of Default -21-
10.2. Acceleration of the Obligations -23-
10.3. Other Remedies -23-
10.4. Remedies Cumulative; No Waiver -24-
SECTION 11. MISCELLANEOUS -24-
11.1. Power of Attorney -24-
11.2. Indemnity -25-
11.3. Modification of Agreement; Sale of Interest -25-
11.4. Severability -25-
11.5. Successors and Assigns -26-
11.6. Cumulative Effect; Conflict of Terms -26-
11.7. Execution in Counterparts -26-
11.8. Notice -26-
11.9. Credit Inquiries -26-
11.10. Time of Essence -27-
11.11. Entire Agreement; Appendix A and Exhibits -27-
11.12. Interpretation -27-
11.13. GOVERNING LAW; CONSENT TO FORUM -27-
11.14. WAIVERS BY LOAN PARTIES -27-
(..continued)