<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 1996
REGISTRATION NO. 33-54243
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AMERICA WEST AIRLINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 4512 86-0418245
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
4000 EAST SKY HARBOR BOULEVARD
PHOENIX, ARIZONA 85034
(602) 693-0800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
STEPHEN L. JOHNSON
SENIOR VICE PRESIDENT
AMERICA WEST AIRLINES, INC.
4000 EAST SKY HARBOR BOULEVARD
PHOENIX, ARIZONA 85034
(602) 693-0800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
With Copies to:
DAVID J. GRAHAM
ANDREWS & KURTH L.L.P.
4200 TEXAS COMMERCE TOWER
HOUSTON, TEXAS 77002
(713) 220-4200
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective, which time is to be
determined by the Selling Securityholders. All of the Securities offered hereby
are offered for the account of the Selling Securityholders.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
America West Airlines, Inc. has prepared this Post Effective Amendment No.
5 to its Registration Statement on Form S-1 (No. 33-54243) for the purpose of
filing with the Securities and Exchange Commission certain exhibits to the
Registration Statement. Post Effective Amendment No. 5 does not modify any
provision of the prospectus included in the registration statement; accordingly,
the related cross reference sheet and such Prospectus have not been included
herein.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses, other than
underwriting discounts and commissions, payable by the Registrant in connection
with the issuance and distribution of the securities being registered hereby:
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Securities and Exchange Commission Filing Fee........................... $ 9,448.00
Blue Sky Filing Fees and Expenses....................................... 1,000.00
Printing Costs.......................................................... 52,500.00
Legal Fees and Expenses................................................. 27,500.00
Accounting Fees and Expenses............................................ 30,000.00
Miscellaneous........................................................... 1,052.00
-----------
Total(1)...................................................... $121,500.00
==========
</TABLE>
- ---------------
(1) Total includes an estimated $76,500 of expenses related to the issuance and
distribution of the securities registered hereby that were incurred prior to
the filing of this post-effective amendment. Expenses related solely to this
post-effective amendment total $45,000 and include: (i) Printing
Costs -- $27,500; (ii) Legal Fees and Expenses ($7,500) and (iii) Accounting
Fees and Expenses -- $10,000.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") authorizes,
inter alia, a corporation generally to indemnify any person ("indemnitee") who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding (other than an action by or in the right
of the corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation, in a similar position with another corporation or
entity, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. With respect to actions or
suits by or in the right of the corporation; however, an indemnitee who acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation is generally limited to attorneys' fees and
other expenses, and no indemnification shall be made if such person is adjudged
liable to the corporation unless and only to the extent that a court of
competent jurisdiction determines that indemnification is appropriate. Section
145 further provides that any indemnification shall be made by the corporation
only as authorized in each specific case upon a determination by the (i)
stockholders, (ii) board of directors by a majority vote of a quorum of
disinterested directors so directs, that indemnification of the indemnitee is
proper because he has met the applicable standard of conduct. Section 145
provides that indemnification pursuant to its provisions is not exclusive of
other rights of indemnification to which a person may be entitled under any
by-law agreement, vote of stockholders or disinterested directors or otherwise.
Section 8.02 of the Company's By-laws, a copy of which is filed as Exhibit
3.2 to this Registration Statement provides, in substance, that directors,
officers, employees and agents shall be indemnified to the fullest extent
permitted by Section 145 of the DGCL.
Article 12.0 of the Company's Restated Certificate of Incorporation, a copy
of which is filed as Exhibit 3.1 to this Registration Statement, limits the
liability of directors of the Company to the Company or its stockholders (in
their capacity as directors but not in their capacity as officers) to the
fullest extent permitted by the DGCL. Specifically, directors of the Company
will not be personally liable for monetary damages for breach of a director's
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for unlawful payments of dividends or unlawful stock
repurchase or redemptions as provided in section 174 of the DGCL or (iv) for any
transaction from which the director derived an improper personal benefit. The
Restated Certificate of Incorporation also
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<PAGE> 4
provides that if the DGCL is amended after the approval of the Restated
Certificate of Incorporation to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
director of the Company will be eliminated or limited to the full extent
permitted by the DGCL, as so amended.
The form of the Third Revised Investment Agreement filed as Exhibit 10.1 to
this Registration Statement contains certain provisions for indemnification of
directors and officers of the Company and the Selling Securityholder against
civil liabilities under the Securities Act. Certain of these provisions are set
forth in the form of the Registration Rights Agreement filed as Exhibit 4.6 to
this Registration Rights Agreement.
The Company intends to enter into indemnification agreements with certain
of its directors providing for indemnification to the fullest extent permitted
by the laws of the State of Delaware. These agreements provide for specific
procedures to better assure the directors' rights to indemnification, including
procedures for directors to submit claims, for determination of directors
entitled to indemnification (including the allocation of the burden of proof and
selection of a reviewing party) and for enforcement of directors'
indemnification rights.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following summarizes transactions occurring within the last three years
in which the Company has sold securities without registration under the
Securities Act.
On February 15, 1991, the Company sold 253,422 shares of its common stock
to Transpacific Enterprises, Inc. for $1,393,821, or $5.50 per share, in
reliance upon the exemption set forth in Section 4(2) of the Securities Act.
On the Effective Date, the Company issued the following securities in
connection with its Reorganization:
1. The Company issued 26,053,185 shares of Class B Common Stock to
holders of approximately $310 million of allowed, general unsecured
prepetition claims against the Company in satisfaction of such claims in
reliance upon the exemption set forth in Section 1145 of the Bankruptcy
Code.
2. The Company issued 3,865,179 shares of Class B Common Stock
(1,615,179 of which shares are to be issued in exchange for cash,
aggregating $14,357,326, provided by such equity holders upon the exercise
of rights to subscribe for such shares at a price of $8.889 per share) and
6,230,769 Warrants to the holders of pre-existing equity interests in the
Company in consideration of cancellation of such pre-existing equity
interests in reliance upon the exemption set forth in Section 1145 of the
Bankruptcy Code.
3. The Company issued 900,000 shares of Class B Common Stock and
1,384,615 Warrants to Guiness Peat Aviation and its affiliates ("GPA") in
satisfaction of claims of GPA against the Company in reliance upon the
exemption set forth in Section 1145 of the Bankruptcy Code.
4. The Company issued the following securities to partners of AmWest
(or to Lehman Brothers Inc. or certain funds and accounts managed or
advised by Fidelity Management Trust Company, in each case as assignees of
AmWest's rights to acquire such securities) for new consideration paid to
the Company in accordance with the Company's Plan: (i) 1,200,000 shares of
Class A Common Stock for $7.467 per share; (ii) 12,981,636 shares of Class
B Common Stock for $7.467 per share and 721,815 shares of Class B Common
Stock for $8.889 per share; (iii) $100 million principal amount of Senior
Notes for $100 million in cash; and (iv) 2,769,231 Warrants, separate
consideration for which was not specified. The Company relied upon the
exemption set forth in Section 4(2) of the Securities Act.
In September, 1994 the Company issued 125,000 shares of Class B Common
Stock to William A. Franke, the Chief Executive Officer of America West, as a
reorganization success bonus.
In October 1994, the Company issued Additional Senior Notes and cash to
Fidelity and Lehman in exchange for full satisfaction of pre-existing secured
claims and other interests.
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<PAGE> 5
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE.
(a) The following exhibits are filed as part of this Registration
Statement:
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EXHIBIT
NUMBER TITLE
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*1.1 -- Form of Purchase Agreement.
2.1 -- The Company's Plan of Reorganization, as amended under Chapter 11 of the
Bankruptcy Code -- Incorporated by reference to the Company's Report on
Form 8-K dated September 9, 1994.
3.1 -- Restated Certificate of Incorporation of America West Airlines,
Inc. -- Incorporated by reference to the Company's Report on Form 8-K
dated September 8, 1994.
3.2 -- Restated By-laws of America West Airlines, Inc., as
amended -- Incorporated by reference to the Company's Report on Form 10-K
dated December 31, 1994.
4.1 -- Indenture for 10 3/4% Senior Unsecured Notes due 2003 -- Incorporated by
reference to the Company's Form S-4 (No. 33-61099).
4.2 -- Form of Senior Note (included as Exhibit A to Exhibit 4.1 above).
4.3 -- Warrant Agreement dated August 25, 1994 between America West Airlines,
Inc. and First Interstate, N.A., as Warrant Agent -- Incorporated by
reference to the Company's Report on Form 8-K dated September 9, 1994.
4.4 -- Form of Warrant (included as Exhibit A to Exhibit 4.3 above).
4.5 -- Stockholders' Agreement for America West Airlines, Inc. dated August 25,
1994 among America West Airlines, Inc., AmWest Partners, L.P., GPA Group
plc and certain other Stockholder Representatives -- Incorporated by
reference to the Company's Report on Form 8-K dated September 9, 1994.
4.6 -- First Amendment to Stockholders' Agreement for America West Airlines, Inc.
dated September 6, 1994 among Air Partners II, L.P., TPG Partners, L.P.,
TPG Parallel I, L.P., Continental Airlines, Inc., Mesa Airlines, Inc., GPA
Group plc and certain other stockholder representatives -- Incorporated by
reference to the Company's Report on Form 8-K dated September 9, 1994.
4.6 -- Registration Rights Agreement dated August 25, 1994 among America West
Airlines, Inc., AmWest Partners, L.P. and other holders -- Incorporated by
reference to the Company's Report on Form 8-K dated September 9, 1994.
4.7 -- Article 4.0 of the Company's Restated Certificate of Incorporation
(included in Exhibit 3.1 above).
5.1 -- Opinion of Andrews & Kurth L.L.P.
10.1 -- Third Revised Investment Agreement dated April 21, 1994 between America
West Airlines, Inc. and AmWest Partners, L.P. -- Incorporated by reference
to Exhibit 10.A to the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 1994.
10.11 -- Third Revised Interim Procedures Agreement dated April 21, 1994 between
America West Airlines and AmWest Partners, L.P. -- Incorporated by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1993.
10.14 -- The GPA Term Sheet between America West Airlines, Inc. and GPA Group plc,
dated June 13, 1994 -- Incorporated by Reference to the Company's
Registration Statement on Form S-1 (No. 54243), as amended.
10.15 -- America West Airlines Management Resignation Allowance Guidelines, as
amended, dated November 18, 1993 -- Incorporated by Reference to the
Company's Registration Statement on Form S-1 (No. 54243), as amended.
10.16 -- Airbus A320 Purchase Agreement (including exhibits thereto), dated as of
September 28, 1990 between AVSA, S.A.R.L. and the Company, together with
Letter Agreement Nos. 1-10, inclusive -- Incorporated by reference to
Exhibit 10-(D)(1) to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990.
10.17 -- Loan Agreement, dated as of September 28, 1990, among the Company, AVSA
and AVSA, as agent -- Incorporated by reference to Exhibit 10-(D)(2) to
the Company's Quarterly Report on Form 10-Q for the period ended September
30, 1990.
</TABLE>
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<PAGE> 6
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EXHIBIT
NUMBER TITLE
---------- --------------------------------------------------------------------------
<S> <C>
10.19 -- V2500 Support Contract Between the Company and International Aero Engines
AG, dated September 28, 1990, together with Side Letters Nos. 1-4,
inclusive -- Incorporated by reference to Exhibit 10-(D)(3) to the
Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1990.
10.20 -- Cash Management Agreement, dated September 28, 1991, among the Company, BT
and First Interstate of Arizona, N.A. -- Incorporated by reference to
Exhibit 10-D(21) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1991.
10.21 -- First Amendment to Cash Management Agreement, dated December 1, 1991,
among the Company, BT and First Interstate of Arizona,
N.A. -- Incorporated by reference to Exhibit 10-D(22) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991.
10.22 -- Second Amendment to Cash Management Agreement, dated September 1, 1992,
among the Company, BT and First Interstate of Arizona,
N.A. -- Incorporated by reference to Exhibit 10-O(3) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.23 -- Restructuring Agreement, dated December 1, 1991 between the Company and
Kawasaki -- Incorporated by reference to Exhibit 10-D(24) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991.
10.24 -- A320 Put Agreement, dated December 1, 1991 between the Company and
Kawasaki -- Incorporated by reference to Exhibit 10-D(25) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991.
10.25 -- First Amendment to A320 Put Agreement, dated September 1,
1992 -- Incorporated by reference to Exhibit 10-R(2) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.26 -- A320 Put Agreement, dated as of June 25, 1991 between the Company and GPA
Group plc -- Incorporated by reference to Exhibit 10-D(26) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1991.
10.27 -- First Amendment to A320 Put Agreement, dated as of September 1, 1992 --
Incorporated by reference to Exhibit 10-S(2) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992.
10.28 -- Restructuring Agreement, dated as of June 25, 1991 among GPA Group plc,
GPA Leasing USA I, Inc. GPA Leasing USA Sub I, and the
Company -- Incorporated by reference to Exhibit 10-D(27) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991.
10.29 -- Official Statement dated August 11, 1986 for the $54,000,000 Variable Rate
Airport Facility Revenue Bonds -- Incorporated by reference to Exhibit
10.e to the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1986.
10.30 -- Airport Use Agreement dated July 1, 1989 (the "Airport Use Agreement")
among the City of Phoenix, The Industrial Development Authority of the
City of Phoenix, Arizona and the Company -- Incorporated by reference to
Exhibit 10-D(9) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1989.
10.31 -- First Amendment dated August 1, 1990 to Airport Use
Agreement -- Incorporated by reference to Exhibit 10-(D)(9) to the
Company's Quarterly Report on Form 10-Q for the period ended September 30,
1990.
10.32 -- Revolving Loan Agreement dated April 17, 1990, by and among the Company,
the Bank signatories thereto, and Bank of America National Trust and
Savings Association, as Agent for the Banks (the "Revolving Loan
Agreement") -- Incorporated by reference to Exhibit 10-1 to the Company's
Quarterly Report on Form 10-Q for the period ended March 31, 1990.
10.33 -- First Amendment dated April 17, 1990 to Revolving Loan
Agreement -- Incorporated by reference to Exhibit 10-(D)(10) to the
Company's Quarterly Report on Form 10-Q for the period ended September 30,
1990.
10.34 -- Second Amendment dated September 28, 1990 to the Revolving Loan
Agreement -- Incorporated by reference to Exhibit 10-(D)(11) to the
Company's Quarterly Report on Form 10-Q for the period ended September 30,
1990.
</TABLE>
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<PAGE> 7
<TABLE>
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EXHIBIT
NUMBER TITLE
---------- --------------------------------------------------------------------------
<S> <C>
10.35 -- Third Amendment dated as of January 14, 1991 to the Revolving Loan
Agreement -- Incorporated by reference to Exhibit 10-(D)(13) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1990.
10.36 -- Spares Credit Agreement, dated as of September 28, 1990, between the
Company and IAE -- Incorporated by reference to Exhibit 10-(D)(4) to the
Company's Quarterly Report on Form 10-Q for the period ended September 30,
1990.
10.37 -- Master Credit Modification Agreement dated as of October 1, 1992, among
the Company, IAE International Aero Engines AG, Intlaero (Phoenix A320)
Inc., Intlaero (Phoenix B737) Inc., CAE Electronics Ltd., and Hughes
Rediffusion Simulation Limited -- Incorporated by reference to Exhibit
10-L to the Company's Annual Report on Form 10-K for the year ended
December 31, 1992.
10.38 -- Credit Agreement, dated as of September 28, 1990 between the Company and
IAE -- Incorporated by reference to Exhibit 10-(D)(5) to the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 1990.
10.39 -- Amendment No. 1 to the Credit Agreement, dated March 1,
1991 -- Incorporated by reference to Exhibit 10-(M)(2) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.40 -- Amendment No. 2 to the Credit Agreement, dated May 15,
1991 -- Incorporated by reference to Exhibit 10-(M)(3) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.41 -- Amendment No. 3 to the Credit Agreement, dated October 1,
1992 -- Incorporated by reference to Exhibit 10-(M)(4) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.42 -- Form of Third Amended and Restated Credit Agreement dated September 30,
1993, among the Company, various lenders, and BT Commercial Corp. as
Administrative Agent (without exhibits) -- Incorporated by reference to
Exhibit 10-(N)(1) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1993.
10.43 -- Form of Amended and Restated Management Letter Agreement, dated as of
September 30, 1993 from the Company to the Lenders -- Incorporated by
reference to Exhibit 10-N(2) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1993.
10.44 -- Form of Amendment to Amended and Restated Management Letter Agreement;
Consent to Amendment of By-laws dated February 8, 1994 from the Company to
the Lenders -- Incorporated by reference to Exhibit 10-N(3) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1993.
10.45 -- Fourth Amended and Restated Credit Agreement dated June 30,
1994 -- Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 1994.
10.46 -- Key Employee Protection Agreement dated as of June 27, 1994 between
America West Airlines, Inc. and William A. Franke -- Incorporated by
reference to the Company's Registration Statement on Form S-1 (No. 54243),
as amended.
10.47 -- Management Rights Agreement dated August 25, 1994 between TPG Partners
L.P., TPG Genpar, L.P. and America West Airlines, Inc. -- Incorporated by
reference to the Company's Registration Statement on Form S-1 (No. 54243),
as amended.
10.48 -- V2500 Support Contract dated December 23, 1994 between America West
Airlines, Inc. and International Aero Engineers, as
amended -- Incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.
10.49 -- Form of America West Airlines, Inc. 1994 Incentive Equity Plan
Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.
*10.50 -- Employment Agreement dated as of November 9, 1995 between America West
Airlines, Inc. and William A. Franke.
11.1 -- Statement re: computation of net income (loss) per common share.
12.1 -- Statement re: computation of ratio of earnings to fixed charges.
23.1 -- Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1 above).
*23.2 -- Consent of KPMG Peat Marwick LLP (independent auditors) -- Included at
page S-1.
</TABLE>
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<PAGE> 8
<TABLE>
<CAPTION>
EXHIBIT
NUMBER TITLE
---------- --------------------------------------------------------------------------
<S> <C>
24.1 -- Power of Attorney (included on the signature pages of this Registration
Statement.)
27 -- Financial Data Schedule.
</TABLE>
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* Filed herewith.
(b) Financial Statement Schedule:
The following financial statement schedule is filed as part of this
Registration Statement, but not included in the Prospectus.
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SCHEDULE PAGE
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<S> <C>
Independent Auditors' Report on Schedule and Consent.................. S-1
Schedule VIII -- Valuation and Qualifying Accounts.................... S-2
</TABLE>
All other schedules for which provision is made in Regulation S-X of the
Commission are not required under the related instructions or are
inapplicable or the required information is included in the financial
statements or notes thereto and, therefore, have been omitted.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes: (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this registration statement: (i) to include any prospectus required by section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the registration statement; (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE> 9
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF PHOENIX,
STATE OF ARIZONA, ON THE 30TH DAY OF JANUARY, 1996.
AMERICA WEST AIRLINES, INC.
By: /s/ WILLIAM A. FRANKE
------------------------------------
William A. Franke
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED BELOW ON JANUARY 30TH, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ ----------------------------------------
<S> <C>
/s/ WILLIAM A. FRANKE Chairman of the Board and Chief Executive
- ------------------------------------------ Officer
William A. Franke
/s/ W. DOUGLAS PARKER Senior Vice President and Chief Financial
- ------------------------------------------ Officer
W. Douglas Parker
* Director
- ------------------------------------------
Julia Chang Bloch
* Director
- ------------------------------------------
Stephen F. Bollenbach
* Director
- ------------------------------------------
Frederick W. Bradley, Jr.
* Director
- ------------------------------------------
James G. Coulter
* Director
- ------------------------------------------
John F. Fraser
* Director
- ------------------------------------------
John L. Goolsby
* Director
- ------------------------------------------
Richard C. Kraemer
* Director
- ------------------------------------------
John R. Power, Jr.
* Director
- ------------------------------------------
Larry L. Risley
</TABLE>
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<PAGE> 10
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ ---------------------------------------
<S> <C>
* Director
- ------------------------------------------
Frank B. Ryan
* Director
- ------------------------------------------
Richard P. Schifter
* Director
- ------------------------------------------
John F. Tierney
* Director
- ------------------------------------------
Raymond S. Troubh
*By: /s/ WILLIAM A. FRANKE
- ------------------------------------------
Attorney-in-fact
</TABLE>
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<PAGE> 11
INDEPENDENT AUDITORS' REPORT ON SCHEDULE AND CONSENT
The Board of Directors and Stockholders
America West Airlines, Inc.
Under date of February 24, 1995, we reported on the balance sheets of
America West Airlines, Inc. as of December 31, 1994 and 1993, and the related
statements of operations, cash flows and stockholders' equity (deficiency) for
the period August 26, 1994 to December 31, 1994, the period January 1, 1994 to
August 25, 1994 and for each of the years in the two-year period ended December
31, 1993, which are included herein. In connection with our audits of the
aforementioned financial statements, we also audited the related financial
statement schedule as included in the registration statements. The financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statement schedule
based on our audits. In our opinion, the financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.
The audit report on the financial statements of America West Airlines, Inc.
referred to above contains an explanatory paragraph that states that as
discussed in Notes 1 and 2 to the financial statements, on August 25, 1994,
America West Airlines, Inc. emerged from bankruptcy. The financial statements of
the Reorganized Company reflect the impact of adjustments to reflect the fair
value of assets and liabilities under fresh start reporting. As a result, the
financial statements of the Reorganized Company are presented on a different
basis than those of the Predecessor Company and, therefore, are not comparable
in all respects.
KPMG Peat Marwick LLP
Phoenix, Arizona
January 30, 1996
S-1
<PAGE> 12
AMERICA WEST AIRLINES, INC.
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE PERIODS AUGUST 26 TO DECEMBER 31, 1994, JANUARY 1 TO AUGUST 25, 1994
AND THE YEARS ENDED DECEMBER 31, 1993 AND 1992
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
- ---------------------------------------------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful receivables:
Period ended:
August 26, 1994 to December 31, 1994........ $2,833 $1,074 $ -- $ 376 $ 3,531
======== ======== ======== ======== =======
Allowance for doubtful receivables:
Period ended:
January 1, 1994 through August 25, 1994..... $3,030 $4,742 $ -- $4,939 $ 2,833
======== ======== ======== ======== =======
Years ended:
December 31, 1993........................... $2,542 $5,474 $ -- $4,986 $ 3,030
======== ======== ======== ======== =======
December 31, 1992........................... $3,603 $3,800 $ -- $4,861 $ 2,542
======== ======== ======== ======== =======
Reserve for obsolescence:
Period ended:
August 26, 1994 to December 31, 1994........ $ -- $ 483 $ -- $ -- $ 483
======== ======== ======== ======== =======
Reserve for obsolescence:
Period ended:
January 1, 1994 through August 25, 1994..... $7,231 $ 794 $ -- $8,025(a) $ --
======== ======== ======== ======== =======
Years ended:
December 31, 1993........................... $6,921 $ 902 $ -- $ 592 $ 7,231
======== ======== ======== ======== =======
December 31, 1992........................... $3,638 $3,283 $ -- $ -- $ 6,921
======== ======== ======== ======== =======
</TABLE>
- ---------------
(a) Includes fresh start adjustment of approximately $7,885.
S-2
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER TITLE
---------- -----------------------------------------------------------------
<S> <C>
*1.1 -- Form of Purchase Agreement.
2.1 -- The Company's Plan of Reorganization, as amended under Chapter 11
of the Bankruptcy Code -- Incorporated by reference to the
Company's Report on Form 8-K dated September 9, 1994.
3.1 -- Restated Certificate of Incorporation of America West Airlines,
Inc. -- Incorporated by reference to the Company's Report on Form
8-K dated September 8, 1994.
3.2 -- Restated By-laws of America West Airlines, Inc., as
amended -- Incorporated by reference to the Company's Report on
Form 10-K dated December 31, 1994.
4.1 -- Indenture for 10 3/4% Senior Unsecured Notes due
2003 -- Incorporated by reference to the Company's Form S-4 (No.
33-61099).
4.2 -- Form of Senior Note (included as Exhibit A to Exhibit 4.1 above).
4.3 -- Warrant Agreement dated August 25, 1994 between America West
Airlines, Inc. and First Interstate, N.A., as Warrant
Agent -- Incorporated by reference to the Company's Report on
Form 8-K dated September 9, 1994.
4.4 -- Form of Warrant (included as Exhibit A to Exhibit 4.3 above).
4.5 -- Stockholders' Agreement for America West Airlines, Inc. dated
August 25, 1994 among America West Airlines, Inc., AmWest
Partners, L.P., GPA Group plc and certain other Stockholder
Representatives -- Incorporated by reference to the Company's
Report on Form 8-K dated September 9, 1994.
4.6 -- First Amendment to Stockholders' Agreement for America West
Airlines, Inc. dated September 6, 1994 among Air Partners II,
L.P., TPG Partners, L.P., TPG Parallel I, L.P., Continental
Airlines, Inc., Mesa Airlines, Inc., GPA Group plc and certain
other stockholder representatives -- Incorporated by reference to
the Company's Report on Form 8-K dated September 9, 1994.
4.6 -- Registration Rights Agreement dated August 25, 1994 among America
West Airlines, Inc., AmWest Partners, L.P. and other
holders -- Incorporated by reference to the Company's Report on
Form 8-K dated September 9, 1994.
4.7 -- Article 4.0 of the Company's Restated Certificate of
Incorporation (included in Exhibit 3.1 above).
5.1 -- Opinion of Andrews & Kurth L.L.P.
10.1 -- Third Revised Investment Agreement dated April 21, 1994 between
America West Airlines, Inc. and AmWest Partners,
L.P. -- Incorporated by reference to Exhibit 10.A to the
Company's Quarterly Report on Form 10-Q for the period ended
March 31, 1994.
10.11 -- Third Revised Interim Procedures Agreement dated April 21, 1994
between America West Airlines and AmWest Partners,
L.P. -- Incorporated by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1993.
10.14 -- The GPA Term Sheet between America West Airlines, Inc. and GPA
Group plc, dated June 13, 1994 -- Incorporated by Reference to
the Company's Registration Statement on Form S-1 (No. 54243), as
amended.
10.15 -- America West Airlines Management Resignation Allowance
Guidelines, as amended, dated November 18, 1993 -- Incorporated
by Reference to the Company's Registration Statement on Form S-1
(No. 54243), as amended.
10.16 -- Airbus A320 Purchase Agreement (including exhibits thereto),
dated as of September 28, 1990 between AVSA, S.A.R.L. and the
Company, together with Letter Agreement Nos. 1-10,
inclusive -- Incorporated by reference to Exhibit 10-(D)(1) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990.
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT
NUMBER TITLE
---------- -----------------------------------------------------------------
<S> <C>
10.17 -- Loan Agreement, dated as of September 28, 1990, among the
Company, AVSA and AVSA, as agent -- Incorporated by reference to
Exhibit 10-(D)(2) to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1990.
10.19 -- V2500 Support Contract Between the Company and International Aero
Engines AG, dated September 28, 1990, together with Side Letters
Nos. 1-4, inclusive -- Incorporated by reference to Exhibit
10-(D)(3) to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990.
10.20 -- Cash Management Agreement, dated September 28, 1991, among the
Company, BT and First Interstate of Arizona, N.A. -- Incorporated
by reference to Exhibit 10-D(21) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1991.
10.21 -- First Amendment to Cash Management Agreement, dated December 1,
1991, among the Company, BT and First Interstate of Arizona,
N.A. -- Incorporated by reference to Exhibit 10-D(22) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1991.
10.22 -- Second Amendment to Cash Management Agreement, dated September 1,
1992, among the Company, BT and First Interstate of Arizona,
N.A. -- Incorporated by reference to Exhibit 10-O(3) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1992.
10.23 -- Restructuring Agreement, dated December 1, 1991 between the
Company and Kawasaki -- Incorporated by reference to Exhibit
10-D(24) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1991.
10.24 -- A320 Put Agreement, dated December 1, 1991 between the Company
and Kawasaki -- Incorporated by reference to Exhibit 10-D(25) to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1991.
10.25 -- First Amendment to A320 Put Agreement, dated September 1, 1992 --
Incorporated by reference to Exhibit 10-R(2) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.26 -- A320 Put Agreement, dated as of June 25, 1991 between the Company
and GPA Group plc -- Incorporated by reference to Exhibit
10-D(26) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1991.
10.27 -- First Amendment to A320 Put Agreement, dated as of September 1,
1992 -- Incorporated by reference to Exhibit 10-S(2) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1992.
10.28 -- Restructuring Agreement, dated as of June 25, 1991 among GPA
Group plc, GPA Leasing USA I, Inc. GPA Leasing USA Sub I, and the
Company -- Incorporated by reference to Exhibit 10-D(27) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1991.
10.29 -- Official Statement dated August 11, 1986 for the $54,000,000
Variable Rate Airport Facility Revenue Bonds -- Incorporated by
reference to Exhibit 10.e to the Company's Quarterly Report on
Form 10-Q for the period ended September 30, 1986.
10.30 -- Airport Use Agreement dated July 1, 1989 (the "Airport Use
Agreement") among the City of Phoenix, The Industrial Development
Authority of the City of Phoenix, Arizona and the
Company -- Incorporated by reference to Exhibit 10-D(9) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1989.
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NUMBER TITLE
---------- -----------------------------------------------------------------
<S> <C>
10.31 -- First Amendment dated August 1, 1990 to Airport Use Agreement --
Incorporated by reference to Exhibit 10-(D)(9) to the Company's
Quarterly Report on Form 10-Q for the period ended September 30,
1990.
10.32 -- Revolving Loan Agreement dated April 17, 1990, by and among the
Company, the Bank signatories thereto, and Bank of America
National Trust and Savings Association, as Agent for the Banks
(the "Revolving Loan Agreement") -- Incorporated by reference to
Exhibit 10-1 to the Company's Quarterly Report on Form 10-Q for
the period ended March 31, 1990.
10.33 -- First Amendment dated April 17, 1990 to Revolving Loan
Agreement -- Incorporated by reference to Exhibit 10-(D)(10) to
the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1990.
10.34 -- Second Amendment dated September 28, 1990 to the Revolving Loan
Agreement -- Incorporated by reference to Exhibit 10-(D)(11) to
the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1990.
10.35 -- Third Amendment dated as of January 14, 1991 to the Revolving
Loan Agreement -- Incorporated by reference to Exhibit 10-(D)(13)
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1990.
10.36 -- Spares Credit Agreement, dated as of September 28, 1990, between
the Company and IAE -- Incorporated by reference to Exhibit
10-(D)(4) to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1990.
10.37 -- Master Credit Modification Agreement dated as of October 1, 1992,
among the Company, IAE International Aero Engines AG, Intlaero
(Phoenix A320) Inc., Intlaero (Phoenix B737) Inc., CAE
Electronics Ltd., and Hughes Rediffusion Simulation
Limited -- Incorporated by reference to Exhibit 10-L to the
Company's Annual Report on Form 10-K for the year ended December
31, 1992.
10.38 -- Credit Agreement, dated as of September 28, 1990 between the
Company and IAE -- Incorporated by reference to Exhibit 10-(D)(5)
to the Company's Quarterly Report on Form 10-Q for the period
ended September 30, 1990.
10.39 -- Amendment No. 1 to the Credit Agreement, dated March 1, 1991 --
Incorporated by reference to Exhibit 10-(M)(2) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.40 -- Amendment No. 2 to the Credit Agreement, dated May 15, 1991 --
Incorporated by reference to Exhibit 10-(M)(3) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.41 -- Amendment No. 3 to the Credit Agreement, dated October 1, 1992 --
Incorporated by reference to Exhibit 10-(M)(4) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992.
10.42 -- Form of Third Amended and Restated Credit Agreement dated
September 30, 1993, among the Company, various lenders, and BT
Commercial Corp. as Administrative Agent (without exhibits) --
Incorporated by reference to Exhibit 10-(N)(1) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1993.
10.43 -- Form of Amended and Restated Management Letter Agreement, dated
as of September 30, 1993 from the Company to the
Lenders -- Incorporated by reference to Exhibit 10-N(2) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1993.
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NUMBER TITLE
---------- -----------------------------------------------------------------
<S> <C>
10.44 -- Form of Amendment to Amended and Restated Management Letter
Agreement; Consent to Amendment of By-laws dated February 8, 1994
from the Company to the Lenders -- Incorporated by reference to
Exhibit 10-N(3) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1993.
10.45 -- Fourth Amended and Restated Credit Agreement dated June 30,
1994 -- Incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the period ended June 30, 1994.
10.46 -- Key Employee Protection Agreement dated as of June 27, 1994
between America West Airlines, Inc. and William A.
Franke -- Incorporated by reference to the Company's Registration
Statement on Form S-1 (No. 54243), as amended.
10.47 -- Management Rights Agreement dated August 25, 1994 between TPG
Partners L.P., TPG Genpar, L.P. and America West Airlines,
Inc. -- Incorporated by reference to the Company's Registration
Statement on Form S-1 (No. 54243), as amended.
10.48 -- V2500 Support Contract dated December 23, 1994 between America
West Airlines, Inc. and International Aero Engineers, as
amended -- Incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.
10.49 -- Form of America West Airlines, Inc. 1994 Incentive Equity Plan --
Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1994.
*10.50 -- Employment Agreement dated as of November 9, 1995 between America
West Airlines, Inc. and William A. Franke.
11.1 -- Statement re: computation of net income (loss) per common share.
12.1 -- Statement re: computation of ratio of earnings to fixed charges.
23.1 -- Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1
above).
*23.2 -- Consent of KPMG Peat Marwick LLP (independent
auditors) -- Included at page S-1.
24.1 -- Power of Attorney (included on the signature pages of this
Registration Statement.)
27 -- Financial Data Schedule.
</TABLE>
- ---------------
* Filed herewith.
<PAGE> 1
EXHIBIT 1.1
6,100,000 Shares
AMERICA WEST AIRLINES, INC.
(a Delaware corporation)
Class B Common Stock
(Par Value $.01 Per Share)
PURCHASE AGREEMENT
February [ ], 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
Lehman Brothers Inc.
as Representatives of the several Underwriters
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Dear Sirs:
America West Airlines, Inc., a Delaware corporation (the "Company"),
and the selling stockholders named in Schedule B hereto (each a "Selling
Stockholder" and collectively, the "Selling Stockholders") confirm their
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), Lehman Brothers Inc. ("Lehman Brothers") and each of the
other Underwriters named in Schedule A hereto (collectively, the "Underwriters,"
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), for whom Merrill Lynch, DLJ and Lehman Brothers
are acting as representatives (in such capacity, Merrill Lynch, DLJ and Lehman
Brothers shall hereinafter be referred to as the "Representatives"), with
respect to the sale by the Selling Stockholders, acting severally and not
jointly, and the purchase by the Underwriters, acting severally and not jointly,
of the respective numbers of shares of Class B Common Stock, par value $.01
<PAGE> 2
per share, of the Company ("Common Stock") set forth in said Schedule A (except
as may otherwise be provided in the Pricing Agreement, as hereinafter defined)
and with respect to the grant by two Selling Stockholders, acting severally and
not jointly, as set forth in Schedule B hereto, to the Underwriters, acting
severally and not jointly, of the option described in Section 2(b) hereof to
purchase all or any part of 610,000 additional shares of Common Stock solely to
cover over-allotments, if any, in each case except as may otherwise be provided
in the Pricing Agreement. The aforesaid 6,100,000 shares of Common Stock (the
"Initial Securities") to be purchased by the Underwriters and all or any part of
the 610,000 shares of Common Stock subject to the option described in Section
2(b) hereof (the "Option Securities") are collectively hereinafter called the
"Securities."
Prior to the purchase and public offering of the Securities by the
several Underwriters, the Company, the Selling Stockholders, acting severally
and not jointly, and the Representatives, acting on behalf of the several
Underwriters, shall enter into an agreement substantially in the form of Exhibit
A hereto (the "Pricing Agreement"). The Pricing Agreement may take the form of
an exchange of any standard form of written telecommunication among the Company,
the Selling Stockholders and the Representatives and shall specify such
applicable information as is indicated in Exhibit A hereto. The offering of the
Securities will be governed by this Agreement, as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the Pricing
Agreement, this Agreement shall be deemed to incorporate the Pricing Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 33-54243), for the
registration of 26,447,326 shares of Common Stock, 1,200,000 shares of the
Company's Class A Common Stock, par value $.01 (the "Class A Common Stock") and
5,872,108 warrants, each entitling the holder thereof to purchase one share of
Common Stock (the "Warrants"), under the Securities Act of 1933 (the "1933
Act"), on June 23, 1994; and pre-effective amendments thereto on July 27, 1994,
August 2, 1994, August 15, 1994 and August 23, 1994; and prospectus supplements
thereto on August 29, 1994, June 21, 1995, October 5, 1995, November 13, 1995,
and January 29, 1996; and Post-Effective Amendments thereto on November 15,
1994, April 19, 1995 and January 30, 1996 and will file such additional
amendments thereto and such amended or supplemental prospectuses as may
hereafter be required. Such registration statement (as amended, if applicable)
and the prospectus constituting a part thereof (including in each case the
information, if any, deemed to be part thereof pursuant to Rule 434 of the rules
and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations")), as from time to time amended or supplemented pursuant to the
1933 Act, are hereinafter referred to as the "Registration Statement" and the
"Prospectus," respectively, except that if any revised prospectus shall be
provided to the Underwriters by the Company for use in connection with the
offering of the Securities which differs from the Prospectus on file at the
Commission (whether or not such revised prospectus is required to be filed by
the Company pursuant to Rule 424(b) of the 1933 Act Regulations), the term
"Prospectus" shall refer to such revised prospectus from and after the time it
is first provided
2
<PAGE> 3
to the Underwriters for such use. Additionally, if the Company has elected to
rely upon Rule 434 of the 1933 Act Regulations, the Company will prepare and
file a term sheet (a "term sheet"), in accordance with the provisions of Rules
434 and 424(b) of such Regulations, promptly after execution of the Pricing
Agreement.
The Company and the Selling Stockholders understand that the
Underwriters propose to make a public offering of the Securities as soon as the
Representatives deem advisable after the Pricing Agreement has been executed and
delivered.
Section 1. Representations and Warranties. (a) The Company represents
and warrants to each Underwriter as of the date hereof and as of the date of the
Pricing Agreement (such latter date being hereinafter referred to as the
"Representation Date") as follows:
(i) At the time the Registration Statement became effective
and at the Representation Date (unless the term "Prospectus" refers to
prospectuses which have been provided to the Underwriters by the
Company for use in connection with the offering of Securities which
differs from the Prospectus on file at the Commission, in which case at
the time the Prospectus is first provided to the Underwriters for their
use), the Registration Statement complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations and did not contain and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. The Prospectus, at the Representation Date, at the time it
is first provided to the Underwriters for their use and at the Closing
Time referred to in Section 2 hereof, will not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and if Rule
434 is used, the Prospectus shall not be "materially different" as such
term is used in Rule 434 of the 1933 Act Regulations, from the
prospectus first provided to the Underwriters for their use; provided,
however, that the representations and warranties in this subsection
shall not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any Underwriter
through the Representatives expressly for use in the Registration
Statement or Prospectus.
(ii) The accountants who certified the financial statements and
supporting schedules included in the Registration Statement are
independent public accountants as required by the 1933 Act and the 1933
Act Regulations.
(iii) The financial statements included in the Registration
Statement and the Prospectus present fairly the financial position of
the Company as at
3
<PAGE> 4
the dates indicated and the results of its operations for the periods
specified; except as otherwise stated in the Registration Statement,
said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis;
and the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein.
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company, whether or not arising in
the ordinary course of business, (B) there have been no transactions
entered into by the Company, other than those in the ordinary course of
business, which are required to be disclosed therein under the 1933 Act
and the 1933 Act Regulations and are not so disclosed, and (C) there
has been no dividend or distribution of any kind declared, paid or made
by the Company on any class of its capital stock, except for any
distribution of securities upon the resolution of bankruptcy-related
claims.
(v) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state
of Delaware with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement and the Pricing Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a
material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company.
(vi) The Company has no subsidiaries.
(vii) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus under "Capitalization"
(except for subsequent issuances, if any, pursuant to reservations,
agreements, employee benefit plans or the exercise of convertible
securities and the warrants referred to in the Prospectus); the shares
of issued and outstanding Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable.
(viii) The Company is not in violation of its charter or in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement,
4
<PAGE> 5
note, lease or other instrument to which the Company is a party or by
which it may be bound, or to which any of the property or assets of the
Company is subject, excluding in each case, violations or defaults
which, individually or in the aggregate would not have a material
adverse effect on the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company; and
the execution, delivery and performance of this Agreement and the
Pricing Agreement and the consummation of the transactions contemplated
herein and therein and compliance by the Company with its obligations
hereunder and thereunder have been duly authorized by all necessary
corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company
pursuant to, any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which the Company is a party or by which
it may be bound, or to which any of the property or assets of the
Company is subject, excluding in each case, conflicts, breaches,
defaults or liens which, individually or in the aggregate, would not
have a material adverse effect on the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Company, nor will such action result in any violation of the
provisions of the charter or bylaws of the Company or any applicable
law, rule, administrative regulation, judgment, order, consent or
decree of any government instrumentality or court, having jurisdiction
over the Company or any of its properties.
(ix) The Company is not in violation of any Federal, state or
local law relating to discrimination in the hiring, promotion or pay of
employees nor any applicable wage or hour laws that, singly or in the
aggregate, could have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company. There is (A) no significant unfair labor
practice complaint pending against the Company or, to the best
knowledge of the Company, threatened against the Company, before the
National Labor Relations Board or any state or local labor relations
board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement
is so pending against the Company or, to the best knowledge of the
Company, threatened against the Company, and (B) no labor dispute in
which the Company is involved nor, to the best knowledge of the
Company, is any labor dispute imminent, other than routine disciplinary
and grievance matters, except as disclosed in the Prospectus. The
Company is in compliance in all material respects with all presently
applicable provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and the regulations and published
interpretations thereunder, including but not limited to Sections 4975
and 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"). There are no "pension plans" established or maintained by the
Company or "multi-employer
5
<PAGE> 6
pension plans" to which the Company is a contributor that are intended
to be qualified under Section 401(a) of the Code.
(x) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, threatened, against or affecting
the Company which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which is reasonably
expected to result in any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company or is reasonably expected to
materially and adversely affect the properties or assets thereof or
which might materially and adversely affect the consummation of this
Agreement; there are no contracts or documents of the Company which is
required to be filed as exhibits to the Registration Statement by the
1933 Act or by the 1933 Act Regulations which have not been so filed.
(xi) The Company (i) has been subject to the requirements of
Section 12 of the 1934 Act for a period of at least 12 calendar months,
(ii) has filed in a timely manner all reports required to be filed
during the 12 calendar months preceding the Representation Date, and
(iii) the aggregate market value of the voting stock held by non-
affiliates of the Company is $75 million or more.
(xii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
offering of and the sale of the Securities hereunder, except such as
may be required under the 1933 Act or the 1933 Act Regulations or state
securities laws.
(xiii) The Company possesses such certificates, authorities or
permits issued by the appropriate state, federal or foreign regulatory
agencies or bodies necessary to conduct the business now operated by it
[except as would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company], and the Company has not received any notice
of proceedings relating to the revocation or modification of any such
certificate, authority or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would
materially and adversely affect the condition, financial or otherwise,
or the earnings, business affairs or business prospects of the Company.
(xiv) The Company has sufficient title for the use made and
proposed to be made of all of its properties, whether real or personal,
free and clear of all liens, encumbrances and defects, except as stated
in the Prospectus or such as would not have a material adverse effect
on the condition, financial or
6
<PAGE> 7
otherwise, or in the earnings, business affairs or business prospects
of the Company.
(xv) There are no persons with registration or other similar
rights to have any securities registered pursuant to the Registration
Statement or to participate in the offering of the Securities
contemplated by this Agreement, except such as have been waived in
writing or complied with by the inclusion of such securities in the
Registration Statement or the inclusion of such persons as Selling
Stockholders in Schedule B hereto, as the case may be.
(xvi) This Agreement has been, and, at the Representation Date
the Pricing Agreement will have been, duly executed and delivered by
the Company.
(xvii) The Company has not and is not presently doing business
with the government of Cuba or with any person or any affiliate located
in Cuba.
(xviii) The Company is an "air carrier" and after consummation of
the transactions contemplated herein will be a "citizen of the United
States," in each case within the meaning of the Federal Aviation Act of
1958, as amended.
(xix) There is no pending or threatened action, suit or
proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving the Company or its property and
involving (A) licenses, certificates, permits or other governmental
authorizations issued by or from the Department of Transportation, the
Federal Aviation Administration, the Federal Communications Commission
or any other federal or any state transportation or aviation regulatory
authority or (B) the Federal Aviation Act of 1958, as amended ((A) and
(B) together, "Aviation Laws") that is of a character required to be
disclosed in the Prospectus.
(xx) The descriptions in the Registration Statement of laws,
regulations and rules, of legal and governmental proceedings and of
contracts, agreements, leases and other documents including, without
limitation, under the headings "Risk Factors -- Government Regulation,"
"Business -- Aircraft and -- Government Regulation" are accurate in all
material respects, and comply as to form in all material respects with
the applicable requirements of the 1933 Act and the 1933 Act
Regulations.
(xxi) The Company is not in violation of any Federal, state or
local laws and regulations relating to pollution or protection of human
health or the environment (including, without limitation, ambient air,
surface water, ground
7
<PAGE> 8
water, land surface or subsurface strata), including, without
limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of toxic or hazardous substances,
materials or wastes, or petroleum and petroleum products ("Materials of
Environmental Concern"), or otherwise relating to the protection of
human health and safety, or the storage, disposal, transport or
handling of Materials of Environmental Concern (collectively,
"Environmental Laws"), which violation includes, but is not limited to,
noncompliance with any permits or other governmental authorizations,
excluding any violations which individually or in the aggregate would
not have a material adverse effect on the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Company; the Company has not received any communication (written
or oral), whether from a governmental authority or otherwise, alleging
any such violation or noncompliance, and there are no circumstances,
either past, present or that are reasonably foreseeable, that may lead
to such violation in the future; there is no pending or threatened
claim, action, investigation or notice (written or oral) by any person
or entity alleging potential liability for investigatory, cleanup, or
governmental responses costs, or natural resources or property damages,
or personal injuries, attorney's fees or penalties relating to (x) the
presence, or release into the environment, of any Material of
Environmental Concern at any location owned or operated by the Company,
now or in the past, or (y) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law
(collectively, "Environmental Claims"); and there are no past or
present actions, activities, circumstances, conditions, events or
incidents, that could form the basis of any Environmental Claim against
the Company or against any person or entity whose liability for any
Environmental Claim the Company has retained or assumed either
contractually or by operation of law. In the ordinary course of its
business, the Company conducts a periodic review of the effect of
Environmental Laws on the business, operations and properties of the
Company, in the course of which it identifies and evaluates associated
costs and liabilities (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties); on the basis of such review, the Company
has reasonably concluded that such associated costs and liabilities
could not singly or in the aggregate, have a material adverse effect on
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company.
(xxii) The Common Stock is listed on the New York Stock
Exchange and has been registered under Section 12(b) of the Securities
Exchange Act of 1934 Act, as amended (the "1934 Act").
8
<PAGE> 9
(xxiii) All tax returns required to be filed by the Company have
been timely filed and such returns are true, complete and correct in
all material respects. All taxes due or claimed to be due from the
Company that are due and payable have been paid, other than those (i)
being contested in good faith and for which an adequate reserve or
accrual has been established in accordance with GAAP or (ii) those
currently payable without penalty or interest for which an adequate
reserve or accrual has been established or extensions duly paid. Except
as described in the Prospectus, the Company does not know of (A) any
actual or proposed material additional tax assessments or (B) any
probable basis for the imposition of any material additional tax
assessments for any fiscal period against the Company.
(b) Each of the Selling Stockholders severally and not jointly
represents and warrants to, and agrees with, each Underwriter as follows:
(i) Such Selling Stockholder has reviewed and is familiar
with the Registration Statement and the Pro- spectus contained therein
or filed as supplements thereto and, such Selling Stockholder has no
reason to believe that the Prospectus (and any amendment, supplement or
term sheet thereto) does not (and, as of the Closing Time, as defined
in Section 2 below, will not) include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and such Selling Stockholder is not prompted
to sell the Securities to be sold by such Selling Stockholder by any
information concerning the Company that is not set forth in the
Prospectus or the term sheet.
(ii) On the date the Pricing Agreement is executed and at the
Closing Time, as defined in Section 2 below (and if any Option
Securities are purchased, at the Date of Delivery, as defined in
Section 2 below), and, unless the Company has notified you as provided
in Section 3(e) below, at all times between the first delivery of the
Prospectus and the term sheet, if any, to the Underwriters for their
use and the Closing Time, as defined in Section 2 below, (and, if any
Option Securities are purchased, the Date of Delivery, as defined in
Section 2 below), such parts of the Registration Statement and any
amendments and supplements thereto as specifically refer to such
Selling Stockholder will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and such parts
of the Prospectus or term sheet, if any, as specifically refer to such
Selling Stockholder will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
9
<PAGE> 10
(iii) Certificates for all of the Securities to be sold by such
Selling Stockholder pursuant to this Agreement, in suitable form for
transfer by delivery or accompanied by duly executed instruments of
transfer or assignment in blank with signatures guaranteed have been
deposited with First Interstate Bank of California, as custodian (the
"Custodian") pursuant to a Custody Agreement dated as of January 31,
1996 (the "Custody Agreement") for the purpose of effecting delivery
pursuant to this Agreement.
(iv) This Agreement and the Custody Agreement have been duly
authorized, executed and delivered by such Selling Stockholder. The
execution and delivery of this Agreement and the Custody Agreement, by
such Selling Stockholder and the sale and delivery of the Securities to
be sold by such Selling Stockholder do not and will not conflict with,
or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of such
Selling Stockholder under any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which such
Selling Stockholder is a party or by which it may be bound or to which
any of its properties may be subject (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
such Selling Stockholder and its subsidiaries considered as one
enterprise and would not materially and adversely affect the
consummation of the transactions contemplated by this Agreement) or any
existing applicable law, rule, regulation, judgment, order or decree of
any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over such Selling Stockholder or any of
its respective properties.
(v) Such Selling Stockholder will, at the Closing Time, as
defined in Section 2 below, (and, if any Option Securities are
purchased, on the Date of Delivery, as defined in Section 2 below),
have good and valid title to the Securities to be sold by such Selling
Stockholder pursuant to this Agreement, free and clear of any pledge,
lien, security interest, charge, claim, equity or encumbrance of any
kind, other than pursuant to this Agreement; such Selling Stockholder
has full right, power and authority to sell, transfer and deliver such
Securities pursuant to this Agreement; and, upon delivery of such
Securities and payment of the purchase price therefor as contemplated
in this Agreement, assuming each such Underwriter has no notice of any
adverse claim, each of the Underwriters will receive good and valid
title to the offered Securities purchased by it from such Selling
Stockholder, free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind, other than any such
pledge, lien, security interest, charge, claim, equity
10
<PAGE> 11
or encumbrance created by such Underwriter or resulting from any
actions taken by such Underwriter.
(vi) For a period of 90 days from the date hereof, such
Selling Stockholder will not, without Merrill Lynch's prior written
consent, directly or indirectly, sell, offer to sell, grant any option
for the sale of, or otherwise dispose of (whether directly or
synthetically) or enter into any agreement to sell or otherwise dispose
of (whether directly or synthetically) any Common Stock, Class A Common
Stock or Warrants or any security convertible into or exchangeable or
exercisable for Common Stock, Class A Common Stock or Warrants,except
pursuant to a transaction in which all holders of Common Stock may
participate on a pro rata basis at the same price per share and on the
same economic terms, including without limitation, a tender offer or
exchange offer and except for transfers to an affiliate (as such term
is defined in Rule 405 of the 1933 Act Regulations.
(vii) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock .
(viii) Neither the offer and sale of the Securities being sold
by such Selling Stockholder, nor the consummation of any other of the
transactions herein contemplated by such Selling Stockholder, will
conflict with, or result in a breach or violation of, any Aviation Law.
(ix) There are no transfer taxes or other similar fees or
charges required under any Aviation Law to be paid in connection with
the execution, delivery and performance of this Agreement or the sale
by such Selling Stockholder of the Securities to be sold by such
Selling Stockholder.
(x) Such Selling Stockholder will furnish each of
the Underwriters with any such certification or completed forms that
may be required under applicable Federal or state tax laws.
(c) Any certificate signed by any officer of the Company and delivered
to the Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
(d) Any certificate signed by any officer or partner, as the case may
be, of a Selling Stockholder and delivered to the Representatives or to counsel
for the Underwriters shall be deemed a representation and warranty by such
Selling Stockholder to each Underwriter as to the matters covered thereby.
11
<PAGE> 12
Section 2. Sale and Delivery to Underwriters; Closing. (a) On
the basis of the representations and warranties herein contained and subject to
the terms and conditions herein set forth, the Selling Stockholders severally
and not jointly agree to sell the number of Initial Securities set forth in
Schedule B opposite the name of each Selling Stockholder to each Underwriter,
severally and not jointly, and each Underwriter, severally and not jointly,
agrees to purchase from the Selling Stockholders, at the price per share set
forth in the Pricing Agreement, the number of Initial Securities set forth in
Schedule A opposite the name of such Underwriter (except as otherwise provided
in the Pricing Agreement), plus any additional number of Initial Securities
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
two Selling Stockholders identified on Schedule B hereby severally and not
jointly grant an option to the Underwriters to purchase up to all of the Option
Securities set forth in Schedule B opposite the name of each such Selling
Stockholder at the purchase price per share set forth in the Pricing Agreement.
The option granted will expire 30 days after the Representation Date and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to the
Company and the Selling Stockholders setting forth the number of Option
Securities as to which the several Underwriters are then exercising the option
and the time and date of payment and delivery for such Option Securities. Any
such time and date of delivery (a "Date of Delivery") shall be determined by the
Representatives, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined, unless otherwise agreed by the Representatives, the Company
and the Selling Stockholders. If the option is exercised as to all or any
portion of the Option Securities, each of the Underwriters, acting severally and
not jointly, will purchase that proportion of the total number of Option
Securities then being purchased which the number of Initial Securities set forth
in Schedule A opposite the name of such Underwriter bears to the total number of
Initial Securities (except as otherwise provided in the Pricing Agreement),
subject in each case to such adjustments as Merrill Lynch in its discretion
shall make to eliminate any purchases of fractional interests, plus any
additional number of Option Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof. If the
option is exercised as to all or any portion of the Option Security, each
Selling Stockholder, granting such option acting severally and not jointly, will
sell that proportion of the total number of Option Securities then being
purchased which is the ratio of the number of Option Securities set forth
opposite the name of such Selling Stockholder on Schedule B bears to the total
number of Option Securities.
(c) Payment of the purchase price for the Securities shall be made at
the office of Skadden, Arps, Slate, Meagher & Flom, 300 South Grand Avenue, Los
Angeles, California, or at such other place as shall be agreed upon by the
Representatives, the Selling Stockhold-
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<PAGE> 13
ers and the Company, at 7:00 A.M. California time on the third business day
(unless postponed in accordance with the provisions of Section 10) after
execution of the Pricing Agreement, or such other time not later than ten
business days after such date as shall be agreed upon by the Representatives,
the Selling Stockholders and the Company (such time and date of payment and
delivery being herein called the "Closing Time"). Payment shall be made to the
respective Selling Stockholders by certified or official bank check or checks
drawn in New York Clearing House funds or similar next day funds payable to the
order of the respective Selling Stockholders, against delivery to the
Representatives at Merrill Lynch's World Headquarters, North Tower, World
Financial Center, New York, New York 10281, for the respective accounts of the
Underwriters of certificates for the Securities to be purchased by them.
Certificates, if any, for the Securities shall be in such denominations and
registered in such names as the Representatives may request in writing, of the
Custodian on behalf of the Selling Stockholders, at least two business days
before the Closing Time. It is understood that each Underwriter has authorized
the Representatives, for their account, to accept delivery of, receipt for, and
make payment of the purchase price for, the Securities which it has agreed to
purchase. Merrill Lynch, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Securities to be purchased by any Underwriter whose check has not
been received by the Closing Time, but such payment shall not relieve such
Underwriter from its obligations hereunder. The certificates, if any, for the
Securities will be made available, by the Custodian on behalf of the Selling
Stockholders, for examination and packaging by the Representatives not later
than 10:00 A.M. on the last business day prior to the Closing Time at Merrill
Lynch's World Headquarters, North Tower, World Financial Center, New York, New
York 10281.
(d) In addition, in the event that any or all of the Option Securities
are purchased by the Underwriters, payment of the purchase price for such Option
Securities shall be made at the above-mentioned offices of Skadden, Arps, Slate,
Meagher & Flom, or at such other place as shall be agreed upon by the
Representatives, the Selling Stockholders granting the option for the Option
Securities and the Company, on each Date of Delivery as specified in the notice
from the Representatives to the Company and the Selling Stockholders granting
the option for the Option Securities. Payment shall be made to the respective
Selling Stockholders by certified or official bank check or checks drawn in New
York Clearing House funds or similar next day funds payable to the order of such
Selling Stockholders, against delivery to the Representatives at the above
mentioned offices of Merrill Lynch for such accounts of the Underwriters of
certificates for the Option Securities to be purchased by them. Certificates for
the Option Securities, if any, shall be in such denominations and registered in
such names as the Representatives may request in writing of the Custodian at
least two business days before the Closing Time or the relevant Date of
Delivery, as the case may be. It is understood that each Underwriter has
authorized the Representatives, for their accounts, to accept delivery of,
receipt for, and make payment of the purchase price for the Option Securities,
if any, which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the
13
<PAGE> 14
purchase price for the Option Securities, if any, to be purchased by any
Underwriter whose check has not been received by the relevant Date of Delivery,
as the case may be, but such payment shall not relieve such Underwriter from its
obligations hereunder. The certificates, for the Option Securities, if any, will
be made available, by the Custodian on behalf of the Selling Stockholders
granting the option for the Option Securities, for examination and packaging by
the Representatives not later than 10:00 A.M. on the last business day prior to
the relevant Date of Delivery. For purposes of this agreement "business day"
means a day on which the New York Stock Exchange is open for business.
Section 3. Covenants of the Company. The Company covenants
with each Underwriter as follows:
(a) The Company will, for so long as the Underwriters are
required to deliver a prospectus in connection with the offer and sale
of the Securities, notify the Representatives immediately (i) of the
effectiveness of any post-effective amendment to the Registration
Statement filed in connection with the offering of the Securities, (ii)
of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose. The
Company will make every reasonable effort to prevent the issuance of
any stop order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible moment.
(b) The Company will, for so long as the Underwriters are
required to deliver a prospectus in connection with the offer and sale
of the Securities, give the Representatives notice of its intention to
file or prepare any post-effective amendment to the Registration
Statement or any amendment or supplement to the Prospectus (including
any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Securities or any
term sheet (whether or not such revised prospectus or term sheet is
required to be filed pursuant to Rules 424(b) or 434 of the 1933 Act
Regulations), whether pursuant to the 1933 Act, the 1934 Act or
otherwise), will furnish the Representatives with copies of any such
amendment or supplement or term sheet a reasonable amount of time prior
to such proposed filing or use, as the case may be, and will not file
any such amendment or supplement or term sheet or use any such
prospectus to which the Representatives or counsel for the Underwriters
shall object.
(c) The Company will deliver to each Representative a signed
copy of any post-effective amendment to the Registration Statement made
in connection with the offering of the Securities (including exhibits
filed therewith or incorporated by reference therein and documents
incorporated or deemed to be incorporated by reference therein) and
will also deliver to the Representatives a conformed copy of the Regis-
14
<PAGE> 15
tration Statement as originally filed and of each amendment,
post-effective amendment or supplement or term sheet thereto (without
exhibits) for each of the Underwriters.
(d) The Company will furnish to each Underwriter, from time to
time during the period when the Prospectus is required to be delivered
under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) and the term sheet, if any, as
such Underwriter may reasonably request for the purposes contemplated
by the 1933 Act or the 1934 Act or the respective applicable rules and
regulations of the Commission thereunder.
(e) If any event shall occur as a result of which it is
necessary, in the opinion of counsel for the Underwriters or counsel
for the Company, to amend or supplement the Prospectus in order to make
the Prospectus not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, the Company will
forthwith amend or supplement the Prospectus (in form and substance
satisfactory to counsel for the Underwriters) so that, as so amended or
supplemented, the Prospectus will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances existing
at the time it is delivered to a purchaser, not misleading, and the
Company will furnish to the Underwriters [and the Selling Stockholders]
a reasonable number of copies of such amendment or supplement.
(f) The Company will endeavor, in cooperation with the
Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions of
the United States as the Representatives may designate; provided,
however, that the Company shall not be obligated to qualify as a
foreign corporation in any jurisdiction in which it is not so
qualified. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
date of the Pricing Agreement. The Company will inform the Florida
Department of Banking and Finance if prior to the completion of the
distribution of the Securities by the Underwriters the Company
commences engaging in business with the government of Cuba or with any
person or affiliate located in Cuba. Such information will be provided
within 90 days of the commencement thereof or after a change to any
such previously reported information.
(g) The Company will make generally available to its security
holders as soon as practicable, but not later than 90 days after the
close of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering a twelve-month period beginning not later than the first day
of the Company's fiscal quarter next following the "effective date" (as
defined in said Rule 158) of the Registration Statement.
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<PAGE> 16
(h) Immediately following the execution of the Pricing
Agreement, the Company will prepare, and file or transmit for filing
with the Commission in accordance with Rules 434 and 424(b) of the 1933
Act Regulations, copies of an amended Prospectus supplement and term
sheet, if any, to the Registration Statement, containing all omitted
information.
(i) The Company, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, will file
all documents required to be filed with the Commission pursuant to
Section 13, 14 or 15 of the 1934 Act within the time periods required
by the 1934 Act and the rules and regulations of the Commission under
the 1934 Act.
(j) During a period of 90 days from the Representation Date,
the Company will not, without Merrill Lynch's prior written consent,
directly or indirectly, sell, offer to sell, grant any option for the
sale of, or otherwise dispose of (whether directly or synthetically) or
enter into any agreement to sell or otherwise dispose of (whether
directly or synthetically) any Common Stock, Class A Common Stock or
Warrants or any security convertible into or exchangeable into or
exercisable for Common Stock (except for Common Stock issued pursuant
to reservations, agreements, employee benefit plans, the exercise of
Warrants or the exercise of convertible securities referred to in
Section 1(a)(vii) hereof), Class A Common Stock or Warrants.
(k) If the Company uses Rule 434 of the 1933 Act Regulations,
it will comply with the requirements of Rule 434 of such regulations
and the Prospectus will not be "materially different," as such term is
used in Rule 434 of the 1933 Act Regulations, from the Prospectus first
given to the Underwriters for their use.
(l) The Company will use its best efforts to cause the
continued listing of the Common Stock on the New York Stock Exchange.
Section 4. Payment of Expenses. The Company or the Selling
Stockholders, as such parties may agree, will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the printing
and filing of any post-effective amendment to the Registration Statement
required in connection with the sale of the Securities, (ii) the preparation,
issuance and delivery of the certificates for the Securities to the
Underwriters, (iii) the fees and disbursements of the Company's counsel and
accountants, (iv) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees
and the fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the Blue Sky Survey and any
Legal Investment Survey, (v) the printing and delivery to the Underwriters of
copies of the Registration Statement as originally filed and of each amendment
thereto, of each preliminary prospectus supplement, and of the Prospectus and
any amendments or supplements thereto, (vii) the printing and
16
<PAGE> 17
delivery to the Underwriters of copies of the Blue Sky Survey and any Legal
Investment Survey, (viii) the fees and expenses of continuing the listing of the
Common Stock on the New York Stock Exchange and (ix) the fee of the National
Association of Securities Dealers, Inc.
If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the
Company shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Underwriters.
Section 5. Conditions of Underwriters' Obligations. The
obligations of the Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Stockholders
herein contained, to the performance by the Company and the Selling Stockholders
of their obligations hereunder, and to the following further conditions:
(a) The Registration Statement, as amended, shall have become
effective on or prior to the date of this Agreement. At the Closing
Time, no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission. The price of the
Securities and any price-related information previously omitted from
the effective Registration Statement and any term sheet used pursuant
to Rule 434 of the 1933 Act Regulations shall have been transmitted to
the Commission for filing pursuant to Rule 424(b) of the 1933 Act
Regulations within the prescribed time period and prior to the Closing
Time the Company shall have provided evidence satisfactory to the
Representatives of such timely filing, or a post-effective amendment
providing such information shall have been promptly filed and declared
effective.
(b) At the Closing Time, the Representatives shall have
received:
(i) The favorable opinion, dated as of the Closing
Time, of Andrews & Kurth, L.L.P., counsel for the Company, in
form and substance satisfactory to counsel for the
Underwriters, to the effect that:
a. The Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of the state of Delaware.
b. The Company has corporate power and
authority to own, lease and operate its properties
and to conduct its business as described in the
Registration Statement and to enter into and perform
its obligations under this Agreement and the Pricing
Agreement.
17
<PAGE> 18
c. The Shares of Common Stock to be sold by
the Selling Stockholders have been duly authorized
and validly issued and are fully paid and
nonassessable.
d. The issuance of the Securities was not
subject, at the date of issue, to statutory
preemptive or, other similar rights arising by
operation of law, under the charter or bylaws of the
Company or, to the best of their knowledge and
information, after due inquiry,. under any agreement
to which the Company is a party.
e. This Agreement and the Pricing Agreement
have each been duly authorized, executed and
delivered by the Company.
f. The Registration Statement and all post
effective amendments thereto were declared effective
under the 1933 Act and, to the best of their
knowledge and information, no stop order suspending
the effectiveness of the Registration Statement has
been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission.
g. The Registration Statement at its
effective time and at the Representation Date (other
than the financial statements, financial and
statistical information and supporting schedules
included therein, as to which no opinion need be
rendered) complied as to form in all material
respects with the requirements of the 1933 Act and
the 1933 Act Regulations.
h. The Common Stock and the Class A Common
Stock conform to the description thereof contained in
the Prospectus under the caption "Description of
Capital Stock" and the Warrants conform to the
description thereof contained in the Prospectus under
the caption "Description of Warrants" and the form of
certificate used to evidence the Common Stock
complies with the requirements of the Delaware
General Corporation Law.
i. To the best of their knowledge and
information, the Company is not in violation of its
charter or bylaws which violation could have a
material adverse effect on the condition, financial
or otherwise, or on the earnings, business affairs or
business prospects of the Company.
j. To the best of their knowledge and
information, there are no contracts, indentures,
mortgages, loan agreements, notes, leases or
18
<PAGE> 19
other instruments required to be described or
referred to in the Registration Statement or to be
filed as exhibits thereto other than those described
or referred to therein or filed as exhibits thereto,
and the descriptions thereof or references thereto
are fair and accurate summaries of such agreements or
instruments.
k. No authorization, approval, consent or
order of any court or governmental authority or
agency is required in connection with the offering or
sale of the Securities to the Underwriters, except
such as may be required under the 1933 Act or the
1933 Act Regulations or state securities law.
l. To the best of their knowledge and
information, the execution, delivery and performance
of this Agreement and the Pricing Agreement and the
consummation of the transactions contemplated herein
and therein and compliance by the Company with its
obligations hereunder and thereunder will not
conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or
assets of the Company pursuant to any contract,
indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company is a party or
by which it is or it may be bound, or to which any of
the property or assets of the Company is subject, nor
will such action result in any violation of the
provisions of the charter or bylaws of the Company,
or any applicable law (applicable law for this
purposes shall be limited to those United States
statutes, laws or regulations currently in effect
which, in such counsel's experience, are normally
applicable to transactions of the type contemplated
by this Agreement).
m. To such counsel's knowledge, there are no
persons with registration or other similar rights to
have any securities registered pursuant to the
Registration Statement or to participate in the
offering of the Securities contemplated by this
Agreement, except such as have been waived in writing
or complied with by the inclusion of such
Stockholders in the Registration Statement or the
inclusion of such persons as Selling Stockholders in
Schedule B hereto, as the case may be.
In addition such counsel shall state that
they have participated in conferences with directors,
officers and other representatives of the Company,
the Representatives, the Company's independent
accountants, counsel for the Selling Stockholders and
counsel for the Underwriters, at which conferences
the contents of the Registration Statement
19
<PAGE> 20
and the Prospectus and related matters were discussed
and, although they are not passing upon, and do not
assume any responsibility for, the accuracy,
completeness or fairness of the statements contained
in the Registration Statement or Prospectus, and they
have not made any independent check or verification
thereof, on the basis of the foregoing, nothing has
come to their attention that would lead them to
believe that the Registration Statement, as amended,
(except for financial statements and other financial
and statistical data included therein), at the time
it became effective, contained any untrue statement
of a material fact or omitted to state a material
fact required to be stated therein or necessary to
make the statements therein not misleading or that
the Prospectus (except for the financial statements
and other financial and statistical data contained
therein), at the Representation Date (unless the term
"Prospectus" refers to a prospectus which has been
provided to the Underwriters by the Company for use
in connection with the offering of the Securities
which differs from the Prospectus on file at the
Commission at the Representation Date, in which case
at the time it is first provided to the Underwriters
for such use) or at the Closing Time, included any
untrue statement of a material fact or omitted to
state a material fact required to be stated therein
or necessary to make the statements therein, in light
of the circumstance in which they are made, not
misleading.
(ii) The favorable opinion or opinions of counsel to
each of the Selling Stockholders (such counsel may be counsel
employed by such Selling Stockholder), dated as of the Closing
Time, such counsel and the form and substance of such opinion
being satisfactory to counsel for the Underwriters, to the
effect that:
a. Assuming that (i) each of the
Underwriters acquired its interest in the Securities
to be sold by the Selling Stockholders pursuant to
this Agreement in good faith and without any notice
of any adverse claim or restriction on transfer of
any of the Securities imposed by the Company, except
as disclosed in the Prospectus, and (ii) the
certificates representing the Securities and
registered in the names of the Underwriters do not
contain a lien in favor of the Company or a
restriction on transfer imposed by the Company,
except as disclosed in the Prospectus, upon delivery
to the Representatives as agent for the Underwriters
in the State of New York of such Securities
registered in such Underwriters' names, the
Underwriters will acquire all of the Selling
Stockholders rights in the Securities free and clear
of any adverse claim (within the meaning of Section
8-302 of the New York Uniform Commercial Code) of any
person, any lien in favor of the Company and any
20
<PAGE> 21
restriction on transfer imposed by the Company,
except as disclosed in the Prospectus. The owner of
such Securities, if other than such Selling
Stockholder, is precluded from asserting against the
Underwriters the ineffectiveness of any unauthorized
endorsements.
b. This Agreement and the Custody Agreement
have been duly authorized, executed and delivered by
such Selling Stockholder. The execution and delivery
of this Agreement by such Selling Stockholder and the
sale and delivery of the Securities to be sold by
such Selling Stockholder do not and will not conflict
with, or result in a breach of any of the terms or
provisions of, or constitute a default under, or
result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of
such Selling Stockholder under any contract,
indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which such Selling
Stockholder is a party or by which it may be bound or
to which any of its properties may be subject or any
existing applicable law, rule, regulation, judgment,
order or decree of any government, governmental
instrumentality or court, domestic or foreign, having
jurisdiction over such Selling Stockholder or any of
its respective properties (except for such conflicts,
breaches or defaults or liens, charges or
encumbrances that would not [have a material adverse
effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects
of such Selling Stockholder and its subsidiaries
considered as one enterprise and would not]
materially and adversely affect the consummation of
the transactions contemplated by this Agreement).
(iii) The favorable opinion, dated as of the Closing
Time, of Winthrop, Stimson, Putnam and Roberts, special
aviation regulatory counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, to the
effect that:
a. The Company is an "air carrier" and after
consummation of the transactions contemplated herein
will be a "citizen of the United States," within the
meaning of the Federal Aviation Act of 1958, as
amended;
b. The Company has such licenses,
certificates, permits and other governmental
authorizations from the Department of Transportation,
as successor to the Civil Aeronautics Board, the
Federal Aviation Administration, the Federal
Communications Commission and any other federal,
state or local transportation or aviation regulatory
authority as are necessary to own its properties and
to conduct its business in
21
<PAGE> 22
the manner described in the Prospectus, and no such
license, certificate, permit or other governmental
authorization is the subject of any "show cause" or
other order of, or any proceeding before, or any
investigation by, any such authority (other than
proceedings for the renewal of temporary rights),
which in the opinion of such counsel might reasonably
result in a final order impairing the validity of
such licenses, certificates, permits and other
governmental authorizations;
c. To the best knowledge of such counsel,
there is no pending or threatened action, suit or
proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving
the Company or their property and involving (A)
licenses, certificates, permits or other governmental
authorizations issued by or from the Department of
Transportation, the Federal Aviation Administration,
the Federal Communications Commission or any other
federal or any state transportation or aviation
regulatory authority or (B) the Federal Aviation Act
of 1958, as amended ((A) and (B) together, "Aviation
Laws") that is of a character required to be
disclosed in the Prospectus; and the statements in
the Prospectus under the heading "Business --
Government Regulation" fairly summarize in all
material respects the matters therein described as
they relate to Aviation Laws;
d. No consent, approval, authorization,
filing with or order of any court or governmental
agency or body involving Aviation Laws is required
for consummation of the transactions contemplated
herein, other than as has been obtained or performed;
e. Neither the sale of the Securities being
sold by the Selling Stockholders nor the consummation
of any other of the transactions herein contemplated
by the Company and the Selling Stockholders will
conflict with, or result in a breach or violation of,
any Aviation Law;
f. There are no transfer taxes or other
similar fees or charges required under any Aviation
Law to be paid in connection with the execution,
delivery and performance of this Agreement or the
sale by the Selling Stockholders of the Securities;
and
g. The descriptions in the Registration
Statement of laws, regulations and rules, of legal
and governmental proceedings and of contracts,
agreements, leases and other documents, in so far as
they relate to Aviation Laws, including, without
limitation, under the headings "Risk Factors --
Government Regulation," "Risk Factors -- Limitation
on Voting by Foreign Owners," "Business -- Aircraft
and --
22
<PAGE> 23
Government Regulation" have been reviewed by such
counsel and are accurate in all material respects,
and comply as to form in all material respects with
the applicable requirements of the 1933 Act and the
1933 Act Regulations.
In addition, solely in its capacity as
special regulatory counsel for the Company such
counsel shall state that they have no reason to
believe that at the Closing Time the Registration
Statement contained any untrue statement of a
material fact or omitted to state any material fact
required to be stated therein or necessary to make
the statements therein not misleading or that the
Prospectus, as of its date or the Closing Time,
included or includes any untrue statement of a
material fact or omitted or omits to state a material
fact necessary to make the statements therein, in the
light of the circumstances under which they were
made, not misleading. In rendering such opinion, such
counsel may rely as to matters of fact, to the extent
they deem proper, on certificates of responsible
officers of the Company and public officials.
(iv) The favorable opinion, dated as of the Closing
Time, of Stephen L. Johnson, Senior Vice President - Legal
Affairs, in form and substance satisfactory to counsel for the
Underwriters, addressed to the Representatives and each
Selling Stockholder to the effect that:
a. To the best of his knowledge and information, the
Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which
such qualification is required.
b. To the best of his knowledge and information,
there are no legal or governmental proceedings pending or
threatened which are required to be disclosed in the
Registration Statement, other than those disclosed therein,
and all pending legal or governmental proceedings to which the
Company is a party or to which any of their property is
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the
business, are, considered in the aggregate, not material.
c. The information in the Prospectus under "Risk
Factors -- Labor Negotiations," "Business -- Labor Relations,
-- Facilities and -- Government Regulation," to the extent
that it constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has
been reviewed by him and is correct in all material respects,
except as to Aviation Laws as to which he need not express any
opinion.
23
<PAGE> 24
d. To the best of his knowledge and information,
there are no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to
be filed as exhibits thereto other than those described or
referred to therein or filed as exhibits thereto, the
descriptions thereof or references thereto are correct, and no
default (except for defaults which, individually or in the
aggregate would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company) exists in the
due performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument so
described, referred to, or filed.
He and lawyers under his supervision have
participated in conferences with directors, officers and other
representatives of the Company, the Representatives, the
Company's independent accountants, counsel for the Selling
Stockholders and counsel for the Underwriters, at which
conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although he
is not passing upon, and does not assume any responsibility
for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement or Prospectus, and he
has not made any independent check or verification thereof, on
the basis of the foregoing, nothing has come to his attention
that would lead him to believe that the Registration
Statement, as amended (except for financial statements and
other financial data included therein), at the time it became
effective, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading or that the Prospectus (except for the financial
statements and other financial information contained therein),
at the Representation Date (unless the term "Prospectus"
refers to a prospectus which has been provided to the
Underwriters by the Company for use in connection with the
offering of the Securities which differs from the Prospectus
on file at the Commission at the Representation Date, in which
case at the time it is first provided to the Underwriters for
such use) or at the Closing Time, included any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
(v) The favorable opinion, dated as of the Closing
Time, of Skadden, Arps, Slate, Meagher & Flom, counsel for the
Underwriters, with respect to the matters set forth in (a),
(d), (e) (solely as to preemptive rights arising by operation
of law or under the charter or bylaws of the Company), (h),
(i) and (j), of subsection (b)(i) of this Section, except
that, with respect to the matters
24
<PAGE> 25
referred to in (d), no opinion need be expressed as to whether
any of the Company's outstanding shares of Common Stock, other
than the Securities, have been duly authorized or validly
issued or are fully paid or nonassessable.
In giving their opinions required by subsection
(b)(v) of this Section 5, Skadden, Arps, Slate, Meagher & Flom
shall additionally state that nothing has come to their
attention that would lead them to believe that the
Registration Statement (except for financial statements and
schedules and other financial or statistical data included
therein, as to which counsel need make no statement), at the
Representation Date, contained an untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading or that the Prospectus (except for financial
statements and schedules and other financial or statistical
data included therein, as to which counsel need make no
statement), at the time it is first provided to the
Underwriters for such use or at the Closing Time, included or
includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
(c) At the Closing Time there shall not have been, since the
date hereof or since the respective dates as of which information is
given in the Registration Statement and the Prospectus, any material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company,
whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the chairman of
the board and chief executive officer of the Company and of the chief
financial officer of the Company, dated as of the Closing Time, to the
effect that (i) there has been no such material adverse change, (ii)
the representations and warranties in Section 1 hereof are true and
correct with the same force and effect as though expressly made at and
as of the Closing Time, (iii) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been initiated or
threatened by the Commission.
(d) At the time of the execution of this Agreement, the
Representatives shall have received from KPMG Peat Marwick, L.L.P. a
letter dated such date, in form and substance satisfactory to the
Representatives, to the effect that (i) they are independent public
accountants with respect to the Company within the meaning of the 1933
Act and the 1933 Act Regulations; (ii) it is their opinion that the
financial statements and supporting schedules included in the
Registration Statement and covered by their opinions therein comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations;
25
<PAGE> 26
(iii) based upon limited procedures set forth in detail in such letter,
nothing has come to their attention which causes them to believe that
(A) the unaudited financial statements and supporting schedules of the
Company included in the Registration Statement do not comply as to form
in all material respects with the applicable accounting requirements of
the 1933 Act and the 1933 Act Regulations or are not presented in
conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial
statements included in the Registration Statement, (B) the unaudited
amounts of revenues, net income and net income per share set forth
under "Selected Financial Data" in the Prospectus were not determined
on a basis substantially consistent with that used in determining the
corresponding amounts in the audited financial statements included in
the Registration Statement, or (C) at a specified date not more than
five days prior to the date of this Agreement, there has been any
change in the capital stock of the Company or any increase in the long
term debt of the Company or any decrease in net current assets or net
assets as compared with the amounts shown in the balance sheet included
in the Registration Statement or, during the period from September 30,
1995 to a specified date not more than five days prior to the date of
this Agreement, there were any decreases, as compared with the
corresponding period in the preceding year, in revenues, net income or
net income per share of the Company, except in all instances for
changes, increases or decreases which the Registration Statement and
the Prospectus disclose have occurred or may occur; and (iv) in
addition to the audit referred to in their opinions and the limited
procedures referred to in clause (iii) above, they have carried out
certain specified procedures, not constituting an audit, with respect
to certain amounts, percentages and financial information which are
included in the Registration Statement and Prospectus and which are
specified by the Representatives, and have found such amounts,
percentages and financial information to be in agreement with the
relevant accounting, financial and other records of the Company
identified in such letter.
(e) At the Closing Time the Representatives shall have
received from KPMG Peat Marwick, L.L.P. a letter, dated as of the
Closing Time, to the effect that they reaffirm the statements made in
the letter furnished pursuant to subsection (d) of this Section, except
that the specified date referred to shall be a date not more than five
days prior to the Closing Time and, to the further effect that they
have carried out procedures as specified in clause (iv) of subsection
(d) of this Section with respect to certain amounts, percentages and
financial information specified by the Representatives and have found
such amounts, percentages and financial information to be in agreement
with the records specified in such clause (iv).
(f) At the Closing Time and at each Date of Delivery, the
Securities shall continue to be listed on the New York Stock Exchange.
26
<PAGE> 27
(g) At the Closing Time and at each Date of Delivery, if any,
counsel for the Underwriters shall have been furnished with such
documents and opinions as they may reasonably require and have
specifically requested prior to such time for the purpose of enabling
them to pass upon the offer and sale of the Securities as herein
contemplated and related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company and the Selling Stockholders in
connection with the offer and sale of the Securities as herein
contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(h) In the event that the Underwriters exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the
Option Securities, the representations and warranties of the Company
contained herein and the statements in any certificates furnished by
the Company hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the Representatives
shall have received:
(i) A certificate, dated such Date of Delivery, of the
chairman and chief executive officer of the Company and of the
chief financial officer of the Company confirming that the
certificate delivered at the Closing Time pursuant to Section
5(c) hereof remains true and correct as of such Date of
Delivery.
(ii) The favorable opinion of Andrews & Kurth, L.L.P., counsel
for the Company, in form and substance satisfactory to counsel
for the Underwriters, dated such Date of Delivery, relating to
the Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by
Section 5(b)(i) hereof.
(iii) The favorable opinion or opinions of counsel for each of
the Selling Stockholders (such counsel may be counsel employed
by such Selling Stockholder), in form and substance
satisfactory to counsel for the Underwriters, dated such Date
of Delivery, relating to the Option Securities to be purchased
on such Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(b)(ii) hereof.
(iv) The favorable opinion of Winthrop, Stimson, Putnam &
Roberts, special aviation regulatory counsel to the Company,
in form and substance satisfactory to counsel to Underwriters
confirming their opinion delivered at the Closing Time,
pursuant to Section 5(b)(iii) hereof, remains their opinion on
such Date of Delivery.
27
<PAGE> 28
(v) The favorable opinion of Stephen L. Johnson, Senior Vice
President Legal Affairs, in form and substance satisfactory to
counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date
of Delivery and otherwise to the same effect as the statement
required by Section 5(b)(iv) hereof.
(vi) The favorable opinion of Skadden, Arps, Slate, Meagher &
Flom, counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the
opinion required by Section 5(b)(v) hereof.
(vii) A letter from KPMG Peat Marwick, L.L.P., in form and
substance satisfactory to the Representatives and dated such
Date of Delivery, substantially the same in form and substance
as the letter furnished to the Representatives and the Selling
Stockholders pursuant to Section 5(e) hereof, except that the
"specified date" in the letter furnished pursuant to this
Section 5(h)(vii) shall be a date not more than five days
prior to such Date of Delivery.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Representatives by notice to the Company and each Selling Stockholder at
any time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4
hereof.
Section 6. Indemnification. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act as
follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment
thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus, the Prospectus
(or any amendment, supplement or term sheet thereto) or the
omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental
28
<PAGE> 29
agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission,
or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as
incurred (including, subject to Section 6(c) hereof, the fees
and disbursements of counsel chosen by Merrill Lynch),
reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or
omission, to the extent that any such expense is not paid
under (a)(i) or (a)(ii) above;
provided, however, that this indemnity agreement shall not
apply to any loss, liability, claim, damage or expense to the
extent arising out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and
in conformity with written information furnished to the
Company by any Underwriter through the Representatives
expressly for use in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment, supplement or term sheet
thereto).
(b) Each Selling Stockholder jointly, and not severally,
agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a material
fact made or omitted in reliance upon and in conformity with
public documents, oral information furnished to the Company or
written information furnished to the Company pertaining to
such Selling Stockholder and included in or omitted from the
Registration Statement (or any amendment thereto), and the
omission or alleged omission therefrom of a material fact
referring to such Selling Stockholder required to be stated
therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged
untrue statement of a material fact contained in any
preliminary prospectus, the Prospectus (or any amendment,
supplement or term sheet thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settle-
29
<PAGE> 30
ment of any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or
of any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission,
if such settlement is effected with the written consent of
such Selling Stockholder; and
(iii) against any and all expense whatsoever, as
incurred (including, subject to Section 6(c) hereof, the fees
and disbursements of counsel chosen by Merrill Lynch),
reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or
omission, to the extent that any such expense is not paid
under (b)(i) or (b)(ii) above;
provided, however, that each Selling Stockholder's maximum
aggregate liability to indemnify or otherwise make payments to
the Underwriters and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act
pursuant to the indemnity agreement under this Section 6(b)
and for any breach of the representations and warranties of
such Selling Stockholder set forth in Section 1(b)(ii) of this
Agreement shall be limited to the aggregate amount of the
gross proceeds (after deducting the Underwriters' discount but
before deducting expenses) received by such Selling
Stockholder from the sale of such Selling Stockholder's
Securities pursuant to this Agreement.
provided, further, that each Selling Stockholder agrees to
indemnify and hold harmless each Underwriter and each person,
if any, who controls andy Underwriter within the meaning of
Section 15 of the 1933 Act against any all loss, liability,
claim, damage and expense whatsoever, as incurred, arising out
of a breach of such Selling Stockholder's representation and
warranty set forth in Section 1(b)(i) and 1(b)(iii) through
1(b)(x).
(c) The indemnity agreement contained in this Section 6, with
respect to any preliminary prospectus, shall not inure to the benefit
of any Underwriter, or any person who controls an Underwriter within
the meaning of Section 15 of the 1933 Act to the extent that any loss,
liability, claim, damage or expense results from the fact that a copy
of the Prospectus was not sent or given, at or prior to the written
confirmation of the sale of Common Stock, by or on behalf of such
Underwriter to the person asserting such loss, claim, damage or
liability to the extent that delivery of the Prospectus would have
cured the defect giving rise to such loss, claim, damages, liability or
expense if such Underwriter shall have been provided with copies of the
Prospectus and it is determined that such delivery was required under
the 1933 Act and was not so made.
30
<PAGE> 31
(d) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed
the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act and each
Selling Stockholder and each person who controls such Selling
Stockholder within the meaning of Section 15 of the 1933 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or
any amendment, supplement or term sheet thereto) in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment, supplement or term
sheet thereto). In addition, each Underwriter severally agrees to
indemnify and hold harmless the Company, its directors, each of its
officers who signed the Registration Statement, and each person, if
any, who controls the Company within the meaning of Section 15 of the
1933 Act and each Selling Stockholder and each person who controls such
Selling Stockholder within the meaning of Section 15 of the 1933 Act
against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to any loss, liability claim, damage
and expense to the extent that any loss, liability, claim, damage or
expense results from the fact that a copy of the Prospectus was not
sent or given by or on behalf of such Underwriter to the person
asserting such loss, claim, damage or liability to the extent that
delivery of the Prospectus would have cured the defect giving rise to
such loss, claim, damage, liability or judgment if such Underwriter
shall have been provided with copies of the Prospectus and it is
determined that such delivery was required under the 1933 Act and was
not so made.
(e) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action
commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability which it may have
otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees
and expenses of more than one+ counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances.
(f) The provisions of this Section 6 and Section 7 hereof
shall not affect any separate agreement among the Company and the
Selling Stockholders with respect to indemnification and contribution.
31
<PAGE> 32
Section 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company, the
Selling Stockholders and the Underwriters shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
said indemnity agreement incurred by the Company and the Selling Stockholders
and one or more of the Underwriters as incurred, in such proportions that the
Underwriters are responsible for that portion represented by the percentage that
the underwriting discount appearing on the cover page of the Prospectus or term
sheet, if applicable, bears to the initial public offering price appearing
thereon and the Company and the Selling Stockholders are responsible for the
balance, provided that the aggregate liability of each Selling Stockholder under
this Section 7 and for any breach of any representation and warranty set forth
in Section 1(b) of this Agreement (to the extent such breach does not also
constitute a breach of any other representation and warranty of such Selling
Stockholder) shall be limited to an amount equal to the net proceeds (after
deducting the aggregate Underwriters' discount or commission, but before
deducting expenses) received by such Selling Stockholder from the sale of its
Securities pursuant to this Agreement; provided, however, that no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation, and provided that the contribution provisions
of this Section 7 shall not inure to the benefit of any Underwriter to the
extent that the aggregate losses, liabilities, claims, damages and expenses
result from the circumstances described in Section 6(c). For purposes of this
Section, each person, if any, who controls an Underwriter within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as the Company and each person, if any, who controls a
Selling Stockholder within the meaning of Section 15 of the 1933 Act shall have
the same rights to contribution as such Selling Stockholder.
Section 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers of
the Company or the Selling Stockholders submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or controlling person, or by or on behalf of the
Company or the Selling Stockholders, and shall survive delivery of the
Securities to the Underwriters.
Section 9. Termination of Agreement. (a) The Representatives may
terminate this Agreement, by notice to the Company and each Selling Stockholder,
at any time at or prior to the Closing Time (i) if there has been, since the
date of this Agreement or since the respective dates as of which information is
given in the Registration Statement, any
32
<PAGE> 33
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or
elsewhere or any outbreak of hostilities or escalation thereof or other calamity
or crisis the effect of which is such as to make it, in the judgment of the
Representatives, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in the Common Stock or the
Warrants has been suspended by the Commission, or if trading generally on either
the American Stock Exchange or the New York Stock Exchange has been suspended,
or minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of said Exchanges or by
order of the Commission or any other governmental authority, or if a banking
moratorium has been declared by either Federal, New York or Arizona authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof.
Section 10. Default by One or More of the Underwriters. If one or
more of the Underwriters shall fail at the Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement and
the Pricing Agreement (the "Defaulted Securities"), the Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or more
of the non-defaulting Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the Securities, each of the non-defaulting Underwriters shall be
obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
Securities, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, any of the Representatives, the Selling
Stockholders (acting unanimously) or the Company shall have the right to
postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements.
33
<PAGE> 34
Section 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives c/o Merrill Lynch & Co. at
10900 Wilshire Boulevard, Suite 900, Los Angeles, California 90024, attention of
Robert Woolway, Director; notices to the Company shall be directed to the
Company at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, attention of
Stephen L. Johnson, Esquire, Senior Vice President; notices to TPG, TPG Parallel
and Air Partners II shall be directed to Rick Shifter, Texas Pacific Group
Partners, L.P., 1133 Connecticut Avenue N.W., Suite 800, Washington, DC 20036;
notices to Continental Airlines, Inc. shall be directed to Continental Airlines,
Inc.at 2929 Allen Parkway, Houston, Texas, 77019 attention of Jeff Smisek,
Esquire, General Counsel; notices to Lehman Brothers Holdings Inc. shall be
directed to Lehman Brothers Inc. at 3 World Financial Center, New York, New York
10285, attention of Kevin Genirs, Esquire, Vice President and notices to Mesa
Airlines Group, Inc. shall be directed to Mesa Airlines, at 2323 30th Street,
Farmington, New Mexico, 87401, attention of Larry Risley, Chairman and Chief
Executive Officer.
Section 12. Parties. This Agreement and the Pricing Agreement shall
each inure to the benefit of and be binding upon the Underwriters, the Selling
Stockholders and the Company and their respective successors. Nothing expressed
or mentioned in this Agreement or the Pricing Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Underwriters,
the Selling Stockholders and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or the Pricing Agreement or any
provision herein or therein contained. This Agreement and the Pricing Agreement
and all conditions and provisions hereof and thereof are intended to be for the
sole and exclusive benefit of the Underwriters, the Selling Stockholders and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
Section 13. Governing Law and Time. THIS AGREEMENT AND THE PRICING
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID
STATE. Except as otherwise set forth herein, specified times of day refer to New
York City time.
34
<PAGE> 35
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Underwriters, the Selling Stockholders and the Company in accordance
with its terms.
Very truly yours,
AMERICA WEST AIRLINES, INC.
By:________________________
Name:
Title:
TPG PARTNERS, L.P.
By: TPG Genpar, L.P.
General Partner
By: TPG Advisors, Inc.
General Partner
By:_________________________
Name:
Title:
TPG PARALLEL II, L.P.
By: TPG Genpar, L.P.
General Partner
By: TPG Advisors, Inc.
General Partner
By:_________________________
Name:
Title:
35
<PAGE> 36
AIR PARTNERS II, L.P.
By: TPG Genpar, L.P.
General Partner
By: TPG Advisors, Inc.
General Partner
By:_________________________
Name:
Title:
CONTINENTAL AIRLINES, INC.
By:_________________________
Name:
Title:
MESA AIR GROUP, INC.
By:_________________________
Name:
Title:
LEHMAN BROTHERS HOLDINGS INC.
By:_________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH PIERCE FENNER & SMITH INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
LEHMAN BROTHERS INC.
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By__________________________________
Authorized Signatory
For each of themselves and as Representatives of the other
Underwriters named in Schedule A hereto.
36
<PAGE> 37
SCHEDULE A
<TABLE>
<CAPTION>
Number
Name of Underwriter of Securities
------------------- -------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . . . . .
Donaldson, Lufkin & Jenrette Securities Corporation . . . . . . . .
Lehman Brothers Inc . . . . . . . . . . . . . . . . . . . . . .
-------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-------------
</TABLE>
37
<PAGE> 38
SCHEDULE B
<TABLE>
<CAPTION>
Number of
Name of Selling Stockholder Option Securities Number of Option
--------------------------- ----------------- ----------------
<S> <C> <C>
TPG Partners, L.P. . . . . . . . . 2,072,567 0
TPG Parallel I, L.P. . . . . . . . 208,843 0
Air Partners II, L.P. . . . . . . . 218,590 0
Contingental Airlines, Inc. . . . . 1,100,000 258,030
Mesa Air Group, Inc. . . . . . . . 1,500,000 351,970
Lehman Brothers Holding Inc . . . . 1,000,000 0
--------- -------
Total . . . . . . . . . . . . . . . 6,100,000 610,000
========= =======
</TABLE>
Sch B - 1
<PAGE> 39
Exhibit A
6,100,000 Shares
AMERICA WEST AIRLINES, INC.
(a Delaware corporation)
Class B Common Stock
(Par Value $.01 Per Share)
PRICING AGREEMENT
February [ ], 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
Lehman Brothers Inc.
as Representatives of the several
Underwriters named in the within-
mentioned Purchase Agreement
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281
Dear Sirs:
Reference is made to the Purchase Agreement dated February [ ], 1996
(the "Purchase Agreement") relating to the purchase by the several Underwriters
named in Schedule A thereto, for whom Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation and Lehman Brothers Inc. are acting as representatives (the
"Representatives"), of the above shares of Class B Common Stock (the
"Securities"), of America West Airlines, Inc., a Delaware corporation (the
"Company"), to be sold by certain stockholders named in Schedule B thereto (the
"Selling Stockholders").
1
<PAGE> 40
Pursuant to Section 2 of the Purchase Agreement, the Selling
Stockholders severally and not jointly agree with each Underwriter as follows:
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $ .
2. The purchase price per share for the Securities to be paid by
the several Underwriters shall be $ , being an amount equal to the initial
public offering price set forth above less $ per share; provided that the
purchase price per share for any Option Securities (as defined in the Purchase
Agreement) purchased upon exercise of the over-allotment option described in
Section 2(b) of the Purchase Agreement shall be reduced by an amount per share
equal to any dividends declared by the Company and payable on the Initial
Securities (as defined in the Purchase Agreement) but not payable on the Option
Securities.
2
<PAGE> 41
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Underwriters, the Selling Stockholders and the Company in accordance
with its terms.
Very truly yours,
TPG PARTNERS, L.P.
By: TPG Genpar, L.P.
General Partner
By: TPG Advisors, Inc.
General Partner
By: _________________________
Name:
Title:
TPG PARALLEL I, L.P.
By: TPG Genpar, L.P.
General Partner
By: TPG Advisors, Inc.
General Partner
By: _________________________
Name:
Title:
AIR PARTNERS II, L.P.
By: TPG Genpar, L.P.
General Partner
By: TPG Advisors, Inc.
General Partner
3
<PAGE> 42
By: _________________________
Name:
Title:
CONTINENTAL AIRLINES, INC.
By: _________________________
Name:
Title:
MESA AIR GROUP, INC.
By: _________________________
Name:
Title:
LEHMAN BROTHERS HOLDINGS INC.
By: _________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH PIERCE FENNER & SMITH INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
LEHMAN BROTHERS INC.
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By__________________________________
Authorized Signatory
For each of themselves and as Representatives of the other
Underwriters named in Schedule A of the Purchase Agreement
4
<PAGE> 43
ACKNOWLEDGED
as of the date first above written
AMERICA WEST AIRLINES, INC.
By: ________________________
Name:
Title:
5
<PAGE> 1
EXHIBIT 10.50
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), dated November 9, 1995,
by and between AMERICA WEST AIRLINES, INC., a Delaware corporation ("Company"),
and WILLIAM A. FRANKE ("Franke").
WHEREAS, Franke currently serves the Company as its Chairman of
the Board ("COB") and Chief Executive Officer ("CEO"); and
WHEREAS, the Company desires for Franke to continue serving (i)
as COB through the Expiration Date (defined below) and (ii) as CEO until the
earlier of the Expiration Date and the date on which another person is appointed
CEO and assumes the responsibilities of such office, and Franke is willing to
continue serving in such capacities, all on the terms and conditions herein set
forth.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties, and agreements contained herein, and for other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions and Interpretations
1.1. Definitions
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, the following terms shall
have the following respective meanings:
"AmWest Registration Agreement" shall have the meaning specified
in Section 6.1.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as from time to time amended, and any successor
statute thereto.
"Base Salary" shall have the meaning specified in Section 3.1.
"Board" shall mean the Board of Directors of the Company.
"CEO" shall have the meaning specified in the first recital of
this Agreement.
"Change in Control" shall occur if, after the Transition Date:
(i) the individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board"), cease for any
reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by
the Company's stockholders, was
<PAGE> 2
approved by a vote of at least two-thirds of the directors then
comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board; or
(ii) any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended) acquires (directly or
indirectly) the beneficial ownership (within the meaning of Rule
13d-3 promulgated under such Act) of more than 50% of the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors ("Voting Power"); or
(iii) any Shares or other voting securities of the
Company shall be purchased pursuant to a tender or exchange
offer (other than a tender or exchange offer made by the
Company); or
(iv) the Company's stockholders shall approve a merger
or consolidation involving the Company other than (A) a merger
or consolidation in which the voting securities of the Company
outstanding immediately prior thereto will become (by operation
of law), or are to be converted into, voting securities of the
surviving corporation or its parent corporation immediately
after such merger or consolidation that are owned by the same
person or entity or persons or entities as immediately prior
thereto and possess at least 75% of the Voting Power held by the
voting securities of the surviving corporation or its parent
corporation, (B) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in
which no person acquires more than 50% of the Voting Power or
(C) a merger or consolidation in which the Company is the
surviving corporation and such transaction was determined not to
be a Change in Control, which transaction and determination was
approved by a majority of the Board in actions taken prior to,
and with respect to, such transaction; or
(v) the Company's stockholders shall approve a merger,
consolidation, reorganization, disposition of assets,
liquidation or other transaction (or series of related
transactions) in which the Company will not survive as a
publicly-owned corporation.
"COB" shall have the meaning specified in the first recital of
this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as in
effect from time to time.
"Confidential Information" shall have the meaning specified in
Section 5.1(a).
"Disability" shall mean a physical or mental condition of Franke
that, in the good faith judgment of not less than a majority of the
entire membership of the Board, based upon
-2-
<PAGE> 3
certification by a licensed physician reasonably acceptable to Franke and
the Board, (i) prevents Franke from being able to perform the services
required under this Agreement, (ii) has continued for a period of at
least six months during any period of twelve consecutive months and (iii)
is expected to continue.
"Dispute" shall have the meaning specified in Article VII.
"Employment Period" shall mean that the period commencing on the
Transition Date and ending on the Expiration Date; provided, however,
that if either party gives a Notice of Termination pursuant to Section
4.1 or 4.2, then the Employment Period shall not extend beyond the
relevant Termination Date.
"Expiration Date" shall mean December 31, 1998.
"Good Reason" shall mean any of the following:
(1) without Franke's express written consent, a
material alteration during Phase I in the nature or status of
Franke's positions, functions, duties or responsibilities with
the Company applicable to Phase I, including any change which
would (i) alter Franke's reporting responsibilities, (ii) cause
Franke's position with the Company to become of less dignity or
importance than the positions and attributes of COB and CEO
and/or (iii) cause Franke not to have all of the powers,
functions, duties and responsibilities described in the first
sentence of Section 2.2(a);
(2) without Franke's express written consent, a
material alteration during Phase II in the nature or status of
Franke's position, functions, duties or responsibilities with
the Company applicable to Phase II, including any alteration
which would (i) change Franke's reporting responsibilities, (ii)
cause Franke's position with the Company to become of less
dignity or importance than the position and attributes of COB
and/or (iii) cause Franke not to have all of the powers,
functions, duties and responsibilities described in the first
and last sentences of Section 2.2(b); provided, however, that
each such alteration shall cease to be a Good Reason on the date
which is 90 days after the occurrence of such alteration unless,
prior to such date, Franke gives a Notice of Termination
pursuant to Section 4.1 on account of such alteration;
(3) without Franke's express written consent, the
failure of the Company to perform any of its obligations under
this Agreement in any material regard, but only if such failure
shall continue unremedied for more than 15 days after written
notice thereof is given by Franke to the Company;
(4) without Franke's express written consent, the
relocation of the principal executive offices of the Company
outside the greater Phoenix, Arizona metropolitan area or the
Company's requiring Franke to be based other than at such
principal
-3-
<PAGE> 4
executive offices; provided, however, that such relocation shall
cease to be a Good Reason on the date which is 90 days after the
occurrence of such relocation unless, prior to such date, Franke
gives a Notice of Termination pursuant to Section 4.1 on account
of such relocation;
(5) the failure the Company at any time during
Phase I to elect or re-elect, or to appoint or re-appoint,
Franke to the offices of COB and CEO;
(6) the failure the Company at any time during
Phase II to elect or re-elect, or to appoint or re-appoint,
Franke to the office of COB;
(7) any purported termination by the Company of
Franke's employment not in accordance with the provisions of
this Agreement;
(8) the failure of the Company to obtain any
assumption agreement required by Section 9.5(a); or
(9) the failure of Franke to be elected or
appointed, or to be re-elected or re-appointed, as a director of
the Company at any time during the Employment Period.
"Holders" shall have the meaning specified in Section 6.1.
"Incentive Plan" shall mean the Company's 1994 Incentive Equity
Plan effective as of December 1, 1994.
"Market Value per Share" means, at any date, the closing price
per Share on that date (or, if there are no sales on that date, the last
preceding date on which there was sale) in the principal market in which
the Shares are traded.
"Misconduct" shall mean one or more of the following:
(i) the willful and continued failure by Franke to
perform his duties described in Section 2.2 (other than any such
failure resulting from Franke's incapacity due to physical or
mental illness) after written notice of such failure has been
given to Franke by the Company and Franke has had a reasonable
period to correct such failure;
(ii) the willful commission by Franke of acts that are
both dishonest and demonstrably injurious to the Company
(monetarily or otherwise) in any material respect, provided that
no act taken by Franke shall be deemed to constitute Misconduct
if such act was taken by Franke in good faith and in the
reasonable belief that such act was in the best interest of the
Company or in furtherance of Franke's duties and
responsibilities described in Section 2.2;
-4-
<PAGE> 5
(iii) the conviction of Franke for a felony offense
involving moral turpitude;
or
(iv) a material breach by Franke of any of the
covenants set forth in this Agreement, but only if such breach
shall continue unremedied for more than 15 days after written
notice thereof is given to Franke by the Company.
"New Stock Grant" shall have the meaning specified in Section
3.2(a).
"New Stock Option" shall have the meaning specified in Section
3.3(b).
"Notice of Termination" shall mean a notice purporting to
terminate Franke's employment in accordance with Section 4.1 or 4.2,
which notice shall set forth in reasonable detail the reason for such
termination and the facts and circumstances claimed to provide a basis
for such termination.
"Person" shall mean and include an individual, a partnership, a
joint venture, a corporation, a trust and an unincorporated organization.
"Phase I" shall mean the period commencing on the Transition
Date and ending on the earlier of the Expiration Date and the date on
which Franke's successor as CEO assumes the responsibilities of such
office.
"Phase II" shall mean that portion of the Employment Period
following Phase I.
"Piggyback Registration Notice" shall have the meaning specified
in Section 6.2(a).
"Registrable Securities" shall have the meaning specified in
Section 6.1.
"Restricted Period" shall have the meaning specified in Section
5.2(a).
"Restricted Shares" shall have the meaning specified in Section
3.2(a).
"SEC" shall mean the Securities and Exchange Commission.
"Share" shall mean a share of the Class B common stock, $.01 par
value, of the Company.
"Termination Date" shall mean the termination date specified in
a Notice of Termination delivered in accordance with Article IV, provided
that in no event shall such termination date be less than 30 nor more
than 60 days after the date such Notice of Termination is given.
-5-
<PAGE> 6
"Transfer Restriction" shall have the meaning specified in
Section 3.2(c).
"Transitition Date" shall mean January 1, 1996, being the date
from and after which Franke's employment by the Company will be governed
by this Agreement rather than the 1994 Agreement.
"1994 Agreement" shall mean the Employment Agreement between
Franke and the Company dated as of December 1, 1994.
1.2. Interpretations
(a) In this Agreement, unless a clear 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
Article, Section or other subdivision, (ii) reference to any Article or Section,
means such Article or Section hereof, (iii) the words "including" (and with
correlative meaning "include") means including, without limiting the generality
of any description preceding such term, and (iv) where any provision of this
Agreement refers to action to be taken by either party, or which such party is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such party.
(b) The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
(c) No provision of this Agreement shall be interpreted or
construed against either party solely because that party or its legal
representative drafted such provision.
ARTICLE II
Employment; Term; Positions and Duties
2.1. Employment; Term
The Company agrees to continue Franke's employment as COB and
CEO during Phase I and Franke agrees to remain employed by the Company in such
capacities during Phase I, all on the terms and conditions set forth in this
Agreement. The Company agrees to continue Franke's employment as COB during
Phase II and Franke agrees to remain employed by the Company in such capacity
during Phase II, all on the terms and conditions set forth in this Agreement.
2.2. Positions and Duties
(a) During Phase I, Franke shall serve as COB and CEO and
shall have and may exercise all of the powers, functions, duties and
responsibilities normally attributable to the positions
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of COB and CEO, including (without limitation) such duties and responsibilities
as are set forth with respect to such offices in the Company's certificate of
incorporation and bylaws (as from time to time in effect). During Phase I,
Franke shall have such additional duties and responsibilities commensurate with
the offices of COB and CEO as from time to time may be reasonably assigned to
him by the Board.
(b) During Phase II, Franke shall serve as COB and shall
have and may exercise all of the powers, functions, duties and responsibilities
normally attributable to the position of COB, including (without limitation)
such duties and responsibilities as are set forth with respect to such office in
the Company's certificate of incorporation and bylaws (as from time to time in
effect). During Phase II, Franke shall have such additional duties and
responsibilities commensurate with the office of COB (but not the office of CEO)
as from time to time may be reasonably assigned to him by the Board. During
Phase II, the CEO shall report directly to Franke.
(c) While employed hereunder, Franke shall report directly
and exclusively to the Board and shall observe and comply with all lawful
policies, directions and instructions of the Board which are consistent with
paragraphs (a) and (b) above.
(d) The Company agrees to use its reasonable best efforts
to cause Franke to be elected or appointed, or re-elected or re-appointed, as
director of the Company at all times during the Employment Period.
(e) During Phase I, Franke agrees to devote a substantial
portion of his business time, attention, skill and efforts to the faithful and
efficient performance of his duties hereunder as COB and CEO. During Phase II,
Franke agrees to devote a reasonable portion (which need not constitute a
substantial portion) of his business time, attention, skill and efforts to the
faithful and efficient performance of his duties hereunder as COB.
(f) During Phase I, Franke shall not accept employment with
or for any Person other than the Company and, during Phase II, Franke shall not
accept employment with or for any Person in violation of Section 5.2; provided,
however, that Franke may engage in the following activities so long as they do
not interfere in any material respect with the performance of Franke's duties
and responsibilities hereunder: (i) serve on corporate, civic or charitable
boards or committees, (ii) deliver lectures, fulfill speaking engagements or
teach on a part-time basis at educational institutions, (iii) manage his
personal investments and (iv) render consultation and financial advisory
services to third parties. The Company acknowledges that Franke is the principal
owner of Franke & Company, Inc. through which Franke owns and oversees equity
interests in several enterprises and provides consultation and financial
advisory services to third parties.
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2.3. Place of Employment
Franke's place of employment hereunder shall be at the Company's
principal executive offices in the greater Phoenix, Arizona metropolitan area.
ARTICLE III
Compensation and Benefits
3.1. Base Salary
(a) For services rendered by Franke under this Agreement,
the Company shall pay to Franke an annual cash base salary ("Base Salary") in
the amount (i) $500,000 during Phase I and (ii) $100,00 during Phase II. The
Base Salary shall be payable semi-monthly as earned.
(b) The amount of the Base Salary may be increased at any
time as the Board may deem appropriate. If the Base Salary is increased as
aforesaid, it may not thereafter be decreased unless a proportionally similar
decrease is made to the base compensation of all other senior executives of the
Company; provided that in no event may the Base Salary be decreased below the
applicable amount specified in the first sentence of paragraph (a) above.
3.2. Stock Grant
(a) On the Transition Date, the Company shall issue and
deliver to Franke 108,000 Shares (the "Restricted Shares") as additional
compensation for services rendered under this Agreement. The grant of the
Restricted Shares in accordance with this paragraph (a) (the "New Stock Grant")
shall be in lieu of, and not in addition to, the stock grants described in
Section 3.2(a)(3) of the 1994 Agreement.
(b) Except as expressly set forth below in this Section 3.2,
(i) the New Stock Grant shall be irrevocable and unconditional and (ii) none of
the Restricted Shares shall be subject to forfeiture or surrender for any
reason.
(c) Franke will not sell, transfer or otherwise dispose of
any of the Restricted Shares other than by will or by laws of descent and
distribution; provided, however, that the foregoing restriction (the "Transfer
Restriction") shall lapse with respect to any Restricted Shares which are no
longer subject to forfeiture by Franke pursuant to paragraph (d) below and,
provided further, that the Transfer Restriction shall automatically lapse in
full (i) upon the occurrence of a Change in Control, (ii) in the event of
Franke's death or (iii) in the event Franke's employment is terminated by Franke
for Good Reason or on account of Disability or by the Company for any reason
other than Misconduct on account of the conviction of Franke for a felony.
(d) In the event Franke's employment is terminated by Franke
pursuant to Section 4.1 other than for Good Reason or by the Company pursuant to
Section 4.2 for Misconduct, then
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Franke shall forfeit and be obligated, for no consideration, to surrender to the
Company that number of Restricted Shares determined by multiplying 108,000 by a
fraction the numerator of which shall be the number of whole calendar months
within the period beginning on the Termination Date and ending on the Expiration
Date and the denominator of which shall be 36.
(e) The New Stock Grant shall be made pursuant to the
Incentive Plan and shall become vested when the Transfer Restriction has lapsed
with respect thereto.
(f) Certificates evidencing the Restricted Shares will be
issued by the Company in Franke's name. The Company may cause such certificates
to bear a legend setting forth or incorporating the Transfer Restriction, and
the Company may cause such certificates to be delivered upon issuance to the
Secretary of the Company (or such other depositary as may be designated by the
committee which administers the Incentive Plan) as a depositary for safe-keeping
until the Transfer Restriction lapses with respect thereto or until forfeiture
occurs with respect thereto pursuant to paragraph (d) above. If such
certificates bear a legend setting forth or incorporating the Transfer
Restriction, then upon the lapse of the Transfer Restriction without forfeiture,
the Company will cause a new certificate or certificates to be issued in the
name of Franke without such legend. The Company may require Franke to execute
and deliver stock powers in the event of forfeiture.
(g) Franke shall be entitled to receive all dividends and
distributions in respect of the Restricted Shares (subject to applicable tax
withholding), to vote the Restricted Shares and to give consents, waivers and
ratifications with respect to the Restricted Shares; provided, however, that
distributions applicable to any Restricted Shares shall be held by the Company
until (i) the Transfer Restriction lapses with respect to such Shares, at which
time such distributions shall be paid to Franke or his designee without interest
or (ii) forfeiture occurs with respect to such Shares pursuant to paragraph (d)
above, at which time such distributions shall be forfeited.
(h) If requested by Franke at any time, the Company shall
promptly request, and diligently seek in good faith to obtain, a no action
letter from the SEC to the effect that the date of purchase, within the meaning
and for the purposes of the short-swing profit provisions of Section 16(b) of
the Securities Exchange Act of 1934 (as amended), of the Restricted Shares is
the grant date thereof.
(i) If requested by Franke, the Company will loan Franke up
to $860,000 solely for the purpose of enabling Franke to pay all or portion of
the taxes (Federal and state) attributable to the New Stock Grant. Such loan
shall be evidenced by, and subject to the terms and conditions of, a promissory
note duly executed by Franke and payable to the order of the Company (the
"Promissory Note"). The Promissory Note shall be in form and substance
reasonably satisfactory to the Company and shall be secured by a pledge
agreement (the "Pledge Agreement") initially covering that number of the
Restricted Shares determined by dividing 150% of the principal amount of the
Promissory Note by the Market Value per Share on the day prior to the date the
loan is funded. The Pledge Agreement shall be in form and substance (including
release of collateral provisions based on a collateral value to loan ratio of
1.5 to 1.0) reasonably satisfactory to the Company and
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shall be accompanied by appropriate stock powers. The Promissory Note shall be
payable in two equal installments on September 26, 2000 and September 26, 2001
and shall bear interest, compounded monthly, at the applicable federal rate
determined in accordance with section 1274(d) of the Code. Franke shall not be
personally liable for payments due under the Promissory Note, it being expressly
understood and agreed that the sole recourse of the Company for satisfaction of
the Promissory Note shall be against the Restricted Shares pledged as collateral
for the Promissory Note under the Pledge Agreement.
3.3. Stock Options
(a) Pursuant to the 1994 Agreement, the Company has
previously granted to Franke certain options to purchase Shares, including the
following:
(i) two 50,000 Share options awarded pursuant to
Section 3.3(b) of the 1994 Agreement;
(ii) one 50,000 Share option awarded pursuant to
Section 3.3(c) of the 1994 Agreement; and
(iii) one 100,000 Share option awarded pursuant to
Section 3.3(c) of the 1994 Agreement.
It is agreed that the vesting requirements set forth with
respect to the foregoing options in the 1994 Agreement are hereby rescinded and
terminated so that such options shall be fully exercisable as of the date
hereof.
(b) Franke is hereby granted pursuant to the Incentive Plan an
option (the "New Stock Option") to purchase 150,000 Shares, with an exercise
price per Share equal to $16.50, being the Market Value per Share on the date
hereof. The New Stock Option shall become exercisable as to one-third of the
Shares covered thereby on the December 31 immediately preceding each anniversary
of the Transition Date, so that the New Stock Option will be exercisable in full
on December 31, 1998.
(c) Upon the exercise of the New Stock Option, Franke shall pay
to the Company an amount equal to the relevant exercise price, such amount to be
paid (i) in cash, (ii) by delivering to the Shares already owned by Franke which
have an aggregate Market Value per Share at the date of exercise equal to the
relevant exercise price, (iii) by directing the Company to sell a sufficient
number of Shares to be acquired on exercise of the New Stock Option through a
broker approved by the Company, in which event the proceeds of such sale shall
be applied by the Company to the payment of the relevant exercise price, with
any surplus then remaining to be paid to Franke or his designee, or (iv) by any
combination of the foregoing.
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(d) Upon the occurrence of a Change in Control, the New
Stock Option shall become automatically vested in full and may be exercised at
any time thereafter; provided, however, in no event shall the New Stock Option
be exercisable after the tenth anniversary of the date of this Agreement.
(e) In the event Franke's employment is terminated by
Franke pursuant to Section 4.1 other than for Good Reason or on account of
Disability or by the Company pursuant to Section 4.2 for Misconduct, the New
Stock Option, to the extent then vested, may be exercised by Franke at any time
within six months following the Termination Date, but not thereafter; provided,
however, in no event shall the New Stock Option be exercisable after the tenth
anniversary of the date of this Agreement. To the extent the New Stock Option is
not vested on such Termination Date, the New Stock Option (or the portion
thereof that is not vested on such Termination Date) shall automatically lapse
and be cancelled unexercised as of such Termination Date.
(f) The New Stock Option shall become automatically vested
in full on the date of Franke's death and may be exercised by the person to whom
Franke's rights shall pass by will or by the laws of descent and distribution at
any time within the one-year period beginning on the date of Franke's death, but
not thereafter, and in no event shall the New Stock Option be exercisable after
the tenth anniversary of the date of this Agreement.
(g) In the event Franke's employment is terminated by
reason of Disability, the New Stock Option shall become automatically vested in
full on the date of such Disability and may be exercised at any time within the
36-month period beginning on the date of such Disability, but not thereafter,
and in no event shall the New Stock Option be exercisable after the tenth
anniversary of the date of this Agreement.
(h) Except as otherwise provided herein, the New Stock
Option may be exercised in whole or in part or in two or more successive parts.
(i) The New Stock Option shall not be transferrable by
Franke, otherwise than by will or by laws of descent and distribution. During
the lifetime of Franke, the New Stock Option may not be exercised by anyone
other than Franke.
(j) The New Stock Option may be exercised from time to time
by a notice in writing which identifies the New Stock Option and specifies the
number of Shares in respect of which it is being exercised. Such notice shall be
delivered to the Secretary of the Company or addressed to the Secretary of the
Company at its principal corporate offices. The date of exercise of the New
Stock Option shall be the date the exercise notice is hand delivered or mailed
to the Secretary of the Company, whichever is applicable. An election to
exercise the New Stock Option shall be irrevocable.
(k) The New Stock Option is not intended to qualify as an
incentive stock option under Section 422 of the Code.
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(l) The New Stock Option shall be in lieu of, and not in
addition to, the stock options to be granted to Franke on August 25, 1996
pursuant to Section 3.3(c) of the 1994 Agreement.
3.4. Life Insurance
During the Employment Period, the Company agrees to maintain, at
all times and without cost to Franke, a term life insurance policy on the life
of Franke in the amount of $2 million, the proceeds of which, in the event of
Franke's death, shall be payable to one or more beneficiaries designated by
Franke or, in the absence of any such designation, to his estate. Such policy
shall be issued by a solvent insurance company reasonably acceptable to Franke.
3.5. Annual Administrative Expense Allowance
(a) During the Employment Period, the Company shall
continue to pay to Franke or his designee, in accordance with past practices, an
annual allowance of $50,000 (subject to adjustment as provided in paragraph (b)
below) for administrative expenses incurred by Franke in connection with the
performance of his duties and responsibilities and the exercise of his powers
and authority under this Agreement. Each such annual allowance shall be paid to
Franke in twelve equal monthly installments. So long as the Company is not in
default under this Section 3.5, Franke shall be responsible for providing, in
accordance with past practices, at least one administrative assistant/secretary.
(b) The amount of the annual allowance referred to in
paragraph (a) above shall be adjusted upwards or downwards, as the case may be,
for each calendar year commencing on or after January 1, 1996 by the amount of
the change, if any, in the Cost of Living during the prior calendar year based
on the Consumer Price Index for Urban Consumers All Items - Less Shelter - Index
(1967=100) as published with respect to the Phoenix metropolitan area by the
Bureau of Labor Statistics for the United States Department of Labor; provided,
however, than in no event shall the amount of any such annual adjustment exceed
6%. If such Index is discontinued or revised in any material respect, the
parties shall mutually agree upon a substitute index which shall thereafter be
used in order to obtain substantially the same result as would have been
obtained had such Index had not been so discontinued or revised.
3.6. Business Expenses
The Company shall, in accordance with the rules and policies
that it may establish from time to time for senior executives, reimburse Franke
for business expenses reasonably incurred in the performance of Franke's duties
hereunder. It is understood that Franke is authorized to incur reasonable
business expenses for promoting the business and reputation of the Company,
including reasonable expenditures for travel, lodging, meals and client and/or
business associate entertainment. Requests for reimbursement for such expenses
must be accompanied by appropriate documentation.
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3.7. Other Benefits
Franke shall be entitled to receive all fringe benefits and
other perquisites that may be offered by the Company to its senior executives as
a group or to any of its senior executives individually or to the members of the
Board, including, without limitation, (i) participation in the various employee
benefit plans or programs provided to senior executives of the Company in
general (including the Company's split-dollar life insurance and disability
insurance programs), subject to meeting the eligibility requirements with
respect to each of such benefit plans or programs, (ii) tax/financial planning
assistance, (iii) automobile allowances, (iv) club memberships, (v) on-line and
interline, positive space travel privileges and (vi) participation in the
Company's retiree medical insurance program, subject to meeting the eligibility
requirements of such program other than the requirement relating to five years
service with the Company, which requirement is hereby waived. However, nothing
in this Section 3.7 shall be deemed to prohibit the Company from making any
changes in any of the plans, programs or benefits described herein, provided the
change similarly affects all senior executives of the Company or members of the
Board, as the case may be, similarly situated. Notwithstanding the foregoing,
Franke shall not be entitled to participate in the Incentive Plan or any other
incentive plans offered to key employees of the Company, except as expressly
provided herein.
ARTICLE IV
Termination of Employment
4.1. Termination by Franke
Franke may, at any time prior to the Expiration Date, terminate
his employment hereunder for any reason by delivering a Notice of Termination to
the Board.
4.2. Termination by the Company
The Company may, at any time prior to the Expiration Date,
terminate Franke's employment hereunder for any reason by delivering a Notice of
Termination to Franke; provided, however, that in no event shall the Company be
entitled to terminate Franke's employment prior to the Expiration Date unless
the Board shall duly adopt, by the affirmative vote of at least a majority of
the entire membership of the Board, a resolution authorizing such termination
and stating that, in the opinion of the Board, sufficient reason exists
therefor. Nothing in this Agreement shall preclude the Company from replacing
Franke as CEO at any time after the Transition Date, and such replacement alone
shall not be considered a termination of Franke's employment hereunder.
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4.3. Accrued Base Salary, Vacation Pay, etc.
(a) Promptly upon the termination of Franke's employment
hereunder for any reason, the Company shall pay to Franke a lump sum amount for
(i) any unpaid Base Salary earned hereunder prior to the termination date, (ii)
all unused vacation time accrued by Franke as of the termination date in
accordance with the Company's vacation policy for senior executives, (iii) all
unpaid benefits earned by Franke as of the termination date under any and all
incentive compensation plans or programs of the Company, (iv) all amounts owing
to Franke under Sections 3.5 and 3.6 and (v) any additional amounts or benefits
which may be required to be paid in a lump sum by applicable law.
(b) A termination of Franke's employment in accordance with
this Agreement shall not alter or impair (i) any of Franke's rights or benefits
under any issued and outstanding stock options except as provided with respect
to the New Stock Option in Section 3.3, (ii) any of Franke's rights or benefits
under the 1994 Agreement except as expressly provided in Section 9.8(a) or (iii)
any of Franke's rights or benefits, if any, under employee benefit plans or
programs maintained by the Company.
4.4. Other Termination Benefits and Privileges
The following provisions shall apply if Franke terminates his
employment hereunder for Good Reason or if the Company terminates Franke's
employment hereunder for any reason other than Misconduct or Disability:
(i) Severance Payment. The Company shall promptly pay to
Franke a severance payment (in cash or other immediately available funds)
in the amount of (A) $1.5 million, if the Termination Date is during
Phase I and (B) $1 million, if the Termination Date occurs during Phase
II; provided, however, that such severance payment shall be reduced to
the extent necessary so that no portion of such payment (or of any other
payment or benefit which constitutes a "parachute payment" within the
meaning of Section 280G of the Code and which Franke has received or is
entitled to receive shall be subject to the excise tax imposed by Section
4999 of the Code, but only if, by reason of such reduction, Franke's net
after tax benefit shall exceed the net after tax benefit if such
reduction were not made.
(ii) Medical Insurance. During the 24-month period following
the Termination Date, the Company, at its cost, shall maintain in full
force and effect for the continued benefit of Franke and Franke's
dependents all benefits available to Franke and Franke's dependents under
all medical plans and programs of the Company, provided that (a) Franke's
continued participation is possible under the terms and provisions of
such plans and programs and (b) Franke pays the regular employee premium,
if any, required by such plans and programs. In the event that
participation by Franke (or his dependents) in any such plan or program
after the Termination Date is barred pursuant to the terms thereof, or in
the event the Company shall terminate any such plan or program, the
Company shall obtain for Franke (and/or his dependents) comparable
coverage under individual policies.
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(iii) Life Insurance. During the 12-month period following the
Termination Date, the Company, at its cost, shall continue to provide
Franke all life insurance coverages (and in the same amounts) provided to
him by the Company immediately prior to the date on which the relevant
Notice of Termination is given in accordance with this Article IV.
(iv) Travel Privileges. The Company shall provide Franke (and
his wife and dependents) lifetime on-line and interline, positive space
travel privileges in accordance with the terms of the Company's
non-revenue travel policy as in effect on the date hereof; provided,
however, that the travel privileges to be provided to Franke (and his
wife and dependents) under this clause (iv) shall be at least as
favorable to Franke (and his wife and dependents) as the travel
priviledges generally provided by the Company to its senior executives
from time to time.
4.5. Company to Pay Benefits During Pendency of Dispute
Either party may, within 10 days after its receipt of a Notice
of Termination given by the other party, provide notice to the other party that
a dispute exists concerning the termination, in which event such dispute shall
be resolved in accordance with Article VII. Notwithstanding the pendency of any
such dispute and notwithstanding any provision herein to the contrary, the
Company will (i) continue to pay Franke the Base Salary in effect when the
notice giving rise to the dispute was given, (ii) make the New Stock Grant in
accordance with Section 3.2 and (iii) continue Franke as a participant in all
compensation and benefit plans in which Franke was participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved or,
with respect to a Notice of Termination given by Franke, the date of termination
specified in such notice, if earlier, but, in each case, not past the Expiration
Date. If (i) the Company gives a Notice of Termination to Franke, (ii) Franke
disputes the termination as contemplated by this Section 4.5 and (iii) such
dispute is finally resolved in favor of the Company in accordance with Article
VII, then Franke shall be required to refund to the Company any amounts paid to
Franke under this Section 4.5 but only if, and then only to the extent, Franke
is not otherwise entitled to receive such amounts under this Agreement.
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ARTICLE V
Confidential Information and Non-Competition
5.1. Confidential Information
(a) Franke recognizes that the services to be performed by
him hereunder are special, unique and extraordinary and that, by reason of his
employment with the Company, he may acquire Confidential Information (defined
below) concerning the Company, the use or disclosure of which would cause the
Company substantial loss and damages which could not be readily calculated and
for which no remedy at law would be adequate. Accordingly, Franke agrees that he
will not (directly or indirectly) at any time, whether during or after his
employment hereunder, disclose any such Confidential Information to any Person
except (i) in the performance of his obligations to the Company hereunder, (ii)
as required by applicable law, (iii) in connection with the enforcement of his
rights under this Agreement, the 1994 Agreement or any other agreement, (iv) in
connection with any disagreement, dispute or litigation (pending or threatened)
between Franke and the Company or (v) with the prior written consent of the
Board. As used herein, "Confidential Information" includes information with
respect to the Company's services, facilities and methods, research and
development, trade secrets and other intellectual property, systems, patents and
patent applications, procedures, manuals, confidential reports, financial
information, business plans, prospects or opportunities; provided, however, that
such term shall not include any information that (x) is or becomes generally
known or available other than as a result of a disclosure by Franke or (y) is or
becomes known or available to Franke on a nonconfidential basis from a source
(other than the Company) which, to Franke's knowledge, is not prohibited from
disclosing such information to Franke by a legal, contractual, fiduciary or
other obligation to the Company.
(b) Franke confirms that all Confidential Information is
the exclusive property of the Company. All business records, papers and
documents kept or made by Franke while employed by the Company relating to the
business of the Company shall be and remain the property of the Company at all
times. Upon the request of the Company at any time, Franke shall promptly
deliver to the Company, and shall retain no copies of, any written materials,
records and documents made by Franke or coming into his possession while
employed by the Company concerning the business or affairs of the Company other
than personal materials, records and documents (including notes and
correspondence) of Franke not containing proprietary information relating to
such business or affairs. Notwithstanding the foregoing, Franke shall be
permitted to retain copies of, or have access to, all such materials, records
and documents relating to any disagreement, dispute or litigation (pending or
threatened) between Franke and the Company.
5.2. Non-Competition
(a) While employed hereunder and for a period of 18 months
thereafter (the "Restricted Period"), Franke shall not, unless he receives the
prior written consent of the Board, own an interest in, manage, operate, join,
control, lend money or render financial or other assistance to or participate in
or be connected with, as an officer, employee, partner, stockholder, consultant
or otherwise, any Person which competes with the Company in the United States
other than Alaska Airlines, American Airlines, Continental Airlines, Delta
Airlines, Northwest Airlines, TWA, United
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Airlines, USAir and ValueJet; provided, however, that the foregoing restriction
shall not apply at any time if Franke's employment is terminated by Employee for
Good Reason or by the Company for any reason other than Misconduct.
(b) Franke has carefully read and considered the provisions
of this Section 5.2 and, having done so, agrees that the restrictions set forth
in this Section 5.2 (including the Restricted Period, scope of activity to be
restrained and the geographical scope) are fair and reasonable and are
reasonably required for the protection of the interests of the Company, its
officers, directors, employees, creditors and shareholders. Franke understands
that the restrictions contained in this Section 5.2 may limit his ability to
engage in a business similar to the Company's business, but acknowledges that he
will receive sufficiently high remuneration and other benefits from the Company
hereunder to justify such restrictions.
(c) During the Restricted Period, Franke shall not, whether
for his own account or for the account of any other Person (excluding the
Company), intentionally (i) solicit, endeavor to entice or induce any employee
of the Company to terminate his employment with the Company or accept employment
with anyone else or (ii) interfere in a similar manner with the business of the
Company.
(d) In the event that any provision of this Section 5.2
relating to the Restricted Period and/or the areas of restriction shall be
declared by a court of competent jurisdiction to exceed the maximum time period
or areas such court deems reasonable and enforceable, the Restricted Period
and/or areas of restriction deemed reasonable and enforceable by the court shall
become and thereafter be the maximum time period and/or areas.
5.3. Stock Ownership
Nothing in this Agreement shall prohibit Franke from acquiring
or holding any issue of stock or securities of any Person that has any
securities registered under Section 12 of the Exchange Act, listed on a national
securities exchange or quoted on the automated quotation system of the National
Association of Securities Dealers, Inc. so long as (i) Franke is not deemed to
be an "affiliate" of such Person as such term is used in paragraphs (c) and (d)
of Rule 145 under the Securities Act of 1933, as amended, and (ii) Franke and
members of his immediate family do not own or hold more than 5% of any voting
securities of any such Person.
5.4. Injunctive Relief
Franke acknowledges that a breach of any of the covenants
contained in this Article V may result in material irreparable injury to the
Company for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach, any payments remaining under the terms of this Agreement shall
cease and the Company shall be entitled to obtain a temporary restraining order
and/or a preliminary or permanent injunction restraining Franke from engaging in
activities prohibited by this Article V or such other
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relief as may required to specifically enforce any of the covenants contained in
this Article V. Franke agrees to and hereby does submit to in personam
jurisdiction before each and every such court for that purpose.
ARTICLE VI
Piggyback Registration Rights
6.1. Definitions
Capitalized terms used herein and in Exhibit A hereto that are
not otherwise defined herein shall have the meanings ascribed to them in that
certain Registration Rights Agreement dated August 25, 1994 among the Company,
AmWest Partners, L.P., and others therein named ("AmWest Registration Rights
Agreement"), to which agreement reference is made for such definitions and for
all purposes. In addition, the following terms, as used in this Article VI, have
the following meanings:
"Holders" shall mean (i) Franke, his heirs and personal
representatives and (ii) any direct or indirect transferee of Registrable
Securities.
"Registrable Securities" means (1) the 125,000 Shares heretofore
granted to Franke as a bonus for his efforts relating to the successful
reorganization of the Company under the Bankruptcy Code, (2) all equity
securities of the Company acquired by Franke pursuant to the 1994
Agreement and (3) all equity securities of the Company acquired by Franke
pursuant to this Agreement, including, without limitation, (a) the New
Stock Grant, (b) the New Stock Option, (c) any Shares issued on exercise
of the New Stock Option and (d) any securities issued or issuable with
respect to any such securities by way of stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (i) a registration statement with respect to
the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with the plan of distribution set forth in such registration
statement, (ii) such securities shall have been distributed in accordance
with Rule 144, (iii) the Company has caused to be delivered an opinion of
counsel in accordance with Section 6.2(c) that such securities are
distributable in accordance with Rule 144 or (iv) such securities shall
have been otherwise transferred, new certificates therefor not bearing a
legend restricting further transfer shall have been delivered in exchange
therefor by the Company and subsequent disposition of such securities
shall not require registration or qualification under the Securities Act
or any similar state law then in force.
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6.2. Piggybank Registration
(a) Right to Include Registrable Securities. If the Company
at any time proposes to register any of its equity securities under the
Securities Act (other than by a registration (i) on Form S-4 or Form S-8, or any
successor or similar form then in effect or (ii) pursuant to Section 2.1 of the
AmWest Registration Rights Agreement) in a form and in a manner that would
permit registration of the Registrable Securities, whether or not for sale for
its own account, it will give prompt (but in no event less than 30 days prior to
the proposed date of filing the registration statement relating to such
registration) notice to all Holders of Registrable Securities of the Company's
intention to do so and of such Holders' rights under this Section 6.2. Upon the
request of any such Holder made within 20 days after the receipt by such Holder
of any such notice (which request shall specify the Registrable Securities
intended to be disposed of by such Holder and the intended method or methods of
disposition thereof) (the "Piggyback Registration Notice"), the Company will use
Commercially Reasonable Efforts to effect the registration under the Securities
Act of all Registrable Securities which the Company has been so requested to
register by the Holders thereof, to the extent required to permit the
disposition (in accordance with the intended method or methods thereof as
aforesaid) of the Registrable Securities so to be registered, provided that if,
at any time after giving notice of its intention to register any equity
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such equity securities, the Company
may, at its election, give notice of such determination to each such Holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay all Registration Expenses in
connection therewith) and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities
for the same period as the delay in registering such other equity securities.
(b) Priority in Piggyback Registration. If (i) a
registration pursuant to this Section 6.2 involves an underwritten offering of
the securities being registered, whether or not for sale for the account of the
Company, to be distributed (on a firm commitment basis) by or through one or
more underwriters of recognized standing under underwriting terms appropriate
for such a transaction and (ii) the managing underwriter of such underwritten
offering shall inform the Company and the Holders requesting such registration
by letter of its belief that the amount of securities requested to be included
in such registration exceeds the amount which can be sold in (or during the time
of) such offering within a price range acceptable to the Company, then the
Company will include in such registration such amount of securities which the
Company is so advised can be sold in (or during the time of) such offering as
follows: first, all securities proposed by the Company to be sold for its own
account; second, such securities of the Company requested to be included in such
registration pursuant to the terms of the AmWest Registration Rights Agreement
and the GPA Registration Rights Agreement; third, such Registrable Securities
requested to be included in such registration by all Holders pro rata on the
basis of the amount of such securities so proposed to be sold and so requested
to be included by such Holders; and fourth, all other securities of the Company
requested to be included in such registration pro rata on the basis of the
amount of such securities so proposed to be sold and so requested to be
included.
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(c) The Holders shall be entitled to exercise their
registration rights pursuant to this Section 6.2 at any time or times until all
of the Registrable Securities have been sold pursuant to an effective
registration statement under the Securities Act, or until the Company shall have
obtained an opinion of counsel reasonably acceptable to the Company and Holders
that such Registrable Securities may be sold without registration pursuant to
available exemptions under Rule 144 without limitation on amount.
6.3. Registration Procedures
Each registration pursuant to Section 6.2 shall be effected in
accordance with the procedures, and subject to the indemnification and other
provisions, set forth in Exhibit A hereto.
ARTICLE VII
Dispute Resolution
(a) In the event a dispute shall arise between the parties
as to whether the provisions of this Agreement have been complied with (a
"Dispute"), the parties agree to resolve such Dispute in accordance with the
following procedure:
(1) A meeting shall be held promptly between the parties,
attended by (in the case of the Company) by one or more individuals with
decision-making authority regarding the Dispute, to attempt in good faith
to negotiate a resolution of the Dispute.
(2) If, within 10 days after such meeting, the parties have
not succeeded in negotiating a resolution of the Dispute, the parties
agree to submit the Dispute to mediation in accordance with the
Commercial Mediation Rules of the American Arbitration Association.
(3) The parties will jointly appoint a mutually acceptable
mediator, seeking assistance in such regard from the American Arbitration
Association if they have been unable to agree upon such appointment
within 10 days following the 10-day period referred to in clause (2)
above.
(4) Upon appointment of the mediator, the parties agree to
participate in good faith in the mediation and negotiations relating
thereto for 15 days.
(5) If the parties are not successful in resolving the
Dispute through mediation within such 15-day period, the parties agree
that the Dispute shall be settled by arbitration in accordance with the
Expedited Procedures of the Commercial Arbitration Rules of the American
Arbitration Association.
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(6) The fees and expenses of the mediator/arbitrators shall
be borne solely by the non-prevailing party or, in the event there is no
clear prevailing party, as the mediator/arbitrators deem appropriate.
(7) If any dispute shall arise under this Agreement
involving termination of Franke's employment with the Company or
involving the failure or refusal of the Company to fully perform in
accordance with the terms hereof, the Company shall reimburse Franke, on
a current basis, for all legal fees and expenses, if any, incurred by
Franke in connection with such dispute, together with interest thereon at
the rate of 8% per annum, such interest to accrue from the date the
Company receives Franke's statement for such fees and expenses through
the date of payment thereof; provided, however, that in the event the
resolution of such dispute in accordance with this Article VII includes a
finding denying, in all material respects, Franke's claims in such
dispute, Franke shall be required to reimburse the Company, over a period
not to exceed 12 months from the date of such resolution, for all sums
advanced to Franke with respect to such dispute pursuant to this
paragraph (7).
(8) Except as provided above, each party shall pay its own
costs and expenses (including, without limitation, attorneys' fees)
relating to any mediation/arbitration proceeding conducted under this
Article VII.
(9) All mediation/arbitration conferences and hearings will
be held in Phoenix, Arizona.
(b) In the event there is any disputed question of law
involved in any arbitration proceeding, such as the proper legal interpretation
of any provision of this Agreement, the arbitrators shall make separate and
distinct findings of all facts material to the disputed question of law to be
decided and, on the basis of the facts so found, express their conclusion of the
question of law. The facts so found shall be conclusive and binding on the
parties, but any legal conclusion reached by the arbitrators from such facts may
be submitted by either party to a court of law for final determination by
initiation of a civil action in the manner provided by law. Such action, to be
valid, must be commenced within 20 days after receipt of the arbitrators'
decision. If no such civil action is commenced within such 20-day period, the
legal conclusion reached by the arbitrators shall be conclusive and binding on
the parties. Any such civil action shall be submitted, heard and determined
solely on the basis of the facts found by the arbitrators. Neither of the
parties shall, or shall be entitled to, submit any additional or different facts
for consideration by the court. In the event any civil action is commenced under
this paragraph (b), the party who prevails or substantially prevails (as
determined by the court) in such civil action shall be entitled to recover from
the other party all costs, expenses and reasonable attorneys' fees incurred in
connection with such action and on appeal.
(c) Except as limited by paragraph (b) above, the parties
agree that judgment upon the award rendered by the arbitrators may be entered in
any court of competent jurisdiction. In the event legal proceedings are
commenced to enforce the rights awarded in an arbitration proceeding,
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the party who prevails or substantially prevails in such legal proceeding shall
be entitled to recover from the other party all costs, expenses and reasonable
attorneys' fees incurred in connection with such legal proceeding and on appeal.
(d) Except as provided above, (i) no legal action may be
brought by either party with respect to any Dispute and (ii) all Disputes shall
be determined only in accordance with the procedures set forth above.
ARTICLE VIII
Antidilution Provisions and Reservation of Shares
8.1. Antidilution
(a) In the event of any change after the date hereof in the
number of issued shares of common stock (or any class thereof) of the Company by
reason of any stock dividend, split-up, recapitalization, merger, combination,
conversion, exchange of shares or other change in the corporate or capital
structure of the Company, then there shall be appropriate and equitable
adjustments made (with adjustments being cumulative if more than one of such
events shall have occurred) in the number and kind of shares of stock or other
securities of the Company (i) thereafter issued to Franke pursuant to Section
3.2(a) and (ii) thereafter issued upon exercise of the New Stock Option.
Whenever an adjustment is made as required or permitted by the provisions of
this paragraph (a), the Company shall promptly deliver to Franke written notice
thereof setting forth a brief statement of the facts requiring such adjustment
and the computation thereof.
(b) In case of any liquidation, dissolution or winding up
of the affairs of the Company, the Company shall make prompt, proportionate,
equitable, lawful and adequate provision as part of the terms of such
dissolution, liquidation or winding up such that Franke may thereafter receive,
in lieu of each Share which Franke would have been entitled to receive under
Section 3.2(a) or upon exercise of the New Stock Option, the same kind and
amount of any stock, securities or assets as may be issuable, distributable or
payable on any such dissolution, liquidation or winding up with respect to each
outstanding Share.
8.2. Covenant to Reserve Shares for Issuance
The Company covenants that it will at all times reserve and keep
available (free of preemptive rights) out of its authorized and unissued Shares,
solely for the purpose of issuance pursuant to Section 3.2 or upon exercise of
the New Stock Option, the full number of Shares, if any, then issuable under
Section 3.2 or upon exercise of the New Stock Option. The Company further
covenants that all Shares which shall be so issuable shall be duly and validly
issued and fully paid and non-assessable.
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ARTICLE IX
Miscellaneous
9.1. No Mitigation
The provisions of this Agreement are not intended to, nor shall
they be construed to, require that Franke mitigate the amount of any payment
provided for in this Agreement by seeking or accepting other employment, nor
shall the amount of any payment provided for in this Agreement be reduced by any
compensation earned by Franke as the result of employment by another employer or
otherwise. Without limitation of the foregoing, the Company's obligations to
make the payments to Franke required under this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set off,
counterclaim, recoupment, defense or other claim, right or action that the
Company may have against Franke.
9.2. Assignability
The obligations of Franke hereunder are personal and may not be
assigned or delegated by Franke or transferred in any manner whatsoever, nor are
such obligations subject to involuntary alienation, assignment or transfer. The
Company shall have the right to assign this Agreement and to delegate all
rights, duties and obligations hereunder as provided in Section 9.5.
9.3. Notices
All notices and all other communications provided for in the
Agreement shall be in writing and addressed (i) if to the Company, at its
principal office address or such other address as it may have designated by
written notice to Franke for purposes hereof, directed to the attention of the
Board with a copy to the Secretary of the Company and (ii) if to Franke, at his
residence address on the records of the Company or to such other address as he
may have designated to the Company in writing for purposes hereof. Each such
notice or other communication shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested,
postage prepaid, except that any notice of change of address shall be effective
only upon receipt.
9.4. Severability
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
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9.5. Successors; Binding Agreement
(a) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance reasonably acceptable to Franke, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement. As
used herein, the term "Company" shall include any successor to its business
and/or assets as aforesaid which executes and delivers the Agreement provided
for in this Section 9.5 or which otherwise becomes bound by all terms and
provisions of this Agreement by operation of law.
(b) This Agreement and all rights of Franke hereunder shall
inure to the benefit of and be enforceable by Franke's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Franke should die while any amounts would be payable
to him hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Franke's devisee, legatee, or other designee or, if there be no such designee,
to Franke's estate.
9.6. Tax Withholdings
The Company shall withhold from all payments hereunder all
applicable taxes (federal, state or other) which it is required to withhold
therefrom unless Franke has otherwise paid to the Company the amount of such
taxes.
9.7. Amendments and Waivers
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by Franke and such member of the Board as may be specifically
authorized by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or in compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
9.8. Entire Agreement; Termination of Employment under 1994 Agreement
(a) The parties acknowledge, confirm and agree that
Franke's employment under the 1994 Agreement shall automatically terminate on
December 31, 1995 and shall not be subject to extension as contemplated by
Section 2.3 of the 1994 Agreement.
(b) This Agreement is an integration of the parties
agreement and no agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
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9.9. Governing Law
THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ARIZONA WITHOUT
REGARD TO ITS CONFLICT OF LAWS PROVISION.
9.10. Counterparts
This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
9.11. Payment of Certain Taxes
The Company will from time to time promptly pay all transfer,
stamp or similar taxes that may be imposed in respect of the initial issuance of
any Shares hereunder, but the Company shall not be obligated to pay any such
taxes in respect of any transfer of Shares effected by Franke.
9.12. Indemnification
Without Franke's prior written consent, the Company will not
amend, modify or repeal any provision of its certificate of incorporation or
bylaws if such amendment, modification or repeal would materially adversely
affect Franke's rights to indemnification by the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
AMERICA WEST AIRLINES, INC.
By:
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Chairman of Compensation/Human
Resources Committee
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William A. Franke
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