exv10w23



 



Exhibit 10.23


AMENDED AND RESTATED



LOAN AND SECURITY AGREEMENT



dated as of



July 31, 2003



Between



ATLANTIC COAST AIRLINES



And



WACHOVIA BANK, NATIONAL ASSOCIATION



 






 


TABLE OF CONTENTS




	 	 	 	 	 	 
	 	 	 	Page
	 	 	 	

	ARTICLE I DEFINITIONS
	 	 	2	 
	 	SECTION 1.01 Definitions
	 	 	2	 
	 	SECTION 1.02 Accounting Terms and Determinations
	 	 	7	 
	 	SECTION 1.03 References
	 	 	8	 
	 	SECTION 1.04 Use of Defined Terms
	 	 	8	 
	 	SECTION 1.05 Terminology
	 	 	8	 
	ARTICLE II REVOLVING LINE OF CREDIT
	 	 	8	 
	ARTICLE III CONDITIONS PRECEDENT
	 	 	8	 
	ARTICLE IV LETTERS OF CREDIT
	 	 	9	 
	 	SECTION 4.01 Letters of Credit
	 	 	9	 
	 	SECTION 4.02 Compensation for Letters of Credit
	 	 	9	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES
	 	 	9	 
	 	SECTION 5.01 Corporate Existence and Power
	 	 	9	 
	 	SECTION 5.02 Corporate and Governmental Authorization; No Contravention
	 	 	10	 
	 	SECTION 5.03 Binding Effect
	 	 	10	 
	 	SECTION 5.04 Compliance with ERISA
	 	 	10	 
	 	SECTION 5.05 Compliance with Laws; Payment of Taxes
	 	 	10	 
	 	SECTION 5.06 Ownership of Property
	 	 	11	 
	 	SECTION 5.07 No Default
	 	 	11	 
	 	SECTION 5.08 Full Disclosure
	 	 	11	 
	 	SECTION 5.09 Insolvency
	 	 	11	 
	ARTICLE VI AFFIRMATIVE COVENANTS
	 	 	12	 
	 	SECTION 6.01 Information
	 	 	12	 
	 	SECTION 6.02 Inspection of Books and Records
	 	 	12	 
	 	SECTION 6.03 Conduct of Business and Maintenance of Existence
	 	 	12	 
	 	SECTION 6.04 Compliance with Laws; Payment of Taxes
	 	 	12	 
	 	SECTION 6.05 Notices of Certain Events
	 	 	13	 
	ARTICLE VII NEGATIVE COVENANTS
	 	 	13	 
	 	SECTION 7.01 Consolidations, Mergers and Sales of Assets
	 	 	13	 
	 	SECTION 7.02 Dissolution
	 	 	13	 
	 	SECTION 7.03 Change in Control
	 	 	13	 
	ARTICLE VIII DEFAULTS
	 	 	13	 
	 	SECTION 8.01 Events of Default
	 	 	13	 
	ARTICLE IX [INTENTIONALLY DELETED]
	 	 	14	 
	ARTICLE X SECURITY AGREEMENT
	 	 	14	 



i






 




	 	 	 	 	 	 
	 	 	 	Page
	 	 	 	

	 	SECTION 10.01 Security Interest in Collateral
	 	 	14	 
	 	SECTION 10.02 Security Instruments; Further Assurances
	 	 	14	 
	 	SECTION 10.03 Power of Attorney
	 	 	14	 
	ARTICLE XI MISCELLANEOUS
	 	 	15	 
	 	SECTION 11.01 Notices
	 	 	15	 
	 	SECTION 11.02 No Waivers
	 	 	15	 
	 	SECTION 11.03 Expenses; Documentary Taxes
	 	 	15	 
	 	SECTION 11.04 Indemnification
	 	 	15	 
	 	SECTION 11.05 Amendments and Waivers
	 	 	16	 
	 	SECTION 11.06 Independence of Covenants
	 	 	16	 
	 	SECTION 11.07 Successors and Assigns
	 	 	16	 
	 	SECTION 11.08 Virginia Law
	 	 	16	 
	 	SECTION 11.09 Severability
	 	 	16	 
	 	SECTION 11.10 Interest
	 	 	16	 
	 	SECTION 11.11 Interpretation
	 	 	17	 
	 	SECTION 11.12 Waiver of Jury Trial; Consent to Jurisdiction
	 	 	17	 
	 	SECTION 11.13 Counterparts
	 	 	17	 
	 	SECTION 11.14 Ratification of Existing Documents
	 	 	17	 
	 	SECTION 11.15 Release of Guaranty
	 	 	18	 
	 	SECTION 11.16 Inconsistency Between Documents
	 	 	18	 





	 	 	 	 	 	 
	Schedule 4.01 Letters of Credit
	 	 	 	 
	 
	EXHIBIT A
	 	 	 	 







ii






 


AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT



     THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”)
is dated as of July 31, 2003 by and between ATLANTIC COAST AIRLINES (the
“Borrower”), a California corporation, and WACHOVIA BANK, NATIONAL ASSOCIATION
(the “Lender”).


RECITALS



       1.     The Borrower and the Lender are parties to a
revolving line of credit facility evidenced by a Note dated September 28, 2001,
in the face amount of Twenty Five Million Dollars, as amended by a Loan
Modification Agreement dated December 23, 2002 (which reduced the face amount
of the Note to $17,500,000.00).



	 	2.	 	The terms and conditions of the revolving line of credit
facility and a letter of credit facility are set forth in a Loan and
Security Agreement dated September 28, 2001, between the Borrower
and the Lender, as amended by the Loan Modification Agreement.
	 
	 	3.	 	Atlantic Coast Airlines Holdings, Inc. guarantees payment of
all of the Borrower’s debt to the Lender pursuant to an
Unconditional Guaranty dated September 28, 2001.
	 
	 	4.	 	The Borrower granted and conveyed to the Trustee for the
benefit of the Lender, as security for $12,345,000.00 of the
Obligations (as defined below), the Deed of Trust (as defined
below).
	 
	 	5.	 	The Lender has issued fourteen Letters of Credit for the
account of the Borrower, including the Bond Letter of Credit (as
defined below).
	 
	 	6.	 	Pursuant to a letter agreement dated December 6, 2002, the
Lender agreed to waive its right to declare an Event of Default
under the Loan and Security Agreement by reason of the filing of a
Voluntary Petition under Chapter 11 of the Bankruptcy Code by United
Air Lines, Inc., subject to certain conditions.
	 
	 	7.	 	On December 9, 2002, UAL Corporation and related entities,
including United Air Lines, Inc., filed Voluntary Petitions under
Chapter 11 of the Bankruptcy Code in the United States Bankruptcy
Court for the Northern District of Illinois, Eastern Division, Case
No. 02B48191.
	 
	 	8.	 	The waiver, pursuant to the December 6, 2002 letter
agreement, expires on July 31, 2003.
	 
	 	9.	 	As of July 22, 2003, there were no sums due under the Note.



1






 







	 	10.	 	The Lender has requested that the Borrower fully cash secure
all Letters of Credit issued by the Lender for the account of the
Borrower. The Borrower has requested that the Lender modify the
Loan and Security Agreement to cure the existing Event of Default.
The Lender is agreeable to the Borrower’s request, and the Borrower
is agreeable to the Lender’s request, all subject to the execution
of this Agreement.



     NOW, THEREFORE, the Lender and the Borrower agree as follows:


ARTICLE I

DEFINITIONS



     SECTION 1.01 Definitions. The terms as
defined in this Section 1.01 shall, for all purposes of this Agreement and any
amendment hereto (except as herein otherwise expressly provided or unless the
context otherwise requires), have the meanings set forth herein:


     “Affiliate” of any relevant Person means any other Person (other than a
Subsidiary): (i) who directly, or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the relevant
Person; (ii) who beneficially owns or hold 5% or more of any class of the
Voting Stock of such Person; or (iii) 5% or more of the Voting Stock (or in the
case of a Person which is not a corporation, 5% or more of the equity interest)
of which is beneficially owned or held by such Person or a Subsidiary of such
person.


     “Agreement” means this Amended and Restated Loan and Security Agreement,
as the same may hereafter be amended, modified, supplemented or restated from
time to time, and all exhibits hereto.


     “Applicable Law” means all laws, rules and regulations applicable to the
Person, conduct, transaction, covenant or Loan Documents in question,
including, but not limited to, all applicable common law and equitable
principles; all provisions of all applicable 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.


     “Authority” means the Metropolitan Washington Airports Authority.


     “Bond Letter of Credit” means the Lender’s irrevocable, transferable
direct-pay letter of credit in substantially the form of Exhibit
A to the Reimbursement Agreement in the original undrawn amount of
$12,147,090.41.


     “Borrower” means Atlantic Coast Airlines, a California corporation, and
its successors and its permitted assigns.


     “Business Day” means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the Commonwealth of Virginia or is a


2






 


day on which banking institutions located in the Commonwealth of Virginia
are closed.


     “CERCLA” means the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. § 9601 et. seq. and its implementing regulations and
amendments.


     “CERCLIS” means the Comprehensive Environmental Response Compensation and
Liability Inventory System established pursuant to CERCLA.


     “Closing Date” means July 31, 2003.


     “Code” means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code.


     “Collateral” means (i) the certificate of deposit listed on
Exhibit A, (ii) all substitutions and replacements of the
property described in (i) above, and (iii) the proceeds of any of the foregoing
items (i) and (ii) above.


     “Controlled Group” means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.


     “Debt” of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee under capital
leases, (v) all obligations of such Person to reimburse any bank or other
Person in respect of amounts payable under a banker’s acceptance, (vi) all
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid under a letter of credit or similar instrument, (vii) all Debt of
others secured by a Lien on any asset of such Person, whether or not such Debt
is assumed by such Person, and (viii) all Debt of others Guaranteed by such
Person.


     “Deed of Trust” means the Credit Line Leasehold Deed of Trust and Security
Agreement executed by the Borrower on or about September 28, 2001 in favor of
the trustee named therein for the benefit of the Lender, as it may be amended,
modified, supplemented or restated from time to time, by which the Borrower
granted and conveyed to the trustee for the benefit of the Lender, as security
for $12,345,000 of the Obligations, Liens upon the Borrower’s Leasehold
Interest in the Realty leased by the Borrower from the Authority pursuant to
the Lease. The Deed of Trust is being released in connection with execution
and delivery of this Agreement.


3






 


     “Default” means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.


     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any provision
of ERISA shall also be deemed to be a reference to any successor provision or
provisions thereof.


     “Event of Default” has the meaning set forth in Section 8.01.


     “FAA” means the Federal Aviation Administration, an agency of the United
States Government, or any successor or replacement administration or
governmental agency having the same or similar authority and responsibilities.


     “GAAP” means generally accepted accounting principles applied on a basis
consistent with those which, in accordance with Section 1.02, are to be used in
making the calculations for purposes of determining compliance with the terms
of this Agreement.


     “Guarantee” by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
secure, purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to provide collateral security, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the
term Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business. The term “Guarantee” used as a verb has a
corresponding meaning.


     “Improvements” means the maintenance facility and associated access
roadway, vehicle parking and maneuvering areas and aircraft paving aprons on
the Realty.


     “Lease” means that certain Ground Lease Agreement, dated as of June 23,
1997, between the Authority and the Borrower, as amended.


     “Leasehold Interest” means the Borrower’s interest in the Realty and the
Improvements under the Lease.


     “Lender” means Wachovia Bank, National Association, and its successors and
assigns.


4






 


     “Lender’s Expenses” means and includes: (a) all reasonable costs and
expenses which Borrower is required to pay or cause to be paid under this
Agreement or any of the other Loan Documents and which are paid or advanced by
Lender pursuant to the provisions of this Agreement or any of the other Loan
Documents; (b) all taxes and insurance premiums of every kind and nature which
Borrower is required to pay or cause to be paid under this Agreement or any of
the other Loan Documents and which are paid or advanced by Lender pursuant to
the provisions of this Agreement or any of the other Loan Documents; (c) all
necessary or advisable filing, recording, publication and search fees paid or
incurred by Lender in connection with the transactions contemplated by this
Agreement; (d) all reasonable costs and expenses paid or incurred by Lender
(with or without suit) to correct any default or enforce any provisions of this
Agreement or any of the other Loan Documents or in gaining possession of,
maintaining, handling, preserving, storing, refurbishing, appraising, selling,

preparing for sale and advertising to sell the Collateral, whether or not a
sale is consummated; (e) all reasonable costs and expenses paid or incurred by
Lender in enforcing or defending this Agreement, any of the other Loan
Documents, or any portion of any thereof; and (f) reasonable attorneys fees and
expenses paid or incurred by Lender in enforcing or defending this Agreement,
any of the other Loan Documents or any provision of any thereof, whether or not
suit is brought, and including any action brought in any bankruptcy or
insolvency proceeding.


     “Lending Office” means (i) the Lender’s office located at its address set
forth on the signature pages hereof (or identified on the signature pages
hereof as its Lending Office), or such other office as Lender may hereafter
designate as its Lending Office by notice to the Borrower.


     “Letters of Credit” means all letters of credit issued by the Lender or
any of the Lender’s Affiliates for the account of the Borrower.


     “Letter of Credit Application Agreement” means the Lender’s standard form
of letter of credit application, together with all schedules and exhibits
thereto, as such form may be modified from time to time.


     “Letter of Credit Fee” means an annual amount equal to forty-five (45)
basis points of the face amount of a Letter of Credit issued by the Lender.


     “Lien” means, with respect to any Collateral, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement which has the practical effect of constituting a
security interest or encumbrance, or encumbrance or servitude of any kind in
respect of such Collateral to secure or assure payment of a Debt or a
Guarantee, whether by consensual agreement or by operation of statute or other
law, or by any agreement, contingent or otherwise, to provide any of the
foregoing. For the purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to own subject to a Lien any Collateral which it has acquired
or holds subject to the


5






 


interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.


     “Loan Documents” means this Agreement, the Letter of Credit Application
Agreements and the Security Documents, as such documents and instruments may be
amended or supplemented from time to time.


     “Material Adverse Effect” means, with respect to any event, act, condition
or occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (a) the financial
condition, operations, business, properties or prospects of the Borrower and
any Consolidated Subsidiaries taken as a whole, (b) the rights and remedies of
the Lender under the Loan Documents, or the ability of the Borrower to perform
its obligations under the Loan Documents to which it is a party, as applicable,
or (c) the legality, validity or enforceability of any Loan Document or the
collateral for any Loan Document.


     “Maximum Rate” has the meaning set forth in Section 11.10.


     “Multiemployer Plan” shall have the meaning set forth in Section
4001(a)(3) of ERISA.


     “Obligations” means all indebtedness, obligations and liabilities of any
of the Borrower and its Subsidiaries to the Lender existing on the date of this
Agreement or arising thereafter, direct or indirect, joint or several, absolute
or contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, whether arising by contract, operation of law or otherwise.


     “PBGC” means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.


     “Person” means an individual, a corporation, a partnership, an
unincorporated association, a trust or any other entity or organization,
including, but not limited to, a government or political subdivision or an
agency or instrumentality thereof.


     “Plan” means at any time an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code and is either (i) maintained by a member of the Controlled
Group for employees of any member of the Controlled Group or (ii) maintained
pursuant to a collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which a member of the
Controlled Group is then making or accruing an obligation to make contributions
or has within the preceding 5 plan years made contributions.


6






 


     “Property” means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, leased or otherwise used or
occupied by the Borrower or any Subsidiary, wherever located.


     “Realty” means that certain parcel of real property of approximately 6.96
acres located at Washington Dulles International Airport in Loudoun County,
Virginia leased from the Authority by the Borrower and on which Borrower’s
Improvements are constructed.


     “Reimbursement Agreement” means that certain Letter of Credit and
Reimbursement Agreement, dated September 28, 2001, among the Lender and the
Borrower, pursuant to which the Lender issued the Bond Letter of Credit, as
amended, modified, supplemented or restated from time to time.


     “Security Documents” means this Agreement and all other instruments and
agreements now or at any time hereafter securing the whole or any part of the
Obligations.


     “Subsidiary” means any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting
Stock at the time of determination. Unless otherwise qualified, all references
to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.


     “Voting Stock” means securities (as such term is defined in Section 2(1)
of the Securities Act of 1933, as amended) of any class or classes, the holders
of which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).


     SECTION 1.02  Accounting Terms and Determinations. Unless
otherwise specified herein, all terms of an accounting character used herein
shall be interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent (except for
changes concurred in by the Borrower’s independent public accountants or
otherwise required by a change in GAAP) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Lender unless with respect to any such change
concurred in by the Borrower’s independent public accountants or required by
GAAP, in determining compliance with any of the provisions of this Agreement or
any of the other Loan Documents: (i) the Borrower shall have objected to
determining such compliance on such basis at the time of delivery of such
financial statements, or (ii) the Lender shall so object in writing within 30
days after the delivery of such financial statements, in either of which events
such calculations shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such objection shall
not have been made.


7






 


     SECTION 1.03 References. Unless
otherwise indicated, references in this Agreement to “Articles”, “Exhibits”,
“Schedules”, “Sections” and other subdivisions are references to articles,
exhibits, schedules, sections and other subdivisions hereof.


     SECTION 1.04 Use of Defined
Terms. All terms defined in this Agreement shall
have the same defined meanings when used in any of the other Loan Documents,
unless otherwise defined therein or unless the context shall require otherwise.


     SECTION 1.05 Terminology. All personal pronouns used in
this Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural, and the
plural shall include the singular. Titles of Articles and Sections in this
Agreement are for convenience only, and neither limit nor amplify the
provisions of this Agreement.


ARTICLE II

REVOLVING LINE OF CREDIT



     Article II is deleted in its entirety. The Lender is under no obligation
to make Revolving Credit Loans (as defined in the Loan and Security Agreement)
to the Borrower, the Note (as defined in the Loan and Security Agreement) is
cancelled, and the Lender acknowledges that the Borrower has fully paid and
satisfied all commitment fees related to the revolving line of credit.


ARTICLE III

CONDITIONS PRECEDENT



     The effectiveness of this Agreement is subject to the satisfactory receipt
by the Lender of the following: (a) evidence that the Borrower has deposited
cash with the Lender in an amount sufficient to fully cash secure the Letters
of Credit; (b) a First Modification of Letter of Credit and Reimbursement
Agreement signed by the Borrower; (c) an opinion letter of Reed Smith LLP,
counsel for the Borrower, dated as of the Closing Date; (d) a certificate of
the Borrower signed by the secretary or an assistant secretary of the Borrower,
certifying as to the names, true signatures and incumbency of the officer or
officers of the Borrower authorized to execute and deliver this Agreement, and
a certified copy of the action taken by the board of directors of the Borrower
authorizing the Borrower’s execution, delivery and performance of this
Agreement; and (e) delivery of such
other documents, instruments and agreements as the Lender shall reasonably
request in connection with the foregoing matters.


8






 


ARTICLE IV

LETTERS OF CREDIT



     SECTION 4.01 Letters of Credit. The
Lender has issued fourteen Letters of Credit for the account of Borrower as set
forth on Schedule 4.01, in accordance with the terms of
Letter of Credit Application Agreements. The Lender is under no obligation to
issue any additional Letters of Credit for the account of the Borrower.


     SECTION 4.02 Compensation for Letters of
Credit.


               (a)  With respect to each Letter of Credit in the face amount of $200,000
or less, effective on the Closing Date, the Borrower shall pay to the Lender
with respect to each Letter of Credit the Letter of Credit Fee, payable in
advance on the Business Day on which the Letter of Credit was issued and every
six months thereafter. Letter of Credit Fees payable hereunder shall be
computed on the basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last day).


               (b)  With respect to each Letter of Credit in the face amount of more than
$200,000, effective on the Closing Date, the Borrower shall pay to the Lender
with respect to each Letter of Credit the Letter of Credit Fee, payable in
arrears on the next Business Day which is a ninety day multiple of the date of
issuance of the Letter of Credit, and every ninety days thereafter. The Lender
shall provide to the Borrower an appropriate credit on the first due date of a
Letter of Credit Fee, in connection with the modification of the Letter of
Credit Fee as provided in this subsection. Letter of Credit Fees payable
hereunder shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).


               (c)  The Borrower shall also pay to the Lender its customary administrative
fees in connection with the issuance and/or renewal of each Letter of Credit.


ARTICLE V

REPRESENTATIONS AND WARRANTIES



     The Borrower represents and warrants to the Lender that:


     SECTION 5.01 Corporate Existence and
Power. The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. The Borrower is
duly qualified to transact business in every jurisdiction where, by the nature
of its business, such qualification is necessary, and has all corporate powers
and all governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted, except in each case where such
failure to be so qualified or have such powers, licenses, authorizations,
consents or approvals would not


9






 


have a Material Adverse Effect. The Borrower
is an air carrier holding a certificate issued by the FAA under 49 U.S.C. §
44705.


     SECTION 5.02 Corporate and Governmental
Authorization; No Contravention. The execution, delivery
and performance by the Borrower of this Agreement, and each of the other Loan
Documents to which the Borrower is a party, as applicable (i) are within the
Borrower’s corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) require no action by or in respect of or filing with,
any governmental body, agency or official, (iv) do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the certificate of incorporation or by-laws of the Borrower or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
the Borrower or any of its Subsidiaries, and (v) do not result in the creation
or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries except as contemplated by the Loan Documents.


     SECTION 5.03 Binding Effect. This Agreement constitutes a
valid and binding agreement of the Borrower enforceable in accordance with its
terms, and the other Loan Documents, when executed and delivered in accordance
with this Agreement, will constitute valid and binding obligations of the
Borrower enforceable in accordance with their respective terms,
provided that the enforceability hereof and thereof is
subject in each case to general principles of equity and to bankruptcy,
insolvency and similar laws affecting the enforcement of creditors’ rights
generally.


     SECTION 5.04 Compliance with ERISA.


               (a)  The Borrower has fulfilled its obligations under the minimum funding
standards of ERISA and the Code with respect to a Plan and is in compliance in
all material respects with the presently applicable provisions of ERISA and the
Code, and has not incurred any liability to the PBGC or a Plan under Title IV
of ERISA.


               (b)  The Borrower has not incurred any withdrawal liability with respect to
any Multiemployer Plan under Title IV of ERISA, and no such liability is
expected to be incurred.


     SECTION 5.05 Compliance with Laws; Payment of Taxes.
The Borrower and its Subsidiaries are in compliance with all applicable laws,
regulations and similar requirements of governmental authorities, except where
such compliance is being contested in good faith through appropriate
proceedings or where non-compliance, alone or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. There have been filed
on behalf of the Borrower and its Subsidiaries all Federal, state, local and
foreign income, excise, property and other tax returns which are required to be
filed by them and to the best of Borrower’s knowledge, all taxes due pursuant
to such returns or pursuant to any assessment received by or on behalf of the
Borrower or any Subsidiary have


10






 


been paid. The charges, accruals and reserves
on the books of the Borrower and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate. The
Borrower has not given or been requested to give a waiver of the statute of
limitation relating to the payment of Federal, state, local or foreign taxes.


     SECTION 5.06 Ownership of Property. The Borrower has title
to its properties sufficient for the conduct of its business.


     SECTION 5.07 No Default. Except as described in the
Recitals, the Borrower is not in default under or with respect to any
agreement, instrument or undertaking to which it is a party or by which it or
any of its property is bound which, alone or in the aggregate, could reasonably
be expected to have a Material Adverse Effect. Except as described in the
Recitals, no Default or Event of Default has occurred and is continuing.


     SECTION 5.08 Full Disclosure. All information heretofore
furnished by the Borrower to the Lender for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrower to the Lender will be, true,
accurate and complete in every material respect or based on reasonable
estimates on the date as of which such information is stated or certified. The
Borrower has disclosed to the Lender in writing any and all facts which, alone
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.


     SECTION 5.09 Insolvency. After giving effect to this
Agreement: (i) the Borrower will not (x) be “insolvent,” within the meaning of
such term as used in O.C.G.A. § 18-2-22 or as defined in § 101 of the
“Bankruptcy Code”, or Section 2 of either the “UFTA” or the “UFCA”, or as
defined or used in any “Other Applicable Law” (as those terms are defined
below), or (y) be unable to pay its debts generally as such debts become due
within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA
or Section 6 of the UFCA, or (z) have an unreasonably small capital to engage
in any business or transaction, whether current or contemplated, within
the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA or
Section 5 of the UFCA; and (ii) the obligations of the Borrower under the Loan
Documents will not be rendered avoidable under any Other Applicable Law. For
purposes of this Section 5.11, “Bankruptcy Code” means Title 11 of the United
States Code, “UFTA” means the Uniform Fraudulent Transfer Act, “UFCA” means the
Uniform Fraudulent Conveyance Act, and “Other Applicable Law” means any other
applicable law pertaining to fraudulent transfers or acts voidable by
creditors, in each case as such law may be amended from time to time.


11






 


ARTICLE VI

AFFIRMATIVE COVENANTS



     The Borrower covenants and agrees that, so long as any Letter of Credit is
outstanding:


     SECTION 6.01 Information. The Borrower
will deliver to the Lender:


               (c)  prompt written notice of any legal or arbitral proceedings, or of any
proceedings, by or before any court or governmental or regulatory authority or
agency, and any material development in respect of such proceedings, affecting
the Borrower, if an adverse determination in any such proceeding could
reasonably be expected to have, alone or in the aggregate, a Material Adverse
Effect; and


               (d)  from time to time such additional information regarding the financial
position or business of the Borrower as the Lender may reasonably request.


     SECTION 6.02 Inspection of Books and
Records. The Borrower will (i) keep, and cause each
Subsidiary to keep, proper books of record and account in which full, true and
correct entries in conformity with GAAP shall be made of all dealings and
transactions in relation to its business and activities; and (ii) permit, and
cause each Subsidiary to permit, representatives of the Lender at the Lender’s
expense prior to the occurrence of a Default and at the Borrower’s expense
after the occurrence of a Default, to examine and make abstracts from any of
their respective books and records and to discuss their respective affairs,
finances and accounts with their respective officers, employees and independent
public accountants. The Borrower agrees to cooperate and assist in such visits
and inspections, in each case at such reasonable times and as often as may
reasonably be desired.


     SECTION 6.03 Conduct of Business and Maintenance of
Existence.
The Borrower shall, and shall cause each operating Subsidiary to, maintain its
corporate existence and carry on its business in substantially the same fields
as such business is now carried on and maintained.


     SECTION 6.04 Compliance with Laws; Payment of
Taxes. The Borrower will, and will cause each of its
Subsidiaries to, comply with applicable laws (including but not limited to
ERISA), regulations and similar requirements of governmental authorities
(including but not limited to PBGC), except where the necessity of such
compliance is being contested in good faith through appropriate proceedings
diligently pursued or where noncompliance could not, alone or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Borrower will,
and will cause each of its Subsidiaries to, pay promptly when due all taxes,
assessments, governmental charges, claims for labor, supplies, rent and other
obligations which, if unpaid, might become a lien against the Property of the
Borrower or any Subsidiary, except liabilities being contested in good faith
and against which the Borrower has set up reserves in accordance with GAAP.


12






 


     SECTION 6.05 Notices of Certain Events.
The Borrower shall notify the Lender in writing promptly after the occurrence
thereof, of any Default or Event of Default


ARTICLE VII

NEGATIVE COVENANTS



     The Borrower covenants and agrees that, so long as any Letter of Credit is
outstanding:


     SECTION 7.01 Consolidations, Mergers and Sales of
Assets. The Borrower will not consolidate or merge with or
into, or sell, lease or otherwise transfer all or any substantial part of its
assets to, any other Person. The parties agree that termination of the code
sharing agreement between the Borrower and United Airlines Inc. shall not
constitute a violation of this Section 7.01.


     SECTION 7.02 Dissolution. The Borrower shall not suffer or
permit dissolution or liquidation either in whole or in part.


     SECTION 7.03 Change in Control.
The Borrower shall not suffer a change in control such that a single
entity controls or acquires 40% or more of the Borrower’s Voting Stock.


ARTICLE VIII

DEFAULTS



     SECTION 8.01 Events of Default. If one or more of the
following events (“Events of Default”) shall have occurred and be continuing:


               (e)  the Borrower shall default (after the expiration of any applicable
notice and cure periods) under any Letter of Credit Application Agreement; or


               (f)  the Borrower shall fail to observe or perform any covenant or
agreement contained or incorporated by reference in this Agreement or the other
Loan Documents; or


               (g)  any representation, warranty, certification or statement made by the
Borrower in Article V of this Agreement or in any certificate, financial
statement or other document delivered pursuant to this Agreement shall prove to
have been incorrect or misleading in any material respect when made (or deemed
made);


then, in every event, (i) the Lender may exercise all remedies available to it
under any Security Document or any other Loan Document; (ii) provided the
Lender has given written notice to Borrower of such Event of Default and
Borrower has failed to cure such Event of Default within within ten (10) days
of receipt of such notice, then Lender may request and Borrower shall provide,
cash collateral to secure any and all Obligations of the Borrower to the
Lender, which


13






 


cash collateral shall be in an amount acceptable to the Bank in
its sole and reasonable discretion (but not to exceed 100% of the amount of all
Obligations (other than the Letters of Credit) of the Borrower to the Lender);
and (iii) the Lender shall have available to it all other remedies at law or
equity.


ARTICLE IX

[INTENTIONALLY DELETED]



ARTICLE X

SECURITY AGREEMENT



     SECTION 10.01 Security Interest in Collateral. To secure
the prompt repayment of the Obligations and to secure the prompt performance of
any and all other Obligations to be performed by the Borrower, the Borrower
hereby grants to the Lender a continuing security interest in and lien upon the
Collateral, whether now owned or existing or at any time hereafter acquired,
arising or created by the Borrower. The Lender’s security interest in
and lien upon the Collateral shall attach to all of the Collateral upon the
execution and delivery of this Agreement, without further act being required of
either the Lender or the Borrower.


     SECTION 10.02 Security Instruments; Further Assurances. The
Lender may file one or more Uniform Commercial Code financing statements,
providing the Lender with a valid first lien on all Collateral now owned or
hereafter acquired by the Borrower, and the Borrower hereby authorizes the
Lender to file such financing statements.


     SECTION 10.03 Power of Attorney. The Borrower hereby
irrevocably appoints the Lender as its attorney-in-fact and agent with full
power of substitution and re-substitution for the Borrower and in its name to
do, at the Lender’s option, any one or more of the following acts, upon the
occurrence and during the continuance of an Event of Default but not
thereafter: (a) to compromise, prosecute or defend any action, claim or
proceeding concerning the Collateral; (b) to do any and all acts which the
Borrower is obligated to do under this Agreement or under any of the other Loan
Documents; (c) to exercise such rights as the Borrower might exercise relative
to the Collateral; (d) to give notice of the Lender’s security interest in and
lien upon the Collateral, and (e) to execute in the Borrower’s name and file
any notices, financing statements and other documents or instruments Lender
determines are necessary or required to fully carry out the intent and purpose
of this Agreement or to perfect the Lender’s security interest and lien in and
upon the Collateral. The appointment of the Lender as the Borrower’s
attorney-in-fact, and each and every one of the Lender’s rights and powers in
connection therewith, being coupled with any interest, are and shall remain
irrevocable during the continuance of an Event of Default until all of the
Obligations have been paid and performed.


14






 


ARTICLE XI

MISCELLANEOUS



     SECTION 11.01 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopier
or similar writing) and shall be given to such party at its address or
telecopier number set forth on the signature pages hereof or such other address
or telecopier number as such party may hereafter specify for the purpose by
notice to each other party. Each such notice, request or other communication
shall be effective (i) if given by telecopier, when such telecopy is
transmitted to the telecopier number specified in this Section and the
confirmation is received, (ii) if given by mail, 72 hours after such
communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid or (iii) if given by any other means, when delivered at the address
specified in this Section.


     SECTION 11.02 No Waivers. No failure or delay by the Lender
in exercising any right, power or privilege hereunder or under any Loan
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.


     SECTION 11.03 Expenses; Documentary Taxes. The Borrower
shall pay (i) all out-of-pocket expenses of the Lender, including fees and
disbursements of special counsel for the Lender, in connection with the
preparation of this Agreement and the other Loan Documents, any waiver or
consent hereunder or thereunder or any amendment hereof or thereof or any
Default or alleged Default hereunder or thereunder and (ii) if a Default
occurs, all out-of-pocket expenses incurred by the Lender, including fees and
disbursements of counsel, in connection with such Default and collection and
other enforcement proceedings resulting therefrom, including out-of-pocket
expenses incurred in enforcing this Agreement and the other Loan Documents. The
Borrower shall indemnify the Lender against any transfer taxes, documentary
taxes, assessments or charges made by any Governing Authority by reason of the
execution and delivery of this Agreement or the other Loan Documents.


     SECTION 11.04 Indemnification. The Borrower shall indemnify
the Lender and each Affiliate thereof and its respective directors, officers
and employees from, and hold each of them harmless against, any and all losses,
liabilities, claims or damages to which any of them may become subject, insofar
as such losses, liabilities, claims or damages arise out of or result from any
transaction contemplated by this Agreement or any other Loan Document or any
breach by the Borrower of this Agreement or any other Loan Document or from any
investigation, litigation (including, without limitation, any actions taken by
the Lender or to enforce this Agreement or any of the other Loan Documents) or
other proceeding (including, without limitation, any threatened investigation
or proceeding) relating to the foregoing, and the Borrower shall reimburse the


15






 


Lender, and each Affiliate thereof and its respective directors, officers, and
employees, upon demand for any expenses (including, without limitation, legal
fees) incurred in connection with any such investigation or proceeding; but
excluding any such losses, liabilities, claims, damages or expenses which are
determined by a final, non-appealable judgment of a court to have been incurred
by reason of the gross negligence or
willful misconduct of the Person to be indemnified. In the case of any
investigation, litigation or other proceeding to which the indemnity in this
Section applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Borrower or any
Subsidiary or Affiliate thereof, or any of their respective directors,
shareholders, or creditors or an Indemnified Party, or any other Person or any
Indemnified Party is otherwise a party thereto and whether or not any
transaction contemplated by this Agreement or any other Loan Document is
consummated.


     SECTION 11.05 Amendments and Waivers. Any provision of this
Agreement or any other Loan Document may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed by the Borrower and the
Lender.


     SECTION 11.06 Independence of Covenants. All covenants
under this Agreement and the other Loan Documents shall be given independent
effect so that if a particular action or condition is not permitted by any such
covenant, the fact that it would be permitted by an exception to, or would be
otherwise allowed by, another covenant shall not avoid the occurrence of a
Default if such action is taken or such condition exists.


     SECTION 11.07 Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the benefit

of the parties hereto and their respective successors and assigns; provided
that the Borrower may not assign or otherwise transfer any of its rights or
obligations under this Agreement.


     SECTION 11.08 Virginia Law. This Agreement and all of the
other Loan Documents shall be construed in accordance with and governed by the
law of the Commonwealth of Virginia.


     SECTION 11.09 Severability. In case any one or more of the
provisions contained in this Agreement or any of the other Loan Documents
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby and shall be
enforced to the greatest extent permitted by law.


     SECTION 11.10 Interest. In no event shall the amount of
interest, and all charges, amounts or fees contracted for, charged or collected
pursuant to this Agreement or the other Loan Documents and deemed to be
interest under applicable law (collectively,
“Interest”) exceed the highest rate of interest allowed


16






 


by applicable law (the
“Maximum Rate”), and in the event any such payment is inadvertently received by
the Lender, then the excess sum (the “Excess”) shall be credited as a payment
of principal, unless the Borrower shall notify the Lender in writing that it
elects to have the Excess returned forthwith. It is the express intent hereof
that the Borrower not pay and the Lender not receive, directly or indirectly in
any manner whatsoever, interest in excess of that which may legally be paid by
the Borrower under applicable law.


     SECTION 11.11 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.


     SECTION 11.12 Waiver of Jury Trial; Consent to Jurisdiction.
The Borrower (a) and the Lender irrevocably waive, to the fullest extent
permitted by law, any and all right to trial by jury in any legal proceeding
arising out of this Agreement, any of the other Loan Documents, or any of the
transactions contemplated hereby or thereby, (b) submit to the nonexclusive
personal jurisdiction in the Commonwealth of Virginia, the courts thereof and
the United States District Courts sitting therein, for the enforcement of this
Agreement and the other Loan Documents, (c) waive any and all personal rights
under the law of any jurisdiction to object on any basis (including, without
limitation, inconvenience of forum) to jurisdiction or venue within the
Commonwealth of Virginia for the purpose of litigation to enforce this
Agreement or the other Loan Documents, and (d) agree that service of process
may be made upon it at the address set forth in Section 11.01 for the giving of
notice to the Borrower. Nothing herein contained, however, shall prevent the
Lender from bringing any action or exercising any rights against any security
and against the Borrower personally, and against any assets of the Borrower,
within any other state or jurisdiction.


     SECTION 11.13 Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.


     SECTION 11.14 Ratification of Existing
Documents. The Borrower ratifies and confirms all of its
obligations, liabilities and indebtedness under the provisions of the other
Loan Documents in effect as of the date hereof. The Lender and the Borrower
agree it is their intention that nothing herein shall be construed to
extinguish, release or discharge or
constitute, create or effect a novation of, or an agreement to extinguish, any
of the obligations, indebtedness and liabilities of the Borrower to the Lender.


17






 


     SECTION 11.15 Release of Guaranty.
The Unconditional Guaranty of Atlantic Coast Airlines Holdings, Inc. dated
September 28, 2001 is terminated and of no further force or effect.


     SECTION 11.16 Inconsistency Between
Documents. To the extent of any inconsistency between this
Agreement and any Letter of Credit Application Agreement, this Agreement shall
control.


     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, under seal, by their respective authorized officers as of the
day and year first above written.



	 	 	 	 	 	 	 
	 	 	BORROWER:
	 	 	 	 	 	 	 
	 	 	ATLANTIC COAST AIRLINES
	 	 	 	 	 	 	 
	 	 	
By:
	 	 	 	(SEAL)
	 	 	 	 	
	 	 
	 	 	 	 	Richard Surratt,
Executive Vice President
	 	 	 	 	and Chief Financial Officer
	 	 	 	 	 	 	 
	 	 	45200 Business Court, Suite 100
	 	 	Dulles, Virginia 20166
	 	 	
Attn:
	 	Richard Surratt
	 	 	 	 	Executive Vice President and
	 	 	 	 	Chief Financial Officer
	 	 	Telecopier
number: ___________________
	 	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL
	 	 	ASSOCIATION
	 	 	 	 	 	 	 
	 	 	
By:
	 	 	 	(SEAL)
	 	 	 	 	
	 	 
	 	 	Melissa K. Powell, Vice President
	 	 	 	 	 	 	 
	 	 	Lending Office
	 	 	Wachovia Bank, National Association
	 	 	1970 Chain Bridge Road
	 	 	3rd Floor
	 	 	McLean, Virginia 22102
	 	 	Attention: Melissa Powell, Vice
	 	 	President
	 	 	Telecopier number: 703-760-6300




18