EXHIBIT 10.23(a)
FIRST AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Amendment"),
dated as of the 1st day of June, 1997, made by and between
FLEET CAPITAL CORPORATION, a Rhode Island corporation (successor by
merger with Fleet Capital Corporation, a Connecticut corporation, which was
formerly known as Shawmut Capital Corporation) (the "Lender"),
ATLANTIC COAST AIRLINES, a California corporation (the "Borrower"), and
ATLANTIC COAST AIRLINES, INC., a Delaware corporation (the "Parent";
the Borrower and the Parent being collectively called the "Loan Parties");
to the Loan and Security Agreement, dated October 12, 1995 (the "Loan
Agreement"). All capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Loan Agreement.
RECITALS
RECITALS RECITALS
A. Pursuant to the Loan Agreement, and upon the terms and subject to
the conditions contained therein, the Lender has made available to the Borrower
a $20,000,000 revolving line of credit evidenced by the Loan Agreement.
B. The Industrial Development Authority of Loudoun County, Virginia
(the "Issuer") pursuant to an Indenture of Trust, dated of even date herewith
("Indenture"), between the Issuer and FMB Trust Company, National Association,
as trustee (the "Bond Trustee"), has agreed to issue $9,425,000 in aggregate
principal amount of the Issuer's Variable Rate Demand/Fixed Rate Revenue Bonds
(Atlantic Coast Airlines Project) Series 1997 (the "Bonds").
C. Pursuant to a Financing Agreement (the "Bond Loan Agreement"), dated
of even date herewith, between the Issuer and the Borrower, the proceeds of the
sale of the Bonds will be used by the Borrower for the purpose of financing the
cost of construction of a maintenance facility and associated access roadway,
vehicle parking and maneuvering areas and aircraft paving aprons on land
controlled by the Metropolitan Washington Airports Authority (the "Authority")
and forming part of the Washington Dulles International Airport which is leased
by the Authority to the Borrower pursuant to a Ground Lease Agreement, dated
June 23, 1997 (the "Lease").
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D. Pursuant to a Letter of Credit and Reimbursement Agreement, dated of
even date herewith (the "Reimbursement Agreement"), among Fleet National Bank
(the "Bank"), the Lender and the Borrower, the Borrower has requested the Bank
to issue its irrevocable, transferable direct-pay letter of credit in
substantially the form of Exhibit A to the Reimbursement Agreement (the "Bond
Letter of Credit"), in the original undrawn amount of $9,579,932.
E. In order to induce the Bank to issue the Bond Letter of Credit, the
Bank has required that the Lender join in the execution of the Reimbursement
Agreement and guaranty the reimbursement and other obligations owing by the
Borrower to the Bank thereunder.
F. The Loan Parties have each requested that the Lender join in the
execution of the Reimbursement Agreement and guaranty the reimbursement and
other obligations of the Borrower thereunder, and the Lender has agreed to such
request, provided, among other things, the Loan Agreement and the other Loan
Documents are amended as herein provided.
G. To accomplish the foregoing purposes, the parties hereto are
mutually desirous of amending the Loan Agreement as set forth herein .
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, the Loan Parties and the Lender hereby agree as follows:
ARTICLE I
AMENDMENTS TO LOAN AGREEMENT
The Loan Agreement is hereby amended as follows:
1.1 Credit Facility. Section 1, Credit Facility, is amended by adding the following Section 1.4 at
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the end thereof:
"1.4. Letters of Credit; Letter of Credit Guaranties.
1.4.1 Issuance of Letters of Credit and Letter of
Credit Guaranties. Lender agrees, for so long as no Default or Event of
Default exists and subject to the provisions of Section 9 below, to
issue its, or cause to be issued its Affiliate's, Letters of Credit and
Letter of Credit Guaranties, provided that the aggregate amount of the
Letter of Credit Obligations outstanding at any time shall not exceed
$10,500,000 and, without the prior written consent of Lender, no Letter
of Credit or Letter of Credit Guaranty may have an expiration date that
is after the last day of the Original Term or the then applicable
Renewal Term.
1.4.2 Reimbursement Obligations. All indebtedness,
liabilities or obligations whatsoever arising or incurred in connection
with any Letter of Credit or Letter of Credit Guaranty shall be
incurred solely as an accommodation to Borrower and for Borrower's
account. Borrower shall reimburse Lender for the total amount of all
sums paid by Lender under the terms of any Letter of Credit or Letter
of Credit Guaranty, any drawing or demand under any Letter of Credit or
Letter of Credit Guaranty, or any additional or further liability which
may accrue against Lender in connection with a Letter of Credit or
Letter of Credit Guaranty, immediately upon the date of payment by
Lender (either with the proceeds of a Revolver Loan obtained hereunder
or otherwise). If Borrower shall fail to reimburse Lender as provided
herein, the unreimbursed amount of such payment by Lender shall bear
interest, compounded monthly, at a per annum rate equal to the same
rate applicable to the Revolver Loans until such amount is paid in
full. The reimbursement obligations of Borrower hereunder shall be
absolute and unconditional under all circumstances irrespective of any
rights of set-off, counterclaim or defense to payment Borrower may
claim or have against Lender, the beneficiary of the Letter of Credit
or the Letter of Credit Guaranty drawn upon or any other Person,
including, without limitation, (i) any defense based on any failure of
Borrower to receive consideration, (ii) the legality, validity,
regularity or unenforceability of the Letter of Credit or Letter of
Credit Guaranty or any agreement or instrument related thereto, (iii)
any amendment or waiver of any consent to departure from the terms of
the Letter of Credit or any Letter of Credit Guaranty or any agreement
or instrument related thereto, (iv) any statement, draft or other
document presented under a Letter of Credit or Letter of Credit
Guaranty proving to be forged, fraudulent, invalid or insufficient in
any respect, or any statement therein being untrue or inaccurate in any
respect whatsoever, except if resulting from Lender's gross negligence
in accepting any such forged or fraudulent draft or document, (v) the
surrender or impairment of any Collateral, or (vi) the existence of any
claim, setoff, defense or other right which Borrower may have against
the beneficiary of a Letter of Credit or Letter of Credit Guaranty or
any other Person, whether in connection with any of the agreements or
documents related thereto or otherwise.
1.4.3 Rights and Remedies. In the event of Borrower's failure
to reimburse Lender for the total amount of all sums paid by Lender
under the terms of any Letter of Credit or Letter of Credit Guaranty,
any drawing or demand under any Letter of Credit or Letter of Credit
Guaranty or any additional or further liability which may accrue
against Lender in connection therewith, Lender, in addition to its
rights under the Code and under this Agreement, shall be fully
subrogated to the rights of the issuer of the Letter of Credit under
the agreement made with Borrower relating to the issuance of such
Letter of Credit, each such agreement being incorporated herein by
reference, and Lender shall be entitled to exercise all such rights and
remedies thereunder and under law in such regard as fully as if it were
the issuer of the Letter of Credit. If any Letter of Credit is drawn
upon to discharge any obligation of Borrower to the beneficiary of such
Letter of Credit, in whole or in part, Lender shall be fully subrogated
to the rights of such beneficiary with respect to the obligation of
Borrower to such beneficiary to the extent discharged with the proceeds
of such Letter of Credit.
1.4.4 Indemnification. Borrower hereby unconditionally agrees
to indemnify Lender and hold Lender harmless from any and all losses,
claims or liabilities arising from any transactions or occurrences
relating to the Letters of Credit or the Letter of Credit Guaranties
issued, established, opened or accepted for Borrower's account, and any
drafts or acceptances thereunder, and all Letter of Credit Obligations
incurred in connection therewith. This indemnity shall survive the
payment in full of all amounts payable to Lender hereunder and the
termination of this Agreement.
1.4.5 Termination. In the event that this Agreement is
terminated for any reason by either party as herein provided, in
addition to Lender's other rights under this Agreement, unless all
outstanding Letters of Credit and Letter of Credit Guaranties are
terminated or cancelled and Lender and its Affiliates released from all
liability thereunder, Lender shall be entitled to pay and discharge all
Letter of Credit Obligations with respect to all outstanding Letters of
Credit and Letter of Credit Guaranties which are not terminated or
cancelled, whether such Letter of Credit Obligations are absolute or
contingent, and all sums paid by Lender in connection therewith shall
be deemed to have been loaned by Lender to Borrower as a Revolver Loan,
shall be secured by all of the Collateral and shall bear interest and
be payable at the same rate and in the same manner as Revolver Loans."
1.2 Letter of Credit and Letter of Credit Guaranty Fees. Section 2.2, Fees, is amended by
adding the following Sections 2.2.3 and 2.2.4 at the end thereof:
"2.2.3. Letter of Credit and Letter of Credit Guaranty Fees. Borrower shall pay the
following fees for all Letters of Credit and Letter of Credit Guaranties issued by Lender and
its Affiliates pursuant to Section 1.4.1 hereof:
(i) Upon issuance of the Bond Letter of Credit and
the Bond Letter of Credit Guaranty, fees to Bank in the
amounts and on the dates as set forth in Section 2.03 of the
Reimbursement Agreement;
(ii) Upon issuance of each other Letter of Credit and
Letter of Credit Guaranty:
Consolidated Adjusted Net
Earnings From Operations Per Annum Fee
(a) an issuance fee to Lender for the
account of both Lender and its Affiliate that issues
such other Letter of Credit equal to the greater of
(a) $500 or (b) three percent (3%) per annum (or such
lesser percentage as Lender shall, in the exercise of
its sole discretion, agree in writing at or before
the date of issuance) of the undrawn amount of such
Letter of Credit, payable in advance upon the
issuance of each other Letter of Credit and Letter of
Credit Guaranty and on each extension of the stated
termination date thereof for so long as such other
Letter of Credit and Letter of Credit Guaranty is
outstanding; and
(b) the reasonable and customary charges
from time to time of the issuer of such other Letter
of Credit with respect to the issuance, notification,
amendment, transfer, administration, cancellation and
conversion of, and drawings under, such other Letter
of Credit, all of which shall be payable to Lender
for the account of such issuer.
All issuance fees in connection with each Letter of Credit and
Letter of Credit Guaranty as set forth in Sections 2.2.3 (i)(a) and
(ii)(a) hereof shall be deemed fully earned upon the issuance of the
Letter of Credit and Letter of Credit Guaranty and shall not be subject
to rebate or proration upon the termination of this Agreement for any
reason.
2.2.4 Interest on Unpaid Fees. Any amount of fees payable by
Borrower to Lender that is not paid when due shall bear interest, from
the date such amount of fees was due until the date of payment in full,
at the rate applicable to the Revolver Loans outstanding, payable upon
demand and on the date of payment in full."
1.3 Loan Requests. Section 3.1.1, Loan Requests, is amended by deleting
subsection (ii) in its entirety and by substituting in lieu thereof the
following:
"(ii) 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, or under the Reimbursement Agreement,
whether as principal, accrued interest, fees, expenses or other
charges, including, without limitation, payments required to be made
pursuant to Section 1.4.2 hereof and payments required to be made to
Bank pursuant to Section 2.3 of the Reimbursement Agreement, 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, expenses 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 expenses 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."
1.4 Cash Collateral Account. Section 3.2, Payments, is amended by adding a new Section 3.2.4,
Cash Collateral Account, as follows:
"3.2.4 Cash Collateral Account. If at any time the Net
Accounts Availability, when added to the amount of funds then on
deposit in the Cash Collateral Account, is less than the amount of the
Availability Reserve, then Borrower shall immediately pay to Lender, on
Lender's demand, an amount equal to the difference to be held by Lender
in the Cash Collateral Account as security for the Obligations. If at
any time the amount of funds on deposit in the Cash Collateral Account,
when added to the Net Accounts Availability at such time, is more than
the Availability Reserve, then Lender shall release to Borrower that
portion of the funds then on deposit in the Cash Collateral Account
equal to such excess, if, and only to the extent that, immediately
before and after giving effect to such release, no Default, Event of
Default or Overadvance Condition has occurred and continues to exist."
1.5 Term of Agreement. Section 4.1, Term of Agreement, is amended in its entirety to read as
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follows:
"4.1 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 from the Closing
Date through and including September 30, 2000 (the "Original Term"),
and this Agreement shall automatically renew itself for one (1) year
periods thereafter (each a "Renewal Term"), unless terminated as
provided in Section 4.2 hereof."
1.6 Termination Charges. Section 4.2.4, Termination Charges, is amended in its entirety to read
as follows:
"4.2.4 Termination Charges. On the effective date of termination of
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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, times
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one percent (1%) if termination occurs at any time during
the Original Term on or before September 30, 1998, and
one-half of one percent (0.50%) if termination occurs at any
time thereafter during the Original Term or during any
Renewal Term; provided, however, in the event that Borrower
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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; and provided further in
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the event that the credit rating of Bank as established by
Standard and Poor's, Inc. shall at any time while the Bond
Letter of Credit is outstanding fall below an "a" rating,
and, as a result of such reduced credit rating, the variable
interest rate on the Bonds thereafter remarketed by the
Remarketing Agent shall be increased, as confirmed by the
written certification of the Remarketing Agent delivered to
Lender, Borrower may, within one hundred twenty (120) days
after the increase of the interest rate on the Bonds
remarketed by the Remarketing Agent, terminate this
Agreement and the foregoing termination charge shall be one
percent (1%) of the Average Monthly Revolver Loan Balance
during the immediately preceding 12-month period ending with
the month immediately preceding the date of such
termination. If termination occurs on the last day of the
Original Term or any Renewal Term, no termination charge
shall be payable."
1.7 Affirmative Covenants. Section 8.1, Affirmative Covenants, is amended by adding a new
Section 8.1.9 at the end thereof as follows:
"8.1.9 Completion of Improvements. Cause the construction of
the Improvements to be carried on continuously and to complete the
Improvements not later than the time required therefor as required by
the terms of the Lease. The Improvements will be constructed
substantially in accordance with the plans and specifications, all
applicable ordinances and statutes and in accordance with the
requirements of all regularly constituted authorities having
jurisdiction over the same. The Improvements will be constructed
entirely on the Realty and will not encroach upon or overhang any
easement or right of way, nor upon any land not leased under the Lease,
and the Improvements when erected shall be wholly within the building
restriction lines, however established, and will not violate applicable
use or other restrictions contained in prior conveyances or applicable
protective covenants or restrictions. Borrower will promptly correct
any structural defect in the Improvements or any departure in any
material respect from the plans and specifications not previously
approved by Lender. Upon the completion of the construction of all of
the Improvements:
(i) Borrower shall furnish to Lender an approved
written certification of completion from Borrower's architect
in the form previously approved by Lender and such architect;
(ii) Borrower shall furnish such certificates of
public officials, utility companies, and others as Lender may
reasonably request certifying that the Improvements located on
the Realty is connected to public sewer, public water and
public electricity lines;
(iii) Borrower shall furnish to Lender a copy of the
certificate (or certificates) of occupancy, compliance or
completion issued by the governmental authority having
jurisdiction over the Realty with respect to all of the
Improvements to be constructed upon the Realty;
(iv) Borrower shall furnish to Lender for Lender's
approval, a current "as-built" survey of the Realty and the
Improvements which shall show no matters which would
materially and adversely affect the operation of the
Improvements as a maintenance facility or materially and
adversely affect the value of the Improvements;
(v) Borrower shall have fully paid all costs and
expenses of the construction and development of the
Improvements and Borrower shall furnish to Lender a
satisfactory endorsement to Lender's title insurance policy
through the date of completion of the Improvements and the
payment in full of all costs and expenses of construction in
providing coverage against materialman's and mechanics' liens
and against matters of survey; and
(vi) Borrower shall furnish to Lender certified
copies of Borrower's casualty insurance policies with respect
to the Improvements located on the Realty, together with loss
payable endorsements on Lender's standard form of loss payee
endorsement naming Lender as loss payee in accordance with the
provisions of this Agreement."
1.8 Specific Financial Covenants. Section 8.3, Specific Financial Covenants, is amended in its
entirety to read as follows:
"8.3. 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:
8.3.1 Consolidated Adjusted Tangible Net Worth. The
Consolidated Adjusted Tangible Net Worth of the Loan Parties
shall not be 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 quarter ended March 31, $30,000,000
1997
Fiscal quarter ended June 30, 1997 $34,250,000
Fiscal quarter ended September $38,000,000
30, 1997
Fiscal year ended December 31, $39,000,000
1997
Fiscal quarter ended March 31, $36,500,000
1998
Fiscal quarter ended June 30, 1998 $42,750,000
Fiscal quarter ended September $48,750,000
30, 1998
Fiscal year ended December 31, $53,250,000
1998
Fiscal quarter ended March 31, $51,000,000
1999
Fiscal quarter ended June 30, 1999 $56,500,000
Consolidated Adjusted
Date or Period Tangible Net Worth
Fiscal quarter ended September $63,000,000
30, 1999
Fiscal year ended December 31, $65,000,000
1999 and end of each fiscal
quarter of each fiscal year
thereafter
Provided, however, that the minimum amount of
Consolidated Adjusted Tangible Net Worth required to be
maintained by the Loan Parties as set forth above shall be
reduced to the extent that any of the proceeds of the
Subordinated Debt Offering are used contemporaneously from the
issuance thereof for the redemption of any Securities of the
Parent which are excluded from the definition of a
Distribution and therefore permitted to be made by the Loan
Parties pursuant to Section 8.2.5 of this Agreement.
8.3.2 Profitability. The Consolidated Adjusted Net
Earnings from Operations of the Loan Parties shall not be less
than the amount shown below for the period corresponding
thereto:
Consolidated Adjusted Net
Period Earnings From Operations
First fiscal quarter ended March $ 700,000
31, 1997
First two fiscal quarters ended $ 5,100,000
June 30, 1997
First three fiscal quarters ended $ 8,750,000
September 30, 1997
Consolidated Adjusted Net
Period Earnings From Operations
Fiscal year ended December 31, 1997
$10,000,000First fiscal quarter ($ 2,750,000)
ended March 31, 1998 and first
fiscal quarter ended of each
fiscal year thereafter
First two fiscal quarters ended $ 3,750,000
June 30, 1998 and the first two
fiscal quarters ended of each
fiscal year thereafter
First three fiscal quarters ended $10,000,000
September 30, 1998 and the first
three fiscal quarters ended of
each fiscal year thereafter
Fiscal year ended December 31, $13,000,000
1998 and each fiscal year
thereafter
8.3.3 Consolidated Debt Service Coverage Ratio. The
Consolidated Debt Service Coverage Ratio of the Loan Parties shall not
be less that the ratio shown below for the period corresponding
thereto:
Consolidated Debt Service
Period Coverage Ratio
Fiscal quarter ended March 31, 1997 1.50 to 1.0
First two fiscal quarters ended 1.75 to 1.0
June 30, 1997
First three fiscal quarters ended 2.50 to 1.0
September 30, 1997
Fiscal year ended December 31, 1997 2.50 to 1.0
Consolidated Debt Service
Period
Coverage RatioFirst fiscal Negative 5.00 to 1.0
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quarter ended March 31, 1998 and
the first fiscal quarter of each
fiscal year thereafter
First two fiscal quarters ended 2.00 to 1.0
June 30, 1998 and the first two
fiscal quarters of each fiscal
year thereafter
First three fiscal quarters ended 2.50 to 1.0
September 30, 1998 and the first
three fiscal quarters of each
fiscal year thereafter
Fiscal year ended December 31, 2.50 to 1.0
1998 and each fiscal year
thereafter
8.3.4 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 year ended December 31, 1997 $12,000,000
Fiscal year December 31, 1998 $ 7,000,000
Fiscal year December 31, 1998 and $ 9,500,000
each fiscal year thereafter
provided, however, there shall be excluded from the foregoing
calculation the aggregate amount of Capital Expenditures made by
Borrower with the proceeds of the Bonds; and provided further that any
Capital Expenditures permitted to be incurred during the fiscal year
ending December 31, 1997 or any subsequent fiscal year and which are
not incurred during such fiscal year may be carried over and incurred
in the following fiscal year (but not in any subsequent fiscal year).
1.9 Conditions Precedent. Section 9, Conditions Precedent, is amended as follows:
(i) Section 9.2, Conditions Precedent to All Revolver Loans,
is amended by deleting the first paragraph thereof in its entirety and by
substituting in lieu thereof the following:
"9.2 Conditions Precedent to All Revolver Loans, Letters of
Credit and Letter of Credit Guaranties. 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) or issue or cause its Affiliate to issue any Letter of Credit or
Letter of Credit Guaranty unless and until, in addition to the
conditions set forth in Sections 9.1 and 9.3, each of the following
conditions has been and continue to be satisfied:"
(ii) Section 9.3, Waiver of Conditions Precedent, is amended
by deleting in line 2 the phrase "Sections 9.1 and 9.2 hereof" and by
substituting in lieu thereof the phrase "Sections 9.1, 9.2 and 9.4 hereof".
(iii) A new Section 9.4, Conditions Precedent to Issuance of
Bond Letter of Credit Guaranty, is added as follows:
"9.4. Conditions Precedent to Issuance of Bond Letter of
Credit Guaranty. Notwithstanding any other provision 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 shall have no obligation under
Section 1.4 of this Agreement to issue or cause its Affiliate to issue
the Bond Letter of Credit or the Bond Letter of Credit Guaranty on the
Bond Letter of Credit Closing Date unless and until, in addition to
each of the conditions elsewhere set forth in this Section 9, each of
the following conditions shall have been satisfied, all in form and
substance satisfactory to Lender and its counsel;
9.4.1 Documentation. Lender shall have received the
following documents, each to be in form and substance satisfactory to
Lender and its counsel:
(i) A closing certificate signed by an
officer of each of the Loan Parties, dated as of the Bond
Letter of Credit Closing Date, stating that (a) the
representations and warranties of the Loan Parties set forth
in this Agreement and the other Loan Documents are true and
correct on and as of such date, (b) each of the Loan Parties
is on such date in compliance with all of the terms and
provisions set forth in this Agreement and the other Loan
Documents, and (c) no Default or Event of Default exists;
(ii) Copies of each of the Bond Documents duly executed by the
parties thereto;
(iii) The Deed of Trust, duly recorded with
all fees and taxes thereon, if any, paid;
(iv) A policy of title insurance, including,
without limitation, revolving credit, variable rate,
comprehensive, zoning and last dollar endorsements, issued by
a title insurance company satisfactory to Lender, with all
premiums thereon paid, insuring that the Deed of Trust
constitutes a valid and enforceable first priority Lien upon
Borrower's leasehold estate in the Realty encumbered thereby,
free and clear of all title defects and encumbrances
whatsoever other than Permitted Liens applicable thereto;
(v) A foundation survey of the Realty
showing no deed, building line, easement or any other property
covenant or ordinance violation whatsoever;
(vi) A phase 1 environmental site assessment
relating to the Realty, together with a reliance letter
addressed to Lender allowing Lender to rely on such
assessment;
(viii) UCC financing statements, duly
executed by Borrower and filed in all jurisdictions necessary
or appropriate to perfect the Lien of Lender in the personal
property encumbered by the Deed of Trust;
(ix) A certificate of the Secretary of
Borrower, certifying (i) that attached thereto is a true and
complete copy of the resolutions adopted by the board of
directors of Borrower authorizing the execution, delivery and
performance of the First Amendment to this Agreement and the
other Loan Documents executed in connection therewith, and the
consummation of the transactions contemplated by the Bond
Documents, and (ii) as to the incumbency and genuineness of
the signatures of each officer of Borrower executing the First
Amendment to this Agreement and the other Loan Documents
contemplated thereby;
(x) A certificate of the Secretary of
Parent, certifying (i) that attached thereto is a true and
complete copy of the resolutions adopted by the board of
directors of Parent authorizing the execution, delivery and
performance of the First Amendment to this Agreement and the
other Loan Documents executed in connection therewith, and the
consummation of the transactions contemplated by the Bond
Documents, and (ii) as to the incumbency and genuineness of
the signatures of each officer of Parent executing the First
Amendment to this Agreement and the other Loan Documents
contemplated thereby;
(xi) Receipt by Lender of an opinion of counsel to the Loan
Parties; and
(xii) Such other instruments, documents,
certificates, opinions or assurances as Lender or its counsel
may reasonably request in connection with the issuance of the
Bond Letter of Credit Guaranty or to evidence or confirm
compliance by Borrower with the conditions of this Agreement."
1.10 Events of Default. Section 10, Events of Default, Rights and
Remedies on Default, is amended as follows:
(i) Section 10.1.1, Payment of Loans, is amended in its entirety to read as follows:
"10.1.1 Payment of Loans and Amounts for Cash Collateral
Account. Borrower shall fail to make any payment of principal, interest
or premium, if any, owing on the Loans, or any amounts to be paid into
the Cash Collateral Account pursuant to Section 3.2.4 hereof, within
two (2) Business Days of the due date thereof (whether due at stated
maturity, on demand, upon acceleration or otherwise)."
(ii) A new Section 10.1.19, Reimbursement Agreement, is added at the end of Section 10.1 as
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follows:
"10.1.19 Default Under Reimbursement Agreement. There shall occur any
"Event of Default" under the Reimbursement Agreement as such term is defined in Section 6.01
thereof."
(iii) Section 10.3, Other Remedies, is amended by adding the
following Section 10.3.6 at the end thereof:
"10.3.6 Upon the occurrence and during the
continuance of an Event of Default, Lender may also, at its option,
with respect to the face amount of all Letters of Credit and Letter of
Credit Guaranties then outstanding, require Borrower to deposit with
Lender funds equal to such undrawn face amount, and if Borrower fails
promptly to make such deposit, Lender may advance such amount as a
Revolver Loan. Any such deposit or advance shall be held by Lender in
the Cash Collateral Account as a reserve to fund future payments on the
outstanding Letters of Credit or Letter of Credit Guaranties. At such
time as all Letters of Credit and Letter of Credit Guaranties have
expired or have been cancelled or terminated, any amounts remaining in
the Cash Collateral Account shall be applied against any outstanding
Obligations, or, to the extent all Obligations have been indefeasibly
paid in full, returned to Borrower."
1.11 Notices. Section 11.8 is modified as follows:
(i) In line three thereof, the phrase "or by facsimile" is deleted; and
(ii) All notices to the Borrower and the Parent shall be sent in the manner set forth in
Section 11.8 as modified hereby and addressed as follows:
If to Borrower: Atlantic Coast Airlines
515-A Shaw Road
Sterling, Virginia 20166
Attention: Director of Treasury Management
If to Parent: Atlantic Coast Airlines, Inc
515-A Shaw Road
Sterling, Virginia 20166
Attention: Senior Vice President and General Counsel
With a copy to: Hazel & Thomas
3110 Fairview Park Drive
Suite 1400
Falls Church, Virginia 22042
Attention: Carol C. Honigberg, Esq.
1.12 Indemnity by Lender. A new Section 11.15, Indemnity by Lender, is added as follows:
"11.15 Indemnity by Lender. Lender hereby agrees to
indemnify Borrower against any liability, loss, damage or expense which
Borrower may suffer or occur as a result of Lender's breach of any of
its warranties and representations set forth in Section 4.02 of the
Reimbursement Agreement or Lender's failure to comply with any of the
covenants set forth in Section 5.03 of the Reimbursement Agreement and
Bank's exercise of its rights under Section 6.02 of the Reimbursement
Agreement as a result thereof."
1.13 Definitions. Appendix A, General Definitions, is amended as follows:
(i) The following definitions are amended in their entirety:
"Availability Reserve - On any date of determination thereof,
an amount equal to the sum of (i) any amounts of past due rent or other
charges (other than project rental as specified in the Lease) owing at
such time by Borrower to the Authority under the Lease; (ii) any
amounts which Borrower is obligated to pay pursuant to the provisions
of the Loan Documents but does not pay when due and which Lender elects
to pay pursuant to any of the Loan Documents for the account of
Borrower; (iii) the estimated cost of services ordered by Borrower from
United under the United Express Emergency Response Agreement; (iv) the
Fixed Bond Letter of Credit Guaranty Reserve at such date; (v) the
Increasing Bond Letter of Credit Guaranty Reserve at such date; (vi)
the amount of all Letter of Credit Obligations outstanding at such date
except for those with respect to the Bond Letter of Credit and the Bond
Letter of Credit Guaranty; and (vii) 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 and Letter of Credit
Obligations outstanding 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 - Fleet National Bank, and its successors and assigns.
Borrowing Base - as at any date of determination thereof, an
amount equal to the lesser of:
(i) the amount of the Revolver Loan Facility less the amount of
the Letter of Credit Obligations outstanding at such date; or
(ii) the sum of:
(a) the Accounts Borrowing Base at such
date;
MINUS
(b) the Availability Reserve at such
date.
Consolidated Debt Service Coverage Ratio - with respect to any
Person for any period of determination, the ratio of (i) Consolidated
Cash Flow for such period to (ii) payments of Indebtedness for Money
Borrowed required to be paid by such Person during such period;
provided, however, payments made on the $11,000,000 Indebtedness for
Money Borrowed owed to Bombardier Air for the funding of a deposit for
the acquisition of CRJ regional jet aircraft, to the extent made from
the proceeds of the Subordinated Debt Offering, shall not be deemed a
payment by the Loan Parties of Indebtedness for Money Borrowed and
shall be excluded from the foregoing calculation.
Security Documents - the Deed of Trust, each Guaranty
Agreement, and all other instruments and agreements now or at any time
hereafter securing the whole or any part of the Obligations."
(ii) The following definitions are added in the appropriate alphabetical sequence:
Accounts Borrowing Base - at any date of determination
thereof, an amount equal to sixty-five percent (65%) of the net amount
of Eligible Accounts outstanding at such date. For the purposes of
calculating the Accounts Borrowing Base, 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).
Available Amount - as such term is defined in the
Reimbursement Agreement.
Average Monthly Revolver Loan Balance - the amount
obtained by adding the aggregate unpaid balance of all Loans and all
Letter of Credit Obligations except for the Letter of Credit
Obligations arising under the Bond Letter of Credit Guaranty, in each
case which are outstanding at the end of each day during the month in
question and by dividing that sum by the number of days in such month.
Bond Documents - collectively, the Bond Loan
Agreement, the Bonds, the Indenture, the Reimbursement Agreement, and
all guaranties, agreements, opinions, certificates or assurances
executed in connection therewith.
Bond Letter of Credit - as defined in the Recitals
contained in the First Amendment to the Agreement.
Bond Letter of Credit Guaranty - the guaranty by
Lender of the reimbursement and other obligations owing by Borrower to
Bank in respect of the Bond Letter of Credit as set forth in the
Reimbursement Agreement.
Bond Letter of Credit Closing Date - the date on
which all of the conditions set forth in Section 9.4 of the Agreement
are satisfied and Lender issues the Bond Letter of Credit Guaranty in
favor of Bank.
Bond Loan Agreement - as defined in the Recitals
contained in the First Amendment to the Agreement.
Bonds - as defined in the Recitals contained in the
First Amendment to the Agreement.
Cash Collateral - cash deposited with Lender in
accordance with the Agreement as security for the Letter of Credit
Obligations to the extent provided in the Agreement.
Cash Collateral Account - an interest-bearing account
established by Lender on its books and to which Lender shall credit all
Cash Collateral deposited with Lender in accordance with the Agreement.
Deed of Trust - the Credit Line Leasehold Deed of
Trust and Security Agreement executed by Borrower on or about the Bond
Letter of Credit Closing Date in favor of the trustees named therein
for the benefit of Lender, as it may be amended, modified, supplemented
or restated from time to time, by which Borrower has granted and
conveyed to the trustees for the benefit of Lender, as security for the
Obligations, Liens upon Borrower's leasehold estate in the Realty
leased by Borrower from the Authority pursuant to the Lease.
Fixed Bond Letter of Credit Guaranty Reserve - for so
long as the Bond Letter of Credit and the Bond Letter of Credit
Guaranty is outstanding, a reserve established by Lender in the amount
of $4,479,932, or such lesser amount as Lender, in the exercise of its
sole and unfettered discretion, may establish from time to time.
Improvements - the construction of a maintenance
facility and associated access roadway, vehicle parking and maneuvering
areas and aircraft paving aprons on the Realty.
Increasing Bond Letter of Credit Guaranty Reserve -
for so long as the Bond Letter of Credit and the Bond Letter of Credit
Guaranty is outstanding, a reserve established by Lender which shall on
the Bond Letter of Credit Closing Date be equal to zero, but shall
thereafter increase on the first day of each month, commencing on the
first day of the month following the Bond Letter of Credit Closing
Date, by an amount equal to $53,750, and shall thereafter decrease by
the amount of any Voluntary Redemptions of the Bonds, but in no event
shall the amount of the Increasing Bond Letter of Credit Guaranty
Reserve be less than zero nor, when added to the amount of the Fixed
Bond Letter of Credit Guaranty Reserve, exceed the Available Amount.
Indenture - as defined in the Recitals contained in
the First Amendment to the Agreement.
Issuer - as defined in the Recitals contained in the
First Amendment to the Agreement.
Lease - as defined in the Recitals contained in the
First Amendment to the Agreement.
Letter of Credit - the Bond Letter of Credit and any
other letter of credit issued by any of Lender's Affiliates for the
account of Borrower.
Letter of Credit Guaranty - the Bond Letter of Credit
Guaranty and any other guaranty issued by Lender for the account of
Borrower by which Lender shall guarantee the payment by Borrower of its
reimbursement obligations under a Letter of Credit.
Letter of Credit Obligations - that portion of the
Obligations constituting Borrower's obligation to reimburse Lender for
all amounts paid by Lender under or with respect to a Letter of Credit
Guaranty.
Net Accounts Availability - at any date of the
determination thereof, the sum of (i) the Accounts Borrowing Base, less
(ii) the aggregate amount of the Loans and the Letter of Credit
Obligations outstanding at such date except for those with respect to
the Bond Letter of Credit and the Bond Letter of Credit Guaranty.
Realty - the tract or parcels of real property leased
by Borrower from the Authority pursuant to the Lease, together with the
Improvements and the fixtures attached thereto.
Reimbursement Agreement - as defined in the Recitals
contained in the First Amendment to the Agreement.
Remarketing Agent - shall have the meaning ascribed
to such term in the Indenture.
Subordinated Debt Offering - the $50,000,000
aggregate principal amount ($57,500,000 aggregate principal amount if
the initial purchasers' over-allotment option is exercised) of the
Parent's Convertible Subordinated Notes, payable in semi-annual
interest payments and with a final maturity date of July 1, 2004, and
subordinated in right of payment to certain of the Parent's senior
indebtedness as more particularly described in the indenture under
which the notes are issued, which are expected to be issued by the
Parent by August 31, 1997.
Voluntary Redemptions - optional redemptions of the
Bonds made by Borrower pursuant to Sections 3.1(g) and (h) of the
Indenture."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Loan Parties each hereby represents and warrants to the Lender
that:
2.1 Compliance with the Loan Agreement and Other Loan Documents. As of
the execution of this Amendment, each of the Loan Parties is in compliance with
all of the terms and provisions set forth in the Loan Agreement and in the other
Loan Documents to be observed or performed by each of the Loan Parties, except
where the failure of the Loan Parties to comply has been waived in writing by
the Lender.
2.2. Representations in Loan Agreement and other Loan Documents. The
representations and warranties of the Loan Parties set forth in the Loan
Agreement and the other Loan Documents are 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 in any exhibit attached to the Loan
Agreement either inaccurate, incomplete or misleading, so long as the Lender has
consented to such changes or such changes are not expressly prohibited by the
Loan Agreement.
2.3. No Event of Default. No Default or Event of Default exists.
ARTICLE III
MODIFICATION OF LOAN DOCUMENTS; ACKNOWLEDGMENT OF OBLIGATIONS
3.1 Modification of Loan Document The Loan Agreement and each of the
other Loan Documents are amended to provide that any reference to the Loan
Agreement in the Loan Agreement or any of the other Loan Documents shall mean
the Loan Agreement as amended by this Amendment, and as it is further amended,
restated, supplemented or modified from time to time. The provisions of that
certain letter from the Lender to the Borrower, dated June 13, 1997, are deemed
superseded and replaced by this Amendment and are of no further force and
effect.
3.2. Acknowledgments by the Loan Parties. To induce the Lender to enter
into this Amendment, each Loan Party acknowledges and agrees with the Lender
that as of June 1, 1997, the aggregate principal balance owing on the Revolving
Loans outstanding under the Loan Agreement was in the sum of zero, and the
aggregate amount of Letters of Credit and Letter of Credit Guaranties
outstanding was in the sum of $531,000 and that all such Obligations outstanding
are owed to the Lender without any offset, deduction, defense or counterclaim of
any nature in favor of either Loan Party.
ARTICLE IV
GENERAL
4.1. Full Force and Effect. As expressly amended hereby, the Loan
Agreement shall continue in full force and effect in accordance with the
provisions thereof. As used in the Loan Agreement, "hereinafter", "hereto",
"hereof" or words of similar import, shall, unless the context otherwise
requires, mean the Loan Agreement as amended by this Amendment.
4.2 Applicable Law. This Amendment shall be governed by and construed
in accordance with the internal laws and judicial decisions of the State of
North Carolina.
4.3 Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute but one and the same instrument.
4.4 Expenses. The Borrower shall reimburse the Lender for all
reasonable fees and expenses (legal or otherwise) incurred by the Lender in
connection with the preparation, negotiation, execution and delivery of this
Amendment and all other agreements and documents referred to herein or
contemplated hereby.
4.5. Headings. The headings in this Amendment are for the purpose of reference only and shall not
affect the construction of this Amendment.
4.6 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE LOAN PARTIES AND THE LENDER EACH WAIVES THE RIGHT TO TRIAL BY JURY IN
ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR
RELATED TO THIS AMENDMENT, THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered on the date first above written.
Borrower:
ATLANTIC COAST AIRLINES
By:________________________________________
Title:__________________________________
ATTEST:
- ----------------------------
_________ - Secretary
[CORPORATE SEAL]
Parent:
ATLANTIC COAST AIRLINES, INC.
By:________________________________________
Title:__________________________________
ATTEST:
- ----------------------------
_________ - Secretary
[CORPORATE SEAL]
Accepted in Charlotte, North Carolina
Lender:
FLEET CAPITAL CORPORATION
By:_______________________________________
Title:___________________________________