<PAGE 1>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
Commission file number 0-21976
ATLANTIC COAST AIRLINES HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3621051
(State of incorporation) (IRS Employer
Identification No.)
515-A Shaw Road, Dulles, Virginia 20166
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (703) 925-6000
Securities registered pursuant to Section 12(b) of the Act:
Common Stock par value $ .02 NASDAQ
National Market
(Title of Class)
(Name of each exchange
on which registered)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No__
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. ____
The aggregate market value of voting stock held by nonaffiliates of
the registrant as of March 1, 1999 was approximately $358,046,414.
As of March 1, 1999 there were 20,925,359 shares of Common Stock of
the registrant issued and 19,452,859 shares of Common Stock were
outstanding.
Documents Incorporated by Reference
Certain portions of the document listed below have been incorporated
by reference into the indicated part of this Form 10-K.
Document Incorporated Part of Form 10-K
Proxy Statement for 1999 Annual Meeting of Shareholders
Part III, Items 10-13
<PAGE 2>
PART I
Item 1. Business
General
This Annual Report on Form 10-K contains forward looking
statements. Statements in the Summary of Company Business Strategy
and Management's Discussion and Analysis of Operations and Financial
Condition sections of this filing, together with other statements
beginning with such words as "believes", "intends", "plans", and
"expects" include forward-looking statements that are based on
management's expectations given facts as currently known by
management. Actual results may differ materially. Factors that
could cause the Company's future results to differ materially from
the expectations described herein include the response of the
Company's competitors to the Company's business strategy, market
acceptance of regional jet ("RJ") service to new destinations, the
cost of fuel, the weather, satisfaction of regulatory requirements
and general economic and industry conditions.
Atlantic Coast Airlines Holdings, Inc. ("ACAI"), is the
holding company of Atlantic Coast Airlines ("ACA"), together, (the
"Company"), a large regional airline, serving 51 destinations in 24
states in the Eastern and Midwestern United States as of March 1,
1999 with 530 scheduled non-stop flights system-wide every weekday.
The Company markets itself as "United Express" and is the only code-
sharing regional airline for United Airlines, Inc. ("United")
operating as United Express in the Eastern United States. The
Company caters primarily to business travelers with its principle
operations at Washington-Dulles International Airport ("Washington-
Dulles"), which serves the Northern Virginia and Washington, D.C.
markets. In August 1998, the Company began operating as United
Express from Chicago's O'Hare International Airport ("Chicago-
O'Hare") and, as of December 31, 1998, served six cities from
Chicago-O'Hare. The Company coordinates its schedules with United,
particularly at Washington-Dulles, where United operates 75 daily
departures to 32 destinations in the U.S., Europe and Latin America
and at Chicago-O'Hare, where United operates 519 daily departures to
105 destinations in the U.S., Europe, Asia and Latin America. As of
March 1, 1999, the Company operated a fleet of 75 aircraft (15
regional jets and 60 turboprop aircraft) having an average age of
approximately five years.
Summary of Company Business Strategy
The Company's long-term corporate objective is to achieve
sustained earnings growth by focusing its resources in the following
areas:
1. Continue to capitalize on and grow the Company's
identity with United: The Company intends to capitalize on and
promote its code-sharing relationship with United, which has already
contributed significantly to the Company's growth. The Company
markets itself as "United Express" under its United Express
Agreements ("Agreements") with United. The Agreements, as further
described under "United Express Agreement", provide the Company with
a shared market identity with United, allow the Company to list its
flights under United's two letter flight designator code in airline
Computer Reservation Systems ("CRSs") and other published schedules
and to award United's "Mileage Plus" frequent flyer miles to its
passengers. The Company coordinates its schedules with United, and
participates with United in cooperative advertising and marketing
agreements. In most cities served by the Company other than
Washington-Dulles and Chicago-O'Hare, United provides all airport
facilities and related ground support services to the Company. The
Company also participates in United's "Apollo" reservation system
and all major CRSs, uses the United Express logo and has exterior
aircraft paint schemes similar to those of United.
<PAGE 3>
2. Continued implementation of the regional jet fleet:
During 1998, the Company placed into service nine additional 50-seat
RJs, confirmed the delivery for five of the six outstanding
conditionally ordered RJs, and converted an additional 20 option
orders to firm deliveries. This brings the total number of firm
ordered RJs to 43 with remaining option RJs totaling 27. The future
delivery schedule of the remaining undelivered firm ordered RJ
aircraft is as follows: For 1999, one RJ was delivered in January
and eight additional RJs are scheduled for delivery between March
and December. Nine aircraft are scheduled for delivery in 2000 and
eleven are scheduled for delivery in 2001.
The Company has utilized the RJ to complement its route
system by initiating service from Washington-Dulles to markets
beyond the economic operating range of turboprop aircraft and
selectively deploying the RJ to its existing turboprop routes in the
short-haul, high-density East Coast markets. This has provided
additional connecting passengers to the Company's turboprop flights
and to United's jets flying from Washington-Dulles.
During 1998, the Company also initiated RJ service at
Chicago's O'Hare airport providing connecting service to United's
large hub operation. Operating as United Express with all RJ
aircraft, as of March 1, 1999 the Company offered non-stop flights
from Chicago-O'Hare to Charleston, WV; Springfield, MO; Wilkes-
Barre/Scranton, PA; Sioux Falls, SD; Fargo, ND; and Peoria, IL.
3. Continue to emphasize operational safety and
efficiency: During the last four years, the Company has worked with
the Federal Aviation Administration ("FAA") to develop a prototype
Crew Resource Management ("CRM") training program for the airline
industry called Advanced Crew Resource Management ("ACRM"). The
research team concluded that developing and training ACRM procedures
has a significant advantage over traditional CRM training methods
like those being used at most commercial airlines. The Company and
the research team developed specific ACRM procedures allowing the
crews to use ACRM skills on a daily basis. The Company anticipates
that it will continue to work with the FAA on developing new methods
for training and evaluating the effectiveness of pilot performance.
The Company equipped its turboprop aircraft with an
automated aircraft time reporting system which enables the Company
to more efficiently communicate with flight crews and further
automate the flight tracking process. The Company intends to
install an automatic aircraft time reporting system in its RJs as
early as the fourth quarter 1999. This system improves the
timeliness and accuracy of flight information communicated and
displayed to the Company's passengers.
The Company has initiated the utilization of global
positioning satellite technology ("GPS") and flight management
systems ("FMS") onboard its aircraft. With the entire fleet of
regional jets and turboprop aircraft equipped with FMS, the Company
believes it has improved safety and efficiency. The first 22 of 96
GPS routes between Dulles and other markets were implemented in 1998
with the remaining routes expected to be implemented in the second
quarter 1999. These routes, combined with the continued success of
FMS procedure development for Washington-Dulles, have reduced the
number of required miles flown by ACA aircraft while reducing pilot
and air traffic controller workload. In 1999, the Company intends
to implement more FMS procedures at Washington-Dulles which will
increase the capacity and efficiency of Washington-Dulles' airspace.
<PAGE 4>
In 1998 the Company signed an agreement for participation
in an airline safety program called Flight Operational Quality
Assurance ("FOQA"). FOQA programs obtain and analyze certain data,
recorded during flights, to improve many aspects of flight
operations, including flight crew performance, training programs,
operating and Air Traffic Control ("ATC") procedures, airport
maintenance and design as well as aircraft design.
Markets
As of March 1, 1999, the Company scheduled 232 non-stop
flights from Washington-Dulles which was more flights from that
airport than any other airline. During 1998, the Company accounted
for more passenger boardings from Washington-Dulles than any airline
other than United. On a combined basis, the Company and United
generated approximately 57% of passenger traffic at Washington-
Dulles during 1998.
The Company's top four airports based on frequency of
operations are Washington-Dulles, Chicago O'Hare, New York-JFK and
Newark. During 1998, the Company added new routes from Washington-
Dulles and commenced operations at Chicago-O'Hare. The Company
increased operations in existing Washington-Dulles markets by 22
daily departures and added new service to six cities: Indianapolis,
IN; Greenville/Spartanburg, SC; and Savannah, GA with RJs, and
Wilkes-Barre/Scranton, PA; Wilmington, NC; and Worcester, MA with
turboprop aircraft. During 1998, the Company also replaced or
complemented turboprop service with RJ service in the following
markets: Charleston, SC; Charleston, WV; Portland, ME; Raleigh-
Durham, NC; Detroit, MI; and Hartford, CT. The Company commenced
operations at Chicago-O'Hare on August 3, 1998 with non-stop RJ
service to Charleston, WV. Additional Chicago-O'Hare non-stop all
RJ service was added to: Springfield/Branson, MO; Wilkes-
Barre/Scranton, PA; Fargo, ND; Sioux Falls, SD; and Peoria, IL. In
1998, the Company ceased operations to Worcester, MA. In January
1999, the Company ceased operations to Atlanta, GA and Tampa, FL.
<PAGE 5>
The following table sets forth the destinations served by
the Company as of March 1, 1999:
Washington-Dulles (To/From)
<TABLE>
<C> <C>
Albany, NY Manchester, NH
Allentown, PA Nashville, TN
Baltimore, MD New York, NY (Kennedy)
Binghamton, NY New York, NY (LaGuardia)
Buffalo, NY Newark, NJ
Burlington, VT** Newport News, VA
Charleston, SC** Norfolk, VA
Charleston, WV** Philadelphia, PA
Charlottesville, VA Pittsburgh, PA
Cleveland, OH Portland, ME*
Columbia,SC (Effective Providence, RI
5/25/99)*
Columbus, OH** Raleigh-Durham, NC**
Dayton, OH** Richmond, VA
Detroit, MI** Roanoke, VA
Fort Myers, FL* Rochester, NY
Greensboro, NC Savannah, GA*
Greenville/Spartanburg, SC* State College, PA
Harrisburg, PA Stewart, NY
Hartford, CT** Syracuse, NY
Indianapolis, IN* Westchester County, NY
Jacksonville, FL* Wilkes-Barre/Scranton,
PA
Knoxville, TN Wilmington, NC
Lynchburg, VA
</TABLE>
Chicago-O'Hare (To/From)
<TABLE>
<C> <C>
Charleston, WV* Sioux Falls, SD*
Fargo, ND* Springfield/Branson, MO*
Peoria, IL* Wilkes-Barre/Scranton,
PA*
Savannah, GA (Effective 5/17/99)
*
</TABLE>
Other Routes Served
New York, NY (Kennedy) to: Boston, MA; Baltimore, MD; Rochester, NY
Boston, MA to Stewart, NY
* Denotes all RJ service
** Denotes mixture of RJ and turboprop service
<PAGE 6>
United Express Agreements
The Company's United Express Agreements ("Agreements")
define the Company's relationship with United. The Agreements
authorize the Company to use United's "UA" flight designator code to
identify its flights and fares in the major CRSs, including United's
"Apollo" reservation system, to use the United Express logo and
exterior aircraft paint schemes and uniforms similar to those of
United, and to otherwise advertise and market its association with
United.
In December 1998, the Company and United agreed to a ten
year extension of the Agreements. Prior to March 31, 2004, United
may terminate the Agreements at any time if the Company fails to
maintain certain performance standards, and may terminate without
cause after March 31, 2004 by providing one year's notice to the
Company. If by January 2, 2001 United has not given the Company the
ability to operate regional jets of 44 seats or less seating
capacity as United Express, in addition to its allocation of 50 seat
regional jets, the Company may terminate the Agreements as of March
31, 2004. The Company would be required to provide notice of
termination prior to January 2, 2002, which notice would be void if
United ultimately grants such authority prior to January 2, 2002.
Under the terms of the Agreements, the Company pays United
monthly fees based on the total number of revenue passengers boarded
by the Company on its flights for the month. The fee per passenger
is subject to periodic increases during the duration of the ten year
extension period.
Company passengers may participate in United's "Mileage
Plus" frequent flyer program and are eligible to receive a certain
minimum number of United frequent flyer miles for each of the
Company's flights. Mileage Plus members are also eligible to redeem
their awards on the Company's route system. In 1998, approximately
56% of the Company's passengers participated in United's "Mileage
Plus" frequent flyer program. The Company limits the number of
"Mileage Plus" tickets that may be used on its flights and believes
that the displacement, if any, of revenue passengers is minimal.
The Agreements also provide for coordinated schedules and
through-fares. A through-fare is a fare offered by a major air
carrier to prospective passengers who, in order to reach a
particular destination, transfer between the major carrier and its
code-sharing partner. Generally, these fares are less expensive than
purchasing the combination of local fares. United establishes all
through-fares and allows the Company a portion of these fares on a
fixed rate or formula basis subject to periodic adjustment. The
Agreements also provide for interline baggage handling, and for
reduced airline fares for eligible United and Company personnel and
their families.
Pursuant to the Agreements, United provides a number of
additional services to the Company. These include publication of the
fares, rules and related information that are part of the Company's
contracts of carriage for passengers and freight; publication of the
Company's flight schedules and related information; provision of
toll-free reservations services; provision of ground support
services at most of the airports served by both United and the
Company; provision of ticket handling services at United's ticketing
locations; provision of airport signage at airports where both the
Company and United operate; provision of United ticket stock and
related documents; provision of expense vouchers, checks and cash
disbursements to Company passengers inconvenienced by flight
cancellations, diversions and delays; and cooperation in the
development and execution of advertising, promotion, and marketing
efforts featuring United Express and the relationship between United
and the Company.
<PAGE 7>
The Agreements require the Company to obtain United's
consent to operate service between city pairs as "United Express".
If the Company experiences net operating expenses that exceed
revenues for three consecutive months on any required route, the
Company may withdraw from that route if United and the Company are
unable to negotiate an alternative mutually acceptable level of
service for that route. The Agreements also require the Company to
obtain United's approval if it chooses to enter into code-sharing
arrangements with other carriers, but do not prohibit United from
competing, or from entering into agreements with other airlines who
would compete, on routes served by the Company.
The Agreements restrict the ability of the Company to
merge with another company or dispose of certain assets or aircraft
without offering United a right of first refusal to acquire the
Company or such assets or aircraft. United also has a right of first
refusal with respect to issuance by the Company of shares of its
Common Stock if, as a result of the issuance, certain of the
Company's stockholders and their permitted transferees do not own at
least 50% of the Company's Common Stock after such issuance. Because
the holdings of these stockholders and their permitted transferees
are currently substantially less than 50%, management believes that
such a right is unlikely to be exercised.
Fleet Description
Fleet Expansion: As of March 1, 1999, the Company
operated a fleet of 15 RJs and 60 turboprop aircraft, consisting of
32 British Aerospace Jetstream-41 ("J-41s") and 28 British Aerospace
Jetstream-32 ("J-32s").
As of March 1, 1999, the Company had a total of 28 RJs on
order from Bombardier, Inc., in addition to the 15 already
delivered, and held options for 27 additional RJs. During 1998, the
Company converted five of the six conditional orders and converted
20 option aircraft to firm orders. Of the remaining 28 firm
aircraft deliveries, eight are scheduled for the remainder of 1999,
nine are scheduled for 2000, and eleven are scheduled for 2001.
Fleet Composition: The following table describes the
Company's fleet of aircraft, scheduled deliveries and options as of
March 1, 1999:
<TABLE> Number of Passenger Average Future
<CAPTION> Aircraft Capacity Age in Scheduled
Years Deliveries
/
Options
<S> <C> <C> <C> <C>
Canadair 15 50 1.0 28/27
Regional Jets
British 32 29 4.2 -
Aerospace J-41
British 28 19 9.1 -
Aerospace J-32
75 5.4 28/27
</TABLE>
The Company is continually assessing its fleet
requirements, including the feasibility of operating less than 50-
seat regional jets. The Company requires United's approval for the
addition of regional jet aircraft that exceed its current
allocation.
<PAGE 8>
The Company previously announced that it is exploring
alternatives to accelerate the retirement of its fleet of 28 leased
19 seat J-32 aircraft. The Company is assessing plans to target the
phase-out of the J-32 from its United Express operation by the end
of 2001. As of March 1, 1999, the Company has J-32 operating lease
commitments with remaining lease terms ranging from three to seven
years and related minimum lease payments of approximately $47
million. The Company intends to complete its analysis of a phase-
out plan, including quantification of any one-time fleet
rationalization charge, during 1999.
Lufthansa Agreement
The Company has a code-sharing agreement with Lufthansa
German Airlines ("Lufthansa"), which permits Lufthansa to place its
airline code on flights operated by the Company. Additionally,
Lufthansa is a member of the STAR Alliance, a global airline
alliance, comprised of United, Air Canada, Ansett, SAS, Thai and
Varig. The United Express-Lufthansa agreement provides a wide range
of benefits for code-share passengers including the ability to check-
in once at their initial departure city and receive boarding passes
and seat assignments for the flights on both carriers while their
luggage is automatically checked through to their final destination.
Members of the Lufthansa Miles & More frequent flyer program receive
mileage credit for these flights.
The following markets served by the Company now carry both
the United (UA) and Lufthansa (LH) designator codes on selected
flights: Washington-Dulles to: Charlottesville, VA; Cleveland, OH;
Charleston, WV; Fort Myers, FL; Greensboro, NC; Greenville, SC;
Jacksonville, FL; Nashville, TN; Newport News, VA; Norfolk, VA;
Pittsburgh, PA; Raleigh-Durham, NC; Richmond, VA; Roanoke, VA;
Savannah, GA; and Syracuse, NY; Chicago-O'Hare to; Springfield, MO.
Fuel
The Company has not experienced difficulties with fuel
availability and expects to be able to obtain fuel at prevailing
prices in quantities sufficient to meet its future requirements.
During 1998, the Company purchased approximately 50% of its fuel
from United Aviation Fuels Corporation ("UAFC"), an affiliate of
United, utilizing fixed price forward purchase agreements for the
delivery of 33,000 barrels of jet fuel per month at Washington-
Dulles. For the first six months of 1999, the Company has hedged
the price it will ultimately record as fuel expense for
approximately 80% of its anticipated fuel requirements by entering
into contracts with independent counterparties that reduce the
Company's exposure to upward movements in the price per gallon of
jet fuel. The Company has also contracted with UAFC and other fuel
suppliers to provide jet fuel at the airports it serves at
prevailing market prices.
Marketing
The Company's advertising and promotional programs
emphasize the Company's close affiliation with United, including
coordinated flight schedules and the ability of the Company's
passengers to participate in United's "Mileage Plus" frequent flyer
program. The Company's services are marketed primarily by means of
listings in CRSs and the Official Airlines Guide, advertising and
promotions, and through direct contact with travel agencies and
corporate travel departments. For the year ended December 31, 1998,
approximately 72% of the Company's passenger revenue was derived
from ticket sales generated through travel agencies and corporate
travel departments. In marketing to travel agents, the Company
relies on personal contacts and direct mail campaigns, provides
familiarization flights and hosts group presentations and other
functions to acquaint travel agents with the Company's services.
Many of these activities are conducted in cooperation with United
marketing representatives. In addition, the Company and United
jointly run radio and print advertising in markets served by the
Company.
<PAGE 9>
The Company participates in United's electronic ticketing
program. This program allows customers to travel on flights of
United and the Company without the need for a paper ticket. The
primary benefit of this program is improved customer service and
reduced ticketing costs. For the year ended December 31, 1998, 43.5%
of the Company's passengers utilized electronic tickets up from
25.6% for the year ended December 31, 1997.
Competition
The Company competes primarily with regional and major air
carriers as well as with ground transportation. The Company's
competition from other air carriers varies by location, type of
aircraft (both turboprop and jet), and in certain cities, comes from
carriers which serve the same destinations as the Company but
through different hubs. The Company believes that its ability to
compete in its market areas is strengthened by its code-sharing
relationship with United, which has a substantial presence at
Washington-Dulles, thereby enhancing the importance of the "UA"
flight designator code on the East Coast. The Company competes with
other airlines by offering frequent flights. In addition, the
Company's competitive position benefits from the large number of
participants in United's "Mileage Plus" frequent flyer program who
fly regularly to or from the markets served by the Company.
In late 1998, US Airways announced its intention to
increase activity at Washington-Dulles utilizing its mainline
service, lowfare MetroJet product, and its US Airways Express
affiliates. US Airways has since implemented or announced service
to eight of the Company's markets using both jet and turboprop
equipment. In two of the Company's existing markets, MetroJet will
provide the service at a significantly lower fare structure. The
Company continually monitors the effects competition has on its
routes, fares and frequencies. The Company believes that it can
compete effectively with US Airways, however there can be no
assurances that US Airways expansion at Washington-Dulles will not
have a material adverse effect on the Company's results of
operations or financial position.
In early 1999, United announced its intention to increase
its level of activity at Washington-Dulles by 60% beginning in April
and May 1999. The Company believes that United's announced increase
will add approximately 7,000 additional daily seat departures to the
United/United Express operation at Washington-Dulles. The Company,
in concert with United, also announced either increased frequencies
or upgraded equipment, or both, in all of its markets affected by
the US Airways expansion.
The Airline Deregulation Act of 1978 ("Deregulation Act")
eliminated many regulatory constraints on airline competition,
thereby freeing airlines to set prices and, with limited exceptions,
to establish domestic routes without the necessity of seeking
government approval. The airline industry is highly competitive,
and there are few barriers to entry in the Company's markets.
Furthermore, larger carriers with greater resources can impact the
Company's markets through fare discounting as well as flight
schedule modifications.
<PAGE 10>
Yield Management
The Company closely monitors its inventory and pricing of
available seats by use of a computerized yield management system.
Effective with flights departing after January 31, 1999, the Company
upgraded its yield management system to United's enhanced revenue
management system, "Orion". This system represents the latest in
revenue management technology and is designed to manage entire
passenger itineraries rather than individual flight legs. The
Company now is able to expand the number of booking classes
available on its flights. These expanded booking classes will allow
the Company to broaden the number of fare categories offered to
customers, while simplifying booking procedures. Orion uses an
advanced derivative of IBM's "Deep Blue" computer technology to
process the large number of complex calculations involved in this
analysis. Orion replaces the PROS IV yield management system that
the Company had implemented in the second quarter 1997.
Slots
Slots are reservations for takeoffs and landings at
specified times and are required by governmental authorities to
operate at certain airports. The Company utilizes takeoff and
landing slots at Chicago-O'Hare and the LaGuardia, Kennedy and White
Plains, New York airports. The Company also uses slot exemptions at
Chicago-O'Hare, which differ from slots in that they allow service
only to designated cities and are not transferable to other airlines
without the approval of the U.S. Department of Transportation
("DOT"). Airlines may acquire slots by governmental grant, by lease
or purchase from other airlines, or by loan when another airline
does not use a slot but desires to avoid governmental reallocation
of a slot for lack of use. All leased and loaned slots are subject
to renewal and termination provisions.
As of March 1, 1999 the Company utilized 18 slots at
LaGuardia, 15 slots at Kennedy, 30 slots or slot exemptions at
Chicago-O'Hare, and six slots at White Plains. These slots can be
withdrawn without compensation under certain circumstances.
Employees
As of March 1, 1999, the Company had 1,918 full-time and
296 part-time employees, classified as follows:
<TABLE>
<CAPTION> Classification Full- Part-
Time Time
<S> <C> <C>
Pilots 750 -
Flight attendants 224 -
Station personnel 441 267
Maintenance personnel 208 4
Administrative and 285 25
clerical personnel
Management 10 -
Total employees 1,918 296
</TABLE>
<PAGE 11>
The Company's pilots are represented by the Airline Pilots
Association ("ALPA"), its flight attendants by the Association of
Flight Attendants ("AFA"), and its mechanics by the Aircraft
Mechanics Fraternal Association ("AMFA").
The ALPA collective bargaining agreement was amended on
February 26, 1997 and is amendable after three years. The amended
contract modified work rules to allow more flexibility, includes
regional jet pay rates, and transfers pilots into the Company's
employee benefit plans.
The AMFA was certified as the collective bargaining
representative elected by mechanics and related employees of the
Company in 1994. On June 22, 1998, the Company's mechanics ratified
an initial four year contract. The new contract includes a pay
scale comparable to the Company's peers in the regional airline
industry, and a one-time signing bonus, and allows the mechanics to
participate in the Company's employee benefit plans.
The Company's contract with the AFA became amendable on
April 30, 1997. An agreement was negotiated and agreed to between
the Company and AFA during 1998, and was ratified by the Company's
flight attendants on October 11, 1998. The new agreement is for a
four year duration and provides for a higher than previously
provided starting pay rate and a pay scale and per diem rate
comparable to the Company's peers in the regional airline industry.
The Company believes that the wage rates and benefits for
other employee groups are comparable to similar groups at other
regional airlines. The Company also believes that the incremental
costs as a result of the new and amended contracts will not have any
material effect on the Company's financial position or results of
its operations over the life of the agreements. The Company is
unaware of any significant organizing activities by labor unions
among its other non-union employees at this time.
As the Company continues to pursue its growth strategy,
its employee staffing needs and recruitment efforts are expected to
increase commensurately. Due to competitive local labor markets and
normal attrition to the major airlines, there can be no assurance
that the Company will be able to satisfy its hiring requirements.
The Company has committed additional resources to its employee
recruiting and retention efforts. In 1998, the Company began to pay
for new hire pilot training. Annual turnover of Company pilots was
approximately 10% during 1998, compared to 11% during 1997.
Pilot Training
The Company performs pilot training in state-of-the-art,
full motion simulators and conducts training in accordance with FAA
Part 121 regulations. In 1993, the Company initiated an Advanced
Qualification Program ("AQP") to enhance pilot performance in both
technical and CRM skills. The FAA has recognized the Company's
leadership in CRM training and selected the Company to participate
in a FAA sponsored training grant called ACRM. The Company and the
grant team were successful in introducing improvements in CRM and
AQP training that have benefited not only the Company, but also the
entire airline industry.
In December 1998, the Company entered into an agreement
with Pan Am International Flight Academy ("PAIFA") to provide
simulator training for the Company's RJ program. Under terms of the
agreement, PAIFA will develop a comprehensive training facility to
be based near the Company's headquarters in Loudoun County, VA.
This facility is expected to be completed during the fourth quarter
of 1999. The Company has committed to purchase an annual minimum
number of simulator training hours for a period of ten years at a
guaranteed fixed price once the facility receives FAA certification.
The Company's payment obligations for the next ten years are
approximately $13 million.
<PAGE 12>
Regulation
Economic. With the passage of the Deregulation Act, much
of the regulation of domestic airline routes and rates was
eliminated. DOT still has extensive authority to issue certificates
authorizing carriers to engage in air transportation, establish
consumer protection regulations, prohibit certain unfair or anti-
competitive pricing practices, mandate conditions of carriage and
make ongoing determinations of a carrier's fitness, willingness and
ability to provide air transportation. The DOT can also bring
proceedings for the enforcement of its regulations under applicable
federal statutes, which proceedings may result in civil penalties,
revocation of operating authority or criminal sanctions.
The Company holds a certificate of public convenience and
necessity, issued by the DOT, that authorizes it to conduct air
transportation of persons, property and mail between all points in
the United States, its territories and possessions. This
certificate requires that the Company maintain DOT-prescribed
minimum levels of insurance, comply with all applicable statutes and
regulations and remain continuously "fit" to engage in air
transportation.
Based on conditions in the industry, or as a result of
Congressional directives or statutes, the DOT from time to time
proposes and adopts new regulations or amends existing regulations
which new or amended regulations may impose additional regulatory
burdens and costs on the Company.
The DOT has also enacted rules establishing guidelines for
setting reasonable airport charges and procedural rules for
challenging such charges. The DOT has adopted a compliance policy
regarding the increasing use of ticketless travel and the consumer-
related notices that must be supplied to passengers before travel.
The DOT has also proposed rules to implement a statutory directive
and a Presidential Commission recommendation to improve notice to
families of passengers involved in aviation accidents. The DOT is
considering the means by which it will require domestic and
international carriers to collect additional passenger-related
information, including emergency contact names and telephone numbers
and other identifying information. The DOT has estimated that the
cost to the industry of obtaining this information from each
passenger could be significant.
Safety. The FAA extensively regulates the safety-related
activities of air carriers. The Company is subject to the FAA's
jurisdiction with respect to aircraft maintenance and operations,
equipment, ground facilities, flight dispatch, communications,
training, weather observation, flight personnel and other matters
affecting air safety. To ensure compliance with its regulations,
the FAA requires that airlines under its jurisdiction obtain an
operating certificate and operations specifications for the
particular aircraft and types of operations conducted by such
airlines. The Company possesses an Air Carrier Certificate issued
by the FAA and related authorities authorizing it to conduct
operations with turboprop and turbojet equipment. The Company's
authority to conduct operations is subject to suspension,
modification or revocation for cause. The FAA has authority to
bring proceedings to enforce its regulations, which proceedings may
result in civil or criminal penalties or revocation of operating
authority.
<PAGE 13>
From time to the time, the FAA conducts inspections of air
carriers with varying degrees of intensity. The Company underwent
an intensive, two-week FAA Regional Aerospace Inspection Program
("RASIP") audit during the fourth quarter of 1997. The final audit
report consisted of recommendations and minor findings, none of
which resulted in civil penalties. The Company responded to the
findings and believes that it has met and continues to meet the
required standards for safety and operational performance. The
Company's airline operations will continue to be audited by the FAA
for compliance with applicable safety regulations.
In order to ensure the highest level of safety in air
transportation, the FAA has authority to issue maintenance
directives and other mandatory orders relating to, among other
things, inspection of aircraft and the mandatory removal and
replacement of parts that have failed or may fail in the future. In
addition, the FAA from time to time amends its regulations. Such
amended regulations may impose additional regulatory burdens on the
Company such as the installation of new safety-related items.
Depending upon the scope of the FAA's order and amended regulations,
these requirements may cause the Company to incur substantial,
unanticipated expenses.
The FAA requires air carriers to adopt and enforce
procedures designed to safeguard property, ensure airport security
and screen passengers to protect against terrorist acts. The FAA,
from time to time, imposes additional security requirements on air
carriers and airport authorities based on specific threats or world
conditions or as otherwise required. The Company incurs substantial
expense in complying with current security requirements and it
cannot predict what additional security requirements may be imposed
in the future or the cost of complying with such requirements.
Associated with the FAA's security responsibility is its
program to ensure compliance with rules regulating the
transportation of hazardous materials. The Company neither accepts
nor ships hazardous materials or other dangerous goods. Employees of
the Company are trained in hazardous materials and dangerous goods
recognition through a FAA approved training course. The FAA
enforces its hazardous material regulations by the imposition of
civil penalties, which can be substantial.
Other Regulation. In the maintenance of its aircraft
fleet and ground equipment, the Company handles and uses many
materials that are classified as hazardous. The Environmental
Protection Agency and similar local agencies have jurisdiction over
the handling and processing of these materials. The Company is also
subject to the oversight of the Occupational Safety and Health
Administration concerning employee safety and health matters. The
Company is subject to the Federal Communications Commission's
jurisdiction regarding the use of radio frequencies.
The Airport Noise Control Act ("ANCA") requires that
airlines phase-out the operation of certain types of aircraft. None
of the Company's aircraft are subject to the phase-out provisions of
ANCA. While ANCA generally preempts airports from imposing
unreasonable local noise rules that restrict air carrier operations,
airport operators may implement reasonable and nondiscriminatory
local noise abatement procedures, which procedures could impact the
ability of the Company to serve certain airports, particularly in
off-peak hours. Certain local noise rules adopted prior to ANCA
were grandfathered under the statute.
<PAGE 14>
Federal Excise Taxes. Ticketing airlines are obligated to
collect a U.S. transportation excise tax on passenger ticket sales.
This tax, known as the aviation trust tax or the "ticket tax" is
used to defray the cost of FAA operations and other aviation
programs. Beginning on October 1, 1997, a revised formula for
determining the ticket tax took effect. Under this revised formula,
the ticket tax is now comprised of a percentage of the passenger
ticket price plus a flat fee for each segment flown, and will be
adjusted annually. For the period from October 1, 1997 through
September 30, 1998, the ticket tax was equal to nine percent of
passenger ticket price plus $1 per segment. Beginning October 1,
1998, the ticket tax was eight percent of passenger ticket price
plus $2 per segment.
Seasonality
As is common in the industry, the Company experiences
lower demand for its product during the period of December through
February. Because the Company's services and marketing efforts are
focused on the business traveler, this seasonality of demand is
somewhat greater than for airlines which carry a larger proportion
of leisure travelers. In addition, the Company's principal
geographic area of operations experiences more adverse weather
during this period, causing a greater percentage of the Company's
and other airlines' flights to be canceled. These seasonal factors
have combined in the past to reduce the Company's capacity, traffic,
profitability, and cash generation for this three month period as
compared to the rest of the year.
Item 2. Properties
Leased Facilities
Airports
The Company leases gate and ramp facilities at all of the
airports it serves and leases ticket counter and office space at
those locations where ticketing is handled by Company personnel.
Payments to airport authorities for ground facilities are generally
based on a number of factors, including space occupied as well as
flight and passenger volume. In June 1998, the Company announced
that the Metropolitan Washington Airports Authority ("MWAA") in
coordination with the Company, will build a 69,000 square foot
passenger concourse at Washington-Dulles dedicated solely to
regional airline operations. The 36-gate concourse, designed to
support the Company's expanding United Express operation, is
scheduled to open in May 1999. MWAA will provide the permanent
financing for the $18 million concourse through passenger facility
charges and/or airport facility bonds, with the Company agreeing to
provide short term interim financing for up to $15 million of
construction costs. (See Management's Discussion and Analysis -
Other Commitments)
Corporate Offices
The Company's leased headquarters in Dulles, VA provides
over 45,000 square feet in one building for the executive,
administrative, training and system control departments. The Company
believes that these facilities are adequate to conduct its current
and planned operations.
Maintenance Facilities
The FAA's safety regulations mandate periodic inspection
and maintenance of commercial aircraft. The Company performs most
line maintenance, service and inspection of its aircraft and engines
at its maintenance facilities using its own personnel.
<PAGE 15>
In February 1998, the Company occupied its new 90,000
square foot aircraft maintenance facility comprised of 60,000 square
feet of hangar space and 30,000 square feet of support space at
Washington-Dulles. The Company has consolidated all maintenance
functions to this facility which includes hangar, shop and office
space necessary to maintain the Company's growing fleet.
Item 3. Legal Proceedings
The Company is a party to routine litigation and FAA
proceedings incidental to its business, none of which is likely to
have a material effect on the Company's financial position or the
results of its operations.
The Company was a party to an action pending in the United
States District Court for the Southern District of Ohio, Peter J.
Ryerson, administrator of the estate of David Ryerson, v. Atlantic
Coast Airlines, Case No. C2-95-611. In September and October 1998,
this action and all related litigation was settled, the cost of
which was covered by insurance and was not borne by the Company.
The Company is also a party to an action pending in the
United States Court of Appeals for the Fourth Circuit known as Afzal
v. Atlantic Coast Airlines (No. 98-1011). This action is an appeal
of the December 1997 decision granted in favor of the Company in a
case claiming wrongful termination of employment brought in the
United States District Court for the Eastern District of Virginia
known as Afzal v. Atlantic Coast Airlines (Civil Action No. 96-1537-
A). The Company does not expect the outcome of this case to have
any material adverse effect on its financial condition or results of
its operations.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fiscal quarter ended
December 31, 1998, to a vote of the security holders of the Company
through the solicitation of proxies or otherwise.
<PAGE 16>
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The Company's common stock, par value $.02 per share (the
"Common Stock"), is traded on the Nasdaq National Market
("Nasdaq/NM") under the symbol "ACAI". Trading of the Common Stock
commenced on July 21, 1993.
On April 14, 1998, the Company declared a 2-for-1 stock
split payable as a stock dividend on May 15, 1998. The stock
dividend was contingent on shareholder approval to increase the
number of authorized Common Shares from 15,000,000 to 65,000,000
shares, which was obtained at the Company's 1998 Annual Meeting.
References in the Company's Annual Report on Form 10-K related to
Common Shares, including price, number of shares, etc. have been
adjusted to reflect the stock split.
The following table sets forth the reported high and low
closing sale prices of the Common Stock on the Nasdaq/NM for the
periods indicated:
<TABLE>
<S> <C> <C>
1997 High Low
First quarter $ 8.50 $ 5.94
Second quarter $ 8.63 $ 6.13
Third quarter $11.00 $ 7.75
Fourth quarter $15.94 $ 9.25
1998
First quarter $25.38 $15.56
Second quarter $33.00 $23.50
Third quarter $35.00 $17.00
Fourth quarter $30.50 $13.25
1999
First quarter
(through March 1, 1999) $35.00 $26.81
</TABLE>
As of March 1, 1999, the closing sales price of the Common
Stock on Nasdaq/NM was $30.875 per share and there were
approximately 121 holders of record of Common Stock.
The Company has not paid any cash dividends on its Common
Stock and does not anticipate paying any Common Stock cash dividends
in the foreseeable future. The Company intends to retain earnings to
finance the growth of its operations. The payment of Common Stock
cash dividends in the future will depend upon such factors as
earnings levels, capital requirements, the Company's financial
condition, the applicability of any restrictions imposed upon the
Company's subsidiary by certain of its financing agreements, the
dividend restrictions imposed by the Company's $35 million line of
credit, and other factors deemed relevant by the Board of Directors.
In addition, ACAI is a holding company and its only significant
asset is its investment in its subsidiary, ACA.
<PAGE 17>
In July 1997, the Company issued $57.5 million aggregate
principal amount of 7.0% Convertible Subordinated Notes due July 1,
2004 (the "Notes"), pursuant to Rule 144A under the Securities Act
of 1933, and received net proceeds of approximately $55.6 million
related to the sale of the Notes. The Notes are convertible into
shares of Common Stock, par value $0.02 of the Company by the
holders at any time after sixty days following the latest date of
original issuance thereof and prior to maturity, unless previously
redeemed or repurchased, at a conversion price of $9 per share,
subject to certain adjustments. The Company may not call the Notes
for redemption prior to July 1, 2000.
In January 1998, $5.9 million face amounts of Notes were
converted at the option of several holders into 660,826 shares of
the Company's Common Stock. On March 3, 1998, the Company notified
holders of the Notes that the Company was temporarily reducing the
conversion price in order to induce the holders to redeem their
Notes for Common Stock During the reduced conversion price period,
which was effective from March 20 through April 8, 1998, $31.7
million of the Notes were converted to common stock, resulting in
the issuance of 3,576,782 common shares. The reduced conversion
price caused approximately 56,174 additional common shares to be
issued to converting Note holders, resulting in a charge of
approximately $1.4 million. As of March 1, 1999, approximately
$19.8 million principal amount of Notes were outstanding, which were
convertible into approximately 2.2 million shares of Common Stock.
In July 1997, the Company repurchased 1.46 million shares
of the Company's Common Stock from British Aerospace for $16.9
million using a portion of the proceeds received from the issuance
of the Notes.
Item 6. Selected Financial Data
The following selected financial data under the caption
"Consolidated Financial Data" and "Consolidated Balance Sheet Data"
relating to the years ended December 31, 1994, 1995, 1996, 1997 and
1998 have been derived from the Company's consolidated financial
statements. The following selected operating data under the caption
"Selected Operating Data" have been derived from Company records.
The data should be read in conjunction with "Management's Discussion
and Analysis of Results of Operations and Financial Condition" and
the Consolidated Financial Statements and Notes thereto included
elsewhere in this Annual Report on Form 10-K.
<PAGE 18>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
(Dollars in thousands, except per share amounts and operating data)
Consolidated Financial Data: Years ended December 31,
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1997 1998
Operating revenues:
Passenger revenues $156,047 $153,918 $179,370 $202,540 $285,243
Total operating 158,919 156,968 182,484 205,444 289,940
revenues
Operating expenses:
Salaries and related 41,590 40,702 44,438 49,661 68,135
costs
Aircraft fuel 15,189 13,303 17,124 17,766 23,978
Aircraft maintenance 22,345 15,252 16,841 16,860 22,730
and materials
Aircraft rentals 35,565 25,947 29,137 29,570 36,683
Traffic commissions 25,913 25,938 28,550 32,667 42,429
and related fees
Facility rent and 9,598 7,981 8,811 10,376 13,475
landing fees
Depreciation and 2,329 2,240 2,846 3,566 6,472
amortization
Other 15,569 13,281 14,900 16,035 23,347
Write-off of 6,000 - - - -
intangible assets
Restructuring charges 8,099 (521) (426) - -
(reversals)
Total operating 182,197 144,123 162,221 176,501 237,249
expenses
Operating income (loss) (23,278) 12,845 20,263 28,943 52,691
Interest expense (2,153) (1,802) (1,013) (3,450) (4,207)
Interest income - 66 341 1,284 4,145
Debt conversion - - - - (1,410)
expense (1)
Other income 295 181 17 62 326
(expense), net
Total non operating (1,858) (1,555) (655) (2,104) (1,146)
expenses
Income (loss) before
income tax expense (25,136) 11,290 19,608 26,839 51,545
and extraordinary
item
Income tax provision - (1,212) 450 12,339 21,133
(benefit)
Income (loss) before (25,136) 12,502 19,158 14,500 30,412
extraordinary item
Extraordinary item (2) - 400 - - -
Net Income (loss) $(25,136) $12,902 $19,158 $14,500 $30,412
</TABLE>
<PAGE 19>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
(Dollars in thousands, except per share amounts and operating data)
Years ended December 31,
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1997 1998
Income (loss) per share:
Basic:
Income (loss) before $(1.84) $0.73 $1.13 $0.93 $1.68
extraordinary item
Extraordinary item - 0.03 - - -
Net income (loss) per $(1.84) $0.76 $1.13 $0.93 $1.68
share
Diluted:
Income (loss) before $(1.84) $0.65 $1.08 $0.80 $1.42
extraordinary item
Extraordinary item - 0.02 - - -
Net income (loss) per $(1.84) $0.67 $1.08 $0.80 $1.42
share
Weighted average number
of shares used
in computation (in 13,716 16,684 16,962 15,647 18,128
thousands) 13,716 19,742 17,840 19,512 22,186
Basic
Diluted
Selected Operating Data:
Departures 134,804 131,470 137,924 146,069 170,116
Revenue passengers 1,545,520 1,423,463 1,462,241 1,666,975 2,534,077
carried
Revenue passenger 393,013 348,675 358,725 419,977 792,934
miles (000s) (3)
Available seat miles 885,744 731,109 771,068 861,222 1,410,763
(000s) (4)
Passenger load 44.3% 47.7% 46.5% 48.8% 56.2%
factor (5)
Breakeven passenger 47.0% 43.9% 41.4% 41.8% 45.8%
load factor (6)
Revenue per $0.179 $0.215 $0.237 $0.239 $0.206
available seat mile
Cost per available $0.189 $0.198 $0.211 $0.205 $0.168
seat mile (7)
Average yield per $0.397 $0.441 $0.500 $0.482 $0.360
revenue passenger mile
(8)
Average fare $101 $108 $123 $122 $113
Average passenger 254 245 245 252 313
trip length (miles)
Aircraft in service 56 54 57 65 74
(end of period)
Destinations served 42 41 39 43 53
(end of period)
Consolidated Balance
Sheet Data:
Working capital $(4,488) $4,552 $17,782 $45,028 $68,130
(deficiency)
Total assets 40,095 47,499 64,758 148,992 227,626
Long-term debt and
capital leases, less 6,675 7,054 5,673 76,145 64,735
current
portion
Redeemable Series A,
Cumulative, 3,825 3,825 - - -
Convertible,
Preferred Stock
Total stockholders' 1,922 14,561 34,637 34,805 110,377
equity
</TABLE>
<PAGE 20>
[FN]
1. In connection with the induced conversion of a portion of the 7%
Convertible Subordinated Notes ("Notes"), the Company recorded a non-cash,
non-operating charge of approximately $1.4 million. No similar charges were
recognized for the period from 1994 to 1997.
2. In connection with the early extinguishment of certain senior notes, in
1995 the Company recorded an extraordinary gain of $400,000 associated with
the extinguished debt. No similar extinguishments were recognized in 1994,
1996, 1997 or 1998.
3. "Revenue passenger miles" or "RPMs" represent the number of miles flown by
revenue passengers.
4. "Available seat miles" or "ASMs" represent the number of seats available
for passengers multiplied by the number of scheduled miles the seats are
flown.
5. "Passenger load factor" represents the percentage of seats filled by
revenue passengers and is calculated by dividing revenue passenger miles by
available seat miles.
6. "Breakeven passenger load factor" represents the percentage of seats needed
to be filled by revenue passengers for the airline to break even after
operating expenses, less other revenues and excluding restructuring and
write-offs of intangible assets. Had restructuring and write-offs of
intangible assets been included for the years ended December 31, 1994, 1995,
1996, 1997 and 1998, this percentage would have been 51.0%, 43.8%, 41.3%,
41.8% and 45.8%, respectively.
7. "Operating cost per available seat mile" represents total operating
expenses excluding restructuring and write-offs of intangible assets divided
by available seat miles. Had restructuring and write-offs of intangible assets
been included for the years ended December 31, 1994, 1995, 1996, 1997 and
1998, cost per available seat mile would have been $0.206, $0.197, $0.210,
$0.205 and $0.168, respectively.
8. "Average yield per revenue passenger mile" represents the average passenger
revenue received for each mile a revenue passenger is carried.
<PAGE 21>
Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition
General
In 1998, Atlantic Coast Airlines Holdings, Inc. ("ACAI")
and its wholly-owned subsidiary, Atlantic Coast Airlines ("ACA"),
together (the "Company"), recorded a profit of $30.4 million
compared to a profit of $14.5 million for 1997, and $19.2 million in
1996. The increased profitability from 1997 to 1998 is primarily
the result of the Company's growth and operating margin improvement.
For 1998, the Company's available seat miles ("ASM") increased 64%
with the addition of nine Regional Jets ("RJs") during the year.
Passenger acceptance of the RJ and the related increase in
connecting traffic to turboprop flights resulted in a 52% increase
in total passengers and an 89% increase in revenue passenger miles
("RPM").
The reduction in net income from 1996 to 1997 is primarily
due to an increase in the Company's provision for income taxes of
approximately $12.3 million in 1997 as compared to approximately
$500,000 for 1996. The increase in tax expense was primarily
attributable to higher levels of taxable income that could not be
offset by net operating loss carryforwards that were fully utilized
in 1996.
Results of Operations
The Company earned net income of $31.8 million (excluding
a non-cash, non-operating charge of $1.4 million) or $1.49 per
diluted share in 1998 compared to net income of $14.5 million or
$0.80 per diluted share in 1997, and $19.2 million or $1.08 per
diluted share in 1996. Net income was $30.4 million or $1.42 per
diluted share including the $1.4 million charge. During 1998, the
Company generated operating income of $52.7 million compared to
$28.9 million for 1997, and $20.3 million for 1996. Operating
margins for 1998, 1997 and 1996 were 18.2%, 14.1% and 11.1%,
respectively.
The improvement in operating income from 1997 to 1998
reflects a 63.8% increase in ASMs partially offset by a 13.8%
decrease in unit revenue (revenue per ASM) from $0.239 to $0.206 and
a 18% decrease in unit cost (cost per ASM) from $0.205 to $0.168.
The improvement in operating income from 1996 to 1997
reflects a 0.8% increase in unit revenue (revenue per ASM) from
$0.237 to $0.239 coupled with an 11.7% increase in ASMs and a 2.8%
decrease in unit cost (cost per ASM).
Fiscal Year 1997 vs. 1998
<PAGE 22>
Operating Revenues
The Company's operating revenues increased 41.1% to $289.9
million in 1998 compared to $205.4 million in 1997. The increase
resulted from a 63.8% increase in ASMs, and an increase in load
factor of 7.4 points, partially offset by a 25.3% decrease in
revenue per revenue passenger mile (yield). The reduction in yield
is caused principally by a 24.2% increase in the average passenger
stage length from 252 miles in 1997 to 313 miles for 1998. Revenue
passengers
increased 52% in 1998 compared to 1997, which combined with the
increase in the average passenger stage length resulted in an 88.8%
increase in RPMs.
Operating Expenses
The Company's operating expenses increased 34.4% to $237.2
million in 1998 compared to $176.5 million in 1997 due primarily to
the 63.8% increase in ASMs and the 52% increase in passengers. The
increase in ASMs reflects the addition of nine RJ aircraft in 1998
and the full year effect of adding five RJs and five British
Aerospace Jetstream-41 ("J-41") aircraft during 1997.
A summary of operating expenses as a percentage of
operating revenue and operating cost per ASM for the years ended
December 31, 1997 and 1998 is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1998
Percent Cost Percent Cost
of of
Operating per Operating per ASM
ASM
Revenues (cents Revenue (cents)
) s
<S> <C> <C> <C> <C>
Salaries and related 24.2% 5.8 23.5% 4.8
costs
Aircraft fuel 8.6% 2.1 8.3% 1.7
Aircraft maintenance 8.2% 2.0 7.8% 1.6
and materials
Aircraft rentals 14.4% 3.4 12.7% 2.6
Traffic commissions and 15.9% 3.8 14.6% 3.0
related fees
Facility rent and 5.1% 1.1 4.6% 1.0
landing fees
Depreciation and 1.7% .4 2.2% .5
amortization
Other 7.8% 1.9 8.1% 1.6
Total 85.9% 20.5 81.8% 16.8
</TABLE>
Costs per ASM decreased 18% to 16.8 cents in 1998 compared
to 20.5 cents in 1997 primarily due to a 63.8% increase in ASMs in
1998 compared to 1997, offset by a 52% increase in passengers
carried. The increase in ASMs reflects the addition of nine RJ
aircraft during 1998 and the full year effect of adding five RJs and
five J-41 aircraft during 1997.
Salaries and related costs per ASM decreased 17.2% to 4.8
cents in 1998 compared to 5.8 cents in 1997. In absolute dollars,
salaries and related expenses increased 37.2% from $49.7 million in
1997 to $68.1 million in 1998. The increase primarily resulted from
the addition of 609 full and part time employees during 1998 to
support the additional aircraft.
The cost per ASM of aircraft fuel decreased to 1.7 cents
in 1998 compared to 2.1 cents in 1997. The total price per gallon
of fuel decreased 15% to 67.4 cents in 1998 compared to 79.3 cents
in 1997. In absolute dollars, aircraft fuel expense increased 35%
from $17.8 million in 1997 to $24 million in 1998 reflecting a 23%
increase in block hours and the higher fuel consumption per hour of
a RJ aircraft versus a turboprop aircraft.
The cost per ASM of aircraft maintenance and materials
decreased to 1.6 cents in 1998 compared to 2.0 cents in 1997. The
decreased maintenance expense per ASM resulted primarily from the
addition of the RJ aircraft. In addition to generating higher ASMs,
the RJ aircraft are covered by manufacturer's warranty for up to
three years on certain components. The Company did not record any
heavy maintenance repair costs related to the RJ aircraft. The RJ
cost savings are partially offset by the increasing costs of the
turboprop aircraft as they age. In absolute dollars, aircraft
maintenance and materials expense increased 34.8% from $16.9 million
in 1997 to $22.7 million in 1998.
<PAGE 23>
The cost per ASM of aircraft rentals decreased to 2.6
cents in 1998 compared to 3.4 cents in 1997. The decreased unit
costs reflect the full year effect of refinancing to lower rental
rates, eleven used J-41 aircraft, and the purchase of three used J-
41s all during the second half of 1997 and the refinancing of three
J-41s, combined with the purchases of two RJs and one J41 aircraft
during 1998. In absolute dollars, aircraft rental expense increased
24.1% to $36.7 million as compared to $29.6 million in 1997 due to
the additional aircraft added to the fleet.
The cost per ASM of traffic commissions and related fees
decreased to 3.0 cents in 1998 as compared to 3.8 cents in 1997.
The decrease reflects the reduced (from 10% to 8%) agency commission
rate for domestic travel adopted in late 1997. Since substantially
all passenger revenues are derived from interline sales, the Company
did not begin to realize the savings from this reduction until
February 1998. In addition, the Company's percentage of tickets
sold by travel agents decreased year over year by approximately ten
percentage points due principally to the acceptance of electronic
ticketing by the travelling public. Related fees include program
fees paid to United and CRS segment booking fees for reservations.
In absolute dollars, traffic commissions and related fees increased
29.9% to $42.4 million in 1998 from $32.7 million in 1997.
The cost per ASM of facility rent and landing fees
decreased to 1.0 cent in 1998 compared to 1.1 cents in 1997. In
absolute dollars, facility rent and landing fees increased 29.9% to
$13.5 million for 1998 from $10.4 million in 1997. The absolute
increase is the result of expansion of the Company's business to new
markets and increased landing fees due to the heavier RJ aircraft.
The cost per ASM of depreciation and amortization
increased to 0.5 cents in 1998 compared to 0.4 cents in 1997. In
absolute dollars, depreciation and amortization expense for 1998
increased 81.5% to $6.5 million from $3.6 million in 1997. The
absolute increase results from the purchase of two RJ aircraft, a J-
41 aircraft and RJ rotable spare parts in 1998 for approximately $51
million and the full year effect of purchasing four J-41 aircraft
and rotable spare parts in late 1997.
The cost per ASM of other operating expenses decreased to
1.6 cents in 1998 compared to 1.9 cents in 1997. In absolute
dollars, other operating expenses increased 45.6% to $23.3 million
for 1998 from $16.0 million in 1997. This absolute increase is
caused primarily by increases in crew accommodations and training
costs related to the general expansion of the Company's business and
increased distressed passenger expenses. During the fourth quarter
1998, the Company began to pay for new hire training. Due to the
scheduled addition of six additional RJs in the first five months of
1999, the Company incurred new hire pilot training costs of
approximately $678,000 in the fourth quarter 1998. The Company
expects pilot training costs to continue to increase as the
remaining firm ordered RJ aircraft are received.
As a result of the foregoing expense items, total
operating expenses were $237.2 million for 1998, an increase of
34.4% compared to $176.5 million in 1997. Total ASMs increased
63.8% year over year causing the cost per ASM to decrease from 20.5
cents in 1997 to 16.8 cents in 1998.
<PAGE 24>
Interest expense increased from $3.4 million in 1997 to
$4.2 million in 1998. During the first part of 1998, the Company
accepted for conversion into common stock approximately $38 million
of its 7% Convertible Subordinated Notes ("Notes"). The reduced
interest costs resulting from the debt conversion partially offset
the full year effect of the debt outstanding for the purchase of
four J-41s in 1997, and the issuance of new debt to acquire two RJs
and one J-41 in 1998.
Interest income increased from $1.3 million in 1997 to
$4.1 million in 1998. This is primarily the result of the Company's
significantly higher cash balances during 1998 as compared to 1997
and the capitalization of interest on the Company's outstanding
aircraft deposits with the manufacturers.
From March 20 through April 8, 1998, the Company
temporarily reduced the conversion price from $9 to $8.86 for
holders of the Notes. During this temporary period, $31.7 million
of the Notes converted into approximately 3.6 million shares of
common stock. As a result of this temporary price reduction, the
Company recorded a $1.4 million charge to other expense during 1998
representing the fair value of the additional shares distributed
upon conversion.
The Company recorded a provision for income taxes of
$21.1 million for 1998, compared to a provision for income taxes of
$12.3 million in 1997. The 1998 effective tax rate of approximately
41% and the 1997 effective tax rate of approximately 46% are higher
than the statutory federal and state rates. The higher effective
tax rates reflect non-deductible permanent differences between
taxable and book income. Net operating loss carryforwards were
fully utilized in 1996.
Fiscal Year 1996 vs. 1997
Operating Revenues
The Company's operating revenues increased 12.6% to $205.4
million in 1997 compared to $182.5 million in 1996. The increase
resulted from an 11.7% increase in ASMs, an increase in load factor
of 2.3 points, partially offset by a 3.6% decrease in yield.
The reduction in yield is related in part to the
reinstatement of the federal excise ticket tax from March 7, 1997
through the remainder of the year. During 1996, this tax was only
in effect from August 27, 1996 to December 31, 1996. Total
passengers increased 14.0% in 1997 compared to 1996 as a result of
the 11.7% increase in ASMs and 2.3 point increase in load factor.
Operating Expenses
The Company's operating expenses increased 8.8% to $176.5
million in 1997 compared to $162.2 million in 1996 due primarily to
an 11.7% increase in ASMs, and a 14.0% increase in passengers. The
increase in ASMs reflects the net addition of five J-41 and five RJ
aircraft during 1997.
<PAGE 25>
A summary of operating expenses as a percentage of
operating revenue and operating cost per ASM for the years ended
December 31, 1996 and 1997 is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1997
Percent Cost Percent Cost
of of
Operating per Operating per ASM
ASM
Revenues (cents) Revenues (cents)
<S> <C> <C> <C> <C>
Salaries and related 24.4% 5.8 24.2% 5.8
costs
Aircraft fuel 9.4% 2.2 8.6% 2.1
Aircraft maintenance 9.2% 2.2 8.2% 2.0
and materials
Aircraft rentals 16.0% 3.8 14.4% 3.4
Traffic commissions and 15.6% 3.7 15.9% 3.8
related fees
Facility rent and 4.8% 1.1 5.1% 1.1
landing fees
Depreciation and 1.5% .4 1.7% .4
amortization
Other 8.2% 1.9 7.8% 1.9
Total (before
reversals of 89.1% 21.1 85.9% 20.5
restructuring
charges)
</TABLE>
Costs per ASM before reversals of restructuring charges
decreased 2.8% to 20.5 cents in 1997 compared to 21.1 cents in 1996
primarily due to an 11.7% increase in ASMs in 1997 compared to 1996,
offset by a 14.0% increase in passengers carried. The increase in
ASMs resulted from the net addition of five J-41 aircraft and five
50-seat RJ aircraft along with a 1.2% improvement in daily aircraft
block hour utilization.
Salaries and related costs per ASM remained unchanged at
5.8 cents in 1997 compared to 1996. In absolute dollars, salaries
and related expenses increased 11.9% from $44.4 million in 1996 to
$49.7 million in 1997. The increase resulted from additional flight
payroll related to a contractual increase in May 1996 and February
1997 and a 10.7% increase in profit sharing expense year over year.
The cost per ASM of aircraft fuel decreased to 2.1 cents
in 1997 compared to 2.2 cents in 1996. The total cost of fuel per
gallon decreased 4.2% to 79.3 cents in 1997 compared to 82.8 cents
in 1996. In absolute dollars, aircraft fuel expense increased 4.1%
from $17.1 million in 1996 to $17.8 million in 1997.
The cost per ASM of aircraft maintenance and materials
decreased to 2.0 cents in 1997 compared to 2.2 cents in 1996. The
decreased maintenance expense resulted primarily from the receipt of
performance guarantee fees from an overhaul vendor. In absolute
dollars, aircraft maintenance and materials expense increased 0.6%
from $16.8 million in 1996 to $16.9 million in 1997.
The cost per ASM of aircraft rentals decreased to 3.4
cents in 1997 compared to 3.8 cents in 1996. The decreased unit
costs reflect the refinancing to lower rental rates of eleven used J-
41 aircraft and the purchase by the Company of three used J-41s.
All of these transactions were accomplished in the second half of
1997. In absolute dollars, aircraft rentals increased 1.7% from
$29.1 million in 1996 to $29.6 million in 1997.
<PAGE 26>
The cost per ASM of traffic commissions and related fees
increased to 3.8 cents in 1997 compared to 3.7 cents in 1996. The
increased commissions reflect the contractual increases in program
fees paid to United and a higher percentage of tickets sold by
travel agencies. Commission rates as a percent of total passenger
revenue fluctuate based on the mix of commissionable and non-
commissionable tickets, and have changed due to a cap on the total
amount of commission that travel agents can earn. Commissions as a
percentage of total passenger revenue averaged 7.3% in 1997 and 7.4%
in 1996. Related fees include program fees to United and segment
booking fees for reservations. In absolute dollars, traffic
commissions and related fees increased 14.3% from $28.6 million in
1996 to $32.7 million in 1997.
The cost per ASM of facility rent and landing fees
remained unchanged at 1.1 cents in 1997 compared to 1996. In
absolute dollars, facility rent and landing fees increased 17.8% to
$10.4 million for 1997 from $8.8 million in 1996. This absolute
increase is the result of expansion of the Company's business to new
markets and increased landing fees due to the heavier RJ aircraft.
The cost per ASM of depreciation and amortization remained
unchanged at 0.4 cents in 1997 compared to 1996. Absolute increases
in depreciation expense were offset by increases in ASMs. The
absolute increase results primarily from the purchase of four J-41
aircraft (one of these aircraft was new to the fleet in 1997),
additional rotable spare parts associated with additional J-41
aircraft, improvements to aircraft, leasehold improvements and
purchases of computer equipment. In absolute dollars, depreciation
and amortization expense increased 28.6% from $2.8 million in 1996
to $3.6 million in 1997.
The cost per ASM of other operating expenses remained
unchanged at 1.9 cents in 1997 compared to 1996. Absolute increases
were offset by increased ASMs. The absolute increase in expenses
are primarily attributable to increased training and distressed
passenger expenses. In absolute dollars, other operating expenses
increased 7.6% from $14.9 million in 1996 to $16 million in 1997.
As a result of the foregoing expense items, total
operating expenses before reversals of restructuring charges were
approximately $176.5 million for 1997, an increase of 8.5% compared
to $162.6 million in 1996. Total ASMs increased 11.7% year over
year and the cost per ASM decreased from 21.1 cents for 1996 to 20.5
cents for 1997.
The Company reversed excess restructuring reserves of
$426,000 in 1996 (0.1 cents per ASM). The Company established the
reserves with a charge of $8.1 million in 1994. The reversals
reflected remaining unused reserves for pilot requalification,
return conditions, spare parts reconciliation and miscellaneous
professional fees. As of December 31, 1996, there were no remaining
reserves related to the restructuring.
Interest expense, net of interest income, was $2.2 million
in 1997 and $672,000 in 1996. The increased expense reflects the
Company's issuance in July 1997 of $57.5 million of 7% convertible
debt and $16.4 million of equipment notes associated with pass
through trust certificates issued in September 1997 reduced by a
significant increase in the Company's cash balances in 1997 and use
of proceeds from the convertible debt to repay higher interest
bearing debt.
The Company recorded a provision for income taxes of
approximately $12.3 million for 1997, compared to a provision for
income taxes of approximately $500,000 in 1996. The 1996 effective
tax rate of approximately 2.3% was significantly less than the
statutory federal and state rates due principally to the full
utilization of net operating loss carryforwards and the elimination
of
the valuation allowance. The 1997 effective tax rate of
approximately 46% is higher than the statutory federal and state
rates primarily due to permanent differences.
<PAGE 27>
Outlook
This Outlook section and the Liquidity and Capital
Resources section below contain forward-looking statements. The
Company's actual results may differ significantly from the results
discussed in forward-looking statements. Factors that could cause
the Company's future results to differ materially from the
expectations described here include the response of the Company's
competitors to the Company's business strategy, market acceptance of
RJ service to new destinations, the cost of fuel, the weather,
satisfaction of regulatory requirements and general economic and
industry conditions.
A central element of the Company's business strategy is
expansion of its jet aircraft fleet. At December 31, 1998, the
Company had firm commitments to acquire 29 additional 50-seat RJs.
The Company believes that the continued implementation of these
aircraft will expand the Company's business into new markets. In
general, service to new markets may result in increased operating
expenses that may not be immediately offset by increases in
operating revenues.
In the fourth quarter of 1998, the Company began using
United's "ORION" revenue management system for flights departing
after January 31, 1999 and beyond. The PROS IV revenue management
system, which has been in operation since May 1997 at the Company,
was no longer used as of that date. ORION allows the Company to
take advantage of state of the art "Origin and Destination" revenue
maximization capabilities. As with the previous system, revenue
management analysts will continue to monitor forecasts and make
adjustments for changes in demand and behavior. The ORION system is
designed to optimize all of the passenger itineraries that flow over
the entire United/United Express network. Management believes that
ORION will further promote maximization of passenger revenue,
although there can be no assurance that this will occur.
As a result of the recent addition of new RJs, the
Company's maintenance expense on these aircraft were not material
due to manufacturers' warranties and the generally lower failure
rates of major components due to the newness of the aircraft. The
current average age of the Company's RJ fleet is approximately one
year. The Company's maintenance expense for RJ aircraft will
increase in future periods when substantial airframe and engine
repair costs are incurred. The Company has fixed, "not to exceed"
airframe maintenance cost per hour flown rates guaranteed by the
manufacturer. To date, the Company's actual airframe maintenance
cost per hour flown has not exceeded the guaranteed rate.
In late 1998, US Airways announced its intention to
increase activity at Washington-Dulles utilizing its mainline
service, lowfare MetroJet product, and its US Airways Express
affiliates. US Airways has since implemented or announced service
to eight of the Company's markets using both jet and turboprop
equipment. In two of the Company's existing markets, MetroJet will
provide the service at a significantly lower fare structure. The
Company continually monitors the effects competition has on its
routes, fares and frequencies. The Company believes that it can
compete effectively with US Airways, however there can be no
assurances that US Airways' expansion at Washington-Dulles will not
have a material adverse effect on the Company's results of
operations or financial position.
In early 1999, United announced its intention to increase
its level of activity at Washington-Dulles by 60% beginning in April
and May 1999. The Company believes that United's announced increase
will add approximately 7,000 additional daily seat departures to the
United/United Express operation at Washington-Dulles. The Company,
in concert with United, also announced either increased frequencies
or upgraded equipment, or both, in all of its markets affected by
the US Airways expansion.
<PAGE 28>
Liquidity and Capital Resources
The Company's balance sheet improved significantly during
1998 compared to 1997. As of December 31, 1998, the Company had
cash and cash equivalents of $64.4 million and working capital of
$68.1 million compared to $39.2 million and $45.2 million,
respectively, as of December 31, 1997. During the year ended
December 31, 1998, cash and cash equivalents increased $25.2
million, reflecting net cash provided by operating activities of
$39.7 million, net cash used in investing activities of $39.7
million (related to purchases of aircraft and equipment and
decreases in short term investments) and net cash provided by
financing activities of $25.2 million. Net cash provided by
financing activities increased principally due to the issuance of
long term debt to acquire two RJ and one J-41 aircraft.
The Company's balance sheet also improved significantly
during 1997 compared to 1996. As of December 31, 1997, the Company
had cash and cash equivalents of $39.2 million and working capital
of $45.2 million compared to $21.5 million and $17.8 million,
respectively, as of December 31, 1996. During the year ended
December 31, 1997, cash and cash equivalents increased $17.7
million, reflecting net cash provided by operating activities of
$21.3 million, net cash used in investing activities of $55.2
million (related to deposits for the RJs, purchases of equipment and
increases in short term investments) and net cash provided by
financing activities of $51.6 million. Net cash provided by
financing activities increased principally due to the receipt of net
proceeds of $55.6 million in July 1997 from the issuance of
convertible notes due 2004 partially offset by the $16.9 million
purchase of the Company's common stock from British Aerospace in
July 1997.
Other Financing
On February 8, 1999, the Company entered into an asset-
based lending agreement with two financial institutions that
provides the Company with a line of credit of up to $35 million,
depending on the amount of assigned ticket receivables and the value
of certain rotable spare parts. This line replaced a previous $20
million line. Borrowings under the line of credit can provide the
Company a source of working capital until proceeds from ticket
coupons are received. The line is collateralized by all of the
Company's receivables and certain rotable spare parts. There were
no borrowings under the previous line during 1998. The Company
pledged $2.9 million of this line of credit as collateral to secure
letters of credit issued on behalf of the Company by a financial
institution.
In July 1997, the Company issued $57.5 million aggregate
principal amount of 7% Convertible Subordinated Notes due July 1,
2004 ("the Notes"). The Notes are convertible into shares of Common
Stock unless previously redeemed or repurchased, at a conversion
price of $9 per share, (after giving effect to the stock split on
May 15, 1998) subject to certain adjustments. Interest on the Notes
is payable on April 1 and October 1 of each year. The Notes are not
redeemable by the Company until July 1, 2000.
<PAGE 29>
In January 1998, approximately $5.9 million of the Notes
were converted, pursuant to their original terms, into 660,826
shares of Common Stock. From March 20, 1998 to April 8, 1998, the
Company temporarily reduced the conversion price from $9 to $8.86
for holders of the Notes. During this period, $31.7 million of the
Notes converted into approximately 3.6 million shares of Common
Stock. As a result of this temporary price reduction, the Company
recorded a non-cash, non-operating charge to earnings during the
second quarter of 1998 of $1.4 million representing the fair value
of the additional shares distributed upon conversion.
In September 1997, approximately $112 million of pass
through certificates were issued in a private placement by separate
pass through trusts, which purchased with the proceeds, equipment
notes (the "Equipment Notes") issued in connection with (i)
leveraged lease transactions relating to four J-41s and six RJs, all
of which were leased to the Company (the "Leased Aircraft"), and
(ii) the financing of four J-41s owned by the Company (the "Owned
Aircraft"). The Equipment Notes issued with respect to the Owned
Aircraft are direct obligations of ACA, guaranteed by ACAI and are
included as debt obligations in the accompanying consolidated
financial statements. The Equipment Notes issued with respect to the
Leased Aircraft are not obligations of ACA or guaranteed by ACAI.
With respect to one RJ leased aircraft, at December 31,
1997 (the "Prefunded Aircraft"), the proceeds from the sale of the
Equipment Notes were deposited into collateral accounts, to be
released at the closing of a leveraged lease related to the
Prefunded Aircraft. In January 1998, an equity investor purchased
this aircraft and entered into a leveraged lease with the Company
and the collateral accounts were released.
Other Commitments
In July 1997, the Company entered into a series of put and
call contracts having an aggregate notional amount of $39.8 million.
The contracts matured between March and September 1998. The
contracts were entered into as an interest rate hedge designed to
limit the Company's exposure to interest rate changes on the
anticipated issuance of permanent financing relating to the delivery
of aircraft in 1998. During 1998, the Company settled these
contracts, paying the counterparty approximately $2.3 million, and
is amortizing this cost over the life of the related aircraft leases
or is depreciating the cost as part of the aircraft acquisition cost
for owned aircraft. On July 2, 1998, the Company entered into
additional put and call contracts having an aggregate notional
amount of $51.8 million to hedge its exposure, to interest rate
changes on the anticipated issuance of permanent financing for six
RJ aircraft scheduled for delivery between October 1998 and April
1999. In the fourth quarter 1998, the Company settled two
contracts, paying the counterparty approximately $700,000, and is
amortizing this cost over the life of the related aircraft lease for
the leased aircraft and is depreciating the cost as part of the
aircraft acquisition cost for the owned aircraft. The Company would
have been obligated to pay the counterparty approximately $1.5
million had the remaining contracts settled on December 31, 1998.
<PAGE 30>
In September and December 1998, the Company entered into
call option contracts to hedge price changes on approximately 34,000
barrels of jet fuel per month during the period from January 1999 to
June 1999. The contracts provide for a premium payment of
approximately $273,000 and sets a cap on the average maximum price
equal to 40.625 cents per gallon of jet fuel excluding taxes and
into-plane fees with the premium and any gains on this contract to
be recognized as a component of fuel expense during the period in
which the Company purchases fuel. In October and November 1998, the
Company entered into commodity swap transactions to hedge price
changes on approximately 34,000 additional barrels of jet fuel per
month during the period from January 1999 to June 1999. The
contracts provide for an average fixed price of 44.35 cents per
gallon of jet fuel with any gains or losses recognized as a
component of fuel expense during the period in which the Company
purchases fuel. With these transactions, the Company has hedged
approximately 80% of its jet fuel requirements for the first half of
1999. Had the commodity swap transactions settled on December 31,
1998, the Company would have incurred approximately $900,000 in
additional fuel expense.
In the second quarter of 1998, the Company announced that
the Metropolitan Washington Airport Authority ("MWAA"), in
coordination with the Company, will build an approximately 69,000
square foot regional passenger concourse at Washington-Dulles. The
facility is scheduled to open in May 1999. The new facility will
offer improved passenger amenities and operational enhancements, and
will provide additional space to support the Company's expanded
operations resulting from the introduction of RJs. The facility
will be designed, financed, constructed, operated and maintained by
MWAA, and will be leased to the Company. The lease rate will be
determined based upon final selection of funding methods and rates.
MWAA has agreed to fund the construction through the proceeds of
bonds and, subject to approval by the FAA, passenger facility
charges ("PFC"). In order to obtain the most favorable permanent
financing, the Company agreed to obtain its own interim financing
from a third party lender to fund a portion of the total program
cost of the regional concourse for approximately $15 million. MWAA
has agreed to replace the Company's interim financing with the
proceeds of bonds or, if obtained, PFC funds, no later than one year
following the substantial completion date of the project. If MWAA
replaces the interim financing with PFC funding rather than bond
financing, the Company's lease cost will be significantly lower. The
Company obtained financing for this obligation from two banks in
February 1999 and has borrowed $4.5 million through March 1, 1999.
MWAA has agreed to reimburse principal borrowings but the Company
will be responsible for all interest costs.
Aircraft
The Company has significant lease obligations for aircraft
including seven additional RJ leveraged leases entered into in 1998
that are classified as operating leases and therefore are not
reflected as liabilities on the Company's balance sheet. The
remaining terms of such leases range from two to sixteen and a half
years. The Company's total rent expense in 1998 under all non-
cancelable aircraft operating leases with remaining terms of more
than one year was approximately $37.5 million. As of December 31,
1998, the Company's minimum rental payments for 1999 under all non-
cancelable aircraft operating leases with remaining terms of more
than one year were approximately $42 million.
As of March 1, 1999, the Company had a total of 28 RJs on
order from Bombardier, Inc., in addition to the 15 already
delivered, and held options for 27 additional RJs. During 1998, the
Company converted five of the six conditional orders and converted
20 option aircraft to firm orders. Of the remaining 28 firm
aircraft deliveries, eight are scheduled for the remainder of 1999,
nine are scheduled for 2000, and eleven are scheduled for 2001.
<PAGE 31>
The Company is obligated to purchase and finance
(including leveraged leases) the 28 firm ordered aircraft at an
approximate capital cost of $520 million.
The Company previously announced that it is exploring
alternatives to accelerate the retirement of its fleet of 28 leased
19 seat J-32 aircraft. The Company is assessing plans to target the
phase-out of the J-32 from its United Express operation by the end
of 2001. As of March 1, 1999, the Company has J-32 operating lease
commitments with remaining lease terms ranging from three to seven
years and related minimum lease payments of approximately $47
million. The Company intends to complete its analysis of a phase-
out plan including quantifications of any one-time fleet
rationalization charge during 1999.
In order to ensure the highest level of safety in air
transportation, the FAA has authority to issue maintenance
directives and other mandatory orders relating to, among other
things, inspection of aircraft and the mandatory removal and
replacement of parts that have failed or may fail in the future. In
addition, the FAA from time to time amends its regulations. Such
amended regulations may impose additional regulatory burdens on the
Company such as the installation of new safety-related items.
Depending upon the scope of the FAA's order and amended regulations,
these requirements may cause the Company to incur substantial,
unanticipated expenses.
Capital Equipment and Debt Service
In 1999 the Company anticipates capital spending of
approximately $51 million consisting of $47 million to own two RJ
aircraft, rotable spare parts, spare engines and equipment, and $4
million for other capital assets. The Company anticipates that it
will be able to arrange financing for the aircraft and spares on
generally favorable terms, although there is no certainty that such
financing will be available or in place before the commencement of
deliveries.
Debt service for 1999 is estimated to be approximately $10
million reflecting borrowings related to the purchase of two RJ
aircraft, five J-41s acquired in 1997 and 1998 and interest due on
the remaining 7% Convertible Subordinated Notes. The foregoing
amount does not include additional debt that may be required for the
financing of the RJs, spare parts and engines.
The Company believes that, in the absence of unusual
circumstances, its cash flow from operations, the $35 million credit
facility, and other available equipment financing will be sufficient
to meet its working capital needs, expected operating lease
commitments, capital expenditures, and debt service requirements for
the next twelve months.
Inflation
Inflation has not had a material effect on the Company's
operations.
<PAGE 32>
Year 2000 Readiness
Background
The "Year 2000 problem" refers to the potential
disruptions arising from the inability of computer and embedded
microprocessor systems to process or operate with data inputs
involving the years beginning with 2000 and, to a lesser extent,
involving the year 1999. As used by the Company, "year 2000 ready"
means that a system will function in the year 2000 without
modification or adjustment, or with a one-time manual adjustment.
State of Readiness
The Company is highly reliant on information technology
("IT") systems and non-IT embedded technologies of third party
vendors and contractors and governmental agencies, such as the CRS
systems, United, aircraft and parts manufacturers, the FAA, the DOT,
and MWAA and other local airport authorities. The Company sent
questionnaires to these third party vendors, contractors and
government agencies. For all mission critical and key vendors, the
Company has received a response and has assessed which of their
systems may be affected by year 2000 issues and what the status of
their remediation plans are. All mission critical and key vendors
have stated that they will be year 2000 compliant by June 30, 1999.
In cases where the Company has not received assurances from non
critical third parties that their systems are year 2000 ready, it is
initiating further mail or phone correspondence. The Company also
has surveyed its internal IT and non-IT systems and embedded
operating systems to evaluate and prioritize those which are not
year 2000 ready. The Company has completed remediation and testing
of approximately 97% of its internal IT and non-IT systems, and
expects the Company's remaining IT systems to be remediated and
tested by April 30, 1999.
Costs
The Company has utilized existing resources and has not
incurred any significant costs to evaluate or remediate year 2000
issues to date. The Company does not utilize older mainframe
computer technology in any of its internal IT systems. In addition,
most of its hardware and software were acquired within the last few
years, and many functions are operated by third parties or the
government. Because of this, the Company believes that the cost to
modify its own non-year 2000 ready systems or applications will not
have a material effect on its financial position or the results of
its operations.
Risks
The Company's year 2000 compliance efforts are heavily
dependent on year 2000 compliance by governmental agencies, United,
CRS vendors and other critical vendors and suppliers. The failure
of any one of these mission critical functions (which the Company
believes to be the most likely worst case scenario), such as a shut-
down of the air traffic control system, could result in the
reduction or suspension of the Company's operations and could have a
material adverse effect on the
Company's financial position and results of its operations. The
failure of other systems could cause disruptions in the Company's
flight operations, service delivery and/or cash flow. Until it has
fully completed its evaluation of all internal IT and non-IT
systems, the Company cannot accurately estimate all risks of its
Year 2000 issue. The Company may identify internal systems that
present a risk of Year 2000 related disruption. Any such disruption
could have a material adverse effect upon the Company's financial
condition and results of operations.
<PAGE 33>
Contingency Plans
The Company is in the process of developing year 2000
contingency plans. The Company intends to closely monitor the year
2000 compliance efforts of the third parties upon which it is
heavily reliant and its own internal remediation efforts. While
certain of the Company's systems could be handled manually, under
certain scenarios the Company may not be able to operate in the
absence of certain systems, in which cases the Company would need to
reduce or suspend operations until such systems were restored to
operational status. Any such reduction or suspension could have a
material adverse effect upon the Company's financial condition and
results of operations.
Recent Accounting Pronouncements
The American Institute of Certified Public Accountants
issued Statement of Position 98-5 on accounting for start-up costs,
including preoperating costs related to the introduction of new
fleet types by airlines. The new accounting guidelines will take
effect for fiscal years beginning after December 15, 1998. The
Company has previously deferred certain start-up costs related to
the introduction of the RJs and is amortizing such costs to expense
ratably over four years. The Company will be required to expense any
remaining unamortized amounts as of January 1, 1999 as a cumulative
effect of a change in accounting principle. In January 1999, the
Company recorded a charge for the remaining unamortized balance of
approximately $1.5 million associated with preoperating costs.
In June 1998, the FASB issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This
Statement establishes accounting and reporting standards for
derivative instruments and all hedging activities. It requires that
an entity recognize all derivatives as either assets or liabilities
at their fair values. Accounting for changes in the fair value of a
derivative depends on its designation and effectiveness. For
derivatives that qualify as effective hedges, the change in fair
value will have no impact on earnings until the hedged item affects
earnings. For derivatives that are not designated as hedging
instruments, or for the ineffective portion of a hedging instrument,
the change in fair value will affect current period earnings. The
Company will adopt Statement No. 133 during its first quarter of
fiscal 2000 and is currently assessing the impact this statement
will have on interest rate swaps and any future hedging contracts
that may be entered into by the Company.
Item 7A. Quantitative and Qualitative Disclosures about Market
Risk
The Company's principal market risk results from changes
in jet fuel pricing and in interest rates.
For 1999, the Company has hedged its exposure to jet fuel
price fluctuations by entering into jet fuel option contracts for
approximately 40% of its estimated 1999 fuel requirements. The
option contracts are designed to provide protection against sharp
increases in the price of jet fuel. Based on the Company's 1999
projected fuel consumption of 45 million gallons, a one-cent
increase in the average annual price per gallon of jet fuel would
increase the Company's annual aircraft fuel expense by approximately
$366,000.
The Company's exposure to market risk associated with
changes in interest rates relates to the Company's commitment to
acquire regional jets. The Company has entered into put and call
contracts designed to limit the Company's exposure to interest rate
changes until permanent financing is secured upon delivery of the
aircraft. At December 31, 1998 the Company had four swap contracts
outstanding related to the delivery of the next four RJs. A one
percentage point decrease in interest rates from the Company's call
contracts would increase the Company's annual aircraft lease or
ownership costs associated with these contracts by $160,000.
<PAGE 34>
As of March 1, 1999, the Company has commitments to
purchase 28 additional RJ aircraft. The Company expects to finance
this commitment using a combination of debt, leveraged leases and
single entity operating leases. Changes in interest rates will
impact the actual cost to the Company for these transactions in the
future.
The Company does not have significant exposure to changing
interest rates on its long-term debt as the interest rates on such
debt are fixed. Likewise, the Company does not hold long-term
interest sensitive assets and therefore is not exposed to interest
rate fluctuations for its assets. The Company does not purchase or
hold any derivative financial instruments for trading purposes.
<PAGE 35>
Item 8. Consolidated Financial Statements
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
Page
Independent Auditors' Report for the years ended December 36
31, 1997 and 1998
Report of Independent Certified Public Accountants for the 37
year ended December 31, 1996
Consolidated Balance Sheets as of December 31, 1997 and 38
1998
Consolidated Statements of Operations for the years ended 39
December 31, 1996, 1997 and 1998
Consolidated Statements of Stockholders' Equity for the 40
years ended December 31, 1996, 1997 and 1998
Consolidated Statements of Cash Flows for the years ended 41
December 31, 1996, 1997 and 1998
Notes to Consolidated Financial Statements 42
<PAGE 36>
Independent Auditors' Report
The Board of Directors and Stockholders
Atlantic Coast Airlines Holdings, Inc.:
We have audited the accompanying consolidated balance sheets of
Atlantic Coast Airlines Holdings, Inc. and subsidiary as of December
31, 1997 and 1998, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the years then
ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Atlantic Coast Airlines Holdings, Inc. and subsidiary as
of December 31, 1997 and 1998 and the results of their operations
and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
KPMG LLP
Washington, D.C.
January 27, 1999
<PAGE 37>
Report of Independent Certified Public Accountants
Board of Directors and Stockholders
Atlantic Coast Airlines Holdings, Inc.
We have audited the accompanying consolidated statements of income,
stockholders'equity and cash flows
of Atlantic Coast Airlines Holdings, Inc. and subsidiary, as of
December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the results of
operations and the cash flows of Atlantic Coast Airlines Holdings, Inc.
and subsidiary at
December 31, 1996 in conformity with generally accepted accounting
principles.
BDO Seidman, LLP
Washington, D.C.
January 24, 1997, except for Note 18,
The date which is May 29, 1997
<PAGE 38>
<TABLE>
<CAPTION>
(In thousands, except for share data and par values)
December 31, 1997 1998
Assets
Current:
<S> <C> <C>
Cash and cash equivalents $ $
39,167 64,412
Short term investments 10,737 63
Accounts receivable, net 22,321 30,210
Expendable parts and fuel inventory, net 2,477 3,377
Prepaid expenses and other current 2,006 3,910
assets
Deferred tax asset - 2,534
Total current assets 76,708 104,506
Property and equipment at cost, net of
accumulated depreciation and amortization 40,638 88,326
Preoperating costs, net of accumulated 2,004 1,486
amortization
Intangible assets, net of accumulated 2,613 2,382
amortization
Deferred tax asset 688 -
Debt issuance costs, net of accumulated 3,051 3,420
amortization
Aircraft deposits 19,040 21,060
Other assets 4,250 6,446
Total assets $ $
148,992 227,626
Liabilities and Stockholders' Equity
Current:
Current portion of long-term debt $ $
1,851 3,450
Current portion of capital lease 1,730 1,334
obligations
Accounts payable
4,768 5,262
Accrued liabilities
23,331 26,330
Total current liabilities 31,680 36,376
Long-term debt, less current portion 73,855 63,289
Capital lease obligations, less current 2,290 1,446
portion
Deferred tax liability - 6,238
Deferred credits, net 6,362 9,900
Total liabilities 114,187 117,249
Stockholders' equity:
Preferred Stock: $.02 par value per share;
shares authorized - -
5,000,000; no shares issued or outstanding
in 1997 or 1998
Common stock: $.02 par value per share;
shares authorized 15,000,000 in 1997 and
65,000,000 in 1998; shares issued 16,006,514
in 1997 and 20,821,001 in 1998; shares 175 416
outstanding 14,534,014 in 1997 and
19,348,501 in 1998
Class A common stock: nonvoting; par value;
$.02 stated value per share; shares - -
authorized 6,000,000; no shares issued or
outstanding
Additional paid-in capital 40,296 85,215
Less: Common stock in treasury, at cost,
1,472,500 shares in 1997 and in 1998
(17,069) (17,069)
Retained earnings
11,403 41,815
Total Stockholders' Equity 34,805 110,377
Total Liabilities and Stockholders' $ $
Equity 148,992 227,626
Commitments and Contingencies
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE 39>
<TABLE>
<CAPTION>
(In thousands, except for per share data)
Years ended December 31,
1996 1997 1998
Operating revenues:
<S> <C> <C> <C>
Passenger $ $ $
179,370 202,540 285,243
Other 3,114 2,904 4,697
Total operating revenues 182,484 205,444 289,940
Operating expenses:
Salaries and related costs 44,438 49,661 68,135
Aircraft fuel 17,124 17,766 23,978
Aircraft maintenance and materials 16,841 16,860 22,730
Aircraft rentals 29,137 29,570 36,683
Traffic commissions and related fees 28,550 32,667 42,429
Facility rents and landing fees 8,811 10,376 13,475
Depreciation and amortization 2,846 3,566 6,472
Other 14,900 16,035 23,347
Restructuring charges (reversals)
(426) - -
Total operating expenses 162,221 176,501 237,249
Operating income 20,263 28,943 52,691
Other income (expense):
Interest expense
(1,013) (3,450) (4,207)
Interest income 341 1,284
4,145
Debt conversion expense - - (1,410)
Other income (expense), net 17 62 326
Total other expense
(655) (2,104) (1,146)
Income before income tax
provision 19,608 26,839 51,545
Income tax provision 450 12,339 21,133
Net income $19,158 $14,500 $30,412
Income per share:
Basic $1.13 $0.93 $1.68
Diluted $1.08 $0.80 $1.42
Weighted average shares used in
computation: 16,962 15,647 18,128
Basic 17,840 19,512 22,186
Diluted
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE 40>
<TABLE>
<CAPTION>
(In thousands, except
for share data) Common Stock Addit Treasury Stock Retained
------------- ional --------------- Earnings
------------- Paid- -------------- (Deficit)
-- In Shares
Shares Capit Amount
Amount al
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 8,356,411 167 36,774 12,500 (125) (22,255)
1995
Exercise of common 142,499 3 351 - - -
stock options
Tax benefit of stock - - 564 - - -
option exercise
Net Income - - - - - 19,158
Balance December 31, 8,498,910 170 37,689 12,500 (125) (3,097)
1996
Exercise of common 240,597 5 1,250 - - -
stock options
Tax benefit of stock - - 1,357 - - -
option exercise
Purchase of treasury - - - 1,460,000 (16,944) -
stock
Net Income - - - - - 14,500
Balance December 31, 8,739,507 $175 $40,296 $1,472,500 $(17,069) $11,403
1997
Exercise of common 286,011 6 2,473 - - -
stock options
Tax benefit of stock - - 4,239 - - -
option exercise
Amortization of
deferred - - 574 - - -
compensation
Stock split 9,673,901 193 (193) - - -
Conversion of debt 2,121,582 42 37,826 - -
Net Income - - - - - 30,412
Balance December 31, 20,821,001 $416 $85,215 1,472,500 $(17,069) $41,815
1998
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE 41>
<TABLE>
<CAPTION>
(In thousands)
Years ended December 31,
1996 1997 1998
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 19,158 $ 14,500 $ 30,412
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 2,434 3,111 5,829
Amortization of intangibles and 412 455 690
preoperating costs
Provision for uncollectible 387 168 124
accounts receivable
Provision for inventory 50 63 86
obsolescence
Amortization of deferred credits (27) (243) (801)
Amortization of debt issuance - 181 465
costs
Capitalized interest, net - - (1,640)
Deferred tax (benefit) provision (1,640) 2,452 4,392
Net loss on disposal of fixed 1 450 247
assets
Amortization of debt discount and 46 76 70
finance costs
Debt conversion expense - - 1,410
Deferred compensation - - 574
Changes in operating assets and
liabilities:
Accounts receivable (1,741) (5,829) (6,077)
Expendable parts and 41 (781) (990)
fuel inventory
Prepaid expenses and (796) 403
other current assets (2,512)
Preoperating costs - (2,057) -
Accounts payable 238 998 423
Accrued liabilities 1,590 7,313 7,028
Net cash provided by 20,153 21,260 39,730
operating activities
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchase of property and equipment (2,128) (26,005) (51,020)
Proceeds from sales of fixed assets - -
1,318
Maturities of short term -
investments (10,737) 10,677
Refund of aircraft deposits - - 120
Payments for aircraft and other (61) (18,447) (832)
deposits
Net cash used in (2,189) (55,189) (39,737)
investing activities
Cash flows from financing activities:
Proceeds from issuance of long-term 486 75,220 29,650
debt
Payments of long-term debt (1,234) (3,241) (2,248)
Payments of capital lease (1,171) (2,258) (2,656)
obligations
Proceeds from receipt of deferred 513 809 96
credits and other
Deferred financing costs (239) (3,215) (2,069)
Payment of convertible preferred (335) - -
stock dividend
Redemption of convertible preferred (3,825) - -
stock
Proceeds from exercise of stock 915 1,255 2,479
options
Purchase of treasury stock - (16,944) -
Net cash (used in) (4,890) 51,626 25,252
provided by financing activities
Net increase in cash and cash 13,074 17,697 25,245
equivalents
Cash and cash equivalents, beginning 8,396 21,470 39,167
of year
Cash and cash equivalents, end of year $ 21,470 $ 39,167 $ 64,412
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE 42>
1. Summary of (a)
Accounting Basis of Presentation
Policies
The accompanying consolidated financial
statements include the accounts of Atlantic Coast
Airlines Holdings, Inc. ("ACAI") and its wholly-
owned subsidiary, Atlantic Coast Airlines
("ACA"), together, (the "Company"). All
significant intercompany accounts and
transactions have been eliminated in
consolidation. As of December 31, 1998, the
Company operated in the air transportation
industry providing scheduled service for
passengers to 53 destinations in 24 states in the
Eastern and Midwestern United States. All of the
Company's flights are currently operated under a
code sharing agreement with United Airlines, Inc.
("United") and are identified as United Express
flights in computer reservation systems.
(b)Cash, Cash Equivalents and Short-Term Investments
The Company considers investments with an
original maturity of three months or less when
purchased to be cash equivalents. Investments
with an original maturity greater than three
months and less than one year are considered
short-term investments. All short-term
investments are considered to be available for
sale. Due to the short maturities associated
with the Company's investments, the amortized
cost approximates fair market value.
Accordingly, no adjustment has been made to
record unrealized holding gains and losses.
(c)Airline Revenues
Passenger fares and cargo revenues are recorded
as operating revenues at the time transportation
is provided. Substantially all of the Company's
passenger tickets are sold by other air
carriers. The value of unused passenger tickets
sold by the Company, which is minimal, is
included in current liabilities. The Company
participates in United's Mileage Plus frequent
flyer program. The Company does not accrue for
incremental costs for mileage accumulation
relating to this program because the Company
believes such costs are immaterial. Incremental
costs for awards redeemed on the Company's
flights are expensed as incurred.
(d)Accounts Receivable
Accounts receivable are stated net of allowances
for uncollectible accounts of approximately
<PAGE 43>
$269,000 and $364,000 at December 31, 1997 and
1998, respectively. Amounts charged to costs and
expenses for uncollectible accounts in 1996, 1997
and 1998 were $387,000, $168,000 and $124,000,
respectively. Write-off of accounts receivable
were $650,000, $186,000 and $29,000 in 1996, 1997
and 1998, respectively. Accounts receivable
included approximately $700,000 and $3.6 million
related to manufacturers credits to be applied
towards future spare parts purchases and RJ pilot
training expenses for the years ended December
31, 1997 and 1998, respectively.
(e)Concentrations of Credit Risk
The Company provides commercial air
transportation in the Eastern and Midwestern
United States. Substantially all of the Company's
passenger tickets are sold by other air carriers.
The Company has a significant concentration of
its accounts receivable with other air carriers
with no collateral. At December 31, 1997 and
1998, accounts receivable from air carriers
totaled approximately $18.7 million and $24.4
million, respectively. Such accounts receivable
serve as collateral to a financial institution in
connection with the Company's line of credit
arrangement. (See note 4). Of the total amount,
approximately $14.8 million and $20.8 million
at December 31, 1997 and 1998, respectively,
were due from United. Historically, accounts
receivable losses have been insignificant.
(f)Risks and Uncertainties
The airline industry is highly competitive and
volatile. The Company competes primarily with
other air carriers and, particularly with
respect to its shorter flights, with ground
transportation. Airlines primarily compete on
the basis of pricing, scheduling and type of
equipment. The Company's operations are
primarily dependent upon business-related travel
and are not subject to wide seasonal
fluctuation. However, some seasonal decline does
occur during portions of the winter months due
to lesser demand. The ability of the Company to
compete with ground transportation and other air
carriers depends upon public acceptance of its
aircraft and the provision of convenient,
frequent and reliable service to its markets at
reasonable rates.
The Company operates under code-sharing and
other marketing agreements with United, which
expire on March 31, 2009, unless earlier
terminated by United (the "Agreements"). Prior
to March 31, 2004, United may terminate the
Agreements at any time if the Company fails to
maintain certain performance standards, and may
terminate without cause after March 31, 2004 by
providing one year's notice to the Company. If
<PAGE 44>
by January 2, 2001 United has not given the
Company the abiltiy to operate regional jets of
44 seats or less seating capacity as United
Express, in addition to its allocation of 50
seat regional jets, the Company may terminate
the Agreements as of March 31, 2004. The Company
would be required to provide notice of
termination prior to January 2, 2002, which
notice would be void if United ultimately grants
such authority prior to January 2, 2002. Under
the terms of the Agreements, the Company pays
United monthly fees based on the total number of
revenue passengers boarded by the Company on its
flights for the month. The fee per passenger is
subject to periodic increases during the
duration of the ten year extension period. The
agreement allows the Company to operate under
United's colors, utilize the "United Express"
name and identify its flights using United's
designator code. The Company believes that its
relationship with United substantially enhances
its ability to compete for passengers. The loss
of the Company's affiliation with United could
have a material adverse effect on the Company's
business.
The Agreements require the Company to obtain
United's consent to operate service between city
pairs as "United Express". If the Company
experiences net operating expenses that exceed
revenues for three consecutive months on any
required route, the Company may withdraw from
that route if United and the Company are unable
to negotiate an alternative mutually acceptable
level of service for that route. The Agreements
also require the Company to obtain United's
approval if it chooses to enter into code-
sharing arrangements with other carriers, but do
not prohibit United from competing, or from
entering into agreements with other airlines who
would compete, on routes served by the Company.
The Agreements may be canceled if the Company
fails to meet certain financial tests or
performance standards or fails to maintain
certain minimum flight frequency levels.
The Company's pilots are represented by the
Airline Pilots Association ("ALPA"), its flight
attendants by the Association of Flight
Attendants ("AFA"), and its mechanics by the
Aircraft Mechanics Fraternal Association
("AMFA").
The ALPA collective bargaining agreement was
amended on February 26, 1997 and becomes
amendable again in February 2000. The current
contract modified work rules to allow more
flexibility, includes regional jet pay rates,
and transfers pilots into the Company's employee
benefit plans.
The AMFA was certified as the collective
bargaining representative elected by mechanics
and related employees of the Company in 1994.
On June 22, 1998, the Company's mechanics
ratified an initial four year contract. The new
contract includes a pay scale comparable to the
regional airline industry and a one-time signing
bonus, and allows the mechanics to participate
in the Company's employee benefit plans.
<PAGE 45>
The Company's contract with the AFA became
amendable on April 30, 1997. An agreement was
negotiated and agreed to between the Company and
AFA during 1998, and was ratified by the
Company's flight attendants on October 11, 1998.
The new agreement is for a four year duration
and provides for a higher starting pay rate and
a pay scale and per diem rate comparable to the
regional airline industry.
The Company believes that the wage rates and
benefits for other employee groups are
comparable to similar groups at other regional
airlines. The Company is unaware of significant
organizing activities by labor unions among
other non-union employees at this time.
(g)Use of Estimates
The preparation of financial statements in
accordance with generally accepted accounting
principles requires management to make certain
estimates and assumptions regarding valuation of
assets, recognition of liabilities for costs such
as aircraft maintenance, differences in timing of
air traffic billings from United and other
airlines, operating revenues and expenses during
the period and disclosure of contingent assets
and liabilities at the date of the consolidated
financial statements. Actual results could
differ from those estimated.
(h)Expendable Parts
Expendable parts and supplies are stated at the
lower of cost or market, less an allowance for
obsolescence of $232,600 and $318,000 as of
December 31, 1997 and 1998, respectively.
Expendable parts and supplies are charged to
expense as they are used. Amounts charged to
costs and expenses for obsolescence in 1996, 1997
and 1998 were $49,950, $62,652 and $86,000,
respectively.
(i)Property and Equipment
Property and equipment are stated at cost.
Depreciation is computed on the straight-line
method over the estimated useful lives of the
related assets which range from five to sixteen
and one half years. Capital leases and leasehold
improvements are amortized over the remaining
life of the lease. Amortization of capital leases
and leasehold improvements is included in
depreciation expense.
<PAGE 46>
The Company periodically evaluates whether events
and circumstances have occurred which may impair
the estimated useful life or the recoverability
of the remaining balance of its long-lived
assets. If such events or circumstances were to
indicate that the carrying amount of these assets
would not be recoverable, the Company would
estimate the future cash flows expected to result
from the use of the assets and their eventual
disposition. If the sum of the expected future
cash flows (undiscounted and without interest
charges) is less than the carrying amount of the
asset, an impairment loss would be recognized by
the Company.
(j)Preoperating Costs
Preoperating costs represent the cost of
integrating new types of aircraft. Such costs,
which consist primarily of flight crew training
and aircraft ownership related costs, are
deferred and amortized over a period of four
years on a straight-line basis.
During 1997 the Company capitalized approximately
$2.1 million of these costs related to the
introduction of the regional jet ("RJ") into the
Company's fleet. Accumulated amortization of
preoperating costs at December 31, 1997 and 1998
were $53,000 and $571,000, respectively. In
1997, the J-41 preoperating costs were completely
amortized. In 1999, the Company will write-off
the remaining unamortized preoperating costs
balance (See Note 16).
(k)Intangible Assets
Goodwill of approximately $3.2 million,
representing the excess of cost above the fair
value of net assets acquired in the acquisition
of ACA, is being amortized by the straight-line
method over twenty years. The primary financial
indicator used by the Company to assess the
recoverability of its goodwill is undiscounted
future cash flows from operations. The amount of
impairment, if any, is measured based on
projected future cash flows using a discount rate
reflecting the Company's average cost of funds.
Costs incurred to acquire slots are being
amortized by the straight-line method over twenty
years. Accumulated amortization of intangible
assets at December 31, 1997 and 1998 was $1.1
million and $1.3 million, respectively.
(l)Maintenance
The Company's maintenance accounting policy is a
combination of expensing events as incurred and
accruing for certain maintenance events. For the
J-41 and J-32 aircraft, the Company accrues for
airframe components and certain engine repair
costs on a per flight hour basis. For the RJ
<PAGE 47>
aircraft, the Company accrues for the replacement
of major engine life limited parts on a per cycle
basis and for APU repairs on a per APU hour
basis. All other maintenance costs are expensed
as incurred.
(m)Deferred Credits
The Company accounts for incentives provided by
the aircraft manufacturers as deferred credits
for leased aircraft. These credits are amortized
on a straight-line basis as a reduction to lease
expense over the respective lease term. The
incentives are credits that may be used to
purchase spare parts, pay for pilot training
expenses, satisfy aircraft return conditions or
be applied against future rental payments.
(n)Income Taxes
The Company accounts for income taxes using the
asset and liability method. Under the asset and
liability method, deferred tax assets and
liabilities are recognized for the future tax
consequences attributable to differences between
the financial statement carrying amounts for
existing assets and liabilities and their
respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates
expected to apply to taxable income in future
years in which those temporary differences are
expected to be recovered or settled.
(o)Stock-Based Compensation
The Company accounts for its stock-based
compensation plans using the intrinsic value
method prescribed under Accounting Principles
Board (APB) No. 25. Under these principles, the
Company records compensation expense for stock
options and awards only if the exercise price is
less than the fair market value of the stock on
the measurement date.
<PAGE 48>
(p)Income Per Share
Basic income per share is computed by dividing
net income, after deducting any preferred
dividend requirements, by the weighted average
number of common shares outstanding. Diluted
income per share is computed by dividing net
income, after deducting any preferred dividend
requirements, by the weighted average number of
common shares outstanding and common stock
equivalents, which consist of shares subject to
stock options computed using the treasury stock
method. In addition, dilutive convertible
securities are included in the denominator while
interest, on convertible debt, net of tax, is
added back to the numerator.
In 1996, the dilutive effect of convertible
preferred stock is included in the calculation
of diluted income per share. In 1997, the
calculation included the dilutive effect of new
convertible debt, but not the convertible
preferred stock as it was redeemed in 1996. In
1998, the calculation included the dilutive
effect of the convertible debt issued in 1997
<PAGE 49>
A reconciliation of the numerator and denominator
used in computing income per share is as follows
(in thousands, except per share amounts):
<TABLE>
<CAPTION>
1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Basic Diluted Basic Diluted Basic Diluted
Share calculation:
Average number of common
shares 16,962 16,962 15,647 15,647 18,128 18,128
Outstanding
Incremental
shares due to - 622 - 701 - 876
assumed exercise of
options
Incremental shares
due to assumed - 256 - - - -
conversion of
preferred stock
Incremental shares
due to assumed - - - 3,164 - 3,182
conversion of
convertible debt
Weighted average
common shares 16,962 17,840 15,647 19,512 18,128 22,186
Outstanding
Adjustments to net
income:
Net income $19,158 $19,158 $14,500 $14,500 $30,412 $30,412
Preferred dividend
requirements based
on average number (64) - - - - -
of preferred shares
Interest expense on - - - 1,187 - 1,202
convertible debt,
net of tax
Net income available
to common
shareholders $19,094 $19,158 $14,500 $15,687 $30,412 $31,614
Net income per
share $1.13 $1.08 $0.93 $0.80 $1.68 $1.42
</TABLE>
(q)Reclassifications
Certain prior year amounts as previously
reported have been reclassified to conform to
the current year presentation.
(r)Interest rate hedges
The Company has periodically used swaps to hedge
the effects of fluctuations in interest rates
associated with aircraft financings. These
transactions meet the requirements for current
hedge accounting. Gains and losses resulting
from the interest rate swap contracts are
deferred until the contracts are settled and
then amortized over the aircraft lease term or
capitalized as part of acquisition cost, if
purchased, and depreciated over the life of the
aircraft.
<PAGE 50>
(s)Segment Information
In 1998, the Company adopted the provisions of
Financial Accounting Standards Board Statement
No. 131, "Disclosure about Segments of an
Enterprise and Related Information (SFAS 131).
SFAS 131 establishes standards for reporting
information about operating segments and related
disclosures about products and services.
Operating segments are defined as components of
an enterprise about which separate financial
information is available that is regularly
evaluated by chief operating decision makers in
deciding how to allocate resources or in
assessing performance.
The Company's chief decision makers assess
operating and financial performance based on the
consolidated results of the Company and
accordingly, no further disclosure of segment
information is considered necessary.
Substantially all of the Company's revenues and
operating activity relate to passenger airline
transportation service. The Company does not
have any international service.
2. Property Property and equipment consist of
and the following:
Equipment
<TABLE>
<CAPTION>
(in thousands) 1997 1998
December 31,
<S> <C> <C>
Owned aircraft and improvements $ $
18,916 58,912
Improvements to leased aircraft 3,521 4,949
Flight equipment, primarily 18,456 27,420
rotable spare parts
Maintenance and ground equipment 4,166 5,850
Computer hardware and software 2,029 2,408
Furniture and fixtures 445 753
Leasehold improvements 1,831 2,144
49,364 102,436
Less: Accumulated depreciation 8,726 14,110
and amortization
$ 40,638 $88,326
</TABLE>
<PAGE 51>
3. Accrued Accrued liabilities consist of the
Liabilities following:
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
December 31,
1997 1998
Payroll and employee benefits $ 6,914 $ 9,597
Air traffic liability 1,404 516
Interest 1,352 1,061
Aircraft rents 1,644 2,118
Passenger related expenses 2,441 3,233
Maintenance costs 3,589 3,866
Fuel 977 2,260
Taxes payable 2,704 -
Other 2,306 3,679
$23,331 $26,330
</TABLE>
4. Debt On November 1, 1995, the Company entered into a
line of credit agreement with a financial
institution which, based on a specified percentage
of outstanding interline receivables (financing
base), provides for borrowings of up to $20
million. The line of credit is collateralized by
accounts receivable and general intangibles and
will expire on September 30, 2000, or upon
termination of the United Express marketing
agreement, whichever is sooner. Interest is
payable monthly at an annual rate of prime plus 1%
(9% at December 31, 1998). The Company has pledged
approximately $5.8 million of this line as
collateral to secure letters of credit issued on
behalf of the Company. At December 31, 1998, the
Company's remaining available borrowing limit was
approximately $7.5 million. There was no balance
outstanding under the line of credit at December
31, 1997 or December 31, 1998. On February 8, 1999,
the Company replaced the $20 million line of credit
agreement with a new line of credit with two
financial institutions which provides for
borrowings up to $35 million. See footnote 15 for
additional information regarding this matter.
<PAGE 52>
<TABLE>
Long-term debt consists of the following:
(in thousands)
December 31, 1997 1998
<S> <C> <C>
Convertible subordinated notes, principal
due July 1, 2004, interest payable in
semi-annual installments on the $57,500 $19,820
outstanding principal with interest at
7%, unsecured.
Equipment Notes associated with Pass
Through Trust Certificates, due
January 1, 2008 and January 1,
2010, principal payable annually through
January 1, 2006 and semi-annually 16,431 15,388
thereafter through maturity, interest
payable semi-annually at 7.49%
throughout term of notes, collateralized
by J-41 aircraft.
Notes payable to supplier, due December
1999, principal and interest payable in
monthly installments of $14,027, with 331 161
interest at 8%, collateralized by flight
equipment, spare engines and parts, and
ground equipment.
Notes payable to supplier, due between May
15, 2000 and January 15, 2001, principal 1,225 1,839
payable monthly with interest of 6.74%
and 7.86%, unsecured.
Notes payable to institutional lenders, due
between March 29 and May 19, 2015,
principal payable semiannually with - 25,556
interest of 5.65% and 5.88% through
maturity, collateralized by RJ aircraft.
Note payable to institutional lender,
principal payable monthly with interest 217 -
at 6.61%, unsecured.
Note payable to institutional lender, due
October 2, 2006, principal payable - 3,975
semiannually with interest at 6.56%,
collateralized by J41 aircraft.
Other 2 -
Total 75,706 66,739
Less: Current Portion 1,851 3,450
$73,855 $63,289
</TABLE>
In September 1997, approximately $112 million of
pass through certificates were issued in a private
placement by separate pass through trusts, which
used the proceeds to purchase equipment notes (the
"Equipment Notes") issued in connection with (i)
leveraged lease transactions relating to four J-41s
and six RJs (delivered or expected to be delivered),
all of which are leased to the Company (the "Leased
Aircraft"), and (ii) the financing of four J-41s
owned by the Company (the "Owned Aircraft"). The
Equipment Notes issued with respect to the Owned
Aircraft are direct obligations of ACA, guaranteed
by ACAI and are included as debt obligations in the
accompanying financial statements. These borrowings
carry a weighted average interest rate of
approximately 7.49% with three Equipment Notes
maturing on January 1, 2008, and one Equipment Note
maturing January 1, 2010. The Equipment Notes
issued with respect to the Leased Aircraft are
neither debt obligations of ACA nor guaranteed by
ACAI.
<PAGE 53>
With respect to one RJ leased aircraft, at December
31, 1997 (the "Prefunded Aircraft"), the proceeds
from the sale of the Equipment Notes were deposited
into collateral accounts, to be released at the
closing of a leveraged lease related to the
Prefunded Aircraft. In January 1998, an equity
investor purchased this aircraft and entered into a
leveraged lease with the Company and the collateral
accounts were released.
In July 1997, the Company issued $57.5 million
aggregate principal amount of 7% Convertible
Subordinated Notes due July 1, 2004 ("the Notes").
The Notes are convertible into 6.4 million shares
of Common Stock, $9 per share, (after giving effect
to the stock split on May 15, 1998) subject to
certain adjustments. Interest on the Notes is
payable on April 1 and October 1 of each year. The
Notes are not redeemable by the Company until July
1, 2000. Thereafter, the Notes will be redeemable,
at any time, on at least 15 days notice at the
option of the Company, in whole or in part, at the
redemption prices set forth in the Indenture dated
July 2, 1997, in each case, together with accrued
interest. The Notes are unsecured and subordinated
in right of payment in full to all existing and
future Senior Indebtedness as defined in the
Indenture. The holders of the Notes have certain
registration rights with respect to the Notes and
the underlying Common Stock.
In January 1998, approximately $5.9 million of the
Notes were converted, pursuant to their original
terms, into 660,826 shares of Common Stock. From
March 20, 1998 to April 8, 1998, the Company
temporarily reduced the conversion price from $9 to
$8.86 for holders of the Notes. During this
period, $31.7 million of the Notes converted into
approximately 3.6 million shares of Common Stock.
As a result of this temporary price reduction, the
Company recorded a non-cash, non-operating charge
to earnings during the second quarter of 1998 of
$1.4 million representing the fair value of the
additional shares distributed upon conversion.
On April 1, 1997, the Company executed an $11
million short-term promissory note for deposits
related to the acquisition of RJs. The promissory
note was paid in full on July 2, 1997 from the
proceeds of the Notes issued on July 2, 1997 as
described above. During 1997, the Company retired
$3.1 million of certain high interest rate debt
with the proceeds of the Notes.
On September 29, and November 19, 1998 the Company
issued long-term promissory notes for $12.7 million
and $12.9 million respectively, for the acquisition
of two new RJ aircraft. The promissory notes
mature on March 29, 2015 and May 19, 2015
respectively, and are collateralized by the RJ
aircraft delivered, with principal and interest at
rates of 5.65% and 5.88%, payable on a semi-annual
basis through maturity.
<PAGE 54>
On September 29, 1998, the Company issued a long-
term promissory note for approximately $4 million
for the acquisition of one Jetstream 41 ("J-41)
aircraft that was delivered in December 1997 under
an interim manufacturer financing arrangement. The
promissory note matures on October 2, 2006 and is
collateralized by the J-41 aircraft delivered with
principal and interest, at a rate of 6.56%, payable
semiannually through maturity.
As of December 31, 1998, maturities of long-term
debt are as follows:
(in thousands)
1999 $ 3,450
2000 3,439
2001 2,575
2002 2,742
2003 2,865
Thereafter 51,668
$66,739
The Company has various financial covenant
requirements associated with its debt and United
marketing agreements. These covenants require
meeting certain financial ratio tests, including
tangible net worth, net earnings, current ratio and
debt service levels.
5. Obligations The Company leases certain equipment for
Under noncancellable terms of more than one year. The net
Capital book value of the equipment under capital leases at
Leases December 31, 1997 and 1998, is $4.5 million and $3.0
million, respectively. The leases were capitalized
at the present value of the lease payments. The
weighted average interest rate for these leases is
approximately 8 %.
At December 31, 1998, the future minimum payments, by
year and in the aggregate, together with the present
value of the net minimum lease payments, are as
follows:
<PAGE 55>
(in thousands)
Year Ending December 31,
1999 $ 1,501
2000 686
2001 453
2002 358
2003 161
Future minimum lease payments 3,159
Amount representing interest 379
Present value of minimum lease 2,780
payments
Less: Current maturities 1,334
$ 1,446
6. Operating Future minimum lease payments under noncancellable
Leases operating leases at December 31, 1998 are as follows:
(in thousands)
<TABLE>
<CAPTION>
Year ending December 31, Aircraft
Other Total
<S> <C> <C> <C>
1999 $42,322 $2,789 $45,111
2000 42,057 2,640 44,697
2001 40,684 2,498 43,182
2002 39,992 2,060 42,052
2003 38,257 2,078 40,335
Thereafter 259,880 29,108 288,988
Total minimum $463,192 $41,173 $504,365
lease payments
</TABLE>
Certain of the Company's leases require aircraft to
be in a specified maintenance condition at lease
termination or upon return of the aircraft.
The Company's lease agreements generally provide that
the Company pay taxes, maintenance, insurance and
other operating expenses applicable to leased assets.
Operating lease expense related to aircraft was $33.8
million; $35.7 million; and $37.5 million for the
years ended December 31, 1996, 1997 and 1998,
respectively.
7. Stockholders' Stock Split
Equity
On April 14, 1998, the Company declared a 2-for-1
stock split payable as a stock dividend on May 15,
1998. The stock dividend was contingent on
shareholder approval to increase the number of
authorized Common Shares from 15,000,000 to
65,000,000 shares. Shareholder approval was obtained
on May 5, 1998. The effect of this stock split is
reflected in the calculation of income per share and
in the stock option table presented below as of and
for the years ended December 31, 1996, 1997 and 1998,
respectively.
<PAGE 56>
Stock Option Plans
The Company has two nonqualified stock option plans
which provide for the issuance of options to purchase
common stock of the Company to certain employees and
directors of the Company. Under the plans, options
are granted by the compensation committee of the
board of directors and vest over a one, three or five
year period, commencing one year after the date of
the grant.
In 1998, the Company's shareholders approved the
addition of one million shares to the Company's stock
based compensation plans. The Company has reserved
4,000,000 shares of common stock for issuance upon
the exercise of options and stock awards granted
under the plans.
A summary of the status of the Company's stock
options awarded as of December 31, 1996, 1997 and
1998 and changes during the periods ending on those
dates is presented below:
1996 1997 1998
<TABLE> Weighted- Weighted- Weighted-
<CAPTION> average average average
Shares Shares Shares
exercise exercise exercise
price price price
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at 1,459,116 $1.43 1,916,784 $3.16 2056922 $5.14
beginning of year
Granted 791,000 $5.71 684,000 $8.91 539000 $19.42
Exercised 284,998 $1.24 481,194 $2.60 572023 $4.33
Canceled 48,334 $3.92 62,668 $5.45 260000 $17.25
Options outstanding at 1,916,784 $3.16 2056922 $5.14 1763899 $7.97
end of year
Options exercisable at 1,062,887 $1.67 916,568 $2.27 872,878 $3.88
year-end
Options available for 1,649,514 1,028,182 649,182
granting at year end
Weighted-average fair
value of options $4.25 $6.49 $11.88
granted during the
year
</TABLE>
The Company awarded 100,000 shares of restricted
stock to certain employees during 1998. These shares
vest over three years. The Company recognized
$281,000 in compensation expense associated with
these awards and $293,000 associated with other
stock options awards during 1998. No such expense was
recognized in the years ended 1996 and 1997.
The Company uses the Black Sholes stock option model
to estimate fair value. A risk-free interest rate of
5.25%, 5.8% and 4.73% for 1996, 1997 and 1998,
respectively, a volatility rate of 71%, 50% and 55%
for 1996, 1997 and 1998, respectively, with an
expected life of 7.5 years for 1996 and 1997 and 6.5
years for 1998, was assumed in estimating the fair
value. No dividend rate was assumed for any of the
years.
<PAGE 57>
The following table summarizes information about
stock options outstanding at December 31, 1998:
<TABLE>
<CAPTION
Options Outstanding Options Exercisable
Weighted-
Number average Weighted- Number Weighted-
outstand remainin average exercisa average
Range of exercise ing at g exercise ble exercise
price 12/31/98 contract price 12/31/98 price
ual life
(years)
<S> <C> <C> <C> <C> <C>
$0.00 - $3.23 527,666 3.9 $ 1.13 527,666 $ 1.13
$3.23 - $6.45 290,113 7.4 $ 5.20 134,114 $ 4.82
$6.45 - $9.68 415,181 8.2 $ 7.63 108,502 $ 7.83
$9.68 - $12.90 246,939 8.8 $11.08 76,930 $11.05
$12.90 - $16.13 86,000 9.7 $14.43 1,666 $15.25
$16.13 - $19.35 68,000 9.1 $17.25 24,000 $17.25
$19.35 - $22.58 1,000 9.8 $20.00 - $ 0.00
$22.58 - $29.03 49,500 9.9 $24.61 - $ 0.00
$29.03 - $32.25 79,500 9.4 $30.24 - $ 0.00
1,763,899 7.1 $ 7.97 872,878 $ 3.88
</TABLE>
The following summarizes the pro forma effects
assuming compensation for such awards had been
recorded based upon the estimated fair value. The
proforma information disclosed below does not include
the impact of awards made prior to January 1, 1995
(in thousands, except per share data):
<PAGE 58>
<TABLE>
<CAPTION>
1996 1997 1998
As Pro As Pro As Pro
Reporte Forma Report Forma Reporte Forma
d ed d
<S> <C> <C> <C> <C> <C> <C>
Net Income $ $ $ $ $ $
19,158 18,117 14,500 13,436 30,412 27,201
Basic
earnings $ $ $ $ $ $
per share 1.13 1.07 0.93 0.86 1.68 1.50
Diluted
earnings $ $ $ $ $ $
per share 1.08 1.02 0.80 0.75 1.42 1.28
</TABLE>
Preferred Stock
The Board of Directors of the Company is authorized
to provide for the issuance by the Company of
preferred stock in one or more series and to fix the
rights, preferences, privileges, qualifications,
limitations and restrictions thereof, including,
without limitation, dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption
or repurchase, redemption or repurchase prices,
limitations or restrictions thereon, liquidation
preferences and the number of shares constituting any
series or the designation of such series, without any
further vote or action by the stockholders.
8. Employee Employee Stock Ownership Plan
Benefit
Plans The Company established an Employee Stock Ownership
Plan (the "ESOP") covering substantially all
employees. For each of the years 1992 through 1995,
the Company made contributions to the ESOP which were
used in part to make loan and interest payments. No
contributions were made to the ESOP in 1996, 1997 or
1998. Shares of common stock acquired by the ESOP
are to be allocated to each employee based on the
employee's annual compensation. The number of shares
allocated to the plan at December 31, 1998 was
1,110,754.
Effective June 1, 1998, the Board of Directors of the
Company voted to terminate the Plan. On March 15,
1999, the Internal Revenue Service issued a
determination letter notifying the Company that the
termination of the Plan does not adversely affect the
Plan's qualification for federal tax purposes. Upon
termination of the Plan, a participant becomes 100%
vested in his or her account. The interest of each
participant will be distributed to such participant
or his or her beneficiary at the time prescribed by
the Plan terms. As a result of this termination, no
new participants were eligible to join the Plan
during 1998.
<PAGE 59>
401K Plan
Effective January 1, 1992, the Company adopted a
401(k) Plan (the "Plan"). The Plan covers
substantially all full-time employees who meet the
Plan's eligibility requirements. Employees may elect
a salary reduction contribution up to 17% through
June 30, 1998 and 15% thereafter of their annual
compensation not to exceed the maximum amount allowed
by the Internal Revenue Service.
Effective October 1, 1994, the Plan was amended to
require the Company to make contributions to the Plan
for eligible pilots in exchange for certain
concessions. These contributions are in excess of
any discretionary contributions made for the pilots
under the original terms of the plan. These
contributions are 100% vested and equal to 3% of the
first $15,000 of each eligible pilot's compensation
plus 2% of compensation in excess of $15,000. The
Company's contributions for the pilots shall not
exceed 15% of the Company's adjusted net income
before extraordinary items for such plan year. The
Company's obligations to make contributions with
respect to all plan years in the aggregate is limited
to $2.5 million. Contribution expense was
approximately $370,000, $445,000, and $552,000 for
1996, 1997 and 1998, respectively.
Effective June 1, 1995 and October 1, 1998, the Plan
was amended to allow the Company to make a
discretionary matching contribution for non-union
employees, pilots and mechanics equal to 25% of
salary contributions up to 4% of total compensation.
The Company's matching contribution, if any, vests
ratably over five years. Contribution expense was
approximately $29,000, $133,000 and $235,000 for
1996, 1997 and 1998, respectively. Effective April
1, 1997, all eligible pilots were included under the
terms of the Plan.
Profit Sharing Programs
The Company has profit sharing programs which result
in periodic payments to all eligible employees.
Profit sharing compensation, which is based on
attainment of certain performance and financial
goals, was approximately $2.6 million, $3.6 million,
and $3.9 million in 1996, 1997 and 1998,
respectively.
<PAGE 60>
9. Income The provision (benefit) for income taxes includes the
following components:
Taxes <TABLE>
<CAPTION>
(in thousands)
Year Ended December 31,
1996 1997 1998
Federal:
<S> <C> <C> <C>
Current $ $ $
1,699 7,342 13,580
Deferred (1,344) 1,907 3,591
Total federal 355 9,249 17,171
provision
State:
Current 391 2,545 3,161
Deferred (296) 545 801
Total state provision 95 3,090 3,962
Total provision $ 450 $ 12,339 $ 21,133
</TABLE>
A reconciliation of income tax expense at the
applicable federal statutory income tax rate of 35%
to the tax provision recorded is as follows:
<TABLE>
<CAPTION>
(in thousands)
Year ended December
31, 1996 1997 1998
<S> <C> <C> <C>
Income tax expense
at statutory rate $ 6,863 $ 9,394 $18,041
Increase (decrease)
in tax expense due to:
Change in
valuation (1,640) - -
allowance
Utilization of
net operating (5,811) - -
loss
carryforward
Permanent
differences 58 937 517
and other
State income
taxes, net 980 2,008 2,575
of federal
benefit
Income tax expense $ 450 $12,339 $21,133
</TABLE>
Deferred income taxes result from temporary
differences which are the result of provisions of the
tax laws that either require or permit certain items
of income or expense to be reported for tax purposes
in different periods than for financial reporting
purposes.
<PAGE 61>
The following is a summary of the Company's deferred
income taxes as of December 31, 1997, and 1998:
<TABLE>
<CAPTION>
(in thousands)
December 31,
1997 1998
Deferred tax assets:
<S> <C> <C>
Engine maintenance $ 1,489 $ 1,268
accrual
Intangible assets 1,139 934
Air traffic liability 746 503
Allowance for bad debts 150 146
Deferred aircraft rent - 530
Deferred credits 1,940 2,335
Accrued vacation 392 534
Other 323 582
Total deferred tax 6,179 6,832
assets
Deferred tax liabilities:
Depreciation and (4,614) (9,756)
amortization
Preoperating costs (828) (596)
Other (49) (184)
Total deferred tax (5,491) (10,536)
liabilities
Net deferred income tax $ 688 $(3,704)
assets (liabilities)
</TABLE>
No valuation allowance was established in either
1997 or 1998 as the Company believes it is more
likely than not that the deferred tax assets can be
realized.
The Tax Reform Act of 1986 enacted an alternative
minimum tax ("AMT") system, generally effective for
taxable years beginning after December 31, 1986.
The Company is not subject to alternative minimum
tax for the year ended December 31, 1998. An AMT
tax credit carryover of approximately $564,000 was
fully utilized in 1997.
10. Aircraft
Commitments
and
As of December 31, 1998, the Company had a total of
Contingencie 29 RJs on order from Bombardier, Inc., and held
s options for 27 additional RJs. Of the remaining firm
aircraft deliveries, nine are scheduled for delivery
in 1999, nine in 2000 and eleven in 2001. The
Company is obligated to purchase and finance
(including leveraged leases) the 29 firm ordered
aircraft at an approximate capital cost of $539
million.
The Company is continually assessing its fleet
requirements, including the feasibility of operating
less than 50-seat regional jets. The Company
requires United's approval for the addition of
regional jet aircraft that exceed its current
allocation.
<PAGE 62>
The Company previously announced that it is
exploring alternatives to accelerate the retirement
of its fleet of 28 leased 19 seat J-32 aircraft.
The Company is assessing plans to target the phase-
out of the J-32 from its United Express operation by
the end of 2001. As of March 1, 1999, the Company
has J-32 operating lease commitments with remaining
lease terms ranging from three to seven years and
related minimum lease payments of approximately $47
million. The Company intends to complete its
analysis of a phase-out plan, including
quantification of any one-time fleet rationalization
charge, during 1999.
Training
The Company has entered into an agreement with Pan
Am International Flight Academy ("PAIFA") whereby
PAIFA will develop a RJ simulator training facility.
The Company has committed to purchase an annual
minimum number of simulator training hours for a
period of ten years at a guaranteed fixed price once
the facility receives Federal Aviation
Administration ("FAA") certification.
At December 31, 1998, the Company's payment
obligations are as follows:
(in thousands)
Year ended December 31,
<TABLE>
<S>
<C>
1999 $ -
2000 1,748
2001 1,331
2002 1,351
2003 1,371
Thereafter 7,457
$13,258
</TABLE>
Derivative Financial Instruments
In July 1997, the Company entered into a series of
put and call contracts having an aggregate notional
amount of $39.8 million. The contracts matured
between March and September 1998. The contracts were
entered into as an interest rate hedge designed to
limit the Company's exposure to interest rate
changes on the anticipated issuance of permanent
financing relating to the delivery of aircraft in
1998. During 1998, the Company settled these
contracts, paying the counterparty approximately
$2.3 million, and is amortizing this cost over the
life of the related aircraft leases or is
depreciating the cost as part of the aircraft
acquisition cost for owned aircraft. On July 2,
1998, the Company entered into additional put and
call contracts having an aggregate notional amount
of $51.8 million to hedge its exposure to interest
rate changes on the anticipated issuance of
permanent financing for six RJ aircraft scheduled
for delivery between October 1998 and April 1999.
<PAGE 63>
In the fourth quarter 1998, the Company settled two
contracts, paying the counterparty approximately
$700,000, and is amortizing this cost over the life
of the related aircraft lease for the leased
aircraft and is depreciating the cost as part of the
aircraft acquisition cost for the owned aircraft.
The Company would have been obligated to pay the
counterparty approximately $1.5 million had the
remaining contracts settled on December 31, 1998.
In September and December 1998, the Company entered
into call option contracts to hedge price changes on
approximately 34,000 barrels of jet fuel per month
during the period from January 1999 to June 1999.
The contracts provide for a premium payment of
approximately $273,000 and set a cap on the average
maximum price equal to 40.625 cents per gallon of
jet fuel excluding taxes and into-plane fees with
the premium and any gains on this contract to be
recognized as a component of fuel expense during the
period in which the Company purchases fuel. In
October and November 1998, the Company entered into
commodity swap transactions to hedge price changes
on approximately 34,000 additional barrels of jet
fuel per month during the period from January 1999
to June 1999. The contracts provide for an average
fixed price of 44.35 cents per gallon of jet fuel
with any gains or losses recognized as a component
of fuel expense during the period in which the
Company purchases fuel. With these transactions, the
Company has hedged approximately 80% of its jet fuel
requirements for the first half of 1999. Had the
commodity swap transactions settled on December 31,
1998, the Company would have incurred approximately
$900,000 in additional fuel expense.
11. The Company wrote off the remaining accruals for
Restructuring restructuring costs of $426,000 as of December 31,
Charges 1996 related to a fleet simplification plan
initiated in 1994. No similar costs were recorded
in 1997 or 1998.
12. Litigation The Company is a party to routine litigation and
FAA proceedings incidental to its business, none of
which is likely to have a material effect on the
Company's financial position or the results of its
operations.
The Company was a party to an action pending in the
United States District Court for the Southern
District of Ohio, Peter J. Ryerson, administrator
of the estate of David Ryerson, v. Atlantic Coast
Airlines, Case No. C2-95-611. In September and
October 1998, this action and all related
litigation was settled, the cost of which was
covered by insurance and was not borne by the
Company.
<PAGE 64>
The Company is also a party to an action pending in
the United States Court of Appeals for the Fourth
Circuit known as Afzal v. Atlantic Coast Airlines,
Inc. (No. 98-1011). This action is an appeal of
the December 1997 decision granted in favor of the
Company in a case claiming wrongful termination of
employment brought in the United States District
Court for the Eastern District of Virginia known as
Afzal v. Atlantic Coast Airlines, Inc. (Civil
Action No. 96-1537-A). The Company does not expect
the outcome of this case to have any material
adverse effect on its financial condition or
results of its operations.
13. Financial In December 1995, the Company adopted Statement of
Financial Accounting Standards No. 107, "Disclosure
Instruments of Fair Value of Financial Instruments" (SFAS 107).
SFAS 107 requires the disclosure of the fair value
of financial instruments; however, this information
does not represent the aggregate net fair value of
the Company. Some of the information used to
determine fair value is subjective and judgmental
in nature; therefore, fair value estimates,
especially for less marketable securities, may
vary. The amounts actually realized or paid upon
settlement or maturity could be significantly
different.
Unless quoted market price indicates otherwise, the
fair values of cash and cash equivalents, short
term investments, accounts receivable and accounts
payable generally approximate market because of the
short maturity of these instruments. The Company
has estimated the fair value of long term debt
based on quoted market prices.
The estimated fair values of the Company's
financial instruments, none of which are held for
trading purposes, are summarized as follows
(brackets denote liability):
<TABLE>
<CAPTION>
(in thousands) December 31, December 31,
1997 1998
Carrying Estimated Carrying Estimated
Amount Fair Amount Fair
Value Value
<S> <C> <C> <C> <C>
Cash and cash
equivalents $39,167 $39,167 $64,412 $64,412
Short-term
investments 10,737 10,737 63 63
Long-term debt (75,706)(120,125) (66,739) (101,975)
See note 10 for information regarding the fair value of
derivative financial instruments.
14. Supplemental disclosures of cash flow
Supplemental information:
Cash Flow Year ended December 31,
(in thousands)
Cash paid during the
Information period for: 1996 1997 1998
- Interest $883 $1,778 $3,665
- Income taxes 1,319 5,767 15,426
<PAGE 65>
The following non cash investing and financial
activities took place in 1996, 1997 and 1998:
In 1996, the Company acquired $1.2 million in
rotable parts, ground equipment, telephone system
upgrades and Director's and Officer's Liability
Insurance under capital lease obligations and by
issuing notes. These purchases were financed by
suppliers and outside lenders.
In 1997, the Company acquired $2.9 million in
rotable parts, spare engines, market planning
software and other fixed assets and expendable
parts under capital lease obligations and through
the use of manufacturers credits. As of December
31, 1997, there was a remaining balance of $700,000
in earned, but unused manufacturer credits which is
reflected in accounts receivable.
In November 1997, the Company received $4.3 million
in additional manufacturers credits pursuant to the
terms of aircraft agreements of which $261,000 was
received in cash by the end of 1997 leaving a
balance of $4.1 million due from the manufacturer
as of December 31, 1997. Such amount has been
classified as other assets.
In September and December 1998, the Company
received $352,000 of manufacturers credits which
were applied against the purchase price of two RJs
purchased in 1998 from the manufacturer. The
credits will be utilized primarily through the
purchase of rotable parts and other fixed assets,
expendable parts, and pilot training.
In 1998, the Company acquired $3.0 million
consisting primarily of rotable parts and other
fixed assets and expendable parts under capital
lease obligations and through the use of
manufacturer credits. As of December 31, 1998,
there was a remaining balance of approximately
$607,000 in earned, but unused manufacturer credits
which is reflected in accounts receivable.
In 1998, the note holders elected to convert $37.8
million of the Company's Notes to common stock
resulting in a recognition of $1.4 million of debt
conversion expense.
In April 1998, the Company declared a 2-for-1 stock
split payable as a stock dividend. Pursuant to
this dividend, $193,000 was transferred from
additional paid-in capital to common stock to
properly maintain the par value per share.
<PAGE 66>
On September 29, and November 19, 1998 the Company
issued long-term promissory notes for $12.7 million
and $12.9 million respectively, for the acquisition
of two new RJ aircraft. The promissory notes
mature on March 29, 2015 and May 19, 2015
respectively, and are collateralized by the RJ
aircraft delivered with principal and interest, at
rates of 5.65% and 5.88%, payable on a semiannual
basis through maturity.
In 1998, the Company capitalized $1.7 million in
interest related to a $15 million deposit with a
manufacturer.
15. SubsequentIn February 1999, the Company entered into an
Events asset-based lending agreement with two financial
institutions that provides the Company with a line
of credit of up to $35 million, depending on the
amount of assigned ticket receivables and the value
of certain rotable spare parts. Borrowings under
the line of credit can provide the Company a source
of working capital until proceeds from ticket
coupons are received. The line is collateralized
by all of the Company's receivables and certain
rotable spare parts. The Company pledged $2.9
million of this line of credit as collateral to
secure letters of credit issued on behalf of the
Company by a financial institution.
In the second quarter of 1998, the Company
announced that the Metropolitan Washington Airport
Authority ("MWAA"), in coordination with the
Company, will build an approximately 69,000 square
foot regional passenger concourse at Washington
Dulles International Airport. The facility is
scheduled to open in May 1999. The new facility
will offer improved passenger amenities and
operational enhancements, and will provide
additional space to support the Company's expanded
operations resulting from the introduction of RJs.
The facility will be designed, financed,
constructed, operated and maintained by MWAA, and
will be leased to the Company. The lease rate will
be determined based upon final selection of funding
methods and rates. MWAA has agreed to fund the
construction through the proceeds of bonds and,
subject to approval by the FAA, passenger facility
charges ("PFC"). In order to obtain the most
favorable permanent financing, the Company agreed
to obtain its own interim financing from a third
party lender to fund a portion of the total program
cost of the regional concourse for approximately
$15 million. MWAA has agreed to replace the
Company's interim financing with the proceeds of
bonds or, if obtained, PFC funds, no later than one
year following the substantial completion date of
the project. If MWAA replaces the interim financing
with PFC funding rather than bond financing, the
Company's lease cost will be significantly lower.
The Company obtained financing for this obligation
from two banks in February 1999 and has borrowed
$4.5 million through March 1, 1999. MWAA has
agreed to reimburse principal borrowings but the
Company will be responsible for all interest costs.
<PAGE 67>
16. Recent The American Institute of Certified Public
Accounting Accountants issued Statement of Position 98-5 on
Pronouncement accounting for start-up costs, including
s preoperating costs related to the introduction of
new fleet types by airlines. The new accounting
guidelines will take effect for fiscal years
beginning after December 15, 1998. The Company has
previously deferred certain start-up costs related
to the introduction of the RJs and is amortizing
such costs to expense ratably over four years. The
Company will be required to expense any remaining
unamortized amounts as of January 1, 1999 as a
cumulative effect of a change in accounting
principle. In January 1999, the Company recorded a
charge for the remaining unamortized balance of
approximately $1.5 million associated with
preoperating costs.
In June 1998, the FASB issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging
Activities." This Statement establishes accounting
and reporting standards for derivative instruments
and all hedging activities. It requires that an
entity recognize all derivatives as either assets or
liabilities at their fair values. Accounting for
changes in the fair value of a derivative depends on
its designation and effectiveness. For derivatives
that qualify as effective hedges, the change in fair
value will have no impact on earnings until the
hedged item affects earnings. For derivatives that
are not designated as hedging instruments, or for
the ineffective portion of a hedging instrument, the
change in fair value will affect current period
earnings. The Company will adopt Statement No. 133
during its first quarter of fiscal 2000 and is
currently assessing the impact this statement will
have on interest rate swaps and any future hedging
contracts that may be entered into by the Company.
<PAGE 68>
17. Selected
Quarterly
Financial
Data (in thousands, except per share amounts)
(Unaudited)
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
March 31, June 30, September December 31,
1998 1998 30, 1998
1998
<S> <C> <C> <C> <C>
Operating $58,055 $75,759 $78,100 $78,026
revenues
Operating 5,875 17,358 17,055 12,403
income
Net income 2,983 9,092 10,613 7,725
Net income
per share
Basic $ 0.20 $ 0.48 $ 0.55 $ 0.40
Diluted $ 0.16 $ 0.42<FN>1 $ 0.49 $ 0.36
Weighted
average 22,034 22,246 22,244 22,289
shares
outstanding
</TABLE>
Quarter Ended
<TABLE>
<CAPTION
March 31, June 30, September December 31,
1997 1997 30, 1997
1997
<S> <C> <C> <C> <C>
Operating $41,114 $53,220 $54,864 $56,246
revenues
Operating 1,037 9,968 9,054 8,884
income
Net income 703 5,885 4,844 3,068
Net income
per share
Basic $ 0.04 $ 0.35 $ 0.34 $ 0.21
Diluted $ 0.04 $ 0.33 $ 0.26 $ 0.17
Weighted
average 17,002 17,675 21,149 21,545
shares
outstanding
</TABLE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Reference is hereby made to the Company's Form 8-K Item 4,
filed October 29, 1997.
<PAGE 69>
PART III
The information required by this Part III (Items 10, 11, 12 and
13) is hereby incorporated by reference from the Company's definitive
proxy statement which is expected to be filed pursuant to Regulation 14A
of the Securities Exchange Act of 1934 not later than 120 days after the
end of the fiscal year covered by this report.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements
The Consolidated Financial Statements listed in the index
in Part II, Item 8, are filed as part of this report.
2. Consolidated Financial Statement Schedules
Reference is hereby made to the Consolidated Financial
Statements and the Notes thereto included in this filing
in Part II, Item 8.
3. Exhibits
Exhibit
Number Description of Exhibit
3.1 (note 3) Restated Certificate of Incorporation of the Company.
3.2 (note 3) Restated By-laws of the Company.
4.1 (note 1) Specimen Common Stock Certificate.
4.2 (note 9) Stockholders' Agreement, effective as of October 15,
1991, among the Company, the stockholders and the holder
of warrants of the Company named on the signature pages
thereto and a trust established pursuant to the Atlantic
Coast Airlines, Inc. Employee Stock Ownership Plan,
together with Amendment and Second Amendment thereto
dated as of February 24, 1992 and May 1, 1992
respectively.
4.3 (note 9) Registration Rights Agreement, dated as of September 30,
1991, among the Company and the stockholders named on
the signature pages thereto (the "Stockholders
Registration Rights Agreement").
4.4 (note 9) Form of amendment to the Stockholders Registration
Rights Agreement.
4.17 (note 5) Indenture, dated as of July 2, 1997, between the Company
and First Union National Bank of Virginia
4.18 (note 6) Registration Rights Agreement, dated as of July 2, 1997,
by and among the Company, Alex. Brown & Sons
Incorporated and the Robinson-Humphrey Company, Inc.
<PAGE 70>
4.19 (note 2) Rights Agreement between Atlantic Coast Airlines
Holdings, Inc. and Continental Stock Transfer & Trust
Company dated as of January 27, 1999
10.1 (note 9) Atlantic Coast Airlines, Inc. 1992 Stock Option Plan.
10.2 (note 6) Restated Atlantic Coast Airlines, Inc. Employee Stock
Ownership Plan, effective October 11, 1991, as amended
through December 31, 1996.
10.4 (note 6) Restated Atlantic Coast Airlines 401(k) Plan, as amended
through February 3, 1997.
10.4(a) (note 4) Amendment to the Atlantic Coast Airlines 401(k) Plan
effective May 1, 1997
10.6 (notes 9 & 10) United
Express Agreement, dated October 1, 1991, among United
Airlines, Inc., Atlantic Coast Airlines and the Company,
together with Amendment No. 1, dated as of April 1,
1993.
10.6(a) (note 4) Third Amendment to United Express Agreement, dated March
3, 1998, among United Airlines, Inc., Atlantic Coast
Airlines and the Company.
10.6(b) notes 1 & 11 Fourth
Amendment to the United Express Agreement, dated
December 11, 1998, among United Airlines, Inc., Atlantic
Coast Airlines and the Company.
10.7 (notes 9 & 10) Agreement
to Lease British Aerospace Jetstream-41 Aircraft, dated
December 23, 1992, between British Aerospace, Inc. and
Atlantic Coast Airlines.
10.12(b) (note 1) Amended
and Restated Severance Agreement, dated as of January
20, 1999, between the Company and Kerry B. Skeen.
10.12(c) (note 1) Amended
and Restated Severance Agreement, dated as of January
20, 1999, between the Company and Thomas J. Moore.
10.12(h) (note 1) Form of
Severance Agreement. The Company has entered into
substantially identical agreements with Michael S.
Davis, renewed as of January 1, 1999, and with Paul H.
Tate, renewed as of February 1, 1999.
10.13(a) (note 6) Form of
Indemnity Agreement. The Company has entered into
substantially identical agreements with the individual
members of its Board of Directors.
10.21 (note 8) Acquisition Agreement, dated as of December 30, 1994, by
and among Jetstream Aircraft, Inc., JSX Capital
Corporation, and Atlantic Coast Airlines.
10.21(a) (note 6) Amendment
Number One to Acquisition Agreement, dated as of June
17, 1996, by and among Jetstream Aircraft, Inc., JSX
Capital Corporation, and Atlantic Coast Airlines.
10.23 (note 1) Amended and Restated Loan and Security Agreement dated
February 8, 1999 between Atlantic Coast Airlines and
Fleet Capital Corporation.
10.24 (note 1) Stock Incentive Plan of 1995, as amended as of May 5,
1998.
10.25(a) (note 1) Form of
Incentive Stock Option Agreement. The Company enters
into this agreement with employees who have been granted
incentive stock options pursuant to the Stock Incentive
Plans.
10.25(b) (note 1) Form of
Incentive Stock Option Agreement. The Company enters
into this agreement with corporate officers who have
been granted incentive stock options pursuant to the
Stock Incentive Plans.
10.25(c) (note 1)Form of Non-Qualified Stock Option Agreement. The
Company enters into this agreement with employees who
have been granted non-qualified stock options pursuant
to the Stock Incentive Plans.
10.25(d) (note 1) Form of
Non-Qualified Stock Option Agreement. The Company enters
into this agreement with corporate officers who have
been granted non-qualified stock options pursuant to the
Stock Incentive Plans.
<PAGE 71>
10.25(e) (note 1) Form of
Restricted Stock Agreement. The Company entered into
this agreement with corporate officers who were granted
restricted stock pursuant to the Stock Incentive Plans.
10.27 (note 7) Split Dollar Agreement, dated as of December 29, 1995,
between the Company and Kerry B. Skeen.
10.27(a) (note 6) Form of
Split Dollar Agreement. The Company has entered into
substantially identical agreements with Thomas J. Moore
and with Michael S. Davis, both dated as of July 1,
1996, and with Paul H. Tate, dated as of February 1,
1998.
10.29 (note 7) Agreement of Assignment of Life Insurance Death Benefit
As Collateral, dated as of December 29, 1995, between
the Company and Kerry B. Skeen.
10.29(a) (note 6) Form of
Agreement of Assignment of Life Insurance Death Benefit
As Collateral. The Company has entered into
substantially identical agreements with Thomas J. Moore
and with Michael S. Davis, both dated as of July 1,
1996, and with Paul H. Tate, dated as of February 1,
1998.
10.31 (note 6) Summary of Senior Management Bonus Program. The Company
has adopted a plan in substantially the form as outlined
in this exhibit for 1999 and 1998.
10.32 (note 4) Summary of "Share the Success" Profit Sharing Plan. The
Company has adopted a plan in substantially this form
for 1999 and for the three previous years. (what about
the change from 3 bonus groups to three - was this
filed?)
10.40A (notes 1, 10 & 11)Purchase Agreement between Bombardier Inc. and
Atlantic Coast Airlines Relating to the Purchase of
Canadair Regional Jet Aircraft dated January 8, 1997, as
amended through December 31, 1998.
10.50(a) (note 4)Form of Purchase Agreement, dated September 19, 1997,
among the Company, Atlantic Coast Airlines, Morgan
Stanley & Co. Incorporated and First National Bank of
Maryland, as Trustee.
10.50(b) (note 4)Form of Pass Through Trust Agreement, dated as of
September 25, 1997, among the Company, Atlantic Coast
Airlines, and First National Bank of Maryland, as
Trustee.
10.50(c) (note 4)Form of Pass Through Trust Certificate.
10.50(d) (note 4)Form of Participation Agreement, dated as of September
30, 1997, Atlantic Coast Airlines, as Lessee and Initial
Owner Participant, State Street Bank and Trust Company
of Connecticut, National Association, as Owner Trustee,
the First National Bank of Maryland, as Indenture
Trustee, Pass-Through Trustee, and Subordination Agent,
including, as exhibits thereto, Form of Lease Agreement,
Form of Trust Indenture and Security Agreement, and Form
of Trust Agreement.
10.50(e) (note 4)Guarantee, dated as of September 30, 1997, from the
Company.
10.80 (note 4) Ground Lease Agreement Between The Metropolitan
Washington Airports Authority And Atlantic Coast
Airlines dated as of June 23, 1997.
10.85 (note 1) Lease Agreement Between The Metropolitan Washington
Airports Authority and Atlantic Coast Airlines, with
amendments as of March 12, 1999.
10.90 (notes 4 & 10) Schedules
and Exhibits to ISDA Master Agreement between the
Company and Bombardier Inc. dated as of July 11, 1997
(the Company entered into substantially similar
arrangements for interest rate hedges that are presently
outstanding).
<PAGE 72>
21.1 (note 1) Subsidiaries of the Company.
23.1 (note 1) Consent of KPMG Peat Marwick.
23.2 (note 1) Consent of BDO Seidman.
Notes
(1) Filed as an Exhibit to this Annual Report on Form 10-K for the
fiscal year ended December 31, 1998.
(2) Filed as Exhibit 99.1 to Form 8-A (File No. 000-
21976), incorporated herein by reference.
(3) Filed as Exhibit to the Quarterly Report on Form 10-Q for the
three month period ended June 30, 1998.
(4) Filed as an Amendment to the Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, incorporated herein by
reference.
(5) Filed as an Exhibit to the Quarterly Report on Form 10-Q for the
three month period ended June 30, 1997, incorporated herein by
reference.
(6) Filed as an Amendment to the Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, incorporated herein by
reference.
(7) Filed as an Exhibit to the Annual report on Form 10-K for the
fiscal year ended December 31, 1995, incorporated herein by
reference.
(8) Filed as an Exhibit to the Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, incorporated herein by
reference.
(9) Filed as an Exhibit to Form S-1, Registration No. 33-62206,
effective July 20, 1993, incorporated herein by reference.
(10) Portions of this document have been omitted pursuant to a request
for confidential treatment that has been granted.
(11) Portions of this document have been omitted pursuant to a request
for confidential treatment that is pending.
(b) Reports on Form 8-K.
None.
<PAGE 73>
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized on March 18, 1999.
ATLANTIC COAST AIRLINES, INC.
By /S/
:
/ C. Edward Acker
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 16, 1998.
Name Title
/S/ Chairman of the Board of
Directors
C. Edward Acker
/S/ Director, President
Kerry B. Skeen and Chief Executive Officer
(principal executive officer)
/S/ Director, Executive Vice
President
Thomas J. Moore and Chief Operating Officer
/S/ Senior Vice President, Treasurer
and
Paul H. Tate Chief Financial Officer
(principal financial officer)
/S/ Vice President, Financial
Planning and Controller
David W. Asai (principal accounting officer)
/S/ /S/
John Sullivan Susan M. Coughlin
Director Director
/S/ /S/
Robert Buchanan James Kerley
Director Director
/S/ /S/
Joseph Elsbury James Miller
Director Director
_______________________________
1 Excluding a non-cash, non-operating charge to earnings during the
second quarter of 1998 of $1.4 million representing the fair value of the
additional shres distributed upon conversion.
Exhibit 4.1
SPECIMEN COMMON STOCK CERTIFICATE
COMMON STOCK COMMON
STOCK
- ------------------------ ---------------
- -
NUMBER ACA
ATLANTIC COAST AIRLINES HOLDINGS, INC. SHARES
- ------------------------ ---------------
- -
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 048396
10 5
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF
ATLANTIC COAST AIRLINES HOLDINGS, INC., transferable on the
books of the Corporation in person or by attorney upon
surrender of this certificate duly endorsed or assigned.
This certificate and the shares represented hereby are
subject to the laws of the State of Delaware, and to the
Restated Certificate of Incorporation and By-Laws of the
Corporation, as now or hereafter amended. This certificate
is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the
facsimile signatures of its duly authorized officers.
Dated:
/s/ Richard J. Kennedy /s/ Kerry B.
Sheen
Secretary President
[SEAL]
Countersigned and
Registered:
CONTINENTAL STOCK
TRANSFER & TRUST COMPANY
(Jersey City, NJ)
Transfer
Agent and Registrar
Authorized
Officer
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH
STOCKHOLDER WHO SO REQUESTS, A STATEMENT OF THE POWERS,
DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL, OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR
SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS.
The following abbreviations, when used in the
inscription on the face of this certificate, shall be
construed as though they were written out in full according
to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT MIN ACT --
.........................Custodian..........................
(Cust) (Minor)
TEN ENT -- as tenants by the entireties under Uniform
Gifts to Minors
JT TEN -- as joint tenants with right
Act..........................................
of survivorship and not as
(State)
tenants in common
Additional abbreviations may also be used
though not in the above list.
For value received,
...........................................................h
ereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
............................................................
............................................................
............................................................
..........
Please print or typewrite name and address including postal
zip of assignee
............................................................
............................................................
............................................................
Shares of the Common Stock represented by the within
Certificate, and do hereby irrevocably constitute and
appoint
............................................................
............................................................
............................................................
...........
Attorney to transfer the said stock on the books of the
within-named Company with full power of substitution in the
premises.
Dated,......................................................
.....
NOTICE: The signature to
this assignment must correspond with the name as
written upon the face of
the Certificate, in every particular, without alteration or
enlargement, or any
change whatever.
This certificate also represents Rights that entitle the
holder hereof to certain rights as set forth in a Rights
Agreement between the Corporation and Continental Stock
Transfer & Trust Company, as Rights Agent, dated as of
January 27, 1999, as it may be amended from time to time in
accordance with its terms (the "Rights Agreement"), the
terms, conditions and limitations of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal offices of the Corporation. Under
certain circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The
Corporation will mail to the holder of this certificate a
copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a written
request therefor. Under certain circumstances set forth in
the Rights Agreement, Rights issued to, or beneficially
owned by, any Person who is, was or becomes an Acquiring
Person or any Affiliate or Associate thereof (as such terms
are defined in the Rights Agreement), whether currently held
by or on behalf of such Person or by any subsequent holder,
may become null and void.
Exhibit 10.6(b)
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST.
FOURTH AMENDMENT TO THE UNITED EXPRESS AGREEMENT
[United Airlines Letterhead]
December 11, 1998
Mr. Kerry B. Skeen
President & CEO
Atlantic Coast Airlines
515A Shaw Road
Dulles, VA 20166
Re: Fourth Amendment to United Express
Agreement, dated October 1, 1991, and as
amended from time to time thereafter (the
"United Express Agreement")
Dear Kerry:
This letter, when countersigned by you, will constitute a
further amendment to the United Express Agreement as
follows:
1. Parties. Atlantic Coast Airlines Holdings, Inc. will
be a party to the United Express Agreement, and,
together with Atlantic Coast Airlines, will be referred
to in the United Express Agreement as "Contractor".
2. Extension of the United Express Agreement
a. Article 2.B of the United Express Agreement is
hereby amended to read as follows:
"B. This Agreement becomes effective on
October 1, 1991 ("Effective Date"), and,
subject to termination at an earlier
date pursuant to one or more provisions
of this Agreement, will continue in
effect until March 31, 2009; provided,
however, United may terminate this
Agreement without cause effective no
earlier than March 31 2004 upon one (1)
years' prior written notice; provided
further, however, if United so
terminates this Agreement upon one (1)
years prior written notice, the
liquidated damages under Article 16.G
will not apply. In the event, however,
that by January 2, 2001 United fails to
grant Contractor the ability, separate
and apart from the allocations of fifty
seat regional jet aircraft, to operate
regional jet aircraft of 44 seats or
less capacity under this Agreement, then
Contractor will have the right to notify
United that the Agreement will terminate
as of March 31, 2004, which notice must
be given by Contractor by no later than
January 2, 2002; provided, however, if
Contractor timely gives such notice but
United then makes such allocation on or
before January 2, 2002 then Contractor's
aforesaid notice will be null and
avoid."
b. The fifth and sixth lines of Article 16.G (2) are
amended to read as follows:
". . . during the period commencing with the
date of termination through the end of the
term of this Agreement in accordance with
Article 2.B; provided, however, if United
secures . . ."
c. To the extent the agreements entered into between
the parties related to the United Express
Agreement (including agreements relating to
Mileage Plus participation, prorate/revenue
sharing, interline travel, groundhandling, and
emergency response) contain a termination date,
all such agreements are hereby amended such that
each of such agreements will continue in effect
for a term equal to that stated in Article 2.B of
the United Express Agreement; provided, however,
that all such agreements automatically will
terminate contemporaneously with the termination
of the United Express Agreement. The parties
confirm that previous extensions of the United
Express Agreement were intended to effectuate
extensions of these other agreements as well.
3. Program Fee. Appendix I of the United Express
Agreement is amended by the addition of the following
paragraph:
"Notwithstanding anything else contained in
this United Express Agreement to the
contrary, the current Program Fee will be
fixed through March 31, 2000 and will be
subsequently adjusted only in accordance with
the terms of this paragraph. [ *
]
4. Regional Jets. A new Article 4.F, entitled "Regional
Jets" is hereby added to the United Express Agreement
as follows:
"F. Regional Jets
(1) Contractor is authorized to operate up
to 43 regional jet aircraft, 50-seat
capacity, as United Express under the
terms of this Agreement. The schedule
for the introduction of the 34th through
43 such aircraft will be as set forth in
a schedule to this Fourth Amendment to
this Agreement to be agreed upon by
December 21, 1998. The deployment of
any regional jet aircraft operated by
Contractor, as United Express or
operated with United Express livery,
must be approved by United on a city
pair by city pair basis. [ *
] The allocation of any such aircraft to
Contractor thereafter will be governed
by subparagraph F.(2), below.
(2) If the operation of greater than a total
of [* ] fifty seat regional jet
aircraft within the United Express
system is approved and allocated by
United, Contractor will be authorized to
operate a minimum of [ * ] of any
such aircraft above [ *]. Said
percentage will be based upon the total
number of such aircraft approved and
allocated for operation in the total
United Express fleets of all United
Express carriers, in excess of the
initial [ *] fifty seat regional jet
aircraft, measured as of the end of each
calendar year; provided, however, in
applying the foregoing percentage to
determine the number of aircraft
allocable to Contractor fractional
aircraft shall be disregarded."
5. Additional Terms
a. The parties agree to revise the Operating
Performance Standards contained in the United
Express Agreement to mutually agreed levels and
agree upon mutually agreed revised incentives and
consequences based upon achievement or lack
thereof of those Operating Performance Standards.
b. The terms of the letter of understanding, dated
November 2, 1998, regarding Contractor's use of
Orion and its IRS database are incorporated into
the United Express Agreement.
c. The following Article 4.G is hereby added to the
United Express Agreement:
"G. [ *
]
d. Article 16.D of the United Express Agreement is
amended to read as follows:
"D. United may immediately terminate this
Agreement if Contractor enters into a
similar arrangement (including, without
limitation, a code share arrangement)
with any other carrier, unless United
has given Contractor its express prior
written approval of such arrangement."
e. A new Article 12.G is hereby added to the United
Express Agreement as follows:
G. United hereby assumes liability for and
agrees to indemnify, release, defend,
protect, save and hold Contractor, its
officers, directors, agent, and
employees harmless from and against any
and all liabilities, damages, expenses,
losses, claims, demands, suits, fines,
or judgments, including, but not limited
to, attorneys' and witnesses' fees,
costs, and expenses incident thereto,
which may be suffered by, accrue
against, be charges to or be recovered
from Contractor, its officers,
directors, employees, or agents, by
reason of any injuries to or deaths of
persons or the loss of, damage to, or
destruction of property, including the
loss of use thereof, arising out of, in
connection with, or in any way related
to any act, error, omission, operation,
performance or failure of performance of
United or its officers, directors,
employees or agents, which is in any way
related to the services of United
contemplated by or provided pursuant to
this Agreement."
f. Pursuant to Article 3.1 of the United Express
Agreement, United will provide a minimum co-op
advertising budget for calendar year 1999 of [
*].
6. Other Terms and Conditions. Except as specifically
stated above, all other terms and conditions of the
United Express Agreement remain in full force and
effect.
Please confirm the concurrence of Atlantic Coast Airlines
and Atlantic Coast Airlines Holdings, Inc. to the foregoing
by signing below.
Very truly yours
United Air Lines, Inc.
By: /s/ Thomas Hanley_________
Thomas Hanley
By: /s/ Rono Dutta____________
Rono Dutta
Accepted and Agreed to this
17th day of December, 1998
Atlantic Coast Airlines
Atlantic Coast Airlines
Holdings, Inc.
By: /s/Kerry B. Skeen__________
Kerry B. Skeen
President and CEO
Exhibit 10.12(b)
AMENDED AND RESTATED SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED SEVERANCE AGREEMENT (the
"Agreement") is made and entered into as of this 20th day of
January, 1999 (the "Effective Date"), by and between
ATLANTIC COAST AIRLINES HOLDINGS, INC., a Delaware
corporation ("ACAH"), ATLANTIC COAST AIRLINES, a California
corporation ("ACA") (ACAH and ACA are herein collectively
referred to as the "Company") and KERRY B. SKEEN ("Skeen").
WITNESSETH THAT:
WHEREAS, Skeen is currently employed by the Company as
Chief Executive Officer and President, and in connection
with such employment entered into a Severance Agreement
(dated October 16, 1991), as amended (April 28, 1994, April
27, 1995 and October 16, 1996), with the Company; and
WHEREAS, the Company wishes to assure itself of the
continued services of Skeen; and
WHEREAS, the Board of Directors of the Company has
determined that the best interests of the Company would be
served by entering into this amended and restated Agreement
with Skeen; and
WHEREAS, this Amended and Restated Severance Agreement
is intended to correct and restate the Severance Agreement
dated July 20, 1998;
NOW, THEREFORE, the parties, for and in consideration
of the mutual and reciprocal covenants and agreements
hereinafter contained, and intending to be legally bound
hereby, do contract and agree as follows:
1. Employment: Company hereby employs Skeen and Skeen
hereby accepts employment by Company and agrees to perform
his duties and responsibilities hereunder upon all of the
terms and conditions as are hereinafter set forth.
2. Duties: Skeen shall serve in the capacities of
Chief Executive Officer and President of the Company and of
any other entity(ies) to which the Company's obligations
under this Agreement shall be assigned pursuant to Paragraph
11. Skeen shall be responsible for supervising and
directing all operations of the Company. All other officers
of the Company shall report to Skeen except the Chairman of
the Board of Directors (to the extent such person is deemed
to be an officer). Skeen shall otherwise be responsible for
carrying out all duties assigned to the President by the
Company's Board of Directors and under ACAH's and ACA's
Bylaws. The Company shall use its good faith efforts to
ensure that Skeen continues to serve as a member of the
Company's Board of Directors.
3. Terms of Employment: Skeen's term of employment
under this Agreement shall commence on the Effective Date
and shall terminate on the last day of the calendar month
which is thirty-six (36) calendar months after the Effective
Date, unless further extended as hereinafter set forth.
Commencing on each successive anniversary of the Effective
Date, the Agreement shall automatically be extended for an
additional twelve (12) months without further action by
either party unless one party provides the other sixty (60)
days' written notice that such party does not wish to extend
the term of this Agreement.
4. Extent of Service: Skeen shall devote such time
and attention as is required to perform his obligations
under this Agreement and will at all times faithfully and
industriously, consistent with his ability, experience and
talent, perform his duties hereunder.
5. Compensation: During the term of this Agreement,
Company agrees to pay to Skeen, and Skeen agrees to accept
from Company, in full payment for services rendered by Skeen
and work to be performed by him under the terms of this
Agreement, the following:
A. An annual base salary of Two-Hundred Ninety
Five Thousand Dollars ($295,000) shall be paid to Skeen.
Commencing October 1, 1998 and each October 1 thereafter,
the amount of Skeen's base salary shall be increased as
determined by the Compensation Committee of the Board of
Directors of the Company; provided, however, that in no
event shall Skeen's annual base salary be less than the
previous year's annual base salary. Skeen's base salary for
each year shall be payable to him in accordance with the
reasonable payroll practices of the Company as from time to
time in effect for executive employees (but in no event less
often than monthly).
B. Skeen shall participate in the Company's
Management Incentive Program, or any successor bonus plan or
program for management employees. In addition, if the
Company maintains an additional executive/management bonus
plan, then Skeen's bonus arrangement shall be at least
consistent with the provisions of such bonus plan.
C. Skeen shall be eligible for an additional
annual bonus under an executive performance bonus plan
currently known as Senior Management Incentive Plan for so
long as the Board of Directors determines to maintain such
plan. Under such plan, each calendar year, Skeen shall be
entitled to receive a bonus equal to specified percentage of
base salary upon the attainment of certain pre-established
goals. The maximum bonus under this plan assuming all goals
are met will not be less than 100% of base salary. Such
goals and percentage of salary shall be determined by the
Compensation Committee of the Board of Directors of the
Company prior to the commencement of each plan year. The
bonus amount each year shall be paid in a single cash lump
sum paid at the time period provided under such plan, at the
same time as paid to other eligible employees, and generally
no later than 90 days after the end of the plan period.
D. Skeen will be entitled to deferred compensation
("Deferred Compensation") as described in this section. The
Company will make Deferred Compensation contributions at the
rate of fifty percent (50%) of Skeen's annual base salary.
Deferred Compensation will be based on Skeen's annual base
salary in effect on October 1 in each year beginning 1998,
and will be payable as of October 1 in each year beginning
1998. Such contributions will be applied toward funding
such deferred compensation program as the Company and Skeen
may agree to from time to time, consistent with the funding
and vesting provisions of this Agreement.
The method of funding of Deferred Compensation, and the
timing of the actual payment of contributions, shall be
agreed between the Company and Skeen from time to time. As
of the date hereof, the Deferred Compensation program is
provided under a split dollar life insurance arrangement
with Phoenix Home Life Mutual - (the "Split Dollar
Agreement". The Company may implement a substitute Deferred
Compensation plan not tied to a Split Dollar Agreement so
long as (1) the amount contributed by the Company on Skeen's
behalf equals the amount set forth herein, and (2) the
vesting schedule, credit for Years of Service, and terms of
distribution are all at least as favorable to Skeen as set
forth herein. The Company shall continue to abide by the
terms of the Split Dollar Agreement with Skeen previously
executed the 29th day of December, 1995, which shall provide
for a split dollar plan for a policy of insurance upon the
life of Skeen in a face amount to be mutually agreed upon
between Skeen and the Company. For so long as the Split
Dollar Agreement shall serve as the deferred compensation
program under this Agreement, the following terms shall
apply:
(i) Skeen shall be the owner of the policy under
the Split Dollar Agreement and will have the right to
designate his beneficiary with respect to proceeds of the
policy payable upon his death; provided, however, that
notwithstanding the foregoing, the Company shall have a
collateral assignment of the policy as security for the
repayment of the amounts contributed by the Company toward
the payment of premiums for the policy.
(ii) The Company shall, except as provided in
Paragraph 5D(iii) below, each year as required under the
Split Dollar Agreement and the related policy, pay, on or
before the due date(s) under the terms of the policy, the
entire amount of the annual premium due on the policy
acquired pursuant to the terms of the Split Dollar
Agreement. The annual premium due on the policy will be the
amount of the Company's contribution to deferred
compensation calculated as described above.
(iii) The "Deferred Compensation Ending Date"
shall mean the date of termination of Skeen's employment if
Skeen's employment with the Company is terminated at any
time under circumstances that do not entitle him to
Severance Compensation pursuant to Section 10 of this
Agreement, or shall mean the last day of the Severance
Period (as defined in Section 10) if Skeen is entitled to
Severance Compensation. During a Severance Period, Deferred
Compensation shall continue pursuant to the terms of
10.E.(iii) hereof. Upon the Deferred Compensation Ending
Date, the following shall occur:
(a) The applicable vested percentage of
Skeen's interest in Deferred Compensation shall be
calculated as provided herein. Skeen will be
entitled to receive the deferred compensation
benefit provided under such deferred compensation
program only to the extent he is vested in the
Company's contributions. Vesting will be based
upon "Years of Service", with Skeen to be credited
with one Year of Service for completion of each
twelve (12) consecutive month period of employment
with the Company beginning January 1, 1996 and
ending on the Deferred Compensation Ending Date.
(That is, Skeen will be credited with Years of
Service for any applicable Severance Period, as
further provided in Section 10.E.(iv) hereof.)
Skeen will become vested in the deferred
compensation based on the following schedule:
YEARS OF SERVICE PERCENTAGE VESTED
Less than 4 0%
At least 4 but less than 5 25%
At least 5 but less than 6 35%
At least 6 but less than 7 50%
At least 7 but less than 8 65%
At least 8 but less than 9 80%
At least 9 100%
In the event of a Change in Control (as defined in
Paragraph 8.C. of this Agreement) of the Company,
Skeen shall become immediately 100% vested in his
Deferred Compensation amount notwithstanding the
above vesting schedule.
(b) The Split Dollar Agreement shall
continue in full force and effect and survive
separate and apart from this Agreement; provided,
however, that the Company shall, at its election,
have no further obligation to pay any premium on
the policy under the Split Dollar Agreement which
has a due date after the Deferred Compensation
Ending Date and such obligation shall be
transferred to Skeen.
(c) The Company shall pay to Skeen whatever
"Deferred Compensation" amount is equal to the
applicable vested percentage of the total policy
premiums paid by the Company pursuant to the Split
Dollar Agreement. The Company shall make this
payment within thirty (30) days following the
Deferred Compensation Ending Date by releasing its
interest in the policy, or a portion thereof, on
Skeen's life acquired pursuant to the terms of the
Split Dollar Agreement, or any or all of the paid
up additions standing to the credit of such
policy, if any, such that such released interest
equals the Deferred Compensation amount paid to
Skeen pursuant to this Paragraph 5D. The Company
agrees that the amount of any such release of
interest by the Company shall reduce the amount of
"Liabilities" (as such term is defined in the
Agreement of Assignment of Life Insurance Death
Benefit As Collateral entered into between Skeen
and the Company in connection with the Split
Dollar Agreement) owed to the Company in
connection with the Split Dollar Agreement and
related Collateral Assignment Agreement.
Accordingly, the Company also agrees to reduce to
such extent its collateral assignment of the
policy pursuant to the Split Dollar Agreement and
related Collateral Assignment Agreement.
E. The Company may pay Skeen discretionary
compensation, bonuses and benefits in addition to those
provided for herein in such amounts and at such times as the
Compensation Committee of the Board of Directors of the
Company shall determine.
6. Benefits:
A. The Company shall pay for or provide Skeen
such vacation time and benefits, including but not limited
to, coverage under Company's major medical, accident,
health, dental, disability and life insurance plans, as are
made available to other executive employees of Company
generally (and, to the extent provided by such policies, to
Skeen's dependents).
B. The Company agrees to promptly reimburse
Skeen for any otherwise unreimbursed premiums and/or
uncovered medical expenses up to $10,000 per calendar year
under a written medical reimbursement plan maintained for
Skeen and other key executive employees. If such payments
are taxable to Skeen, the Company shall pay Skeen a gross-
up equal to the estimated income, FICA and Medicare taxes
due with respect to such reimbursement, with federal and
state income taxes being estimated at the highest marginal
rates.
C. Skeen shall be eligible to participate in any
profit sharing plan, employee stock ownership plan or other
qualified retirement plan adopted by Company to the same
extent as other executive employees of Company. Skeen shall
also be eligible to participate in any stock option, stock
appreciation rights or stock purchase plans or programs or
nonqualified deferred compensation arrangements of Company,
which participation shall be at levels at least equal in
value to such benefits provided by Company to other key
executive employees of Company.
7. Reimbursement of Expenses: The Company agrees to
promptly reimburse Skeen, within fifteen (15) days after
presentation of receipts and other appropriate
documentation, for all reasonable, ordinary and necessary
travel costs and other necessary expenses incurred by Skeen
in performing his duties pursuant to this Agreement.
8. Stock Options:
A. Company agrees to continue in force a stock
option plan or one which is substantially similar to the
existing plan ("Stock Option Plan"), which has been approved
by the shareholders of the Company and, on the first
business day in each January commencing in January, 1999,
and (subject to the provisions of Paragraph 10.A.(vii))
continuing so long as Skeen is employed by the Company to
grant Skeen options under the Stock Option Plan to purchase
not less than 100,000 shares of the common stock of ACAH at
the price per share at the closing of the trading market on
the last business date prior to such grant. The Company
also agrees to approve the issuance of such additional
shares as are necessary to enable Skeen to exercise such
options. The Company will not be required to reserve shares
from existing plans to cover future obligations under this
paragraph, but will use reasonable efforts to obtain
shareholder approval as necessary from time to time to make
a sufficient number of additional shares available on a
timely basis, and will provide Skeen with equivalent
alternative compensation should approval not be obtained.
The terms of the grant of such options granted after January
1, 1998 shall provide that (a) Skeen's right to exercise
such options shall vest and become exercisable over the five-
year period beginning on the date of each grant at the rate
of one-fifth per year (i.e., one-fifth shall vest and become
exercisable on the first anniversary of the grant) so long
as Skeen is employed by the Company, (b) Skeen's right to
exercise such options to purchase the entire number of
shares covered thereby shall become immediately 100% vested
in the event there is a Change in Control (as hereinafter
defined) or in the event Company shall otherwise become
obligated to provide Skeen with Severance Compensation as
provided in Paragraph 10.e. herein, (c) such options shall
be exercisable for ten (10) years after the date of the
grant so long as Skeen is employed by the Company and (d)
Skeen shall have the right to exercise such vested options
within ninety (90) days following any termination of Skeen's
employment except that in the case of termination of
employment for which Skeen is entitled to "Severance
Compensation" as provided herein, in which case the terms of
Paragraph 10.E.(iii) shall apply.
B. In addition to the foregoing, if the Company
in the exercise of its discretion, shall grant Skeen any
additional stock options, such options shall contain terms
and conditions which are at least as favorable to Skeen as
those set forth in this Paragraph 8. All outstanding options
previously issued to Skeen prior to the Effective Date of
this Amended and Restated Severance Agreement shall also be
subject to the foregoing terms, except that options granted
on or before December 31, 1997 shall vest over three years
at the rate of one-third per year and except that no such
terms shall be applicable to options intended to qualify as
Incentive Stock Options if and to the extent such terms
would be deemed to result in a "material modification" of
such options (for example, Skeen will not be entitled to
more than 90 days to exercise such options following any
termination of employment other than on account of death or
disability, in which case he will be entitled to one year to
exercise such options).
C. For purposes of this Agreement, a "Change in
Control" shall be deemed to occur on the earliest of (a) an
acquisition (other than directly from Company) of any
securities of Company entitled to vote for the election of
Directors (the "Voting Securities") by any "person or group"
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934) other than an employee
benefit plan of Company, immediately after which such person
has "Beneficial Ownership" (within the meaning of Rule 13d-3
under the Exchange Act) of more than thirty percent (30%) of
the combined voting power of Company's then outstanding
Voting Securities; (b) announcement by any "person or
group" (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934) of its acceptance
for payment of securities tendered pursuant to a tender
offer or exchange offer initiated by such person owning or
representing securities constituting more than twenty
percent (20%) of the combined voting power of Company's then
outstanding Voting Securities; (c) the approval by the
Company's stockholders of (1) a merger, consolidation or
reorganization involving Company or a transfer of
substantially all of the assets of Company (other than to an
entity or entities owned by Company), unless the company
resulting from such merger, consolidation or reorganization
or the company to which such assets are transferred (the
"Surviving Corporation") shall adopt or assume this
Agreement and the stockholders of Company immediately before
such merger, consolidation or reorganization own, directly
or indirectly immediately following such merger,
consolidation or reorganization, at least eighty percent
(80%) of the combined voting power of the Surviving
Corporation in substantially the same proportion as their
ownership immediately before such merger, consolidation or
reorganization, or (2) a complete liquidation or dissolution
of Company; or (d) persons who on the date of this
Agreement are directors of Company, together with people
nominated by a majority of them or by persons who were
nominated by them, cease for any reason to constitute a
majority of Company's Board of Directors.
9. Deductions: Deductions shall be made from Skeen's
compensation for social security, Medicare, federal, state
and local withholding taxes, and any other such taxes as
may from time to time be required by any governmental
authority.
10. Termination: Skeen's employment with the Company
shall be terminated only in accordance with the following
provisions:
A. Disability.
(i) In the event Skeen shall become mentally
or physically disabled so as to have been unable to perform
his duties hereunder for twelve (12) consecutive months,
subject to Skeen's right to return to work as provided
below, Company shall have the right to terminate Skeen's
employment with Company upon the expiration of such twelve
(12) month period; provided, however, that upon any such
termination Company shall be obligated to provide Skeen with
Severance Compensation as provided in Paragraph 10.E.
herein. Such twelve-month period shall be deemed to have
commenced on the date when Skeen is first unable to perform
his duties on a substantially full-time basis because of
mental or physical disability and shall end on the date on
which Skeen shall return to the substantial full-time
performance of his duties. If at the expiration of such
twelve (12) month period, the Company shall desire to
terminate Skeen on the basis of disability, it shall give
written notice to him. Skeen's employment shall thereafter
be terminated if he does not return to substantial full-time
performance of his duties within ten (10) calendar days
after such notice is given.
(ii) Nothing contained herein shall be
construed to affect Skeen's rights under any disability
insurance or similar policy, whether maintained by the
Company, Skeen or another party. The Company may utilize a
disability policy to fund, in whole or in part, the
compensation that would be due to Skeen during the term of
or in the event of a disability, in which case the proceeds
of the policy would not be in addition to any compensation
otherwise payable to Skeen.
(iii) For purposes of this Agreement,
Skeen shall be deemed to be disabled when he shall have been
absent from his duties because of sickness, illness, injury
or other physical or mental infirmity on a substantially
full-time basis. In the event of a dispute as to whether
Skeen is disabled, the issue of the determination of
disability shall be submitted to a Board of Arbiters for a
binding decision under the procedures set forth in Paragraph
10.A.(v) below.
(iv)At the end of any disability (other
than a disability that results in the termination of
Skeen's employment with the Company), Skeen shall return to
work and this Agreement shall continue as though such
disability had not occurred.
(v) If there is a dispute as to whether
Skeen is subject to any disability, the issue shall be
submitted to a Board of Arbiters (whose decision shall be
binding on the Company and Skeen) consisting of three
persons: one physician who specializes in the physical or
mental disability in dispute (hereinafter referred to as a
"Specialist") shall be appointed on behalf of Company by the
Board of Directors of Company (with Skeen having no vote on
this question); a second Specialist shall be appointed by
Skeen and a third Specialist shall be appointed by the two
Specialists so appointed. The decision of a majority of
such Specialists shall be binding upon the parties hereto.
If a majority of the Specialists determines that Skeen is
not subject to any disability for purposes of this
Agreement, Skeen shall return to work under the provisions
hereof. Such Specialists may physically examine Skeen, who
hereby consents to such examination and to make available
any pertinent medical records. The cost of such Specialists
shall be paid by Company.
(vi) If it is determined that Skeen can
return to work hereunder on a part-time basis, the parties
agree to use good faith efforts to negotiate the terms of
Skeen's return to work.
(vii) During any period in which Skeen is
disabled but his employment shall not have been terminated,
Skeen shall continue to receive his base salary and any
applicable bonus, and shall continue to receive all benefits
as an employee and as provided herein generally. Any options
previously granted shall continue to vest, but no new
options shall be issued to Skeen.
(viii) During any period in which Skeen is
disabled but his employment shall not have been terminated,
Skeen shall continue to be credited with Years of Service
for purposes of vesting of Deferred Compensation as set
forth in Paragraph 5.D.
B. Death.
(i) Skeen's employment with Company shall
terminate immediately upon Skeen's death; provided, however,
that Company shall be obligated to provide the Severance
Compensation as specified in Paragraph 10.E. herein to
Skeen's estate, heirs or beneficiaries.
(ii) Nothing contained herein shall be
construed to affect Skeen's rights under any life insurance
or similar policy, whether maintained by Company, Skeen or
another party. The Company may utilize a life insurance
policy to fund, in whole or in part, the Severance
Compensation that would be payable in the event of Skeen's
death, in which case the proceeds of any such policy other
than the Split Dollar Agreement would not be in addition to
any Severance Compensation otherwise payable under this
Paragraph 10.B.
C. Termination by Skeen.
(i) Without Good Reason. Skeen may, without
"Good Reason" (as hereinafter defined), terminate his
employment by giving to Company sixty (60) days' written
notice by Certified Mail, Return Receipt Requested, at the
office of Company, and such termination shall be effective
on the sixtieth (60th) day following the date of such notice
(the "Termination Date"). In such event, Skeen (i) shall
continue to render his services up to the Termination Date
if so requested by Company and (ii) shall be paid his
regular base salary and shall receive all benefits up to the
Termination Date. Skeen will be entitled to payment of any
bonus due but not yet paid for prior bonus periods, and for
a pro-rata bonus amount for the bonus period in which the
termination occurs pursuant to this Paragraph 10.C.(i) but
will not be entitled to Severance Compensation or to any
other compensation, bonus or fringe benefits accrued after
the Termination Date. The bonus payable to Skeen will be
paid at the same time it would have been paid had Skeen's
employment not been terminated, will be based on the
achievement of targets for the entire bonus period without
regard to interim results as of the termination date, and
will be paid pro-rata based on the number of full months
Skeen was employed within the bonus period divided by the
total number of months in the bonus period.
(ii) With Good Reason. Skeen may terminate
his employment with Company immediately for Good Reason. In
the event Skeen's employment with Company is terminated by
Skeen for Good Reason, Company shall be obligated to provide
Skeen with Severance Compensation as provided in Paragraph
10.E. herein". Good Reason" shall mean any of the following
(without Skeen's express prior written consent):
(a) The assignment to Skeen by Company
of duties inconsistent with Skeen's positions, duties,
responsibility and status with Company, or any removal of
Skeen from or any failure to re-elect Skeen to his
positions, including his position as a member of the
Company's Board of Directors (except in connection with the
termination of his employment for disability, death or for
cause as provided herein), unless cured within fifteen (15)
days of Skeen giving written notice thereof to the Company.
(b) Any material adverse change in any
benefit plan or arrangement in which Skeen is participating
and which is not applicable generally to other key executive
employees of Company who participate in such plan or
arrangement), unless cured within fifteen (15) days of Skeen
giving written notice thereof to the Company.
(c) Skeen's relocation outside of the
Washington D.C./ Northern Virginia region without his
consent, except for required travel by Skeen on Company
business; provided, however, that if the Board of Directors
of Company determines to relocate Company's principal
executive offices, Company shall pay all of Skeen's
reasonable moving and other relocation expenses, the Board
of Directors shall make such adjustments in Skeen's salary
as it reasonably deem necessary to reflect the increased
costs of living in the new location, and Skeen shall be
obligated to perform his services generally at such new
location and such relocation shall not constitute "Good
Reason" hereunder.
(d) Any material breach by Company of
any provisions of this Agreement which is not cured by
Company within fifteen (15) days of Skeen giving written
notice thereof to the Company.
(e) Except in the case of disability or
death, any purported termination of Skeen's employment by
the Company which is not effected pursuant to sixty (60)
days' prior written notice of termination.
(f) Any termination by Skeen of his
employment with the Company which is effected as a result
of, in connection with or within twelve (12) months
following a "Change in Control" as defined and determined
under Paragraph 8.C. of this Agreement.
D. Termination by Company.
(i) Without Cause. Company may, without
cause, terminate Skeen's employment under this Agreement at
any time by giving Skeen sixty (60) days' written notice
thereof, and such termination shall be effective on the
sixtieth (60th) day following the date such notice is given
(said 60th day, the "Termination Date"). Company shall be
obligated to provide Skeen with Severance Compensation as
provided in Paragraph 10.E. herein. At the option of
Company, Skeen's employment shall be immediately terminated
upon the Company giving such notice, in which case Skeen
shall continue to receive his full base salary and related
fringe benefits through the Termination Date.
Notwithstanding any provision of this Agreement to the
contrary, any termination of Skeen's employment by the
Company, for any reason or no reason, within one year
following a "Change in Control", as defined and determined
under Paragraph 8.C. of this Agreement, shall automatically
be deemed to be a termination without cause.
(ii) For Cause. Company may terminate Skeen's
employment under this Agreement immediately for "cause." In
such event, Skeen will be entitled to payment of a pro-rata
bonus amount to the date of termination of employment, but
will not be entitled to Severance Compensation or to any
other compensation, bonus or fringe benefits accrued after
the date of termination of employment. The bonus amount
payable to Skeen will be calculated in the same fashion as
in the case of termination by Skeen without good reason, as
set forth in Paragraph 10.C.(i) above. Cause shall be
defined as any of the following: (i) willful unauthorized
misconduct in the material performance of Skeen's duties
hereunder, (ii) commission of an act of theft, fraud or
dishonesty by Skeen, which act is materially harmful to
Company, (iii) material breach of any provision of this
Agreement if such breach has not been cured by Skeen (or if
Skeen has not compensated the Company for such breach by
payment of an amount deemed reasonable by the Company if the
breach cannot be cured) within fifteen (15) days after the
Company gives Skeen written notice of such breach. Any
termination under this Paragraph 10.D.(ii) shall take effect
immediately upon the Company giving Skeen written notice
thereof.
E. Severance Compensation. "Severance
Compensation" is defined as all of the compensation and
benefits described in this Paragraph 10.E. It will be
provided to Skeen upon the occurrence of any of the events
described elsewhere in this Agreement as providing for
Skeen's receipt of Severance Compensation, but not in any
other circumstances except to the extent that individual
components of Severance Compensation may be separately
provided pursuant to the terms of this Agreement.
"Termination Date" is defined as the last day of Skeen's
employment with the Company. "Severance Period" is defined
as the period beginning on the day following the Termination
Date and ending on the day which is three years following
the Termination Date. The compensation and benefits to be
provided as Severance Compensation are as follows:
(i) Severance Pay. Throughout the Severance
Period, Skeen will receive severance pay at the rate of 100%
of his annual base salary in effect at the time of his
termination, to be paid on the Company's regular payroll
payment dates at the same time and in the same fashion as
the Company's regular payroll payments.
(ii) Bonus. The Company shall pay to Skeen a
one-time bonus equal to three times the highest annual bonus
received by Skeen during any one of the five years
immediately preceding the year in which the Termination Date
occurs. This bonus will be paid within thirty days
following the Termination Date. It shall be considered to
be full compensation for all amounts due to Skeen for bonus
plans in which he was participating as of the Termination
Date, and he shall not be entitled to any further payments
under any of said plans during the Severance Period or
thereafter. Notwithstanding the above, any bonus due to
Skeen for years (or other applicable bonus period) completed
prior to the Termination Date but not yet paid shall be paid
in addition to the bonus described herein.
(iii) Stock Options. All options to
purchase shares of ACAH stock that have been granted to
Skeen shall become 100% vested as of the Termination Date.
All options that would have been granted to Skeen in the
future pursuant to Paragraph 8.A. hereof shall not be
granted if the date on which they would have been granted
occurs after the Termination Date, even though said date may
occur during the Severance Period. Skeen (or, in the case
of death, his estate or his beneficiaries) shall have the
right to exercise such vested options until the earlier of
the original expiration date of said option, or a date
determined as follows: (a) for options not intended to
qualify as Incentive Stock Options, Skeen shall have the
right to exercise vested options any time prior to the end
of the Severance Period; (b) for options intended to qualify
as Incentive Stock Options where termination is caused by
reasons other than his death or disability, Skeen shall have
the right to exercise within 90 days following termination
of his employment; (c) for options intended to qualify as
Incentive Stock Options where termination is caused by his
death or disability, Skeen (or his estate or his
beneficiaries) shall have the right to exercise within one
year following termination of his employment.
(iv) Deferred Compensation. The Deferred
Compensation program will continue throughout the Severance
Period, including Skeen's accumulation of Years of Service
for vesting purposes, and including the Company's
continuation of contributions. The Split Dollar Agreement
shall continue in full force and effect through the
Severance Period and shall survive separate and apart from
this Agreement, and the Company's obligation to pay all
premiums pursuant to this Agreement shall continue in
accordance with the terms of the Split Dollar Agreement for
the Severance Period. At the end of the Severance Period,
Skeen shall receive his vested interest and any obligation
to pay premiums shall be transferred to Skeen.
Alternatively, the Company may elect to pay such amounts to
Skeen as would be payable during the Severance Period by the
Company under the Deferred Compensation program in a single
lump sum payment within fifteen (15) days after the
Termination Date.
(v) Insurance Programs. Coverage under the
Company's major medical, accident, health, dental,
disability and life insurance plans as from time to time
provided to other executive employees of the Company (and,
to the extent provided by such policies, to Skeen's
dependents) shall continue to be paid for by the Company
during the Severance Period, or, in the event of Skeen's
termination following a Change of Control of the Company as
defined in Paragraph 8.C., for the longer of the Severance
Period or the remainder of Skeen's life. Provided, however,
if such coverage cannot be continued during the Severance
Period or until Skeen's death, as the case may be, under the
terms of such policies or plans, the Company shall reimburse
Skeen for the cost of comparable coverage under individually
obtained policies or for COBRA coverage, or shall make other
arrangements to assure that Skeen has comparable coverage.
(vi) Vacation. Vacation shall not continue
to accrue after the Termination Date under any
circumstances.
(vii) Executive Medical Reimbursement
Plan. Throughout the Severance Period, the Company will
continue to promptly reimburse Skeen for any otherwise
unreimbursed premiums and/or uncovered medical expenses up
to $10,000 per calendar year under a written medical
reimbursement plan maintained for the Company's key
executive employees, including the tax gross-up, if
applicable.
(viii) Travel Benefits. Skeen and his
wife shall be provided with free travel on the Company's
planes or on the planes of any successor in interest to the
Company on a positive space basis. These travel benefits
will be provided throughout the Severance Period, or, in the
event of a Change of Control of the Company as defined in
Paragraph 8.C., for the longer of the Severance Period or
the remainder of Skeen's life. Skeen shall not be entitled
to travel benefits on any other airline.
(ix) Deductions for Taxes. Any compensation
due to Skeen hereunder will be subject to deductions for
social security, federal and state withholding taxes, and
any other such taxes as may from time to time be required by
governmental authority.
(x) Notwithstanding any provision to the
contrary in this Agreement, if any part of the payments
provided for under or pursuant to this Agreement (the
"Agreement Payments"), together with all payments in the
nature of compensation to or for the benefit of Skeen under
any other arrangement, would if paid constitute a "parachute
payment" under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), then the amount payable to
Skeen under or pursuant to this Agreement in such
circumstances shall be subject to the following sentence of
this Paragraph 10.E(x). If (i) the value of the Agreement
Payments plus the value of all other payments to or for the
benefit of Skeen that constitute "parachute payments," minus
the amount of any excise taxes payable under Code
Section 4999 with respect to such payments and the amount of
any similar or comparable taxes payable only in connection
with a change in control, is greater than (ii) the greatest
value of payments in the nature of compensation contingent
upon a change in control that could be paid at such time to
or for the benefit of Skeen and not constitute a "parachute
payment" (the "Alternative Payment"), then the Agreement
Payments shall be payable to Skeen; otherwise, only the
Alternative Payment shall be payable to Skeen.
11. Assignment: This Agreement, as it relates to the
employment of Skeen, is a personal contract and the rights
and interests of Skeen hereunder may not be sold,
transferred, assigned, pledged or hypothecated. However,
this Agreement shall inure to the benefit of and be binding
upon Company and its successors and assigns including,
without limitation, any corporation or other entity into
which Company is merged or which acquires all or
substantially all of the outstanding common stock or assets
of Company. At any time prior to a Change in Control,
Company may provide, without the prior written consent of
Skeen, that Skeen shall be employed pursuant to this
Agreement by any of its affiliates instead of or in addition
to Company, and in such case all references herein to the
"Company" shall be deemed to include any such entity,
provided that (i) such action shall not relieve Company of
its obligation to make or cause an affiliate to make or
provide for any payment to or on behalf of Skeen pursuant to
this Agreement, and (ii) Skeen's duties and responsibilities
shall not be significantly diminished as a result thereof.
Unless otherwise agreed to by Skeen, Company shall provide
that Skeen shall be employed pursuant to this Agreement by
any other entities to which ACAH or ACA may after the date
of this Agreement transfer or assign any of the operations
or businesses operated by either of them as of the date of
this Agreement, and in such case all references herein to
the "Company" shall be deemed to include any such entities,
provided that such action shall not relieve Company of its
obligation to make or cause an affiliate to make or provide
for any payment to or on behalf of Skeen pursuant to this
Agreement. The Board of Directors may assign any or all of
its responsibilities hereunder to any committee of the
Board, in which case references to the Board of Directors
shall be deemed to refer to such committee.
12. Invalid Provisions: The invalidity of any one or
more of the paragraphs or provisions of this Agreement shall
not affect the reasonable enforceability of the remaining
paragraphs or provisions of this Agreement, all of which are
inserted herein conditionally upon being valid in law; and
in the event one or more of the paragraphs or provisions
contained herein shall be invalid, this instrument shall be
construed as if such invalid paragraphs or provisions had
not been inserted or, alternatively, said paragraphs or
provisions shall be reasonably limited to the extent that
the applicable court interpreting the provisions of this
Agreement considered to be reasonable.
13. Specific Performance: The parties hereby agree
that any violation by Skeen of the covenants and agreements
contained herein shall cause irreparable damage to Company,
and Company may, as a matter of course, enjoin and restrain
said violation by Skeen by process issued out of a court of
competent jurisdiction, in addition to any other remedies
that said court may see fit to award.
14. Binding Effect: All the terms of this Agreement
shall be binding upon and inure to the benefit of the
parties hereto and their respective legal representatives,
successors and assigns.
15. Attorneys' Fees: Company shall pay all legal fees
incurred by Skeen in connection with the preparation of this
Agreement promptly after submission of a bill therefor. In
the event an action is taken by either party to enforce this
Agreement or resolve a dispute in connection herewith, the
prevailing party shall be entitled to recover the costs
incurred with the prosecution and defense of such action,
including reasonable attorney's fees.
16. Waiver of Breach or Violation Not Deemed
Continuing: The waiver by either party of any provision of
this Agreement shall not operate as, or be construed to be,
a waiver of any subsequent breach hereof.
17. Entire Agreement; Law Governing: This Agreement
supersedes in its entirety any and all other agreements
(specifically including any earlier versions of this
Severance Agreement), either oral or in writing, between the
parties hereto with respect to the subject matter hereof, by
and between Company and Skeen, and contains all the
covenants and agreements among the parties with respect to
such subject matter. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Virginia.
Skeen hereby acknowledges that he was represented by counsel
of his choosing in the drafting and negotiation of this
Agreement and that he reviewed this Agreement with and was
advised as to each of the terms thereof by such counsel. In
interpreting this Agreement, a court shall not treat either
party as the draftsman of the Agreement.
18. Paragraph Headings: The Paragraph headings
contained in this Agreement are for convenience only and
shall in no manner be construed as a part of this Agreement.
19. Release by Skeen. In the event of a termination
of employment by Skeen that results in the payment of
Severance Compensation to him pursuant to the terms of this
Agreement, in consideration for such Severance Compensation,
Skeen hereby agrees to execute a full and complete release
to the Company releasing any and all claims that he may have
against the Company including any claims relating to his
termination of employment.
20. Notices. All notices permitted or required to be
given pursuant to this Agreement shall be in writing and
shall be deemed to have been sufficiently given, subject to
the further provisions of this Section 20, for all purposes
when presented personally to such party (which in the case
of notice to the Company, shall be presented to the person
holding the office or offices identified below) or sent by
facsimile transmission, any national overnight delivery
service, or certified or registered mail, to such party at
its address set forth below:
If to Skeen, to the most recent address indicated
for Skeen's residence in the personnel records of Company,
unless Skeen gives written notice that such notices are to
be delivered to another address.
If to ACA or the Company:
Atlantic Coast Airlines Holdings, Inc.
Atlantic Coast Airlines
515A Shaw Road
Dulles, VA 20166
Attention: General Counsel or Corporate Secretary
Fax No. (703) 925-6294
Such notice shall be deemed to be given and received when
delivered if delivered personally, upon electronic or other
confirmation of receipt if delivered by facsimile
transmission, the next business day after the date sent if
sent by a national overnight delivery service, or five (5)
business days after the date mailed if mailed in the
continental United States by certified or registered mail.
Any notice of any change in such address shall also be given
in the manner set forth above. Whenever the giving of
notice is required, the giving of such notice may be waived
in writing by the party entitled to receive such notice.
A copy of any notice given to Skeen shall be sent to:
Robert E. Madden
Carr Goodson Lee & Warner
1301 K Street, NW
Suite 400, East Tower
Washington, DC 20005-3300
Fax No. (202) 310-5555
IN WITNESS WHEREOF, the Company has hereunto caused
this Agreement to be executed by a duly authorized officer
and Skeen has hereunto set his hand as of the day and year
first above written.
WITNESS:
________________________________
_____________________________
Kerry B. Skeen
COMPANY:
ATTEST: ATLANTIC COAST AIRLINES
_______________________________ BY:
_________________________
Richard J. Kennedy, C. Edward Acker,
Secretary Chairman of the
Board
ATTEST: ATLANTIC COAST
AIRLINES HOLDINGS, INC.
_______________________________ BY:
_________________________
Richard J. Kennedy, C. Edward Acker,
Secretary Chairman of the Board
Exhibit 10.12 (c)
SEVERANCE AGREEMENT
This Amended And Restated Severance Agreement (the
"Agreement") is made and entered into as of this 20th day of
January, 1999 (the "Effective Date"), by and between
ATLANTIC COAST AIRLINES HOLDINGS, INC., a Delaware
corporation ("ACAH"), ATLANTIC COAST AIRLINES, a California
corporation ("ACA") (ACAH and ACA are herein collectively
referred to as the "Company") and THOMAS J. MOORE ("Moore").
Witnesseth That:
Whereas, Moore is currently employed by the
Company as Chief Operating Officer and Executive Vice
President, and in connection with such employment entered
into a Severance Agreement (dated as of January 1, 1997)
with the Company; and
Whereas, the Company wishes to assure itself of
the continued services of Moore; and
Whereas, the Board of Directors of the Company has
determined that the best interests of the Company would be
served by entering into this amended and restated Agreement
with Moore;
Now, Therefore, the parties, for and in
consideration of the mutual and reciprocal covenants and
agreements hereinafter contained, and intending to be
legally bound hereby, do contract and agree as follows:
1. Employment Company hereby employs Moore and
Moore hereby accepts employment by Company and agrees to
perform his duties and responsibilities hereunder upon all
of the terms and conditions as are hereinafter set forth.
2. Duties Moore shall serve the Company in the
capacities of Chief Operating Officer and Executive Vice
President. Moore shall be responsible for supervising and
directing all operations of the Company and of any other
entity(ies) to which the Company's obligations under this
Agreement shall be assigned pursuant to Paragraph 12. Moore
shall otherwise be responsible for carrying out all such
other duties and services for the Company commensurate with
Moore's position, as may be designed from time to time by
the Chief Executive Officer of the Company (the "CEO").
3. Term of Employment Moore's term of
employment under this Restated Agreement shall commence on
the Effective Date and shall terminate on the last day of
the calendar month which is twelve (12) calendar months
after the Effective Date, unless further extended as
hereinafter set forth. Commencing on each successive
anniversary of the Effective Date, the Agreement shall
automatically be extended for an additional twelve (12)
months without further action by either party unless Moore's
employment has previously been terminated or unless Moore or
the Company has provided notice of intention to terminate
Moore's employment pursuant to the terms of Paragraph 10
below, in which case Moore's term of employment under this
Agreement will be extended to the pending Termination Date.
4. Extent of Service Moore shall devote such
time and attention as is required to perform his obligations
under this Agreement and will at all times faithfully and
industriously, consistent with his ability, experience and
talent, perform his duties hereunder under the direction of
the CEO.
5. Compensation During the term of this
Agreement, Company agrees to pay to Moore, and Moore agrees
to accept from Company, in full payment for services
rendered by Moore and work to be performed by him under the
terms of this Agreement, the following:
A. An annual base salary of Two-Hundred
Thousand Dollars ($200,000) shall be paid to Moore.
Commencing on May 1, 1999 and on each May 1 thereafter, the
amount of Moore's base salary shall be increased as
determined by the Compensation Committee of the Board of
Directors of the Company. Moore acknowledges that his
salary increase effective May 1, 1999 pursuant to this
paragraph has already been provided to him in the form of
certain stock options. Moore's base salary for each year
shall be payable to him in accordance with the reasonable
payroll practices of the Company as from time to time in
effect for executive employees (but in no event less often
than monthly).
B. Moore shall participate in the Company's
Management Incentive Program, or any successor bonus plan or
program for management employees.
C. Moore shall be eligible for an
additional annual bonus under an executive performance bonus
plan currently known as Senior Management Incentive Plan for
so long as the Board of Directors determines to maintain
such plan. Under such plan, each calendar year, Moore shall
be entitled to receive a bonus equal to specified percentage
of base salary upon the attainment of certain pre-
established goals. Such goals and percentage of salary shall
be determined by the Compensation Committee of the Board of
Directors of the Company prior to the commencement of each
plan year. The bonus amount each year shall be paid in a
single cash lump sum paid at the time period provided under
such plan, at the same time as paid to other eligible
employees, and generally no later than 90 days after the end
of the plan period.
D. Moore will be entitled to deferred
compensation ("Deferred Compensation") as described in this
section. The Company will make Deferred Compensation
contributions at the rate of thirty percent (30%) of Moore's
annual base salary. Deferred Compensation will be based on
Moore's annual base salary in effect on May 1 in each year
beginning 1998, and will be payable as of May 1 in each year
beginning 1998. Such contributions will be applied toward
funding such deferred compensation program as the Company
and Moore may agree to from time to time, consistent with
the funding and vesting provisions of this Agreement.
The method of funding of Deferred Compensation,
and the timing of the actual payment of contributions, shall
be agreed between the Company and Moore from time to time.
As of the date hereof, the Deferred Compensation program is
provided under a split dollar life insurance arrangement
with Phoenix Home Life Mutual - (the "Split Dollar
Agreement"). The Company may implement a substitute
Deferred Compensation plan not tied to a Split Dollar
Agreement so long as (1) the amount contributed by the
Company on Moore's behalf equals the amount set forth
herein, and (2) the vesting schedule, credit for Years of
Service, and terms of distribution are all at least as
favorable to Moore as set forth herein. The Company shall
continue to abide by the terms of the Split Dollar Agreement
with Moore previously executed as of July 1, 1996, which
shall provide for a split dollar plan for a policy of
insurance upon the life of Moore in a face amount to be
mutually agreed upon between Moore and the Company. For so
long as the Split Dollar Agreement shall serve as the
deferred compensation program under this Agreement, the
following terms shall apply:
(i) Moore shall be the owner of the
policy under the Split Dollar Agreement and will have the
right to designate his beneficiary with respect to proceeds
of the policy payable upon his death; provided, however,
that notwithstanding the foregoing, the Company shall have a
collateral assignment of the policy as security for the
repayment of the amounts contributed by the Company toward
the payment of premiums for the policy.
(ii) The Company shall, except as
provided in Paragraph 5D(iii) below, each year as required
under the Split Dollar Agreement and the related policy,
pay, on or before the due date(s) under the terms of the
policy, the entire amount of the annual premium due on the
policy acquired pursuant to the terms of the Split Dollar
Agreement. The annual premium due on the policy will be the
amount of the Company's contribution to deferred
compensation calculated as described above.
(iii) The "Deferred Compensation
Ending Date" shall mean the date of termination of Moore's
employment if Moore's employment with the Company is
terminated at any time under circumstances that do not
entitle him to Severance Compensation pursuant to Section 10
of this Agreement, or shall mean the last day of the
Severance Period (as defined in Section 10) if Moore is
entitled to Severance Compensation. During a Severance
Period, Deferred Compensation shall continue pursuant to the
terms of 10.E.(iv) hereof. Upon the Deferred Compensation
Ending Date, the following shall occur:
(a) The applicable vested percentage of Moore's
interest in Deferred Compensation shall be calculated as
provided herein. Moore will be entitled to receive the
deferred compensation benefit provided under such deferred
compensation program only to the extent he is vested in the
Company's contributions. Vesting will be based upon "Years
of Service", with Moore to be credited with one Year of
Service for completion of each twelve (12) consecutive month
period of employment with the Company beginning January 1,
1997 and ending on the Deferred Compensation Ending Date.
(That is, Moore will be credited with Years of Service for
any applicable Severance Period, as further provided in
Section 10.E.(iv) hereof.) Moore will become vested in the
deferred compensation based on the following schedule:
Years of Service Percentage Vested
Less than 4 0%
At least 4 but less than 5 25%
At least 5 but less than 6 35%
At least 6 but less than 7 50%
At least 7 but less than 8 65%
At least 8 but less than 9 80%
At least 9 100%
In the event of a Change in Control (as defined in
Paragraph 8.C. of this Agreement) of the Company, Moore
shall become immediately 100% vested in his Deferred
Compensation amount notwithstanding the above vesting
schedule.
(b) The Split Dollar Agreement shall continue in
full force and effect and survive separate and apart from
this Agreement; provided, however, that the Company shall,
at its election, have no further obligation to pay any
premium on the policy under the Split Dollar Agreement which
has a due date after the Deferred Compensation Ending Date
and such obligation shall be transferred to Moore.
(c) The Company shall pay to Moore whatever
"Deferred Compensation" amount is equal to the applicable
vested percentage of the total policy premiums paid by the
Company pursuant to the Split Dollar Agreement. The Company
shall make this payment within thirty (30) days following
the Deferred Compensation Ending Date by releasing its
interest in the policy, or a portion thereof, on Moore's
life acquired pursuant to the terms of the Split Dollar
Agreement, or any or all of the paid up additions standing
to the credit of such policy, if any, such that such
released interest equals the Deferred Compensation amount
paid to Moore pursuant to this Paragraph 5D. The Company
agrees that the amount of any such release of interest by
the Company shall reduce the amount of "Liabilities" (as
such term is defined in the Agreement of Assignment of Life
Insurance Death Benefit As Collateral entered into between
Moore and the Company in connection with the Split Dollar
Agreement) owed to the Company in connection with the Split
Dollar Agreement and related Collateral Assignment
Agreement. Accordingly, the Company also agrees to reduce
to such extent its collateral assignment of the policy
pursuant to the Split Dollar Agreement and related
Collateral Assignment Agreement.
E. The Company may pay Moore discretionary
compensation, bonuses and benefits in addition to those
provided for herein in such amounts and at such times as the
Compensation Committee of the Board of Directors of the
Company shall determine.
6. Benefits
A. The Company shall pay for or provide
Moore such vacation time and benefits, including but not
limited to, coverage under Company's major medical,
accident, health, dental, disability and life insurance
plans, as are made available to other executive employees of
Company generally (and, to the extent provided by such
policies, to Moore's dependents).
B. The Company agrees to promptly reimburse
Moore for any otherwise unreimbursed premiums and/or
uncovered medical expenses up to $10,000 per calendar year
under a written medical reimbursement plan maintained for
Moore and other key executive employees. If such payments
are taxable to Moore, the Company shall pay Moore a gross-up
equal to the estimated income, FICA and Medicare taxes due
with respect to such reimbursement, with federal and state
income taxes being estimated at the highest marginal rates.
C. Moore shall be eligible to participate
in any profit sharing plan, employee stock ownership plan or
other qualified retirement plan adopted by Company to the
same extent as other executive employees of Company. Moore
shall also be eligible to participate in any stock option,
stock appreciation rights or stock purchase plans or
programs or nonqualified deferred compensation arrangements
of Company, which participation shall be at levels as may be
determined appropriate by the Compensation Committee of the
Board of Directors.
7. Reimbursement of Expenses The Company agrees
to promptly reimburse Moore, within fifteen (15) days after
presentation of receipts and other appropriate
documentation, for all reasonable, ordinary and necessary
travel costs and other necessary expenses incurred by Moore
in performing his duties pursuant to this Agreement.
8. Stock Options
A. Mandatory Stock Options. Company agrees
to continue in force a stock option plan or one which is
substantially similar to the existing plan ("Stock Option
Plan"), which has been approved by the shareholders of the
Company and, on the first business day in each May
commencing in May, 1999, and (subject to the provisions of
Paragraph 10.A.(vii)) continuing so long as Moore is
employed by the Company to grant Moore options under the
Stock Option Plan to purchase not less than 35,000 shares of
the common stock of ACAH at the price per share at the
closing of the trading market on the last business date
prior to such grant. The Company also agrees to approve the
issuance of such additional shares as are necessary to
enable Moore to exercise such options. The Company will not
be required to reserve shares from existing plans to cover
future obligations under this Paragraph, but will use
reasonable efforts to obtain shareholder approval as
necessary from time to time to make a sufficient number of
additional shares available on a timely basis, and will
provide Moore with equivalent alternative compensation
should approval not be obtained. The terms of the grant of
such options shall be consistent with the terms of options
granted as of the time of the grant to other senior
executive officers at or below Moore's position with the
Company.
B. Acceleration of Stock Options upon a
Change in Control. If the Company experiences a Corporate
Change, the exercisability and vesting of all Stock Options
held by Moore as of the date of the Corporate Change shall
accelerate as of the date of such Corporate Change. The
Compensation Committee of the Company's Board of Directors
(the "Committee") shall provide that if a Corporate Change
occurs, then effective as of a date selected by the
Committee, the Committee (which for purposes of the
Corporate Changes described in clauses (iii) and (v) of the
definition of Corporate Change below shall be the Committee
as constituted prior to the occurrence of such Corporate
Change) acting in its sole discretion without the consent or
approval of Moore, will effect one or more of the following
alternatives or combination of alternatives with respect to
all outstanding Stock Options (which alternatives may be
conditional on the occurrence of such of the Corporate
Change specified in clause (i) through (v) of the definition
of Corporate Change below which gives rise to the Corporate
Change: (1) in the case of a Corporate Change specified in
clauses (i), (ii) or (iv) of the definition thereof, provide
that exercisable options (including any options exercisable
pursuant to the first sentence of this Paragraph 8.B.) then
outstanding may be exercised in full for a limited period of
time on or before a specified date (which will permit Moore
to participate with the Common Stock received upon exercise
of such option in the event of a Corporate Change specified
in clauses (i), (ii) or (iv) of the definition of Corporate
Change below, as the case may be) fixed by the Committee,
after which specified date all unexercised options and all
rights of Moore thereunder shall terminate, (2) provide that
exercisable options (including any options exercisable
pursuant to the first sentence of this Paragraph 8.B.) then
outstanding may be exercised so that such options may be
exercised in full for their then remaining term, or
(3) require the mandatory surrender to the Company of
outstanding options held by Moore (including any options
exercisable pursuant to the first sentence of this Paragraph
8.B.) as of a date, before or not later than sixty days
after such Corporate Change, specified by the Committee, and
in such event the Committee shall thereupon cancel such
options and the Company shall pay to Moore an amount of cash
equal to the excess of the fair market value of the
aggregate shares subject to such option over the aggregate
option price of such shares; provided, however, the
Committee shall not select an alternative (unless consented
to by Moore) that, if Moore exercised his accelerated
options pursuant to alternative 1 or 2 and participated in
the transaction specified in clause (i), (ii) or (iv) of
the definition of Corporate Change below or received cash
pursuant to alternative 3, would result in Moore's owing any
money by virtue of operation of Section 16(b) of the
Exchange Act. If all such alternatives have such a result,
the Committee shall take such action, which is hereby
authorized, to put Moore in as close to the same position as
Moore would have been in had alternative 1, 2 or 3 been
selected but without resulting in any payment by Moore
pursuant to Section 16(b) of the Exchange Act.
Notwithstanding the foregoing, with the consent of Moore,
the Committee may in lieu of the foregoing make such
provision with respect of any Corporate Change as it deems
appropriate.
C. Definitions. For purposes of this
Agreement:
(i) "Stock Options" shall mean any
grant to Moore by the Company, pursuant to a Stock Option
Plan, of the right and option to purchase from the Company a
specified number of shares of Atlantic Coast Airlines
Holdings, Inc. common stock under certain terms and
conditions.
(ii) "Change in Control" and "Corporate
Change" shall each mean (i) any merger or consolidation in
which the Company shall not be the surviving entity (or
survives only as a subsidiary of another entity, unless the
stockholders of Company immediately before such merger or
consolidation own, directly or indirectly immediately
following such merger or consolidation, substantially all of
the combined voting power of the surviving entity in
substantially the same proportion as their ownership
immediately before such merger or consolidation, (ii) the
sale of all or substantially all of the Company's assets to
any other person or entity (other than a wholly-owned
subsidiary), (iii) the acquisition of beneficial ownership
or control of (including, without limitation, power to vote)
more than 50% of the outstanding shares of Common Stock by
any person or entity (including a "group" as defined by or
under Section 13(d)(3) of the Exchange Act), (iv) the
dissolution or liquidation of the Company, (v) a contested
election of directors, as a result of which or in connection
with which the persons who were directors of the Company
before such election or their nominees cease to constitute a
majority of the Board, or (vi) any other event specified by
the Committee, regardless of whether at the time an Option
is granted or thereafter.
D. Amendment to Existing Option Agreements.
The provisions of this Paragraph 18 shall apply to all Stock
Options or restricted stock previously granted to Employee,
and this Amendment Number One shall be deemed to be an
amendment to all Stock Option or Restricted Stock Agreements
presently in existence between the Company and Employee, and
will supersede any language to the contrary contained in
said agreements. These terms will also apply to mandatory
Stock Options granted as provided in subparagraph A above.
The Compensation Committee of the Board of Directors retains
full discretion of whether to grant any additional Stock
Options in the future, and if so whether the terms provided
herein will apply to said Stock Options.
9. Deductions Deductions shall be made from
Moore's compensation for social security, Medicare, federal,
state and local withholding taxes, and any other such taxes
as may from time to time be required by any governmental
authority.
10. Termination Moore's employment with the
Company shall be terminated only in accordance with the
following provisions:
A. Disability.
(i) In the event Moore shall become
mentally or physically disabled so as to have been unable to
perform his duties hereunder for six (6) consecutive months,
subject to Moore's right to return to work as provided
below, Company shall have the right to terminate Moore's
employment with Company upon the expiration of such
six month period; provided, however, that upon any such
termination Company shall be obligated to provide Moore with
Severance Compensation as provided in Paragraph 10.E.
herein. Such six-month period shall be deemed to have
commenced on the date when Moore is first unable to perform
his duties on a substantially full-time basis because of
mental or physical disability and shall end on the date on
which Moore shall return to the substantial full-time
performance of his duties. If at the expiration of such six
month period, the Company shall desire to terminate Moore on
the basis of disability, it shall give written notice to
him. Moore's employment shall thereafter be terminated if
he does not return to substantial full-time performance of
his duties within ten (10) calendar days after such notice
is given.
(ii) Nothing contained herein shall be
construed to affect Moore's rights under any disability
insurance or similar policy, whether maintained by the
Company, Moore or another party. The Company may utilize a
disability policy to fund, in whole or in part, the
compensation that would be due to Moore during the term of
or in the event of a disability, in which case the proceeds
of the policy would not be in addition to any compensation
otherwise payable to Moore.
(iii) For purposes of this
Agreement, Moore shall be deemed to be disabled when he
shall have been absent from his duties because of sickness,
illness, injury or other physical or mental infirmity on a
substantially full-time basis. In the event of a dispute as
to whether Moore is disabled, the issue of the determination
of disability shall be submitted to a Board of Arbiters for
a binding decision under the procedures set forth in
Paragraph 10.A.(v) below.
(iv) At the end of any disability
(other than a disability that results in the termination of
Moore's employment with the Company), Moore shall return to
work and this Agreement shall continue as though such
disability had not occurred.
(v) If there is a dispute as to whether
Moore is subject to any disability, the issue shall be
submitted to a Board of Arbiters (whose decision shall be
binding on the Company and Moore) consisting of three
persons: one physician who specializes in the physical or
mental disability in dispute (hereinafter referred to as a
"Specialist") shall be appointed on behalf of Company by the
President, Chairman of the Board, or by the Compensation
Committee of the Board of Directors of Company; a second
Specialist shall be appointed by Moore and a third
Specialist shall be appointed by the two Specialists so
appointed. The decision of a majority of such Specialists
shall be binding upon the parties hereto. If a majority of
the Specialists determines that Moore is not subject to any
disability for purposes of this Agreement, Moore shall
return to work under the provisions hereof. Such
Specialists may physically examine Moore, who hereby
consents to such examination and to make available any
pertinent medical records. The cost of such Specialists
shall be paid by Company.
(vi) If it is determined that Moore can
return to work hereunder on a part-time basis, the parties
agree to use good faith efforts to negotiate the terms of
Moore's return to work.
(vii) During any period in which
Moore is disabled but his employment shall not have been
terminated, Moore shall continue to receive his base salary
and any applicable bonus, and shall continue to receive all
benefits as an employee and as provided herein generally.
Any options previously granted shall continue to vest, but
no new options shall be issued to Moore. Any mandatory
option grants as provided herein shall be deferred until
such time as the disability period ends.
(viii) During any period in which
Moore is disabled but his employment shall not have been
terminated, Moore shall continue to be credited with Years
of Service for purposes of vesting of Deferred Compensation
as set forth in Paragraph 5.D.
B. Death.
(i) Moore's employment with Company
shall terminate immediately upon Moore's death; provided,
however, that Company shall be obligated to provide the
Severance Compensation as specified in Paragraph 10.E.
herein to Moore's estate, heirs or beneficiaries.
(ii) Nothing contained herein shall be
construed to affect Moore's rights under any life insurance
or similar policy, whether maintained by Company, Moore or
another party. The Company may utilize a life insurance
policy to fund, in whole or in part, the Severance
Compensation that would be payable in the event of Moore's
death, in which case the proceeds of any such policy other
than the Split Dollar Agreement would not be in addition to
any Severance Compensation otherwise payable under this
Paragraph 10.B.
C. Termination by Moore.
(i) Other than Following a Change in
Control. Moore may terminate his employment by delivering
to Company sixty (60) days' written notice, and such
termination shall be effective on the sixtieth (60th) day
following the date of receipt of such notice (the
"Termination Date"). In such event, Moore (i) shall
continue to render his services up to the Termination Date
if so requested by Company and (ii) shall be paid his
regular base salary and shall receive all benefits up to the
Termination Date. Moore will be entitled to payment of any
bonus due but not yet paid for prior bonus periods (paid at
the same time it would have been paid had Moore's employment
not been terminated), but will not be entitled to Severance
Compensation, to any bonus for the current bonus period, or
to any other compensation, bonus or fringe benefits accrued
after the Termination Date.
(ii) Following a Change in Control.
Notwithstanding the above, in the event of any termination
by Moore of his employment with the Company which is
effected within twelve (12) months following a "Change in
Control" as defined and determined under Paragraph 8.C. of
this Agreement, Company shall be obligated to provide Moore
with Severance Compensation as provided in Paragraph 10.E.
herein. The twelve month period will be deemed to mean any
notice given within twelve months following a Change in
Control where an actual termination occurs within sixty days
following said notice.
D. Termination by Company.
(i) Without Cause. Company may,
without cause, terminate Moore's employment under this
Agreement at any time by giving Moore fifteen (15) days'
written notice thereof, and such termination shall be
effective on the fifteenth day following the date such
notice is given (said 15th day, the "Termination Date").
Company shall be obligated to provide Moore with Severance
Compensation as provided in Paragraph 10.E. herein. At the
option of Company, Moore's employment shall be immediately
terminated upon the Company giving such notice, in which
case Moore shall continue to receive his full base salary
and related fringe benefits through the Termination Date.
Notwithstanding any provision of this Agreement to the
contrary, any termination of Moore's employment by the
Company, for any reason or no reason, effected as a result
of, in connection with or within twelve (12) months
following a "Change in Control", as defined and determined
under Paragraph 8.C. of this Agreement, shall automatically
be deemed to be a termination without cause. The twelve
month period will be deemed to mean any notice given within
twelve months following a Change in Control regardless of
when actual termination occurs following said notice.
(ii) For Cause. Company may terminate
Moore's employment under this Agreement immediately for
"cause". In such event, the Company shall not be liable to
Moore for any compensation, bonus or benefits after the date
of termination of employment. Cause shall be defined as any
of the following: (i) willful unauthorized misconduct in the
material performance of Moore's duties hereunder, (ii)
commission of an act of theft, fraud, dishonesty or personal
misconduct by Moore, which act is harmful to Company, (iii)
breach of any provision of this Agreement if such breach has
not been cured by Moore (or if Moore has not compensated the
Company for such breach by payment of an amount deemed
reasonable by the Company if the breach cannot be cured)
within fifteen (15) days after the Company gives Moore
written notice of such breach. Any termination under this
Paragraph 10.D.(ii) shall take effect immediately upon the
Company giving Moore written notice thereof.
E. Severance Compensation. "Severance
Compensation" is defined as all of the compensation and
benefits described in this Paragraph 10.E. It will be
provided to Moore upon the occurrence of any of the events
described elsewhere in this Agreement as providing for
Moore's receipt of Severance Compensation, but not in any
other circumstances except to the extent that individual
components of Severance Compensation may be separately
provided pursuant to the terms of this Agreement.
"Termination Date" is defined as the last day of Moore's
employment with the Company. "Severance Period" is defined
as the period beginning on the day following the Termination
Date and ending on the day which is two years following the
Termination Date. The compensation and benefits to be
provided as Severance Compensation are as follows:
(i) Severance Pay. Throughout the
Severance Period, Moore will receive severance pay at the
rate of 100% of his annual base salary in effect at the time
of his termination, to be paid on the Company's regular
payroll payment dates at the same time and in the same
fashion as the Company's regular payroll payments.
(ii) Bonus. The Company shall pay to
Moore a one-time bonus equal to two times the highest annual
bonus received by Moore during any one of the five years
immediately preceding the year in which the Termination Date
occurs. This bonus will be paid within thirty days
following the Termination Date. It shall be considered to
be full compensation for all amounts due to Moore for bonus
plans in which he was participating as of the Termination
Date, and he shall not be entitled to any further payments
under any of said plans during the Severance Period or
thereafter. Notwithstanding the above, any bonus due to
Moore for years (or other applicable bonus period) completed
prior to the Termination Date but not yet paid shall be paid
in addition to the bonus described herein.
(iii) Stock Options. All options to
purchase shares of ACAH stock that have been granted to
Moore and that are not exercisable as of the Termination
Date shall terminate as of said date. For all options that
are exercisable as of said date (including options that are
accelerated following a Change in Control pursuant to
Paragraph 8 above), the terms of exercise, payment, and
expiration, shall be as provided in each option agreement.
All options that would have been granted to Moore in the
future pursuant to Paragraph 8.A. hereof shall not be
granted if the date on which they would have been granted
occurs after the Termination Date, even though said date may
occur during the Severance Period.
(iv) Deferred Compensation. The
Deferred Compensation program will continue throughout the
Severance Period, including Moore's accumulation of Years of
Service for vesting purposes, and including the Company's
continuation of contributions. The Split Dollar Agreement
shall continue in full force and effect through the
Severance Period and shall survive separate and apart from
this Agreement, and the Company's obligation to pay all
premiums pursuant to this Agreement shall continue in
accordance with the terms of the Split Dollar Agreement for
the Severance Period. At the end of the Severance Period,
Moore shall receive his vested interest and any obligation
to pay premiums shall be transferred to Moore.
Alternatively, the Company may elect to pay such amounts to
Moore as would be payable during the Severance Period by the
Company under the Deferred Compensation program in a single
lump sum payment within fifteen (15) days after the
Termination Date.
(v) Insurance Programs. Coverage under
the Company's major medical, accident, health, dental,
disability and life insurance plans as from time to time
provided to other executive employees of the Company (and,
to the extent provided by such policies, to Moore's
dependents) shall continue to be paid for by the Company
during the Severance Period. Provided, however, if such
coverage cannot be continued during the Severance Period or
until Moore's death, as the case may be, under the terms of
such policies or plans, the Company shall reimburse Moore
for the cost of comparable coverage under individually
obtained policies or for COBRA coverage, or shall make other
arrangements to assure that Moore has comparable coverage.
(vi) Vacation. Vacation shall not
continue to accrue after the Termination Date under any
circumstances.
(vii) Executive Medical
Reimbursement Plan. Throughout the Severance Period, the
Company will continue to promptly reimburse Moore for any
otherwise unreimbursed premiums and/or uncovered medical
expenses up to $10,000 per calendar year under a written
medical reimbursement plan maintained for the Company's key
executive employees, including the tax gross-up, if
applicable.
(viii) Travel Benefits. The Atlantic
Coast Airlines, Inc. flight pass privileges currently
granted to Moore will continue for the Severance Period.
Moore and his wife shall be provided with free travel on the
Company's planes or on the planes of any successor in
interest to the Company on a positive space basis, and his
children shall be provided free travel on a space available
basis. Moore shall not be entitled to travel benefits on
any other airline.
(ix) Deductions for Taxes. Any
compensation due to Moore hereunder will be subject to
deductions for social security, federal and state
withholding taxes, and any other such taxes as may from time
to time be required by governmental authority.
(x) Certain Adjustments.
Notwithstanding any provision to the contrary in this
Agreement, if any part of the payments provided for under or
pursuant to this Agreement (the "Agreement Payments"),
together with all payments in the nature of compensation to
or for the benefit of Moore under any other arrangement,
would if paid constitute a "parachute payment" under
Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), then the amount payable to Moore under
or pursuant to this Agreement in such circumstances shall be
subject to the following sentence of this Paragraph 10.E(x).
If (i) the value of the Agreement Payments plus the value of
all other payments to or for the benefit of Moore that
constitute "parachute payments", minus the amount of any
excise taxes payable under Code Section 4999 with respect to
such payments and the amount of any similar or comparable
taxes payable only in connection with a change in control,
is greater than (ii) the greatest value of payments in the
nature of compensation contingent upon a change in control
that could be paid at such time to or for the benefit of
Moore and not constitute a "parachute payment" (the
"Alternative Payment"), then the Agreement Payments shall be
payable to Moore; otherwise, only the Alternative Payment
shall be payable to Moore.
11. Nonsolicitation, Non-Competition, and
Confidentiality
A. Nonsolicitation and Non-Competition.
For so long as Moore is an employee of the Company, and
continuing thereafter for twelve months following any
termination of Moore's employment, or with respect to the
provisions of (i), below, for the longer of such twelve
month period or for such period as Moore is receiving
Severance Compensation, Moore shall not, without the prior
written consent of the Company, directly or indirectly, as a
sole proprietor, member of a partnership, stockholder or
investor, officer or director of a corporation, or as an
employee, associate, consultant or agent of any person,
partnership, corporation or other business organization or
entity other than the Company: (i) solicit or endeavor to
entice away from the Company or any of its subsidiaries any
person or entity who is, or, during the then most recent 12
month period, was employed by, or had served as an agent of,
the Company or any of its subsidiaries; or (ii) engage in or
contract with others to engage in any business enterprise,
line of work consulting contract, joint venture or other
arrangement which conducts a business or businesses
substantially similar to the business conducted by Company
in any area in which Company or any of its affiliates or
subsidiaries provides or plans to provide air transportation
to the public. Moore acknowledges that the geographic area
covered hereby, and the period and nature of the agreed
restrictions are reasonable and necessary for the protection
of the business of the Company. All provisions of this
Paragraph concerning non-competition are severable; and
while it is the intention of the parties that all of said
provisions shall be enforceable, if any one of the same
shall be held to be unenforceable in whole or in part, the
remainder shall continue to be in full force and effect.
The terms of this Paragraph 11.A will not apply following
any termination of Moore's employment that was effected as a
result of, in connection with or within twelve (12) months
following a Change in Control. The twelve month period will
be deemed to mean any notice given within twelve months
following a Change in Control regardless of when actual
termination occurs following said notice. In the event
Moore is receiving Severance Compensation following
B. Confidentiality. Moore covenants and
agrees with the Company that he will not at any time, except
in performance of his obligations to the Company hereunder
or with the prior written consent of the Company, directly
or indirectly, disclose any secret or confidential
information that he may learn or has learned by reason of
his association with the Company or any of its subsidiaries
and affiliates. The term "confidential information"
includes information not previously disclosed to the public
or to the trade by the Company's management, or otherwise in
the public domain, with respect to the Company's or any of
its affiliates' or subsidiaries', products, facilities,
applications and methods, trade secrets and other
intellectual property, systems, procedures, manuals,
confidential reports, price lists, customer lists, technical
information, financial information (including the revenues,
costs or profits associated with the Company), business
plans, prospects or opportunities, but shall exclude any
information which (i) is or becomes available to the public
or is generally known in the industry or industries in which
the Company operates other than as a result of disclosure by
Moore in violation of his agreements under this Paragraph
11B or (ii) Moore is required to disclose under any
applicable laws, regulations or directives of any government
agency, tribunal or authority having jurisdiction in the
matter or under subpoena or other process of law.
C. Exclusive Property. Moore confirms that
all confidential information is and shall remain the
exclusive property of the Company. All business records,
papers and documents kept or made by Moore relating to the
business of the Company shall be and remain the property of
the Company, except for such papers customarily deemed to be
the personal copies of Moore.
D. Injunctive Relief. Without intending to
limit the remedies available to the Company, Moore
acknowledges that a breach of any of the covenants contain
in this Paragraph 11 may result in material and irreparable
injury to the Company or its affiliates or subsidiaries for
which there is no adequate remedy at law, that it will not
be possible to measure damages for such injuries precisely
and that, in the event of such a breach or threat thereof,
the Company shall be entitled to seek a temporary
restraining order and/or a preliminary or permanent
injunction restraining Moore from engaging in activities
prohibited by this Paragraph 11 or such other relief as may
be required specifically to enforce any of the covenants in
this Paragraph 11. If for any reason, it is held that the
restrictions under this Paragraph 11 are not reasonable or
that consideration therefor is inadequate, such restrictions
shall be interpreted or modified to include as much of the
duration and scope identified in this Paragraph 11 as will
render such restrictions valid and enforceable.
12. Assignment This Agreement, as it relates to
the employment of Moore, is a personal contract and the
rights and interests of Moore hereunder may not be sold,
transferred, assigned, pledged or hypothecated. However,
this Agreement shall inure to the benefit of and be binding
upon Company and its successors and assigns including,
without limitation, any corporation or other entity into
which Company is merged or which acquires all or
substantially all of the outstanding common stock or assets
of Company. At any time prior to a Change in Control,
Company may provide, without the prior written consent of
Moore, that Moore shall be employed pursuant to this
Agreement by any of its affiliates instead of or in addition
to Company, and in such case all references herein to the
"Company" shall be deemed to include any such entity,
provided that such action shall not relieve Company of its
obligation to make or cause an affiliate to make or provide
for any payment to or on behalf of Moore pursuant to this
Agreement.
13. Invalid Provisions The invalidity of any one
or more of the paragraphs or provisions of this Agreement
shall not affect the reasonable enforceability of the
remaining paragraphs or provisions of this Agreement, all of
which are inserted herein conditionally upon being valid in
law; and in the event one or more of the paragraphs or
provisions contained herein shall be invalid, this
instrument shall be construed as if such invalid paragraphs
or provisions had not been inserted or, alternatively, said
paragraphs or provisions shall be reasonably limited to the
extent that the applicable court interpreting the provisions
of this Agreement considers to be reasonable.
14. Specific Performance The parties hereby
agree that any violation by Moore of the covenants and
agreements contained herein shall cause irreparable damage
to the Company, and the Company may, as a matter of course,
enjoin and restrain said violation by Moore by process
issued out of a court of competent jurisdiction, in addition
to any other remedies that said court may see fit to award.
15. Binding Effect All the terms of this
Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective legal
representatives, successors and assigns.
16. Waiver of Breach or Violation Not Deemed
Continuing The waiver by the Company of any provision of
this Agreement may be effected only by a written waiver duly
executed on behalf of the Company and except to the extent
specifically provided in such waiver shall not operate as,
or be construed to be, a waiver of any subsequent breach
hereof.
17. Entire Agreement; Law Governing This
Agreement supersedes in its entirety any and all other
agreements (specifically including any earlier versions of
this Severance Agreement), either oral or in writing,
between the parties hereto with respect to the subject
matter hereof, by and between the Company and Moore, and
contains all the covenants and agreements among the parties
with respect to such subject matter. This Agreement shall
be construed in accordance with the laws of the Commonwealth
of Virginia. Moore hereby acknowledges that he was given the
opportunity to be represented by counsel of his choosing in
the drafting and negotiation of this Agreement and that he
reviewed this Agreement. In interpreting this Agreement, a
court shall not treat either party as the draftsman of the
Agreement.
18. Paragraph Headings The Paragraph headings
contained in this Agreement are for convenience only and
shall in no manner be construed as a part of this Agreement.
19. Release by Moore In the event of a
termination of employment by Moore that results in the
payment of Severance Compensation to him pursuant to the
terms of this Agreement, in consideration for such Severance
Compensation and as a condition precedent to the payment
thereof, Moore hereby agrees to execute a full and complete
release to the Company releasing any and all claims that he
may have against the Company including any claims relating
to his termination of employment.
20. Notices All notices permitted or required to
be given pursuant to this Agreement shall be in writing and
shall be deemed to have been sufficiently given, subject to
the further provisions of this Section 20, for all purposes
when presented personally to such party (which in the case
of notice to the Company, shall be presented to the person
holding the office or offices identified below) or sent by
facsimile transmission, any national overnight delivery
service, or certified or registered mail, to such party at
its address set forth below:
If to Moore, to the most recent address indicated
for Moore's residence in the personnel records of Company,
unless Moore gives written notice that such notices are to
be delivered to another address.
If to ACA or the Company:
Atlantic Coast Airlines Holdings, Inc.
Atlantic Coast Airlines
515A Shaw Road
Dulles, VA 20166
Attention: General Counsel or Corporate
Secretary
Fax No. (703) 925-6294
Such notice shall be deemed to be given and
received when delivered if delivered personally, upon
electronic or other confirmation of receipt if delivered by
facsimile transmission, the next business day after the date
sent if sent by a national overnight delivery service, or
five (5) business days after the date mailed if mailed in
the continental United States by certified or registered
mail. Any notice of any change in such address shall also
be given in the manner set forth above. Whenever the giving
of notice is required, the giving of such notice may be
waived in writing by the party entitled to receive such
notice.
In Witness Whereof, the Company has hereunto caused
this Agreement to be executed by a duly authorized officer
and Moore has hereunto set his hand as of the day and year
first above written.
WITNESS:
_______________________________
________________________
Thomas J. Moore
COMPANY:
ATTEST: ATLANTIC COAST AIRLINES
_______________________________ BY:
________________________
Richard J. Kennedy, Kerry B. Skeen,
Secretary President & Chief
Executive Officer
ATTEST: ATLANTIC COAST
AIRLINES HOLDINGS, INC.
_______________________________ BY:
_________________________
Richard J. Kennedy, Kerry B. Skeen,
Secretary President & Chief
Executive Officer
Exhibit 10.12(h)
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (the "Agreement") is made and
entered into as of this ____ day of ___________, 199__ (the
"Effective Date"), by and between ATLANTIC COAST AIRLINES,
INC., a Delaware corporation (the "Company") and
______________ ("Employee").
W I T N E S S E T H T H A T:
WHEREAS, Employee is currently employed by the Company
and the Company desires to continue to employ Employee; and
Employee desires to continue to be employed by the Company,
upon the terms and conditions hereinafter set forth; and
WHEREAS, the Company and Employee desire to expressly
set forth in this Agreement the terms of Employee's
employment with the Company; and
WHEREAS, the Company has determined that the best
interests of the Company would be served by entering into
this Agreement with Employee; and
WHEREAS, the Company and Employee are both legally
able, and not restricted by prior agreements with other
parties, to enter into this Agreement; and
NOW, THEREFORE, the parties, for and in consideration
of the mutual and reciprocal covenants and agreements
hereinafter contained, and intending to be legally bound
hereby, do contract and agree as follows:
1. Employment: The Company hereby employs Employee
and Employee hereby accepts employment by the Company and
agrees to perform his duties and responsibilities hereunder
upon all of the terms and conditions as are hereinafter set
forth.
2. Duties: Employee shall serve the Company in the
capacities of ___________________________________. Employee
shall be responsible for supervising and directing all
operations of the Company. Employee shall otherwise be
responsible for carrying out such other duties and services
for the Company commensurate with Employee's position, as
may be designated from time to time by __________________.
3. Term of Employment: Employee's term of employment
under this Agreement shall commence on the Effective Date
and shall terminate on the last day of the calendar month
which is twelve (12) calendar months after the Effective
Date, unless further extended as hereinafter set forth.
Commencing on each successive anniversary of the Effective
Date, the Agreement shall automatically be extended for an
additional twelve (12) months without further action by
either party unless one party provides the other fifteen
(15) days' written notice that such party does not wish to
extend the term of this Agreement. The fifteenth (15th) day
following the date of such notice shall be deemed to be a
"Termination Date" for purposes of this Agreement.
4. Extent of Service: Employee shall devote such
time and attention as is required to perform his obligations
under this Agreement and will at all times faithfully and
industriously, consistent with his ability, experience and
talent, perform his duties hereunder under the direction of
the CEO.
5. Compensation: During the term of this Agreement,
the Company agrees to pay to Employee, and Employee agrees
to accept from the Company, in full payment for services
rendered by Employee and work to be performed by him under
the terms of this Agreement, the following:
A. During the first year under this Agreement,
an annual base salary of _____________________
($___________). Thereafter, the amount of Employee's base
salary shall be adjusted as determined by the Compensation
Committee of the Board of Directors of the Company.
Employee's base salary for each year shall be payable to him
in accordance with the reasonable payroll practices of the
Company, as from time to time, in effect for executive
personnel (but in no event less often than monthly).
B. Employee shall participate in the Company's
Senior Management Incentive Plan, or any successor bonus
plan or program for key executives.
C. The Company has entered into a Split Dollar
Agreement with Employee effective _______________, which
provides for a split dollar plan for a policy of insurance
upon the life of Employee in a face amount of
_______________ dollars ($__________).
(i) Employee is the owner of the policy
under the Split Dollar Agreement and has the right to
designate his beneficiary with respect to proceeds of the
policy payable upon his death; provided, however, that
notwithstanding the foregoing, the Company has a collateral
assignment of the policy as security for the repayment of
the amounts contributed by the Company toward the payment of
premiums for the policy.
(ii) The Company shall, each year as required
under the Split Dollar Agreement and the related policy,
pay, on or before the due date(s) under the terms of the
policy, the entire amount of the annual premium due on the
policy acquired pursuant to the terms of the Split Dollar
Agreement. Effective _______________, the annual premium due
on the policy will be determined by multiplying Employee's
annual base salary for the next twelve month period by a
percentage equal to twenty percent (20%) of said base
salary. The initial face amount of the policy will be not
less than ________________dollars ($_________).
(iii) Effective __________, in the event
that Employee's employment with the Company is terminated by
the Company for other than "for cause" (as hereinafter
defined) or should Employee elect to resign his employment
with the Company for any reason or no reason, the Company
shall pay to Employee a "Deferred Compensation" amount equal
to the applicable vested percentage of the total policy
premiums paid by the Company pursuant to the Split Dollar
Agreement. The applicable vested percentage shall be
determined as follows:
Years of Service Percentage Vested
1-4 0%
5 25%
6 35%
7 50%
8 65%
9 80%
10 100%
For purposes of determining Years of Service,
Employee will be credited with a "Year of Service" for
completion of each twelve (12) consecutive month period of
employment with the Company, beginning ___________. Said
Deferred Compensation amount shall be paid in a single lump
sum payment within fifteen (15) days after the termination
date as specified in this Paragraph D.
Notwithstanding the foregoing, in the event of a
change in control (as defined in Item 8 of this Agreement)
of the Company, Employee shall become immediately 100%
vested in his Deferred Compensation amount.
The Company shall release its interest in the policy,
or a portion thereof, on Employee's life acquired pursuant
to the terms of the Split Dollar Agreement, or any or all of
the paid up additions standing to the credit of such policy,
if any, such that such released interest equals the Deferred
Compensation amount paid to Employee pursuant to this
Paragraph D. The Company agrees that the amount of any such
release of interest by the Company shall reduce the amount
of "Liabilities" (as such term is defined in the Agreement
of Assignment of Life Insurance Death Benefit As Collateral
entered into between Employee and the Company in connection
with the Split Dollar Agreement) owed to the Company in
connection with the Split Dollar Agreement and related
Collateral Assignment Agreement. Accordingly, the Company
also agrees to reduce its collateral assignment of the
policy pursuant to the Split Dollar Agreement and related
Collateral Assignment Agreement.
D. Discretionary compensation, bonuses and benefits
in addition to those provided for herein in such amounts and
at such times as the Compensation Committee of the Board of
Directors of the Company shall determine.
6. Benefits: The Company shall pay for or provide
Employee such vacation time and benefits, including but not
limited to coverage under the Company's major medical,
accident, health, dental, disability and life insurance
plans available to other employees of the Company (and, to
the extent provided by such policies, Employee's
dependents). The Company shall provide Employee with an
executive medical reimbursement plan under which the Company
agrees to promptly reimburse Employee for any otherwise
unreimbursed premium and/or covered medical expenses, up to
$10,000 per calendar year.
7. Reimbursement of Expenses: The Company agrees to
promptly reimburse Employee, within fifteen (15) days after
presentation of receipts and other appropriate
documentation, for all reasonable, ordinary and necessary
travel costs and other necessary expenses incurred by
Employee in performing his duties pursuant to this
Agreement.
8. Deductions: Deductions shall be made from Employee's
compensation for social security, federal and state
withholding taxes, and any other such taxes as may, from
time to time, be required by governmental authority.
9. Termination: Employee's employment with the Company
shall be terminated as hereinafter provided:
A. Disability.
(i) In the event Employee shall become mentally
or physically disabled so as to be unable to perform his
duties hereunder (such determination to be made solely by
the Company) for six (6) consecutive months, the Company
shall have the right to terminate Employee's employment with
the Company upon the expiration of such six (6) month
period; provided, however, that the Company shall be
obligated to provide Employee with the such severance
compensation and benefits as hereinafter provided.
(ii) In the event Employee's employment is
terminated by the Company due to a disability as provided
herein, the Company shall continue to provide Employee with
the basic major medical insurance benefits maintained by the
Company and shall pay Employee such severance compensation
as hereinafter provided for a period (the "Severance
Period") which shall be twelve (12) months from the date of
Employee's termination. Employee's severance compensation
("Severance Compensation") shall be determined as follows:
during the Severance Period Employee shall receive an amount
equal to one hundred percent (100%) of his annual base
salary in effect at the commencement of his disability. In
addition, the Company shall pay Employee a prorated portion
of any annual bonus amount accrued through the Termination
Date, provided, however, that such bonus amount will be paid
at the time that such bonus amounts are normally paid by the
Company. The Atlantic Coast Airlines, Inc. flight pass
privileges currently granted to Employee will continue for
the Severance Period. However, such flight pass privileges
will be limited to flights on Atlantic Coast Airlines only.
(iii) Nothing contained herein shall be
construed to affect Employee's rights under any disability
insurance or similar policy, whether maintained by the
Company, Employee or another party.
(iv) For purposes of this Agreement, Employee
shall be deemed to be disabled when he shall have been
absent from his duties on a full time basis for six (6)
consecutive months.
(v) At the end of any disability (other than a
disability that results in the involuntary termination of
Employee's employment with the Company), Employee shall
return to work and this Agreement shall continue as though
such disability had not occurred.
(vi) If Employee desires to return to work at
the end of any disability, but there is a dispute as to
whether he is able to perform his duties hereunder, the
Company shall have sole discretion in determining whether
Employee is able to perform his duties hereunder on a
full-time basis.
B. Death.
(i) Employee's employment with the Company
shall terminate immediately upon Employee's death; provided,
however, that the Company shall be obligated to provide
Employee with such severance compensation and benefits as
hereinafter provided.
(ii) In the event Employee's employment with the
Company is terminated due to his death, the Company shall
continue to provide Employee's dependents with the basic
major medical insurance benefits maintained by the Company
(provided that such dependents were covered under the
applicable Company benefit plan at the time of Employee's
death) and shall pay Employee's estate Employee's
"Severance Compensation" for the "Severance Period." For
purposes of this Paragraph 9B, the Severance Period shall be
twelve (12) months from the date of Employee's death. The
amount of Employee's Severance Compensation shall be
determined as follows: during the Severance Period, an
amount equal to one hundred percent (100%) of Employee's
annual base salary in effect at the time of his death. In
addition, the Company shall pay Employee a prorated portion
of any annual bonus amount accrued through the Termination
Date, provided however, that such bonus amount will be paid
at the time that such bonus amounts are normally paid by the
Company.
(iii) Nothing contained herein shall be
construed to affect Employee's rights under any life
insurance or similar policy, whether maintained by the
Company, Employee or another party.
C. Termination by Employee.
Employee may terminate his employment with the
Company as provided in Paragraph 3. In such event, the
Company shall not be liable to Employee for any
compensation, bonus or fringe benefits after the date of
termination of employment.
D. Termination by the Company.
(i) Without Cause. The Company may, without
cause, terminate this Agreement at any time by giving to
Employee fifteen (15) days' written notice by Certified
Mail, Return Receipt Requested, at the last known residence
of Employee, and such termination shall be effective on the
fifteenth (15th) day following the date of such notice (the
"Termination Date"). At the option of the Company,
Employee's employment shall be immediately terminated upon
receipt of the notice, in which case Employee shall continue
to receive his full base salary and related benefits through
the Termination Date. In addition, the Company shall
continue to provide Employee with the basic major medical
insurance benefits maintained by the Company and shall pay
Employee "Severance Compensation" for the "Severance
Period." For purposes of this Paragraph D1, the Severance
Period shall be twelve (12) months from the Termination
Date. The amount of Employee's Severance Compensation shall
be determined as follows: during the Severance Period, an
amount equal to one hundred percent (100%) of Employee's
annual base salary in effect at the Termination Date. In
addition, the Company shall pay Employee a prorated portion
of any annual bonus amount accrued through the Termination
Date, provided however, that such bonus amount will be paid
at the time that such bonus amounts are normally paid by the
Company. In the discretion of the Company, the Severance
Compensation may be paid, in a single lump sum payment or
periodic payments in accordance with the reasonable payroll
practices of the Company as from time to time in effect for
executive personnel (but in no event less often than
monthly). The Atlantic Coast Airlines, Inc. flight pass
privileges currently granted to Employee will continue for
the Severance Period. However, such flight pass privileges
will be limited to flights on Atlantic Coast Airlines only.
(ii) For "cause." Company may terminate
Employee's employment under this Agreement immediately for
"cause." In such event, the Company shall not be liable to
Employee for any compensation, bonus or benefits after the
date of termination of employment. Cause shall be defined
as any of the following: (i) unauthorized misconduct in the
performance of Employee's duties hereunder, (ii) commission
of an act of dishonesty by Employee or personal misconduct,
which act is harmful to the Company, (iii) breach of any
provision of this Agreement. Any termination under this
Paragraph D2 shall take effect immediately upon Employee's
receipt of written notice from the Company to Employee.
10. Nonsolicitation and Confidentiality.
A. Nonsolicitation. For so long as Employee is an
employee of the Company and continuing for one (1) year
thereafter, Employee shall not, without the prior written
consent of the Company, directly or indirectly, as a sole
proprietor, member of a partnership, stockholder or
investor, officer or director of a corporation, or as an
employee, associate, consultant or agent of any person,
partnership, corporation or other business organization or
entity other than the Company: (i) solicit or endeavor to
entice away from the Company or any of its subsidiaries any
person or entity who is, or, during the then most recent 12-
month period, was employed by, or had served as an agent of,
the Company or any of its subsidiaries; or (ii) solicit or
endeavor to entice away from the Company or any of its
subsidiaries any person or entity who is, or was within the
then most recent 12-month period, a customer or client (or
reasonably anticipated (to the general knowledge of Employee
or the public) to become a customer or client) of the
Company or any of its subsidiaries.
B. Confidentiality. Employee covenants and agrees
with the Company that he will not at any time, except in
performance of his obligations to the Company hereunder or
with the prior written consent of the Company, directly or
indirectly, disclose any secret or confidential information
that he may learn or has learned by reason of his
association with the Company or any of its subsidiaries and
affiliates. The term "confidential information" includes
information not previously disclosed to the public or to the
trade by the Company's management, or otherwise in the
public domain, with respect to the Company's or any of its
affiliates' or subsidiaries', products, facilities,
applications and methods, trade secrets and other
intellectual property, systems, procedures, manuals,
confidential reports, price lists, customer lists, technical
information, financial information (including the revenues,
costs or profits associated with the Company), business
plans, prospects or opportunities, but shall exclude any
information which (i) is or becomes available to the public
or is generally known in the industry or industries in which
the Company operates other than as a result of disclosure by
Employee in violation of his agreements under this Paragraph
10B or (ii) Employee is required to disclose under any
applicable laws, regulations or directives of any government
agency, tribunal or authority having jurisdiction in the
matter or under subpoena or other process of law.
C. Exclusive Property. Employee confirms that all
confidential information is and shall remain the exclusive
property of the Company. All business records, papers and
documents kept or made by Employee relating to the business
of the Company shall be and remain the property of the
Company, except for such papers customarily deemed to be the
personal copies of Employee.
D. Injunctive Relief. Without intending to limit
the remedies available to the Company, Employee acknowledges
that a breach of any of the covenants contained in this
Section 10 may result in material and irreparable injury to
the Company or its affiliates or subsidiaries for which
there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and
that, in the event of such a breach or threat thereof, the
Company shall be entitled to seek a temporary restraining
order and/or a preliminary or permanent injunction
restraining Employee from engaging in activities prohibited
by this Section 10 or such other relief as may be required
specifically to enforce any of the covenants in this Section
10. If for any reason, it is held that the restrictions
under this Section 10 are not reasonable or that
consideration therefor is inadequate, such restrictions
shall be interpreted or modified to include as much of the
duration and scope identified in this Section 10 as will
render such restrictions valid and enforceable.
11. Assignment: This Agreement, as it relates to the
employment of Employee, is a personal contract and the
rights and interests of Employee hereunder may not be sold,
transferred, assigned, pledged or hypothecated. However,
this Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns including,
without limitation, any corporation or other entity into
which the Company is merged or which acquires all or
substantially all of the outstanding common stock or assets
of the Company.
12. Invalid Provisions: The invalidity of any one or
more of the clauses or words contained in this Agreement
shall not affect the reasonable enforceability of the
remaining provisions of this Agreement, all of which are
inserted herein conditionally upon being valid in law; and
in the event one or more of the words or clauses contained
herein shall be invalid, this instrument shall be construed
as if such invalid words or clauses had not been inserted
or, alternatively, said words or clauses shall be reasonably
limited to the extent that the applicable court interpreting
the provisions of this Agreement considers to be reasonable.
13. Specific Performance: The parties hereby agree that
any violation by Employee of the covenants and agreements
contained herein shall cause irreparable damage to the
Company, and the Company may, as a matter of course, enjoin
and restrain said violation by Employee by process issued
out of a court of competent jurisdiction, in addition to any
other remedies that said court may see fit to award.
14. Binding Effect: All the terms of this Agreement
shall be binding upon and inure to the benefit of the
parties hereto and their respective legal representatives,
successors and assigns.
15. Waiver of Breach or Violation Not Deemed Continuing:
The waiver by the Company of any provision of this Agreement
shall not operate as, or be construed to be, a waiver of any
subsequent breach hereof.
16. Entire Agreement; Law Governing: This Agreement
supersedes any and all other agreements, either oral or in
writing, between the parties hereto with respect to the
subject matter hereof, by and between the Company and
Employee, and contains all the covenants and agreements
among the parties with respect to such subject matter. This
Agreement shall be construed in accordance with the laws of
the Commonwealth of Virginia.
17. Paragraph Headings: The Paragraph headings contained
in this Agreement are for convenience only and shall in no
manner be construed as a part of this Agreement.
18. Stock Options:
A. Acceleration of Stock Options upon a
Change in Control. If the Company experiences a Corporate
Change, the exercisability and vesting of all Stock Options
granted to Employee before November 13, 1998 and held by
Employee as of the date of the Corporate Change shall
accelerate as of the date of such Corporate Change. The
Compensation Committee of the Company's Board of Directors
(the "Committee") shall provide that if a Corporate Change
occurs, then effective as of a date selected by the
Committee, the Committee (which for purposes of the
Corporate Changes described in clauses (iii) and (v) of the
definition of Corporate Change below shall be the Committee
as constituted prior to the occurrence of such Corporate
Change) acting in its sole discretion without the consent or
approval of Employee, will effect one or more of the
following alternatives or combination of alternatives with
respect to all outstanding Stock Options (which alternatives
may be conditional on the occurrence of such of the
Corporate Change specified in clause (i) through (v) of the
definition of Corporate Change below which gives rise to the
Corporate Change: (1) in the case of a Corporate Change
specified in clauses (i), (ii) or (iv) of the definition
thereof, provide that exercisable options (including any
options exercisable pursuant to the first sentence of this
Paragraph 18.A.) then outstanding may be exercised in full
for a limited period of time on or before a specified date
(which will permit Employee to participate with the Common
Stock received upon exercise of such option in the event of
a Corporate Change specified in clauses (i), (ii) or (iv) of
the definition of Corporate Change below, as the case may
be) fixed by the Committee, after which specified date all
unexercised options and all rights of Employee thereunder
shall terminate, (2) provide that exercisable options
(including any options exercisable pursuant to the first
sentence of this Paragraph 18.A.) then outstanding may be
exercised so that such options may be exercised in full for
their then remaining term, or (3) require the mandatory
surrender to the Company of outstanding options held by
Employee (including any options exercisable pursuant to the
first sentence of this Paragraph 18.A.) as of a date, before
or not later than sixty days after such Corporate Change,
specified by the Committee, and in such event the Committee
shall thereupon cancel such options and the Company shall
pay to Employee an amount of cash equal to the excess of the
fair market value of the aggregate shares subject to such
option over the aggregate option price of such shares;
provided, however, the Committee shall not select an
alternative (unless consented to by Employee) that, if
Employee exercised his accelerated options pursuant to
alternative 1 or 2 and participated in the transaction
specified in clause (i), (ii) or (iv) of the definition of
Corporate Change below or received cash pursuant to
alternative 3, would result in Employee's owing any money by
virtue of operation of Section 16(b) of the Exchange Act.
If all such alternatives have such a result, the Committee
shall take such action, which is hereby authorized, to put
Employee in as close to the same position as Employee would
have been in had alternative 1, 2 or 3 been selected but
without resulting in any payment by Employee pursuant to
Section 16(b) of the Exchange Act. Notwithstanding the
foregoing, with the consent of Employee, the Committee may
in lieu of the foregoing make such provision with respect of
any Corporate Change as it deems appropriate.
B. Definitions. For purposes of this
Agreement:
(i) "Stock Options" shall mean any
grant to Employee by the Company, pursuant to the Company's
1992 or 1995 Stock Option Plan, of the right and option to
acquire from the Company a specified number of shares of
Atlantic Coast Airlines Holdings, Inc. common stock under
certain terms and conditions.
(ii) "Change in Control" and "Corporate
Change" shall each mean (i) any merger or consolidation in
which the Company shall not be the surviving entity (or
survives only as a subsidiary of another entity, unless the
stockholders of Company immediately before such merger or
consolidation own, directly or indirectly immediately
following such merger or consolidation, substantially all of
the combined voting power of the surviving entity in
substantially the same proportion as their ownership
immediately before such merger or consolidation, (ii) the
sale of all or substantially all of the Company's assets to
any other person or entity (other than a wholly-owned
subsidiary), (iii) the acquisition of beneficial ownership
or control of (including, without limitation, power to vote)
more than 50% of the outstanding shares of Common Stock by
any person or entity (including a "group" as defined by or
under Section 13(d)(3) of the Exchange Act), (iv) the
dissolution or liquidation of the Company, (v) a contested
election of directors, as a result of which or in connection
with which the persons who were directors of the Company
before such election or their nominees cease to constitute a
majority of the Board, or (vi) any other event specified by
the Committee, regardless of whether at the time an Option
is granted or thereafter.
C. Amendment to Existing Option Agreements.
The provisions of this Paragraph 18 shall apply to all Stock
Options or restricted stock previously granted to Employee,
and this Amendment Number One shall be deemed to be an
amendment to all Stock Option Agreements and the Restricted
Stock Agreement presently in existence between the Company
and Employee, and will supersede any language to the
contrary contained in said agreements. The Compensation
Committee of the Board of Directors retains full discretion
of whether to grant any additional Stock Options in the
future, and if so whether the terms provided herein will
apply to said Stock Options.
IN WITNESS WHEREOF, the Company has hereunto caused this
Agreement to be executed by a duly authorized officer and
Employee has hereunto set his hand as of the day and year
first above written.
_______________________________
COMPANY:
ATLANTIC COAST AIRLINES, INC.
By:_____________________________
(CORPORATE SEAL)
ATTEST:
______________________
Exhibit 10.23
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
_________________________________________
ATLANTIC COAST AIRLINES HOLDINGS, INC.
ATLANTIC COAST AIRLINES
_________________________________________
__________________________________________
__________________________________________
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Date: February 8,1999
$50,000,000
__________________________________________
__________________________________________
__________________________________________
FLEET CAPITAL CORPORATION,
as Lender
__________________________________________
TABLE OF CONTENTS
Page
SECTION 1. CREDIT FACILITIES -1-
1.1 Revolver Loans. -1-
1.2 Bridge Loan. -2-
1.3 Letters of Credit; Letter of Credit Guaranties -2-
1.4 Use of Proceeds of Loans -4-
SECTION 2. INTEREST, FEES AND CHARGES -4-
2.1 Interest -4-
2.2 Fees -7-
2.3 Computation of Interest and Fees -8-
2.4 Reimbursement of Expenses -8-
2.5 Bank Charges -9-
2.6 Illegality. -9-
2.7 Increased Costs -10-
2.8 Capital Adequacy -11-
2.9 Funding Losses -11-
2.10 Maximum Interest. -12-
2.11 Limitation on Borrower's Payments -13-
SECTION 3. LOAN ADMINISTRATION. -13-
3.1 Manner of Borrowing and Funding Revolver Loans -13-
3.2 Special Provisions Governing LIBOR Rate Loans -14-
SECTION 4. PAYMENTS -15-
4.1 General Payment Provisions. -15-
4.2 Payment of Principal of Loans -15-
4.3 Payment of Interest -17-
4.4 Payment of Other Obligations. -17-
4.5 Mandatory Prepayments of Bridge Loan. -17-
4.6 Optional Prepayments of Loans. -17-
4.7 Application of Payments and Collateral Proceeds. -18-
4.8 Marshalling; Payments Set Aside. -18-
4.9 All Loans to Constitute One Obligation. -18-
4.10 Loan Account -18-
4.11 Statements of Account -19-
SECTION 5. TERM AND TERMINATION OF AGREEMENT -19-
5.1 Term of Agreement. -19-
5.2 Termination of Agreement -19-
SECTION 6. SECURITY INTERESTS -21-
6.1 Security Interest in Collateral. -21-
6.2 Other Collateral. -21-
6.3 Lien Perfection; Further Assurances. -22-
6.4 Lien on Leasehold Estate. -22-
6.5 Exclusion From Collateral. -22-
6.6 Release of Lien in Rotable Spare Parts. -22-
SECTION 7. COLLATERAL ADMINISTRATION -23-
7.1 General Provisions -23-
7.2. Administration of Accounts -24-
7.3 Administration of Rotable Spare Parts -26-
7.4 Payment of Charges -26-
SECTION 8. REPRESENTATIONS AND WARRANTIES -26-
8.1. General Representations and Warranties. -26-
8.2.Continuous Nature of Representations and Warranties. -32-
8.3. Survival of Representations and Warranties. -32-
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS -32-
9.1 Affirmative Covenants -32-
9.2 Negative Covenants -36-
9.3 Specific Financial Covenants -38-
SECTION 10. CONDITIONS PRECEDENT -38-
10.1Conditions Precedent to Initial Revolver Loan on Closing Date-38-
10.2Conditions Precedent to All Loans and Letters of Credit and Letter
of
Credit Guaranties -41-
10.3 Waiver of Conditions Precedent -42-
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON
DEFAULT -42-
11.1 Events of Default -42-
11.2 Acceleration of the Obligations -45-
11.3 Other Remedies -45-
11.4 Remedies Cumulative; No Waiver. -46-
SECTION 12 MISCELLANEOUS -47-
12.1 Power of Attorney -47-
12.2 Indemnity -48-
12.3 Survival of Indemnities -48-
12.4 Modification of Agreement -48-
12.5 Severability -49-
12.6 Successors and Assigns. -49-
12.7 Cumulative Effect; Conflict of Terms -49-
12.8 Execution in Counterparts -49-
12.9 Required Lender's Consent -49-
12.10 Notice -49-
12.11 Credit Inquiries. -50-
12.12 Time of Essence -50-
12.13 Entire Agreement -51-
12.14 Interpretation -51-
12.15 GOVERNING LAW; CONSENT TO FORUM -51-
12.16 WAIVERS -51-
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this
"Agreement") is made this 8th day of February, 1999, by and among
ATLANTIC COAST AIRLINES ("Borrower"), a California corporation
with its chief executive office and principal place of business
at 515-A Shaw Road Sterling, Virginia 20166; and ATLANTIC COAST
AIRLINES HOLDINGS, INC. ("Parent"; Borrower and Parent being
herein collectively called the "Loan Parties" and, individually,
a "Loan Party"), a Delaware corporation with its chief executive
office and principal place of business at 515-A Shaw Road
Sterling, Virginia 20166; and FLEET CAPITAL CORPORATION, a Rhode
Island corporation with an office at 6100 Fairview Road Suite 200
Charlotte, North Carolina 28210 ("Lender"). Capitalized terms
used in this Agreement have the meanings assigned to them in
Appendix A, General Definitions.
BACKGROUND STATEMENT
The Loan Parties and Lender are parties to that certain Loan
and Security Agreement, dated October 12, 1995, as amended by
First Amendment thereto, dated June 1, 1997 (the "Existing Loan
Agreement"), by which Lender has agreed to extend credit to
Borrower. The Loan Parties have requested that Lender enter into
certain amendments to the Existing Loan Agreement and Lender has
agreed to such amendments, subject to all of the terms,
conditions and provisions hereof. Effective on the date on which
all of the conditions set forth in Section 10 hereof are
satisfied and Lender makes the initial Loan hereunder (such date
being herein called the "Closing Date"), this Agreement shall
amend and restate in its entirety the Existing Loan Agreement,
and shall represent the entire agreement between the Loan Parties
and Lender with respect to the terms and conditions upon which
Lender is to extend credit to Borrower from and after the Closing
Date. Amounts in respect of interest, fees, and other amounts
payable to or for the account of Lender shall be calculated (i)
in accordance with the provisions of the Existing Loan Agreement
with respect to any period (or a portion of any period) ending
prior to the Closing Date, and (ii) in accordance with the
provisions of this Agreement with respect to any period (or a
portion of any period) commencing on or after the Closing Date.
On the Closing Date, all Loans outstanding under the Existing
Loan Agreement shall be deemed Loans outstanding under this
Agreement.
SECTION 1.CREDIT FACILITIESSECTION 1. CREDIT FACILITIES
Subject to the terms and conditions of, and in reliance upon
the representations and warranties made in, this Agreement and
the other Loan Documents, Lender agrees to make a total credit
facility of $50,000,000 available upon Borrower's request
therefor as follows:
1.1 Revolver Loans. 1.1 Revolver Loans. Lender
agrees, for so long as no Default or Event of Default exists and
subject to the provisions of Section 10 below, to make Revolver
Loans to Borrower from time to time, as requested by Borrower in
the manner set forth in Section 3.1 hereof, up to a maximum
principal amount at any time outstanding equal to the lesser of
the Revolver Facility Amount or the Borrowing Base at such time.
The Revolver Loans may be repaid and reborrowed in accordance
with the provisions of this Agreement. Each Revolver Loan shall,
at the option of Borrower, be made or continued as, or converted
into, a Base Rate Loan, a Daily LIBOR Loan or a LIBOR Loan upon
the terms set forth herein. Upon the Closing Date, all Revolver
Loans outstanding under the Existing Loan Agreement shall,
without the necessity of any further action by Borrower or
Lender, be deemed Revolver Loans outstanding under this
Agreement.
1.2 Bridge Loan. 1.2 Bridge Loan. Lender agrees,
provided no Default or Event of Default exists and subject to the
provisions of Section 10 below, to make Bridge Loan Advances
under the Bridge Loan to Borrower, as requested by Borrower in
the manner set forth in Section 3.1 hereof, up to a maximum
amount of Bridge Loan Advances made in the amount of $15,000,000,
which shall be repayable in accordance with the terms of Section
4.2.2 of this Agreement and the Bridge Note and shall be secured
by all of the Collateral. Borrower shall not be entitled to
reborrow any amounts repaid with respect to the Bridge Loan.
Each Bridge Loan Advance shall, at the option of Borrower, be
made or continued as, or converted into, a Base Rate Loan, a
Daily LIBOR Loan or a LIBOR Loan, upon the terms set forth
herein.
1.3 Letters of Credit; Letter of Credit Guaranties1.3
Letters of Credit; Letter of Credit Guaranties.
1.3.1 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
10 below, to issue its, or cause to be issued its Affiliate's
Letters of Credit and Letter of Credit Guaranties, as requested
by Borrower, provided that the Letter of Credit Amount at any
time shall not exceed $15,000,000 and 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. Upon the Closing Date, all Letters of Credit and
Letter of Credit Guaranties outstanding under the Existing Loan
Agreement, including, without limitation, the Bond Letter of
Credit and the Bond Letter of Credit Guaranty, shall, without the
necessity of any further action by Borrower, Lender or Lender's
Affiliates, be deemed Letter of Credit and Letter of Credit
Guaranties outstanding under this Agreement.
1.3.2 Reimbursement Obligations. All indebtedness,
liabilities or obligations whatsoever arising or incurred in
connection with any Letters of Credit or Letter of Credit
Guaranties shall be incurred solely as an accommodation to
Borrower and for Borrower's account. Borrower hereby
unconditionally agrees to reimburse Lender for the total amount
of all sums paid by Lender on Borrower's behalf 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 the same, immediately upon the date of
payment by Lender. Any such sum paid or liability incurred by
Lender in connection with any Letter of Credit or Letter of
Credit Guaranty shall, at Lender's option, if not reimbursed by
Borrower on the date paid or incurred by Lender, be treated for
all purposes and shall have the same force and effect as if such
amount had 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 that are Base Rate Loans.
1.3.3 Rights and Remedies. In the event that,
coincident with or subsequent to the occurrence of, and during
the continuance of, a Default or an Event of Default, Lender
becomes aware of the possibility of a draw, or enforcement of
Lender's obligations, under a Letter of Credit or Letter of
Credit Guaranty, Lender, at its option, may, but shall not be
required to, pay Borrower's obligations to the beneficiary or
holder of such Letter of Credit or Letter of Credit Guaranty
directly to such beneficiary or holder, and, in such event, the
amount of any such payment made by Lender shall be treated for
all purposes and shall have the same force and effect as if such
amount had 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 that are Base Rate Loans. Additionally, in the
event of Borrower's failure to reimburse Lender for the total
amount of all sums paid by Lender on Borrower's behalf 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 and remedies of the issuer of the
Letter of Credit under any 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 discharged with the
proceeds of such Letter of Credit.
1.3.4 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 Letters of
Credit or 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; provided, however, the foregoing shall not
apply to losses, claims or liabilities arising out of Lender's
gross negligence or willful misconduct. This indemnity shall
survive the payment in full of all amounts payable to Lender
hereunder and the termination of this Agreement.
1.3.5 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 canceled 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 canceled, 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 that are Base Rate Loans.
1.4 Use of Proceeds of Loans. 1.4 Use of Proceeds of
Loans. The Borrower shall use the proceeds of the Loans as
follows:
(i) On the Closing Date, the proceeds of the
initial Revolver Loan, together with other funds then
available to Borrower, shall be used solely for the purposes
of (i) refinancing all of the Indebtedness for Money
Borrowed owed by Borrower to Fleet under the Existing Loan
Agreement, and (ii) to the extent of the balance, paying the
costs of the transactions contemplated by this Agreement;
(ii) All Revolver Loans made after the
Closing Date shall be used solely for Borrower's general
working capital needs in a manner consistent with the
provisions of this Agreement and Applicable Law and for any
other purposes not inconsistent with this Agreement; and
(iii) The Bridge Loan Advances shall be
used solely by Borrower to finance, or to reimburse the
Authority for the financing of, the costs of the
development, construction and related construction expenses
of a terminal facility located at the Dulles International
Airport on land owned by the Authority.
SECTION 2. INTEREST, FEES AND CHARGESSECTION 2.
INTEREST, FEES AND CHARGES
2.1 Interest2.1 Interest.
2.1.1 Rates of Interest - Loans. Subject to the
provisions of Section 2.1.6 of this Agreement, Borrower agrees to
pay interest on the unpaid principal amount of the Loans
outstanding from the respective dates such principal amounts are
advanced until paid (whether at stated maturity, on acceleration,
or otherwise) at a variable rate per annum equal to the
applicable rate indicated below:
(i) For Loans made or outstanding as Base
Rate Loans, the Base Rate in effect from time to time plus
the Applicable Percentage;
(ii) For Loans made or outstanding as Daily
LIBOR Loans, the Daily LIBOR Rate in effect from time to
time plus the Applicable Percentage; or
(iii) For Loans made or outstanding as
LIBOR Rate Loans, the relevant Adjusted LIBOR Rate for the
applicable Interest Period selected by Borrower in
conformity with this Agreement plus the Applicable
Percentage.
2.1.2 Computation of Interest. Upon determining the
Adjusted LIBOR Rate for any Interest Period requested by
Borrower, Lender shall promptly notify Borrower thereof by
telephone or in writing, and such Adjusted LIBOR Rate shall
remain in effect throughout the applicable Interest Period. Such
determination shall, absent manifest error, be final, conclusive
and binding on all parties and for all purposes. The applicable
rates of interest with respect to all Base Rate Loans shall be
increased or decreased, as the case may be, by an amount equal to
any increase or decrease in the Base Rate, with such adjustments
to be effective as of the opening of business on the day that any
such change in the Base Rate becomes effective. Interest on each
Loan shall accrue from and including the date of such Loan to but
excluding the date of any repayment thereof; provided, however,
that if a Loan is repaid on the same day made, one day's interest
shall be paid on such Loan.
2.1.3 Conversions and Continuations.
(i) Borrower may on any Business Day,
subject to the giving of a proper Notice of
Conversion/Continuation, elect to (a) continue all or any
part of the principal amount of a LIBOR Rate Loan by
selecting a new Interest Period therefor, to commence on the
last day of the Interest Period immediately preceding such
new Interest Period, or (b) convert all or any part of a
Loan of one Type into a Loan of another Type; provided,
however, that no outstanding Loans may be converted into or
continued as LIBOR Rate Loans when any Default or Event of
Default has occurred and is continuing, and no conversion of
any LIBOR Rate Loans into Base Rate Loans or Daily Rate
Loans shall be made except on the last day of the Interest
Period for such LIBOR Rate Loans.
(ii) Whenever Borrower desires to convert
or to continue Loans under Section 2.1.4(i) hereof, Borrower
shall give Lender written notice (or telephonic notice
promptly confirmed in writing), substantially in the form of
Exhibit B attached hereto (a "Notice of
Conversion/Continuation"), signed by an authorized officer
of Borrower, at least two (2) Business Days before the
requested conversion or continuation date. Each such Notice
of Conversion/Continuation shall be irrevocable and shall
specify the aggregate principal amount of the Loans to be
converted or continued, the date of such conversion or
continuation (which shall be a Business Day), and whether
the Loans are being converted into or continued as LIBOR
Rate Loans (and, if so, the duration of the Interest Period
to be applicable thereto), Daily LIBOR Loans or Base Rate
Loans. If, upon the expiration of any Interest Period in
respect of any LIBOR Rate Loans, Borrower shall have failed
to deliver a Notice of Conversion/Continuation, Borrower
shall be deemed to have elected to convert such LIBOR Rate
Loans to Base Rate Loans.
2.1.4 Interest Periods. In connection with the
making or continuation of, or conversion into, each Borrowing of
LIBOR Rate Loans, Borrower shall select an interest period (each
an "Interest Period") to be applicable to such LIBOR Rate Loan,
which interest period shall commence on the date such LIBOR Rate
Loan is made and shall end 30, 60, 90 or 180 days thereafter;
provided, however, that:
(i) The initial Interest Period for a
LIBOR Rate Loan shall commence on the date of such Borrowing
(including the date of any conversion from a Borrowing
consisting of LIBOR Rate Loans) and each Interest Period
occurring thereafter in respect of such Borrowing shall
commence on the date on which the next preceding Interest
Period expires;
(ii) If any Interest Period would otherwise
expire on a day which is not a Business Day, such Interest
Period shall expire on the next succeeding Business Day;
(iii) No Interest Period shall extend
beyond the last day of the Original Term or the last day of
any Renewal Term; and
(iv) No Interest Period with respect to
any portion of principal of a Loan shall extend beyond a
date on which Borrower is required to make a scheduled
payment of such portion of principal.
2.1.5 Interest Rate Not Ascertainable. If Lender
shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) that on
any date for determining the Adjusted LIBOR Rate for any Interest
Period, by reason of any changes affecting the London interbank
market or Lender's or Bank's position in such market, adequate
and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of
Adjusted LIBOR Rate, then, and in any such event, Lender shall
forthwith give notice (by telephone confirmed in writing) to
Borrower of such determination. Until Lender notifies Borrower
that the circumstances giving rise to the suspension described
herein no longer exist, the obligation of Lender to make LIBOR
Rate Loans shall be suspended, and such affected Loans then
outstanding shall, at the end of the then applicable Interest
Period or at such earlier time as may be required by Applicable
Law, bear the same interest as Base Rate Loans.
2.1.6 Default Rate of Interest. During the
existence of an Event of Default, the principal amount of all
Loans (and, to the extent permitted by Applicable Law, all
accrued interest that is past due) shall bear interest at a rate
per annum equal to two percent (2%) above the interest rate
otherwise applicable thereto (the "Default Rate").
2.1.7 Daily LIBOR Loans. Notwithstanding any
provision to the contrary in this Agreement, the principal amount
of Loans outstanding on any date shall be deemed to be Daily
LIBOR Loans and shall bear interest at the rate otherwise
provided herein with respect to Daily LIBOR Loans, if and to the
extent that (i) Borrower shall request any such Loans to be Daily
LIBOR Loans in a Notice of Borrowing, (ii) Borrower shall have
converted an outstanding Base Rate Loan or LIBOR Rate Loan to a
Daily LIBOR Loan pursuant to a Notice of Conversion/Continuation,
or (iii) Borrower shall have failed to continue a LIBOR Rate Loan
upon the expiration of an applicable Interest Period for a new
Interest Period and shall not have elected to convert such LIBOR
Rate Loan to a Base Rate Loan, in either case pursuant to a
Notice of Conversion/Continuation. Lender shall have no
obligation to notify Borrower on any date of the Daily LIBOR Rate
effective for such date, unless requested to do so in writing by
Borrower for a specific date (but in no event shall Lender be
obligated to advise Borrower of the Daily LIBOR Rate more than
once each week). Each determination of the Daily LIBOR Rate
shall, absent manifest error, be final, conclusive and binding on
all parties and for all purposes. The applicable rate of
interest for all Loans bearing interest based upon the Daily
LIBOR Rate shall be increased or decreased, as the case may be,
by an amount equal to any increase or decrease in the Daily LIBOR
Rate, with such adjustments to be effective as of the opening of
business on the day that any such change in the Daily LIBOR Rate
becomes effective. The provisions of Section 2.1.5, 2.6 and 2.7
with respect to LIBOR Rate Loans (but specifically omitting
Section 2.9) shall apply to and govern the making and
administration of Daily LIBOR Loans.
2.2 Fees2.2 Fees.
2.2.1 Closing Fee. Borrower shall pay to Lender a
closing fee of $100,000 which shall be fully earned and non-
refundable on the Closing Date and shall be paid concurrently
with and from the proceeds of the initial Loan hereunder.
2.2.2 Unused Line Fee. Borrower shall pay to Lender
an unused line fee equal to the Applicable Percentage of the
amount by which seventy-five percent (75%) of the aggregate of
the Revolver Facility Amount exceeds the Average Monthly Revolver
Loan and Letter of Credit Balance. The unused line fee shall
begin to accrue on the Closing Date and shall be payable monthly
in arrears on the first day of each calendar month after the
Closing Date and upon the termination of this Agreement. The
Revolver Facility Amount in effect on the Closing Date and on the
first day of each month thereafter shall be used in the
calculation of the unused line fee payable for the month in which
the Closing Date occurs and each month thereafter.
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 1.3.1 hereof:
(i) Fees to Bank in the amounts and on the dates
as set forth in Section 2.03 of the Reimbursement Agreement;
and
(ii) Upon issuance of each other Letter of Credit
and Letter of Credit Guaranty:
(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 (1) $500 or (2) the Applicable
Percentage 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 fees in connection with each Letter of Credit and Letter
of Credit Guaranty as set forth in Sections 2.2.3(i) 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 Agency Fee. In the event that Lender sells
any portion of the Loans and the Loan Documents to a
Participating Lender, then on the date that Borrower receives
notice of such sale from Lender and on each anniversary of such
date, Borrower shall pay to Lender an annual agency fee of
$10,000 per year, which fee shall not be subject to rebate or
proration upon the termination of this Agreement for any reason.
2.2.5 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 that are Base Rate Loans, payable upon demand and
on the date of payment in full.
2.2.6 Audit and Appraisal Fees. Borrower shall
reimburse Lender for all reasonable out-of-pocket costs and
expenses from time to time incurred by Lender in connection with
all audits and appraisals of Borrower's books and records and of
the Collateral and such other matters related thereto as Lender
shall deem appropriate; provided, however, for so long as no
Default or Event of Default exists, the maximum amount of such
audit and appraisal expenses for which Borrower shall be
obligated to pay Lender for any Loan Year shall not exceed
$8,000.
2.3 Computation of Interest and Fees2.3 Computation of
Interest and Fees. All interest, fees and other charges provided
for in this Agreement shall be calculated daily and shall be
computed on the actual number of days elapsed over a year of 360
days. For the purpose of computing interest hereunder, all items
of payment received by Lender shall be deemed applied by Lender
on account of the Obligations (subject to final payment of such
items) on the Business Day of receipt by Lender of such items in
immediately available funds, and Lender shall be deemed to have
received such item of payment on the date specified in Section
4.1 hereof.
2.4 Reimbursement of Expenses2.4 Reimbursement of
Expenses. If, at any time or times regardless of whether or
not an Event of Default then exists, Lender incurs legal or
accounting expenses or any other costs or out-of-pocket expenses
in connection with (i) the negotiation and preparation of this
Agreement or any of the other Loan Documents, or any amendment of
or modification of this Agreement or any of the other Loan
Documents, or any sale or attempted sale of any interest herein
to a Participating Lender; (ii) reasonable charges for Persons
whom Lender may engage from time to time during the existence of
an Event of Default to render opinions concerning the books,
records and financial condition of Borrower and its Subsidiaries
and the condition and value of the Collateral; (iii) any
litigation, contest, dispute, suit, proceeding or action (whether
instituted by Lender, Borrower or any other Person) in any way
relating to the Collateral, this Agreement or any of the other
Loan Documents; provided, however, Borrower shall not be
obligated for the expenses and costs of Lender set forth in this
Section 2.4(iii) in connection with any litigation, contest,
dispute, suit, proceeding or action initiated by Lender or
Borrower in which Borrower is ultimately the prevailing party;
(iv) the enforcement of the rights of Lender against Borrower or
any other Person which may be obligated to Lender by virtue of
this Agreement or any of the other Loan Documents, including,
without limitation, the Account Debtors; (v) any attempt by
Lender to inspect, verify, protect, preserve, restore, collect,
sell, liquidate or otherwise dispose of or realize upon the
Collateral after the occurrence and during the continuance of an
Event of Default; (vi) the filing and recording of the Deed of
Trust and the financing statements and all other documents
required by Lender to perfect Lender's Lien in the Collateral,
and the conducting of searches in all filing offices at such
intervals as Lender may reasonably determine to confirm the
priority of Lender's Lien in the Collateral; and (vii) any
documentary stamp tax or any other taxes incurred by Lender
because of the filing or recording of the Deed of Trust or the
financing statements or the other documents required by Lender to
perfect Lender's Lien in the Collateral; then all such legal and
accounting expenses, other costs and out of pocket expenses of
Lender shall be charged to, and paid by, Borrower. Borrower
shall also reimburse Lender for expenses incurred by Lender in
its administration of the Collateral to the extent and in the
manner provided in Section 7 hereof or in any of the Loan
Documents.
2.5 Bank Charges2.5 Bank Charges. Borrower shall pay
to Lender, on demand, any and all fees, costs or expenses which
Lender pays to a bank or other similar institution arising out of
or in connection with (i) the forwarding to Borrower or any other
Person on behalf of Borrower by Lender of proceeds of Loans made
by Lender to Borrower pursuant to this Agreement, (ii) the
depositing for collection, by Lender of any Payment Item received
or delivered to Lender on account of the Obligations, and (iii)
the forwarding by Lender to any Participating Lender of any
payments on the Obligations received by Lender. Borrower
acknowledges and agrees that Lender may charge such costs, fees
and expenses to Borrower based upon Lender's good faith estimate
of such costs, fees and expenses as they are incurred by Lender.
2.6 Illegality.2.6 Illegality. Notwithstanding anything to
the contrary contained elsewhere in this Agreement, if (i) any
change in any law or regulation or in the interpretation thereof
by any governmental authority charged with the administration
thereof shall make it unlawful for Lender or any Participating
Lender to make or maintain a LIBOR Rate Loan or to give effect to
its obligations as contemplated hereby with respect to a LIBOR
Rate Loan or (ii) at any time Lender or any Participating Lender
reasonably determines that the making or continuance of any LIBOR
Rate Loan has become impracticable as a result of a contingency
occurring after the date hereof which materially and adversely
affects the London interbank market or the position of Lender in
such market, then, by written notice to Borrower, Lender may (a)
declare that LIBOR Rate Loans will not thereafter be made by
Lender, whereupon any request by Borrower for a LIBOR Rate Loan
shall be deemed a request for a Base Rate Loan unless Lender's or
such Participating Lender's declaration shall be subsequently
withdrawn; and (b) require that all outstanding LIBOR Rate Loans
made by Lender be converted to Base Rate Loans, in which event
all such LIBOR Rate Loans shall be automatically converted to
Base Rate Loans as of the date of Borrower's receipt of the
aforesaid notice from Lender.
2.7 Increased Costs2.7 Increased Costs. If, by reason of
(i) after the date hereof, the introduction of or any change
(including, without limitation, any change by way of imposition
or increase of Statutory Reserves or other reserve requirements)
in or in the interpretation of any Applicable Law, or (ii) the
compliance with any guideline or request from any central bank or
other governmental authority or quasi-governmental authority
exercising control over banks or financial institutions generally
(whether or not having the force of law):
(a) Lender shall be subject to any Tax, duty
or other charge with respect to any LIBOR Rate Loan or its
obligation to make LIBOR Rate Loans, or shall change the
basis of taxation of payment to Lender of the principal of
or interest on its LIBOR Rate Loans or its obligation to
make LIBOR Rate Loans (except for changes in the rate of Tax
on the overall net income of Lender); or
(b) any reserve (including, without
limitation, any imposed by the Board of Governors), special
deposits or similar requirement against assets of, deposits
with or for the account of, or credit extended by, Lender
shall be imposed or deemed applicable or any other condition
affecting its LIBOR Rate Loans or its obligation to make
LIBOR Rate Loans shall be imposed on Lender or the London
interbank market;
and as a result thereof there shall be any increase in the actual
cost to Lender of agreeing to make or making, funding or
maintaining LIBOR Rate Loans (except to the extent already
included in the determination of the applicable Adjusted LIBOR
Rate for LIBOR Rate Loans), or there shall be a reduction in the
amount received or receivable by Lender, then Borrower shall from
time to time, upon written notice from and demand by Lender, pay
to Lender within ten (10) Business Days after the date specified
in such notice and demand, an additional amount sufficient to
indemnify Lender against such increased cost. A certificate as
to the amount of such increased cost, submitted to Borrower by
Lender, shall be conclusive in the absence of manifest error.
Such certificate will set forth the nature of the occurrence
giving rise to such compensation, the additional amount of
amounts to be paid to Lender, and the method by which such
amounts were determined. In determining such amount, Lender may
use any reasonable averaging and attribution method. For
purposes of this Section 2.7, all references to Lender shall be
deemed to include any Participating Lender and bank holding
company or bank parent of Lender or any Participating Lender.
2.8 Capital Adequacy2.8 Capital Adequacy. If after the date
hereof Lender reasonably determines that (i) the adoption of any
Applicable Law, rule, or regulation regarding capital
requirements for banks or bank holding companies or the
subsidiaries thereof, (ii) any change in the interpretation or
administration of any such law, rule or regulation by any
governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or
(iii) compliance by Lender or its respective holding company with
any request or directive of any such governmental authority,
central bank or comparable agency regarding capital adequacy
(whether or not having the force of law), has the effect of
reducing the return on Lender's capital to a level below that
which Lender could have achieved (taking into consideration
Lender's and its respective holding company's policies with
respect to capital adequacy immediately before such adoption,
change or compliance and assuming that Lender's capital was fully
utilized prior to such adoption, change or compliance) but for
such adoption, change or compliance as a consequence of Lender's
commitment to make the Loans pursuant hereto by any amount deemed
by Lender to be material:
(a) Lender shall promptly, after Lender's
determination of such occurrence, give notice thereof to
Borrower; and
(b) Borrower shall pay to Lender, as an
additional fee from time to time, within ten (10) Business
Days after Lender's demand therefor, such amount as Lender
certifies to be the amount that will compensate Lender for
such reduction.
A certificate of Lender claiming entitlement to compensation
as set forth above will be conclusive in the absence of manifest
error. Such certificate will set forth the nature of the
occurrence giving rise to such compensation, the additional
amount or amounts to be paid to Lender, and the method by which
such amounts were determined. In determining such amount, Lender
may use any reasonable averaging and attribution method. For
purposes of this Section 2.8, all references to Lender shall be
deemed to include any Participating Lender and bank holding
company or bank parent of Lender or any Participating Lender.
2.9 Funding Losses.9 Funding Losses. Borrower shall
reimburse Lender for any loss, cost, expense or liability
(including, without limitation, any interest paid by Lender to
lenders of funds borrowed by Lender to make or carry the LIBOR
Rate Loans to the extent not recovered by Lender in connection
with the re-employment of such funds) sustained or incurred by
Lender if for any reason (other than a default by Lender): (i) a
Borrowing of, or conversion to or continuation of, a LIBOR Rate
Loan does not occur on the date specified therefor in a Notice of
Borrowing or Notice of Conversion/Continuation (whether or not
withdrawn); (ii) any repayment (including any conversions
pursuant to Section 2.1.3 hereof) of any LIBOR Rate Loans occurs
on a date that is not the last day of an Interest Period
applicable thereto; or (iii) Borrower defaults in its obligation
to repay LIBOR Rate Loans when required by the terms of this
Agreement. Borrower shall pay such amount within five (5)
Business Days after presentation by Lender of a statement setting
forth the amount and Lender's calculation thereof pursuant
hereto, which statement shall, except for manifest error, be
final, conclusive and binding. For purposes of this Section 2.9,
all references to Lender shall be deemed to include any
Participating Lender and bank holding company or bank parent of
Lender or any Participating Lender.
2.10 Maximum Interest..10 Maximum Interest. Regardless
of any provision contained in this Agreement or any of the other
Loan Documents, in no contingency or event whatsoever shall the
aggregate of all amounts that are contracted for, charged or
collected pursuant to the terms of this Agreement or any of the
other Loan Documents and that are deemed interest under
Applicable Law exceed the highest rate permissible under any
Applicable Law. No agreements, conditions, provisions or
stipulations contained in this Agreement or any of the other Loan
Documents, or the exercise by Lender of the right to accelerate
the payment or the maturity of all or any portion of the
Obligations, or the exercise of any option whatsoever contained
in any of the Loan Documents, or the prepayment by Borrower of
any of the Obligations, or the occurrence of any contingency
whatsoever, shall entitle Lender to charge or receive in any
event, interest or any charges, amounts, premiums or fees deemed
interest by Applicable Law (such interest, charges, amounts,
premiums and fees referred to herein collectively as "Interest")
in excess of the Maximum Rate and in no event shall Borrower be
obligated to pay Interest exceeding such Maximum Rate, and all
agreements, conditions or stipulations, if any, which may in any
event or contingency whatsoever operate to bind, obligate or
compel Borrower to pay Interest exceeding the Maximum Rate shall
be without binding force or effect, at law or in equity, to the
extent only of the excess of Interest over such Maximum Rate. If
any Interest is charged or received in excess of the Maximum Rate
("Excess"), Borrower acknowledges and stipulates that any such
charge or receipt shall be the result of an accident and bona
fide error, and such Excess, to the extent received, shall be
applied first to reduce the principal Obligations and the
balance, if any, returned to Borrower, it being the intent of the
parties hereto not to enter into a usurious or otherwise illegal
relationship. The right to accelerate the maturity of any of the
Obligations does not include the right to accelerate any interest
that has not otherwise accrued on the date of such acceleration,
and Lender does not intend to collect any unearned interest in
the event of any such acceleration. Borrower recognizes that,
with fluctuations in the rates of interest set forth in Section
2.1.1 of this Agreement, and in the Maximum Rate, such an
unintentional result could inadvertently occur. All monies paid
to Lender hereunder or under any of the other Loan Documents,
whether at maturity or by prepayment, shall be subject to any
rebate of unearned interest as and to the extent required by
Applicable Law. By the execution of this Agreement, Borrower
covenants that (i) the credit or return of any Excess shall
constitute the acceptance by Borrower of such Excess, and (ii)
Borrower shall not seek or pursue any other remedy, legal or
equitable, against Lender, based in whole or in part upon
contracting for, charging or receiving any Interest in excess of
the Maximum Rate. For the purpose of determining whether or not
any Excess has been contracted for, charged or received by
Lender, all interest at any time contracted for, charged or
received from Borrower in connection with any of the Loan
Documents shall, to the extent permitted by Applicable Law, be
amortized, prorated, allocated and spread in equal parts
throughout the full term of the Obligations. Borrower and Lender
shall, to the maximum extent permitted under Applicable Law, (i)
characterize any non-principal payment as an expense, fee or
premium rather than as Interest and (ii) exclude voluntary
prepayments and the effects thereof. The provisions of this
subsection shall be deemed to be incorporated into every Loan
Document (whether or not any provision of this Section is
referred to therein). All such Loan Documents and communications
relating to any Interest owed by Borrower and all figures set
forth therein shall, for the sole purpose of computing the extent
of Obligations, be automatically recomputed by Borrower, and by
any court considering the same, to give effect to the adjustments
or credits required by this Section.
2.11 Limitation on Borrower's Payments.11 Limitation on
Borrower's Payments. Notwithstanding anything contained in this
Agreement to the contrary, Borrower shall not have any obligation
to pay to Lender amounts owing under Sections 2.7 or 2.8 hereof
if such amounts relate to any period which is more than ninety
(90) days prior to the date upon which the request for payment
therefor is delivered to Borrower.
SECTION 3. LOAN ADMINISTRATION.SECTION 3. LOAN
ADMINISTRATION.
3.1 Manner of Borrowing and Funding Revolver Loans3.1
Manner of Borrowing and Funding Revolver Loans. Borrowings
pursuant to Section 1.1 hereof shall be made and funded as
follows:
3.1.1. Notice of Borrowing.
(i) Whenever Borrower desires to make a
Borrowing under Section 1.1 or 1.2 of this Agreement (other
than a Borrowing resulting from a conversion or continuation
pursuant to Section 2.1.4), Borrower shall give Lender prior
written notice (or telephonic notice promptly confirmed in
writing) of such Borrowing request (a "Notice of
Borrowing"), which shall be in the form of Exhibit C
attached hereto and signed by an authorized officer of
Borrower. Such Notice of Borrowing shall be given by
Borrower no later than 11:00 a.m., Charlotte, North Carolina
time, at the office of Lender designated by Lender from time
to time (a) on the Business Day of the requested funding
date of such Borrowing, in the case of all Base Rate Loans
and Daily LIBOR Loans, and (b) at least two (2) Business
Days prior to the requested funding date of such Borrowing
in the case of LIBOR Rate Loans. Notices received after
11:00 a.m., Charlotte, North Carolina time, shall be deemed
received on the next Business Day. All Loans made on the
Closing Date shall be made as Daily LIBOR Loans and
thereafter may be made or continued as or converted into
Base Rate Loans, Daily LIBOR Loans or LIBOR Rate Loans.
Each Notice of Borrowing (or telephonic notice thereof)
shall be irrevocable and shall specify (a) the principal
amount of the Borrowing, which, in the case of a Bridge Loan
Advance, shall be in a minimum amount of at least $500,000,
(b) the date of Borrowing (which shall be a Business Day),
(c) whether the Borrowing is to consist of Base Rate Loans,
Daily LIBOR Loans or LIBOR Rate Loans, and the amount of
each such Loan, and (d) in the case of LIBOR Rate Loans, the
duration of the Interest Period to be applicable thereto.
Borrower may not request any LIBOR Rate Loans or Daily LIBOR
Loans if a Default or Event of Default exists.
(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 1.3.2 hereof and payments
required to be made to Bank pursuant to Section 2.03 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.
(iii) As an accommodation to Borrower,
Lender may permit telephonic requests for Borrowings and
electronic transmittal of instructions, authorizations,
agreements or reports to Lender by Borrower; provided,
however, that Borrower shall confirm each such telephonic
request for a Borrowing of LIBOR Loans by delivery of the
required Notice of Borrowing to Lender by facsimile
transmission promptly, but in no event later than 5:00 p.m.,
Charlotte, North Carolina time, on the same day. Unless
Borrower specifically directs Lender in writing not to
accept or act upon telephonic or electronic communications
from Borrower, Lender shall have no liability to Borrower
for any loss or damage suffered by such Borrower as a result
of Lender's honoring of any requests, execution of any
instructions, authorizations or agreements or reliance on
any reports communicated to it telephonically or
electronically and purporting to have been sent to Lender by
Borrower and Lender shall have no duty to verify the origin
of any such communication or the identity or authority of
the Person sending it.
3.1.2. Disbursement Authorization. Borrower hereby
irrevocably authorizes Lender to disburse the proceeds of each
Revolver Loan requested, or deemed to be requested pursuant to
Section 3.1.1, as follows: (i) the proceeds of each Revolver
Loan requested under Section 3.1.1(i) shall be disbursed by
Lender in lawful money of the United States of America in
immediately available funds in accordance with the terms of the
written disbursement letter from Borrower in the case of the
initial Borrowing, and, in the case of each subsequent Borrowing,
by wire transfer to such bank account as may be agreed upon by
Borrower and Lender from time to time or elsewhere if pursuant to
a written direction from Borrower; and (ii) the proceeds of each
Revolver Loan requested under Section 3.1.1(ii) shall be
disbursed by Lender by way of direct payment of the relevant
interest or other Obligation.
3.2 Special Provisions Governing LIBOR Rate Loans3.2
Special Provisions Governing LIBOR Rate Loans.
3.2.1 Number of LIBOR Rate Loans. In no event may
the number of LIBOR Rate Loans outstanding in respect of the
Loans at any time exceed six (6).
3.2.2 Minimum Amount of each LIBOR Rate Loan. Each
election of a LIBOR Rate Loan pursuant to Section 3.1.1(i), and
each continuation of or conversion into a LIBOR Rate Loan
pursuant to Section 2.1.4 hereof, shall be in a minimum amount of
$500,000 and integral multiples of $100,000 in excess of that
amount.
3.2.3 LIBOR Lending Office. Lender's initial LIBOR
Lending Office is set forth opposite its name on the signature
pages hereof. Lender shall have the right at any time and from
time to time to designate a different office of itself or any
Affiliate as Lender's LIBOR Lending Office, and to transfer any
outstanding LIBOR Loans to such LIBOR Lending Office. No such
designation or transfer shall result in any liability on the part
of Borrower for increased costs or expenses resulting solely from
such designation or transfer (except any such transfer that is
made by Lender pursuant to Sections 2.6 or 2.7 hereof, or
otherwise for the purpose of complying with Applicable Law).
Increased costs for expenses resulting from a change in
Applicable Law occurring subsequent to any such designation or
transfer shall be deemed not to result solely from such
designation or transfer.
SECTION 4. PAYMENTSSECTION 4. PAYMENTS
4.1 General Payment Provisions. 4.1 General Payment
Provisions. All payments (including all prepayments) of the
principal of, and interest on, the Loans and all of the other
Obligations that are payable to Lender shall be made to Lender in
Dollars without any offset or counterclaim and free and clear of
(and without deduction for) any present or future Taxes. All
payments received by Lender in immediately available funds on a
Business Day for which Borrower shall have given Lender notice of
its intent to make such payment no later than 12:00 o'clock noon,
Charlotte, North Carolina, on such Business Day, shall be deemed
to be made on the Business Day of receipt. If payment is
received by Lender after such time, or if notice of Borrower's
intent to make such payment is not given by Borrower or, if
given, is given later than 12:00 o'clock noon, Charlotte, North
Carolina time, then such payment shall be deemed to have been
made on the next succeeding Business Day. If any payment under
this Agreement or the other Loan Documents shall be specified to
be made upon a day which is not a Business Day, it shall be made
on the next succeeding day which is a Business Day, and such
extension of time shall in such case be included in computing
interest and fees, if any, in connection with such payment.
4.2 Payment of Principal of Loans4.2 Payment of Principal
of Loans.
4.2.1 Payment of Principal of Revolver Loans. The
outstanding principal amounts of the Revolver Loans shall be due
and payable as follows:
(i) Any portion of the Revolver Loans
consisting of the principal amount of Base Rate Loans or
Daily LIBOR Loans shall be paid by Borrower to Lender unless
converted to a LIBOR Rate Loan in accordance with this
Agreement, immediately upon the earlier of (a) the receipt
by Lender or Borrower of any proceeds of any of the
Collateral, to the extent of such proceeds, or (b) the
termination of this Agreement by Borrower or Lender pursuant
to Section 5 hereof.
(ii) Any portion of the Revolver Loans
consisting of the principal amount of LIBOR Rate Loans shall
be paid by Borrower to Lender, unless converted to a Base
Rate Loan or Daily LIBOR Loan or continued as a LIBOR Rate
Loan in accordance with the terms of this Agreement, upon
the earlier of (a) the last day of the Interest Period
applicable thereto or (b) the termination of this Agreement
by Borrower or Lender pursuant to Section 5 hereof. In no
event shall Borrower be authorized to pay any LIBOR Rate
Loan prior to the last day of the Interest Period applicable
thereto unless otherwise agreed in writing by Lender or
Borrower is otherwise expressly authorized or required by
any other provision of this Agreement to pay any LIBOR Rate
Loan outstanding on a date other than the last day of the
Interest Period applicable thereto, and Borrower pays to
Lender concurrently with any prepayment of a LIBOR Rate Loan
the amount due Lender under Section 2.9 hereof as a result
of such prepayment.
(iii) Notwithstanding anything to the
contrary contained elsewhere in this Agreement, if an
Overadvance Condition shall exist, Borrower shall, without
the necessity of a demand, repay the outstanding Revolver
Loans that are Base Rate Loans or Daily LIBOR Loans in an
amount sufficient to reduce the aggregate unpaid principal
amount of all such Revolver Loans by an amount equal to such
excess; and, if such payment of Base Rate Loans or Daily
LIBOR Loans is not sufficient to cure the Overadvance
Condition, then Borrower shall immediately either (a)
deposit with Lender, for application to any outstanding
Revolver Loans bearing interest as LIBOR Rate Loans as the
same become due and payable at the end of the applicable
Interest Periods, cash in an amount sufficient to cure such
Overadvance Condition to be held by Lender in the Cash
Collateral Account, pending disbursement of same to Lender,
but subject to Lender's Lien therein and rights of offset
with respect thereto, or (b) pay the Revolver Loans that are
LIBOR Rate Loans to the extent necessary to cure such
Overadvance Condition and also pay to Lender any and all
amounts required by Section 2.9 hereof to be paid by reason
of the prepayment of a LIBOR Rate Loan prior to the last day
of the Interest Period applicable thereto.
4.2.2 Payment of Principal of Bridge Loan.
Borrower shall repay the principal balance of the Bridge Loan in
full on or before the Bridge Loan Maturity Date.
4.2.3 Cash Collateral Account. If at any time
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 on any date the amount of funds on deposit
in the Cash Collateral Account, when added to Availability at
such time, is more than the Availability Reserve, then Lender
shall release to Borrower on such date 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.
4.3 Payment of Interest4.3 Payment of Interest. Interest
accrued on all of the Loans shall be paid upon the earlier of (i)
the first calendar day of each month for the immediately
preceding month, computed through the last calendar day of the
preceding month, or (ii) the termination of this Agreement by
Borrower or Lender pursuant to Section 5 hereof.
4.4 Payment of Other Obligations.4.4 Payment of Other
Obligations. Borrower shall pay all costs, fees and charges
pursuant to this Agreement as and when provided in Section 2.2
hereof, to Lender, or to any other Person designated by Lender in
writing. The balance of the Obligations requiring the payment of
money shall be payable by Borrower to Lender as and when provided
in this Agreement, the Other Agreements or the Security
Documents, or, if no date of payment is otherwise specified in
the Loan Documents, on demand.
4.5 Mandatory Prepayments of Bridge Loan.4.5 Mandatory
Prepayments of Bridge Loan. In addition to the payment in full
of the Bridge Loan on the Bridge Loan Maturity Loan as set forth
in Section 4.2.2 hereof and in the Bridge Note, Borrower shall
make mandatory payments of principal on the Bridge Loan as
follows:
(i) Upon the termination of this Agreement
for any reason, Borrower shall prepay the Bridge Loan in
full; and
(ii) If, at any time and for any reason, the
amount of the Escrow Funds pledged to Lender as security for
the Bridge Loan Obligations is less than the principal
balance of the Bridge Loan, Borrower shall pay to Lender the
amount of such deficiency.
Each mandatory prepayment applied to the Bridge Loan
pursuant to this Section 4.5 shall be applied first to Base Rate
Loans and Daily LIBOR Loans to the full extent thereof before
application to any LIBOR Rate Loans; provided, however, that, so
long as no Default or Event of Default has occurred and is
continuing, in lieu of application of such prepayment to LIBOR
Rate Loans prior to the expiration of the respective Interest
Periods with respect thereto and the resulting requirement to pay
the charges provided for in Section 2.9 hereof, Borrower may, at
its option, deposit with Lender cash funds equal to such
prepayment to be held by Lender in the Cash Collateral Account
for disbursement to Lender and application to the Bridge Loan on
the sooner to occur of the expiration of the Interest Period
applicable thereto or the termination of this Agreement by
Borrower or Lender pursuant to Section 5 hereof.
4.6 Optional Prepayments of Loans. .6 Optional Prepayments
of Loans. Borrower may, at its option, prepay the principal
owing on any Loan at any time in whole and from time to time in
part, but (i) any such prepayment in connection with a
termination of this Agreement shall be subject to the payment of
any applicable termination charge pursuant to Section 5.2.4
hereof, (ii) any partial prepayment of the Bridge Loan shall be
in amounts aggregating $500,000 or any greater multiple of
$100,000, and (iii) if such prepayment is made of a LIBOR Rate
Loan and on a date other than the last day of any applicable
Interest Period, by paying any charges required by Section 2.9
hereof. Borrower shall give written notice (or telephonic notice
confirmed in writing) to Lender of any intended prepayment not
less than one (1) Business Day prior to any prepayment of Daily
LIBOR Loans or Base Rate Loans and not less than two (2) Business
Days prior to any prepayment of LIBOR Rate Loans. Such notice,
once given, shall be irrevocable.
4.7. Application of Payments and Collateral Proceeds. .7.
Application of Payments and Collateral Proceeds. Except to the
extent that the manner of application to the Obligations of
payments or proceeds of Collateral is expressly governed by other
provisions of this Agreement, Borrower irrevocably waives the
right to direct the application of any and all payments and
Collateral proceeds at any time or times hereafter received by
Lender from or on behalf of Borrower, and Borrower does hereby
irrevocably agree that Lender shall have the continuing exclusive
right to apply and reapply any and all such payments and
Collateral proceeds received at any time or times hereafter by
Lender or its agent against the Obligations, in such manner as
Lender may deem advisable, notwithstanding any entry by Lender
upon any of its books and records, provided such application of
payments and collections is made in a manner consistent with this
Agreement and the other Loan Documents. If as the result of the
clearance and collections of all Accounts of Borrower through the
ACH and the direct payment of all funds credited to Borrower's
Clearing Bank Account to Lender for application to the
Obligations, all as provided in Sections 7.2.5 and 7.2.6 hereof,
a credit balance exists in the Loan Account, such credit balance
shall not accrue interest in favor of Borrower, but shall be
available to Borrower at any time or times for so long as no
Default or Event of Default exists.
4.8 Marshalling; Payments Set Aside..8 Marshalling;
Payments Set Aside. Lender shall be under no obligation to
marshall any assets in favor of Borrower or any other Person or
against or in payment of any or all of the Obligations. To the
extent that Borrower makes a payment or payments to Lender or
Lender receives payment from the proceeds of any Collateral or
exercises its right of setoff, and such payment or payments or
the proceeds of such setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other
party, then, to the extent of such recovery, the obligation or
part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred. The provisions of
the immediately preceding sentence of this Section 4.8 shall
survive any termination of this Agreement and payment in full of
the Obligations.
4.9 All Loans to Constitute One Obligation. .9 All Loans
to Constitute One Obligation. The Loans shall constitute one
general Obligation of Borrower and shall be secured by Lender's
Lien in all of the Collateral.
4.10 Loan Account.10 Loan Account. Lender shall enter
all Revolver Loans as debits to Borrower's Loan Account and shall
also record in the Loan Account all payments made by Borrower on
the Revolver Loans and all proceeds of Collateral which are
finally paid to Lender, and may record therein other debits and
credits, including interest and all charges and expenses,
properly chargeable to Borrower under this Agreement and the
other Loan Documents.
4.11 Statements of Account.11 Statements of Account. Lender
will account to Borrower monthly with a statement of Loans,
charges and payments made pursuant to this Agreement, and such
account rendered by Lender shall be deemed final, binding and
conclusive upon Borrower unless Lender is notified by Borrower in
writing to the contrary within thirty (30) days after the date on
which such accounting is deemed to have been sent pursuant to
Section 12.10 hereof. Such notice shall only be deemed an
objection to those items specifically objected to therein.
SECTION 5. TERM AND TERMINATION OF AGREEMENTSECTION 5.
TERM AND TERMINATION OF AGREEMENT
5.1 Term of Agreement. 5.1 Term of Agreement. Subject to
Lender's right to cease making Loans to Borrower during the
existence of any Default or Event of Default, this Agreement
shall be in effect from the date hereof 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 5.2 hereof.
5.2 Termination of Agreement.2 Termination of Agreement
5.2.1 Termination by Lender. Upon at least ninety
(90) days prior written notice to Borrower, Lender may terminate
this Agreement as of the last day of the Original Term or the
then current Renewal Term and Lender may terminate this Agreement
without notice during the existence of an Event of Default.
5.2.2 Termination by Borrower. Upon at least
ninety (90) days prior written notice to Lender, Borrower may, at
its option, terminate this Agreement; provided, however, no such
termination by Borrower shall be effective until Borrower has
satisfied all of the Obligations. For purposes hereof, the
Obligations shall not be deemed to have been satisfied until all
Obligations for the payment of money have been paid to Lender in
same day funds and all Obligations that are at the time in
question contingent have been fully cash securitized in favor and
to the satisfaction of Lender or Lender has received as
beneficiary a direct pay letter of credit in form and from an
issuing bank reasonably acceptable to Lender and providing for
direct payment to Lender of all such contingent Obligations at
the time they become fixed. Any notice of termination given by
Borrower shall be irrevocable unless Lender otherwise agrees in
writing. Borrower may elect to terminate this Agreement in its
entirety only. No section of this Agreement or type of Loan
available hereunder may be terminated by Borrower singly.
5.2.3 Termination Upon Expiration of United Express
Operating Agreement. This Agreement shall, at Lender's option,
automatically terminate three (3) months before the United
Express Termination Date.
5.2.4 Termination Charges. On the effective date
of termination of this Agreement for any reason, Borrower shall
pay to Lender (in addition to the then outstanding principal,
accrued interest and other charges owing under the terms of this
Agreement and any of the other Loan Documents) as liquidated
damages for the loss of the bargain and not as a penalty, an
amount equal to the product obtained by multiplying the highest
of the Average Monthly Loan and Letter of Credit Balance for any
month during the immediately preceding 12-month period ending
with the month immediately preceding the date of such termination
(or shorter period of time this Agreement is in effect), times
one-half percent (0.50%); provided however, in 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-half of one percent
(0.50%) of the highest 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.
5.2.5 Effect of Termination. On the effective date
of termination of this Agreement, all of the Obligations shall be
immediately due and payable and Lender shall have no obligation
to make any Loans. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan
Documents shall survive any such termination and Lender shall
retain its Liens in the Collateral and all of its rights and
remedies under the Loan Documents notwithstanding such
termination until Borrower has satisfied the Obligations to
Lender, in full, in immediately available funds, together with
the applicable termination charge, if any. Notwithstanding the
payment in full of the Obligations, Lender shall not be required
to terminate its Liens in the Collateral unless, with respect to
any loss or damage Lender may incur as a result of dishonored
checks or other items of payment constituting uncollected funds
received by Lender from Borrower or any Account Debtor and
applied to the Obligations before final collection, Lender shall,
at its option, (i) have received a written agreement, executed by
Borrower and by any Person whose loans or other advances to
Borrower are used in whole or in part to satisfy the Obligations,
indemnifying Lender from any such loss or damage, or (ii) such
monetary reserves and Liens on the Collateral for such period of
time as Lender, in its reasonable discretion, may deem reasonably
necessary to protect Lender from any such loss or damage. All
obligations of Borrower to indemnify Lender pursuant to this
Agreement shall survive any termination of this Agreement.
Subject to the provisions of this Section 5.2.5, the termination
of this Agreement shall constitute a termination of all Loan
Documents; provided, however, that any and all provisions of such
Loan Documents that are intended to survive payment in full of
the Obligations shall survive such termination as and to the
extent provided in such Loan Documents.
SECTION 6. SECURITY INTERESTSSECTION 6.
SECURITY INTERESTS
6.1 Security Interest in Collateral.6.1 Security
Interest in Collateral. To secure the prompt payment and
performance to Lender of the Obligations, Borrower hereby grants
to Lender a continuing Lien upon all of the following Property
and interests in Property of Borrower, whether now owned or
existing or hereafter created, acquired or arising and
wheresoever located:
(i) All Accounts;
(ii)
All Rotable
Spare Parts;
(iii) All General Intangibles;
(iv) All Documents;
(v) All Instruments;
(vi) All Chattel Paper;
(vii) All tickets, exchange orders and other
billing documents for the air transportation of passengers
and property, whether processed or unprocessed;
(viii) All right, title and interest of Borrower in
and to the settlement accounts maintained with the Clearing
Bank and all sums now or hereafter in, payable to or
withdrawable from such accounts;
(ix) All monies and other Property of any kind now
or at any time or times hereafter in the possession or
under the control of Lender or a bailee or Affiliate of
Lender;
(x) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (i)
through (ix) above, including, without limitation, proceeds
of and unearned premiums with respect to insurance policies
insuring any of the Collateral; and
(xi) All books and records (including, without
limitation, customer lists, credit files, computer programs,
print-outs, and other computer materials and records) of
Borrower pertaining to any of (i) through (x) above.
6.2 Other Collateral.6.2 Other Collateral. In addition
to the items of Property referred to in Section 6.1 above, (a)
the Bridge Loan Obligations shall be secured by the Escrow Funds
to the extent provided in the Escrow Agreement, and (b) all of
the Obligations shall also be secured by the Cash Collateral to
the extent provided herein and all of the other items of Property
from time to time described in any of the Security Documents as
security for any of the Obligations.
6.3 Lien Perfection; Further Assurances.6.3 Lien
Perfection; Further Assurances. At Lender's request, Borrower
shall execute, and shall cause each of its Subsidiaries to
execute, such UCC-1 financing statements as are required by the
Code and such other instruments, assignments or documents as are
necessary to perfect Lender's Lien upon any of the Collateral
and, at Lender's request, shall take such other action as may be
directed by Lender to perfect or to continue the perfection of
Lender's Lien upon the Collateral. Unless prohibited by
Applicable Law, Borrower hereby authorizes Lender to execute and
file any such financing statement on Borrower's behalf. The
parties agree that a carbon, photographic or other reproduction
of this Agreement shall be sufficient as a financing statement
and may be filed in any appropriate office in lieu thereof. At
Lender's request, Borrower shall also promptly execute or cause
to be executed and shall deliver to Lender any and all documents,
instruments and agreements deemed necessary by Lender to give
effect to or carry out the terms or intent of the Loan Documents.
6.4 Lien on Leasehold Estate.6.4 Lien on Leasehold Estate.
The due and punctual payment and performance of up to $9,579,932
of the Obligations shall also be secured by the Lien created by
the Deed of Trust upon Borrower's leasehold estate in the Realty
leased by Borrower from the Authority pursuant to the Lease. The
Deed of Trust shall be executed by Borrower in favor of Lender
and shall be duly recorded, at Borrower's expense, in each office
where such recording is required to constitute a fully perfected
Lien on the Property encumbered thereby. Borrower shall deliver
to Lender, at Borrower's expense, mortgagee title insurance
policies issued by a title insurance company satisfactory to
Lender, which policies shall be in form and substance
satisfactory to Lender and shall insure a valid first Lien in
favor of Lender on Borrower's leasehold estate in the Realty,
subject only to those exceptions acceptable to Lender and its
counsel.
6.5 Exclusion From Collateral. .5 Exclusion From
Collateral. The Collateral in which Lender is granted a Lien
pursuant to Section 6.1 of this Agreement shall not include any
licenses, permits, contracts or other agreements to the extent
that the grant of a Lien therein or assignment thereof is
prohibited under, or would result in a breach of the terms of,
any such license, permit, contract or other agreement, or is
prohibited by Applicable Law; provided, however, the foregoing
exclusion shall in no way be construed (i) to apply if any such
prohibition is unenforceable under Section 9-318 of the Uniform
Commercial Code or other Applicable Law or (ii) so as to limit,
impair or otherwise affect Lender's unconditional continuing
Liens in any rights or interests of Borrower in or to monies due
or to become due under any such license, permit, contract or
other agreement (including any Accounts).
6.6 Release of Lien in Rotable Spare Parts. .6 Release of
Lien in Rotable Spare Parts. Upon Borrower's written request,
Lender shall release its Lien in all Rotable Spare Parts, and, at
Borrower's expense, execute, deliver and record such termination
statements, instruments, documents and other agreements as
Borrower may reasonably request to release Lender's Lien in the
Rotable Spare Parts, provided that each of the following
conditions shall have first been satisfied: (i) concurrently with
such release, Borrower, Parent and Lender shall have executed and
delivered an amendment to this Agreement, in form and substance
reasonably satisfactory to Lender and its counsel, modifying the
definition of the Borrowing Base to eliminate as one of the
components thereof the Rotable Spare Parts Borrowing Base, and
(ii) immediately before, and after giving pro forma effect to,
such elimination of the Rotable Spare Parts Borrowing Base, no
Default, Event of Default or Overadvance Condition shall exist.
SECTION 7. COLLATERAL ADMINISTRATIONSECTION 7.
COLLATERAL ADMINISTRATION
7.1 General Provisions7.1 General Provisions
7.1.1 Location of Rotable Spare Parts. All of the
Rotable Spare Parts shall at all times be kept by Borrower at one
or more of the business locations set forth in Schedule 7.1.1
hereto and shall not, without the prior written approval of
Lender, be moved therefrom except, prior to an Event of Default,
for (i) the location of Rotable Spare Parts at locations within
the continental United States other than those shown in Schedule
7.1.1 hereto if, (a) Borrower gives Lender written notice of such
a location at least thirty (30) days prior to moving or locating
any Rotable Spare Parts to such location, (b) Lender's Lien in
such Rotable Spare Parts is and continues to be a duly perfected
Lien thereon (and Borrower shall have taken such action as may be
required pursuant to Section 6.3 hereof to perfect Lender's Lien
thereon, including, without limitation, the execution and
recordation in the registry of the FAA of an amendment or
supplement to the Rotable Spare Parts Security Agreement
designating such new location) subject to no other Lien thereon
except for Permitted Liens, and (c) neither Borrower's nor
Lender's right of entry upon the premises where the Rotable Spare
Parts are stored, or its right to remove the Rotable Spare Parts
therefrom, is restricted in any material respect; and (ii)
temporary transfers (for a period not to exceed three (3) months
in any event) of Rotable Spare Parts from any location set forth
in Schedule 7.1.1 hereto to another location if done for the
limited purpose of repairing, refurbishing or overhauling such
Rotable Spare Parts in the ordinary course of Borrower's
business, and, while such Rotable Spare Parts are away from any
location set forth in Schedule 7.1.1 hereto, they are excluded
from the Rotable Spare Parts Borrowing Base even if they satisfy
all other criteria set forth in the definition thereof.
7.1.2 Insurance. Borrower shall maintain and pay
for insurance upon all of the Rotable Spare Parts wherever
located and with respect to Borrower's business, covering
casualty, hazard, public liability and such other risks in such
amounts, with such deductibles and with such insurance companies
as are reasonably satisfactory to Lender. Borrower shall deliver
the originals or copies (which copies shall be certified if
requested by Lender) of such policies to Lender with satisfactory
lender's loss payable endorsements naming Lender as sole loss
payee, assignee or additional insured, as appropriate. Each
policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than thirty (30) days
prior written notice to Lender in the event of cancellation of
the policy for any reason whatsoever and a clause specifying that
the interest of Lender shall not be impaired or invalidated by
any act or neglect of Borrower or the owner of the Property or by
the occupation of the premises for purposes more hazardous than
are permitted by said policy. If Borrower fails to provide and
pay for such insurance, Lender may, at its option, but shall not
be required to, procure the same and charge Borrower therefor.
Borrower agrees to deliver to Lender, promptly, if requested by
Lender, true copies of all reports made in any reporting forms to
insurance companies. In addition to the insurance required
herein with respect to the Collateral, Borrower shall maintain,
with financially sound and reputable insurers, insurance with
respect to its Properties and business against such casualties
and contingencies of such type and in such amounts as is
customary in the business of Borrower, or as otherwise may be
reasonably required by Lender. All proceeds of insurance
received by Borrower or Lender on account of any casualty to the
Collateral shall be applied as follows:
(i) if an Event of Default exists, all such
insurance proceeds shall, at Lender's option, be deemed Net
Proceeds and paid to Lender and applied first, as a
mandatory prepayment of the Revolver Loans outstanding and
added to the Availability Reserve, and, after the Revolver
Loans are paid in full, to the other Obligations in such
order and against such particular Obligations as Lender
shall determine; and
(ii) if no Event of Default exists, all such
insurance proceeds of any claim of less than $500,000 shall
be released to Borrower for the purpose of Borrower's
repairing, replacing or restoring the damaged or destroyed
Collateral (and, if replaced, the replacement Collateral
shall be subject to Lender's duly perfected first priority
Lien therein subject to no other Lien other than Permitted
Liens), and all such insurance proceeds of any claim of more
than $500,000 shall be remitted to Lender and applied first,
as a mandatory prepayment of the Revolver Loans outstanding
and added to the Availability Reserve, and, after the
Revolver Loans are paid in full, added to the Cash
Collateral Account, and thereafter released from the
Availability Reserve and the Cash Collateral Account to
Borrower from time to time, but not more often than monthly,
against such evidence of repair, replacement or restoration
as Lender may reasonably require (subject, as aforesaid, in
the case of replacement Collateral).
7.1.3 Protection of Collateral. All expenses of
protecting, storing, warehousing, insuring, handling, maintaining
and shipping the Collateral, all Taxes imposed by any Applicable
Law on any of the Collateral or in respect of the sale thereof,
and all other payments required to be made by Lender to any
Person to realize upon the Collateral, shall be borne and paid by
Borrower. If Borrower fails to promptly pay any portion thereof
when due, Lender may, at its option, but shall not be required
to, pay the same and charge Borrower therefor. Lender shall not
be liable or responsible in any way for the safekeeping of any of
the Collateral or for any loss or damage thereto (except for
reasonable care in the custody thereof while any Collateral is in
Lender's actual possession) or for any diminution in the value
thereof, or for any act or default of any warehouseman, carrier,
forwarding agency, or other person whomsoever, but the same shall
be at Borrower's sole risk.
7.2. Administration of Accounts7.2. Administration of
Accounts.
7.2.1 Records, Schedules and Assignments of
Accounts. Borrower shall keep accurate and complete records in
accordance with standard air carrier industry practice of its
Accounts and all payments and collections thereon and shall
submit to Lender:
(i) On such periodic basis as Lender shall
request, but no less frequently than weekly, a Borrowing
Base Certificate;
(ii) Copies of each recap sheet submitted to the
ACH under the ACH Procedure Manual concurrently with the
sending thereof to ACH;
(iii) Copies of each monthly settlement sheet
received from ACH pursuant to the ACH Procedure Manual, no
later than the third (3rd) Business Day after the receipt
thereof; and
(iv) Upon Lender's request therefor, copies of all
interline invoices submitted to, or received from, ACH under
the ACH Procedure Manual, and such other matters and
information relating to the Accounts of Borrower included on
any Borrowing Base Certificate as Lender shall from time to
time reasonably request.
In addition, if Accounts owing by any Account Debtor to
Borrower in an aggregate amount in excess of $25,000 become
ineligible because they fall within one of the specified
categories of ineligibility set forth in the definition of
Eligible Accounts or otherwise established by Lender, Borrower
shall notify Lender of such occurrence no later than the second
(2d) Business Day following such occurrence and the Borrowing
Base shall thereupon be adjusted to reflect such occurrence.
7.2.2 Discounts, Allowances, Disputes. If Borrower
grants any discounts or allowances that are not reflected in the
calculation of the face value of each Account involved, Borrower
shall report such discounts or allowances to Lender as part of
the next required Borrowing Base Certificate. In the event any
amounts due and owing in excess of $25,000 are in dispute between
Borrower and any Account Debtor, Borrower shall provide Lender
with written notice thereof at the time of submission of the next
Borrowing Base Certificate, explaining in detail the reason for
the dispute, all claims related thereto and the amount in
controversy.
7.2.3 Taxes. If an Account of Borrower includes a
charge for any Tax, Lender is authorized, in its sole discretion,
to pay the amount thereof to the proper taxing authority for the
account of Borrower and to charge Borrower therefor, provided,
however, that neither Lender nor any Lender shall be liable for
any Taxes that may be due by Borrower.
7.2.4 Account Verification. Whether or not a
Default or an Event of Default has occurred, any of Lender's
officers, employees or agents shall have the right, at any time
or times hereafter, in the name of Lender, any designee of Lender
or Borrower, to take reasonable steps to verify the validity,
amount or any other matter relating to any Accounts of Borrower
by verbal or written communications. Borrower shall cooperate
fully with Lender in an effort to facilitate and promptly
conclude any such verification process.
7.2.5 Transmission of Funds. Borrower shall cause
all funds credited to its Clearing Bank Account to be sent by
federal funds wire transfer to the Payment Account.
7.2.6 Collection of Accounts and Other Proceeds of
Collateral. All Eligible Accounts of Borrower shall be cleared
and collected for payment by ACH pursuant to the ACH Procedure
Manual. After the occurrence of an Event of Default, all Payment
Items received by Borrower on account of, or with respect to, its
Accounts or the proceeds of any other Collateral shall be held as
Lender's property by Borrower as trustee of an express trust for
Lender's benefit and, no later than the first (1st) Business Day
after receipt, Borrower shall immediately forward the same in
kind to Lender for application to the Obligations. Borrower
shall obtain the agreement by the Clearing Bank in favor of
Lender to waive any offset rights the Clearing Bank may otherwise
have against the funds credited to the Clearing Bank Account.
Lender assumes no responsibility for the Clearing Bank Account or
its maintenance or operation, including, without limitation, any
claim of accord and satisfaction or release with respect to
deposits made by the Clearing Bank thereto.
7.3 Administration of Rotable Spare Parts7.3
Administration of Rotable Spare Parts.
7.3.1 Records and Reports of Rotable Spare Parts.
Borrower shall keep accurate and complete records of its Rotable
Spare Parts. Borrower shall furnish to Lender reports of its
Rotable Spare Parts in form and detail satisfactory to Lender at
such times as Lender may request, but at least once each month,
not later than the twentieth (20th) day of such month for Rotable
Spare Parts of Borrower as of the end of the preceding month.
Borrower shall conduct a physical inventory of its Rotable Spare
Parts no less frequently than annually and shall provide to
Lender a report based on each such physical inventory promptly
thereafter, together with such supporting information as Lender
shall request.
7.4 Payment of Charges7.4 Payment of Charges. All
amounts chargeable to Borrower under Section 7 hereof shall be
Obligations secured by all of the Collateral, shall be payable on
demand and shall bear interest from the date such advance was
made until paid in full at the rate applicable to Revolver Loans
from time to time.
SECTION 8. REPRESENTATIONS AND WARRANTIESSECTION 8.
REPRESENTATIONS AND WARRANTIES
8.1.General Representations and Warranties. .1. General
Representations and Warranties. To induce Lender to enter into
this Agreement and to make Loans and extend credit hereunder,
each Loan Party warrants and represents to Lender that:
8.1.1 Organization and Qualification. Each Loan
Party is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation. Each Loan Party is duly qualified and is
authorized to do business and is in good standing as a foreign
corporation in each state or jurisdiction listed on Schedule
8.1.1 hereto and in all other states and jurisdictions where the
character of its Properties or the nature of its activities make
such qualification necessary except where the failure of such
Loan Party or its respective Subsidiaries to be so qualified
cannot reasonably be expected to have a Material Adverse Effect.
Borrower is an air carrier holding a certificate issued by the
FAA under 49 U.S.C. 44705.
8.1.2 Corporate Power and Authority. Each Loan
Party is duly authorized and empowered to enter into, execute,
deliver and perform this Agreement and each of the other Loan
Documents to which it is a party. The execution, delivery and
performance of this Agreement and each of the other Loan
Documents by each Loan Party have been duly authorized by all
necessary corporate action and do not and will not (i) require
any consent or approval of the shareholders of such Loan Party;
(ii) contravene such Loan Party's charter, articles or
certificate of incorporation or by-laws; (iii) violate, or cause
such Loan Party to be in default under, any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award in effect having applicability to such
Loan Party; (iv) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which such Loan Party is a
party or by which it or its Properties may be bound or affected
that may reasonably be expected to have a Material Adverse
Effect; or (v) result in, or require, the creation or imposition
of any Lien (other than Permitted Liens) upon or with respect to
any of the Properties now owned or hereafter acquired by such
Loan Party.
8.1.3 Legally Enforceable Agreement. This
Agreement is, and each of the other Loan Documents when delivered
under this Agreement will be, a legal, valid and binding
obligation of each Loan Party enforceable against it in accor
dance with its respective terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a
proceeding in equity or in law.
8.1.4 Capital Structure. Schedule 8.1.4 hereto
states (i) the name of each corporate or joint venture Affiliates
of each Loan Party and the nature of the affiliation, (ii) the
number and nature of all outstanding Securities of each Loan
Party, and (iii) the number of authorized, issued and treasury
shares of each Loan Party. Each Loan Party has good title to all
of the shares it purports to own of the stock of each of its
Subsidiaries, free and clear in each case of any Lien other than
Permitted Liens. All such shares have been duly issued and are
fully paid and non-assessable. There are no outstanding options
to purchase, or any rights or warrants to subscribe for, or any
commitments or agreements to issue or sell, or any Securities or
obligations convertible into, or any powers of attorney relating
to, shares of the capital stock of any Loan Party or any its
respective Subsidiaries, except as listed on Schedule 8.1.4.
There are no outstanding agreements or instruments binding upon
any Loan Party's shareholders relating to the ownership of its
shares of capital. Borrower is a wholly-owned Subsidiary of
Parent and is the only Subsidiary of Parent. Borrower has no
Subsidiaries other than Atlantic Coast Airlines, Inc. and
Atlantic Coast Management, Inc., each a Delaware corporation
which, as of the Closing Date, is not conducting any activities
and has no material assets.
8.1.5 Corporate Names. No Loan Party has been
known as or used any corporate, fictitious or trade (other than
substantially similar variations of its respective corporate
name) names except those listed on Schedule 8.1.5 hereto. Except
as set forth on Schedule 8.1.5, no Loan Party has been the
surviving corporation of a merger or consolidation or acquired
all or substantially all of the assets of any Person.
8.1.6 Chief Executive Office. Each Loan Party's
chief executive office is as listed on Schedule 7.1.1 hereto.
8.1.7 Title to Properties; Priority of Liens. Each
Loan Party has good, indefeasible and marketable title to and fee
simple ownership of, or valid and subsisting leasehold interests
in, all of its real Property, and good title to all of the
Collateral and all of its other Property, and, in the case of the
Collateral, free and clear of all Liens except Permitted Liens.
Each Loan Party has paid or discharged all lawful claims which,
if unpaid, might become a Lien against any of such Loan Party's
Properties that is not a Permitted Lien. The Liens granted to
Lender under Section 6 hereof are first priority Liens, subject
only to those Permitted Liens that are expressly stated to have
priority over the Liens of Lender.
8.1.8 Accounts. Lender may rely, in determining
which Accounts of Borrower are Eligible Accounts, on all
statements and representations made by Borrower with respect to
any Account or Accounts. Unless otherwise indicated in writing
to Lender, with respect to each Account listed on a Borrowing
Base Certificate:
(i) It is genuine and in all respects what
it purports to be, and it is not evidenced by a judgment,
Instrument, Document or Chattel paper;
(ii) It arises out of a completed, bona fide
rendition of air transportation services by Borrower in the
ordinary course of its business and in accordance with the
terms and conditions of all contracts or other documents
relating thereto and forming a part of the contract between
Borrower and the Account Debtor;
(iii) It is for a liquidated amount
maturing as stated in the duplicate invoice covering such
service, a copy of which has been furnished or is available
to Lender;
(iv) To the best knowledge of Borrower, such
Account, and Lender's Lien therein, is not, and will not (by
voluntary act or omission of Borrower) be in the future,
subject to any offset, deduction, defense, dispute,
counterclaim or any other adverse condition except for, in
the case of Accounts owing by United, United's right of
setoff for current amounts owing under the United Express
Agreements, and in the case of all other Accounts, offsets
arising in the ordinary course of business for settlement
through the ACH under the ACH Agreement in accordance with
the ACH Procedure Manual, and each such Account is
absolutely owing to Borrower and is not contingent in any
respect or for any reason;
(v) Borrower has made no agreement with any
Account Debtor thereunder for any extension, compromise,
settlement or modification of any such Account or any
deduction therefrom, except for, in the case of Accounts
owing by United, United's right of setoff for amounts owing
under the United Express Agreements, and except for
discounts or allowances reported to Lender pursuant to
Section 7.2.1 hereof;
(vi) To the best knowledge of Borrower, there
are no facts, events or occurrences which in any way impair
the validity or enforceability of such Account;
(vii) To the best knowledge of Borrower,
the Account Debtor thereunder (1) had the capacity to
contract at the time any contract or other document giving
rise to the Account was executed and (2) such Account Debtor
is Solvent; and
(viii) To the best knowledge of Borrower,
there are no proceedings or actions which are threatened or
pending against any Account Debtor thereunder which might
result in any material adverse change in such Account
Debtor's financial condition or the collectibility of such
Account.
8.1.9 Financial Statements; Fiscal Year.
(i) The Consolidated balance sheets of the
Loan Parties and such other Persons described therein
(including the accounts of all Subsidiaries of each Loan
Party for the respective periods during which a Subsidiary
relationship existed) as of December 31, 1997 and November
30, 1998, and the related statements of income, changes in
stockholder's equity, and changes in financial position for
the periods ended on such dates, have been prepared in
accordance with GAAP, and present fairly the financial
position of the Loan Parties and such Persons as of such
dates and the results of the Loan Parties' operations for
such periods. Since September 30, 1998, there has been no
material change in the condition, financial or otherwise, of
any Loan Party and such other Persons as shown on the
Consolidated balance sheet as of such date;
(ii) The Consolidated balances sheets of the
Loan Parties and such other Persons described therein, and
the related statements of income, changes in stockholder's
equity, and changes in financial position, which are from
time to time delivered to Lender pursuant to Section 9.1.3
of this Agreement fairly present the financial position of
the Loan Parties and such Persons at such dates and the
results of the operations of the Loan Parties and such
Persons for the periods set forth therein; and
(iii) The fiscal year of each Loan Party ends on
December 31 of each year.
8.1.10 Full Disclosure. The financial statements
referred to in subsection 8.1.9 hereof do not, nor does this
Agreement or any other written statement of any Loan Party or its
respective Subsidiaries to Lender, contain any untrue statement
of a material fact or omit a material fact necessary to make the
statements contained therein or herein not misleading. To the
best of each Loan Party's knowledge, there is no fact (other than
matters of a general economic nature) which a Loan Party has
failed to disclose to Lender in writing which such Loan Party
reasonably expects may materially affect adversely the
Properties, business, prospects, profits or condition (financial
or otherwise) of a Loan Party or the ability of a Loan Party to
perform this Agreement or the other Loan Documents.
8.1.11 Solvent Financial Condition. The Loan
Parties are now and, after giving effect to the Loans to be made
hereunder, at all times will be, Solvent on a Consolidated basis.
8.1.12 Surety Obligations. Except for those
obligations of Borrower to the Authority with respect to the
Bridge Loan, no Loan Party is obligated as surety or indemnitor
under any surety or similar bond or other contract issued or
entered into any agreement to assure payment, performance or
completion of performance of any undertaking or obligation of any
Person other than the other Loan Party.
8.1.13 Taxes. The federal tax identification number
of each Loan Party is shown on Schedule 8.1.13 hereto. Each
Loan Party has filed all federal, state and local tax returns and
other reports it is required by law to file and has paid, or made
provision for the payment of, all Taxes upon it, its income and
Properties as and when such Taxes are due and payable, except to
the extent being Properly Contested. The provision for Taxes on
the books of each Loan Party is adequate for all years not closed
by applicable statutes, and for its current fiscal year.
8.1.14 Brokers. There are no claims for brokerage
commissions, finder's fees or investment banking fees in
connection with the transactions contemplated by this Agreement.
8.1.15 Patents, Trademarks, Copyrights and Licenses.
Each Loan Party owns or possesses all the patents, trademarks,
service marks, trade names, copyrights and licenses necessary for
the present and planned future conduct of its business, without
any known conflict with the rights of others. All such patents,
trademarks, service marks, tradenames, copyrights, licenses and
other similar rights of a material nature are listed on Schedule
8.1.15 hereto.
8.1.16 Governmental Consents. Each Loan Party has,
and is in good standing with respect to, all governmental con
sents, approvals, licenses, authorizations, permits, certifi
cates, inspections and franchises necessary to continue to
conduct its business as heretofore or proposed to be conducted by
it and to own or lease and operate its Properties as now owned or
leased by it.
8.1.17 Compliance with Laws. Each Loan Party has
duly complied with, and its Properties, business operations and
leaseholds are in compliance in all material respects with, the
provisions of all Applicable Law and there have been no
citations, notices or orders of noncompliance issued to any Loan
Party or any of its respective Subsidiaries under any such law,
rule or regulation where such non-compliance could reasonably be
expected to have a Material Adverse Effect. Each Loan Party and
its respective Subsidiaries has established and maintains an
adequate monitoring system to insure that it remains in
compliance with all federal, state and local laws, rules and
regulations applicable to it.
8.1.18 Restrictions. No Loan Party is a party or
subject to any contract, agreement, or charter or other corporate
restriction, which materially and adversely affects its business
or the use or ownership of any of its Properties. No Loan Party
is a party or subject to any contract or agreement which
restricts its right or ability to incur Indebtedness, other than
as set forth on Schedule 8.1.18 hereto, none of which prohibit
the execution of or compliance with this Agreement or the other
Loan Documents by any Loan Party or any of its respective
Subsidiaries, as applicable.
8.1.19 Litigation. Except as set forth on Schedule
8.1.19 hereto, there are no actions, suits, proceedings or
investigations pending on the date hereof or, to the knowledge of
the Loan Parties, threatened against or affecting any Loan Party,
or the business, operations, Properties, prospects, profits or
condition of any Loan Party, and no such action, suit or
proceeding will, if decided adversely, have a Material Adverse
Effect. No Loan Party is in default with respect to any order,
writ, injunction, judgment, decree or rule of any court,
governmental authority or arbitration board or tribunal which is
reasonably expected to have a Material Adverse Effect.
8.1.20 No Defaults. No event has occurred and no
condition exists which would, upon or after the execution and
delivery of this Agreement or any Loan Party's performance
hereunder, constitute a Default or an Event of Default. No Loan
Party is in default, and no event has occurred and no condition
exists which constitutes, or which with the passage of time or
the giving of notice or both would constitute, a default in the
payment of any Indebtedness to any Person for Money Borrowed in
excess of $500,000.
8.1.21 Leases. Each Loan Party is in compliance in
all material respects with all of the terms of each of its
respective capitalized and operating leases.
8.1.22 Pension Plans. Except as disclosed on
Schedule 8.1.22 hereto, no Loan Party has any Plan on the date
hereof. Each Loan Party is in full compliance with the
requirements of ERISA and the regulations promulgated thereunder
with respect to each Plan. No fact or situation that could
result in a Material Adverse Effect exists in connection with any
Plan. No Loan Party has any withdrawal liability in connection
with a Multiemployer Plan.
8.1.23 Trade Relations. There exists no actual or
threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship between any
Loan Party and any customer or any group of customers whose
purchases individually or in the aggregate are material to the
business of any Loan Party, or with any material supplier
(unless such supplier can be readily replaced on terms which
cannot reasonably be expected to have a Material Adverse Effect),
and, the best of each Loan Party's knowledge, there exists no
present condition or state of facts or circumstances which would
materially affect adversely any Loan Party or prevent any Loan
Party from conducting such business after the consummation of the
transactions contemplated by this Agreement in substantially the
same manner in which it has heretofore been conducted.
8.1.24 Labor Relations. Except as described on
Schedule 8.1.24 hereto, no Loan Party is a party to any
collective bargaining agreement on the date hereof. There are no
material grievances, disputes or controversies with any union or
any other organization of any Loan Party's or any of its
respective Subsidiaries' employees, or threats of strikes, work
stoppages or any asserted pending demands for collective
bargaining by any union or organization.
8.1.25 Loans Outstanding Under Existing Loan
Agreement. All Loans and reimbursement obligations owing to
Lender under the Existing Loan Agreement which, upon the Closing
Date, shall be deemed Loans and reimbursement obligations owing
to Lender under this Agreement, are owing to Lender without any
defenses, offsets or claims of any nature.
8.2. Continuous Nature of Representations and Warranties.
.2. Continuous Nature of Representations and Warranties. The
representations and warranties made by Borrower in this Agreement
and the other Loan Documents shall be true and correct in all
material respects on the Closing Date and on the date of each
Borrowing under this Agreement except for any representation and
warranty relating to a specific period before the date of such
Borrowing. Each request for a Revolver Loan made by Borrower
pursuant to this Agreement shall constitute (i) an automatic
representation and warranty by Borrower to Lender that there does
not then exist any Default or Event of Default and (ii) a
reaffirmation as of the date of such request that all of the
representations and warranties of the Loan Parties contained in
this Agreement and the other Loan Documents are true in all
material respects, except for any representations and warranties
relating to a specific period before the date of such request and
except for any changes in the nature of the business or
operations of the Loan Parties and their respective Subsidiaries
that would render the information contained in any Schedule or
Exhibit attached hereto either inaccurate or incomplete, so long
as Lender has consented to such changes or such changes are not
prohibited by this Agreement.
8.3. Survival of Representations and Warranties. .3.
Survival of Representations and Warranties. All representations
and warranties of each Loan Party contained in this Agreement or
any of the other Loan Documents shall be true at the time of the
execution of this Agreement and the other Loan Documents, and
shall survive the execution, delivery and acceptance thereof by
Lender and the parties thereto and the closing of the
transactions described therein or related thereto.
SECTION 9. COVENANTS AND CONTINUING AGREEMENTSSECTION
9. COVENANTS AND CONTINUING AGREEMENTS
9.1 Affirmative Covenants9.1 Affirmative Covenants. During
the term of this Agreement, and thereafter for so long as there
are any Obligations to Lender, each Loan Party covenants that,
unless otherwise consented to by Lender in writing, it shall:
9.1.1 Visits and Inspections. Permit
representatives of Lender, from time to time, as often as may be
reasonably requested, but only during normal business hours upon
reasonable advance notice, to visit and inspect the Properties of
each Loan Party, inspect, audit and make extracts from its books
and records, and discuss with its officers, its employees and its
independent accountants, each Loan Party's business, assets,
liabilities, financial condition, business prospects and results
of operations.
9.1.2. Notices. Notify Lender in writing (i) of the
occurrence of any event or the existence of any fact which
renders any representation or warranty in this Agreement or any
of the other Loan Documents inaccurate, incomplete or misleading
in any material respect; (ii) promptly after a Loan Party's
learning thereof, of the commencement of any litigation affecting
any Loan Party or any of its Properties, whether or not the claim
is considered by such Loan Party to be covered by insurance, and
of the institution of any administrative proceeding which, in
either case, if decided adversely could reasonably be expected to
have a Material Adverse Effect; (iii) promptly after the
execution of any amendment or modification to the United Express
Operating Agreement that would extend the United Express
Termination Date and send to Lender a copy thereof; (iv) promptly
after a Loan Party's learning thereof, of any organized labor
dispute of a material nature to which a Loan Party may become a
party, any strikes or walkouts by organized labor relating to any
of its facilities, and the final expiration of any collective
bargaining agreement to which it is a party or by which it is
bound; (v) promptly after a Loan Party's learning thereof, of any
material default by any Loan Party under any note, indenture,
loan agreement, mortgage, lease, deed, guaranty or other similar
agreement relating to any Indebtedness of such Loan Party
exceeding $500,000; (vi) promptly after the occurrence thereof,
of any Default or Event of Default; (vii) promptly after the
occurrence thereof, of any default or event of default by
Borrower or United under any of the United Express Agreements;
(viii) promptly after the rendition thereof, of any judgment
rendered against a Loan Party in an amount exceeding $500,000
which is not fully covered by insurance; (ix) of the ordering of
any services from United under the United Express Emergency
Response Agreement, and give Lender full particulars of the
estimated costs thereof, to the extent not covered by insurance;
and (x) promptly upon any change of the fiscal year of the Loan
Parties.
9.1.3 Financial Statements . Keep, and cause each
Subsidiary to keep, adequate records and books of account with
respect to its business activities in which proper entries are
made in accordance with GAAP reflecting all its financial
transactions; and cause to be prepared and furnished to Lender
the following (all to be prepared in accordance with GAAP applied
on a consistent basis, unless Borrower's certified public
accountants concur in any change therein and such change is
disclosed to Lender and is consistent with GAAP):
(i) not later than ninety-one
(91) days after the close of each fiscal year of the Loan
Parties, audited financial statements of the Loan Parties as
of the end of such year, on a Consolidated basis, certified
by one of the big five national accounting firms or other
firm of independent certified public accountants of
recognized standing selected by the Loan Parties but
reasonably acceptable to Lender;
(ii) not later than sixty (60) days
after the end of the months of January, February and
December in each fiscal year of the Loan Parties, and thirty
(30) days after the end of each other month in each fiscal
year of the Loan Parties, unaudited interim financial
statements of the Loan Parties as of the end of such month
and of the portion of the Loan Parties' fiscal year then
elapsed, on a Consolidated basis, certified by a financial
officer of the Loan Parties as prepared in accordance with
GAAP and fairly presenting the Consolidated financial
position and results of operations of the Loan Parties for
such month and period subject only to changes from audit and
year-end adjustments and except that such statements need
not contain notes;
(iii) promptly after the sending or
filing thereof, as the case may be, copies of any proxy
statements, financial statements or reports which each Loan
Party has made available to its shareholders and copies of
any regular, periodic and special reports or registration
statements which each Loan Party files with the Securities
and Exchange Commission or any governmental authority which
may be substituted therefor, or any national securities
exchange;
(iv) promptly after the filing thereof,
copies of any annual report to be filed with ERISA in
connection with each Plan; and
(v) such other data and information
(financial and otherwise) maintained by the Loan Parties as
Lender, from time to time, may reasonably request, bearing
upon or related to the Collateral or each Loan Party's
financial condition or results of operations.
Concurrently with the delivery of the financial
statements described in clause (i) of this Section 9.1.3, the
Loan Parties shall cause to be prepared and shall furnish to
Lender a certificate of the aforesaid certified public
accountants certifying to Lender that, based upon their
examination of the financial statements of the Loan Parties
performed in connection with their examination of said financial
statements, they are not aware of any Default or Event of
Default, or, if they are aware of such Default or Event of
Default, specifying the nature thereof, and acknowledging, in a
manner satisfactory to Lender, that they are aware that Lender is
relying on such financial statements in making its decisions with
respect to the Loans. No later than ten days after receipt of
the accountants' letter to the management of the Loan Parties
that is prepared in connection with the financial statements
described in clause (i) of this Section 9.1.3, but in no event
later than 150 days after the end of each fiscal year, the Loan
Parties shall forward to Lender a copy of such accountants'
letter. Concurrently with the delivery of the financial
statements described in clause (i) of this Section 9.1.3 and
those financial statements described in clause (ii) of this
Section 9.1.3 which are for the last month in a fiscal quarter of
the Loan Parties, the Loan Parties shall cause to be prepared and
furnished to Lender a Compliance Certificate in the form of
Exhibit D hereto executed by a financial officer of the Loan
Parties.
9.1.4 Projections. No later than 45 days after the
end of each fiscal year of the Loan Parties, deliver to Lender
Projections of each Loan Party for the forthcoming fiscal year,
month by month.
9.1.5 Taxes and Liens. Pay and discharge, and
cause each Subsidiary to pay and discharge, all Taxes prior to
the date on which such Taxes become delinquent or penalties
attach thereto, except and only to the extent that such Taxes are
being Properly Contested. Each Loan Party shall also pay,
discharge or provide a bond with respect to, any lawful claims
which, if unpaid or unbonded, might become a Lien against any of
a Loan Party's Property except for Permitted Liens.
9.1.6 Tax Returns. File, and cause each Subsidiary
to file, all federal, state and local tax returns and other
reports any Loan Party is required by law to file and maintain
adequate reserves for the payment of all Taxes imposed upon it,
its income or its profits, or upon any Property belonging to it.
9.1.7 Compliance with Applicable Laws. Comply with
all Applicable Laws, and obtain and keep in force any and all
licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its Property or to
the conduct of its business, which violation or failure to obtain
might have a Material Adverse Effect.
9.1.8 Environmental Events. Notify Lender in
writing promptly after learning thereof (i) of any violation of
any Environmental Law, (ii) of any inquiry, proceeding,
investigation or other action, involving a request for
information or a notice of potential environmental liability from
any foreign, federal, state or local environmental agency or
board, or (iii) of the discovery of the release of any Hazardous
Material at, on, under or from any real Property owned or leased
by any Loan Party or any facility or equipment thereat in excess
of reportable or reliable standards or levels under any
Environmental Law, or in a manner and/or amount which could
reasonably be expected to result in liability under any
Environmental Law, in each case which would have a Material
Adverse Effect. In the event of the presence of any Hazardous
Materials on any real Property owned or leased by any Loan Party
which is in violation of, or which could reasonably be expected
to result in liability under, any Environmental Law, in each case
which would have a Material Adverse Effect, such Loan Party upon
discovery thereof, shall take all necessary steps to initiate and
expeditiously complete all remedial, corrective and other action
to mitigate and eliminate any such adverse effect, and shall keep
Lender informed of their actions and the results.
9.1.9 Computer Software. Establish an action plan,
and cause such action plan to be implemented by no later than
June 30, 1999, to reasonably assure that the essential items of
the computer software of each Loan Party is able to be used and
operated before, during and after calendar year 2000 A.D. without
error functions of a material nature relating to date data,
specifically including any error of a material nature relating
to, or the conduct of, date data which represents or references
different centuries or more than one century, and provide Lender
with assurances reasonably satisfactory to Lender that after June
30, 1999 the essential items of the computer software of the Loan
Parties will be able to recognize and perform without error
functions relating to date data before, during and after calender
year 2000 A.D.
9.2 Negative Covenants9.2 Negative Covenants. During
the term of this Agreement, and thereafter for so long as there
are any Obligations to Lender, each Loan Party covenants that,
unless Lender has first consented thereto in writing, it will
not:
9.2.1 Fundamental Changes. Merge or consolidate
with any Person or acquire all or any substantial part of the
Properties of any Person; provided, however, the foregoing
restriction shall not apply to (i) a merger by Parent with and
into Borrower with Borrower as the surviving corporation or (ii)
a merger by Borrower with and into Parent or with a Subsidiary of
Borrower, with Parent or such Subsidiary as the surviving
corporation, provided, in the case of a merger pursuant to clause
(ii) hereof, the following conditions are first satisfied by the
Loan Parties: (a) Borrower shall have given Lender not less than
fifteen (15) days prior written notice of the effective date of
such merger, (b) Lender shall have received, in form and
substance satisfactory to Lender and its counsel, an assumption
agreement as of the effective date of the merger, duly executed
by Parent or such Subsidiary into which Borrower proposes to
merge, pursuant to which Parent or such Subsidiary, as the case
may be, shall assume, adopt, ratify and confirm all of the
Obligations of Borrower under this Agreement and the other Loan
Documents, together with such other documents as Lender or its
counsel may reasonably require, (c) Lender shall have received
copies of all agreements, documents and instruments relating to
the merger as executed by the parties thereto, including the
certificates of merger as issued and certified by the Secretary
of States of the jurisdictions of incorporation of each Loan
Party, (d) Lender's Lien in the Collateral is and continues to be
a duly perfected Lien thereon (and each Loan Party shall have
taken such action as may be required pursuant to Section 6.3 and
any other provision of this Agreement or any other Loan Document
to perfect Lender's Lien thereon) subject to no other Lien
thereon except for Permitted Liens, and (e) no Default, Event of
Default or Overadvance Condition shall exist immediately before
or after giving effect to such merger.
9.2.2 Loans. Make any loans or other advances of
money to any Person, except:
(i) salary or other employment related
benefit, travel advances, advances against commissions and
other similar advances in the ordinary course of business,
including loans to pilots and other employees for the
payment of training courses;
(ii) loans or advances from one Loan
Party to the other Loan Party; and
(iii) other loans and advances not
in excess of $200,000 outstanding in the aggregate at any
one time.
9.2.3 Affiliate Transactions. Enter into, or be a
party to, any transaction with any Affiliate of a Loan Party
(other than the other Loan Party) or stockholder, except in the
ordinary course of and pursuant to the reasonable requirements of
such Loan Party's business and upon fair and reasonable terms
which are fully disclosed to Lender and are no less favorable to
such Loan Party than would be obtained in a comparable arm's
length transaction with a Person not an Affiliate of such Loan
Party.
9.2.4 Limitation on Liens. Create or suffer to
exist any Lien upon any of the Collateral, whether now owned or
hereafter acquired, except:
(i) Liens at any time granted in favor
of Lender;
(ii) Liens for taxes (excluding any Lien
imposed pursuant to any of the provisions of ERISA) not yet
due or that are being Properly Contested;
(iii) statutory Liens arising in
the ordinary course of such Loan Party's business by
operation of law or regulation, but only if payment in
respect of any such Lien is not at the time required or such
Liens are being Properly Contested and do not, in the
aggregate, materially detract from the value of the
Collateral or materially impair the use thereof in the
operation of such Loan Party's business; and
(iv) Purchase Money Liens in Rotable
Spare Parts, provided such Purchase Money Liens are limited
by their express terms to readily identifiable Rotable Spare
Parts and such Rotable Spare Parts are segregated by
Borrower from all of its other Rotable Spare Parts.
9.2.5 Distributions. Declare or make any
Distributions.
9.2.6 Disposition of Collateral. Sell, lease or
otherwise dispose of any of the Collateral except for
dispositions of the Rotable Spare Parts for so long as no
Default, Event of Default or Overadvance Condition then exists,
or, after giving effect to such disposition, will exist.
9.2.7 Restricted Investment. Make or have any
Restricted Investment.
9.2.8 Tax Consolidation. File or consent to the
filing of any consolidated income tax return with any Person
other than a Subsidiary of a Loan Party.
9.2.9 Guaranties. Become liable upon the
obligations of any Person (other than the other Loan Party), by
assumption, endorsement or guaranty thereto or otherwise (other
than to Lender), except the endorsement of checks in the ordinary
course of business and the issuance of guaranties in the ordinary
course of business of loans to pilots and other employees of a
Loan Party for the payment of training courses
9.2.10 United Express Agreements. Enter into, or agree
to, any amendment, modification, supplement or termination of any
United Express Agreement subsequent to the date of this Agreement
if the effect of such amendment, modification, supplement or
termination would (i) shorten the period during which the United
Express Operating Agreement is in effect or (ii) increase, or
could reasonably be expected to increase, in any material way the
structure or the basis of payment of the fees, charges or other
Indebtedness owing by Borrower to United which, pursuant to the
United Non-Offset Agreement, United is permitted to offset
against the Accounts of Borrower owing by United.
9.2.11 ACH Membership. Withdraw from being an
associate member of the ACH.
9.2.12 Subsidiaries. Hereafter divest itself of any
material assets by transferring them to any Subsidiary.
9.2.13 Subordinated Debt. Prepay or redeem any of the
Subordinated Debt before its scheduled maturity date or pay any
of the Subordinated Debt except in accordance with the terms of
the instrument under which such Subordinated Debt has been
subordinated to the payment of the Obligations.
9.3 Specific Financial Covenants9.3 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 Lender has first consented thereto
in writing, it shall comply with the following financial
covenants:
9.3.1 Consolidated Fixed Charge Coverage Ratio. The
Loan Parties and their respective Subsidiaries shall maintain a
Consolidated Fixed Charge Coverage Ratio as of the end of each
Testing Period, beginning with the Testing Period ending December
31, 1998, of not less than 1.6 to 1.0.
9.3.2 Consolidated Leverage Ratio. The Loan
Parties and their respective Subsidiaries shall maintain at all
times a Consolidated Leverage Ratio of no greater than 1.5 to
1.0.
9.3.3 Consolidated Senior Indebtedness/Consolidated
EBITDA Ratio. The Loan Parties and their respective Subsidiaries
shall maintain a Consolidated Senior Indebtedness/Consolidated
EBITDA Ratio as of the end of each Testing Period, beginning with
the Testing Period ending December 31, 1998, of no greater than
3.0 to 1.0.
SECTION 10. CONDITIONS PRECEDENT10. CONDITIONS
PRECEDENT
10.1 Conditions Precedent to Initial Revolver Loan on
Closing Date10.1 Conditions Precedent to Initial Revolver Loan
on Closing Date. Notwithstanding any other provision of this
Agreement or any of the other Loan Documents, and without
affecting in any manner the rights of Lender under the other
sections of this Agreement, it is understood and agreed that
Lender will have no obligation to make the initial Revolver Loan
under Section 1 of this Agreement on the Closing Date unless and
until, in addition to each of the conditions set forth in Section
10.2 hereof, each of the following conditions has been satisfied:
10.1.1 Documentation. Lender shall have received
the following documents, each to be in form and substance
satisfactory to Lender and its counsel:
(i) Certified copies of casualty
insurance policies of Borrower, together with loss payable
endorsements on Lender's standard form of Loss Payee
Endorsement naming Lender as loss payee as its interests may
appear, and certified copies of the liability insurance
policies of Borrower, together with endorsements naming
Lender as a coinsured;
(ii) Copies of all filing receipts or
acknowledgments issued by any governmental authority
(including, without limitation, the FAA) to evidence any
filing or recordation necessary to perfect the Liens of
Lender in the Collateral and evidence in a form acceptable
to Lender that such Liens constitute valid and perfected
first priority security interests and Liens, subject only to
those Permitted Liens which are expressly stated to have
priority over the Liens of Lender;
(iii) Copies of the Articles or
Certificate of Incorporation of each Loan Party and all
amendments thereto, certified by the Secretary of State or
other appropriate official of its respective jurisdiction of
incorporation;
(iv) Good standing certificates for
each Loan Party issued by the Secretary of State or other
appropriate official of such Loan Party's respective
jurisdiction of incorporation and each jurisdiction where
the conduct of such Loan Party's business activities
necessitates qualification and in which the failure of such
Loan Party to be so qualified would have a Material Adverse
Effect;
(v) A closing certificate signed
by the chief executive or financial officer of each Loan
Party, dated as of the Closing Date, stating that (a) the
representations and warranties set forth in Section 8 hereof
are true and correct in all material respects on and as of
such date, (b) such Loan Party is on such date in compliance
in all material respects with all the terms and provisions
set forth in this Agreement and the other Loan Documents and
(c) on such date no Default or Event of Default has occurred
and is continuing;
(vi) The Security Documents duly
executed, accepted and acknowledged by or on behalf of each
of the signatories thereto;
(vii) The Other Agreements duly
executed and delivered by each Loan Party;
(viii) The favorable, written opinion
of counsel to the Loan Parties as to the transactions
contemplated by this Agreement and the other Loan Documents;
(ix) Written instructions from the
Loan Parties directing the application of proceeds of the
Bridge Loan and the initial Revolver Loan made to the Loan
Parties pursuant to this Agreement on the Closing Date;
(x) Certificates of the Secretary
or an Assistant Secretary of each Loan Party certifying (a)
that attached thereto is a true and complete copy of the
Bylaws of such Loan Party, as in effect on the date of such
certification, (b) that attached thereto is a true and
complete copy of the resolutions adopted by the Board of
Directors of such Loan Party, authorizing the execution,
delivery and performance of this Agreement and the other
Loan Documents to which such Loan Party is a party and the
consummation of the transactions contemplated hereby and
thereby, and (c) as to the incumbency and genuineness of the
signature of each officer of such Loan Party executing this
Agreement or any of the Loan Documents;
(xi) An amendment to the Reimbursement
Agreement, duly executed by Borrower and Bank, conforming
the definition of the "Applicable Percentage" to the
definition of that term as set forth in this Agreement;
(xii) Certificate of the Secretary
of the Authority certifying (a) that attached thereto is a
true and complete copy of the resolutions adopted by the
Authority, authorizing the execution, delivery and
performance of the Escrow Agreement and the consummation of
the transactions contemplated thereby, and (b) as to the
incumbency and genuineness of the signature of each officer
of the Authority executing the Escrow Agreement;
(xiii) The favorable, written opinion
of counsel to the Authority as to the transactions
contemplated by the Escrow Agreement;
(xiv) an opinion from Lender's
special FAA counsel, certifying to Lender that Lender has a
first priority Lien in the Rotable Spare Parts of Borrower;
(xv) an amendment to the Deed of Trust,
duly executed by Borrower, the trustee under the Deed of
Trust and Lender, with all fees and taxes, if any, paid
thereon, reflecting the amendments to the Existing Loan
Agreement made by this Agreement;
(xvi) an endorsement to the policy
of title insurance currently insuring the lien of the Deed
of Trust, updating the effective date of such policy to the
recordation date of the amendment to the Deed of Trust
insured thereby executed pursuant to this Agreement, with
all premiums thereon paid, and
(xvii) Such other documents,
instruments and agreements as Lender shall reasonably
request in connection with the foregoing matters.
10.1.2 No Injunction, etc. No action, proceeding,
investigation, regulation or legislation shall have been
instituted, threatened or proposed before any court, governmental
agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises
out of this Agreement or the Loan Documents or the consummation
of the transactions contemplated hereby or which, in Lender's
reasonable judgment, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other
Loan Documents.
10.1.3 Consents. All approvals, licenses, consents
and filings necessary to permit the transactions contemplated by
this Agreement shall have been obtained and made.
10.1.4 Material Adverse Change. There shall not
have occurred any material adverse change in the financial
condition, results of operations or business of Borrower and its
Subsidiaries or the value of the Collateral from November 30,
1998 to the Closing Date, or any event, condition or state of
facts which would reasonably be expected to have a Material
Adverse Effect, as reasonably determined by Lender.
10.1.5 No Default or Event of Default. No Default
or Event of Default shall have occurred and be continuing.
10.1.6 Liens. Lender shall be satisfied that this
Agreement and the other Loan Documents create or will create, as
security for the Obligations, a valid and enforceable perfected
first priority security interest in and Lien upon all of the
Collateral in favor of Lender, subject to no other Liens other
than Permitted Liens which are expressly stated to have priority
over the Liens of Lender.
10.1.7 Escrow Funds. Lender shall have received
evidence that the Escrow Funds have been received by the Escrow
Agent to be held pursuant to the Escrow Agreement.
10.2 Conditions Precedent to All Loans and Letters of Credit
and Letter of Credit Guaranties10.2 Conditions Precedent to
All Loans and 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 Loan (including the Bridge Loan Advances and the initial
Revolver Loan) and Lender will have no obligation to issue any
Letter of Credit or Letter of Credit Guaranty unless and until,
in addition to the conditions set forth in Section 10.1, each of
the following conditions has been and continues to be satisfied:
10.2.1 Events of Default. No Default, Event of
Default or Overadvance Condition shall exist.
10.2.2 Delivery of Documents. Lender shall have
received copies of all documents, reports and information
required to be delivered to Lender hereunder.
10.2.3 Representations and Warranties. The
representations and warranties contained in Section 8 of this
Agreement and in the Loan Documents shall be true and correct in
all material respects except for changes in the nature of a Loan
Party's business or operations that would render the information
contained in any Exhibit or Schedule attached hereto either
inaccurate, incomplete or misleading, except for any changes in
the nature of the business or operations of the Loan Parties and
their respective Subsidiaries that would render the information
contained in any Schedule or Exhibit attached hereto either
inaccurate or incomplete, so long as Lender has consented to such
changes or such changes are not prohibited by this Agreement.
10.2.4 Subordinated Debt. The Loan, if made, would
enjoy the benefits and privileges of being senior in right of
payment to all Subordinated Debt then outstanding.
10.3 Waiver of Conditions Precedent10.3 Waiver of Conditions
Precedent. If Lender makes any Loan or issues any Letter of
Credit or Letter of Credit Guaranty prior to the fulfillment of
any of the conditions precedent set forth in Sections 10.1 and
10.2 hereof, the making of such Loan or the issuance of such
Letter of Credit or Letter of Credit Guaranty shall constitute
only an extension of time for the fulfillment of such condition
and not a waiver thereof, and each Loan Party shall thereafter
use its best efforts to fulfill such condition promptly.
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON
DEFAULTSECTION 11. EVENTS OF DEFAULT; RIGHTS
AND REMEDIES ON DEFAULT
11.1 Events of Default11.1 Events of Default. The
occurrence of one or more of the following events shall
constitute an "Event of Default":
11.1.1 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 4.2.3 hereof, within two (2) Business Days of the due
date thereof (whether due at stated maturity, on demand, upon
acceleration or otherwise)."
11.1.2 Payment of Other Obligations. Borrower shall
fail to pay any of the other Obligations (other than those dealt
with specifically in Section 11.1.1 hereof) on the due date
thereof (whether due at stated maturity, on demand, upon
acceleration or otherwise) and such failure shall continue for a
period of three (3) Business Days after Lender's giving Borrower
written notice thereof.
11.1.3 Misrepresentations. Any representation,
warranty or other statement made or furnished to Lender by or on
behalf of any Loan Party or in this Agreement, any of the other
Loan Documents or any instrument, certificate or financial
statement furnished in compliance with or in reference thereto
proves to have been false or misleading in any material respect
when made or furnished or when reaffirmed pursuant to Section 8.2
hereof.
11.1.4 Breach of Specific Covenants. Any Loan Party
shall fail or neglect to perform, keep or observe any covenant
contained in Sections 6.3, 7.1.1, 7.2.5, 7.2.6, 9.1.1, 9.1.3,
9.2 or 9.3 hereof on the date that such Loan Party is required to
perform, keep or observe such covenant.
11.1.5 Breach of Loan Documents. Any Loan Party
shall fail or neglect to perform, keep or observe any covenant
contained in this Agreement (other than a covenant which is dealt
with specifically elsewhere in Section 11.1 hereof) or the other
Loan Documents and the breach of such other covenant or the other
Loan Documents is not cured within fifteen (15) days after the
sooner to occur of such Loan Party's receipt of notice of such
breach from Lender or the date on which such failure or neglect
first becomes known to any officer of such Loan Party.
11.1.6 Other Defaults. There shall occur any
default or event of default on the part of any Loan Party under
any agreement, document or instrument to which Borrower is a
party or by which a Loan Party or any of its Property is bound,
creating or relating to any Indebtedness for Money Borrowed in
excess of $200,000 in the aggregate (other than the Obligations)
and such default or event of default remains uncured beyond the
applicable notice and grace period, if any, with respect thereto.
11.1.7 Insolvency and Related Proceedings. Any Loan
Party shall cease to be Solvent; or United or any Loan Party
shall suffer the appointment of a receiver, trustee, custodian or
similar fiduciary, or shall make an assignment for the benefit of
creditors, or any petition for an order for relief shall be filed
by or against any Loan Party or United under the Bankruptcy Code
(if against a Loan Party or United, the continuation of such
proceeding for more than 60 days); or any Loan Party shall make
any offer of settlement, extension or composition to their
respective unsecured creditors generally.
11.1.8 Business Disruption. Any Loan Party shall
suffer the loss or revocation of any license or permit now held
or hereafter acquired by any Loan Party which is necessary to the
continued or lawful operation of a material part of its business;
or any Loan Party shall be enjoined, restrained, or otherwise
permanently prevented by court, governmental or administrative
order from conducting all or any material part of its business
affairs; or any material lease or agreement pursuant to which any
Loan Party leases, uses or occupies any Property shall be
canceled or terminated prior to the expiration of its stated
term; or any Loan Party or United ceases scheduled air
transportation services other than on a temporary basis.
11.1.9 Change of Ownership. Parent shall cease to
own and control, beneficially and of record, all of the issued
and outstanding stock of Borrower other than pursuant to a
transaction permitted by Section 9.2.1(i) or (ii) hereof.
11.1.10 Challenge to Agreement. Any Loan Party or
any Affiliate of any of them, shall challenge or contest in any
action, suit or proceeding the validity or enforceability of this
Agreement, or any of the other Loan Documents, the legality or
enforceability of any of the Obligations or the perfection or
priority of any Lien granted to Lender. Nothing set forth herein
shall preclude a Loan Party from enforcing its rights, and
Lender's duties and obligations, under this Agreement and the
other Loan Documents.
11.1.11 Criminal Forfeiture. Any Loan Party or any
Subsidiary of any Loan Party shall be criminally indicted or
convicted under any law that could lead to a forfeiture of any
Property of any Loan Party or any Subsidiary of any Loan Party
which can reasonably be expected to have a Material Adverse
Effect.
11.1.12 Judgments. One or more money judgments,
writs of attachment or similar process is filed against any Loan
Party or any Subsidiary of any Loan Party or any of their
respective Property involving liability of $200,000 or more in
the aggregate (to the extent not paid or fully covered by
insurance provided by a carrier who has acknowledged coverage),
and the same is not released, stayed, discharged or bonded within
thirty (30) days after the entry thereof.
11.1.13 Repudiation of or Default Under Guaranty
Agreement. Any Guarantor shall revoke or attempt to revoke the
Guaranty Agreement signed by such Guarantor, or shall repudiate
such Guarantor's liability thereunder or shall be in default
under the terms thereof.
11.1.14 ACH Procedure Manual. Borrower shall cease
scheduled air transportation services other than on a temporary
basis for a work stoppage and, in consequence thereof, ACH shall
have directed the Clearing Bank to withhold twenty-five percent
(25%) of the net funds due Borrower in any subsequent settlement
in which Borrower is a net creditor, pursuant to paragraph 8 of
the settlement regulations set forth in Section B of the ACH
Procedure Manual.
11.1.15 Withdrawal as Member. Borrower shall give
notice of withdrawal from the ACH Agreement.
11.1.16 Termination or Breach of the United Express
Operating Agreement or the United Express Agreements. The
termination for any reason of the United Express Operating
Agreement by Borrower without the prior written consent of Lender
as required by Section 9.2.11 hereof or by United; or Borrower
shall default in the payment (beyond the applicable grace period
with respect thereto, if any) with respect to any Indebtedness
owing under any of the United Express Agreements or fail to
perform or observe any term, covenant or agreement on its part to
be performed or observed pursuant to any of the United Express
Agreements, the effect of which failure is to cause, or permit,
United to terminate any of the United Express Agreements.
11.1.17 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.
11.2 Acceleration of the Obligations.2 Acceleration of the
Obligations. Without in any way limiting the right of Lender to
demand payment of any portion of the Obligations payable on
demand in accordance with Section 3.2 hereof, upon or at any time
after the occurrence of an Event of Default, all or any portion
of the Obligations shall, at the option of Lender and without
presentment, demand, protest or further notice by Lender, become
at once due and payable and Borrower shall forthwith pay to
Lender the full amount of such Obligations, provided, that upon
the occurrence of an Event of Default specified in subsection
11.1.7 hereof, all of the Obligations shall become automatically
due and payable without declaration, notice or demand by Lender.
11.3 Other Remedies.3 Other Remedies. During the
existence of an Event of Default, Lender may exercise from time
to time the following rights and remedies:
11.3.1. All of the rights and remedies of a secured
party under the Code or under other Applicable Law, and all other
legal and equitable rights to which Lender may be entitled, all
of which rights and remedies shall be cumulative and shall be in
addition to any other rights or remedies contained in this
Agreement or any of the other Loan Documents, and none of which
shall be exclusive.
11.3.2. The right to terminate this Agreement as
provided in Section 5.2.1 hereof.
11.3.3. The right to notify Account Debtors to make
remittance to Lender of all sums due on Accounts of Borrower,
collect such Accounts directly from the Account Debtors, and take
such other and further action with respect thereto as set forth
in Section 12.1.2 hereof.
11.3.4. The right to take immediate possession of the
Collateral, and to (i) require Borrower to assemble the
Collateral, at Borrower's expense, and make it available to
Lender at a place designated by Lender which is reasonably
convenient to both parties, and (ii) enter any premises where any
of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be
the Property of Borrower, Borrower agrees not to charge Lender
for storage thereof).
11.3.5. The right to sell or otherwise dispose of all
or any Collateral in a commercially reasonable manner, at public
or private sale or sales, with such notice as may be required by
law, in lots or in bulk, for cash or on credit, all as Lender, in
its sole discretion, may deem advisable. Borrower agrees that 10
days written notice to Borrower of any public or private sale or
other disposition of Collateral shall be reasonable notice
thereof, and such sale shall be at such locations as Lender may
designate in said notice. Lender shall have the right to conduct
such sales on Borrower's premises, without charge therefor, and
such sales may be adjourned from time to time in accordance with
applicable law. Lender shall have the right to sell, lease or
otherwise dispose of the Collateral, or any part thereof, for
cash, credit or any combination thereof, and Lender may purchase
all or any part of the Collateral at public or, if permitted by
law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the
Obligations. The proceeds realized from the sale of any
Collateral may be applied, after allowing 2 Business Days for
collection, first to the reasonable costs, expenses and
attorneys' fees incurred by Lender in collecting the Obligations,
in enforcing the rights of Lender under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing,
advertising for sale, selling and delivering any Collateral,
second to the interest due upon any of the Obligations; and
third, to the principal of the Obligations. If any deficiency
shall arise, Borrower shall remain liable to Lender therefor. If
there shall be any surplus, Lender shall remit such surplus to
Borrower or other Person entitled thereto.
11.3.6 With respect to the face amount of all
Letters of Credit and Letter of Credit Guaranties then
outstanding, Lender may, at its option, require the Loan Parties
to deposit with Lender funds equal to such undrawn face amount,
and if the Loan Parties fail 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 such 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 canceled or terminated and Lender and its Affiliates
released from all liability thereunder, any amounts remaining in
such reserves shall be applied against any outstanding
Obligations, or, to the extent all Obligations have been
indefeasibly paid and satisfied in full, returned to the Loan
Parties.
11.3.7 With respect to the Escrow Funds, the right
to notify the Escrow Agent of the existence of an Event of
Default and to demand that, pursuant to the terms of the Escrow
Agreement, so much of the Escrow Funds be remitted to Lender for
application to the Bridge Loan Obligations.
11.4 Remedies Cumulative; No Waiver. .4 Remedies
Cumulative; No Waiver. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of
any Loan Party contained in this Agreement and the other Loan
Documents, or in any document referred to herein or contained in
any agreement supplementary hereto or in any schedule or
contained in any other agreement between Lender and any Loan
Party, heretofore, concurrently, or hereafter entered into, shall
be deemed cumulative to and not in derogation or substitution of
any of the terms, covenants, conditions, or agreements herein
contained. The failure or delay of Lender to require strict
performance by any Loan Party of any provision of this Agreement
or to exercise or enforce any rights, Liens, powers, or remedies
hereunder or under any of the aforesaid agreements or other
documents or security or Collateral shall not operate as a waiver
of such performance, Liens, rights, powers and remedies, but all
such requirements, Liens, rights, powers, and remedies shall
continue in full force and effect until all Loans and all other
Obligations owing or to become owing from Borrower to Lender
shall have been fully satisfied. None of the undertakings,
agreements, warranties, covenants and representations of any Loan
Party contained in this Agreement or any of the other Loan
Documents and no Event of Default by any Loan Party under this
Agreement or any other Loan Documents shall be deemed to have
been suspended or waived by Lender, unless such suspension or
waiver is by an instrument in writing specifying such suspension
or waiver and is signed by a duly authorized representative of
Lender and directed to the Loan Parties.
SECTION 12 MISCELLANEOUSSECTION 12 MISCELLANEOUS
12.1 Power of Attorney.1 Power of Attorney. Borrower hereby
irrevocably designates, makes, constitutes and appoints Lender
(and all Persons designated by Lender) as Borrower's true and
lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower and in either Borrower's
or Lender's name, but at the cost and expense of Borrower:
12.1.1. At such time or times as Lender or said
agent, in its sole discretion, may determine, endorse Borrower's
name on any checks, notes, acceptances, drafts, money orders or
any other evidence of payment or proceeds of the Collateral which
come into the possession of Lender or under Lender's control for
application to the Obligations in accordance with this Agreement.
12.1.2. At such time or times during the existence of
an Event of Default, and during the continuance thereof, as
Lender or its agent in its sole discretion may determine: (i)
demand payment of the Accounts of Borrower from the Account
Debtors, enforce payment of such Accounts of Borrower by legal
proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of
its Accounts; (ii) in a commercially reasonable manner settle,
adjust, compromise, discharge or release any of the Accounts of
Borrower or other Collateral or any legal proceedings brought to
collect any of the Accounts of Borrower or other Collateral;
(iii) sell or assign any of the Accounts of Borrower and other
Collateral upon and for such commercially reasonable terms, for
such amounts and at such time or times as Lender deems advisable;
(iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file and sign
Borrower's name to a proof of claim in bankruptcy or similar
document against any Account Debtor or to any notice of lien,
assignment or satisfaction of lien or similar document in
connection with any of the Collateral; (vi) receive, open and
dispose of all mail addressed to Borrower and notify postal
authorities to change the address for delivery thereof to such
address as Lender may designate; (vii) endorse the name of
Borrower upon any of the Payment Items or proceeds relating to
any Collateral and deposit the same to the account of Lender on
account of the Obligations; (viii) endorse the name of such
Borrower upon any Chattel Paper, Document, Instrument, invoice,
freight bill, bill of lading or similar document or agreement
relating to the Accounts or Rotable Spare Parts of the Borrower
and any other Collateral; (ix) use Borrower's stationery for the
purpose of and sign the name of Borrower to verifications of its
Accounts and notices thereof to Account Debtors; (x) use the
information recorded on or contained in any data processing
equipment and computer hardware and software relating to the
Accounts and Rotable Spare Parts of Borrower and any other
Collateral; (xi) make and adjust claims under policies of
insurance; and (xii) do all other acts and things necessary, in
Lender's determination, to fulfill Borrower's obligations under
this Agreement.
12.1.3. The power of attorney granted pursuant to
this Section 14.1, being coupled with an interest, shall be
irrevocable by Borrower until all of the Obligations are paid and
satisfied in full.
12.2 Indemnity.2 Indemnity.
12.2.1 Indemnity by Borrower. Borrower hereby agrees
to indemnify the Lender and to hold the Lender harmless from and
against any liability, loss, damage, suit, action or proceeding
ever suffered or incurred by the Lender (including reasonable
attorneys fees and reasonable legal expenses) arising out of or
related to this Agreement or any of the other Loan Documents, the
performance by Lender of its duties or the exercise of any of its
rights and remedies hereunder, on account of, or as the result
of, a claim made, asserted or initiated by any Person other than
a Loan Party that any Loan Party has failed to observe, perform
or discharge such Loan Party's duties hereunder or under any of
the Loan Documents. In addition, Borrower shall also indemnify
and defend the Lender against and save the Lender harmless from
all Claims of any Person with respect to the Collateral.
Additionally, if any Taxes (excluding Taxes imposed upon or
measured by the net income of the Lender, but including, without
limitation, any intangibles tax, stamp tax, recording tax or
franchise tax) shall be payable by Lender or by any Loan Party or
any of its Subsidiaries on account of the execution or delivery
of this Agreement, or the execution, delivery, issuance or
recording of any of the other Loan Documents, or the creation of
any of the Obligations, by reason of any existing or hereafter
enacted federal, state, foreign or local statute, rule or
regulation, Borrower will pay (or will promptly reimburse Lender
for the payment of) all such Taxes, including, without
limitation, any interest and penalties thereon, and will
indemnify and hold Lender harmless from and against all liability
in connection therewith. The foregoing indemnities shall not
apply to protect Lender for the consequences of its gross
negligence or willful misconduct.
12.2.2 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.
12.3 Survival of Indemnities.3 Survival of Indemnities.
Notwithstanding any contrary provision in this Agreement or the
other Loan Documents, the obligation of the Loan Parties and
Lender with respect to each indemnity given by it in this
Agreement or any of the other Loan Documents shall survive the
payment in full of the Obligations and the termination of this
Agreement.
12.4 Modification of Agreement.4 Modification of
Agreement. This Agreement may not be modified, altered or
amended, except by an agreement in writing signed by each Loan
Party and Lender. No Loan Party may sell, assign or transfer any
interest in this Agreement, any of the other Loan Documents, or
any of the Obligations, or any portion thereof, including,
without limitation, such Loan Party's rights, title, interests,
remedies, powers, and duties hereunder or thereunder. Each Loan
Party hereby consents to Lender's participation, sale,
assignment, transfer or other disposition, at any time or times
hereafter, of this Agreement and any of the other Loan Documents,
or of any portion hereof or thereof, including, without
limitation, Lender's rights, title, interests, remedies, powers,
and duties hereunder or thereunder; provided, however, no such
sale, assignment, participation, transfer or other disposition by
Lender will result in any diminution of the rights and
obligations of the Loan Parties under this Agreement and the
other Loan Documents. In the case of an assignment, the assignee
shall have, to the extent of such assignment, the same rights,
benefits and obligations as it would if it were "Lender"
hereunder and Lender shall be relieved of all obligations
hereunder upon any such assignments. Each Loan Party agrees that
it will use its best efforts to assist and cooperate with Lender
in any manner reasonably requested by Lender to effect the sale
of participations in or assignments of any of the Loan Documents
or any portion thereof or interest therein, including, without
limitation, assisting in the preparation of appropriate
disclosure documents. Each Loan Party further agrees that Lender
may disclose credit information regarding such Loan Party and its
Subsidiaries to any potential participant or assignee.
12.5 Severability.5 Severability. Wherever possible, each
provision of this Agreement shall be interpreted in such manner
as to be effective and valid under Applicable Law, but if any
provision of this Agreement shall be prohibited by or invalid
under Applicable Law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
12.6 Successors and Assigns. .6 Successors and Assigns.
This Agreement, the Other Agreements and the Security Documents
shall be binding upon and inure to the benefit of the successors
and assigns of Borrower and Lender.
12.7 Cumulative Effect; Conflict of Terms.7 Cumulative
Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative
with the provisions of this Agreement. Except as otherwise
provided in any of the other Loan Documents by specific reference
to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern
and control.
12.8 Execution in Counterparts.8 Execution in
Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument.
12.9 Required Lender's Consent.9 Required Lender's
Consent. Whenever Lender's consent is required to be obtained
under this Agreement or any of the other Loan Documents as a
condition to any action, inaction, condition or event, Lender
shall be authorized to give or withhold its consent in its sole
and absolute discretion and to condition its consent upon the
giving of additional collateral security for the Obligations, the
payment of money or any other matter.
12.10Notice.10 Notice. All notices, requests and demands to
or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt
requested, by personal delivery against receipt, by overnight
courier or by facsimile transmission and, unless otherwise
expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against
receipt, three (3) Business Days after deposit in the mail,
postage prepaid, or, in the case of facsimile transmission, when
received (if on a Business Day and, if not received on a Business
Day, then on the next Business Day after receipt), or one (1)
Business Day after deposit with an overnight courier, addressed
as follows:
If to Borrower: Atlantic Coast Airlines
515-A Shaw Road
Sterling, Virginia 20166
Attention: Director of Treasury
Management
Facsimile: 703-925-6299
If to Parent: Atlantic Coast Airlines, Inc.
515-A Shaw Road
Sterling, Virginia 20166
Attention: Chief Financial Officer
Facsimile: 703-925-6299
If to Lender: Fleet Capital Corporation
6100 Fairview Road
Suite 200
Charlotte, North Carolina 28210
Attention: Southeast Loan Administration
Facsimile No.: 704-553-6738
With a copy to: Carruthers & Roth, P.A.
235 N. Edgeworth Street
Greensboro, North Carolina 27401
Attention: Kenneth M. Greene, Esq.
Facsimile No.: 336-273-7885
or to such other address as each party may designate for itself
by notice given in accordance with this Section 12.10; provided,
however, that any notice, request or demand to or upon Lender
pursuant to subsection 3.1.1 or 5.2.2 hereof shall not be
effective until received by Lender. Any written notice or demand
that is not sent in conformity with the provisions hereof shall
nevertheless be effective on the date that such notice is
actually received by the noticed party.
12.11Credit Inquiries. .11 Credit Inquiries. Each Loan
Party hereby authorizes and permits Lender, at its discretion and
without any obligation to do so, to respond to credit inquiries
from third parties concerning a Loan Party or any of its
Subsidiaries.
12.12Time of Essence.12 Time of Essence. Time is of the
essence of this Agreement, the Other Agreements and the Security
Documents.
12.13Entire Agreement.13 Entire Agreement; Appendix A and
Exhibits and Schedules. This Agreement and the other Loan
Documents, together with all other instruments, agreements and
certificates executed by the parties in connection therewith or
with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to
the subject matter hereof and thereof and supersede all prior
agreements, understandings and inducements, whether express or
implied, oral or written. Appendix A and each of the exhibits
and schedules attached hereto are incorporated into this
Agreement and by this reference made a part hereof.
12.14Interpretation.14 Interpretation. No provision of
this Agreement or any of the other Loan Documents shall be
construed against or interpreted to the disadvantage of any party
hereto by any court or other governmental or judicial authority
by reason of such party having or being deemed to have structured
or dictated such provision.
12.15GOVERNING LAW; CONSENT TO FORUM.15 GOVERNING LAW;
CONSENT TO FORUM. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NORTH CAROLINA; PROVIDED, HOWEVER, THAT IF ANY OF THE
COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER
THAN NORTH CAROLINA, THE LAWS OF SUCH JURISDICTION SHALL
GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE
OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT
OF LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL
TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE
DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF NORTH
CAROLINA. EACH OF THE PARTIES HERETO HEREBY CONSENTS AND
AGREES THAT ANY STATE OR FEDERAL COURT IN MECKLENBURG COUNTY,
NORTH CAROLINA SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES AMONG THE LOAN PARTIES AND
LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH PARTY
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND EACH PARTY HEREBY WAIVES ANY OBJECTION WHICH ANY
PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
12.16WAIVERS.16 WAIVERS. EACH LOAN PARTY WAIVES (i)
TO THE FULLEST EXTENT PROVIDED BY APPLICABLE LAW, THE
RIGHT TO TRIAL BY JURY (WHICH LENDER HEREBY ALSO WAIVES)
IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY
KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN
DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii)
PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT,
PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR
ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS,
INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME
HELD BY LENDER ON WHICH THE LOAN PARTIES MAY IN ANY WAY
BE LIABLE; (iii) NOTICE PRIOR TO TAKING POSSESSION OR
CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER
TO EXERCISE ANY OF LENDER'S REMEDIES; (iv) THE BENEFIT OF
ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (v)
NOTICE OF ACCEPTANCE HEREOF. EACH LOAN PARTY ACKNOWLEDGES
THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO
LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS
RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS
WITH THE LOAN PARTIES. EACH LOAN PARTY WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS
WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY
WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH
LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
IN WITNESS WHEREOF, this Agreement has been duly executed
on the day and year specified at the beginning of this Agreement.
ATTEST: ATLANTIC COAST AIRLINES
("Borrower")
__________________________________
By:____________________________
Richard J. Kennedy. Secretary Thomas J. Moore, Executive Vice
President and Chief Operating
Officer
[CORPORATE SEAL]
ATTEST: ATLANTIC COAST AIRLINES HOLDINGS,
INC.
("Parent")
__________________________________ By:___________________________
Richard J. Kennedy. Secretary Thomas J. Moore, Executive
Vice President and
Chief Operating Officer
[CORPORATE SEAL]
Accepted in Charlotte, North Carolina
FLEET CAPITAL CORPORATION
("Lender")
By:_______________________________________
Title:___________________________________
LIBOR Lending Office:
6100 Fairview Road
Suite 200 Charlotte, North Carolina
28210
Attention: Southeast Loan
Administration
Facsimile No.: 704-553-6738
APPENDIX A
GENERAL DEFINITIONS
When used in the Amended and Restated Loan and
Security Agreement, dated of even date herewith, by and
among ATLANTIC COAST AIRLINES ("Borrower"), and ATLANTIC
COAST AIRLINES HOLDINGS, INC. ("Parent"; Borrower and Parent
being herein collectively called the "Loan Parties" and,
individually, a "Loan Party"), and FLEET CAPITAL CORPORATION
("Lender"), the following terms shall have the following
meanings (terms defined in the singular to have the same
meaning when used in the plural and vice versa):
ACH - Airline Clearing House, Inc., a Delaware
corporation.
ACH Agreement - the Associate Membership
Agreement, dated January 3, 1992, which incorporates by
reference the Agreement Relating to the Settlement of
Interline Accounts through Airlines Clearing House,
Inc. dated as of February 1, 1948, as amended from time
to time, each among ACH, certain air carriers that are
and may become party thereto, and Borrower.
ACH Procedure Manual - the Manual of Procedure for
the clearing and settlement functions of ACH as in
effect from time to time.
ACH Settlement Date - in the case of ACH
transactions between Borrower and an Account Debtor,
the twenty-eighth (28th) calendar day of the month
following the month in which the air transportation
services are rendered and revenues earned, and, in the
case of IATA transactions between Borrower and an
Account Debtor, the fifteenth (15th) calendar day of
the second month following the month in which the air
transportation services are rendered and revenues
earned, and, if such calendar day falls on a Saturday,
Sunday or legal holiday observed by the Clearing Bank,
the ACH Settlement Date shall be the next working day.
Account - shall have the meaning ascribed to the
term "account" under the Code, and shall include,
without limitation, any right to payment for goods sold
or leased or for services rendered which is not
evidenced by an Instrument, Document or Chattel Paper,
whether secured or unsecured, and whether or not earned
by performance.
Account Debtor - any Person who is or may become
obligated under or on account of an Account.
Accounts Borrowing Base - at any date of
determination thereof, an amount equal to seventy-five
percent (75%) 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).
Adjusted LIBOR Rate - with respect to each
Interest Period for a LIBOR Rate Loan, an interest rate
per annum (rounded to the nearest ten thousandth of 1%)
equal to the quotient of (i) the LIBOR Rate in effect
for such Interest Period divided by (ii) a percentage
(expressed as a decimal) equal to 100% minus Statutory
Reserves.
Affiliate - as to any Person, any other Person
(other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with,
such Person; (ii) which beneficially owns or holds 5%
or more of any class of the Voting Stock of such
Person; or (iii) 5% or more of the Voting Stock (or in
the case of a Person which is not a corporation, 5% or
more of the equity interest) of which is beneficially
owned or held by such Person or a Subsidiary of such
Person. For the purposes of the Agreement, United shall
not be deemed an Affiliate of a Loan Party.
Agreement - the Loan and Security Agreement
referred to in the first sentence of this Appendix A,
as the same may hereafter be amended, modified,
supplemented or restated from time to time, all
exhibits hereto and this Appendix A.
Appliance - an instrument, equipment, apparatus, a
part, an appurtenance, or an accessory used, capable of
being used, or intended to be used, in operating or
controlling aircraft in flight, including a parachute,
communication equipment, and another mechanism
installed in or attached to aircraft during flight, and
not a part of an aircraft, aircraft engine, or
propeller.
Applicable Law - all laws, rules and regulations
applicable to the Person, conduct, transaction,
covenant or Loan Documents in question, including, but
not limited to, all applicable common law and equitable
principles; all provisions of all applicable state and
federal constitutions, statutes, rules, regulations and
orders of governmental bodies; orders, judgments and
decrees of all courts and arbitrators and all
Environmental Laws.
Applicable Percentage - for any day, the rate per
annum set forth below opposite the applicable Level
then in effect, it being understood that the Applicable
Percentage for (i) the Revolver Loans that are LIBOR
Rate Loans or Daily LIBOR Loans shall be the percentage
set forth in Table I under the column Applicable
Percentage for LIBOR Loans, (ii) the Revolver Loans
that are Base Rate Loans shall be the percentage set
forth in Table I under the column Applicable Percentage
for Base Rate Loan, (iii) the portion of the Bridge
Loan that are LIBOR Rate Loans or Daily LIBOR Loans
shall be the percentage set forth in Table II under the
column Applicable Percentage for LIBOR Loans, (iv) the
portion of the Bridge Loan that are Base Rate Loans
shall be the percentage set forth in Table II under the
column Applicable Percentage for Base Rate Loans, (v)
the unused line fee shall be the percentage set forth
in Table I under the column Applicable Percentage for
Unused Line Fee; and (vi) the letter of credit fee
shall be the percentage set forth in Table I under the
column Applicable Percentage for Letter of Credit Fee:
Table I
Revolver Loans; Unused Line Fee; Letter of Credit Fee
Applicable Applicable
ApplicableApplicable
Percentage for Percentage for
Percentage for Percentage for
Level LIBOR Loan Base Rate
Loan Unused Line Fee Letter of Credit Fee
Level I .75% 0% .25% .75%
Level II 1.00% 0% .375% 1.0%
Level III 1.25% 0%
.375% 1.0%
Level IV 1.50% .25% .375% 1.0%
Level V 1.75% .25% .375% 1.25%
Table II
Bridge Loan
Applicable
Applicable
Percentage for Percentage for
Level LIBOR Loan Base
Rate Loan
Level I .25% 0%
Level II .50% 0%
Level III 0.75% 0%
Level IV 1.0% .25%
Level V 1.25% .25%
The Applicable Percentage shall, in each case, be
determined after receipt by Lender of the financial
statements as of the end of each fiscal quarter and for
that portion of the fiscal year of the Loan Parties
then ended which are required to be delivered to Lender
in accordance with the provisions of Section 9.1.3(ii)
of the Agreement, commencing with the fiscal quarter
ending March 31, 1999, and shall be adjusted effective
on the first day of the month following the receipt by
Lender of such financial statements (each, an
"Adjustment Date"). Such Applicable Percentage shall
be effective from such Adjustment Date until the next
such Adjustment Date. The initial Applicable
Percentages shall be based on Level IV until the first
Adjustment Date occurring after March 31, 1999.
Authority - the Metropolitan Washington Airports
Authority.
Availability - the amount of money which Borrower
is entitled to borrow from time to time as Revolver
Loans, such amount being the difference derived when
the sum of the principal amount of Revolver Loans then
outstanding (including any amounts which Lender may
have paid for the account of Borrower pursuant to any
of the Loan Documents and which have not been
reimbursed by Borrower) is subtracted from the
Borrowing Base. If the amount outstanding is equal to
or greater than the Borrowing Base, Availability is
zero (0).
Availability Reserve - On any date of
determination thereof, an amount equal to the sum of
(i) any amounts 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
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 (v) 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, (2) any diminution in the value of
any of the Rotable Spare Parts, to the extent not
otherwise taken into account in the calculation of the
Rotable Spare Parts Borrowing Base, and (3) other sums
chargeable against Borrower's Loan Account as Revolver
Loans under any section of the Agreement.
Average Monthly Revolver Loan and Letter of Credit
Balance - the amount obtained by adding the aggregate
unpaid balance of all Revolver 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.
Average Monthly Revolver Loan Balance - the amount
obtained by adding the aggregate unpaid balance of all
Revolver 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.
Bank - Fleet National Bank, and its successors and
assigns.
Base Rate - the rate of interest announced or
quoted by Bank from time to time as its base rate for
commercial loans, whether or not such rate is the
lowest rate charged by Bank to its most preferred
borrowers; and, if such base rate for commercial loans
is discontinued by Bank as a standard, a comparable
reference rate designated by Bank as a substitute
therefor shall be the Base Rate.
Base Rate Loan - a Loan, or portion thereof,
during any period in which it bears interest at a rate
based upon the Base Rate.
Board of Governors - the Board of Governors of the
Federal Reserve System of the United States.
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 - Bank'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 $9,579,932.
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 Loan Agreement - that certain Financing
Agreement dated June 1, 1997 between the Issuer and the
Borrower, pursuant to which 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 Authority.
Bond Trustee - FMB Trust Company, National
Association.
Bonds - Issuer's Variable Rate Demand/Fixed Rate
Revenue Bonds (Atlantic Coast Airlines Project) Series
1997 in the aggregate principal amount of $9,425,000.
Borrowing - a borrowing of one or more Loans,
including Bridge Loan Advances, made on the same day by
Lender.
.
Borrowing Base - as at any date of determination
thereof, an amount equal to the sum of:
(i) the Accounts Borrowing Base at
such date;
PLUS
(ii) subject to the provisions
of Section 6.6 of the Agreement, the Rotable Spare
Parts Borrowing Base at such date;
MINUS
(iii) the Availability
Reserve.
Borrowing Base Certificate - A certificate of an
officer of Borrower certifying to Lender the amount and
value of all of Borrower's Eligible Accounts and
Eligible Rotable Spare Parts, and other information
about the Collateral reasonably requested by Lender, as
of a specific date, such certificate to be in form and
detail reasonably satisfactory to Lender.
Bridge Loan - the Loan to Borrower by Lender as
provided in Section 1.2 of the Agreement.
Bridge Loan Advance - the principal amount of
loans, advances and disbursements made by Lender to
Borrower pursuant to Section 1.2 of the Agreement with
respect to the Bridge Loan.
Bridge Note - the Bridge Note to be executed by
Borrower in favor of Lender on or about the Closing
Date in the form of Exhibit A hereto.
Bridge Loan Maturity Date - the date that is the
earlier to occur of (a) September 30, 2000 or (b) the
date on which the Obligations have been declared or
have automatically become due and payable pursuant to
Section 11.2 of the Agreement.
Bridge Loan Obligations - that portion of the
Obligations consisting of the principal of, and
interest on, the Bridge Loan, and all expenses, fees,
attorneys' fees and any other amounts chargeable to, or
to be paid by, Borrower or any Guarantor under any of
the Loan Documents, in connection with the enforcement
by Lender of its rights to collect the Bridge Loan from
Borrower or any Guarantor in accordance with the terms
of the Loan Documents or to collect the Escrow Funds
from the Escrow Agent or otherwise realize upon the
Escrow Funds.
Business Day - any day excluding Saturday, Sunday
and any day which is a legal holiday under the laws of
the State of North Carolina or is a day on which
banking institutions located in such states are closed,
provided, however, that when used with reference to a
LIBOR Rate Loan (including the making, continuing,
prepaying or repaying of any LIBOR Rate Loan for an
Interest Period), the term "Business Day" shall also
exclude any day on which banks are not opened for
dealings in dollar deposits on the London interbank
market.
Cash Collateral - cash deposited with Lender in
accordance with the Agreement as security for the
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.
Capital Expenditures - expenditures made or
liabilities incurred for the acquisition of any fixed
assets or improvements, replacements, substitutions or
additions thereto which have a useful life of more than
one year, including the total principal portion of
Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness
represented by obligations under a lease that is
required to be capitalized for financial reporting
purposes in accordance with GAAP.
Cash Equivalents - (i) marketable direct
obligations issued or unconditionally guaranteed by the
United States Government and backed by the full faith
and credit of the United States Government having
maturities of not more than twelve (12) months from the
date of acquisition; (ii) certificates of deposit and
time deposits (including eurodollar time deposits)
having maturities of not more than twelve (12) months
from the date of acquisition, and banker's acceptances
having maturities of not more than twelve (12) months
from the date of acquisition and overnight bank
deposits, which in each case (unless issued by Lender)
are not subject to offset rights in favor of such bank
arising from any banking relationship with such bank;
(iii) repurchase obligations with a term of not more
than thirty (30) days for underlying securities of the
types described in clauses (i) and (ii); (iv)
commercial paper having a maturity within nine (9)
months after the date of acquisition thereof; (v) money
market mutual funds; (vi) municipal auction rate
preferred instruments; (vii) corporate auction rate
preferred instruments; (viii) municipal auction rate
bonds; and (ix) variable rate demand notes.
Chattel Paper - shall have the meaning ascribed to
"chattel paper" under the Code.
Claim - any and all claims, demands, liabilities,
obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever (including reasonable
attorneys' fees and expenses), whether arising under or
in connection with the Loan Documents, under any
Applicable Law (including any Environmental Law) or
otherwise.
Clearing Bank - The Chase Manhattan Bank, and any
successor clearing bank under the ACH Procedure Manual.
Clearing Bank Account - the account maintained by
Borrower at the Clearing Bank in which, pursuant to the
ACH Procedure Manual, all funds due and payable to
Borrower are credited.
Closing Date - the date on which all of the
conditions precedent in Section 10 of the Agreement are
satisfied and the initial Loan is made under the
Agreement.
Code - the Uniform Commercial Code as adopted and
in force in the State of North Carolina, as from time
to time in effect.
Collateral - all of the Property and interests in
Property of Borrower described in Section 6 of the
Agreement, and all other Property and interests in
Property of Borrower or any other Person that now or
hereafter secure the payment and performance of any of
the Obligations.
Consolidated - the consolidation in accordance
with GAAP of the accounts or other items as to which
such term applies.
Consolidated Adjusted Net Earnings From Operations
- with respect to any Person for any fiscal period,
means the net earnings (or loss) after provision for
income taxes for such fiscal period of such Person as
reflected on the financial statements of such Person
supplied to Lender pursuant to Section 9.1.3 of the
Agreement, but excluding:
(i) any gain or loss arising from
the sale of capital assets;
(ii) any gain arising from any
write-up of assets;
(iii) earnings of any Subsidiary
of such Person accrued prior to the date it became
a Subsidiary of such Person;
(iv) earnings of any corporation,
substantially all the assets of which have been
acquired in any manner by such Person, realized by
such corporation prior to the date of such
acquisition;
(v) any portion of the net
earnings of any Subsidiary of such Person which
for any reason is unavailable for payment of
dividends to such Person;
(vii) the earnings of any Person
to which any assets of such Person shall have been
sold, transferred or disposed of, or into which
such Person shall have merged, or been a party to
any consolidation or other form of reorganization,
prior to the date of such transaction;
(viii) any gain or loss arising
from the acquisition of any Securities of such
Person; and
(ix) any gain or loss arising from
extraordinary or non-recurring items.
Consolidated Cash Flow -with respect to any Person
for any fiscal period, the sum of (i) Consolidated
Adjusted Net Earnings From Operations of such Person
for such fiscal period, plus (ii) depreciation and
amortization expense of such Person for such fiscal
period which were subtracted from earnings in
calculating Consolidated Adjusted Earnings From
Operations of such Person for such fiscal period, minus
(iii) Capital Expenditures not financed by Purchase
Money Indebtedness which are incurred by such Person
during such fiscal period, minus (iv) Distributions
paid by such Person during such fiscal period.
Consolidated Current Assets - with respect to any
Person at any date, the amount at which all of the
Consolidated current assets of such Person would be
properly classified as Consolidated current assets
shown on a Consolidated balance sheet of such Person at
such date in accordance with GAAP except that amounts
due from Affiliates and investments in Affiliates shall
be excluded therefrom.
Consolidated Current Liabilities - with respect to
any Person at any date, the amount at which all of the
Consolidated current liabilities of such Person would
be properly classified as Consolidated current
liabilities on a Consolidated balance sheet of such
Person at such date in accordance with GAAP.
Consolidated EBITDA - with respect to any Person
for any fiscal period, the sum of (i) Consolidated
Adjusted Net Earnings From Operations of such Person
for such fiscal period, plus (ii) interest, taxes,
depreciation and amortization expenses of such Person
for such fiscal period which were subtracted from
earnings in calculating Consolidated Adjusted Net
Earnings From Operations of such Person for such fiscal
period.
Consolidated EBITDA - with respect to any Person
for any fiscal period, the sum of (i) Consolidated
EBITDA of such Person for such fiscal period, plus (ii)
rental expenses of such Person for such fiscal period
which were subtracted from earnings in calculating
Consolidated Adjusted Net Earnings From Operations of
such Person for such fiscal period.
Consolidated Fixed Charges - with respect to any
Person for any period, the sum of (i) interest expense
of such Person for such period in respect of all of its
Indebtedness for Money Borrowed, plus (ii) regularly
scheduled payments of principal on Indebtedness for
Money Borrowed required to be paid by such Person
during such period, plus (iii) rentals for aircraft,
engines and propellers required to be paid by such
Person during such period.
Consolidated Fixed Charges Coverage Ratio - on the
determination thereof with respect to any Person at the
end of each Testing Period, the ratio of (i)
Consolidated EBITDA of such Person for such Testing
Period to (ii) Consolidated Fixed Charges required to
be paid by such Person during such Testing Period.
Consolidated Leverage Ratio - with respect to any
Person at any date, means the ratio of (i) Indebtedness
of such Person and its Subsidiaries at such date to
(ii) Consolidated Net Worth of such Person and its
Subsidiaries at such date.
Consolidated Net Worth - with respect to any
Person at any date, the total stockholders' equity of
such Person and its Subsidiaries shown on its
Consolidated balance sheet at such date in accordance
with GAAP.
Consolidated Senior Indebtedness/Consolidated
EBITDA Ratio - on the determination thereof with
respect to any Person at the end of each Testing
Period, the ratio of (i) the aggregate principal
balance of all Senior Indebtedness for Money Borrowed
of such Person outstanding at the end of such Testing
Period to (ii) Consolidated EBITDA of such Person for
the Testing Period then ended.
Convertible Subordinated Notes - the 7% Event
Convertible Subordinated Notes issued by Parent
pursuant to an Indenture dated July 2, 1997 between
Parent and First Union National Bank of Virginia which
have a scheduled maturity date of July 1, 2004, as
outstanding on the Closing Date.
Daily LIBOR Loan - a Loan, or any portion thereof,
during any period in which it bears interest at a rate
based upon the Daily LIBOR Rate.
Daily LIBOR Rate - for each day that such rate is
in effect under the Agreement, an interest rate per
annum equal to the quotient of (a) the Fleet Bank
Posted LIBOR Rate in effect for such day divided by (b)
a percentage (expressed as a decimal) equal to 100%
minus Statutory Reserves.
Deed of Trust - the Credit Line Leasehold Deed of
Trust and Security Agreement executed by Borrower on or
about June 1, 1997 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
$9,579,932 of the Obligations, Liens upon Borrower's
leasehold estate in the Realty leased by Borrower from
the Authority pursuant to the Lease.
Default - an event or condition the occurrence of
which would, with the lapse of time or the giving of
notice, or both, become an Event of Default.
Default Rate - a rate per annum equal to two
percent (2%) in excess of the interest rates otherwise
applicable to the Loans.
Distribution - in respect of any corporation means
and includes: (i) the payment of any dividends or
other distributions on capital stock of the corporation
(except distributions in such stock) and (ii) the
redemption or acquisition of Securities (or any warrant
or option for the purchase of any such Securities)
unless made contemporaneously from the net proceeds of
the sale of Securities.
Document - shall have the meaning ascribed to the
term "document" under the Code.
Dollars - and the sign $ shall refer to currency
of the United States of America.
Eligible Account - an inter-airline Account of
Borrower arising and created in the ordinary course of
Borrower's business from the rendition of air
transportation and related services which Lender, in
its sole credit judgment, based upon its usual and
customary credit and collateral considerations, deems
to be an Eligible Account. To be an Eligible Account,
such Account must be subject to Lender's perfected Lien
and no other Lien other than a Permitted Lien, must be
cleared and collected through the Clearing Bank
pursuant to the ACH Procedure Manual, and must be
billed monthly by a recap sheet submitted to ACH, no
later than the nineteenth (19th) day of each month, for
all air transportation and related services rendered
and revenues earned during the preceding month.
Without limiting the generality of the foregoing, no
Account of Borrower shall be an Eligible Account if:
(i) it arises out of air
transportation and related services rendered by
Borrower to a Subsidiary, or an Affiliate of
Borrower, or to a Person controlled by an
Affiliate of Borrower; or
(ii) payment of such Account is
not received from the ACH within fifteen (15) days
after the ACH Settlement Date for such Account; or
(iii) any covenant,
representation or warranty contained in the
Agreement with respect to such Account has been
breached; or
(iv) in the case of Accounts
owing by United, are subject to any right of
offset other than United's right of setoff for
amounts owing under the United Express Agreements,
and, in the case of all other Accounts, the
Account Debtor is also Borrower's creditor or
supplier, or the Account Debtor has disputed
liability with respect to such Account, or the
Account Debtor has made any claim with respect to
any other Account due from such Account Debtor to
Borrower, or the Account otherwise is subject to
any right of setoff by the Account Debtor; or
(v) the Account Debtor has
commenced a voluntary case under the federal
bankruptcy laws, as now constituted or hereafter
amended, or made an assignment for the benefit of
creditors, or a decree or order for relief has
been entered by a court having jurisdiction in the
premises in respect of the Account Debtor in an
involuntary case under the federal bankruptcy
laws, as now constituted or hereafter amended, or
any other petition or other application for relief
under the federal bankruptcy laws has been filed
against the Account Debtor, or if the Account
Debtor has failed, suspended business, ceased to
be Solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant
portion of its assets or affairs; or
(vi) the Account is evidenced by
Chattel Paper or an Instrument of any kind, or has
been reduced to judgment; or
(vii) the Account is contingent in any
respect or for any reason; or
(viii) the Account Debtor is the
United States of America or any department, agency
or instrumentality thereof, unless Borrower
assigns its right to payment of such Account to
Lender, in a manner satisfactory to Lender, so as
to comply with the Assignment of Claims Act of
1940 (31 U.S.C. 203 et seq., as amended); or
(ix) the Account is subject to a
Lien other than a Permitted Lien; or
(x) the air transportation and
related services giving rise to such Account have
not been performed by Borrower or the Account
otherwise does not represent a final sale; or
(xi) Borrower has made any
agreement with the Account Debtor for any
deduction therefrom, except, in the case of
Accounts owing by United, United's right of setoff
for amounts owing under the United Express
Agreements; or
(xii) Borrower has made an
agreement with the Account Debtor to extend the
time of payment thereof; or
(xiii) Borrower has failed to
comply with the provisions of Section 7.2.1 with
respect to such Account and the Account Debtor
obligated thereon; or
(xiv) It is not based upon or
evidenced by passenger tickets, exchange orders or
other passenger billing documents which have been
separated and put into batches in accordance with
the requirements of the ACH Procedure Manual.
Eligible Rotable Spare Parts - such Rotable Spare
Parts of Borrower which Lender, in its sole credit
judgment, based upon its usual and customary credit and
collateral considerations, deems to be Eligible Rotable
Spare Parts. Without limiting the generality of the
foregoing, no Rotable Spare Parts shall be Eligible
Rotable Spare Parts unless:
(i) it is in airworthy
condition in accordance with all Applicable Laws,
including all applicable FAA rules and
regulations, and is not obsolete;
(ii) it meets all standards
imposed by any applicable governmental agency or
authority;
(iii) it conforms in all
respects to the warranties and representations set
forth in the Agreement;
(iv) Lender shall have (and
shall have received reasonably satisfactory
evidence of) a first priority perfected Lien in
such Rotable Spare Parts and such Rotable Spare
Parts shall not be subject to any other Lien
except a Permitted Lien that is not a Purchase
Money Lien;
(v) it is situated at a
location in compliance with the Agreement; and
(vi) it is owned outright by
Borrower and not held by Borrower on consignment
or other sale or return basis.
Environmental Laws - all federal, state and local
laws, rules, regulations, ordinances, programs,
permits, guidances, orders and consent decrees relating
to health, safety and environmental matters.
ERISA - the Employee Retirement Income Security
Act of 1974, as amended, and all rules and regulations
from time to time promulgated thereunder.
Escrow Agent - FMB Trust, N.A., a national banking
association.
Escrow Funds - cash in the amount of $15,000,000
deposited by the Authority with the Escrow Agent
pursuant to the terms of the Escrow Agreement as
security for the Bridge Loan Obligations.
Escrow Agreement - the Escrow Agreement dated on
or about the Closing Date among Borrower, the Authority
and the Escrow Agent, in form and substance
satisfactory to Lender, by which the Authority deposits
with the Escrow Agent the Escrow Funds to be held by
the Escrow Agent as security for the Bridge Loan
Obligations and disbursed in the manner set forth
therein.
Eurocurrency Liabilities - shall have the meaning
ascribed thereto in Regulation D issued by the Board of
Governors.
Event of Default - as defined in Section 11.1 of
the Agreement.
FAA - the Federal Aviation Administration, an
agency of the United States of America.
Existing Loan Agreement - the Loan and Security
Agreement, dated October 12, 1995, between Lender and
the Loan Parties, as in effect on the Closing Date.
GAAP - generally accepted accounting principles in
the United States of America in effect from time to
time.
General Intangibles - with respect to any Person,
all general intangibles of such Person, including,
without limitation, all choses in action, causes of
action, corporate or other business records, deposit
accounts, inventions, blueprints, designs, patents,
patent applications, trademarks, trademark
applications, trade names, trade secrets, service
marks, goodwill, brand names, copyrights,
registrations, licenses, franchises, customer lists,
tax refund claims, computer programs, operational
manuals, all claims under guaranties, security
interests or other security held by or granted to such
Person to secure payment of any of the Accounts by an
Account Debtor, all rights to indemnification and all
other intangible property of every kind and nature
(other than Accounts). General Intangibles shall not
include any landing slots of Borrower at any airport.
Guarantor - Parent and any other Person who may
hereafter guarantee payment or performance of the whole
or any part of the Obligations.
Guaranty Agreement - the Guaranty Agreement
executed by each Guarantor in form and substance
satisfactory to Lender.
Hazardous Material - any pollutants, contaminants,
chemicals, toxic or hazardous substance or material
defined as such in (or for purposes of) the
Environmental Laws, including without limitation, any
waste constituents coming within the definition or list
of hazardous substances in 40 C.F.R. 261.1 through
261.33.
Hedging Obligations - with respect to any Person,
all liabilities of such Person under interest rate swap
agreements, interest rate cap agreements and interest
rate collar agreements, foreign exchange contracts,
currency swap agreements, and all other agreements or
arrangements designed to protect such Person against
fluctuations in interest rates or currency exchange
rates.
IATA - International Air Transport Association.
Improvements - the construction of a maintenance
facility and associated access roadway, vehicle parking
and maneuvering areas and aircraft paving aprons on the
Realty.
Indebtedness - as applied to a Person means,
without duplication:
(i) all items which in accordance
with GAAP would be included in determining total
liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of
which Indebtedness is to be determined, including,
without limitation, Capitalized Lease Obligations,
(ii) all obligations of other
Persons which such Person has guaranteed,
(iii) in the case of Borrower
(without duplication), the Obligations.
Indenture - that certain Indenture of Trust, dated
June 1, 1997, between the Issuer and the Bond Trustee
pursuant to which Issuer has issued the Bonds.
Instrument - shall have the meaning ascribed to
the term "instrument" under the Code.
Interest Period - as defined in Section 2.1.4 of
the Agreement.
Internal Revenue Code - the Internal Revenue Code
of 1986, as amended from time to time.
Issuer - the Industrial Development Authority of
Loudoun County, Virginia.
Lease - that certain Ground Lease Agreement, dated
June 23, 1997 between the Authority and the Borrower.
Letter of Credit - any letter of credit issued by
Lender or any of Lender's Affiliates for the account of
Borrower pursuant to the Agreement.
Letter of Credit Amount - at any time, the
aggregate undrawn face amount of all Letters of Credit
and Letter of Credit Guaranties then outstanding.
Letter of Credit Guaranty - any guaranty issued by
Lender pursuant to which Lender shall guarantee the
payment or performance 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.
Level - as at the determination thereof at the end
of each Testing Period, the level set forth below
corresponding to the Consolidated Fixed Charges
Coverage Ratio as of the end of such Testing Period:
Level Ratio
Level I >2.5
Level II >2.2
but 2.5
Level III >2.0
but 2.2
Level IV >1.7
but 2.0
Level V 1.7
LIBOR Lending Office - with respect to Lender, the
office designated as the LIBOR Lending Office for
Lender on the signature pages of the Agreement (or on
any Assignment and Acceptance, in the case of an
assignee) and such other office of Lender or any of its
Affiliates that is hereafter designated by notice to
Lender.
LIBOR Rate - with respect to an Interest Period,
the rate per annum determined by Lender at which
deposits of Dollars of amounts equal to or comparable
to the amount of the LIBOR Rate Loan to which such
Interest Period relates and for a term comparable to
such Interest Period are offered to Bank by prime banks
in the London interbank foreign currency deposits
market at approximately 11:00 o'clock a.m., London
time, two (2) Business Days prior to the first day of
such Interest Period. Each determination by Lender of
any LIBOR Rate shall, in the absence of manifest error,
be conclusive.
LIBOR Rate Loan - a Loan, or portion thereof,
during any period in which it bears interest at a rate
based upon the applicable Adjusted LIBOR Rate.
Lien - any interest in Property securing an
obligation owed to, or a claim by, a Person other than
the owner of the Property, whether such interest is
based on common law, statute or contract. The term
"Lien" shall also include reservations, exceptions,
encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title
exceptions and encumbrances affecting Property. For
the purpose of this Agreement, Borrower shall be deemed
to be the owner of any Property which it has acquired
or holds subject to a conditional sale agreement or
other arrangement pursuant to which title to the
Property has been retained by or vested in some other
Person for security purposes.
Loan - the Bridge Loan and the Bridge Loan
Advances made thereunder, a Revolver Loan or all or any
of them as the context may require.
Loan Account - the loan account established on the
books of Lender pursuant to Section 4.10 of the
Agreement.
Loan Documents - the Agreement, the Other
Agreements and the Security Documents.
Margin Stock - shall have the meaning ascribed to
it in Regulation U of the Board of Governors.
Material Adverse Effect - the effect of any event
or condition which, alone or when taken together with
other events or conditions occurring or existing
concurrently therewith, (i) has or may be reasonably
expected to have a material adverse effect upon the
business, operations, Properties, condition (financial
or otherwise) of the Loan Parties and their respective
Subsidiaries taken as a whole; (ii) has or may be
reasonably expected to have any material adverse effect
whatsoever upon the validity or enforceability of the
Agreement or any of the other Loan Documents; (iii) has
or may be reasonably expected to have any material
adverse effect upon the Collateral, the Liens of Lender
with respect to the Collateral or the priority of such
Liens; or (iv) materially impairs the ability of the
Loan Parties and their respective Subsidiaries or any
Guarantor to perform their respective obligations under
the Agreement, any Guaranty Agreement or any of the
other Loan Documents or of Lender to enforce or collect
the Obligations or realize upon any of the Collateral
in accordance with the Loan Documents and Applicable
Law.
Maximum Rate - the maximum non-usurious rate of
interest permitted by Applicable Law that at any time,
or from time to time, may be contracted for, taken,
reserved, charged or received on the Indebtedness in
question or, to the extent permitted by Applicable Law,
under such Applicable Law that may hereafter be in
effect and which allow a higher maximum non-usurious
interest rate than Applicable Law now allows.
Notwithstanding any other provision hereof, the Maximum
Rate shall be calculated on a daily basis (computed on
the actual number of days elapsed over a year of 365 or
366 days, as the case may be).
Money Borrowed - with respect to any Person, (i)
Indebtedness arising from the lending of money by any
other Person to such Person; (ii) Indebtedness, whether
or not in any such case arising from the lending by any
other Person of money to such Person, (a) which is
represented by notes payable or drafts accepted that
evidence extensions of credit, (b) which constitutes
obligations evidenced by bonds, debentures, notes or
similar instruments, or (c) upon which interest charges
are customarily paid (other than accounts payable) or
that was issued or assumed as full or partial payment
for Property; (iii) Indebtedness that constitutes a
Capitalized Lease Obligation; (iv) Indebtedness of such
Person under any guaranty of obligations that would
constitute Indebtedness for Money Borrowed under
clauses (i) through (iii) hereof, if owed directly by
such Person.
Moody's - Moody's Investors Service, Inc., or any
successor thereto.
Multiemployer Plan - has the meaning set forth in
Section 4001(a)(3) of ERISA.
Notice of Borrowing - as defined in Section
3.1.1(i) of the Agreement.
Notice of Conversion/Continuation - as defined in
Section 2.1.4(ii) of the Agreement.
Obligations - collectively, (i) the Loans and all
other sums loaned or advanced by Lender to or on behalf
of Borrower pursuant to the Agreement or the other Loan
Documents, (ii) all liabilities, indebtedness and
obligations now or any time hereafter owing by Borrower
or any Guarantor to Lender under the Agreement or any
of the other Loan Documents, (iii) Hedging Obligations
in respect of the Loans owing to Lender or an Affiliate
thereof (unless the Lender or such Affiliate otherwise
agrees in writing), (iv) the Bridge Loan Obligations,
and (iv) all other liabilities, indebtedness and
obligations of any and every kind now or hereafter
owing or to become due from Borrower or any Guarantor
in respect of the Loans. The term includes, without
limitation, all principal, interest, charges, expenses,
fees, attorneys' fees and any other sums chargeable to,
or to be paid by, Borrower or any Guarantor under any
of the Loan Documents.
Original Closing Date - October 12, 1995.
Original Term - as defined in Section 5.1 of the
Agreement.
Other Agreements - any and all agreements,
instruments and documents (other than the Agreement and
the Security Documents), heretofore, now or hereafter
executed by a Loan Party, any Subsidiary of a Loan
Party, or any other third party and delivered to Lender
in respect of the transactions contemplated by the
Agreement.
Overadvance - a Revolver Loan made by Lender when
an Overadvance Condition exists or would result from
the making of such Revolver Loan.
Overadvance Condition - at any date, a condition
such that the principal amount of the Revolver Loans
outstanding to Borrower on such date exceeds the lesser
of the Borrowing Base or the Revolver Facility Amount
on such date.
Participating Lender - any Person who shall be
granted the right by Lender to participate in any of
the Loans described in the Agreement and who shall have
entered into a participation agreement in form and
substance satisfactory to Lender.
Payment Account - an account maintained by Lender
to which all monies from time to time deposited to a
Dominion Account shall be transferred and all other
payments shall be sent in immediately available federal
funds.
Payment Item - all checks, drafts or other items
of payment payable to Borrower, including proceeds of
any of the Collateral.
Permitted Liens - any Lien of a kind specified in
Section 9.2.4 of the Agreement.
Person - an individual, partnership, corporation,
limited liability company, joint stock company, land
trust, business trust, unincorporated organization, or
a government or agency or political subdivision
thereof.
Plan - an employee benefit plan now or hereafter
maintained for employees of a Loan Party that is
covered by Title IV of ERISA.
Projections - the Loan Parties' forecasted
Consolidated (i) balance sheets, (ii) profit and loss
statements, and (iii) cash flow statements, all
prepared on a consistent basis with the Loan Parties'
historical financial statements, together with
appropriate supporting details and a statement of
underlying assumptions.
Properly Contested -in the case of any
Indebtedness of any Loan Party or any of its
Subsidiaries (including, but not limited to, any Taxes)
that is not paid as and when due or payable by reason
of such Loan Party's or any Subsidiary's bona fide
dispute concerning its liability to pay same or
concerning the amount thereof, that (i) such
Indebtedness is being properly contested in good faith
by appropriate proceedings promptly instituted and
diligently conducted, (ii) such Loan Party has estab
lished appropriate reserves as shall be required in
conformity with GAAP, (iii) the non-payment of such
Indebtedness will not have a Material Adverse Effect;
(iv) no Lien is imposed upon such Loan Party's or any
Subsidiary's Property with respect to such Indebtedness
unless such Lien is at all times junior and subordinate
in priority to the Liens in favor of Lender (except
only with respect to Taxes that have priority as a
matter of any state's Applicable Laws); and (v) if such
contest is abandoned, settled or determined adversely
to such Loan Party or any of its Subsidiaries, such
Loan Party forthwith pays such Indebtedness and all
penalties and interest in connection therewith.
Property - any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or
intangible.
Purchase Money Indebtedness - means and includes
(i) Indebtedness (other than the Obligations) for the
payment of all or any part of the purchase price of any
Property, (ii) any Indebtedness (other than the
Obligations) incurred at the time of or within ten (10)
days prior to or after the acquisition of any Property
for the purpose of financing all or any part of the
purchase price thereof, and (iii) any renewals,
extensions or refinancings thereof.
Purchase Money Lien - a Lien upon Rotable Spare
Parts which secures Purchase Money Indebtedness, but
only if such Lien shall at all times be confined solely
to the Rotable Spare Parts the purchase price of which
was financed through the incurrence of the Purchase
Money Indebtedness secured by such Lien and shall not
extend to any other Property of Borrower.
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.
Regulation D - Regulation D of the Board of
Governors.
Reimbursement Agreement - that certain Letter of
Credit and Reimbursement Agreement, dated June 1, 1997,
among the Bank, Lender and Borrower, pursuant to which
Bank issued the Bond Letter of Credit, as amended,
modified, supplemented or restated from time to time.
Related United Express Agreements - those
agreements between United and Borrower described on
Schedule A attached hereto, as the same may be amended,
modified, supplemented or restated from time to time.
Remarketing Agent - shall have the meaning
ascribed to such term in the Indenture.
Renewal Term - as defined in Section 5.1 of the
Agreement.
Reportable Event - any of the events set forth in
Section 4043(b) of ERISA.
Restricted Investment - any investment made in
cash or by delivery of Property to any Person, whether
by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance, deposit,
capital contribution or otherwise, or in any Property
except the following:
(i) investments in one or more
Subsidiaries of a Loan Party to the extent
existing on the Closing Date;
(ii) Property to be used in the
ordinary course of business;
(iii) Consolidated Current Assets
arising from the sale of goods and services in the
ordinary course of business of a Loan Party and
its Subsidiaries;
(iv) cash and Cash Equivalents;
and
(v) investments in certificates
of deposit (a) which issues a letter of credit for
the account of a Loan Party, (b) securing the
reimbursement obligations of a Loan Party with
respect to such letter of credit, and (c) maturing
on a date corresponding to the expiration date of
such letter of credit.
Revolver Facility Amount - at any date of the
determination thereof, the sum of (i) Thirty Five
Million Dollars ($35,000,000), less (ii) the Letter of
Credit Amount at such date.
Revolver Loan - a Loan made by Lender to Borrower
as provided in Section 1.1 of the Agreement.
Rotable Spare Parts - those Spare Parts which can
be economically restored to a serviceable condition
and, in the normal course of operations, can be
repeatedly rehabilitated to a fully serviceable
condition over a period approximating the life of the
flight equipment to which it is related.
Rotable Spare Parts Borrowing Base - at any date
of determination thereof, the lesser of (a) $8,000,000
or (b) sixty percent (60%) of the aggregate value of
Borrower's Eligible Rotable Spare Parts at such date,
in each case calculated on the basis of lower of book
value or market value, with book value calculated on
the basis of original cost less accumulated
depreciation in accordance with GAAP.
Rotable Spare Parts Security Agreement - the
Rotable Spare Parts Security Agreement to be executed
by Borrower on or about the Closing Date, in form and
substance satisfactory to Lender, by which Borrower
shall grant Lender Liens in all of its Rotable Spare
Parts, whether now owned or hereafter acquired, as
security for the Obligations.
Security - shall have the same meaning as in
Section 2(1) of the Securities Act of 1933, as amended.
Security Documents - the Rotable Spare Parts
Security Agreement, the Escrow Agreement, 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.
Senior Indebtedness for Money Borrowed - with
respect to any Person, all of such Person's
Indebtedness for Money Borrowed except for Subordinated
Debt.
Solvent - as to any Person, such Person (i) owns
Property whose fair saleable value is greater than the
amount required to pay all of such Person's
Indebtedness (including contingent debts), (ii) is
generally able to pay all of its Indebtedness as such
Indebtedness matures and (iii) has capital sufficient
to carry on its business and transactions and all
business and transactions in which it is about to
engage.
Spare Parts - (a) an accessory, appurtenance or
part of (i) an aircraft (except an aircraft engine or
propeller), (ii) aircraft engine (except a propeller),
or (iii) propeller, or (b) an Appliance, that is to be
installed at a later time in an aircraft, aircraft
engine, propeller or Appliance. Spare Parts shall not
include any aircraft engines, propellers or quick
engine change kits now owned or hereafter acquired by
Borrower.
Statutory Reserves - on any date, the percentage
(expressed as a decimal) established by the Board of
Governors which is the then stated maximum rate for all
reserves (including, but not limited to, any emergency,
supplemental or other marginal reserve requirements)
applicable to any member bank of the Federal Reserve
System in respect to Eurocurrency Liabilities (or any
successor category of liabilities under Regulation D).
Such reserve percentage shall include, without
limitation, those imposed pursuant to said Regulation
D. The Statutory Reserves shall be adjusted
automatically on and as of the effective date of any
change in such percentage.
Subordinated Debt - the Convertible Subordinated
Notes and any other Indebtedness of a Loan Party that
is subordinated to the Obligations in a manner and upon
terms satisfactory to Lender.
Subsidiary - any corporation of which a Person
owns, directly or indirectly through one or more
intermediaries, more than 50% of the Voting Stock at
the time of determination.
Taxes - any present or future taxes, levies,
imposts, duties, fees, assessments, deductions,
withholdings or other charges of whatever nature,
including income, receipts, excise, property, sales,
use, transfer, license, payroll, withholding, social
security and franchise taxes now or hereafter imposed
or levied by the United States, or any state, local or
foreign government or by any department, agency or
other political subdivision or taxing authority thereof
or therein and all interest, penalties, additions to
tax and similar liabilities with respect thereto, but
excluding, in the case of Lender, taxes imposed on or
measured by the net income or overall gross receipts of
Lender.
Testing Period - each period of four (4)
consecutive fiscal quarters.
Type - the type of Loan, which shall either be a
LIBOR Rate Loan or a Base Rate Loan.
United -United Airlines, Inc., a Delaware
corporation.
United Express Agreements -the United Express
Operating Agreement and the Related United Express
Agreements or any one or more of them as the context
may require.
United Express Emergency Response Agreement - the
Emergency Response Services Agreement between United
and Borrower dated June 23, 1995, which constitutes one
of the United Express Related Agreements.
United Express Operating Agreement - the United
Express Agreement between United and Borrower, dated
October 1, 1991, as the same is amended, modified,
supplemented or restated from time to time, pursuant to
which, among other things, Borrower has acquired a non-
exclusive license to use trademarks, service marks,
trade names, and logos and related intellectual
property rights in the operations of Borrower's
business.
United Express Termination Date - the termination
date of the United Express Operating Agreement as that
date may be modified pursuant to the terms of the
United Express Operating Agreement and as may be
permitted by the terms of the Agreement.
United Non-Offset Agreement - the non-offset
agreement, dated October 12, 1995, executed by Lender
and United pursuant to which United agreed to limit its
right of setoff against Borrower to current amounts
owing by Borrower to United under the United Express
Agreements, as amended by amendment thereto dated on or
about the Closing Date.
Voting Stock - Securities of any class or classes
of a corporation the holders of which are ordinarily,
in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons
performing similar functions).
Other Terms. All other terms contained in the
Agreement shall have, when the context so indicates, the
meanings provided for by the Code to the extent the same are
used or defined therein. Accounting terms not otherwise
specifically defined herein shall be construed in accordance
with GAAP consistently applied.
Certain Matters of Construction. The terms
"herein", "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole and not to
any particular section, paragraph or subdivision. Whenever
in the Agreement the word "including" is used, it is
understood to mean "including, without limitation". Any
pronoun used shall be deemed to cover all genders. The
section titles, table of contents and list of exhibits
appear as a matter of convenience only and shall not affect
the interpretation of the Agreement. All references to
statutes and related regulations shall include any
amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents
shall include any and all modifications thereto and any and
all extensions or renewals thereof. All references to any
Person shall mean and include successors and permitted
assigns of such Person. All references to "including" and
"include" shall be understood to mean "including, without
limitation".
IN WITNESS WHEREOF, the parties have caused this
Appendix to be duly executed by their duly authorized
officers on February 8, 1999.
ATTEST: ATLANTIC COAST AIRLINES
("Borrower")
__________________________
By:___________________________________
Richard J. Kennedy. Secretary Thomas J. Moore, Executive
Vice President and
Chief Operating Officer
[CORPORATE SEAL]
ATTEST: ATLANTIC COAST AIRLINES
HOLDINGS, INC.
("Parent")
_________________________ By:______________________________
Richard J. Kennedy. Secretary Thomas J. Moore, Executive
Vice President and
Chief Operating Officer
[CORPORATE SEAL]
FLEET CAPITAL CORPORATION
("Lender")
By:_______________________________________
Title:___________________________________
EXHIBIT 10.24
ATLANTIC COAST AIRLINES HOLDINGS, INC.
1995 STOCK INCENTIVE PLAN
(AS AMENDED AS OF MAY 5, 1998, AND ADJUSTED TO
REFLECT MAY 15, 1998 STOCK SPLIT)
SECTION 1. Purpose of the Plan. The purpose of this
1995 Stock Incentive Plan effective October 18, 1995
("Plan") is to encourage ownership of common stock, $.01 par
value ("Common Stock"), of Atlantic Coast Airlines Holdings,
Inc., a Delaware corporation (the "Company"), by eligible
key employees and directors of the Company and its
Affiliates (as defined below) and to provide increased
incentive for such employees and directors to render
services and to exert maximum effort for the business
success of the Company through grants of options and other
stock-based awards. In addition, the Company expects that
the Plan will further strengthen the identification of
employees and directors with the stockholders. Options
granted under this Plan may be intended to qualify as
Incentive Stock Options ("ISOs") pursuant to Section 422 of
the Internal Revenue Code of 1986, as amended ("Code"), or
may be options which are not intended to qualify as ISOs
("Nonqualified Options"), either or both as provided in the
agreements evidencing the options as provided in Section 6
hereof. As used in this Plan, the term "Affiliates" means
any "parent corporation" of the Company and any "subsidiary
corporation" of the Company within the meaning of Code
Sections 424(e) and (f), respectively.
SECTION 2. Administration of the Plan.
(a) Composition of Committee. The Plan shall be
administered by one or more committees of the Board
(any such committee, the "Committee"). If no persons
are designated by the Board to serve on the Committee,
the Plan shall be administered by the Board and all
references herein to the Committee shall refer to the
Board. The Board shall have the discretion to appoint,
add, remove or replace members of the Committee, and
shall have the sole authority to fill vacancies on the
Committee. Unless otherwise provided by the Board:
(i) with respect to any Award (as defined in Section 7)
for which such is necessary and desired for such Award
to be exempted by Rule 16b-3 of the Exchange Act, the
Committee shall consist of two or more directors, each
of whom is a "disinterested person" (as such term is
defined in Rule 16b-3 promulgated under the Exchange
Act, as such Rule may be amended from time to time),
(ii) with respect to any Award that is intended to
qualify as "performance based compensation" under
Section 162(m) of the Code, the Committee shall consist
of two or more directors, each of whom is an "outside
director" (as such term is defined under Section 162(m)
of the Code), and (iii) with respect to any other
Award, the Committee shall consist of one or more
directors (any of whom also may be a Participant (as
defined in Section 4) who has been granted or is
eligible to be granted Awards under the Plan).
(b) Committee Action. The Committee shall hold
its meetings at such times and places as it may
determine. A majority of its members shall constitute
a quorum, and all determinations of the Committee shall
be made by not less than a majority of its members.
Any decision or determination reduced to writing and
signed by a majority of the members shall be fully as
effective as if it had been made by a majority vote of
its members at a meeting duly called and held. The
Committee may designate the Secretary of the Company or
other Company employees to assist the Committee in the
administration of the Plan, and may grant authority to
such persons to execute Award agreements or other
documents on behalf of the Committee and the Company.
(c) Committee Expenses. All expenses and
liabilities incurred by the Committee in the
administration of the Plan shall be borne by the
Company. The Committee may employ attorneys,
consultants, accountants or other persons.
(d) Powers of the Committee. Subject to the
express provisions of this Plan, the Committee shall be
authorized and empowered to do all things necessary or
desirable in connection with the administration of this
Plan with respect to the Awards over which such
Committee has authority, including, without limitation,
the following:
(i) prescribe, amend and rescind rules
and regulations relating to this Plan;
(ii) determine which persons are
Participants and to which of such Participants,
if any, and when options and/or other Awards
shall be granted hereunder;
(iii) to prescribe and amend the terms of
the Award agreements (which need not be
identical);
(iv) to make all other determinations
deemed necessary or advisable for the
administration of the Plan;
(v) determine whether, and the extent to
which adjustments are required pursuant to
Section 7(e) hereof; and
(vi) interpret and construe this Plan, any
rules and regulations under the Plan and the
terms and conditions of any Award granted
hereunder.
SECTION 3. Stock Reserved for the Plan. Subject to
adjustment as provided in Section 7(e) hereof, the aggregate
number of shares of Common Stock that may be issued and
issuable pursuant to all Awards (including Incentive Stock
Options) granted under the Plan is 2,500,000 and such number
of shares shall be and is hereby reserved for sale for such
purpose. The aggregate number of Shares subject to Awards
granted during any calendar year to any one Participant
(including the number of shares involved in Awards having a
value derived from the value of Shares) shall not exceed
750,000. The shares subject to the Plan shall consist of
authorized but unissued shares of Common Stock or previously
issued and reacquired shares of Common Stock. Any of such
shares which may remain unsold and which are not subject to
outstanding options at the termination of the Plan shall
cease to be reserved for the purpose of the Plan, but until
termination of the Plan or the termination of the last of
the options granted under the Plan, whichever last occurs,
the Company shall at all times reserve a sufficient number
of shares to meet the requirements of the Plan. The
aggregate number of Shares issued under this Plan at any
time shall equal only the number of shares actually issued
upon exercise or settlement of an Award and not returned to
the Company upon forfeiture of an Award or in payment or
satisfaction of the purchase price, exercise price or tax
withholding obligation of an Award.
SECTION 4. Eligibility. The persons eligible to
participate in the Plan as a recipient of Awards
("Participant") shall include only key employees and
directors of the Company or its Affiliates at the time the
Award is granted; provided, however, the members of the
Committee shall not be eligible to be granted Awards if the
Company is governed by Rule 16b-3 as in effect on April 31,
1994. An employee who has been granted an option hereunder
may be granted an additional option or options, if the
Committee shall so determine.
SECTION 5. Grant of Options.
(a) Committee Discretion. The Committee shall
have sole and absolute discretionary authority (i) to
determine, authorize, and designate those key employees
and directors of the Company or its Affiliates who are
to receive options under the Plan (each, an
"Optionee"), (ii) to determine the number of shares of
Common Stock to be covered by such options and the
terms thereof, and (iii) to determine the type of
option granted: ISO, Nonqualified Option or a
combination of ISO and Nonqualified Options; provided
that a non-employee director may not receive any ISOs.
The Committee shall thereupon grant options in
accordance with such determinations as evidenced by a
written option agreement.
(b) Limitation on Incentive Stock Options.
Except as described in Section 6(i), the aggregate fair
market value (determined in accordance with
Section 6(b) of this Plan at the time the option is
granted) of the Common Stock with respect to which
options intended to qualify as ISOs may be exercisable
for the first time by any Optionee during any calendar
year under all such plans of the Company and its
Affiliates shall not exceed $100,000.
SECTION 6. Terms and Conditions. Each option granted
under the Plan shall be evidenced by an agreement, in a form
approved by the Committee, which shall be subject to the
following express terms and conditions and to such other
terms and conditions as the Committee may deem appropriate.
(a) Option Period. The Committee shall promptly
notify the Optionee of the option grant and a written
agreement shall promptly be executed and delivered by
and on behalf of the Company and the Optionee, provided
that the option grant shall expire if a written
agreement is not signed by said Optionee (or his agent
or attorney) and returned to the Company within 60 days
from date of receipt by the Optionee of such agreement.
Each option agreement shall specify the period for
which the option thereunder is granted (which in no
event shall exceed ten years from the date of grant)
and shall provide that the option shall expire at the
end of such period. If the original term of an option
is less than ten years from the date of grant, the
option may be amended prior to its expiration, with the
approval of the Committee and the Optionee, to extend
the term so that the term as amended is not more than
ten years from the date of grant. However, in the case
of an ISO granted to an individual who, at the time of
grant, owns stock possessing more than 10 percent of
the total combined voting power of all classes of stock
of the Company or its Affiliate ("Ten Percent
Stockholder"), such period shall not exceed five years
from the date of grant.
(b) Option Price. The purchase price of each
share of Common stock subject to each option granted
pursuant to the Plan shall be determined by the
Committee at the time the option is granted and, in the
case of options intended to qualify as ISOs or as
"performance based compensation" for purposes of
Section 162(m) of the Code, shall not be less than 100%
of the fair market value of a share of Common Stock on
the date the option is granted, as determined by the
Committee. In the case of an ISO granted to a Ten
Percent Stockholder, the option price shall not be less
than 110% of the fair market value of a share of Common
Stock on the date the option is granted. The purchase
price of each share of Common Stock subject to a
Nonqualified Option under this Plan shall be determined
by the Committee prior to granting the option. The
Committee shall set the purchase price for each share
subject to a Nonqualified Option at either the fair
market value of each share on the date the option is
granted, or at such other price as the Committee in its
sole discretion shall determine.
For all purposes under the Plan, the fair market
value of a share of Common Stock on a particular date
shall be determined by such manner as shall be approved
by the Committee. In the event the Common Stock is not
publicly traded at the time a determination of its
value is required to be made hereunder, the
determination of its fair market value shall be made by
the Committee in such manner as it deems appropriate.
(c) Exercise Period. The Committee may provide
in the option agreement that an option may be exercised
in whole, immediately, or is to be exercisable in
increments. However, no portion of any option may be
exercisable by an Optionee prior to the approval of the
Plan by the stockholders of the Company.
(d) Procedure for Exercise. Options shall be
exercised by the delivery of written notice to the
Secretary of the Company setting forth the number of
shares with respect to which the option is being
exercised. Such notice shall be accompanied by payment
of the exercise price for such number of shares, which
may be paid in the form of cash, previously owned
shares of capital stock of the Company, other property
deemed acceptable by the Committee, a reduction in the
amount of Common Stock or other property otherwise
issuable pursuant to such option, or a promissory note
of the Optionee or of a third party, the terms and
conditions of which shall be determined by the
Committee. The notice shall specify the address to
which the certificates for such shares are to be sent.
Subject to satisfaction of any tax obligations pursuant
to Section 11, an Optionee shall be deemed to be a
stockholder with respect to shares covered by an option
on the date the Company receives such written notice
and such option payment.
As promptly as practicable after receipt of such
written notification and payment, the Company shall
deliver to the Optionee certificates for the number of
shares with respect to which such option has been so
exercised; provided, however, that such delivery shall
be deemed effected for all purposes when a stock
transfer agent of the Company shall have deposited such
certificates in the United States mail, addressed to
the Optionee at the address specified pursuant to this
Section 6(d).
(e) Termination of Employment. In the event an
employee to whom an option is granted ceases to be
employed by the Company for any reason other than death
or disability or if a director to whom an option is
granted ceases to serve on the Board for any reason
other than death or disability, any option previously
granted to him may be exercised (to the extent he would
have been entitled to do so at the date the employee
ceases to be employed by the Company or a director
ceases to serve on the Board) at any time and from time
to time, within a thirty (30) day period after such
date the employee ceases employment with the Company or
the director ceases to serve on the Board; provided,
however, the Committee, in its sole discretion, may
(i) allow a longer period for exercise than thirty (30)
days as stated in this paragraph or (ii) allow for the
exercise of all or a part of those options not
exercisable by the employee on account of his
termination of employment or by the director on account
of his cessation from service on the Board.
(f) Disability or Death of Optionee. In the
event of the determination of disability or the death
of an Optionee under the Plan while he is employed by
the Company or while he serves on the Board, the
options previously granted to him may be exercised (to
the extent he would have been entitled to do so at the
date of the determination of disability or of death) at
any time and from time to time, within a one year
period after such determination of disability or death,
by the former employee or director, the guardian of his
estate, the executor or administrator of his estate or
by the person or persons to whom his rights under the
option shall pass by will or the laws of descent and
distribution, but in no event may the option be
exercised after its expiration under the terms of the
option agreement. An Optionee shall be deemed to be
disabled if, in the opinion of a physician selected by
the Committee, he is incapable of performing services
for the Company of the kind he was performing at the
time the disability occurred by reason of any medically
determinable physical or mental impairment which can be
expected to result in death or to be of long, continued
and indefinite duration. The date of determination of
disability for purposes hereof shall be the date of
such determination by such physician. The Committee,
in its sole discretion, may (i) allow a longer period
for exercise than the one year period as stated in this
paragraph or (ii) allow for the exercise of all or a
part of those options not exercisable by the employee
on account of his death or disability.
(g) Incentive Stock Options. Each option
agreement may contain such terms and provisions as the
Committee may determine to be necessary or desirable in
order to qualify an option designated as an ISO.
(h) No Rights as Stockholder. No Optionee shall
have any rights as a stockholder with respect to shares
covered by an option until the option is exercised by
the written notice, accompanied by payment as provided
in clause (d) above, and any tax obligations are
satisfied pursuant to Section 11.
(i) Extraordinary Corporate Transactions. If the
Company recapitalizes or otherwise changes its capital
structure, or merges, consolidates, sells all of its
assets or dissolves (each of the foregoing a
"Fundamental Change"), then thereafter upon any
exercise of an option theretofore granted, the Optionee
shall be entitled to purchase under such option, in
lieu of the number of shares of Common Stock as to
which such option shall then be exercisable, the number
and class of shares of stock and securities to which
the Optionee would have been entitled pursuant to the
terms of the Fundamental Change if, immediately prior
to such Fundamental Change, the Optionee had been the
holder of record of the number of shares of Common
Stock as to which such option is then exercisable. For
purposes of the Plan and Options granted under the
Plan, the term "Corporate Change" shall mean (i) any
merger or consolidation in which the Company shall not
be the surviving entity (or survives only as a
subsidiary of another entity whose shareholders did not
own all or substantially all of the Company's Common
Stock immediately prior to such transaction), (ii) the
sale of all or substantially all of the Company's
assets to any other person or entity (other than a
wholly-owned subsidiary), (iii) the acquisition of
beneficial ownership or control of (including, without
limitation, power to vote) more than 50% of the
outstanding shares of Common Stock by any person or
entity (including a "group" as defined by or under
Section 13(d)(3) of the Exchange Act), (iv) the
dissolution or liquidation of the Company, (v) a
contested election of directors, as a result of which
or in connection with which the persons who were
directors of the Company before such election or their
nominees cease to constitute a majority of the Board,
or (vi) any other event specified by the Committee,
regardless of whether at the time an Option is granted
or thereafter. The Committee may provide, either at
the time an Option is granted or thereafter, that a
Corporate Change shall have such effect as specified by
the Committee, or no effect, as the Committee in its
sole discretion may provide. Without limiting the
foregoing, the Committee may but need not provide,
either at the time an Option is granted or thereafter,
that if a Corporate Change occurs, then effective as of
a date selected by the Committee, the Committee (which
for purposes of the Corporate Changes described in
(iii) and (v) above shall be the Committee as
constituted prior to the occurrence of such Corporate
Change) acting in its sole discretion without the
consent or approval of any Optionee, will effect one or
more of the following alternatives or combination of
alternatives with respect to all outstanding options
(which alternatives may be conditional on the
occurrence of such of the Corporate Change specified in
clause (i) through (v) above which gives rise to the
Corporate Change and which may vary among individual
Optionees): (1) in the case of a Corporate Change
specified in clauses (i), (ii) or (iv), accelerate the
time at which options then outstanding may be exercised
in full for a limited period of time on or before a
specified date (which will permit the Optionee to
participate with the Common Stock received upon
exercise of such option in the event of a Corporate
Change specified in clauses (i), (ii) or (iv), as the
case may be) fixed by the Committee, after which
specified date all unexercised options and all rights
of Optionees thereunder shall terminate, (2) accelerate
the time at which options then outstanding may be
exercised so that such options may be exercised in full
for their then remaining term, or (3) require the
mandatory surrender to the Company of outstanding
options held by such Optionee (irrespective of whether
such options are then exercisable under the provisions
of the Plan) as of a date, before or not later than
sixty days after such Corporate Change, specified by
the Committee, and in such event the Committee shall
thereupon cancel such options and the Company shall pay
to each Optionee an amount of cash equal to the excess
of the fair market value of the aggregate shares
subject to such option over the aggregate option price
of such shares; provided, however, the Committee shall
not select an alternative (unless consented to by the
Optionee) that, if the Optionee exercised his
accelerated options pursuant to alternative 1 or 2 and
participated in the transaction specified in clause
(i), (ii) or (iv) or received cash pursuant to
alternative 3, would result in the Optionee's owing any
money by virtue of operation of Section 16(b) of the
Exchange Act. If all such alternatives have such a
result, the Committee shall take such action, which is
hereby authorized, to put such Optionee in as close to
the same position as such Optionee would have been in
had alternative 1, 2 or 3 been selected but without
resulting in any payment by such Optionee pursuant to
Section 16(b) of the Exchange Act. Notwithstanding the
foregoing, with the consent of the Optionee, the
Committee may in lieu of the foregoing make such
provision with respect of any Corporate Change as it
deems appropriate.
(j) Acceleration of Options. Except as herein
expressly provided, (i) the issuance by the Company of
shares of stock of any class of securities convertible
into shares of stock of any class, for cash, property,
labor or services, upon direct sale, upon the exercise
of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company
convertible into such shares or other securities,
(ii) the payment of a dividend in property other than
Common Stock, or (iii) the occurrence of any similar
transaction, and in any case whether or not for fair
value, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of
shares of Common Stock subject to options theretofore
granted or the purchase price per share, unless the
Committee shall determine in its sole discretion that
an adjustment is necessary to provide equitable
treatment to Optionee. Notwithstanding anything to the
contrary contained in this Plan, the Committee may in
its sole discretion accelerate the time at which any
option may be exercised, including, but not limited to,
upon the occurrence of the events specified in this
Section 6, and is authorized at any time (with the
consent of the Optionee) to purchase options from an
Optionee.
(k) Stockholders Agreement. The Committee shall
provide in the option agreement that prior to receiving
any shares of Common Stock or other securities on the
exercise of the option, the Optionee (or the Optionee's
representative upon the Optionee's death) shall be
required to execute the Company's Stockholders
Agreement.
SECTION 7. Other Provisions of Options and Other
Awards.
(a) Awards. The terms upon which an award under
this Plan (an "Award") is granted shall be evidenced by
a written agreement executed by the Company and the
Participant to whom such Award is granted. Awards that
are granted under this Plan are not restricted to any
specified form or structure and may include, without
limitation, stock options as provided in Sections 5 and
6, sales or bonuses of stock, restricted stock, reload
stock options, stock purchase warrants, other rights to
acquire stock, securities convertible into or
redeemable for stock, stock appreciation rights,
limited stock appreciation rights, phantom stock,
dividend equivalents, performance units or performance
shares, or any other arrangement that involves or might
involve the issuance of Common Stock or a right or
interest with a value based on the value of the Common
Stock, and an Award may consist of one such security or
benefit, or consist of or be amended to include two or
more of them in tandem or in the alternative.
(b) Powers of the Committee. Subject to the
provisions of this Plan, the Committee shall have sole
and absolute discretionary authority (i) to determine,
authorize and designate those Participants who are to
receive Awards under the Plan, (ii) to determine the
number of shares of Common Stock subject to any such
Award, and (iii) at any time to cancel an Award with
the consent of the holder and grant a new Award to such
holder in lieu thereof, which new Award may be for a
greater or lesser number of Shares and may have a
higher or lower exercise or settlement price.
(c) Terms of Awards. Subject to the provisions
of this Plan, the Committee, in its sole and absolute
discretion, shall determine all of the terms and
conditions of each Award granted under this Plan, which
terms and conditions may include, among other things:
(i) provisions permitting the Committee
to allow or require the recipient of such
Award, or permitting any such recipient the
right, to pay the purchase price of the shares
or other property issuable pursuant to such
Award, in whole or in part, by any one or more
of the means permitted for the payment of the
exercise price of options under Section 6(d);
(ii) provisions specifying the purchase,
exercise or settlement price for any Award, or
specifying the method by which such price is
determined, provided that the exercise or
settlement price of any stock appreciation
right or similar Award that is intended to
qualify as "performance based compensation" for
purposes of Section 162(m) of the Code shall be
not less than the fair market value of a share
of Common Stock on the date such Award is
granted;
(iii) provisions relating to the
exercisability and/or vesting of Awards, lapse
and non-lapse restrictions upon the shares
obtained or obtainable under Awards or under
the Plan and the termination, expiration and/or
forfeiture of Awards, which provisions may but
need not be conditioned upon the passage of
time, continued employment or service on the
Board, the satisfaction of performance
criteria, the occurrence of certain events
(including events which the Board or the
Committee determine constitute a change of
control), or other factors; and/or
(iv) provisions conditioning or
accelerating the grant of an Award or the
receipt of benefits pursuant to such Award,
either automatically or in the discretion of
the Committee, upon the occurrence of specified
events, including, without limitation, the
achievement of performance goals, the exercise
or settlement of a previous Award, the
satisfaction of an event or condition within
the control of the recipient of the Award or
within the control of others, a change of
control of the Company, an acquisition of a
specified percentage of the voting power of the
Company, the dissolution or liquidation of the
Company, a sale of substantially all of the
property and assets of the Company or an event
of the type described in Section 6(i) hereof.
(d) Assignability. Unless otherwise provided by
the Committee, (i) an Award (including an option) shall
not be assignable or otherwise transferable except by
will or by the laws of descent and distribution or
pursuant to a domestic relations order, and (ii) during
the lifetime of a Participant, an Award (including an
option) shall be exercisable only by him.
(e) Changes in Company's Capital Structure. The
existence of outstanding Awards (including any options)
shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations,
exchanges, or other changes in the Company's capital
structure or its business, or any merger or
consolidation of the Company, or any issuance of Common
Stock or other securities or subscription rights
thereto, or any issuance of bonds, debentures,
preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or
the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding,
whether of a similar character or otherwise. However,
if the outstanding shares of Common Stock or other
securities of the Company, or both, for which the Award
is then exercisable or as to which the Award is to be
settled shall at any time be changed or exchanged by
declaration of a stock dividend, stock split,
combination of shares, recapitalization, or
reorganization, the number and kind of shares of Common
Stock or other securities which are subject to the Plan
or subject to any Awards theretofore granted, and the
exercise or settlement prices, shall be appropriately
and equitably adjusted so as to maintain the
proportionate number of shares or other securities
without changing the aggregate exercise or settlement
price, provided, however, that such adjustment shall be
made only to the extent that such will not affect the
status of any Award intended to qualify as an ISO or as
"performance based compensation" under Section 162(m)
of the Code.
SECTION 8. Amendments or Termination. The Board may
amend, alter or discontinue the Plan, but no amendment or
alteration shall be made which would impair the rights of
any Award holder, without his consent, under any Award
theretofore granted. Notwithstanding the foregoing, if an
amendment to the Plan would affect the ability of Awards
granted under the Plan to comply with Rule 16b-3 under the
Exchange Act or Section 422 or 162(m) or other applicable
provisions of the Code, the amendment shall be approved by
the Company's stockholders to the extent required to comply
with Rule 16b-3 under the Exchange Act, Section 422 or
Section 162(m) of the Code, or other applicable provisions
of or rules under the Code.
SECTION 9. Compliance With Other Laws and Regulations.
The Plan, the grant and exercise of Awards thereunder, and
the obligation of the Company to sell, issue or deliver
shares under such Awards, shall be subject to all applicable
federal and state laws, rules and regulations and to such
approvals by any governmental or regulatory agency as may be
required. The Company shall not be required to issue or
deliver any certificates for shares of Common Stock prior to
the completion of any registration or qualification of such
shares under any federal or state law or issuance of any
ruling or regulation of any government body which the
Company shall, in its sole discretion, determine to be
necessary or advisable. Any adjustments provided for in
Section 6(i), Section (6)(j) and Section 7(e) shall be
subject to any shareholder action required by Delaware
corporate law. This Plan is intended to constitute an
unfunded arrangement for a select group of management or
other key employees.
SECTION 10. Purchase for Investment. Unless the
Awards and shares of Common Stock covered by this Plan have
been registered under the Securities Act of 1933, as
amended, or the Company has determined that such
registration is unnecessary, each person exercising an
option or other Award or receiving Common Stock pursuant to
any Award under this Plan may be required by the Company to
give a representation in writing that he is acquiring such
shares for his own account for investment and not with a
view to, or for sale in connection with, the distribution of
any part thereof.
SECTION 11. Taxes.
(a) The Company may make such provisions or
impose such conditions as it may deem appropriate for
the withholding or payment by the Participant of any
taxes which it determines are required in connection
with any Awards granted under this Plan.
(b) Notwithstanding the terms of Paragraph 11(a),
any Optionee or other Participant may pay all or any
portion of the taxes required to be withheld by the
Company or paid by him in connection with the exercise
of a Nonqualified Option or the exercise, vesting or
settlement of any other Award by electing to have the
Company withhold shares of Common Stock, or by
delivering previously owned shares of Common Stock,
having a fair market value, determined in accordance
with Paragraph 6(b), equal to the amount required to be
withheld or paid. Any such elections are subject to
such conditions or procedures as may be established by
the Committee and may be subject to disapproval by the
Committee.
SECTION 12. Replacement of Options. The Committee
from time to time may permit an Optionee under the Plan to
surrender for cancellation any unexercised outstanding
option and receive from the Company in exchange an option
for such number of shares of Common Stock as may be
designated by the Committee. The Committee may, with the
consent of the person entitled to exercise any outstanding
option, amend such option, including reducing the exercise
price of any option to not less than the fair market value
of the Common Stock at the time of the amendment and
extending the term thereof.
SECTION 13. No Right to Company Employment. Nothing
in this Plan or as a result of any Award granted pursuant to
this Plan shall confer on any individual any right to
continue in the employ of the Company or interfere in any
way with the right of the Company to terminate an
individual's employment at any time. The Award agreements
may contain such provisions as the Committee may approve
with reference to the effect of approved leaves of absence.
SECTION 14. Liability of Company. The Company and any
Affiliate which is in existence or hereafter comes into
existence shall not be liable to a Participant, an Optionee
or other persons as to:
(a) The Non-Issuance of Shares. The non-issuance
or sale of shares as to which the Company has been
unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company's
counsel to be necessary to the lawful issuance and sale
of any shares hereunder; and
(b) Tax Consequences. Any tax consequence
expected, but not realized, by any Participant,
Optionee or other person due to the receipt, exercise
or settlement of any option or other Award granted
hereunder.
SECTION 15. Effectiveness and Expiration of Plan. The
Plan shall be effective on the date the Board adopts the
Plan. All Awards, including any options, granted under this
Plan are subject to, and may not be exercised before, the
approval of this Plan by the stockholders prior to the first
anniversary date of the effective date of the Plan, by the
affirmative vote of the holders of a majority of the
outstanding shares of the Company present, or represented by
proxy, and entitled to vote thereat or by written consent in
accordance with the laws of the State of Delaware; provided
that if such approval by the stockholders of the Company is
not forthcoming, all options or other Awards previously
granted under this Plan shall be void. If the stockholders
of the Company fail to approve the Plan within twelve months
of the date the Board approved the Plan, the Plan shall
terminate and all options and other Awards previously
granted under the Plan shall become void and of no effect.
No option or other Award granted under this Plan shall have
a term of more than ten years from the date it is granted.
The Plan shall expire ten years after the effective date of
the Plan and thereafter no Awards shall be granted pursuant
to the Plan.
SECTION 16. Non-Exclusivity of the Plan. Neither the
adoption of the Plan by the Board nor the submission of the
Plan to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may
deem desirable, including without limitation, the granting
of restricted stock or stock options otherwise than under
the Plan, and such arrangements may be either generally
applicable or applicable only in specific cases.
SECTION l7. Governing Law. This Plan and any
agreements hereunder shall be interpreted and construed in
accordance with the laws of the State of Delaware and
applicable federal law.
Exhibit 10.25(a)
ATLANTIC COAST AIRLINES HOLDINGS, INC.
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement ("Option Agreement")
is between Atlantic Coast Airlines Holdings, Inc., a
Delaware Corporation (the "Company"), and the employee named
in Section 1 below (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Atlantic Coast Airlines
Holdings, Inc. 1995 Stock Incentive Plan, as amended (the
"Plan") for the purpose of encouraging ownership of common
stock, $.02 par value ("Common Stock"), of the Company by
eligible key employees and directors of the Company, of
providing increased incentive for such employees and
directors to render services and to exert maximum effort for
the business success of the Company, and of further
strengthening the identification of employees and directors
with the stockholders; and
WHEREAS, Section 422 of the Internal Revenue Code provides
that an employee shall not be taxed upon exercise of an
option that qualifies as an incentive stock option, provided
that the employee does not dispose of the shares acquired
upon exercise of such option until two years after the
option is granted to the employee and one year after the
option is exercised; and
WHEREAS, the Company, acting through the Compensation
Committee of its Board of Directors (the "Committee"), has
determined that its interests will be advanced
by the issuance to Optionee of an incentive stock option
under the Plan.
NOW, THEREFORE, for and in consideration of these premises
it is agreed as follows:
1. Identifying Provisions: As used in this Option
Agreement, the following terms shall have the following
respective meanings:
(a) Optionee: ____________________
(b) Date of Grant: ___________
(c) Effective Date: ___________
(d) Number of shares subject to Option Agreement: ______
(e) Exercise Price per share: $ _________
(f) Expiration Date: _________
2. Option. Subject to the terms and conditions contained
herein, the Company hereby grants to Optionee the right and
option ("Option") to purchase from the Company up to that
number of shares of Common Stock specified in Section 1(d)
of this Option Agreement, at a price per share equal to the
Exercise Price specified in Section 1(e) of this Option
Agreement. This Option is intended to qualify to the
maximum extent possible as an incentive stock option under
Section 422 of the Internal Revenue Code (the "Code"), and
therefore meets the following requirements: (i) the Exercise
Price is not less than the fair market value of the Common
Stock on the date when the Company completed the corporate
action constituting an offer of stock for sale to the
Optionee; (ii) the Option is not exercisable more than one
year after the employee ceases to be employed because of
death or a disability (as defined in Section 22(e)(3) of the
Code) or three months after the Optionee otherwise ceases to
be an employee of the Company or its parent or a subsidiary,
(iii) the Optionee is not a greater than ten percent
shareholder (or, if Optionee is, such further conditions
required under Code Section 422 have been satisfied), and
(iv) such option shall not be exercisable more than ten
years after the date on which such option is granted. The
Code further provides that option shares do not qualify for
incentive stock option treatment if and to the extent that
(i) the aggregate Exercise Price for shares that could be
purchased under the Option in the year the Option first
became exercisable as to such shares, plus (ii) the
aggregate exercise price for shares under any of the
Optionee's other concurrently or previously granted
incentive stock options that first became exercisable in
that same calendar year, exceeds $100,000. Therefore,
notwithstanding anything to the contrary herein, if and to
the extent that any shares are issued under a portion of
this Option that exceeds the forgoing $100,000 limitation,
such shares shall not be treated as issued under an
incentive stock option.
3. Option Period. The Option herein granted may not be
exercised or exercisable after the Expiration Date specified
in Section 1(f) of this Option Agreement. This Option shall
not be exercisable on the Date of Grant, but, subject to
such further terms and limitations set forth herein, on each
anniversary of the Date of Grant this Option shall become
exercisable to purchase, and shall vest with respect to, a
number of shares of Common Stock (rounded to the nearest
whole share) such that the aggregate number of shares of
Common Stock as to which this Option has become exercisable
shall equal the total number of shares subject to this
Option Agreement (as specified in Section 1(d)), multiplied
by the percentage set forth below with respect to the
specified anniversary of the Date of Grant:
Date Percentage of
Option Exercisable
On the first anniversary of the Date of Grant: 20%
On the second anniversary of the Date of Grant: 40%
On the third anniversary of the Date of Grant: 60%
On the fourth anniversary of the Date of the 80%
Grant:
On the fifth anniversary of the Date of the 100%
Grant:
4. Procedure for Exercise. The Option herein granted may
be exercised by written notice by Optionee to the Secretary
of the Company setting forth the number of shares of Common
Stock with respect to which the Option is to be exercised,
and specifying such further information regarding delivery
of such shares as the Secretary of the Company may
reasonably request. Payment shall be by means of cash, or a
cashier's check or bank draft, payable to the order of the
Company, by a commitment from a brokerage firm acceptable to
the Secretary of the Company to pay the aggregate Exercise
Price from proceeds of a sale of shares issuable on exercise
of the Option, or at the option of the Optionee, in Common
Stock theretofore owned by such Optionee for at least six
months (or a combination of cash and Common Stock). As
promptly as practicable after exercise of this Option, the
Company shall issue to Optionee the number of shares of
Common Stock with respect to which such Option has been so
exercised.
5. Termination of Employment. If Optionee's employment
with the Company is terminated prior to the Expiration Date
for any reason other than death or disability, the Option
shall immediately terminate to the extent it is not
exercisable on the date of Optionee's termination of
employment. To the extent that the Option is exercisable on
the date of Optionee's termination of employment for any
reason other than death or disability, the Option may be
exercised at any time on or before the earlier of (i) the
close of business on the thirtieth (30th) day after such
date of termination of employment, and (ii) the Expiration
Date.
6. Disability or Death. If Optionee's employment with the
Company is terminated by Optionee's disability or death, the
Option shall immediately terminate to the extent it is not
exercisable on such date. To the extent that the Option is
exercisable on the date of Optionee's termination of
employment on account of disability or death, the Option may
be exercised by Optionee, his executor or administrator, or
the person or persons to whom his rights under this Option
Agreement shall pass by will or by the laws of descent and
distribution, as the case may be, at any time on or before
the earlier of (i) the date that is one (1) year from the
date of Optionee's death or the date of the determination of
Optionee's disability, and (ii) the Expiration Date.
Optionee shall be deemed to be disabled if, in the opinion
of a physician selected by the Committee, he is incapable of
performing services for the Company by reason of any
medically determinable physical or mental impairment which
can be expected to result in death or to be of long,
continued and indefinite duration.
7. Transferability. This Option shall not be transferable
by Optionee otherwise than by Optionee's will or by the laws
of descent and distribution. During the lifetime of
Optionee, the Option shall be exercisable only by him. Any
heir or legatee of Optionee shall take rights under this
Option subject to the terms and conditions of this Option
Agreement. No such transfer of this Option Agreement to
heirs or legatees of Optionee shall be effective to bind the
Company unless the Company shall have been furnished with
written notice thereof and a copy of such evidence as the
Committee may deem necessary to establish the validity of
the transfer and the acceptance and assumption by the
transferee or transferees of the obligations of the Optionee
and of the other terms and conditions hereof.
8. No Rights as Stockholder. Optionee shall have no
rights as a stockholder with respect to any shares of Common
Stock covered by this Option Agreement until the date of
issuance of shares of Common Stock purchased pursuant to
this Option Agreement. Until such time, Optionee shall not
be entitled to dividends or to vote at meetings of the
stockholders of the Company. Except as provided in
paragraph 10 hereof, no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash or
securities or other property) paid or distributions or other
rights granted in respect of any share of Common Stock for
which the record date for such payment, distribution or
grant is prior to the date upon which the Optionee shall
have been issued share certificates, as provided
hereinabove.
9. Extraordinary Corporate Transactions. If the Company
experiences a "Fundamental Change" that is not a "Corporate
Change" (as those terms are defined in Section 6(i) of the
Plan), the Committee shall make appropriate and
proportionate adjustments in the number and type of shares
or other securities or cash or other property that may
thereafter be acquired upon the exercise of the Option;
provided, however, that any such adjustments in the Option
shall be made without changing the aggregate Exercise Price
for the then unexercised portion of the Option. If the
Company experiences a "Fundamental Change" that is a
"Corporate Change," the Option granted hereunder shall be
treated as specified by the Committee in its sole discretion
on or prior to the date that the Corporate Change occurs,
which treatment Optionee hereby consents to as a condition
to receipt of this Option, pursuant to Section 6(i) of the
Plan or, if the Committee has not otherwise provided on or
prior to the date that the Corporate Change occurs, the
Option granted hereunder shall become 100% exercisable as of
the date of such Corporate Change as provided in clause (1)
of Section 6(i) of the Plan.
10. Compliance With Securities Laws. Upon the acquisition
of any shares pursuant to the exercise of the Option herein
granted, Optionee (or any person acting under paragraph 7 of
this Agreement) shall enter into such written
representations, warranties and agreements as the Company
may reasonably request in order to comply with applicable
securities laws or with this Option Agreement.
11. Compliance With Laws. Notwithstanding any of the other
provisions hereof, Optionee agrees that he will not exercise
the Option granted hereby, and that the Company will not be
obligated to issue any shares pursuant to this Option
Agreement, if the exercise of the Option or the issuance of
such shares of Common Stock would constitute a violation by
the Optionee or by the Company of any provision of any law
or regulation of any governmental authority. The
certificates representing the shares of Common Stock
purchased by exercise of an Option will be stamped or
otherwise imprinted with legends in such form as the Company
or its counsel may require with respect to any applicable
restrictions on sale or transfer and the stock transfer
records of the Company will reflect stop-transfer
instructions with respect to such shares.
12. Withholding of Tax. If the Company becomes obligated
to withhold an amount on account of any tax imposed as a
result of the exercise of the Option or the disposition of
shares of Common Stock acquired by exercise of this Option,
including, without limitation, any federal, state, local or
other income tax, or any F.I.C.A., Medicare, state
disability insurance tax or other employment tax, the
Optionee shall be obligated, as of the first date on which
the Company is so obligated, to pay such amounts to the
Company in cash or check, or other property acceptable to
the Secretary of the Company in his sole discretion; and, if
the Optionee fails to make such payment, the Company is
authorized by the Optionee to withhold from any payments
then or thereafter payable to the Optionee, any such amounts
or the Company may otherwise refuse to issue or transfer any
shares otherwise required to be issued or transferred
pursuant to the terms hereof. The Committee may, in its
sole discretion, allow the Optionee to pay any such amounts
through the surrender of whole shares of Common Stock or by
having the Company withhold whole shares of Common Stock
otherwise issuable upon the exercise of this Option. Any
such shares surrendered or withheld shall be valued at their
market value, determined by such method as the Secretary of
the Company in his sole discretion shall determine, equal to
the sums required to be withheld as of the date on which the
amount of tax to be withheld is determined.
13. Resolution of Disputes. As a condition of the grant of
the Option hereby and of the ability to exercise the Option,
the Optionee and his heirs, successors and personal
representatives agree that any dispute or disagreement which
may arise hereunder shall be determined by the Committee in
its sole discretion and judgment, and that any such
determination and any interpretation by the Committee of the
terms of this Option Agreement shall be final and shall be
binding and conclusive, for all purposes, upon the Company,
Optionee, his heirs, successors and personal
representatives.
14. Notices. Every notice hereunder shall be in writing
and shall conclusively be deemed to be given only if given
by registered or certified mail. All notices of the
exercise of any Option hereunder shall be directed to
Atlantic Coast Airlines Holdings, Inc., 515-A Shaw Road,
Dulles, Virginia 20166, Attention: Secretary. Any notice
given by the Company to Optionee directed to him at his
address on file with the Company shall be effective to bind
him and any other person who shall have acquired rights
hereunder. The Company shall be under no obligation
whatsoever to advise Optionee of the existence, maturity or
termination of any of Optionee's rights hereunder and
Optionee shall be deemed to have familiarized himself with
all matters contained herein and in the Plan which may
affect any of Optionee's rights or privileges hereunder.
15. Construction and Interpretation. Whenever the term
"Optionee" is used herein under circumstances applicable to
any other person or persons to whom this award, in
accordance with the provisions of paragraph 7 hereof, may be
transferred, the word "Optionee" shall be deemed to include
such person or persons. References to the masculine gender
herein also include the feminine gender for all purposes.
This Option Agreement shall be administered, interpreted and
enforced under the laws of the State of Delaware.
16. Agreement Subject to Plan. This Option Agreement is
subject to the Plan (including any subsequent amendments
thereto). In the event of a conflict between any term or
provision contained herein and a term or provision of the
Plan, the applicable terms and provisions of the Plan will
govern and prevail. All definitions of words and terms
contained in the Plan shall be applicable to this Option
Agreement.
17. Employment Relationship. For purposes of this Option
Agreement, an employee shall be considered to be in the
employment of the Company as long as he remains an employee
of the Company or an Affiliate (as defined in the Plan) or
remains a director of the Company or of such an Affiliate.
Any questions as to whether and when there has been a
termination of such employment and the cause of such
termination shall be determined by the Committee, and its
determination shall be final. Nothing contained herein
shall be construed as conferring upon the Optionee the right
to continue in the employ of the Company, nor shall anything
contained herein be construed or interpreted to limit the
"employment at will" relationship between the Optionee and
the Company.
18. Binding Effect. This Option Agreement shall be binding
upon and inure to the benefit of any successors to the
Company.
IN WITNESS WHEREOF, the Option Agreement has been executed
as of the ____ day of ____________, _____.
Atlantic Coast Airlines
Holdings, Inc.
By:___________________________
____
Optionee
______________________________
____
Name
Exhibit 10.25(b)
ATLANTIC COAST AIRLINES HOLDINGS, INC.
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement ("Option Agreement")
is between Atlantic Coast Airlines Holdings, Inc., a
Delaware Corporation (the "Company"), and the employee named
in Section 1 below (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Atlantic Coast Airlines
Holdings, Inc. 1995 Stock Incentive Plan, as amended (the
"Plan") for the purpose of encouraging ownership of common
stock, $.02 par value ("Common Stock"), of the Company by
eligible key employees and directors of the Company, of
providing increased incentive for such employees and
directors to render services and to exert maximum effort for
the business success of the Company, and of further
strengthening the identification of employees and directors
with the stockholders; and
WHEREAS, Section 422 of the Internal Revenue Code provides
that an employee shall not be taxed upon exercise of an
option that qualifies as an incentive stock option, provided
that the employee does not dispose of the shares acquired
upon exercise of such option until two years after the
option is granted to the employee and one year after the
option is exercised; and
WHEREAS, the Company, acting through the Compensation
Committee of its Board of Directors (the "Committee"), has
determined that its interests will be advanced
by the issuance to Optionee of an incentive stock option
under the Plan.
NOW, THEREFORE, for and in consideration of these premises
it is agreed as follows:
1. Identifying Provisions: As used in this Option
Agreement, the following terms shall have the following
respective meanings:
(a) Optionee: ____________________
(b) Date of Grant: ___________
(c) Effective Date: ___________
(d) Number of shares subject to Option Agreement: ______
(e) Exercise Price per share: $ _________
(f) Expiration Date: _________
2. Option. Subject to the terms and conditions contained
herein, the Company hereby grants to Optionee the right and
option ("Option") to purchase from the Company up to that
number of shares of Common Stock specified in Section 1(d)
of this Option Agreement, at a price per share equal to the
Exercise Price specified in Section 1(e) of this Option
Agreement. This Option is intended to qualify to the
maximum extent possible as an incentive stock option under
Section 422 of the Internal Revenue Code (the "Code"), and
therefore meets the following requirements: (i) the Exercise
Price is not less than the fair market value of the Common
Stock on the date when the Company completed the corporate
action constituting an offer of stock for sale to the
Optionee; (ii) the Option is not exercisable more than one
year after the employee ceases to be employed because of
death or a disability (as defined in Section 22(e)(3) of the
Code) or three months after the Optionee otherwise ceases to
be an employee of the Company or its parent or a subsidiary,
(iii) the Optionee is not a greater than ten percent
shareholder (or, if Optionee is, such further conditions
required under Code Section 422 have been satisfied), and
(iv) such option shall not be exercisable more than ten
years after the date on which such option is granted. The
Code further provides that option shares do not qualify for
incentive stock option treatment if and to the extent that
(i) the aggregate Exercise Price for shares that could be
purchased under the Option in the year the Option first
became exercisable as to such shares, plus (ii) the
aggregate exercise price for shares under any of the
Optionee's other concurrently or previously granted
incentive stock options that first became exercisable in
that same calendar year, exceeds $100,000. Therefore,
notwithstanding anything to the contrary herein, if and to
the extent that any shares are issued under a portion of
this Option that exceeds the forgoing $100,000 limitation,
such shares shall not be treated as issued under an
incentive stock option.
3. Option Period. The Option herein granted may not be
exercised or exercisable after the Expiration Date specified
in Section 1(f) of this Option Agreement. This Option shall
not be exercisable on the Date of Grant, but, subject to
such further terms and limitations set forth herein, on each
anniversary of the Date of Grant this Option shall become
exercisable to purchase, and shall vest with respect to, a
number of shares of Common Stock (rounded to the nearest
whole share) such that the aggregate number of shares of
Common Stock as to which this Option has become exercisable
shall equal the total number of shares subject to this
Option Agreement (as specified in Section 1(d)), multiplied
by the percentage set forth below with respect to the
specified anniversary of the Date of Grant:
Date Percentage of
Option Exercisable
On the first anniversary of the Date of Grant: 20%
On the second anniversary of the Date of Grant: 40%
On the third anniversary of the Date of Grant: 60%
On the fourth anniversary of the Date of the 80%
Grant:
On the fifth anniversary of the Date of the 100%
Grant:
4. Procedure for Exercise. The Option herein granted may
be exercised by written notice by Optionee to the Secretary
of the Company setting forth the number of shares of Common
Stock with respect to which the Option is to be exercised,
and specifying such further information regarding delivery
of such shares as the Secretary of the Company may
reasonably request. Payment shall be by means of cash, or a
cashier's check or bank draft, payable to the order of the
Company, by a commitment from a brokerage firm acceptable to
the Secretary of the Company to pay the aggregate Exercise
Price from proceeds of a sale of shares issuable on exercise
of the Option, or at the option of the Optionee, in Common
Stock theretofore owned by such Optionee for at least six
months (or a combination of cash and Common Stock). As
promptly as practicable after exercise of this Option, the
Company shall issue to Optionee the number of shares of
Common Stock with respect to which such Option has been so
exercised.
5. Termination of Employment. If Optionee's employment
with the Company is terminated prior to the Expiration Date
for any reason other than death or disability, the Option
shall immediately terminate to the extent it is not
exercisable on the date of Optionee's termination of
employment. To the extent that the Option is exercisable on
the date of Optionee's termination of employment for any
reason other than death or disability, the Option may be
exercised at any time on or before the earlier of (i) the
close of business on the thirtieth (30th) day after such
date of termination of employment, and (ii) the Expiration
Date.
6. Disability or Death. If Optionee's employment with the
Company is terminated by Optionee's disability or death, the
Option shall immediately terminate to the extent it is not
exercisable on such date. To the extent that the Option is
exercisable on the date of Optionee's termination of
employment on account of disability or death, the Option may
be exercised by Optionee, his executor or administrator, or
the person or persons to whom his rights under this Option
Agreement shall pass by will or by the laws of descent and
distribution, as the case may be, at any time on or before
the earlier of (i) the date that is one (1) year from the
date of Optionee's death or the date of the determination of
Optionee's disability, and (ii) the Expiration Date.
Optionee shall be deemed to be disabled if, in the opinion
of a physician selected by the Committee, he is incapable of
performing services for the Company by reason of any
medically determinable physical or mental impairment which
can be expected to result in death or to be of long,
continued and indefinite duration.
7. Transferability. This Option shall not be transferable
by Optionee otherwise than by Optionee's will or by the laws
of descent and distribution. During the lifetime of
Optionee, the Option shall be exercisable only by him. Any
heir or legatee of Optionee shall take rights under this
Option subject to the terms and conditions of this Option
Agreement. No such transfer of this Option Agreement to
heirs or legatees of Optionee shall be effective to bind the
Company unless the Company shall have been furnished with
written notice thereof and a copy of such evidence as the
Committee may deem necessary to establish the validity of
the transfer and the acceptance and assumption by the
transferee or transferees of the obligations of the Optionee
and of the other terms and conditions hereof.
8. No Rights as Stockholder. Optionee shall have no
rights as a stockholder with respect to any shares of Common
Stock covered by this Option Agreement until the date of
issuance of shares of Common Stock purchased pursuant to
this Option Agreement. Until such time, Optionee shall not
be entitled to dividends or to vote at meetings of the
stockholders of the Company. Except as provided in
paragraph 10 hereof, no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash or
securities or other property) paid or distributions or other
rights granted in respect of any share of Common Stock for
which the record date for such payment, distribution or
grant is prior to the date upon which the Optionee shall
have been issued share certificates, as provided
hereinabove.
9. Extraordinary Corporate Transactions.
A. If the Company experiences a "Fundamental
Change" (as that term is defined in Section 6(i) of the
Plan), the Committee may make appropriate and proportionate
adjustments in the number and type of shares or other
securities or cash or other property that may thereafter be
acquired upon the exercise of the Option; provided, however,
that any such adjustments in the Option shall be made
without changing the aggregate Exercise Price for the then
unexercised portion of the Option.
B. Acceleration of Option upon a Change in
Control. If the Company experiences a Corporate Change, the
exercisability and vesting of this Option shall accelerate
as of the date of such Corporate Change. The Compensation
Committee of the Company's Board of Directors (the
"Committee") shall provide that if a Corporate Change
occurs, then effective as of a date selected by the
Committee, the Committee (which for purposes of the
Corporate Changes described in clauses (iii) and (v) of the
definition of Corporate Change below shall be the Committee
as constituted prior to the occurrence of such Corporate
Change) acting in its sole discretion without the consent or
approval of Optionee, will effect one or more of the
following alternatives or combination of alternatives with
respect to this Option (which alternatives may be
conditional on the occurrence of such of the Corporate
Change specified in clause (i) through (v) of the definition
of Corporate Change below which gives rise to the Corporate
Change): (1) in the case of a Corporate Change specified in
clauses (i), (ii) or (iv) of the definition thereof, provide
that the Option (including any portion exercisable pursuant
to the first sentence of this Paragraph 9.A.) may be
exercised in full for a limited period of time on or before
a specified date (which will permit Optionee to participate
with the Common Stock received upon exercise of such option
in the event of a Corporate Change specified in clauses (i),
(ii) or (iv) of the definition of Corporate Change below, as
the case may be) fixed by the Committee, after which
specified date the Option and all rights of Optionee
hereunder shall terminate, (2) provide that the Option
(including any portion exercisable pursuant to the first
sentence of this Paragraph 9.A.) may be exercised for the
Options then remaining term, or (3) require the mandatory
surrender to the Company of this Option (including any
portion exercisable pursuant to the first sentence of this
Paragraph 9.A.) as of a date, before or not later than sixty
days after such Corporate Change, specified by the
Committee, and in such event the Committee shall thereupon
cancel such Options and the Company shall pay to Optionee an
amount of cash equal to the excess of the fair market value
of the aggregate shares subject to such Option over the
aggregate option price of such shares; provided, however,
the Committee shall not select an alternative (unless
consented to by Optionee) that, if Optionee exercised
Optionee's accelerated Options pursuant to alternative 1 or
2 and participated in the transaction specified in clause
(i), (ii) or (iv) of the definition of Corporate Change
below or received cash pursuant to alternative 3, would
result in Optionee's owing any money by virtue of operation
of Section 16(b) of the Exchange Act. If all such
alternatives have such a result, the Committee shall take
such action, which is hereby authorized, to put Optionee in
as close to the same position as Optionee would have been in
had alternative 1, 2 or 3 been selected but without
resulting in any payment by Optionee pursuant to
Section 16(b) of the Exchange Act. Notwithstanding the
foregoing, with the consent of Optionee, the Committee may
in lieu of the foregoing make such provision with respect of
any Corporate Change as it deems appropriate.
C. Definitions. For purposes of this Agreement
"Corporate Change" shall each mean (i) any merger or
consolidation in which the Company shall not be the
surviving entity (or survives only as a subsidiary of
another entity, unless the stockholders of Company
immediately before such merger or consolidation own,
directly or indirectly immediately following such merger or
consolidation, substantially all of the combined voting
power of the surviving entity in substantially the same
proportion as their ownership immediately before such merger
or consolidation, (ii) the sale of all or substantially all
of the Company's assets to any other person or entity (other
than a wholly-owned subsidiary), (iii) the acquisition of
beneficial ownership or control of (including, without
limitation, power to vote) more than 50% of the outstanding
shares of Common Stock by any person or entity (including a
"group" as defined by or under Section 13(d)(3) of the
Exchange Act), (iv) the dissolution or liquidation of the
Company, (v) a contested election of directors, as a result
of which or in connection with which the persons who were
directors of the Company before such election or their
nominees cease to constitute a majority of the Board, or
(vi) any other event specified by the Committee, regardless
of whether at the time an Option is granted or thereafter.
10. Compliance With Securities Laws. Upon the acquisition
of any shares pursuant to the exercise of the Option herein
granted, Optionee (or any person acting under paragraph 7 of
this Agreement) shall enter into such written
representations, warranties and agreements as the Company
may reasonably request in order to comply with applicable
securities laws or with this Option Agreement.
11. Compliance With Laws. Notwithstanding any of the other
provisions hereof, Optionee agrees that he will not exercise
the Option granted hereby, and that the Company will not be
obligated to issue any shares pursuant to this Option
Agreement, if the exercise of the Option or the issuance of
such shares of Common Stock would constitute a violation by
the Optionee or by the Company of any provision of any law
or regulation of any governmental authority. The
certificates representing the shares of Common Stock
purchased by exercise of an Option will be stamped or
otherwise imprinted with legends in such form as the Company
or its counsel may require with respect to any applicable
restrictions on sale or transfer and the stock transfer
records of the Company will reflect stop-transfer
instructions with respect to such shares.
12. Withholding of Tax. If the Company becomes obligated
to withhold an amount on account of any tax imposed as a
result of the exercise of the Option or the disposition of
shares of Common Stock acquired by exercise of this Option,
including, without limitation, any federal, state, local or
other income tax, or any F.I.C.A., Medicare, state
disability insurance tax or other employment tax, the
Optionee shall be obligated, as of the first date on which
the Company is so obligated, to pay such amounts to the
Company in cash or check, or other property acceptable to
the Secretary of the Company in his sole discretion; and, if
the Optionee fails to make such payment, the Company is
authorized by the Optionee to withhold from any payments
then or thereafter payable to the Optionee, any such amounts
or the Company may otherwise refuse to issue or transfer any
shares otherwise required to be issued or transferred
pursuant to the terms hereof. The Committee may, in its
sole discretion, allow the Optionee to pay any such amounts
through the surrender of whole shares of Common Stock or by
having the Company withhold whole shares of Common Stock
otherwise issuable upon the exercise of this Option. Any
such shares surrendered or withheld shall be valued at their
market value, determined by such method as the Secretary of
the Company in his sole discretion shall determine, equal to
the sums required to be withheld as of the date on which the
amount of tax to be withheld is determined.
13. Resolution of Disputes. As a condition of the grant of
the Option hereby and of the ability to exercise the Option,
the Optionee and his heirs, successors and personal
representatives agree that any dispute or disagreement which
may arise hereunder shall be determined by the Committee in
its sole discretion and judgment, and that any such
determination and any interpretation by the Committee of the
terms of this Option Agreement shall be final and shall be
binding and conclusive, for all purposes, upon the Company,
Optionee, his heirs, successors and personal
representatives.
14. Notices. Every notice hereunder shall be in writing
and shall conclusively be deemed to be given only if given
by registered or certified mail. All notices of the
exercise of any Option hereunder shall be directed to
Atlantic Coast Airlines Holdings, Inc., 515-A Shaw Road,
Dulles, Virginia 20166, Attention: Secretary. Any notice
given by the Company to Optionee directed to him at his
address on file with the Company shall be effective to bind
him and any other person who shall have acquired rights
hereunder. The Company shall be under no obligation
whatsoever to advise Optionee of the existence, maturity or
termination of any of Optionee's rights hereunder and
Optionee shall be deemed to have familiarized himself with
all matters contained herein and in the Plan which may
affect any of Optionee's rights or privileges hereunder.
15. Construction and Interpretation. Whenever the term
"Optionee" is used herein under circumstances applicable to
any other person or persons to whom this award, in
accordance with the provisions of paragraph 7 hereof, may be
transferred, the word "Optionee" shall be deemed to include
such person or persons. References to the masculine gender
herein also include the feminine gender for all purposes.
This Option Agreement shall be administered, interpreted and
enforced under the laws of the State of Delaware.
16. Agreement Subject to Plan. This Option Agreement is
subject to the Plan (including any subsequent amendments
thereto). In the event of a conflict between any term or
provision contained herein and a term or provision of the
Plan, the applicable terms and provisions of the Plan will
govern and prevail. All definitions of words and terms
contained in the Plan shall be applicable to this Option
Agreement.
17. Employment Relationship. For purposes of this Option
Agreement, an employee shall be considered to be in the
employment of the Company as long as he remains an employee
of the Company or an Affiliate (as defined in the Plan) or
remains a director of the Company or of such an Affiliate.
Any questions as to whether and when there has been a
termination of such employment and the cause of such
termination shall be determined by the Committee, and its
determination shall be final. Nothing contained herein
shall be construed as conferring upon the Optionee the right
to continue in the employ of the Company, nor shall anything
contained herein be construed or interpreted to limit the
"employment at will" relationship between the Optionee and
the Company.
18. Binding Effect. This Option Agreement shall be binding
upon and inure to the benefit of any successors to the
Company.
IN WITNESS WHEREOF, the Option Agreement has been executed
as of the ____ day of ____________, _____.
Atlantic Coast Airlines
Holdings, Inc.
By:___________________________
____
Optionee
______________________________
____
Name
Exhibit 10.25(c)
ATLANTIC COAST AIRLINES HOLDINGS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement ("Option
Agreement") is between Atlantic Coast Airlines Holdings,
Inc., a Delaware Corporation (the "Company"), and the
employee named in Section 1 below (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Atlantic Coast Airlines
Holdings, Inc. 1995 Stock Incentive Plan, as amended (the
"Plan") for the purpose of encouraging ownership of common
stock, $.02 par value ("Common Stock"), of the Company by
eligible key employees and directors of the Company, of
providing increased incentive for such employees and
directors to render services and to exert maximum effort for
the business success of the Company, and of further
strengthening the identification of employees and directors
with the stockholders; and
WHEREAS, the Company, acting through the Compensation
Committee of its Board of Directors (the "Committee"), has
determined that its interests will be advanced by the
issuance to Optionee of a nonqualified stock option under
the Plan.
NOW, THEREFORE, for and in consideration of these premises
it is agreed as follows:
1. Identifying Provisions: As used in this Option
Agreement, the following terms shall have the following
respective meanings:
(a) Optionee: ______________
(b) Date of Grant: ___________
(c) Effective Date: ____________
(d) Number of shares subject to Option Agreement: ______
(e) Exercise Price per share: $ _____
(f) Expiration Date: ___________
2. Option. Subject to the terms and conditions contained
herein, the Company hereby grants to Optionee the right and
option ("Option") to purchase from the Company up to that
number of shares of Common Stock specified in Section 1(d)
of this Option Agreement, at a price per share equal to the
Exercise Price specified in Section 1(e) of this Option
Agreement. This Option is not intended to qualify as an
incentive stock option under Section 422 of the Internal
Revenue Code.
3. Option Period. The Option herein granted may not be
exercised or exercisable after the Expiration Date specified
in Section 1(f) of this Option Agreement. This Option shall
not be exercisable on the Date of Grant, but, subject to
such further terms and limitations set forth herein, on each
anniversary of the Date of Grant this Option shall become
exercisable to purchase, and shall vest with respect to, a
number of shares of Common Stock (rounded to the nearest
whole share) such that the aggregate number of shares of
Common Stock as to which this Option has become exercisable
shall equal the total number of shares subject to this
Option Agreement (as specified in Section 1(d)), multiplied
by the percentage set forth below with respect to the
specified anniversary of the Date of Grant:
Date Percentage of
Option Exercisable
On the first anniversary of the Date of Grant: 20%
On the second anniversary of the Date of Grant: 40%
On the third anniversary of the Date of Grant: 60%
On the fourth anniversary of the Date of the 80%
Grant:
On the fifth anniversary of the Date of the 100%
Grant:
4. Procedure for Exercise. The Option herein granted may
be exercised by written notice by Optionee to the Secretary
of the Company setting forth the number of shares of Common
Stock with respect to which the Option is to be exercised,
and specifying such further information regarding delivery
of such shares as the Secretary of the Company may
reasonably request. Payment shall be by means of cash, or a
cashier's check or bank draft, payable to the order of the
Company, by a commitment from a brokerage firm acceptable to
the Secretary of the Company to pay the aggregate Exercise
Price from proceeds of a sale of shares issuable on exercise
of the Option, or at the option of the Optionee, in Common
Stock theretofore owned by such Optionee for at least six
months (or a combination of cash and Common Stock). As
promptly as practicable after exercise of this Option, the
Company shall issue to Optionee the number of shares of
Common Stock with respect to which such Option has been so
exercised.
5. Termination of Employment. If Optionee's employment
with the Company is terminated prior to the Expiration Date
for any reason other than death or disability, the Option
shall immediately terminate to the extent it is not
exercisable on the date of Optionee's termination of
employment. To the extent that the Option is exercisable on
the date of Optionee's termination of employment for any
reason other than death or disability, the Option may be
exercised at any time on or before the earlier of (i) the
close of business on the thirtieth (30th) day after such
date of termination of employment, and (ii) the Expiration
Date.
6. Disability or Death. If Optionee's employment with the
Company is terminated by Optionee's disability or death, the
Option shall immediately terminate to the extent it is not
exercisable on such date. To the extent that the Option is
exercisable on the date of Optionee's termination of
employment on account of disability or death, the Option may
be exercised by Optionee, his executor or administrator, or
the person or persons to whom his rights under this Option
Agreement shall pass by will or by the laws of descent and
distribution, as the case may be, at any time on or before
the earlier of (i) the date that is one (1) year from the
date of Optionee's death or the date of the determination of
Optionee's disability, and (ii) the Expiration Date.
Optionee shall be deemed to be disabled if, in the opinion
of a physician selected by the Committee, he is incapable of
performing services for the Company by reason of any
medically determinable physical or mental impairment which
can be expected to result in death or to be of long,
continued and indefinite duration.
7. Transferability. This Option shall not be transferable
by Optionee otherwise than by Optionee's will or by the laws
of descent and distribution. During the lifetime of
Optionee, the Option shall be exercisable only by him. Any
heir or legatee of Optionee shall take rights under this
Option subject to the terms and conditions of this Option
Agreement. No such transfer of this Option Agreement to
heirs or legatees of Optionee shall be effective to bind the
Company unless the Company shall have been furnished with
written notice thereof and a copy of such evidence as the
Committee may deem necessary to establish the validity of
the transfer and the acceptance and assumption by the
transferee or transferees of the obligations of the Optionee
and of the other terms and conditions hereof.
8. No Rights as Stockholder. Optionee shall have no
rights as a stockholder with respect to any shares of Common
Stock covered by this Option Agreement until the date of
issuance of shares of Common Stock purchased pursuant to
this Option Agreement. Until such time, Optionee shall not
be entitled to dividends or to vote at meetings of the
stockholders of the Company. Except as provided in
paragraph 10 hereof, no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash or
securities or other property) paid or distributions or other
rights granted in respect of any share of Common Stock for
which the record date for such payment, distribution or
grant is prior to the date upon which the Optionee shall
have been issued share certificates, as provided
hereinabove.
9. Extraordinary Corporate Transactions. If the Company
experiences a "Fundamental Change" that is not a "Corporate
Change" (as those terms are defined in Section 6(i) of the
Plan), the Committee shall make appropriate and
proportionate adjustments in the number and type of shares
or other securities or cash or other property that may
thereafter be acquired upon the exercise of the Option;
provided, however, that any such adjustments in the Option
shall be made without changing the aggregate Exercise Price
for the then unexercised portion of the Option. If the
Company experiences a "Fundamental Change" that is a
"Corporate Change," the Option granted hereunder shall be
treated as specified by the Committee in its sole discretion
on or prior to the date that the Corporate Change occurs,
which treatment Optionee hereby consents to as a condition
to receipt of this Option, or, if the Committee has not
otherwise provided on or prior to the date that the
Corporate Change occurs, the Option granted hereunder shall
become 100% exercisable as of the date of such Corporate
Change as provided in clause (1) of Section 6(i) of the
Plan.
10. Compliance With Securities Laws. Upon the acquisition
of any shares pursuant to the exercise of the Option herein
granted, Optionee (or any person acting under paragraph 7 of
this Agreement) shall enter into such written
representations, warranties and agreements as the Company
may reasonably request in order to comply with applicable
securities laws or with this Option Agreement.
11. Compliance With Laws. Notwithstanding any of the other
provisions hereof, Optionee agrees that he will not exercise
the Option granted hereby, and that the Company will not be
obligated to issue any shares pursuant to this Option
Agreement, if the exercise of the Option or the issuance of
such shares of Common Stock would constitute a violation by
the Optionee or by the Company of any provision of any law
or regulation of any governmental authority. The
certificates representing the shares of Common Stock
purchased by exercise of an Option will be stamped or
otherwise imprinted with legends in such form as the Company
or its counsel may require with respect to any applicable
restrictions on sale or transfer and the stock transfer
records of the Company will reflect stop-transfer
instructions with respect to such shares.
12. Withholding of Tax. If the Company becomes obligated
to withhold an amount on account of any tax imposed as a
result of the exercise of the Option, including, without
limitation, any federal, state, local or other income tax,
or any F.I.C.A., Medicare, state disability insurance tax or
other employment tax, the Optionee shall be obligated, as of
the first date on which the Company is so obligated, to pay
such amounts to the Company in cash or check, or other
property acceptable to the Secretary of the Company in his
sole discretion; and, if the Optionee fails to make such
payment, the Company is authorized by the Optionee to
withhold from any payments then or thereafter payable to the
Optionee, any such amounts or the Company may otherwise
refuse to issue or transfer any shares otherwise required to
be issued or transferred pursuant to the terms hereof. The
Committee may, in its sole discretion, allow the Optionee to
pay any such amounts through the surrender of whole shares
of Common Stock or by having the Company withhold whole
shares of Common Stock otherwise issuable upon the exercise
of this Option. Any such shares surrendered or withheld
shall be valued at their market value, determined by such
method as the Secretary of the Company in his sole
discretion shall determine, equal to the sums required to be
withheld as of the date on which the amount of tax to be
withheld is determined.
13. Resolution of Disputes. As a condition of the grant of
the Option hereby and of the ability to exercise the Option,
the Optionee and his heirs, successors and personal
representatives agree that any dispute or disagreement which
may arise hereunder shall be determined by the Committee in
its sole discretion and judgment, and that any such
determination and any interpretation by the Committee of the
terms of this Option Agreement shall be final and shall be
binding and conclusive, for all purposes, upon the Company,
Optionee, his heirs, successors and personal
representatives.
14. Notices. Every notice hereunder shall be in writing
and shall conclusively be deemed to be given only if given
by registered or certified mail. All notices of the
exercise of any Option hereunder shall be directed to
Atlantic Coast Airlines Holdings, Inc., 515-A Shaw Road,
Dulles, Virginia 20166, Attention: Secretary. Any notice
given by the Company to Optionee directed to him at his
address on file with the Company shall be effective to bind
him and any other person who shall have acquired rights
hereunder. The Company shall be under no obligation
whatsoever to advise Optionee of the existence, maturity or
termination of any of Optionee's rights hereunder and
Optionee shall be deemed to have familiarized himself with
all matters contained herein and in the Plan which may
affect any of Optionee's rights or privileges hereunder.
15. Construction and Interpretation. Whenever the term
"Optionee" is used herein under circumstances applicable to
any other person or persons to whom this award, in
accordance with the provisions of paragraph 7 hereof, may be
transferred, the word "Optionee" shall be deemed to include
such person or persons. References to the masculine gender
herein also include the feminine gender for all purposes.
This Option Agreement shall be administered, interpreted and
enforced under the laws of the State of Delaware.
16. Agreement Subject to Plan. This Option Agreement is
subject to the Plan (including any subsequent amendments
thereto). In the event of a conflict between any term or
provision contained herein and a term or provision of the
Plan, the applicable terms and provisions of the Plan will
govern and prevail. All definitions of words and terms
contained in the Plan shall be applicable to this Option
Agreement.
17. Employment Relationship. For purposes of this Option
Agreement, an employee shall be considered to be in the
employment of the Company as long as he remains an employee
of the Company or an Affiliate (as defined in the Plan) or
remains a director of the Company or of such an Affiliate.
Any questions as to whether and when there has been a
termination of such employment and the cause of such
termination shall be determined by the Committee, and its
determination shall be final. Nothing contained herein
shall be construed as conferring upon the Optionee the right
to continue in the employ of the Company, nor shall anything
contained herein be construed or interpreted to limit the
"employment at will" relationship between the Optionee and
the Company.
18. Binding Effect. This Option Agreement shall be binding
upon and inure to the benefit of any successors to the
Company.
IN WITNESS WHEREOF, the Option Agreement has been executed
as of the ____ day of _________ _____.
Atlantic Coast Airlines
Holdings, Inc.
By:___________________________
____
Optionee
______________________________
____
Name
Exhibit 10.25(d)
ATLANTIC COAST AIRLINES HOLDINGS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement ("Option
Agreement") is between Atlantic Coast Airlines Holdings,
Inc., a Delaware Corporation (the "Company"), and the
employee named in Section 1 below (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Atlantic Coast Airlines
Holdings, Inc. 1995 Stock Incentive Plan, as amended (the
"Plan") for the purpose of encouraging ownership of common
stock, $.02 par value ("Common Stock"), of the Company by
eligible key employees and directors of the Company, of
providing increased incentive for such employees and
directors to render services and to exert maximum effort for
the business success of the Company, and of further
strengthening the identification of employees and directors
with the stockholders; and
WHEREAS, the Company, acting through the Compensation
Committee of its Board of Directors (the "Committee"), has
determined that its interests will be advanced by the
issuance to Optionee of a nonqualified stock option under
the Plan.
NOW, THEREFORE, for and in consideration of these premises
it is agreed as follows:
1. Identifying Provisions: As used in this Option
Agreement, the following terms shall have the following
respective meanings:
(a) Optionee: ______________
(b) Date of Grant: ___________
(c) Effective Date: ____________
(d) Number of shares subject to Option Agreement: ______
(e) Exercise Price per share: $ _____
(f) Expiration Date: ___________
2. Option. Subject to the terms and conditions contained
herein, the Company hereby grants to Optionee the right and
option ("Option") to purchase from the Company up to that
number of shares of Common Stock specified in Section 1(c)
of this Option Agreement, at a price per share equal to the
Exercise Price specified in Section 1(d) of this Option
Agreement. This Option is not intended to qualify as an
incentive stock option under Section 422 of the Internal
Revenue Code.
3. Option Period. The Option herein granted may not be
exercised or exercisable after the Expiration Date specified
in Section 1(e) of this Option Agreement. This Option shall
not be exercisable on the Date of Grant, but, subject to
such further terms and limitations set forth herein, on each
anniversary of the Date of Grant this Option shall become
exercisable to purchase, and shall vest with respect to, a
number of shares of Common Stock (rounded to the nearest
whole share) such that the aggregate number of shares of
Common Stock as to which this Option has become exercisable
shall equal the total number of shares subject to this
Option Agreement (as specified in Section 1(c)), multiplied
by the percentage set forth below with respect to the
specified anniversary of the Date of Grant:
Date Percentage of
Option Exercisable
On the first anniversary of the Date of Grant: 20%
On the second anniversary of the Date of Grant: 40%
On the third anniversary of the Date of Grant: 60%
On the fourth anniversary of the Date of the 80%
Grant:
On the fifth anniversary of the Date of the 100%
Grant:
4. Procedure for Exercise. The Option herein granted may
be exercised by written notice by Optionee to the Secretary
of the Company setting forth the number of shares of Common
Stock with respect to which the Option is to be exercised,
and specifying such further information regarding delivery
of such shares as the Secretary of the Company may
reasonably request. Payment shall be by means of cash, or a
cashier's check or bank draft, payable to the order of the
Company, by a commitment from a brokerage firm acceptable to
the Secretary of the Company to pay the aggregate Exercise
Price from proceeds of a sale of shares issuable on exercise
of the Option, or at the option of the Optionee, in Common
Stock theretofore owned by such Optionee for at least six
months (or a combination of cash and Common Stock). As
promptly as practicable after exercise of this Option, the
Company shall issue to Optionee the number of shares of
Common Stock with respect to which such Option has been so
exercised.
5. Termination of Employment. If Optionee's employment
with the Company is terminated prior to the Expiration Date
for any reason other than death or disability, the Option
shall immediately terminate to the extent it is not
exercisable on the date of Optionee's termination of
employment. To the extent that the Option is exercisable on
the date of Optionee's termination of employment for any
reason other than death or disability, the Option may be
exercised at any time on or before the earlier of (i) the
close of business on the thirtieth (30th) day after such
date of termination of employment, and (ii) the Expiration
Date.
6. Disability or Death. If Optionee's employment with the
Company is terminated by Optionee's disability or death, the
Option shall immediately terminate to the extent it is not
exercisable on such date. To the extent that the Option is
exercisable on the date of Optionee's termination of
employment on account of disability or death, the Option may
be exercised by Optionee, his executor or administrator, or
the person or persons to whom his rights under this Option
Agreement shall pass by will or by the laws of descent and
distribution, as the case may be, at any time on or before
the earlier of (i) the date that is one (1) year from the
date of Optionee's death or the date of the determination of
Optionee's disability, and (ii) the Expiration Date.
Optionee shall be deemed to be disabled if, in the opinion
of a physician selected by the Committee, he is incapable of
performing services for the Company by reason of any
medically determinable physical or mental impairment which
can be expected to result in death or to be of long,
continued and indefinite duration.
7. Transferability. This Option shall not be transferable
by Optionee otherwise than by Optionee's will or by the laws
of descent and distribution. During the lifetime of
Optionee, the Option shall be exercisable only by him. Any
heir or legatee of Optionee shall take rights under this
Option subject to the terms and conditions of this Option
Agreement. No such transfer of this Option Agreement to
heirs or legatees of Optionee shall be effective to bind the
Company unless the Company shall have been furnished with
written notice thereof and a copy of such evidence as the
Committee may deem necessary to establish the validity of
the transfer and the acceptance and assumption by the
transferee or transferees of the obligations of the Optionee
and of the other terms and conditions hereof.
8. No Rights as Stockholder. Optionee shall have no
rights as a stockholder with respect to any shares of Common
Stock covered by this Option Agreement until the date of
issuance of shares of Common Stock purchased pursuant to
this Option Agreement. Until such time, Optionee shall not
be entitled to dividends or to vote at meetings of the
stockholders of the Company. Except as provided in
paragraph 10 hereof, no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash or
securities or other property) paid or distributions or other
rights granted in respect of any share of Common Stock for
which the record date for such payment, distribution or
grant is prior to the date upon which the Optionee shall
have been issued share certificates, as provided
hereinabove.
9. Extraordinary Corporate Transactions.
A. If the Company experiences a "Fundamental
Change" (as that term is defined in Section 6(i) of the
Plan), the Committee may make appropriate and proportionate
adjustments in the number and type of shares or other
securities or cash or other property that may thereafter be
acquired upon the exercise of the Option; provided, however,
that any such adjustments in the Option shall be made
without changing the aggregate Exercise Price for the then
unexercised portion of the Option.
B. Acceleration of Option upon a Change in
Control. If the Company experiences a Corporate Change, the
exercisability and vesting of this Option shall accelerate
as of the date of such Corporate Change. The Compensation
Committee of the Company's Board of Directors (the
"Committee") shall provide that if a Corporate Change
occurs, then effective as of a date selected by the
Committee, the Committee (which for purposes of the
Corporate Changes described in clauses (iii) and (v) of the
definition of Corporate Change below shall be the Committee
as constituted prior to the occurrence of such Corporate
Change) acting in its sole discretion without the consent or
approval of Optionee, will effect one or more of the
following alternatives or combination of alternatives with
respect to this Option (which alternatives may be
conditional on the occurrence of such of the Corporate
Change specified in clause (i) through (v) of the definition
of Corporate Change below which gives rise to the Corporate
Change): (1) in the case of a Corporate Change specified in
clauses (i), (ii) or (iv) of the definition thereof, provide
that the Option (including any portion exercisable pursuant
to the first sentence of this Paragraph 9.A.) may be
exercised in full for a limited period of time on or before
a specified date (which will permit Optionee to participate
with the Common Stock received upon exercise of such option
in the event of a Corporate Change specified in clauses (i),
(ii) or (iv) of the definition of Corporate Change below, as
the case may be) fixed by the Committee, after which
specified date the Option and all rights of Optionee
hereunder shall terminate, (2) provide that the Option
(including any portion exercisable pursuant to the first
sentence of this Paragraph 9.A.) may be exercised for the
Options then remaining term, or (3) require the mandatory
surrender to the Company of this Option (including any
portion exercisable pursuant to the first sentence of this
Paragraph 9.A.) as of a date, before or not later than sixty
days after such Corporate Change, specified by the
Committee, and in such event the Committee shall thereupon
cancel such Options and the Company shall pay to Optionee an
amount of cash equal to the excess of the fair market value
of the aggregate shares subject to such Option over the
aggregate option price of such shares; provided, however,
the Committee shall not select an alternative (unless
consented to by Optionee) that, if Optionee exercised
Optionee's accelerated Options pursuant to alternative 1 or
2 and participated in the transaction specified in clause
(i), (ii) or (iv) of the definition of Corporate Change
below or received cash pursuant to alternative 3, would
result in Optionee's owing any money by virtue of operation
of Section 16(b) of the Exchange Act. If all such
alternatives have such a result, the Committee shall take
such action, which is hereby authorized, to put Optionee in
as close to the same position as Optionee would have been in
had alternative 1, 2 or 3 been selected but without
resulting in any payment by Optionee pursuant to
Section 16(b) of the Exchange Act. Notwithstanding the
foregoing, with the consent of Optionee, the Committee may
in lieu of the foregoing make such provision with respect of
any Corporate Change as it deems appropriate.
C. Definitions. For purposes of this Agreement
"Corporate Change" shall each mean (i) any merger or
consolidation in which the Company shall not be the
surviving entity (or survives only as a subsidiary of
another entity, unless the stockholders of Company
immediately before such merger or consolidation own,
directly or indirectly immediately following such merger or
consolidation, substantially all of the combined voting
power of the surviving entity in substantially the same
proportion as their ownership immediately before such merger
or consolidation, (ii) the sale of all or substantially all
of the Company's assets to any other person or entity (other
than a wholly-owned subsidiary), (iii) the acquisition of
beneficial ownership or control of (including, without
limitation, power to vote) more than 50% of the outstanding
shares of Common Stock by any person or entity (including a
"group" as defined by or under Section 13(d)(3) of the
Exchange Act), (iv) the dissolution or liquidation of the
Company, (v) a contested election of directors, as a result
of which or in connection with which the persons who were
directors of the Company before such election or their
nominees cease to constitute a majority of the Board, or
(vi) any other event specified by the Committee, regardless
of whether at the time an Option is granted or thereafter.
10. Compliance With Securities Laws. Upon the acquisition
of any shares pursuant to the exercise of the Option herein
granted, Optionee (or any person acting under paragraph 7 of
this Agreement) shall enter into such written
representations, warranties and agreements as the Company
may reasonably request in order to comply with applicable
securities laws or with this Option Agreement.
11. Compliance With Laws. Notwithstanding any of the other
provisions hereof, Optionee agrees that he will not exercise
the Option granted hereby, and that the Company will not be
obligated to issue any shares pursuant to this Option
Agreement, if the exercise of the Option or the issuance of
such shares of Common Stock would constitute a violation by
the Optionee or by the Company of any provision of any law
or regulation of any governmental authority. The
certificates representing the shares of Common Stock
purchased by exercise of an Option will be stamped or
otherwise imprinted with legends in such form as the Company
or its counsel may require with respect to any applicable
restrictions on sale or transfer and the stock transfer
records of the Company will reflect stop-transfer
instructions with respect to such shares.
12. Withholding of Tax. If the Company becomes obligated
to withhold an amount on account of any tax imposed as a
result of the exercise of the Option, including, without
limitation, any federal, state, local or other income tax,
or any F.I.C.A., Medicare, state disability insurance tax or
other employment tax, the Optionee shall be obligated, as of
the first date on which the Company is so obligated, to pay
such amounts to the Company in cash or check, or other
property acceptable to the Secretary of the Company in his
sole discretion; and, if the Optionee fails to make such
payment, the Company is authorized by the Optionee to
withhold from any payments then or thereafter payable to the
Optionee, any such amounts or the Company may otherwise
refuse to issue or transfer any shares otherwise required to
be issued or transferred pursuant to the terms hereof. The
Committee may, in its sole discretion, allow the Optionee to
pay any such amounts through the surrender of whole shares
of Common Stock or by having the Company withhold whole
shares of Common Stock otherwise issuable upon the exercise
of this Option. Any such shares surrendered or withheld
shall be valued at their market value, determined by such
method as the Secretary of the Company in his sole
discretion shall determine, equal to the sums required to be
withheld as of the date on which the amount of tax to be
withheld is determined.
13. Resolution of Disputes. As a condition of the grant of
the Option hereby and of the ability to exercise the Option,
the Optionee and his heirs, successors and personal
representatives agree that any dispute or disagreement which
may arise hereunder shall be determined by the Committee in
its sole discretion and judgment, and that any such
determination and any interpretation by the Committee of the
terms of this Option Agreement shall be final and shall be
binding and conclusive, for all purposes, upon the Company,
Optionee, his heirs, successors and personal
representatives.
14. Notices. Every notice hereunder shall be in writing
and shall conclusively be deemed to be given only if given
by registered or certified mail. All notices of the
exercise of any Option hereunder shall be directed to
Atlantic Coast Airlines Holdings, Inc., 515-A Shaw Road,
Dulles, Virginia 20166, Attention: Secretary. Any notice
given by the Company to Optionee directed to him at his
address on file with the Company shall be effective to bind
him and any other person who shall have acquired rights
hereunder. The Company shall be under no obligation
whatsoever to advise Optionee of the existence, maturity or
termination of any of Optionee's rights hereunder and
Optionee shall be deemed to have familiarized himself with
all matters contained herein and in the Plan which may
affect any of Optionee's rights or privileges hereunder.
15. Construction and Interpretation. Whenever the term
"Optionee" is used herein under circumstances applicable to
any other person or persons to whom this award, in
accordance with the provisions of paragraph 7 hereof, may be
transferred, the word "Optionee" shall be deemed to include
such person or persons. References to the masculine gender
herein also include the feminine gender for all purposes.
This Option Agreement shall be administered, interpreted and
enforced under the laws of the State of Delaware.
16. Agreement Subject to Plan. This Option Agreement is
subject to the Plan (including any subsequent amendments
thereto). In the event of a conflict between any term or
provision contained herein and a term or provision of the
Plan, the applicable terms and provisions of the Plan will
govern and prevail. All definitions of words and terms
contained in the Plan shall be applicable to this Option
Agreement.
17. Employment Relationship. For purposes of this Option
Agreement, an employee shall be considered to be in the
employment of the Company as long as he remains an employee
of the Company or an Affiliate (as defined in the Plan) or
remains a director of the Company or of such an Affiliate.
Any questions as to whether and when there has been a
termination of such employment and the cause of such
termination shall be determined by the Committee, and its
determination shall be final. Nothing contained herein
shall be construed as conferring upon the Optionee the right
to continue in the employ of the Company, nor shall anything
contained herein be construed or interpreted to limit the
"employment at will" relationship between the Optionee and
the Company.
18. Binding Effect. This Option Agreement shall be binding
upon and inure to the benefit of any successors to the
Company.
IN WITNESS WHEREOF, the Option Agreement has been
executed as of the ____ day of _________ _____.
Atlantic Coast Airlines
Holdings, Inc.
By:___________________________
____
Optionee
______________________________
____
Name
Exhibit 21.1
Subsidiaries of the Company
Atlantic Coast Airlines, a California corporation. This
company is a 100% owned subsidiary of Atlantic Coast
Airlines Holdings, Inc.
Atlantic Coast Airlines, Inc., a Delaware corporation. This
company is a 100% owned subsidiary of Atlantic Coast
Airlines (a California corporation).
Page
Consent of Independent Auditors
The Board of Directors
Atlantic Coast Airlines Holdings, Inc.:
We consent to incorporation by reference in the
registration statements (No. 333-66265, 333-15795 and 33-
67492) on Form S-8 of Atlantic Coast Airlines Holdings,
Inc. of our report dated January 27, 1999, relating to the
consolidated balance sheets of Atlantic Coast Airlines
Holdings, Inc. and subsidiary (the "Company") as of
December 31, 1998 and 1997, and the related consolidated
statements of operations, stockholders' equity, and cash
flows for the years then ended, which report appears in the
December 31, 1998, annual report on Form 10-K of the
Company.
/S/
KPMG LLP
Washington, DC
March 22, 1999
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Atlantic Coast Airlines, Inc.
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (No. 333-15795 and 33-
67492) of our report dated January 24, 1997, except for Note
18, the date of which is May 29, 1997, relating to the
consolidated financial statements and schedule of Atlantic
Coast Airlines, Inc. appearing in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
BDO Seidman, LLP
Washington, D.C.
March 19, 1999
<TABLE> <S> <C>
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<PERIOD-END> DEC-31-1998
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0
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</TABLE>
Exhibit 10.25(e)
ATLANTIC COAST AIRLINES HOLDINGS, INC.
RESTRICTED STOCK AGREEMENT
This Restricted Stock Restricted Stock Agreement
("Restricted Stock Agreement") is between Atlantic Coast
Airlines Holdings, Inc., a Delaware Corporation (the
"Company"), and the employee named in Section 1 below (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Atlantic Coast Airlines
Holdings, Inc. 1995 Stock Incentive Plan, as amended (the
"Plan"), for the purpose of encouraging ownership of common
stock, $.02 par value ("Common Stock"), of the Company by
eligible key employees and directors of the Company, of
providing increased incentive for such employees and
directors to render services and to exert maximum effort for
the business success of the Company, and of further
strengthening the identification of employees and directors
with the stockholders; and
WHEREAS, the Company, acting through the Compensation
Committee of its Board of Directors (the "Committee"), has
determined that its interests will be advanced by the
issuance to Employee of restricted stock under the Plan.
NOW, THEREFORE, for and in consideration of these premises
it is agreed as follows:
1. Identifying Provisions: As used in this Restricted
Stock Agreement, the following terms shall have the
following respective meanings:
(a) Employee: __________________
(b) Date of Grant: ____________
(c) Effective Date: ___________
(d) Number of shares subject to Restricted Stock Agreement:
________
2. Grant of Shares. Subject to the terms and conditions
contained herein, the Company hereby grants to Employee (the
"Grant") the right to receive up to that number of shares of
Common Stock specified in Section 1(d) of this Restricted
Stock Agreement (the "Shares").
3. Vesting Period. The Shares shall not be issued on the
Date of Grant, and Employee's rights therein shall not be
vested and shall be forfeited unless and until otherwise
vested pursuant to the terms hereof. Subject to such
further terms and limitations set forth herein, on each
vesting date as identified below this Grant shall vest with
respect to a number of shares of Common Stock (rounded to
the nearest whole share) such that the aggregate number of
shares of Common Stock as to which this Grant has vested
shall equal the total number of shares subject to this
Restricted Stock Agreement (as specified in Section 1(d)),
multiplied by the percentage set forth below with respect to
the specified vesting date:
Vesting Date Percentage of
Option Exercisable
On January 29, 1999: 20%
On January 29, 2000: 40%
On January 29, 2001: 60%
On January 29, 2002: 80%
On January 29, 2003: 100%
4. Procedure for Issuance of Shares. As promptly as
practicable after each vesting date, the number of Shares of
Common Stock that vested on that date shall cease to be
forfeitable, and the Company shall issue to Employee a
certificate representing such Shares.
5. Termination of Employment. If Employee's employment
with the Company is terminated prior to the January 29, 2003
for any reason other than death or disability, the Grant
shall immediately terminate and be cancelled to the extent
it is not vested on the date of Employee's termination of
employment, and any Shares as to which Grant has not then
become vested shall be forfeited.
6. Disability or Death. If Employee's employment with the
Company is terminated by Employee's disability or death,
then the Grant shall terminate and be cancelled on the first
anniversary of the date of Employee's termination of
employment on account of disability or death, and any Shares
as to which the Grant has not then vested shall be
forfeited. Employee shall be deemed to be disabled if, in
the opinion of a physician selected by the Committee, he is
incapable of performing services for the Company by reason
of any medically determinable physical or mental impairment
which can be expected to result in death or to be of long,
continued and indefinite duration.
7. Transferability. This Grant shall not be transferable
by Employee. None of the Shares subject to or issuable
under this Grant may be sold, pledged, transferred, assigned
or hypothecated except the extent that the Grant has vested
with respect to such Shares.
8. No Rights as Stockholder. Employee shall have no
rights as a stockholder with respect to any Shares of Common
Stock covered by this Restricted Stock Agreement except to
the extent this Grant has vested with respect to such Shares
pursuant to this Restricted Stock Agreement. Until such
time, Employee shall not be entitled to dividends or to vote
at meetings of the stockholders of the Company with respect
to such unvested Shares. Except as provided in paragraph 9
hereof, no adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash or securities or other
property) paid or distributions or other rights granted in
respect of any share of Common Stock for which the record
date for such payment, distribution or grant is prior to the
date upon which Shares have vested pursuant to this
Restricted Stock Agreement.
9. Extraordinary Corporate Transactions. If the Company
experiences a "Fundamental Change" that is not a "Corporate
Change" (as those terms are defined in Section 6(i) of the
Plan), the Committee may make appropriate and proportionate
adjustments in the number and type of shares or other
securities or cash or other property that may thereafter be
issued pursuant to this Grant. If the Company experiences a
"Corporate Change," this Grant shall be vested as of the
date that the Corporate Change occurs and all of the Shares
subject to this Restricted Stock Agreement shall immediately
be issued in the name of Employee.
10. Compliance With Securities Laws. Upon the acquisition
of any Shares pursuant to this Grant, Employee shall enter
into such written representations, warranties and agreements
as the Company may reasonably request in order to comply
with applicable securities laws or with this Restricted
Stock Agreement. Nothing herein obligates the Company to
register or qualify the Shares pursuant any federal or state
securities laws.
11. Compliance With Laws. Notwithstanding any of the other
provisions hereof, Employee agrees that the Company will not
be obligated to issue any Shares pursuant to this Restricted
Stock Agreement, if the issuance of such Shares of Common
Stock would constitute a violation by the Employee or by the
Company of any provision of any law or regulation of any
governmental authority. The certificates representing the
Shares of Common Stock issued pursuant to this Grant will be
stamped or otherwise imprinted with legends in such form as
the Company or its counsel may require with respect to any
applicable restrictions on sale or transfer and the stock
transfer records of the Company will reflect stop-transfer
instructions with respect to such Shares.
12. Withholding of Tax. If the Company becomes obligated
to withhold an amount on account of any tax imposed as a
result of the issuance or vesting of the Shares, including,
without limitation, any federal, state, local or other
income tax, or any F.I.C.A., Medicare, state disability
insurance tax or other employment tax, the Employee shall be
obligated, as of the first date on which the Company is so
obligated, to pay such amounts to the Company in cash or
check, or other property acceptable to the Secretary of the
Company in his sole discretion; and, if the Employee fails
to make such payment, the Company is authorized by the
Employee to withhold from any payments then or thereafter
payable to the Employee any such amounts or the Company may
otherwise refuse to issue or transfer any Shares otherwise
required to be issued or transferred pursuant to the terms
hereof. The Committee may, in its sole discretion, allow
the Employee to pay any such amounts through the surrender
of whole shares of Common Stock or by having the Company
withhold whole Shares of Common Stock otherwise issuable
pursuant to this Grant. Any such shares surrendered or
withheld shall be valued at their market value, determined
by such method as the Secretary of the Company in his sole
discretion shall determine, equal to the sums required to be
withheld as of the date on which the amount of tax to be
withheld is determined.
13. Resolution of Disputes. As a condition of this Grant
hereby, the Employee, on behalf of himself, his heirs,
successors and personal representatives, agrees that any
dispute or disagreement which may arise hereunder shall be
resolved as determined by the Committee in its sole
discretion and judgment, and that any such determination and
any interpretation by the Committee of the terms of this
Restricted Stock Agreement shall be final and shall be
binding and conclusive, for all purposes, upon the Company,
Employee, his heirs, successors and personal
representatives.
14. Notices. Every notice hereunder shall be in writing
and shall conclusively be deemed to be given only if given
by registered or certified mail. All notices to the Company
shall be directed to Atlantic Coast Airlines Holdings, Inc.,
515-A Shaw Road, Dulles, Virginia 20166, Attention:
Secretary. Any notice given by the Company to Employee
directed to him at his address on file with the Company
shall be effective to bind him and any other person who
shall have acquired rights hereunder. The Company shall be
under no obligation whatsoever to advise Employee of the
existence, maturity or termination of any of Employee's
rights hereunder and Employee shall be deemed to have
familiarized himself with all matters contained herein and
in the Plan which may affect any of Employee's rights or
privileges hereunder.
15. Construction and Interpretation. Whenever the term
"Employee" is used herein under circumstances applicable to
any other person or persons to whom this award may be
transferred, the word "Employee" shall be deemed to include
such person or persons. References to the masculine gender
herein also include the feminine gender for all purposes.
This Restricted Stock Agreement shall be administered,
interpreted and enforced under the laws of the State of
Delaware.
16. Agreement Subject to Plan. This Restricted Stock
Agreement is subject to the Plan (including any subsequent
amendments thereto). In the event of a conflict between any
term or provision contained herein and a term or provision
of the Plan, the applicable terms and provisions of the Plan
will govern and prevail. All definitions of words and terms
contained in the Plan shall be applicable to this Restricted
Stock Agreement.
17. Employment Relationship. For purposes of this
Restricted Stock Agreement, an employee shall be considered
to be in the employment of the Company as long as he remains
an employee of the Company or an Affiliate (as defined in
the Plan) or remains a director of the Company or of such an
Affiliate. Any questions as to whether and when there has
been a termination of such employment and the cause of such
termination shall be determined by the Committee, and its
determination shall be final. Nothing contained herein
shall be construed as conferring upon the Employee the right
to continue in the employ of the Company, nor shall anything
contained herein be construed or interpreted to limit the
"employment at will" relationship between the Employee and
the Company.
18. Binding Effect. This Restricted Stock Agreement shall
be binding upon and inure to the benefit of any successors
to the Company.
IN WITNESS WHEREOF, the Restricted Stock Agreement has been
executed as of the _____ day of ___________, _____.
Atlantic Coast Airlines
Holdings, Inc.
By:___________________________
____
Employee
______________________________
____
Name
Initials
Buyer________ BRAD
______
Exhibit 10.40A
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST.
PURCHASE AGREEMENT BETWEEN BOMBARDIER, INC. AND
ATLANTIC COAST AIRLINES, AS AMENDED
BOMBARDIER REGIONAL AIRCRAFT DIVISION
PURCHASE AGREEMENT
RJ-0350
BETWEEN
BOMBARDIER INC.
AND
ATLANTIC COAST AIRLINES
Relating to the Purchase of
Thirty-three (33) Canadair Regional Jet aircraft
Including related Customer Support Services
TABLE OF CONTENTS
ARTICLE
1 INTERPRETATION
2 SUBJECT MATTER OF SALE
3 CUSTOMER SUPPORT SERVICES AND WARRANTY
4 PRICE
5 PAYMENT
6 DELIVERY PROGRAM
7 BUYER INFORMATION
8 CERTIFICATION/FOR EXPORT/
9 ACCEPTANCE PROCEDURE
10 TITLE AND RISK
11 CHANGES
12 BUYER'S REPRESENTATIVES AT MANUFACTURE SITE
13 EXCUSABLE DELAY
14 NON-EXCUSABLE DELAY
15 LOSS OR DAMAGE
16 TERMINATION
17 NOTICES
18 INDEMNITY AGAINST PATENT INFRINGEMENT
19 LIMITATION OF LIABILITY
20 ASSIGNMENT
21 SUCCESSORS
22 APPLICABLE LAWS
23 CONFIDENTIAL NATURE OF AGREEMENT
24 AGREEMENT
25 DISPUTES
APPENDIX
I ECONOMIC ADJUSTMENT FORMULA
II DELIVERY SCHEDULE
III SPECIFICATION
IV BUYER SELECTED OPTIONAL FEATURES
EXHIBIT
I CERTIFICATE OF ACCEPTANCE
II BILL OF SALE
III CERTIFICATE OF RECEIPT OF AIRCRAFT
IV CHANGE ORDER
ANNEX A CUSTOMER SUPPORT SERVICES
ANNEX B WARRANTY AND SERVICE LIFE POLICY
LETTER AGREEMENTS
B96-7701-RJTL-RJ0350-001A Credit Memorandum
B96-7701-RJTL-RJ0350-002 Conditions Precedent
B96-7701-RJTL-RJ0350-003 Option Aircraft
B96-7701-RJTL-RJ0350-004 Options
B96-7701-RJTL-RJ0350-005A FIPP
B96-7701-RJTL-RJ0350-006 Operational Restrictions
B96-7701-RJTL-RJ0350-007A Financing
B96-7701-RJTL-RJ0350-008 Schedule Completion Rate
B96-7701-RJTL-RJ0350-009 Airframe Direct Maintenance Cost
B96-7701-RJTL-RJ0350-010 Additional Customer Support
B96-7701-RJTL-RJ0350-011 Spares
B96-7701-RJTL-RJ0350-012 Marketing Support
B96-7701-RJTL-RJ0350-013 Spares Credit
B96-7701-RJTL-RJ0350-014 Taxes, Duties and Licenses
B96-7701-RJTL-RJ0350-015 Airworthiness Directives
B96-7701-RJTL-RJ0350-016 Reconciliation
B97-7701-AP-RJ0350-017 Spare Parts Price Catalogue
B97-7701-AP-RJ0350-018 Exercise of Twelve Option Aircraft
B97-7701-AP-RJ0350-019 Transferability of Aircraft
Delivery Positions
B97-7701-AP-RJ0350-020 United Approval
B97-7701-AP-RJ0350-021 Flight Data Recorder
B97-7701-AP-RJ0350-022 Cargo Floorboards
Letter Agreement No. 023 n/a
B98-7701-AP-RJ0350-024 Additional Option Aircraft
Letter Agreement No. 025 n/a
This Agreement is made on the 8th day of January 1997.
BY AND BETWEEN: BOMBARDIER INC., a Canadian Corporation
represented by its BOMBARDIER REGIONAL AIRCRAFT
DIVISION ("BRAD") having an office at 123
Garratt Boulevard, Downsview, Ontario, Canada.
AND: ATLANTIC COAST AIRLINES, a California Company,
having offices at 515A Shaw Road, Sterling,
Virginia, U.S.A. 20166 ("Buyer")
WHEREAS Bombardier Inc. through its Canadair
Manufacturing Division, is engaged in the
manufacture of the Canadair Regional Jet
aircraft products; and
BRAD has been created for the purpose of
providing marketing, sales and customer support
services for the Canadair Regional Jet aircraft
and related products;
WHEREAS Buyer desires to purchase thirty-three (33)
Aircraft (as later defined) and related data,
documents, and services under this Agreement
(as later defined), and BRAD desires to arrange
the sale of such Aircraft, data, documents and
services to Buyer,
WHEREAS Atlantic Coast Airlines Inc., a Delaware
Corporation, the parent of Buyer, is prepared
to provide a guarantee of Buyer's obligations
hereunder, in a form acceptable to the parties
and the financiers.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, Buyer and BRAD agree as follows:
ARTICLE 1. INTERPRETATION
1.1 The recitals above have been inserted for convenience only
and do not form part of the agreement.
1.2 The headings in this agreement are included for convenience
only and shall not be used in the construction and
interpretation of this agreement.
1.3 In this agreement, unless otherwise expressly provided, the
singular includes the plural and vice-versa.
1.4 In this agreement the following expressions shall, unless
otherwise expressly provided, mean:
(a) "Acceptance Period" shall have the meaning attributed
to it in Article 9.3;
(b) "Acceptance Date" shall have the meaning attributed to
it in Article 9.7.(a);
(c) "Agreement" means this Agreement, including its
Exhibits, Annexes, Appendices and Letter Agreements, if
any, attached hereto (each of which is incorporated in
the Agreement by this reference), as they may be
amended pursuant to the provisions of the Agreement;
(d) "Aircraft" shall have the meaning attributed to it in
Article 2.1;
(e) "Aircraft Purchase Price" shall have the meaning
attributed to it in Article 4.2;
(f) "Base Price" shall have the meaning attributed to it in
Article 4.1;
(g) "Bill of Sale" shall have the meaning attributed to it
in Article 9.7 (c);
(h) "BFE" shall have the meaning attributed to it in
Article 11.1;
(h.1) "Bombardier Group" shall have the meaning
attributed to it in Article 24.3;
(h.2) [ *
]
(i) "Buyer Selected Optional Features" shall have the
meaning attributed to it in Article 2.1;
(j) "Delivery Date" shall have the meaning attributed to it
in Article 9.7.(c);
(k) "Economic Adjustment Formula" shall have the meaning
attributed to it in Article 4.2;
(l) "Excusable Delay" shall have the meaning attributed to
it in Article 13.1;
(m) "FAA" shall have the meaning attributed to it in
Article 8.1;
(m.1) "Grace Period" shall have the meaning attributed
to it in Article 14.1;
(n) "Non-Excusable Delay" shall have the meaning attributed
to it in Article 14.1;
(o) "Notice" shall have the meaning attributed to it in
Article 17.1;
( p) "Other Patents" shall have the meaning attributed to it
in Article 18.1;
( q) "Permitted Change" shall have the meaning attributed to
it in Article 11.2;
( r) "Readiness Date" shall have the meaning attributed to
it in Article 9.1;
( s) "Regulatory Change" shall have the meaning attributed
to it in Article 8.4;
( t) "Scheduled Delivery Dates" shall have the meaning
attributed to it in Article 6;
( u) "Specification" shall have the meaning attributed to it
in Article 2.1;
( v) "Taxes" shall have the meaning attributed to it in
Article 4.3.;
( w) "TC" shall have the meaning attributed to it in
Article 8.1;
( x) "Net Aircraft Purchase Price" shall have the meaning
attributed to it in Article 5.3.;
( y) [ *
]
( z) "Deposit" shall have the meaning attributed to it in
Article 5.2.1.;
(z.1) "Technical Data" shall have the meaning attributed
to it in Annex A Article 4.1;
(z.2) "Total Deposit)" shall have the meaning attributed
to it in
Article 5.2.1.b); and
1.5 All dollar amounts in this Agreement are in United States
Dollars.
ARTICLE 2 - SUBJECT MATTER OF SALE
2.1 Subject to the provisions of this Agreement, BRAD will sell
and Buyer will purchase thirty-three (33) Canadair Regional
Jet aircraft model CL600-2B19 Version 200ER, manufactured
pursuant to specification Number RAD-601R-146 Issue NC dated
November 18, 1996, attached hereto as Appendix III, as that
specification may be modified from time to time in
accordance with this Agreement (the "Specification"), as
supplemented to reflect the incorporation of the Buyer
selected optional features ("Buyer Selected Optional
Features") set forth in Appendix IV hereto (collectively the
"Aircraft").
ARTICLE 3 - CUSTOMER SUPPORT SERVICES AND WARRANTY
3.1 BRAD shall provide to Buyer the customer support services
pursuant to the provisions of Annex A attached hereto.
3.2 BRAD shall provide to Buyer the warranty and the service
life policy described in Annex B attached hereto.
3.3 Unless expressly stated otherwise, the services referred to
in 3.1 and 3.2 above are incidental to the sale of the
Aircraft and are included in the Aircraft Purchase Price.
ARTICLE 4 - PRICE
4.1 (a) The base price for each of the Aircraft (excluding
the Buyer Selected Optional Features) Ex Works
(Incoterms 1990) BRAD's offices or premises in
Montreal, Province of Quebec, Canada, is [ *
] expressed
in July 1, 1995 dollars.
(b) The base price of the Buyer Selected Optional
Features, for the first through eighth Aircraft, is
[ *
] expressed in
July 1, 1995 dollars.
(c) The base price of the Buyer Selcted Optional
Features, for the ninth and subsequent Aircraft, is
[ *
] expressed in
July 1, 1995 dollars.
The Aircraft base price shall be the base price for the
Aircraft as stated in paragraph (a), plus the base price of
the Buyer Selected Optional Features as stated in paragraph
(b) or (c), as applicable (the "Base Price").
4.2 The price of the Aircraft (the "Aircraft Purchase Price")
shall be the Base Price adjusted to the date of delivery; to
reflect economic fluctuations during the period from July 1,
1995 to the respective delivery date of the Aircraft. Such
adjustments shall be based on the formula as found in
Appendix I ("Economic Adjustment Formula"). [ *
]
[ *
]
[ *
]
[ *
]
4.3 Upon the occurrence of events as described in this paragraph
4.3, there will be adjustments as follows:
4.3.1 In the event that BRAD and Buyer agree to any
changes in the Specification or selected optional
features, or should changes in the Specification or
selected optional features be made pursuant to Article
11.1 or as a result of any Regulatory Changes pursuant
to Article 8.4 which are chargeable to Buyer pursuant
to Article 8.5, or in the event that BRAD and Buyer
agree to any [ *
]
4.3.2 The [ * ]
adjustment shall be based
on the projected index rate for the agreed delivery
month as identified in Attachment 1 to Appendix I.
4.3.3 The Credit Memorandum adjustment shall be in
accordance with the terms of Letter Agreement No. 1B.
4.3.4 [ *
]
4.3.5 In the event of a Non-Excusable Delay, the
provisions of Article 14.2 shall apply.
4.4 The Aircraft Purchase Price does not include any taxes, fees
or duties including, but not limited to, sales, use, value
added (including the Canadian Goods and Services Tax),
personal property, gross receipts, franchise, excise taxes,
assessments or duties ("Taxes") which are or may be imposed
by law upon BRAD, any affiliate of BRAD, Buyer or the
Aircraft whether or not there is an obligation for BRAD to
collect same from Buyer, by any taxing authority or
jurisdiction occasioned by, relating to or as a result of
the execution of this Agreement or the sale, lease,
delivery, storage, use or other consumption of any Aircraft,
BFE or any other matter, good or service provided under or
in connection with this Agreement.
4.5 If any Taxes (other than income taxes charged on the income
of Bombardier Group) are imposed upon Buyer or become due or
are to be collected from Bombardier Group by any taxing
authority resulting from, relating to or in connection with
the execution of this Agreement, the sale, lease, delivery,
storage, use or other consumption of any Aircraft, BFE or
any other matter, goods or services provided for under this
Agreement, BRAD shall notify Buyer and Buyer shall promptly,
but no later than ten (10) working days after receiving such
notice, pay such Taxes directly to the taxing authority, or
reimburse BRAD for such Taxes, as the case may be, including
interest and penalties. Buyer shall only reimburse BRAD for
interest and penalties if BRAD notifies Buyer in writing of
the imposition of these Taxes within ten (10) working days
of the member of Bombardier Group receiving written
notification of such Taxes.
4.6 Upon BRAD's request, Buyer shall execute and deliver to BRAD
any documents that BRAD deems necessary or desirable in
connection with any exemption from or reduction of or the
contestation of or the defense against any imposition of
Taxes.
4.7 Upon Buyer's request, BRAD shall execute and deliver to
Buyer any documents that Buyer deems necessary or desirable
in connection with any exemption from or reduction of or the
contestation of or the defense against any imposition of
Taxes.
ARTICLE 5 - PAYMENT
5.1 Intentionally left blank.
5.2 Deposit
5.2.1 The deposit for the Aircraft (the "Deposit") will
be paid as follows:
a) Four Million ($4,000,000 U.S.) United States
Dollars on the business day following execution of the
Agreement, and
b) Eleven Million ($ 11,000,000 U.S.) United States
Dollars on or before April 1, 1997.
The total sum of Fifteen Million ($15,000,000
U.S.) United States Dollars (the "Total Deposit") will
be retained by BRAD [ *
]
[ *
]
[ *
]
5.2.2 Notwithstanding the provisions of Article 5.2.1 (b)
above, should Buyer not be in a position to provide the
total Eleven Million ($ 11,000,000 U.S.) United States
Dollars referred to in Article 5.2.1 (b) by April 1, 1997,
[ *
]
any
remaining portion of the Deposit then due, up to a sum of
Eleven Million ($11,000,000 U.S.) United States Dollars.
[ *
]
Buyer
agrees to pay BRAD the Deposit or the remaining portion
thereof, by issuing an assignable promissory note payable on
July 15, 1997. The promissory note shall bear interest at
an annual interest rate of [ * ] per annum
calculated and compounded monthly for any such outstanding
balance of the Deposit, from April 1, 1997, and up to and
including the day prior to receipt of such payment.
5.3 Payment Terms
Buyer shall pay BRAD on or before the Delivery Date either
i) the Aircraft Purchase Price of such Aircraft less the
amount of the applicable Credit Memorandum as set out in
Letter Agreement No. 1, which will be credited by BRAD
toward the Aircraft Purchase Price, [ *
] such
amount being the "Net Aircraft Purchase Price".
5.4 Subject to the provisions of Article 9.9 hereof, should
Buyer fail to make any of the aforementioned Deposit
payments on or before the stipulated date and Buyer does not
correct the default within a period of thirty (30) days
thereafter, this Agreement shall automatically terminate and
BRAD shall have no further obligation to Buyer under this
Agreement, including the obligation to proceed further with
the manufacture of the Aircraft on behalf of Buyer or the
sale and/or delivery of the Aircraft to Buyer. BRAD shall
have the option (but not the obligation) of waiving such
termination should Buyer make arrangements satisfactory to
BRAD for such payment and all future payments within ten
(10) calendar days of Buyer's default.
5.5 Buyer shall pay BRAD daily interest on late payments, from
the date that any payment becomes due up to and including
the day prior to receipt of payment, at a rate of two per
cent (2 %) per annum over the U.S. prime rate charged by the
Chase Manhattan Bank, New York Branch, or its successor,,
from time to time, calculated and compounded monthly. BRAD's
right to receive such interest is in addition to any other
right or remedy BRAD has at law as a result of Buyer's
failure to make payments when due.
5.6 If under any terms of the Agreement BRAD is obligated to
return the Deposit or make other payments if applicable to
Buyer, with or without interest as provided for herein, BRAD
shall do so within five (5) working days , and if BRAD fails
to do so, BRAD shall pay Buyer daily interest on late
payments from the date any payment becomes due up to and
including the day prior to receipt of payment, at a rate of
two per cent
(2 %) per annum over the U.S. prime rate charged from time
to time by the Chase Manhattan Bank, New York Branch, or its
successor, calculated and compounded monthly. The five (5)
days grace period mentioned above shall not apply to return
of Deposits coincident with the return of the last six (6)
Aircraft.
5.7 Buyer shall make all payments due under this Agreement in
immediately available funds by deposit on or before the due
date to BRAD's account in the following manner:
(a) Transfer to: [ *
]
(b) For credit to: [ *
]
(c) For further credit to: [ *
]
BRAD shall make all payments due under this Agreement in
immediately available funds by deposit on or before the due
date to Buyer's account as specified below:
Account Name: [ * ]
Bank Name: [ *
]
Account No.: [ * ]
Bank ABA: [ * ]
5.8 All other amounts due with respect to each Aircraft shall be
paid on or prior to the Delivery Date of the respective
Aircraft.
5.9 All payments provided for under this Agreement to either
party shall be made so as to be received in immediately
available funds on or before the dates stipulated herein.
Neither party shall incur interest charges for any delay
which occurs after provision of a proof of transfer from
that party's bank.
5.10 BRAD, or its affiliate to whom the Aircraft may have been
sold, shall remain the exclusive owner of the Aircraft, free
and clear of all rights, liens, charges or encumbrances
created by or through Buyer, until such time as all payments
referred to in this Article 5 have been made.
ARTICLE 6 - DELIVERY PROGRAM
6.1 The Aircraft shall be offered for inspection and acceptance
to Buyer at BRAD's facility in Montreal, Quebec during the
months set forth in Appendix II attached hereto (the
"Scheduled Delivery Dates").
ARTICLE 7 - BUYER INFORMATION
7.1 During the manufacture of the Aircraft, Buyer shall provide
to BRAD on or before the date required by BRAD, all
information as BRAD may reasonably request to manufacture
the Aircraft including, without limitation, the selection of
furnishings, internal and external colour schemes.
On or before January 31, 1997, Buyer will:
(a) provide BRAD with an external paint scheme agreed on by
the parties; and
(b) select interior colours (from BRAD's standard colours).
Failure of Buyer to substantially comply with these
requirements may result in a reasonable increase in price,
as applicable, a delay in delivery of the Aircraft, or both.
ARTICLE 8 - CERTIFICATION FOR EXPORT
8.1 BRAD has obtained and will continue to have on each Delivery
Date from Transport Canada ("TC"), a valid TC Type Approval
(Transport Category) and from the Federal Aviation
Administration of the United States ("FAA") an FAA Type
Certificate for the type of aircraft purchased under this
Agreement.
8.2 BRAD shall provide to Buyer a TC Certificate of
Airworthiness (Transport Category) for export, on or before
the Delivery Date with respect to each Aircraft.
8.3 The obtaining of any import license or authority required to
import or operate the Aircraft into any country outside of
Canada shall be the responsibility of Buyer. BRAD will,
assist Buyer in obtaining import permits and licenses. BRAD
shall, with Buyer's assistance, obtain the issuance of a
Canadian export license to enable Buyer to export the
Aircraft from Canada, subject to prevailing export control
regulations in effect on the Delivery Date. Except as
provided in Articles 8.1, 8.2 and 8.3 BRAD shall not be
obligated to obtain any other certificates or approvals as
part of this Agreement.
8.4 If any addition or change to, or modification or testing of
the Aircraft is required or will be required by the passage
of time by any law or governmental regulation or requirement
or interpretation thereof by any governmental agency having
jurisdiction subsequent to the date of this Agreement but
prior to the Delivery Date in order to meet the requirements
of Article 8.2 (a "Regulatory Change"), such Regulatory
Change shall be made to the Aircraft prior to Delivery Date,
or at such other time after the Delivery Date as the parties
may agree upon taking into account the terminating action
deadline.
8.5 The Regulatory Change shall be made without additional
charge to Buyer unless such Regulatory Change is:
(a) necessary to comply with any requirement of the
United States, the country of import, which varies from
or is in addition to its regulation, requirement or
interpretation in effect on the date hereof for the
issuance of a Certificate of Airworthiness in said
country of import (unless such requirement has been
imposed to correct a defect specific to the Aircraft or
to the Canadair Regional Jet fleet of aircraft), in
which case Buyer shall pay BRAD's reasonable charges
for such Regulatory Change, or
(b) required by any governmental law or regulations or
interpretation thereof promulgated by TC or the FAA
which is effective subsequent to the date of this
Agreement but before the Delivery Date and which is
applicable to all aircraft in general or to all
aircraft of the same category as the Aircraft, in which
case Buyer shall pay BRAD's reasonable charges for such
Regulatory Change incorporated in any such Aircraft.
8.6 If delivery of the Aircraft is delayed by the incorporation
of any Regulatory Change, such delay shall be an Excusable
Delay within the meaning of Article 13 subject to the
limitations therein. Notwithstanding the provision of
Article 13.2(b), should the Regulatory Change be required to
correct a defect specific to the Aircraft or to the Canadair
Regional Jet fleet of aircraft, [ *
]
8.7 BRAD shall issue a Change Order, reflecting any Regulatory
Change required to be made under this Article 8, which shall
set forth in detail the particular changes to be made and
the effect, if any, of such changes on design, performance,
weight, balance, time of delivery, Base Price, the Aircraft
Purchase Price, [ *
] all in accordance with this
Agreement. Any Change Orders issued pursuant to this
Article shall be effective and binding upon the date of
BRAD's transmittal of such Change Order, all in accordance
with this Agreement. Although Buyer's consent to said
Change Order is not required, BRAD agrees to consult with
Buyer regarding the change proposed by BRAD to implement
such Regulatory Change.
8.8 If the use of any of the certificates identified in this
Article 8 are discontinued during the performance of this
Agreement, reference to such discontinued certificate shall
be deemed a reference to any other certificate or instrument
which corresponds to such certificate or, if there should
not be any such other certificate or instrument, then BRAD
shall be deemed to have obtained such discontinued
certificate(s) upon demonstrating that the Aircraft complies
substantially with the Specification.
ARTICLE 9 - ACCEPTANCE PROCEDURE
9.1 No later than
[ *
BRAD
shall inform Buyer by facsimile or telegraphic communication
or other expeditious means, of the projected week of
delivery within the delivery month
BRAD shall give Buyer at least [ * ]
advance notice, by facsimile or
telegraphic communication or other expeditious means, of the
projected date of readiness of each Aircraft for inspection
and delivery. BRAD and Buyer shall then agree on a mutually
acceptable targeted delivery schedule within the delivery
month.
BRAD shall give Buyer at least
[ * ] advance
notice, by
facsimile or telegraphic communication or other expeditious
means, of the date on which an Aircraft will be ready for
Buyer's inspection, flight test and acceptance (the
"Readiness Date"), which Readiness Date shall take into
account the targeted delivery schedule mentioned above or
such other date as the parties may have agreed upon.
9.2 Within two (2) days following receipt by Buyer of the notice
of Readiness Date Buyer shall:
(a) provide notice to BRAD as to the source and method
of payment of the balance of the Aircraft Purchase
Price;
(b) identify to BRAD the names of Buyer's
representatives who will participate in the inspection,
flight test and acceptance; and
(c) provide evidence of the authority of the
designated persons to execute the Certificate of
Acceptance and other delivery documents on behalf of
Buyer.
9.3 Buyer shall have three (3) consecutive working days
commencing on the Readiness Date in which to complete the
inspection and flight test (such three (3) working day
period being the "Acceptance Period"). This three (3) day
period may be extended in the event of any delay by BRAD in
making the Aircraft available for inspection and flight
test.
9.4 Up to four (4) representatives of Buyer may participate in
Buyer's ground inspection of the Aircraft and two (2)
representatives of Buyer may participate in the flight test.
BRAD shall, if requested by Buyer, perform an acceptance
flight of not less than one (1) and not more than three (3)
hours duration. Ground inspection, in accordance with
procedures to be mutually agreed to, and flight test shall
be conducted in accordance with BRAD's acceptance procedures
(a copy of which shall be provided to Buyer at least 30 days
prior to the Scheduled Delivery Date of the First Aircraft
hereunder), as may be amended by mutual agreement of Buyer
and BRAD, and at BRAD's expense. At all times during ground
inspection and flight test, BRAD shall retain control over
the Aircraft.
9.5 If no Aircraft defect or discrepancy is revealed during the
ground inspection or flight test, Buyer shall accept the
Aircraft on or before the last day of the Acceptance Period
in accordance with the provisions of Article 9.7.
9.6 If any material defect or discrepancy in the Aircraft is
revealed by Buyer's ground inspection or flight test, the
defect or discrepancy will promptly be corrected by BRAD, at
no cost to Buyer, which correction may occur during or after
the Acceptance Period depending on the nature of the defect
or discrepancy and of the time required for correction. To
the extent necessary to verify such correction, BRAD shall
perform one (1) or more further acceptance flights or ground
inspections as applicable. Notwithstanding the provisions
of Article 4.2, should the Delivery Date of an Aircraft
occur in the month subsequent to the Scheduled Delivery Date
due to the correction of defects or discrepancies, [ *
]
9.7 Upon completion of the ground inspection and acceptance
flight of the Aircraft and correction of any defects or
discrepancies:
(a) Buyer will sign a Certificate of Acceptance (in
the form of Exhibit I hereto) for the Aircraft.
Execution of the Certificate of Acceptance by or on
behalf of Buyer shall be evidence of Buyer having
examined the Aircraft and found it in accordance with
the provisions of this Agreement. The date of
signature of the Certificate of Acceptance shall be the
"Acceptance Date";
(b) BRAD will supply a TC Certificate of Airworthiness
for Export; and
(c) Buyer shall pay BRAD the balance of
[ * ] and
any other amounts due, at which time BRAD shall issue
an FAA bill of sale and a warranty bill of sale in a
form acceptable to BRAD and financiers (substantially
in accordance with the forms attached as Exhibit II(a)
and Exhibit II(b) hereto), passing to Buyer, or
approved assignee pursuant to Article 20, good title to
the Aircraft free and clear of all liens, claims,
charges and encumbrances except for those liens,
charges or encumbrances created by or claimed through
Buyer (the "Bill of Sale"). The date on which BRAD
delivers the Bill of Sale and Buyer takes delivery of
the Aircraft shall be the "Delivery Date".
Delivery of the Aircraft shall be evidenced by the execution
and delivery of the Bill of Sale and of the Certificate of
Receipt of Aircraft (in the form of Exhibit III hereto).
9.8 Provided that BRAD has met all of its obligations under this
Article 9, should Buyer not accept, pay for (subject to
Letter Agreement No. 7) and take delivery of any of the
Aircraft within ten (10) calendar days after the end of the
Acceptance Period of such Aircraft, Buyer shall be deemed to
be in default of the terms of this Agreement [ *
]
9.9 Should the Buyer be in default pursuant to Article 9.8
hereof, Buyer shall promptly, upon demand, reimburse BRAD
for all costs and expenses reasonably incurred by BRAD as a
result of such Buyer's failure to accept or take delivery of
the Aircraft, including but not limited to reasonable
amounts for storage, insurance, taxes, preservation or
protection of the Aircraft, and provided that BRAD has met
all of its obligations under this Article 9, should Buyer
not accept, pay for and/or take delivery of any one of the
Aircraft within [ *
] following the end of the Acceptance
Period, BRAD may, at its option, terminate the present
Agreement with respect to any of the undelivered Aircraft.
BRAD shall however, have the option (but not the obligation)
of waiving such termination should Buyer, within ten (10)
calendar days following such termination, make arrangements
satisfactory to BRAD to accept delivery and provide payment
for all amounts owing or to become due pursuant to this
Agreement.
ARTICLE 10 - TITLE AND RISK
10.1 Title to the Aircraft and risk of loss of or damage to the
Aircraft passes to Buyer when BRAD presents the Bill of Sale
to Buyer on the Delivery Date.
10.2 If, after transfer of title on the Delivery Date, the
Aircraft remains in or is returned to the care, custody or
control of BRAD, Buyer shall retain risk of loss of, or
damage to the Aircraft and for itself and on behalf of its
insurer(s) hereby waives and renounces to, and releases BRAD
and any of BRAD's affiliates from any claim, whether direct,
indirect or by way of subrogation, for damages to or loss of
the Aircraft arising out of, or related to, or by reason of
such care, custody or control
[ * ]
ARTICLE 11 - CHANGES
11.1 Other than a Permitted Change as described in Article 11.2,
or a Regulatory Change as described in Article 8.4, any
change to this Agreement (including without limitation the
Specification) or any features or Buyer Furnished Equipment
("BFE"), if any, changing the Aircraft from that described
in the Specification attached hereto, and as may be mutually
agreed upon by the parties hereto, shall be made using a
change order ("Change Order") substantially in the format of
Exhibit IV hereto. Should Buyer request a change, BRAD
shall advise Buyer, to the extent reasonably practical, of
the effect, if any, of such change request on:
(a) the Scheduled Delivery Date;
(b) the price and payment terms applicable to the
Change Order; and
(c) any other material provisions of this Agreement
which will be affected by the Change Order.
Such Change Order shall become effective and binding on the
parties hereto when signed by a duly authorized
representative of each party.
11.2 BRAD, prior to the Delivery Date and without a Change Order
or Buyer's consent, may:
(a) substitute the kind, type or source of any
material, part, accessory or equipment with any other
material, part, accessory or equipment of like,
equivalent or better kind or type; or
(b) make such change or modification to the
Specification as it deems appropriate to:
1) improve the Aircraft, its maintainability or
appearance, or
2) to prevent delays in manufacture or delivery,
or
3) to meet the requirements of Articles 2
and 8, other than for a Regulatory Change to which
the provisions of Articles 8.4 and 8.5 shall
apply,
provided that such substitution, change or modification
shall not affect the Aircraft Purchase Price or materially
affect the Scheduled Delivery Date,
[ *
] Any change made in accordance with the
provisions of this Article 11.2 shall be deemed to be a
"Permitted Change" and the cost thereof shall be borne by
BRAD.
ARTICLE 12 - BUYER'S REPRESENTATIVES AT MANUFACTURE SITE
12.1 From time to time, commencing with the date of this
Agreement and ending with the Delivery Date of the last
Aircraft purchased hereunder, BRAD shall furnish, without
charge, office space at BRAD's facility for one (1)
representative of Buyer. Buyer shall be responsible for all
expenses of its representative and shall notify BRAD at
least thirty (30) calendar days prior to the first scheduled
visit of such representative and three (3) days for each
subsequent visit.
12.2 BRAD's and BRAD's affiliates facilities shall be accessible
to Buyer's representative during normal working hours.
Buyer's representative shall have the right to periodically
observe the work at BRAD's or BRAD's affiliates' facilities
where the work is being carried out provided there shall be
no disruption in the performance of the work.
12.3 BRAD shall advise Buyer's representative of BRAD's or BRAD's
affiliates' rules and regulations applicable at the
facilities being visited and Buyer's representative shall
conform to such rules and regulations.
12.4 At any time prior to delivery of the Aircraft, Buyer's
representative may request, in writing, correction of parts
or materials which they reasonably believe are not in
accordance with the Specification. BRAD shall provide a
written response to any such request. Communication between
Buyer's representative and BRAD shall be solely through
BRAD's Contract Department or its designate.
12.5 BUYER HEREBY RELEASES AND AGREES TO DEFEND, INDEMNIFY AND
HOLD HARMLESS BRAD, ITS ASSIGNEES AND AFFILIATES AND THEIR
OFFICERS, DIRECTORS, AGENTS, EMPLOYEES AND CONTRACTORS FROM
AND AGAINST ALL LIABILITIES, DAMAGES, LOSSES, COSTS AND
EXPENSES RESULTING FROM INJURIES TO OR DEATH OF BUYER'S
REPRESENTATIVES WHILE AT BRAD'S OR BRAD'S AFFILIATES OR
SUBCONTRACTOR'S FACILITIES AND/OR DURING INSPECTION, FLIGHT
TEST OR ACCEPTANCE OF THE AIRCRAFT, WHETHER OR NOT CAUSED BY
THE ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE OR STRICT PRODUCTS
LIABILITY OF BRAD, ITS ASSIGNEES, AFFILIATES OR THEIR
OFFICERS, DIRECTORS, AGENTS, EMPLOYEES OR CONTRACTORS
[ *
]
12.6 [ *
]
ARTICLE 13 - EXCUSABLE DELAY
13.1.1 In the event of a delay on the part of BRAD in the
performance of its obligations or responsibilities under the
provisions of this Agreement due directly or indirectly to a
cause which is beyond the reasonable control or without the
fault or negligence of BRAD (an "Excusable Delay"), BRAD
shall not be liable for, nor be deemed to be in default
under this Agreement on account of such delay in delivery of
the Aircraft or other performance hereunder and the time
fixed or required for the performance of any obligation or
responsibility in this Agreement shall be extended for a
period equal to the period during which any such cause or
the effect thereof persist. Excusable Delay shall be deemed
to include, without limitation, delays occasioned by the
following causes:
(a) force majeure or acts of God;
(b) war, warlike operations, act of the enemy, armed
aggression, civil commotion, insurrection, riot or
embargo;
(c) fire, explosion, earthquake, lightning, flood,
draught, windstorm or other action of the elements or
other catastrophic or serious accidents;
(d) epidemic or quarantine restrictions;
(e) any legislation, act, order, directive or
regulation of any governmental or other duly
constituted authority;
(f) strikes, lock-out, walk-out, and/or other labour
troubles causing cessation, slow-down or interruption
of work;
(g) lack or shortage or delay in delivery of supplies,
materials, accessories, equipment, tools or parts,
[ *
]
(h)
[ *
] delay or failure of carriers,
subcontractors or suppliers for any reason whatsoever;
or
(i) delay in obtaining any airworthiness approval or
certificate, or any equivalent approval or
certification, by reason of any law or governmental
order, directive or regulation or any change thereto,
or interpretation thereof, by a governmental agency,
the effective date of which is subsequent to the date
of this Agreement, or by reason of any change or
addition made by BRAD or its affiliates or requested by
a governmental agency to the compliance program of BRAD
or of its affiliate, or any part thereof, as same may
have been approved by TC, or change to the
interpretation thereof to obtain any such airworthiness
approval or certificate; or
(j) the incorporation of a Regulatory Change as set
out in Article 8.
13.1.2 [ *
]
13.2 (a) If BRAD concludes, based on its appraisal of the
facts and normal scheduling procedures, that due to
Excusable Delay it can be reasonably anticipated that
delivery of the Aircraft will be delayed, BRAD shall
give prompt written notice to Buyer of such delay.
BRAD and Buyer agree to collaborate and to use their
reasonable efforts to mitigate the impact of such
delays upon the parties.
(b) If, as a result of an Excusable Delay, delivery of
the Aircraft will be delayed to a date beyond the
originally Scheduled Delivery Date or any revised date
previously agreed to in writing by the parties, Buyer
and BRAD agree, [ *
]
(c) In the event of an Excusable Delay
[ * ] or
an
anticipated Excusable Delay
[ *
]
shall conduct an appraisal of the facts and normal
scheduling procedures, and if it concludes that
delivery of one or more of the Aircraft will be delayed
for [ * ]
after the originally Scheduled
Delivery Date or any revised date agreed to in writing
by the parties, [ *
] may then terminate this
Agreement with respect to such delayed Aircraft by
giving written notice [ *
]
(d) If, due to Excusable Delay
[ * ]
delivery of any Aircraft is delayed for
[ * ] after
the Scheduled Delivery Date, either party may terminate
this Agreement with respect to such Aircraft by giving
written notice to the other within fifteen (15)
business days after the expiration of such
[ * ]period.
13.3 Termination under Article 13.2 shall discharge all
obligations and liabilities of Buyer and BRAD hereunder with
respect to such delayed Aircraft and all related undelivered
items and services, [ *
] BRAD shall, within [ *
] such termination, repay to
Buyer, and BRAD's sole liability
and responsibility shall be limited to the repayment to
Buyer, of all deposits for such Aircraft received by BRAD
less any amount due by Buyer to BRAD.
13.4 The termination rights set forth in Article 13.2 are in
substitution for any and all other rights of termination or
contract lapse arising by operation of law in connection
with Excusable Delays.
ARTICLE 14 - NON-EXCUSABLE DELAY
14.1 If delivery of the Aircraft is delayed beyond the end of the
Scheduled Delivery Date, by causes not excused under Article
13.1, this shall constitute a non-excusable delay (a "Non-
Excusable Delay").
14.2 If as a result of an Non-Excusable Delay, delivery of the
Aircraft will be delayed to a date beyond the originally
Scheduled Delivery Date or any revised date previously
agreed to in writing by the parties, the Aircraft Purchase
Price of the Aircraft at delivery, [ *
]
ARTICLE 15 - LOSS OR DAMAGE
15.1 In the event that prior to the Delivery Date of any
Aircraft, the Aircraft is lost, destroyed or damaged beyond
repair due to any cause, BRAD shall promptly notify Buyer in
writing. Such notice shall specify the earliest date
reasonably possible, consistent with BRAD's other
contractual commitments and production schedule, by which
BRAD estimates it would be able to deliver a replacement for
the lost, destroyed or damaged Aircraft. This Agreement
shall automatically terminate as to such Aircraft unless
Buyer gives BRAD written notice, within thirty (30) days of
BRAD's notice, that Buyer desires a replacement for such
Aircraft. If Buyer gives such notice to BRAD, the parties
shall execute an amendment to this Agreement which shall set
forth the Delivery Date for such replacement aircraft and
corresponding new replacement Aircraft Purchase Price;
provided, however, that nothing herein shall obligate BRAD
to manufacture and deliver such replacement aircraft if it
would require the reactivation or acceleration of its
production line for the model of aircraft purchased
hereunder. The terms and conditions of this Agreement
applicable to the replaced Aircraft shall apply to the
replacement aircraft.
15.2 If an Aircraft is lost, destroyed or damaged beyond repair
as contemplated under this Article, due to a cause to which
reference is made in Article 13.1, and Buyer elects to
purchase a replacement Aircraft, then [ *
]
ARTICLE 16 - TERMINATION
16.1 This Agreement may be terminated, in whole or in part, with
respect to any or all of the Aircraft before the Delivery
Date by BRAD or Buyer by notice of termination to the other
party upon the occurrence of any of the following events:
(a) a party makes an assignment for the benefit of
creditors or admits in writing its inability to pay its
debts or generally does not pay its debts as they
become due; or
(b) a receiver or trustee is appointed for a party or
for substantially all of such party's assets and, if
appointed without such party's consent, such
appointment is not discharged or stayed within [ *
]
thereafter; or
(c) proceedings or action under any law relating to
bankruptcy, insolvency or the reorganization or relief
of debtors are instituted by or against a party, and,
if contested by such party, are not dismissed or stayed
within [ *
] thereafter; or
(d) any writ of attachment or execution or any similar
process is issued or levied against a party or any
significant part of its property and is not released,
stayed, bonded or vacated within [ * ]
after its issue or levy.
16.2 In addition, this Agreement may be terminated, with respect
to any or all undelivered Aircraft, in whole or in part,
before the Delivery Date
(a) as otherwise provided in this Agreement; and
(b) by BRAD
[ * ] default
or breach of any material term or condition of this
Agreement and such party does not cure such default or
breach within forty-five (45) calendar days after
receipt of Notice from BRAD [ * ]
specifying such default or breach.
16.3 In case of termination of this Agreement under Articles 5.4,
9.9, 16.1 or 16.2:
(a) all rights (including property rights), if any,
which Buyer or its assignee may have or may have had in
or to (i) this Agreement or portion thereof with
respect to the undelivered Aircraft, or (ii) any or all
of the undelivered Aircraft, shall become null and void
with immediate effect;
(b) BRAD may sell, lease or otherwise dispose of such
Aircraft to another party free of any claim by Buyer;
(c) in the event of termination by BRAD, all amounts
paid by Buyer with respect to the applicable
undelivered Aircraft shall be retained by BRAD and
shall be applied against the costs, expenses, losses
and damages incurred by BRAD as a result of Buyer's
default and/or the termination of this Agreement, to
which BRAD shall be entitled, [ *
]
and
(d) [ *
]
16.4 Notwithstanding the foregoing, nothing herein contained
shall, in the event of
termination of this Agreement, limit
[ * ] ongoing rights and
obligations with respect to Aircraft delivered prior to the
termination date, such as the after sale support obligations
described in Annex A, the warranty provisions and Service
Life Policy of Annex B and the obligation contained in
Letters of Agreement where it is expressly provided that
said obligations (or part thereof) shall survive
termination, subject to any adjustments of said rights or
obligations required to reflect the number of Aircraft in
service, if applicable.
16.5 [ *
]
ARTICLE 17 - NOTICES
17.1 Any notice, request, approval, permission, consent or other
communication ("Notice"), to be given or required under this
Agreement shall be provided in writing, by registered mail,
facsimile, courier, telegraphic or other electronic
communication providing reasonable proof of transmission,
except that no notice shall be sent by mail if disruption of
postal service exists or is threatened either in the country
of origin or of destination, by the party giving the Notice
and shall be addressed as follows until changed by notice in
writing:
(a) Notice to BRAD shall be addressed to:
Bombardier Inc.
Bombardier Regional Aircraft Division
123 Garratt Boulevard
Downsview, Ontario
Canada
M3K 1Y5
Attention: Director Contracts
Telephone: (416)375-4052
Telex: 06-22128
Facsimile: (416) 375-4533
(b) Notice to Buyer shall be addressed to:
ATLANTIC COAST AIRLINES
515A Shaw Road,
Dulles, Virginia
U.S.A. 20166
Attention: General Counsel
Telephone: 703-925-6000
Facsimile: 703-925-6294
17.2 Notice given in accordance with Article 17.1 shall be deemed
sufficiently given to and received by the addressees:
(a) if delivered by hand, on the day when the same
shall have been so delivered; or
(b) if mailed or sent by courier on the day indicated
on the corresponding acknowledgment of receipt; or
(c) if sent by telex or facsimile on the day indicated
by the acknowledgment or the answer back of the
receiver in provable form.
ARTICLE 18 - INDEMNITY AGAINST PATENT INFRINGEMENT
18.1 In the case of any actual or alleged infringement of any
Canadian or United States patent or, subject to the
conditions and exceptions set forth below, any patent issued
under the laws of any other country in which Buyer from time
to time may lawfully operate the Aircraft ("Other Patents"),
by the Aircraft, or by any system, accessory, equipment or
part installed in such Aircraft at the time title to such
Aircraft passes to Buyer, BRAD shall indemnify, protect,
hold harmless and defend (subject to applicable court
procedures) Buyer from and against all claims, suits,
actions, liabilities, damages and costs (including
reasonable attorney fees
[ *
]
resulting from the infringement, excluding any
incidental or consequential damages (which include without
limitation loss of revenue or loss of profit) and BRAD shall
and as promptly as possible under the circumstances, at its
option and expense:
(a) procure for Buyer the right under such patent to
use such system, accessory, equipment or part; or
(b) replace such system, accessory, equipment or part
with one of the similar nature and quality that is non-
infringing; or
(c) modify such system, accessory, equipment or part
to make same non-infringing in a manner such as to keep
it otherwise in compliance with the requirements of
this Agreement.
BRAD's obligation hereunder shall extend to Other Patents
only if from the time of design of the Aircraft, system,
accessory, equipment or part until the alleged infringement
claims are resolved:
(d) such other country and the country in which the
Aircraft is permanently registered have ratified and
adhered to and are at the time of the actual or alleged
infringement contracting parties to the Chicago
Convention on International Civil Aviation of December
7, 1944 and are fully entitled to all benefits of
Article 27 thereof; and
(e) such other country and the country of registration
shall each have been a party to the International
Convention for the Protection of Industrial Property
(Paris Convention) or have enacted patent laws which
recognize and give adequate protection to inventions
made by the nationals of other countries which have
ratified, adhered to and are contracting parties to
either of the foregoing conventions.
18.2 The foregoing indemnity does not apply to BFE, or to
avionics, engines or any system, accessory, equipment or
part that was not manufactured to BRAD's detailed design or
to any system, accessory, equipment or part manufactured by
a third party to BRAD's detailed design without BRAD's
authorization. [ *
]
18.3 Buyer's remedy and BRAD's obligation and liability under
this Article are conditional upon (i) Buyer giving BRAD
written notice within ten (10) days after Buyer receives
notice of a suit or action against Buyer alleging
infringement or within twenty (20) days after Buyer receives
any other written claim of infringement (ii) Buyer uses
reasonable efforts in full cooperation with BRAD to reduce
or mitigate any such expenses, damages, costs or royalties
involved, and (iii) Buyer furnishes promptly to BRAD all
data, papers and records in its possession or control
necessary or useful to resist and defend against such claim
or suit. BRAD may at its option conduct negotiations with
any party claiming infringement and may intervene in any
suit or action. Whether or not BRAD intervenes, BRAD shall
be entitled at any stage of the proceedings to assume or
control the defense. Buyer's remedy and BRAD's obligation
and liability are further conditional upon BRAD's prior
approval of Buyer's payment or assumption of any
liabilities, expenses, damages, royalties or costs for which
BRAD may be held liable or responsible.
18.4 THE INDEMNITY, OBLIGATIONS AND LIABILITIES OF BRAD AND
REMEDIES OF BUYER SET OUT IN THIS ARTICLE ARE EXCLUSIVE AND
ACCEPTED BY BUYER TO BE IN LIEU OF AND IN SUBSTITUTION FOR,
AND BUYER HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER
INDEMNITIES, OBLIGATIONS AND LIABILITIES OF BRAD AND OF ITS
AFFILIATES AND ALL OTHER RIGHTS, REMEDIES AND CLAIMS,
INCLUDING CLAIMS FOR DAMAGES, DIRECT, INCIDENTAL OR
CONSEQUENTIAL, OF BUYER AGAINST BRAD AND ITS AFFILIATES
EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH
RESPECT TO ANY ACTUAL OR ALLEGED PATENT INFRINGEMENT BY THE
AIRCRAFT OR ANY INSTALLED SYSTEM, ACCESSORY, EQUIPMENT OR
PART.
ARTICLE 19 - LIMITATION OF LIABILITY AND INDEMNIFICATION
19.1 ANNEX B, EXCEPT AS OTHERWISE PROVIDED IN LETTERS OF
AGREEMENT NO. 6, 8, 9 AND 15 HERETO, EXCLUSIVELY SETS FORTH
BRAD'S OBLIGATIONS WITH RESPECT TO ANY NON-CONFORMANCE OF
THE AIRCRAFT WITH THE SPECIFICATION OR ANY DEFECT IN THE
AIRCRAFT AND THE OBLIGATIONS AND LIABILITIES OF BRAD UNDER
THE AFORESAID ARE ACCEPTED BY BUYER TO BE EXCLUSIVE AND IN
LIEU OF, AND BUYER HEREBY WAIVES, RELEASES AND RENOUNCES ALL
OTHER REMEDIES, WARRANTIES, GUARANTEES, OBLIGATIONS,
REPRESENTATIONS OR LIABILITIES, EXPRESS OR IMPLIED, OF BRAD
AND ITS AFFILIATES WITH RESPECT TO DEFECTS IN EACH AIRCRAFT
OR PART THEREOF, PRODUCT, DOCUMENT OR SERVICE DELIVERED OR
PROVIDED UNDER THIS AGREEMENT, ARISING IN FACT, IN LAW, IN
CONTRACT, IN TORT, OR OTHERWISE, INCLUDING, WITHOUT
LIMITATION,
A. ANY IMPLIED WARRANTY OF CONDITION OR
MERCHANTABILITY OR FITNESS;
B. ANY IMPLIED WARRANTY OR CONDITION
ARISING FROM COURSE OF PERFORMANCE, COURSE OF
DEALING OR USAGE OF TRADE;
C. ANY OBLIGATION, LIABILITY, RIGHT, CLAIM
OR REMEDY IN TORT, WHETHER OR NOT ARISING FROM THE
ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE OR STRICT
PRODUCTS LIABILITY OF BRAD OR ITS AFFILIATES, BY
REASON OF THE DESIGN, MANUFACTURE, SALE, REPAIR,
LEASE OR USE OF THE AIRCRAFT OR PRODUCT AND
SERVICES DELIVERED HEREUNDER; AND
D. ANY OBLIGATION, LIABILITY, RIGHT, CLAIM
OR REMEDY FOR LOSS OF OR DAMAGE TO ANY AIRCRAFT OR
PART THEREOF, ANY BRAD PARTS, ANY POWER PLANT
PARTS, ANY VENDOR PARTS, ANY SPARE PARTS OR ANY
TECHNICAL DATA.
19.2 BUYER HEREBY RELEASES AND AGREES TO DEFEND, INDEMNIFY AND
HOLD HARMLESS BRAD, ITS SUBSIDIARIES, AFFILIATES,
SUBCONTRACTORS AND LESSORS, AND THEIR RESPECTIVE EMPLOYEES,
DIRECTORS, OFFICERS AND AGENTS, AND EACH OF THEM (THE
"INDEMNIFIED PARTIES"), FROM AND AGAINST ALL LIABILITIES,
CLAIMS, DAMAGES, LOSSES, COSTS AND EXPENSES FOR LOSS OF OR
DAMAGE TO PROPERTY INCLUDING ANY AIRCRAFT, AND LOSS OF USE
THEREOF, OR INJURIES TO OR DEATH OF ANY AND ALL PERSONS
(INCLUDING BUYER'S DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES
BUT EXCLUDING BRAD'S DIRECTORS, OFFICERS, AGENTS AND
EMPLOYEES), ARISING DIRECTLY OR INDIRECTLY OUT OF OR IN
CONNECTION WITH ANY SERVICE PROVIDED UNDER ANNEX A WHETHER
OR NOT CAUSED BY THE ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE
OR STRICT PRODUCTS LIABILITY OF THE INDEMNIFIED PARTIES.
THE FOREGOING SHALL NOT APPLY WHERE SUCH LOSSES OR DAMAGES
ARE CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
THE INDEMNIFIED PARTIES.
19.3 NOTHING CONTAINED IN ARTICLE 19.1 OR 19.2 ABOVE SHALL
CONSTITUTE A WAIVER OR RELEASE OR RENUNCIATION OF, OR
INDEMNITY FOR, ANY LOSSES, DAMAGES OR CLAIMS, BY BUYER
AGAINST BRAD FOR CONTRIBUTION TOWARD THIRD-PARTY BODILY
INJURY OR PROPERTY DAMAGE CLAIMS BASED ON PRODUCT LIABILITY
THEORIES TO THE EXTENT OF BRAD'S RELATIVE PERCENTAGE OF THE
TOTAL FAULT OR OTHER LEGAL RESPONSIBILITY OF PERSONS CAUSING
SUCH BODILY INJURY OR PROPERTY DAMAGE.
19.4 IN THE EVENT OF ANY LOSSES OR DAMAGES SUFFERED BY ANYONE FOR
OR ARISING OUT OF (i) ANY LACK OR LOSS OF USE OF ANY
AIRCRAFT, EQUIPMENT, BRAD PARTS, VENDOR PARTS, SPARE PARTS,
GROUND SUPPORT EQUIPMENT, TECHNICAL PUBLICATIONS OR DATA OR
(ii) ANY SERVICES TO BE PROVIDED HEREUNDER, OR (iii) FOR
ANY FAILURE TO PERFORM ANY OBLIGATIONS HEREUNDER, NEITHER
PARTY SHALL HAVE ANY OBLIGATION FOR LIABILITY TO THE OTHER
(AT LAW OR IN EQUITY), WHETHER ARISING IN CONTRACT
(INCLUDING WITHOUT LIMITATION, WARRANTY), IN TORT (INCLUDING
THE ACTIVE, PASSIVE OR IMPUTED NEGLIGENCE OR STRICT PRODUCTS
LIABILITY OF BRAD OR ITS AFFILIATES), OR OTHERWISE, FOR LOSS
OF USE, REVENUE OR PROFIT OR FOR ANY OTHER INDIRECT,
INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND OR
NATURE.
ARTICLE 20 - ASSIGNMENT
This Agreement may be assigned only as follows:
20.1 Either party may assign, sell, transfer or dispose of (in
whole or in part) any of its rights and obligations
hereunder to a wholly owned subsidiary or affiliate provided
that there is no increase to the liability and/or
responsibility of the non-assigning party and that the
assigning party remains jointly and severally liable with
any assignee for the performance of its obligation under
this Agreement.
20.2 With the other party's prior written consent not to be
unreasonably withheld, either party may assign, sell,
transfer or dispose of (in whole or in part) any of its
rights and obligations hereunder to another entity only
provided that (i) [ *
]
(ii) there is no increase to the liability and/or
responsibility of the non assigning party, (iii) assigning
party remains jointly and severally liable with any assignee
for the performance of its obligation under this Agreement,
(iv) the assignment is made only for operational and
financial considerations, (v) the assignee shall execute a
confidentiality agreement prohibiting the disclosure of
confidential information, and (vi) [ *
]
20.3 With BRAD's prior written consent, not to be unreasonably
withheld, Buyer may assign, sell, transfer or dispose of (in
whole or in part) any of its rights and obligations
hereunder to another entity to which Buyer does not hold
majority interest provided that (i) there is no increase
to the liability and/or responsibility of BRAD, (ii) the
Buyer remains jointly and severally liable with any assignee
for the performance of its obligation under this Agreement,
(iii) the assignment is made only for operational and
financial considerations, (iv) the shareholders (other
than shareholders purchasing stock through arms length,
publicly traded transactions) or owners of assignee, other
than Buyer, are not engaged in air transportation, (v) the
assignee operates or is to operate its business in a fashion
that is generally held out and structured to be perceived by
people knowledgeable in the industry to be closely
affiliated with Buyer or Buyer's parent, (vi) the assignee
shall execute a confidentiality agreement prohibiting the
disclosure of confidential information, and (vii) the
assignee does not compete with the Bombardier Group with
respect to the manufacture of aircraft.
20.4 Except as provided in Articles 20.1, 20.2 and 20.3, Buyer
shall not assign, sell, transfer or dispose of (in whole or
in part) any of its rights or obligations hereunder without
BRAD's prior written consent, such consent not to be
unreasonably withheld. In the event of such assignment,
sale, transfer or disposition Buyer shall remain jointly and
severally liable with any assignee for the performance of
all and any of Buyer's obligations under this Agreement and
BRAD reserves the right as a condition of its consent to
amend one or more of the terms and conditions of this
Agreement.
20.5 Notwithstanding Article 20.4 above, Buyer may assign, after
transfer of title of the Aircraft, its rights under the
Agreement to a third party purchaser of any one of the
Aircraft, provided said third party acknowledges in writing
to be bound by the applicable terms and conditions of this
Agreement, including but not limited to the provisions and
limitations as detailed Annex A, Customer Support Services,
Annex B, Warranty and Service Life Policy and of the
provisions and limitations in Limitation of Liability as
defined in Article 19 hereof and Indemnity Against Patent
Infringement as defined in Article 18 hereof and any other
on-going obligations of Buyer, which shall apply to it to
the same extent as if said third party was Buyer hereunder
and provided that there is no increase to the liability
and/or responsibility of BRAD.
20.6 BRAD may assign any of its rights to receive money hereunder
without the prior consent of Buyer.
20.7 Notwithstanding the other provisions of this Article 20,
BRAD shall, at Buyer's cost and expense, if so requested in
writing by Buyer, take any action reasonably required for
the purpose of causing any of the Aircraft to be subjected
(i) to, at or after the Delivery Date, an equipment trust,
conditional sale or lien, leases and mortgages, or (ii) to
another arrangement for the financing of the Aircraft by
Buyer, providing, however, there shall be no increase to the
liability and/or responsibility of BRAD arising through such
financing.
ARTICLE 21 - SUCCESSORS
21.1 This Agreement shall inure to the benefit of and be binding
upon each of BRAD and Buyer and their respective successors
and permitted assignees.
21.2 As used herein, reference to an airworthiness authority such
as Transport Canada and the FAA, to a regulation or
directive issued by such airworthiness authority or other
governmental authority, shall include any successor to such
authority then responsible for the duties of such authority
and regulation or directive covering the same subject
matters.
ARTICLE 22 - APPLICABLE LAWS
22.1 THIS AGREEMENT SHALL BE SUBJECT TO AND CONSTRUED IN
ACCORDANCE WITH AND THE RIGHTS OF THE PARTIES SHALL BE
GOVERNED BY THE DOMESTIC LAWS OF THE STATE OF NEW YORK,
U.S.A., EXCLUDING THE CHOICE OF LAW RULES, AND THE PARTIES
HAVE AGREED THAT THE APPLICATION OF THE UNITED NATIONS
CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS
IS HEREBY EXCLUDED.
22.2 Each of Buyer and BRAD agrees that any legal action or
proceeding with respect to this Agreement may be brought in
the Federal Courts of the United States of America in the
Southern District Courts of New York or in the Supreme
Courts of the State of New York in the County of New York
and by the execution and delivery of this Agreement
irrevocably consents and submits to the nonexclusive
jurisdiction of each of the aforesaid court in personam with
respect to any such action or proceeding and irrevocably
waive any objection either party may have as to venue or any
such suit, action or procedure brought in such court or that
such court is an inconvenient forum. Nothing in this
paragraph shall affect the right of any party hereto or
their successors or assigns to bring any action or
proceeding against the other party hereto or their property
in the courts of other jurisdictions.
ARTICLE 23 - CONFIDENTIAL NATURE OF AGREEMENT
23.1 This Agreement is confidential between the parties and shall
not, without the prior written consent of the other party,
be disclosed by either party in whole or in part to any
other person or body except:
i) as may be necessary for either party to carry out
its obligations under this Agreement or other
agreements related to this Agreement to which it
is a party, and
ii) as may be required by law, and
iii) [ *
]
23.2 Except as may be reasonably required for the operation,
maintenance, overhaul, modification, storage and repair of
the Aircraft by Buyer or any third party, Buyer shall hold
confidential all Technical Data and other proprietary
information (and so marked by BRAD) supplied by or on behalf
of BRAD, and shall not reproduce any such Technical Data or
proprietary information or divulge the same to any third
party unless such disclosure requires the third party to
hold same in confidence and use it only for the purposes
stated above.
23.3 Either party may announce the signing of this Agreement by
means of a notice to the press provided that the content and
date of the notice has been agreed to by the other party.
23.4 BRAD hereby acknowledges that Buyer is sensitive with
respect to the public disclosure of its operating data
provided to BRAD pursuant to this Agreement. Although BRAD
shall have no confidentiality undertaking with respect to
such data, BRAD agrees to consider Buyer's sensitivity in
its public use of said data.
ARTICLE 24 - AGREEMENT
24.1 This Agreement and the matters referred to herein constitute
the entire Agreement between BRAD and Buyer and supersede
and cancel all prior representations, brochures, alleged
warranties, statements, negotiations, undertakings, letters,
memoranda of agreement, acceptances, agreements,
understandings, contracts and communications, whether oral
or written, between BRAD and Buyer or their respective
agents, with respect to or in connection with the subject
matter of this Agreement and no agreement or understanding
varying the terms and conditions hereof shall be binding on
either BRAD or Buyer hereto unless an amendment to this
Agreement is issued and duly signed by their respective
authorized representatives pursuant to the provisions of
this Article hereof. In the event of any inconsistencies
between any provisions of this Agreement and those of any
Letter Agreements, the provisions of the Letter Agreements
shall prevail.
24.2 If any of the provisions of this Agreement are for any
reason declared by judgment of a court of competent
jurisdiction to be unenforceable or ineffective, those
provisions shall be deemed severable from the other
provisions of this Agreement and the remainder of this
Agreement shall remain in full force and effect.
24.3 THE BENEFIT OF THE WAIVER, LIMITATION, RELEASE, RENUNCIATION
AND/OR EXCLUSION OF LIABILITY CONTAINED IN THIS AGREEMENT
EXTENDS TO THE OTHER DIVISIONS, OTHER SUBSIDIARIES, AND
OTHER AFFILIATES OF BOMBARDIER INC., INCLUDING DE HAVILLAND
INC. (COLLECTIVELY THE "BOMBARDIER GROUP") AND TO THE
OFFICERS, DIRECTORS, EMPLOYEES AND REPRESENTATIVES OF THE
BOMBARDIER GROUP, ON WHOSE BEHALF AND FOR WHOSE BENEFIT BRAD
IS, FOR PURPOSES OF THIS ARTICLE 24.3, ACTING AS AGENT AND
TRUSTEE.
[ *
]
24.4 Buyer and BRAD agree that this Agreement has been the
subject of discussion and negotiation and is fully
understood by the parties hereto and that the price of the
Aircraft and the other mutual agreements of the parties set
forth herein were arrived at in consideration of the
limitation provisions contained in Article 19 and the other
similar provisions contained in this Agreement.
ARTICLE 25 - DISPUTES
25.1 Any dispute, difference, controversy or claim arising out of
or relating to this Agreement, the breach, or non-
performance thereof shall first be attempted to be resolved
by BRAD and Buyer through mutual negotiations, consultation
and discussions.
25.2 Should the parties hereto be unable to settle their
differences or disputes which may arise between them with
respect to the interpretation or application of this
Agreement (a "Dispute"), by mutual agreement as provided in
Article 25.1 above, the parties agree to each appoint two
(2) representatives to constitute a joint commission (the
"Joint Commission") to jointly hear the representations of
each party regarding the Dispute. One representative will
be appointed as chair of the Joint Commission on an
alternate basis. At least one (1) representative of each
party shall have knowledge in technical or contractual
matters depending on the nature of the Dispute. The Joint
Commission shall, following representations by each party,
issue non-binding written recommendations to the parties as
to how best settle the Dispute. If the representatives do
not agree on joint recommendations, the representatives of
each party shall issue their own recommendations.
25.3 Either party may request the formation of the Joint
Commission if a dispute is not settled within forty-five
(45) days following a written notice from either party to
the other detailing the nature of the Dispute and the
resolution sought. The request for a Joint Commission shall
be made in writing and shall contain the names of the
representatives appointed by the party requesting its
formation. The other party shall then provide the names of
its representatives within thirty (30) days following the
receipt of the request for a Joint Commission.
25.4 The Joint Commission shall have forty-five (45) days from
its formation to agree on the procedure to be followed,
including the place of hearing, if any. The Joint
Commission shall have sixty (60) days from the completion of
the representations by each party to issue its
recommendations.
25.5 If, despite the recommendations of the Joint Commission, the
parties are unable to resolve the Dispute, either party may,
except where the remedies sought include termination of the
Agreement in whole or in part or injunctive relief, or other
controversy involving an amount claimed in good faith in
excess of Five Million United States Dollars ( $5,000,000
U.S.) unless otherwise agreed, request by sixty (60) days
prior notice that the Dispute be settled by arbitration in
accordance with arbitration rules to be agreed upon before
delivery of the first Aircraft.
25.6 Within thirty (30) days of the demand to refer the Dispute
to arbitration, each party shall appoint one (1) arbitrator,
who in turn will appoint the third arbitrator, within thirty
(30) days of their appointments. This third arbitrator
shall act as the chairman of the Arbitral Tribunal so
constituted.
25.7 The venue of arbitration shall be Toronto, Ontario, New York
City, or Washington, DC, U.S.A., as agreed between the
parties.
25.8 The arbitrators shall not act as "Amiable Compositeur" and
shall decide according to the terms of the agreement and to
the laws of New York.
25.9 The award of the arbitration shall be final and shall not be
called in question in any court or tribunal.
25.10 It is expressly agreed that any statement,
representation or document made or produced to or in
connection with, or as a result of the formation of a Joint
Commission shall be without prejudice and without admission
of liability by either party and shall not be used as such
by the other party.
25.11 Each party shall be responsible for its own costs and
expenses incurred as a result of, or in connection with the
Joint Commission and arbitration including the cost, fees
and expenses of its own representatives.
In witness whereof this Agreement was signed on the date written
hereof:
For and on behalf of For an on behalf of
Atlantic Coast Airlines: Bombardier Inc.:
_______________________ ______________________
James B. Glennon Michel Bourgeois
Sr. Vice President and C.F.O. Vice President, Contracts
APPENDIX I
REGIONAL JET AIRCRAFT
ECONOMIC ADJUSTMENT FORMULA
Pursuant to the provision of Article 4 of the Agreement, economic
adjustment will be calculated using the lesser amount of those
generated by the following two calculations:
(i) The Economic Adjustment Formula:
PP = PO (0.28 LD + 0.35 ED + 0.20 CD +
0.15 MD + 0.02 FD)
LO EO CO MO FO
[ *
]
Where:
PP = Aircraft Purchase Price;
PO = Base Price;
LD = the Canadian labour index based upon the indices for
the last full month preceding the month of delivery of the
relevant Aircraft;
LO = the Canadian labour index which, as at 1 July 1995, is
19.69;
ED = the U.S. labour index based upon the indices for the
last full month preceding the month of delivery of the
relevant Aircraft;
EO = the U.S. labor index which, as at 1 July 1995, is
18.07;
CD = the Industrial Commodities index based upon the indices
for the last full month preceding the month of delivery of
the relevant Aircraft;
CO = the Industrial Commodities index which, as at 1 July
1995, is 126.6;
MD = the material index based upon the indices for the last
full month preceding the month of delivery of the relevant
Aircraft;
MO = the material index which, as at 1 July 1995, is 134.8;
FD = the fuel index based on the indices for the last full
month preceding the month of delivery of the relevant
Aircraft; and
FO = the fuel index which, as at 1 July 1995, is 81.0.
For the purpose of the Economic Adjustment Formula and the
calculation of the economic adjustment:
(a) the Canadian labour index shall be the index provided in the
Standard Industrial Classification (S.I.C.) Code 321 for
Average Hourly Earnings for the Aircraft and Parts Industry
(Canada) published by Statistics Canada in "Employment
Earnings and Hours" Table 3.1.
(b) the U.S. labour index shall be the index provided in the
Bureau of Labor Statistics (B.L.S.) Code 372 Gross Hourly
Earnings of production and non-supervisory workers in the
Aircraft and Aircraft Parts Industry as published by the
U.S. Department of Labor, Bureau of Labor Statistics in
"Employment and Earnings" Table C-2.
(c) the Industrial Commodities index shall be the index provided
in the Producer Price Index as Industrial Commodities as
published by the U.S. Department of Labor, Bureau of Labor
Statistics in "Producer Prices and Price Indexes" Table 6.
(d) the material index shall be the index provided in the
Producer Price Index for Code 10 Metals and Metals Products
as published by the U.S. Department of Labor, Bureau of
Labor Statistics in "Producer Prices and Price Indexes"
Table 6.
(e) the fuel index shall be the index provided in the Bureau of
Labor Statistics (B.L.S.) Code 5 "Fuel and Related Products
and Power" Table 6 as published by the U.S. Department of
Labor.
(f) in the event that BRAD shall be prevented from calculating
the Aircraft Purchase Price of each Aircraft due to any
delay in the publication of the required indices, BRAD shall
use the last provisionally published indices, and in the
event that provisional indices are not available, BRAD shall
extrapolate from the last three (3) months of published
indices and where the balance of the Aircraft Purchase Price
payable is calculated on the provisionally published
indices, and/or extrapolation, BRAD will amend such
installment on publication of the final indices and will
submit supplementary claims or provide credit notes in
respect of any adjustment so caused.
Should BRAD be required to submit supplementary claims to
Buyer, Buyer and BRAD hereby agree that BRAD will deduct
these supplementary claims from the next FIPP Contributions
payable, such FIPP Contributions being identified in Letter
Agreement No. 5005B. Should the supplementary claims not be
fully covered by future FIPP Contributions, Buyer and BRAD
agree to meet and arrive at a mutually agreeable method of
payment for those services not fully covered by FIPP
Contributions.
Notwithstanding the foregoing, it is the intention of the
parties to finalize the Aircraft Purchase Price within
twelve (12) months following the Aircraft delivery date.
Accordingly, at the end of each calendar quarter the parties
shall review and finalize by mutual agreement the Aircraft
Purchase Price of the Aircraft delivered more than twelve
months prior to such review, using the best data and
information available at that time.
(g) the indices used in the Economic Adjustment Formula and the
weighting assigned to them, as well as the various indices
as of July 1st, 1995 quoted here, are based on the
information known to date and represent the projection by
BRAD of the manner in which BRAD will incur cost in the
production of the Aircraft. In the event there is a change
in the indices published or in circumstances which
materially affects the indices chosen or the weighting
assigned to them, the indices and/or the weighting shall be
amended accordingly by mutual agreement of the parties. The
change in circumstances referred to above shall include but
not be limited to:
1) Any material change in the basis upon which the chosen
indices have been calculated or if any of said indices are
discontinued or withdrawn from publication,
2) Any change in manufacturing plan involving the letting of a
new sub-contract or the termination of an existing sub-
contract, and
3) Any change in the escalation or Economic Adjustment Formula
used in a Vendor or sub-contractor contract with BRAD; and
In the calculation of the Aircraft Purchase Price the following
guidelines in respect of decimal places shall apply:
(a) All indices in the Economic Adjustment Formula shall be
rounded to the second decimal place,
(b) The Economic Adjustment Formula shall be calculated and
rounded to four decimal places, and
(c) The Aircraft Purchase Price resulting from the Economic
Adjustment Formula shall be rounded to the nearest dollar.
APPENDIX II
DELIVERY SCHEDULE
First Aircraft [ * ]
Second Aircraft [ * ]
Third Aircraft [ * ]
Fourth Aircraft [ * ]
Fifth Aircraft [ * ]
Sixth Aircraft [ * ]
Seventh Aircraft [ * ]
Eighth Aircraft [ * ]
Ninth Aircraft [ * ]
Tenth Aircraft [ * ]
Eleventh Aircraft [ * ]
Twelfth Aircraft [ * ]
Thirteenth Aircraft [ * ]
Fourteenth Aircraft [ * ]
Fifteenth Aircraft [ * ]
Sixteenth Aircraft [ * ]
Seventeenth Aircraft [ * ]
Eighteenth Aircraft [ * ]
Nineteenth Aircraft [ * ]
Twentieth Aircraft [ * ]
Twenty-first Aircraft [ * ]
Twenty-second Aircraft [ * ]
Twenty-third Aircraft [ * ]
Twenty-fourth Aircraft [ * ]
Twenty-fifth Aircraft [ * ]
Twenty-sixth Aircraft [ * ]
Twenty-seventh Aircraft [ * ]
Twenty-eighth Aircraft [ * ]
** Twenty-ninth Aircraft [ * ]
** Thirtieth Aircraft [ * ]
Thirty-first Aircraft [ * ]
Thirty-second Aircraft [ * ]
APPENDIX II
DELIVERY SCHEDULE (CONTINUED)
Thirty-third Aircraft [ * ]
Thirty-fourth Aircraft [ * ]
** Thirty-fifth Aircraft [ * ]
Thirty-sixth Aircraft [ * ]
** Thirty-seventh Aircraft [ * ]
** Thirty-eighth Aircraft [ * ]
** Thirty-ninth Aircraft [ * ]
** Fortieth Aircraft [ * ]
** Forty-first - Aircraft [ * ]
** Forty-second Aircraft [ * ]
** Forty-third Aircraft [ * ]
APPENDIX III
SPECIFICATION
TYPE SPECIFICATION
[ * ]
[ * ]
APPENDIX IV (A)
AIRCRAFT ONE THROUGH EIGHT
BUYER SELECTED OPTIONAL FEATURES
CR No. Description
Price
(in July, 1995 US$)
00-008 Higher Design Weights (51,000 lbs MTOW) - ER [ *
]
00-009 Centre Wing Fuel Tank [ *
]
00-013 FAA Collins Strapping [ *
]
F/A Call Annunciation Lights [ *
]
Interior - Universal North American [ *
]
Class C Baggage Compartment minus temperature [ *
control ]
Reduced V2 Vref Speed [ *
]
30-001 Red Anti-Ice Warning Light (FAA) [ *
]
Logo Lights (includes Cargo Door Light) [ *
]
30-003 Red Beacon Lights [ *
]
33-027 Altimeter Reset Auto Flash [ *
]
34-031 Single Collins FMS 4100* [ *
]
EROS Magic Mask [ *
]
72-002 GE CF34-3B1 Engine - Series 200 [ *
]
00-012 Additional Flap Setting [ *
]
25-077 Exterior Paint Scheme - ACA (1st thru 4th A/C [ *
only) ]
25-305 Ext. Paint Scheme [ *
[ * ]
]
Avicom Announcement and Boarding Music System [ *
]
34-037 Single GPS 4000 (CR 34-037) [ *
]
Total Technical Features [ * ]
All prices listed above are expressed in July 1, 1995 US dollars, and are
subject to economic adjustment as provided in the Agreement.
[ *
]
[ *
]
APPENDIX IV (B)
AIRCRAFT NINE AND SUBSEQUENT
BUYER SELECTED OPTIONAL FEATURES
CR No. Description
Price
(in July, 1995 US$)
00-008 Higher Design Weights (51,000 lbs MTOW) - ER [ *
]
00-009 Centre Wing Fuel Tank [ *
]
00-013 FAA Collins Strapping [ *
]
F/A Call Annunciation Lights [ *
]
Interior - Universal North American [ *
]
Class C Baggage Compartment minus temperature [ *
control ]
Reduced V2 Vref Speed [ *
]
30-001 Red Anti-Ice Warning Light (FAA) [ *
]
Logo Lights (includes Cargo Door Light) [ *
]
30-003 Red Beacon Lights [ *
]
33-027 Altimeter Reset Auto Flash [ *
]
34-031 Single Collins FMS 4100* [ *
]
EROS Magic Mask [ *
]
72-002 GE CF34-3B1 Engine - Series 200 [ *
]
00-012 Additional Flap Setting [ *
]
25-077 Exterior Paint Scheme - ACA (1st thru 4th A/C [ *
only) ]
25-305 Ext. Paint Scheme [ *
[ * ]
]
Avicom Announcement and Boarding Music System [ *
** ]
23-363 *** Passenger Briefing and Music System [ *
Provisions(1) ]
34-037 Single GPS 4000 (CR 34-037) [ *
]
Total Technical Features [ * ]
All prices listed above are expressed in July 1, 1995 US dollars, and are
subject to economic adjustment as provided in the Agreement.
[ *
]
[ *
]
(1) Incorporation of Passenger Briefing and Music System Provisions
effective on Eighth Aircraft and subsequent.
CUSTOMER SUPPORT SERVICES
ANNEX A - TECHNICAL SUPPORT, SPARE PARTS, TRAINING AND
TECHNICAL DATA
The following Customer Support Services are those services to which
reference is made in Article 3 of the Agreement.
ARTICLE 1 - TECHNICAL SUPPORT
1.1 Factory Service
BRAD agrees to maintain or cause to be maintained the capability to
respond to Buyer's technical inquiries, to conduct investigations
concerning maintenance problems and to issue findings and recommend
action thereon. This service shall be provided for as long as ten
(10) CL-600-2B19 aircraft remain in commercial air transport
service.
1.2 Field Service Representative
1.2.1 Services
BRAD shall assign one (1) Field Service Representative ("FSR") to
Buyer's main base of operation or other location as may be mutually
agreed.
1.2.2 Term
Such assignment shall be for
[ * ] based on the
purchase and delivery of thirty-three (33) Aircraft to Buyer
(should Buyer eventually exercise and take delivery of less
than thirty-three (33) Aircraft, the term shall be accordingly
amended as per Letter Agreement No. 003A Article 3.0), and
shall commence approximately one (1) month prior to the
Delivery Date of the first Aircraft. The FSR assignment may
be extended on terms and conditions to be mutually agreed.
1.2.3 Responsibility
The FSR's responsibility shall be to provide technical advice
to Buyer for the line maintenance and operation of the
Aircraft systems and troubleshooting during scheduled and
unscheduled maintenance by Buyer's designated personnel ("FSR
Services").
1.2.4 Travel
If requested by Buyer, the FSR may, at Buyer's expense, travel
to another location to provide technical advice to Buyer. The
FSR must fly on Buyer's airline, if such service is available.
1.2.5 Office Facilities
Buyer shall furnish the FSR, at no charge to BRAD, suitable
and private office facilities [ * ] and
related equipment including desk, file cabinet, access to two
telephone lines, facsimile and photocopy equipment
conveniently located at Buyer's main base of operation or
other location as may be mutually agreed.
1.2.6 Additional Expenses
Buyer shall reimburse BRAD (net of any additional taxes on
such reimbursement) the amount of any and all taxes (except
Canadian taxes on the income of the FSR) and fees of whatever
nature, including any customs duties, withholding taxes or
fees together with any penalties or interest thereon, paid or
incurred by BRAD or the FSR or other BRAD employee as a result
of or in connection with the rendering of the services.
1.2.7 Right to Stop Work
BRAD shall not be required to commence or continue the
FSR Services when:
a.) there is a labour dispute or work stoppage in
progress at Buyer's facilities;
b.) there exist war, risk of war or warlike operations,
riots or insurrections;
c.) there exist conditions that are dangerous to the
safety or health of the FSR or other BRAD employee;
or
d.) the Government of the country where Buyer's
facilities are located or where Buyer desires the FSR
to travel refuses the BRAD employee permission to
enter said country or Buyer's base of operations.
1.2.8 Work Permits and Clearances
Buyer shall assist in arranging for all necessary airport
security clearances required for the FSR or other BRAD
employee to permit timely accomplishment of the FSR services.
1.3 Maintenance Planning Support
1.3.1 Scheduled Maintenance Task Cards
As described in Annex A Attachment A, BRAD shall provide Buyer
BRAD's standard format scheduled maintenance task cards that
shall conform to the Aircraft at the Delivery Date. At
Buyer's request BRAD shall provide a proposal for task cards
produced to Buyer's format.
1.3.2 In-Service Maintenance Data
Buyer agrees to provide to BRAD in-service maintenance data in
order to provide updates to BRAD's recommended maintenance
program. Buyer and BRAD shall agree on standards and
frequency for communication of such data.
1.4 Additional Services
At Buyer's request BRAD shall provide a proposal to provide such
additional support services as the parties may agree upon, which
may include special investigations, maintenance and repair of the
Aircraft.
ARTICLE 2 - SPARE PARTS, GSE, TOOLS AND TEST EQUIPMENT
2.1.1 Definitions
a. "BRAD Parts":
any spare parts, ground support equipment, tools and test
equipment which bear an inhouse Cage Code number in the BRAD
Provisioning Files (as that expression is defined in ATA
Specification 2000).
b. "Power Plant Parts":
any power plant or power plant part or assembly carrying the
power plant manufacturer's part number or any part furnished
by the power plant manufacturer for incorporation on the
Aircraft.
c. "Vendor Parts":
any spare parts, ground support equipment, tools and test
equipment for the Aircraft which are not BRAD Parts or Power
Plant Parts.
d. "Spare Parts":
all materials, spare parts, assemblies, special tools and
items of equipment, including ground support equipment,
ordered for the Aircraft by Buyer from BRAD. The term Spare
Parts includes BRAD Parts, Power Plant Part and Vendor Parts.
e. "Order":
any order for Spare Parts issued by Buyer to BRAD; and
f. "Technical Data":
shall have the meaning attributed to it in Annex A Article
4.1.
2.1 Term and Applicability
The term of this Annex A Article 2 shall become effective on the
date hereof and shall remain in full force and effect with respect
to the purchase and sale of Spare Parts for each Aircraft so long
as at least ten (10) of the CL-600-2B19 aircraft remain in
commercial air transport service. The provisions of Annex A
Articles 2.2, 2.6.5, 2.24 and Annex B Article 5.0 shall survive
expiration or termination of this Agreement.
2.2 Order Terms
Terms and conditions hereof shall apply to all Orders placed by
Buyer with BRAD in lieu of any terms and conditions in Buyer's
purchase orders.
2.3 Purchase and Sale of Spare Parts
2.3.1 Agreement to Manufacture and Sell
BRAD shall manufacture, or procure, and make available for
sale to Buyer suitable Spare Parts in quantities sufficient to
meet the reasonably anticipated needs of Buyer for normal
maintenance and normal spares inventory replacement for each
Aircraft. During the term specified in Annex A Article 2.1
above, BRAD shall also maintain, or cause to be maintained, a
shelf stock of certain BRAD Parts selected by BRAD to ensure
reasonable re-order lead times and emergency support. BRAD
shall maintain, or cause to be maintained, a reasonable
quantity of BRAD insurance parts at a U.S. distribution
centre. Insurance parts as used herein shall include, but not
be limited to, dispatch-essential parts such as major flight
control surfaces.
2.4 Agreement to Purchase BRAD Parts
2.4.1 [ *
]
2.4.2 Buyer's Right to Purchase, Redesign or Manufacture
[ *
] shall
not be construed as a granting of a license by BRAD and shall
not obligate BRAD to disclose to anyone Technical Data or
other information nor to the payment of any license fee or
royalty or create any obligation whatsoever to BRAD and BRAD
shall be relieved of any obligation or liability with respect
to patent infringement in connection with any such redesigned
part. Buyer shall be responsible for obtaining all regulatory
authority approvals required by Buyer to repair the Aircraft
using redesigned or manufactured BRAD Parts as described in
the preceding Article. Any such redesigned part shall be
identified with Buyer's part number only.
2.4.3 Notice to BRAD of Redesigned Parts
BRAD reserves the right to negotiate with Buyer the access to
redesigned parts, drawings and the non-exclusive manufacturing
rights of the redesigned part, if Buyer redesigns or has had
any BRAD parts redesigned.
2.5 Purchase of Vendor Parts & Power Plant Parts
BRAD shall not be obligated to maintain a stock of Power Plant
Parts. BRAD maintains a spares stock of selected Vendor Parts at
its own discretion to support provisioning and replenishment sales.
BRAD agrees to use all reasonable efforts to require its vendors to
comply with the terms and conditions of this Annex A Article 2 as
they apply to Vendor Parts. Vendor Parts shall be delivered in
accordance with the vendor's quoted lead time plus BRAD's internal
processing time.
2.6 Spare Parts Pricing
2.6.1 Spare Parts Price Catalogue
Prices for commonly used BRAD Parts stocked by BRAD shall be
published in the spare parts price catalogue ("Spare Parts
Price Catalogue"). BRAD shall hold the published prices firm
for catalogue stock class items for a period of twelve (12)
months and shall provide at least ninety (90) calendar days
notice prior to changing the published price.
2.6.2 BRAD prices for Vendor Parts
If Buyer orders Vendor Parts from BRAD, the price shall be as
published in the Spare Parts Price Catalogue.
2.6.3 Quotations
Price and delivery quotations for items not included in the
Spare Parts Price Catalogue shall be provided at Buyer's
request by BRAD. Price quotations will be held firm for a
period of ninety (90) calendar days or as otherwise specified
by BRAD. Responses to quotation requests will be provided
within ten (10) calendar days.
2.6.4 Currency and Taxes
All Spare Parts Price Catalogue and quotation prices shall be
in U.S. dollars and exclusive of transportation, taxes, duties
and licenses.
Buyer shall pay to BRAD upon demand the amount of any sales,
use, value-added, excise or similar taxes imposed by any
federal, provincial or local taxing authority within Canada,
and the amount of all taxes imposed by any taxing authority
outside Canada, required to be paid by BRAD as a result of any
sale, use, delivery, storage or transfer of any Spare Parts.
If BRAD has reason to believe that any such tax is applicable,
BRAD shall separately state the amount of such tax in its
invoice. If a claim is made against BRAD for any such tax,
BRAD shall promptly notify Buyer.
In addition, Buyer shall pay to BRAD on demand the amount of
any customs duties required to be paid by BRAD with respect to
the importation by Buyer of any Spare Parts.
2.6.5 Vendor Pricing
BRAD shall use reasonable efforts to require its major vendors
to maintain any published price for their parts for a period
of at least twelve (12) months with a ninety (90) calendar day
notice period prior to changing a published price.
2.7 Provisioning
2.7.1 Pre-provisioning/Provisioning Conference
Pre-provisioning and provisioning conferences shall be
convened on dates to be mutually agreed between Buyer and BRAD
in order to:
(i) discuss the operational parameters to be provided by
Buyer to BRAD which BRAD considers necessary for
preparing its quantity recommendations for initial
provisioning of Spare Parts to be purchased from BRAD or
vendors ("Provisioning Items");
(ii) review Buyer's ground support equipment and special tool
requirements for the Aircraft;
(iii) discuss the format of the provisioning documentation
to be provided to Buyer from BRAD for the selection of
Provisioning Items; and
(iv) arrive at a schedule of events for the initial
provisioning process, including the establishment of a
date for the initial provisioning conference ("Initial
Provisioning Conference") which shall be scheduled where
possible at least six (6) months prior to delivery of the
first Aircraft.
The time and location of the pre-provisioning conference shall
be mutually agreed upon between the parties; however, BRAD and
Buyer shall use their best efforts to convene such meeting
within thirty (30) days after execution of the Agreement.
2.8 Initial Provisioning Documentation
Initial provisioning documentation for BRAD Parts and Vendor Parts
shall be provided by BRAD as follows:
a) BRAD shall provide, as applicable to Buyer, no later than six
(6) months prior to the Scheduled Delivery Date of the first
Aircraft, or as may be mutually agreed, the initial issue of
provisioning files.
Revisions to this provisioning data shall be issued by BRAD
every ninety (90) calendar days until ninety (90) calendar
days following the Delivery Date of the last Aircraft or as
may be mutually agreed; and
b) the Illustrated Parts Catalogue designed to support
provisioning shall be issued concurrently with provisioning
data files and revised at ninety (90) calendar day intervals.
2.8.1 Obligation to Substitute Obsolete Spare Parts
In the event that, prior to delivery of the first Aircraft,
any Spare Part purchased by Buyer from BRAD is rendered
obsolete or unusable due to the redesign of the Aircraft or of
any accessory, equipment or part thereto (other than a
redesign at Buyer's request), BRAD shall deliver to Buyer new
and usable Spare Parts in substitution for such obsolete or
unusable Spare Parts upon return of such Spare Parts to BRAD
by Buyer. BRAD shall credit Buyer's account with the price
paid by Buyer for any such obsolete or unusable Spare Part and
shall invoice Buyer for the purchase price of any such
substitute Spare Part delivered to Buyer.
2.8.2 Delivery of Obsolete Spare Parts and Substitutes
Obsolete or unusable Spare Parts returned by Buyer pursuant to
Annex A Article 2.8.1. shall be delivered to BRAD at its plant
in Ontario or Quebec, or such other destination as BRAD may
reasonably designate. Spare Parts substituted for such
returned obsolete or unusable Spare Parts shall be delivered
to Buyer from BRAD's plant in Ontario or Quebec, or such
other BRAD shipping point as BRAD may reasonably designate.
BRAD shall pay the freight charges for the shipment from Buyer
to BRAD of any such obsolete or unusable Spare Part and for
the shipment from BRAD to Buyer of any such substitute Spare
Part.
2.8.3 Obligation to Repurchase Surplus Provisioning Items
During a period [ *
]
receipt of Buyer's written request and subject to the
exceptions in Annex A Article 2.8.4, repurchase unused and
undamaged Provisioning Items which: (i) were recommended by
BRAD as initial provisioning for the Aircraft, (ii) were
purchased by Buyer from BRAD or Vendor at BRAD's
recommendation, and (iii) are surplus to Buyer's needs.
2.8.4 Exceptions
BRAD shall not be obligated under Annex A Article 2.8.3 to
repurchase any of the following: (i) quantities of
Provisioning Items in excess of those quantities recommended
by BRAD in its Recommended Spare Parts List ("RSPL") for the
Aircraft, (ii) Power Plant Parts, QEC Kits, standard hardware,
bulk and raw materials, ground support equipment and special
tools, (iii) Provisioning Items which have become obsolete or
have been replaced by other Provisioning Items as a result of
Buyer's modification of the Aircraft and (iv) Provisioning
Items which become surplus as a result of a change in Buyer's
operating parameters provided to BRAD pursuant to Annex A
Article 2.7, which were the basis of BRAD's initial
provisioning recommendations for the Aircraft.
2.8.5 Notification and Format
Buyer shall notify BRAD, in writing, when Buyer desires to
return Provisioning Items which Buyer's review indicates are
eligible for repurchase by BRAD under the provisions of Annex
A Article 2.8.3. Buyer's notification shall include a
detailed summary, in part number sequence, of the Provisioning
Items Buyer desires to return. Such summary shall be in the
form of listings as may be mutually agreed between BRAD and
Buyer, and shall include part number, nomenclature, purchase
order number, purchase order date and quantity to be returned.
Within sixty (60) calendar days after receipt of Buyer's
notification and detailed summary BRAD shall complete the
review of such summary.
2.8.6 Review and Acceptance by BRAD
Upon completion of BRAD's review of any detailed summary
submitted by Buyer pursuant to Annex A Article 2.8.5., BRAD
shall within sixty calendar days issue to Buyer a Material
Return Authorization notice ("MRA") for those Provisioning
Items BRAD agrees are eligible for repurchase in accordance
with Annex A Article 2.8.3. BRAD will advise Buyer of the
reason that any Provisioning Items included in Buyer's
detailed summary are not eligible for return. The MRA notice
shall state the date by which Provisioning Items listed in the
MRA notice must be redelivered to BRAD as agreed between the
parties, and Buyer shall arrange for shipment of such
Provisioning Items accordingly, to the U.S. distribution
centre.
2.8.7 Price and Payment
The price of each Provisioning Item repurchased by BRAD
pursuant to Annex A Article 2.8.6 will be the original invoice
price thereof. BRAD shall pay the repurchase price by issuing
a credit memorandum in favour of Buyer which may be applied
against amounts due BRAD for the purchase of Spare Parts and
services.
2.8.8 Return of Surplus Provisioning Items
Provisioning Items repurchased by BRAD pursuant to Annex A
Article 2.8.6 shall be delivered to BRAD's [ *
]
2.8.9 Obsolete Spare Parts and Surplus Provisioning Items -
Title and Risk of Loss
Title to and risk of loss of any obsolete or unusable Spare
Parts returned to BRAD pursuant to Annex A Article 2.8.8 shall
pass to BRAD upon delivery thereof to BRAD. Title to and risk
of loss of any Spare Parts substituted for an obsolete or
unusable Spare Part pursuant to Annex A Article 2.8.1 shall
pass to Buyer upon delivery thereof to Buyer. Title to and
risk of loss of any Provisioning Items repurchased by BRAD
pursuant to Annex A Article 2.8.3 shall pass to BRAD upon
delivery thereof to BRAD.
With respect to the obsolete or unusable Spare Parts which may
be returned to BRAD and the Spare Parts substituted therefor,
pursuant to Annex A Article 2.8.1, and the Provisioning Items
which may be repurchased by BRAD, pursuant to Annex A Article
2.8.3, the party which has the risk of loss of any such Spare
Part or Provisioning Item shall have the responsibility of
providing any insurance coverage thereon desired by such
party.
2.9 Procedure for Ordering Spare Parts
Orders for Spare Parts may be placed by Buyer to BRAD by any method
of order placement (including but not limited to SITA, ARINC,
telecopier, letter, telex, facsimile, telephone or hard copy
purchase order).
2.9.1 Requirements
Orders shall include at a minimum order number, part number,
nomenclature, quantity, delivery schedule requested, shipping
instructions and BRAD's price, if available.
2.9.2 Processing of Orders
Upon acceptance of any Order, unless otherwise directed by
Buyer, BRAD shall, if the Spare Parts are in stock, proceed
immediately to prepare the Spare Parts for shipment to Buyer.
If BRAD does not have the Spare Parts in stock, BRAD shall
proceed immediately to acquire or manufacture the Spare Parts.
Purchase order status and actions related to the shipment of
Spare Parts shall be generally consistent with the provisions
of the World Airline Suppliers Guide, as applicable to Buyer.
2.9.3 Changes
BRAD reserves the right, without Buyer's consent, to make any
necessary corrections or changes in the design, part number
and nomenclature of Spare Parts covered by an Order, to
substitute Spare Parts and to adjust prices accordingly,
provided that interchangeability is not affected [ *
]unless Buyer's order
specifically and reasonably prohibits such substitution. BRAD
shall promptly give Buyer written notice of corrections,
changes, substitutions and consequent price adjustments.
Corrections, changes, substitutions and price adjustments
which affect interchangeability or exceed the price
limitations set forth above may be made only with Buyer's
written consent, which consent shall conclusively be deemed to
have been given unless Buyer gives BRAD written notice of
objection within thirty (30) calendar days after receipt of
BRAD's notice. In case of any objection, the affected Spare
Part will be deemed to be deleted from Buyer's Order.
2.10 Packing
All Spare Parts ordered shall receive standard commercial packing
suitable for export shipment via air freight. Such standard
packing will generally be to ATA 300 standards as amended from time
to time. All AOG orders will be handled, processed, packed and
shipped separately.
2.11 Packing List
BRAD shall insert in each shipment a packing list/release note
itemized to show:
(i) the contents of the shipment,
(ii) the approved signature of BRAD's TC authority attesting to the
airworthiness of the Spare Parts.
(iii) value of the shipment for customs clearance if required.
2.12 Container Marks
Upon Buyer's request each container shall be marked with shipping
marks as specified on the Order. In addition BRAD shall, upon
request, include in the markings: gross weight and cubic
measurements.
2.13 Delivery, Title and Risk of Loss
2.13.1 Delivery Point
Spare Parts, other than AOG and Critical Orders, shall be
delivered to Buyer FOB BRAD's U.S. distribution centre. AOG
and Critical Orders shall be delivered FOB point of origin.
2.13.2 Delivery Time
BRAD shall use reasonable efforts so that shipment of BRAD
Parts to Buyer be as follows:
a) AOG Orders
Ship AOG Orders within four (4) hours of receipt of
Order. Buyer's affected Aircraft factory production
number shall be required on AOG Orders;
b) Critical Orders (A1)
Ship critical Orders within twenty-four (24) hours of
order receipt;
c) Expedite Orders (A2)
Ship expedite Orders within seven (7) calendar days of
order receipt;
d) Initial Provisioning Orders
Prior to the Delivery Date of the first Aircraft or as
may be mutually agreed; and
e) Other Orders
Shipment of stock items shall be approximately thirty
(30) calendar days after BRAD's receipt of Buyer's Order.
Shipment of non-stock items shall be in accordance with
quoted lead times or lead times published in the current
Spare Parts Price Catalogue, procurement data, or
provisioning data.
2.14 Collect Shipments
Where collect shipments are not deemed practicable by BRAD, charges
for shipment, insurance, prepaid freight charges and all other
costs paid by BRAD shall be paid by Buyer promptly upon
presentation to Buyer of invoices covering the same.
2.15 Freight Forwarder
If Buyer elects to use the services of a freight forwarder for the
onward movement of Spare Parts, Buyer agrees to release BRAD from
and indemnify it for any liability for any fines or seizures of
Spare Parts imposed under any governmental Goods in Transit
regulations. Any such fines levied against BRAD will be invoiced
to Buyer and any Spare Parts seized under such regulations will be
deemed to be received, inspected, and accepted by Buyer at the time
of seizure.
2.16 Intentionally Left Blank
2.17 Title and Risk of Loss
Property and title to the Spare Parts will pass to Buyer upon
payment for the Spare Parts in full. Until payment in full for
Spare Parts, (a) title to them will not pass to Buyer, and (b) BRAD
maintains a purchase money security interest in them. Risk of loss
of the Spare Parts will pass to the Buyer upon delivery by BRAD.
With respect to Spare Parts rejected by Buyer pursuant to Annex A
Article 2.19, risk of loss shall remain with Buyer until such Spare
Parts are re-delivered to BRAD .
BRAD agrees to notify Buyer when material is shipped and shall
provide carrier's reference information (i.e., waybill number).
2.18 Inspection and Acceptance
All Spare Parts shall be subject to inspection by Buyer at
destination. Use of Spare Parts or failure of Buyer to give notice
of rejection within forty-five (45) days after receipt shall
constitute acceptance. Acceptance shall be final and Buyer waives
the right to revoke acceptance for any reason, whether or not known
to Buyer at the time of acceptance. Buyer's remedies for defects
discovered before acceptance are exclusively provided for in Annex
A Article 2.19 herein.
2.19 Rejection
Any notice of rejection referred to in Annex A Article 2.18 shall
specify the reasons for rejection. If BRAD concurs with a
rejection, BRAD shall, at its option, either correct, repair or
replace the rejected Spare Parts. Buyer shall, upon receipt of
BRAD's written instructions and Material Return Authorization
("MRA") number, which BRAD shall issue in a timely manner, return
the rejected Spare Parts to BRAD at its specified plant, or other
destination as may be mutually agreeable. The return of the
rejected Spare Parts to BRAD and the return or delivery of a
corrected or repaired rejected Spare Part or any replacement for
any such Spare Part to Buyer shall be at BRAD's expense. Any
corrected, repaired or replacement Spare Parts shall be subject to
the provisions of this Agreement.
2.20 Payment
Except as provided in Annex A Article 2.22 below, payment terms
shall be net thirty (30) calendar days of invoice date for
established open accounts. Any overdue amount shall bear interest
from the due date until actual payment is received by BRAD at an
annual rate of interest equal to the U.S. prime interest rate as
established from time to time by the Chase Manhattan Bank, New York
Branch, or its successor,,, plus two percent (2%) calculated and
compounded monthly.
2.21 Payment for Provisioning Items
Payment for Provisioning Items purchased by Buyer as contemplated
by Paragraph 2.7.1(i) shall be made by Buyer as follows:
a) a deposit of 7.5% of the total price of the Provisioning Items
as selected by Buyer, upon signature of the spares
provisioning document; and
b) the balance of the total price of Provisioning Items upon
their delivery.
2.22 Modified Terms of Payment
BRAD reserves the right to alter the terms of payment without prior
notice if Buyer fails to pay when due an amount Buyer owes under
any agreement with BRAD, unless such failure relates to a good
faith dispute of an invoice.
2.23 Regulations
Buyer shall comply with all applicable monetary and exchange
control regulations and shall obtain any necessary authority from
the governmental agencies administering such regulations to enable
Buyer to make payments at the time and place and in the manner
specified herein.
2.24 Warranty
The warranty applicable to Spare Parts is set forth in Annex B hereto.
2.25 Cancellation of Orders
Except as otherwise may apply to initial provisioning, if Buyer
cancels an Order, BRAD, at its option, shall be entitled to recover
actual damages, but not less than the following cancellation
charges or more than the purchase price of the Spare Parts covered
by the Order:
a) if work accomplished on the Order has been limited to BRAD
Spares Department, or the part has been identified as "shelf
stock" in the Spare Parts Price Catalogue, no cancellation
charges shall be made;
b) if production planning has been completed on the Order and
shop orders have been written, but no shop time or material
charges have been made against the Order, the cancellation
charge shall be 10% of the price but not to exceed $100 per
unit;
c) if shop time or material charges have been made against the
Order, the cancellation charge shall be based on the cost of
such time and materials, plus overhead; and
d) if the Spare Parts covered by the Order can be absorbed into
BRAD's inventory without increasing BRAD's normal maximum
stock level, no cancellation charges shall be made.
2.26 Lease
BRAD shall select and make available certain parts for lease,
subject to availability Buyer has the option to negotiate a lease
agreement with BRAD separate from this Agreement.
2.27 Additional Terms and Conditions
BRAD's conditions of sale are deemed to incorporate the terms and
conditions stated herein. Additional terms and conditions
applicable at time of receipt of each order from Buyer may be added
providing such terms and conditions do not conflict with the terms
and conditions provided herein. Such additional terms and
conditions shall be provided to Buyer at least ninety (90) calendar
days prior to their effective date.
ARTICLE 3 - TRAINING
3.1 General Terms
3.1.1 The objective of the training programs (the "Programs"),
as described herein, shall be to familiarize and assist
Buyer's personnel in the introduction, operation, and
maintenance of the Aircraft.
BRAD shall offer to the Buyer the Programs in the English
language at a BRAD designated facility.
[ *
]
3.1.2 Buyer shall be responsible for all travel and living
expenses, including local transportation, of Buyer's personnel
incurred in connection with the Programs.
3.1.3 The Programs shall be designed to reflect the model
and/or configuration of the Aircraft and may include
differences training to identify such configuration or model.
Manuals which are provided during the Programs exclude
revision service.
3.1.4 A training conference shall be held where possible no
later than six (6) months prior to the Scheduled Delivery Date
of the first Aircraft to the Buyer, or as may be otherwise
agreed, to establish the Programs' content and schedule.
3.2 Flight Crew Training
3.2.1 Flight Crew Ground Training
At no additional charge, BRAD will provide with each delivered
Aircraft, a TC or FAA approved transition training for one (1)
of Buyer's crews (two (2) pilots) who meet the minimum entry
requirement provided in the applicable training manual. Each
course shall consist of up to eighty (80) hours of classroom
instruction which may include part task trainer, Computer
Based Training (CBT), and/or Flight Training Device (FTD).
BRAD shall furnish each of Buyer's licensed pilots attending
the course one copy of the Flight Crew Operating Manual.
3.2.2 Pilot Simulator Training
At no additional charge, BRAD shall provide access to a TC or
FAA approved flight simulator for the crews trained under
Annex A Article 3.2.1. BRAD shall provide a simulator and a
simulator instructor for up to eight (8) missions for the
crews trained on BRAD's designated simulator in Montreal; each
mission shall consist of four (4) hours in the simulator and
required briefing/debriefing sessions.
3.2.3 In-flight Training
Should Buyer require aircraft flight training, such training
shall be conducted in Buyer's Aircraft after the Delivery Date
for up to a maximum of four (4) of Buyer's pilots. BRAD shall
provide an instructor pilot at no additional charge; Buyer
shall be responsible for the cost of fuel, oil, landing fees,
taxes, insurance, maintenance, and other associated operating
expenses required for the Aircraft during such training.
3.2.4 Flight Attendant Course
A familiarization course for up to two (2) of Buyer's flight
attendant personnel shall be conducted. Each course shall be
for a maximum of five (5) working days duration. This course
shall present general information on the Aircraft and detailed
information on the operation of the passenger safety equipment
and emergency equipment. BRAD shall furnish for each
participant in this course one (1) copy of the Flight
Attendant Training Guide which shall not be revised. Buyer
shall assist BRAD in the development of the Flight Attendant
Training Guide to incorporate Buyer's specific equipment and
procedures.
3.2.5 Flight Dispatcher Course
A course for up to two (2) of Buyer's flight dispatch
personnel shall be conducted. Each course shall be for a
maximum of five (5) working days duration. The course shall
consist of classroom instruction covering general Aircraft
familiarization, coverage of performance, flight planning,
weight and balance and the Minimum Equipment List. BRAD shall
furnish for each participant in this course one (1) copy of
the Flight Crew Operating Manual which shall not be revised.
3.2.6 Recurrent Pilot Training
BRAD shall, upon Buyer's request, provide a proposal for a TC
or FAA approved course for type rated pilots, customized in
content to meet the recurrent training of Buyer's pilots.
3.2.7 Course Training Material
BRAD shall, upon Buyer's request, present a proposal to
provide one (1) set of the materials (without revision
service) used to conduct the Flight Crew Ground Training
course, as follows:
i) 35 mm slides;
ii) Instructional Narrative and/or Instruction Guides;
iii) Overhead Projection Transparencies;
iv) Motion picture and/or Video tapes; and
v) Audio cassettes tapes.
3.3 Maintenance Training
3.3.1 Airframe and Powerplant Systems Maintenance Course
At no additional charge, with each delivered Aircraft, BRAD
shall train up to two (2) of Buyer's qualified personnel.
This course shall emphasize detailed systems description,
operation, and routine line maintenance practices. The course
material shall be principally mechanical with electrical and
avionics information for overall systems comprehension. The
course duration shall be for a maximum of twenty-five (25)
working days.
3.3.2 Electrical and Avionics Systems Maintenance Course
At no additional charge, with each delivered Aircraft, BRAD
shall train up to two (2) of Buyer's qualified personnel. The
course shall emphasis detailed systems description, operation
and routine line maintenance practices. The course material
shall be principally electrical and avionic but shall include
mechanical information for overall systems comprehension. The
course duration shall be for a maximum of twenty-five (25)
working days.
3.3.3 Ground Handling Course
BRAD shall, at no additional charge, train up to two (2) of
Buyer's qualified personnel. This course shall provide ramp
service personnel with training to be able to tow and park
Aircraft and perform routine ramp servicing tasks. Such
training shall be conducted in class with a practical
demonstration on Buyer's Aircraft after acceptance. The
course duration shall be a maximum of five (5) working days
and the practical demonstration shall not exceed two (2)
working days.
3.3.4 General Familiarization Course
BRAD shall, at no additional charge, train up to
[ * ] of Buyer's personnel. The course shall
generally describe the Aircraft, the systems and the
maintenance and support requirements. This course is
primarily designed for Buyer's facilities planning, parts
provisioning and aircraft management personnel. The course
duration is for a maximum of five (5) working days.
3.3.5 Engine Run-up Course
BRAD shall provide an Engine Run-up course, at no additional
charge, for up to [ * ] of Buyer's qualified
personnel. This course enables Buyer's personnel to gain
proficiency in engine and APU runs, cockpit management
procedures , malfunctions and exceedences. A prerequisite for
this course is satisfactory completion of the Airframe and
Powerplant Systems Maintenance course. The course duration
shall be for a maximum of two (2) working days.
3.3.6 Specialist Courses
At Buyer's request, BRAD shall make a proposal for specialist
courses which will be derived from BRAD's standard courses
detailed herein.
3.3.7 Recurrent Training
At Buyer's request, BRAD shall make a proposal for a
Regulatory Authority approved training plan for maintenance
recurrent training.
3.3.8 Vendor Training
At Buyer's request, BRAD shall assist Buyer to obtain vendor
maintenance training.
3.3.9 Course Training Material
BRAD, upon Buyer's request, shall present a proposal to
provide one (1) set of the training materials (without
revision service) used to conduct BRAD's standard training as
detailed herein:
i) 35 mm slides;
ii) Lesson Guides;
iii) Overhead Projection Transparencies;
iv) Motion picture and/or Video tapes; and
v) Audio cassettes tapes.
3.4 Insurance
3.4.1 Buyer shall at all times during flight training in
Buyer's Aircraft secure and maintain in effect, at its own
expense, insurance policies covering the Aircraft including
without limitation:
a) liability insurance covering public liability, passenger,
crew, property and cargo damage in amounts [ *
]
b) all risk aircraft hull and engine insurance for an amount
which is not less than its then fair market value.
3.4.2 The liability policy shall name BRAD (and its affiliates)
as additional insured. The hull policy shall contain a waiver
of subrogation in favour of BRAD (and its affiliates); [ *
]. All
insurance policies shall provide for payments despite any
misrepresentations or breach of warranty by any person (other
than the assured receiving payments) and shall not be subject
to any offset by any other insurance carried by BRAD except
that Buyer shall not be required to provide insurance with
respect to the manufacturing, repair and maintenance
activities of BRAD (and of its affiliates) and the related
potential liability (product or otherwise) arising therefrom.
ARTICLE 4 - TECHNICAL DATA
4.1 Technical Data Provided
BRAD shall furnish to Buyer the Technical Data described in
Attachment A hereto (the "Technical Data"). The Technical Data
shall be in the English language and shall provide information on
items manufactured according to BRAD's detailed design and in those
units of measures used in the Specification or as may otherwise be
required to reflect Aircraft instrumentation as may be mutually
agreed.
4.2 Shipment
All Technical Data provided hereunder shall be delivered to Buyer
Free Carrier (Incoterms) BRAD's designated facilities and at the
time indicated in Attachment A.
4.3 Proprietary Technical Data
It is understood and Buyer acknowledges that the Technical Data
provided herein is proprietary to BRAD and all rights to copyright
belong to BRAD and the Technical Data shall be kept confidential by
Buyer. Buyer agrees to use the Technical Data solely to maintain,
operate, overhaul or repair the Aircraft or to make installation or
alteration thereto allowed by BRAD.
Technical Data shall not be disclosed to third parties or used by
Buyer or furnished by Buyer for the design or manufacture of any
aircraft or Spare Parts including BRAD Parts or items of
equipment, except when manufacture or redesign is permitted under
the provisions Article 23.2 of the Agreement or of Annex A Article
2.4 hereof and then only to the extent and for the purposes
expressly permitted therein.
ANNEX B - WARRANTY AND SERVICE LIFE POLICY
ARTICLE 1 - WARRANTY
The following warranty is that to which reference is made in Article 3
of the Agreement.
1.1 Warranty
1.1.1 Subject to Annex B Articles 1.9, 1.10, and 2, BRAD
warrants that, at the date of delivery of the Aircraft or BRAD
Part, as applicable :
a) the Aircraft shall conform to the Specification, except
that any matter stated in the Specification as type
characteristics, estimates or approximations is excluded
from this Warranty;
b) the Aircraft shall be free from defects caused by the
failure of BRAD to install a Vendor Part or Powerplant
Part in accordance with reasonable instructions of the
vendor;
c) the Aircraft, excluding however Vendor Parts and
Powerplant Parts which shall be governed by Article 2
hereof, shall be free from defects in material or
workmanship [
* ] and
d) the Aircraft, excluding however Vendor Parts and
Powerplant Parts which shall be governed by Article 2
hereof, shall be free from defects in design, having
regard to the state of the art as of the date of such
design.
1.1.2 The Warranty set forth in Annex B Article 1.1.1 (c) and
(d) above shall also be applicable to BRAD Parts purchased as
Spare Parts.
1.1.3 BRAD further warrants that, at the time of delivery, the
Technical Data shall be free from error.
1.2 Warranty Period
1.2.1 The Warranty set forth in Annex B Article 1.1 shall
remain in effect for any defect covered by the Warranty (a
"Defect") becoming apparent during the following periods
(individually, the "Warranty Period"):
a) for failure to conform to the Specification and in the
installation referred to in Annex B Article 1.1.1 (a) and
1.1.1 (b), thirty-six (36) months from the Delivery Date;
b) for those Defects in material or workmanship referred to
in Annex B Article 1.1.1 (c) and 1.1.2, thirty-six (36)
months from the date of delivery of the Aircraft or BRAD
Parts, as applicable;
c) for those Defects in design referred to in Annex B
Article 1.1.1 (d), thirty-six (36) months from the date
of delivery of the Aircraft or BRAD Parts, as applicable;
and
d) for errors in the Technical Data referred to in Annex B
Article 1.1.3, twelve (12) months from the date of
delivery of the applicable Technical Data.
1.3 Repair, Replacement or Rework
As to each matter covered by this Warranty BRAD's sole obligation
and liability under this Warranty is expressly limited to, at
BRAD's election, correction by the repair, replacement or rework of
the defective part or item of Technical Data. The repaired,
replaced or reworked part or item of Technical Data which is the
subject of the Warranty claim shall then be warranted under the
same terms and conditions for the then unexpired portion of the
Warranty Period.
In the case of a Defect relating to non-conformance with the
Specification, BRAD shall correct that Defect in the equipment item
or part in which the Defect appears, except that BRAD will not be
obligated to correct any Defect which has no material adverse
effect on the maintenance, use or operation of the Aircraft or the
image of Buyer as a reputable airline operator.
1.4 Claims Information
BRAD's obligations hereunder are subject to a Warranty claim to be
submitted in writing to BRAD's warranty administrator, which claim
shall include but not be limited to the following information:
a) the identity of the part or item involved, including the Part
number, serial number if applicable nomenclature and the
quantity claimed to be defective;
b) the manufacturer's serial number of the Aircraft from which
the part was removed;
c) the date the claimed Defect became apparent to Buyer;
d) the total flight hours (and cycles if applicable) accrued on
the part at the time the claimed Defect became apparent to
Buyer; and
e) a description of the claimed Defect and the circumstances
pertaining thereto.
1.5 Intentionally Left Blank .
1.6 Timely Corrections
BRAD shall make the repair, replacement or rework, following
receipt of the defective part or item, with reasonable care and
dispatch.
In the event that BRAD does not respond or confirm receipt of a
warranty claim from Buyer within
[ *
] subject to Buyer and
BRAD agreeing on a non-receipt of a confirmation from BRAD within
[ * ] from the
date of submittal of claim.
1.7 Labour Reimbursement
For correction of Defects BRAD shall establish a reasonable
estimate for the labour hours required for the repair, replacement
or rework of the defective BRAD Part and, if the repair,
replacement or rework is performed by Buyer or by third party on
behalf of Buyer, BRAD shall reimburse Buyer for BRAD estimated
hours or for Buyer's or third party's actual labour hours,
whichever is less, for the repair, replacement or rework of the
defective BRAD Part excluding any work necessary to gain access to
said BRAD Part. Such reimbursement shall be based upon Buyer's
direct labour rate per manhour plus burden rate of fifty percent
(50%), subject to annual review and adjustment of such labour rate
as mutually agreed; provided, however, that this amount shall not
exceed fifty percent (50%) of the BRAD published selling labour
rate.
1.8 Approval, Audit, Transportation and Waiver
All Warranty claims shall be subject to audit and approval by BRAD.
BRAD will use reasonable efforts to advise in writing the
disposition of Buyer's Warranty claim within thirty (30) days
following the receipt of the claim and (if requested) return of the
defective BRAD Part to BRAD's designated facility. BRAD shall
notify Buyer of BRAD's disposition of each claim.
Buyer shall pay all costs of transportation of the defective part
from Buyer to BRAD's U.S. distribution centre and BRAD shall pay
all costs of transportation of the repaired, corrected or
replacement parts back to Buyer.
1.9 Limitations
1.9.1 BRAD shall be relieved of and shall have no obligation or
liability under this Warranty if:
a) the Aircraft was operated with any products or parts not
specifically approved by BRAD, unless Buyer furnishes
reasonable evidence acceptable to BRAD that such products
or parts were not a cause of the Defect; or
b) the Aircraft was not operated or maintained in accordance
with the Technical Data listed in Attachment A of Annex A
and the manufacturer's documentation furnished to Buyer
(including Service Bulletins and airworthiness
directives) unless Buyer furnishes reasonable evidence
acceptable to BRAD that such operation or maintenance was
not a cause of the Defect; or
c) the Aircraft was not operated under normal airline use,
unless Buyer furnishes reasonable evidence acceptable to
BRAD that such operation was not a cause of the Defect;
or
d) Buyer does not
1) report the Defect in writing to BRAD's Warranty
administrator within forty-five (45) calendar days
following such Defect becoming apparent, and
2) retain the BRAD Part claimed to be defective until
advised by BRAD to return such BRAD Part to BRAD's
designated facility in order for BRAD to finalize
its evaluation of the Warranty claim or to otherwise
dispose of such BRAD Part; or
e) Buyer does not submit reasonable demonstration to BRAD
within forty-five (45) calendar days after the Defect
becomes apparent that the Defect is due to a matter
covered within this Warranty; or
f) Buyer does not allow BRAD reasonable opportunity (taking
into account Buyer's wish to replace Aircraft back in
service) to be present during the disassembly and
inspection of the BRAD Part claimed to be defective.
1.9.2 The above warranties do not apply to Buyer Furnished
Equipment.
1.10 Normal Usage
Normal wear and tear and the need for regular maintenance and
overhaul shall not constitute a Defect or failure under this
Warranty.
1.11 Overhaul of Warranty Parts
BRAD's liability for a BRAD Part which has a Defect and is
overhauled by Buyer within the Warranty Period shall be limited
only to that portion of the labour and material replacement related
to the Defect.
1.12 No Fault Found
In the event that a BRAD Part returned under a Warranty claim is
subsequently established to be serviceable then BRAD shall be
entitled to charge and recover from Buyer any reasonable
inspection, transportation, repair and other costs of a similar
nature incurred by BRAD in connection with such Warranty claim.
Providing, however, in the event that repetitive in-service failure
occurs on the particular BRAD Part which is subsequently identified
by BRAD on a repeated basis to be "no fault found," then BRAD and
Buyer shall discuss and mutually agree a course of further action
to help identify the problem. In the event the fault is ultimately
confirmed to be a legitimate Warranty claim then the above
mentioned costs, if incurred by BRAD will be borne by BRAD, and any
such costs already paid by Buyer will be reimbursed by BRAD.
ARTICLE 2 - VENDOR WARRANTIES
2.1 Warranties from Vendors
The Warranty provisions of this Annex B apply to BRAD Parts only.
However, BRAD has made or shall make reasonable efforts to obtain
favourable warranties from vendors, with respect to Vendor Parts
and Power Plant Parts. Except as specifically provided under this
Annex B Article 2, BRAD shall have no liability or responsibility
for any such Vendor Parts and Power Plant Parts and the warranties
for those Vendor Parts and Power Plant Parts shall be the
responsibility of the vendor and a matter as between Buyer and
vendor.
2.2 Vendor Warranty Backstop
For those Vendor Parts installed on the Aircraft at the Delivery
Date or subsequently purchased through BRAD, excluding the
Powerplant or the Power Plant Parts, in the event the parties agree
that a vendor is in default in the performance of any material
obligation under any applicable warranty obtained by BRAD from such
vendor pursuant to Annex B Article 2.1 above, the warranties and
all other terms and conditions of Annex B Article 1 shall become
applicable as if the Vendor Parts had been a BRAD Part, except that
the warranty period shall be the Warranty Period as set forth
herein or by the vendor's warranty, whichever is shorter.
2.3 BRAD's Interface Commitment
In the event of a dispute in the application of a Vendor Part
warranty, at Buyer's request addressed to BRAD's warranty
administrator, BRAD shall, without charge, conduct an investigation
and analysis of any such dispute resulting from a technical
interface problem to determine, if possible, the cause of the
interface problem and then recommend feasible corrective action.
Buyer shall furnish to BRAD all data and information in Buyer's
possession relevant to the interface problem and shall cooperate
with BRAD in the conduct of its investigation and such tests as may
be required. BRAD, at the conclusion of its investigation, shall
advise Buyer in writing of BRAD's opinion as to the cause of the
problem and BRAD's recommended corrective action.
ARTICLE 3 - SERVICE LIFE POLICY
3.1 Applicability
The Service Life Policy ("SLP") described in this Annex B Article 3
shall apply if [ *
] in any Covered Component which is
defined in Annex B Article 3.7 below.
3.2 Term
3.2.1 Should such failures occur in any Covered Component
within one hundred and forty-four (144) months following
delivery of the Aircraft containing such Covered Component,
BRAD shall, as promptly as practicable and at its option;
a) design and/or furnish a correction for such failed
Covered Component; or
b) furnish a replacement Covered Component (exclusive of
standard parts such as bearings, bushings, nuts, bolts,
consumables and similar low value items).
3.3 Price
Any Covered Component which BRAD is required to furnish under this
SLP shall be provided for at a price calculated in accordance with
the following formula:
P = C x T
144
Where:
P = Price of Covered Component to Buyer;
C = BRAD's then current price for the Covered Component;
T = The total time to the nearest month since the Aircraft
containing the Covered Component,
[ * ] was delivered
by BRAD
3.4 Conditions and Limitations
3.4.1 The following general conditions and limitations shall
apply to the SLP:
a) the transportation cost for the return to BRAD's
designated facility, if practicable, of any failed
Covered Component necessary for failure investigation or
redesigning studies shall be borne by BRAD but Buyer
agrees to use reasonable efforts to ship the Covered
Component on Buyer's aircraft to a scheduled destination
closest to Canadair's designated facility at no cost to
BRAD;
b) BRAD's obligations under this SLP are conditional upon
the submission of reasonable proof acceptable to BRAD
that the failure is covered hereby;
c) Buyer shall report any failure of a Covered Component in
writing to BRAD`s Warranty administrator within two (2)
months after such failure becomes evident
[ * ] Failure
to give this required notice shall
excuse BRAD from all obligations with respect to such
failure;
d) the provisions of Annex B Article 1.9 of the Warranty
(except for subparagraphs (d) and (e) thereof) are
incorporated by this reference and shall condition BRAD's
obligations under this SLP with respect to any Covered
Component;
e) BRAD's obligations under this SLP shall not apply to any
Aircraft which has not been correctly modified in
accordance with the specifications or instructions
contained in the relevant Service Bulletins which are
furnished to Buyer prior to receipt by BRAD from Buyer of
any notice of an occurrence which constitutes a failure
in a Covered Component, subject to Buyer having had
reasonable time to i) obtain parts required for the
installation of the Service Bulletin and ii) incorporate
the Service Bulletin into the Aircraft. The provisions
of this subparagraph shall not apply in the event that
Buyer furnishes reasonable evidence acceptable to BRAD
that such failure was not caused by Buyer's failure to so
modify the Aircraft;
f) this SLP shall not apply to a failure of a Covered
Component if BRAD determines that such failure may not
reasonably be expected to occur on a repetitive basis
unless subsequently demonstrated to be; and
g) this SLP shall not apply to a Covered Component where the
failure results from an accident, abuse, misuse,
degradation, except for normal wear and tear, negligence
or wrongful act or omission, unauthorized repair or
modification adversely affecting a Covered Component,
impact or foreign object damage, to any Covered
Component.
3.5 Coverage
This SLP is neither a warranty, performance guarantee nor an
agreement to modify the Aircraft to conform to new developments in
design and manufacturing art. BRAD's obligation is only to provide
correction instructions to correct a Covered Component or furnish
replacement at a reduced price as provided in this SLP.
3.6 Covered Component
Only those items or part thereof listed in Attachment A to this
Annex B shall be deemed to be a Covered Component, and subject to
the provisions of this SLP.
ARTICLE 4 - GENERAL
4.1 It is agreed that BRAD shall not be obligated to provide to Buyer
any remedy which is a duplicate of any other remedy which has
been provided to Buyer under any other part of this Annex B.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST.
Bombardier Inc.
Bombardier Regional Aircraft
Division
Garratt Boulevard
Downsview, Ontario
Canada M3K 1Y5
Telephone (416) 633-7310
January 29, 1998
Our Ref: B96-7701-RJTL-RJ0350-001B
Atlantic Coast Airlines
515A Shaw Road,
Dulles, Virginia,
U.S.A. 20166
Gentlemen,
This Letter Agreement to Purchase Agreement No. RJ-0350 dated January 8,
1997 (the "Agreement") between Bombardier Inc. ("BRAD") and Atlantic
Coast Airlines ("Buyer") relating to the purchase of twelve (12)
Canadair Regional Jet Aircraft (the "Aircraft").
This Letter Agreement No. 001B dated April 24, 1997 cancels and
supersedes Letter Agreement No. 001A, dated April 16, 1997
Subject: Credit Memorandum
This letter constitutes an integral part of the Agreement and evidences
our further agreement with the matters set forth below. All terms used
herein and in the Agreement and not defined herein, shall have the same
meaning as in the Agreement.
Recital
As provided in Letter Agreement RJ0350-13 to the Agreement as amended by
this Contract Change Order herein, Buyer has elected to receive
[ * ] out of the total credit memorandum available to Buyer
in accordance with Letter Agreement RJ0350-001, in the form of a
[ * ] credit memorandum for the [ * ]
Aircraft. As stipulated in Letter Agreement RJ0350-13, such credit
memorandum shall be utilized by Buyer [ *
]
Notwithstanding the above, and in order to assist Buyer in the
acquisition of [ * ] BRAD agrees, subject always to Buyer
being in compliance with all terms and conditions of the Agreement, to
provide Buyer each of the [ * ] credit memorandum allocated to
the [ * ] Aircraft at time of delivery of the First
Aircraft as set forth below;
1.0 This letter constitutes an integral part of the Agreement and
evidences our further agreement with the matters set forth below.
All terms used herein and in the Agreement and not defined herein,
shall have the same meaning as in the Agreement.
2.0 In consideration of Buyer having entered into the above referenced
Agreement for the purchase of twenty-three (23) Aircraft, BRAD will
issue to Buyer upon delivery and payment for the price of the
Aircraft in accordance with the Agreement, a credit memorandum in
the amount of (i) [ *
], or (ii) [ *
]
***3.0 In addition, BRAD will, a) issue to Buyer upon delivery
and payment in full for the
First Aircraft, [ * ] credit memorandum in the
amount of [ *
] and b), issue
to Buyer upon delivery and payment in
full for the Fifth Aircraft, a [ * ] credit
memorandum in the amount of [ *
] Each of the
credit memorandum in a) and b) above, shall be made available to
Buyer by reducing the escalated value of the credit memoranda
listed in 2.0 above by [ * ] for each of the
[ * ] Aircraft, resulting a corresponding increase
in the [ *
] as stated in
Letter Agreement RJ0350-13 Such credit memoranda as provided by
BRAD above, will be used [ *
]
4.0 [ *
The credit memorandum will [ * ] be adjusted on the same pro-
rata percentage calculation as other aircraft price changes due to
changes in the Specification or Buyer selected optional features as
otherwise provided for in this Agreement. The credit memorandum,
as adjusted, will be known as the "Credit Memorandum".
5.0 Notwithstanding the provisions of this Letter Agreement, in the
case of any Aircraft where the [ *
]
6.0 In the event of the Termination of the Agreement, this Letter
Agreement shall become automatically null and void with respect to
any undelivered Aircraft.
7.0 The provisions of this Letter Agreement are personal to Buyer and
shall not be assigned or otherwise disposed of by Buyer, except as
required for financing purposes in accordance with Letter Agreement
No. 7 (Financing Assistance) and except as part of an assignment of
the Agreement as expressly permitted in Article 20 of the
Agreement, without the prior written consent of BRAD.
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms
hereof, then this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Scott Crawford
Senior Contracts Account Executive
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
Rick Kennedy
General Counsel and Corporate Secretary
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST.
January 8, 1997
Our Ref: B96-7701-RJTL-RJ0350-002
Atlantic Coast Airlines
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Gentlemen,
Letter Agreement No. 002 to Purchase Agreement No. RJ-0350 dated January
8, 1997 (the "Agreement" between Bombardier Inc. ("BRAD") and Atlantic
Coast Airlines ("Buyer") relating to the purchase of twelve (12)
Canadair Regional Jet Aircraft (the "Aircraft")
Subject: Conditions Precedent
1.0 This letter constitutes an integral part of the Agreement and
evidences our further agreement with the matters set forth below.
All terms used herein and in the Agreement and not defined herein,
shall have the same meaning as in the Agreement.
2.0 In consideration of Buyer having entered into the above referenced
Agreement for the purchase of twelve (12) Aircraft, BRAD and Buyer
agree that the Agreement is subject to the following conditions:
2.1 United Approval
It is understood that Buyer requires approval to operate fifty (50)
seat jet aircraft as a United Express operator, on terms
satisfactory to Buyer ("United Approval"). If on or before [* ]
Buyer determines that United Approval will not be achieved by such
date, or in any event Buyer has not received United Approval by [
*] then either party may, unless the parties agree to extend said
date with such amendment to the terms hereof that may be
appropriate in the circumstances, terminate this Agreement by
providing ten (10) days prior notice, which notice shall be given
on or before [ *]
2.2 Board Approval
BRAD and Buyer confirm to each other they have each obtained the
required authorizations and fulfilled any conditions applicable to
enable each of them to enter into this Agreement, except that
Buyer's final acceptance of the Agreement will be conditioned on
the approval of Buyer's Board of Directors to be obtained ten (10)
business days following execution of the Agreement, failing receipt
of which, either party may terminate this Agreement by providing
ten (10) days prior notice.
2.3 Termination
Upon notification of termination as provided by Articles 2.1 and
2.2 above, BRAD shall, [ *
]
3.0 The provisions of this Letter Agreement are personal to Buyer and
shall not be assigned or otherwise disposed of by Buyer without the
prior written consent of BRAD.
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms
hereof, then this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
James B. Glennon
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST.
Bombardier Inc.
Bombardier Regional Aircraft
Division
Garratt Boulevard
Downsview, Ontario
Canada M3K 1Y5
Telephone (416) 633-7310
December 17, 1998
Our Ref: B98-7701-RJTL-RJ0350-003B
Atlantic Coast Airlines
515A Shaw Road,
Sterling, Virginia,
U.S.A. 20166
Gentlemen,
Letter Agreement No. 003B to Purchase Agreement No. RJ-0350 dated
January 8, 1997 (the "Agreement") between Bombardier Inc. ("BRAD") and
Atlantic Coast Airlines ("Buyer") relating to the purchase of forty-
three (43) Canadair Regional Jet Aircraft (the "Aircraft")
This Letter Agreement No. 003B dated December 17, 1998 cancels and
supersedes Letter Agreement No. 003A dated March 31, 1998 .
Subject: Option Aircraft
1.0 This letter constitutes an integral part of the Agreement and
evidences our further agreement with the matters set forth below.
All terms used herein and in the Agreement and not defined herein,
shall have the same meaning as in the Agreement.
2.0 In consideration of the purchase of the Firm Aircraft, BRAD will
grant to Buyer the right to purchase seventeen (17) Option Aircraft
in accordance with the following conditions:
(a) Number of Options
The Option Aircraft are [ *
]
(b) Terms
(i) The Option Aircraft will be as described in Article 2 of
the Agreement.
(ii) The base price for each of the Option Aircraft excluding
the Buyer selected optional features, Ex Works (Incoterms
1990) BRAD's facilities in Montreal, Quebec shall be
[ *
] The base price of the
Buyer Selected Special Optional Features shall be
[ *
] The price of the Aircraft shall
be the sum of the Aircraft Base Price and the price of
the Buyer Selected Optional Features, and is subject to
escalation in accordance with the Economic Adjustment
Formula attached as Appendix I to the Agreement, [ *
] of each Option Aircraft
("Option Aircraft Purchase Price").
(iii) Unless expressly provided for in the Agreement, the
terms and conditions of the Agreement (including Letter
Agreements, except as noted below) shall apply mutatis
mutandis to the Option Aircraft, with the exception that
the provisions for (i) [ *
] and (ii) with respect to Annex A
training courses as specified in
Article 3.2.5 (flight dispatch), Article 3.3.3 (ground
handling), Article 3.3.4 (general familiarization) and
Article 3.3.5 (engine run-up), and (iii) a start-up team
as found in Article 3 of Letter Agreement No. 10
(Additional Customer Support) shall not apply to the
Option Aircraft.
(iv) The following Letter Agreements shall not apply to the
Option Aircraft and are hereby excluded:
Letter Agreement No. 2 (Conditions Precedent)
Letter Agreement No. 4 (Options)
Letter Agreement No. 11 (Spares)
Letter Agreement No. 19 (Transferability)
Letter Agreement No. 20 (United Approval)
Letter Agreement No. 23 (Compensation)
Letter Agreement No. 24 (Additional Options)
(v) Letter Agreement No. 6 (Operational Restrictions), Letter
Agreement No. 8 (Schedule Completion Rate), Letter
Agreement No. 9 (Maintenance Cost) and Letter Agreement
No. 12 (Marketing Support) shall apply mutatis mutandis
to the Option Aircraft, with specific terms for Option
Aircraft as set out therein.
(c) Exercise Procedures for Blocks No. 1, 2, 3, 4 and 5
Timing and procedures for the exercise of options for aircraft
in each Block shall be as follows:
(i) [ * ] prior to the first day
of the desired delivery month of the
first aircraft in that Block:
Buyer shall give notice ("Notice of Intention") to BRAD
of it s
conditional intention to purchase Option Aircraft and
indicating its
desired delivery months for the Option Aircraft in that
Block; and
Buyer shall pay to BRAD a reservation fee
("Reservation Fee") of
[ * ] per Option
Aircraft.
Buyer shall not request delivery positions [ * ]
(ii) During the month following Notice of Intention, BRAD and
Buyer will discuss and agree on available delivery
positions, [ *
]
(iv) Within [ * ] following Notice of Intention:
Buyer shall give notice ("Notice of Exercise") to BRAD of its
exercise of its option to purchase the Option Aircraft in
the respective
Block, at which time the Option Aircraft shall become Aircraft;
and
Coincident with a Notice of Exercise, Buyer shall make
payments to
BRAD as is necessary to bring the total amount of Total
Deposits held to
the amount identified in Article 5.2 of the Agreement; and
Reservation fees shall be applied as follows:
For each Option Aircraft for which Notice of Exercise
has been
made, all Reservation Fees paid shall be applied
toward the Total
Deposits, if any, that are then due, or if no Total
Deposits are due,
shall be refunded by direct bank transfer within
[ * ]of Notice of Exercise;
[ *
]
(v) [ *
]
3.0 BRAD will, upon payment for and delivery of each Option Aircraft,
at no additional charge to Buyer, extend the term of Article 1.2.2
of Annex A of the Agreement (the Field Service Representative
("FSR")) by two (2) additional months.
4.0 In the event of the Termination of the Agreement, this Letter
Agreement shall become automatically null and void.
5.0 Upon exercise of Buyer's rights to purchase in accordance with this
Letter Agreement, the parties shall amend the Agreement or enter
into an additional purchase agreement in order to give effect to
the purchase of Option Aircraft in accordance with the terms and
conditions thereof.
6.0 The provisions of this Letter Agreement are personal to Buyer and,
except as part of an assignment of the Agreement as expressly
permitted by the provisions in Article 20 of the Agreement, shall
not be assigned or otherwise disposed of by Buyer without the prior
written consent of BRAD.
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms
hereof, then this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Anthony Prezioso
Manager, Contracts
Acknowledged and Accepted
ATLANTIC COAST AIRLINES
________________________ Date:_____________
Kerry B. Skeen
President and C.E.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST.
January 8, 1997
Our Ref: B96-7701-RJTL-RJ0350-004
Atlantic Coast Airlines
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Gentlemen,
Letter Agreement No. 004 to Purchase Agreement No. RJ-0350 dated January
8, 1997 (the "Agreement" between Bombardier Inc. ("BRAD") and Atlantic
Coast Airlines ("Buyer") relating to the purchase of twelve (12)
Canadair Regional Jet Aircraft (the "Aircraft")
Subject: Options
1.0 This letter constitutes an integral part of the Agreement and
evidences our further agreement with the matters set forth below.
All terms used herein and in the Agreement and not defined herein,
shall have the same meaning as in the Agreement.
2.0 In consideration of Buyer having entered into the above referenced
Agreement, and in addition to the provisions of Letter Agreement
No. 003, [ *
]
(a) [ *
]
(b) [ *
]
[ *
]
(c) [ *
]
[ *
]
(d) [ *
]
3.0 In the event of the Termination of the Agreement, this Letter
Agreement shall become automatically null and void.
4.0 Upon exercise of Buyer's rights to purchase in accordance with this
Letter Agreement, the parties shall amend the Agreement or enter
into an additional purchase agreement in order to give effect to
the purchase of Option Aircraft in accordance with the terms and
conditions thereof.
5.0 The provisions of this Letter Agreement are personal to Buyer and,
except as part of an assignment of the Agreement as expressly
permitted by the provisions of Article 20 of the Agreement, shall
not be assigned or otherwise disposed of by Buyer without the prior
written consent of BRAD.
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms
hereof, then this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
James B. Glennon
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST.
Bombardier Inc.
Bombardier Regional Aircraft
Division
Garratt Boulevard
Downsview, Ontario
Canada M3K 1Y5
Telephone (416) 633-7310
November 21, 1997
Our Ref: B96-7701-RJTL-RJ0350-005B
Atlantic Coast Airlines
515A Shaw Road,
Sterling, Virginia,
U.S.A. 20166
Gentlemen,
Letter Agreement No. 005B to Purchase Agreement No. RJ-0350 dated
January 8, 1997 (the "Agreement" between Bombardier Inc. ("BRAD") and
Atlantic Coast Airlines ("Buyer") relating to the purchase of twenty-
three (23) Canadair Regional Jet Aircraft (the "Aircraft")
This Letter Agreement No. 005B dated November 21, 1997 cancels and
supersedes Letter Agreement No. 005A dated May 19, 1997.
Subject: FIPP
1.0 This letter constitutes an integral part of the Agreement and
evidences our further agreement with the matters set forth below.
Unless otherwise specified, the term "Aircraft" in this Letter
Agreement only shall refer additionally to the thirty-seven (37)
Option Aircraft as well as the thirty-three (33) Firm Canadair
Regional Jet Aircraft. All other terms used herein and in the
Agreement and not defined herein, shall have the same meaning as in
the Agreement.
2.0 BRAD will participate with Buyer in a
[ *
] ("FIPP") pursuant to which [ *
3.0 In the event of termination pursuant to Article 16.1 or 16.2 for
the default of Buyer or in the event of default of Buyer (or its
assignee) under a financing arrangement referred to in Letter
Agreement No. 007B which results in a termination of such an
arrangement, this Letter Agreement shall become automatically null
and void. [ *
]
4.0 The provisions of this Letter Agreement are personal to Buyer and
shall not be assigned or otherwise disposed of by Buyer without the
prior written consent of BRAD [ *
]
except to a member of the Buyer's group of companies to which
reference is made in paragraph 20.1, 20.2 or 20.3 of the Agreement.
[ *
]
provided: (i) that the confidentiality of the terms of this
Letter Agreement be maintained in a manner satisfactory to both
parties; (ii) that there is no increase in the liability or
exposure of BRAD, (iii) that Buyer remains jointly and severally
liable with assignee, except in the event of the sale of the
Aircraft where BRAD is released of its obligation under the
financing, and (iv) that BRAD shall be given a first right of
refusal to purchase the Aircraft at the same terms and conditions
as that agreed to with assignee.
5.0 [ *
]
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms
hereof, then this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
Paul Tate
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST.
January 8, 1997
Our Ref: B96-7701-RJTL-RJ0350-006
Atlantic Coast Airlines,
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Gentlemen,
Letter Agreement No. 006 to Purchase Agreement No. RJ-0350 dated
January 8, 1997 (the "Agreement") between Bombardier Inc. ("BRAD") and
Atlantic Coast Airlines, Inc ("Buyer") relating to the purchase of
twelve (12) Canadair Regional Jet Aircraft (the "Aircraft")
Subject: Operational Restrictions
1.0 This letter constitutes an integral part of the Agreement and
evidences our further agreement with the matters set forth below.
All terms used herein and in the Agreement and not defined herein,
shall have the same meaning as in the Agreement.
2.0 Grounding
2.1 In the event that
(a) the FAA issues an Airworthiness Directive that is ultimately
attributable to a defect in the design and/or manufacturing of
the Canadair Regional Jet Aircraft (taking into account the
state of the art at the time of design or manufacture) that
results in a grounding or operational restrictions of all or
part of Buyer's fleet of Aircraft (except where directed at
Buyer or resulting from Buyer's operating or maintenance
practices), which effectively prevents Buyer from operating
the Aircraft in revenue service for more than
[ * ] or
(b) Buyer is prevented from operating the Aircraft in revenue
service for more than [ *
] by a court order in
the case of a patent infringement claim or
action filed before a court in Canada or the United States,
[ *
]
3.0 During the time that Buyer is prevented from operating the Aircraft
due to such operational restrictions, Buyer shall use best efforts
to reschedule the Aircraft within its total route system such that
the restriction does not prevent the Aircraft from operating in
revenue service.
4.0 The undertaking by BRAD in this Letter Agreement excludes any such
grounding or operational restriction caused by:
(i) BFE or Buyer-selected equipment or other products or parts not
specifically approved by BRAD;
(ii) failure by Buyer (subject to parts availability) to comply
with or incorporate a service bulletin which would have
prevented the grounding;
(iii) failure by Buyer to comply with the conditions of the
Airworthiness Directive, within a reasonable length of time
given the availability of BRAD Parts, Vendor Parts or
Powerplant Parts;
(iv) modifications made to the Aircraft or its Vendor Parts
subsequent to the Delivery Date by Buyer or a third party,
unless approved by BRAD;
(v) failure to operate or maintain the Aircraft in accordance with
the Technical Data; or
(vi) not operating the Aircraft in normal commercial airline
service.
5.0 The term of this Letter Agreement shall commence on the date of
start of revenue service of Buyer's first Aircraft and shall expire
five (5) years thereafter.
6.0 Without limitation to the foregoing, during any period of grounding
or operational restrictions, BRAD will diligently work to correct
the cause(s) relating thereto and Buyer will provide all reasonable
assistance, if required.
7.0 Limitation
7.1 [ *
]
8.0 The provisions of this Letter Agreement are personal to Buyer and
shall not be assigned or otherwise disposed of by Buyer except as
part of an assignment of the Agreement without the prior written
consent of BRAD.
9.0 This Letter Agreement constitutes an integral part of the Agreement
and subject to the terms and conditions contained therein.
10.0 In the event of the Termination of the Agreement, this Letter
Agreement shall become automatically null and void unless this
Agreement is terminated by Buyer pursuant to Article 16.1 or 16.2
as a result of a default or breach of this Agreement by BRAD, or as
a result of an Excusable Delay
[ * ] in which event the terms
and conditions of this Letter Agreement will continue to apply to
the Aircraft delivered prior to the date of termination.
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms
hereof, then this Letter Agreement shall prevail.
Yours very truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
James B. Glennon
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST.
Bombardier Inc.
Bombardier Regional Aircraft
Division
Garratt Boulevard
Downsview, Ontario
Canada M3K 1Y5
Telephone (416) 633-7310
November 21, 1997
Our Ref: B96-7701-RJTL-RJ0350-007B
Atlantic Coast Airlines
515A Shaw Road,
Sterling, Virginia,
U.S.A. 20166
Gentlemen,
Letter Agreement No. 007B to Purchase Agreement No. RJ-0350 dated
January 8, 1997 (the "Agreement") between Bombardier Inc. ("BRAD") and
Atlantic Coast Airlines ("Buyer") relating to the purchase of twenty-
four (24) Canadair Regional Jet Aircraft (the "Aircraft")
This Letter Agreement No. 007B dated November 21, 1997 cancels and
supersedes Letter Agreement No. 007A dated May 19, 1997.
Subject: Financing
1.0 This letter constitutes an integral part of the Agreement and
evidences our further agreement with the matters set forth below.
All terms used herein and in the Agreement and not defined herein,
shall have the same meaning as in the Agreement.
1.1 This Letter Agreement describes the general terms and conditions of
the financing assistance to be provided by BRAD to Buyer. [ *
] collectively referred
to as the "Financed Aircraft").
2.0 Financing Assistance
2.1 Lease financing of the Financed Aircraft will be arranged by Buyer
working in close coordination with and supported by BRAD with
backstop financing to be underwritten by BRAD as generally outlined
below. Any information related to the form and amount of any
support which may be provided by BRAD is to be treated as
confidential and is not to be provided by Buyer to any third party
without the express written consent of BRAD and then only subject
to the third party agreeing to BRAD's confidentiality agreement.
It is Buyer's responsibility to have such form executed with any
third party prior to Buyer's disclosure of any such information and
to provide such form to BRAD for approval. The above does not
apply where Buyer or the applicable third party is required to
disclose such information by law or compelled by court order to do
so. It is acknowledged that Buyer's advisor Babcock & Brown has
received a copy of this proposal and that BRAD and Babcock & Brown
will execute a confidentiality agreement.
2.2 [ *
]
2.3 Buyer and BRAD will work together to structure, arrange and source
acceptable third party lease financing based on Buyer's and
Guarantor's credit. If Buyer, in conjunction with BRAD, is unable
to arrange such lease financing as described above in the first
sentence of paragraph 2.1 on the basis of Buyer's and Guarantor's
credit, [ *
]
2.4 [ *
]
2.5 [ *
]
2.6 [ *
]
2.7 [ *
]
[ *
]
2.8 [ *
]
2.9 [ *
]
3.0 [ *
]
4.0 In the event of the termination of the Agreement pursuant to
Article 16.1 or 16.2 as a result of a default or breach of this
Agreement by Buyer, or in the event of a default of Buyer (or its
assignee) under a financing arrangement referred to Letter
Agreement No. 007B which results in termination of such
arrangement, this Letter Agreement shall become automatically null
and void.
5.0 The provisions of this Letter Agreement are personal to Buyer and
shall not be assigned or otherwise disposed of by Buyer except as
part of an assignment of the Agreement expressly permitted by
Article 20 of the Agreement.
Should there be any inconsistency between this Letter Agreement and the
Agreement with respect to the subject matter covered by the terms
hereof, then this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
Paul Tate
Sr. Vice President and C.F.O.
ANNEX A
[ *
]
[ *
]
[ *
]
**** 7.0 [ *
]
*** 8.0The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer except as part of an assignment of the
Agreement expressly permitted by Article 20 of the
Agreement (with the exception of Article 4.0 and 7.0
hereof, which can only be assigned to a wholly owned
subsidiary).
9.0 This Letter Agreement constitutes an integral part of
the Agreement and subject to the terms and conditions
contained therein.
10.0 In the event of the Termination of the Agreement, this
Letter Agreement shall become automatically null and
void.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
January 8, 1997
Our Ref: B96-7701-RJTL-RJ0350-008
Atlantic Coast Airlines
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Gentlemen,
Letter Agreement No. 008 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of twelve (12) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Schedule Completion Rate
1.0 This letter constitutes an integral part of the
Agreement and evidences our further agreement with the
matters set forth below. All terms used herein and in
the Agreement and not defined herein, shall have the
same meaning as in the Agreement.
2.0 Intent
The intent of the Schedule Completion Rate
[ * ] is to achieve the
full potential of the inherent technical reliability of
the Aircraft [ *
]
3.0 Definition
[ *
]
4.0 [ * ]
[ *
]
5.0 [ * ]
[ *
]
6.0 Formula
[ *
]
[ *
]
7.0 Assumptions
[ *
]
8.0 Conditions and Limitations
8.1 [ *
]
[ *
]
8.2 Reporting
Buyer shall provide to BRAD not later than
[ *
] all reports as required by
Buyer's regulatory authority relating to dispatch
reliability and schedule completion. [ *
] Buyer shall also provide BRAD
such other
information and data as BRAD may reasonably
request for the purpose of analyzing
[ * ]. BRAD shall
respond to the data in a timely manner and
shall provide Buyer with a summary of fleetwide
dispatch reliability reports [ *
]
8.3 Master Record
The master record of Schedule Completion Rate
will be maintained by BRAD in its format based
upon information provided by Buyer's maintenance
control program as requested herein.
BRAD will provide a copy to Buyer of the
data. Buyer shall review the data and if it is
not in agreement with Buyer's records, Buyer and
BRAD will consult to resolve any differences.
9.0 Corrective Action
9.1 In the event the achieved schedule completion
rate, as reported to Buyer by BRAD,
[ *
]
BRAD and Buyer will
jointly review the performance for that period to
identify improvement changes
required.
[ *
]
[ *
]
9.2 [ *
] shall be dependent upon the
quality, extent and regularity of information and
data reported to BRAD by Buyer.
10.0 Implementation of Changes
Buyer may, at its option, decline to implement any
change proposed by BRAD under Article 9.0 above. If
Buyer so declines, [ *
]
11.0 [ *
]
12.0 [ * ]
[ *
]
13.0 Limitation of Liability
[ *
]
14.0 The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer without the prior written consent of BRAD,
which consent shall not be unreasonably withheld.
15.0 This Letter Agreement constitutes an integral part of
the Agreement and subject to the terms and conditions
contained therein.
16.0 In the event of the Termination of the Agreement, this
Letter Agreement shall become automatically null and
void.
Should there be any inconsistency between this Letter
Agreement and the Agreement with respect to the subject
matter covered by the terms hereof, then this Letter
Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
James B. Glennon
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
Bombardier Inc.
Bombardier Regional Aircraft
Division
Garratt Boulevard
Downsview, Ontario
Canada M3K 1Y5
Telephone (416) 633-7310
December 17, 1998
Our Ref: B96-7701-RJTL-RJ0350-009B
Atlantic Coast Airlines
515A Shaw Road,
Sterling, Virginia,
U.S.A. 20166
Dear Sirs,
Letter Agreement No. 009B to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines, Inc. ("Buyer")
relating to the purchase of forty-three (43) Canadair
Regional Jet Aircraft (the "Aircraft")
This Letter Agreement No. 009B dated December 17, 1998
cancels and supersedes Letter Agreement No. 009A dated
August 21,1998.
Subject: Airframe Direct Maintenance Cost
1.0 This letter constitutes an integral part of the
Agreement and evidences our further agreement with the
matters set forth below. All terms used herein and in
the Agreement and not defined herein, shall have the
same meaning as in the Agreement.
2.0 Intent
2.1 The intent of the Airframe direct maintenance cost
[ * ] is to achieve the full potential of
the maintainability of the Aircraft [ *
] [ *
]
2.2 The "Airframe" shall mean the Aircraft excluding
Power Plant Parts, APU parts, seatcovers and
carpets, Collins Avionics Components, Buyer
Furnished Equipment (BFE) and Ground Support
Equipment (GSE).
3.0 Airframe Direct Maintenance Cost [ * ]
3.1 [ *
]
3.1.1 The term of this Letter Agreement shall
commence on the first day of the month
following delivery of the first Aircraft and
shall end seven (7) years thereafter;
3.1.2 [ *
]
3.1.3 [ *
]
3.2 [ *
]
[ *
]
4.0 Calculation of Cost
4.1 Airframe Direct Maintenance Material Cost
("ADMMC")
The ADMMC is defined as the cost of material
consumed, which excludes initial provisioning
purchases, for the direct airframe maintenance of
the aircraft, less any transportation, duties,
taxes or license fees. Notwithstanding Buyer's
internal cost allocation system all elements of
indirect material such as cleaning supplies,
consumable tools, hydraulic fluids, oils and
greases, welding supplies and adhesives are
excluded from the calculation of ADMMC.
4.2 Airframe Direct Outside Service Cost ("ADOSC")
The ADOSC is defined as the cost expended in
outside services for direct airframe and component
maintenance of the aircraft. The ADOSC shall
include the total outside service charges of both
labour and material costs, but excluding
transportation and taxes.
4.3 Hourly Airframe Direct Maintenance Cost ("ADMC")
The following formula shall be used to calculate
the hourly ADMC:
ADMC = ADMMC + ADOSC
T
Where:
ADMMC = Airframe Direct Maintenance
Material Cost,
ADOSC = Airframe Direct Outside
Service Cost,
T = Total flight hours for the
Aircraft recorded for
the applicable period.
4.4 Exclusion of In-House Labour Costs
For more certainty, the parties agree that
all labour costs incurred in-house by Buyer
in maintaining the Aircraft, including but
not limited to scheduled and routine
maintenance, troubleshooting, removal and
installation of parts, is excluded
[ * ]
5.0 [ * ]
5.1 [ * ]
5.1.1 [ *
]
5.1.2 [ *
]
[ *
]
5.1.3 [ *
]
5.1.4 [ *
]
5.2 [ * ]
5.2.1 [ *
]
5.2.2 [ *
]
[ *
]
[ *
]
6.0 Final Adjustment
6.1 [ *
]
6.2 [ *
]
[ *
]
6.3 [ *
]
6.4 [ *
]
6.5 [ *
]
[ *
]
6.6 [ *
]
6.7 [ *
]
7.0 [ * ]
[ *
]
8.0 Reporting
8.1 Buyer will furnish data to BRAD to allow BRAD to
carry out its analysis and tracking of Buyer's
maintenance costs with respect to
[ * ]. If Buyer is not in agreement
with BRAD's request for specific data and format,
Buyer and BRAD will consult to resolve any
differences.
8.2 BRAD shall provide a quarterly report to Buyer on
the status of the Airframe direct maintenance cost
based on the data submitted by Buyer and approved
by BRAD. BRAD shall review the report and, if the
supporting data is not in agreement with Buyer's
records, Buyer and BRAD will consult to resolve
any differences. [ *
]
8.3 BRAD shall not contest any data, as supplied by
Buyer, once the [ * ] has
been agreed to.
8.4 [ *
]
9.0 Limitation of Liability
[ *
]
10.0 The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer without the prior written consent of BRAD,
which shall not be unreasonably withheld.
11.0 This Letter Agreement constitutes an integral part of
the Agreement and subject to the terms and conditions
contained therein.
12.0 In the event of the termination of the Agreement, this
Letter Agreement shall become automatically null and
void unless this Agreement is terminated by Buyer
pursuant to Article 16.1 or 16.2 as a result of a
default or breach of this Agreement by BRAD, or as a
result of an Excusable Delay or [ *
]
Should there be any inconsistency between this Letter
Agreement and the Agreement with respect to the subject
matter covered by the terms hereof, then this Letter
Agreement shall prevail.
Yours very truly,
BOMBARDIER INC.
________________________ Date:_____________
Anthony Prezioso
Manager, Contracts
Acknowledged and Accepted
ATLANTIC COAST AIRLINES
________________________ Date:_____________
Kerry B. Skeen
President and C.E.O.
APPENDIX A
AIRFRAME DIRECT MAINTENANCE COST [ * ]
[ * ]
The following is a listing of all assumptions used to
determine [ * ] per flight hour. It is
understood by the parties that these assumptions may change
in which case the parties, with mutual agreement, will
adjust [ * ]
1. All costs are based upon Specification.
2. All costs are based on the maintenance inspection
intervals in the Buyer's regulatory agency approved
maintenance program.
3. All costs are expressed in July 1, 1997 United States
Dollars subject to escalation in accordance with the
terms of Appendix B of this Letter Agreement, and are
rounded to the nearest whole dollar.
5. Buyer's subcontract airframe labour rate per man-hour
is [ *
]
6. [ *
]
7. Annual average Aircraft utilization is not more than
[ * ]
flight hours per year.
8. Buyer's average annual flight duration for the Aircraft
will be [ * ] minutes per departure.
9. Total number of Aircraft Buyer has on firm order from
BRAD (including delivered Aircraft under the Agreement)
equals [ * ]
Should Buyer's average annual flight duration change
throughout the [ * ] a
new Airframe Direct Maintenance Cost [ * ]
value will be generated as per the following formula:
[ *
]
9. Buyer's subcontracted maintenance cost levels are:
ATA CHAPTER PERCENT
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
[ *
]
APPENDIX B
ADMCG Economic Adjustment Formula
The [ * ] will be calculated using
the following [ * ] Formula. The
[ * ] term is specified in Section 3.1.1 of the
Letter Agreement.
[ *
]
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
January 8, 1997
Our Ref: B96-7701-RJTL-RJ0350-010
Atlantic Coast Airlines
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Gentlemen,
Letter Agreement No. 010 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of twelve (12) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Additional Customer Support
1.0 This letter constitutes an integral part of the
Agreement and evidences our further agreement with the
matters set forth below. All terms used herein and in
the Agreement and not defined herein, shall have the
same meaning as in the Agreement.
2.0 Training
2.1 General Terms
2.1.1 The objective of the training programs
(the "Programs"), as described herein, shall
be to familiarize and assist Buyer's
personnel in the introduction, operation, and
maintenance of the aircraft.
BRAD shall offer to the Buyer the Programs in
the English language at a BRAD designated
facility.
[ *
]
2.1.2 [ *
]
2.1.3 The Programs shall be designed to
reflect the model and/or the configuration of
the Aircraft and may include differences
training to identify such configuration or
model. Manuals and training materials which
are provided during the Programs exclude
revision service.
2.1.4 A Training Conference shall be held
where possible no later than six (6) months
prior to the Scheduled Delivery of the first
aircraft to the Buyer, or as may be otherwise
agreed, to establish the Programs' content
and schedule.
2.2 [ *
]
2.3 [ *
]
3.0 [ *
]
4.0 [ * ]
4.1 [ *
]
4.2 [ *
]
4.3 In regard to Article 4.2, [ *
]
5.0 Manuals on CD-ROM
5.1 BRAD and Buyer are aware that BRAD is currently in the
process of investigating and bringing on-line CD-ROM
versions of various manuals. BRAD hereby commits that
in the event that it is able to successfully and cost-
effectively complete this program, it will provide
Buyer with CD-ROM versions of Buyer's technical
publications [ *
]
6.0 [ * ]
[ *
]
7.0 [ * ]
]
8.0 The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer except as part of an assignment of the
Agreement expressly permitted by Article 20 of the
Agreement (with the exception of Article 4.0 hereof,
which can only be assigned to a wholly owned
subsidiary).
9.0 This Letter Agreement constitutes an integral part of
the Agreement and subject to the terms and conditions
contained therein.
10.0 In the event of the Termination of the Agreement, this
Letter Agreement shall become automatically null and
void.
Should there be any inconsistency between this Letter
Agreement and the Agreement with respect to the subject
matter covered by the terms hereof, then this Letter
Agreement shall prevail.
Yours very truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
James B. Glennon
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
January 8, 1997
Our Ref: B96-7701-RJTL-RJ0350-011
Atlantic Coast Airlines
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Gentlemen,
Letter Agreement No. 011 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of twelve (12) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Spares
1.0 This letter constitutes an integral part of the
Agreement and evidences our further agreement with the
matters set forth below. All terms used herein and in
the Agreement and not defined herein, shall have the
same meaning as in the Agreement.
2.0 [ *
]
3.0 [ *
]
4.0 The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer except as part of an assignment of the
Agreement (in whole but not in part) expressly
permitted by Article 20 of the Agreement.
5.0 This Letter Agreement constitutes an integral part of
the Agreement and subject to the terms and conditions
contained therein.
6.0 In the event of the Termination of the Agreement, this
Letter Agreement shall become automatically null and
void.
Should there be any inconsistency between this Letter
Agreement and the Agreement with respect to the subject
matter covered by the terms hereof, then this Letter
Agreement shall prevail.
Yours very truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
James B. Glennon
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
January 8, 1997
Our Ref: B96-7701-RJTL-RJ0350-012
Atlantic Coast Airlines
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Gentlemen,
Letter Agreement No. 012 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of twelve (12) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Marketing Support
1.0 This letter constitutes an integral part of the
Agreement and evidences our further agreement with the
matters set forth below. All terms used herein and in
the Agreement and not defined herein, shall have the
same meaning as in the Agreement.
2.0 [ *
]
3.0 The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer except as part of an assignment of the
Agreement expressly permitted under Article 20 of the
Agreement.
4.0 This Letter Agreement constitutes an integral part of
the Agreement and subject to the terms and conditions
contained therein.
5.0 In the event of the Termination of the Agreement, this
Letter Agreement shall become automatically null and
void.
Should there be any inconsistency between this Letter
Agreement and the Agreement with respect to the subject
matter covered by the terms hereof, then this Letter
Agreement shall prevail.
Yours very truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
James B. Glennon
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
January 8, 1997
Our Ref: B96-7701-RJTL-RJ0350-013
Atlantic Coast Airlines
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Gentlemen,
Letter Agreement No. 013 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of twelve (12) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Spares Credit
1.0 This letter constitutes an integral part of the
Agreement and evidences our further agreement with the
matters set forth below. All terms used herein and in
the Agreement and not defined herein, shall have the
same meaning as in the Agreement.
2.0 [ *
]
3.0 [ *
]
4.0 [ *
]
5.0 The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer except as part of an assignment of the
Agreement expressly permitted in Article 20 of the
Agreement.
6.0 This Letter Agreement constitutes an integral part of
the Agreement and subject to the terms and conditions
contained therein.
7.0 In the event of the Termination of the Agreement, this
Letter Agreement shall become automatically null and
void with respect to any undelivered Aircraft.
Should there be any inconsistency between this Letter
Agreement and the Agreement with respect to the subject
matter covered by the terms hereof, then this Letter
Agreement shall prevail.
Yours very truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
James B. Glennon
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
January 8, 1997
Our Ref: B96-7701-RJTL-RJ0350-014
Atlantic Coast Airlines
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Gentlemen,
Letter Agreement No. 014 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of twelve (12) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Taxes, Duties And Licenses
1.0 This letter constitutes an integral part of the
Agreement and evidences our further agreement with the
matters set forth below. All terms used herein and in
the Agreement and not defined herein, shall have the
same meaning as in the Agreement.
2.0 The parties contemplate that at time of delivery, the
Aircraft will be sold to a United States company or
other USA entity (the "Lessor"), and directly exported
from Canada and subsequently leased to Buyer. [ *
]
3.0 [ *
]
4.0 [ *
]
5.0 The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer except as part of an assignment of the
Agreement expressly permitted by Article 20 of the
Agreement without the prior written consent of BRAD.
6.0 This Letter Agreement constitutes an integral part of
the Agreement and subject to the terms and conditions
contained therein.
7.0 In the event of the Termination of the Agreement, this
Letter Agreement shall become automatically null and
void.
Should there be any inconsistency between this Letter
Agreement and the Agreement with respect to the subject
matter covered by the terms hereof, then this Letter
Agreement shall prevail.
Yours very truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
James B. Glennon
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
January 8, 1997
Our Ref: B96-7701-RJTL-RJ0350-015
Atlantic Coast Airlines
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Gentlemen,
Letter Agreement No. 015 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of twelve (12) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Airworthiness Directives
1.0 Intent
In consideration of Buyer entering into the above-
referenced Agreement, BRAD states that it is its
intention to incorporate before delivery of the
Aircraft any Mandatory Modification Service Bulletins
outstanding on the Aircraft. [ *
]
2.0 Applicability
The provisions of this Letter Agreement will apply to
mandatory Airworthiness Directives ("AD"), and
resulting service bulletins, issued by the DOT and/or
the FAA pursuant to applicable regulations prior to the
time of delivery of any Aircraft ("Mandatory
Modification Service Bulletin").
3.0 Conditions
For any Mandatory Modification Service Bulletin not
incorporated on the Delivery Date, as defined in
Article 2.0 above, BRAD shall, subject to the
provisions of Article 8.5 of the Agreement,
[ *
] as provided in Article 4
hereof.
4.0 [ *
]
5.0 This letter constitutes an integral part of the
Agreement and evidences our further agreement with the
matters set forth below. All terms used herein and in
the Agreement and not defined herein, shall have the
same meaning as in the Agreement.
6.0 The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer except as part of an assignment of the
Agreement expressly permitted in Article 20 of the
Agreement.
7.0 In the event of the termination of the Agreement, this
Letter Agreement shall become automatically null and
void unless this Agreement is terminated by Buyer
pursuant to Article 16.1 or 16.2 as a result of a
default or breach of this Agreement by BRAD, in which
event the terms and conditions of this Letter Agreement
will continue to apply to the Aircraft delivered prior
to the date of termination.
Should there be any inconsistency between this Letter
Agreement and the Agreement with respect to the subject
matter covered by the terms hereof, then this Letter
Agreement shall prevail.
Yours very truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
James B. Glennon
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
January 8, 1997, 1996
Our Ref: B96-7701-RJTL-RJ0350-016
Atlantic Coast Airlines
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Gentlemen,
Letter Agreement No. 016 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of twelve (12) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Reconciliation
1.0 The parties recognize that in the course of the
administration of this Agreement, [ *
] in accordance
with the terms of the Agreement.
2.0 [ *
]
3.0 [ *
]
4.0 This letter constitutes an integral part of the
Agreement and evidences our further agreement with the
matters set forth below. All terms used herein and in
the Agreement and not defined herein, shall have the
same meaning as in the Agreement.
5.0 The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer except as part of an assignment of the
Agreement (in whole not in part) expressly permitted
under Article 20 of the Agreement and otherwise such
consent shall not be unreasonably withheld.
6.0 In the event of the Termination of the Agreement, this
Letter Agreement shall become automatically null and
void.
7.0 Should there be any inconsistency between this Letter
Agreement and the Agreement with respect to the subject
matter covered by the terms hereof, then this Letter
Agreement shall prevail.
Yours very truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
James B. Glennon
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
Bombardier Inc.
Bombardier Regional Aircraft
Division
Garratt Boulevard
Downsview, Ontario
Canada M3K 1Y5
Telephone (416) 633-7310
November 21, 1997
Our Ref: B97-7701-AP-RJ0350-017
Atlantic Coast Airlines
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Gentlemen,
Letter Agreement No. 017 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement") between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of twenty-four (24) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Spare Parts Price Catalogue
This letter constitutes an integral part of the Agreement
and evidences our further agreement with the matters set
forth below. All terms used herein and in the Agreement and
not defined herein, shall have the same meaning as in the
Agreement.
1.0 In consideration of Buyer having entered into the above
referenced Agreement, Bombardier hereby confirms,
[ *
]
2.0 In the event that during [ *
]
3.0 In reference to Article 2 above, Bombardier and Buyer
shall mutually agree on the [ *
]
4.0 Except as provided for in Article 20.1 of the
Agreement, the provisions of this Letter Agreement are
personal to Buyer and shall not be assigned or
otherwise disposed of by Buyer without the prior
written consent of Bombardier.
5.0 This Letter Agreement constitutes an integral part of
the Agreement and is subject to the terms and
conditions contained therein. To the extent of any
inconsistency or conflict between this Letter Agreement
and the Agreement, this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
Paul Tate
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
Bombardier Inc.
Bombardier Regional Aircraft
Division
Garratt Boulevard
Downsview, Ontario
Canada M3K 1Y5
Telephone (416) 633-7310
November 21, 1997
Our Ref: B97-7701-AP-RJ0350-018
Atlantic Coast Airlines
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Letter Agreement No. 018 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of twenty-four (24) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Exercise of Twelve Option Aircraft
Gentlemen:
Reference is made to Notice of Intention to Exercise letter
dated August 27, 1997, whereby Buyer states of its intention
to purchase twelve (12) Option Aircraft pursuant to Letter
Agreement No. 003 of the Agreement and to Letter of Intent
dated October 30, 1997, whereby Buyer states the terms and
conditions by which Buyer will exercise its right to acquire
the Option Aircraft.
This letter constitutes an integral part of the Agreement
and evidences our further agreement with the matters set
forth below. All terms used herein and in the Agreement and
not defined herein, shall have the same meaning as in the
Agreement.
1.0 [ *
]
1.1 [ *
]
1.2 [ *
]
2.0 [ * ]
2.1 [ *
]
2.2 [ *
]
3.0 [ * ]
3.1 [ *
]
4.0 In the event of the termination of the Agreement, this
Letter Agreement shall become automatically null and
void.
5.0 The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer without the prior written consent of
Bombardier.
6.0 This Letter Agreement constitutes an integral part of
the Agreement and is subject to the terms and
conditions contained therein. To the extent of any
inconsistency or conflict between this Letter Agreement
and the Agreement, this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
Paul Tate
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
Bombardier Inc.
Bombardier Regional Aircraft
Division
Garratt Boulevard
Downsview, Ontario
Canada M3K 1Y5
Telephone (416) 633-7310
November 21, 1997
Our Ref: B97-7701-AP-RJ0350-019
Atlantic Coast Airlines
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Letter Agreement No. 019 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of twenty-four (24) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Transferability of Aircraft Delivery Positions
Gentlemen:
Reference is made to Notice of Intention to Exercise letter
dated August 27, 1997, whereby Buyer states of its intention
to purchase twelve (12) Option Aircraft pursuant to Letter
Agreement No. 003 of the Agreement and to Letter of Intent
dated October 30, 1997, whereby Buyer states the terms and
conditions by which Buyer will exercise its right to acquire
the Option Aircraft.
This letter constitutes an integral part of the Agreement
and evidences our further agreement with the matters set
forth below. All terms used herein and in the Agreement and
not defined herein, shall have the same meaning as in the
Agreement.
1. [ *
]
2. Subject to Article 20.5 of the Agreement, Buyer may
[ *
]
3. [ *
]
4. In the event of the termination of the Agreement, this
Letter Agreement shall become automatically null and
void.
5. The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer without the prior written consent of
Bombardier.
6. This Letter Agreement constitutes an integral part of
the Agreement and is subject to the terms and
conditions contained therein. To the extent of any
inconsistency or conflict between this Letter Agreement
and the Agreement, this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
Paul Tate
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
Bombardier Inc.
Bombardier Regional Aircraft
Division
Garratt Boulevard
Downsview, Ontario
Canada M3K 1Y5
Telephone (416) 633-7310
November 21, 1997
Our Ref: B97-7701-AP-RJ0350-020
Atlantic Coast Airlines
1 Export Drive,
Sterling, Virginia,
U.S.A. 20164
Letter Agreement No. 020 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of twenty-four (24) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: United Approval
Gentlemen:
Reference is made to Notice of Intention to Exercise letter
dated August 27, 1997, whereby Buyer states of its intention
to purchase twelve (12) Option Aircraft pursuant to Letter
Agreement No. 003 of the Agreement and to Letter of Intent
dated October 30, 1997, whereby Buyer states the terms and
conditions by which Buyer will exercise its right to acquire
the Option Aircraft.
This letter constitutes an integral part of the Agreement
and evidences our further agreement with the matters set
forth below. All terms used herein and in the Agreement and
not defined herein, shall have the same meaning as in the
Agreement.
1. United Approval
1.1 The Aircraft from Block No. 2 of the Option
Aircraft [ *] are conditional on United
Airlines granting Buyer the authority to operate
said Aircraft as a United Express operator, on
terms satisfactory to Buyer ("United Approval").
If on or before [ *] Buyer determines that
United Approval will not be granted or received by
such date, or in any event if Buyer has not
received United Approval by such date for Block
No. 2 of the Option Aircraft, then either party
may, unless the parties agree to extent said date
with such amendment to the terms hereof that may
be appropriate in the circumstances, terminate the
exercise of Block No. 2 of the Option Aircraft
pursuant to Change Order No. 7, by providing ten
(10) days notice.
1.2 Similarly, the Aircraft derived from Block No. 3
of the Option Aircraft [ *] are conditional
on United Airlines granting Buyer the authority to
operate said Aircraft as a United Express
operator, on terms satisfactory to Buyer ("United
Approval").
If on or before [ *] determines that United
Approval will not be granted or received by such
date, or in any event if Buyer has not received
United Approval by such date for Block No. 3 of
the Option Aircraft, then either party may, unless
the parties agree to extend said date with such
amendment to the terms hereof that may be
appropriate in the circumstances, terminate those
Aircraft positions held for Buyer pursuant to
Letter Agreement No. 018 (Article 1.2), by
providing ten (10) days notice.
2. [ *]
2.1 In the event that United Approval is not granted
and either party terminates the exercise of Option
Aircraft Block No. 2 as specified in 1.1 above,
then Buyer shall [ *
]
2.2 Similarly, in the event that United Approval is
not granted and either party terminates those
Option Aircraft delivery positions as specified in
1.2 above, then Buyer shall [ *
]
3. In the event of the termination of the Agreement, this
Letter Agreement shall become automatically null and
void.
4. The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer without the prior written consent of
Bombardier.
6. This Letter Agreement constitutes an integral part of
the Agreement and is subject to the terms and
conditions contained therein. To the extent of any
inconsistency or conflict between this Letter Agreement
and the Agreement, this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
Paul Tate
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
Bombardier Inc.
Bombardier Regional Aircraft
Division
Garratt Boulevard
Downsview, Ontario
Canada M3K 1Y5
Telephone (416) 633-7310
March 31, 1998
Our Ref: B98-7701-AP-RJ0350-021
Atlantic Coast Airlines
515A Shaw Road,
Sterling, Virginia,
U.S.A. 20166
Letter Agreement No. 021 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of twenty-three (23) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Flight Data Recorder
Gentlemen:
This letter constitutes an integral part of the Agreement
and evidences our further agreement with the matters set
forth below. All terms used herein and in the Agreement and
not defined herein, shall have the same meaning as in the
Agreement.
1. [ *
]
2. The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer without the prior written consent of
Bombardier.
3. This Letter Agreement constitutes an integral part of
the Agreement and is subject to the terms and
conditions contained therein. To the extent of any
inconsistency or conflict between this Letter Agreement
and the Agreement, this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
Paul Tate
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
Bombardier Inc.
Bombardier Regional Aircraft
Division
Garratt Boulevard
Downsview, Ontario
Canada M3K 1Y5
Telephone (416) 633-7310
August 31, 1998
Our Ref: B98-7701-AP-RJ0350-022
Atlantic Coast Airlines
515A Shaw Road,
Sterling, Virginia,
U.S.A. 20166
Letter Agreement No. 022 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of thirty-three (33) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Cargo Floorboards
Gentlemen:
This letter constitutes an integral part of the Agreement
and evidences our further agreement with the matters set
forth below. All terms used herein and in the Agreement and
not defined herein, shall have the same meaning as in the
Agreement.
1. [ *
]
2. [ *
]
3. [ *
]
4. The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer without the prior written consent of
Bombardier.
5. This Letter Agreement constitutes an integral part of
the Agreement and is subject to the terms and
conditions contained therein. To the extent of any
inconsistency or conflict between this Letter Agreement
and the Agreement, this Letter Agreement shall prevail.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Michel Bourgeois
Vice President, Contracts
Acknowledged and Accepted
Atlantic Coast Airlines
________________________ Date:_____________
Paul Tate
Sr. Vice President and C.F.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
August 27, 1998
Tony Prezioso
Bombardier Inc.
123 Garratt Blvd.
Downsview, Ontario, Canada
M3K 1Y5
Re: Letter Agreement No. 23 to Purchase Agreement (the
"Purchase Agreement") Between Bombardier Inc. and
Atlantic Coast Airlines dated January 8, 1997
Dear Tony:
This Letter Agreement No. 23, when countersigned by
you, shall set forth our further understanding with regard
to the matters contained herein.
[ *
]
[ *
]
All other terms and conditions of the Purchase
Agreement shall remain unchanged. The foregoing terms are
subject to the terms and conditions of the Purchase
Agreement. Defined terms used but not defined herein shall
be as defined in the Purchase Agreement. All amounts
expressed herein shall be in U.S. dollars.
In Witness Whereof, the parties hereto have executed
this Letter Agreement No. 23 as of the day and year first
above written.
AGREED and ACCEPTED:
Atlantic Coast Airlines Bombardier, Inc.
By: _____________________________ By:
____________________________
Paul H. Tate
Title: Senior Vice President Title:
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
Bombardier Inc.
Bombardier Regional Aircraft
Division
Garratt Boulevard
Downsview, Ontario
Canada M3K 1Y5
Telephone (416) 633-7310
December 17, 1998
Our Ref: B98-7701-AP-RJ0350-024
Atlantic Coast Airlines
515A Shaw Road,
Sterling, Virginia,
U.S.A. 20166
Letter Agreement No. 024 to Purchase Agreement No. RJ-0350
dated January 8, 1997 (the "Agreement" between Bombardier
Inc. ("BRAD") and Atlantic Coast Airlines ("Buyer") relating
to the purchase of forty-three (43) Canadair Regional Jet
Aircraft (the "Aircraft")
Subject: Additional Option Aircraft
Gentlemen:
This letter constitutes an integral part of the Agreement
and evidences our further agreement with respect to the
matters set forth below. All terms used herein and in the
Agreement and not defined herein, shall have the same
meaning as in the Agreement.
1.0 [ *
]
1.1 The Additional Option Aircraft will be as
described in Article 2 of the Agreement.
1.2 The price for each of the Additional Option
Aircraft will [ *
]
1.3 The Option Aircraft shall be offered in [ *
]
1.4 [ *
]
[ *
]
2.0 In the event of the termination of the Agreement, this
Letter Agreement shall become automatically null and
void.
3.0 The provisions of this Letter Agreement are personal to
Buyer and shall not be assigned or otherwise disposed
of by Buyer without the prior written consent of
Bombardier.
Yours truly,
BOMBARDIER INC.
________________________ Date:_____________
Anthony Prezioso
Manager, Contracts
Acknowledged and Accepted
ATLANTIC COAST AIRLINES
________________________ Date:_____________
Kerry B. Skeen
President and C.E.O.
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
A CONFIDENTIAL TREATMENT REQUEST.
January 20, 1999
Tony Prezioso
Bombardier Inc.
123 Garratt Blvd.
Downsview, Ontario, Canada
M3K 1Y5
Re: Letter Agreement No. 25 to Purchase Agreement (the
"Purchase Agreement") Between Bombardier Inc. and
Atlantic Coast Airlines dated January 8, 1997
Dear Tony:
This Letter Agreement No. 25, when countersigned by
you, shall set forth our further understanding with regard
to the matters contained herein.
[ *
]
[ *
]
All other terms and conditions of the Purchase
Agreement shall remain unchanged. The foregoing terms are
subject to the terms and conditions of the Purchase
Agreement. Defined terms used but not defined herein shall
be as defined in the Purchase Agreement. All amounts
expressed herein shall be in U.S. dollars.
In Witness Whereof, the parties hereto have executed
this Letter Agreement No. 25 as of the day and year first
above written.
AGREED and ACCEPTED:
Atlantic Coast Airlines Bombardier, Inc.
By: _____________________________ By:
____________________________
Richard J. Kennedy
Title: Vice President & Secretary Title:
2.1
ARTICLE 2.
PERIOD OF AGREEMENT
2.01 Effective Date. The Effective Date of this Agreement
shall be January 1, 1990, or if executed by the Airline after
February 28, 1990, the date on which the Agreement is executed by
both the Authority and the Airline.
2.02 Expiration Date. This Agreement shall expire on September
30, 2014, unless sooner terminated as provided in this Article 2,
or Article 10, Article 13, or Article 14 of this Agreement.
2.02.1 This Agreement shall terminate as to all Signatory
Airlines effective at midnight September 30, 1990, if, prior to
August 1, 1990, at least fifty percent (50%) in number of major
or national domestic airlines and foreign flag airlines at each
Airport representing more than fifty percent (50%) of the true
origin and destination passenger activity at each Airport for the
twelve (12) month period ending September 30, 1989, have -not
become Signatory Airlines. Notwithstanding the foregoing, the
Authority has the right to continue the Agreement in effect in
accordance with its terms by giving notice thereof to the
Airline. Notice, to be effective, must be in writing and mailed
to all Signatory Airlines prior to August 31, 1990, provided,
that in such event the Airline may elect to terminate this
Agreement by notice to the Authority prior to October 1, 1990.
2.02.2 Notwithstanding any other provisions, the
Authority may, in its sole discretion for any reason, terminate
this Agreement effective at midnight December 31, 2004, or
September 30 of any year thereafter during the Period of this
Agreement, provided that the Authority gives one hundred eighty
(180) days written notice to the Airline which states the
Authority's reasons for the termination and, further, the
Authority terminates the Agreement of all Signatory Airlines
effective on the same date. The Authority shall not terminate
the Agreement of any Signatory Airline under this provision
unless similar and simultaneous action is taken and effected to
terminate the Agreement of each signatory Airline.
2.03 Prior Agreements and Leases.
2.03.1 At midnight, December 31, 1989, all Prior
Agreements and Leases not then terminated or expired shall be
deemed terminated as of that date, except that the Surviving
Agreements, or provisions thereof, listed in Exhibits N-K and D-K
shall continue in effect until they expire or are terminated by
the Authority or the Airline in accordance with the provisions
included in any such Surviving Agreements.
2.03.2 The joint lease agreement listed in Exhibit D-K,
Item 2, (Amendments to Contracts DTFAl5-85-C-50015, DTFAl5-85-C-
50006, and DTFA15-85-C-50020) shall expire on December 31, 1990,
and the airlines who are parties thereto and the Authority shall
have no further obligations thereunder.
2.03.3 The contract listed in Exhibit N-K, Item 3,
(Contract No. DOT-FA-NA-5135, as amended) between the Authority
and Eastern Air Lines, Inc., and all rights thereunder shall
expire on the Substantial Completion Date of Eastern's Permanent
Premises in the New North Terminal if not otherwise terminated as
provided for therein.
ARTICLE 3.
DEFINITIONS AND INTERPRETATION
3.01 Definitions. Except as otherwise clearly indicated by the
context, the following words, terms, and phrases wherever used in
this Agreement shall for the purposes of this Agreement have the
following meanings:
Additional Projects shall mean capital expenditures for
construction, acquisitions, and improvements related to the
Airports, other than small capital items includable as O&M
Expenses in accordance with Authority policy and other than those
Projects included in the Capital Development Program.
Administrative Cost Center shall mean the Cost Center
described in Exhibits N-E and D-E.
Agreement shall mean this Airport Use Agreement and Premises
Lease between the Authority and the Airline, as the same may be
amended or supplemented from time to time.
Air Transportation Business shall mean that business of a
Scheduled Air Carrier operated by the Airline at either or both
of the Airports.
Air Transportation Company shall mean (i) a Scheduled Air
Carrier or (ii) a company engaged in nonscheduled common carriage
by air of persons, property, and/or mail.
Aircraft Parking Positions shall mean those portions of the
Ramp Areas at each of the Airports, other than Dulles Jet Apron
Positions, that are used for the parking of aircraft and support
vehicles and the loading and unloading of passengers and cargo.
Aircraft Parking Position Charges shall mean those charges
payable by the Airline, if applicable, for the preferential use
of Aircraft Parking Positions as set forth in Section 8.04.
Airfield Cost Center shall mean the Cost Center described in
Exhibits N-E and D-E.
Airfield Net Requirement shall mean at each Airport the
Total Requirement attributable to the Airfield Cost Center, less
(i) Aircraft Parking Position Charges and Dulles Jet Apron Fees,
if any; (ii) direct utility or other reimbursements attributable
or allocable to the Airfield Cost Center; and (iii) Transfers, if
any, allocable to the Airfield Cost Center.
Airline shall mean the Scheduled Air Carrier executing this
Agreement.
Airline Funded Airfield Coverage shall mean for each Fiscal
Year at each Airport, Debt Service Coverage allocable to the
Airfield Cost Center for such Fiscal Year multiplied by a
fraction, the numerator of which is the landed weight for all
Signatory Airlines at that Airport for such Fiscal Year and the
denominator of which is the total landed weight for all Air
Transportation Companies and General Aviation at that Airport for
such Fiscal Year. Airline Funded Airfield Coverage shall be
calculated separately for Debt Service on Subordinated Bonds and
Debt Service on Senior Bonds.
Airline Funded Coverage shall mean for each Fiscal Year at
each Airport, the sum of Airline Funded Airfield Coverage for
such Fiscal Year for that Airport and Airline Funded Terminal
Coverage for such Fiscal Year for that Airport. Airline Funded
Coverage shall not include Equipment Coverage.
Airline Funded Terminal Coverage shall mean for each Fiscal
Year for each Airport for each Cost Center and Terminal Sub-
Center within the Terminal Cost Center, Debt Service Coverage for
such Fiscal Year allocated to such Sub-Center multiplied by a
fraction the numerator of which is the amount of Premises leased
to and the amount of space used as Common Use Premises by the
Signatory Airlines in such Sub-Center and the denominator of
which is the total amount of Rentable Space in such Cost Center
and Terminal Sub-Center. The Airline Funded Terminal Coverage
shall be calculated separately for Debt Service on Subordinated
Bonds and Debt Service on Senior Bonds.
Airline Operating Facilities shall mean furniture,
furnishings, special light fixtures, carpeting, draperies, wall
coverings, decorations, decorating or other special finishing
work, signs, appliances, trade fixtures and equipment that is
owned, furnished, installed, and used by the Airline in its
operations on the Airport.
Airline Representative shall mean that person designated by
a numerical majority of the Signatory Airlines at each Airport to
represent said Signatory Airlines in matters relating to the
Capital Development Program and Additional Projects at that
Airport.
Airline Supported Areas shall mean for each Airport the
Airfield, Terminal and Equipment Cost Centers at that Airport and
at Dulles shall also include the IAB, the AOB, and the Passenger
Conveyance System Cost Centers.
Airline Transfer Account shall mean the account in the
Revenue Fund created pursuant to Section 9.06.
Airport or Airports shall mean the real property including
improvements constituting either or both Washington National
Airport ("National" or "National Airport"), located in Arlington
County, Virginia, and Washington Dulles International Airport
("Dulles" or "Dulles Airport"), located partially in Fairfax
County and partially in Loudoun County, Virginia, as depicted in
Exhibits N-A and D-A attached hereto, and as each may be
subsequently improved, enlarged, or otherwise modified.
Washington Dulles International Airport shall include the
Washington Dulles International Airport Access Highway.
Airside Operations Buildings (or "AOB") shall mean the
facilities (other than the Existing or New Midfield Concourses)
located on the Dulles Jet Apron and used to support the servicing
of aircraft.
Airside Operations Buildings (or "AOB") Rentals shall mean
those rentals payable by the Airline for its use, if any, of the
Airside Operations Buildings in accordance with Paragraph 8.08.3.
Airside Operations Buildings (or "AOB") Cost Center shall
mean the Cost Center described in Exhibit D-E.
Amortization Requirements shall mean the repayment of
capital costs as principal and interest, in substantially, equal
annual installments over a fixed term for a capital expenditure
which is not debt financed, and for which Amortization
Requirements are to be included in rentals, fees, and charges
pursuant to Section 10.06. The Amortization Requirement for each
such capital expenditure shall be computed using an amortization
period as reasonably determined by the Authority, and an interest
component equal to the Thirty-Year Revenue Bond Index, published
by the "Bond Buyer," on the date nearest the date on which said
capital expenditure is placed in service; provided, however, if
the asset in question could not legally be financed with the
proceeds of tax-exempt Bonds, the interest component shall be
fifty (50) basis points above the then current yield for a United
States Government obligation with a maturity comparable to the
period of amortization.
Authority shall mean the Metropolitan Washington Airports
Authority.
Authority Capital Fund shall mean that fund created pursuant
to Section 9.06.
Authority's Architects and Engineers shall mean the
architects and engineers employed by the Authority, or who are
under contract to the Authority.
Aviation Cost Center shall mean the Cost Center described in
Exhibits N-E and D-E.
Base-of-the-Tower Facilities shall mean the facilities for
the conduct of business by an Air Transportation Company
appurtenant, as of January 1, 1990, to Aircraft Parking Positions
A-l through A-18.
Board shall mean the Board of Directors of the Metropolitan
Washington Airports Authority.
Bonds shall mean Senior Bonds, Subordinated Bonds, and Other
Indebtedness.
Capital Charges shall mean (i) Debt Service, (ii)
Depreciation Requirements, and (iii) Amortization Requirements.
Capital Development Program shall mean the construction,
acquisitions and improvements to the Airports, as more
particularly described in Exhibits N-I and D-I attached hereto,
including the Dulles Stage II Development Plan.
Cargo Cost Center shall mean the Cost Center described in
Exhibit D-E.
Chargeable Landings shall mean those aircraft landings for
which landing fees shall be due and payable by the Airline, as
set forth in Section 8.02. Such landings shall include all
landings of aircraft that come to a complete stop on the Airport,
with the exception of emergency landings.
Common Use Charges shall mean those charges, if any, payable
by the Airline t& the Authority for the use of Common Use
Premises at each Airport, determined in accordance with Paragraph
8.03.5.
Common Use Premises shall mean those areas at the Airport
which two or more Scheduled Air Carriers are authorized to use,
as shown on Exhibits N-B and D-B attached hereto. For purposes
of calculating rentals, fees, and charges hereunder, such Common
Use Premises shall be deemed Rentable Space; provided, however,
no leasehold interests shall accrue to or be acquired by any
authorized user thereof.
Construction Documents shall mean those plans and
specifications prepared for inclusion in construction bid
documents for the Capital Development Program.
Contract Security shall mean a security for payment as set
forth in Section 8.13.
Cost Centers shall mean those areas or functional activities
established by the Authority at each Airport, as set forth in
Exhibits N-E and D-E attached hereto, and as may be amended by
the Authority.
Current Cost Estimate shall mean, as of any date of
calculation, the projected total costs in then current dollars of
one or more or all of the Projects in the Capital Development
Program (as the context shall determine) as estimated by the
Authority's Program Manager. Any Current Cost Estimate shall
incorporate actual costs for completed Projects; substitute bid
amounts for estimates when available; include the financial
impacts of change-orders accepted by the Authority; and, reflect
any other changes that the Authority reasonably believes will
change said projected total costs from the amounts shown in
Exhibits N-I and D-I.
Debt Service shall mean, as of any date of calculation for
any Rate Period, the amounts required pursuant to the terms of
any Indenture to be collected during said period for the payment
of Bonds, plus fees and amounts payable to providers of any form
of credit enhancement used in connection with Bonds.
Debt Service Coverage shall mean, as of any date of
calculation for any period, an amount equal to twenty-five
percent (25%) of the portion of Debt Service attributable to
Senior Bonds and Subordinated Bonds, plus such other amounts as
may be established by any financing agreement or arrangement with
respect to Other Indebtedness.
Debt Service Reserve Fund shall mean any fund of that name
created and established pursuant to any Indenture.
Deplaning Passenger shall mean any revenue passenger
disembarking at the Airports, including any such passenger that
shall subsequently board another aircraft of the same or a
different Air Transportation Company.
Depreciation Requirements shall mean the annual amount
charged by the Authority to recover its remaining investment in
certain vehicles and equipment acquired by the Authority during
the period from June 7, 1987, through September 30, 1989.
Direct Cost Centers shall mean those areas or functional
activities established by the Authority at each Airport as set
forth in Exhibits N-E and D-E, and as may be amended by the
Authority.
Dulles Cargo Apron shall mean those areas provided by the
Authority at Dulles for the loading and unloading of all-cargo
flights, as shown in Exhibit D-A attached hereto.
Dulles Jet Apron shall mean that portion of the Dulles Ramp
Areas identified as such and shown in Exhibit D-A.
Dulles Jet Apron Fees shall mean those amounts payable by
the Airline, if applicable, for the use of the Dulles Jet Apron
positions, including hard stands, as set forth in Paragraph
8.04.4.
Dulles Main Terminal shall mean a Terminal Sub-Center at
Dulles as more particularly described in Exhibit D-E.
Dulles Rate Credit Amortization Requirements shall mean the
amounts to be included in the Total Requirement to reimburse
certain Scheduled Air Carriers for terminal improvements
completed and paid for by said Scheduled Air Carriers prior to
October 1, 1989, as set forth in the Surviving Agreements.
Dulles Stage II Development Plan (or "Dulles Stage II")
shall mean specific Projects identified as such in Exhibit D-I,
which Projects shall generally include the initial New Midfield
Concourse(s), Passenger Conveyances, and other related
improvements at Dulles.
Early Program shall mean those Projects of the Capital
Development Program funded from the proceeds of Subordinated
Bonds issued prior to January 1, 1990.
Effective Date shall mean the date set forth in Article 2
for the commencement of this Agreement.
Emergency R&R Fund shall mean that fund created by the
Senior Indenture for emergency repair and rehabilitation of the
Airports.
Enabling Legislation shall mean the District of Columbia
Regional Airports Authority Act of 1985 (D.C. Law 6-67), as
amended1 and Chapter 598, Virginia Acts of Assembly of 1985, as
amended.
Enplaning Passenger shall mean any revenue passenger ~
boarding at the Airports, including any such passenger that
previously disembarked from another aircraft of the same or a
different Air Transportation Company.
Equipment shall mean that equipment and devices owned by the
Authority and leased to the Airline, which may include but shall
not be limited to, baggage make-up and baggage claim conveyors
and devices, loading bridges, 400 Hz, and preconditioned air
units.
Equipment Charges shall mean those amounts payable by the
Airline, if applicable, for the use of Equipment in accordance
with Section 8.05.
Equipment Coverage shall mean for each Fiscal Year for each
Airport, Debt Service Coverage for such Fiscal Year included in
Equipment Charges.
Equipment Sub-Centers shall mean those individual facilities
at each Airport that are included in the Equipment Cost Center at
that Airport, as described in Exhibits N-E and D-E.
Exclusive Use Premises shall mean those Premises leased
exclusively to the Airline, as shown on Exhibits N-B and D-B
attached hereto. Except as may otherwise be agreed to, Exclusive
Use Premises shall include ticket counters, associated offices,
and baggage make-up area and Equipment reasonably necessary for
the use thereof.
Existing Airport Facilities shall mean those Airport areas
available for beneficial use and occupancy on January 1, 1990.
Existing Midfield Concourses shall mean a Terminal Sub-
Center at Dulles as more particularly described in Exhibit D-E.
Existing North Terminal shall mean a Terminal Sub-Center at
National as more particularly described in Exhibit N-E.
Extraordinary Coverage Protection Payments shall mean those
payments, if any, required pursuant to Paragraph 9.07.3.
FAA shall mean the Federal Aviation Administration, or its
authorized successor(s) other than the Authority.
Federal Lease shall mean the Agreement and Deed of Lease,
dated March 2, 1987, between the United States of America, acting
through the Secretary of Transportation, and the Authority, as
the same may be amended or supplemented.
Fiscal Year shall mean the annual accounting period of the
Authority for its general accounting purposes which, at the time
of entering into this Agreement, is the period of twelve
consecutive months beginning with the first day of October of any
year.
Fixed Base Operators (or "FBOs") shall mean those commercial
businesses at the Airports authorized by the Authority to sell
aviation fuels and provide other aviation-related services, but
shall not mean the Fueling Agent.
Fueling Agent shall mean, for each Airport, that agent
selected to operate and maintain the Fueling System for that
Airport and deliver fuel through the Fueling System.
Fueling System shall mean (i) at Dulles, the Authority-owned
hydrant fueling system, if any, and the Authority-owned fuel
farm; and (ii) at National, the Authority-owned hydrant fueling
system, if any, and the Authority-owned fuel farm.
General Aviation shall mean an operator of (i) private or
corporate aircraft not used in the common carriage of passengers,
cargo, or freight; or (ii) aircraft as a nonscheduled air taxi.
General Manager shall mean the General Manager of the
Authority and shall include such person or persons as may from
time to time be authorized by the General Manager to act for the
General Manager with respect to any or all matters pertaining to
this Agreement.
General Purpose Fund shall mean that fund created by the
Senior Indenture.
Ground Transportation Cost Center shall mean the Cost Center
described in Exhibits N-E and D-E.
Indenture shall mean the Senior Indenture, Subordinated
Indenture, or Other Indenture, including amendments, supplements,
and successors thereto
Indirect Cost Centers shall mean those functions and related
facilities, not within a Direct Cost Center, established by the
Authority at each Airport as set forth in Exhibits N-E and D-E,
and as may be amended by the Authority.
Interim Hangar 11 Terminal shall mean a Terminal Sub-Center
at National as more particularly described in Exhibit N-E.
International Arrivals Building ("IAB") shall mean those
facilities provided by the Authority at Dulles for the processing
by U.S. Customs and Immigration Services of international
Deplaning Passengers requiring such processing and shall include
the IAB to be constructed at Dulles pursuant to the Capital
Development Program.
International Arrivals Building (or "IAB") Charges shall
mean those charges payable by the Airline for the use, if any, of
the International Arrivals Building in accordance with Section
8.07.
International Arrivals Building (or "IAB") Cost Center shall
mean the Cost Center described in Exhibit D-E.
Joint Use Premises shall mean those Premises leased on a
joint use basis to the Airline and one or more other Signatory
Airlines, as shown on Exhibits N-B and D-B attached hereto.
Landing Area shall mean those portions of each Airport
provided for the landing, taking off and taxiing of aircraft,
including without limitation, approach and turning zones,
avigation or other easements, runways, taxiways, runway and
taxiway lights, and other appurtenances in connection therewith.
Landing Fees shall mean those fees, calculated in accordance
with Section 8.01, payable by the Airline for the use of the
Airfield.
Low Volume Airline shall mean a Scheduled Air Carrier
operating under Part 135 of the FAA Regulations1 eligible to pay
Low Volume Common Use Fees for the use of Common Use Premises, as
described in Paragraph 8.03.6.
Low Volume Common Use Fees shall mean those fees payable by
a Low Volume Airline, if applicable, for the use of Common Use
Premises, as set forth in Paragraph 8.03.6.
Main Terminal shall mean a Terminal Sub-Center at National
as more particularly described in Exhibit N-E.
Maintenance Cost Center shall mean the Cost Centers
described in Exhibits N-E and D-E.
Majority-in-Interest shall mean, at each Airport, for the
Airfield Cost Center, fifty percent (50%) in number of all
Signatory Airlines and Signatory Cargo Carriers at such Airport
which together landed more than sixty percent (60%) of Signatory
Airlines' and Signatory Cargo Carriers' landed weight at that
Airport during the most recent six (6) full month period for
which the statistics are available, and for the Airline Supported
Areas (excluding the Airfield Cost Center), fifty percent (50%)
in number of Signatory Airlines at such Airport which together
were obligated to pay more than sixty percent (60%) of the sum of
Terminal Rentals, Common Use Charges, IAB Charges, AOB Rentals,
Passenger Conveyance Charges, and Equipment Charges at such
Airport during the most recent six (6) full month period for
which statistics are available.
Maximum Certificated Gross Landed Weight shall mean the
maximum gross certificated landing weight in one thousand pound
units, as stated in the Airline's flight operations manual, at
which each aircraft operated at the Airports by the Airline is
certificated by the FAA.
Net Remaining Revenue shall mean that amount set forth in
Paragraph 9.05.2.
New Midfield Concourse(s) shall mean a Terminal Sub-Center
at Dulles and particularly the building(s) and related facilities
for the conduct of business by an Air Transportation Company and
for appurtenant Aircraft Parking Positions to be constructed as
part of the Capital Development Program.
New North Terminal shall mean a Terminal Sub-Center at
National and particularly the buildings and related facilities
for the conduct of business by an Air Transportation Company and
for appurtenant Aircraft Parking Positions to be constructed as
part of the Capital Development Program.
Non-Aviation Cost Center shall mean the Cost Center
described in Exhibits N-E and D-E.
Operation and Maintenance Expenses ("O&M Expenses") shall
mean for any period all expenses of the Authority paid or accrued
for the operation, maintenance, administration, and ordinary
current repairs of the Airports. Operation and Maintenance
Expenses shall not include (i) the principal of, premium, if any,
or interest payable on any Bonds; (ii) any allowance for
amortization or depreciation of the Airports; (iii) any other
expense for which (or to the extent to which) the Authority is or
will be paid or reimbursed from or through any source that is not
included or includable as Revenues; (iv) any extraordinary items
arising from the early extinguishment of debt; (v) rentals
payable under the Federal Lease; and (vi) any expense paid with
amounts from the Emergency R&R Fund.
Operation and Maintenance Fund ("O&M Fund") shall mean that
fund created by the Senior Indenture.
O&M Reserve shall mean that reserve for O&M Expenses
required by the Senior Indenture.
Original Cost Estimate shall mean for one or more or all of
the Projects in the Capital Development Program (as the context
shall determine) the amount specified for such Project in
Exhibits N-I and D-I.
Other Indebtedness shall mean any financing instrument or
obligation of the Authority, except the Federal Lease, payable
from Revenues on a basis subordinate to the Authority's
obligation to pay Subordinated Bonds.
Other Indenture shall mean any indenture, loan agreement,
credit arrangement, or other agreement which specifies the terms
of the Authority's obligation to pay Other Indebtedness.
Outstanding shall mean, with respect to any series of Bonds,
the definition of "Outstanding" in the Indenture under which said
series of Bonds were issued.
Passenger Conveyances shall mean the Dulles mobile lounges,
buses, or other ground transportation devices, including any
underground people mover systems provided by the Authority at
Dulles for the movement of passengers and other persons (i)
between aircraft, on the one hand, and the Dulles Main Terminal
or the IAB, on the other, (ii) between and among the Existing or
New Midfield Concourses and the Dulles Main Terminal, and (iii)
between and among the Dulles Main Terminal and IAB at Dulles.
Passenger Conveyance Charges shall mean those charges
payable by the Airline pursuant to Section 8.09.
Passenger Conveyance System Cost Center shall mean the Cost
Center described in Exhibit D-E.
Passenger Security Reimbursements shall mean those amounts
payable by the Airline for the law enforcement officers stationed
at the passenger screening facilities pursuant to Federal
Aviation Regulations Parts 107 and 108, as they may be amended,
and for any cost incurred pursuant to any future regulations, as
set forth in Section 8.06.
Pavement Structural Maintenance shall mean the maintenance,
rehabilitation, and keeping in good repair of asphalt, concrete,
or other improved surfaces.
Period shall mean the period of time during which the
Airline's activities at the Airport shall be governed by this
Agreement, as set forth in Article 2 herein.
Permanent Premises shall mean those Premises designated as
such in Exhibits N-B and D-B.
Plateau Amount shall mean, at National, the amount of eight
million dollars ($8,000,000) in Fiscal Year 1990, and at Dulles
the amount of twelve million dollars ($12,000,000) in Fiscal Year
1990. Both amounts shall be subject to annual escalation in
accordance with changes in the U.S. Implicit Price Deflator
Index. The base date for such adjustment shall be the index for
October 1, 1989.
Preferential Use Premises shall mean those Premises leased
on a preferential use basis to the Airline, as shown on Exhibits
N-B and D-B attached hereto. Except as may otherwise be agreed
upon by the parties hereto, Preferential Use Premises shall
include the holdrooms and Aircraft Parking Positions leased by
the Airline hereunder, if any, and all Equipment reasonably
necessary for the use thereof.
Premises shall mean areas at the Airports1 whether Permanent
Premises or Temporary Airline Premises1 leased by the Airline
pursuant to Article 6 of this Agreement. Premises shall include
Exclusive, Preferential, and Joint Use Premises.
Prior Agreements and Leases shall mean an agreement or
contract, if any, between the Authority or its predecessor-in-
interest, and an airline or its predecessor-in-interest for the
use and lease of facilities at the Airports which was entered
into prior to January 1, 1990. This shall not be construed to
include prior agreements between the Authority and the Airline or
other airlines, or the agent thereof, for the use, operation, and
maintenance of the Fueling Systems, for the provisions of crew
transportation and skycap services, or for the operation of in-
flight kitchens.
Priority 2 Projects shall mean those Projects so designated
in Exhibits N-I and D-I.
Program Manager shall mean the firm or individual employed
by the Authority to provide overall construction and project
management services for the Capital Development Program.
Project shall mean any discrete, functionally complete
portion of the Capital Development Program identified as a
separate project in Exhibits N-I and D-I, as revised from time to
time.
Public Safety Cost Center shall mean the Cost Center
described in Exhibits N-E and D-E.
Rail System shall mean any rail system designed to transport
persons to and from Dulles. A Rail System shall not include a
Passenger Conveyance. For purposes of this definition, Dulles
shall not include the Dulles Access Highway.
Ramp Area shall mean the aircraft parking and maneuvering
areas adjacent to the Terminals and shall include within its
boundaries all Aircraft Parking Positions and the Dulles Jet
Apron positions; provided, however, it shall not include the
Dulles Cargo Apron.
Ramp Area Charges shall mean the Dulles Aircraft Parking
Position Charges and Dulles Jet Apron Fees, as set forth in
Section 8.04.
Rate Period shall mean that period for which rates for
rentals, fees and charges are applicable, as set forth in
Articles 8 and 9.
Regional/Commuter Air Carrier shall mean a Scheduled Air
Carrier that is operating under a Part 135 of the FAA
Regulations.
Rentable Space shall mean, for each Terminal Sub-Center at
each Airport, and for the AOB, the total of all areas in that
Terminal Sub-Center, or the AOB, which constitute Premises,
Common Use Premises, or areas otherwise available for lease to
airlines or non-airline tenants, except for any Premises required
to be excluded from the Terminal Rentals calculation pursuant to
a Surviving Agreement.
Requesting Airline shall mean a Scheduled Air Carrier
requesting the lease or use of Premises, as set forth in Section
17.03.
Revenue Fund shall mean that fund created by the Senior
Indenture.
Revenues shall mean all revenues of the Authority received
or accrued except (i) interest income on, and any profit realized
from, the investment of moneys in any fund or account to the
extent that such income or profit is not transferred to, or
retained in, the Revenue Fund or the Bond Fund created by the
Senior Indenture or the Bond Funds created by the Subordinated
Indenture; (ii) interest income on, and any profit realized from,
the investment of moneys in any fund or account funded from the
proceeds of Special Facility Bonds; (iii) amounts received by the
Authority from, or in connection with, Special Facilities, unless
such funds are treated as Revenues by the Authority; (iv) the
proceeds of any passenger facility charge or similar charge
levied by, or on behalf of, the Authority, unless such funds are
treated as Revenues by the Authority; (v) grants-in-aid,
donations, and/or bequests; (vi) insurance proceeds which are not
deemed to be revenues in accordance with generally accepted
accounting principles; (vii) the proceeds of any condemnation
awards; and (viii) any other amounts which are not deemed to be
revenues in accordance with generally accepted accounting
principles or which are restricted as to their use.
Scheduled Air Carrier shall mean any company performing,
pursuant to published schedules, commercial air transportation of
persons, property, and/or mail over specified routes to and from
the Airport and holding the necessary authority from the
appropriate Federal or state agencies to provide such air
transportation services.
Senior Bonds shall mean any bonds or other financing
instrument or obligation issued pursuant to the Senior Indenture.
Senior Indenture shall mean the Master Indenture of Trust
dated as of February 1, 1990, securing the Authority's Airport
System Revenue Bonds, as such may be amended or supplemented.
Signatory Airline shall mean a Scheduled Air Carrier which
has an agreement with the Authority substantially similar to this
Agreement.
Signatory Cargo Carriers shall mean those scheduled all-
cargo Air Transportation Companies, if any, signatory to an
agreement with the Authority providing for the calculation of
Landing Fees on substantially the same basis as this Agreement.
Special Facility shall mean any facility, improvement,
structure, equipment, or assets acquired or constructed on any
land or in or on any structure or building at the Airports, the
cost of construction and acquisition of which are paid for (i) by
the obligor under the special facility agreement, or (ii) from
the proceeds of Special Facility Bonds, or (iii) both.
Special Facility Bonds shall mean revenue bonds, notes, or
other obligations of the Authority, issued to finance any Special
Facility, the payment of principal of, premium, if any, and
interest on which are payable from and secured by the proceeds
thereof and rentals, payments, and other charges payable by the
obligor under the Special Facility Agreement.
Stage II shall mean the Dulles Stage II Development Plan.
Sub-Center shall mean either a Terminal or Equipment Sub-
Center.
Subordinated Bonds shall mean any bonds or other financing
instrument or obligation issued pursuant to the Subordinated
Indenture.
Subordinated Indenture shall mean the Master Indenture of
Trust dated March 1, 1988, securing the Authority's General
Airport Subordinated Revenue Bonds, as such may be supplemented
or amended.
Substantial Completion Date (and "Substantially Complete")
shall mean the date that any Premises are ready to be moved into
and occupied by the Airline, or any Project is substantially
complete, as certified by the Authority's Architects and
Engineers.
Surviving Agreements shall mean those Prior Agreements and
Leases between the Authority and any airline, or provisions
thereof, which continue in effect after the Effective Date, if
any, and which are described in Exhibits N-K and D-K.
Systems and Services Cost Center shall mean the Cost Center
described in Exhibits N-E and D-E.
Temporary Airline Premises ("TAP") shall mean those Premises
that are temporarily occupied by the Airline pursuant to Article
5 during the course of the Capital Development Program.
Terminal Cost Center shall mean the Cost Center as described
in Exhibits N-E and D-E.
Terminal Rentals shall mean those amounts payable by the
Airline, calculated in accordance with Paragraph 8.02.4, for the
lease of its Exclusive, Preferential, and Joint Use Premises.
Terminal Sub-Centers shall mean those individual facilities
at each Airport that are included in the Terminal Cost Center at
that Airport, as described in Exhibits N-E and D-E. At National,
Terminal Sub-Centers shall mean the Main Terminal (which shall
also include the Existing North Terminal), the Interim Hangar 11
Terminal, and the New North Terminal. At Dulles, Terminal Sub-
Centers shall mean the Dulles Main Terminal, the Existing
Midfield Concourses, and the New Midfield Concourse(s).
Terminal Sub-Center Net Requirement shall mean, for each
Terminal Sub-Center at each Airport, the Total Requirement
attributable or allocable to each such Terminal Sub-Center, less
direct utility or other reimbursements attributable or allocable
to said Terminal Sub-Center.
Total Passengers shall mean the total of Enplaning
Passengers and Deplaning Passengers.
Total Requirement shall mean, with respect to any Direct
Cost Center or Terminal or Equipment Sub-Center, that portion of
the sum of (i) O&M Expenses; (ii) required deposits under the
Senior Indenture to maintain the O&M Reserve; (iii) Capital
Charges; (iv) Debt Service Coverage; (v) required deposits to any
Debt Service Reserve Fund; (vi) Federal Lease payment; (vii)
Dulles Rate Credit Amortization Requirements (at Dulles only);
(viii) required deposits to the Emergency R&R Fund; and (ix)
Extraordinary Coverage Protection Payments, if any, properly
attributable or allocable to each said Direct Cost Center or Sub-
Center.
Transfers shall mean the amounts to be transferred by the
Authority to reduce Signatory Airline rentals, fees, and charges
as set forth in Section 9.05.
U.S. Implicit Price Deflator Index shall mean the then most
recently issued year-to-year U.S. GNP Implicit Price Deflator
Index, issued by the United States Department of Commerce, or, if
such index shall be discontinued, a successor index as designated
by the United States Government.
Utility Production and Delivery System shall mean the
utility production and main line transportation components for
electrical, water, sewage, heating and air conditioning or
natural gas service up to a main distribution panel, reduction
station, shut-off valve, or other point of connection with
Terminal buildings.
Additional words and phrases used in this Agreement but not
defined herein shall have the meanings set forth in the
Indenture, if defined therein.
3.02 Interpretation. In this Agreement, unless the context
otherwise requires:
3.02.1 Divisions of Articles with one decimal point are
Sections, e.g., 1.01. Divisions of Sections with two decimal
points are Paragraphs, e.g., 1.01.1.
3.02.2 All Article, Section, and Paragraph references,
unless otherwise expressly indicated, are to Articles, Sections,
and Paragraphs of this Agreement.
3.02.3 The terms "hereby," "herein," "hereof," "hereto,"
and "hereunder" and any similar terms used in this Agreement
refer to this Agreement.
3.02.4 Words importing persons shall include firms,
associations, partnerships, trusts, corporations, and other legal
entities, including public bodies, as well as natural persons.
3.02.5 Any headings preceding the text of the articles
and sections of this Agreement, and any table of contents, shall
be solely for convenience of reference and shall not constitute a
part of this Agreement, nor shall they affect its meaning,
construction or effect.
3.02.6 Words importing the male gender shall include the
female gender and vice versa.
3.02.7 Words importing the singular shall include the
plural and vice versa, unless the context clearly indicates
otherwise.
ARTICLE 4.
USE OF THE AIRPORTS
4.01 Airline Rights and Privileges at Both Airports. The
Airline, together with others so authorized, shall have the
following rights to use the Premises and Equipment leased to the
Airline pursuant to Article 6, and certain other facilities at
the Airports, including, but not limited to, Common Use Premises,
all as shown in Exhibits N-B and D-B, but not including Premises
leased Exclusively, Preferentially, or Jointly to others, for the
operation of the Airline's Air Transportation Business. These
rights are subject to the terms of this Agreement, including the
exclusions, reservations, and conditions set forth in Sections
4.02, 4.03, and 4.04 and the payment obligation set forth in
Article 8. These rights are as follows:
4.01.1 To land upon, take off from, and fly over the
Airports, and to taxi, park, load, unload, tow, and store the
Airline's aircraft and support equipment on the Airport in areas
designated for such purposes by the Authority, and, in all
events, on the terms and conditions imposed by the Authority.
4.01.2 To enplane and deplane persons, mail, and/or
property, along with food, beverages, and other supplies; to
provide passenger handling services for the Airline's passengers,
including the sale of air transportation tickets and services,
and to process the Airline's passengers and their baggage for air
travel; to sell, handle and provide mail, freight and package
express services for the Airline's customers; to maintain,
service and repair aircraft and ground support equipment operated
by the Airline in areas designated for these purposes by the
Authority; to provide porter/skycap services; to provide
interline and lost baggage services for the Airline's passengers;
to provide security screening services so long as the services
meet the FAA requirements; to provide ground transportation on
the Airport for employees, baggage, and, with the approval of the
Authority, the Airline's passengers; and to provide ground
transportation to and from the Airport for employees, lost
baggage, and for passengers and baggage from diverted or
cancelled flights of the Airline. In addition, the Airline may,
in accordance with the provisions of Article 16 with regard to
handling agreements, provide these services for other Air
Transportation Companies either by itself or in conjunction with
other Signatory Airlines, if the Airline is performing these
services for itself at the Airports.
4.01.3 To train personnel in the employ of or to be
employed by the Airline at the Airports in the operation of the
Airline's Air Transportation Business.
4.01.4 To sell, dispose of, or exchange the Airline's
aircraft, engines, accessories, gasoline, oil, grease,
lubricants, or other similar equipment or supplies, except
aviation fuels, in areas of the Airports designated for this
purpose by the Authority; provided, however, that this Paragraph
shall not be construed to prohibit the Airline from selling or
otherwise conveying aviation fuels or propellants to an Air
Transportation Company which is a successor company to the
Airline or to another Signatory Airline from time to time.
4.01.5 To select, together with the other Signatory
Airlines, a single Fueling Agent for each Airport, and to
receive, store and transmit fuel through the Fueling Systems at
the Airports in accordance with the provisions of the separate
fuel system agreement(s) between the Authority and the Fueling
Agent selected by the Signatory Airlines and approved by the
Authority, or between the Authority and the Fueling Agent
selected in accordance with Paragraph 4.02.6.
4.01.6 To install and maintain in the Airline's Premises,
at the Airline's sole cost and expense, identifying signs,
posters, displays, and other materials which advertise the
services offered by the Airline to the traveling public,
consistent with the Authority's regulations and orders; provided,
however, identifying signs, posters, displays, and other similar
materials shall not be permitted on the Ramp Area, and provided,
further, that only the corporate identifiers or "logos" of the
Air Transportation Companies using the holdroom shall be
permitted in a holdroom area. All such signs, posters, displays,
and other similar materials must be approved in writing by the
Authority prior to use at the Airport. The Authority reserves
the right to place advertising displays in all areas of the
Airport that are visible to the public excluding the Exclusive
Use Premises and holdroom areas leased to the Airline. The
Authority agrees not to allow the placement of advertising of
competing route services in the Airline's Premises or common use
areas.
4.01.7 To install, maintain and operate at no cost to the
Authority, alone or in conjunction with any other Signatory
Airline, radio communication, computer, meteorological and aerial
navigation equipment and facilities on the Airline's Premises;
provided, however, that such installations shall be subject to
the prior written approval of the Authority.
4.01.8 To install, maintain and operate customer
relations, security and holdroom facilities and equipment,
administrative offices, operations offices, and related
facilities, and to install personal property, including
furniture, furnishings, supplies, machinery and equipment, in the
Airline's Premises.
4.01.9 To construct modifications, finishes and
improvements in the Airline's Premises subject to the provisions
of Section 10.09.
4.01.10 To have ingress to and egress from the Airports
and the Airline's Premises for the Airline's officers, employees,
agents, contractors, and invitees, including furnishers of
services and supplies.
4.01.11 To use, for the benefit of the Airline's employees
who perform substantially all of their work at the Airports,
vehicular parking areas which will be designated by the Authority
4.01.12 To install soft drink vending machines and snack
vending machines in the Airline's non-public Premises for the
sole use of the Airline's officers, employees and agents.
Vending machines shall not be within the view of the general
public and all machine locations are subject to the prior written
approval of the Authority.
4.01.13 To furnish and operate a preferred customer or
"VIP" club for the Airline's passengers in Premises designated
for this purpose by the Authority. Further, such preferred
customer or "VIP" club may be shared with one or more other Air
Transportation Companies; provided, however, that the club is
leased to the Airline only, and provided that the rights of all
the Air Transportation Companies using the club terminate when
such lease terminates.
4.01.14 To install telephones, telefax, and other
telecommunications devices and conduit in the Airline's Premises
that are not accessible to the public. The Authority retains the
right to install all public telephones, telefax, and other
telecommunications devices and conduit in all areas of the
Airports accessible to the public, including the Premises leased
to the Airline, and to collect the proceeds therefrom; provided,
however, the Airlines may install telephones and telefax in the
Airline's "VIP" club. If the Airline installs public telephones
or telefax in its "VIP" club, it shall pay to the Authority a
monthly payment of fifty percent (50%) of the gross revenues
received by the Airline from any source from the installation and
operation of such telephones or telefax.
4.01.15 To install, operate and maintain, using the
Airline's own employees or those of a wholly-owned subsidiary of
the Airline or the Airline's parent company, an establishment for
the cooking and preparation of food and beverages for consumption
only by passengers and crews on the Airline's aircraft and in the
Airline's "VIP" club, if any; provided that the Authority
determines, in its discretion, that space is available on the
Airports for this purpose and that, if such space is not included
and designated in the Airline's Premises, the Airline enters into
a separate agreement for such cooking and food preparation space
with the Authority. Such food and beverages shall not be
intended for consumption by any persons except the Airline's
passengers and crews while on the Airline's aircraft, patrons of
Airline's "VIP" club, and such employees directly engaged in the
cooking and preparation of such food and beverages; provided,
however, upon entering a separate agreement with the Authority,
and subject to fees and conditions as set forth therein, the
Airline may provide these services to one or more other Air
Transportation Companies operating from the Airport, including
another Signatory Airline.
4.01.16 To purchase prepared food and beverages for
consumption by passengers and crews on the Airline's aircraft and
in the Airline's "VIP" club, if any; provided, however, if the
Airline purchases catering, not including beverages and
complimentary packages of snack food to be consumed on the
Airline's aircraft, from an off-Airport caterer including, but
not limited to, an Air Transportation Company, for delivery of
prepared food and/or beverages to the Airline on the Airport,
said caterer will be required to have a contract with the
Authority and to pay a fee to the Authority at a rate equal to
the rate paid by the Authority's inflight food catering
concessionaires located on that Airport. The Airline shall not
purchase any prepared food or beverage from a caterer for
delivery on the Airports unless and until the caterer is
authorized by the Authority to do business on the Airports.
4.01.17 To acquire, by purchase or otherwise, any Air
Transportation Business-related services and/or supplies from any
agent, contractor, or other Signatory Airline subject to the
conditions of Paragraph 4.02.5.
4.02 Exclusions, Reservations, and Conditions. The rights
granted to the Airline under this Agreement shall be strictly
construed, and may be exercised by the Airline only to the extent
such rights are necessary or incidental to the conduct by the
Airline of its Air Transportation Business. Except with the
prior written approval of the Authority, the Airline is
prohibited from conducting any business on the Airport separate
and apart from the conduct of its Air Transportation Business.
4.02.1 If the Airline receives notice from the Authority,
or if the Airline reasonably should know (i) that it is
materially interfering with the use, operation or maintenance of
the Airport, including but not limited to, the safe and efficient
use of the Airfield and the effectiveness or accessibility of the
drainage, sewerage, water, communications, fire protection,
utility, electrical, or other systems installed or located from
time to time at the Airport; (ii) that it is causing or
contributing to a dangerous or hazardous condition; or (iii) that
it is in violation of law or applicable rules or regulations; the
Airline shall immediately cease such interference, or, where
immediate elimination of said interference is not possible, the
Airline shall immediately take corrective action and cause others
under its control to take corrective action to eliminate the
interference.
4.02.2 As soon as possible, after obtaining any necessary
approval from appropriate governmental agencies, the Airline
shall remove any of its disabled aircraft from the Landing Area
and Ramp Area upon the request of the Authority. The Airline
shall place any such disabled aircraft only in such storage areas
as may be designated by the Authority, and shall store such
disabled aircraft only upon such terms and conditions as at that
time may be established by the Authority, consistent with any
directives of the FAA and the National Transportation Safety
Board.
(i) In the event the Airline shall fail to remove any of
its disabled aircraft as expeditiously as possible, the Authority
may, but shall not be obligated to, cause the removal of such
disabled aircraft by any reasonable means; provided however, the
Authority shall give the Airline prior notice of its intent to do
so.
(ii) If the Authority removes, or causes another to remove
the Airline's disabled aircraft, the Airline shall pay to the
Authority, upon receipt of an invoice, the costs incurred for
such removal, including the cost of labor. The Airline shall
also pay any damages incurred by, or imposed upon the Authority
as a result of the disabled aircraft.
4.02.3 Except as may otherwise be authorized herein or in
separate agreements between the Airline and the Authority, the
Airline shall not provide to its passengers, other Air
Transportation Companies, or other persons on the Airport food or
beverages, products or services of a kind normally provided by
Airport concessionaires nor shall the Airline maintain or operate
on the Airport a cafeteria, restaurant, bar, or cocktail lounge,
stand, or any other facility for the purpose of providing food
and beverages to the public or to the Airline's employees and
passengers or to any other Air Transportation Company. This
prohibition shall not apply to the Airline's "VIP" club to the
extent the Airline provides, in such club, such food and
beverage, products or services on a complimentary basis and such
club is located and constructed in such a manner as to be
separate and distinct from the space that is accessible by the
public who are not members of the club and is physically
separated by a wall or walls from the Airline's passenger
holdroom or boarding area, where persons holding tickets to board
the Airline's aircraft are congregating. Further, it shall not
be construed to apply to the provision of food, beverages,
products, or services aboard an aircraft.
4.02.4 The Airline shall not use, store, transport, or
dispose of any fuels, oil, grease, lubricants, or other hazardous
materials to, from, within, or upon the Airports in a manner
which violates federal, state, local, or Authority laws and
regulations.
4.02.5 If the Airline uses anyone other than its own
employees, the employees of a parent or subsidiary company, or
those of another Signatory Airline to perform the Air
Transportation Business services and related activity authorized
in this Article, the person or entity providing the service may
be required to meet the Authority's reasonable qualifications for
doing business on the Airports, and obtain an Authority permit,
license, or contract if required to do so by the Authority. The
Authority may also require the person or entity providing the
services to pay reasonable fees or rents, except as otherwise
provided in Section 8.10. The Airline shall provide the
Authority with a copy of any contract or agreement between the
Airline and the agent or contractor upon the Authority's request.
4.02.6 The Authority reserves the right to impose
reasonable conditions on the use of the Fueling System at either
Airport whenever a separate agreement on the use of the system is
not in effect. In the event the Signatory Airlines fail to
select a Fueling Agent by October 1, 1990, the Authority shall
have the right to select its own agent to be responsible for the
overall operation and maintenance of the Fueling System and to
award a contract for a period not to exceed five (5) years to
such agent; provided, however, that the Authority shall not
select a Fueling Agent without first providing notice to the
Signatory Airlines at the Airport (i) of the Authority's intent
to select an agent, and (ii) of the anticipated date that the
agent will assume responsibility for the Fueling System1 which
date shall be at least ninety (90) days after the date of the
said notice; and, provided, further, that if the Signatory
Airlines thereafter select a different Fueling Agent, in
accordance with Paragraph 4.01.5, the Authority shall, upon
receipt of a written request from the Signatory Airlines,
terminate its contract with the Fueling Agent selected by it at
the earliest date upon which such contract may be terminated
without penalty and shall thereupon enter into an agreement with
such different Fueling Agent in accordance with Paragraph 4.01.5.
4.02.7 The Authority reserves the right to either
temporarily or permanently restrict the use of any roadway,
taxiway, or runway or other area at the Airport at any time,
provided, that in the event of such restrictions, the Authority
shall ensure the availability of reasonable ingress and egress,
and shall not unreasonably restrict Airfield operations.
4.03 Operating Rights, Exclusions, and Conditions Applicable Only
at National. In addition to the Airline's rights, privileges,
and exclusions enumerated in Sections 4.01 and 4.02, the
following rights, privileges, and exclusions are applicable to
the Airline's operations at National:
4.03.1 The Airline may (i) use only those Aircraft
Parking Positions at National shown on Exhibit N-B for enplaning
and deplaning passengers, baggage, cargo and/or mail, and the
servicing of aircraft; (ii) park an aircraft that is ready for
immediate use as an extra section of a scheduled flight only at
an area designated on Exhibit N-B; and (iii) park an aircraft
overnight at a location at other than its Aircraft Parking
Positions only with the express permission of the Authority and
on reasonable terms and conditions, including payment of fees as
set forth in Section 8.04.
4.03.2 Unless otherwise authorized by the Authority, the
Airline must use the Fueling Agent to service its aircraft.
4.03.3 The Airline may not load or unload an all cargo
aircraft on the passenger Ramp Areas adjacent to the Terminal
facilities.
4.04 Operating Rights, Exclusions, and Conditions Applicable Only
at Dulles. In addition to the rights, privileges, and exclusions
enumerated in Sections 4.01 and 4.02, the following rights,
privileges and exclusions are applicable to the Airline's
operations at Dulles:
4.04.1 The Airline may use only those hard stand or
Dulles Jet Apron positions assigned by the Authority for
enplaning and deplaning passengers, baggage, cargo and mail, and
for servicing of aircraft.
4.04.2 If the Airline leases space in the Airside
Operations Building on the Dulles Jet Apron, the Authority, in
its assignment of Dulles Jet Apron positions, will use its best
efforts to assign the Airline those positions which are
reasonably convenient to the Airline's Airside Operations
Building space. The Airline may park aircraft overnight at a
location other than the Airline's Aircraft Parking Positions, or
assigned Dulles Jet Apron positions, if any, only with the prior
permission of the Authority and on reasonable terms and
conditions, including payment of fees as set forth in Section
8.04.
4.04.3 The Airline shall use only the Fueling Agent to
fuel its aircraft, except that the Airline may use the Fixed Base
Operators at Dulles to fuel the Airline's aircraft if the
aircraft are on the FBO's own premises or on the Cargo Ramp,
except as may be agreed to in a separate agreement between the
Authority and the Fueling Agent.
4.04.4 The Airline may not load or unload cargo from all-
cargo aircraft on the passenger Ramp Area adjacent to the
Terminal or the Dulles Jet Apron positions.
ARTICLE 5.
TRANSITION PROVISIONS
5.01 Implementation of Capital Development Program. The
Authority and the Airline agree that completion of the Capital
Development Program shown in Exhibits N-I and D-I entails (i) the
physical modification or removal of some Existing Airport
Facilities and (ii) the modification in the function or use of
other Existing Airport Facilities (whether or not these
facilities are physically modified) and, in particular, the
reduction in the number of Aircraft Parking Positions used for
aircraft of other than Regional/Commuter Air Carriers in the
Existing Airport Facilities at National Airport. Notwithstanding
the preceding two sentences, after construction of the Capital
Development Program at National Airport, the number of Aircraft
Parking Positions for aircraft of Scheduled Air Carriers (other
than Regional/Commuter Air-Carriers) at National where passengers
enplane and deplane through a loading bridge shall be forty-four
(44), the same as in the Existing Airport Facilities at National.
5.02 Temporary Airline Premises.
5.02.1 In order to implement the Capital Development
Program in accordance with Section 5.01, the Airline agrees that
the Premises leased to it pursuant to Section 6.01 will be deemed
to be Temporary Airline Premises (TAP), and the Premises to be
leased to it pursuant to Section 6.02 will be deemed to be the
Airline's Permanent Premises. The implementation of the Capital
Development Program may require the Airline to lease TAP on the
Effective Date hereof. Further, the Airline may be required to
relocate on a temporary or permanent basis, from TAP to Premises
that are different from those that the Airline occupies on the
Effective Date. Such relocation is anticipated by the Airline
and the Authority but will occur only if it is reasonably
necessary to accomplish the Capital Development Program.
Further, such relocation may be from TAP into other TAP until the
Airline relocates to Permanent Premises. However, at Dulles, the
Airlines will not be required to relocate from the TAP initially
leased under Section 6.01 into other TAP except as follows:
(i) To implement the expansion and rehabilitation of the
Dulles Main Terminal;
(ii) To implement Dulles Stage II of the Capital Development
Program; or Article 17.
(iii) As part of a relocation required by Article 17.
5.02.2 Unless a different notice period and procedure is
agreed to, the Airline's occupancy and use of TAP are subject to
the notice and process provided in Paragraphs 5.02.3, 5.02.4, and
5.02.5 to vacate the TAP and to relocate to other TAP or to
Airline's Permanent Premises. The Authority agrees to use its
best efforts to (i) relocate the Airline to TAP suitable for the
conduct of the Airline's Air Transportation Business, but not
necessarily comparable in size, location, access, or other
features of the Premises originally leased under Section 6.01,
(ii) minimize operational disruptions to the Airline as a result
of such relocations, and (iii) maintain a phasing schedule for
implementation of the Capital Development Program, including the
Substantial Completion Date of the Airline's Permanent Premises
so as to not unreasonably interfere with the Airline's operation.
5.02.3 When, in the judgment of the Authority,
implementation of the Capital Development Program requires the
Airline to vacate TAP, the Authority shall give to the Airline
not less than sixty (60) calendar days written notice to vacate
any, or all, of the TAP, and the Authority shall then have the
right to amend the Exhibits to this Agreement to reflect the
deletion of the TAP from the Airline's Premises and in the
Authority's sole discretion, to lease said TAP to another tenant
or to close said TAP. The Airline agrees to vacate the TAP on
the date specified in the said written notice, regardless of
whether that date is the last day of the month; provided,
however, that if the Airline notifies the Authority as promptly
as is reasonably practicable upon receipt of such notice that it
cannot reasonably prepare the TAP to which the Airline is being
relocated within such notice period, and the reasons therefor,
the Airline shall have additional time, not to exceed thirty (30)
days, to vacate the TAP.
5.02.4 The Airline agrees that it will cooperate with the
Authority in moving to TAP, in moving from TAP to other TAP, and
in moving to Permanent Premises, and that it will move in such a
manner so as not to interfere unreasonably with the Authority's
planned Capital Development Program. The allocation of the
Airline's costs associated with relocation to assist the Capital
Development Program shall be in accordance with the Authority
policy attached hereto as Exhibit A-P.
5.02.5 The Airline, while occupying TAP, shall be subject
to all of the other conditions and terms of this Agreement.
5.03 Transition to Permanent Premises.
5.03.1 The Authority shall give written notice to the
Airline of the estimated Substantial Completion Date of the
Airline's Permanent Premises, at least one hundred and twenty
(120) days prior to said date. The Airline will be permitted to
install its own equipment and furnishings in the Airline's
Permanent Premises beginning sixty (60) days prior to such
estimated Substantial Completion Date.
5.03.2 The Airline shall move into and occupy its
Permanent Premises on or before the actual Substantial Completion
Date of such Permanent Premises whereupon such Permanent Premises
shall not be considered TAP subject to Section 5.02; provided,
however, that if the Airline notifies the Authority as promptly
as is reasonably practicable upon receipt of the notice specified
in Paragraph 5.03.1 that it cannot reasonably prepare its
Permanent Premises by the estimated Substantial Completion Date,
and the reasons therefor, the Airline shall have additional time,
not to exceed thirty (30) days, to move into and occupy its
Permanent Premises. Unless a different payment is required by
Section 8.14, the Airline shall be subject to, and shall pay, the
rentals, fees, and charges for its Permanent Premises beginning
on the actual Substantial Completion Date thereof regardless of
whether the Airline occupies its Permanent Premises prior to, on,
or after such actual Substantial Completion Date.
5.03.3 If the Airline's Permanent Premises are not
completed by the estimated Substantial Completion Date that was
contained in the written notice given by the Authority pursuant
to Paragraph 5.03.1, the Authority shall not be liable to the
Airline for failure to deliver possession or to complete said
Permanent Premises by said date. The Authority will notify the
Airline of any change in such estimated Substantial Completion
Date.
ARTICLE 6.
LEASE
6.01 Lease of Temporary Airline Premises and Equipment. The
Authority, as lessor, hereby leases to the Airline, and the
Airline, as lessee, hereby leases from the Authority, commencing
on the date hereof and subject to all of the terms and conditions
herein, particularly the transition provisions of Article 5, the
following Temporary Airline Premises and Equipment:
(i) The Exclusive Use Premises specifically described and
identified as TAP in Exhibits N-B and D-B;
(ii) The Joint Use Premises specifically described and
identified as TAP in Exhibits N-B and D-B;
(iii) The Preferential Use Premises specifically
described and identified as TAP in Exhibits N-B and D-B; and
(iv) The Equipment specifically described and identified as
TAP in Exhibits N-H and D-H.
6.02 Lease of Permanent Premises and Equipment. Commencing on
the Substantial Completion Date of the Airline's Permanent
Premises, the Authority, as lessor, shall, without any further
action, lease to the Airline, and the Airline, as lessee, shall,
without any further action, lease from the Authority, subject to
all of the terms and conditions herein, the following Permanent
Premises and Equipment:
(i) The Exclusive Use Premises described and identified in
Exhibits N-B and D-B;
(ii) The Joint Use Premises described and identified in
Exhibits N-B and D-B;
(iii) The Preferential Use Premises described and
identified in Exhibits N-B and D-B; and
(iv) The Equipment described and identified in Exhibits N-H
and D-H.
6.03 Changes. All of the Premises and Equipment described in
Sections 6.01 and 6.02 are subject to modification in accordance
with Article 5, this Article 6, Article 16, and Article 17 of
this Agreement.
6.04 Allocation of Premises at Dulles. At Dulles, prior to the
completion of the design of the westerly expansion of the Main
Terminal, and subsequently, prior to the completion of the design
of the easterly expansion of the Main Terminal, the Authority
will determine the location of each Airline's Premises in the
expanded Main Terminal. The following will be the primary, but
not exclusive, considerations in establishing the priority order
of allocation:
(i) The amount of space committed to by each Airline in an
executed use and lease agreement;
(ii) The individual Airline's preference with respect to
location of its leasable Premises, and the desirability of, and
operational requirements for, contiguous space for related
functions; and
(iii) The efficient phasing and implementation of the
Main Terminal expansion, whereby relocations are minimized and
flexibility for construction phasing is maximized.
6.05 Modification of Premises. In the event that the Authority
and the Airline, by mutual agreement, add additional space or
spaces to, or delete space or spaces from, the various Premises
of the Airline, Exhibits N-B or D-B, as applicable, shall be
revised accordingly to reflect such addition or deletion and the
revised exhibits shall be incorporated into the Agreement. Space
added to the Airline's Premises shall be subject to all of the
terms, conditions, requirements, and limitations of this
Agreement and the Airline shall pay to the Authority all rentals,
fees, and charges applicable to such additional space in
accordance with the provisions of this Agreement.
6.06 Addition of Equipment.
6.06.1 Subject to Paragraph 6.06.3, the Authority
reserves the right to acquire and install Equipment in, upon, and
adjacent to, the Airline's Premises but only in one or more of
the following events:
(i) The acquisition and installation of the Equipment is
identified as part of the Capital Development Program;
(ii) The acquisition and installation of Equipment is
identified as part of any Additional Project;
(iii) In any Premises, whenever there is a change in
tenants; or
(iv) Such acquisition and installation are agreed to between
the Airline and the Authority.
6.06.2 The Airline agrees to facilitate the installation
of the Equipment, including, upon reasonable notice from the
Authority, the decommissioning and removal, at the Airline's
expense, of the Airline's equipment, if any, that is to be
replaced by Equipment pursuant to Paragraph 6.06.1.
6.06.3 Prior to the acquisition and installation of
Equipment pursuant to Paragraph 6.06.1, the Authority shall
consult with the Airlines with respect to the technical standards
and requirements applicable to such Equipment. So long as such
Equipment meets such standards and requirements, the Airline may
select the vendor or supplier of Equipment for the Airline's
Premises. At the request of the Airline, and provided that it
would not adversely affect the tax-exempt status of the Bonds,
the Authority may allow the Airline to initially purchase the
Equipment and be subsequently reimbursed by the Authority.
6.07 Adjustment of Dimensions. After the Substantial Completion
Date of each Airline's Permanent Premises, the actual square
footage of the Airline's Premises shall be determined by the
Authority from actual measurements, and incorporated into revised
Exhibits N-B and N-C, and D-B and D-C. If measurements are to be
taken, the Airline shall be notified in advance and shall be
entitled to have a representative present when such measurements
are taken. Premises consisting of enclosed space shall be
measured for interior space from the center line of interior
walls to the inside face of exterior walls.
ARTICLE 7.
OPERATION AND MAINTENANCE
7.01 Authority Responsibilities.
7.01.1 The Authority shall, with reasonable
diligence and prudence, operate and maintain the Airports
with adequate, efficient, qualified personnel, and keep the
Airports in good condition and repair, including the
Terminals, Ramp Area, Existing and New Midfield Concourses,
Airside Operations Buildings, and any Passenger Conveyances
between Existing and New Midfield Concourses or between
aircraft and Terminals and the visual public display of
arrival and departure flight information for the Dulles Main
Terminal.
7.01.2 The Authority shall, with reasonable
diligence and prudence, act to maintain the Landing Area for
the safe and proper use thereof by the Airline, including
the clearing and removal of snow from the runways and
taxiways as quickly as reasonably practicable.
7.01.3 The Authority will operate and maintain the
Airports in a manner at least equal to the standards
established by the FAA to maintain the Airport Operating
Certificates and any other governmental agency having
jurisdiction thereof, except for conditions beyond the
control of the Authority.
7.01.4 The Authority shall not be liable to the
Airline for temporary failure to furnish all or any services
to be provided by the Authority hereunder, whether due to
mechanical breakdown or for any other causes beyond the
reasonable control of the Authority.
7.01.5 The Authority's operation and maintenance
responsibilities are set forth in Exhibits D-D and N-D,
except that the Airline and the Authority may agree to a
different allocation of maintenance responsibility in
Exhibits N-B and D-B (leasehold exhibits) in which event any
conflict between Exhibits D-D and ND and D-B and N-B shall
be resolved in accordance with Exhibits D-B and N-B.
Further, and except as may be provided in Exhibits D-B and N-
B, the Authority shall not be obligated to perform the
operation and maintenance responsibilities designated by
Section 7.02 and Exhibits N-D and D-D as being the
responsibility of the Airline, or for which the Airline,
another Signatory Airline, or any other person has assumed
such responsibility by separate written agreement with the
Authority, including a Surviving Agreement.
7.01.6 The Authority shall provide, operate, and
maintain the Passenger Conveyance system at Dulles,
including a sufficient number of trained personnel. The
Authority shall provide adequate Passenger Conveyances for
the transportation of passengers between the Main Terminal
and the Airline's aircraft that are parked on remote hard
stand or on the Dulles Jet Apron at a parking position that
is not serviced by a passenger holdroom and a loading
bridge. The Airline shall determine who boards Passenger
Conveyances traveling between the Dulles Main Terminal and
its aircraft directly. On Passenger Conveyances serving
aircraft directly, passengers enplaning or deplaning for
more than one aircraft operation shall not be combined in a
single one-way trip. Except in an emergency, the Authority
shall not be obligated to provide transportation directly
between the Terminal and the Airline's aircraft which is, or
in the reasonable judgment of the Authority can be, parked
at an Aircraft Parking Position at the Existing Midfield
Concourse or New Midfield Concourse(s) and served by a
passenger holdroom and a loading bridge. If the Passenger
Conveyance has departed directly for the Airline's aircraft
before all of the Airline's passengers have boarded it, the
Airline may transport its passengers to or from its aircraft
by another means subject to the Authority's approval.
7.01.7 The Authority and the Airline recognize that
regular, shuttle-type mobile lounge service of high quality
is important for the proper transportation of passengers to
and from the Existing Midfield Concourse. The Authority
agrees:
(i) To use its reasonable best efforts to provide
mobile lounge service from the Dulles Main Terminal to the
Existing Midfield Concourse beginning one hour before any
Airline's first departure from the Existing Midfield
Concourse and will continue to operate on a regular basis
until a half hour after the' last scheduled flight arrives,
even if that flight is later than its scheduled arrival.
(ii) To use its reasonable best efforts so that (a)
after a mobile lounge departs from a terminus another takes
its place as soon as practicable, and (b) regardless of the
number of passengers carried, mobile lounges depart the
terminus after waiting no more than five minutes for
boarding passengers; provided that a lounge may remain at
one or each terminus for a longer period if no passengers of
a Signatory Airline are waiting service for transportation.
(iii) An adequate number of gates at the Dulles
Main Terminal will be designated as the gates from which the
mobile lounges to the Existing Midfield Concourses will
operate. The Authority reserves the right to designate
different or additional gates for this service from time to
time upon reasonable notice to the Airlines whose aircraft
operate at the Existing Midfield Concourse.
7.02 Airline Responsibilities - General. The Airline shall
perform custodial grounds and interior maintenance,
including janitorial services, to the non-public areas of
its Premises as specified in the Exhibits hereto, and such
other operations and maintenance responsibilities as
specified herein or by separate written agreement with the
Authority, including the Surviving Agreements. In addition,
the Airline shall be responsible for operation and
maintenance of all Airline Operating Facilities located
within its Premises.
7.02.1 The Airline shall supervise, or cause to be
supervised, all persons lawfully present on its Premises,
including, but not limited to, its Enplaning and Deplaning
Passengers on the loading bridges, persons traveling on
Passenger Conveyances directly to or from the Airline's
aircraft, persons traveling on buses or similar vehicles
operated by the Airline, and on all paths, walkways, and
Ramp Areas used by the passengers to move between the
Terminal and/or Passenger Conveyances, and the Airline's
aircraft.
7.02.2 The Airline shall operate, maintain, and
repair, at its own expense (i) any loading bridges and
ground power/preconditioned air units located at its
assigned Aircraft Parking Positions, and (ii) any outbound
baggage makeup conveyor system located on its Premises,
whether or not title to such bridges, ground
power/preconditioned air units, or baggage conveyors rests
with the Airline or the Authority; provided, however, the
Authority retains the right to assume responsibility for
operation, maintenance, and repair of any Equipment upon
thirty (30) days prior written notice to the Airlines, and
provided, further, that nothing herein shall relieve the
Airline of the obligation to pay Equipment Charges for any
Equipment, as set forth in Section 8.05 and Exhibits N-H and
D-H.
7.02.3 Except as authorized in writing by the
Authority, or except in an emergency, the Landing Area of
the Airport shall not be used by any of the Airline's
aircraft which exceed the design strength of the Landing
Area as described in the then current FAA-approved Airport
Layout Plan. In addition, the Authority may prohibit or
restrict the use of the Ramp Area by any aircraft the wheel
loading of which exceeds the design strength of the pavement
as determined by the Authority.
7.02.4 The Airline shall, together with all other
Signatory Airlines, operate, maintain, and repair the
triturator at each Airport through a common agent of and
selected by the Signatory Airlines; provided, however, there
shall be no more than one such agent at each Airport1 and
that such agent shall be subject to the approval of the
Authority.
7.03 Additional Airline Responsibilities at National.
7.03.1 At National, the Airline shall be responsible
for custodial grounds maintenance, including removal of
snow, ice, vegetation, stones, fuel, oil, grease, debris,
and all other foreign matter from the Ramp Areas and
equipment storage areas, including passenger walkways and
Aircraft Parking Positions, and cargo handling areas at its
Premises, from the exterior face of the Terminal to the
nearest edge of the Airfield's vehicle lane, as depicted in
Exhibit N-B.
7.03.2 The Airline shall assume Pavement Structural
Maintenance responsibilities for its Aircraft Parking
Positions if the Airline (i) improperly parks aircraft on an
Aircraft Parking Position pad, or (ii) fails to perform the
custodial grounds maintenance responsibilities required by
Paragraph 7.03.1 and, in the Authority's determination, any
of these events is sufficient to cause damage to the
Aircraft Parking Position. The Authority shall provide the
Airline with written notice when it determines that any of
these events is sufficient to cause damage to the Aircraft
Parking Position. In that event, the cost of performing any
Pavement Structural Maintenance for those Aircraft Parking
Position(s) shall become payable by the Airline, without
reimbursement.
7.03.3 If the Airline desires to park heavier or
larger aircraft on an Aircraft Parking Position than the
Aircraft Parking Position was designed to accommodate, it
shall, prior to such use and subject to the approval of the
Authority, at its own cost and expense, improve the Aircraft
Parking Position so that it meets the Authority's standards
for such aircraft. In that event, the Airline shall be
entitled to reimbursement from the Authority for these
improvements at such time as, and to the extent that, the
Authority has funds available for such purpose.
7.04 Additional Airline Responsibilities at Dulles.
7.04.1 The Airline shall be responsible for
custodial grounds maintenance, including removal of snow,
ice, vegetation, stones, fuel, oil, grease, debris, and all
other foreign matter from the following Ramp Areas and
equipment storage areas at its Premises:
(i) If the Airline has Premises in the Existing
Midfield Concourses or Airside Operations Building on the
Dulles Jet Apron, the Airline shall perform custodial
grounds maintenance for the Dulles Jet Apron out from the
exterior wall of said Premises to the south edge of the
vehicle roadway on the north side of the Dulles Jet Apron,
and out to the north edge of the vehicle roadway to the
south, as depicted in Exhibit D-B.
(ii) If the Airline's Premises include any of the space
in the Base-of-the-Tower Facilities, the Airline shall
perform custodial grounds maintenance for the Ramp Area from
the south exterior wall of said Premises to the north edge
of the vehicle roadway, as depicted in Exhibit D-B.
7.04.2 If the Airline desires to park heavier or
larger aircraft on an Aircraft Parking Position than the
Aircraft Parking Position was designed to accommodate, it
shall, prior to such use and subject to the approval of the
Authority, at its own cost and expense, improve the Aircraft
Parking Position so that it meets the Authority's standards
for such aircraft. In that event, the Airline shall be
entitled to reimbursement from the Authority for these
improvements at such time as, and to the extent that, the
Authority has funds available for such purpose. In no event
shall the Airline park any aircraft with a fuselage longer
than one hundred twenty (120) feet at the Base-of-the-Tower
Facilities.
7.04.3 The Airline shall provide and maintain at its
expense, the telecommunications system between the Airline
and the mobile lounge controllers. The Airline will
cooperate with the Authority in its operation of the flight
information and mobile lounge dispatch communications system
by furnishing necessary information to the Authority's
controller through said system.
7.05 If the Airline fails to perform its maintenance
obligations hereunder, or as specified in Exhibits N-D and D-
D, or if the negligence or willful misconduct of the Airline
causes additional maintenance obligations for the Authority,
the Authority shall have the right, but shall not be
required, to perform such maintenance, and to charge the
Airline therefor; provided, however, the Authority shall
give to the Airline reasonable advance written notice of non-
compliance and the Authority's intent to enter upon the
Premises prior to the exercise of this right.
8.23
ARTICLE 8.
RENTALS, FEES, AND CHARGES
8.01 General.
8.01.1 The Airline shall pay to the Authority rentals for
use of Premises at the Airports, and fees and charges for the
other rights, licenses, and privileges granted hereunder during
the Period of this Agreement. Such rentals, fees, and charges
shall be calculated based on allocations of Total Requirements,
reduced by Transfers, to the Cost Centers and Sub-Centers within
the Airline Supported Areas and as specifically provided for
herein and in Exhibits N-F and D-F and the accompanying
Schedules.
8.01.2 In each Fiscal Year at each Airport, the total of
rentals, fees, and charges payable by the Signatory Airlines
hereunder (and, with respect to the Airfield Cost Center, by the
Signatory Cargo Carriers), plus Transfers allocable to the
Airline Supported Areas at such Airport for such Fiscal Year,
shall in any event be at least equal to the sum of (i) O&M
Expenses, (ii) amounts required to maintain the O&M Reserve,
(iii) Debt Service, (iv) other Capital Charges, (v) Federal Lease
payment, (vi) at Dulles, Dulles Rate Credit Amortization
Requirement, (vii) required deposits, if any, to the Debt Service
Reserve Fund, and (viii) required deposits, if any, to the
Emergency R&R Fund allocable to the Airline Supported Areas at
such Airport for such Fiscal Year; and, in each Fiscal Year, at
each Airport, the total of rentals, fees, and charges payable
hereunder by the Signatory Airlines (and, with respect to the
Airfield Cost Center, by the Signatory Cargo Carriers), shall in
any event be at least equal to the amount required such that
total Revenues of that Airport, plus Transfers for such Fiscal
Year, less Operating and Maintenance Expenses at that Airport,
for such Fiscal Year, shall be at least equal to one hundred
twenty-five percent (125%) of the sum of Debt Service on Senior
Bonds and Debt Service on Subordinated Bonds at that Airport for
such Fiscal Year.
8.01.3 Notwithstanding the above, the Airline shall not
be required to pay rentals, fees, and charges that are
inconsistent with a Surviving Agreement, if any, between the
Airline and the Authority.
8.01.4 For purposes of calculating rates for rentals,
fees, and charges payable hereunder, the following Direct Cost
Centers and Indirect Cost Centers, each as described in Exhibits
N-E and D-E, are hereby created:
(i) Direct Cost Centers - National
(a) Airfield
(b) Terminal
(c) Aviation
(d) Ground Transportation
(e) Non-Aviation
(f) Equipment
(ii) Direct Cost Centers - Dulles
(a) Airfield
(b) Terminal
(c) International Arrivals Building (IAB)
(d) Airside Operations Buildings (AOB)
(e) Cargo
(f) Aviation
(g) Ground Transportation
(h) Non-Aviation
(i) Equipment
(j) Passenger Conveyance System
(iii) Indirect Cost Centers - National/Dulles
(a) Maintenance
(b) Public Safety
(c) Systems and Services
(d) Administrative
8.01.5 For purposes of calculating rates for rentals,
fees, and charges payable hereunder, and subject to the
provisions of Paragraph 8.03.2, the following Terminal Sub-
Centers and Equipment Sub-Centers, each as described in Exhibits
N-E and D-E, are hereby created:
(i) Terminal and Equipment Sub-Centers - National
(a) Main Terminal (Includes Existing North
Terminal)
(b) Interim Hangar 11 Terminal
(c) New North Terminal
(ii) Terminal and Equipment Sub-Centers - Dulles
(a) Main Terminal (Includes Base-of-Tower
Facilities)
(b) Existing Midfield Concourses
(c) New Midfield Concourse(s)
(iii) Additional Equipment Sub-Centers - Dulles
(a) International Arrivals Building (IAB)
(b) Airside Operations Buildings (AOB)
8.02 Landing Fees.
8.02.1 Calculation of Rates. The Landing Fee rates for
each Airport in any Rate Period shall be calculated by dividing
each Airport's Airfield Net Requirement by the combined estimated
landed weight for all Air Transportation Companies and General
Aviation operating at that Airport during the Rate Period.
8.02.2 Rate Schedule. Schedules NF-l (National) and DF-l
(Dulles) show the calculation of Landing Fee rates for each Rate
Period.
8.02.3 Airline's Landing Fee Charges. Each month the
Airline shall pay to the Authority Landing Fees for Chargeable
Landings for the preceding month. The Airline's Landing Fees
shall be determined as the product of the appropriate Airport's
Landing Fee rate for the Rate Period, and the Airline's total
landed weight for the month. The Airline's total landed weight
at each Airport for the month shall be determined as the sum of
the products obtained by multiplying the Maximum Authorized Gross
Landed weight of each type of aircraft operated by the Airline at
each Airport by the number of Chargeable Landings of each said
aircraft operating at that respective Airport during such month.
8.03 Terminal Rentals, Fees, and Charges.
8.03.1 Calculation of Rates. The Terminal Rental rates
at each Airport in each Rate Period shall be calculated
separately for each Terminal Sub-Center. The rates for each type
of space shall be determined in the following Manner:
(i) First, for each Terminal Sub-Center at each Airport,
the Terminal Sub-Center average rental rates shall be calculated
as follows:
(a)Each Terminal Sub-Center Net Requirement
shall first be divided by total Rentable Space in that Sub-Center
to determine that Terminal Sub-Center's average rental rate for
the Rate Period; provided, however, the transition adjustments
related to the Capital Development Program as set forth in
Paragraph 8.03.2 shall be made prior to determining each Terminal
Sub-Center's average rental rates.
(b)The unadjusted Signatory Airline requirement
shall next be determined by multiplying the total amount of
Signatory Airline Premises and Common Use Premises in each
Terminal Sub-Center, as set forth on Schedules NF-1l and DF-13,
times the appropriate Terminal Sub-Center average rental rate.
(c)The unadjusted Signatory Airline requirement
shall then be reduced by the amount of Transfers, if any, and by
the amount, if any, of certain Revenues derived from Surviving
Agreements, applicable to each Terminal Sub-Center at each
Airport to determine the adjusted amount due from the Signatory
Airlines.
(d)The adjusted amount calculated in (c) shall
then be divided by the total amount of Signatory Airline Terminal
Sub-Center Premises and Common Use Premises to determine the
Terminal Sub-Center average Signatory Airline rental rate.
(ii) To determine the differential Terminal Sub-Center
rental rates, each Terminal Sub-Center Premises and Common Use
Premises shall first be classified according to the types of
space set forth below:
Type of Weighted
Space Location/Function Value
1 Ticket Counter 1.00
2 Ticket Offices; .90
Administrative and Upper
Level Offices; V.I.P.
Rooms; Holdrooms
3 Bag Claim; Baggage Service .85
Offices
4 Bag Make-Up; Operations .55
Areas
5 Tug Drives; Exterior .25
Baggage Space
6 Unenclosed Covered Areas (a) (b)
7 Unenclosed Improved (a) (b)
Uncovered Areas
(a) Rentals for Type 6 and Type 7 space shall be based on
initial fixed rates of $4.00 and $1.00, respectively, per
square foot, with said rates to be adjusted each Fiscal
Year, commencing October 1, 1990, in accordance with changes
in the U.S. Implicit Price Deflator Index. The base date
for such adjustment shall be the index available on
October 1, 1989.
(b) If the Airline encloses, or otherwise modifies any such
areas, as approved by the Authority, or if the Authority
encloses or otherwise modifies any such area(s), the area(s)
shall be reclassified into the appropriate space type. The
rate for the reclassified space shall be the then current
rate for the reclassified space. If the Airline modifies
any such area and the rental rate for the reclassified space
is higher than it was prior to reclassification, then, at
the time the Airline requests approval to modify the space,
the Airline and the Authority shall negotiate an appropriate
rental credit(s) to reimburse the Airline for any costs
incurred by the Airline in modifying such area(s); provided,
however, such agreed upon rental credits shall in no event
result in ~ rate less than the then current rate for the
space prior to its modification.
(iii) Next, using the appropriate space totals shown in
Schedules NF-11 and DF-13, the Signatory Airline Terminal Sub-
Center average rental rate for each Terminal Sub-Center for the
Rate Period shall then be converted to differential Terminal Sub-
Center rental rates as follows:
(a)For each Terminal Sub-Center, the amount of
Type 1 through Type 5 space shall be Multiplied by the relative
weighted values set forth in Paragraph 8.03.1(ii) above, to
obtain a weighted equivalent amount of space.
(b)The adjusted Signatory Airline requirement
calculated in Paragraph 8.03.1(i)(c), above, shall be reduced by
the amount of Type 6 and Type 7 space rentals due for that Rate
period, to determine the differential Signatory Airline
requirement.
(c)For each Terminal Sub-Center, said
differential Signatory Airline requirement shall then be divided
by the weighted equivalent amount of Premises and Common Use
Premises for said Terminal Sub-Center to determine the rate for
Type 1 (premium) space. Rates for Types 2 through Type 5 space
shall then be determined by multiplying the Type 1 (premium) rate
by the relative weighted values for each type of rentable area.
8.03.2 Transition Adjustments. The parties hereto
recognize that certain facilities at each Airport, due to
construction of the Capital Development Program, are anticipated
to be abandoned and/or ultimately demolished in stages during the
Period of this Agreement:
(i) To the extent any portions of the Existing North
Terminal at National are in service during the Period of this
Agreement, the following transition adjustments shall be made:
(a)The Terminal Sub-Center Net Requirement
calculated for National's Main Terminal Sub-Center shall also
include the costs attributable to the Existing North Terminal,
whether occupied or not, during any Rate Period in which the
Existing North Terminal has not yet been demolished; and
(b)Rentable Space in the Existing North Terminal
used for the calculations in Paragraph 8.03.1 shall include only
those areas of the Existing North Terminal actually occupied in
each Rate Period.
(ii) To the extent any portions of the Base-of-the-Tower
Facilities at Dulles are in service during the Period of this
Agreement, the following transition adjustments shall be made:
(a)The Terminal Sub-Center Net Requirement
calculated for the Main Terminal Sub-Center at Dulles shall also
include the costs attributable to the Base-of-the-Tower
Facilities, whether occupied or not, during any Rate Period in
which the Base-of-the-Tower Facilities have not yet been
demolished; and
(b)Rentable Space in the Base-of-the-Tower
Facilities used for the calculations in Paragraph 8.03.1 shall
include only those areas of the Base-of-the-Tower Facilities
actually occupied in each Rate Period.
(iii) To the extent any portions of the Existing
Midfield Concourses at Dulles are in service following
Substantial Completion of one or more New Midfield Concourse(s) I
the following transition adjustments shall be made:
(a)The Existing Midfield Concourse Sub-Center
Net Requirement shall include the costs attributable to all then
remaining portions of the Existing Midfield Concourses, whether
occupied or not; and
(b)Rentable Space in the then remaining Existing
Midfield Concourses used for the calculations in Paragraph 8.03.1
shall include only those areas of the Existing Midfield
Concourses actually occupied in each Rate Period.
(iv) To the extent that certain areas of each Terminal Sub-
Center at either Airport, due to relocations necessitated by the
Capital Development Program, may be vacant for temporary periods,
the total Rentable Space used for the calculations in Paragraph
8.03.1 at the affected Airport(s) shall be reduced by the amount
of such vacated space, whether such temporarily vacated space is
that of the Signatory Airlines or other Terminal tenants.
(v) Upon Substantial Completion of the New North Terminal
at National, the Total Requirement for the Interim Hangar 11
Terminal (related to either its use as a terminal or certain
costs related to its conversion from terminal use) shall be
included in the calculation of rental rates for the New North
Terminal at National.
8.03.3 Rate Schedules. Schedules NF-2, NF-3, and NF-4
(National) and Schedules DF-2, DF-3, and DF-4 (Dulles) show the
calculation of average and differential rental rates for each
Terminal Sub-Center.
8.03.4 Airline's Terminal Rentals. The Airline's
Terminal Rentals for Exclusive, Preferential, and Joint Use
Premises in each Rate Period shall be determined as the sum of
the products obtained by multiplying the appropriate differential
Terminal Sub-Center rental rate for the Rate Period, calculated
in accordance with Paragraph 8.03.1, by the amount of the
corresponding type of space leased by the Airline in each
Terminal Sub-Center at each Airport as Exclusive, Preferential,
and Joint Use Premises. Said Terminal Rentals for each Rate
Period shall be payable in equal Monthly installments.
8.03.5 Common Use Charges. The Common Use Charges due
from Signatory Airlines for Common Use Premises in each Terminal
Sub-Center at each Airport in each Rate Period shall be
calculated as the product of the appropriate differential
Terminal rental rate for the Rate Period and the amount of each
category and area of Common Use Premises in each Terminal Sub-
Center. Said total Common Use requirement for each Terminal Sub-
Center at each Airport shall then be reduced by any amounts for
that Rate Period estimated by the Authority (based upon the prior
Rate Period's Low Volume Common Use Fees) to be payable as Low
Volume Common Use Fees attributable to said Terminal Sub-Center,
as set forth in Paragraph 8.03.6, to derive the "net aggregate
Common Use requirement." Each Signatory Airline's monthly Common
Use Charge, if applicable, for each Airport shall then be
determined as follows:
(i) Ten percent (10%) of the net aggregate Common Use
requirement due in each Terminal Sub-Center (or category or area
thereof, if applicable) at each Airport shall be prorated equally
among the Signatory Airlines, other than those paying Low Volume
Common Use Fees.
(ii) The remaining ninety percent (90%) of the net aggregate
Common Use requirement due in each Terminal Sub-Center (or
category or area thereof, if applicable) at each Airport shall be
prorated among the Signatory Airlines, other than those paying
Low Volume Common Use Fees, based upon each such Signatory
Airline's proportionate share of Total Passengers for all
Signatory Airlines, except that the component of the Common Use
Charge at Dulles attributable to baggage claim and holdroom shall
be calculated on the basis of Total Passengers less the Airline's
deplaning passengers using the IAB.
(iii) The allocation of Common Use Charges pursuant to
Paragraphs (i) and (ii) above, shall be made by the Authority
twice each Fiscal Year, with the first such allocation applicable
to the six month period commencing on the first day of each
Fiscal Year and ending on the last day of the sixth Month of said
Fiscal Year, and the second allocation applicable to the
remaining six months of said Fiscal Year; provided, however, the
Authority shall further have the right to adjust such allocations
for the remaining portion of the then current six month period at
any other time rates for Common Use Charges are adjusted during a
Fiscal Year pursuant to Sections 9.03 or 9.04. At any time such
allocations are adjusted, the Authority shall notify the Airline
and other Signatory Airlines of the revised allocations, the
amounts due from each Signatory Airline, and the period for which
such allocations and amounts are applicable, and the Airline
shall then pay its allocated share of Common Use Charges in equal
monthly installments during said period. Each such allocation
shall be based upon activity data for the most recent six months
for which such data is then available.
(iv) For purposes of the Common Use Charge allocation
calculations, the Airline shall include in its monthly activity
report required by Section 8.12, and individually identify, the
number of Enplaning Passengers and Deplaning Passengers handled
or otherwise accommodated by the Airline for other Air
Transportation Companies not having an agreement with the
Authority that provides for the direct payment to the Authority
of appropriate Common Use Charges.
8.03.6 Low Volume Common Use Fees. Notwithstanding the
above Paragraph 8.03.5, a Signatory Airline that is a Low Volume
Airline shall pay a monthly Low Volume Common Use Fee in lieu of
the payment of Common Use Charges, in each Rate Period, for each
Airport, calculated as follows:
(i) The Common Use requirement for such Rate Period, at
such Airport, calculated in accordance with Paragraph 8.03.5
shall be divided by the actual Total Passengers at each Airport
for the most recent twelve (12) months for which such activity
reports are available. This amount shall be the Low Volume
Common Use Fee per Passenger for each Airport.
(ii) For each Common Use Charge allocation period as set
forth in Paragraph 8.03.5(iii), a Low Volume Airline is a
Signatory Airline (a) which operated at that Airport, (b) which
operates under Part 135 of the FAA Regulations, and (c) which
either reported an average monthly Enplaning Passenger activity
level at that Airport less than or equal to one thousand (1,000)
Enplaning Passengers per month during the preceding Common Use
Charge allocation period, or, if a new Signatory Airline, is
projected to generate a monthly average of less than one thousand
(1,000) Enplaning Passengers at that Airport for the ensuing
Common Use Charge allocation period.
(a)In the event that the monthly average
Enplaning Passenger activity level of any Signatory Airline
paying the Low Volume Common Use Fee becomes greater than one
thousand (1,000) Enplaning Passengers at that Airport during the
then-current Common Use Charge allocation period, such signatory
Airline shall pay Common Use Charges as set forth in Paragraph
8.03.5 in the next ensuing Common Use allocation period.
(b)In the event that the monthly average
Enplaning Passenger activity level of any Signatory Airline
paying Common Use Charges pursuant to Paragraph 8.03.5 (and which
operates under Part 135 of the FAA Regulations) becomes less than
one thousand (1,000) Enplaning Passengers at that Airport during
the then-current Common Use Charge allocation period, such
Signatory Airline shall pay the Low Volume Common Use Fee in the
next ensuing Common Use Charge allocation period.
8.03.7 Rate Schedules. Schedules NF-5 (National) and DF-
5 (Dulles) show the calculation of Common Use Charges and Low
Volume Common Use Fees for each Rate Period.
8.04 Aircraft Parking Position Charges and Dulles Jet Apron Fees.
8.04.1 Aircraft Parking Position Charges at National.
The Authority reserves the right to charge the Airline Aircraft
Parking Position Charges at National during the Period of this
Agreement; provided, however,
(i) The Authority shall provide written notice no less than
ninety (90) days prior to the effective date of such Aircraft
Parking Position Charge;
(ii) The Aircraft Parking Position Charge at National shall
be calculated in a manner substantially similar to the Aircraft
Parking Position Charge at Dulles, as set forth in Paragraph
8.04.2;
(iii) The total amount for such charge shall not exceed
ten percent (10%) of the Airfield Total Requirement; and
(iv) Revenues derived from any such charges shall be applied
to reduce the Airfield Total Requirement in any Rate Period in
which such charges are imposed and collected by the Authority.
8.04.2 Rates for Ramp Area Charges at Dulles. Dulles
Aircraft Parking Position Charges and Dulles Jet Apron Fees
("Ramp Area Charges") shall be calculated, beginning January 1,
1992, as follows:
(i) For the initial period commencing January 1, 1992, five
percent (5%) of the estimated Airfield Total Requirement shall be
the basis of Ramp Area Charges; provided, however, the Authority
shall estimate in each subsequent Rate Period the actual
requirement attributable to the Ramp Area as a percentage of the
Dulles Airfield Total Requirement. Such Authority-estimated Ramp
Area requirement for Dulles shall not exceed ten percent (10%) of
the Airfield Total Requirement in any Rate Period.
(ii) The Ramp Area requirement for Dulles determined as set
forth in Paragraph 8.04.2(i) above shall be next divided into
Aircraft Parking Position and Dulles Jet Apron components, based
upon the number of Aircraft Parking Positions and Dulles Jet
Apron positions as a percentage, respectively, of the total of
all such aircraft positions at Dulles.
(iii) The Aircraft Parking Position requirement
determined in Paragraph 8.04.2(u) above in each Rate Period shall
be divided by the actual linear footage of all Aircraft Parking
Positions (measured one hundred (100) feet from the face of the
Terminal or Concourse) in each Rate Period, to determine the
Aircraft Parking Position Charge rate. In the event such actual
measurement cannot be accomplished, each Aircraft Parking
position for a narrow-body aircraft shall be deemed to be one
hundred twenty-five (125) linear feet and for a wide-body
aircraft shall be deemed to be one hundred seventy-five (175)
linear feet.
(iv) The Dulles Jet Apron requirement determined in
Paragraph 8.04.2(u) above in each Rate Period shall be divided by
the estimated number of operations at the Dulles Jet Aprons in
each Rate Period to determine the Dulles Jet Apron Fee rate for
each operation.
(v) In the event that the Authority designates a separate
area(s) of the Ramp Area for the shared use by Signatory Airlines
operating under Part 135 of the FAA Regulations, then in such
event the Authority shall allocate a reasonable amount of the
Ramp Area requirement determined as set forth in Paragraph
8.04.2(i) above to such area(s), and shall charge such Airline
for the use of said area(s) based upon each such operator's share
of total Enplaning Passengers using the area(s).
8.04.3 Airline's Dulles Aircraft Parking Position
Charges. At Dulles, the Airline's Aircraft Parking Position
Charges, if applicable, shall be the product obtained by
Multiplying the total linear footage of the Airline's Aircraft
Parking Position(s), as set forth in Exhibit D-B, tiles the
Aircraft Parking Position Charge rate for the Rate Period. Such
charge shall be paid in equal Monthly installments in accordance
with Section 8.11.
8.04.4 Airline's Dulles Jet Apron Fees The Airline's
monthly Dulles Jet Apron Fees, if applicable, shall be calculated
as the product obtained by multiplying the Dulles Jet Apron Fee
rate for the Rate Period by the number of the Airline's aircraft
utilizing the Jet Apron to board or disembark passengers during
the month; provided, however, the Airline shall not be subject to
this Dulles Jet Apron Fee if the Airline pays Aircraft Parking
Position Charges directly to the Authority and uses the Dulles
Jet Apron exclusively to disembark passengers. An aircraft which
both disembarks and boards passengers at a Jet Apron Position
will be subject to a single fee. The fee shall be paid monthly
in accordance with Section 8.11.
8.05 Equipment Charges.
8.05.1 Equipment Charges. For each Rate Period, the
Airline shall pay charges for each type and item of Equipment
leased by the Airline from the Authority, if any, as set forth in
Exhibits NH and DH. Except as set forth in Paragraph 8.05.2,
said charges shall be calculated as the sum of the following:
(i) The annual capital requirement for each type and item
of Equipment shall be equal to the sum of the Capital Charges
plus Debt Service Coverage reduced by Transfers allocable to such
Equipment; and
(ii) The O&M requirement in each Rate Period for each type
and item of Equipment which shall be equal to the O&M Expenses
incurred by the Authority and allocable to such Equipment.
8.05.2 The Airline's charges for certain types of
Equipment, including baggage claim conveyors and devices, and
flight information and baggage information display systems, shall
be included in the Airline's Terminal Rentals and Common Use
Charges for the Premises and the Common Use Premises in the
Terminal Sub-Center in which such Equipment is located.
8.05.3 Equipment Charge Rate Schedules.
Schedules NF-6 (National) and DF-6 (Dulles) show the
calculation of Equipment Charges rates for each Rate Period.
8.06 Passenger Security Reimbursements.
8.06.1 Security Reimbursement Requirement. Total
Passenger Security Reimbursements due and payable at each Airport
in each Fiscal Year shall be equal to the Authority's costs of
providing security services, including law enforcement officers,
for passenger screening.
8.06.2 Airline's Passenger Security Requirements.
(i) The Passenger Security Reimbursement requirement shall
be allocated among the Signatory Airlines serving each Airport
based upon their respective total Enplaning Passengers requiring
such services as set forth in Paragraph 8.06.2(u).
(ii) The allocation of Passenger Security Reimbursements
pursuant to Paragraph 8.06.2(i) shall be made by the Authority
twice each Fiscal Year, with the first such allocation applicable
to the six month period commencing on the first day of each
Fiscal Year and ending on the last day of the sixth month of said
Fiscal Year, and the second allocation applicable to the
remaining six months of said Fiscal Year; provided, however, the
Authority shall further have the right to adjust said allocation
for the remaining portion of the then current six month period at
any other time the Passenger Security Reimbursements requirement
is adjusted during a Fiscal Year pursuant to Sections 9.03 and
9.04. Each such allocation shall be based upon activity data for
the most recent six months for which such activity data is then
available.
(iii) For purposes of such allocations, the Airline
shall include in its monthly activity report required pursuant to
Section 8.12, and individually identify, the number of Enplaning
Passengers handled or otherwise accommodated by the Airline for
other Air Transportation Companies not having an agreement with
the Authority that provides for the direct payment to the
Authority of appropriate charges for Passenger Security
Reimbursements.
8.06.3 Passenger Security Reimbursement Schedules.
Schedules NF-7 (National) and DF-7 (Dulles) show the calculation
of the Passenger Security Reimbursement charges for the current
Rate Period.
8.07 International Arrivals Building ("IAB") Charges at Dulles.
8.07.1 IAB Rate. The IAB rate for each Rate Period shall
be calculated by reducing the Total Requirement for the IAB by
utility and other reimbursements and Transfers, and dividing such
amount by the estimated total international Deplaning Passengers
using the IAB facility in each Rate Period, to determine the IAB
rate per international Deplaning Passenger.
8.07.2 IAB Rate Schedule. Schedule DF-S shows the
calculation of the IAB rate for each Rate Period.
8.07.3 Airline's IAB Charges. The Airline's monthly IAB
Charge, if any, shall be determined as the product of the IAB
rate for the Rate Period and the Airline' 5 international
Deplaning Passengers using the facility during the month.
8.08 Airside Operations Building ("AOB") Rentals at Dulles.
8.08.1 AOB Rate. The AOB Rental rate in each Rate Period
shall be calculated by reducing the Total Requirement for the AOB
by utility and other reimbursements and Transfers, and dividing
such net requirement by the total AOB Rentable Space.
8.08.2 AOB Rate Schedule. Schedule DF-9 shows the
calculation of the AOB rate for each Rate Period.
8.08.3 Airline's AOB Charges. The Airline's AOB Rentals
for each Rate Period, if any, shall be determined as the product
of the AOB Rental rate and the number of square feet of AOB
Premises leased to the Airline. The Airline shall pay such AOB
Rentals in equal monthly installments.
8.09 Passenger Conveyance Charges.
8.09.1 Passenger Conveyance Charges Prior to the
Completion of Dulles Stage II.
(i) The Total Passenger Conveyance Charges requirement in
each Rate Period prior to the completion of Dulles Stage II shall
be equal to the Total Requirement for Passenger Conveyances,
reduced by Transfers allocable to Passenger Conveyances and by
mobile lounge fees, if any, received by the Authority from non-
Signatory Airlines.
(ii) The Passenger Conveyance Charges requirement determined
above shall be allocated among the Signatory Airlines serving
Dulles based upon their respective total Enplaning Passengers for
such Rate Period as set forth in Paragraph 8.09.l(iii).
(iii) The allocation of Passenger Conveyance Charges
pursuant to Paragraph 8.09.1(u) shall be Made by the Authority
twice each Fiscal Year, with the first such allocation applicable
to the six month period commencing on the first day of each
Fiscal Year and ending on the last day of the sixth month of said
Fiscal Year, and the second allocation applicable to the
remaining six months of said Fiscal Year; provided, however, the
Authority shall further have the right to adjust said allocation
for the remaining portion of the then current six month period at
any other time the Passenger Conveyance Charges requirement is
adjusted during a Fiscal Year pursuant to Sections 9.03 and 9.04.
Each such allocation shall be based upon activity data for the
most recent six months for which such activity data is then
available.
(iv) For purposes of such allocations, the Airline shall
include in its Monthly activity report required pursuant to
Section 8.12g and individually identify, the number of Enplaning
Passengers handled or otherwise accommodated by the Airline for
other Air Transportation Companies not having an agreement with
the Authority that provides for the direct payment to the
Authority of appropriate charges for Passenger Conveyances.
(v) Schedule DF-l0 (Dulles) shows the calculation of the
Passenger Conveyance Charges requirement for the current Rate
Period.
8.09.2 Passenger Conveyance Charges Following Substantial
Completion of Dulles Stage II.
(i) Total Passenger Conveyance Charges requirements in each
Rate Period following completion of Dulles Stage II shall be
calculated in the same manner as set forth in Paragraph 8.09.1(i)
above; provided, however, said requirement shall then be divided
by the Authority into two components based upon the respective
Total Requirements of each component:
(a)Inter-Terminal and IAB People Mover Train
component
(b)Mobile Lounge/Planemate/Bus component
(ii) The Mobile Lounge/Planemate/Bus component shall be
allocated among the signatory Airlines based on their number of
Enplaning Passengers using this transportation component in the
manner as set forth in Paragraph 8.09.1 above.
(iii) The Inter-Terminal and IAB People Mover Train
component shall first be allocated between the IAB, on the one
hand, and the Terminal Cost Center, on the other hand, based upon
the number of Deplaning Passengers using the IAB and the number
of Deplaning Passengers using the Terminal Cost Center,
respectively.
(b) The remainder of such component shall be allocated to
the Total Requirement for each Terminal Sub-Center served by said
system, based upon the respective Rentable Space in each such
Terminal Sub-Center.
(c) Notwithstanding the foregoing1 if the Inter-Terminal
and IAB People Mover Train does not serve the IAB, no portion of
the Inter-Terminal and IAB People Mover component shall be
allocated to the IAB.
8.10 Other Fees and Charges.
8.10.1 The Authority expressly reserves the right to
assess and collect the following:
(i) Reasonable and non-discriminatory concession, permit or
license fees for services or supplies provided by the Airline to
others, and by others to the Airline. Notwithstanding the
foregoing, except with respect to the provision of inflight
catering services or the provision of other food, beverage,
products, or services for the Airline's passengers, the Authority
shall not charge the following:
(a)Any such fees to a Signatory Airline
providing supplies or services, including aircraft and Equipment
maintenance, to another Signatory Airline, so long as the
Signatory Airline providing such services or supplies is
concurrently providing such supplies or services for itself and
such provision of supplies or services is incidental to its Air
Transportation Business and is not conducted as a separate
business; or
(b)Any such fees in excess of the Authority's
actual costs of any services or facilities provided by the
Authority to such servicer/supplier for services or supplies that
the Airline could otherwise perform or provide for itself
pursuant to Section 4.01.
(ii) Pro rata shares of any charges for the provision of any
services or facilities which the Authority is required to provide
by any governmental entity having jurisdiction over the Airport
or the operations of the Airline.
8.10.2 The Authority reserves the right to charge the
Airline or its employees a reasonable fee for the employee
parking areas provided at the Airports. Such fee shall be based
upon the Authority's costs to construct, operate and maintain
such facility(s).
8.10.3 The Airline shall pay charges for other services
or facilities that are provided by the Authority to the Airline
at the Airline's request or which are the responsibility of the
Airline hereunder. Such services or facilities may include, but
are not limited to, maintenance of Airline Premises, when such
maintenance is requested by the Airline or is the responsibility
of the Airline pursuant to this Agreement, directly metered
utility costs and other O&M Expenses, if any, related to
Equipment.
8.10.4 The Airline shall pay the required fees for all
permits and licenses necessary for the conduct of its Air
Transportation Business at the Airport. The Airline shall also
pay all taxes and assessments, which during the Period of this
Agreement may become a lien or which may be levied by any
governmental authority upon any taxable interest acquired by the
Airline in this Agreement, or any taxable possessory right which
the Airline may have in or to the Premises or facilities leased
hereunder, or the improvements thereon, by reason of its
occupancy thereof, or otherwise, as well as taxes on taxable
property, real or personal, owned by the Airline in or about said
Premises. Upon any termination of tenancy by expiration,
cancellation or otherwise, all taxes then levied or a lien on any
of said property, or taxable interest therein, shall be paid in
full by the Airline as soon as a statement thereof has been
issued by the taxing jurisdiction. However, the Airline shall
not be deemed to be in default under this Agreement for failure
to pay taxes pending the outcome of any proceedings instituted by
the Airline to contest the validity or the amount of such taxes.
8.10.5 Nothing herein shall be construed to prohibit the
Authority from imposing and collecting any fines or penalties
imposed for violations of any regulation now or hereafter
lawfully adopted, as such regulation may be amended, including a
regulation for noise abatement purposes.
8.10.6 The Authority reserves the right to charge ground
rentals or fees for the lease or use of land at the Airports.
8.11 Payments.
8.11.1 Rentals for the Airline's Exclusive, Preferential,
and Joint Use Premises, Common Use Charges, Passenger Conveyance
Charges, Equipment Charges, Aircraft Parking Position Charges,
Passenger Security Reimbursements, and Airside Operations
Building Rentals as applicable, shall be due and payable in
advance, without demand or invoice, except as provided in Article
9 with respect to adjustments in rates, on the first calendar day
of each month. Said rentals and charges shall be deemed
delinquent if payment is not received by the tenth calendar day
of the month.
8.11.2 Payment for Landing Fees, Low Volume Common Use
Fees, Dulles Jet Apron Fees, and International Arrivals Building
Charges for each month shall be due and payable on the tenth
calendar day of the next month without demand or invoice and
shall be deemed delinquent if not received by the twentieth
calendar day of that month.
8.11.3 Payment for all other fees and charges payable
hereunder, including but not limited to metered utility charges,
and other miscellaneous charges, shall be due within twenty (20)
days of the date of the Authority's invoice. Said payment for
fees and charges shall be deemed delinquent if payment is not
received within thirty (30) days of the date of such invoice.
8.11.4 If the Airline fails to make any payment of
rentals, fees, or charges due under this Agreement on or before
the due date such payment shall bear monthly interest from the
date payment was due at the rate per annum which is four percent
(4~) higher than the "prime rate" as published in The Wall Street
Journal on the date such payment was due; provided, however, that
nothing contained herein shall be construed as permitting the
Authority to charge or receive interest in excess of the maximum
legal rate then allowed by law. Further, this provision shall
not be construed as precluding the Authority from pursuing any
other remedies it may have for the Airline's default in the
payment of its rentals, fees, or charges, from executing against
or requiring the Airline to furnish Contract Security pursuant to
Section 8.13, or from exercising any other rights contained
herein or provided by law.
8.11.5 In the event the Airline fails to submit its
monthly activity reports as required in Section 8.12 the
Authority may, in its discretion, estimate the fees and charges
due and payable by the Airline as set forth in Paragraph 8.11.2,
based upon one hundred twenty-five percent (125~) of the monthly
activity reported by the Airline for the next preceding month and
issue an invoice to the Airline for said estimated amount, less
amounts, if any, already received from the Airline for rentals,
fees, and charges due for such month for which complete activity
data has not been received by the Authority. The Airline agrees
to pay said estimated amount and to be liable for any
deficiencies in payments based on this estimate, plus interest,
as set forth in Paragraph 8.11.4 above. If such estimate results
in an overpayment by the Airline, and (i) if the Airline submits
the delinquent activity report to the Authority within 30 days of
the original date due, then the Authority shall credit the
Airline's subsequent month's amount due for such overpayment less
adjustment for applicable interest charges, if any, as set forth
in Paragraph 8.11.4; or (ii) if the Airline does not submit the
delinquent activity report to the Authority within thirty (30)
days of the original date due, the Authority shall have the right
to retain any such overpayment. If such estimate results in an
underpayment by the Airline, the Airline shall include with its
delinquent activity report any additional amounts due to the
Authority, plus applicable interest charges.
8.11.6 In the event the Airline's rights, licenses, or
privileges granted hereunder shall commence or terminate on any
date other than the first or last day, respectively, of the
month, the Airline's rentals, fees, and charges shall be prorated
on the basis of the number of days such Premises, facilities,
rights, licenses, services, or privileges were enjoyed during
that month and on the Authority's estimate of the Airline's
activity for such number of days.
8.11.7 The Airline will assure that all payments due
hereunder are made separately for each Airport. All payments
shall be accompanied by a written certificate substantially in
the form of Exhibits N-L and D-L attached hereto setting forth
the Airport, Premises or activity and period for which payment is
being made. All payments due and payable hereunder shall be paid
in lawful money of the United States of America, without set off,
by check made payable to the Metropolitan Washington Airports
Authority and, unless another address is specified by the
Authority, delivered to:
Metropolitan Washington Airports Authority
P.O. Box 2143
Merrifield, Virginia 22116-2143
8.12 Information to be Supplied by the Airline.
8.12.1 Not later than seven (7) calendar days after the
end of each month, the Airline shall file with the Authority
written reports on forms provided by the Authority for activity
conducted by the Airline during said month, and for activity
handled or otherwise accommodated by the Airline for other Air
Transportation Companies not having an agreement with the
Authority providing for its own submission of activity data to
the Authority. Unless otherwise specified in writing by the
Authority, the report shall be delivered to:
Metropolitan Washington Airports Authority
Office of Air Carrier Affairs
44 Canal Center Plaza
Alexandria, Virginia 22314
8.12.2 The Authority shall have the right to rely on said
activity reports in determining rentals, fees, and charges due
hereunder; provided, however, the Airline shall have full
responsibility for the accuracy of said reports. Payment
deficiencies due to incomplete or inaccurate activity reports
shall be subject to interest charges as set forth in Paragraph
8.11.4. Notwithstanding the foregoing, upon receipt of complete,
accurate reports, overpayments, if any, shall be credited by the
Authority against the Airline's subsequent month's amount due.
8.12.3 The Airline agrees, at all times, to maintain and
keep books, ledgers, accounts or other records, accurately
reflecting all of the entries for the activity statistics to be
reported pursuant to Paragraph 8.12.1. Such records shall be
retained by the Airline for a period of three (3) years
subsequent to the activities reported therein. The Airline
agrees to produce such books and records for the Authority at the
Authority's place of business within fifteen (15) calendar days
of the Authority's notice to do so or, at a location of the
Airline's choosing, in which case the Airline shall pay all
reasonable expenses, including, but not limited to,
transportation, food, and lodging, necessary for an auditor
selected by the Authority to audit said books and records.
8.12.4 The cost of the audit, with the exception of the
aforementioned expenses, shall be borne by the Authority;
provided, however, the total cost of said audit shall be borne by
the Airline if either or both of the following conditions exist:
(i) The audit reveals an underpayment of the lesser of one
hundred thousand dollars ($100,000) or five percent (5%) of
rentals, fees, and charges due hereunder, as determined by said
audit; and/or
(ii) The Airline has failed to maintain accurate and
complete books, accounts, and other records in accordance with
Paragraph 8.12.3.
8.13 Security for Payment.
8.13.1 If at any time during the twelve (12) consecutive
months immediately preceding the Effective Date of this
Agreement, the Airline committed an act or omission that
constituted a default in payments due to the Authority pursuant
to the terms and provisions of the Prior Agreements and Leases,
then the Authority has the right to require the Airline to
provide to the Authority on the Effective Date, payment of
outstanding default amounts, if any, and a surety bond,
irrevocable letter of credit or other security acceptable to the
Authority ("Contract Security") in an amount equal to an estimate
of four (4) months' rentals, fees, and charges payable by the
Airline pursuant to this Article 8. Such Contract Security shall
be for the purpose of guaranteeing the payment of all rentals,
fees, and charges due hereunder. If Contract Security is
required by the Authority, the Airline shall maintain such
Contract Security in effect until the expiration of twelve (12)
consecutive months during which period the Airline commits no act
or omission that would constitute a payment default pursuant to
Paragraph 13.01.9 of this Agreement. Such Contract Security
shall be in such form and with such company approved to do
business in the Commonwealth of Virginia as shall be reasonably
acceptable to the Authority.
8.13.2 Upon the failure of the Airline to make a payment
on or before the date due, as prescribed in Section 8.11, and the
continued failure by the Airline to make payments within five (5)
calendar days after the date of written notice from the Authority
of such failure to pay, the Authority, within thirty (30) days of
the date of the written notice, shall have the right to impose or
reimpose the requirements of Paragraph 8.13.1, above, on the
Airline. In such event, the Airline shall provide the Authority
with the required Contract Security within fourteen (14) days
from its receipt of such written notice that the Authority is
imposing or reimposing such Contract Security requirement and
maintain said security in effect until the expiration of a period
of twelve (12) consecutive months during which the Airline makes
all payment, to the Authority as required by Section 8.11 herein
when due. The Authority shall have the right to reimpose the
requirements of Paragraph 8.13.1, above, on the Airline each time
the Airline fails to make a payment as required by Section 8.11
during the Period of this Agreement. The Authority's rights
under this Paragraph 8.13.2 shall be in addition to all other
rights and remedies available to the Authority either by law or
under the terms of this Agreement.
8.14 Rentals, Fees, and Charges During Construction of the
Capital Development Program.
8.14.1 The rentals, fees, and charges payable by the
Airline to the Authority, and the rates for such rentals, fees,
and charges, may be recalculated and increased or decreased a~
appropriate, effective as of each Substantial Completion Date of
any Project included in the Capital Development Program to the
extent that the costs allocable to such Project, or a portion
thereof, are allocable to the Airline Supported Areas; provided,
however, the Authority may include in any rate adjustment made
pursuant to Sections 9.02 and 9.03 the Capital Charges, Debt
Service Coverage, O&M Expenses, and all other payments and
reserves for any such Project anticipated by the Authority to
become payable from Revenues during the next ensuing Rate Period.
8.14.2 Upon the Substantial Completion Date of any
Premises and until the actual square footage of such Premises has
been incorporated into revised Exhibits N-C-2 and D-C-2, all
determinations that are based on the dimensions of the Premises,
including rentals, fees, and charges, shall be based on the
approximate dimensions stated in Exhibits N-C-l and D-C-l. After
the incorporation of the actual square footage, the rentals,
fees, and charges that are determined by the dimensions of the
Premises shall be calculated using the actual square footage, and
amounts previously paid or owed by the Airline shall be adjusted
retroactively to the Substantial Completion Date. After the
retroactive adjustment, the Airline shall pay to the Authority,
together with the payment for the next monthly period, any
additional rentals, fees, and charges that are due to the
Authority or the Authority shall credit the Airline with any
rentals, fees, and charges that were overpaid by the Airline so
that the total payment made by the Airline for the period
beginning with the Substantial Completion Date and ending with
the date of the adjustment shall be the amount the Airline would
have paid if the rentals, fees, and charges had been calculated
on the actual square footage from the Substantial Completion
Date.
8.14.3 In the event that Debt Service and Debt Service
Coverage applicable to any Project in a Cost Center or Sub-Center
within any Airline Supported Area shall become payable from
Revenues prior to the Substantial Completion Date of said
Project, the Total Requirement for such Cost Center or Sub-Center
shall include such Debt Service and Debt Service Coverage from
such earlier date.
8.15 Passenger Facility Charges. in the event that passenger
facility charges, now precluded by 49 U.S.C. 1513(a), are by
legislative enactment, regulatory action, or by an adjudication
by a court of competent jurisdiction determined to be lawful for
the Authority to assess and collect during the Period of this
Agreement, the Authority hereby reserves the right to assess,
collect and expend such charges, subject to any conditions and
restrictions expressly provided by such legislation or
regulation.
8.16 No Other Fees and Charges. Except as provided for in this
Agreement or any other contract between the Airline and the
Authority, no charges, fees, or tolls of any nature, direct or
indirect, shall be imposed by the Authority upon the Airline, its
employees, agents, passengers, guests, patrons, and invitees, its
suppliers of materials, or furnishers of services; provided,
however, and except as otherwise provided herein, that the
foregoing shall not be construed to prohibit the Authority from
imposing and collecting charges and fees for the use of the
public auto parking areas on the Airports, from operators of
ground transportation to, from, and on the Airports and from any
concessionaire at the Airports in accordance with the terms of a
contract with the Authority for the operation of such concession.
8.17 1990 Fiscal Year Adjustment. In consideration for the
Authority's agreement to refrain from exercising its right under
Prior Agreements and Leases to impose new rates and charges on
the Airline effective as of October 1, 1989, and instead,
deferring the effectiveness of said new rates and charges to
January 1, 1990, the rates and charges in effect for the period
January 1, 1990, through September 30, 1990, will include an
amount that represents the difference, during the period from
October 1, 1989, to December 31, 1989, between the amount of the
rates and charges then in effect and the amount that would have
been charged to the Airline if the rates and charges under this
Agreement had been made effective on October 1, 1989.
ARTICLE 9.
CHANGES IN RATES FOR RENTALS, FEES, AND CHARGES
9.01 General.
9.01.1 Rates for Signatory Airlines' rentals1 fees, and
charges shall be adjusted as set forth in this Article 9. Said
adjusted rates shall become effective (i) on the first day of
each Fiscal Year pursuant to Section 9.02 ("Annual Adjustment");
(ii) on the first day of the seventh month of each Fiscal Year,
if adjusted pursuant to Section 9.03 ("Midyear Adjustment"); or
(iii) at any other time pursuant to Section 9.04.
9.01.2 Beginning on the effective date of a Rate Period
following each such adjustment as provided for herein and for the
duration of that Rate Period, unless said rates are subsequently
adjusted during a Fiscal Year pursuant to Section 9.03 or 9.04,
the Airline's rentals, fees, and charges payable to the Authority
hereunder shall be based upon the rates as adjusted.
9.01.3 All adjustments made pursuant to this Article 9
shall be determined by the Authority and provided to the Airline
substantially in conformance with the methods set forth in
Article 8. Upon each adjustment, revised Schedules NF-l through
NF-l1 and DF-1 through DF-14, showing the calculation of adjusted
rates for rentals, fees, and charges for that Rate Period shall
be prepared by the Authority and transmitted to the Airline, and
said rates shall apply without the necessity of formal amendment
of this Agreement.
9.01.4 If the calculation of adjusted rates for the next
ensuing Rate Period is not completed by the Authority or the
notice to the Airline of said adjusted rates as required herein
is not given on or before twenty (20) calendar days prior to the
end of the then current Rate Period, the rates for rentals, fees,
and charges then in effect shall continue to be paid by the
Airline until such calculations are concluded and such twenty
(20) day notice is given. Upon the conclusion of such
calculations and the giving of such twenty (20) day notice, the
Authority shall determine the difference(s), if any, between the
actual rentals, fees, and charges paid by the Airline to date for
the then current Rate Period and the rentals, fees, and charges
that would have been paid by the Airline if said adjusted rates
had been in effect beginning on the first day of the then current
Rate Period. Said differences shall be applied to the particular
rentals, fees or charges for which a difference(s) in rates
resulted in an overpayment or underpayment, and shall be remitted
by the Airline or credited by the Authority in the month
immediately following the calculation of the new Rate Period
rates and the giving of notice to Signatory Airlines.
9.02 Annual Adjustment.
9.02.1 Approximately sixty (60) days prior to the end of
each Fiscal Year, the Authority shall notify the Signatory
Airlines of the estimated rates for rentals, fees, and charges
for the next ensuing Fiscal Year. Said rates shall be based upon
estimated activity at each Airport, budgeted O&M Expenses, the
estimated Transfers amount required by this Agreement, Capital
Charges, Debt Service Coverage, Lease payments, and all other
payments and reserves as set forth in Exhibits N-F and D-F, for
the next ensuing Fiscal Year.
9.02.2 Within twenty (20) days after the forwarding of
said estimated rates for rentals, fees, and charges, the
Authority shall meet collectively with the Signatory Airlines of
each Airport at a mutually convenient time for the purpose of
discussing such estimated rates for rentals, fees, and charges.
The Authority shall make available to the Signatory Airlines any
reasonably requested additional information relating to the
determination of the proposed rates. The Authority agrees to
fully consider the comments and recommendations of the Signatory
Airlines prior to finalizing its schedule of estimated rates for
rentals, fees, and charges for the next ensuing Fiscal Year.
9.02.3 Following said meeting, the Authority shall
provide at least twenty (20) days advance written notice to the
Signatory Airlines of the estimated rates for rentals, fees, and
charges in accordance with this Section 9.02, and subject to the
provisions of Paragraph 9.01.4, such adjusted rates shall become
effective on the first day of the next ensuing Fiscal Year.
9.03 Midyear Adjustment.
9.03.1 In addition to the provisions of Sections 9.02 and
9.04, the Authority shall have the right to adjust the estimated
rates for rentals, fees, and charges payable by the Signatory
Airlines at the midpoint of each Fiscal Year in accordance with
this Section 9.03.
9.03.2 Approximately sixty (60) days prior to the end of
the sixth month of the then current Fiscal Year, the Authority
shall re-estimate the rates for rentals, fees, and charges
payable hereunder, applicable to the last six months of the then
current Fiscal Year, and shall then determine in accordance with
Paragraph 9.03.5 whether a midyear adjustment to any rate(s) will
be made. Said re-estimated rates shall be based upon any
adjustment to Transfers required by this Agreement based upon the
actual audited results for the preceding Fiscal Year and revised
estimates of activity, 0&M Expenses, Capital Charges, Debt
Service Coverage, and all other payments and reserves, as set
forth in Exhibits N-F and D-F, for the then current Fiscal Year.
9.03.3 In the event midyear adjustments to rates are made
by the Authority, the Authority shall notify the Signatory
Airlines of the re-estimated rates approximately forty-five (45)
days prior to the end of the sixth month of the then current
Fiscal Year. Within twenty (20) days after the forwarding of
said rates, the Authority shall, if requested by the Airline or
another Signatory Airline, meet collectively with the Signatory
Airlines at each Airport at a mutually convenient time for the
purpose of discussing said re-estimated rates. The Authority
shall make available to the Signatory Airlines any reasonably
requested additional information relating to said rates. The
Authority agrees to fully consider the comments and
recommendations of the Signatory Airlines prior to finalizing the
midyear adjusted rates.
9.03.4 Following said meeting, the Authority shall
provide at least twenty (20) days advance written notification to
the Signatory Airlines of the adjusted rates to become effective
on the first day of the seventh month of the then current Fiscal
Year, subject to the provisions of Paragraph 9.01.4.
9.03.5 Nothing in this Section 9.03 shall be construed to
require that the Authority make a midyear adjustment to estimated
rates at either Airport; provided further that the Authority
shall not make any such midyear adjustment to any rate at an
Airport if the total of rentals, fees, or charges payable by the
Signatory Airlines at that Airport, using the then current rates
for rentals, fees, and charges at that Airport, is at least
ninety-eight percent (98%) of the total of rentals, fees, or
charges that would be payable by the Signatory Airlines using any
re-estimated rate(s) calculated pursuant to this Section 9.03.
9.03.6 In the event that the Authority does not make a
midyear adjustment to rates, any difference between the estimated
Transfers amount included in the calculation of the then current
rates, and the amount of Transfers actually due to the Signatory
Airlines based upon the audited results for the preceding Fiscal
Year, may at the option of the Authority (i) be included in any
subsequent adjustment of rates during the then current Fiscal
Year, as provided for in Section 9.04; or (ii) be incorporated
into the settlement calculations for the then current Fiscal Year
as provided for in Section 9.07.
9.04 Other Rate Adjustments.
9.04.1 Notwithstanding the provisions of Sections 9.02
and 9.03, any rate for rentals, fees, or charges payable by the
Signatory Airlines at an Airport may be adjusted by the Authority
at any other time in the event of one or more of the following:
(i) Current year-to-date unaudited financial data and/or
activity statistics indicate that total rentals, fees, and
charges payable at an Airport pursuant to the then current rates
are projected by the Authority to vary by more than five percent
(5%) from the total rentals, fees, and charges that would be paid
during the Rate Period at that Airport if rates were based upon
more current financial and activity data then available.
(ii) The Indenture requires such an adjustment; provided,
however, that total rentals, fees, and charges payable to the
Authority by Signatory Airlines shall be calculated in accordance
with this Agreement.
(iii) Additional Projects are constructed in Airline
Supported Areas, and Debt Service and/or Amortization
Requirements for such Additional Projects become payable from
Revenues on a date other than the first day of any Fiscal Year;
provided, however, the Authority may include in any rate
adjustments made pursuant to Sections 9.02 and 9.03 the Capital
Charges, O&M Expenses, and all other payments, Debt Service
Coverage, and reserves required by this Agreement for any such
Additional Project, the costs of which are anticipated by the
Authority to become payable from Revenues (as opposed to
capitalized interest) during the next ensuing Rate Period.
(iv) At any other time as provided for in this Agreement,
including, but not limited to, adjustments made in accordance
with Section 8.14 for Projects included in the Capital
Development Program.
9.04.2 The Authority shall provide at least twenty (20)
days advance written notice to the Signatory Airlines of changes
to estimated rates made in accordance with this Section 9.04,
including the reasons necessitating any such adjustment, and such
adjusted rates shall become effective on the date specified in
the Authority's written notice to the Airline, subject to the
provisions of Paragraph 9.01.4.
9.05 Transfers.
9.05.1 At the conclusion of each Fiscal Year, the amount
of any "Net Remaining Revenue" at each Airport, as such term is
defined in Paragraph 9.05.2, shall be determined. For each
Fiscal Year during the Period of this Agreement such Net
Remaining Revenue shall be allocated between the Authority and
the Signatory Airlines at that Airport in accordance with
provisions of Paragraph 9.05.4. For the first Fiscal Year
immediately following the expiration or earlier termination of
this Agreement, such Net Remaining Revenue shall be allocated in
accordance with the provisions of Paragraph 9.05.6. The
Signatory Airlines' share (hereinafter called "Transfers") of Net
Remaining Revenue for each Fiscal Year shall be transferred by
the Authority from the General Purpose Fund to the Airline
Transfer Account at the beginning of the next ensuing Fiscal
Year. Amounts in the Airline Transfer Account shall be applied
as credits in the calculation of Signatory Airline rates for
rentals, fees, and charges in such next ensuing Fiscal Year. The
Authority's share of Net Remaining Revenue shall be transferred
by the Authority from the General Purpose Fund to the Authority
Capital Fund at the beginning of such next ensuing Fiscal Year,
and used for the purposes described in Section 9.06.
9.05.2 For any Fiscal Year, Net Remaining Revenue at each
Airport is hereby defined to mean the total of Revenues for such
Fiscal Year plus Transfers, if any, from the prior Fiscal Year
less (i) O&M Expenses; (ii) required deposits to maintain the O&M
Reserve; (iii) Debt Service; (iv) Federal Lease payment; (v) the
amount of rental credits given to certain Scheduled Air Carriers
as set forth in the Surviving Agreements; (vi) required deposits
to any Debt Service Reserve Fund; and (vii) required deposits to
the Emergency R&R Fund; all as calculated in accordance with
Schedules NF-8 and DF-l0 for the then current Fiscal Year.
9.05.3 When estimating the rates for rentals, fees, and
charges for the next ensuing Fiscal Year, as set forth in Section
9.02, the Authority shall also estimate for each Airport the
Transfers required by this Agreement to be transferred from Net
Remaining Revenue generated at each Airport in the then current
Fiscal Year. Said estimated required Transfers at each Airport
shall be allocated to the Cost Centers and Sub-Centers at that
Airport in the manner described in Paragraph 9.05.4, and included
as a credit in the calculation of rates for Signatory Airlines'
rentals, fees, and charges for the next ensuing Fiscal Year.
9.05.4 Net Remaining Revenue at each Airport for each
Fiscal Year shall be allocated between the Signatory Airlines and
the Authority and the Signatory Airlines' share shall be
allocated to Airline Supported Areas at each Airport as follows:
(i) An amount equal to the entire amount of the
Depreciation Requirement collected from the Signatory Airlines
for such Fiscal Year shall be allocated to the Authority;
(ii) An amount equal to the entire amount of Airline Funded
Coverage on Subordinated Bonds (or if any such Bonds have been
refunded from the proceeds of Senior Bonds, then the entire
amount of Airline Funded Coverage on such Senior Bonds) collected
from the Signatory Airlines for such Fiscal Year shall be
allocated to the Airline Supported Areas in direct proportion to
the allocation of Debt Service on Subordinated Bonds (or Senior
Bonds, if any, issued to refund Subordinated Bonds) to the Cost
Centers and Sub-Centers within the Airline Supported Areas;
(iii) An amount equal to the entire amount of any
Extraordinary Coverage Protection Payments, as described in
Paragraph 9.07.3, shall be allocated to Airline Supported Areas
in direct proportion to the Total Requirements of each of the
Cost Centers and Sub-Centers within the Airline Supported Areas.
(iv) An amount equal to the entire amount of Equipment
Coverage collected from the Signatory Airlines for such Fiscal
Year shall be allocated to the Equipment Sub-Centers in direct
proportion to the allocation of Debt Service to such Sub-Centers.
(v) An amount equal to the excess of Net Remaining Revenue
for such Fiscal Year over the sum of the amounts described in
(i), (ii), (iii), and (iv) above shall be divided between the
Signatory Airlines and the Authority as follows:
(a)Such amount for each Airport shall be divided
equally between the Signatory Airlines and the Authority until
the Authority's share under this Paragraph (v) for that Airport
is equal to the Plateau Amount for that Airport for that Fiscal
Year;
(b)Once the Authority's share of Net Remaining
Revenue has reached the Plateau Amount for an Airport for such
Fiscal Year, the Signatory Airlines' share of any additional Net
Remaining Revenue at that Airport shall equal seventy-five
percent (75%) and the Authority's share shall equal twenty-five
percent (25%);
(vi) The Signatory Airlines' share of Net Remaining Revenue
determined pursuant to Paragraph (v) above shall be allocated to
the Airline Supported Areas as follows:
(a)An amount equal to fifty percent (50%) of the
amount of Airline Funded Coverage on Debt Service on Senior Bonds
collected from the Signatory Airlines for such Fiscal Year shall
be allocated to the Airline Supported Areas in proportion to the
allocation of Debt Service on Senior Bonds to the Cost Centers
and Sub-Centers within the Airline Supported Areas;
(b)The remainder shall be allocated to the
Airline Supported Areas in proportion to the Total Requirements
(for purposes of this allocation only, Total Requirements shall
include one hundred twenty-five percent (125%) of any Special
Facility Bond debt service attributable to facilities in the
Airline Supported Areas which are reasonably entitled pursuant to
Paragraph 10.01.3 and the terms of any Special Facility agreement
to the benefit of Transfers) of each of the Cost Centers and Sub-
Centers within the Airline Supported Areas.
9.05.5 The Authority shall credit Transfers only from
funds available for such purposes in the General Purpose Fund.
If for any reason the amount in the General Purpose Fund
available for Transfers to the Signatory Airlines pursuant to
this Agreement is less than the amount required to be credited to
the Signatory Airlines pursuant to Paragraph 9.05.4, the
Authority shall make appropriate increases in Transfers from
available funds in subsequent Fiscal Years.
9.05.6 Net Remaining Revenue for the last Fiscal Year
during the Period of this Agreement shall be allocated either (i)
in accordance with the terms of any subsequent airport use
agreement entered into between the Authority and some or all of
the Signatory Airlines, or (ii) in the absence of such agreement,
between the Authority, on the one hand, and the airlines then
operating at the Airports on the other hand, substantially in
accordance with the methodology set forth in this Agreement
except with respect to any distinctions made herein between
Signatory Airlines and non-Signatory Airlines.
9.06 Creation of Funds and Accounts.
Authority Capital Fund - The Authority shall create a fund
to be entitled the Authority Capital Fund into which the
Authority shall transfer its share of Net Remaining Revenue
calculated in accordance with Section 9.05. Amounts in the
Authority Capital Fund may be used by the Authority for any one
or more of the following purposes:
(i) To pay the costs of any Projects in the Capital
Development Program, including any cost overruns;
(ii) To redeem, defease, or retire any Outstanding Bonds;
(iii) To pay the costs of any Additional Projects,
including any projects in the Authority's repair and
rehabilitation program;
(iv) To pay the O&M Expenses of, or any capital costs in
excess of ten million dollars ($10,000,000) for, a Rail System;
and
(v) To pay Debt Service on any Bonds issued to fund the
costs of any of the foregoing.
Airline Transfer Account - The Authority shall create an
account to be held in the Revenue Fund into which the Authority
shall deposit Transfers calculated in accordance with Section
9.05.
9.07 Settlement.
9.07.1 Rentals, fees, and charges paid by the Airline
during any Fiscal Year shall be subject to adjustment provided
for in this Section 9.07. Within one hundred twenty (120) days
following the close of each Fiscal Year or as soon as the audited
financial data for said Fiscal Year is available, rates for
rentals, fees, and charges for the preceding Fiscal Year shall be
recalculated using audited financial data and the methods set
forth in Article 8 and Exhibits N-F and D-F. Upon the
determination of any difference(s) between the rentals, fees, and
charges paid by the Signatory Airlines during the preceding
Fiscal Year and the rentals, fees, and charges that would have
been paid by the Signatory Airlines using said recalculated
rates, the Authority shall credit the Airline with the amount of
any overpayment, and/or invoice the Airline for the amount of any
underpayment
9.07.2 Notwithstanding the results of the settlement
calculations made pursuant to Paragraph 9.07.1, the Authority
shall also determine whether the total of Revenues and Transfers
allocable hereunder to the Airline Supported Areas at each
Airport in the preceding Fiscal Year then being audited were at
least equal to the (i) O&M Expenses; (ii) amounts required to
maintain the O&M Reserve; (iii) Debt Service; (iv) other Capital
Charges; (v) Federal Lease payment; (vi) at Dulles, Dulles Rate
Credit Amortization Requirement; (vii) required deposits, if any,
if any, to the Emergency R&R Fund allocable to the Airline
Supported Areas at that Airport in said Fiscal Year. Should any
deficiency exist for any reasons whatsoever, including but not
limited to payment defaults and/or unleased premises, then the
Airline, collectively with all other Signatory Airlines and
Signatory Cargo Carriers, if any, shall pay its pro rata share of
such deficiency, with such payments to be included as Revenues in
the Fiscal Year then being audited. The Airline's pro rata share
shall be calculated (i) on the basis of its share of total
Signatory Airline and Signatory Cargo Carrier landed weight at
the Airport at which the deficiency occurred, if attributable to
the Airfield; and/or (ii) on the basis of its share of total
Terminal Premises actually rented by the Signatory Airlines and
for which rental payments were actually received by the Authority
at the Airport at which the deficiency occurred, if attributable
to the Terminal. The Authority shall invoice the Airline for its
share of any such deficiency, and the Airline shall remit its
payment therefor within thirty (30) days of the date of the
Authority' 5 invoice.
9.07.3 The Authority shall include Extraordinary Coverage
Protection Payments in the rates for rentals, fees, and charges
for the Airline Supported Areas at each Airport in any Fiscal
Year in which the amount of Revenues plus Transfers less
operating and Maintenance Expenses at that Airport is projected
to be less than one hundred twenty-five percent (125%) of the sum
of Debt Service on Senior Bonds and Debt Service on Subordinated
Bonds at that Airport. Any amounts which must be collected for
such Extraordinary Coverage Protection Payments will be allocated
to Cost Centers and Sub-Centers within the Airline Supported
Areas on the basis of the Total Requirements of such Cost Centers
and Sub-Centers.
ARTICLE 10.
CAPITAL IMPROVEMENTS
10.01 General.
10.01.1 The parties hereto recognize that capital
expenditures to preserve, protect, enhance, expand, or
otherwise improve the Airports, or parts thereof, are
required during the Period of this Agreement. Such capital
expenditures include the Capital Development Program and
Additional Projects of the Authority, and may include
improvements by the Airline. Any such improvements by the
Airline, and capital expenditures of the Authority to be
paid for or financed with Bonds or Revenues of the Airports
shall be subject to the provisions of this Article 10.
10.01.2 Subject to the provisions of this Article 10,
the Authority may pay for any such capital expenditures
using any funds lawfully available for such purposes, and/or
may issue Bonds, whether subject to, or exempt from, Federal
income taxation, in amounts sufficient to finance any such
capital expenditures, including any costs for design or
program management, capitalized interest, any required Debt
Service Reserve Fund, costs of issuance, bond insurance
premiums or credit facility fees, or any other costs
reasonably incurred by the Authority in connection with the
issuance of Bonds. All costs associated with such capital
expenditures of the Authority, including but not limited to,
O&M Expenses and appropriate reserves therefor, Debt
Service, Debt Service Coverage, and any other payments,
Amortization Requirements, and/or reserves applicable to
said capital expenditures, shall be included in the
determination of rates for rentals, fees, and charges in
accordance with Articles 8 and 9; provided, however, that,
except in accordance with Paragraph 9.07.3, no such rentals,
fees, and charges payable hereunder, shall be payable by the
Airline for capital expenditures, the costs for which are
not properly attributable or allocable to the Airline
Supported Areas.
10.01.3 Nothing herein shall preclude the Authority
from undertaking, or authorizing to be undertaken, capital
expenditures to be financed or paid from sources other than
Revenues, or to borrow funds which are repayable from
sources other than Revenues, for the purpose of funding
capital expenditures. Such other sources may specifically
include, but are not limited to, the proceeds of Special
Facility Bonds. In the event any Special Facility is
constructed within any Airline Supported Areas, the Special
Facility agreement between the Authority and the Special
Facility obligor may provide, among other things, for the
following:
(i) The treatment of O&M Expenses and responsibilities
either as direct obligations of the obligor or in the same
manner as O&M Expenses are handled for other facilities
within the Airline Supported Areas;
(ii) A method of compensating the obligor for costs
allocable to any premises constructed as part of the Special
Facility which costs, under the Authority's allocation
methodology, would not be allocated to airline leased
premises and to allocate a fair and reasonable amount of
Transfers to such Special Facility; the method of
compensation or allocation could include, for example, fair
and reasonable direct payments to the Special Facility
obligor, allocations of Revenues or Transfers, credits
against other payments due from the Special Facility
obligor, or any combination of the foregoing;
(iii) Provisions relating to security for the
Special Facility Bonds; and
(iv) Provisions relating to the operation and use of
the Special Facility, including accommodation provisions.
10.02 Capital Development Program.
10.02.1 Exhibits N-I and N-J (National) and Exhibit D-
I and D-J (Dulles) summarize the Capital Development Program
commenced by the Authority in 1988, including a listing of
Projects, a description of the Projects, their priority
status, their estimated costs, their estimated construction
start and Substantial Completion Dates, and the applicable
Cost Centers or Terminal or Equipment Sub-Centers. The
Authority shall, from time to time, refine and update such
Project descriptions. Such Project refinements may include
the addition or deletion of components functionally related
to the Capital Development Program; provided, however, that
no such refinements shall materially change the scope of the
Capital Development Program.
10.02.2 Subject to the issuance of Bonds, and the
availability of the proceeds thereof, and to the provisions
of Section 10.04 with respect to the Dulles Stage II
Development Plan, the Authority shall complete the Projects
of the Capital Development Program in a good and workmanlike
manner, substantially in accordance with Exhibits N-J and D-
J and the Project Construction Documents developed or to be
developed by the Authority's Architects and Engineers for
each Project, current copies of which are or will be on file
at the Authority's offices.
10.02.3 The Authority shall provide the Airline
information with respect to the Capital Development Program
and an opportunity to consult on matters with respect
thereto. This may be accomplished in the following manner
The Signatory Airlines will establish, staff, and maintain
an organization known as the Metropolitan Washington
Airlines Committee ("MWAC"). The Airline may designate its
representative to MWAC. The seven largest Signatory
Airlines, as determined by reference to the combined landed
weight at the two Airports, will constitute an executive
committee of the MWAC, provided that the executive committee
includes at least one domestic airline from each Airport and
at least one foreign flag airline at Dulles. The executive
committee of MWAC shall designate an individual to serve as
a representative for all Scheduled Air Carriers ("Airline
Representative") to the Authority with respect to the
construction and operational impact of all Projects
described in the Capital Development Program and all
Additional Projects.
(i) The Authority shall afford the Airline
Representative access to all construction sites relating to
the Capital Development Program and an opportunity to
participate in the evaluation of design and construction
alternatives. The Authority shall consider the comments and
requests of the Airline Representative regarding design and
construction of a Project and of alternatives and methods
proposed to reduce or eliminate adverse operational impacts
or costs.
(ii) The Authority shall provide the Airline
Representative the following:
(a)The scope, budget, and schedule for each
Project in the Capital Development Program prior to the
award of a contract for design, if any, for that Project.
(b)Copies of design submittals for the
schematic, design, development, and construction document
phases of the design process. Routine submittals will
include site plans, floor plans, and elevations.
Architectural and structural details or mechanical and
electrical design documents will not be routinely submitted.
Design submittals shall not include correspondence or
minutes of meetings between the Authority and the designer.
(c)A periodic Capital Development Program
cost control report which shall include the original Cost
Estimate and the Current Cost Estimate, including all fees,
for each Project contained in the Capital Development
Program.
(d)Notice of pre-bid and pre-construction
meetings
(e)A monthly listing of change orders in
excess of one hundred thousand dollars ($100,000).
(f)A monthly update of the Capital
Development Program schedule.
(g)A monthly status report for each
contract which has been awarded and not completed and each
contract that is in the bidding process.
(h)A weekly construction forecast.
(iii) The Airline Representative shall have an
opportunity, upon his reasonable request, to meet with the
Authority to discuss the Project design, and the effects of
the Project construction on airfield operations or landside
access.
(iv) The Authority agrees to sponsor employment of said
Airline Representative by providing necessary funds to the
Air Transport Association ("ATA") for his salary and for the
staffing and operation of his office. Payments will be made
to ATA commencing February 1, 1990, and every six (6) months
thereafter based on a budget submitted by the Airline
Representative to the Authority for its review following
approval by the executive committee of MWAC. Salaries,
benefits, and expenses will be included as O&M Expenses of
the Airfield Cost Centers.
(v) The Authority will provide to the Airline
Representative an office at National which shall be
considered administrative space for rate making purposes.
The space will be furnished, finished, maintained, and
provided utilities by the Authority, the cost of which will
be recovered as if it were the Authority's administrative
space. All necessary permits and access facilitation,
including employee parking and National and Dulles security
identification, will be made available to the Airline
Representative and his staff.
10.03 Capital Development Program Other Than Projects in
the Early Program or in the Dulles Stage II Development
Plan.
10.03.1 The Original Cost Estimate for the Capital
Development Program, not including the Early Program and not
including the Dulles Stage II Development Plan, is six
hundred sixty-nine million and four hundred fifty-four
thousand and four hundred dollars ($669,454,400) (stated in
1989 dollars) for National (Exhibit N-I), and three hundred
fifty-nine million and six hundred four thousand dollars
($359,604,000) (stated in 1989 dollars) for Dulles (Exhibit
D-I). Such Original Cost Estimate excludes financing costs,
interest on Bonds, or on any interim financing obtained by
the Authority to finance the Capital Development Program,
and other deposits and reserves required by any Indenture.
The Original Cost Estimate for each Airport shall be revised
from time to time to reflect any design changes approved by
the Authority and a Majority-in-Interest of Signatory
Airlines for the Airfield Cost Center at that Airport. In
addition, the Original Cost Estimates shall be revised
annually in accordance with the U.S. Implicit Price Deflator
Index. Such revision shall be calculated by escalating the
estimated costs of the Projects included in the Original
Cost Estimate to their respective midpoints of construction.
The Original Cost Estimates, as revised pursuant to this
Paragraph 10.03.1, of the Capital Development Program, shall
not be exceeded except as set forth in this Article.
10.03.2 The Authority shall for each Airport develop
and maintain Current Cost Estimates for each of the Projects
included in the Capital Development Program, except for
Projects in the Early Program, and except for the Dulles
Stage II Development Plan which shall be subject to
Paragraph 10.04.3.
(i) Whenever the Current Cost Estimate applicable to a
Project in the Capital Development Program (except the Early
Program and the Dulles Stage II Development Plan) at either
Airport exceeds the Original Cost Estimate, as revised
pursuant to Paragraph 10.03.1, for that Project by more than
five percent (5%) percent, the Authority shall promptly
notify the Airline Representative. Whenever such excess is
more than ten percent (10%), the Authority shall meet
promptly with the Airline Representative to discuss such
increased cost and to determine whether and how the Project
could be revised so that the Current Cost Estimate for such
Project will not exceed the Original Cost Estimate for such
Project by more than ten percent (10%).
(ii) The Authority agrees to consider the requests,
suggestions, and recommendations of the Airline
Representative; provided, however, that so long as the
Current Cost Estimate for the Capital Development Program
(excluding the Early Program and Dulles Stage II) at an
Airport has not exceeded the Original Cost Estimate, as
revised pursuant to Paragraph 10.03.1, plus the contingency
described in Paragraph 10.03.3, the decision whether to
revise the Capital Development Program at that Airport shall
be solely reserved to the Authority, and shall be made at
the sole discretion of the Authority.
10.03.3 The following contingencies are hereby
established for the Capital Development Program (excluding
the Early Program and excluding the Dulles Stage II
Development Plan):
National: twenty-five percent (25%)
of the Original Cost
Estimate, as revised
pursuant to Paragraph
10.03.01
Dulles: twenty percent (20%) of
the Original Cost
Estimate, as revised
pursuant to Paragraph
10.03.1
In the event the Original Cost Estimate, as revised pursuant
to Paragraph 10.03.1, plus the contingency, for the Capital
Development Program (excluding the Early Program and Dulles
Stage II) at either Airport is exceeded by the Current Cost
Estimate for such Airport, the Authority shall be required
to do one or more of the following:
(i) Modify or defer a sufficient number of Priority 2
Projects at that Airport so that the Current Cost Estimate
for such Airport does not exceed the Original Cost Estimate,
as revised pursuant to Paragraph 10.03.1, plus the
contingency at such Airport;
(ii) Fund the cost overrun from the Authority's annual
share of Net Remaining Revenue or from any balance in the
Authority Capital Fund (in which event there shall be no
Amortization Requirement);
(iii) Issue subordinated debt payable from and
secured by the Authority's share of Net Remaining Revenue to
fund the cost overrun; or
(iv) Obtain approval for additional funding from a
Majority-in-Interest of the Signatory Airlines for the
appropriate Cost Center at that Airport.
10.03.4 The Authority shall provide to the Signatory
Airlines a financial feasibility study of the Capital
Development Program Project 152 (structured parking at
Dulles), as it may be redesignated, and any analysis thereof
by the Authority. The Authority will not proceed with
completion of final design and construction of such Project
until a five month review and comment period for Signatory
Airline response on the feasibility study has transpired.
10.04 Dulles Stage II Development Plan.
10.04.1 The Authority shall have the right to
undertake the construction of the Dulles Stage II
Development Plan only after one or more of the following
provisions has been satisfied:
(i) Design and construction may commence at any time
that the cost of the New Midfield Concourse(s) is to be
financed as a Special Facility;
(ii) Design and construction may commence at any time
that Signatory Airlines at Dulles accounting for at least
fifty percent (50%) of total Dulles Enplaning Passengers
during the then most recent twelve (12) consecutive month
period, have executed amendments to their Agreements to
lease at least sixty-six and two-thirds percent (66.67%) of
the Airline leasable premises in the New Midfield
Concourse(s);
(iii) In the absence of the authorization to begin
design and construction of the Dulles Stage II Development
Plan pursuant to Paragraph 10.04.1(i) or (ii), the design
and preparation of Construction Documents for the Dulles
Stage II Development Plan may be undertaken by the Authority
(but no actual construction may commence) at any time
following the date that total Enplaning Passengers at Dulles
in the twelve (12) consecutive month period immediately
preceding said date were at least eight million (8,000,000)
Enplaning Passengers; during such design period, the
Authority and the Signatory Airlines shall use their best
efforts to resolve any outstanding issues related to the
Dulles Stage II Development Plan;
(iv) In the absence of the authorization to begin
design and construction of the Dulles Stage II Development
Plan pursuant to Paragraph 10.04.1(i) or (ii), subject to
the Signatory Airlines' rights described in Paragraph
10.04.6, actual construction of the Dulles Stage II
Development Plan may commence at any time following the date
that total Enplaning Passengers at Dulles in the twelve (12)
consecutive month period immediately preceding said date
were at least nine million five hundred thousand (9,500,000)
Enplaning Passengers. For purposes of this Paragraph
10.04.1, "actual construction" shall be deemed to commence
at the time that a contract, or contracts, has been awarded
for the construction of any portion of the Dulles Stage II
Development Plan, provided that the total amount of such
contract, or contracts, is at least two million dollars
($2,000,000);
(v) Design and construction of the Dulles Stage II
Development Plan may commence at any time with approval of a
Majority-in-Interest of the Signatory Airlines for the
Airline Supported Areas (excluding the Airfield Cost Center)
at Dulles; or
(vi) Design and construction of the Dulles Stage II
Development Plan may commence at any time on or after
January 1, 2000.
10.04.2 The Original Cost Estimate for the Dulles
Stage II Development Plan is three hundred twenty-five
million and three hundred ninety-five thousand dollars
($325,395,000) (stated in 1989 dollars). Such Original Cost
Estimate excludes financing costs, interest on Bonds or on
any interim financing obtained by the Authority to finance
Dulles Stage II, and other deposits and reserves required by
the Indenture. The Original Cost Estimate shall be revised
from time to time to reflect any design changes approved by
the Authority and a Majority-in-Interest of the Signatory
Airlines at Dulles for the Airline Supported Areas excluding
the Airfield Cost Center. In addition, the Original Cost
Estimate shall be revised annually in accordance with the
U.S. Implicit Price Deflator Index. Such revision shall be
calculated by escalating the estimated Project costs
included in the Original Cost Estimate to their respective
midpoints of construction. In the event Dulles Stage II is
undertaken pursuant to Paragraph 10.04.l(iv), the Original
Cost Estimate, as revised pursuant to this Paragraph
10.04.2, for the Dulles Stage II Development Plan shall not
be exceeded except as set forth in this Article.
10.04.3 The Authority shall develop and maintain
Current Cost Estimates for each of the Projects included in
the Dulles Stage II Development Plan. In the event Dulles
Stage II is undertaken pursuant to Paragraph l0.04.l(iv),
the following shall apply:
(i) Whenever the Current Cost Estimate applicable to a
Project in the Dulles Stage II Development Plan exceeds the
Original Cost Estimate, as revised in accordance with
Paragraph 10.04.2, for that Project by more than five
percent (5%) percent, the Authority shall promptly notify
the Airline Representative. Whenever that excess is more
than ten percent (10%), the Authority shall meet promptly
with the Airline Representative to discuss such increased
cost and to determine whether and how the Project could be
revised so that the Current Cost Estimate for such Project
will not exceed the Original Cost Estimate for such Project
by more than ten percent (10%).
(ii) The Authority agrees to consider the requests,
suggestions, and recommendations of the Airline
Representative; provided, however, that so long as the
Current Cost Estimate for the Dulles Stage II Development
Plan has not exceeded the Original Cost Estimate, as revised
in accordance with Paragraph 10.04.2, plus the contingency
described in Paragraph 10.04.4, the decision whether to
revise the Stage II Development Plan shall be solely
reserved to the Authority, and shall be made at the sole
discretion of the Authority.
10.04.4 The contingency for the Dulles Stage II
Development Plan is hereby established as twenty-five
percent (25%) of the Original Cost Estimate, as revised in
accordance with Paragraph 10.04.2, of the Stage II
Development Plan.
10.04.5 In the event Dulles Stage II is undertaken
pursuant to Paragraph l0.04.l(iv) and except as provided in
Paragraph 10.04.6, in the event the Original Cost Estimate,
as revised in accordance with Paragraph 10.04.2, plus the
contingency, for the Dulles Stage II Development Plan is
exceeded by the Current Cost Estimate, the Authority shall
be required to do one or more of the following:
(i) Modify or defer a sufficient number of Priority 2
Projects, if any, so that the Current Cost Estimate does not
exceed the Original Cost Estimate, as revised in accordance
with Paragraph 10.04.2, plus the contingency;
(ii) Fund the cost overrun from the Authority's annual
share of Net Remaining Revenue or from any balance in the
Authority Capital Fund (in which event there shall be no
Amortization Requirement);
(iii) Issue subordinated debt payable from and
secured by the Authority's share of Net Remaining Revenue to
fund the cost overrun; or
(iv) Obtain approval for additional funding from a
Majority-in-Interest of the Signatory Airlines for the
Airline Supported Areas (excluding the Airfield Cost Center)
at that Airport.
10.04.6 In the event the condition in Paragraph
l0.04.1(iv) is satisfied and the Authority notifies the
Airline Representative that it intends to proceed with
construction of the Stage II Development Plan, and at the
time of the notice the Current Cost Estimate exceeds the
Original Cost Estimate, as revised in accordance with
Paragraph 10.04.2, plus contingency, if the Authority does
not receive a Majority-in-Interest approval of the Signatory
Airlines at Dulles for the Airline Supported Areas
(excluding the Airfield Cost Center), the Authority shall
defer actual construction of Dulles Stage II for one year.
Thereafter, the Authority may proceed with construction of
the Dulles Stage II Development Plan and (i) Paragraph
10.04.5 shall not apply, and (ii) to the extent that the
Authority expends funds for the Dulles Stage II Development
Plan from the Authority's share of Net Remaining Revenues or
from any balance in the Authority Capital Fund, there shall
be no Amortization Requirement.
10.04.7 Upon Substantial Completion of the New
Midfield Concourse(s), the Authority may, in its sole
discretion, remove from service or demolish all, or a
portion of, the Existing Midfield Concourses.
10.05 Additional Projects.
10.05.1 The Authority will provide the Airline
Representative with a list of any proposed Additional
Projects for each Fiscal Year in advance of the Fiscal Year.
The Authority will also provide the Airline Representative
at least sixty (60) days notice before beginning any
Additional Project not included in said list. No additional
notification, approval, or other requirements shall apply to
any other Additional Projects except those in Airline
Supported Areas. In addition, the Authority shall notify
the Airline in writing if it intends to undertake Additional
Projects in Airline Supported Areas. Such notice shall
include the following:
(i) A description of the proposed Additional
Project(s) together with cost estimates, scheduling, and any
preliminary drawings, if applicable;
(ii) A statement of the need for the proposed
Additional Project(s), along with the planned benefits to be
derived from such expenditures;
(iii) The Authority's means of financing or paying
the costs of the proposed Additional Project(s); and
(iv) The planned allocation of the costs thereof to the
various Cost Centers and Sub-Centers and the estimated
impact on Signatory Airline rates for rentals, fees, and
charges.
10.05.2 Within thirty (30) days after the Authority's
delivery of said notice of Additional Projects in Airline
Supported Areas, the Authority shall schedule a meeting with
the Signatory Airlines collectively, or with an airline
committee selected by the Signatory Airlines. The Authority
shall review and consider the comments, suggestions, and
recommendations of the Airline together with the comments
and recommendations of the other Signatory Airlines;
provided, however, the Authority reserves the right to make,
subject to the provisions of Paragraph 10.05.4 with respect
to Additional Projects to be financed with the proceeds of
Bonds, the final decision with respect to such Additional
Project. After the meeting, the Authority shall notify the
Airline of its decision on whether to proceed with the
Additional Project as proposed or modified.
10.05.3 If the Authority proceeds with Additional
Projects in the Airline Supported Areas, the Authority shall
provide the Airline Representative the following:
(i) The scope, budget, and schedule for the Additional
Project.
(ii) Copies of design submittals, if any, for the
schematic, design, development, and construction document
phases of the design process. Routine submittals will
include site plans, floor plans, and elevations.
Architectural and structural details or mechanical and
electrical design documents will not be routinely submitted.
Design submittals shall not include correspondence or
minutes of meetings between the Authority and the designer.
(iii) An opportunity to meet with the Authority to
discuss the Project design and the effects of Project
construction on airfield operations or landside access.
(iv) Notice of pre-bid and pre-construction meetings.
10.05.4 With respect to Additional Projects in
Airline Supported Areas which the Authority proposes to fund
with the proceeds of Bonds, the following provisions shall
apply:
(i) If the Additional Project is within one or more of
the following categories, no additional procedures are
required:
(a)Projects necessary to comply with any
current or future law, rule, regulation, order or judgment
of any Federal, state, or local agency (excluding the
Authority) or court, or any Federal grant agreement or
airport certification requirement, including any required
modification or replacement of the National air traffic
control tower;
(b)Projects to improve the safe operation
of the Airport;
(c)Projects for restoration or replacement
of airport capacity;
(d)Airfield projects eligible for Federal
funding for which the Authority has received the full level
of eligible Federal funding;
(e)Any project with respect to which the
Authority has received commitments from users to lease
eighty percent (80%) or more of the leasable premises
included in such project;
(f)Projects necessary to replace or repair
damaged, destroyed, or condemned property to the extent that
the amount of insurance or condemnation proceeds has been
inadequate;
(g)Projects for the acquisition and
installation of Equipment in accordance with Section 6.06;
or
(h)Projects included in the Fiscal Year
1990 repair and rehabilitation program and, in the Fiscal
Year in which a Surviving Agreement at Dulles expires,
projects in the amounts necessary and appropriate to fund
additions to the O&M Reserve required by the application of
this Agreement to the Premises which were leased under the
Surviving Agreement; or
(i)Any project with respect to which the
Authority has received approval of a Majority-in-Interest of
the Signatory Airlines with respect to the Cost Center at
the Airport in which the project is located.
(ii) If an Additional Project is not within one or more
of the foregoing categories, then:
(a)During Fiscal Years 1990 through 1994,
the Authority could not issue Bonds to fund such project;
(b)During Fiscal Years 1995 through 1999,
the Authority could issue Bonds to fund such project but
only if the amount of such Bonds, together with Bonds
previously issued pursuant to this Paragraph (b) or
previously issued pursuant to a Majority-in-Interest
approval, would not exceed one hundred million dollars
($100,000,000) at either Airport;
(c)During Fiscal Years 2000 through 2004,
the Authority could issue Bonds to fund such project but
only if the Authority defers for one year from the date of
Majority-in-Interest disapproval the issuance of Bonds for
any such project the estimated cost of which exceeds twenty-
five million dollars ($25,000,000); and
(d)During Fiscal Years 2005 through 2014,
the Authority could issue Bonds to fund such project but
only if the Authority defers for one year from the date of
Majority-in-Interest disapproval the issuance of Bonds for
any such project the estimated cost of which exceeds twenty-
five million dollars ($25,000,000) (stated in 2001 dollars
and escalated in accordance with the U.S. Implicit Price
Deflator Index); thereafter, the Authority may proceed with
the Project (i) if it obtains a Majority-in-Interest
approval, or (ii) if after requesting Majority-in-Interest
approval, such approval is not obtained, the Authority may
issue Bonds for the project only after giving the Airline
sixty (60) days notice of its intent to do so. Commencing
on the date of notification of the Authority's intent to
proceed to issue Bonds and continuing for sixty (60) days
thereafter, the Airline would have the right to terminate
this Agreement upon one hundred eighty (180) days' written
notice to the Authority; provided, further, however, that if
the Authority does not issue such Bonds, any such
termination notice shall be ineffective.
10.06 Amortization. Subject to the provisions of
Paragraph 10.03.3(u), 10.04.5(u), and 10.04.6 in the event
that the Authority funds any Project in the Capital
Development Program, or portion thereof, or any Additional
Project, or portion thereof, attributable or allocable to
the Airline Supported Areas from the Authority's share of
Net Remaining Revenue, Amortization Requirements shall be
charged for such Additional Project and included in the
calculation of Signatory Airline rentals, fees, and charges
pursuant to Articles 8 and 9.
10.07 Capital Development Program Audit. The MWAC may
conduct a financial audit, using a nationally recognized
accounting firm, of the Authority's implementation of the
Capital Development Program and of Additional Projects in
the Airline Supported Area. The Authority shall make its
financial records for the most recent three (3) years
available for this audit at a location selected by the
Authority upon reasonable notice of the audit from the
Airline Representative. The finding of any such audit shall
be reviewed with the Authority.
10.08 Federal and State Grants and Loans.
10.08.1 The Authority agrees to use its best efforts
to maximize Federal and Commonwealth of Virginia aviation
grants that may be available to fund a portion of the costs
of the Capital Development Program and any Additional
Projects.
10.08.2 The parties hereto recognize that the
Commonwealth of Virginia has advanced four million dollars
($4,000,000) to the Authority to be expended on design costs
for the New Midfield Concourse(s). Upon repayment of this
advance by the Authority to the Commonwealth, Capital
Charges related to such repayment shall be included in the
calculation of Signatory Airline Passenger Conveyance
Charges until the Substantial Completion Date of the New
Midfield Concourse(s) at which time such repayment shall be
included in the calculation of Terminal Rentals for the New
Midfield Concourse(s). Such repayment shall be amortized or
financed over a ten (10) year period.
10.09 Improvements by the Airline.
10.09.1 The Airline may construct and install,
consistent with the terms and provisions of this Agreement
and at its sole expense, Airline Operating Facilities and
improvements in its Exclusive, Preferential, and if any,
Joint Use Premises as the Airline deems to be necessary for
its operations; provided, however, that the plans and
specifications, location, and construction schedule for such
Airline Operating Facilities and improvements must be
approved by the Authority in writing prior to the
commencement of any and all such construction or
installation. No reduction or abatement of rentals, fees,
and charges due to the Authority hereunder shall be allowed
for any interference by such construction with the Airline's
operations hereunder.
10.09.2 Prior to the commencement of construction of
any such Airline Operating Facilities and improvements, the
Airline shall obtain or cause to be obtained a contract
surety bond in a sum equal to the full amount of any
construction contract. Said bond shall (i) be drawn in a
form and from such company reasonably acceptable to the
Authority; (ii) shall guarantee the faithful performance of
necessary construction and completion of improvements in
accordance with the Authority's approved final plans and
detailed specifications; and, (iii) shall protect the
Authority against any losses and liability, damages,
expenses, claims, liens, and judgments caused by or
resulting from the failure to perform completely the work
described. The Airline shall further acquire, or cause to
be acquired, a payment bond with any contractor or
contractors of the Airline as principal, in a sum equal to
the full amount of the construction contract awarded by the
Airline for the improvements and shall require its
contractor to acquire similar bond from its subcontractors.
Said bond shall guarantee payment of all wages for labor and
services engaged, and of all bills for materials, supplies
and equipment used in the performance of said construction
contract. The Airline shall assure that any work associated
with such construction or installation shall not
unreasonably interfere with the operation of the Airports,
or otherwise unreasonably interfere with the permitted
activities of other Airport tenants and users. The Airline
shall within five (5) working days discharge any lien filed
against its property or Premises by posting a bond or other
adequate security.
10.09.3 The Airline shall require contractors to
furnish satisfactory evidence of statutory worker's
compensation insurance1 comprehensive general liability
insurance, comprehensive automobile insurance and physical
damage insurance, on a builder's risk form with the interest
of the Authority endorsed hereon, in such amounts and in
such manner as the Authority may reasonably require. The
Authority may require additional insurance for any
alterations or improvements approved hereunder, in such
limits as the Authority reasonably determines to be
necessary.
10.09.4 Any construction or installation shall be at
the sole risk of the Airline and shall be in accordance with
all applicable state and local codes and laws and subject to
inspection by the Authority.
10.09.5 Upon completion of approved construction, and
within sixty (60) days of the Airline's receipt of a
certificate of occupancy for the new construction, a
complete set of as-built drawings shall be delivered to the
Authority for the permanent record of the Authority.
10.09.6 All Airline Operating Facilities, except
those financed by the Authority, shall be and remain the
property of the Airline during the Period of this Agreement.
Upon termination or expiration of this Agreement, any
Airline Operating Facilities and improvements which are
permanently affixed to the Airline's Premises shall become
the property of the Authority. Provided, that in the event
of a termination of this Agreement before the expiration of
the twenty-five (25) year Period in accordance with Section
2.02, the Airline shall be entitled to receive from the
Authority, or the Authority shall cause the Airline to
receive, payment for the unamortized value of approved
installation of Airline Operating Facilities and
improvements that are permanently affixed to the Premises
which are vacated by the Airline and not leased to the
Airline in a subsequent Agreement or subsequently used by
the Airline. For these purposes, facilities and
improvements shall be amortized on the basis of generally
accepted accounting principles over their useful life as
agreed upon at the time the Authority approves the
improvement in accordance with Paragraph 10.08.1.
10.10 Rail System. The Authority and the Airlines
recognize that, at the time of preparation and distribution
for execution of this Agreement, the Authority has no
current intention to participate in the capital or operating
costs of a Rail System. The Authority will, however, be
supportive of efforts of those outside the Authority to
provide a Rail System to the Airport and will use its best
efforts to accommodate a Rail System on the Airport. The
Authority and the Airlines have mutual concerns regarding
potential financial impact of future proposals or decisions
relating to a Rail System. In view of these concerns, it is
agreed as follows:
(i) No operating or maintenance costs associated with
any Rail System may be incurred by the Authority and/or paid
for from any source of funds other than the Authority's
Capital Fund unless and until such costs are addressed and
mutually resolved in a written agreement between the
Majority-in-Interest of the Signatory Airlines at Dulles for
the Airfield Cost Center and the Authority.
(ii) Any capital costs in excess of ten million dollars
($10,000,000), and all operating costs that may ultimately
be incurred by the Authority as a result of its
accommodation of or participation in a Rail System will be
addressed in an agreement between the Majority-in-Interest
of the Signatory Airlines at Dulles for the Airfield Cost
Center and the Authority. The negotiation of such an
agreement will commence at least six (6) months prior to the
Authority's Fiscal Year in which such costs would be
incurred with the objective of reaching an agreement not
less than sixty (60) days prior to such Fiscal Year.
(iii) In the absence of such an agreement, the
aggregate of all capital costs of any rail link to Dulles
which the Authority may incur is ten million dollars
($10,000,000) over the Period of this Agreement and all
costs shall be allocated to the Dulles ground transportation
cost center.
11.3
ARTICLE 11.
DAMAGE AND DESTRUCTION TO PREMISES; INSURANCE
11.01 The Authority's Responsibilities.
11.01.1 The Authority shall maintain insurance or cause
insurance to be maintained with a responsible insurance company
or companies approved to do business in the Commonwealth of
Virginia, or adopt and maintain a risk financing plan for
property losses and said insurance, plan, or combination thereof
shall cover such risks as are ordinarily insured against by
reasonably prudent operators of airports, including the insurance
required by the Indenture, and further, including, without
limiting the generality of the foregoing, fire, lightning,
windstorm, hail, floods, explosion, riot, riot attending a
strike, civil commotion, damage from aircraft, smoke and uniform
standard extended coverage with vandalism and malicious mischief
endorsements, coverage of demolition of buildings and removal of
debris, all-risk coverage, business interruptions, and extra
expense. Such insurance or plan shall be maintained in an amount
not less than the full insurable replacement value. Full
insurable replacement value of any insured improvement shall be
deemed to equal the actual replacement cost of the improvement
and shall be determined by the Authority from time to time, but
not less frequently than once every three years. In the event
that such determination of full insurable replacement value
indicates that the improvements are underinsured, the Authority
shall secure the necessary additional coverage.
11.01.2 If a portion of the Airports within the Airline
Supported Areas, except property for which the Airline is
responsible under Section 11.02, is damaged or destroyed by fire
or other peril, and except for TAP or as provided elsewhere in
this Article 11, the Authority after consultation with the
Airline, shall, to the extent of proceeds of the Authority's
property insurance paid to the Authority or self insurance,
repair, reconstruct, and replace the damaged or destroyed
improvements so that the Airports are returned substantially to
the same condition, character, and utility value (based upon the
plans and specifications for the Premises, subject to the then-
existing Airport building standards) as existed prior to such
damage or destruction, exclusive of improvements made by the
Airline and Airline Operating Facilities. With respect to TAP,
the Authority shall so repair, reconstruct, and replace damaged
or destroyed TAP to the extent suitable to the conduct of the
Airline's Air Transportation Business or provide alternative
suitable Premises.
11.02 The Airline's Property Insurance Responsibilities.
11.02.1 The Airline shall be primarily responsible for
insuring its Airline Operating Facilities and for insuring the
property for which it has responsibility in accordance with a
Surviving Agreement. The Authority shall be an additional named
insured on policies for the insurance of the Airline's Premises.
11.02.2 The insurance for Airline Operating Facilities and
property required by Paragraph 11.02.1 shall be in an amount
equal to the full replacement value thereof. This insurance
shall include the following coverages at a minimum fire,
lightning, windstorm, hail, floods, explosion, riot, riot
attending a strike, civil commotion, damage from aircraft, smoke
and uniform standard extended coverage with vandalism and
malicious mischief endorsements, coverage of demolition of
buildings and removal of debris, all-risk coverage, business
interruptions, and extra expense.
11.03 Rental Abatement.
11.03.1 If the Premises or Equipment, or any portion
thereof, are rendered untenantable by reason of damage or
destruction, other than damage or destruction described in
Paragraph 11.03.2, the Airline shall be entitled to a pro rata
abatement of rentals, based upon size and type of area rendered
untenantable, until the Premises or Equipment are restored;
provided, however, that the Airline shall not be entitled to any
such abatement of rentals at any time if the rate covenant under
the Indenture is not at such time being met, or if such abatement
would cause the rate covenant to be violated, or if such
abatement would prevent the Authority from complying with any
additional bonds test under the Indenture.
11.03.2 Notwithstanding any other provisions of this
Article 11, if the Premises or Equipment shall be damaged or
destroyed by fire or other peril, due to the negligence or
willful act or omission of the Airline, its officers, its
employees acting within the course and scope of their employment,
its agents, or licensees, the Airline shall not be entitled to
any rental abatement.
11.04 Responsibilities if Damage or Destruction Occurs.
11.04.1 The Authority shall use its best efforts to
provide the Airline with alternative Premises and Equipment
during the period that its Premises and Equipment are damaged or
destroyed and are untenantable or unusable. Said alternative
Premises or Equipment shall be suitable for the conduct of the
Airline's Air Transportation Business, but shall not be construed
to require alternative Premises and Equipment that are comparable
to the size1 location, access, or other features of the Premises
or Equipment leased under Article 6.
11.04.2 The Airline shall pay rentals, fees, and charges
in accordance with Article 8 for any alternative Premises and
Terminal Equipment used or leased by it during the period of
repair and reconstruction of the original Premises.
ARTICLE 12.
THIRD PARTY OBLIGATIONS; INDEMNIFICATION AND INSURANCE
12.01 Indemnification. The Airline shall defend, indemnify,
and hold the Authority and its agents, officers and employees
completely harmless from and against any and all claims, suits,
demands, actions, liabilities, losses, damages, judgments, or
fines arising by reason of injury or death of any person, or
damage to any property, including all reasonable costs for
investigation and defense thereof (including, but not limited to,
attorney fees, court costs and expert fees) of any nature
whatsoever arising out of the Airline's conduct of its Air
Transportation Business on the Airports, or in its use or
occupancy of the Premises, regardless of where the injury, death,
or damage may occur, except to the extent such injury, death, or
damage is caused by the negligent act or omission or willful
misconduct of the Authority. The Authority shall give to the
Airline reasonable notice of, and an opportunity to defend
against, any such claims or actions, and the Authority shall take
reasonable actions to mitigate its damages.
12.01.1 The Airline shall defend, indemnify, and hold the
Authority, and its agents, officers, and employees, completely
harmless from and against any claim, suit, demand, action,
liability, loss, damage, judgment, fine, or civil penalty and all
costs and expenses of whatever kind or nature (including, but not
limited to, attorney fees, court costs, and expert fees)
associated therewith in any way arising from or based upon the
violation of any Federal, state, or municipal laws, statutes,
resolutions, or regulations by the Airline, its agents,
employees, contractors, or tenants, in conjunction with the
Airline's use and/or occupancy of the Airport. The Authority
shall give the Airline reasonable notice of, and an opportunity
to defend against, any such claims or actions, and the Authority
shall take reasonable actions to mitigate its damages.
12.01.2 If the Authority is deemed to be in noncompliance
with laws or regulations governing access to secure areas of the
Airport and to the areas of the Airfield and said non-compliance
is the result of or due to the negligence or willful act or
omission of the Airline or of any of the Airline's employees,
agents, or contractors and such breach results in a civil penalty
action against the Authority, the Airline agrees to reimburse the
Authority for all expenses, including reasonable attorney fees,
incurred by the Authority in defending against the civil penalty
action and for any civil penalty or settlement amount paid by the
Authority as a result of being deemed in non-compliance. The
Authority shall give the Airline reasonable notice of any
allegation, investigation, or proposed or actual civil penalty
sought for such non-compliance.
12.01.3 The provisions of this Section 12.01 shall survive
the expiration, termination, or early cancellation of this
Agreement for claims, suits, demands, actions, liabilities, loss,
or damage, which occur prior to the termination or early
cancellation of this Agreement.
12.02 Required Insurance Coverage. The Airline, at its sole
cost and expense, shall throughout the Period of this Agreement,
keep all of its operations on the Airports, and its obligation to
indemnify the Authority pursuant to Section 12.01, continuously
and fully insured in accordance with this section of this
Agreement. The minimum amounts and types of insurance coverage
required hereunder shall in no event be construed to limit or
modify the Airline's obligation to indemnify the Authority as set
forth in Section 12.01.
12.02.1 Airline Liability Insurance This insurance shall
be maintained in respect of all aircraft owned, leased or
operated by the Airline for bodily injury or death and property
damage liability in a combined single limit amount of not less
than two hundred million dollars ($200,000,000) per occurrence
and shall include aircraft liability, airport liability,
passenger liability and baggage and cargo liability. Provided,
however, if the Airline operates at the Airports only as a
Regional/Commuter Air Carrier, the Airline shall maintain
aircraft liability insurance in a combined single limit amount of
not less than fifty million dollars ($50,000,000) per occurrence.
A twenty-five million dollars ($25,000,000) per occurrence sub-
limit for personal injury, bodily injury (including death) and
property damage liability shall cover premises-operation, medical
payments, contractual liability, liability of independent
contractors, personal injury, and fire legal liability. If the
Airline operates a club or "VIP" room serving alcoholic
beverages, liquor liability insurance must be provided.
12.02.2 Comprehensive Automobile Liability Insurance.
This insurance shall cover owned, hired, and nonowned vehicles
against death, bodily injury, and property damage claims, in a
combined single limit amount of not less than five million
dollars ($5,000,000).
12.02.3 Workers' Compensation and Employers' Liability.
This insurance shall provide Virginia Statutory Limits with an
All States Endorsement and one million dollars ($1,000,000) in
Employer's Liability coverage.
12.03 Insurance Companies; Certificates; Self Insurance;
Review of Coverage.
12.03.1 All insurance shall be in a form and with an
insurance company or companies that is reasonably acceptable to
the Authority, and, if a domestic insurer, rated B+10 or better
under the Best rating system. Said insurance shall be in
occurrence form, not claims made.
12.03.2 On or before the Effective Date, an original
Certificate or Certificates of Insurance shall be transmitted to
the Authority providing evidence that the required insurance
coverage has been procured by the Airline and is in effect on the
Effective Date in the types and amounts required by this Article.
Said Certificate(s) shall clearly list the Metropolitan
Washington Airports Authority as an additional named insured on
the liability policies with respect to the Airline's indemnity
obligation under Section 12.01. Further, said Certificate(s) of
Insurance shall unequivocally provide thirty (30) days advance
written notice to the Authority prior to any material change,
cancellation, or non-renewal of coverage thereunder. The
Certificate(s) shall be signed by, or bear the facsimile of, a
representative of the insurance company authorized to bind that
company.
12.03.3 All insurance policies required hereunder may be
written to include a reasonable retention or deductible. Said
retention or deductible shall be subject to the approval of the
Authority which approval shall not be unreasonably withheld.
12.03.4 Notwithstanding anything to the contrary in this
Article, the Authority will allow the insurance coverage required
by Section 12.02 herein to be provided through a self-insurance
plan established by the Airline; provided that the self-insurance
plan may consist of a combination of primary, excess umbrella
insurance and a self-insured retention, and the total of
insurance and self insurance protection is no less than the
limits stated in this Article. The self-insurance plan must be
approved in writing by the Authority prior to becoming effective
at the Airports. An Airline requesting the Authority's approval
of a self-insurance plan must submit a copy of its self-insurance
plan, current financial statement showing the limits of its
established self-insurance retention and proof of the primary and
excess umbrella insurance. The Authority shall have thirty (30)
days to review the proposed self-insurance plan. If the self-
insurance plan is approved by the Authority and becomes
effective, the Airline shall not increase the self-insurance
retention levels stated in the self-insurance plan approved by
the Authority without the approval of the Authority.
12.03.5 The Authority reserves the right to periodically
review any and all policies of insurance and to request
reasonable adjustments in the limits of coverage required
hereunder from time to time throughout the Period of this
Agreement, but not more frequently than once every two years.
The Authority shall provide the Airline with such request in
writing and the Airline shall comply within sixty (60) days from
the receipt thereof.
ARTICLE 13.
AUTHORITY REMEDIES
13.01 Default. The occurrence of any of the following events
shall be considered an event of default by the Airline:
13.01.1 The Airline becomes insolvent (as such term is
defined under Section 101 of the Federal Bankruptcy Code, 11
U.S.C. 101 et seq., or any successor statute thereto); or fails
to pay its debts generally as they mature; or takes the benefit
of any present or future Federal or state insolvency statute; or
makes a general assignment for the benefit of creditors, or files
a voluntary petition in bankruptcy or a petition or answer
seeking an arrangement of its indebtedness under the Federal
Bankruptcy Code or under any other law or statute of the United
States or of any state thereof, or consents to the appointment of
a receiver, trustee, custodian, liquidator, or other similar
official, of all or substantially all of its property; or an
order for relief shall be entered by or against the Airline under
any chapter of the Federal Bankruptcy Code.
13.01.2 The Airline is adjudged a debtor or bankrupt by
order or decree of a court, or an order is made approving a
petition filed by any of the Airline's creditors or by any of its
stockholders, seeking its reorganization or the restructuring of
its indebtedness under the Federal Bankruptcy Code or under any
other law or statute of the United States or any state thereof,
and such order or decree shall not be stayed or vacated within
sixty (60) days of its issuance.
13.01.3 A petition under any chapter of the Federal
Bankruptcy Code or an action under any Federal or state
insolvency law or statute shall be filed against the Airline and
is not dismissed or stayed within sixty (60) days after the
filing thereof.
13.01.4 A receiver, trustee, custodian, liquidator, or
other similar official takes possession or control of all or
substantially all of the property of the Airline by or pursuant
to, or under authority of any legislative act, resolution, or
rule, or any order or decree of any court or governmental board,
agency, or officer, and such possession or control continues in
effect for a period of sixty (60) days.
13.01.5 The Airline becomes a corporation in dissolution.
13.01.6 The transfer, passing, or devolving of any
interests or rights of the Airline hereunder, by operation of law
or otherwise1 to any other person, firm, corporation, or other
entity, by, in connection with, or as a result of any bankruptcy,
insolvency, trusteeship, liquidation, or other proceedings or
occurrence described in Paragraphs 13.01.1 through 13.01.5.
13.01.7 The discontinuance by the Airline of its Air
Transportation Business at the Airports for a period of thirty
(30) consecutive days or for a period of sixty (60) days in any
Fiscal Year; provided, however, that suspension of operations by
the Airline during a strike or work stoppage by its employees at
the Airports, or for similar reasons beyond the control of the
Airline, shall not be a discontinuance of operations.
13.01.8 The voluntarily discontinued use or abandonment by
the Airline for a period of thirty (30) consecutive days of all,
or a portion, of its Premises or Equipment at one or both
Airports and the failure to remedy this condition within thirty
(30) days of notice to remedy same from the Authority.
13.01.9 The failure of the Airline to pay rentals, fees,
and charges or any other payment required by this Agreement when
due and the expiration of the period, if any, provided for herein
after which said payment due becomes delinquent, except, however,
in the event of a dispute over a payment, the Airline shall not
be in default provided that the Airline has presented, at the
time the payment is due, the dispute in detail and in writing, to
the General Manager of the Authority. The decision of the
General Manager will reinstate or modify the amount due and the
due date. The Airline shall pay the amount due as specified by
the General Manager within ten (10) days of the receipt of notice
from the General Manager. If a dispute remains over that amount,
the Airline agrees to pay the amount claimed by the Authority
while pursuing its remedies.
13.01.10 The failure of the Airline to maintain the minimum
insurance levels required in Articles 11 and 12 of this
Agreement.
13.01.11 The failure of the Airline to provide Contract
Security required pursuant to Section 8.13.
13.01.12 The conduct of any business, practice, or
performance of any act at the Airport which is not specifically
authorized herein or by any other agreement between the Authority
and the Airline, if said business or act does not cease
permanently within thirty (30) days of receipt of the Authority's
written notice to cease said business, practice, or act.
13.01.13 The nonperformance by the Airline of any other
material covenant, condition, term, or agreement required to be
performed by the Airline herein, and the continued failure of the
Airline (i) to remedy such nonperformance within a thirty (30)
day period after receipt of written notice from the Authority to
remedy the same; or (ii) to diligently commence and proceed
towards a remedy for such nonperformance which cannot be remedied
within such thirty (30) day period in which event the Airline
shall have the burden of proving that the nonperformance cannot
be remedied within thirty (30) days, that it is proceeding with
diligence to remedy same, and that such nonperformance will be
remedied within a reasonable period of time.
13.01.14 The issuance of an order or the taking of action
by any court or governmental authority having jurisdiction over
the Airline's operations which for a period of thirty (30) days
substantially limits or prohibits the Airline's operations at the
Airports. Provided, however, that before it invokes its remedies
for a default under this Paragraph 13.01.14, the Authority will
have reasonably determined that the material adverse consequences
of a default herein cannot be substantially eliminated by the
procedures available to the Authority under Article 17.
13.02 Remedies.
13.02.1 In addition to any remedy provided by law, and
except for defaults under Paragraph 13.01.8, if the Airline shall
be in default under this Agreement, and if the notice of default
to the Airline stated that this Agreement could, as a result
thereof, be terminated, the Authority shall have the right, in
its sole discretion, to terminate this Agreement. The
termination may be effective in not less than ten (10) calendar
days from the date of written notice of termination from the
Authority unless the Airline has cured the default during this
period.
13.02.2 The Authority's remedies for a default under
Paragraph 13.01.8 includes the right to reclaim, in its
discretion, the Premises that have been abandoned and to delete
same from the Airline's Agreement. Such reclamation may be
effective in not less than ten (10) calendar days from the date
of written notice from the Authority. Nothing herein shall
preclude the Authority from terminating this Agreement in its
entirety in the event that the Airline's default under Paragraph
13.01.8 relates to all of its Premises at both Airports. Nothing
herein shall, in the event of a default under Paragraph 13.01.8,
preclude the Authority, as an alternative to reclaiming the
Premises or Equipment or terminating this Agreement, from
continuing to hold the Airline responsible for the performance of
this Agreement for the Period thereof.
13.02.3 Upon the effective date of termination or
reclamation under Paragraphs 13.02.1 or 13.02.2, respectively,
the Authority may re-enter and take immediate possession of the
Premises. Notices of termination or reclamation under Paragraphs
13.02.1 or 13.02.2 shall operate as a notice to quit and any
other notice to quit or notice of the Authority's intention to re-
enter the Premises is hereby expressly waived. If necessary, the
Authority may proceed to recover possession of the Premises under
and by virtue of the laws of the Commonwealth of Virginia, or by
such other proceedings, including re-entry and possession, as may
be applicable. If the Authority elects to terminate this
Agreement in whole or in part, everything contained in this
Agreement on the part of the Authority to be done and performed
shall cease without prejudice to the right of the Authority to
recover from the Airline all rentals, fees, charges, and other
sums accrued up to the time of termination or recovery of
possession by the Authority, whichever is later. Further, the
Authority shall use its best efforts to relet the Premises, and,
if the full rentals provided for herein plus the costs, expenses,
and damages described below shall not be realized by the
Authority, the Airline shall be liable for all damages sustained
by the Authority, including, without limitation, any deficiency
in rentals, fees, and charges, the expenses of placing the
Premises in good rentable condition, and reasonable attorneys'
fees. The provisions contained in this Section shall be in
addition to, and shall not prevent the enforcement of, any claim
the Authority may have against the Airline for anticipatory
breach of this Agreement.
13.02.4 All rights and remedies of the Authority set forth
herein are in addition to all other rights and remedies available
to the Authority at law or in equity. All rights and remedies
available to the Authority hereunder, at law or in equity, are
expressly declared to be cumulative. The exercise by the
Authority of any such right or remedy shall not prevent the
concurrent or subsequent exercise of any other right or remedy.
No delay in the enforcement or exercise of any such right or
remedy shall constitute a waiver of any default by the Airline
hereunder or of any of the Authority's rights or remedies in
connection therewith. The Authority shall not be deemed to have
waived any default by the Airline hereunder unless such waiver is
set forth in a written instrument signed by the Authority. If
the Authority waives in writing any default by the Airline, such
waiver shall not be construed as a waiver of any covenant,
condition, or term set forth in this Agreement except as to the
specific circumstances described in such written waiver.
13.02.5 If the Authority shall institute proceedings
against the Airline and a compromise or settlement thereof shall
be made, the same shall not constitute a waiver of any subsequent
breach of the same or of any other covenant, condition, or term
set forth herein, nor of any of the Authority's rights hereunder
with regard to any future occurrence of the same or other matter.
Neither the payment by the Airline of a lesser amount than the
full rentals, fees, and charges due hereunder nor any endorsement
or statement on any check or letter accompanying a check for
payment of rent or other sums payable hereunder shall be deemed
an accord and satisfaction, and the Authority may accept such
check or payment without prejudice to the Authority's right to
recover the balance of such rent or other sums or to pursue any
other remedy available to the Authority. Unless previously
agreed to by the Authority in writing, no re-entry by the
Authority shall be considered an acceptance of a surrender of
this Agreement or Premises.
13.03 To the extent that the Authority's right to terminate
this Agreement as a result of an event enumerated in Paragraphs
13.01.1 through 13.01.6 of this Article is determined to be
unenforceable under the Federal Bankruptcy Code, as amended from
time to time, or under any other statute, then the Airline and
any trustee who may be appointed agree (i) to perform promptly
every obligation of the Airline under this Agreement until this
Agreement is either assumed or rejected under the Federal
Bankruptcy Code; (ii) to pay on a current basis all rentals,
fees, and charges set forth in this Agreement; (iii) to reject or
assume this Agreement within sixty (60) days of a filing of a
petition under the Federal Bankruptcy Code; (iv) to cure or
provide adequate assurance of a prompt cure of any default of the
Airline under this Agreement; and (v) to provide to the Authority
such adequate assurance of future performance under this
Agreement as may be requested by the Authority, including a
tender of Contract Security as set forth in Section 8.13 of this
Agreement.
13.04 Special Cancellation Right. In the event that the
United States government determines that the Airline has failed
to comply with the nondiscrimination covenants set forth in
Section 18.04 herein, the Authority shall have the right to
cancel this Agreement after such action as the United States
government may direct to enforce such covenants has been followed
and completed, including exercise or expiration of appeal rights
ARTICLE 14.
AIRLINE REMEDIES
14.01 Default. The occurrence of the following shall be
considered an event of default by the Authority The failure of
the Authority to perform any material covenant or term required
to be performed by the Authority and the failure continues for
thirty (30) days after receipt of written notice from the
Airline, or, if by its nature such default cannot reasonably be
cured within thirty (30) days, the Authority fails to diligently
commence to cure such default within said thirty (30) day period
after receipt from the Airline of written notice to remedy the
same
14.02 Airline's Remedy. Provided the Airline is not itself
in default of this Agreement as set forth in Article 13, the
Airline may bring an appropriate action in a court of competent
jurisdiction to compel the Authority to perform in accordance
with the terms of this Agreement.
14.03 Termination. At any time when no Bonds are
Outstanding, and if the Airline is not then in default in the
payment of any amount due from it to the Authority hereunder, the
Airline may terminate this Agreement by giving the Authority
sixty (60) days advance notice upon or after the happening and
during the continuance of any one of the following events:
(i) The issuance by any court of competent jurisdiction of
an injunction in any way preventing or restraining the use of the
Airport or any part thereof so as to substantially limit or
prohibit the Airline's use of the Airport in the conduct of its
Air Transportation Business, and the remaining in force of such
injunction, not stayed by way of appeal or otherwise, for a
period of at least sixty (60) days;
(ii) The enactment of any law, issuance of any order, rule,
ordinance, or regulation, or the taking of any action by a
Federal, state, or local government body or agency having
jurisdiction with respect to the Airport, or the occurrence of
any fire, other casualty, act of God or the public enemy,
substantially limiting or prohibiting, for a period of at least
sixty (60) days, the Airline's use of the Airport in the conduct
of its Air Transportation Business; provided, however, that none
of the foregoing is instituted or initiated by the Airline or due
to any fault of the Airline;
(iii) The default by the Authority in the performance of
any material covenant or agreement required to be performed by
the Authority herein, which default materially and adversely
limits or prohibits the Airline's operations at the Airport, and
the failure by the Authority to remedy such default after written
notice thereof has been delivered to the Authority, unless (a)
the Authority takes prompt action to remedy such default within a
period of thirty (30) days after receipt from the Airline of such
notice, or (b) in the case of any such failure which cannot with
due diligence be cured within such thirty (30) day period, the
Authority takes corrective action within the thirty (30) day
period and diligently pursues such action until the failure is
cured.
(iv) The substantial limiting or restricting of the
Authority's operation of the Airport by action of any Federal,
state, local government body or agency having jurisdiction with
respect thereto, and the continuance thereof for a period of not
less than sixty (60) days, provided such restriction materially
and adversely affects the Airline's operations at the Airport.
ARTICLE 15.
SURRENDER OF PREMISES; HOLDING OVER
15.01 Surrender and Delivery. Immediately upon termination
or the expiration of this Agreement, or upon deletion of any
portion of the Premises (including TAP) and Equipment leased
hereunder in accordance with Article 5 or 17, the Airline shall
peaceably surrender and deliver to the Authority the Premises and
Equipment that are the subject of said expiration or termination.
Premises and Equipment shall be surrendered in good condition,
with the exception of ordinary wear from use of the Premises and
Equipment for the purpose for which they were leased. After
surrender, the Airline agrees to pay to the Authority the costs,
if any, incurred by the Authority to bring the Premises and
Equipment up to such condition.
15.02 Removal of Property.
15.02.1 Except as provided in Paragraph 15.02.2, nothing
herein shall be construed to preclude the Airline from removing
from the Airports or otherwise disposing of its personal
property, including aircraft, tools, equipment, and trade
fixtures, title to which is to remain with the Airline. All
Authority property damaged by or as a result of the removal of
Airline property shall be promptly restored by the Airline to the
condition existing before such damage, at the Airline's sole cost
and expense. Such aircraft, tools, equipment, trade fixtures,
and other personal property shall be removed upon the expiration
of this Agreement or from any portion of the Premises upon the
deletion from this Agreement of that portion from the Premises
leased hereunder.
15.02.2 Any removal of property by the Airline pursuant to
this Section 15.02 shall be subject to any valid lien which the
Authority may have thereon and such property shall not be removed
from the Airport without the written consent of the Authority.
15.02.3 At the expiration or termination of this
Agreement, any personal property of the Airline not removed in
accordance with Paragraph 15.02.1 above, at the option of the
Authority, may be removed and placed in storage by the Authority
at the sole cost of the Airline. If such property is not removed
from storage by the Airline within one month after placement
therein, the Authority may elect, after notice to the Airline, to
take ownership of the property or dispose of the property by
either public or private sale and retain the proceeds. Any costs
of removal and disposition not covered by such proceeds shall be
borne by the Airline.
15.03 Holding Over. In the event the Airline holds over,
refuses, or fails to give up the possession of the Premises and
Equipment at the expiration or termination of this Agreement, or
the relevant portion of Premises and Equipment in the event of
expiration or termination of the lease for said portion, without
written consent of the Authority, the Airline shall have only the
status of a tenant at sufferance and no periodic tenancy will be
deemed to have been created. The Airline shall pay reasonable
rentals, rates, and charges as then prescribed by the Authority
and such rentals, rates, and charges may be different from those
prescribed during the Period of the Agreement. Rent shall be
paid on a pro rata basis for the period of time that the Airline
is in such a hold over status. Further, in the event that the
Airline holds over, and if the Authority shall desire to regain
possession of the Premises, then the Authority may re-enter and
take possession of the Premises. Furthermore, if the Authority
so elects, it may accept rent and concurrently commence legal
proceedings to regain possession of the Premises.
ARTICLE 16.
TRANSFER OF PREMISES BY ASSIGNMENT, SUBLETTING, ETC.
HANDLING AGREEMENTS
16.01 General. The Airline shall not assign, transfer,
convey, sell, mortgage, pledge, or encumber (hereinafter
collectively referred to in Article 16 as "assignment") or sublet
its Premises or Equipment, without the prior written approval of
the Authority. The Airline shall not allow the use of its
Premises or Equipment through a handling or services agreement or
similar arrangement (hereinafter collectively referred to in
Article 16 as "handling agreements") by any other Air
Transportation Company without the prior written approval of the
Authority. If the Airline fails to obtain prior written approval
of any such assignment, sublease, or handling agreement, the
Authority, in addition to the rights and remedies set forth in
Article 13, shall have the right to refuse to recognize the
agreement and the assignee, sublessee or "handled" Air
Transportation Company shall acquire no interest in this
Agreement or any rights to use Premises or Equipment.
16.02 Authority Approval of Assignments. It shall not be
unreasonable for the Authority to disapprove or condition an
assignment of the Airline's Premises or Equipment under any or
all of the following circumstances, among others:
16.02.1 If the Airline has failed to accommodate a
Requesting Airline on reasonable terms prescribed by the
Authority in accordance with Article 17.
16.02.2 If said assignment would result in the transfer of
fifty percent (50%) or more of any of the following the Airline's
linear feet of ticket counter space; square feet of holdroom
space; or number of gate positions.
16.02.3 If the assignee is not, and is not willing to
become, a Signatory Airline.
16.02.4 If a Signatory Airline, including a Signatory
Airline which is not leasing space directly from the Authority
because of the unavailability of such space, is, in the
determination of the Authority, in need of the Premises and/or
Equipment proposed to be assigned; provided, however, that such
signatory Airline is willing to take such Premises and Equipment
on substantially the same terms and conditions relating to the
use of such Premises and Equipment to be assigned as proposed in
the assignment.
16.02.5 If the Authority determines that there is adequate
space for lease by the proposed assignee directly from the
Authority.
16.02.6 If the Authority determines that the proposed
assignee is not substantially as creditworthy as the Airline.
16.02.7 Notwithstanding the foregoing, this section shall
not be interpreted to preclude the assignment of this Agreement,
and the Airline's rights and obligations hereunder, to a parent,
subsidiary, or merged company if such parent, subsidiary, or
merged company conducts an Air Transportation Business at the
Airport at which the Airline is a Signatory Airline and assumes
all rights and obligations hereunder. Written notice of such
assumption shall be provided by the parent, subsidiary, or merged
company thirty (30) days prior to the effective day of such
assignment.
16.03 Authority Approval of Subleases. It shall not be
unreasonable for the Authority to disapprove or condition a
sublease of the Airline's Premises or Equipment under any or all
of the following circumstances, among others:
16.03.1 If the Airline has failed to accommodate a
Requesting Airline on reasonable terms prescribed by the
Authority in accordance with Article 17.
16.03.2 If said sublease would result in the sublease
(i) for a period greater than fifty percent (50%) of the
remaining Period of the Agreement, and (ii) is for greater than
fifty percent (50%) of any of the following Premises the
Airline's linear feet of ticket counter space; square feet of
holdroom space; or number of gate positions.
16.03.3 If the sublessee is an Air Transportation Company
who is not, and is not willing to become, a Signatory Airline.
16.03.4 If a Signatory Airline, including a Signatory
Airline which is not leasing space directly from the Authority
because of the unavailability of such space, is, in the
determination of the Authority, in need of the Premises and/or
Equipment proposed to be subleased; provided, however, that such
Signatory Airline is willing to take such Premises or Equipment
on substantially the same terms and conditions as proposed in the
sublease and is willing to provide the Airline with a reasonable
security deposit, not to exceed three (3) months' rentals.
16.03.5 If the Authority determines that there is adequate
space for lease directly from the Authority by the proposed
sublessee or if the sublease does not contain a provision which
permits it to be terminated upon notice from the Authority to the
parties thereto of the availability of Premises in accordance
with Section 1.04.
16.04 Authority Approval of Handling Agreements. It shall
not be unreasonable for the Authority to disapprove or condition
a handling agreement if the Airline has failed to accommodate a
Requesting Airline on reasonable terms prescribed by the
Authority in accordance with Article 17.
16.05 Reasons for Disapproval. The circumstances under which
the Authority may determine to disapprove or condition
assignments, subleases, and handling agreements set forth in
Sections 16.02, 16.03, and 16.04 are not intended to be a
comprehensive list of all those which the Authority may impose
under Section 16.01.
16.06 Method of Obtaining Approval. The Airline, when
requesting an approval of an assignment, sublease, or handling
agreement under Section 16.01, shall include with its request a
copy of the proposed agreement, if prepared, or a detailed
summary of the material terms and conditions to be contained in
such agreement. Any proposed agreement or detailed summary
thereof shall provide the following information (i) the Premises
and/or Equipment to be assigned, sublet, or used under a handling
agreement; (ii) the terms; (iii) if a sublease, the rentals and
fees to be charged; and (iv) all material terms and conditions of
the assignment, sublease, or handling agreement the Authority may
reasonably require. If approved, the Airline shall submit a
fully executed copy of such agreement to the Authority within
thirty (30) days prior to the commencement of the assignment or
sublease or within fifteen (15) days after the commencement of
the handling agreement.
16.07 Administrative Charge. In the event the Airline is
authorized by the Authority to sublease any portion of its
Premises or Equipment, the Airline may charge such sublessee, in
addition to a reasonable charge for any services and Airline
owned property provided by the Airline or actual costs other than
rental costs incurred by the Airline, reasonable rentals not to
exceed one hundred fifteen percent (115%) of the Airlines'
rentals for such portion of the Premises and Equipment.
16.08 Airline to Remain Liable. The Airline shall
remain fully and primarily liable during the Period of this
Agreement for the payment of all of the rental due and payable to
the Authority for the Premises and Equipment that are subject to
an assignment, sublease, or handling agreement under Section
16.01, and fully responsible for the performance of all the other
obligations hereunder, unless otherwise agreed to by the
Authority; provided, however, this Section 16.08 shall not apply
to Premises and Equipment with respect to which an assignment has
been made at the Authority's request pursuant to Paragraph
16.02.4 hereof.
16.09 Authority Determination of Type of Agreement. The
Authority shall have the right to examine the terms of any
agreement or arrangement submitted to it for approval pursuant to
this Article 16, and determine whether such agreement or
arrangement is most appropriately characterized as an assignment,
sublease, or handling agreement, regardless of the Airline's
characterization of such agreement or arrangement.
ARTICLE 17.
AVAILABILITY OF ADEQUATE FACILITIES
17.01 General. The Authority and the Airline agree that
facilities at the Airports are limited and the Airline shall
cooperate fully with the Authority's exercise of its obligation
to prudently operate and manage the Airports so as to provide
adequate facilities for all Air Transportation Companies,
including the Airline1 operating or desiring to operate at the
Airports.
17.02 Periodic Reallocation of Premises. It is recognized
that an allocation of Premises at National occurred in 1989 and
is reflected in Exhibits N-B and D-B. It is recognized that an
allocation of Premises will occur at Dulles in conjunction with
the westerly and easterly expansions of the Main Terminal and
said allocation will be consistent with Section 6.04. In
addition to any other rights of the Authority, the Authority may,
effective the date which is nine (9) months prior to the date of
Substantial Completion of the new North Terminal at National and
on every third anniversary of the date of Substantial Completion
thereafter, reallocate the Airline's Premises and Equipment at
National Airport among the Signatory Airlines. In addition to
any other rights of the Authority, the Authority may, effective
on the date which is the third anniversary of the date of
Substantial Completion of the westerly expansion of the Main
Terminal at Dulles and on every third anniversary of that date
thereafter, reallocate the Airline's Premises and Equipment at
Dulles Airport among the Signatory Airlines. Such reallocations
may result in the reduction of the Airline's Premises and
Equipment and/or cause the Airline to vacate Premises and
relocate to other Premises. The reallocation of any Premises
shall be accomplished in accordance with a utilization study
conducted by the Authority which shall take into account the
following factors, among others:
(i) Each Signatory Airline's historical, current and
reasonably projected frequency of operations;
(ii) Each Signatory Airline's number of Enplaning and
Deplaning Passengers;
(iii) Each Signatory Airline's number of gates;
(iv) Each Signatory Airline's linear feet of ticket counter
space, square feet of holdroom space and square feet of other
Premises;
(v) The need to provide Premises and Equipment to a
Signatory Airline which is without adequate Premises and
Equipment leased directly from the Authority due to the
unavailability of such space;
(vi) The practicality of the Authority constructing
additional Premises within a reasonable period of time; and
(vii) The need for the Authority to manage aircraft and
passenger activity at the Airport in order to correct an
imbalanced use of Airport facilities, including Aircraft Parking
Positions, or to minimize or ameliorate congestion in the
Terminal or at the curbside.
17.02.1 In making such reallocations, the Authority shall
give the Airline, along with other Signatory Airlines at the
affected Airport, not less than thirty (30) days written notice
of the proposed space reallocations together with the Authority's
reasons for the reallocations. The Airline shall during the
thirty (30) day period be entitled to respond to the proposed
reallocations in writing. A final decision of the Authority
shall be in writing from the General Manager and contain the
basis therefor along with the effective date of a reallocation,
if any.
17.02.2 In implementing such reallocations, the Authority
shall attempt to minimize disruptions to the Airline's operations
and to preserve the operational integrity of the Airline's
Premises during and after such reallocation.
17.02.3 If, as a result of a reallocation under this
Section 17.02, the Airline is required to relocate all or a
portion of its operations, or to consolidate its operations in
its remaining Premises, the Authority shall determine the
reasonable cost of such relocation or consolidation, including
the unamortized cost on the basis of generally accepted
accounting principles of reallocated Airline Operating Facilities
and fixed improvements vacated by the Airline, and said costs
shall be borne by the Signatory Airline gaining the use of the
reallocated Premises or Equipment, and shall be paid to the
Airline.
17.02.4 The Authority shall revise the Exhibits hereto, as
appropriate, to reflect the resulting modifications of the
Agreement, and such amended Exhibits shall be substituted herein.
17.03 Voluntary Accommodation of a Requesting Airline.
17.03.1 The need exists to maximize the use of facilities
that are available on a long term basis to the signatory Airlines
and to facilitate the entry of new Scheduled Air Carriers and the
expansion of service by other Scheduled Air Carriers operating at
the Airports (hereinafter collectively referred to as "Requesting
Airline(s)"). The Authority hereby expresses a preference to
have, to the extent possible, a Requesting Airline's need to use
the Airport(s) accommodated by the Signatory Airlines on a
voluntary basis. The Airline's voluntary accommodation of a
Requesting Airline hereunder shall be subject to the prior
execution of a handling agreement or written sublease between the
Airline and such Requesting Airline setting forth mutually agreed
upon terms, conditions, rates and charges, which handling
agreement or sublease shall also require the written approval of
the Authority prior to the effectiveness thereof in accordance
with Article 16. Any such accommodation agreement made by the
Airline and the Requesting Airline may define the priority rights
of the Airline.
17.04 Accommodation on Exclusive and Joint Use Premises.
17.04.1 In the event the Authority receives a written
request from a Requesting Airline for a type of space leased on
an exclusive or joint use basis to others, and the Requesting
Airline demonstrates to the satisfaction of the Authority that it
has contacted all Signatory Airlines at a level above the local
station manager and has exhausted all reasonable efforts to find
reasonable accommodations for its proposed operations on the
Airport, the Authority shall serve written notice to all
Signatory Airlines of the Authority's intention to make a
determination, in not less than fifteen (15) calendar days, as to
how the Requesting Airline will be accommodated.
17.04.2 The Authority will be guided by all pertinent
factors, including Airline's present use and the use planned by
the Airline for such Premises in the one hundred eighty (180)
days immediately after the request, the present and planned
requirements for Air Transportation Companies that the Airline is
then accommodating or handling, the compatibility of such
Requesting Airline's proposed operations and work force with the
Airline's own operations and work force and those of other Air
Transportation Companies already using such facilities, and the
security of the Airline's and the Requesting Airline's
operations.
17.04.3 The Authority may request that planned uses and
requirements be documented and submitted in writing to the
Authority, and if the Airline requests, the Authority shall treat
such planned uses and requirements as confidential, proprietary
information.
17.04.4 If the Authority determines that the Requesting
Airline can be accommodated on the Airline's Exclusive or Joint
Use Premises, the Authority may (i) authorize in writing the
Requesting Airline to use the Premises leased to the Airline;
(ii) notify the Airline in writing of such authorization and the
effective date thereof; and (iii) provide to the Airline and to
such Requesting Airline a written statement specifying the
required terms and conditions, if any, including whether the
Requesting Airline may handle its aircraft and passengers with
its own employees or agents, except that the Authority shall not
prescribe the rates and charges to be imposed by the Airline upon
the Requesting Airline for any services provided by the Airline
to the Requesting Airline, other than as prescribed in Article
16.
17.04.5 If the Airline is directed to accommodate a
Requesting Airline in accordance with Section 17.04 and Section
17.06, the Airline shall make available to the Requesting
Airline for the Requesting Airline's use, the Airline's Exclusive
or Joint Use Premises or such portion thereof as shall be
determined by the Authority.
17.05 Accommodation on Preferential Use Premises.
17.05.1 In the event the Authority receives a request from
a Requesting Airline for a type of space leased on a preferential
basis to others, the Authority shall make a determination as to
how the Requesting Airline will be accommodated. Promptly
thereafter, the Authority shall notify the Airline of any planned
accommodation on the Airline's Preferential Use Premises;
provided, however, the Authority has determined that the
Requesting Airline's schedule is compatible with the Airline's
priority use as described in Paragraph 17.05.2 and would not
require the Airline to reschedule an existing arrival or
departure. The Airline shall, consistent with its right of
priority use, as described in Paragraph 17.05.2, accommodate such
Requesting Airline as directed by the Authority by providing
access to and use of its Preferential Use Premises.
17.05.2 If the Airline is directed to accommodate a
Requesting Airline under Paragraph 17.05.1, the Airline shall
have the priority use of such Premises at all times except for
each period commencing fifteen (15) minutes before the Requesting
Airline's next scheduled arrival at a gate and continuing until
the earlier of the Requesting Airline's scheduled departure from
the gate or forty-five (45) minutes (one hundred twenty (120)
minutes for a wide body aircraft) before the next scheduled use
of the gate by the Airline assuming there is no other gate
available to the Airline for such next scheduled use. The
Airline may make a change in its own scheduled use of said
facilities by giving the Requesting Airline who is being
accommodated at least thirty (30) days notice of any schedule
change that would require the Requesting Airline to change its
schedule or otherwise discontinue use of said facilities. In the
event of any conflicts due to schedule delays of either the
Airline or the Requesting Airline, such conflicts shall be
resolved in the manner least likely to inconvenience the
passengers of both airlines. Such conflicts shall be resolved by
the Airline and the Requesting Airline whenever possible. In the
absence of such resolution, the Authority shall resolve such
conflicts.
17.05.3 Accommodation on Preferential Use Premises shall
not be subject to the procedures of Section 17.04, but shall be
as directed by the Authority for the operations of aircraft by an
Air Transportation Company; provided, however, that the Authority
shall not require an accommodation under this Section 17.05
unless there is not a reasonable means of accommodating the Air
Transportation Company on Premises and Equipment obtained
directly from the Authority, and, if the Requesting Airline is a
Signatory Airline, there is not a reasonable means as determined
by the Authority, of accommodating the aircraft operations on
that Signatory Airline's Premises and Equipment.
17.05.4 For purposes of Paragraph 17.05.1, a direction by
the Authority shall be sufficient if given by the manager of the
Airport to the Airline's manager of its station for the Airport.
17.06 Use of Equipment. In connection with an accommodation
pursuant to Section 17.04 or 17.05, the Authority may also
authorize the Requesting Airline to use Equipment or airline-
owned equipment; provided, however, that whenever the Requesting
Airline is authorized to use airline-owned equipment, the
following conditions shall apply (i) such equipment must be
essential to the accommodation of the Requesting Airline (e.g.,
loading bridges and baggage claim and makeup equipment), and (ii)
when reasonably required, the Airline may require the Requesting
Airline to use the Airline's employees to operate such equipment.
17.07 Indemnification. During the period of accommodation by
a Requesting Airline pursuant to Sections 17.04 through 17.06,
the Airline shall be relieved of its obligation under this
Agreement to indemnify and save harmless the Authority, its
officers, directors, employees, or agents with regard to any
claim for property damage or personal injury arising out of the
accommodation of said Requesting Airline unless such damage or
injury is caused by the negligence or willful misconduct of the
Airline, its officers, directors, employees, or agents. The
Authority shall require the Requesting Airline to agree in
writing to indemnify the Authority and the Airline in the manner
and to the extent required of the Airline, pursuant to Article 12
hereof.
17.08 Payment by Requesting Airline. Payment by the
Requesting Airline to the Airline for accommodation on the
Airline's Premises or Equipment or Airline-owned property and for
services shall be reasonable and for the Premises or Equipment or
Airline-owned property shall not exceed one hundred fifteen
percent (115%) of the Airline's cost on a pro-rata basis. The
Airline may require a reasonable security deposit from the
Requesting Airline, not to exceed three (3) months' payments. In
the event of a payment default by the Requesting Airline, the
Airline may institute termination procedures in the following
manner (i) the Airline shall certify such payment default to the
Authority; (ii) the Authority shall have fifteen (15) days in
which to pursue appropriate remedies against the Requesting
Airline; and (iii) if, after such fifteen (15) day period, the
Requesting Airline remains in default, the Airline may terminate
the Requesting Airline's use of such Premises, Equipment and
airline-owned equipment upon fifteen (15) days' notice.
ARTICLE 18.
FEDERAL REQUIREMENTS
18.01 Relationship to Federal Lease. This Agreement shall be
and remain subordinate to the provisions of the Federal Lease
dated March 2, 1987, between the United States Department of
Transportation and the Authority, providing for the Authority's
lease of the Airports effective June 7, 1987. The Authority
agrees to provide the Airline written advance notice of any
material amendments to the Federal Lease. At any time after the
execution of this Agreement, the United States Department of
Transportation, or its successor, shall have the right to declare
this Agreement to be superior to the Federal Lease.
18.02 Other Government Agreements. This Agreement shall be
and remain subordinate to the provisions of any existing or
future agreements between the Authority and the United States
government or other governmental authority, relative to the
operation or maintenance of the Airports, the execution of which
has been or will be required as a condition precedent to the
granting of Federal or other governmental funds for the
development of the Airport, to the extent that the provisions of
any such existing or future agreements are generally required by
the United States or other governmental authority of other civil
airports receiving such funds. The Authority agrees to use its
best efforts to notify the Airline of any provision of which the
Authority becomes aware which would materially and adversely
modify the material terms of this Agreement.
18.03 Federal Government's Emergency Clause. All provisions
of this Agreement shall be subordinate to the rights of the
United States of America to operate the Airports or any portion
thereof during time of war or declared national emergency in
accordance with established lawful procedures. Such rights shall
supersede any provision of this Agreement that is inconsistent
with the operation of the Airports by the United States of
America during a time of war or national emergency.
18.04 Nondiscrimination.
18.04.1 The Airline for itself, its personal
representatives, successors in interest, and assigns, as a part
of the consideration hereof, does hereby agree as a covenant
running with the land that (i) no person on the grounds of race,
color or national origin shall be excluded from participation in,
denied the benefits of, or be otherwise subjected to
discrimination in the use of Premises; (ii) in the construction
of any improvements on, over, or under Premises and the
furnishing of services thereon, no person on the grounds of race,
color or national origin shall be excluded from participation in,
denied the benefits of, or be otherwise subjected to
discrimination; and (iii) the Airline shall use the Premises in
compliance with all other requirements imposed by or pursuant to
the Airport and Airway Improvement Act of 1982, as amended or
superseded, and any regulations issued thereunder, as well as in
compliance with Title VI of the Civil Rights Act of 1964 and 49
CFR, Subtitle A, Part 21, Nondiscrimination in Federally Assisted
Programs of the United States Department of Transportation, as
said Statute and regulations may be amended.
18.04.2 The Airline acknowledges that the provisions of 49
CFR Part 23, "Participation by Minority Business Enterprise in
Department of Transportation Programs," as said regulations may
be amended, and such other similar regulations that may be
enacted governing Disadvantaged Business Enterprises, may be
applicable to the activities of the Airline under the terms of
this Agreement, unless exempted by said regulations, and hereby
agrees to comply with the applicable regulations. These
requirements may include, but not be limited to, compliance with
Disadvantaged Business Enterprise or Minority Business
Enterprise, as such terms are defined in 49 USC 2204, 49 CFR
23.5, or such other statutes or regulations as may be enacted
governing minority or disadvantaged business enterprises,
participation goals, the keeping of certain records of good faith
compliance efforts, which would be subject to review by the
various agencies, the submission of various reports and, if so
directed, the contracting of specified percentages of goods and
services contracts to Minority and Disadvantaged Business
Enterprises.
18.05 Airfield and Sterile Area Security. The Airline
expressly acknowledges its responsibility to provide security for
the sterile area in accordance with 14 CFR Part 107, "Airport
Security," and 14 CFR Part 108, "Airplane Operator Security," as
such may be amended from time to time, and with all rules and
regulations of the Authority concerning security procedures,
including each Airport's approved security program.
18.06 Airport Certification. The Airline shall not operate
at the Airports in a manner that prevents or impairs the
Authority's ability to meet and maintain compliance with 14 CFR
Part 139, "Certification and Operations Land Airports Serving
Certain Air Carriers," and other requirements for obtaining, and
maintaining, an Airport Operating Certificate from the FAA.
ARTICLE 19.
GENERAL PROVISIONS
19.01 Rights Reserved to the Authority. All rights not
specifically granted to the Airline by this Agreement are
reserved to the Authority.
19.02 Actions By the Authority and the Signatory Airlines.
Whenever in this Agreement the doing of any act or the exercise
of any right by the Airline is conditioned upon receipt of
approval, permission, agreement or authorization, the Authority
shall promptly render its decision and shall neither unreasonably
withhold nor unreasonably condition its approval of a request by
the Airline. Whenever in this Agreement any approval is required
from the Airline or from a Majority-in-Interest, such decision
shall be promptly rendered and shall not be unreasonably withheld
or conditioned.
19.03 Majority-in-Interest Approval Procedures. The
Authority shall initiate the Majority-in-Interest approval
process by delivering the request for approval to the Signatory
Airlines at the appropriate Airport for the appropriate Cost
Center. The request will be deemed to have been approved unless
the Authority receives, within thirty (30) days, written notice
of disapproval from the Signatory Airlines representing a
Majority-in-Interest at such Airport for such Cost Center.
19.04 Authority Not Liable. Except as specifically provided
for in this Agreement, the Authority shall not be under any duty
or obligation to the Airline to repair or maintain the Premises,
or any portion thereof, or any facilities or equipment
constructed thereon. The Authority shall not be responsible or
liable to the Airline for any claims for compensation for any
losses, damages, or injury, including lost profits, sustained by
the Airline resulting from failure of any water supply, heat, air
conditioning, electrical power, or sewer or drainage facility, or
caused by the natural physical conditions on the Airports,
whether on the surface or underground, including stability,
moving, shifting, settlement of ground, or displacement of
materials by fire, water, windstorm, tornado, act of God, or
state of war, civilian commotion or riot, or any other cause or
peril beyond the control of the Authority, except to the extent
covered by the Authority's insurance.
19.05 Laws, Regulations, and Compliance.
19.05.1 Laws and Regulations. The Airline and the
Authority shall each comply with all applicable Federal, state,
and local laws, codes, regulations, including regulations of the
Authority, ordinances, rules, and orders now or hereafter in
force; provided, however, that the Airline or the Authority may,
without being considered in breach hereof, contest any of the
foregoing as long as such contest is diligently commenced and
prosecuted by the Airline or the Authority, as the case may be.
19.05.2 Safety and Fire Regulations The Airline shall
conduct its operations and activities under this Agreement in
compliance with all safety regulations and directives of the
Authority and applicable Federal, state, and local laws. The
Airline shall procure and maintain such fire prevention and
extinguishing devices as required by the Authority and shall at
all times be familiar with and comply with the fire regulations
and orders of the Authority.
19.05.3 Security. The Airline understands that the police
security protection provided by the Authority is finite and
limited to that generally provided to any other airline or
business on the Airports and expressly acknowledges that any
special security measures deemed necessary or desirable for
additional protection of the Premises, equipment, improvements,
and the Airline's personal property, and that of its employees
and invitees shall be the sole responsibility of the Airline and
shall involve no cost to the Authority.
19.05.4 Compliance By Other Tenants. The Authority shall,
whenever possible, make reasonable efforts to obtain uniform
compliance with the Authority's rules and regulations; however,
the Authority shall not be liable to the Airline for any
violation or non-observance of such rules and regulations by any
user, tenant, concessionaire, other Air Transportation Company,
invitee, licensee, or trespasser at the Airports nor shall such
violation or non-observance by a user, tenant, concessionaire,
other Air Transportation Company, invitee, licensee, or
trespasser at the Airports, constitute a waiver of the Airline's
obligation to comply with Authority rules and regulations.
19.06 Inspection. The Airline shall allow the Authority's
authorized representatives entry to the Premises for the purpose
of examining and inspecting said Premises, for purposes
necessary, incidental to, or connected with the performance of
the Authority's rights and obligations under this Agreement or in
the exercise of its governmental functions. Except in the case
of an emergency, the Authority shall conduct such inspections
during reasonable business hours, and in the presence of the
Airline's representative.
19.07 Relationship of the Parties. The Airline is and shall
be deemed to be an independent contractor and operator
responsible to all parties for its respective acts and omissions,
and the Authority shall in no way be responsible therefor.
Nothing in this Agreement shall be construed as making the
Airline an agent or representative of the Authority for any
purpose whatsoever.
19.08 Covenant Not to Grant More Favorable Terms. The
Authority shall accord all Signatory Airlines substantially equal
treatment and shall not hereafter, during the Period of this
Agreement, offer to other Scheduled Air Carriers more favorable
rates or terms and conditions at the Airports than those provided
in this Agreement for comparable rights and privileges, unless
the more favorable rates and conditions are offered to the
Airline at the same time; provided, however, nothing herein shall
be construed to limit the Authority's rights to distinguish or
discriminate among different classes of Air Transportation
Companies, or to charge differential rental rates; provided,
further, the Airline acknowledges the Surviving Agreements in
Exhibits N-K and D-K, that these Surviving Agreements will be
accorded priority in the event of a conflict between the terms of
a Surviving Agreement and this Agreement, and the Airline agrees
that more favorable treatment of one or more Signatory Airlines
may result from the implementation of a Surviving Agreement and
said treatment shall not be a violation of this covenant
specifically or this Agreement generally.
19.09 Quiet Enjoyment. The Authority agrees that, upon
payment of the rentals, fees and charges and performance of the
covenants and agreements on the part of the Airline to be
performed hereunder, the Airline shall peaceably have and, in
accordance with the terms hereof, enjoy the Premises and all
rights, licenses, services, and privileges of the Airports and
their appurtenances granted herein.
19.10 No Individual Liability. No member, officer, agent,
director, or employee of the Authority or the Airline shall be
charged personally, or held contractually liable by or to the
other party, under the terms or provisions of this Agreement, or
because of any breach thereof, or because of the execution or
attempted execution of this Agreement.
19.11 Waiver of Performance. The failure of the Authority or
the Airline, in any one or more instances, to invoke a provision,
term, covenant, reservation, condition, or stipulation of this
Agreement, or to enforce or take action to enforce, or to demand
performance by the other party hereto, or to insist upon a strict
performance by the other of any of the provisions, terms,
covenants, reservations, conditions or stipulations contained in
this Agreement shall not be considered a waiver or relinquishment
of the rights to invoke, enforce, demand, or insist thereon, but
the same shall continue and remain in full force and effect, and
no waiver by either party of any provision, term, covenant,
reservation, condition, or stipulation hereof shall be deemed to
have been made in any instance unless expressed in writing. In
the event any agreement contained in this Agreement is breached
by either party and thereafter waived by the other party, such
waiver shall be limited to the particular breach so waived and
shall not be deemed to be a waiver of any other breach hereunder.
19.12 Force Majeure. Except as herein provided, neither the
Authority nor the Airline shall be deemed to be in default
hereunder if either party is prevented from performing any of the
obligations, other than the payment of rentals, fees and charges
hereunder, by reason of strikes, boycotts, labor disputes,
embargoes, shortages of energy or materials, acts of God, acts of
the public enemy, riots, rebellion, or sabotage.
19.13 Severability. If any article, section, provision,
term, or condition of this Agreement is held to be invalid by a
court of competent jurisdiction, the remainder of this Agreement,
including the remaining rights and obligations of the Authority
and the Airline, shall not be affected thereby.
19.14 Subordination to Indenture.
19.14.1 This Agreement and all rights granted to the
Airline hereunder are expressly subordinated and subject to the
lien and provisions of the pledges, transfer, hypothecation or
assignment made by the Authority in any prior Indenture, or
Indenture hereafter executed by the Authority, to issue Bonds.
The Authority expressly reserves the right to enter into such
Indentures and to make such pledges and grant such liens and
enter into such covenants as it may deem necessary or desirable
to secure and provide for the payment of Bonds, including the
creation of reserves therefor; provided, however, that no such
pledges, liens, covenants, or reserves shall have a material
adverse affect on the Airline.
19.14.2 The Airline understands that the Authority is and
will be the issuer of Bonds, the interest on which, with the
exception of taxable Bonds, is intended to be excludable from
gross income from the holders of such Bonds for Federal income
tax purposes under the Internal Revenue Code of 1986. The
Airline agrees that it will not act, or fail to act (and will
immediately cease and desist from any action, or failure to act)
with respect to the use of the Premises and Equipment leased to
the Airline under this Agreement, if such act or failure to act
may cause the Authority to be in noncompliance with the
provisions of the Internal Revenue Code of 1986 as they may be
amended, supplemented, or replaced, or the regulations or rulings
issued thereunder, nor will the Airline take, or persist in, any
action or omission which may cause the interest on the tax-exempt
Bonds not to be excludable from the gross income of the holders
thereof for Federal income tax purposes.
19.15 Prohibition Against Exclusive Rights. It is hereby
specifically understood and agreed that nothing herein contained
shall be construed to grant or authorize the granting of an
exclusive right to provide aeronautical services to the public as
prohibited by Section 308(a) of the Federal Aviation Act of 1958,
as amended, and the Authority reserves the right to grant to
others the privileges and right of conducting any or all
activities of an aeronautical nature.
19.16 Airline Mergers and Consolidations. If the Airline
consolidates with or merges into another corporation or permits
one or more other corporations to consolidate with or merge into
it, or transfers or conveys all or substantially all of its
property, assets and licenses to another corporation, the
corporation resulting from or surviving such merger (if other
than the Airline) or consolidation or the corporation to which
such transfer or conveyance is made shall (i) expressly assume in
writing and agree to perform all of the Airline's obligations
hereunder, (ii) be qualified to do business in the Commonwealth
of Virginia, and (iii) if such corporation shall not be organized
and existing under the laws of the United States of America or
any state or territory thereof or the District of Columbia,
furnish to the Authority an irrevocable consent to service of
process in, and to the jurisdiction of the courts of, the
Commonwealth of Virginia with respect to any action or suit, in
law or at equity, brought by the Authority to enforce the
Agreement. If the Airline is the surviving corporation in such a
merger, the express assumption referred to in the preceding
sentence shall not be required.
19.17 No Third Party Beneficiaries. This Agreement is for
the benefit of the parties hereto only and is not intended to and
shall not create any rights in or confer any benefits upon any
person or entity (including any other Signatory Airline) other
than the parties hereto.
19.18 Distribution of Funds Upon Termination. All amounts
remaining in any fund or account, including any debt service
reserve, established under any Indenture entered into by the
Authority shall be distributed or applied in accordance with the
provisions of the Indenture under which such fund or account was
established. All amounts in any other fund or account
established in connection with this Agreement shall be
distributed to the Authority, which may use such amounts for any
lawful purpose.
19.19 The Airline hereby irrevocably elects (binding the
Airline and all successors-in-interest under the Agreement) not
to claim depreciation or any investment tax credit with respect
to any Project or Additional Project financed with the proceeds
of Bonds.
19.20 Notices. Except as specifically provided elsewhere in
this Agreement, any notice given under the provisions of this
Agreement shall be in writing and shall be delivered personally
or sent by certified or registered mail, postage prepaid --
To Authority:General Manager
Metropolitan Washington Airports
Authority
44 Canal Center Plaza
Alexandria, Virginia 22314
To Airline:
or to such other respective addresses as the parties may
designate to each other in writing from time to time. Notice by
certified or registered mail shall be deemed given three (3) days
after the date that such notice is deposited in a United States
Post Office.
19.21 Governing Law. This Agreement shall be governed by and
in accordance with the laws of the Commonwealth of Virginia.
19.22 Venue. To the extent allowed by law, the venue for any
action arising from this Agreement shall be Arlington County,
Virginia, for National Airport and Loudoun County, Virginia, for
Dulles Airport.
19.23 Capacity to Execute. The individuals executing this
Agreement personally warrant that they have full authority to
execute this Agreement on behalf of the Airline or the Authority
as the case may be.
19.24 Execution. The parties hereto acknowledge that they
have thoroughly read this Agreement, including any exhibits or
attachments hereto and have sought and received whatever
competent advice and counsel was necessary for them to form a
full and complete understanding of all rights and obligations
herein. The parties further acknowledge that this Agreement is
the result of extensive negotiations between the parties and
shall not be construed against the Authority by reason of the
preparation of this Agreement by the Authority.
19.25 Clear Title. The Authority covenants that at the
granting and delivery of this Agreement, it has the right and
authority to lease the Premises and Equipment to the Airline as
set forth in this Agreement.
19.26 Binding Effect. The terms, conditions, and covenants
of this Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and upon their successors, assigns and
sublessees, if any. This provision shall not constitute a waiver
of any conditions regarding assignment or subletting contained in
this Agreement.
19.27 Entirety of Agreement The parties agree that this
Agreement sets forth the entire Agreement between the parties,
and that there are no promises or understandings other than those
stated herein. Except as otherwise provided in this Agreement,
none of the provisions, terms, and conditions contained in this
Agreement may be added to, modified, superseded, or otherwise
altered, except by written instrument executed by the parties
hereto.
IN WITNESS WHEREOF, this Airport Use Agreement and Premises
Lease is duly executed by the AUTHORITY and WESTAIR COMMUTER
AIRLINES as of the dates shown below, intending themselves to be
legally bound hereby.
WESTAIR COMMUTER AIRLINES
By:
Title:
Date:
METROPOLITAN WASHINGTON
AIRPORTS AUTHORITY
By:
General Manager
Date:
SECRETARY'S CERTIFICATE
I, __________________________________, certify that I am the
Secretary of the Corporation named as Airline herein; that
__________________________________, who signed this Agreement on
behalf of the Airline was then ______________________________ of
said Corporation; that said Agreement was duly signed for in
behalf of said Corporation by authority of its governing body,
and within the scope of its corporate powers.
_______________________________
______
(Secretary's Signature
(Corporate Seal)
WA990750.097/2+
WHEREAS, the METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
(hereinafter referred to as the "Authority") and WESTAIR COMMUTER
AIRLINES (hereinafter referred to as the "Airline") have entered
into Agreement No. 4-90-A040, providing for the use of facilities
and lease of space at Washington National Airport and Washington
Dulles International Airport; and
WHEREAS, a prior agreement between the Authority and other
airlines operating at Washington Dulles expires by its own terms
on December 31, 1990, and certain passenger boarding gates and
other premises revert to the Authority and become available for
lease; and
WHEREAS, the Airline has been utilizing one of the passenger
gates under a sublease with another airline, and desires to
continue the lease of the premises from the Authority; and
WHEREAS, the Authority agrees to lease the premises to the
boarding Airline.
NOW, THEREFORE, the Parties hereto agree as follows:
As provided for in subparagraph 6.05, Modification of
Premises, Area E-270, consisting of 1,459 square feet of space
and known as the Gate A-i Hold Room, is added to the Airline's
leased premises at Washington Dulles, effective January 1, 1991,
as shown on the attached Exhibits D-B-1A and D-B-1, p.10.
All other terms and conditions of the Agreement remain
unchanged.
IN WITNESS WHEREOF, the Parties hereto have executed this
Amendment as of the dates shown below.
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By
Charles C. Erhard, Manager
Finance and Administration Division
Washington Dulles International Airport
Date
WESTAIR COMMUTER AIRLINES
By
Title
Date
SECRETARY'S CERTIFICATE
I, ___________________, certify that I am the secretary of
the corporation named as the Airline herein; that
___________________, who signed this amendment on behalf of the
Airline, was then _________________ of said corporation; that
said amendment was duly signed for and on behalf of said
corporation by authority of its governing body, and is within the
scope of its corporate powers.
______________________________
(Corporate Seal)
Secretary's Signature
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
WASHINGTON DULLES INTERNATIONAL AIRPORT
AIRLINE PREMISES EXHIBIT
The following space is leased to ATLANTIC COAST AIRLINES, a
division of WESTAIR COMMUTER AIRLINES, as provided for in
this Agreement:
PAP (P) RENTAL RATE
SQUARE
AREA/NUMBER/PURPOSE or PER SQUARE ANNUAL
FEET FOOT
TAP (T) RATE
PER ANNUM
Type 2 Space - Ticket Offices; Administrative and Upper Level
Offices; VIP Rooms; Hold Rooms
Exhibit D-B-1, p.5
W-200 T 169
Administrative
Office
W-201 T 213
Administrative
Office
W-202 T 260
Administrative
Office
W-203 T 84
Administrative
Office
W-210 Gate A-11 T 1,833
Hold Room
W-220 Gate A-12 1,833
Hold Room
Exhibit D-B-1, p.10
E-270 Gate A-1 Hold T 1,459
Room
TOTAL Type 2 5,851 $ 83.37 $487,79
Space 7.87
TOTAL ANNUAL RENTAL EFFECTIVE $487,79
1/1/91: 7.87
TOTAL MONTHLY RENTAL EFFECTIVE $
1/1/91: 40,649.
82
THIS AMENDMENT NO. 2 is made effective as of January 1,
1992, by and between the METROPOLITAN WASHINGTON AIRPORTS
AUTHORITY ("Authority") and ATLANTIC COAST AIRLINES, a
California corporation with its principal office in
Sterling, Virginia ("ACAI"), and ATLANTIC COAST AIRLINES, a
Delaware corporation, with its principal office in Sterling,
Virginia ("ACA") (collectively referred to in this Amendment
as the ("Airline") to Agreement No. 4-90-A040 (the
"Agreement").
WHEREAS, the Agreement provides that the Airline lease
the aircraft parking positions connected to the preferential
use holdrooms leased by the Airline under the Agreement.
NOW, THEREFORE, the Parties hereto agree as follows:
As provided for in Article 8.04, Aircraft Parking
Position Charges and Dulles Jet Apron Fees, the preferential
use aircraft parking positions for Gates A-1, A-11, and A-
12, all narrow-bodied aircraft positions, are added to the
Airline's leased premises at Washington Dulles, effective
January 1, 1992, as shown on the attached Exhibit D-B-1A and
Exhibit D-B-1, p.5 and 10.
All other terms and conditions of the Agreement remain
unchanged.
WITNESS the following signatures:
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By
Charles C. Erhard, Manager
Finance and Administration Division
Washington Dulles International Airport
ATLANTIC COAST AIRLINES,
a California Corporation
By
Title
SECRETARY'S CERTIFICATE
I, ___________________, certify that I am the Ass't.
secretary of the corporation named as Atlantic Coast
Airlines, Inc., herein; that ___________________, who signed
this amendment on behalf of the Airline, was then
_________________ of said corporation; that said amendment
was duly signed for and on behalf of said corporation by
authority of its governing body, and is within the scope of
its corporate powers.
______________________________
(Corporate Seal)
Secretary's Signature
ATLANTIC COAST AIRLINES,
a California Corporation
By
Title
SECRETARY'S CERTIFICATE
I, ___________________, certify that I am the Ass't.
secretary of the corporation named as Atlantic Coast
Airlines, Inc., herein; that ___________________, who signed
this amendment on behalf of the Airline, was then
_________________ of said corporation; that said amendment
was duly signed for and on behalf of said corporation by
authority of its governing body, and is within the scope of
its corporate powers.
______________________________
(Corporate Seal)
Secretary's Signature
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
WASHINGTON DULLES INTERNATIONAL AIRPORT
AIRLINE PREMISES EXHIBIT
The following space is leased to ATLANTIC COAST AIRLINES as
provided for in this Agreement:
PAP (P) RENTAL RATE
SQUARE
AREA/NUMBER/PURPOSE or PER SQUARE ANNUAL
FEET FOOT
TAP (T) RATE
PER
ANNUM
Type 2 Space - Ticket Offices; Administrative and Upper Level
Offices; VIP Rooms; Hold Rooms
Exhibit D-B-1, p.5
W-200 T 169
Administrative
Office
W-201 T 213
Administrative
Office
W-202 T 260
Administrative
Office
W-203 T 84
Administrative
Office
W-210 Gate A-11 T 1,833
Hold Room
W-220 Gate A-12 1,833
Hold Room
Exhibit D-B-1, p.10
E-270 Gate A-1 Hold T 1,459
Room
TOTAL Type 2 5,851 $ 61.99 $362,70
Space 3.49
Aircraft Parking
Positions
Exhibit D-B-1, p.5
Gate A-11 Narrow- T $13,750
body .32
Gate A-12 Narrow- T $13,750
body .32
Exhibit D-B-1, p.10
Gate A-1 Narrow- T $13,750
body .32
TOTAL Aircraft Parking $41,250
Position Charges .96
TOTAL ANNUAL RENTAL EFFECTIVE $403,95
1/1/91: 4.45
TOTAL MONTHLY RENTAL EFFECTIVE $
1/1/91: 33,662.
87
Mr. Barron Beneski
Atlantic Coast Airlines
1 Export Drive
Sterling, VA 22170
Dear Mr. Beneski:
Enclosed is proposed Amendment No. 3 to Agreement No.
4-90-A040 providing for the lease of the Gate A-2 passenger
holdroom and the associated aircraft parking position at
Washington Dulles.
Please have three copies of the amendment signed, your
Secretary's Certificate completed, and return the copies to
me. The extra copy is for your file. When the amendment is
executed on behalf of the Authority, a fully executed copy
will be returned to you.
If you have any questions about this issue, please call
James Flanagan of my staff on 703-661-2911.
Sincerely,
Keith W. Meurlin
Airport Manager
Enclosures
KWM:lge
MA-230A:JMFlanagan & MA-232:DSMorris:lge:661-2911:4/13/93
Ltr revised per MA-7:DMorris:lge:661-2907:6/14/93
cc: MA-1/2, 20, 22(Wenneson) w/enc., 50, 53 w/enc.,
130 w/enc.,
200(2), 230
(WP.Jim-1--AM3-A040.con)
THIS AMENDMENT NO. 3 is made effective as of April
1, 1993, by and between the METROPOLITAN WASHINGTON AIRPORTS
AUTHORITY ("Authority") and ATLANTIC COAST AIRLINES, INC., a
California corporation with its principal office in
Sterling, Virginia ("ACAI"), and ATLANTIC COAST AIRLINES, a
Delaware corporation, with its principal office in Sterling,
Virginia ("ACA") (collectively referred to in this Amendment
as the "Airline") to Agreement
No. 4-90-A040 (the "Agreement") as amended on January 10,
1992.
WHEREAS, the Airline desires to lease an
additional passenger boarding gate and associated aircraft
parking position to handle an increase in its operations at
Washington Dulles; and
WHEREAS, the Authority agrees to lease such space
and gate, which had previously been designated as airline
common use assigned premises, to the Airline.
NOW, THEREFORE, the Parties hereto agree as
follows:
As provided for in subparagraph 6.05, Modification
of Premises, Area E-260, consisting of 1,877 square feet of
space and known as the Gate A-2 Hold Room, and Aircraft
Parking Position A-2, a narrow-body aircraft position, is
added to the Airline's leased premises at Washington Dulles,
effective April 1, 1993, as shown on the attached Exhibits D-
B-1A and D-B-1, p.10.
All other terms and conditions of the Agreement
remain
unchanged.
Amendment No. 3
Agreement No. 4-90-A040
Page 1 of 3 Pages
WITNESS the following signatures:
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By
Charles C. Erhard, Manager
Finance and Administration Division
Washington Dulles International Airport
ATLANTIC COAST AIRLINES, INC.
a California Corporation
By
Title
SECRETARY'S CERTIFICATE
I, , certify that I am
the secretary of the corporation named as Atlantic Coast
Airlines, Inc., herein; that , who
signed this amendment on behalf of the Airline was then
of said corporation; that said amendment was duly signed for
and on behalf of said corporation by authority of its
governing body, and is within the scope of its corporate
powers.
(Corporate Seal)
Secretary's Signature
Amendment No. 3
Agreement No. 4-90-A040
Page 2 of 3 Pages
ATLANTIC COAST AIRLINES
a Delaware Corporation
By
Title
SECRETARY'S CERTIFICATE
I, , certify that I am
the secretary of the corporation named as Atlantic Coast
Airlines herein; that , who signed
this amendment on behalf of the Airline was then
of said corporation; that said amendment was duly signed for
and on behalf of said corporation by authority of its
governing body, and is within the scope of its corporate
powers.
(Corporate Seal)
Secretary's Signature
THIS AMENDMENT NO. 4 is made effective as of May 1,
1994, by and between the METROPOLITAN WASHINGTON AIRPORTS
AUTHORITY ("Authority") and ATLANTIC COAST AIRLINES, INC., a
California corporation with its principal office in
Sterling, Virginia ("ACAI"), and ATLANTIC COAST AIRLINES, a
Delaware corporation, with its principal office in Sterling,
Virginia ("ACA") (collectively referred to in this Amendment
as the "Airline").
WHEREAS, the Authority has constructed an unenclosed,
covered baggage sort facility which the Airline desires to
lease to support its operations at Washington Dulles; and
WHEREAS, the Authority desires to develop a portion of
the Airline's Gate A-11 passenger holdroom for use as a food
and beverage concession area, and agrees to reduce the
Airline's leased premises to reflect this change.
NOW, THEREFORE, the Parties hereto agree as follows:
As provided for in subparagraph 6.06, Modification of
Premises, the following changes are made to the Airline's
leased premises at Washington Dulles, effective May 1, 1994,
as shown on the attached Exhibits D-B-1A (IAD) and D-B-1,
pages 5 and 16a:
1. Add Area TB-400 consisting of 9,979 square feet of
Type 6 unenclosed, covered space for a baggage sort
facility.
2. Add Area TB-401, consisting of 7,258 square feet
of Type 7 uncovered equipment storage area adjacent to the
baggage sort facility.
3. Reduce the size of Type 2 Holdroom W-210 by
127 square feet to 1,706 square feet, for use as a food and
beverage concession area.
All other terms and conditions of the Agreement remain
unchanged.
IN WITNESS WHEREOF, the Parties hereto have executed
this Amendment as of the dates shown below.
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By _________________________________________________
Charles C. Erhard, Manager
Finance and Administration Division
Washington Dulles International Airport
Date _______________________________________________
ATLANTIC COAST AIRLINES, INC.
a California Corporation
By _________________________________________________
Title ________________________________________________
Date ________________________________________________
SECRETARY'S CERTIFICATE
I, _______________________, certify that I am the Chief
Financial Officer of the corporation named as Atlantic Coast
Airlines, Inc., herein; that Kerry Skeen, who signed this
amendment on behalf of the Airline was then President of
said corporation; that said amendment was duly signed for
and on behalf of said corporation by authority of its
governing body, and is within the scope of its corporate
powers.
_________________________ (Corporate Seal)
Chief Financial Officer & Assistant
Secretary's Signature
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
WASHINGTON DULLES INTERNATIONAL AIRPORT
AIRLINE PREMISES EXHIBIT
The following space is leased to ATLANTIC COAST AIRLINES as
provided for in this Agreement:
PAP (P) RENTAL
RATE
or SQUARE PER SQURE FOOT
ANNUAL
AREA NUMBER/PURPOSE TAP (T) FEET PER ANNUM
RENTAL
Type 2 Space - Ticket Offices; Administrative and
Upper Level Offices;
VIP Rooms; Holdrooms
Exhibit D-B-1, p.5
W-200 Administrative Office T 169
W-201 Administrative Office T 213
W-202 Administrative Office T 260
W-203 Administrative Office T 84
W-210 Gate A-11 Holdroom T 1,706
W-220 Gate A-12 Holdroom T 1,833
Exhibit D-B-1, p.10
E-260 Gate A-2 Holdroom T 1,877
E-270 Gate A-1 Holdroom T 1,459
TOTAL Type 2 Space 7,601 $65.25
$495,965.25
Type 6 Space - Unenclosed Covered Area
Exhibit D-B-1, p.16a
Area TB-400 Baggage Sort Facility T 9,979
TOTAL Type 6 Space 9,979 $4.58
$45,703.82
Type 7 Space - Uncovered Equipment Storage Area
Exhibit D-B-1, p.16a
Area TB-401 Baggage Equipment
Staging Area T 7,258
TOTAL Type 7 Space 7,258 $1.15
$8,346.70
Aircraft Parking Positions
Exhibit D-B-1, p.5
Gate A-11 Narrow-body T
$18,103.00
Gate A-12 Narrow-body T
$18,103.00
Exhibit D-B-1, p.10
Gate A-1 Narrow-body T
$18,103.00
Gate A-1 Narrow-body T
$18,103.00
TOTAL Aircraft Parking Charges
$72,412.00
TOTAL ANNUAL RENTAL EFFECTIVE 5/1/94:
$622,427.77
TOTAL MONTHLY RENTAL EFFECTIVE 5/1/94: $
51,868.98
Ms. Amy L. Patterson
Manager, Properties and Facilities
Atlantic Coast Airlines
1 Export Drive
Sterling, VA 22170
Dear Ms. Patterson:
Enclosed is proposed Amendment No. 5 to Agreement No. 4-
90-A040, providing for the lease of operations building
space at Washington Dulles.
Please have three copies of the amendment signed, the
Secretary's Certificate completed, and return the copies to
me. Upon execution by the Authority, a fully executed copy
will be returned to you. The extra copy is for your files.
If you have any questions about this issue, please call
James Flanagan of my staff
on 703-572-2911.
Sincerely,
Keith W. Meurlin
Airport Manager
Enclosure (4)
KWM:lge
MA-230A:JMFlanagan:lge:572-2911:12/13/96 (WP61WIN--
H:\JMF\AM5-A040.CON)
cc: MA-1/2, -4 w/enc., -22(Wenneson) w/enc., -130 w/enc., -
200(2), 230
THIS AMENDMENT NO. 5 is made effective as of December 1, 1996, by
and between the METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
("Authority") and ATLANTIC COAST AIRLINES, INC., a California
corporation with its principal office in Sterling, Virginia
("ACAI"), and ATLANTIC COAST AIRLINES, a Delaware
corporation, with its principal office in Sterling, Virginia
("ACA") (collectively referred to in this Amendment as the
"Airline").
WHEREAS, the Airline desires to lease operations
building Premises at Washington Dulles.
NOW, THEREFORE, the Authority and the Airline
hereto agree as follows:
1. As provided for in Section 6.05, Modification
of Premises, the Airline's Premises are amended, effective
December 1, 1996, to add Area BR-201C and a 13.3 percent share
of Joint Use Areas BR-200 and BR-210, containing a total of
1,130 square feet of space, as shown on the enclosed Exhibit D-
B-1, page 11A. The enclosed Exhibit D-B-1A, dated December 1,
1996, reflects this change and replaces Exhibit D-B-1A, dated
October 1, 1996.
2. In accordance with paragraph 7.01.5,, the
Airline agrees to be responsible for:
a. Interior maintenance, including janitorial
services, for the joint use utility, hallway, and restroom
premises Areas BR-200 and BR-210, in common with the other
tenants leasing space in the Bravo Ramp operations building.
b. Maintenance and repair of the heating,
ventilation, and air-conditioning (HVAC) production and
distribution system exclusively servicing Area BR-201C,
in common with the other tenants leasing space in Areas BR-
201B and BR-201A.
All other terms and conditions of the Agreement
remain unchanged.
Amendment No. 5
Agreement No. 4-90-A040
Page 1 of 2 Pages
IN WITNESS WHEREOF, the Parties hereto have
executed this Amendment as
of the dates shown below.
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By
Charles C. Erhard, Manager
Finance and Administration Division
Washington Dulles International Airport
Date
ATLANTIC COAST AIRLINES, INC.
a California Corporation
By
Title
Date
SECRETARY'S CERTIFICATE
I,
, certify that I am the secretary of the corporation named
as Atlantic Coast Airlines, Inc., herein; that
, who signed this Amendment on behalf of the Airline was
then of said
corporation; that said Amendment was duly signed for and on
behalf of said corporation by authority of its governing
body, and is within the scope of its corporate powers.
(Corporate Seal)
Secretary's Signature
Ms. Amy L. Patterson
Manager, Properties and Facilities
Atlantic Coast Airlines
1 Export Drive
Sterling, VA 22170
Dear Ms. Patterson:
Enclosed is proposed Amendment No. 6 to Agreement No. 4-
90-A040, providing for the deletion of your baggage sort
building and the associated equipment staging area. As
previously agreed, the Authority is demolishing the building
and the area will be restored for aircraft parking use.
Please have three copies of the amendment signed, the
Secretary's Certificate completed, and return the copies to
me. Upon execution by the Authority, a fully executed copy
will be returned to you. The extra copy is for your files.
If you have any questions about this issue, please call
James Flanagan of my staff
on 572-2911.
Sincerely,
Keith W. Meurlin
Airport Manager
Enclosure (4)
KWM:lge
MA-230A:JMFlanagan:lge:572-2911:7/1/97 (WP61--
H:\JMF\AM6-A040.CON)
cc: MA-1/2, -4 w/enc., -22(Wenneson) w/enc., -130 w/enc., -
200(2), 230
THIS AMENDMENT NO. 6 is made effective as of
July 1, 1997, by and between the METROPOLITAN WASHINGTON
AIRPORTS AUTHORITY ("Authority") and ATLANTIC COAST
AIRLINES, INC., a California corporation with its principal
office in Sterling, Virginia ("ACAI"), and ATLANTIC COAST
AIRLINES, a Delaware corporation, with its principal office
in Sterling, Virginia ("ACA") (collectively referred to in
this Amendment as the "Airline").
WHEREAS, the Authority and the Airline have agreed
to demolish an unenclosed, covered baggage sort facility
which has been leased to the Airline, to provide additional
aircraft parking area.
NOW, THEREFORE, the Authority and the Airline
hereto agree as follows:
1. As provided in Section 6.05 of the Agreement,
the Airline's Premises are amended, effective July 1, 1997, to
delete Area TB-400, containing 9,979 square feet of Type 6
covered space, and Area TB-401, containing 7,258 square feet
of Type 7 uncovered space.
The enclosed Exhibit D-B-1A (IAD), dated July 1, 1997,
reflects this change and replaces
Exhibit D-B-1A (IAD), dated December 1, 1996.
All other terms and conditions of the Agreement
remain unchanged.
Amendment No. 6
Agreement No. 4-90-A040
Page 1 of 2 Pages
IN WITNESS WHEREOF, the Parties hereto have executed this
Amendment as
of the dates shown below.
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By
Charles C. Erhard, Manager
Finance and Administration Division
Washington Dulles International Airport
Date
ATLANTIC COAST AIRLINES, INC.
a California Corporation
By
Title
Date
SECRETARY'S CERTIFICATE
I,
, certify that I am the secretary of the corporation named
as Atlantic Coast Airlines, Inc., herein; that
, who signed this Amendment on behalf of the Airline was
then of said
corporation; that said Amendment was duly signed for and on
behalf of said corporation by authority of its governing
body, and is within the scope of its corporate powers.
(Corporate Seal)
Secretary's Signature
Ms. Amy L. Patterson
Manager, Properties and Facilities
Atlantic Coast Airlines
515A Shaw Road
Dulles, VA 20166
Dear Ms. Patterson:
Enclosed is proposed Amendment No. 7 to Agreement No. 4-
90-A040, providing for the lease of unimproved operations
building premises at Washington Dulles. As you discussed
with my staff, we anticipate these premises will be replaced
when alternative premises become available next year.
Please have three copies of the amendment signed, the
Secretary's Certificate completed, and return the copies to
me. Upon execution by the Authority, a fully executed copy
will be returned to you. The extra copy is for your files.
If you have any questions about this issue, please call
James Flanagan of my staff
on 572-2911.
Sincerely,
Keith W. Meurlin
Airport Manager
Enclosure (4)
KWM:lge
MA-230A:JMFlanagan:lge:572-2911:10/24/97 (WP61--
H:\JMF\AM7-A040.CON)
cc: MA-1/2, -4 w/enc., -22(Wenneson) w/enc., -130 w/enc., -
200(2), 230
THIS AMENDMENT NO. 7 is made effective as of November 1, 1997, by
and between the METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
("Authority") and ATLANTIC COAST AIRLINES, a California
corporation with its principal office in Sterling, Virginia
("ACA"), and ATLANTIC COAST AIRLINES, INC., a Delaware
corporation with its principal office in Sterling, Virginia
("ACAI") (collectively referred to in this Amendment as the
"Airline").
WHEREAS, the Airline desires to lease certain
unimproved operations building premises at Washington
Dulles, and the Authority agrees to such lease, subject to
the conditions described below.
NOW, THEREFORE, the Parties hereto agree as
follows:
1. As provided for in subparagraph 6.05,
Modification of Premises, Bravo Ramp Operations Building
Area BR-107, consisting of 1,833 square feet of Exclusive Use
Premises, and a 23.7 percent share of Areas BR-100 through BR-
110, consisting of 179 square feet of Joint Use Premises, are
added to the Airline's premises at Washington Dulles effective
November 1, 1997, as shown on the enclosed Exhibit D-B-1,
p.11A. The enclosed
Exhibit D-B-1A, dated November 1, 1997, reflects this change
and replaces Exhibit D-B-1A, dated July 1, 1997.
2. The lease of these premises may be canceled by
either Party by providing the other Party with 30 days advance
written notice, subject to the availability and lease of
alternative replacement premises.
3. The Exclusive Use Premises are in a shell
finish condition. The Authority agrees to allow the Airline
to occupy the premises in such condition, provided the
premises are used only for the storage of aircraft maintenance
equipment and components, and other nonflammable, low hazard
group S-2 classification materials. The Airline will be
responsible for custodial maintenance of the restrooms and
other Joint Use Premises, in common with other tenants who may
occupy the building, and shall be responsible for maintenance
of existing electrical and mechanical equipment and fixtures
in the Exclusive Use Premises.
All other terms and conditions of the Agreement
remain unchanged.
Amendment No. 7
Agreement No. 4-90-A040
Page 1 of 2 Pages
IN WITNESS WHEREOF, the Parties hereto have
executed this Amendment as
of the dates shown below.
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By
Charles C. Erhard, Manager
Finance and Administration Division
Washington Dulles International Airport
Date
ATLANTIC COAST AIRLINES
a California Corporation
and
ATLANTIC COAST AIRLINES, INC,
a Delaware Corporation
By
Title
Date
SECRETARY'S CERTIFICATE
I, ,
certify that I am the secretary of the corporation named
herein; that
, who signed this Amendment on behalf of the Airline was
then
of said corporation; that said Amendment was duly signed for
and on behalf of said corporation by authority of its
governing body, and is within the scope of its corporate
powers.
(Corporate Seal)
Secretary's Signature
AMENDMENT NO. 8
TO AGREEMENT NO. 4-90-A040
BETWEEN
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
AND ATLANTIC COAST AIRLINES
WHEREAS, the Metropolitan Washington Airports Authority
("Authority") and ATLANTIC COAST AIRLINES, a California
corporation with its principal office in Sterling, Virginia
("ACA"), and ATLANTIC COAST AIRLINES HOLDINGS, INC., a
Delaware corporation with its principal office in Sterling,
Virginia ("ACAI") (collectively referred to as the
"Airline"), have entered into Agreement No. 4-90-A040
("Agreement") providing for the use and lease of facilities
at Washington Dulles International Airport; and
WHEREAS, the Airline desires to lease and use Premises
including holdrooms, operations space, offices, and Aircraft
Parking Positions suitable for use by a Regional/Commuter
Air Carrier; and
WHEREAS, the Authority is willing to plan, finance,
design, construct, operate, and maintain a Regional
Concourse and aircraft parking apron for the Airline at
Washington Dulles International Airport under the terms and
conditions of the Agreement and as expressed herein; and
WHEREAS, the Airline is willing to facilitate the
Project, as defined herein, and, in order to induce the
Authority to undertake the development of the Regional
Concourse and aircraft parking apron is willing to lease
Premises in the Regional Concourse along with the associated
Aircraft Parking Positions under the terms and conditions of
the Agreement and such other terms as expressed herein;
NOW, THEREFORE, in consideration of the preceding, and
the fees, charges, covenants and agreements contained
herein, the Authority and the Airline (the "Parties") agree
to amend Agreement No. 4-90-A040 as follows:
1. The Project. The Project for purposes of this
Amendment No. 8 consists of the Regional Concourse and
adjacent aircraft apron paving and related improvements.
a. The Authority will undertake and use its best
efforts to plan, finance, design, construct, equip, operate
and maintain an approximate 68,100 square foot Regional
Concourse with 36 gates that is suitable for the operation
of Regional/Commuter Air Carriers at Washington Dulles
International Airport. The Regional Concourse, as described
in Attachment A, will include facilities for accommodating
the enplaning and deplaning of passengers and baggage and
include concessions and other facilities and services for
the public. Construction of the Regional Concourse is
expected to be substantially complete by September 1999.
b. In conjunction with the Regional Concourse,
the Authority will plan, finance, design and construct an
aircraft parking apron adequate for the movement and parking
of up to 36 regional/commuter aircraft using the Regional
Concourse. Construction of the aircraft parking apron is
expected to be substantially complete by September 1999.
See Attachment A.
2. The Airline Covenants.
a. The Airline agrees that the Regional Concourse will be
an Additional Project in Airline Supported Areas and that as
such, the Authority cannot proceed with the Regional
Concourse unless and until the provisions of Section 10.05.4
of the Agreement are met.
b. The Airline hereby covenants that it will
support the Authority in its efforts to undertake and
complete the Regional Concourse and that the Airline will
take all action necessary or appropriate so that the
Authority can proceed in a timely manner to complete the
Regional Concourse as an Additional Project in an Airline
Supported Area.
c. The Airline hereby commits to lease from the
Authority, and take possession of, the leasable Premises in
the Regional Concourse and the associated Aircraft Parking
Positions offered to it by the Authority on the Substantial
Completion Date of the Project for the duration of the
Agreement which shall not be less than 80 percent of the
leasable Premises in the Regional Concourse along with the
associated Aircraft Parking Positions. The Regional
Concourse is in the Airline Supported Areas at Washington
Dulles International Airport.
3. Fitout of Space in the Regional Concourse.
a. Consistent with paragraph 1 above, the Authority will
furnish or contract to furnish all labor, materials,
equipment and furnishings to fitout and furnish the public
areas of the Regional Concourse, including: a) the gate
holdrooms with public area seating, carpeting, public
address system, and podium casework; b) the public
corridors, stairways, elevators, and restrooms; MUFIDS, and
security equipment and cabling; canopies and walkways
leading to the Aircraft Parking Positions; conduit and plugs
for ground power units; and d) through its concessionaires
the concession areas.
b. The Authority shall give written notice to
the Airline of the estimated Substantial
Completion Date of the Project at least one
hundred and twenty (120) days prior to that date.
Upon receipt of the notice of the estimated
Substantial Completion Date, the Airline will be
allowed to commence installation of its own
equipment and furnishings and otherwise fitout and
furnish its exclusively leased club, office, and
operations Premises in the Regional Concourse.
4. Authority not liable for delay. If there is any
delay in the completion of the Project which delays the use
of the Regional Concourse by the Airline beyond the
estimated Substantial Completion Date, the Authority shall
not be liable to the Airline for failure to complete the
Project or deliver possession of the Premises on the
estimated Substantial Completion Date. The Authority will
notify the Airline of any change in the estimated
Substantial Completion Date and the Airline's obligations
will remain as agreed to herein with the changed estimated
Substantial Completion Date. Failure by the Airline to
complete the fitout and furnishing of its exclusively leased
Premises shall not delay the Substantial Completion Date for
purposes of paragraph 6, below.
5. Substantial Completion Date. On the Substantial
Completion Date of the Project, the date of which, unless
changed by mutual agreement, shall not be sooner than one
hundred and twenty (120) days after the notice given in
paragraph 3.b. above, the following shall occur:
a. The lease of the Premises in the Regional
Concourse and associated Aircraft Parking Positions offered
to the Airline shall become effective. Exhibit D-B-1 and
D-B-1A shall be deemed amended to add the Airline's Premises
and associated Aircraft Parking Positions under the
Agreement and all of the provisions, rights, privileges,
obligations including rental charges and other fees, terms
and conditions of the Agreement as amended shall apply.
b. Provided that the Airline has otherwise satisfied all
of its requirements for the Authority to issue a certificate
of public occupancy, the Airline may occupy its Premises in
the Regional Concourse and associated Aircraft Parking
Positions for purposes of conducting its Air Transportation
Business. The Airline's failure to satisfy all of its
requirements for the Authority to issue a certificate of
public occupancy shall not delay the effective date of the
lease of Premises in the Regional Concourse and associated
Aircraft Parking Positions.
6. Rates and Charges.
a. For purposes of determining rates and charges
under Section 8.03 of the Agreement, the Regional Concourse
will be a separate cost Sub-Center ("Regional Concourse Sub-
Center"). Other than those costs paid for with PFC revenue,
all costs to design, finance, construct, operate and
maintain the Regional Concourse, as described under
paragraph 1.a. above, and those additional costs allocated
to the Regional Concourse under the methodology of Article 8
of the Agreement will be allocated to the Regional Concourse
Sub-Center for purposes of determining rates and charges.
b. Except as provided in paragraph 8 hereinafter, all
other costs to design, finance, construct, and maintain the
aircraft movement and parking areas serving the Regional
Concourse, as described under paragraph 1.b. above,
including the additional costs allocated under the
methodology of Article 8 of the Agreement, will be included
in the Airfield Cost Center for Washington Dulles
International Airport. There will be Aircraft Parking
Position Charges as provided for in Section 8.04. of the
Agreement assessed to the Airline for the use of the
aircraft parking areas serving the Regional Concourse. The
Aircraft Parking Position Charges will be established as
equivalent to 12 narrow-body air carrier Aircraft Parking
Positions for the entire Regional Concourse. That is, three
regional/commuter aircraft parking positions will be
equivalent to one narrow-body air carrier aircraft parking
position for the purpose of assessing the Aircraft Parking
Position Charges associated with the Regional Concourse.
c. See Attachment B for the estimate of rates
and charges of the Regional Concourse with Bonds
and PFC's and the estimated Aircraft Parking
Position Charges. The amortization period for the
Bond financing shall be the life of the Bonds.
7. Bond Financing, Airline Interim Financing, and
Passenger Facility Charges (PFC's). The Authority agrees to
submit an application to the Federal Aviation Administration
(FAA) to impose a PFC and use a portion of the PFC revenue
collected, subject to FAA approval, to finance the cost of
the construction of those parts of the Regional Concourse
eligible for PFC financing. The Airline understands that
the application to impose and use PFC revenue may not be
approved by the FAA. The Parties agree that, prior to the
approval of the application to use PFC revenue, or if the
PFC application is not approved, the Parties will pursue
either of the following two financing options, as they may
mutually decide, to complete the Regional Concourse:
a. The Authority may proceed with the usual and customary
planning, design, and construction of the Project and pay
for such work with the proceeds of Bonds. The Authority
agrees that, upon the approval by the FAA to use PFC revenue
for the Regional Concourse, the Authority will take
reasonable and prudent measures to cause the repayment of
the Bonds for those parts of the Regional Concourse eligible
for PFC funding up to a limit of the PFC revenue allocated
to the Regional Concourse and approved by the FAA. The
Airline also understands that to the extent the Project is
paid for, in whole or in part, with Bonds before the
application to use PFC revenue is approved by FAA, the
timing for the repayment of the Bonds for those parts of the
Regional Concourse eligible for PFC funding will be subject
to applicable laws and regulations.
b. b. The Airline may obtain its own Interim
Financing from a third party lender and proceed through the
lender to fund a portion of the total program cost of the
Regional Concourse not to exceed Thirteen Million Dollars
($13 million) and utilize the Authority's construction
contract by making construction progress payments to the
Authority. The provisions for the Airline's Interim
Financing shall be by agreement between the Authority, the
Airline, and the Airline's third party lender. The
Authority shall fund the balance of the total program cost
of the Regional Concourse with Bonds that will total no less
than $4.7 million. The program cost of the Regional
Concourse is estimated to total $17.7 million. The
Authority will not add changes to the Regional Concourse
that increase costs unless requested by the Airline and/or
unforseen costs occur during construction. The Authority
agrees that, upon the approval by the FAA to use PFC revenue
for the Regional Concourse, provided such approval occurs no
later than one year following the Substantial Completion
Date of the Project, the Authority will take reasonable and
prudent measures to replace the Airline's Interim Financing
with its PFC Revenue Note up to the limit of the PFC funding
allocated to the Regional Concourse and approved by the FAA.
Should the FAA disapprove or not act on the Authority
application within the one year period following the
Substantial Completion Date of the Project, the Parties
agree that the Authority shall be obligated to replace the
Airline's Interim Financing with the proceeds of Bonds.
Should the application to use PFC revenue for the Regional
Concourse be subsequently approved by the FAA, the Authority
will take reasonable and prudent measures to cause the
repayment of that portion of the Bonds equal to the limit of
the PFC funding allocated to the Regional Concourse and
approved by the FAA, with the timing of such repayment of
Bonds being subject to applicable laws and regulations.
c.
c. Should the Airline obtain its own Interim Financing to
fund the construction of the Regional Concourse from a third
party lender utilizing the Authority's construction contract
by making construction progress payments to the Authority,
the Authority agrees that it will recognize the interest of
that lender in the Regional Concourse and it will execute
documents to provide appropriate security for the lender
upon the condition, however, that all rights acquired by the
lender under such Interim Financing shall be subject to all
of the covenants, conditions, and restrictions set forth in
Agreement No. 4-90-A040, this Amendment No. 8, and any
supplemental agreement entered into by the Authority, the
Airline, and the lender providing the Interim Financing.
8. Hydrant Fueling. The Authority will plan,
finance, design, and construct a hydrant fueling system to
serve the 36 regional/commuter aircraft parking positions of
the Regional Concourse as part of the work under the Project
completed under paragraph 1.b. above. The costs of this
addition to the hydrant fueling system shall not be part of
the Project. The Airline agrees to make use of the hydrant
fueling system through the Fueling Agent.
9. Maintenance. Maintenance responsibilities for the
Regional Concourse and associated Aircraft Parking Positions
by the Parties will be as provided for under Exhibit D-D of
the Agreement.
10. Cancellation/Termination, Surrender of Premises.
a. Notwithstanding that a portion of the Project
is to be funded with PFC revenue, the Airline's right to
terminate this Amendment No. 8 to Agreement No. 4-90-A040
shall be as specified in the Agreement with respect to Bond
financed projects. Further, in addition to the rights of
the Authority under Paragraph 2.02.2 of the Agreement, the
Authority may, in its sole discretion, terminate the
Airline's lease of Premises in the Regional Concourse and
associated Aircraft Parking Positions, effective at
midnight, December 31, 2004, or December 31 of any year
thereafter during the period of the Agreement, provided that
the Authority gives one hundred eighty (180) days written
notice to the Airline and the Authority terminates the
leases and the rights of all other Airlines using the
Regional Concourse effective on the same date.
b. The Authority may terminate the Airline's
lease of Premises in the Regional Concourse and associated
Aircraft Parking Positions without terminating the Agreement
or leases of Premises elsewhere on the Airport. Article 14,
"Surrender of Premises; Holding over," shall apply to any
action under this paragraph 10.
c. The Airline agrees that, in the event the
Authority exercises the right of termination as described in
this paragraph 10., the Airline shall be relieved on the
date the Authority terminates the lease of Premises of any
remaining unamortized costs of the Regional Concourse.
11. All terms and conditions of the Agreement,
including the provisions of Article 17 regarding
reallocation of Premises and accommodation of other
Airlines, shall apply to the Regional Concourse, except that
the date for periodic reallocation of Premises in the
Regional Concourse, shall be the first anniversary of the
Substantial Completion Date of the Regional Concourse or the
next date for reallocation of Premises for the Airport in
accordance with Section 17.02, whichever is the later date.
12. Any Project cost associated with environmental
clean up of the Project site, if any (e.g., remediation of
contaminated soil), shall be assigned to the Regional
Concourse Sub-Center or to the Airfield Cost Center, as
appropriate.
IN WITNESS WHEREOF, the Parties hereto have executed
this Amendment No. 8 as of the dates shown below.
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By _____________________________________________
James A. Wilding
President and Chief Executive Officer
Date ____________________________________________
ATLANTIC COAST AIRLINES
a California Corporation
and
ATLANTIC COAST AIRLINES HOLDINGS, INC.
A Delaware Corporation
By _____________________________________________
Michael S. Davis
Senior Vice President
Customer Service
Date _____________________________________________
SECRETARY'S CERTIFICATE
I, ____________________________, certify that I am the
Secretary of the corporation named herein; that
______________________________, who signed this Agreement on
behalf of the Airline was then _____________________________
of said corporation, that said Agreement was duly signed for
and on behalf of said corporation by authority of its
governing body and is within the scope of its corporate
powers.
_______________________________ (Corporate Seal)
Secretary's Signature
Regional Concourse
ATTACHMENTS
Attachment A Regional Concourse and Aircraft Parking
Apron
Attachment B Rates and Charges
Mr. Jerome J. Barnack
Acting Director, Properties and Facilities
Atlantic Coast Airlines
515A Shaw Road
Dulles, VA 20166
Dear Mr. Barnack:
Enclosed is proposed Amendment No. 9 to Agreement No. 4-
90-A040, providing for the lease of passenger holdrooms and
aircraft parking positions for Gates A-5, A-6, and
A-7 at Washington Dulles, along with additional
administrative offices in two Concourse A locations.
Please have the original and two copies of the
amendment signed by the appropriate official, the
Secretary's Certificate completed, and return all three
copies to me. The extra copy is for your files. When the
amendment is signed on behalf of the Authority, a fully
executed copy will be returned to you.
If you have any questions, please call Charles Erhard
or James Flanagan of my staff
on 572-2900.
Sincerely,
Keith W. Meurlin
Airport Manager
Enclosure (4)
KWM:lge
MA-230A:JMFlanagan:lge:572-2911:3/18/98 (WP61---
H:\JMF\AM9-A040.CON)
cc: MA-1/2, 4 w/enc., 22(Wenneson) w/enc., 130 w/enc.,
200(2) (IAD#004:1/19/98), 230
THIS Amendment No. 9 is made effective as of
March 16, 1998, by and between the METROPOLITAN WASHINGTON
AIRPORTS AUTHORITY ("Authority") and ATLANTIC COAST
AIRLINES, a California corporation with its principal office
in Sterling, Virginia ("ACA"), and ATLANTIC COAST AIRLINES,
INC., a Delaware corporation with its principal office in
Sterling, Virginia ("ACAI") (collectively referred to in
this Amendment as the "Airline").
WHEREAS, the Airline desires to lease certain
aircraft gates, passenger holdrooms, and administrative
offices in Concourse A at Washington Dulles, and the
Authority agrees to such lease.
NOW, THEREFORE, the Parties hereto agree as
follows:
As provided for in Section 6.05 Modification of
Premises of the Agreement, the Airline's Premises at
Washington Dulles are amended, effective March 16, 1998, to
add the following Premises:
-- Type 2
Holdrooms
E-210, E-
220, and E-
230
4,978
square
feet
--Type 2 Administrative Offices E-231, E-232,
E-233, E-234, and E-235
1,010
square
feet
--Type 2 Administrative Offices E-261, E-262,
E-263, and E-264
967 square
feet
--Narrow-body Aircraft Parking Positions
Gates A-5, A-6, and A-7
3 parking
positions
These Premises are shown on the enclosed drawing
Exhibit D-B-1, p.10. The enclosed Exhibit D-B-1A (IAD),
dated March 16, 1998, reflects this change and replaces
Exhibit D-B-1A (IAD), dated January 1, 1998.
All other terms and conditions of the Agreement
remain unchanged.
IN WITNESS WHEREOF, the Parties hereto have
executed this Amendment as of the dates shown below.
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By
Charles C. Erhard
Airport Administration Manager
Washington Dulles International
Airport
Date
ATLANTIC COAST AIRLINES
a California Corporation
and
ATLANTIC COAST AIRLINES, INC.
a Delaware Corporation
By
Title
Date
SECRETARY'S CERTIFICATE
I,
, certify that I am the secretary of the corporation named
as the Airline herein; that
who signed this Amendment on behalf of the Airline, was then
of said corporation; that said Amendment was duly signed for
and on behalf of said corporation by authority of its
governing body and is within the scope of its corporate
powers.
(Corporate Seal)
Secretary's Signature
Mr. Jerome J. Barnack
Acting Director, Properties and Facilities
Atlantic Coast Airlines
515A Shaw Road
Dulles, VA 20166
Dear Mr. Barnack:
Enclosed is proposed Amendment No. 10 to Agreement
No. 4-90-A040, providing for your relocation to larger
operations building premises at Washington Dulles.
Please have the original and two copies of the
amendment signed by the appropriate official, the
Secretary's Certificate completed, and return all three
copies to me. The extra copy is for your files. When the
amendment is signed on behalf of the Authority, a fully
executed copy will be returned to you.
If you have any questions, please call Charles Erhard
or James Flanagan of my staff on 572-2900.
Sincerely,
Keith W. Meurlin
Airport Manager
Enclosure (4)
KWM:lge
MA-230A:JMFlanagan:lge:572-2911:5/13/98 (WP61---
H:\JMF\AM10-A040.CON)
cc: MA-1/2, 22(Wenneson) w/enc., 130 w/enc., 200(2), 230,
460 w/enc.
THIS Amendment No. 10 is made effective as of
May 1, 1998, by and between the METROPOLITAN WASHINGTON
AIRPORTS AUTHORITY ("Authority") and ATLANTIC COAST
AIRLINES, a California corporation with its principal office
in Sterling, Virginia ("ACA"), and ATLANTIC COAST AIRLINES
HOLDINGS, INC., a Delaware corporation with its principal
office in Sterling, Virginia ("ACAI") (collectively referred
to in this Amendment as the "Airline").
WHEREAS, the Airline desires to relocate to larger
operations building premises at Washington Dulles, and the
Authority agrees to such lease.
NOW, THEREFORE, the Parties hereto agree as
follows:
1. As provided for in Section 6.05
Modification of Premises of the Agreement, the following
changes are made to the Airline's Premises, effective May 1,
1998:
a.Delete the following Premises:
-- Bravo
Ramp
Opera
tions
Build
ing
Area
BR-
107 1,833 square
feet
-- Share of Joint Use Premises BR-
100/BR-110
(23.7 percent of 756 square feet) 179
square feet
b.Add the following Premises:
-- Bravo Ramp Operations Building
Areas BR-202,
BR-204, and BR-211 3,817 square feet
c.Increase the Share of Joint Use Premises
BR-200/BR-210 from 101 square feet to
474 square feet
These areas are shown on the enclosed lease
drawing Exhibit D-B-1, p.11A. The enclosed Exhibit D-B-1A
(IAD), dated May 1, 1998, reflects these changes and
replaces Exhibit D-B-1A (IAD), dated March 16, 1998.
2. In accordance with paragraph 7.01.5, the
Airline will be responsible for interior maintenance,
including janitorial services, for the joint use utility,
hallway, and restroom premises Areas BR-200 and BR-210, in
common with the other tenants leasing space in this Bravo
Ramp operations building. The Authority agrees to be
responsible for the maintenance and repair of the heating,
ventilation, and air-conditioning (HVAC) production and
distribution system servicing areas BR-202, BR-204, and BR-
211, as well as the HVAC system servicing area BR-201C
previously added to the Airline's Premises by
Amendment No. 5 to the Agreement.
Amendment No. 10
Agreement No. 4-90-A040
Page 1 of 2 Pages
All other terms and conditions of the Agreement
remain unchanged.
IN WITNESS WHEREOF, the Parties hereto have
executed this Amendment as of the dates shown below.
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By
Charles C. Erhard, Manager
Airport Administration Department
Washington Dulles International
Airport
Date
ATLANTIC COAST AIRLINES
a California Corporation
and
ATLANTIC COAST AIRLINES HOLDINGS, INC.
a Delaware Corporation
By
Michael F. Davis
Senior Vice President
Customer Service
Date
SECRETARY'S CERTIFICATE
I,
, certify that I am the secretary of the corporation named
as the Airline herein; that
who signed this Amendment on behalf of the Airline, was then
of said corporation; that said Amendment was duly signed for
and on behalf of said corporation by authority of its
governing body and is within the scope of its corporate
powers.
(Corporate Seal)
Secretary's Signature
Amendment No. 10
Agreement No. 4-90-A040
Page 2 of 2 Pages
Mr. Jerome J. Barnack
General Manager - Properties
Atlantic Coast Airlines
515A Shaw Road
Dulles, VA 20166
Dear Mr. Barnack:
Enclosed is proposed Amendment No. 11 to Agreement
No. 4-90-A040, providing for the lease of passenger
holdrooms and aircraft parking positions for Gates A-3 and A-
4 at Washington Dulles, along with additional administrative
offices in Concourse A.
Please have the original and two copies of the
amendment signed by the appropriate official, the
Secretary's Certificate completed, and return all three
copies to me. The extra copy is for your files. When the
amendment is signed on behalf of the Authority, a fully
executed copy will be returned to you.
If you have any questions, please call Charles Erhard
or James Flanagan of my staff
on 572-2900.
Sincerely,
Keith W. Meurlin
Airport Manager
Enclosure (4)
KWM:lge
MA-230A:JMFlanagan:lge:572-2911:7/30/98 (WP61---
H:\JMF\AM11A040.CON)
cc: MA-1/2, 22 (Wenneson) w/enc., 130 (Wilkinson) w/enc.,
200(2), 230, 460 w/enc.
WHEREAS, the METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
("Authority") and ATLANTIC COAST AIRLINES, a California
corporation with its principal office in Sterling, Virginia
("ACA"), and ATLANTIC COAST AIRLINES HOLDINGS, INC., a
Delaware corporation with its principal office in Sterling,
Virginia ("ACAHI") (collectively referred to in this
Amendment as the "Airline"), have entered into Agreement
No. 4-90-A040 ("Agreement") providing for the use and lease
of facilities at Washington Dulles International Airport;
and
WHEREAS, the Airline desires to lease certain
aircraft gates, passenger holdrooms, and administrative
offices in Concourse A at Washington Dulles, and the
Authority agrees to such lease.
NOW, THEREFORE, the Parties hereto agree as
follows:
As provided for in Section 6.05 Modification of
Premises of the Agreement, the Airline's Premises at
Washington Dulles are amended to add the following Premises:
1. Effective July 16, 1998:
-- Type 2 Holdrooms E-240 and E-250
2,994 square feet
-- Narrow-body Aircraft Parking
Positions
Gates A-3 and A-4
2 parking
positions
2. Effective August 1, 1998:
-- Type 2 Administrative Offices E-
251,
E-252, E-253, E-254, and E-255
985 square
feet
These Premises are shown on the enclosed drawing
Exhibit D-B-1, p.10. The enclosed Exhibits D-B-1A (IAD),
dated July 16 and August 1, 1998, reflect these changes and
replace Exhibit D-B-1A (IAD), dated July 1, 1998.
All other terms and conditions of the Agreement
remain unchanged.
IN WITNESS WHEREOF, the Parties hereto have
executed this Amendment No. 11 as of the dates shown below.
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By
Charles C. Erhard, Manager
Airport Administration Department
Washington Dulles International Airport
Date
ATLANTIC COAST AIRLINES
a California Corporation
and
ATLANTIC COAST AIRLINES HOLDINGS, INC.
a Delaware Corporation
By
Title
Date
SECRETARY'S CERTIFICATE
I, ,
certify that I am the secretary of the corporation named as
the Airline herein; that
who signed this Amendment on behalf of the Airline, was then
of said corporation; that said Amendment was duly signed for
and on behalf of said corporation by authority of its
governing body and is within the scope of its corporate
powers.
(Corporate Seal)
Secretary's Signature
WHEREAS, the METROPOLITAN WASHINGTON AIRPORTS
AUTHORITY ("Authority") and ATLANTIC COAST AIRLINES, a
California corporation with its principal office in
Sterling, Virginia ("ACA"), and ATLANTIC COAST AIRLINES
HOLDINGS, INC., a Delaware corporation with its principal
office in Sterling, Virginia ("ACAHI") (collectively
referred to in this Amendment as the "Airline"), have
entered into Agreement No. 4-90-A040 ("Agreement") providing
for the use and lease of facilities at Washington Dulles
International Airport; and
WHEREAS, the Authority is responsible under the
Agreement for providing the Passenger Conveyances at Dulles;
and
WHEREAS, the Airline, with the approval of the
Authority, is providing supplemental passenger ground
transportation to and from the Main Terminal and its
aircraft parked on the Dulles Jet Apron; and
WHEREAS, the Authority agrees to reimburse the
Airline for the costs it incurs in providing its
supplemental passenger ground transportation, as approved by
the Authority.
NOW, THEREFORE, the Parties hereto agree as
follows:
1. The Agreement shall be effective when
signed by both parties and shall be applicable to costs
incurred and approved by the Authority beginning as of
January 1, 1998.
2. Section 8.09 Passenger Conveyance
Charges is amended by adding the following paragraph after
Paragraph 8.09.2:
"8.09.3. The Airline shall provide the
supplemental passenger ground transportation to and from its
aircraft and the Main Terminal in a manner that is
acceptable to the Authority and shall be reimbursed by the
Authority for the costs of that service in accordance with
the following procedures:
(i.) The Airline shall select and
enter into a contract with a service contractor to provide,
operate, and maintain shuttle buses or vans to provide the
supplemental passenger ground transportation. The Authority
shall not be a party to that contract. The Airline shall
submit for the approval of the Authority each contract or
amendment to a contract for which a reimbursement will be
requested.
(ii.) The Airline's supplemental
passenger ground transportation shall be used to transport
passengers to and from its aircraft parked on the Dulles Jet
Apron and the Main Terminal until the Airline relocates its
aircraft to the Regional Concourse. Thereafter, the
Airline's passengers will be transported to the Regional
Concourse by the Authority's Passenger Conveyance system.
It is intended that the remainder of the Airline's aircraft
will be accommodated at the Main Terminal gates and that the
supplemental passenger ground transportation shall be
discontinued at that time..
(iii.) The Authority shall reimburse
the Airline for the supplemental passenger ground
transportation costs approved by the Authority and incurred
by the Airline up to a maximum of $110,000 per month. Such
costs shall include the vehicle leasing costs for up to
seven buses; driver; supervisor/dispatcher labor costs; and
vehicle maintenance, insurance, and fueling costs. Costs in
excess of the $110,000 per month shall not be eligible for
reimbursement unless necessitated by increased passenger
levels.
(iv.) Costs for services that are
not directly related to passenger ground transportation, as
well as the Airline's personnel and overhead costs for
administering the service contract, are not eligible for
reimbursement.
(v.) The Authority shall reimburse
the Airline by granting the Airline a credit against the
monthly fees and charges due to the Authority from the
Airline under the Agreement in accordance with the
following: Within 45 days after the end of each month, the
Airline shall provide to the Authority a certified statement
of the costs it incurred, including original paid invoices
from the service contractor in sufficient detail and format
to compare to the contract terms. In addition, the Airline
shall provide a summary of the service levels provided for
the month, including the number of buses scheduled per hour
for a typical operating day. The Authority shall notify the
Airline in writing, within 15 days after receipt of the
certified statement, of the approval or disapproval of the
certified statement. If disapproved, the reasons for
disapproval and the identification of the costs disapproved
for reimbursement will be stated. After approval by the
Authority, the Airline may apply the approved cost amount as
a credit against fees and charges otherwise due to the
Authority under the Agreement.
(vi.) The certified statement of
costs submitted by the Airline and approved by the Authority
shall be subject to audit by the Authority. The Airline
agrees to maintain all documentation supporting the
certified statement for two year and will make that
documentation available to the Authority upon request. The
Authority reserves the right to adjust the amount of the
credit based on subsequent audits and examination of
supporting documentation.
(vii.) The amount of the approved
credits for the supplemental passenger ground transportation
shall be added to the Passenger Conveyance charge
requirement and recovered as part of the Passenger
Conveyance Charge as provided for under Article 8 of the
Agreement."
All other terms and conditions of the Agreement
remain unchanged.
IN WITNESS WHEREOF, the Parties hereto have
executed this Amendment No. 12 as of the dates shown below.
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By
James A. Wilding
President and Chief Executive Officer
Date
ATLANTIC COAST AIRLINES
a California Corporation
and
ATLANTIC COAST AIRLINES HOLDINGS, INC.
a Delaware Corporation
By
Title
Date
SECRETARY'S CERTIFICATE
I,
, certify that I am the secretary of the corporation named
as the Airline herein; that
who signed this Amendment on behalf of the Airline, was then
of said corporation; that said Amendment was duly signed for
and on behalf of said corporation by authority of its
governing body and is within the scope of its corporate
powers.
(Corporate Seal)
Secretary's Signature
[METROPOLITAN WASHINGTON AIRPORTS AUTHORITY LETTERHEAD]
Date
Mr. Jerome J. Barnack
General Manager, Properties
Atlantic Coast Airlines
515A Shaw Road
Dulles, VA 20166
Dear Mr. Barnack:
Enclosed is a fully executed copy of Amendment No. 13
to Amendment No. 4-90-A040 for the provision and use of
boarding devices for individuals with disabilities using
small aircraft at Ronald Reagan Washington National Airport
and Washington Dulles International Airport.
If you have any questions, please contact Ford Larsen
at (703) 417-8765
Sincerely,
James A. Wilding
President and CEO
Enclosure
WA990760.179/2+
AGREEMENT FOR THE PROVISION AND USE OF BOARDING DEVICES FOR
INDIVIDUALS WITH DISABILITIES USING SMALL AIRCRAFT
WHEREAS, the Metropolitan Washington Airports Authority
(hereafter the "Authority") and Atlantic Coast Airlines
(hereafter, the "Airline" and together with the Authority,
the "Parties,") have entered into Agreement No. 4-9-A040
(hereafter, the "Agreement") providing for the use and lease
of facilities at Ronald Reagan Washington National Airport
("National") and Washington Dulles International Airport
("Dulles") together the "Airports"; and
WHEREAS, the Authority and the Airline desire to provide
boarding assistance devices for individuals with
disabilities who are enplaning onto, or deplaning from,
certain small aircraft operated by the Airline at the
Airports and to do so in a manner that is at least
sufficient to meet the requirements of federal regulations
(49 CFR, Part 27) in effect on the date hereof requiring an
agreement between the Parties on the provision of boarding
devices; and
WHEREAS, the Parties are willing to make commitments to the
terms and conditions expressed herein;
NOW, THEREFORE, in consideration of the foregoing and the
covenants and agreements hereinafter set forth, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Authority
and the Airline agree to amend the Agreement as follows:
1. Definitions:
Boarding device shall mean a boarding assistance device
for individuals with a disability enplaning or
deplaning on small aircraft.
Small aircraft shall mean aircraft with a capacity of
19 seats or more, but not exceeding 30 seats for
passengers exclusive of crew.
2. The Parties agree that they will cooperate with each
other to provide boarding assistance to individuals
with disabilities who are enplaning onto or deplaning
from small aircraft at the Airports by providing
mechanical lifts, ramps or other devices that will
eliminate the need for employees of the Airline or
other persons to lift or carry passengers up, or
downstairs, to or from the small aircraft except for
extraordinary conditions beyond the control of the
Parties.
3. The Authority shall purchase and have available for the
use by the Airline at the Airports following boarding
devices:
a. At National Airport:
Two (2) Self-propelled (electric) Wollard
Passenger Access Lifts (PAL) 651.
b. At Dulles Airport:
Two (2) Self-propelled (electric) Wollard
Passenger Access Lifts (PAL) 651.
4. The Parties agree that these boarding devices are
suitable for providing boarding assistance for
individuals with disabilities who seek to enplane onto
or deplane from small aircraft other than those
aircraft that have been determined by the United States
Department of Transportation to be unsuitable for
boarding assistance by a lift device.
5. The Authority agrees to make these boarding devices
available at the Airports on or before December 2,
1998, and the Airline agrees that, thereafter, it will
use said boarding devices or other suitable boarding
devices to assist individuals with disabilities at the
Airports on the Airline's small aircraft unless
(i) circumstances beyond the control of the Airline
prevent the Airline from using the boarding devices, or
(ii) the United States Department of Transportation
determines that such assistance is not required.
6. Nothing herein shall preclude the Airline from
purchasing or otherwise providing its own boarding
devices for individuals enplaning or deplaning on its
aircraft. Also, the Authority may in its discretion
provide additional boarding devices of the kind
described herein or of some other kind and deploy them
at the Airports.
7. The boarding devices purchased by the Authority in
accordance with paragraph 3 shall be owned by the
Authority. They will be stored on the Airport so as to
be accessible by the Airline for use by the Airline at
the Airports as provided herein.
8. The Airline may use a boarding device that is owned by
the Authority as follows:
a. The Airline shall have access to the boarding
device on a first come, first serve basis to serve
individuals who are present at the Airport. If
the Airline is aware in advance of the
individual's arrival at the airport of the need
for the boarding device, the Airline agrees to
acquire the boarding device from the Authority not
more than 45 minutes before the scheduled
departure of the aircraft or more than 15 minutes
before the scheduled arrival. Unless the
Authority agrees otherwise, transportation of the
boarding device between the place where it is the
responsibility of the Airline. When it has
concluded using the boarding device, the Airline
shall promptly return the boarding device to the
storage area and take all appropriate measures to
properly store the boarding device.
b. Training - The Airline shall assure that each of
its employees or agents who operates the boarding
device on behalf of the Airline is trained to
proficiency in the use of the particular boarding
device. The Airline agrees that only individuals
so trained shall operate the boarding device.
c. Duty to inspect - Prior to each use of the
boarding device by the Airline, qualified
representatives of the Airline shall inspect the
boarding device and following such inspection
shall either (a) in the boarding device appears to
be fit for its intended use, accept the boarding
device for use in accordance with this Agreement,
or (b) if the boarding device appears to be in any
way damaged, unsafe, broken, improperly or not
maintained, missing parts or deficient so as to be
unfit for its intended use, promptly notify the
Authority and not use the boarding device until
such time as the problems identified have been
corrected so as to permit the boarding device to
be safely used for its intended purpose.
9. Maintenance - If at any time the Airline becomes aware
of the need for maintenance or repairs to the
Authority's boarding device, the Airline shall promptly
notify the Authority in writing of the nature of the
maintenance or repairs needed, and refrain from using
the boarding device until such time as the Authority
has performed such repairs or maintenance as it deems
necessary or has granted its written consent to the
continued use of the boarding device. The Airline
shall make no repairs or alterations to the Authority's
boarding device without the prior written consent of
the Authority.
10. After the Airline has taken possession of the
Authority's boarding device, the Authority's boarding
device is to be used exclusively for the purpose of
enplaning and deplaning passengers from small aircraft
that are owned or operated by the Airline and located
at the Airports. The Airline will not permit any other
use of the boarding device without the permission of
the Authority.
11. The cost of the boarding device shall be recovered by
the Authority through the airfield cost center at each
Airport.
12. No warranties - The Authority makes no warranty or
representation, either express or implied, as to the
design or condition of, or as the quality of the
material, equipment or workmanship in the boarding
devices provided by the Authority and the Authority
makes no warranty of merchant ability, or fitness or
suitability of the devices for any particular purpose
or any component thereof or as to any other matter, it
being agreed that all such risks, as between the
airline and the benefits of any and all implied
warranties of the Authority are hereby waived by the
airline.
13. Entire Agreement - The Parties agree that the Agreement
as amended herein sets forth the entire agreement
between the parties with regard to the provision of
boarding devices and there are no promises or
understandings other than those stated in the Agreement
as amended herein.
14. All other terms and conditions of the Agreement as
previously amended remain in effect.
IN WITNESS WHEREOF, the Parties hereto have executed this
Amendment as of the dates shown below.
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By _________________________________________________
Title ________________________________________________
Date ________________________________________________
ATLANTIC COAST AIRLINES
By _________________________________________________
Title ________________________________________________
Date ________________________________________________
SECRETARY'S CERTIFICATE
I, _______________________, certify that I am the
Secretary of the Corporation named herein; that
_______________________, who signed this Agreement on behalf
of Atlantic Coast Airlines was the Senior Vice President of
said corporation; that this Agreement was duly signed for
and on behalf of said Corporation by authority of its
governing body, and is within the scope of its corporate
powers.
_________________________ (Corporate Seal)
Secretary's Signature
WA990760.178/4+
WHEREAS, the Metropolitan Washington Airports Authority
(hereinafter referred to as the "Authority") and ATLANTIC
COAST AIRLINES, a California corporation with its principal
office in Sterling, Virginia ("ACA"), and ATLANTIC COAST
AIRLINES HOLDINGS, INC., a Delaware corporation with its
principal office in Sterling, Virginia ("ACAI")
(collectively referred to as the "Airline", and together
with the "Authority" referred to herein as the "Parties"),
have entered into Agreement No. 4-90-A040 ("Agreement")
providing for the use of facilities at Washington Dulles
International Airport and the lease of Premises; and
WHEREAS, the Airline desires to lease and use
additional Premises including holdrooms, operations space,
offices, and Aircraft Parking Positions suitable for use by
a Regional/Commuter Air Carrier; and
WHEREAS, the Authority is willing to plan, finance,
design, construct, operate, and maintain the additional
Premises for the Airline as part of a development project
(the Project) as defined herein, and lease same to the
Airline at Washington Dulles International Airport under the
terms and conditions of the Agreement and as expressed
herein; and
WHEREAS, the Airline is willing to facilitate the
Project and, in order to induce the Authority to undertake
the development of the Premises, is willing to commit to
lease said Premises under the terms and conditions of the
Agreement and such other terms as expressed herein;
NOW, THEREFORE, in consideration of the preceding, and
of the fees, charges, covenants and agreements contained
herein, the Parties agree to amend Agreement No. 4-90-A040 as
follows:
1. The definitions in the Agreement apply to this
Amendment No. 14 unless expressly stated otherwise.
2. Amendment No. 8 represents a prior agreement
between the Parties on the subject of the Project and the
financing thereof. This Amendment No. 14 represents the
agreement of the Parties as of the date hereof and is a
restatement of, and in furtherance of, the agreement reached
in Amendment No. 8. In the event of any inconsistencies
between the two Amendments, Amendment No. 8 and this
Amendment No. 14 are to be construed so as to give full
effect to this Amendment No. 14.
3. The Project. The Project for purposes of this
Amendment No. 14 consists of the Regional Concourse,
adjacent aircraft apron paving including Aircraft Parking
Positions and other related improvements.
a. The Authority will undertake and use its best
efforts to plan, finance, design, construct, equip, operate
and maintain a building, also known as the Regional
Concourse, containing usual and customary facilities for
accommodating passengers and their baggage, concessions, and
other facilities to serve the Airline's passengers and
others who are associated with the enplaning and deplaning
of aircraft on the apron adjacent to the Regional Concourse.
The Regional Concourse will be constructed to substantially
conform to the drawings attached here to as Exhibit D-B-1
dated January 8, 1999, depicting the Regional Concourse and
the apron. b. In conjunction with the Regional Concourse,
the Authority will plan, finance, design and construct an
aircraft parking apron adequate for the parking and movement
of 36 regional/commuter aircraft. The apron when
constructed will conform substantially to the drawing
attached hereto as Exhibit D-B-1, dated January 8, 1999,
depicting the Regional Concourse and the apron. The
demarcation of the Aircraft Parking Positions will be
proposed by the Airline and approved by the Airport Manager
consistent with the Exhibit.
4. Lease of Permanent Premises. The Airline hereby
commits to the Authority that, as of the Substantial
Completion Date, as provided for in Section 6.02 of the
Agreement, Lease of Permanent Premises and Equipment, the
Airline, without the need for any further action, will lease
from the Authority, subject to all of the terms and
conditions herein, the following Permanent Premises:
a. Type 2 Preferential Use Holdrooms - 24,480
square feet
203.02, 203.04, 204.03, 204.05, 205.10,
and 205.12
b. Type 2 Exclusive Use Club - 204.09 1,330
square feet
c. Type 2 Exclusive Use Admin. Offices - 3,413
square feet
202.04, 204.09A, and 204.01
d. Type 4 Exclusive Use Operations Space -
12,052 square feet
102.12, 102.11, 102.07, 202.03,
204.07, 205.02, 205.14, and 401.02
e. Type 6 Preferential Use Covered Walkways
33,896 square feet
and Covered Baggage Facility - 203.01,
203.05, 204.02, 204.06, 205.09, 205.13,
and 102.05
These Permanent Premises are shown on enclosed drawings
Exhibit D-B-1.
5. Fitout of Space in the Regional Concourse. a.
Consistent with paragraph 3 above, the Authority will
furnish or contract to furnish all labor, materials,
equipment and furnishings to fitout and furnish the public
areas of the Regional Concourse, including: a) the gate
holdrooms with public area seating, carpeting, public
address system, and podium casework; b) the public
corridors, stairways, elevators, and restrooms; c) mobile
lounge docks; d) MUFIDS, and security equipment and cabling;
e) canopies and walkways leading to the Aircraft Parking
Positions; f) conduit and plugs for ground power units; and
g) through its concessionaires, the concession areas.
b. The Authority shall give written notice to
the Airline of the estimated Substantial Completion Date of
the Project at least one hundred and twenty (120) days prior
to that date. Upon receipt of the notice of the estimated
Substantial Completion Date, the Airline will be allowed to
commence installation of its own equipment and furnishings
and otherwise fitout and furnish its exclusively leased
club, office, and operations Premises in the Regional
Concourse.
6. Authority not liable for delay. The Authority
shall not be liable to the Airline for failure to complete
the Project or deliver possession of the Premises on the
estimated Substantial Completion Date. The Authority will
notify the Airline of any change in the estimated
Substantial Completion Date and the Airline's obligations
will remain as agreed to herein with the changed estimated
Substantial Completion Date. Failure by the Airline to
complete the fitout and furnishing of its exclusively leased
Premises shall not delay the Substantial Completion Date for
purposes of paragraph 7, below.
7. Substantial Completion Date. On the Substantial
Completion Date of the Project, the date of which, unless
changed by mutual agreement, shall not be sooner than one
hundred and twenty (120) days after the notice given in
paragraph 5.b. above, the following shall occur a. The
Airline's lease of the Premises in the Regional Concourse
described in paragraph 4, above, and associated Aircraft
Parking Positions shall become effective. Exhibit D-B-1 and
D-B-1A shall be deemed amended as of that date to add the
Airline's Premises and associated Aircraft Parking Positions
under the Agreement and all of the provisions, rights,
privileges, obligations including rental charges and other
fees, terms and conditions of the Agreement as amended shall
apply.
b. Provided that the Airline has otherwise
satisfied all of its requirements for the Authority to issue
a certificate of public occupancy, the Authority shall issue
said certificate and the Airline may occupy its Premises in
the Regional Concourse and associated Aircraft Parking
Positions for purposes of conducting its Air Transportation
Business. The Airline's failure to satisfy all of its
requirements for the Authority to issue a certificate of
public occupancy shall not delay the effective date of the
lease of Premises in the Regional Concourse and associated
Aircraft Parking Positions.
8. PFC and Airline Interim Financing.
a. Pursuant to the Agreement of the Parties in
Amendment No. 8 for the Airline to provide to the Authority
interim financing for the Project in the absence of the
approval by the United States Federal Aviation
Administration (the "FAA") of a Passenger Facility Charge to
finance the cost of the construction of certain eligible
parts of the Project ("PFC Financing") (which PFC Financing
is not available for the Project as of the date hereof due
to no fault or failure of the Authority), the Parties hereby
agree as follows with respect to certain interim funding for
the Project. b. The Airline either will loan to the
Authority, or facilitate the lending to the Authority, of up
to $15.0 million to be utilized by the Authority to pay for
a portion of the total costs of the Project including the
Authority's program management costs (the "Project Costs").
The Airline will utilize the proceeds of a bridge loan (the
"Bridge Loan") from Fleet Capital Corporation (the "Lender")
to reimburse the Authority for Project Costs, on the terms
and conditions provided herein.
c. Bridge Loan proceeds shall be paid by the
Airline to the Authority not later than the 14th day (or
next business day) after receipt by the Airline of a
notification (the "Notification") from the Authority that
the Authority has incurred and paid Project Costs. In the
Notification, the Authority shall (i) include a copy of the
paid invoice(s) representing and confirming the actual
payment of Project Costs by the Authority; (ii) certify and
acknowledge the obligation of the Authority to repay the
principal amount requested in the Notification, that the
amount requested to be paid or reimbursed by the Airline
constitutes the binding repayment obligation of the
Authority to the Airline as provided for herein (a "Bridge
Loan Obligation") as well as a Bridge Loan Obligation
pursuant to, and as defined in, the January __, 1999, Escrow
Agreement (the "Escrow Agreement") among the Airline, the
Authority and Lender; and (iii) certify and acknowledge that
all Project Costs included in the Notification actually have
been incurred (and not prepaid) by the Authority in
connection with the Project in accordance with all
applicable contractual conditions and requirements. d. The
Authority shall pay the balance of the total cost of the
Project with PFC Financing, the proceeds of Bonds and/or an
additional $1.0 million grant from the State of Virginia.
The total cost of the Regional Concourse is reasonably
estimated by the Authority at $21.7 million, and the
Authority has no knowledge, or reason to believe, that the
Regional Concourse cannot be completed for $21.7 million.
The Authority will not add changes to the Regional Concourse
that will materially increase costs without the consent of
the Airline. There exists no material claim or dispute
arising out of the Contract, any other material agreement
concerning the Regional Concourse or with respect to the
construction or completion of the Project.
e. The repayment of the Lender shall be the
Airline's obligation and responsibility subject only to the
terms and conditions of the Escrow Agreement. The Authority
may prepay the Bridge Loan Obligations in whole or in part
at any time, or from time to time, without penalty and will
repay to the Airline the entire then outstanding principal
amount of the Bridge Loan Obligations without right of set-
off, counterclaim or deduction on or before May 1, 2000,
utilizing PFC Financing, Bond proceeds, the amount deposited
in to escrow pursuant to the Escrow Agreement or other
funds. The Authority will be responsible only for the
repayment of the principal amount of the Bridge Loan
Obligations and shall not be obligated to pay to the Airline
or the Lender any interest thereon, or any expenses,
charges, costs or amounts with respect thereto or arising
out of the Bridge Loan, which shall remain the sole
obligation of the Airline.
f. Any amount paid to the Airline by, or on
behalf of, the Authority with respect to the Bridge Loan
Obligations shall be utilized by the Airline to repay its
principal obligation on the Bridge Loan to the Lender with
one business day of receipt from the Authority.
g. The Airline acknowledges that the Authority
has submitted a PFC Application to the FAA for PFC funding
of the Project and is using its reasonable best efforts to
cause the PFC Application to be approved. In the event any
PFC Financing which is obtained is inadequate to repay the
entire amount of the Bridge Loan Obligations which either
then or subsequently are outstanding, the Authority shall
remain obligated pursuant to the terms of this Amendment No.
14 and the Escrow Agreement for the balance of any Bridge
Loan Obligations. In the event the FAA has disapproved, or
failed to act on the PFC Application on or before the date
which is one year after the Substantial Completion Date of
the Regional Concourse, the Authority may repay the Bridge
Loan Obligations with the proceeds of Bonds. Provided,
however, in the event that the Authority has given
Notification to the Airline in accordance with paragraph
8.c. above and payment is not received by the Authority on
or before the 14th day after Notification, the Authority may
expend Bond funds on costs that were the subject of the
Notification.
9. Provisions of Airline Bridge Loan, Security, and
Defaulta. In furtherance of Amendment No. 8, paragraph 7.c.,
the Authority will deposit $15 million with an escrow agent
pursuant and subject to the terms of the Escrow Agreement to
provide security to the Lender for the Bridge Loan
Obligations in the event of a default by the Airline under
the Bridge Loan or, in the event the Bridge Loan Obligations
are not otherwise repaid on or before May 1, 2000, to
provide for repayment of the Bridge Loan Obligations by the
Authority to the Airline, in each case as set forth in the
Escrow Agreement. The Lender shall only have such rights as
against the Authority as are expressly set forth in the
Escrow Agreement.
b. Nothing contained herein, in the Escrow
Agreement or otherwise shall preclude the Airline, the
Lender and the Authority from agreeing that the Authority
will pay the Bridge Loan Obligations directly to the Lender
and that acceptance thereof by the Lender and the
application of such payment by the Lender to the obligations
of the Airline with respect to the Bridge Loan shall
constitute full performance by the Authority and that no
additional amount to the Airline from the Authority will be
due and owing under this Amendment No. 14.
c. Any claim by the Lender against the Airline
or the Authority for any amount in excess of the amount
placed in escrow for any interest due on the Bridge Loan
Obligations, or for any penalty, damages, or fine, shall be
the responsibility of the Airline and not an obligation of
the Authority.
d. Upon the payment by the Authority of the
amount of the Airline's Bridge Loan as provided for herein
with the proceeds of Bonds or PFC Secured Funds, the
Authority shall adjust the Airline's rates and charges as
provided for under Article 8 of the Agreement and paragraph
10 of this Amendment 14 and the Airline shall pay the
adjusted amount due, if any, as provided for under the
Agreement.
e. In addition to its obligations under Article
12 of the Agreement, the Airline shall defend, indemnify,
and hold the Authority and its agents, officers, and
employees completely harmless from and against any and all
claims, suits, demands, actions, liabilities, losses,
damages, judgments, or fines arising from its Bridge Loan.
f. In furtherance of Section 19.14.1 of the Agreement,
this Amendment and any agreement for the Bridge Loan is
expressly subordinated and subject to the pledges, transfer,
hypothecation or assignment made by the Authority in any
prior Indenture or Indenture hereafter entered into to issue
Bonds.
g. The Airline shall not place any lien upon the
Project, or against any Premises Equipment or any rents or
fees due from the Airline to the Authority without the
express written consent of the Authority.
h. By the terms of an agreement among the
Authority, the Airline and the Lender the provisions hereof
may be modified.
10. Rates and Charges.
a. For purposes of determining rates and charges
under Section 8.03 of the Agreement, the Regional Concourse
will be a separate Terminal and Equipment Sub-Center
("Regional Concourse Sub-Center"). All Authority costs to
design, finance, construct, operate and maintain the
Regional Concourse, as described under paragraph 3.a. above,
and those additional Authority costs allocated to the
Regional Concourse under the methodology of Article 8 of the
Agreement will be allocated to the Regional Concourse Sub-
Center for purposes of determining rates and charges. b.
Except as provided in paragraph 11 herein, all other
Authority costs to design, finance, construct, and maintain
the aircraft movement and parking areas serving the Regional
Concourse, as described under paragraph 3.b. above,
including the additional Authority costs allocated under the
methodology of Article 8 of the Agreement, will be included
in the Airfield Cost Center for Washington Dulles
International Airport. The Airline will be responsible for
the Aircraft Parking Position Charges as provided for in
Section 8.04. of the Agreement for the use of the aircraft
parking areas serving the Regional Concourse. Three
regional/commuter aircraft parking positions (Exhibit D-B-1,
Sheet 1) will be equivalent to one narrow-body air carrier
aircraft parking position for the purpose of assessing the
Aircraft Parking Position Charges associated with the
Regional Concourse.
c. Attachment A provides an estimate of rates
and charges for the Regional Concourse assuming
(i) expenditures of $5.7 million in Bonds by
the Authority, $1.0 million grant from the Commonwealth of
Virginia, and Airline Interim Financing of $15 million;
(ii) the same as (i) except that PFC secured
funds are used to repay the Airline for the Interim
Financing, or;
(iii) the same as (i) except that the
proceeds of Bonds are used to repay the Airline for the
Interim Financing.
Exhibit D-B-1A (IAD) will be revised to include the rental
due for the lease of the Premises constructed under the
Project effective on the Substantial Completion Date.
Attachment B presents an estimate of rentals and charges
that will be due for the additional Premises and the
Aircraft Parking Positions in the format of Exhibit D-B-1A
(IAD). The amortization period for any Bond financing shall
be the life of the Bonds as is provided for with other Bond
funded facilities and terminal projects under the
Authority's Capital Development Program.1. Hydrant
Fueling. The Authority will plan, finance, design, and
construct a hydrant fueling system ("the Fueling System") to
serve the aircraft parking apron of the Regional Concourse.
The costs of this addition to the Fueling System shall be
recovered by the Authority from the charges assessed to all
users of the Fueling System.
12. Maintenance. Maintenance responsibilities for the
Regional Concourse and associated Aircraft Parking Positions
by the Parties will be allocated as provided for under
Exhibit D-D of the Agreement.
13. Cancellation/Termination, Surrender of Premises.
a. Notwithstanding that a portion of the Project
is to be funded with PFC revenue, the Airline's right to
terminate its lease of Premises constructed under the
Project shall be to the same extent as its right to
terminate this Agreement No. 4-90-A040 while Bonds are
outstanding.
14. All terms and conditions of the Agreement,
including the provisions of Article 2 regarding termination
and Article 17 regarding reallocation of Premises and
accommodation of other Airlines, shall apply to the Regional
Concourse, except that the date for periodic reallocation of
Premises in the Regional Concourse shall be the second
anniversary of the Substantial Completion Date of the
Regional Concourse or the next date for reallocation of
Premises for the Airport in accordance with Section 17.02,
whichever is the later date. 15. Any Project cost
associated with environmental clean up of the Project site,
if any (e.g., remediation of contaminated soil), shall be
assigned to the Regional Concourse Sub-Center as a cost of
site preparation or to the Airfield Cost Center, or the
Aviation Cost Center as appropriate.
16. Mobile Lounge Service to the Regional Concourse
The Authority's responsibilities to provide
regular shuttle-type mobile lounge service as provided for
under Article 7.01.7 of the Agreement shall include such
service between the Main Terminal and the Regional Concourse
commencing on the Substantial Completion Date.
17. All other terms and conditions of the Agreement
remain unchanged.
18. This Amendment No. 14 shall be effective upon the
signature of the Parties.
IN WITNESS WHEREOF, the Parties hereto have executed
this Amendment No. 14 as of the dates shown below.
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By _____________________________________________
Charles C. Erhard, Manager
Airport Administration Department
Date ____________________________________________
ATLANTIC COAST AIRLINES
a California Corporation
and
ATLANTIC COAST AIRLINES HOLDINGS, INC.
A Delaware Corporation
By _____________________________________________
Michael S. Davis
Senior Vice President
Customer Service
Date _____________________________________________
SECRETARY'S CERTIFICATE
I, ____________________________, certify that I am the
Secretary of the corporation named herein; that
______________________________, who signed this Agreement on
behalf of the Airline was then _____________________________
of said corporation, that said Agreement was duly signed for
and on behalf of said corporation by authority of its
governing body and is within the scope of its corporate
powers.
_______________________________ (Corporate Seal)
Secretary's Signature
Regional Concourse
ATTACHMENTS
Attachment A Regional Concourse and Aircraft Parking
Apron
Attachment B Rates and Charges
EXHIBIT D-B-1A
(IAD)
Preliminary
Rates
Regional
Concourse
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
WAHSINGTON DULLES INTERNATIONAL AIRPORT
AIRLINE PREMISES EXHIBIT
ATLANTIC COAST AIRLINES
RENTAL RATE
PAP (P) PER SQUARE
or SQUARE FOOT PER
ANNUAL
AREA NUMBER/PURPOSE TAP (T) FEET ANNUM
RENTAL
Type 2 Space Holdrooms; VIP Rooms; Administrative Offices
Exhibit D-B-1
205.10 Gates A-1 and 3 Holdroom P 4,080
205.12 Gates A-2 and 4 Holdroom P 4,080
204.03 Gates A-5 and 7 Holdroom P 4.080
204.05 Gates A-6 and 8 Holdroom P 4,080
203.02 Gates A-9 and 11 Holdroom P 4,080
203.04 Gates A-10 and 12 Holdroom P 4,080
204.09 VIP Room P 1,330
202.04 Administrative Offices
204.01 Administrative Offices P 2,898
204.09A Administrative Offices P 515
TOTAL Type 2 Space 29,223 $43.05
$1,258,050.15
Type 4 Space Operations Space
102.12, 102.11, 102.07, 202.03,
204.07, 205.02, 205.14 P 12,052 $26.31 $
317,088.12
Type 6 Space Unenclosed Covered Area
203.01, 203.05, 204.02, 204.06,
205.09, 205.13, 102.05 P 33,896 $ 5.12 $
173,448.00
Aircraft Parking Positions
Exhibit D-B-1
Gates A-1 and 3 2 Narrow-body P
$14,029 x 2 $ 28,058.00
Gates A-2 and 4 2 Narrow-body P
$14,029 x 2 $ 28,058.00
Gates A-5 and 7 2 Narrow-body P
$14,029 x 2 $ 28,058.00
Gates A-6 and 8 2 Narrow-body P
$14,029 x 2 $ 28,058.00
Gates A-9 and 11 2 Narrow-body P
$14,029 x 2 $ 28,058.00
Gates A-10 and 12 2 Narrow-body P
$14,029 x 2 $ 28,058.00
TOTAL Aircraft Parking Positions $
168,348.00
TOTAL ANNUAL RENTAL (Preliminary)
EFFECTIVE SUBSTANTIAL COMPLETION DATE:
$1,916,934.27
TOTAL MONTHLY RENTAL (Preliminary)
EFFECTIVE SUBSTANTIAL COMPLETION DATE: $
159,744.52
This Amendment between the Metropolitan Washington
Airports Authority (hereinafter referred to as the
"Authority") and Atlantic Coast Airlines (hereinafter
referred to as the "Airline") is to provide for the
improvement of the Premises that are being constructed by
the Authority and which will be leased by the Airline as
Permanent Airline Premises at Washington Dulles
International Airport.
WHEREAS, the Airline and the Authority agree that the
Airline is responsible for making these improvements known
as "Fitout Improvements," and that the Airline's Eligible
Costs thereof (Eligible Costs) shall be paid by the
Authority as part of the Capital Development Program and
recovered from the Airline by the Authority through the
Equipment Cost Center identified in Section 8.01(4)(i)(f) of
the Agreement;
NOW THEREFORE, the Parties hereto agree as follows:
1. The effective date of this Amendment shall be February
1, 1999.
2. Section 10.09, Improvements by the Airline, is amended
by adding the following paragraph at the end of the
section:
Section 10.09.7 - The Fitout Improvements listed in
paragraph (ii) to this Amendment shall be constructed
by the Airline. The Eligible Costs of these Fitout
Improvements shall be reimbursed to the Airline by the
Authority in accordance with the following:
(i) The Airline shall select and enter into contracts
with an architect/engineer and a construction
contractor to accomplish the Fitout Improvements.
The Authority shall not be a party to these
contracts. Airline shall submit for review a copy
of each contract for which reimbursement will be
requested This shall be accomplished prior to
reimbursement for work performed under that
contract.
(ii) The Airline's construction contracts for the
Fitout Improvements shall require completion of
the Fitout Improvements by a certain date, which
date shall not be after May 2, 1999, provided that
the Authority makes the Premises available to the
Airline for Fitout Improvements on or before
November 9, 1998.
Provided further, that for every day the Authority
delays in making particular Premises available to
the Airline, the date by which the Airlines must
complete the Fitout Improvements for those
Premises is extended one day The Authority's
rights to move the Airline into Temporary Airline
Premises, or Permanent Airline Premises, in
accordance with Article 5, and the rights of the
other Signatory Airlines to move into Permanent
Airline Premises, shall not be diminished by the
failure of the Airline to complete its Fitout
Improvements. The Airline's acknowledges that
time is of the essence and that the failure to
complete the Fitout on or before May 2, 1999, may
result in the Airline's Permanent Airline Premises
not being substantially complete and that the
substantial completion date of the Airline's
Permanent Premises may, therefore, be delayed.
The Airline's contracts to accomplish the Fitout
Improvements shall contain provisions requiring
the retention of 10 percent of its contractor's
billings pending final acceptance by the Airline
of the Fitout Improvements. The Airline shall
take all reasonable actions necessary to enforce
timely completion of the Fitout Improvements.
(iii) The Authority shall reimburse the Airline for
the Eligible Cost of the Fitout Improvements
incurred by the Airline up to a maximum of
$1,000,000 for Dulles. The Eligible Cost to be
reimbursed by the Authority include amounts paid
by the Airline for all construction, equipment,
and material costs for the Fitout Improvement such
as ceilings; walls; flooring; windows; doors;
mechanical, electrical, and utility systems and
connections and outlets; cabinets and mill work;
and any other equipment and finish work attached
to and made a permanent part of the Premises; and
any taxes and freight costs directly attributed to
the Fitout. The reimbursement would also include
the reasonable amounts paid to architects and
engineers. All invoices should be submitted no
later than May 2, 2000.
(iv) The following are not Eligible Costs: the cost of
any Airline operating facilities, as specified in
the Agreement, Article 3.01, including furniture,
furnishings, special light fixtures, carpeting,
draperies, wall coverings, decorations, decorating
or other special finishing work, appliance, trade
fixtures and equipment that is owned, furnished,
installed and used by the airline in its operation
at the Airport. The cost of Airline personnel and
overhead costs of any Airline are not Eligible
Costs.
(v) Any Fitout Improvement costs incurred by the
Airline in excess of the maximum stated above
shall be the responsibility of the Airline and
shall not be an Eligible Cost.
(vi) The Authority shall reimburse the Airline in
accordance with the payment procedures stated
herein. The Airline will establish a separate
bank checking account to be used exclusively for
payment of Eligible Costs of reimbursable Fitout
Improvement Cost. Checks drawn upon this account
shall require the signature of both the Airline
and the Authority regardless of the amount. The
Authority shall make timely deposits of principal
funds into the account in amounts sufficient to
cover checks drawn on the account. Any interest
earned by the account, less the amount of any bank
charges against the account, including any
penalties assessed by the bank for failure of the
Authority to deposit sufficient funds into the
account to cover checks, shall belong to the
Authority and may be withdrawn by the Authority at
any time after it has been credited to the account
by the bank. Further, funds remaining in the
account after payment of Eligible Costs shall
belong to the Authority to the extent that the
Authority deposited principal into the account in
excess of the reimbursable Fitout Improvement
costs.
(vii) The Airline shall be responsible for
providing to the Authority complete documentation
of the Fitout Improvements and costs for which
reimbursement is sought showing that the work has
been performed in an acceptable manner and that
payment is due to the contractor(s). Failure to
provide such documentation in a timely manner may
delay payment to the Airline's contractor(s).
(viii) Monthly progress payments shall be made on
the basis of Eligible costs incurred or on
estimates thereof as provided by the contractor
and approved by the Airline and the Authority's
contracting officer. The Airline shall require
the contractor to submit an invoice to the
Airline. The Airline has the responsibility to
determine the amount to be paid. The Airline will
mail a signed check, drawn on the account
described herein payable to the contractor with an
original and three copies of the contractor's
invoice to the following address:
Metropolitan Washington Airports Authority
Accounting Operations Department, MA-22B
44 Canal Center Plaza
Alexandria, VA 22314-1562
The Authority reserves the right to recommend to
the Airline a reduction in the payment to the
contractor for noncompliance with Airport
regulations, the terms of this Agreement, as
amended or other specified reasons. The final
decision regarding any reduction in payment is the
responsibility of the Airline. The reason for any
reduction from the contractor's invoice amount by
the Airline shall be stated in writing and
attached to the invoice.
(ix) The Authority's Design Manual, revised as of July
1997 (including Appendices 1-3), is to be employed
by the Airline in making the Fitout Improvements.
(x) All contractors and subcontractors working on
Fitout Improvements must enroll in the Authority's
Owner Controlled Wrap-Up Insurance Program
(OCWIP). Eligibility and enrollment procedures
are defined in the OCWIP Manual, which is
available from the Authority.
(xii) The Airline shall take no action inconsistent
with Article 19.14.2 of the Agreement pertaining
to the Authority's compliance with the Internal
Revenue Code of 1986.
(xiii) The Authority strongly encourages the use of
Minority and Women Business Enterprises (MBE/WBE)
for the Fitout Improvements, regardless of the
size or location of the MBE/WBE. The Local
Disadvantaged Business Enterprise's (LDBE)
participation is also strongly encouraged, with a
goal of 25 percent LDBE participation. The
Airline agrees to contact the Authority's Equal
Opportunity Programs Department at (703) 417-8625
to pursue MBE/WBE/LDBE participation.
All other terms and conditions of the Agreement remain
unchanged.
IN WITNESS WHEREOF, the Parties hereto have executed
this Amendment.
METROPOLITAN WASHINGTON AIRPORTS AUTHORITY
By:
James A. Wilding
Date
President & CEO
ATLANTIC COAST AIRLINES
By:
Name
Date
Title
I, ________________ certify that I am the Secretary of
the Airline named herein: that who signed this Amendment on
behalf of the Airline, was then ________________ of said
Airline; that said Amendment was duly signed for and on
behalf of said corporation by authority of its governing
body and is within the scope of its corporate powers.
________________________
(Corporate Seal)
Secretary's Signature
