SCHEDULE 13D
Amendment No.
America West Airlines, Inc.
common stock
Cusip # 023650104
Filing Fee: Yes
Cusip # 023650104
Item 1: Reporting Person - Belmont Capital Partners II,
L.P. - (Tax ID: 04-3195259)
Item 4: PF
Item 6: Delaware
Item 7: 1,920,987.5
Item 8: None
Item 9: 1,920,987.5
Item 10: None
Item 11: 1,920,987.5
Item 13: 7.60%
Item 14: PN
Item 1. Security and Issuer.
The security to which this statement relates is the
common stock, $0.25 par value per share (the "Common
Stock"), of America West Airlines, Inc., a Delaware
corporation (the "Company"). The principal executive
offices of the Company are located at 4000 East Sky Harbor
Boulevard, Phoenix, Arizona 85034. The Company is currently
operating as a debtor-in-possession under Chapter 11 of the
United States Bankruptcy Code.
Item 2. Identity and Background.
The shares of Common Stock to which this statement
relates are directly owned by Belmont Capital Partners II,
L.P., a Delaware limited partnership ("Belmont II"). The
principal business of Belmont II is to invest in publicly
traded and privately held securities and other obligations
of financially troubled companies. The principal executive
offices of Belmont II are located at 82 Devonshire Street,
Boston, Massachusetts 02109.
The general partner of Belmont II is Fidelity Capital
Partners II Corp., a Massachusetts corporation ("Fidelity
Capital Partners"). The principal business of Fidelity
Capital Partners is to serve as the general partner of
Belmont II. The principal executive offices of Fidelity
Capital Partners are located at 82 Devonshire Street,
Boston, Massachusetts 02109.
Fidelity Capital Partners is a wholly-owned subsidiary
of FMR Corp., a Massachusetts corporation ("FMR"). FMR is a
holding company with various directly or indirectly held
subsidiaries that are engaged in investment management,
venture capital asset management, securities brokerage,
transfer and shareholder servicing and real estate
development. The principal executive offices of FMR are
located at 82 Devonshire Street, Boston, Massachusetts
02109.
Edward C. Johnson 3d owns 34.0% of the outstanding
voting common stock of FMR. Mr. Johnson 3d is also the
Chairman of FMR. The business address and principal
occupation of Mr. Johnson 3d are set forth in Schedule A
hereto.
The name, residence or business address, principal
occupation or employment and citizenship of each of the
executive officers and directors of FMR are set forth in
Schedule A hereto.
Fidelity Management Trust Company ("FMTC"), a wholly-
owned subsidiary of FMR and a bank, as defined in
Section 3(a)(6) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), serves as trustee or managing
agent for Belmont II and various other private investment
accounts, primarily employee benefit plans. FMTC and
Belmont II are parties to an Investment Management Agreement
pursuant to which, among other things, FMTC has the power to
(i) direct the voting of securities held by Belmont II and
(ii) direct the disposition of securities and other assets
held by Belmont II. The principal executive offices of FMTC
are located at 82 Devonshire Street, Boston, Massachusetts
02109.
Belmont II, Fidelity Capital Partners, FMR, Edward C.
Johnson 3d and FMTC are hereinafter referred to collectively
as "Fidelity."
During the last five years, none of the persons named
in this Item 2 or listed on Schedule A hereto has been
convicted in any criminal proceeding (excluding traffic
violations or similar misdemeanors) or has been a party to
any civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or
finding any violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The aggregate amount of funds required by Belmont II to
purchase the Shares (as defined in Item 5) from Transpacific
Enterprises, Inc., a Washington corporation ("Transpacific")
will be $7,283,976.80. Belmont II paid Transpacific
$500,000 of such amount as a deposit upon execution of the
Transpacific Letter Agreement (as defined in Item 6), and
shall pay the balance of such funds to Transpacific at a
closing which is expected to occur on or prior to May 31,
1994. Belmont II will use (and in the case of the $500,000
deposit, has used) its own assets to make such purchase and
no part of the purchase price for the Shares will consist of
borrowed funds.
Item 4. Purpose of Transaction.
The purpose of purchasing the Shares is to acquire an
equity interest in the Company in pursuit of specified
investment objectives established by Belmont II.
Fidelity intends to review continuously its equity
position in the Company. Depending upon future evaluations
of the business prospects of the Company and upon other
developments, including, but not limited to, general
economic and business conditions and money market and stock
market conditions, Fidelity may determine to increase or
decrease its equity interest in the Company by acquiring
additional shares of Common Stock, or by disposing of all or
a portion of the Shares. Funds or accounts managed or
advised by FMTC or its affiliates (other than Belmont II),
including without limitation Belmont Fund, L.P., a Bermuda
limited partnership ("Belmont") and Fidelity Copernicus
Fund, L.P., a Delaware limited partnership ("Copernicus")
(collectively, the "Fidelity Entities"), may also purchase
additional shares of Common Stock subject to, among other
things, the availability and prices of shares for sale and
other investment opportunities that may be available to the
Fidelity Entities.
Except as set forth above and in Item 6 below, Fidelity
has no present plan or proposal which relates to or would
result in:
(a) the acquisition of additional securities of the
Company, or the disposition of securities of the
Company;
(b) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation involving
the Company or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets
of the Company or any of its subsidiaries;
(d) any change in the present board of directors or
management of the Company, including any plans or
proposals to change the number or term of
directors or to fill any existing vacancies on the
board;
(e) any material change in the present capitalization
or dividend policy of the Company;
(f) any other material change in the Company's
business or corporate structure;
(g) changes in the Company's charter, bylaws or
instruments corresponding thereto or other actions
which may impede the acquisition of control of the
Company by any person;
(h) a class of securities of the Company to be
delisted from a national securities exchange or to
cease to be authorized to be quoted in the inter-
dealer quotation system of a registered national
securities association;
(i) a class of equity securities of the Company
becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Exchange Act;
or
(j) any action similar to any of those enumerated
above.
Item 5. Interest in Securities of Issuer.
(a) At the date hereof, Belmont II has the right to
acquire (subject to satisfaction or waiver of the conditions
contained in the Transpacific Letter Agreement and, when
executed and delivered by Belmont II and Transpacific, the
Transpacific Purchase Agreement (as defined in Item 6))
1,884,438 shares (the "Common Shares") of Common Stock and
36,549.5 shares (the "Preferred Shares," together with the
Common Shares, the "Shares") of the Series C 9.75% preferred
stock, $0.25 par value per share (the "Preferred Stock"), of
the Company. The Preferred Shares are convertible into
shares of Common Stock on a share-for-share basis, subject
to certain adjustments. Assuming conversion of all of the
Preferred Shares into shares of Common Stock, the Shares
represent approximately 7.6% of the outstanding shares of
Common Stock.
In addition to Belmont II's beneficial ownership of the
Shares, (i) Fidelity Capital Partners is an indirect
beneficial owner of the Shares as the general partner of
Belmont II, (ii) FMR is an indirect beneficial owner of the
Shares through its ownership of Fidelity Capital Partners,
(iii) Edward C. Johnson 3d is an indirect beneficial owner
of the Shares through his indirect controlling interest in
Fidelity Capital Partners and (iv) FMTC is an indirect
beneficial owner of the Shares as a result of its power to
direct the voting and disposition of the Shares pursuant to
an Investment Management Agreement with Belmont II. Neither
Fidelity, any Fidelity Entity, nor any of their respective
affiliates nor, to the best knowledge of FMR, any of the
individuals named in Schedule A hereto, beneficially owns
any other shares of Common Stock.
As set forth in Item 6, Belmont II has certain
understandings regarding the Preferred Shares with TPG
Partners, L.P., a Delaware limited partnership ("TPG") and
has entered into an agreement with AmWest Partners, L.P., a
Texas limited partnership ("AmWest"), concerning the
assignment of certain of AmWest's rights under the
Investment Agreement (as defined in Item 6 below), but
Fidelity and the Fidelity Entities disclaim that they and
TPG and/or AmWest constitute a group within the meaning of
Section 13(d)(3) of the Exchange Act. To the extent that
Fidelity and TPG and/or AmWest constitute a group, however,
each would be deemed to beneficially own the shares of
Common Stock owned by the other. Information concerning
TPG's and AmWest's ownership of shares of Common Stock is
contained in a separate Schedule 13D which Belmont II
understands is being filed by TPG and AmWest.
(b) Belmont II, acting through Fidelity Capital
Partners, its general partner, has the sole power to vote
and dispose of the Shares. FMTC, pursuant to an Investment
Management Agreement with Belmont II, also has the sole
power to vote and dispose of the Shares. FMR, through its
control of Fidelity Capital Partners and FMTC, could be
deemed to have the power to direct the voting and
disposition of the Shares. Edward C. Johnson 3d, through
his controlling interest in FMR, also could be deemed to
have the power to direct the voting and disposition of the
Shares.
(c) Except as stated herein, no transactions in shares
of Common Stock were effected during the past sixty (60)
days by Fidelity, or, to the best of its knowledge, any of
the individuals identified in Schedule A hereto.
(d) Pursuant to the terms of the Transpacific Letter
Agreement, Belmont II has agreed to pay to Transpacific the
amount of any dividends that Belmont II may receive as the
holder of the Preferred Shares payable in respect of the
period commencing on the date when dividends were last paid
on the Preferred Shares through May 3, 1994.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to
Securities of the Issuer.
On May 5, 1994, Belmont II and Transpacific entered
into a letter agreement (the "Transpacific Letter
Agreement") dated May 5, 1994. The following is a brief
description of the Transpacific Letter Agreement and is
qualified in its entirety by reference to such agreement, a
copy of which is filed as an exhibit hereto and incorporated
herein by reference.
Pursuant to the Transpacific Letter Agreement, Belmont
II has agreed, subject to the satisfaction or waiver of the
conditions set forth therein (including the execution and
delivery by Belmont II and Transpacific of a definitive
purchase agreement), to purchase the Common Shares at a
price of $3.60 per share and the Preferred Shares at a price
of $500,000. In addition, Belmont II has agreed to pay to
Transpacific the amount of any dividends that it may receive
as the holder of the Preferred Shares payable in respect of
the period commencing on the date when dividends were last
paid on the Preferred Shares through May 3, 1994.
Upon the execution of the Transpacific Letter
Agreement, Belmont II paid to Transpacific the sum of
$500,000 as a deposit to be applied against the aggregate
purchase price for the Shares. Belmont II has agreed to pay
to Transpacific the balance of the purchase price at a
closing which is expected to occur on or before May 31,
1994.
Pursuant to the Transpacific Letter Agreement, Belmont
II has agreed to keep Transpacific apprised of any
information that it receives from the Company regarding the
status of the payment of any dividends on the Preferred
Shares and, at its own expense, to prosecute in the
Company's bankruptcy proceedings any claim for the payment
of dividends with respect to the Preferred Shares. TPG and
Belmont II have agreed in principle that (i) TPG will
reimburse Belmont II for all expenses incurred by Belmont II
in connection with such prosecution, and (ii) that such
parties will cooperate in coordinating such prosecution.
With the exception of this agreement in principle (to the
extent that it may be deemed to relate to the Common Stock),
there are no understandings, agreements, or arrangements
among Fidelity or the Fidelity Entities and TPG or AmWest
with respect to the Common Stock.
Transpacific and Belmont II are currently negotiating
the terms of a definitive stock purchase agreement (the
"Transpacific Purchase Agreement") which is to conform with
the terms and provisions of the Transpacific Letter
Agreement and shall contain such other terms and provisions
(including representations and warranties, covenants and
indemnification provisions) as are customarily contained in
stock purchase agreements and as may be reasonably
acceptable to the parties and their respective counsel. In
the event that, despite their best efforts, the parties are
unable to agree upon a mutually acceptable purchase
agreement by May 21, 1994, either Transpacific or Belmont II
may terminate the Transpacific Letter Agreement. The
$500,000 deposit made by Belmont II will be returned to
Belmont II by Transpacific upon any termination which is not
the result of a breach by Belmont II of the Transpacific
Letter Agreement or the Transpacific Purchase Agreement.
On May 6, 1994, TPG entered into a separate letter
agreement with Transpacific, the terms of which are
substantially similar to the terms of the Transpacific
Letter Agreement, except for certain obligations of TPG with
respect to a claim of Transpacific against the Company.
Pursuant to such letter agreement, TPG has agreed, subject
to the satisfaction or waiver of the conditions contained
therein, to purchase from Transpacific an aggregate of
1,884,438 shares of Common Stock and 36,549.5 shares of
Preferred Stock, which together with the Shares, represent
all of the securities of the Company owned by Transpacific.
The acquisition by TPG of such shares of Common Stock and
Preferred Stock is the subject of a separate Schedule 13D
which Belmont II understands is being filed by TPG and
AmWest.
In connection with the transactions described above,
the Company's Board of Directors adopted certain resolutions
(i) excepting Fidelity, the Fidelity Entities and certain of
their affiliates from the application of Section 203 of the
Delaware General Corporation Law, (ii) approving the
"Beneficial Ownership" (as defined in the Amended and
Restated Rights Agreement between the Company and First
Interstate Bank of Arizona, N.A. dated June 17, 1988 (the
"Rights Agreement")) by Fidelity, the Fidelity Entities and
certain of their affiliates for purposes of the Rights
Agreement, (iii) confirming that none of such entities shall
be deemed an "Acquiring Person" or "Adverse Person" (as such
terms are defined in the Rights Agreement) and that no
"Distribution Date," "Share Acquisition Date," "Business
Combination" or "Triggering Event" (as such terms are
defined in the Rights Agreement) shall be deemed to occur as
a result of the acquisition by Fidelity of the Shares,
(iv) agreeing to give Fidelity prior written notice of any
amendment to the resolutions described in clauses (ii) or
(iii) and to provide Fidelity with the opportunity to meet
with the Board to discuss any such amendment prior to its
adoption, and (v) agreeing to indemnify Fidelity, the
Fidelity Entities and certain of their affiliates for any
damages incurred by such entities as a result of or in
connection with any amendment to the resolutions described
in clauses (ii) or (iii).
Prior to Belmont II and TPG entering into the letter
agreements described above, on April 21, 1994, AmWest and
the Company entered into a Third Revised Investment
Agreement dated April 21, 1994 (the "Investment Agreement").
The following is brief description of certain provisions of
the Investment Agreement and is qualified in its entirety by
reference to such agreement, a copy of which is filed as an
exhibit hereto and incorporated herein by reference.
Pursuant to the Investment Agreement, AmWest has
agreed, in connection with and as part of the proposed joint
plan of reorganization of the Company of which AmWest is a
co-proponent (the "Plan") and subject to the satisfaction or
waiver of certain conditions (including confirmation of the
Plan by the United States Bankruptcy Court of the District
of Arizona (the "Bankruptcy Court")), to acquire certain
voting securities, debt securities and warrants of the
reorganized company ("New America West") upon the Company's
emergence from bankruptcy. Under the Investment Agreement,
AmWest has the right to assign (in whole or in part) its
rights to acquire such securities and warrants to other
parties. If the transactions contemplated by the Investment
Agreement are successfully completed, AmWest will own a
controlling interest in New America West. The Investment
Agreement also provides that, in connection with the
consummation of the Plan, the members of the Board of
Directors of New America West shall be designated as
described in the Investment Agreement and the certificate of
incorporation and bylaws of the Company will be amended in
accordance with the provisions of the Investment Agreement.
The Company, AmWest, the Official Equity Committee and
the Official Creditors Committee are currently working to
prepare the Plan and an accompanying disclosure statement,
which the Company currently expects to file with the
Bankruptcy Court by May 17, 1994. Fidelity currently
intends, after the Plan and disclosure statement have been
filed with the Bankruptcy Court, to vote any shares of
Common Stock it or any Fidelity Entity owns in favor of the
Plan. It is anticipated that upon consummation of the Plan,
(i) the Common Stock will be cancelled and will cease to be
authorized to be quoted in the National Association of
Securities Dealers Automated Quotation System and listed on
the Pacific Stock Exchange, and its registration will be
terminated pursuant to Section 12(g)(4) of the Exchange Act,
and (ii) the Preferred Stock will be cancelled.
On April 21, 1994, the Company and AmWest entered into
a Third Revised Interim Procedures Agreement (the
"Procedures Agreement"). The following is a brief
description of certain provisions of the Procedures
Agreement and is qualified in its entirety by reference to
such agreement, a copy of which is filed as an exhibit
hereto and incorporated herein by reference.
During the term of the Procedures Agreement, the
Company has agreed not to initiate or solicit any offer or
proposal providing for, or in furtherance of, any Prohibited
Transaction, except under the circumstances expressly set
forth in the Procedures Agreement, including the provision
of notice and information to AmWest and the opportunity for
AmWest to make a matching bid. Prohibited Transactions are
defined in the Procedures Agreement, subject to certain
express exceptions, as (i) transactions similar to the
investment by AmWest contemplated by the Investment
Agreement, including the issuance and sale by the Company of
any of the securities contemplated thereby, (ii) the
designation of the proposal of a plan of any party other
than AmWest as a Lead Plan Proposal (as defined in the
Procedures Agreement), (iii) the execution of a contract
with any other airline which would interfere with the
operation of the Alliance Agreements (as defined in the
Procedures Agreement) between certain affiliates of AmWest
and the Company which are contemplated by the Investment
Agreement, (iv) any merger or consolidation of the Company,
(v) any issuance or sale of debt or equity securities by the
Company, or (vi) any sale, encumbrance, lease or other
disposition of material assets of the Company or interest
therein outside the ordinary and normal course of the
Company's business.
On April 7, 1994, Belmont II, Belmont and Copernicus
entered into a Subscription Agreement with AmWest dated
April 7, 1994 (the "Subscription Agreement"). The following
is a brief description of the Subscription Agreement and is
qualified in its entirety by reference to such agreement, a
copy of which is filed as an exhibit hereto and incorporated
herein by reference.
Pursuant to the Subscription Agreement, Belmont II,
Belmont and Copernicus agreed, subject to the terms and
conditions contained therein, to accept an assignment from
AmWest of certain of its rights under the Investment
Agreement, including the right to purchase certain voting
securities, debt securities and warrants of New America
West. In addition, Belmont II, Belmont and Copernicus have
agreed that, except with the consent of AmWest, neither they
nor any of their affiliates shall, prior to the earlier of
(i) the consummation of the Plan, or (ii) termination of the
Investment Agreement, commit funds to, or otherwise become
involved with any other entity which may attempt to acquire
control of the Company.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 - Transpacific Letter Agreement
Exhibit 2 - Investment Agreement
Exhibit 3 - Interim Procedures Agreement
Exhibit 4 - Subscription Agreement
This statement speaks as of its date, and no inference
should be drawn that no change has occurred in the facts set
forth herein after the date hereof.
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Belmont Capital Partners II,
L.P.
By: Fidelity Capital Partners
II Corp.,
its general partner
Dated: May 16, 1994 By: /s/ Judy K. Mencher
Name: Judy K. Mencher
Title: Vice President
and Associate General Counsel
Schedule A
The name and present principal occupation or employment
of each executive officer and director of FMR Corp. are set
forth below. The business address of each person is
82 Devonshire Street, Boston, Massachusetts 02109, and the
address of the corporation or organization in which such
employment is conducted is the same as his business address.
All of the persons listed below are U.S. citizens.
POSITION WITH PRINCIPAL
NAME FMR CORP. OCCUPATION
Edward C. Johnson 3d President, Director, Chairman of
the Board
CEO, Chairman & and CEO -
FMR
Mng. Director
J. Gary Burkhead Director President -
Fidelity
Management
& Research
Company(1)
Caleb Loring, Jr. Director, Mng. Director Director -
FMR
James C. Curvey Director, Sr. V.P. Sr. V.P. -
FMR
William L. Byrnes Vice Chairman, Vice
Chairman -
Director & Mng. Director Fidelity International
Limited(2)
Robert C. Pozen Sr. V.P. & Gen'l Counsel Sr. V.P. & Gen'l Counsel - FMR
Mark Peterson Exec. V.P. - Management Exec., V.P.
- - Resources Management
Resources -
FMR
Denis McCarthy Sr. Vice Pres. - Administration Vice Pres., Chief
Chief Financial Officer Financial
Officer - FMR
______________________
(1) Fidelity Management & Research Company is a
Massachusetts corporation and a wholly-owned subsidiary of
FMR ("FMRC"). FMRC is an investment adviser which is
registered under Section 203 of the Investment Advisers Act
of 1940 and which provides investment advisory services to
more than thirty investment companies which are registered
under Section 8 of the Investment Company Act of 1940.
(2) Fidelity International Limited is a Bermuda joint stock
company incorporated for an unlimited duration by private
act of the Bermuda legislature ("FIL"). FIL is an
investment adviser which provides investment advisory and
management services to a number of non-U.S. investment
companies or investment trusts and certain institutional
investors. Various foreign-based subsidiaries of FIL are
also engaged in investment management.
78258.c5
May 5, 1994
Transpacific Enterprises, Inc.
c/o David Mortimer
Finance Director
TNT Limited
TNT Plaza, Tower 1, Lawson Square
Redfern, 2016, New South Wales
Australia
RE: America West Airlines, Inc.
Gentlemen:
Subject to the terms and conditions set forth below,
Transpacific Enterprises, Inc. ("TPE") and all affiliates of
TPE (collectively, the "Seller") hereby agrees to sell, and
Belmont Capital Partners II, L.P. ("Belmont") hereby agrees
to purchase, 1,884,438 shares of the Common Stock of, and
$500,000 face amount of Series C 9.75% Preferred Stock of,
America West Airlines, Inc. ("America West"), a Delaware
corporation currently operating as a debtor-in-possession
under Chapter 11 of the U.S. Bankruptcy Code.
1. Securities to be Purchased:
(a) 1,884,438 shares of Common Stock (the "Common Stock")
and (b) $500,000 face amount of 9.75% Series C Preferred
Stock (the "Preferred Stock," and together with the Common
Stock, the "Stock"). As of the date hereof, the Seller owns
3,768,876 shares of Common Stock and $1,000,000 face amount
of the Preferred Stock of America West. The Stock shall be
delivered to Belmont at the Closing (as defined below) with
good and marketable title, free and clear of any liens,
pledges, security interests, charges, encumbrances or other
restrictions.
2. Price:
(a) The price to be paid for the Common Stock shall
be $3.60 per share.
(b) The price to be paid for the Preferred Stock
shall be $500,000 plus any amount that the holder of the
Preferred Stock shall receive as dividends on the Preferred
Stock payable in respect of the period commencing on the
date when dividends were last paid on the Preferred Stock
through May 3, 1994 (the "TPE Preferred Stock Dividend").
Belmont shall keep TPE apprised of any information that it
receives from America West regarding the status of the
payment of dividends on the Preferred Stock. At the expense
of Belmont, Belmont shall prosecute in the U.S. Bankruptcy
Court proceedings of America West any claim of the holder
for the payment of dividends with respect to the Preferred
Stock; provided, however, that if TPE desires to assume such
prosecution of any such claim it shall notify Belmont, and
thereafter shall have the right at its own expense to assume
the prosecution of such claim.
3. Deposit: Upon the execution
of this letter agreement, Belmont shall pay to TPE the sum
of $500,000 as a deposit against the price to be paid by
Belmont for the Stock. Such deposit shall be returned to
Belmont promptly in the event that the transactions
contemplated by this letter agreement are not consummated by
the Termination Date (as defined below) unless the failure
to consummate the transactions shall result from the breach
by Belmont of its obligations hereunder or under the
Purchase Agreement (as defined below).
4. Closing and Payment: Upon the
Closing Belmont shall pay to TPE a total of (i) an amount
equal to $3.60 times the number of shares of Common Stock to
be purchased under the Purchase Agreement plus
(ii) $500,000, less the Deposit. If the Closing has
occurred, Belmont shall pay to TPE promptly any amount
received by it in respect of dividends received in respect
of the TPE Preferred Stock Dividend and shall hold any such
receipts in trust on behalf of TPE.
5. Purchase Agreement: Following
execution of this letter agreement by TPE and Belmont,
counsel for the parties shall promptly prepare a stock
purchase agreement (the "Purchase Agreement") which shall
conform with the terms and provisions of this letter
agreement and shall contain such other terms and provisions
(including representations and warranties, covenants and
indemnification provisions) as are customarily contained in
stock purchase agreements and as may be reasonably
acceptable to the parties and their respective counsel. The
parties shall use their best efforts to negotiate a mutually
acceptable Purchase Agreement by May 13, 1994. It is the
intention of the parties that the Purchase Agreement be
executed within 14 days after execution of this letter
agreement and the parties shall use their best efforts to do
so. In the event that despite the best efforts of the
parties the parties have not agreed on a mutually acceptable
Purchase Agreement by May 21, 1994, either TPE or Belmont
may terminate this letter agreement.
6. Closing: Closing of the
Purchase Agreement (the "Closing") shall occur as soon as
possible after the execution thereof and upon the receipt of
any necessary governmental or other approvals, if any. TPE
and Belmont shall use their best efforts to cause the
closing of the Purchase Agreement to occur no later than May
31, 1994 (the "Termination Date").
7. Restrictions on Increases in
Ownership of Stock: After the date hereof until the
effectiveness of any plan of reorganization regarding
America West, the Seller shall not directly or indirectly,
through one or more transactions or acting in concert with
one or more persons, acquire, control or hold proxies,
options or warrants for (all of which are comprised within
the word "acquire" as used herein) any additional shares of
Stock or any securities exchangeable for or convertible into
Stock.
8. Purchase for Investment.
Belmont represents that by reason of its business and
financial experience, and the business and financial
experience of those persons, if any, retained by it to
advise it with respect to its investment in the Stock,
Belmont has, alone or together with such advisors, such
knowledge, sophistication and experience in business and
financial matters as to be capable of evaluating the merits
and risks of its proposed investment in the Stock, that it
will be purchasing the Stock for its own account, or for one
or more separate accounts maintained by it, or for the
account of one or more institutional investors on whose
behalf Belmont has authority to make this representation,
for investment and not with a view to the distribution
thereof or with any present intention of distributing or
selling any of the Stock, except in compliance with the U.S.
Securities Act of 1933, as amended, and except to one or
more such institutional investors; provided, however, that
the disposition of Belmont's or such investor's property
shall at all time be within its control.
9. Mutual Representation and
Warranty: Each of TPE and Belmont believes it possesses all
information it considers necessary or appropriate for
deciding whether or not to sell or purchase the Stock. Each
of the parties, through its relationship with America West
in connection with the U.S. Bankruptcy Court proceedings of
America West and the proposed reorganization of America
West, may have material non-public information concerning
America West and, and the extent that it has such
information, is not sharing such information with, or
relying on, the other party hereto, in connection with its
agreement to purchase or sell the Stock.
10. Further Assurances: TPE and
Belmont hereby agree to do such further things and to
execute such further documents as may be necessary or
desirable to effectuate this letter agreement and the
transactions contemplated herein, including, but not limited
to, all necessary consents, permissions, notices and similar
documents or instruments.
11. Governing Law: This letter
agreement and the Purchase Agreement shall be governed by
and construed in accordance with the laws of the State of
Delaware applicable to agreements made and entirely to be
performed with the State of Delaware.
Please confirm that the foregoing correctly sets
forth the understandings between TPE and Belmont by signing
this letter agreement at the space indicated below and
returning one fully signed copy to the undersigned.
BELMONT CAPITAL PARTNERS II, L.P.
By: _____________________
Name: ___________________
Title: __________________
Agreed to this ____ day of
May, 1994:
TRANSPACIFIC ENTERPRISES, INC.
By: ___________________
Name: _________________
Title: ________________
THIRD REVISED INVESTMENT AGREEMENT
April 21, 1994
America West Airlines, Inc.
4000 East Sky Harbor Boulevard
Phoenix, AZ 85034
Attention: William A. Franke
Chairman of the Board
Gentlemen:
This letter agreement (this "Agreement") sets forth the
agreement between America West Airlines, Inc., a Delaware
corporation (including, on or after the effective date of the
Plan, as defined herein, its successors, as reorganized pursuant
to the Bankruptcy Code, as defined herein) (the "Company"), and
AmWest Partners, L.P., a Texas limited partnership ("Investor").
The Company will issue and sell to Investor, and
Investor hereby agrees and commits to purchase from the Company,
a package of securities of the Company for $244,857,000 in cash
(subject to adjustment as herein provided), consisting of (i)
shares of Class A Common Stock of the Company ("Class A Common"),
(ii) shares of Class B Common Stock of the Company ("Class B
Common" and, together with the Class A Common, "Common Stock"),
(iii) senior unsecured notes of the Company ("Notes") and (iv)
warrants to purchase shares of Class B Common ("Warrants"), all
on the terms and subject to the terms and conditions hereinafter
set forth.
Investor's purchase of the securities referred to above
(the "Investment") will be made in connection with and as part of
the transactions to be consummated pursuant to a joint Plan of
Reorganization of the Company (the "Plan") and an order (the
"Confirmation Order") confirming the Plan issued by the
Bankruptcy Court, as defined herein. The Plan will contain
provisions called for by, or otherwise consistent with, this
Agreement.
In consideration of the agreements of Investor
hereunder, and as a precondition and inducement to the execution
of this Agreement by Investor, the Company has entered into the
Third Revised Interim Procedures Agreement with Investor, dated
the date hereof (the "Procedures Agreement").
SECTION 1. Definitions. For purposes of this Agreement,
except as expressly provided herein or unless the context
otherwise requires, the following terms shall have the following
respective meanings:
"Affiliate" shall mean (i) when used with reference to
any partnership, any Person that, directly or indirectly,
owns or controls 10% or more of either the capital or profit
interests of such partnership or is a partner of such
partnership or is a Person in which such partnership has a
10% or greater direct or indirect equity interest and (ii)
when used with reference to any corporation, any Person
that, directly or indirectly, owns or controls 10% or more
of the outstanding voting securities of such corporation or
is a Person in which such corporation has a 10% or greater
direct or indirect equity interest. In addition, the term
"Affiliate," when used with reference to any Person, shall
also mean any other Person that, directly or indirectly,
controls or is controlled by or is under common control with
such Person. As used in the preceding sentence, (A) the
term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the
management and policies of the entity referred to, whether
through ownership of voting securities, by contract or
otherwise and (B) the terms "controlling" and "controls"
shall have meanings correlative to the foregoing.
Notwithstanding the foregoing, the Company will be deemed
not to be an Affiliate of Investor or any of its partners or
assignees.
"Alliance Agreements" shall have the meaning specified
in Section 5.
"Approvals" shall have the meaning specified in Section
8(b).
"Bankruptcy Code" shall mean Chapter 11 of the United
States Bankruptcy Code.
"Bankruptcy Court" shall mean the United States
Bankruptcy Court for the District of Arizona.
"Business Combination" means:
(i) any merger or consolidation of the Company with
or into Investor or any Affiliate of Investor;
(ii) any sale, lease, exchange, transfer or other
disposition of all or any substantial part of the assets
of the Company to Investor or any Affiliate of Investor;
(iii) any transaction with or
involving the Company as a result of which Investor or
any of Investor's Affiliates will, as a result of
issuances of voting securities by the Company (or any
other securities convertible into or exchangeable for
such voting securities) acquire an increased percentage
ownership of such voting securities, except pursuant to
a transaction open on a pro rata basis to all holders of
Class B Common; or
(iv) any related series or combination of
transactions having or which will have, directly or
indirectly, the same effect as any of the foregoing.
"Class A Common" shall have the meaning specified in the
second paragraph of this Agreement.
"Class B Common" shall have the meaning specified in the
second paragraph of this Agreement.
"Common Stock" shall have the meaning specified in the
second paragraph of this Agreement.
"Company" shall have the meaning specified in the first
paragraph of this Agreement.
"Confirmation Date" shall mean the date on which the
Confirmation Order is entered by the Bankruptcy Court.
"Confirmation Order" shall have the meaning specified in
the third paragraph of this Agreement.
"Continental" shall mean Continental Airlines, Inc.
"Creditors' Committee" shall mean the Official Committee
of the Unsecured Creditors of America West Airlines, Inc.
appointed in the Company's Chapter 11 case pending in the
Bankruptcy Court.
"Disclosure Statement" shall mean a disclosure statement
with respect to the Plan.
"Effective Date" shall mean the effective date of the
Plan; provided that in no event shall the Effective Date be
(a) earlier than 11 days after the Bankruptcy Court approves
and enters the Confirmation Order providing for the
confirmation of the Plan or (b) before all material
Approvals are obtained.
"Electing Party" shall have the meaning specified in
Section 4(a)(2)(ii).
"Equity Committee" shall mean the Official Committee of
Equity Holders of America West Airlines, Inc. appointed in
the Company's Chapter 11 case pending in the Bankruptcy
Court.
"Equity Holders" shall mean the Company's equity
security holders (including holders of common stock and
preferred stock) of record as of the applicable record date
fixed by the Bankruptcy Court.
"Governance Agreements" shall have the meaning specified
in Section 6.
"GPA" shall mean GPA Group plc or, if applicable, any
direct or indirect subsidiary thereof.
"GPA Put Agreement" shall have the meaning specified in
Section 7(j).
"Independent Directors" shall have the meaning specified
in Section 6(a)).
"Initial Order" shall have the meaning specified in
Section 8(a).
"Investment" shall have the meaning specified in the
third paragraph of this Agreement.
"Investor" shall have the meaning specified in the first
paragraph of this Agreement.
"Mesa" shall mean Mesa Airlines, Inc.
"Monthly Targets" shall mean the amounts specified in
the Monthly Targets Schedule.
"Monthly Targets Schedule" shall mean the letter
agreement between the Company and Investor dated the date
hereof.
"Notes" shall have the meaning specified in the second
paragraph of this Agreement. The Notes shall be subject to
the terms and conditions set forth in Exhibit B hereto.
"Outside Date" shall mean August 31, 1994; provided that
Investor shall have the right from time to time to
irrevocably extend the Outside Date to a date not later than
November 30, 1994, but only if Investor gives the Company
prior written notice of its election to extend the then
current Outside Date (which notice shall specify the new
Outside Date) and then only if, at the time of the giving of
such notice, Investor is not in breach of any of its
representations, warranties, covenants or obligations under
this Agreement, the Procedures Agreement or any Related
Agreement (excluding any breach by Investor which is not
willful or intentional and which is capable of being cured
on or before the new Outside Date). Unless waived by the
Company, any notice given pursuant to this definition shall
be delivered to the Company not less than 15 days prior to
the then current Outside Date except that, in the event the
Effective Date has not occurred for any reason arising
within such 15-day period not due to a breach by Investor of
any of its representations, warranties, covenants or
agreements hereunder, such notice shall be given as soon as
practicable but in no event later than the then current
Outside Date.
"Person" means a natural person, a corporation, a
partnership, a trust, a joint venture, any Regulatory
Authority or any other entity or organization.
"Plan" shall have the meaning specified in the third
paragraph of this Agreement.
"Plan 9" means the Company's Plan Revision No. 9 which
consists of the Summary Pro Forma Financial Statements: June
1993 Through December 1994, dated July 15, 1993.
"Plan R-2" shall mean the Company's Summary Pro Forma
Financial Statements, 5 Year Plan: 1994 Through 1998, Plan
No. R-2, dated January 13, 1994.
"Procedures Agreement" shall have the meaning specified
in the fourth paragraph of this Agreement.
"Projections" shall mean the projections set forth in
Plan 9 on pages 15 and 18 of Tab E and pages 7 and 8 of Tab
F.
"Purchase Price" shall have the meaning specified in
Section 2.
"Regulatory Approvals" shall mean all approvals,
permits, authorizations, consents, licenses, rulings,
exemptions and agreements required to be obtained from, or
notices to or registrations or filings with, any Regulatory
Authority (including the expiration of all applicable
waiting periods, if any, under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended) that are
necessary or reasonably appropriate to permit the Investment
and the other transactions contemplated hereby and by the
Related Agreements and to permit the Company to carry on its
business after the Investment in a manner consistent in all
material respects with the manner in which it was carried on
prior to the Effective Date or proposed to be carried on by
the reorganized Company.
"Regulatory Authority" shall mean any authority, agency,
commission, official or other instrumentality of the United
States, any foreign country or any domestic or foreign
state, county, city or other political subdivision.
"Related Agreements" shall have the meaning specified in
Section 3.
"Securities" shall mean the securities of the Company
issued to the Unsecured Parties, Investor and its assigns
and GPA under this Agreement. The Securities are described
in Section 4.
"Unsecured Creditors" shall mean, as of any date, the
Persons holding of record as of such date the allowed or
allowable prepetition unsecured claims without priority of
the Company.
"Unsecured Parties" shall mean the Equity Holders and
the Unsecured Creditors.
"Warrants" shall have the meaning specified in the
second paragraph of this Agreement.
SECTION 2. Commitment to Make Investment. Subject to
the terms and conditions of this Agreement and the Procedures
Agreement, on the Effective Date, the Company shall issue and
sell and Investor shall purchase Securities in accordance with
this Agreement and the Plan. Such Securities shall be issued,
sold and delivered to Investor, its designees and/or one or more
third party investors, and the $244,857,000 purchase price
therefor, as such purchase price may be adjusted pursuant hereto
(the "Purchase Price"), shall be paid by wire transfer of
immediately available funds on the Effective Date.
SECTION 3. Related Agreements. The agreements
necessary to effect the Investment (the "Related Agreements",
such term to include the Alliance Agreements and the Governance
Agreements) shall be in form and substance reasonably
satisfactory to Investor and the Company, and shall contain terms
and provisions, including representations, warranties, covenants,
warranty termination periods, materiality exceptions, cure
opportunities, conditions precedent, anti-dilution provisions (as
appropriate), and indemnities, as are in form and substance
reasonably satisfactory to such parties; provided, however, that
the Related Agreements shall contain provisions called for by, or
otherwise consistent with, this Agreement.
SECTION 4. Capitalization. (a) Upon consummation of
the Plan, the capitalization of the Company shall be as follows:
(1) Class A Common. There shall be 1,200,000 shares of
Class A Common, all of which shares shall, in accordance
with the Plan, be issued to Investor. Investor shall pay
$8,960,400 for the Class A Common. At the option of the
holders thereof, shares of Class A Common shall be
convertible into shares of Class B Common on a share for
share basis.
(2) Class B Common. There shall be 43,800,000 shares of
Class B Common, all of which shares shall, in accordance
with the Plan, be issued as follows:
(i) Investor. Investor shall be issued 13,875,000
shares plus the number of shares (if any) to be acquired
by Investor pursuant to clause (ii) below minus the
number of shares, if any, purchased by the Equity
Holders pursuant to the second sentence of clause (iii)
below. For each share of Class B Common issued to it,
Investor shall pay $7.467; provided that (A) for each
share acquired by Investor pursuant to clause (ii) below
and (B) for each share not purchased by the Equity
Holders pursuant to clause (iii) below, Investor shall
pay $8.889.
(ii) Unsecured Creditors. The Unsecured Creditors
(or a trust created for their benefit) shall be issued
26,775,000 shares. Notwithstanding the foregoing, each
Unsecured Creditor shall have the right to elect to
receive cash equal to $8.889 for each share of Class B
Common otherwise allocable to it under this clause (ii).
The election of each such Person (the "Electing Party")
must be made on or before the date fixed by the
Bankruptcy Court for voting with respect to the Plan;
provided, however, that in the event that such elections
of all Electing Parties aggregate to more than $100
million, then (A) the amount of cash so paid shall be
limited to $100 million and (B) the Electing Parties
shall each receive proportionate amounts of cash and
ClassUB Common in accordance with the Plan. Subject to
the foregoing proviso, Investor shall increase the
Investment by the amount necessary to pay all Electing
Parties the cash amounts payable to them under this
clause (ii) in respect of the shares of Class B Common
specified in their elections and, upon payment of such
amounts, such shares shall be issued to Investor without
further consideration. Notwithstanding the foregoing,
Investor's acquisition of shares of Class B Common
pursuant to this clause (ii) shall, if permitted by
applicable securities and other laws, be consummated
immediately after the issuance of such shares to the
Electing Parties on the Effective Date. If such shares
are not so acquired post-consummation of the Plan, all
shares of Class B Common acquired by Investor pursuant
to this clause (ii) shall, for all purposes hereof, be
deemed to be part of the Securities acquired by Investor
hereunder.
(iii) Equity Holders. The Equity Holders (or a
trust created for their benefit) shall be issued
2,250,000 shares. In addition, the Equity Holders shall
have the right to purchase up to 1,615,179 shares
allocable to Investor pursuant to clause (i) above at
$8.889 per share. Such election must be made by each
Equity Holder on or before the date fixed by the
Bankruptcy Court for voting with respect to the Plan.
The Plan shall set forth the terms and conditions on
which the foregoing rights may be exercised.
(iv) GPA. 900,000 shares shall be issued to GPA.
(3) Warrants. There shall be Warrants to purchase
10,384,615 shares of Class B Common at the exercise price as
specified in and subject to the terms of Exhibit A hereto,
and such Warrants shall, in accordance with the Plan, be
issued as follows:
(i) Warrants to purchase up to 2,769,231 shares of
ClassUB Common shall be issued to Investor; and
(ii) Warrants to purchase up to 6,230,769 shares of
ClassUB Common shall be issued to the Equity Holders or
a trust or trusts created for their benefit; and
(iii) Warrants to purchase up to 1,384,615 shares
of Class B Common shall be issued to GPA.
(4) Senior Unsecured Notes. Investor shall, in
accordance with the Plan and subject to the terms of Exhibit
B hereto, be issued $100 million principal amount of Notes
against payment in cash of not less than 100% of the
principal amount thereof to the Company; provided, however,
that the Company shall have the right, exercised at any time
prior to the date fixed by the Bankruptcy Court for voting
with respect to the Plan, to increase the principal amount
of the Notes to be so purchased by Investor to up to $130
million. GPA shall, in accordance with the Plan, be issued
$30,525,000 principal amount of Notes; provided, however,
that GPA shall have the right to elect to receive cash in
lieu of all or any portion of the Notes otherwise issuable
to it under this paragraph (4), such election to be made on
or before the date fixed by the Bankruptcy Court for voting
with respect to the Plan.
(b) Holders of the Class A Common shall have fifty votes
per share. Holders of Class B Common shall have one vote per
share. Holders of Class A Common and holders of Class B Common
shall vote together as a single class except as otherwise
required by law or the provisions of this Agreement. Investor
may elect, with respect to any shares of Class B Common held by
it, to suspend the voting rights relating to such shares by
giving prior written notice to the Company, which notice shall
describe such shares in reasonable detail and state whether or
not the voting suspension is permanent or temporary and, if
temporary, specify the period thereof.
(c) Neither Investor nor any Affiliate of Investor or of
any partner of Investor will transfer or otherwise dispose of any
Common Stock (other than to an Affiliate of the transferor) if,
after giving effect thereto and to any concurrent transaction,
the total number of shares of Class B Common beneficially owned
by the transferor is less than 200% of the total number of shares
of Class A Common beneficially owned by the transferor; provided,
however, than nothing in this paragraph (c) shall prohibit any
Person from transferring or otherwise disposing, in a single
transaction or a series of concurrent transactions, of all shares
of Common Stock owned by such Person.
SECTION 5. Business Alliance Agreements. Continental
and the Company shall enter into mutually acceptable business
alliance agreements on the Effective Date, which agreements may
include, but shall not be limited to, agreements to share ticket
counter space, ground handling agreements, agreements to link
frequent flier programs, and combined purchasing agreements, and
schedule coordination and code sharing agreements. On the
Effective Date, Mesa shall enter into agreements with the Company
extending the existing contractual arrangements between the
Company and Mesa for five years from the Effective Date and
modifying the termination provisions thereof consistent with such
extension. Such agreements with Continental and Mesa are herein
collectively referred to as the "Alliance Agreements".
SECTION 6. Governance Agreements. On the Effective
Date, the Company, Investor and Investor's partners (other than
any such partner holding shares of Class B Common the voting
rights with respect to which have been suspended as contemplated
by Section 4(b)) shall enter into one or more written agreements
(the "Governance Agreements") effectively providing as follows:
(a) At all times during the three-year period commencing
on the Effective Date, the Company's board of directors
shall consist of 15 members designated as follows:
(i) nine members (at least 8 of whom are U.S.
citizens) shall be designated by Investor, with certain
of the partners of Investor having the right to
designate certain of Investor's designated directors;
(ii) three members (at least two of whom are U.S.
citizens) shall be designated by the Creditors'
Committee; provided that each such member shall be
reasonably acceptable to Investor at the time of his or
her initial designation;
(iii) one member shall be designated by the Equity
Committee; provided that such member shall be a U.S.
citizen reasonably acceptable to Investor at the time of
his or her initial designation;
(iv) one member shall be designated by the Company's
board of directors as constituted on the date preceding
the Effective Date; provided that such member shall be a
U.S. citizen reasonably acceptable to Investor at the
time of his or her initial designation; and
(v) one member shall be designated by GPA for so
long as GPA shall own at least 2% of the voting equity
securities of the Company; provided that such member
shall be reasonably acceptable to Investor at the time
of his or her initial designation.
The directors (and their successors) referred to in clauses
(ii), (iii) and (iv) above are hereinafter referred to
collectively as the "Independent Directors".
(b) In the case of the death, resignation, removal or
disability of an Independent Director after the Effective
Date, his or her successor shall be designated by the
Stockholder Representatives, except that if such Independent
Director was initially designated by the Creditors'
Committee or the Equity Committee and if, at the time of
such Independent Director's death, resignation, removal or
disability (as the case may be), the Creditors' Committee or
the Equity Committee (as the case may be) remains in effect,
the successor to such Independent Director shall be
designated by the Creditors' Committee or the Equity
Committee (as the case may be). As used herein,
"Stockholder Representatives" shall mean, collectively, (A)
one individual who, on the date hereof, is serving as a
director of the Company, (B) one individual who, on the date
hereof, is serving as a member of the Creditors' Committee
and (C) one individual who, on the date hereof, is serving
as a member of the Equity Committee. The initial
Stockholder Representatives shall be selected on or before
the Effective Date (x) by the Company's board of directors
in the case of the individual referred to in clause (A)
above, (y) by the Creditors' Committee in the case of the
individual referred to in clause (B) above and (z) by the
Equity Committee in the case of the individual referred to
in clause (C) above. In case of the death, resignation,
removal or disability of a Stockholder Representative after
the Effective Date, his or her successor shall be designated
by the remaining Stockholder Representatives.
(c) Until the third anniversary of the Effective Date,
Investor will vote and cause to be voted all shares of
Common Stock (other than those the voting rights of which
have been suspended) owned by Investor or any of its
partners or by the assignees or transferees of all or
substantially all of the Common Stock owned by Investor or
any of its partners (other than a Person who acquires such
stock pursuant to a tender or exchange offer open to all
stockholders of the Company) in favor of the election as
directors of any and all individuals designated for such
election as contemplated by clauses (ii), (iii), (iv) and
(v) of paragraph (a) above.
(d) No director nominated by Investor shall be an
officer or employee of Continental. All Company directors,
if any, who are selected by, or who are directors of,
Continental shall recuse themselves from voting on, or
otherwise receiving any confidential Company information
regarding, matters in connection with negotiations between
Continental and the Company (including, without limitation,
those relating to the Alliance Agreements) and matters in
connection with any action involving direct competition
between Continental and the Company. All Company directors,
if any, who are selected by, or who are directors, officers
or employees of, Mesa shall recuse themselves from voting
on, or otherwise receiving any confidential Company
information regarding, matters in connection with
negotiations between Mesa and the Company (including,
without limitation, those relating to the Alliance
Agreements) and matters in connection with any action
involving direct competition between Mesa and the Company.
(e) During the three-year period commencing on the
Effective Date, the Company will not consummate any Business
Combination unless such transaction shall be approved in
advance by at least three Independent Directors or by a
majority of the stock voted at the meeting held to consider
such transaction which is owned by stockholders of the
Company other than Investor or any of its Affiliates;
provided, however, that neither Mesa nor any fund or account
managed or advised by Fidelity Management Trust Company or
its Affiliates (or any of their non-Affiliated transferees)
will be deemed an Affiliate of Investor for purposes of
voting on any Business Combination involving Continental.
SECTION 7. Plan of Reorganization. The Plan shall (i)
be proposed jointly by the Company and Investor, (ii) contain
terms and conditions reasonably satisfactory to Investor and the
Company, and (iii) include the following provisions; provided
that Investor and the Company may, by mutual agreement, modify
the Plan or otherwise restructure the Investment in a manner
consistent with the contemplated economic consequences to the
Company, Investor, the Unsecured Parties and GPA in order to
enable the Company, as reorganized, to more fully utilize its
existing tax attributes:
(a) Debtor-in-Possession Financing. The Company's
debtor-in-possession financing shall be repaid in full in
cash on the Effective Date.
(b) Administrative Claims. All allowed administrative
claims shall be paid as required pursuant to Section 1129(a)
of the Bankruptcy Code, provided that such claims do not
exceed the amount set forth in Plan R-2 plus $15 million,
and provided further that payment of such claims in excess
of those set forth in Plan R-2 would not, if payment was to
be made in the month immediately preceding the Effective
Date, cause the Company to fail to meet any of the Monthly
Targets for such month.
(c) Tax Claims. All priority tax claims shall be paid
over the maximum term permitted by the Bankruptcy Code, as
determined by the Bankruptcy Court, with interest accruing
at a rate determined by the Bankruptcy Court, provided that
such claims do not exceed the amounts set forth in Plan R-2
plus $8.5 million, and provided further that payment of such
claims in excess of those set forth in Plan R-2 would not,
if payment was to be made in the month immediately preceding
the Effective Date, cause the Company to fail to meet any of
the Monthly Targets for such month .
(d) Nontax Priority Claims. All nontax priority claims
shall be paid as required pursuant to Section 507 of the
Bankruptcy Code, provided that such claims do not exceed the
amounts set forth in Plan R-2.
(e) Secured Claims. Secured debt claims shall be
treated as provided in Plan R-2 subject to (i) modification
based on updated appraisals of collateral values to be
conducted by the Company and consistent with the applicable
provisions of the Bankruptcy Code, or (ii) such other terms
as shall be reasonably satisfactory to the Company and
Investor.
(f) Unsecured Creditors. In consideration for the
shares and cash issued or paid, as the case may be, to the
Unsecured Creditors pursuant to Section 4(a)(2)(ii), the
unsecured claims of the Unsecured Creditors shall be
cancelled as specified in the Plan.
(g) Equity Holders. In consideration for (A) the right
to purchase shares pursuant to Section 4(a)(2)(iii), (B) the
shares issued to the Equity Holders pursuant to Section
4(a)(2)(iii), and (C) the Warrants issued to the Equity
Holders pursuant to Section 4(a)(3)(ii), the equity
interests of the Equity Holders shall be cancelled as
specified in the Plan.
(h) Leases. All aircraft leases which have been assumed
prior to the date hereof will be honored by the Company in
accordance with their terms and without reduction of rentals
thereunder, provided that with the consent of the Company,
Investor and any applicable lessor, any such lease may be
amended to reduce the rentals payable thereunder, it being
understood that, in consideration of any such amendment and
with the consent of the Creditors' Committee, securities of
the Company may be issued to such lessors from securities
otherwise allocable to the Unsecured Parties to the extent
consistent with any agreement in writing entered into by
Investor and the Equity Committee on or before the date
hereof.
(i) Kawasaki. The contractual right of Kawasaki Leasing
International Inc. ("Kawasaki") to require the Company to
lease certain aircraft and aircraft engines shall be
modified on terms satisfactory to the Company, Investor and
Kawasaki or, in the absence of such modification, honored.
(j) GPA. In consideration for (A) the shares issued to
GPA pursuant to Section 4(a)(2)(iv), (B) the Warrants issued
to GPA pursuant to Section 4(a)(3)(iii), (C) the Notes and
cash issued or paid, as the case may be, to GPA pursuant to
Section 4(a)(4) and (D) the granting to GPA on the Effective
Date of the right (the "New GPA Put") to require the Company
to lease from GPA on or prior to June 30, 1999, up to eight
aircraft of types consistent with the fleet currently
operated by the Company, GPA shall, as specified in the
Plan, cancel and waive all rights to put any aircraft to the
Company which it may have pursuant to the Put Agreement
between GPA and the Company, dated as of June 25, 1991 (the
"GPA Put Agreement") and/or the related Agreement Regarding
Rights of First Refusal for A320 Aircraft, dated as of
September 1, 1992 (the "First Refusal Agreement") and all
other claims of any kind or nature arising out of or in
connection with the GPA Put Agreement and/or the First
Refusal Agreement (other than claims for reimbursement of
expenses incurred by GPA in connection therewith). Each
such lease shall provide for the payment by the Company of a
fair market rental (determined at or about the time of
delivery of the related aircraft to the Company on the basis
of rentals then prevailing in the marketplace for comparable
leases of comparable aircraft to lessees of comparable
creditworthiness); and each such lease shall have such other
terms and provisions and be in such form as is agreed upon
by the Company and GPA with the approval of Investor (which
approval shall not be unreasonably withheld or delayed) and
attached to the agreement pursuant to which GPA is granted
the New GPA Put.
(k) Prepetition Aircraft Purchase Contracts. The
prepetition contract for the purchase of aircraft between
the Company and The Boeing Company shall either be modified
on terms satisfactory to Investor, the Company and The
Boeing Company or, in the absence of such agreement,
rejected. The Company's aircraft purchase contract with
AVSA, S.A.R.L. ("Airbus") shall be amended on terms
consistent with the provisions of the AmWest - A320 Term
Sheet, dated as of February 23, 1994 by and between Investor
and Airbus.
(l) Employees. The Company shall have the right to
release employees from all currently existing obligations to
the Company in respect of shares of Company stock purchased
by such employees pursuant to the Company's stock purchase
plan, such release to be in consideration for the
cancellation of such shares.
(m) Exculpation. The Plan will contain customary
exculpation provisions for the benefit of the Creditors'
Committee and the Equity Committee and their respective
professionals.
SECTION 8. Conditions to Investor's Obligations Relating
to the Investment. The obligations of Investor to consummate the
Investment and the other transactions contemplated herein shall
be subject to the satisfaction, or the written waiver by
Investor, of the following conditions:
(a) an initial order approving the Procedures Agreement,
which order shall be in form and substance reasonably
satisfactory to Investor (the "Initial Order"), shall have
been entered by the Bankruptcy Court on or prior to May 6,
1994 and, once entered, shall be in effect and shall not be
modified in any material respect or stayed;
(b) subject to Section 10(b), the Company and Investor,
as applicable, shall have received all Regulatory Approvals,
which shall have become final and nonappealable or any
period of objection by Regulatory Authorities shall have
expired, as applicable, and all other material approvals,
permits, authorizations, consents, licenses and agreements
from other third parties that are necessary or appropriate
to permit the Investment and the other transactions
contemplated hereby and by the Related Agreements and to
permit the Company to carry on its business after the
Effective Date in a manner consistent in all material
respects with the manner in which it was carried on prior to
the Effective Date (collectively with Regulatory Approvals,
the "Approvals"), which Approvals shall not contain any
condition or restriction that, in Investor's reasonable
judgment, materially impairs the Company's ability to carry
on its business in a manner consistent in all material
respects with prior practice or as proposed to be carried on
by the reorganized Company;
(c) the certificate of incorporation and bylaws of the
Company shall contain the terms contemplated by this
Agreement and shall otherwise be reasonably satisfactory to
Investor;
(d) there shall be in effect no injunction, stay,
restraining order or decree issued by any court of competent
jurisdiction, whether foreign or domestic, staying the
effectiveness of any of the Approvals, the Initial Order or
the Confirmation Order, and there shall not be pending any
request or motion for any such injunction, stay, restraining
order or decree; provided, however, that the foregoing
condition shall not apply to any such injunction, stay,
order or decree requested, initiated or supported by
Investor or any of its partners or other Affiliates or to
any such request or motion made, initiated or supported by
Investor or any its partners or other Affiliates;
(e) there shall not be threatened or pending any suit,
action, investigation, inquiry or other proceeding
(collectively, "Proceedings") by or before any court of
competent jurisdiction or Regulatory Authority (excluding
the Company's bankruptcy case, but including adversary
proceedings and contested matters in such bankruptcy case,
and excluding any such Proceedings fully and accurately
disclosed by the Company in Schedule I hereto), or any
adverse development occurring since December 31, 1993 in any
such Proceedings, which Proceedings or development, singly
or in the aggregate, in the good faith judgment of Investor,
are reasonably likely to have a material adverse effect on
the Company's ability to carry on its business in a manner
consistent in all material respects with prior practices or
are reasonably likely to impair in any material respect
Investor's ability to realize the intended benefits and
value of this Agreement, the Procedures Agreement or any
Related Agreement; provided, however, that the foregoing
condition shall not apply to any such Proceeding or
development requested, initiated or supported by Investor or
any of its partners or other Affiliates;
(f) the Company shall have delivered to Investor
appropriate closing documents, including the instruments
evidencing the Securities being issued to Investor,
certifications of the Company officers (including, but not
limited to, incumbency certificates, and certificates as to
the truth and correctness of statements made in the
Disclosure Statement or any other offering document
distributed in connection with any securities issued in
respect of this Agreement or the Related Agreements) and
opinions of legal counsel, all of which shall be reasonably
satisfactory to Investor;
(g) by no later than March 31, 1994, the Company shall
have delivered to Investor audited financial statements as
of December 31, 1993, and for the year then ended, which
statements shall reflect a financial performance and a
financial position of the Company consistent in all material
respects with the unaudited results previously announced by
the Company for such year, and, if requested by Investor,
the Company shall have discussed such financial statements
with Investor and provided an opportunity for Investor to
discuss such financial statements with the Company's
auditors;
(h) since December 31, 1993, except for the matters
disclosed in Schedule I hereto, no material adverse change
in the Company's condition (financial or otherwise),
business, assets, properties, operations or relations with
employees or labor unions shall have occurred and no matter
(except for the matters disclosed in Schedule I hereto)
shall have occurred or come to the attention of Investor
that, in the reasonable judgment of Investor, is likely to
have any such material adverse effect;
(i) the following shall be true in all material respects
(in each case based on the Company's actual monthly or daily
financial statements, which shall be prepared by the Company
in a manner consistent in all material respects with its
historical monthly and daily financial statements previously
furnished to Investor): (A) the Company's actual monthly
Operating Cash Flow (as defined on the Monthly Targets
Schedule) shall not, in any month, be less than the minimum
amount therefor established as part of the Monthly Targets,
(B) the Company's actual 4 month Rolling Cash Flow (as
defined on the Monthly Targets Schedule) shall not be less,
as of the end of any four calendar month period, than the
minimum amount therefor established as part of the Monthly
Targets, (C) the Company's actual end of month Reported Cash
Balance (as defined in the Monthly Targets Schedule) shall
not, as of the end of any calendar month, be less than the
minimum amount therefor established as part of the Monthly
Targets, (D) the Company's actual five-day average Minimum
Cash Balance (as defined in the Monthly Targets Schedule)
shall not be, as of the end of any five day period, less
than the minimum amount therefor established as part of the
Monthly Targets; (E) the Company shall not have taken any
actions which the Company knew or reasonably should have
known would likely impair or hinder in any material respect
the Company's ability to achieve the Projections; (F) the
amount and nature of the obligations and liabilities
(including, without limitation, tax liabilities and
administrative expense claims) required to be paid by the
Company on the Effective Date or to be paid by the Company
following the Effective Date pursuant to obligations assumed
by the Company during the course of its bankruptcy
proceedings shall not be in excess of the amounts reflected
in Plan R-2 plus any additional allowances provided in
Section 7 (as reduced by any repayments of the existing
debtor-in-possession loan made on or prior to the Effective
Date) and shall not be materially different in nature than
those specified in Plan R-2 (except with respect to
administrative claims not known to the Company when Plan R-2
was developed); and (G) the Company shall have paid all fees
and expenses due Investor under the Procedures Agreement;
(j) since the date hereof, there shall have occurred no
outbreak or escalation of hostilities or other international
or domestic calamity, crisis or change in political,
financial or economic conditions or other adverse change in
the financial markets that impairs (or could reasonably be
expected to impair) in any material respect the Company's
ability to carry on its business in a manner consistent in
all material respects with prior practice or impairs (or
could reasonably be expected to impair) in any material
respect Investor's ability to realize the intended benefits
and value of this Agreement or any Related Agreement;
(k) the Related Agreements, including all Alliance
Agreements, to be executed by the Company shall have been
executed by the Company on or before the Effective Date and,
once executed, shall not have been modified without the
consent of Investor, shall be in effect and shall not have
been stayed;
(l) the Company shall have performed in all material
respects all obligations on its part required to be
performed on or before the Effective Date under this
Agreement, the Procedures Agreement and the Related
Agreements and all orders of the Bankruptcy Court in respect
thereof that are consistent with the provisions of such
instruments;
(m) all representations and warranties of the Company
under this Agreement, the Procedures Agreement and the
Related Agreements shall be true in all material respects as
of the Effective Date;
(n) the Plan and Disclosure Statement each shall have
been filed by the Company on or prior to May 15, 1994, and,
once filed, shall have been served by the Company on all
appropriate parties and, once served, shall not have been
modified in any material respect without the prior consent
of Investor (which consent shall not be unreasonably
withheld), withdrawn by the Company or dismissed;
(o) the Disclosure Statement (in the form approved by
the Bankruptcy Court and as amended or supplemented, if
applicable) shall have been true and correct in all material
respects as of the date first mailed to Unsecured Parties
and as of the date fixed by the Bankruptcy Court for voting
on the Plan and such Disclosure Statement shall not contain
any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made
therein (taken as a whole), in light of the circumstances
under which they were made, not misleading; provided,
however, that the foregoing condition shall not apply to
statements or other information furnished or provided by
Investor or any of its Affiliates for use in the Disclosure
Statement;
(p) the order approving the Disclosure Statement shall
have been entered by the Bankruptcy Court on or prior to
June 30, 1994, and, once entered, shall not have been
modified in any material respect, shall be in effect and
shall not have been stayed;
(q) the Plan (including all securities of the Company to
be issued pursuant thereto and all contracts, instruments,
agreements and other documents to be entered into in
connection therewith), the Disclosure Statement and the
Confirmation Order shall be consistent with the terms of
this Agreement and otherwise reasonably satisfactory in form
and substance to Investor;
(r) the Confirmation Order shall have been entered by
the Bankruptcy Court in form reasonably satisfactory to
Investor on or before August 15, 1994, and, once entered,
shall not have been modified in any material respect, shall
be in effect and shall not have been stayed and shall not be
subject to any appeal;
(s) the Effective Date shall have occurred on or prior
to the Outside Date unless the reason therefor shall be
attributable to the breach by Investor or its Affiliates of
any of their respective representations, warranties,
covenants or obligations contained herein or in the
Procedures Agreement or any Related Agreement;.
(t) either pursuant to the Confirmation Order or
otherwise, the Bankruptcy Court shall have established one
or more bar dates for administrative expense claims pursuant
to an order reasonably acceptable to Investor, which bar
date or dates shall occur on or before dates reasonably
acceptable to Investor; and
(u) the Securities and Exchange Commission shall have
declared effective a shelf registration statement with
respect to the Securities issuable to Investor.
In the event any of the conditions set forth in clause (a) (n),
(p) or (r) is not satisfied by the date specified in such clause
(the "Deadline"), then, on the 15th day following the then
current Deadline, the Deadline shall be automatically extended on
a day-to-day basis unless the Company and Investor otherwise
agree in writing or unless Investor gives a notice of termination
to the Company pursuant to Section 20(b) of the Procedures
Agreement within such 15-day period. If any Deadline is
automatically extended as aforesaid, Investor may thereafter
establish a new Deadline by giving notice to the Company
specifying the new Deadline, provided that the new Deadline may
not be sooner than 30 days after the date of such notice.
SECTION 9. Conditions to Company's Obligations Relating
to Investment. The Company's obligations to consummate or to
cause the consummation of the issuance and sale of the Securities
and the other transactions contemplated by this Agreement shall
be subject to the satisfaction, or to the effective written
waiver by the Company, of the condition described in Section 8(b)
and the following additional conditions:
(a) payment of the Purchase Price;
(b) Investor shall have delivered to the Company
appropriate closing documents, including, but not limited
to, executed counterparts of the Related Agreements and
certifications of officers, and opinions of legal counsel,
all of which shall be reasonably satisfactory to the
Company;
(c) there shall be in effect no injunction, stay,
restraining order or decree issued by any court of competent
jurisdiction, whether foreign or domestic, staying the
effectiveness of any of the Approvals, the Initial Order or
the Confirmation Order, and there shall not be pending any
request or motion for any such injunction, stay, restraining
order or decree; provided, however, that the foregoing
condition shall not apply to any such injunction, stay,
order or decree requested, initiated or supported by the
Company or to any such request or motion made, initiated or
supported by the Company;
(d) the Related Agreements to be executed by Investor
or any of its partners shall have been executed by such
parties on or before the Effective Date and, once executed,
shall not have been modified without the consent of the
Company, shall be in effect and shall not have been stayed;
(e) Investor, Continental and Mesa shall have performed
in all material respects all obligations on their part
required to be performed on or before the Effective Date
under this Agreement, the Procedures Agreement and the
Related Agreements and all orders of the Bankruptcy Court in
respect thereof that are consistent with the provisions of
such instruments;
(f) all representations and warranties of Investor,
Continental and Mesa under this Agreement, the Procedures
Agreement and the Related Agreements shall be true and
correct in all material respects as of the Effective Date;
(g) the Company shall be reasonably satisfied that the
Alliance Agreements, when fully implemented, shall result in
an increase to the Company's pretax income of not less than
$40 million per year; provided, however, that Investor shall
have no liability for any failure of the Company to achieve
any such increase in net income except to the extent such
failure results from a default by Investor or its partners
pursuant to the terms of such Alliance Agreements;
(h) since the date hereof, there shall have occurred (A)
no outbreak or escalation of hostilities or other
international or domestic calamity, crisis or change in
political, financial or economic conditions or other adverse
change in the financial markets or (B) any adverse change in
the condition (financial or otherwise), business, assets,
properties or prospects of Continental or Mesa, in each case
that materially impairs the ability of either Continental or
Mesa to perform its obligations under the Alliance
Agreements or the Company's ability to realize the intended
benefits and value of this Agreement, the Alliance
Agreements (as contemplated by clause (g) above) or the
other Related Agreements;
(i) since the time of their initial filing by the
Company, neither the Plan nor the Disclosure Statement shall
have been modified in any material respect without the prior
consent of the Company (which consent shall not be
unreasonably withheld or delayed), withdrawn by Investor or
dismissed;
(j) the certificate of incorporation and bylaws of the
Company shall contain the terms contemplated by this
Agreement and shall otherwise be reasonably satisfactory to
the Company;
(k) The Plan (including all Securities to be issued
pursuant thereto and all contracts, instruments, agreements
and other documents to be entered into in connection
therewith), the Disclosure Statement and the Confirmation
Order shall be consistent with the terms of this Agreement
and otherwise reasonably satisfactory in form and substance
to the Company;
(l) the Confirmation Order shall have been entered by
the Bankruptcy Court in form reasonably acceptable to the
Company and, once entered, shall not have been modified in
any material respect, shall be in effect and shall not have
been stayed and shall not be subject to any appeal; and
(m) the Effective Date shall have occurred on or prior
to the Outside Date unless the reason therefor shall be
attributable to the breach by the Company of any of its
representations, warranties, covenants or obligations
contained herein or in the Procedures Agreement or any
Related Agreement.
SECTION 10. Cooperation. (a) The Company and Investor
will cooperate in a commercially reasonable manner, and will use
their respective commercially reasonable efforts, to consummate
the transactions contemplated hereby, including all commercially
reasonable efforts to satisfy the conditions specified in this
Agreement. The Company will use commercially reasonable efforts,
and Investor will cooperate in a commercially reasonable manner
in seeking, to obtain all Approvals.
(b) Notwithstanding anything in Section 8 or 9 to the
contrary, if prior to the Outside Date, the Department of Justice
or any other Regulatory Authority raises any antitrust objection
to the consummation of the Investment or the implementation of
any Alliance Agreement, which objection has not been resolved on
or before the Outside Date, Investor nevertheless shall be
required to consummate the Investment and, to that end, agrees
to timely make such adjustment to the composition of its
partnership and to the Alliance Agreements as required to resolve
such antitrust objection; provided, however, that nothing in this
paragraph (b) shall affect the rights of the Company under
Section 9(g) or obligate the Company to enter into or approve any
adjustment or modification of the Alliance Agreements which, in
the Company's reasonable judgment, is prejudicial to the Company
or the Unsecured Parties in any material respect and which, if
entered into or approved, would materially impair the Company's
ability to realize the reasonably anticipated benefits of such
Alliance Agreements.
SECTION 11. Registration Rights Agreement. Investor
and the Company will enter into a registration rights agreement
on terms acceptable to Investor and the Company. The
registration rights agreement will reflect the understanding of
the parties with respect to their registration rights and
obligations and will provide that Investor, its partners and any
assignees and transferees, shall have the right to cause the
Company to (i) include the Securities issuable to Investor
pursuant to the Plan (including any such Securities issued or
issuable in respect of the Warrants or by way of any stock
dividend or stock split or in connection with any combination of
shares, merger, consolidation or similar transaction), on
customary terms, in "piggyback" underwritings and registrations
and (ii) to effect, on customary terms, one demand registration
under the Securities Act for the public offering and sale of the
Securities issued to Investor under the Plan at any time after
the third anniversary of the Effective Date.
SECTION 12. Applicable Provisions of Law and
Regulations. It is understood and agreed that this Agreement
shall not create any obligation of, or restriction upon, the
Company or Investor or the partners of Investor that would
violate applicable provisions of law or regulation relating to
ownership or control of a U.S. air carrier. At all times after
the Effective Date, the certificate of incorporation of the
Company shall provide that, in the event persons who are not U.S.
citizens shall own (beneficially or of record) or have voting
control over shares of Common Stock, the voting rights of such
persons shall be subject to automatic suspension as required to
ensure that the Company is in compliance with applicable
provisions of law or regulation relating to ownership or control
of a U.S. air carrier.
SECTION 13. Representations and Warranties of the
Company. The Company represents and warrants to Investor as
follows:
(a) The Company has complied in all material respects
with the terms of all orders of the Bankruptcy Court in
respect of the Investment, this Agreement and the Procedures
Agreement.
(b) The Company has delivered to Investor copies of the
audited balance sheets of the Company as of December 31,
1992 and the statements of income, stockholders' equity and
cash flows for the years then ended, together with the notes
thereto. Such financial statements, and when delivered to
Investor the financial statements of the Company referred to
in Section 8(g) will, present fairly, in accordance with
generally accepted accounting principles (applied on a
consistent basis except as disclosed in the footnotes
thereto), the financial position and results of operations
of the Company as of the dates and for the periods therein
set forth.
(c) When delivered to Investor, the unaudited financial
statements of the Company referred to in Section 15(b)(ii)
will (i) present fairly, in accordance with generally
accepted accounting principles (applied on a consistent
basis except as disclosed therein and subject to normal
year-end audit adjustments), the financial position and
results of operations of the Company as of the date and for
the period therein set forth, it being understood and
agreed, however, that the foregoing representation relating
to conformity with generally accepted accounting principles
is being made only to the extent such principles are
applicable to interim unaudited reports and (ii) reflect a
financial position and results of operations not materially
worse than those set forth in the pro forma financial
statements contained in Plan 9.
(d) The Projections and the Monthly Targets were
prepared in good faith on a reasonable basis, and when
prepared represented the Company's best judgment as to the
matters set forth therein, taking into account all relevant
facts and circumstances known to the Company. Nothing has
come to the Company's attention since the dates on which the
Projections and the Monthly Targets, respectively, were
prepared which causes the Company to believe that any of the
projections and other information contained therein were
misleading or inaccurate in any material respect as of such
dates. It is specifically understood and agreed that the
delivery of the Projections and the Monthly Targets shall
not be regarded as a representation, warranty or guarantee
that the particular results reflected therein will in fact
be achieved or are likely to be achieved.
(e) No written statement, memorandum, certificate,
schedule or other written information provided (or to be
provided) to Investor or any of its representatives by or on
behalf of the Company in connection with the transactions
contemplated hereby, when viewed together with all other
written statements and information provided to Investor and
its representatives by or on behalf of the Company, in light
of the circumstances under which they were made, (i)
contains or will contain any materially misleading statement
or (ii) omits or will omit to state any material fact
necessary to make the statements therein not misleading.
(f) The board of directors of the Company has approved
the Investment and Investor's acquisition of Securities
hereunder for purposes of, and in accordance with the
provisions and requirements of, Section 203(a)(1) of the
General Corporation Law of the State of Delaware and, as a
consequence, Investor will not be subject to the provisions
of such Section with respect to any "business combination"
between Investor and the Company (as such term is defined in
said Section 203).
SECTION 14. Representations and Warranties of Investor.
Investor represents and warrants to the Company as follows:
(a) The general and limited partners of Investor (other
than one such partner which will elect to suspend the voting
rights of its Securities as contemplated by Section 4(b))
are U.S. citizens within the meaning of Section 101(16) of
the Federal Aviation Act of 1958, as amended.
(b) Investor has, or has commitments for, sufficient
funds to pay the Purchase Price and otherwise perform its
obligations under this Agreement.
(c) No written statement, memorandum, certificate,
schedule or other written information provided (or to be
provided) to the Company or any of its representatives by or
on behalf of Investor in connection with the transactions
contemplated by the Alliance Agreements, when viewed
together with all other written statements and information
provided to the Company and its representatives by or on
behalf of Investor, in light of the circumstances under
which they were made, (i) contains or will contain any
materially misleading statement or (ii) omits or will omit
to state any material fact necessary to make the statements
therein not misleading.
SECTION 15. Covenants. (a) Investor covenants (i) to
support, subject to management's recommendation, increases in
employee compensation through 1995 at least equal to those set
forth in Plan R-2 and (ii) after the Effective Date, to cause the
board of directors of the Company to consider implementation of a
broad based employee incentive compensation plan and a management
stock incentive plan.
(b) The Company covenants (i) to use commercially
reasonable efforts to cause the shelf registration statement
referred to in Section 8(u) to remain effective for three years
following its effective date and (ii) as soon as available, to
deliver to Investor a copy of the unaudited balance sheet of the
Company as of the end of each fiscal quarter of the Company prior
to the Effective Date and the unaudited statements of income and
cash flows for the periods then ended.
SECTION 16. Certain Taxes. The Company shall bear and
pay all transfer, stamp or other similar taxes (if any are not
exempted under Section 1146 of the Bankruptcy Code) imposed in
connection with the issuance and sale of the Securities.
SECTION 17. Administrative Expense. All amounts owed to
Investor or its assignees by the Company under this Agreement,
the Related Agreements, the Procedures Agreement and all orders
of the Bankruptcy Court in respect thereof shall be treated as an
allowed administrative expense priority claim under Section
507(a)(1) of the Bankruptcy Code.
SECTION 18. Incorporation by Reference. The provisions
set forth in the Procedures Agreement, including, but not limited
to, the provisions regarding confidentiality, liability indemnity
and termination, are hereby incorporated by reference and such
provisions shall have the same force and effect herein as if they
were expressly set forth herein in full.
SECTION 19. Notices. All notices, requests and other
communications hereunder must be in writing and will be deemed to
have been duly given only if delivered personally or by facsimile
transmission or mailed (first class postage prepaid) or by
prepaid express courier to the parties at the following addresses
or facsimile numbers:
If to the Company: America West Airlines, Inc. 4000
East Sky Harbor Boulevard Phoenix,
Arizona 85034 Attention: William
A. Franke and
Martin J. Whalen Fax Number:
(602) 693-5904
with a copy to: LeBoeuf, Lamb, Greene & MacRae
633 17th Street, Suite 2800 Denver,
Colorado 80202
Attention: Carl A. Eklund Fax
Number: (303) 297-0422
and a copy to: Andrews & Kurth L.L.P. 4200 Texas
Commerce Tower Houston, Texas
77002 Attention: David G. Elkins
Fax Number: (713) 220-4285
and a copy to: Murphy, Weir & Butler
101 California Street, 39th Floor
San Francisco, California 94111
Attention: Patrick A. Murphy
Fax Number: (415) 421-7879
and a copy to: Lord, Bissell and Brook 115 South
LaSalle Street
Chicago, IL 60603
Attention: Benjamin Waisbren
Fax Number: (312) 443-0336
If to Investor: AmWest Partners, L.P. 201 Main
Street, Suite 2420 Fort Worth,
Texas 76102 Attention: James G.
Coulter Fax Number: (817) 871-4010
with a copy to: Arnold & Porter
1200 New Hampshire Ave., N.W.
Washington, D.C. 20036
Attention: Richard P. Schifter
Fax Number: (202) 872-6720
and a copy to: Jones, Day, Reavis & Pogue
North Point 901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Lyle G. Ganske
Fax Number: (216) 586-7864
and a copy to: Goodwin, Procter &Hoar
Exchange Place
Boston, MA 02109
Attention: Laura Hodges Taylor,
P.C.
Fax Number: (617) 523-1231
and a copy to: Murphy, Weir & Butler
101 California Street, 39th Floor
San Francisco, California 94111
Attention: Patrick A. Murphy
Fax Number: (415) 421-7879
and a copy to: Lord, Bissell and Brook 115 South
LaSalle Street
Chicago, IL 60603
Attention: Benjamin Waisbren
Fax Number: (312) 443-0336
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section,
be deemed given upon delivery, (ii) if delivered by facsimile
transmission to the facsimile number as provided in this Section,
be deemed given upon receipt, and (iii) if delivered by mail or
by express courier in the manner described above to the address
as provided in this Section, be deemed given upon receipt (in
each case regardless of whether such notice is received by any
other person to whom a copy of such notice, request or other
communication is to be delivered pursuant to this Section).
Either party from time to time may change its address, facsimile
number or other information for the purpose of notices to that
party by giving notice specifying such change to the other party
hereto.
SECTION 20. Governing Law. Except to the extent
inconsistent with the Bankruptcy Code, this Agreement shall in
all respects be governed by and construed in accordance with the
laws of the State of Arizona, without reference to principles of
conflicts or choice of law under which the law of any other
jurisdiction would apply.
SECTION 21. Amendment. This Agreement may only be
amended, waived, supplemented or modified by a written instrument
signed by authorized representatives of Investor and the Company.
Investor may extend the time for satisfaction of the conditions
set forth in Section 8 (prior to or after the relevant date) by
notifying the Company in writing. The Company may extend the
time for satisfaction of the conditions set forth in Section 9
(prior to or after the relevant date) by notifying Investor in
writing.
SECTION 22. No Third Party Beneficiary. This Agreement
and the Procedures Agreement are made solely for the benefit of
the Company and Investor and their respective permitted assigns,
and no other Person (including, without limitation, employees,
stockholders and creditors of the Company) shall have any right,
claim or cause of action under or by virtue of this Agreement or
the Procedures Agreement, except to the extent such Person is
entitled to protection as contemplated by Section 28(b) or to
expense reimbursement pursuant to the Procedures Agreement or may
assert a claim for indemnity pursuant to the Procedures
Agreement.
SECTION 23. Assignment. Except as otherwise provided
herein, Investor may assign all or part of its rights under this
Agreement to any of its partners (each of whom may assign all or
part to its Affiliates) or to any fund or account managed or
advised by Fidelity Management Trust Company or any of its
Affiliates and may assign any Securities (or the right to
purchase any Securities) to any lawfully qualified Person or
Persons, and the Company may assign this Agreement to any Person
with which it may be merged or consolidated or to whom
substantially all of its assets may be transferred in
facilitation of the consummation of the Plan and the effectuation
of the issuance and sale of the Securities as contemplated hereby
or by the Related Agreements. None of such assignments shall
relieve the Company or Investor of any obligations hereunder,
under the Procedures Agreement or under the Related Agreements.
SECTION 24. Counterparts. This Agreement may be
executed by the parties hereto in counterparts and by telecopy,
each of which shall be deemed to constitute an original and all
of which together shall constitute one and the same instrument.
With respect to signatures transmitted by telecopy, upon request
by either party to the other party, an original signature of such
other party shall promptly be substituted for its facsimile.
SECTION 25. Invalid Provisions. If any provision of
this Agreement is held to be illegal, invalid or unenforceable
under any present or future laws, rules or regulations, and if
the rights or obligations of Investor and the Company under this
Agreement will not be materially and adversely affected thereby,
(a) such provision will be fully severable, (b) this Agreement
will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (c)
the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom, and (d)
in lieu of such illegal, invalid or unenforceable provision,
there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to
such illegal, invalid or unenforceable provision as may be
possible. If the rights and obligations of Investor or the
Company will be materially and adversely affected by any such
provision held to be illegal, invalid or unenforceable, then
unless such provision is waived in writing by the affected party
in its sole discretion, this Agreement shall be null and void.
SECTION 26. Tagalong Rights. On the Effective Date,
Investor shall enter into a written agreement for the benefit of
all holders of Class B Common (other than Investor and its
Affiliates) whereby Investor shall agree, for a period of three
years after the Effective Date, not to sell, in a single
transaction or related series of transactions, shares of Common
Stock representing 51% or more of the combined voting power of
all shares of Common Stock then outstanding unless such holders
shall have been given a reasonable opportunity to participate
therein on a pro rata basis and at the same price per share and
on the same economic terms and conditions applicable to Investor;
provided, however, that such obligation of Investor shall not
apply to any sale of shares of Common Stock made by Investor (i)
to any Affiliate of Investor, (ii) to any Affiliate of Investor's
partners, (iii) pursuant to a bankruptcy or insolvency
proceeding, (iv) pursuant to judicial order, legal process,
execution or attachment, (v) in a widespread distribution
registered under the Securities Act of 1933, as amended
("Securities Act") or (vi) in compliance with the volume
limitations of Rule 144 (or any successor to such Rule) under the
Securities Act.
SECTION 27. Stock Legend. All securities issued to
Investor pursuant to the Plan shall be conspicuously endorsed
with an appropriate legend to the effect that such securities may
not be sold, transferred or otherwise disposed of except in
compliance with (i) Section 26 and (ii) applicable securities
laws.
SECTION 28. Directors' Liability and Indemnification.
(a) Upon, and at all times after, consummation of the Plan, the
certificate of incorporation of the Company shall contain
provisions which (i) eliminate the personal liability of the
Company's former, present and future directors for monetary
damages resulting from breaches of their fiduciary duties to the
fullest extent permitted by applicable law and (ii) require the
Company, subject to appropriate procedures, to indemnify the
Company's former, present and future directors and executive
officers to the fullest extent permitted by applicable law. In
addition, upon consummation of the Plan, the Company shall enter
into written agreements with each person who is a director or
executive officer of the Company on the date hereof providing for
similar indemnification of such person and providing that no
recourse or liability whatsoever with respect to this Agreement,
the Procedures Agreement, the Related Agreements, the Plan or the
consummation of the transactions contemplated hereby or thereby
shall be had, directly or indirectly, by or in the right of the
Company against such person. Notwithstanding anything contained
herein to the contrary, the provisions of this Section 28(a)
shall not be applicable to any person who ceased being a director
of the Company at any time prior to March 1, 1994.
(b) Investor agrees, on behalf of itself and its
partners, that no recourse or liability whatsoever (except as
provided by applicable law for intentional fraud, bad faith or
willful misconduct) shall be had, directly or indirectly, against
any person who is a director or executive officer of the Company
on the date hereof with respect to this Agreement, the Procedures
Agreement, the Related Agreements, the Plan or the consummation
of the transactions contemplated hereby or thereby, such recourse
and liability, if any, being expressly waived and released by
Investor and its partners as a condition of, and in consideration
for, the execution and delivery of this Agreement.
SECTION 29. Jurisdiction of Bankruptcy Court. The
parties agree that the Bankruptcy Court shall have and retain
exclusive jurisdiction to enforce and construe the provisions of
this Agreement.
SECTION 30. Interpretation. In this Agreement, unless
a contrary intention appears, (i) the words "herein", "hereof"
and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular Section or other
subdivision and (ii) reference to any Section means such Section
hereof. The Section headings herein are for convenience only and
shall not affect the construction hereof. No provision of this
Agreement shall be interpreted or construed against either party
solely because such party or its legal representative drafted
such provision.
SECTION 31. Termination. This Agreement shall
terminate concurrently with the termination of the Procedures
Agreement.
SECTION 32. Entire Agreement. The Agreement supersedes
any and all other agreements (oral or written) between the
parties in respect to the subject matter hereof other than the
Procedures Agreement.
AMWEST PARTNERS, L.P.
By: AmWest Genpar, Inc.,
its General Partner
By:
Title:
Accepted and Agreed to
this 21th day of April, 1994.
AMERICA WEST AIRLINES, INC.
as Debtor and Debtor-in-Possession
By:
Title:
SCHEDULE I
TO
INVESTMENT AGREEMENT
1. On October 26, 1993, the National Mediation board
certified the Airline Pilots Association as
collective bargaining agent for the Company's
flight deck crew members in NMB Case No. R-6213.
As of March 3, 1994, the union remained in a
process of internal organization consisting of a
membership drive and election of local union
officers. No proposals for a collective bargaining
agreement have yet been tendered. The Company
anticipates a formal exchange of opening proposals
as contemplated by the Railway Labor Act to occur
in mid-April.
2. On February 15, 1989 in NMB Case No. R-5817, the
Association of Flight Attendants lost an election
to determine whether the Association would be the
bargaining agent for certain of the Company's
Customer Service Representatives. The NMB has
ordered a rerun election and a determination of
eligibility to vote in such a rerun election is on-
going. No date for a rerun election has yet been
set by the NMB.
3. The Company is subject to an informal inquiry by a
governmental agency as described in the letter,
dated February 22, 1994, from Martin J. Whalen, Sr.
Vice President and General Counsel of the Company,
to Richard P. Schifter, counsel for Investor.
Exhibit A
Stock Purchase Warrants
Indicative Summary of Key Terms and Conditions
Issuer America West (the "Company").
Issue Stock Purchase Warrants (the
"Warrants").
Number Warrants to purchase 10,384,615
shares of the Company's Class B
Common Stock ("Common Stock").
Exercise Price The Exercise Price for the Warrants
will be determined by the
Bankruptcy Court based on a value
equal to total prepetition
unsecured claims divided by .595
times 1.1.
Expiration The Warrants will be exercisable by
the holders thereof at any time on
or prior to the fifth anniversary
of the Effective Date.
Redemption The Warrants will not be
redeemable.
Anti-Dillution Adjustments The number of shares of Common
Stock purchasable upon exercise of
each Warrant will be adjusted upon
(i) payment of a dividend payable
in, or other distribution of,
Common Stock to all of the then
current holders of Common Stock,
(ii) a combination, subdivision or
reclassification of Common Stock,
and (iii) rights issuances.
Common Stock When delivered, the Common Stock
purchased upon exercise of the
Warrants will be fully paid and
nonassessable.
Voting Rights The holders of the Warrants will
not have any voting rights in
respect thereof.
Merger The holders of the Warrants will be
protected in the case of a merger
or other similar transaction
involving the Company.
Exhibit B
Senior Unsecured Notes
Indicative Summary of Key Terms and Conditions
Issuer (Reorganized) America West
Airlines, Inc. (the "Company").
Issue Senior Unsecured Notes (the
"Notes").
Principal Amount Up to $130,000,000, subject to 1%
fee.
Maturity Seven years from issuance.
Interest Rate The Notes will bear interest,
payable semiannually, in arrears at
a rate equal to 425 basis points
over seven year treasuries at time
of closing but not to exceed 11.05%
per annum.
Ranking The Notes will rank pari passu with
all existing and future senior
unsecured indebtedness of the
Company.
Optional Redemption The Notes will not be redeemable
during the first three years except
that the Company may redeem up to
$30 million in principal amount of
the Notes issued to Investor and up
to $10 million in principal amount
of the Notes issued to GPA, in each
case from the Net Proceeds of any
underwritten offering of primary
shares of the Company's Class B
Common Stock at a purchase price
equal to 108% of principal plus
accrued interest as of the date of
redemption. Thereafter, the Notes
are redeemable at the Company's
option, in whole or in part, after
30 days notice. The redemption
price will be equal to the
following percentage of the
principal amount redeemed in each
of the following years plus accrued
interest:
Year 4: 108%
Year 5: 105.3%
Year 6: 102.7%
Year 7: 100.1%
Mandatory Redemption None.
Covenants and Other Provisions Purchasers will negotiate in
good faith standard covenants and
provisions, including, but not
limited to, limitations on
additional indebtedness, liens,
restricted payments, investments,
mergers, asset sales, transactions
with affiliates, and the like.
THIRD REVISED INTERIM PROCEDURES AGREEMENT
THIS THIRD REVISED INTERIM PROCEDURES AGREEMENT, entered
into and dated as of April 21, 1994 (this " Agreement"), between
America West Airlines, Inc., a Delaware corporation (including,
on or after the effective date of the Plan, as hereinafter
defined, its successors, as reorganized pursuant to Chapter 11 of
the Bankruptcy Code, as hereinafter defined) (hereinafter, the
"Company"), operating as debtor-in-possession under Chapter 11 of
the United States Bankruptcy Code, 11 U.S.C. Sect. 101-1330 (the
"Bankruptcy Code") and AmWest Partners, L.P., a Texas limited
partnership (hereinafter the "Investor"). All capitalized terms
used in this Agreement without definition shall have the meanings
assigned to them in the Third Revised Investment Agreement
between the Company and Investor dated as of the date hereof (the
"Investment Agreement").
W I T N E S S E T H:
WHEREAS, the Company has filed a case seeking relief
under Chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court for the District of Arizona (the "Bankruptcy
Court"), and is operating its business as debtor-in-possession;
WHEREAS, on December 8, 1993, the Bankruptcy Court
entered an Order on Motion to Establish Procedures for Submission
of Investment Proposals (the "Procedures Order");
WHEREAS, in accordance with the Procedures Order,
Investor submitted on February 22, 1994 a proposal for making an
investment in the Company (the "Investment") which, subject to
certain changes approved by the Company, Investor, the Creditors'
Committee and the Equity Committee, is set forth in the
Investment Agreement;
WHEREAS, pursuant to the Procedures Order, the Company
has selected the Investment Agreement as the Lead Plan Proposal
(as defined in the Procedures Order) and has provided appropriate
notification of such selection to all persons entitled to receive
such notification; and
WHEREAS, the Investment Agreement contemplates, among
other things, the consummation of a plan of reorganization (the
"Plan") that would, subject to the terms and conditions set forth
in the Investment Agreement, provide for (i) a recapitalization
of the Company, (ii) the execution and delivery of the Alliance
Agreements, the intended effect of which would be to improve the
financial performance of the Company and (iii) the execution and
delivery of the Governance Agreements;
NOW, THEREFORE, in consideration of the premises, and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby
agrees with Investor as follows:
SECTION 1. No Solicitation, etc. (a) Prior to the
termination of this Agreement, the Company shall not directly, or
indirectly through any of its officers, directors, employees,
agents or otherwise, initiate or solicit any offer or proposal
providing for or in furtherance of any Prohibited Transaction.
The term "Prohibited Transaction" shall mean (i) any transaction
or transactions (A) similar to or in substitution for the
Investment contemplated by the Investment Agreement or (B)
similar to or in substitution for the issuance and sale by the
Company of any of the Contemplated Securities (as defined below);
(ii) the designation as a Lead Plan Proposal of any other
proposal made by a party other than Investor; or (iii) the
execution of a contract with another airline or affiliate thereof
which would interfere with full implementation of the Alliance
Agreements, it being understood that normal course of business
arrangements between and among carriers that are either
terminable on not more than 60 days' notice or entered into or
continued with the consent of Investor (which consent shall not
be unreasonably withheld) shall not constitute Prohibited
Transactions. The "Prohibited Transactions," as defined above,
shall also include, without limitation, (1) any merger or
consolidation of the Company, (2) any issuance or sale of equity
or debt securities of the Company, and (3) any sale, encumbrance,
lease or other disposition of material assets of the Company or
interest therein outside the ordinary and normal course of the
Company's business. Notwithstanding the foregoing, "Prohibited
Transactions" shall not include any Permitted Transaction (as
hereinafter defined).
(b) Nothing in this Agreement shall be construed to
prohibit the Company from soliciting proposals or entering
negotiations for a Prohibited Transaction if, at any time after
the date hereof and prior to the Effective Date, Investor or any
of its partners shall (1) initiate proceedings in bankruptcy or
receivership or, voluntarily or involuntarily, be or become
subject to proceedings for protection from its creditors or (2)
shall suffer an adverse change in its condition (financial or
otherwise), business, assets, properties or prospects that, in
the reasonable judgment of the Company's board of directors,
materially impairs (A) the ability of Investor or such partner,
as the case may be, to perform its obligations under this
Agreement, the Investment Agreement or the Related Agreements or
(B) the Company's ability to realize (1) the intended benefits
and value of this Agreement, the Investment Agreement or, the
Related Agreements (other than the Alliance Agreements) and (2)
an increase in the Company's pretax income of not less than $40
million per year from the Alliance Agreements as contemplated by
Section 9(g) of the Investment Agreement; provided, however, that
in no event shall the Company be entitled under this paragraph
(b) to solicit proposals for a Prohibited Transaction until after
the Company shall have given Investor not less than one business
day's advance written notice of the Company's intention to do so.
(c) If both of the following conditions are satisfied:
(i) the Company receives either (A) a proposal for a
Prohibited Transaction prior to the date (the "Cut-off
Date") on which the Bankruptcy Court enters an order
approving a disclosure statement with respect to the
Plan (the "Disclosure Statement Order") or (B) a
proposal for a Prohibited Transaction after the Cut-off
Date under the circumstances contemplated by paragraph
(b) above; and
(ii) the Company's board of directors (A) determines
in good faith, based on advice from the Company's
independent financial advisor, that such proposal (the
"Alternate Proposal") satisfies the criteria for
qualification as an Overbid (as set forth below) and (B)
desires to accept the Alternate Proposal as being in the
best interests of the Company and its constituents,
then the Company shall promptly disclose the Alternate
Proposal to Investor and within two business days submit to
Investor copies of all documents or written information
received by the Company from or on behalf of the party
making such proposal setting forth the terms of such
Alternate Proposal (the "Related Documentation"). In making
the determination required in clause (ii)(B) above, the
Company's board of directors shall consider all relevant
considerations and factors, including, without limitation,
the form and value of consideration, the extent to which the
economic benefits of the Alternate Proposal, taken as a
whole, differ from the economic benefits to the Company
contemplated to be provided by the Investment Agreement,
taken as a whole, the likelihood that the party making the
Alternate Proposal is able to obtain financing to consummate
the Alternate Proposal, the proposed closing date, the
certainty of consummation, competitive issues and closing
conditions. If within seven business days of receipt by
Investor of all Related Documentation and notice that the
Company deems such seven-day period to have started,
Investor offers amendments to the Investment Agreement
and/or the Alliance Agreements that, taken as a whole,
satisfy the criteria for qualification as a Matching Bid in
respect of the Alternate Proposal, then Investor's offer
will continue as the Lead Plan Proposal and all the terms of
this Agreement and the Investment Agreement, as so amended,
will continue in full force and effect. If (A) Investor
offers no such amendments within such seven business days or
(B) in the event the Company disagrees with Investor's
characterization of its offer as a Matching Bid and the
Bankruptcy Court determines, upon petition by the Company,
that Investor's amended offer does not qualify as Matching
Bid or (C) in the event Investor disagrees with the
Company's determination referred to in clause (ii) above and
the Bankruptcy Court determines, upon petition by Investor,
that the Alternate Proposal does qualify as an Overbid, then
the Company may terminate this Agreement in accordance with
Section 20(a)(v), provided that the Expenses have been paid
to Investor as provided in Section 2.
(d) For purposes of paragraph (c) above, the term
"Overbid" shall mean a proposal or offer that is presented to the
Company entirely in writing from one or more parties reasonably
believed by the Company to be financially capable of performing
in full the provisions of its proposal, which proposal:
(A) must provide overall economic benefits to the
Company and its constituents which are materially greater,
in the Company's reasonable judgment, than the overall
economic benefits to be provided under this Agreement, the
Investment Agreement and the Related Agreements, taken as a
whole;
(B) is otherwise on terms and conditions that, taken as
a whole, are more favorable to the Company than those
contained in this Agreement, the Investment Agreement and
the Related Agreements, taken as a whole; and
(C) is not subject to any due diligence, litigation,
environmental or regulatory approval condition that is more
favorable to the proponent than those contained in this
Agreement, the Investment Agreement and the Related
Agreements, taken as a whole.
(e) For purposes of paragraph (c) above, the term
"Matching Bid" shall mean an offer by Investor to amend the
Investment Agreement and/or the Related Agreements such that,
after giving effect to such amendments, the Investment Agreement
and the Related Agreements, taken as a whole, will:
(A) provide overall economic benefits to the Company and
its constituents which are not less, in the Company's
reasonable judgment, than the overall economic benefits to
be provided under the Alternate Proposal;
(B) contain terms and conditions that, taken as a whole,
are at least as favorable to the Company as those contained
in the Alternate Proposal; and
(C) not be subject to any due diligence, litigation,
environmental or regulatory approval condition that is more
favorable to Investor than those contained in the Alternate
Proposal.
Such offer shall be in writing and shall specify, in reasonable
detail, the amendments referred to therein.
(f) After the Cut-off Date and prior to the termination
of this Agreement in accordance with its terms, the Company shall
not consider, entertain or negotiate, or enter into or consummate
any agreement in furtherance of, any Prohibited Transaction
except as expressly permitted by paragraph (b) above.
(g) Nothing in this Agreement shall prohibit the Company
from consummating any Permitted Transaction (as defined in
Section 4.2).
SECTION 2. Expenses. (a) Following the entry of the
order referred to in Section 16, the Company shall, immediately
upon request and upon receipt of an accounting reasonably
acceptable to the Company, reimburse Investor for all reasonable
out-of-pocket or third-party expenses actually paid by Investor
or its partners in connection with efforts to consummate the
Investment, including the negotiation and preparation of
documents necessary or appropriate to consummate the Investment,
and including, without limitation, legal, investment banking,
appraisal, accounting and other similar professional fees
(collectively, the "Expenses"). Notwithstanding the preceding
sentence, the aggregate of the Expenses reimbursable in full to
Investor and its partners pursuant to this Agreement shall not
exceed (i) 550,000 for the period prior to March 1, 1994 or (ii)
$300,000 for any calendar month commencing on or after March 1,
1994; provided, that any unused portion of such $300,000 amount
for any month shall accumulate and be carried forward and be
available in any subsequent month to reimburse any Expenses. No
inference shall be drawn that the limitations set forth in the
preceding sentence are indicative of a reasonable level of
expenses.
(b) In the event this Agreement is terminated pursuant
to Section 20(a) (other than pursuant to clause (iv)(B) thereof)
or pursuant to Section 20(c) for any reason, the Company shall
pay to Investor, within 15 days of such termination but subject
to paragraph (f) below, all Expenses not previously reimbursed
under paragraph (a) above without regard to the limitations set
forth in the second sentence of such paragraph (a).
(c) Upon the Effective Date, the Company shall pay to
Investor all Expenses not previously reimbursed under paragraph
(a) above subject only to the limitation set forth in clause (i)
of the second sentence of such paragraph (a).
(d) Except to the extent otherwise provided herein, the
Expenses payable under this Agreement by the Company shall not be
subject to any offset, return, recoupment or counterclaim and
shall be an allowed administrative expense under Section
507(a)(1) of the Bankruptcy Code.
(e) The Company and Investor agree that the Expenses
payable hereunder are commercially reasonable and necessary to
induce Investor to continue pursuing and to attempt to consummate
the transactions contemplated by the Investment Agreement. The
Company shall use all commercially reasonable efforts, and
endeavor in good faith and without unreasonable delay, to obtain
Bankruptcy Court approval of all Expenses payable to Investor in
accordance with paragraph (a), (b) or (c) above.
(f) Notwithstanding any provision of this Agreement to
the contrary, the Company shall have no obligation under this
Agreement to pay, or reimburse Investor or any other Person for,
any Expenses unless specifically approved by the Bankruptcy
Court.
SECTION 3. Additional Payments. If (i) this Agreement
is terminated in accordance with the provisions of Section
20(a)(v) or (ii) a competing plan of reorganization proposed by
another party in interest (excluding any Affiliate of Investor)
is confirmed by the Bankruptcy Court and Investor has not
previously terminated this Agreement or breached any of its
obligations hereunder or under the Investment Agreement in any
material respect, then Investor shall be entitled, on a
substantial contribution basis consistent with 11 U.S.C. Sect. 503(b),
to seek recovery of an additional amount (not to exceed
$4,000,000) as reasonable compensation for Investor's actions in
connection with the Investment and the benefits it provided to
the Company and its constituents in connection therewith and with
the Company's bankruptcy proceedings; provided, however, that
making the proposed Investment will not, in and of itself,
entitle Investor to any additional payment. Notwithstanding the
termination of this Agreement as aforesaid, the Company agrees
(i) to cooperate in good faith as reasonably requested by
Investor in obtaining Bankruptcy Court approval of any additional
amount sought by Investor as contemplated by the preceding
sentence and (ii) in the event such approval is obtained, to
promptly pay the amount so approved by the Bankruptcy Court to
Investor without offset. Any such additional amount so approved
by the Bankruptcy Court shall be an allowed administrative
expense under Section 507(a)(1) of the Bankruptcy Code.
SECTION 4. Interim Period. The Company covenants as
follows with respect to the period prior to the earlier of (a)
the Effective Date and (b) the termination of this Agreement:
4.1. The Company shall use all commercially reasonable
efforts and shall take all actions reasonably necessary or
appropriate to preserve the value of the business, assets and
goodwill of the Company and to operate the business of the
Company in the ordinary and normal course consistent in all
material respects with prior practices.
4.2. Except as expressly permitted hereunder or with the
written consent of Investor (which consent shall not be
unreasonably withheld or delayed), the Company (a) shall not
implement any material changes to the operation of its business
(such as material route deletions, transfers of international
route authorities, material changes in marketing or advertising,
or abandoning material franchises); (b) shall not enter into any
new material contracts (such as labor union contracts and
employment contracts) or amend, modify or terminate any such
contracts, or waive any of its material rights thereunder; and
(c) shall not modify its business plans or budgets in any
material respect; provided, however, that nothing in this
Agreement shall be construed to prohibit the Company from taking
any of the following actions (collectively, the "Permitted
Transactions"), none of which will be deemed to be a Prohibited
Transaction:
(i) entering into any material modification of any
existing leases, loan agreements and/or security agreements
provided that the Company will obtain the approval of
Investor (which approval shall not be unreasonably withheld
or delayed) before entering into any such modification;
(ii) renewing or extending existing contracts for
products and services, or entering into replacement
contracts for such products and services, in the ordinary
course of business and upon terms and conditions available
in the market place in arms'-length transactions with non-
affiliates;
(iii) entering into agreements with respect to 11
leased aircraft which provide in August 1994 for reset of
lease rentals (as heretofore stipulated in the Bankruptcy
Court and as described in Plan R-2) to the higher of the
current rate and fair market rental value;
(iv) entering into a 3-year lease agreement, on terms
currently available, for a Boeing 757-200 aircraft in
replacement of an A-320 aircraft to be returned in April
1994;
(v) selling to AVSA, S.A.R.L. or its affiliates surplus
A-320 parts for approximately $1.3 million, with the
proceeds thereof to be applied against amounts due to AVSA,
S.A.R.L. or its affiliates under existing spare parts
agreements with the Company;
(vi) entering into a $12.8 million settlement with the
Internal Revenue Service relating to certain priority tax
claims for pre-petition transportation taxes, with
approximately $1 million of the settlement amount payable
prior to the Effective Date and the balance payable after
the Effective Date in accordance with the provisions of the
Bankruptcy Code;
(vii) entering into one or more settlement agreements
with taxing authorities relating to certain priority tax
claims for prepetition ad valorem taxes as contemplated by
Plan R-2, provided that the Company will not be permitted to
enter into settlement agreements pursuant to this clause
(vii) for more than $11.5 million without the prior consent
of Investor;
(viii) extending the Company's existing approximately
$83.6 debtor-in-possession loan ("Present DIP Financing")
through December 31, 1994, provided that at no time will the
principal amount of the Present DIP Financing, together with
any other loan for similar purposes, including any renewal,
extension, modification or replacement thereof, exceed $83.6
million;
(ix) extending the terms of the existing leases between
the Company and Canadian Airlines covering three Boeing 737-
200 aircraft as contemplated by Plan R-2 but in no event at
rentals greater than as currently provided for in such
leases;
(x) entering into an employment contract with the
individual to be hired by the Company to fill the vacancy
created by the resignation of the Company's Senior Vice
President - Operations;
(xi) entering into a settlement agreement or stipulation
with International Aero Engines relating to the terms under
which the Company will exercise its existing purchase option
for one aircraft engine currently held by the Company under
lease, provided that the Company will consult with Investor
before entering into any such settlement agreement or
stipulation;
(xii) consummating the "Real Property Consolidation
Project" initiated in 1993 with the approval of the
Bankruptcy Court;
(xiii) making the capital expenditures contemplated by
Plan R-2, provided that the Company shall consult with
Investor before making any such capital expenditure in
excess of $250,000;
(xiv) selling or otherwise disposing of surplus assets
within the limits specified in the Present DIP Financing;
(xv) implementing increases in employee compensation
through 1995 as contemplated by Plan R-2, provided that the
Company will consult with Investor before implementing any
such increases;
(xvi) issuing common stock of the Company upon the
exercise of options or conversion rights under securities of
the Company currently outstanding;
(xvii) paying and/or compromising administrative claims
as contemplated by Plan R-2; or
(xviii) negotiating a collective bargaining agreement
with the International Air Line Pilots Association on behalf
of the Company's flight deck crew members pursuant to the
Railway Labor Act, as amended, provided that the terms,
conditions and provisions of such collective bargaining
agreement shall be subject to the approval of Investor
(which approval shall not be unreasonably withheld or
delayed). It is understood and agreed that Investor's
approval of the matters set forth in this clause (xviii) is
without prejudice to the position of any party regarding
whether such approval is or is not in conformity with the
provisions of the Railway Labor Act, as amended.
4.3. The Company shall provide Investor and its
Representatives (as hereinafter defined) with full access to all
the Company data reasonably requested by them, with reasonable
access to the Company officers and with full opportunity to
complete an investigation of the Company's business and assets
and shall keep Investor fully informed in reasonable detail and
with all reasonable promptness regarding (i) negotiations with
its creditors, employees, labor unions and other interested
parties in the Company's bankruptcy case; (ii) the nature of, and
any material changes to, its condition (financial or other),
business, assets, liabilities (including contingencies),
properties, prospects (including forecasts and projections), net
worth, working capital, results of operations and cash flows; and
(iii) the nature of any material actions to be taken or omitted
by the Company with respect to any environmental claim or
threatened claim, proceedings or notifications and all known
material instances of noncompliance with environmental laws.
4.4. The Company shall provide Investor with reports that
include a comparison of actual operating performance with the
Projections and Monthly Targets, in form and substance reasonably
satisfactory to Investor, on a monthly basis no later than 30
days after the end of each month or daily basis not less than the
end of the business day following each day, as appropriate.
4.5. The Company will promptly advise Investor, and
(other than with respect to actions respecting environmental
concerns and actions which are disclosed in Plan R-2) will afford
Investor with reasonable and timely opportunities to consult (as
deemed appropriate by Investor), regarding any material actions
to be taken or omitted by the Company with respect to the
proceedings in the Bankruptcy Court or with respect to any
material changes in its charter or bylaws, material capital
commitments, material capital expenditures, material financing
transactions (including renegotiations or other modifications to
existing material debt, credit or lease liabilities or
arrangements, material purchases or sales of assets, material
contracts or material litigation); provided, however, that,
notwithstanding anything else in this Agreement, ultimate control
of the business of the Company shall remain exclusively with the
Company until the Effective Date.
4.6. As soon as practicable, the Company and Investor
will make, and cooperate in making, all filings, applications,
requests for consents or similar authorizations for Regulatory
Approvals; provided that the Company and Investor each agrees to
make such filings and request any such Regulatory Approvals
required on its part by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, or from the United States
Department of Transportation no later than May 15, 1994.
SECTION 5. Cooperation. (a) The Company shall use all
commercially reasonable efforts and endeavor in good faith and
without unreasonable delay (i) to develop with Investor and
jointly file a Plan consistent with the provisions of the
Investment Agreement, (ii) to obtain the order described in
Section 16, (iii) to obtain the Disclosure Statement Order, (iv)
to obtain the Confirmation Order and (v) subject to the entry of
the Confirmation Order, to consummate the transactions
contemplated by the Investment Agreement and the Related
Agreements, all within the respective time periods set forth in
the Investment Agreement. Investor agrees to cooperate in good
faith as reasonably requested by the Company in performing the
obligations in the preceding sentence.
(b) The Company shall consult and coordinate with
Investor with respect to all material filings, hearings and other
proceedings in the Bankruptcy Court, including, without
limitation, those that are pertinent (i) to the Company's
performance of its obligations under the Investment Agreement,
this Agreement and the Related Agreements, or to the satisfaction
of the conditions to the consummation of the transactions
contemplated hereby or thereby or (ii) to the entry of the orders
described above. Such consultation and coordination shall
include providing Investor with reasonable opportunity to review
and comment on all significant drafts of the Plan and the
disclosure statement accompanying the Plan (the "Disclosure
Statement").
(c) Anything in this Agreement or elsewhere to the
contrary notwithstanding, neither the refusal or failure of the
Bankruptcy Court to enter the Disclosure Statement Order or the
Confirmation Order nor the confirmation of a plan of
reorganization relating to the Company (other than the Plan)
shall constitute a breach of this Agreement or the Investment
Agreement by either party except to the extent that such refusal
or failure resulted primarily from the breach by such party of
one or more of its obligations under this Agreement.
SECTION 6. Public Announcements. Unless otherwise
mutually agreed, neither party hereto shall make or authorize any
public release of information regarding the matters contemplated
by this Agreement, the Investment Agreement and any Related
Agreement except (i) that a press release or press releases in
mutually agreed-upon form shall be issued by the parties as
promptly as is practicable following the execution of this
Agreement, (ii) that the parties may communicate with employees,
creditors and other parties in interest in the Company's
bankruptcy case, customers, suppliers, stockholders, bondholders,
lenders, lessors, regulatory authorities, analysts, stock
exchanges and other particular groups including prospective
lenders and investor groups, as may be necessary or appropriate
and not inconsistent with the provisions of Section 1 and the
prompt consummation of the transactions contemplated by this
Agreement, the Investment Agreement and any Related Agreement, it
being understood that each party hereto will keep the other
reasonably informed with respect to such communications which are
material and not confidential and (iii) as either party on advice
of legal counsel shall reasonably deem necessary in complying
with applicable law.
SECTION 7. Confidentiality. (a) Neither party (the
"Recipient") will in any manner, directly or indirectly, disclose
in whole or in part, any confidential or proprietary information
(including, without limitation, information concerning the
Alliance Agreements) of the other party (the "Protected Party")
that comes, or has come, into the possession of the Recipient in
connection with the transactions contemplated hereby (the
"Confidential Information") to any Person or use such
Confidential Information for commercial gain or competitive
advantages or in any way detrimental to the Protected Party;
provided, however, that Confidential Information may be disclosed
to Representatives (as defined below) of the Recipient, to any
prospective investor in the Contemplated Securities or to any
prospective lender to Investor or the Company who needs to know
the Confidential Information for purposes of participating in or
financing the transactions contemplated hereby, it being
understood that all such Representatives will be advised by the
Recipient of the confidential nature of such Confidential
Information and that, by receiving such Confidential Information,
they are agreeing to be bound by this Section. The Company and
Investor shall use their commercially reasonable efforts to
assure that their respective Representatives adhere to the terms
of this Section.
(b) As used herein with respect to any Person, the term
"Representative" shall include (i) any and all officers,
directors, employees, affiliates, agents, partners and
representatives of such Person, (ii) all lawyers, financial
advisers, appraisers, accountants, other professionals or
consultants (and their respective officers, directors, employees,
affiliates, agents, partners and representatives) engaged by such
Person and (iii) any prospective purchaser of any Contemplated
Securities and any prospective lender that is considering making
a loan to the Company or Investor to assist in the consummation
of the transactions contemplated hereby, by the Investment
Agreement or by the Related Agreements and their respective
lawyers, financial advisers, appraisers, accountants, other
professionals or consultants (and their respective officers,
directors, employees, affiliates, agents, partners and
representatives) engaged by such prospective purchaser or lender.
(c) The Recipient shall not be obligated to maintain any
Confidential Information in confidence to the extent that (i) the
Confidential Information is or becomes public knowledge other
than through the breach by the Recipient of this Section or any
other similar agreement binding on the Recipient, (ii) the
Confidential Information is or becomes available on an
unrestricted basis to the Recipient from a source other than the
Protected Party (or its Representatives), or (iii) the
Confidential Information is required to be disclosed pursuant to
court order or government action.
(d) Upon termination of this Agreement (i) if requested
by the Company, and if no dispute between Investor and the
Company or any other Person is pending or in the reasonable
judgment of Investor foreseeable, Investor will destroy all
Confidential Information (including any analyses or reports that
incorporate any Confidential Information) in its possession
relating to the Company and shall certify such destruction and
(ii) if requested by Investor, and if no dispute between Investor
or any other Person and the Company is pending or in the
reasonable judgment of the Company foreseeable, the Company will
destroy all Confidential Information (including any analyses or
reports that incorporate any Confidential Information) in its
possession relating to Investor and shall certify such
destruction.
(e) The foregoing provisions of this Section shall not
apply to any partner of Investor if and to the extent such
provisions are inconsistent with any written agreement relating
to the subject matter of this Section between the Company and
such partner.
(f) The Company shall, upon the request of the
Creditors' Committee or Equity Committee, provide such Committee
with copies of the Confidential Information which is provided to
and/or by Investor pursuant to the provisions of this Agreement,
the Investment Agreement and the Related Agreements following
receipt from such Committee and each of its Representatives who
will have access to such Confidential Information of a written
confidentiality agreement which contains provisions which provide
the Company and Investor protection for such Confidential
Information at least equivalent, in all material respects, to
that provided pursuant to this Section 7 and which contains other
terms and conditions which are reasonably required by the Company
and Investor.
(g) This Section shall survive termination of this
Agreement.
SECTION 8. Liability. Notwithstanding any provision
hereof or in the Investment Agreement (or any implication of such
provision) to the contrary, it is expressly agreed that:
8.1. Investor and its permitted assigns (including any
affiliate, partner, agent, advisor or Representative
thereof) shall not have nor be under any liability of any
nature whatsoever to the Company, the estate of the Company,
any trustee, any committee of creditors or of equity
security holders or any party in interest in the bankruptcy
case concerning the Company, nor to any other Person
whatsoever, arising out of or in any manner connected with
this Agreement, the Investment Agreement or any Related
Agreement, or any actions, inactions or omissions in any
manner relating hereto or thereto or to any actions or
transactions contemplated hereby or thereby, whether
occurring prior to or after the date hereof, except to the
extent that Investor is liable to the Company for damages
which are found in a final judgment by a court of competent
jurisdiction to have resulted from (i) any material breach
by Investor of an express obligation or undertaking
contained in this Agreement, the Investment Agreement or any
Related Agreement or any material breach (as of the date
made) by Investor of an express representation or warranty
contained in this Agreement, the Investment Agreement or any
Related Agreement or for any act of bad faith or willful or
deliberate wrongdoing by Investor, which bad faith, breach
or wrongdoing is not discontinued or remedied promptly (and
in any event within seven days) after written notice thereof
specifying the same in reasonable detail from the Company or
(ii) any untrue statement or alleged untrue statement of a
material fact contained in the Disclosure Statement or in
any offering document pursuant to which any or all of the
securities of the Company in connection with and as part of
the transactions contemplated by the Agreements (the
"Contemplated Securities") may be placed or offered or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission
was made in such offering document in reliance upon and in
conformity with written information furnished by Investor or
any of its partners specifically for inclusion therein or
(iii) any action or inaction in respect of which the Company
is entitled to indemnification under Section 9.
8.2. The Company and its permitted assigns (including any
affiliate, stockholder, director, officer, agent, advisor or
Representative thereof) shall not have nor be under any
liability of any nature whatsoever to Investor or any of its
partners or affiliates, nor to any other Person whatsoever,
arising out of or in any manner connected with this
Agreement, the Investment Agreement or any Related
Agreement, or any actions, inactions or omissions in any
manner relating hereto or thereto or to any actions or
transactions contemplated hereby or thereby, whether
occurring prior to or after the date hereof, except to the
extent that the Company is liable to Investor for damages
which are found in a final judgment by a court of competent
jurisdiction to have resulted from (i) any material breach
by the Company of an express obligation or undertaking
contained in this Agreement, the Investment Agreement or any
Related Agreement or any material breach (as of the date
made) by the Company of an express representation or
warranty contained in this Agreement, the Investment
Agreement or any Related Agreement or for any act of bad
faith or willful or deliberate wrongdoing by the Company,
which bad faith, breach or wrongdoing is not discontinued or
remedied promptly (and in any event within seven days) after
written notice thereof specifying the same in reasonable
detail from Investor or (ii) any untrue statement or alleged
untrue statement of a material fact contained in the
Disclosure Statement or in any offering document pursuant to
which any or all of the Contemplated Securities may be
placed or offered or the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
except to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or
alleged omission was made in such offering document in
reliance upon and in conformity with written information
furnished by Investor or any of its partners specifically
for inclusion therein or (iii) any action or inaction in
respect of which Investor is entitled to indemnification
under Section 9.
8.3. No partner or assignee of the Investor shall have or
be under any liability by reason of any negligence or
asserted negligence or any material breach or willful or
deliberate wrongdoing of any other partner or assignee of
Investor.
8.4. No consequential, exemplary or punitive damages
shall under any circumstances be recoverable against
Investor, the Company or any other Indemnified Party (as
defined in Section 9) in respect of any claim relating to
this Agreement or the Investment Agreement or in connection
with the consummation of or any failure to consummate the
transactions contemplated hereby or thereby.
8.5. If Investor seeks Bankruptcy Court approval of an
additional amount as contemplated by Section 3 and if such
additional amount is approved by the Bankruptcy Court and
paid to Investor by the Company, such payment shall be in
full satisfaction of any and all claims (other than for
Expense reimbursement under Section 2 and for
indemnification under Section 9) that Investor shall have
against the Company.
8.6. In no event will Investor seek to recover damages
against the Company, nor will the Company be liable under
any circumstances for, more than $4,000,000 (less any amount
paid to Investor pursuant to Section 3) in damages on
account of any breach, misconduct or bad faith on the part
of the Company or any other Person relating to this
Agreement or the Investment Agreement or any of the
transactions contemplated hereby or thereby. Nothing in
this Agreement or elsewhere shall be construed to be an
admission by the Company that Investor is or shall be
entitled under any circumstances to recover any amount of
damages from the Company.
SECTION 9. Indemnity.
9.1. As used herein:
(a) "Losses" means (i) in the case of any Investor
Indemnified Party, any and all losses, claims, damages,
liabilities, fines, fees, penalties, deficiencies and
expenses (including, but not limited to, interest,
court costs, fees and expenses of attorneys,
accountants, and other experts or other expenses of
litigation or other proceedings or of any claim, default
or assessment) incurred by such Investor Indemnified
Party as a result of any third party claim asserted
against such Investor Indemnified Party on account of
any breach of any representation or warranty of the
Company contained in this Agreement, the Investment
Agreement or any Related Agreement, or any breach or
alleged breach of any of the Company's covenants or
obligations contained herein or therein and (ii) in the
case of any Company Indemnified Party, any and all
losses, claims, damages, liabilities, fines, fees,
penalties, deficiencies and expenses (including, but
not limited to, interest, court costs, fees and expenses
of attorneys, accountants, and other experts or other
expenses of litigation or other proceedings or of any
claim, default or assessment) incurred by such Company
Indemnified Party as a result of any third party claim
asserted against such Company Indemnified Party on
account of any breach or alleged breach of any
representation or warranty of Investor contained in this
Agreement, the Investment Agreement or any Related
Agreement, or any breach or alleged breach of any of
Investor's covenants or obligations contained herein or
therein.
(b) "Investor Indemnified Party" means Investor or
any of its partners, assignees, affiliates, controlling
persons or employees.
(c) "Company Indemnified Party" means the Company
or any of its partners, assignees, affiliates,
controlling persons, directors or employees.
(d) "Indemnified Party" means a Company Indemnified
Party or an Investor Indemnified Party, as the case may
be.
(e) "Indemnifying Party" means the Company or
Investor, as the case may be.
9.2. Subject to Section 9.4 and to Section 3(e), the
Company agrees to indemnify each Investor Indemnified Party
from and against any and all Losses incurred by such
Investor Indemnified Party, whether prior to or after the
date hereof.
9.3. Subject to Section 9.5, Investor agrees to indemnify
each Company Indemnified Party from and against any and all
Losses incurred by such Company Indemnified Party, whether
prior to or after the date hereof.
.
9.4. The Company will not be liable under this Section 9
for Losses which consist of Expenses covered by Section 2
(which Expenses shall only be payable in the manner and
subject to the limitations set forth in Sections 2 and 3),
nor shall the Company be liable to any Investor Indemnified
Party to the extent that any Loss is found in a final
judgment by a court of competent jurisdiction to have
resulted from (i) any breach by such Investor Indemnified
Party of an express obligation or undertaking pursuant to
this Agreement, the Investment Agreement or any of the
Related Agreements or any act of bad faith or willful or
deliberate wrongdoing by such Investor Indemnified Party,
which bad faith, breach or wrongdoing is not discontinued or
remedied promptly (and in any event within seven days) after
written notice thereof specifying the same in reasonable
detail from the Company or (ii) any untrue statement or
alleged untrue statement of a material fact contained in any
offering document pursuant to which any or all of the
Contemplated Securities may be placed or offered or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading if, and to the extent
that, such untrue statement or alleged untrue statement or
omission or alleged omission was made in such offering
document in reliance upon and in strict conformity with
written information furnished by such Investor Indemnified
Party specifically for inclusion therein, or (iii)Investment
losses in respect of the Contemplated Securities incurred by
such Investor Indemnified Party.
9.5. Investor will not be liable under this Section 9 to
any Company Indemnified Party to the extent that any Loss is
found in a final judgment by a court of competent
jurisdiction to have resulted from (i) any breach by such
Company Indemnified Party of an express obligation or
undertaking pursuant to this Agreement, the Investment
Agreement or any of the Related Agreements or any act of bad
faith or willful or deliberate wrongdoing by such Company
Indemnified Party, which bad faith, breach or wrongdoing is
not discontinued or remedied promptly (and in any event
within seven days) after written notice thereof specifying
the same in reasonable detail from Investor or (ii) any
untrue statement or alleged untrue statement of a material
fact contained in any offering document pursuant to which
any or all of the Contemplated Securities may be placed or
offered or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary
to make the statements therein not misleading, except to the
extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission
was made in such offering document in reliance upon and in
strict conformity with written information furnished by such
Investor Indemnified Party specifically for inclusion
therein or (iii)Investment losses in respect of the
Contemplated Securities incurred by such Company Indemnified
Party.
9.6. If the indemnification of an Indemnified Party
provided for in this Section 9 is for any reason held
unenforceable, the Indemnifying Party agrees to contribute
to the Losses for which such indemnification is held
unenforceable (x) in such proportion as is appropriate to
reflect the relative benefits or proposed benefits to the
Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, of the Agreements (whether or not
the Agreements are entered into and whether or not any
transaction or action pursuant thereto is consummated) or
(y) if (but only if) the allocation provided for in clause
(x) is for any reason held unenforceable, in such proportion
as is appropriate to reflect not only the relative benefits
referred to in clause (x) but also the relative fault of the
Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, as well as any other relevant
equitable considerations. The Indemnifying Party agrees
that for the purposes of this paragraph, the relative
benefits or proposed benefits to the Indemnifying Party and
such Indemnified Party of the Agreements shall be deemed to
be in the same proportion that the total value paid or
issued to, or to be paid or issued to, the Indemnifying
Party, its creditors or its security holders, as the case
may be, as a result of or in connection with the Agreements
bears to the amount received by such Indemnified Party
pursuant to the Agreements (whether in the form of fees paid
to such Indemnified Party or the reimbursement of expenses
provided by the Indemnified Party to such Party).
9.7. Without the Indemnified Party's prior written
consent (which consent shall not be unreasonably withheld),
no Indemnifying Party will settle, compromise or consent to
the entry of any judgment in any pending or threatened
claim, action or proceeding in respect of which
indemnification could reasonably be expected to be sought
against such Indemnifying Party by such Indemnified Party
under this Section 9 (whether or not such Indemnified Party
is an actual party to such claims, action or proceeding),
unless such settlement, compromise or consent includes an
unconditional release of such Indemnified Party from all
liability arising out of such claim, action or proceeding.
9.8. The provisions herein in respect of any Indemnified
Party shall not be affected, or the obligations of the
Indemnifying Party hereunder as to any Indemnified Party in
any manner reduced or limited, by any action, inaction,
omission, breach or default of any Person (other than of
such Indemnified Party and its officers, directors,
employees, agents, advisors, Representatives and controlling
Persons), but then only to the extent provided hereby.
9.9. Without the prior written consent of the
Indemnifying Party (which consent shall not be unreasonably
withheld), no Indemnified Party shall settle, compromise or
consent to the entry of any judgment in any pending or
threatened claim, action or proceeding in respect of which
indemnification from the Indemnifying Party could reasonably
be expected to be sought by such Indemnified Party under
this Section 9 unless such Indemnified Party unconditionally
releases the Indemnifying Party from any and all
indemnification obligations to it arising out of such claim,
action or proceeding.
9.10. Promptly after any Indemnified Party becomes
aware of the existence of facts or other information which
could reasonably be expected to give rise to a claim by such
Indemnified Party for indemnification under this Section 9,
such Indemnified Party will provide written notice thereof
to the Indemnifying Party describing such facts and other
information in reasonable detail. The failure of an
Indemnified Party to give notice in the manner and at the
time provided herein shall not relieve the Indemnifying
Party of its obligations under this Section 9, except to the
extent that the Indemnifying Party actually is prejudiced in
any material respect by such failure to give notice. Any
notice given the Indemnifying Party pursuant to this Section
9.10 shall contain a statement to the effect that the
Indemnified Party giving such notice is making or may in the
future make a claim pursuant to and a formal demand for
indemnification under this Section 9.
9.11. Upon the commencement of any claim, action or
proceeding in respect of which indemnification could be
sought by an Indemnified Party under this Section 9, the
Indemnifying Party shall have the right, with counsel
selected by it (which counsel shall be reasonably
satisfactory to the Indemnified Party), to assume the
defense of such claim, action or proceeding and the
Indemnified Party shall cooperate with the Indemnifying
Party, at the sole cost and expense of the Indemnifying
Party, in connection with such defense. In the event that
the Indemnifying Party selects counsel to defend any claim,
action or proceeding in respect of which indemnification
could be sought by any Indemnified Party under this Section
9 and such counsel determines (or such Indemnified Party
reasonably determines) that issues exist with respect to
such claim, action or proceeding which give rise to a
conflict between the interests of the Indemnifying Party and
such Indemnified Party, then such Indemnified Party shall be
entitled, at the Company's expense, to retain separate
counsel regarding such issues.
SECTION 10. Assignment of this Agreement. This
Agreement shall be binding upon and shall inure to the benefit of
the parties to this Agreement and their successors and permitted
assigns without limitation. Neither this Agreement nor any of
the rights and obligations of any party to this Agreement may be
assigned without the consent of the other party hereto; provided,
however, that Investor may assign any or all of its rights under
this Agreement to any partner, affiliate, related party, or
representative of Investor or to any fund or account managed or
advised by Fidelity Management Trust Company or any of its
affiliates. No such assignment shall relieve either party hereto
of any obligations hereunder, under the Investment Agreement or
under any Related Agreement.
SECTION 11. Notices. All notices required to be given
under this Agreement shall be in writing (including
telecommunication transmission), shall be effective when received
and shall be addressed as follows:
If to the Company:
America West Airlines, Inc.
4000 East Sky Harbor Boulevard
Phoenix, Arizona 85034
Attention: W. A. Franke and Martin J. Whalen
Fax Number: (602) 693-5904
with a copy to:
LeBoeuf, Lamb, Greene & MacRae
633 17th Street, Suite 2800
Denver, Colorado 80202
Attention: Carl A. Eklund
Fax Number: (303) 297-0422
and a copy to:
Andrews & Kurth, L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: David G. Elkins
Fax Number: (713) 220-4285
and a copy to:
Lord, Bissell and Brook
115 South LaSalle Street
Chicago, Illinois 60603
Attention: Benjamin Waisbren
Fax Number: (312) 443-0336
and a copy to:
Murphy, Weir & Butler
101 California Street, 39th Floor
San Francisco, California 94111
Attention: Patrick A. Murphy
Fax Number: (415) 421-7879
If to Investor:
AmWest Partners, L.P.
201 Main Street, Suite 2420
Fort Worth, Texas 76102
Attention: James G. Coulter
Fax Number: (817) 338-2064
with a copy to:
Arnold & Porter
1200 New Hampshire Ave., N.W.
Washington, D.C. 20036
Attention: Richard P. Schifter
Fax Number: (202) 872-6720
and a copy to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Lyle G. Ganske
Fax Number: (216) 586-7864
and a copy to:
Lord Bissell and Brook
115 South LaSalle Street
Chicago, IL 60603
Attention: Benjamin Waisbren
Fax Number: (312) 443-0336
and a copy to:
Murphy, Weir & Butler
101 California Street, 39th Floor
San Francisco, California 94111
Attention: Patrick A. Murphy
Fax Number: (415) 421-7879
and a copy to:
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Attention: Laura Hodges Taylor, P.C.
Fax Number: (617) 523-1231
or to such other address as either party hereto may designate to
the other party to this Agreement in accordance with this
Section.
SECTION 12. Counterparts. This Agreement may be
executed in one or more counterparts and by telecopy, each of
which shall be deemed to constitute an original and all of which
shall be considered one and the same instrument. With respect to
signatures transmitted by telecopy, upon request by either party
to the other party, an original signature of such other party
shall promptly be substituted for its facsimile.
SECTION 13. Entire Agreement. This Agreement sets
forth the entire agreement and understanding of the parties with
respect to the subject matter of this Agreement and, except as
otherwise set forth herein, supersedes all prior agreements and
understandings with respect to the subject matter thereof
(including, without limitation, the Expense Reimbursement
Agreement previously entered into by the Company and Investor but
excluding any existing confidentiality agreement between the
Company and any Affiliate of Investor). This Agreement may only
be amended, supplemented or modified by a written instrument
signed by authorized representatives of each of the parties
hereto.
SECTION 14. Governing Law, etc. Except to the extent
inconsistent with the Bankruptcy Code, this Agreement shall be
governed by and construed in accordance with the laws of the
State of Arizona, without reference to principles of choice or
conflicts of laws under which the law of any other jurisdiction
would apply.
SECTION 15. Invalid Provisions. If any provision of
this Agreement is held to be illegal, invalid or unenforceable
under any present or future laws, rules or regulations, and if
the rights or obligations of Investor and the Company under this
Agreement will not be materially and adversely affected thereby,
(a) such provision will be fully severable, (b)this Agreement
will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (c)the
remaining provisions of this Agreement will remain in full force
and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (d)in
lieu of such illegal, invalid or unenforceable provision, there
will be added automatically as a part of this Agreement a legal,
valid and enforceable provision as similar in terms of such
illegal, invalid or unenforceable provision as may be possible.
If the rights and obligations of Investor or the Company will be
materially and adversely affected by any such provision held to
be illegal, invalid or unenforceable, then unless such provision
is waived in writing by the affected party in its sole
discretion, this Agreement shall be null and void.
SECTION 16. Bankruptcy Court Approval. This Agreement
shall not become effective for any purpose unless and until the
Bankruptcy Court shall have entered an order approving this
Agreement.
SECTION 17. Jurisdiction of Bankruptcy Court. The
parties agree that the Bankruptcy Court shall have and retain
jurisdiction to enforce and construe the provisions of this
Agreement.
SECTION 18. No Third Party Beneficiary. This Agreement
and the Investment Agreement are made solely for the benefit of
the Company and Investor and their respective permitted
assignees, and no other Person (including, without limitation,
employees, shareholders and creditors of the Company) shall have
any right, claim or cause of action under or by virtue of this
Agreement or the Investment Agreement, except to the extent such
Person is entitled to expense reimbursement pursuant to this
Agreement or may assert a claim for indemnity pursuant to this
Agreement.
SECTION 19. Interpretation. In this Agreement, unless
a contrary intention appears, (i) the words "herein", "hereof"
and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular Section or other
subdivision and (ii) reference to any Section means such Section
hereof. The Section headings herein are for convenience only and
shall not affect the construction hereof. No provision of this
Agreement shall be interpreted or construed against either party
solely because such party or its legal representative drafted
such provision. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Investment
Agreement unless otherwise provided or the context otherwise
requires.
SECTION 20. Termination. (a) Anything herein or
elsewhere to the contrary notwithstanding, this Agreement and the
Investment Agreement may be terminated at any time prior to the
Effective Date:
(i) by mutual consent of Investor and the Company;
(ii) by either Investor or the Company if a domestic
court of competent jurisdiction or a domestic Regulatory
Authority of competent jurisdiction shall have issued an
order, decree or ruling or taken any other action, in each
case permanently restraining, enjoining or otherwise
prohibiting the Investment, and such order, decree or ruling
or other action shall have become final and non-appealable;
provided, however, that in no event shall Investor be
entitled to terminate this Agreement or the Investment
Agreement pursuant to this clause (ii) on account of the
issuance of any order, decree or ruling or the taking of any
other action relating to antitrust laws or regulations;
(iii) by Investor if:
(A) any of the conditions specified in Section 8(a),
8(g), 8(n), 8(p), 8(r) or 8(s) of the Investment
Agreement has not been satisfied by the respective
deadlines (as extended from time to time) set forth with
respect thereto in such clauses for any reason other
than (1) a material breach by Investor of any of its
representations, warranties, covenants or obligations
under this Agreement, the Investment Agreement or any
Related Agreement or (2)the issuance of any order,
decree or ruling or the taking of any other action
relating to antitrust laws or regulations;
(B) any of the other conditions precedent set forth
in Section 8 of the Investment Agreement has not been
or, in the reasonable good faith determination of
Investor, will not be able to be satisfied by the
Outside Date for any reason other than (1) a material
breach by Investor of any of its representations,
warranties, covenants or obligations under this
Agreement, the Investment Agreement or any Related
Agreement or (2)the issuance of any order, decree or
ruling or the taking of any other action relating to
antitrust laws or regulations; or
(C) any of the Company's representations or
warranties made herein, in the Investment Agreement or
in any Related Agreement prove to have been inaccurate
in any material respect when made;
provided, however, that Investor shall not be entitled to
terminate this Agreement pursuant to this clause (iii) at a
time when Investor (or its Affiliates) shall be in material
breach of any of its representations, warranties, covenants
or obligations under this Agreement, the Investment
Agreement or any Related Agreement; and, provided further,
however, that upon Investor becoming aware of any breach by
the Company of any of its representations, warranties,
covenants or obligations hereunder or under the Investment
Agreement or any of the Related Agreements, or the
occurrence or nonoccurrence of any other event, in any such
case which would give Investor the ability to terminate this
Agreement pursuant to the provisions of this clause (iii),
Investor promptly shall notify the Company, the Equity
Committee and the Creditors' Committee of the existence of
such breach and provide the Company seven business days to
cure such breach or remedy such occurrence or nonoccurrence
before exercising the termination right granted hereunder;
(iv) by the Company if:
(A) any of the conditions specified in Section 9 of
the Investment Agreement has not been or, in the
reasonable good faith determination of the Company, will
not be able to be satisfied by the Outside Date for any
reason other than a material breach by the Company of
any of its representations, warranties, covenants or
obligations under this Agreement, the Investment
Agreement or any Related Agreement; or
(B) any of the Investor's representations or
warranties made herein, in the Investment Agreement or
in any Related Agreement prove to have been inaccurate
in any material respect when made;
provided, however, that the Company shall not be entitled to
terminate this Agreement pursuant to this clause (iv) at a
time when the Company shall be in material breach of any of
its representations, warranties, covenants or obligations
under this Agreement, the Investment Agreement or any
Related Agreement; and, provided further, however, that upon
the Company becoming aware of any breach by Investor of any
of its representations, warranties, covenants or obligations
hereunder or under the Investment Agreement or any of the
Related Agreements, or the occurrence or nonoccurrence of
any other event, in any such case which would give the
Company the ability to terminate this Agreement pursuant to
the provisions of this clause (iv), the Company promptly
shall notify Investor, the Equity Committee and the
Creditors' Committee of the existence of such breach and
provide Investor seven business days to cure such breach or
remedy such occurrence or nonoccurrence before exercising
the termination right granted hereunder;
(v) by the Company in the event of an Overbid as
contemplated by Section 1(c);
(vi) by either the Company or the Investor if the
Effective Date has not occurred by December 31, 1994; or
(vii) by Investor for any reason; provided, however,
that Investor shall not be entitled to terminate this
Agreement pursuant to this clause (vii) after the Cut-off
Date or at any time when Investor (or its Affiliates) shall
be in material breach of any of its representations,
warranties, covenants or obligations under this Agreement,
the Investment Agreement or any Related Agreement and,
provided further, that promptly after any termination of
this Agreement pursuant to this clause (vii), Investor shall
refund to the Company the aggregate amount of all Expenses
previously paid or reimbursed by the Company pursuant to
Section 2 which were incurred by Investor after March 1,
1994. Any such termination shall constitute an
unconditional waiver by Investor of all claims it may have
under this Agreement or the Investment Agreement other than
for Expense reimbursement under Section 2.
(b) In the event of the termination of this Agreement by
either party pursuant to paragraph (a) above, written notice
thereof shall be promptly given to the other party and, subject
to paragraph (d) below, this Agreement and the Investment
Agreement shall terminate and the transactions contemplated
hereby and thereby shall be abandoned without further action by
Investor or the Company.
(c) This Agreement shall automatically terminate upon
confirmation of a plan of reorganization for the Company (other
than the Plan) prior to the Outside Date.
(d) In the event of the termination of this Agreement as
provided in paragraph (a) or (c) above, (i) this Agreement, the
Investment Agreement and the Related Agreements shall forthwith
become null and void, and there shall be no liability on the part
of any Investor or the Company or any of their respective
partners, officers, directors, employees, agents or stockholders,
except for fraud or for willful breach of this Agreement, the
Investment Agreement (but only if the Confirmation Order is
entered) or the Related Agreements and except that the parties
shall continue to be obligated as set forth in Sections 2, 3, 7,
8, 9, 17 and 18 of this Agreement and in Sections 28(b) and 30 of
the Investment Agreement, all of which Sections shall survive the
termination of this Agreement.
(e) The termination of this Agreement and the Investment
Agreement pursuant to paragraph (a) above shall become effective
when (i) in the case of a termination pursuant to clause (i) of
paragraph (a) above, the required consent is executed and (ii) in
the case of a termination pursuant to any other clause of
paragraph (a) above, the required notice is given by the
terminating party.
(f) No termination of this Agreement pursuant to this
Section 20 shall constitute a breach of this Agreement. The
termination of this Agreement and the Investment Agreement shall
not cause or constitute a termination of any existing
confidentiality agreement between the Company and one or more
Affiliates of Investor.
SECTION 21. Privileged Communication. The parties
hereto anticipate that, being similarly situated and having a
common interest in the Company's bankruptcy case with respect to
the Plan, and in anticipation of potential litigation with other
constituents of the Company, they may share certain documents,
information, factual materials, mental impressions, memoranda,
reports, and attorney-client communications that may be
privileged from disclosure to adverse or other parties as a
result of the attorney-client privilege, the attorney work
product privilege, or other applicable privileges. The parties
hereto agree that the sharing of such information or materials
shall not diminish in any way the confidentiality of such
information or materials and shall not constitute a waiver of any
applicable privilege.
IN WITNESS WHEREOF, the Company and Investor, by their
respective officers thereunto duly authorized, have executed this
Agreement as of the date first above written.
AMERICA WEST AIRLINES, INC.
as Debtor and Debtor-in-
Possession
By:
Title:
AMWEST PARTNERS, L.P.
By: AmWest Genpar, Inc.,
its General Partner
By:
Title:
SUBSCRIPTION AGREEMENT
AmWest Partners, L.P.
201 Main Street
Suite 2420
Fort Worth, Texas 76102
Attention: AmWest Genpar, Inc., General Partner
Gentlemen and Ladies:
Reference is made to that certain Second Revised
Investment Agreement dated April 7, 1994 and attached hereto as
Exhibit A and incorporated herein by reference, as the same may
be amended from time to time (the "Investment Agreement") by
and between AmWest Partners, L.P. (the "Partnership"), a
limited partnership organized and existing under the laws of
the State of Texas, with AmWest Genpar, Inc., a corporation
organized and existing under the laws of the State of Texas, as
its general partner (the "General Partner"), and America West
Airlines, Inc. ("America West"). Capitalized terms used herein
and not otherwise defined herein are used herein as defined in
the Investment Agreement.
Pursuant to and subject to the terms and conditions of
the Investment Agreement, America West, or its successor as
reorganized pursuant to Chapter 11 of the U.S. Bankruptcy Code
("New America West"), has agreed to issue to the Partnership,
and the Partnership has agreed to purchase from America West,
certain Securities of New America West. In furtherance of its
obligations under the Investment Agreement, the Partnership has
agreed to assign to Belmont Fund, L.P., Fidelity Copernicus
Fund, L.P., and Belmont Capital Partners, L.P. (each, a
"Fund"), or other funds or accounts managed or advised by
Fidelity Management Trust Company or its affiliates
("Fidelity") (collectively, the "Investor"), certain of the
Partnership's rights to purchase from New America West and
Investor has agreed to acquire from New America West on the
terms and conditions set forth herein, the Securities specified
herein.
In consideration of the premises and mutual covenants
herein contained, Investor and the Partnership hereby agree as
follows:
. Acquisition of Securities
(a) Pursuant to the Investment Agreement, the
Partnership has agreed, subject to the terms and conditions set
forth therein, to purchase certain of the Securities from New
America West for an aggregate purchase price of $214,857,000,
subject to adjustment as provided therein (the "Purchase
Price"). Investor has agreed and hereby agrees to accept an
assignment from the Partnership of certain of its rights under
the Investment Agreement and the Procedures Agreement,
including the right to purchase such Securities, and Investor
has agreed to assume certain of its obligations in respect
thereof.
Upon the occurrence of the Confirmation Date, the
General Partner shall notify Investor of such event and of the
Securities to be purchased by Investor at the Effective Date.
Upon the Effective Date, Investor shall, against delivery of
the certificates representing such Securities, purchase the
Securities of New America West set forth below:
(i) Investor shall, for a purchase price of
$23,929,000, acquire 2,691,964 shares of Class B Common
and 374,220 Warrants;
(ii) Investor shall, for a purchase price of not
less than $100,000,000 and not more than $130,000,000,
as determined by the Company prior to the Effective
Date, acquire, pursuant to a Note Purchase Agreement
reasonably satisfactory to Investor and under an
indenture reasonable satisfactory to Investor, a like
principal amount of Notes to be issued by New America
West pursuant to the Investment Agreement, and shall be
paid a fee of 1% of the total purchase price therefor
by New America West for consummating such purchase;
(iii) Investor shall, for an amount equal to
23.81% of the cost of any shares of Class B Common, if
any, which the Partnership is required to purchase
pursuant to clause (B) of the proviso to
Section 4(a)(2)(i) of the Investment Agreement,
purchase 23.81% of the shares of Class B Common
purchased pursuant to said Section; and
(iv) Investor shall purchase the first $75,000,000
in value of the shares of Class B Common, if any,
required to be purchased by the Partnership pursuant to
Section 4(a)(2)(ii) of the Investment Agreement;
provided, that in no event shall Investor be required
to purchase more than the aggregate number of shares of
Class B Common required to be purchased pursuant to
such Section.
(b) Investor acknowledges, and the General Partner
agrees, that the closing of the purchase of the Securities of
New America West is subject to the satisfaction of the
conditions precedent as described in Section 8 of the
Investment Agreement. The Partnership will not waive any of
such conditions precedent without the prior written approval of
Investor, which approval will not be withheld unreasonably, and
will not make modify or amend the Investment Agreement or the
Procedures Agreement in any material respect, agree to
provisions of the Plan, or enter into any other agreements with
America West or New America West prior to the Effective Date or
earlier termination of the Investment Agreement, without
Investor's prior consent, which consent will not be withheld
unreasonably. This Subscription Agreement will be returned
promptly to Investor, together with all investment documents
theretofore delivered by Investor, upon the earlier of (i) the
termination of the Investment Agreement or (ii) December 31,
1994, if the Effective Date shall not have occurred by such
date.
. Acceptance of Subscription
The General Partner, on behalf of the Partnership,
shall accept this Subscription Agreement by executing, and
later delivering to Investor, executed copies of this
Subscription Agreement and the Acceptance of Subscription
attached hereto. This Subscription Agreement is delivered
irrevocably but shall terminate upon the earlier of (i) the
termination of the Investment Agreement or (ii) December 31,
1994, if the Effective Date shall not have occurred by such
date.
. Representations and Warranties of each
Fund.
In order to induce the General Partner and the
Partnership to accept this Subscription Agreement, each Fund
severally but not jointly hereby represents and warrants as
follows as to itself:
(a) Investment Intent. The Fund is acquiring the
Securities for its own account, for investment, and not with
the view to a sale of such interest in connection with any
distribution thereof, except in compliance with the Securities
Act of 1933, as amended, and subject to the disposition of
Securities being at all times within such Fund's control,
except as otherwise expressly provided herein or in the
Investment Agreement;
(b) Sophistication. The Fund, alone or with its
professional advisors, has the educational, financial, and
business background and knowledge so as to be capable of
evaluating the merits and risks of an investment in New America
West, and has the capacity to protect its own interests in
making this investment;
(c) Registration and Transfer. The Fund understands
that, pursuant to the Investment Agreement and the Plan, New
America West shall provide registration rights with respect to
the Securities under the Securities Act of 1933, as amended
(the "Securities Act"). Nonetheless, the Fund understands that
there may be restrictions on the transferability of the
Securities. The Fund understands that prior to the Effective
Date there will be no public market for the Securities and that
it is possible that no public market will exist at any time
thereafter;
(d) Advisors. The Fund has been afforded the
opportunity to seek and rely upon the advice of its own
attorneys, accountants, or other professional advisors in
connection with an investment in New America West and the
execution of this Subscription Agreement;
(e) Valid Existence. The Fund has been duly
organized and is validly existing and in partnership good
standing under the laws of its jurisdiction of organization,
with full power and authority to own its property and conduct
its business as currently conducted and to execute, deliver and
perform this Subscription Agreement;
(f) Binding Obligation. The execution and delivery
of this Subscription Agreement by the Fund and the Fund's
performance hereof and the transactions contemplated hereby
have been duly authorized by the requisite action on the part
of the Fund, and no other authorization or consent is required
for the execution and performance hereof;
(g) No Conflict. The execution, delivery and
performance by the Fund of this Subscription Agreement does not
violate, conflict with, or constitute a default under the
Fund's Articles of Incorporation, By-Laws, partnership
agreement, or any other corporate or partnership document or
resolution, any agreement or commitment to which it is a party,
or with respect to which any of its assets are bound, or,
subject to obtaining the Confirmation Order and the Regulatory
Approvals contemplated by Section 8(b) of the Investment
Agreement, require any governmental consent or approval;
(h) Brokers. The Fund has not used or retained any
broker, agent, finder, syndicator or other intermediary with
respect to its acquisition of Securities or the events or
transactions contemplated by this Subscription Agreement;
(i) Financial Capacity. The Fund has the financial
capacity to make the investment required of it under this
Subscription Agreement; and
(j) Citizenship. The Fund is, and shall at all
times be, a "citizen of the United States" as that term is
defined in Section 101(6) of the Federal Aviation Act of 1958,
as amended (49 App. U.S.C. Sect. 1301(16)), or shall elect to
suspend its voting rights in respect of all shares of Class B
Common owned by it during any period in which the
representation contained in this subsection (j) shall be
invalid.
The representations and warranties made pursuant to
this Section 3 shall survive the execution and delivery of this
Agreement.
. Other Business Ventures.
Each of the Partnership and Investor agrees that
notwithstanding anything to the contrary contained in or
inferable from this Subscription Agreement or any other statute
or principle of law, neither Investor nor the Partnership nor
any of their shareholders, directors, management companies,
officers, employees, partners, agents, family members, or
affiliates (each an "Affiliate") shall be prohibited or
restricted in any way from investing in or conducting, either
directly or indirectly, and may invest in and/or conduct,
either directly or indirectly, businesses of any nature
whatsoever, including the ownership and operation of businesses
or properties similar to or in the same geographical area as
those held by the Partnership. Investor, the Partnership or
their Affiliates may, without owing any obligation to Investor,
the Partnership or any Affiliate, purchase and otherwise deal
in securities of any type of American West or New America West
and each may participate in, commit funds to, or otherwise
become involved with any other entity which may attempt to
acquire control of any competitor of America West or New
America West; provided that prior to the Effective Date or
earlier termination of the Investment Agreement, neither
Investor, the Partnership nor any of their Affiliates shall,
without the consent of the Partnership, on the one hand, and
Investor, on the other hand, commit funds to, or otherwise
become involved with any other entity which may attempt to
acquire control of America West. Any investment in or conduct
of any such businesses by Investor, the Partnership or any
Affiliate shall not give rise to any claim for an accounting by
the others or any right to claim any interest therein or the
profits therefrom.
. Indemnification
Investor hereby agrees to indemnify, defend, and hold
harmless the Partnership and its partners and all of their
respective members, directors, officers, employees, and agents
(collectively, the "Indemnified Parties") from and against its
allocable portion (based on relative fault of Investor, on the
one hand, and the Indemnified Parties, on the other hand) of
any and all loss, damage or liability (including without
limitation, any and all attorneys' fees, costs, and other
amounts reasonably incurred by any of them in investigating,
preparing or defending against any claim, litigation, or other
legal action threatened or initiated) which are found in a
final, nonappealable judgment by a court of competent
jurisdiction to have resulted from or arisen out of (a) a
breach by Investor in any material respect of any repre-
sentation, warranty or obligation of Investor contained in this
Subscription Agreement or (b) notwithstanding Section 2.06 of
the Limited Partnership Agreement of the Partnership, any
action or inaction of Investor or any of its affiliates giving
rise to a breach by the Partnership of any of its obligations
under the Investment Agreement or the Procedures Agreement.
. No Assignment or Transfer; Third Party
Beneficiary
(a) Investor agrees not to transfer or assign this
Subscription Agreement or any of its rights, duties or
obligations hereunder without the prior written consent of the
General Partner and America West, which consent will not be
withheld unreasonably, except that no such consent will be
required to be obtained for a transfer or assignment to one or
more funds or accounts managed or advised by Fidelity or any of
its affiliates as to which the representations, warranties and
covenants contained herein are true and accurate in all
material respects as of the date of such transfer and the
Effective Date, and acknowledges that any attempted transfer or
assignment in violation of the foregoing shall be void.
(b) Investor acknowledges that America West is an
express third party beneficiary of the provisions of Section 1
of this agreement and may sue Investor directly to enforce such
obligations upon any breach by (i) Investor of its obligations
thereunder and (ii) the Partnership of any of its obligations
under the Investment Agreement or the Procedures Agreement,
which breach gives rise to a cause of action against the
Partnership under the applicable agreement; provided, that upon
any such breach by the Partnership, Investor shall only be
liable for 23.81% of any damages payable in respect thereof.
. Representations, Warranties, and Covenants of
the Partnership.
In order to induce Investor to execute this
Subscription Agreement, the Partnership hereby represents,
warrants and covenants as follows:
(a) Valid Existence. The Partnership has been duly
organized and is validly existing and in good standing under
the laws of its jurisdiction of organization, with full power
and authority to execute this Subscription Agreement and the
Investment Agreement;
(b) Binding Obligations. The execution and delivery
of this Subscription Agreement, the Investment Agreement and
the Procedures Agreement by the Partnership and its performance
hereof and the transactions contemplated hereby have been duly
authorized by the requisite action on the part of the
Partnership and no other authorization or consent is required
for the execution and performance hereof;
(c) Deliveries. The Partnership will, promptly after
its receipt thereof, deliver to Investor (i) 23.81% of any Fee
(as such term is defined in Section 3 of the Procedures
Agreement) paid to the Partnership by America West, and (ii)
copies of any and all documents and notices received by the
Partnership from America West or otherwise in respect of the
transactions contemplated by the Investment Agreement and the
Procedures Agreement;
(d) Assignment of Rights. The Partnership hereby
assigns to Investor on a shared basis, subject to performance
by Investor of its obligations and duties hereunder, the rights
of the Partnership under the Investment Agreement and
Procedures Agreement, including, without limitation, the right
to sue to enforce any breach thereof; provided, that Investor
shall not, without the prior consent of the Partnership,
contact or otherwise deal directly with America West prior to
the Effective Date in connection with the operation of such
Agreements. The Partnership agrees that (i) Investor has the
ability to cause the Partnership to give any notices permitted
to be given by it to America West pursuant to the provisions of
the Investment Agreement or the Procedures Agreement and (ii)
all matters which, pursuant to the provisions of either
Agreement, require the approval or consent of the Partnership
may not be approved or consented to unless Investor, in the
reasonable exercise of its own business judgment and any
relevant internal, legal or other restrictions or policies
applicable to it, so approves or consents to such matter; and
(e) Public Announcements. The Partnership shall
not, without the prior consent of Fidelity, which consent will
not be withheld unreasonably, issue or consent to the issuance
of any press release or other public announcement which
mentions any Fund or Fidelity or Investor or any affiliate of
any of them.
. Expenses.
(a) Reimbursement of Expenses. Investor shall be
entitled to a reimbursement of its Expenses (as such term is
defined in the Limited Partnership Agreement of the
Partnership) incurred in connection with the transactions
contemplated by this Subscription Agreement, the Investment
Agreement and the Interim Procedures Agreement upon
presentation to the Partnership of appropriate documentation,
setting forth in reasonable detail the amounts for which
reimbursement is sought and the basis on which the charges were
incurred.
(b) Contribution to Expenses. Investor agrees to
pay to the Partnership, within 15 days after request, 23.81% of
the Expenses incurred by Investor, the Partnership and its
partners which are not reimbursed by America West pursuant to
Section 2 of the Procedures Agreement; provided, under no
circumstances will Investor be liable for payment of the
Expenses of the partners or the Partnership incurred in
connection with the negotiation and execution of the Limited
Partnership Agreement of the Partnership.
. Notices
All notices, requests and other communications
hereunder must be in writing and will be deemed to have been
duly given only if delivered personally or by facsimile
transmission or mailed (first class postage prepaid) or by
prepaid express courier to the parties at the following
addresses or facsimile numbers:
If to Investor: Fidelity Management Trust Company
82 Devonshire Street, MS F7E
Boston, Massachusetts 02109
Attn: Daniel J. Harmetz
Fax Number: (617) 227-2536
with a copy to:
Fidelity Management Trust Company
82 Devonshire Street, MS F7D
Boston, Massachusetts 02109
Attn: Wendy Schnipper Clayton, Esq.
Fax Number: (617) 570-7688
and a copy to:
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Attn: Laura Hodges Taylor, P.C.
Fax Number: (617) 523-1231
If to the Partnership:AmWest Partners, L.P.
201 Main Street, Suite 2420
Fort Worth, Texas 76102
Attention: James J. O'Brien
Fax Number: (817) 871-4010
with a copy to:
Arnold & Porter
1200 New Hampshire Ave., N.W.
Washington, D.C. 20036
Attn: Richard P. Schifter
Fax Number: (202) 872-6720
. Governing Laws and Venue
This Agreement and the rights and obligations of
Investor and the Partnership hereunder shall be interpreted,
construed, and enforced in accordance with the laws of the
State of Texas, without regard to its conflicts of laws
provisions.
. Miscellaneous
(a) Rules of Construction. The general rule of
construction for interpreting a contract, which provides that
the provisions of a contract should be construed against the
party preparing the contract, is waived by Investor. Investor
acknowledges that it was represented by separate legal counsel
in this matter who participated in the preparation of this
Subscription Agreement or it had the opportunity to retain
counsel to participate in the preparation of this Subscription
Agreement but chose not to do so.
(b) Entire Agreement. This Subscription Agreement,
including all exhibits to this Subscription Agreement and, if
any, exhibits to such exhibits, contains the entire agreement
among the parties relative to the matters contained in this
Subscription Agreement.
(c) Waiver. No consent or waiver, express or implied,
by Investor or the Partnership to or for any breach or default
by the other party in the performance by such other party of
its obligations under this Subscription Agreement shall be
deemed or construed to be a consent or waiver to or of any
other breach or default in the performance by such other party
of the same or any other obligations of such other party under
this Subscription Agreement. Failure on the part of any party
to complain of any act or failure to act of the other party or
to declare the other party in default, regardless of how long
such failure continues, shall not constitute a waiver by such
party of its rights hereunder.
(d) Severability. If any provision of this
Subscription Agreement or the application thereof to any person
or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Subscription Agreement and the
application of such provisions to other persons or
circumstances shall not be affected thereby, and the intent of
this Subscription Agreement shall be enforced to the greatest
extent permitted by law.
(e) Benefits and Assignment. Subject to the
restrictions on transfers and encumbrances set forth in this
Subscription Agreement, this Subscription Agreement shall inure
to the benefit of and be binding upon the parties and their
respective legal representatives, successors, and assigns.
Whenever, in this Subscription Agreement, a reference to any
party is made, such reference shall be deemed to include a
reference to the legal representatives, successors, and assigns
of such party.
(f) Gender, Etc. Unless the context clearly indicates
otherwise, the singular shall include the plural and vice
versa. Whenever the masculine, feminine, or neuter gender is
used inappropriately in this Subscription Agreement, this
Subscription Agreement shall be read as if the appropriate
gender was used.
(g) Captions. Captions are included solely for
convenience of reference and if there is any conflict between
captions and the text of this Subscription Agreement, the text
shall control.
(h) Execution in Counterparts. This Subscription
Agreement may be executed in multiple counterparts, each of
which shall be deemed an original for all purposes and all of
which when taken together shall constitute a single counterpart
instrument. Executed signature pages to any counterpart
instrument may be detached and affixed to a single counterpart,
which single counterpart with multiple executed signature pages
affixed thereto constitutes the original counterpart
instrument. All of these counterpart pages shall be read as
though one and they shall have the same force and effect as if
all of the parties had executed a single signature page.
(i) Limitation of Liability. The Partnership
acknowledges and agrees that this Agreement is not executed on
behalf of or binding upon any of the trustees, officers,
directors, partners or shareholders of any of the Funds
individually, but is binding only upon the assets and property
of the Funds. With respect to all obligations of each Fund
arising out of this Agreement, the Partnership shall look for
payment or satisfaction of any claim solely to the assets and
property of such Fund. The Partnership acknowledges and agrees
that the obligations of each of the Funds hereunder is several
and not joint.
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement as of the 7th day of April, 1994.
INVESTOR:
BELMONT FUND, L.P., a Bermuda
Limited Partnership
By: Fidelity Management Trust
Company, pursuant to a power
of attorney for Fidelity
International Services
Limited, Managing General
Partner
By: _________________________
Judy K. Mencher
Associate General Counsel
Investor is a Bermuda limited partnership. The Partnership
acknowledges and agrees that this Agreement is not executed on
behalf of or binding upon any of the trustees, officers,
directors, partners or shareholders of Investor individually,
but are binding only upon the assets and property of the
Investor. With respect to all obligations of the Investor
arising out of this Agreement, the Partnership shall look for
payment or satisfaction of any claim solely to the assets and
property of the Investor.
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement as of the 7th day of April, 1994.
FIDELITY COPERNICUS FUND, L.P., a
Delaware Limited Partnership
By: Fidelity Copernicus Corp.,
its General Partner
By: _________________________
Judy K. Mencher
Associate General Counsel
Investor is a Delaware limited partnership. The Partnership
acknowledges and agrees that this Agreement is not executed on
behalf of or binding upon any of the trustees, officers,
directors, partners or shareholders of Investor individually,
but are binding only upon the assets and property of the
Investor. With respect to all obligations of the Investor
arising out of this Agreement, the Partnership shall look for
payment or satisfaction of any claim solely to the assets and
property of the Investor.
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement as of the 7th day of April, 1994.
BELMONT CAPITAL PARTNERS, L.P., a
Massachusetts Limited
Partnership
By: Fidelity Capital Corp., its
General Partner
By: _________________________
Judy K. Mencher
Associate General Counsel
Investor is a Massachusetts limited partnership. The
Partnership acknowledges and agrees that this Agreement is not
executed on behalf of or binding upon any of the trustees,
officers, directors, partners or shareholders of Investor
individually, but are binding only upon the assets and property
of the Investor. With respect to all obligations of the
Investor arising out of this Agreement, the Partnership shall
look for payment or satisfaction of any claim solely to the
assets and property of the Investor.
ACCEPTANCE OF SUBSCRIPTION
The Subscription Agreement of the Investor
indicated hereinbelow with respect to the Securities
of New America West agreed to be acquired by AmWest
Partners, L.P. is hereby accepted.
Dated: , 1994
AMWEST PARTNERS, L.P.
By: AMWEST GENPAR, INC.,
a Texas corporation
By:
Title:
Name of Investor:
Date of Subscription Agreement:
