<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- -------- SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- -------- SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
------ ------
COMMISSION FILE NUMBER 1-10140
AMERICA WEST AIRLINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 86-0418245
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
4000 EAST SKY HARBOR BLVD, PHOENIX, ARIZONA 85034
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (602) 693-0800
N/A
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES XX NO
---- ----
INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND
REPORTS REQUIRED TO BE FILED BY SECTION 12, 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN
CONFIRMED BY A COURT.
YES XX NO
---- ----
THE COMPANY HAS 1,000 SHARES OF CLASS B COMMON STOCK OUTSTANDING AS OF
JULY 31, 1998.
THE REGISTRANT, A WHOLLY OWNED SUBSIDIARY OF AMERICA WEST HOLDINGS CORPORATION,
MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1) (A) AND (B) OF FORM
10-Q AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT PURSUANT
TO GENERAL INSTRUCTION H (2).
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICA WEST AIRLINES, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1998 1997
- ------ ---- ----
<S> <C> <C>
(Unaudited)
Current assets:
Cash and cash equivalents ................................................................. $ 165,079 $ 171,638
Short-term investments .................................................................... 64,423 --
Accounts receivable, net .................................................................. 96,562 88,138
Advances to parent company and affiliate, net.............................................. 48,001 --
Expendable spare parts and supplies, net .................................................. 27,141 27,135
Prepaid expenses .......................................................................... 34,537 36,917
---------- ----------
Total current assets .................................................................. 435,743 323,828
---------- ----------
Property and equipment:
Flight equipment .......................................................................... 839,851 783,384
Other property and equipment .............................................................. 140,482 143,172
Equipment purchase deposits ............................................................... 48,936 45,246
---------- ----------
1,029,269 971,802
Less accumulated depreciation and amortization ............................................ 337,933 276,430
---------- ----------
Net property and equipment ............................................................ 691,336 695,372
---------- ----------
Other assets:
Restricted cash ........................................................................... 29,931 57,158
Reorganization value in excess of amounts allocable to
identifiable assets, net .............................................................. 321,645 363,268
Deferred income taxes ..................................................................... 74,700 74,700
Other assets, net ......................................................................... 33,963 33,005
Long-term note receivable from affiliate .................................................. 16,150 --
Investment in affiliate.................................................................... 16,150 --
---------- ----------
Total other assets .................................................................... 492,539 528,131
---------- ----------
$1,619,618 $1,547,331
========== ==========
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE> 3
AMERICA WEST AIRLINES, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
---- ----
<S> <C> <C>
(Unaudited)
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt ............... $ 46,924 $ 54,000
Accounts payable ................................... 104,848 140,908
Air traffic liability .............................. 211,870 173,149
Accrued compensation and vacation benefits ......... 41,150 37,277
Accrued taxes ...................................... 82,748 36,376
Other accrued liabilities .......................... 64,921 43,574
---------- ----------
Total current liabilities ...................... 552,461 485,284
---------- ----------
Long-term debt, less current maturities ................ 227,438 272,760
Deferred credits and other liabilities ................. 98,405 104,519
Commitments and contingencies
Stockholder's equity:
Common Stock $.01 par value. Authorized, issued and
outstanding; 1,000 shares ...................... -- --
Additional paid-in capital ......................... 533,650 539,301
Retained earnings .................................. 207,664 145,467
---------- ----------
Total stockholder's equity ..................... 741,314 684,768
---------- ----------
$1,619,618 $1,547,331
========== ==========
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE> 4
AMERICA WEST AIRLINES, INC.
CONDENSED STATEMENTS OF INCOME
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenues:
Passenger ................................... $ 491,042 $ 450,753 $ 934,834 $ 886,293
Cargo ....................................... 11,887 12,054 24,492 24,810
Other ....................................... 16,560 14,949 31,116 28,840
--------- --------- --------- ---------
Total operating revenues ................ 519,489 477,756 990,442 939,943
--------- --------- --------- ---------
Operating expenses:
Salaries and related costs .................. 112,262 102,326 217,846 203,343
Aircraft rents .............................. 60,195 55,089 118,940 110,021
Other rents and landing fees ................ 28,794 28,862 58,252 59,678
Aircraft fuel ............................... 47,798 57,608 98,082 126,724
Agency commissions .......................... 34,900 40,452 66,517 78,764
Aircraft maintenance materials and repairs .. 44,041 37,669 86,469 68,981
Depreciation and amortization ............... 12,765 12,348 25,063 24,425
Amortization of excess reorganization value . 4,974 6,256 9,948 12,511
Other ....................................... 99,968 86,563 187,710 171,450
--------- --------- --------- ---------
Total operating expenses ................ 445,697 427,173 868,827 855,897
--------- --------- --------- ---------
Operating income ................................ 73,792 50,583 121,615 84,046
--------- --------- --------- ---------
Nonoperating income (expenses):
Interest income ............................. 6,041 4,390 11,086 8,630
Interest expense, net ....................... (8,263) (12,059) (17,935) (24,140)
Other, net .................................. - (168) (264) 128
--------- --------- --------- ---------
Total nonoperating expenses, net ........ (2,222) (7,837) (7,113) (15,382)
--------- --------- --------- ---------
Income before income taxes ...................... 71,570 42,746 114,502 68,664
--------- --------- --------- ---------
Income taxes .................................... 31,381 19,749 49,921 31,723
--------- --------- --------- ---------
Net income ...................................... $ 40,189 $ 22,997 $ 64,581 $ 36,941
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE> 5
AMERICA WEST AIRLINES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1998 1997
---- ----
<S> <C> <C>
Net cash provided by operating activities .............. $ 187,220 $ 88,846
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment ................ (67,215) (76,459)
Sales (purchases) of short-term investments ........ (64,423) 38,075
Equipment purchase deposits and other .............. (10,456) (6,345)
--------- ---------
Net cash used in investing activities .......... (142,094) (44,729)
--------- ---------
Cash flows from financing activities:
Repayment of debt .................................. (45,634) (21,624)
Repurchase of warrants ............................. (5,651) (13,342)
Other .............................................. (400) --
--------- ---------
Net cash used in financing activities ........... (51,685) (34,966)
--------- ---------
Net increase (decrease) in cash and cash equivalents ... (6,559) 9,151
--------- ---------
Cash and cash equivalents at beginning of period ....... 171,638 137,499
--------- ---------
Cash and cash equivalents at end of period ............. $ 165,079 $ 146,650
========= =========
Cash, cash equivalents and short-term investments at
end of period ...................................... $ 229,502 $ 147,706
========= =========
Cash paid for:
Interest, net of amounts capitalized ............... $ 11,898 $ 15,978
========= =========
Income taxes ....................................... $ 4,211 $ 132
========= =========
Non-cash financing activities:
Notes payable issued for equipment purchase deposits $ 3,500 $ 16,553
========= =========
Notes payable canceled under the aircraft
purchase agreement ............................. $ (10,309) $ --
========= =========
</TABLE>
See accompanying notes to condensed financial statements.
5
<PAGE> 6
AMERICA WEST AIRLINES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1998
1. BASIS OF PRESENTATION
The unaudited condensed financial statements included herein have been
prepared by America West Airlines, Inc., ("AWA" or the "Company"), a
wholly-owned subsidiary of America West Holdings Corporation ("Holdings"),
pursuant to the rules and regulations of the Securities and Exchange Commission
and do not include all information and footnotes required by generally accepted
accounting principles. In the opinion of management, the condensed financial
statements reflect all adjustments, which are of a normal recurring nature,
necessary for a fair presentation. Certain prior year amounts have been
reclassified to conform with current year presentation. The accompanying
condensed financial statements should be read in conjunction with the financial
statements and related notes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997.
2. FLIGHT EQUIPMENT
AIRCRAFT PURCHASE AGREEMENT AMENDMENT In April 1998, AWA and AVSA
executed Amendment No. 1 to the aircraft purchase agreement which provided for
the reduction of the firm order of Airbus aircraft from 34 to 29. The aggregate
net cost of firm commitments remaining is approximately 1.0 billion based on a
3.5 percent annual price escalation.
ENGINE HUSH KITS In May 1998, AWA entered into an agreement to
purchase 14 737 hush kits at an aggregate net cost of approximately $14
million to comply with Federal Aviation Administration's ("FAA") Stage III noise
reduction requirements. Delivery of the hush kits began in May 1998 and will
continue through the first quarter of 1999. As of June 30, 1998, one aircraft
has been outfitted with a hush kit.
ENGINE MAINTENANCE AGREEMENT In April 1998, AWA entered into a
long-term maintenance agreement to have certain aircraft engines maintained on a
flight hour basis.
3. BOND FINANCING
In April 1998 AWA completed the refunding of its $29.3 million variable
rate industrial development revenue bonds due 2016 ("old bonds") by issuing
$29.3 million of 6.3 percent fixed rate industrial development revenue bonds due
April 2023 ("new bonds"). Interest on the new bonds is payable semiannually
(April 1 and October 1) and commences on October 1, 1998. The new bonds are
subject to optional redemption prior to the maturity date on or after April 1,
2008, in whole or in part, on any interest payment date at the following
redemption prices: 102 percent on April 1 or October 1, 2008; 101 percent on
April 1 or October 1, 2009; and 100 percent on April 1, 2010 and thereafter. As
a result of the refinancing, $29.9 million of cash, which secured the
irrevocable direct pay letter of credit that backed the old bonds, was released
and available for general corporate purposes.
6
<PAGE> 7
AMERICA WEST AIRLINES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1998
4. PASSENGER COMMISSIONS
Effective May 1, 1998, AWA revised its eight percent travel agent
commission program to limit commissions paid to a maximum $50 payment per round
trip and a maximum $25 payment per one way itinerary on all tickets issued in
the United States and Canada. AWA also announced a new Internet commission
policy which offers to all online vendors selling AWA travel a five percent
commission with a maximum $10 payment.
5. ADVANCES TO PARENT COMPANY AND AFFILIATE
As of June 30, 1998, AWA has advanced to Holdings $56.3 million. In
addition, AWA has net obligations of $8.3 million due to The Leisure Company
("Leisure Co."), a wholly owned subsidiary of Holdings. All amounts bear
interest at market rates.
6. SUBSEQUENT EVENTS
MESA CODE SHARE AGREEMENT In July 1998, AWA entered into a
codesharing agreement with Mesa Airlines ("Mesa") whereby Mesa serves as a
feeder carrier for AWA to provide America West Express regional airline service
from AWA's Phoenix hub using Canadair regional jets, deHavilland turboprops, and
Hawker-Beech 1900 aircraft. The agreement contemplates adding regional
operations in the airline's hubs in Las Vegas and Columbus. The codesharing
agreement with Mesa provides for convenient flight schedules, passenger handling
and computer reservations under AWA flight designator code. The Mesa agreement
will be in effect through August 2004.
FAA SETTLEMENT On July 15, 1998, AWA and the FAA entered into an
agreement to settle disputes over alleged maintenance violations. Under the
agreement, AWA did not admit any wrongdoing, will implement certain changes in
maintenance oversight and will pay a civil penalty of $2.5 million. An
additional civil penalty of $2.5 million will be forgiven upon implementation of
the terms of the agreement. AWA's response to the FAA initiatives as well as
protracted labor negotiations resulted in a deterioration in AWA's on time
performance and schedule completion in late June and in July 1998.
AIRCRAFT LEASES In July 1998, AWA entered into aircraft lease
arrangements for two B737-300 aircraft with lease terms of five and six years,
respectively.
7
<PAGE> 8
AMERICA WEST AIRLINES, INC.
JUNE 30, 1998
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
In January 1998, Leisure Co. began operations as a new travel
subsidiary of Holdings to develop and grow the vacation package tour business of
the former America West Vacation division. With the commencement of Leisure Co.
operations, management believes that an improved understanding of AWA's results
can be gained by comparing the three and six months ended June 30, 1998 to pro
forma results for the same periods in 1997, which assumes Leisure Co. had
commenced operations as a subsidiary of Holdings on January 1, 1997. The
unaudited pro forma statements of income presented herein have been prepared
based upon certain pro forma adjustments to AWA's historical statements of
income for the three and six months ended June 30, 1997. The 1997 pro forma
results are for information purposes only and are not necessarily indicative of
what actually would have been achieved if Leisure Co. had functioned as a
separate entity during such period. In addition, the pro forma information is
not intended to be a projection of results that will be obtained in the future.
America West Airlines, Inc.
Statements of Income
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
Pro Forma Pro Forma
<S> <C> <C> <C> <C>
Operating revenues:
Passenger ................................ $ 491,042 $ 450,753 $ 934,834 $ 886,293
Cargo .................................... 11,887 12,054 24,492 24,810
Other .................................... 16,560 14,949 31,116 28,840
--------- --------- --------- ---------
Total operating revenues .............. 519,489 477,756 990,442 939,943
--------- --------- --------- ---------
Operating expenses:
Salaries and related costs ............... 112,262 100,554 217,846 199,616
Aircraft rental .......................... 60,195 55,089 118,940 110,021
Rentals and landing fees ................. 28,794 28,862 58,252 59,678
Aircraft fuel ............................ 47,798 57,608 98,082 126,724
Agency commissions ....................... 34,900 38,529 66,517 75,123
Aircraft maintenance materials and repairs 44,041 37,669 86,469 68,981
Depreciation and amortization ............ 12,765 12,258 25,063 24,230
Reorganization value amortization ........ 4,974 5,923 9,948 11,845
Other .................................... 99,968 94,064 187,710 186,006
--------- --------- --------- ---------
Total operating expenses .............. 445,697 430,556 868,827 862,224
--------- --------- --------- ---------
Operating income ............................. 73,792 47,200 121,615 77,719
--------- --------- --------- ---------
Nonoperating income (expenses):
Interest income .......................... 6,041 4,390 11,086 8,630
Interest expense ......................... (8,263) (12,059) (17,935) (24,140)
Other, net ............................... -- (168) (264) 128
--------- --------- --------- ---------
Total nonoperating expenses, net ...... (2,222) (7,837) (7,113) (15,382)
--------- --------- --------- ---------
Income before income taxes ................... $ 71,570 $ 39,363 $ 114,502 $ 62,337
========= ========= ========= =========
</TABLE>
8
<PAGE> 9
AMERICA WEST AIRLINES, INC.
JUNE 30, 1998
The table below sets forth selected operating data for AWA.
<TABLE>
<CAPTION>
Three Months Ended Percent Six Months Ended Percent
June 30, Change June 30 Change
1998 1997 1998-1997 1998 1997 1998-1997
---- ---- --------- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Aircraft (end of period)....................... 104 100 4.0 104 100 4.0
Average daily aircraft utilization (hours)..... 12.2 12.4 (1.6) 12.3 12.4 (0.8)
Available seat miles (in millions)............. 6,082 5,848 4.0 11,928 11,638 2.5
Block hours.................................... 115,050 113,089 1.7 228,252 225,812 1.1
Average stage length (miles)................... 819 770 6.4 811 769 5.5
Average passenger journey (miles).............. 1,227 1,145 7.2 1,170 1,117 4.7
Revenue passenger miles (in millions).......... 4,287 4,144 3.4 7,923 8,126 (2.5)
Load factor (percent).......................... 70.5 70.9 (0.4) pts 66.4 69.8 (3.4) pts
Passenger enplanements (in thousands).......... 4,643 4,674 (0.7) 8,792 9,264 (5.1)
Yield per revenue passenger mile (cents)....... 11.46 10.88 5.3 11.80 10.91 8.2
Revenue per available seat mile:
Passenger (cents)........................... 8.07 7.71 4.7 7.84 7.62 2.9
Total (cents)............................... 8.54 8.17 4.5 8.30 8.08 2.7
Fuel consumption (gallons in millions)......... 97.1 93.4 4.0 190.2 185.5 2.5
Fuel price (cents per gallon).................. 49.23 61.70 (20.2) 51.56 68.32 (24.5)
Average number of full-time equivalent
employees................................... 9,667 9,651 0.2 9,567 9,571 -
</TABLE>
The table below sets forth the major components of operating cost per
available seat mile ("CASM") for AWA. CASM for 1997 is based on the 1997 pro
forma numbers for AWA.
<TABLE>
<CAPTION>
Three Months Ended Percent Six Months Ended Percent
June 30, Change June 30 Change
1998 1997 1998-1997 1998 1997 1998-1997
---- ---- --------- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
(in cents) Pro Forma Pro Forma
Salaries and related costs..................... 1.85 1.72 7.6 1.83 1.71 7.0
Aircraft rents................................. .99 .94 5.3 1.00 .95 5.3
Other rents and landing fees................... .47 .49 (4.1) .49 .51 (3.9)
Aircraft fuel.................................. .79 .99 (20.2) .82 1.09 (24.8)
Agency commissions............................. .57 .66 (13.6) .56 .65 (13.8)
Aircraft maintenance materials and repairs..... .72 .64 12.5 .72 .59 22.0
Depreciation and amortization.................. .21 .21 - .21 .21 -
Amortization of excess reorganization value.... .08 .10 (20.0) .08 .10 (20.0)
Other.......................................... 1.65 1.61 2.5 1.57 1.60 (1.9)
---- ---- ---- ----
7.33 7.36 (0.4) 7.28 7.41 (1.8)
==== ==== ==== ====
</TABLE>
9
<PAGE> 10
AMERICA WEST AIRLINES, INC.
JUNE 30, 1998
Three Months Ended June 30, 1998 and 1997
For the three months ended June 30, 1998 and 1997, AWA realized
operating income of $73.8 million and $47.2 million, respectively. Income before
income taxes for the three month period in 1998 was $71.6 million compared to
$39.4 million in 1997.
Total operating revenues for the 1998 second quarter were $519.5
million. Passenger revenues were $491.0 million for the three months ended June
30, 1998, an increase of $40.3 million or 8.9 percent from 1997. Passenger
revenue per available seat mile ("RASM") for the quarter increased 4.7 percent
to 8.07 cents from 7.71 cents driven by a 5.3 percent increase in passenger
yield. The increase in RASM and yield reflects the continued benefits of AWA's
improved product and revenue management capabilities. The increases occurred
despite a 6.4 percent increase in aircraft stage length due to increased flying
to long-haul business markets. Capacity, as measured by available seat miles
("ASMs"), increased 4.0 percent in the 1998 second quarter as compared to 1997
while load factor decreased by .4 points to 70.5 percent. Cargo and other
revenues increased 5.3 percent to $28.4 million for the second quarter of 1998.
CASM decreased .4 percent to 7.33 cents in the second quarter of 1998
from 7.36 cents for the comparable 1997 period, primarily due to lower fuel
prices. Significant changes in the components of operating expense per ASM are
explained as follows:
- Salaries and related costs per ASM increased 7.6 percent
primarily due to increases in the accrual for AWArd Pay ($5.1
million) resulting from higher operating income in 1998 and
employee benefit related costs. AWArd Pay is the program by
which AWA awards performance bonuses to eligible
non-executive, non-union employees provided certain annually
established operating income and performance targets are
attained. In addition, a salary level increase in the pilot
contract that was effective May 1997 and increased training
drove pilot salaries per ASM higher in the 1998 quarter over
the comparable 1997 period.
- Aircraft rent expense per ASM increased 5.3 percent due to the
net addition of four leased aircraft to the fleet during the
1998 quarter as compared to 1997.
- Other rents and landing fees expense per ASM decreased 4.1
percent in the second quarter of 1998 as landings decreased by
2.9 percent.
- Aircraft fuel expense per ASM decreased 20.2 percent due to a
20.2 percent decrease in the average price per gallon of fuel
to 49.23 cents in the 1998 quarter from 61.70 cents in 1997.
- Agency commissions expense per ASM decreased 13.6 percent as
cost reductions associated with the change in agency
commission rate from 10 percent to eight percent in October
1997 and the $50 commission cap implemented on May 1, 1998
more than offset the effects of higher passenger revenues in
the 1998 quarter.
- Aircraft maintenance materials and repairs expense per ASM
increased 12.5 percent primarily due to a $5.0 million
increase in capitalized maintenance amortization expense for
the second quarter of 1998 when compared to the 1997 second
quarter.
- Amortization of excess reorganization value expense per ASM
decreased 20.0 percent as a result of the reduction in the
unamortized balance of excess reorganization value due to the
utilization of tax attributes of the pre-reorganized Company.
10
<PAGE> 11
AMERICA WEST AIRLINES, INC.
JUNE 30, 1998
- Other operating expenses per ASM increased 2.5 percent to 1.65
cents from 1.61 cents primarily due to the effect in the 1998
quarter of the FAA settlement (see Note 6. "Subsequent Events
- FAA Settlement" in Notes to Condensed Financial Statements)
and Year 2000 costs and higher interrupted trip expense and
crew accommodation costs. These increases were offset in part
by reduced advertising costs.
Net nonoperating expenses decreased $5.6 million to $2.2 million in the
three months ended June 30, 1998 from $7.8 million in 1997. Excluding $2.1
million of interest income and $2.0 million of interest expense associated with
inter-company notes, the year-over-year change was primarily due to a net
decrease in interest expense as AWA's average outstanding debt was $94.7 million
lower in the second quarter of 1998 as compared to 1997.
Six Months Ended June 30, 1998 and 1997
For the six months ended June 30, 1998 and 1997, AWA realized operating
income of $121.6 million and $77.7 million, respectively. Income before income
taxes for the six month period in 1998 was $114.5 million compared to $62.3
million in 1997.
Total operating revenues for the six months ended June 30, 1998 were
$990.4 million. Passenger revenues were $934.8 million for the six months ended
June 30, 1998, an increase of $48.5 million or 5.5 percent from 1997. RASM for
the six months ended June 30, 1998 increased 2.9 percent to 7.84 cents from 7.62
cents driven by an 8.2 percent increase in passenger yield. The increase in RASM
and yield occurred despite a 5.5 percent increase in aircraft stage length due
to increased flying to long-haul business markets and the lapse of a federal
transportation excise tax for the period January 1 to March 6, 1997. Capacity,
as measured by ASMs, increased 2.5 percent in the six months ended June 30, 1998
as compared to 1997 while load factor decreased by 3.4 points to 66.4 percent.
Cargo and other revenues increased 3.6 percent to $55.6 million for the six
months ended June 30, 1998.
CASM decreased 1.8 percent to 7.28 cents in the six months ended June
30, 1998 from 7.41 cents for the comparable 1997 period, primarily due to lower
fuel prices. Significant changes in the components of operating expense per ASM
are explained as follows:
- Salaries and related costs per ASM increased 7.0 percent
primarily due to increases in the accrual for AWArd Pay ($6.3
million) resulting from higher operating income in 1998. In
addition, a salary level increase in the pilot contract that
was effective May 1997 and higher headcount increased pilot
salaries in the six month period ended June 30, 1998 compared
to 1997.
- Aircraft rent expense per ASM increased 5.3 percent due
primarily to the net addition of four leased aircraft to the
fleet during the six months ended June 30, 1998 as compared to
1997.
- Other rents and landing fees expense per ASM decreased 3.9
percent in the six months ended June 30, 1998 as landings
decreased by 3.4 percent. An increase in airport rents of $1.8
million was offset by lower equipment rentals as fewer spare
parts were on loan from other airlines.
- Aircraft fuel expense per ASM decreased 24.8 percent due to a
24.5 percent decrease in the average price per gallon of fuel
to 51.56 cents in the 1998 period from 68.32 cents in 1997.
11
<PAGE> 12
AMERICA WEST AIRLINES, INC.
JUNE 30, 1998
- Agency commissions expense per ASM decreased 13.8 percent as
the cost reduction associated with the change in agency
commission rate from 10 percent to eight percent in October
1997 more than offset the effects of higher passenger revenues
in the six month period ended June 30, 1998. A $50 commission
cap implemented on May 1, 1998 also contributed to the
decrease.
- Aircraft maintenance materials and repairs expense per ASM
increased 22.0 percent primarily due to a $9.5 million
increase in capitalized maintenance amortization expense for
the six months ended June 30, 1998 when compared to the
comparable period in 1997 and higher airframe maintenance and
component repair costs.
- Amortization of excess reorganization value expense per ASM
decreased 20.0 percent as a result of the reduction in the
unamortized balance of excess reorganization value due to the
utilization of tax attributes of the pre-reorganized Company.
- Other operating expenses per ASM decreased 1.9 percent to 1.57
cents from 1.60 cents primarily due to reduced advertising
costs and traffic liability insurance rates which were offset
in part by the effect in 1998 of the FAA settlement and Year
2000 costs, and higher crew accommodation expenses.
Net nonoperating expenses decreased $8.3 million to $7.1 million in the
six months ended June 30, 1998 from $15.4 million in 1997. Excluding $4.2
million of interest income and $3.9 million of interest expense associated with
inter-company notes, the year-over-year change was primarily due to a net
decrease in interest expense as AWA's outstanding debt was $97.1 million lower
in the 1998 period as compared to 1997.
LIQUIDITY AND CAPITAL RESOURCES
Unrestricted cash and cash equivalents and short-term investments
increased to $229.5 million at June 30, 1998 from $171.6 million at December 31,
1997. Net cash provided by operating activities increased to $187.2 million for
the six months ended June 30, 1998 from $88.8 million in 1997 due principally to
the period-over-period change in air traffic liability, which grew 22.4 percent
in the 1998 period as compared to a decrease of 13.7 percent in the 1997 period
and higher net income in 1998. Net cash used in investing activities increased
to $142.1 million for the six months ended June 30, 1998 period from $44.7
million for the 1997 period. This increase was primarily due to the purchase of
short-term investments totaling $64.4 million and the payment of $10.5 million
in equipment purchase deposits for aircraft. Net cash used in financing
activities was $51.7 million for the six months ended June 30, 1998 compared to
$35.0 million in the 1997 period primarily due to the repayment of $30 million
of revolving credit facility debt and the repurchase of AWA warrants.
Operating with a working capital deficiency is common in the airline
industry as tickets sold for transportation which have not yet been provided are
classified as a current liability while the related income producing assets, the
aircraft, are classified as non-current. AWA's working capital deficiency at
June 30, 1998 was $116.7 million, a decrease of 27.7 percent from December 31,
1997.
In April 1998, AWA completed the refunding of its $29.3 million
variable rate industrial development revenue bonds due 2016 ("old bonds") by
issuing $29.3 million of 6.3 percent fixed rate industrial development revenue
bonds due April 2023 ("new bonds"). Interest on the new bonds is payable
semiannually (April 1 and October 1) and commences on October 1, 1998. The new
bonds are subject to optional redemption prior to the maturity date on or after
April 1, 2008, in whole or in part, on any interest payment date at the
following redemption prices: 102 percent on April 1 or October 1, 2008; 101
percent on April 1 or October 1, 2009; and
12
<PAGE> 13
AMERICA WEST AIRLINES, INC.
JUNE 30, 1998
100 percent on April 1, 2010 and thereafter. As a result of the refinancing,
$29.9 million of cash, which secured the irrevocable direct pay letter of credit
that backed the old bonds, was released and became available for general
corporate purposes.
At June 30, 1998, AWA had firm commitments to AVSA, to purchase a total
of 29 Airbus aircraft, with three to be delivered in the fourth quarter of 1998.
AWA also has an option to purchase 52 more Airbus aircraft of which 12 are
subject to reconfirmation by AWA. The aggregate net cost of firm commitments
remaining under the aircraft order is approximately $1.0 billion based on a 3.5
percent annual price escalation. AWA has arranged for financing from AVSA for
more than two-thirds of such commitment. AWA intends to seek additional
financing (which may include public debt financing or private financing) in the
future when and as appropriate. There can be no assurance that sufficient
funding will be obtained for all aircraft. A default by AWA under the AVSA
purchase commitment could have a material adverse effect on the Company.
As of June 30, 1998, AWA's fleet consisted of 104 aircraft of which 17
aircraft meet the FAA's Stage II (but not Stage III) noise reduction
requirements and must be retired or significantly modified prior to the year
2000. In May 1998, AWA entered into an agreement to purchase 14 737 hush kits at
an aggregate net cost of approximately $14 million to comply with Stage III
requirements. Delivery of the hush kits began in May 1998 and will continue
through the first quarter of 1999. As of June 30, 1998, one aircraft had been
outfitted with a hush kit. The remaining four non-compliant aircraft will be
retired.
Capital expenditures for the six months ended June 30, 1998 and 1997
were approximately $67.2 million and $76.5 million, respectively. Included in
these amounts are capital expenditures for capitalized maintenance of
approximately $55.3 million for the six months ended June 30, 1998 and $47.3
million for the six months ended June 30, 1997.
Certain of AWA's long-term debt agreements contain minimum cash balance
requirements, leverage ratios, coverage ratios and other financial covenants
with which AWA was in compliance at June 30, 1998.
OTHER INFORMATION
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are
coded to accept two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. Any programs that have time-sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000. This could result
in the computer shutting down or performing incorrect computations. As a result,
before December 31, 1999, computer systems and software used by many companies
may need to be upgraded to comply with such "Year 2000" requirements. Many of
the Company's systems, including information and computer systems and automated
equipment, will be affected by the Year 2000 issue. The Company is also heavily
reliant on the FAA's management of the nation's air traffic control system,
local authorities' management of the airports at which AWA operates, and vendors
to provide goods (fuel, catering, etc.), services (telecommunications, data
networks, satellites, etc.) and data (frequent flyer partnerships, alliances,
etc.).
13
<PAGE> 14
AMERICA WEST AIRLINES, INC.
JUNE 30, 1998
The Company has underway a Year 2000 Project to identify the programs
and infrastructure that could be affected by the Year 2000 issues and is
implementing a plan to resolve the problems identified on a timely basis. The
plan will require the Company to devote a considerable amount of internal
resources and hire substantial external resources to assist with the
implementation and monitoring of the plan, and will require the replacement of
certain equipment and modification of certain software. The Company currently
estimates that the total cost of its Year 2000 Project will be approximately $29
million, including approximately $23 million which has been or will be expensed
as incurred and approximately $6 million of capital expenditures. These costs
include approximately $6 million of normal system software and equipment
upgrades and replacements which the Company anticipated incurring in the
ordinary course regardless of the Year 2000 issue. Substantially all of those
costs will be incurred during the second half of 1998 and during 1999.
If the Company's plan to address the Year 2000 issue is not
successfully or timely implemented, the Company may need to devote more
resources to the process and additional costs may be incurred, which could have
a material adverse effect on the Company's financial condition and results of
operations. The Company is also in the process of discussing with the FAA,
airport authorities and its vendors the potential impact the Year 2000 issue
will have on their systems. Problems encountered by the FAA, the airport
authorities or vendors in connection with the Year 2000 issue also may have a
material adverse effect on the Company's financial condition and results of
operations. As a component of its Year 2000 Project, the Company is developing
contingency plans to mitigate the affects of problems experienced by it or key
vendors or service providers in the timely implementation of Year 2000 programs.
The costs of the Company's Year 2000 Project and the date on which the
Company plans to complete the Year 2000 compliance program are based on
management's best estimates, and reflect assumptions regarding the availability
and cost of personnel trained in this area, the compliance plans of third
parties (including the FAA and other third parties mentioned above) and similar
uncertainties. However, due to the complexity and pervasiveness of the Year 2000
issue and in particular the uncertainty regarding the compliance programs of
third parties, no assurance can be given that these estimates will be achieved,
and actual results could differ materially from those anticipated.
FORWARD LOOKING INFORMATION
This report contains various forward-looking statements and information
that are based on management's beliefs as well as assumptions made by and
information currently available to management. Whether such forward-looking
statements and information ultimately prove to be accurate depends on various
uncertainties and future developments that cannot be predicted. The results of
operations in the air travel business historically fluctuate in response to
general economic conditions. The airline industry is sensitive to changes in
economic conditions that affect business and leisure travel and is highly
susceptible to unforeseen events, such as political instability, regional
hostilities, recession, fuel price escalation, inflation, adverse weather
conditions or other adverse occurrences that result in a decline in air travel.
Any event that results in decreased travel or increased competition among
airlines could have a material adverse effect on the Company's financial
condition and results of operations. The Company's results of operations for
interim periods are not necessarily indicative of those for an entire year,
because the travel business is subject to seasonal fluctuations. Due to the
greater demand for air travel during the summer months, revenues in the airline
travel industries in the second and third quarters of the year tend to be
greater than revenues in the first and fourth quarters of the year. In addition,
the Company's business is subject to significant risks, including, the
competitive nature of the industry, the lack of significant unencumbered assets
and significant future capital requirements, the results of union negotiations,
the concentration of the voting power of the Company, the cost of aircraft fuel,
certain regulatory matters, operating and financial restrictions on the Company
imposed by certain loan and debt instruments and Year 2000 compliance issues.
For a more complete discussion of these and other risks and uncertainties that
may affect the Company's business and future operating results, please refer to
the Company's Annual Report on Form 10-K for the year ended December 31, 1997,
which is on file with the Securities and Exchange Commission.
14
<PAGE> 15
AMERICA WEST AIRLINES, INC.
JUNE 30, 1998
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
EXHIBIT
NUMBER DESCRIPTION AND METHOD OF FILING
*10.28** Amendment No. 1 dated March 31, 1998 to
Airbus A320/A319 Purchase Agreement dated
September 12, 1997 between AVSA S.A.R.L. and
AWA
*10.29 Financing Agreement dated April 1, 1998
between the Industrial Development Authority
of the City of Phoenix, Arizona and AWA
*10.30 Indenture of Trust dated April 1, 1998 from
the Industrial Development Authority of the
City of Phoenix, Arizona to Norwest Bank,
Arizona N.A.
*27.1 Financial Data Schedule.
_____
* Filed herewith.
** The Company has sought confidential
treatment for portions of the referenced
exhibits.
b. Reports on Form 8-K
None
15
<PAGE> 16
AMERICA WEST AIRLINES, INC.
JUNE 30, 1998
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICA WEST AIRLINES, INC.
By /s/ W. Douglas Parker
-----------------------------
W. Douglas Parker
Senior Vice President and
Chief Financial Officer
DATED: August 7, 1998
16
<PAGE> 17
AMERICA WEST AIRLINES, INC.
JUNE 30, 1998
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION AND METHOD OF FILING
*10.28** Amendment No. 1 dated March 31, 1998 to
Airbus A320/A319 Purchase Agreement dated
September 12, 1997 between AVSA S.A.R.L. and
AWA
*10.29 Financing Agreement dated April 1, 1998
between the Industrial Development Authority
of the City of Phoenix, Arizona and AWA
*10.30 Indenture of Trust dated April 1, 1998 from
the Industrial Development Authority of the
City of Phoenix, Arizona to Norwest Bank,
Arizona N.A.
*27.1 Financial Data Schedule.
_____
* Filed herewith.
** The Company has sought confidential
treatment for portions of the referenced
exhibit.
17
<PAGE> 1
Exhibit 10.28
*** Text Omitted and Filed Separately Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4), 200.83 and 240.24 b-2.
AMENDMENT NO. 1
TO THE A319/A320 PURCHASE AGREEMENT
dated as of September 12, 1997
between
AVSA, S.A.R.L.
and
AMERICA WEST AIRLINES, INC.
This Amendment No. 1 (hereinafter referred to as the "Amendment") is entered
into as of March 31, 1998, by and between AVSA, S.A.R.L., a societe a
responsabilite limitee organized and existing under the laws of the Republic of
France, having its registered office located at 2, Rond Point Maurice Bellonte,
31700 Blagnac, France (hereinafter referred to as the "Seller"), and AMERICA
WEST AIRLINES, INC., a corporation organized and existing under the laws of the
State of Delaware, United States of America, having its principal corporate
offices located at Phoenix Sky Harbor International Airport, 4000 East Sky
Harbor Boulevard, Phoenix, Arizona 85034, U.S.A.
(hereinafter referred to as the "Buyer").
WITNESSETH:
WHEREAS, the Buyer and the Seller have entered into an A319/A320 Purchase
Agreement, dated as of September 12, 1997 (which agreement, as previously
amended by and supplemented with all Exhibits, Appendices, Letter Agreements and
amendments attached thereto is hereinafter called the "Agreement"), which
Agreement relates to the sale by the Seller and the purchase by the Buyer of
certain firmly ordered Airbus Industrie A319-100 and A320-200 model aircraft
(the "Aircraft").
WHEREAS, the Buyer and the Seller agree to further describe in this Amendment
certain flexibility rights to be provided by the Seller to the Buyer with
respect to A320 Aircraft.
WHEREAS, capitalized terms used herein and not otherwise defined in this
Amendment will have the meaning assigned to them in the Agreement. The terms
"herein," "hereof," and "hereunder" and words of similar import refer to this
Amendment.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
<PAGE> 2
1. SCOPE OF THE AMENDMENT
The Buyer has indicated to the Seller that the Buyer has entered into
ten (10) year operating leases with an operating lessor ("SALE") for
five (5) new production A320 aircraft (MSN 762, 770, 803, 856 and 866),
such lease or leases to begin at a date prior to delivery of the first
A319 Aircraft by the Seller to the Buyer (each such A320 aircraft a
"New Leased A320 Aircraft") under the Agreement. In consideration
thereof and under terms and conditions defined in this Amendment, the
Seller hereby agrees to grant to the Buyer the right to cancel one (1)
A320 Aircraft from its firm order under the Agreement for each New
Leased A320 Aircraft leased by and delivered to the Buyer by SALE prior
to delivery of the first A319 Aircraft (such flexibility right is
referred to as the "A320 Aircraft Cancellation Right").
2. A320 AIRCRAFT CANCELLATION RIGHT
2.1 The A320 Aircraft Cancellation Right shall be limited to five (5) A320
Aircraft. The Buyer hereby irrevocably exercises upon the date hereof
the five A320 Cancellation Rights against each of A320 Aircraft
[...***...] (for delivery pursuant to Clause 9 of the Agreement
respectively in [...***...] these Aircraft are referred to herein as
the "Exchanged Aircraft"). The Buyer hereby irrevocably waives and
releases to the Seller and the Manufacturer its rights to the Exchanged
Aircraft and neither the Seller nor the Buyer shall have any further
obligation or right to the other with respect to the Exchanged
Aircraft. The Buyer grants the Seller and the Manufacturer the
unlimited right to remarket these delivery positions upon the date
hereof.
2.2 Except as otherwise agreed, the specification of the New Leased A320
Aircraft will be the specification defined by SALE and the Manufacturer
in the SALE purchase agreement, and the Seller or the Manufacturer
shall not incur any extra cost or liability in order to bring the
specification of the New Leased A320 Aircraft to the level of the
Specification or to another specification desired by the Buyer.
2.3 The parties hereby agree that the terms and conditions applicable to
the sale by the Seller or the Manufacturer and the purchase by SALE of
the New Leased A320 Aircraft shall be solely negotiated between the
Seller or the Manufacturer and SALE and that the terms of the Agreement
shall not in any manner apply to the New Leased A320 Aircraft, except
* Confidential Treatment Requested
<PAGE> 3
that (i) all of the warranties and guarantees set forth in Clauses 12,
13, and 17 of the Agreement and in Letter Agreement N. 6 (limited,
however, to the provisions contained in Paragraphs 1, 2 and 3 only),
Letter Agreement N. 7, Letter Agreement N. 8, Letter Agreement N. 9 and
Letter Agreement N. 10 of the Agreement (the "Exchange Provisions")
shall apply to the New Leased A320 Aircraft as if they were A320
Aircraft and shall be in lieu of the warranties and guarantees set out
in the New Leased A320 Aircraft purchase agreement, such Exchange
Provisions to apply during the operation by the Buyer of these New
Leased A320 Aircraft on the same terms as if the New Leased A320
Aircraft were A320 Aircraft and (ii) all of the provisions relating to
assignment included in the Agreement shall apply to the Exchange
Provisions.
The Buyer shall be responsible for negotiating any lease terms and
conditions applicable to the New Leased A320 Aircraft directly with
SALE and the Seller or the Manufacturer shall have no obligation or
liability relating thereto except as otherwise agreed. Nothing
contained in this Amendment shall subject the Seller or the
Manufacturer to any liability it would not have otherwise incurred had
the A320 Aircraft Cancellation Right not been available to the Buyer
except as otherwise agreed.
The parties also agree that the Buyer shall not be entitled to any
duplicate remedies from the Seller under the warranties and guarantees
provisions of (i) the Agreement, as amended by this Amendment and (ii)
any other purchase or lease agreement involving the Buyer, the
Manufacturer or SALE.
3. [...***...]
In consideration for the execution of the Amendment, the Seller agrees
to provide upon the date hereof the Buyer with a [...***...].
4. EFFECT OF AMENDMENT
The Agreement will be deemed amended to the extent herein provided,
and, except as specifically amended hereby, will continue in full force
and effect in accordance with its original terms.
5. CONFIDENTIALITY
* Confidential Treatment Requested
<PAGE> 4
Subject to any legal or governmental requirements of disclosure, the
parties (which for this purpose will include their employees, agents,
advisors and accountants) will maintain the terms and conditions of
this Amendment and any reports or other data furnished hereunder
strictly confidential. Without limiting the generality of the
foregoing, the Buyer will use its best efforts to limit the disclosure
of the contents of this Amendment to the extent legally permissible in
any filing required to be made by the Buyer with any governmental
agency and will make such applications as will be necessary to
implement the foregoing. With respect to any public disclosure or
filing, the Buyer agrees to submit to the Seller a copy of the proposed
document to be filed or disclosed and will give the Seller a reasonable
period of time in which to review the document. The Buyer and the
Seller will consult with each other prior to the making of any other
public disclosure or filing, permitted hereunder, of this Amendment or
the terms and conditions thereof. The provisions of this Paragraph 5
will survive any termination of the Agreement.
<PAGE> 5
If the foregoing correctly sets forth our understanding, please
indicate your acceptance by signing in the space provided below.
Agreed an Accepted, Agreed and Accepted,
AMERICA WEST AIRLINES, INC. AVSA, S.A.R.L.
By: /s/ Jacques C. Lazard By: /s/ illegible
---------------------------- -------------------------------
Its: Vice President & Treasurer Its: Director Contracts
---------------------------- -------------------------------
Date: April 27, 1998 Date: April 27, 1998
---------------------------- -------------------------------
<PAGE> 1
Exhibit 10.29
===============================================================================
FINANCING AGREEMENT
Dated as of April 1, 1998
By and Between
THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF PHOENIX, ARIZONA
and
AMERICA WEST AIRLINES, INC.
Relating to
$29,300,000
THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF PHOENIX, ARIZONA
AIRPORT FACILITIES REFUNDING BONDS
(AMERICA WEST AIRLINES, INC. PROJECT)
SERIES 1998
===============================================================================
The amounts payable to the Issuer (except for amounts payable to, and
certain rights and privileges of, the Issuer under Sections 4.2(d), 4.2(e), 5.3
and 6.4 hereof and any rights of the Issuer to receive any notices,
certificates, requests, requisitions or communications hereunder) and certain
other rights of the Issuer under this Financing Agreement have been pledged and
assigned under the Indenture of Trust dated as of April 1, 1998, between the
Issuer and Norwest Bank Arizona, N.A., as Trustee.
<PAGE> 2
FINANCING AGREEMENT
TABLE OF CONTENTS
(This Table of Contents is not a part of this Agreement and
is only for convenience of reference).
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C>
Parties................................................................................ 1
Preambles.............................................................................. 1
ARTICLE I DEFINITIONS.......................................................... 1
ARTICLE II REPRESENTATIONS...................................................... 4
Section 2.1. Representations and Covenants by the Issuer....................... 4
Section 2.2. Representations by the Company.................................... 5
ARTICLE III ISSUANCE OF THE BONDS................................................ 5
Section 3.1. Agreement to Issue Bonds; Application of Bond Proceeds............ 5
Section 3.2. Reserved.......................................................... 6
Section 3.3. Reserved.......................................................... 6
Section 3.4. Reserved.......................................................... 6
Section 3.5. Investment of Moneys in Funds..................................... 6
Section 3.6. Tax Exempt Status of Bonds........................................ 7
ARTICLE IV LOAN AND PROVISIONS FOR REPAYMENT.................................... 7
Section 4.1. Loan of Bond Proceeds............................................. 7
Section 4.2. Loan Repayments and Other Amounts Payable......................... 7
Section 4.3. No Defense or Set-Off............................................. 9
Section 4.4. Payments Pledged and Assigned..................................... 9
Section 4.5. Payment of the Bonds and Other Amounts............................ 9
ARTICLE V SPECIAL COVENANTS AND AGREEMENTS..................................... 10
Section 5.1. Company to Maintain its Corporate Existence; Conditions Under
Which Exceptions Permitted........................................ 10
Section 5.2. Annual Statement.................................................. 10
Section 5.3. Maintenance and Repair; Insurance; Taxes; Etc..................... 11
Section 5.4. Recordation and Other Instruments................................. 11
Section 5.5. No Warranty by the Issuer......................................... 11
Section 5.6. Agreement as to Ownership and Use of the Project.................. 11
Section 5.7. Information Reporting, Etc........................................ 11
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
Section 5.8. Limited Liability of Issuer....................................... 12
Section 5.9. Inspection of Project............................................. 12
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES....................................... 12
Section 6.1. Events of Default Defined......................................... 12
Section 6.2. Remedies on Default............................................... 14
Section 6.3. No Remedy Exclusive............................................... 15
Section 6.4. Agreement to Pay Fees and Expenses of Counsel..................... 15
Section 6.5. No Additional Waiver Implied by One Waiver; Consents to Waivers... 15
ARTICLE VII OPTIONS AND OBLIGATIONS OF COMPANY; PREPAYMENTS; REDEMPTION OF
BONDS................................................................ 16
Section 7.1. Option to Prepay.................................................. 16
Section 7.2. Obligation to Prepay.............................................. 16
Section 7.3. Notice of Prepayment.............................................. 16
ARTICLE VIII MISCELLANEOUS........................................................ 17
Section 8.1. Notices........................................................... 17
Section 8.2. Assignments....................................................... 17
Section 8.3. Severability...................................................... 17
Section 8.4. Execution of Counterparts......................................... 17
Section 8.5. Amounts Remaining in Bond Fund.................................... 17
Section 8.6. Amendments, Changes and Modifications............................. 17
Section 8.7. Governing Law..................................................... 18
Section 8.8. Authorized Issuer and Company Representatives..................... 18
Section 8.9. Term of the Agreement............................................. 18
Section 8.10. Cancellation at Expiration of Term................................ 18
Section 8.11. Notice Regarding Cancellation of Contracts........................ 18
Signatures and Seals................................................................... 20
</TABLE>
EXHIBIT A -- Project Description
-ii-
<PAGE> 4
THIS FINANCING AGREEMENT made and entered into as of April 1, 1998, by and
between THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF PHOENIX, ARIZONA, an
Arizona nonprofit corporation and political subdivision of the State of Arizona,
party of the first part (hereinafter referred to as the "Issuer"), and AMERICA
WEST AIRLINES, INC., a corporation duly organized and existing under the laws of
the State of Delaware, party of the second part (hereinafter referred to as the
"Company").
WITNESSETH:
In consideration of the respective representations and agreements
hereinafter contained, the parties hereto agree as follows (provided, that in
the performance of the agreements of the party of the first part herein
contained, any obligation it may thereby incur shall not constitute or give rise
to a pecuniary liability or a charge upon its general credit or against its
taxing powers but shall be payable solely out of the Revenues (as hereinafter
defined) derived from this Financing Agreement and the Bonds, as hereinafter
defined):
ARTICLE I
DEFINITIONS
The following terms shall have the meanings specified in this Article
unless the context clearly requires otherwise. The singular shall include the
plural and the masculine shall include the feminine.
"Act" means Title 35, Chapter 5, Arizona Revised Statutes, and all acts
supplemental thereto or amendatory thereof.
"Administrative Expenses" means the reasonable expenses (including,
without limitation, the reasonable value of employee services and fees of
Counsel) incurred by the Issuer in connection with the Bonds, this Agreement,
the Indenture and any transaction or event contemplated by this Agreement or the
Indenture.
"Agreement" means this Financing Agreement between the Issuer and the
Company and all amendments and supplements hereto.
"Authorized Company Representative" means any person who, at the time,
shall have been designated as such by a written certificate furnished to the
Issuer and the Trustee containing the specimen signature of such person and
signed on behalf of the Company by any officer of the Company. Such certificate
may designate an alternate or alternates.
"Authorized Issuer Representative" means any person at the time designated
to act on behalf of the Issuer by a written certificate furnished to the Company
and the Trustee containing the specimen signature of such person and signed on
behalf of the Issuer by the
<PAGE> 5
President, Vice President, Secretary or Assistant
Secretary. Such certificate may designate an alternate or alternates.
"Bond" or "Bonds" means the Issuer's bonds identified in Section 2.02 of
the Indenture.
"Bond Counsel" means the counsel who renders the opinion as to the tax
exempt status of interest on the Bonds or such other nationally recognized
municipal bond counsel of recognized expertise with respect to such matters as
may be mutually acceptable to the Issuer, the Trustee and the Company.
"Bond Fund" means the fund created by Section 5.02 of the Indenture.
"Code" means the United States Internal Revenue Code of 1986, as amended,
and regulations promulgated or proposed thereunder.
"Company" means America West Airlines, Inc., a Delaware corporation, and
its successors and assigns and any surviving, resulting or transferee
corporation as permitted under Section 5.1 hereof.
"Counsel" means an attorney at law or a firm of attorneys (who may be an
employee of or counsel to the Issuer or the Company or the Trustee) duly
admitted to the practice of law before the highest court of any state of the
United States of America or of the District of Columbia.
"Extraordinary Services" and "Extraordinary Expenses" mean all services
rendered and all expenses (including fees and expenses of Counsel) incurred
under the Indenture and the Tax Agreement other than Ordinary Services and
Ordinary Expenses.
"Force Majeure" means acts of God, strikes, lockouts or other industrial
disturbances; acts of public enemies; orders or restraints of any kind of the
governments of the United States or of the State of Arizona or of the State, or
any of their departments, agencies or officials, or any civil or military
authority; insurrections; riots; landslides; lightning; earthquakes; fires;
tornadoes; volcanoes; storms; droughts; floods; explosions, breakage, or
malfunction or accident to machinery, transmission lines, pipes or canals, even
if resulting from negligence; civil disturbances; or any other cause not
reasonably within the control of the Company.
"Governing Body" means the Board of Directors of the Issuer.
"Hereof", "herein", "hereunder" and other words of similar import refer to
this Agreement as a whole.
"Indenture" means the Indenture of Trust relating to this Agreement
between the Issuer and Norwest Bank Arizona, N.A., as Trustee, of even date
herewith, pursuant to
-2-
<PAGE> 6
which the Bonds are authorized to be issued, including any indentures
supplemental thereto or amendatory thereof.
"Issuer" means The Industrial Development Authority of the City of
Phoenix, Arizona and any successor body to the duties or functions of the
Issuer.
"1954 Code" means the Internal Revenue Code of 1954, as amended.
"Ordinary Services" and "Ordinary Expenses" mean those services normally
rendered and those expenses (including fees and expenses of Counsel) normally
incurred by a trustee under instruments similar to the Indenture and the Tax
Agreement.
"Owner" or "Owner of Bonds" means the Person or Persons in whose name or
names a Bond shall be registered on books of the Issuer kept by the Bond
Registrar for that purpose in accordance with the terms of the Indenture.
"Person" means natural persons, firms, partnerships, associations,
corporations, trusts and public bodies.
"Prior Bonds" means The Industrial Development Authority of the City of
Phoenix, Arizona Variable Rate Airport Facility Revenue Bonds (America West
Airlines, Inc. Project) Series 1986 originally issued in the aggregate principal
amount of $54,000,000 and currently outstanding in the aggregate principal
amount of $29,300,000.
"Project" means the Company's undivided interest in those facilities
described in Exhibit A to this Agreement.
"Project Certificate" means the Company's Project Certificate, delivered
concurrently with the issuance of the Bonds, with respect to certain facts which
are within the knowledge of the Company and certain reasonable assumptions of
the Company, to enable Chapman and Cutler, as Bond Counsel, to determine that
interest on the Bonds is not includable in the gross income of the Owners of the
Bonds for federal income taxes purposes.
"Rebate Fund" means the Rebate Fund, if any, created and established
pursuant to the Tax Agreement.
"State" means the State of Arizona.
"Tax Agreement" means the Tax Exemption Certificate and Agreement with
respect to the Bonds, dated the date of delivery of the Bonds, among the
Company, the Issuer and the Trustee, as from time to time amended and
supplemented.
"Tax-Exempt" means, with respect to interest on any obligations of a state
or local government, including the Bonds, that such interest is excluded from
the gross income of the holders thereof (other than any holder who is a
"substantial user" of facilities financed with such obligations or a "related
person" within the meaning of Section 103(b)(13) of the 1954
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Code or Section 147(a) of the Code) for federal income tax purposes, whether or
not such interest is includable as an item of tax preference or otherwise
includable directly or indirectly for purposes of calculating other tax
liabilities, including any alternative minimum tax or environmental tax under
the 1954 Code or the Code.
"Trust Estate" means the property conveyed to the Trustee pursuant to the
Granting Clauses of the Indenture.
"Trustee" means Norwest Bank Arizona, N.A., as Trustee under the
Indenture, and any successor Trustee appointed pursuant to the Indenture at the
time serving as Trustee thereunder, and any co-trustee serving as such
thereunder.
All other terms used herein which are defined in the Indenture shall have
the same meanings assigned them in the Indenture unless the context otherwise
requires.
ARTICLE II
REPRESENTATIONS
SECTION 2.1. REPRESENTATIONS AND COVENANTS BY THE ISSUER. The Issuer makes
the following representations and covenants as the basis for the undertakings on
its part herein contained:
(a) The Issuer is a duly organized and existing nonprofit
corporation and political subdivision of the State. Under the provisions
of the Act, the Issuer is authorized to enter into the transactions
contemplated by this Agreement, the Indenture and the Tax Agreement and to
carry out its obligations hereunder and thereunder. The Issuer has duly
authorized the execution and delivery of this Agreement, the Indenture and
the Tax Agreement.
(b) The Bonds are to be issued under and secured by the Indenture,
pursuant to which certain of the Issuer's interests in this Agreement and
the Revenues derived by the Issuer pursuant to this Agreement will be
pledged and assigned as security for payment of the principal of, premium,
if any, and interest on, the Bonds.
(c) The Governing Body of the Issuer has found that the issuance of
the Bonds will further the public purposes of the Act.
(d) The Issuer has not assigned and will not assign any of its
interests in this Agreement other than pursuant to the Indenture.
(e) Except as otherwise disclosed by the Issuer, no member of the
Governing Body of the Issuer, nor any other officer of the Issuer, has any
interest, financial, employment or other, in the Company or in the
transactions contemplated hereby.
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(f) To the extent within its reasonable control, the Issuer will not
knowingly engage in any activity which might result in the income of the
Issuer to be received hereunder becoming taxable to it or interest on the
Bonds becoming taxable to the Bondholders under Federal income tax laws.
SECTION 2.2. REPRESENTATIONS BY THE COMPANY. The Company makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) The Company is a corporation duly incorporated under the laws of
the State of Delaware and is in good standing in the State of Delaware, is
qualified to do business as a foreign corporation in the State and in all
other states and jurisdictions wherein the nature of the business
transacted by the Company or the nature of the property owned or leased by
it would make the failure to so qualify reasonably likely to have a
material adverse effect on its business or financial condition, has power
to enter into and by proper corporate action has been duly authorized to
execute and deliver this Agreement and the Tax Agreement.
(b) Neither the execution and delivery of this Agreement or the Tax
Agreement, the consummation of the transactions contemplated hereby and
thereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement and the Tax Agreement, conflicts with or
results in a material breach of any of the terms, conditions or provisions
of any corporate restriction or any material agreement or material
instrument to which the Company is now a party or by which it is bound (in
each case material to the ability of the Company to fulfill its
obligations under this Agreement and the Tax Agreement), or constitutes a
default under any of the foregoing, or results in the creation or
imposition of any material lien, charge or encumbrance whatsoever upon any
of the property or assets of the Company under the terms of any instrument
or agreement other than the Indenture.
(c) The statements, information and descriptions contained in the
Project Certificate and the Tax Agreement, as of the date hereof and at
the time of the delivery of the Bonds to the Original Purchasers, are and
will be true, correct and complete, do not and will not contain any untrue
statement or misleading statement of a material fact, and do not and will
not omit to state a material fact required to be stated therein or
necessary to make the statements, information and descriptions contained
therein, in the light of the circumstances under which they were made, not
misleading.
ARTICLE III
ISSUANCE OF THE BONDS
SECTION 3.1. AGREEMENT TO ISSUE BONDS; APPLICATION OF BOND PROCEEDS. To
provide funds to refinance the cost of the Project, the Issuer agrees that it
will issue under the Indenture, sell and cause to be delivered to the purchasers
thereof, the Bonds. The
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Issuer will thereupon apply the proceeds received from the sale of the Bonds as
provided in the Indenture.
SECTION 3.2. RESERVED.
SECTION 3.3. RESERVED.
SECTION 3.4. RESERVED.
SECTION 3.5. INVESTMENT OF MONEYS IN FUNDS. Except as otherwise herein
provided, any moneys held as a part of the Bond Fund shall be invested or
reinvested by the Trustee at the written direction, or the oral direction
promptly confirmed in writing, of an Authorized Company Representative as to
specific investments, to the extent permitted by law, in:
(a) bonds or other obligations of the United States of America;
(b) bonds or other obligations, the payment of the principal of and
interest on which is unconditionally guaranteed by the United States of
America;
(c) obligations issued or guaranteed as to principal and interest by
any agency or person controlled or supervised by and acting as an
instrumentality of the United States of America pursuant to authority
granted by the Congress of the United States of America;
(d) obligations issued or guaranteed by any state of the United
States of America, or any political subdivision of any such state, or in
funds consisting of such obligations to the extent described in Treasury
Regulation 1.148-8(e)(3)(iii);
(e) prime commercial paper;
(f) prime finance company paper;
(g) bankers' acceptances drawn on and accepted by commercial banks;
(h) repurchase agreements fully secured by obligations issued or
guaranteed as to principal and interest by the United States of America or
by any person controlled or supervised by and acting as an instrumentality
of the United States of America pursuant to authority granted by the
Congress of the United States of America;
(i) certificates of deposit issued by commercial banks, including
banks domiciled outside of the United States of America; and
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(j) units of taxable government money market portfolios composed of
obligations guaranteed as to principal and interest by the United States
of America or repurchase agreements fully collateralized by such
obligations.
The investments so purchased shall be held by the Trustee and shall be
deemed at all times a part of the Bond Fund and the interest accruing thereon
and any profit realized therefrom shall be credited to such fund, subject to the
provisions of the Tax Agreement. The Company agrees that to the extent any
moneys in the Bond Fund represent moneys held for the payment of the principal
of Bonds which have become due at maturity or on a redemption date and the
premium, if any, on such Bonds or interest due on Bonds in all cases where Bonds
have not been presented for payment and paid or such interest is unclaimed, such
moneys shall not be invested.
SECTION 3.6. TAX EXEMPT STATUS OF BONDS. The Company covenants and agrees
that it has not taken or permitted and will not take or permit any action which
results in interest paid on the Bonds being included in gross income of the
holders or beneficial owners of the Bonds for purposes of federal income
taxation (other than a holder or beneficial owner who is a "substantial user" of
the Project or a "related person" within the meaning of Section 147(a) of the
Code or Section 103(b)(13) of the 1954 Code). The Company covenants that none of
the proceeds of the Bonds or the payments to be made under this Agreement, or
any other funds which may be deemed to be proceeds of the Bonds pursuant to
Section 148(a) of the Code, will be invested or used in such a way, and that no
actions will be taken or not taken, as to cause the Bonds to be treated as
"arbitrage bonds" within the meaning of Section 148(a) of the Code. Without
limiting the generality of the foregoing, the Company covenants and agrees that
it will comply with the provisions of the Tax Agreement and the Project
Certificate.
ARTICLE IV
LOAN AND PROVISIONS FOR REPAYMENT
SECTION 4.1. LOAN OF BOND PROCEEDS. (a) The Issuer and the Company agree,
upon the terms and conditions in this Agreement, that the application of the
proceeds of sale of the Bonds to refund and retire the Prior Bonds will be
deemed to be and treated for all purposes as a loan to the Company of an amount
equal to the principal amount of the Bonds.
(b) The Issuer and the Company expressly reserve the right to enter into,
to the extent permitted by law, an agreement or agreements other than this
Agreement, with respect to the issuance by the Issuer, under an indenture or
indentures other than the Indenture, of obligations to provide additional funds
to refund all or any principal amount of the Bonds.
SECTION 4.2. LOAN REPAYMENTS AND OTHER AMOUNTS PAYABLE. (a) By 10:00 a.m.
(Phoenix, Arizona time) on each date provided in or pursuant to the Indenture
for the payment (whether at maturity or upon optional redemption or
acceleration) of principal of,
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and premium, if any, and interest on, the Bonds, until the principal of, and
premium, if any, and interest on, the Bonds shall have been fully paid or
provision for the payment thereof shall have been made in accordance with the
Indenture and thirty-five (35) days prior to a mandatory redemption date under
Section 3.03 of the Indenture, the Company shall pay to the Trustee in
immediately available funds, for deposit in the Bond Fund, as a repayment
installment of the loan of the proceeds of the Bonds pursuant to Section 4.1
hereof, a sum equal to the amount payable on such date (whether at maturity or
upon redemption or acceleration) as principal of, and premium, if any, and
interest on, the Bonds as provided in the Indenture; and provided further, that
the obligation of the Company to make any such repayment installment shall be
reduced by the amount of any moneys then on deposit in the Bond Fund and
available for such payment.
(b) The Company agrees to pay to the Trustee (i) the fees of the Trustee
for the Ordinary Services rendered by it and an amount equal to the Ordinary
Expenses incurred by it under the Indenture and the Tax Agreement, as and when
the same become due, and (ii) the reasonable fees, charges and expenses of the
Trustee for reasonable Extraordinary Services and Extraordinary Expenses, as and
when the same become due, incurred under the Indenture and the Tax Agreement.
The Company agrees that the Trustee, its officers, agents, servants and
employees, shall not be liable for, and agrees that it will at all times
indemnify and hold harmless the Trustee, its officers, agents, servants and
employees against, and pay all expenses of the Trustee, its officers, agents,
servants and employees, relating to any lawsuit, proceeding or claim and
resulting from any action or omission taken or made by or on behalf of the
Trustee, its officers, agents, servants and employees pursuant to this
Agreement, the Indenture or the Tax Agreement, that may be occasioned by any
cause (other than the negligence or willful misconduct of the Trustee, its
officers, agents, servants and employees). In case any action shall be brought
against the Trustee in respect of which indemnity may be sought against the
Company, the Trustee shall promptly notify the Company in writing and the
Company shall be entitled to assume control of the defense thereof, including
the employment of Counsel and the payment of all expenses. The Trustee shall
have the right to employ separate Counsel in any such action and participate in
the defense thereof, but the fees and expenses of such Counsel shall be paid by
the Trustee unless the employment of such Counsel has been authorized by the
Company. The Company shall not be liable for any settlement of any such action
without its consent, but if any such action is settled with the consent of the
Company or if there be final judgment for the plaintiff in any such action, the
Company agrees to indemnify and hold harmless the Trustee from and against any
loss or liability by reason of such settlement or final judgment. The Company
agrees that the indemnification provided herein shall survive the termination of
this Agreement or the Indenture or the resignation or removal of the Trustee.
(c) The Company agrees to pay all costs incurred in connection with the
issuance of the Bonds and the Issuer shall have no obligation with respect to
such costs.
(d) The Company agrees to indemnify and hold harmless the Issuer and any
member, officer, official or employee of the Issuer against any and all losses,
costs, charges, expenses, judgments and liabilities created by or arising out of
this Agreement, the Indenture or the Tax Agreement or otherwise incurred in
connection with the issuance of the Bonds
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(other than from the willful misconduct of the Issuer, its members, officers,
officials or employees). The Issuer may submit to the Company periodic
statements, not more frequently than monthly, for its Administrative Expenses
and the Company shall make payment to the Issuer of the full amount of each such
statement within 30 days after the Company receives such statement.
(e) In the event the Company shall fail to make any of the payments
required by (a) of this Section 4.2, the payment so in default shall continue as
an obligation of the Company until the amount in default shall have been fully
paid and the Company will pay interest to the extent permitted by law, on any
overdue amount at the rate of interest borne by the Bonds on the date on which
such amount became due and payable until paid. In the event that the Company
shall fail to make any of the payments required by (b), (c) or (d) of this
Section 4.2, the payment so in default shall continue as an obligation of the
Company until the amount in default shall have been fully paid, and the Company
agrees to pay the same with interest thereon to the extent permitted by law at a
rate 1% above the rate of interest then charged by the Trustee on 90-day
commercial loans to its prime commercial borrowers until paid.
(f) In the event that moneys are not available for transfer from the Bond
Fund to the Rebate Fund as required by the Tax Agreement, the Company agrees to
pay any such amount required to be so transferred and not available for such
purpose in the Bond Fund by paying such amount to the Trustee for deposit
directly into the Rebate Fund. The obligation of the Company set forth in this
Section 4.2(f) shall survive the termination of this Agreement.
SECTION 4.3. NO DEFENSE OR SET-OFF. The obligation of the Company to make
the payments pursuant to this Agreement shall be absolute and unconditional
without defense or set-off by reason of any default by the Issuer under this
Agreement or under any other agreement between the Company and the Issuer or for
any other reason, it being the intention of the parties that the payments
required hereunder will be paid in full when due without any delay or diminution
whatsoever.
SECTION 4.4. PAYMENTS PLEDGED AND ASSIGNED. It is understood and agreed
that all payments required to be made by the Company pursuant to Section 4.2
hereof (except payments made to the Trustee pursuant to Section 4.2(b) hereof,
to the Issuer pursuant to Section 4.2(d) hereof and to either or both of the
foregoing pursuant to Section 4.2(e) hereof) and certain rights of the Issuer
hereunder are pledged and assigned by the Indenture. The Company consents to
such pledge and assignment. The Issuer hereby directs the Company and the
Company hereby agrees to pay or cause to be paid to the Trustee all said
amounts. The Project will not constitute any part of the security for the Bonds.
SECTION 4.5. PAYMENT OF THE BONDS AND OTHER AMOUNTS. The Bonds and
interest and premium, if any, thereon shall be payable solely from (i) payments
made by the Company to the Trustee under Section 4.2(a) hereof, and (ii) other
moneys on deposit in the Bond Fund and available therefor.
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Payments of principal of, and premium, if any, or interest on, the Bonds
with moneys in the Bond Fund constituting proceeds from the sale of the Bonds or
earnings on investments made under the provisions of the Indenture shall be
credited against the obligation to pay required by Section 4.2(a) hereof.
Whenever any Bonds are redeemable in whole or in part at the option of the
Company, the Trustee, on behalf of the Issuer, shall redeem the same upon the
request of the Company and such redemption (unless conditional) shall be made
from payments made by the Company to the Trustee under Section 4.2(a) hereof
equal to the redemption price of such Bonds.
Whenever payment or provision therefor has been made in respect of the
principal of, or premium, if any, or interest on, all or any portion of the
Bonds in accordance with the Indenture (whether at maturity or upon redemption
or acceleration or upon provision for payment in accordance with Article VII of
the Indenture), payments shall be deemed paid to the extent such payment or
provision therefor has been made and is considered to be a payment of principal
of, or premium, if any, or interest on, such Bonds. If such Bonds are thereby
deemed paid in full, the Trustee shall notify the Company and the Issuer that
such payment requirement has been satisfied. Subject to the foregoing, or unless
the Company is entitled to a credit under this Agreement or the Indenture, all
payments shall be in the full amount required by Section 4.2(a) hereof.
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
SECTION 5.1. COMPANY TO MAINTAIN ITS CORPORATE EXISTENCE; CONDITIONS UNDER
WHICH EXCEPTIONS PERMITTED. The Company agrees that during the term of this
Agreement, it will maintain its corporate existence and its good standing in the
State of Delaware, will be qualified to do business as a foreign corporation in
the State, will not dissolve or otherwise dispose of all or substantially all of
its assets and will not consolidate with or merge into another corporation
unless the acquirer of its assets or the corporation with which it shall
consolidate or into which it shall merge shall (i) be a corporation organized
under the laws of one of the states of the United States of America, (ii) be
qualified to do business in the State, and (iii) assume in writing all of the
obligations of the Company under this Agreement and the Tax Agreement.
Any transfer of all or substantially all of the Company's assets to any of
its wholly owned subsidiaries shall not be deemed to constitute a "disposition
of all or substantially all of the Company's assets" within the meaning of the
preceding paragraph. Any such transfer of the Company's assets shall not relieve
the Company of any of its obligations under this Agreement.
SECTION 5.2. ANNUAL STATEMENT. The Company agrees to have an annual audit
made by its regular independent certified public accountants and to furnish the
Trustee
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(within thirty days after receipt by the Company) with a balance sheet and
statement of income and surplus showing the financial condition of the Company
and its consolidated subsidiaries, if any, at the close of each fiscal year and
the results of operations of the Company and its consolidated subsidiaries, if
any, for each fiscal year, accompanied by a report of said accountants that such
statements have been prepared in accordance with generally accepted accounting
principles. The Company's obligations under this Section 5.2 may be satisfied by
delivering a copy of America West Holdings Corporation's Annual Report to the
Trustee at the same time that it is mailed to stockholders.
SECTION 5.3. MAINTENANCE AND REPAIR; INSURANCE; TAXES; ETC.. The Company
shall maintain or cause to be maintained the Project in good repair and keep it
properly insured and shall promptly pay or cause to be paid all costs thereof.
The Company shall promptly pay or cause to be paid all installments of taxes,
installments of special assessments, and all governmental, utility and other
charges with respect to the Project, when due. The Company may, at its own
expense and in its own name in good faith contest or appeal any such taxes,
assessments or other charges, or installments thereof, but shall not permit any
such taxes, assessments or other charges, or installments thereof, to remain
unpaid if such nonpayment shall subject the Project or any part thereof to loss
or forfeiture.
SECTION 5.4. RECORDATION AND OTHER INSTRUMENTS. The Company shall cause
such security agreements, financing statements and all supplements thereto and
other instruments as may be required from time to time pursuant to the Indenture
to be kept, to be recorded and filed in such manner and in such places as may be
required by law in order to fully preserve, protect and perfect the security of
the Owners of the Bonds and the rights of the Trustee, and to perfect the
security interest created by the Indenture in this Agreement. The Company agrees
to abide by the provisions of Section 4.04 of the Indenture to the extent
applicable to the Company.
SECTION 5.5. NO WARRANTY BY THE ISSUER. The Issuer makes no warranty,
either express or implied, as to the Project or that it will be suitable for the
purposes of the Company or needs of the Company.
SECTION 5.6. AGREEMENT AS TO OWNERSHIP AND USE OF THE PROJECT. The Issuer
and the Company agree that title to the Project shall be in and remain in the
Company, and that the Project shall be the sole property of the Company in which
the Issuer shall have no interest.
SECTION 5.7. INFORMATION REPORTING, ETC.. The Issuer covenants and agrees
that, upon the direction of the Company or Bond Counsel, it will mail or cause
to be mailed to the Secretary of the Treasury (or his designee as prescribed by
regulation, currently the Internal Revenue Service Center, Philadelphia, PA
19255) a statement setting forth the information required by Section 149(e) of
the Code, which statement shall be in the form of the Information Return for
Tax-Exempt Private Activity Bond Issues (Form 8038) of the Internal Revenue
Service (or any successor form) and which shall be completed based in part upon
information supplied by the Company and Bond Counsel.
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SECTION 5.8. LIMITED LIABILITY OF ISSUER. Any obligation or liability of
the Issuer created by or arising out of this Agreement or otherwise incurred in
connection with the issuance of the Bonds (including without limitation any
liability created by or arising out of the representations, warranties or
covenants set forth herein or otherwise) shall not impose a debt or pecuniary
liability upon the Issuer or the State or any political subdivision thereof, or
a charge upon the general credit or taxing powers of any of the foregoing, but
shall be payable solely out of the Revenues or other amounts payable by the
Company to the Issuer hereunder or otherwise.
Neither the issuance of the Bonds nor the delivery of this Agreement
shall, directly or indirectly or contingently, obligate the Issuer or the State
or any political subdivision thereof to levy any form of taxation therefor or to
make any appropriation for their payment. Nothing in the Bonds or in the
Indenture or this Agreement or the proceedings of the Issuer authorizing the
Bonds or in the Act or in any other related document shall be construed to
authorize the Issuer to create a debt of the Issuer or the State or any
political subdivision thereof within the meaning of any constitutional or
statutory provision of the State. The principal of, and premium, if any, and
interest on, the Bonds shall be payable solely from the funds pledged for their
payment in accordance with the Indenture and available therefor under this
Agreement. Neither the State nor any political subdivision thereof shall in any
event be liable for the payment of the principal of, premium, if any, or
interest on, the Bonds or for the performance of any pledge, obligation or
agreement of any kind whatsoever which may be undertaken by the Issuer. No
breach of any such pledge, obligation or agreement may impose any pecuniary
liability upon the Issuer or the State or any political subdivision thereof, or
any charge upon the general credit or against the taxing power of the Issuer or
the State or any political subdivision thereof.
SECTION 5.9. INSPECTION OF PROJECT. The Company agrees that the Issuer and
the Trustee and their duly authorized representatives shall have the right at
all reasonable times upon proper notice to enter upon and examine and inspect
the Project property and shall also be permitted, at all reasonable times upon
proper notice, to examine the books and records of the Company insofar as they
relate to the Project.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT DEFINED. The following shall be "events of
default" under this Agreement and the terms "event of default" or "default"
shall mean, whenever they are used in this Agreement, any one or more of the
following events:
(a) Failure by the Company to pay when due any amounts required to
be paid under Section 4.2(a) hereof, which failure results in an event of
default under subparagraph (a) or (b) of Section 8.01 of the Indenture; or
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(b) Failure by the Company to observe and perform any covenant,
condition or agreement on its part to be observed or performed in this
Agreement, other than as referred to in (a) above, for a period of 90 days
after written notice, or in the case of failure by the Company to observe
and perform any covenant, condition or agreement on its part to be
observed or performed in Section 4.2(f) hereof, for a period of 30 days
after written notice, specifying such failure and requesting that it be
remedied and stating that such notice is a "Notice of Default" hereunder,
given to the Company by the Trustee or to the Company and the Trustee by
the Issuer, unless the Issuer and the Trustee shall agree in writing to an
extension of such time prior to its expiration; provided, however, if the
failure stated in the notice cannot be corrected within the applicable
period, the Issuer and the Trustee will not unreasonably withhold their
consent to an extension of such time if corrective action is instituted
within the applicable period and diligently pursued until the failure is
corrected and such corrective action or diligent pursuit is evidenced to
the Trustee by a certificate of an Authorized Company Representative
provided, however, further that such failure (other than a failure to
perform the agreement in Section 5.1 relating to the Company's existence)
is not an Event of Default if it is a result of any cause or event not
reasonably within the Company's control; or
(c) A proceeding or case shall be commenced, without the application
or consent of the Company, in any court of competent jurisdiction seeking
(i) liquidation, reorganization, dissolution, winding-up or composition or
adjustment of debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Company or of all or any
substantial part of its assets, or (iii) similar relief under any law
relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts, and such proceeding or cause shall
continue undismissed, or an order, judgment, or decree approving or
ordering any of the foregoing shall be entered and shall continue in
effect for a period of 90 days; or an order for relief against the Company
shall be entered against the Company in an involuntary case under the
United States Bankruptcy Code (as now or hereafter in effect) or other
applicable law; or
(d) The Company shall admit in writing its inability to pay its
debts generally as they become due or shall file a petition in voluntary
bankruptcy or shall make any general assignment for the benefit of its
creditors, or shall consent to the appointment of a receiver or trustee of
all or substantially all of its property, or shall commence a voluntary
case under the United States Bankruptcy Code (as now or hereafter in
effect), or shall file in any court of competent jurisdiction a petition
seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of
debts, or shall fail to controvert in a timely or appropriate manner, or
acquiesce in writing to, any petition filed against it in an involuntary
case under such United States Bankruptcy Code or other applicable law; or
(e) Dissolution or liquidation of the Company; provided that the
term "dissolution or liquidation of the Company" shall not be construed to
include the
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cessation of the corporate existence of the Company resulting either from
a merger or consolidation of the Company into or with another corporation
or a dissolution or liquidation of the Company following a transfer of all
or substantially all of its assets as an entirety, under the conditions
permitting such actions contained in Section 5.1 hereof; or
(f) The occurrence of an "event of default" under the Indenture.
The foregoing provisions of Section 6.1(b) are subject to the following
limitations: If by reason of Force Majeure the Company is unable in whole or in
part to carry out its agreements on its part herein contained, other than the
obligations on the part of the Company contained in Article IV and Sections 5.3
and 6.4 hereof, the Company shall not be deemed in default during the
continuance of such inability. The Company agrees, however, to remedy with all
reasonable dispatch the cause or causes preventing the Company from carrying out
its agreements; provided that the settlement of strikes, lockouts and other
industrial disturbances shall be entirely within the discretion of the Company
and the Company shall not be required to make settlement of strikes, lockouts
and other industrial disturbances by acceding to the demands of the opposing
party or parties when such course is in the sole judgment of the Company
unfavorable to the Company.
SECTION 6.2. REMEDIES ON DEFAULT. Whenever any event of default referred
to in Section 6.1 hereof shall have happened and be continuing, the Trustee, as
assignee of the Issuer:
(a) shall, by notice in writing to the Company, declare the unpaid
indebtedness under Section 4.2(a) hereof to be due and payable
immediately, if concurrently with or prior to such notice the unpaid
principal amount of the Bonds shall have been declared to be due and
payable, and upon any such declaration the same (being an amount
sufficient, together with other moneys available therefor in the Bond
Fund, to pay the unpaid principal of, premium, if any, and interest
accrued on, the Bonds) shall become and shall be immediately due and
payable as liquidated damages; and
(b) may take whatever action at law or in equity as may appear
necessary or desirable to collect the payments and other amounts then due
and thereafter to become due hereunder or to enforce performance and
observance of any obligation, agreement or covenant of the Company under
this Agreement.
Any amounts collected pursuant to action taken under this Section 6.2
shall be paid into the Bond Fund (unless otherwise provided in this Agreement)
and applied in accordance with the provisions of the Indenture. No action taken
pursuant to this Section 6.2 shall relieve the Company from the Company's
obligations pursuant to Section 4.2 hereof.
No recourse shall be had for any claim based on this Agreement against any
officer, director or stockholder, past, present or future, of the Company as
such, either directly or
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<PAGE> 18
through the Company, under any constitutional provision, statute or rule of law,
or by the enforcement of any assessment or by any legal or equitable proceeding
or otherwise.
Nothing herein contained shall be construed to prevent the Issuer from
enforcing directly any of its rights under the Sections 4.2(d), 4.2(e), 5.3 and
6.4 hereof.
SECTION 6.3. NO REMEDY EXCLUSIVE. No remedy herein conferred upon or
reserved to the Issuer is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Agreement or now or hereafter
existing at law or in equity or by statute. No delay or omission to exercise any
right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle the Issuer or the Trustee to exercise any remedy reserved to it in this
Article, it shall not be necessary to give any notice, other than such notice as
may be herein expressly required. Subject to the provisions of the Indenture and
hereof, such rights and remedies as are given the Issuer hereunder shall also
extend to the Trustee. The Owners of the Bonds, subject to the provisions of the
Indenture, shall be entitled to the benefit of all covenants and agreements
herein contained.
SECTION 6.4. AGREEMENT TO PAY FEES AND EXPENSES OF COUNSEL. In the event
the Company should default under any of the provisions of this Agreement and the
Issuer or the Trustee should employ Counsel or incur other expenses for the
collection of the indebtedness hereunder or the enforcement of performance or
observance of any obligation or agreement on the part of the Company herein
contained, the Company agrees that it will on demand therefor pay to the
Trustee, the Issuer or, if so directed by the Issuer, to the Counsel for the
Issuer, the reasonable fees of such Counsel and such other expenses so incurred
by or on behalf of the Issuer or the Trustee.
SECTION 6.5. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER; CONSENTS TO
WAIVERS. In the event any agreement contained in this Agreement should be
breached by either party and thereafter waived by the other party, such waiver
shall be limited to the particular breach so waived and shall not be deemed to
waive any other breach hereunder. No waiver shall be effective unless in writing
and signed by the party making the waiver. The Issuer shall have no power to
waive any default hereunder by the Company without the consent of the Trustee to
such waiver. The Trustee shall have the power to waive any default by the
Company hereunder, except a default under Section 3.6, 4.2(d), 5.3 or 6.4
hereof, or under Section 4.2(e) hereof in so far as it pertains to the Issuer,
without the prior written concurrence of the Issuer. Notwithstanding the
foregoing, if, after the acceleration of the maturity of the outstanding Bonds
by the Trustee pursuant to Section 8.02 of the Indenture, (i) all arrears of
principal of and interest on the outstanding Bonds and interest on overdue
principal and (to the extent permitted by law) on overdue installments of
interest at the rate of interest borne by the Bonds on the date on which such
principal or interest became due and payable and the premium, if any, on all
Bonds then Outstanding which have become due and payable otherwise than by
acceleration, and all other sums payable under the Indenture, except the
principal of and the interest on such Bonds which by such
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<PAGE> 19
acceleration shall have become due and payable, shall have been paid, (ii) all
other things shall have been performed in respect of which there was a default,
(iii) there shall have been paid the reasonable fees and expenses of the Trustee
and of the Owners of such Bonds, including reasonable attorneys' fees paid or
incurred and (iv) such event of default under the Indenture shall be waived in
accordance with Section 8.09 of the Indenture with the consequence that such
acceleration under Section 8.02 of the Indenture is rescinded, then the
Company's default hereunder shall be deemed to have been waived and its
consequences rescinded and no further action or consent by the Trustee or the
Issuer shall be required; provided that there has been furnished an opinion of
Bond Counsel to the effect that such waiver will not adversely affect the
exemption from federal income taxes of interest on the Bonds.
ARTICLE VII
OPTIONS AND OBLIGATIONS OF COMPANY;
PREPAYMENTS; REDEMPTION OF BONDS
SECTION 7.1. OPTION TO PREPAY. The Company shall have, and is hereby
granted, the option to prepay the payments due hereunder in whole or in part at
any time or from time to time (a) to provide for the redemption of Bonds
pursuant to the provisions of Section 3.01 of the Indenture or (b) to provide
for the defeasance of the Bonds pursuant to Article VII of the Indenture. In the
event the Company elects to provide for the redemption of Bonds as permitted by
this Section, the Company shall notify and instruct the Trustee in accordance
with Section 7.3 hereof to redeem all or any portion of the Bonds in advance of
maturity. If the Company so elects, any redemption of Bonds pursuant to Section
3.01 of the Indenture may be made conditional.
SECTION 7.2. OBLIGATION TO PREPAY. The Company covenants and agrees that
if all or any part of the Bonds become subject to mandatory redemption, it will
prepay the indebtedness hereunder in whole or in part, prior to the date on
which notice of such redemption is given to the owners of such Bonds, in an
amount sufficient to redeem such Bonds on the date fixed for the redemption of
the Bonds.
SECTION 7.3. NOTICE OF PREPAYMENT. Upon the exercise of the option granted
to the Company in Section 7.1 hereof, or upon the Company having knowledge of
the occurrence of any event requiring mandatory redemption of the Bonds in
accordance with Section 3.03 of the Indenture, the Company shall give written
notice to the Issuer and the Trustee. The notice shall provide for the date of
the application of the prepayment made by the Company hereunder to the
retirement of the Bonds in whole or in part pursuant to call for redemption and
shall be given by the Company not less than 45 days prior to the date of the
redemption which is to occur as a result of such prepayment (or such later date
as is acceptable to the Trustee and the Issuer), and in the case of a redemption
of Bonds pursuant to Section 3.03 of the Indenture shall be given on a date
which will permit the redemption of the Bonds within the time required by
Section 3.03 of the Indenture.
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<PAGE> 20
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. NOTICES. Except as otherwise expressly provided herein, all
notices, certificates or other communications hereunder shall be sufficiently
given and shall be deemed given on the day on which the same have been mailed by
first class mail postage prepaid, or delivered by hand, or sent by telecopy or
similar facsimile transmission, as follows: if to the Issuer, c/o Lewis & Roca,
LLP, 40 North Central Avenue, Phoenix, Arizona 85004-4429, or to telecopy number
(602) 262-5311, if to the Company, at 4000 East Sky Harbor Boulevard, Phoenix,
Arizona 85034, or to telecopy number (602) 693-5886, Attention: Treasurer; if to
the Trustee, at 3300 North Central Avenue, 15th Floor, Phoenix, Arizona 85012,
or to telecopy number (602) 248-1200, Attention: Corporate Trust Services;
provided, however, that notice to the Trustee shall be deemed given when
received by the Trustee. A duplicate copy of each notice, certificate or other
communication given hereunder by either the Issuer or the Trustee to the other
shall also be given to the Company. The Issuer, the Company and the Trustee may,
by notice given hereunder, designate any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.
SECTION 8.2. ASSIGNMENTS. This Agreement may not be assigned by either
party without consent of the other, except that the Issuer shall assign to the
Trustee its rights under this Agreement (except under Sections 4.2(d), 4.2(e),
5.3, and 6.4 hereof) as provided by Section 4.4 hereof, and the Company may
assign its rights under this Agreement to any transferee or any surviving or
resulting corporation as provided by Section 5.1 hereof.
SECTION 8.3. SEVERABILITY. If any provision of this Agreement shall be
held or deemed to be or shall, in fact, be illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative, or unenforceable to
any extent whatever.
SECTION 8.4. EXECUTION OF COUNTERPARTS. This Agreement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
SECTION 8.5. AMOUNTS REMAINING IN BOND FUND. It is agreed by the parties
hereto that after payment in full of (i) the Bonds (or provision for payment
thereof having been made in accordance with the provisions of the Indenture),
(ii) the fees, charges and expenses of the Trustee in accordance with the
Indenture, (iii) the Administrative Expenses, (iv) the fees and expenses of the
Issuer and (v) all other amounts required to be paid under this Agreement and
the Indenture, any amounts remaining in the Bond Fund shall belong to and be
paid to the Company by the Trustee.
SECTION 8.6. AMENDMENTS, CHANGES AND MODIFICATIONS. This Agreement may be
amended, changed, modified, altered or terminated only by written instrument
executed by the Issuer and the Company as provided in Section 11.01 and Section
11.02 of
-17-
<PAGE> 21
the Indenture, and, under either such Section, only if the written
consent of the Trustee to the amendment, change or modification is obtained and
provided, however, that the Issuer shall not thereby incur any monetary
obligation or liability (except only to the extent that the same shall be
payable solely and only out of funds provided or to be provided by the Company)
or surrender or abdicate in whole or in part any of its essential governmental
functions or powers or any of its discretion in exercising the same.
SECTION 8.7. GOVERNING LAW. This Agreement shall be governed exclusively
by and construed in accordance with the applicable laws of the State.
SECTION 8.8. AUTHORIZED ISSUER AND COMPANY REPRESENTATIVES. Whenever under
the provisions of this Agreement the approval of the Issuer or the Company is
required to take some action at the request of the other, such approval of such
request shall be given for the Issuer by the Authorized Issuer Representative
and for the Company by the Authorized Company Representative, and the other
party hereto and the Trustee shall be authorized to act on any such approval or
request and neither party hereto shall have any complaint against the other or
against the Trustee as a result of any such action taken.
SECTION 8.9. TERM OF THE AGREEMENT. This Agreement shall be in full force
and effect from its date to and including such date as all of the Bonds issued
under the Indenture shall have been fully paid or retired (or provision for such
payment shall have been made as provided in the Indenture), provided that all
representations and certifications by the Company as to all matters affecting
the tax-exempt status of the Bonds and the covenants of the Company in Sections
4.2(b), 4.2(d), 4.2(e) and 4.2(f) hereof shall survive the termination of this
Agreement.
SECTION 8.10. CANCELLATION AT EXPIRATION OF TERM. At the acceleration,
termination or expiration of the term of this Agreement and following full
payment of the Bonds or provision for payment thereof and of all other fees and
charges having been made in accordance with the provisions of this Agreement and
the Indenture, the Issuer shall deliver to the Company any documents and take or
cause the Trustee to take such actions as may be necessary to effectuate the
cancellation and evidence the termination of this Agreement.
SECTION 8.11. NOTICE REGARDING CANCELLATION OF CONTRACTS. As required by
the provisions of Section 38-511, Arizona Revised Statutes, as amended, notice
is hereby given that political subdivisions of the State of Arizona or any of
their departments or agencies may, within three (3) years of its execution,
cancel any contract, without penalty or further obligation, made by the
political subdivisions or any of their departments or agencies on or after
September 30, 1988, if any person significantly involved in initiating,
negotiating, securing, drafting or creating the contract on behalf of the
political subdivisions or any of their departments or agencies is, at any time
while the contract or any extension of the contract is in effect, an employee or
agent of any other party to the contract in any capacity or a consultant to any
other party of the contract with respect to the subject matter of the contract.
The cancellation shall be effective when written notice from the chief
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<PAGE> 22
executive officer or governing body of the political subdivision is received by
all other parties to the contract unless the notice specifies a later time.
The Company covenants and agrees not to employ as an employee, agent or,
with respect to the subject matter of the Agreement, a consultant, any person
significantly involved in initiating, negotiating, securing, drafting or
creating this Agreement on behalf of the Issuer within three (3) years from the
execution hereof, unless a waiver is provided by the Issuer.
IN WITNESS WHEREOF, the Issuer has caused these presents to be signed in
its name and behalf by its President and attested by its Assistant Secretary,
and the Company has caused these presents to be signed in its name and behalf by
one of its __________________ and its official seal to be hereunto affixed, and
the same to be attested by one of its __________________, all as of the date
first above written.
THE INDUSTRIAL DEVELOPMENT AUTHORITY OF
THE CITY OF PHOENIX, ARIZONA
By /s/ illegible
-------------------------------------
President
Attest:
/s/ illegible
- ----------------------------------
Assistant Secretary
AMERICA WEST AIRLINES, INC.
By /s/ illegible
-------------------------------------
(SEAL) Its Vice President and Treasurer
Attest:
- ----------------------------------
Its
-------------------------------
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<PAGE> 23
EXHIBIT A
PROJECT DESCRIPTION
The Project consists of aircraft hangar facilities, a two-aircraft
simulator bay and related facilities located at Sky Harbor International
Airport, Phoenix, Arizona, on property owned by the City and leased to the
Company.
<PAGE> 1
Exhibit 10.30
THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF PHOENIX, ARIZONA
TO
NORWEST BANK ARIZONA, N.A.
Trustee
--------------------------------
INDENTURE OF TRUST
--------------------------------
SECURING
$29,300,000
THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF PHOENIX, ARIZONA
AIRPORT FACILITIES REFUNDING BONDS
(AMERICA WEST AIRLINES, INC. PROJECT)
SERIES 1998
--------------------------------
Dated as of April 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Recitals.........................................................................................................................1
Form of Face of Bond.............................................................................................................3
Form of Trustee's Certificate of Authentication..................................................................................5
Form of Reverse of Bond..........................................................................................................5
Form of Assignment...............................................................................................................8
Granting Clauses.................................................................................................................9
ARTICLE I DEFINITIONS..........................................................................................11
Section 1.01. Definitions......................................................................................11
ARTICLE II THE BONDS............................................................................................16
Section 2.01. Authorized Amount and Purpose of Bonds...........................................................16
Section 2.02. Issuance of Bonds................................................................................16
Section 2.03. Ownership, Transfer, Exchange and Registration of Bonds..........................................17
Section 2.04. Execution; Limited Obligation....................................................................18
Section 2.05. Authentication...................................................................................18
Section 2.06. Mutilated, Destroyed, Lost or Stolen Bonds.......................................................18
Section 2.07. Cancellation and Destruction of Surrendered Bonds................................................19
Section 2.08. Delivery of the Bonds............................................................................19
Section 2.09. Book Entry System................................................................................20
ARTICLE III REDEMPTION OF BONDS BEFORE MATURITY..................................................................20
Section 3.01. Optional Redemption..............................................................................20
Section 3.02. Reserved.........................................................................................21
Section 3.03. Mandatory Redemption.............................................................................21
Section 3.04. Notice of Redemption.............................................................................21
Section 3.05. Deposit of Funds.................................................................................23
Section 3.06. Partial Redemption of Bonds......................................................................23
Section 3.07. Selection Of Bonds For Redemption................................................................23
ARTICLE IV PAYMENT; FURTHER ASSURANCES..........................................................................24
Section 4.01. Payment of Principal or Redemption Price of and Interest on Bonds................................24
Section 4.02. Performance of Covenants; The Issuer.............................................................24
Section 4.03. Right to Payments Under Agreement; Instruments of Further Assurance..............................24
Section 4.04. Financing Statements.............................................................................25
Section 4.05. Inspection of Project Books......................................................................25
Section 4.06. Rights under Agreement...........................................................................25
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE V REVENUES AND FUNDS...................................................................................26
Section 5.01. Source of Payment of Bonds.......................................................................26
Section 5.02. Creation of the Bond Fund........................................................................26
Section 5.03. Payments into the Bond Fund......................................................................26
Section 5.04. Use of Moneys in the Bond Fund...................................................................26
Section 5.05. Custody of the Bond Fund.........................................................................26
Section 5.06. Non-Presentment of Bonds.........................................................................27
Section 5.07. Trustee's Fees, Charges and Expenses.............................................................27
Section 5.08. Moneys To Be Held in Trust.......................................................................27
Section 5.09. Repayment to the Company from the Bond Fund......................................................27
Section 5.10. Revenues To Be Paid Over to Trustee..............................................................27
Section 5.11. Payments of Principal and Interest...............................................................28
Section 5.12. Revenues To Be Held for All Bondholders; Certain Exceptions......................................28
Section 5.13. Tax Agreement....................................................................................28
Section 5.14. Cost of Issuance Fund............................................................................28
ARTICLE VI INVESTMENT OF MONEYS.................................................................................28
Section 6.01. Investment of Bond Fund Moneys...................................................................28
Section 6.02. Investments; Arbitrage...........................................................................28
ARTICLE VII DEFEASANCE...........................................................................................29
Section 7.01. Defeasance.......................................................................................29
ARTICLE VIII DEFAULT PROVISIONS; REMEDIES.........................................................................30
Section 8.01. Defaults; Events of Default......................................................................30
Section 8.02. Acceleration.....................................................................................31
Section 8.03. Remedies; Rights Of Bondholders..................................................................31
Section 8.04. Right of Bondholders to Direct Proceedings.......................................................32
Section 8.05. Application of Moneys............................................................................32
Section 8.06. Remedies Vested in Trustee.......................................................................32
Section 8.07. Rights and Remedies of Bondholders...............................................................33
Section 8.08. Termination of Proceedings.......................................................................33
Section 8.09. Waivers of Events of Default.....................................................................33
Section 8.10. Opportunity of Company to Cure Events of Default.................................................34
ARTICLE IX THE TRUSTEE..........................................................................................35
Section 9.01. Acceptance of the Trusts.........................................................................35
Section 9.02. Corporate Trustee Required; Eligibility..........................................................38
Section 9.03. Fees, Charges and Expenses of Trustee............................................................38
Section 9.04. Notice to Bondholders If Default Occurs..........................................................39
Section 9.05. Intervention by Trustee..........................................................................39
Section 9.06. Successor Trustee................................................................................39
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
Section 9.07. Resignation by the Trustee.......................................................................39
Section 9.08. Removal of the Trustee...........................................................................40
Section 9.09. Appointment of Successor Trustee.................................................................40
Section 9.10. Concerning Any Successor Trustees................................................................40
Section 9.11. Appointment of Co-Trustee........................................................................41
ARTICLE X SUPPLEMENTAL INDENTURES..............................................................................42
Section 10.01. Supplemental Indentures Not Requiring Consent of Bondholders.....................................42
Section 10.02. Supplemental Indentures Requiring Consent of Bondholders.........................................43
Section 10.03. Consents to Supplemental Indentures..............................................................44
Section 10.04. Reliance on Opinions of Counsel..................................................................44
ARTICLE XI AMENDMENT OF AGREEMENT...............................................................................44
Section 11.01. Amendments, Etc., to Agreement Not Requiring Consent of Bondholders..............................44
Section 11.02. Amendments, Etc., to Agreement Requiring Consent of Bondholders..................................45
Section 11.03. Reliance on Opinions of Counsel..................................................................45
ARTICLE XII MISCELLANEOUS........................................................................................46
Section 12.01. Consents, Etc., Of Bondholders...................................................................46
Section 12.02. Limitation of Rights.............................................................................46
Section 12.03. Severability.....................................................................................46
Section 12.04. Notices..........................................................................................46
Section 12.05. Holidays.........................................................................................47
Section 12.06. Counterparts.....................................................................................47
Section 12.07. Applicable Law...................................................................................47
Section 12.08. Captions.........................................................................................47
Section 12.09. Notice Regarding Cancellation of Contracts.......................................................47
Signature Page..................................................................................................................48
EXHIBIT I FORM OF INVESTOR LETTER
</TABLE>
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<PAGE> 5
THIS INDENTURE OF TRUST, made and entered into as of April 1, 1998, by
and between THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF PHOENIX,
ARIZONA, an Arizona nonprofit corporation and political subdivision of the State
of Arizona (the "Issuer"), and NORWEST BANK ARIZONA, N.A., as Trustee (the
"Trustee"), a banking corporation duly organized, existing and authorized to
accept and execute trusts of the character herein set out under the laws of the
State of Arizona, with its principal corporate trust office located in Phoenix,
Arizona;
WITNESSETH:
WHEREAS, the Issuer is authorized and empowered under Title 35, Chapter
5, Arizona Revised Statutes, as amended (the "Act"), to issue revenue bonds in
accordance with Article 2 of the Act and to make secured or unsecured loans for
the purpose of financing or refinancing costs of certain airport facilities, to
charge and collect interest on such loans and pledge the proceeds of loan
agreements as security for the payment of principal of and interest on bonds, or
designated issues of bonds, issued by the Issuer and any agreements in
connection therewith, whenever the board of directors finds such loans to be in
furtherance of the purposes of the Issuer; and
WHEREAS, the Issuer has heretofore issued and sold its Variable Rate
Airport Facility Revenue Bonds (America West Airlines, Inc. Project) Series 1986
in the original aggregate principal amount of $54,000,000, of which $29,300,000
is currently outstanding (the "Prior Bonds"), pursuant to an Indenture of Trust,
dated as of August 1, 1986 (the "Prior Indenture"), between the Issuer and
Norwest Bank Arizona, N.A., as successor trustee, and has loaned the proceeds
thereof to America West Airlines, Inc., a Delaware corporation (the "Company"),
for the purpose of financing the airport facilities more particularly described
in the Prior Indenture (the "Project").
WHEREAS, the Company has requested that the Issuer issue and sell bonds
to refund the Prior Bonds and refinance the Project; and
WHEREAS, pursuant to the Act, the Issuer has determined to issue and
sell its airport facility refunding bonds as provided herein (the "Bonds") and
to lend the proceeds thereof to the Company pursuant to the Financing Agreement
of even date herewith (the "Agreement"), between the Issuer and the Company, for
the purpose of refunding the Prior Bonds; and
WHEREAS, the issuance and sale of the Bonds and the loan of the
proceeds thereof to the Company to refund the Prior Bonds will serve the
purposes of the Issuer and the Act and in all respects conform to the provisions
and requirements of the Act; and
WHEREAS, in order to provide for the authentication and delivery of the
Bonds, to establish and declare the terms and conditions upon which the Bonds
are to be issued and secured and to secure the payment of the principal thereof
and of the interest and premium, if any, thereon, the Issuer has authorized the
execution and delivery of this Indenture, and
<PAGE> 6
WHEREAS, all Bonds issued under this Indenture will be secured by a
pledge and assignment of the Issuer's rights under the aforesaid Agreement; and
WHEREAS, the Bonds and the Trustee's certificate of authentication and
the form of assignment to be endorsed thereon are all to be in substantially the
following forms, with necessary and appropriate variations, omissions and
insertions as permitted or required by this Indenture, to wit:
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<PAGE> 7
[FORM OF FACE OF BOND]
UNITED STATES OF AMERICA
THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF PHOENIX, ARIZONA
AIRPORT FACILITIES REFUNDING BOND
(AMERICA WEST AIRLINES, INC. PROJECT)
SERIES 1998
Registered Registered
No. R- $29,300,000
Interest Rate: Dated Date: Maturity Date: CUSIP:
6.30% April 1, 1998 April 1, 2023
Registered Owner: Cede & Co.
Principal Amount: Twenty-nine million three hundred thousand Dollars
[1] THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF PHOENIX,
ARIZONA (the "Issuer"), an Arizona nonprofit corporation and political
subdivision of the State of Arizona, for value received, hereby promises to pay
(but in each case only out of the source hereinafter provided) to the Registered
Owner identified above, or registered assigns as hereinafter provided, on the
Maturity Date identified above, the Principal Amount identified above, and to
pay interest on said Principal Amount until payment of said Principal Amount has
been made or duly provided for at the Interest Rate identified above, on April 1
and October 1 of each year, commencing on October 1, 1998, and to pay interest
on overdue principal and, to the extent permitted by law, on overdue interest at
the rate borne by this Bond, except as the provisions hereinafter set forth with
respect to redemption prior to maturity may become applicable hereto, the
principal of, premium, if any, and interest on this Bond being payable in lawful
money of the United States of America at the designated Corporate Trust Office
of Norwest Bank Arizona, N.A., as Trustee, or its successor in trust (the
"Trustee"); provided, however, payment of interest on any Interest Payment Date
shall be made to the Owner hereof as of the close of business on the Record Date
with respect to such Interest Payment Date and shall be (i) paid by check or
draft mailed on such Interest Payment Date to such Owner hereof at his address
as it appears on the registration books of the Issuer maintained by the Trustee
or at such other address as is furnished in writing by such Owner to the Trustee
as Bond Registrar not later than the close of business on the Record Date or
(ii) transmitted by wire transfer to an account with a commercial bank located
within the United States of America if such Owner owns at least
-3-
<PAGE> 8
$1,000,000 in aggregate principal amount of the Bonds and shall have provided
wire transfer instructions to the Trustee prior to the close of business on such
Record Date.
--------------------------------
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET
FORTH ON THE REVERSE HEREOF AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
--------------------------------
[16] THIS BOND DOES NOT, AND SHALL NEVER, CONSTITUTE AN INDEBTEDNESS
OF THE CITY OF PHOENIX, THE STATE OF ARIZONA OR THE ISSUER WITHIN THE MEANING OF
ANY STATE CONSTITUTIONAL PROVISION OR STATUTORY LIMITATION, AND THIS BOND SHALL
NEVER CONSTITUTE OR GIVE RISE TO A PECUNIARY LIABILITY OF SAID CITY, SAID STATE
OR THE ISSUER OR A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWERS OF SAID
CITY OR SAID STATE OR A CHARGE AGAINST THE GENERAL CREDIT OF THE ISSUER. THE
ISSUER HAS NO TAXING POWER.
[17] IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts and
conditions required to be performed precedent to and in the execution and
delivery of the Indenture and the issuance of this Bond have been performed in
due time, form and manner as required by law, and that the issuance of this Bond
and the issue of which it forms a part does not exceed or violate any
constitutional or statutory limitation.
[18] This Bond shall not be valid or become obligatory for any purpose
or be entitled to any security or benefit under the Indenture unless and until
the certificate of authentication hereon shall have been duly executed by the
Trustee.
[19] IN WITNESS WHEREOF, THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE
CITY OF PHOENIX, ARIZONA has caused this Bond to be executed in its name by the
manual or facsimile signature of its President and attested by the manual or
facsimile signature of its Secretary, all as of April 1, 1998.
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE CITY OF PHOENIX, ARIZONA
By
--------------------------------------------
President
Attest:
- --------------------------------
Secretary
-4-
<PAGE> 9
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This Bond is one of the Bonds described in the within-mentioned
Indenture of Trust.
Date of Authentication: _____________________________________,
as Trustee
By
________________________________ ______________________________________
Authorized Signatory
[FORM OF REVERSE OF BOND]
[2] This Bond is one of an authorized issue of bonds limited in
aggregate principal amount to $29,300,000 (the "Bonds") issued pursuant to a
resolution duly adopted by the governing body of the Issuer on March 19, 1998
(the "Resolution"), and the applicable provisions of Title 35, Chapter 5,
Arizona Revised Statutes, as supplemented and amended to the date hereof (the
"Act"), and issued under an Indenture of Trust (the "Indenture") dated as of
April 1, 1998, between the Issuer and the Trustee, for the purpose of refunding
bonds of the Issuer the proceeds of which were used to finance costs of certain
airport facilities located within the boundaries of the Issuer (the "Project")
for America West Airlines, Inc. (the "Company"). Proceeds from the sale of the
Bonds are to be loaned by the Issuer to the Company under the terms of a
Financing Agreement, dated as of April 1, 1998 (the "Agreement"), between the
Issuer and the Company, which provides for the repayment of such loan by the
Company.
[3] The Bonds are all issued under and equally and ratably secured by
and entitled to the benefits of the Indenture (except as otherwise expressly set
forth in the Indenture), including the security of a pledge and assignment of
certain revenues and receipts derived by the Issuer pursuant to the Agreement,
and all receipts of the Trustee credited under the provisions of the Indenture
against such payments, and from any other moneys held by the Trustee under the
Indenture for such purpose, and there shall be no other recourse against the
Issuer or any property now or hereafter owned by it.
[4] The Bonds are issuable as registered Bonds without coupons in
Authorized Denominations. Subject to the limitations, upon payment of the
charges provided in the Indenture and upon surrender and cancellation hereof,
this Bond may be exchanged for a like aggregate principal amount of Bonds of
other Authorized Denominations. This Bond is transferable by the Owner hereof in
person or by his attorney duly authorized in writing at the designated Corporate
Trust Office of the Trustee but only in the manner, subject to the limitations
and upon payment of the charges provided in the Indenture, and upon surrender
and cancellation of this Bond. Upon such transfer a new registered Bond or
Bonds, of Authorized Denomination or Authorized Denominations, for the same
aggregate principal amount, will be issued to the transferee in exchange
herefor.
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<PAGE> 10
[5] The Bonds are subject to redemption prior to maturity, at the
option of the Company, on or after April 1, 2008, in whole or in part on the
dates set forth below, at the redemption prices (expressed as percentages of
principal amount) set forth in the following table plus accrued interest, if
any, to the redemption date:
<TABLE>
<CAPTION>
Redemption Dates Redemption Prices
---------------- -----------------
<S> <C> <C>
April 1, 2008 and October 1, 2008 102%
April 1, 2009 and October 1, 2009 101%
April 1, 2010 and any Interest Payment Date thereafter 100%
</TABLE>
[6] The Bonds shall be redeemed at 100% of the principal amount
thereof plus accrued interest, if any, to the redemption date within 180 days
after (i) receipt by the Company of written notice of the issuance of a private
letter ruling or a technical advice memorandum by the Internal Revenue Service
in a proceeding in connection with which the Company has had the opportunity to
participate or (ii) the Company receives written notice of a final determination
by any court of competent jurisdiction of the United States in a proceeding to
which the Company is a party or in which the Company has had the opportunity to
participate, in either case, to the effect that, as a result of a failure by the
Company to observe any covenant, agreement, representation or warranty in the
Agreement or the Project Certificate, the interest payable on the Bonds is
included in the gross income for federal income tax purposes of the Owners or
beneficial owners thereof (other than a person who is a "substantial user" of
the Project or a "related person" within the meaning of Section 147(a) of the
Code or Section 103(b)(13) of the 1954 Code). Upon the occurrence of any such
event, the Bonds shall be redeemed in whole unless, in the opinion of Bond
Counsel, the redemption of a portion of the Outstanding Bonds would have the
result that interest payable on the Bonds remaining Outstanding after such
redemption would not be included in the gross income for federal income tax
purposes of any Owners or beneficial owners of the Bonds (other than a person
who is a "substantial user" of the Project or a "related person" within the
meaning of Section 147(a) of the Code or Section 103(b)(13) of the 1954 Code),
in which event only such portion of the Outstanding Bonds shall be redeemed.
[7] In the event any of the Bonds or Authorized Denominations thereof
are called for redemption, notice thereof identifying the Bonds or portions
thereof to be redeemed will be given by the Trustee upon mailing a copy of the
redemption notice by first class mail at least thirty days prior to the date
fixed for redemption to the Owner of each Bond to be redeemed in whole or in
part at the address shown on the registration books; provided, however, that
failure to give such notice by mailing, or any defect therein, shall not affect
the validity of the proceedings for the redemption of any Bond or portion
thereof with respect to which no such failure occurred. All Bonds so called for
redemption will cease to bear interest after the specified redemption date
provided funds for their redemption are on deposit at the place of payment at
that time. In the event any Bond is called for redemption
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<PAGE> 11
in part only, the Issuer shall execute and the Trustee shall authenticate and
deliver to the Owner thereof a new Bond or new Bonds of Authorized Denominations
in aggregate principal amount equal to the unredeemed portion of the Bond
surrendered. Additional notice of redemption of Bonds or portions thereof may be
given by the Trustee as provided in the Indenture, including notice to certain
services and by publication, but no failure to give any such additional notice
or any defect therein shall defeat the effectiveness of a call for redemption if
notice thereof is given as above prescribed.
[8] With respect to any notice of optional redemption of Bonds,
unless upon the giving of such notice such Bonds shall be deemed to have been
paid within the meaning of Article VII of the Indenture, such notice may state
(if so directed by the Company in writing) that such redemption shall be
conditional upon the receipt by the Trustee on or prior to the date fixed for
such redemption of moneys sufficient to pay the principal of, and premium, if
any, and interest on, such Bonds to be redeemed, and that if such moneys shall
not have been so received said notice shall be of no force and effect and the
Issuer shall not be required to redeem such Bonds. In the event that such notice
of redemption contains such a condition and such moneys are not so received, the
redemption shall not be made and the Trustee shall within a reasonable time
thereafter give notice, in the manner in which the notice of redemption was
given, that such moneys were not so received.
[9] This Bond and all other Bonds of the series of which it forms a
part are issued pursuant to and in full compliance with the Constitution and
laws of the State of Arizona, particularly the Act, and pursuant to further
proceedings adopted by the governing authority of the Issuer, which proceedings
authorize the execution and delivery of the Indenture. This Bond and the series
of which it forms a part are special limited obligations of the Issuer payable
solely from the sources described herein. The Project is not security for the
Bonds.
[10] No recourse shall be had for the payment of the principal of, or
premium, if any, or interest on, any of the Bonds or for any claim based thereon
or upon any obligation, covenant or agreement in the Indenture contained,
against any past, present or future member, director, officer, employee or agent
of the Issuer, or through the Issuer, or any successor to the Issuer, under any
rule of law or equity, statute or constitution or by the enforcement of any
assessment or penalty or otherwise, and all such liability of any such member,
director, officer, employee or agent as such is hereby expressly waived and
released as a condition of and in consideration for the execution of the
Indenture and the issuance of any of the Bonds.
[11] The Owner of this Bond shall have no right to enforce the
provisions of the Indenture or to institute action to enforce the covenants
therein, or to take any action with respect to any event of default under the
Indenture, or to institute, appear in or defend any suit or other proceedings
with respect thereto, except as provided in the Indenture. If an Event of
Default as defined in the Indenture occurs and is continuing, the principal of
all Bonds then outstanding may be declared due and payable upon the conditions
and in the manner and with the effect provided in the Indenture.
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<PAGE> 12
[12] The Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the person in whose name this Bond is registered as the Owner
hereof for the purpose of receiving payment as herein provided and for all other
purposes, whether or not this Bond be overdue, and neither the Issuer, the
Trustee nor any such agent shall be affected by notice to the contrary.
[13] The Indenture prescribes the manner in which it may be discharged
and after which the Bonds shall no longer be secured by or entitled to the
benefits of the Indenture, except for the purposes of registration and exchange
of Bonds and of such payment, including a provision that under certain
circumstances the Bonds shall be deemed to be paid if Government Obligations
maturing as to principal and interest in such amounts and at such times as to
insure the availability of sufficient moneys to pay the principal of, and
premium, if any, and interest on, the Bonds and all necessary and proper fees,
compensation and expenses of the Trustee shall have been deposited with the
Trustee.
[14] Modifications or alterations of the Indenture, or of any
supplements thereto, may be made only to the extent and in the circumstances
permitted by the Indenture.
[15] Terms which are used herein as defined terms and which are not
otherwise defined herein shall have the meanings attributed to them in the
Indenture.
[FORM OF ASSIGNMENT]
The following abbreviations, when used in the inscription on the face
of this Bond, shall be construed as though they were written out in full
according to applicable laws or regulations:
UNIF GIFT MIN ACT--
<TABLE>
<CAPTION>
<S> <C> <C>
TEN COM -- as tenants in common ____________ Custodian ___________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right under Uniform Gifts to Minors Act
of survivorship and not ________________________________
as tenants in common State
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto
- ---------------------------------------------------------------------------
(Name and Address of Assignee)
the within Bond of The Industrial Development Authority of the City of Phoenix,
Arizona and does hereby irrevocably constitute and appoint __________________ to
transfer the said
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<PAGE> 13
Bond on the books kept for registration thereof with full power of substitution
in the premises.
Dated:_________________
Signature Guaranteed:
_______________________
NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Bond in every particular, without alteration
or enlargement or any change whatever.
NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock
Exchange or a commercial bank or trust company.
[END OF BOND FORM]
WHEREAS, the execution and delivery of the Bonds and of this Indenture
have been duly authorized and all things necessary to make the Bonds, when
executed by the Issuer and authenticated by the Trustee, valid and binding legal
obligations of the Issuer and to make this Indenture a valid and binding
agreement have been done;
NOW, THEREFORE, THIS INDENTURE OF TRUST WITNESSETH:
That the Issuer in consideration of the premises, the acceptance by the
Trustee of the trusts hereby created, the purchase and acceptance of the Bonds
by the purchasers thereof, one dollar duly paid to the Issuer by the Trustee at
or before the execution and delivery of these presents and of other good and
valuable considerations, the receipt of which is hereby acknowledged, and in
order to secure the payment of the principal of, and premium, if any, and
interest on, all Bonds outstanding hereunder from time to time, according to
their tenor and effect, and to secure the observance and performance by the
Issuer of all the covenants expressed or implied herein and in the Bonds, does
hereby pledge and assign unto the Trustee, and unto its successors and assigns
forever;
GRANTING CLAUSE FIRST
The Agreement, including all extensions and renewals of the term
thereof, if any, together with all right, title and interest of the Issuer
therein (except for the right of the Issuer to the payment of costs, expenses,
indemnification and counsel fees pursuant to Sections 4.2(d), 4.2(e), 5.3 and
6.4 of the Agreement and any rights of the Issuer to receive any notices,
certificates, requests, requisition or other communications under the Agreement)
including, but without limiting the generality of the foregoing, the present and
continuing right to receive, receipt for, collect or make claim for any of the
moneys, income, revenues, issues, profits and other amounts payable or
receivable thereunder,
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<PAGE> 14
including payments made by the Company, whether payable under the Agreement or
otherwise, to bring actions and proceedings thereunder or for the enforcement
thereof, and to do any and all things which the Issuer or any other person is or
may become entitled to do under the Agreement;
GRANTING CLAUSE SECOND
All payments to be received by the Issuer (except as provided in the
preceding paragraph) under the Agreement, together with all other Revenues, and
all moneys and earnings thereon held by the Trustee in the Bond Fund under the
terms of the Indenture; and
GRANTING CLAUSE THIRD
Any and all other property of each name and nature from time to time
hereafter by delivery or by writing of any kind pledged or assigned as and for
additional security hereunder, by the Issuer or by anyone on its behalf or with
its written consent, to the Trustee, which is hereby authorized to receive any
and all such property at any and all times and to hold and apply the same
subject to the terms hereof.
TO HAVE AND TO HOLD all and singular the Trust Estate, whether now
owned or hereafter acquired, unto the Trustee and its respective successors in
said trusts and assigns forever.
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for
the equal and proportionate benefit, security and protection of all present and
future owners of the Bonds, from time to time issued under and secured by this
Indenture without privilege, priority or distinction as to the lien or otherwise
of any of the Bonds over any of the other Bonds (except only as otherwise
expressly stated herein).
PROVIDED HOWEVER, that if the Issuer, its successors or assigns, shall
well and truly cause to be paid, the principal of the Bonds and the interest and
premium, if any, due or to become due thereon, at the times and in the manner
mentioned in the Bonds, according to the true intent and meaning thereof, and
shall cause the payments to be made into the Bond Fund as required under Article
V hereof or shall provide, as permitted by Article VII hereof, for the payment
thereof, and shall well and truly keep, perform and observe all the covenants
and conditions pursuant to the terms of this Indenture to be kept, performed and
observed by it, and shall pay or cause to be paid to the Trustee all sums of
money due or to become due in accordance with the terms and provisions hereof,
then this Indenture and the rights hereby granted shall cease, determine and be
void; otherwise this Indenture to be and remain in full force and effect.
THIS INDENTURE OF TRUST FURTHER WITNESSETH, and it is expressly
declared, that all Bonds issued and secured hereunder are to be issued,
authenticated and delivered and the Revenues hereby assigned and pledged are to
be dealt with and disposed of under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and
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<PAGE> 15
purposes as hereinafter expressed, and the Issuer has agreed and covenanted, and
does hereby agree and covenant, with the Trustee and with the respective owners
from time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. (A) For all purposes of this Indenture, except
as otherwise expressly provided or unless the context otherwise requires:
(1) All references in this Indenture to designated
"Articles", "Sections" and other subdivisions are to the designated
Articles, Sections and other subdivisions of this Indenture.
(2) The words "herein", "hereof", "hereto", "hereby", and
"hereunder" and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section or other
subdivision.
(3) The terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular.
(4) All accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles as in effect from time to time.
(5) Every "request", "order", "demand", "application",
"appointment", "notice", "statement", "certificate", "consent" or
similar action hereunder by the Issuer shall, unless the form thereof
is specifically provided, be in writing signed by the Authorized Issuer
Representative.
(6) Every reference herein to the delivery of Bonds by the
Trustee, or similar references, shall mean that Bonds shall be
available to be picked up at the appointed time at the Corporate Trust
Office of the Trustee.
(7) All other terms used herein which are defined in the
Agreement shall have the same meanings assigned them in the Agreement
unless the context otherwise requires.
(B) For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
"Act" means Title 35, Chapter 5, Arizona Revised Statutes, and all acts
supplementary thereto or amendatory thereof.
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<PAGE> 16
"Administrative Expenses" means the reasonable and necessary expenses
(including the reasonable value of employee services and fees of Counsel)
incurred by the Issuer in connection with the Bonds, the Agreement, this
Indenture and any transaction or event contemplated by the Agreement or this
Indenture.
"Agreement" means the Financing Agreement with respect to the Bonds of
even date herewith by and between the Issuer and the Company, as from time to
time amended and supplemented.
"Authorized Company Representative" means any person who, at the time,
shall have been designated as such by a written certificate furnished to the
Issuer and the Trustee containing the specimen signature of such person and
signed on behalf of the Company by any officer of the Company. Such certificate
may designate an alternate or alternates.
"Authorized Denominations" means $100,000 or any integral multiple
thereof.
"Authorized Issuer Representative" means any person at the time
designated to act on behalf of the Issuer by a written certificate furnished to
the Company and the Trustee containing the specimen signature of such person and
signed on behalf of the Issuer by its President, Vice President, Secretary or
Assistant Secretary. Such certificate may designate an alternate or alternates.
"Bond" or "Bonds" means any one or more of the bonds authorized,
authenticated and delivered under this Indenture.
"Bond Counsel" means the Counsel who renders the opinion as to the
tax-exempt status of interest on the Bonds or other nationally recognized
municipal bond counsel mutually acceptable to the Issuer, the Trustee and the
Company.
"Bond Fund" means the fund created by Section 5.02 hereof.
"Bondholder" or "Holder" or "Owner" or "Owner of Bonds" means the
Person or Persons in whose name or names a Bond shall be registered on books of
the Issuer kept for that purpose in accordance with the terms of this Indenture.
"Bond Registrar" means the Trustee.
"Book Entry Bond" means a Bond authorized to be issued to and
restricted to being registered, in the name of, a Securities Depository as
provided in Section 2.09 hereof.
"Business Day" means a day on which banks located in the city in which
the Corporate Trust Office of the Trustee is located are not required or
authorized to remain closed and on which the New York Stock Exchange is not
closed.
"Code" means the United States Internal Revenue Code of 1986, as
amended, and regulations promulgated or proposed thereunder.
-12-
<PAGE> 17
"Company" means America West Airlines, Inc., a Delaware corporation,
and its successors and assigns and any surviving, resulting or transferee
corporation as permitted in Section 5.1 of the Agreement.
"Corporate Trust Office" means the designated principal office of the
Trustee from which at any particular time its corporate trust business shall be
administered, which office at the date of original execution of this Indenture
is located at 3300 North Central Avenue, 15th Floor, Phoenix, Arizona 85012.
"Counsel" means an attorney at law or a firm of attorneys (who may be
an employee of or counsel to the Issuer or the Company or the Trustee) duly
admitted to the practice of law before the highest court of any state of the
United States of America.
"Dated Date" means April 1, 1998.
"Default" or "event of default" means an occurrence or event specified
in and defined by Section 8.01 hereof.
"DTC" means the Depository Trust Company, a limited purpose trust
company organized under the laws of the State of New York, and its successors
and assigns.
"Executive Officer" means the President of the Governing Body of the
Issuer.
"Extraordinary Services" and "Extraordinary Expenses" mean all services
rendered and all expenses (including fees of Counsel) incurred under the
Indenture and the Tax Agreement other than Ordinary Services and Ordinary
Expenses.
"Governing Body" means the Board of Directors of the Issuer.
"Government Obligations" means non-callable direct general obligations
of, or non-callable obligations the payment of the principal of and interest on
which are unconditionally guaranteed by, the United States of America.
"Indenture" means this Indenture of Trust, including any indentures
supplemental hereto or amendatory hereof.
"Interest Payment Date" means April 1 and October 1 of each year,
commencing October 1, 1998.
"Issue Date" means April 2, 1998, the date of issuance and delivery of
the Bonds.
"Issuer" means The Industrial Development Authority of the City of
Phoenix, Arizona and any successor body to the duties or functions of the
Issuer.
"1954 Code" means the Internal Revenue Code of 1954, as amended.
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<PAGE> 18
"Ordinary Services" and "Ordinary Expenses" mean those services
normally rendered and those expenses, including fees of Counsel, normally
incurred by a trustee, paying agent or bond registrar under instruments similar
to this Indenture and the Tax Agreement.
"Original Purchaser" means Citicorp Securities, Inc.
"Outstanding" or "outstanding" or "Bonds Outstanding", in connection
with the Bonds means, as of the time in question, all Bonds authenticated and
delivered under this Indenture, except:
A. Bonds theretofore cancelled or required to be cancelled
under Section 2.07 hereof;
B. Bonds which are deemed to have been paid in accordance
with Article VII hereof; and
C. Bonds in substitution for which other Bonds have been
authenticated and delivered pursuant to Article II hereof.
In determining whether the Owners of a requisite aggregate principal
amount of outstanding Bonds have concurred in any request, demand,
authorization, direction, notice, consent or waiver under the provisions of the
Indenture, Bonds which are owned of record by the Company or any affiliate
thereof or held by the Trustee for the account of the Company shall be
disregarded and deemed not to be Outstanding hereunder for the purpose of any
such determination (except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Bonds which the Trustee knows to be so owned or
held shall be disregarded) unless all Bonds are owned by the Company or any
affiliate thereof and/or held by the Trustee for the account of the Company, in
which case such Bonds shall be considered outstanding for the purpose of such
determination. For the purpose of this definition, an "affiliate" of any
specified Person means any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
Person and "control," when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Paying Agent" means the Trustee.
"Person" means natural persons, firms, partnerships, associations,
corporations, trusts and public bodies.
"Prior Bonds" has the meaning assigned to such term in the recitals to
this Indenture.
"Prior Indenture" has the meaning assigned to such term in the recitals
to this Indenture.
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<PAGE> 19
"Project" means the facilities described in Exhibit A to the Agreement.
"Rebate Fund" means the Rebate Fund, if any, created and established
pursuant to the Tax Agreement and Section 5.13 hereof.
"Record Date" means the fifteenth (15th) day of the calendar month
immediately preceding an Interest Payment Date, or if such day shall not be a
Business Day, the immediately preceding Business Day.
"Recording Officer" means the Secretary of the Issuer.
"Resolution" means the resolution duly adopted and approved by the
Governing Body of the Issuer on March 19, 1998 authorizing the issuance and sale
of the Bonds and the execution of this Indenture and the Agreement.
"Revenues" means the amounts pledged hereunder to the payment of
principal of, and premium, if any, and interest on, the Bonds, consisting of the
following: (i) all amounts payable from time to time by the Company under
Section 4.2(a) of the Agreement, and all receipts of the Trustee credited under
the provisions of this Indenture against said amounts payable, and (ii) any
portion of the net proceeds of the Bonds deposited with the Trustee under
Section 5.03(a) hereof.
"Securities Depository" means, with respect to a Book Entry Bond, DTC
or any person, firm, association or corporation constituting a "clearing agency"
(securities depository) registered under Section 17A of the Securities Exchange
Act of 1934, as amended, which may at any time be substituted in its place to
act as Securities Depository for the Bonds, or its successors, or any nominee
therefor.
"State" means the State of Arizona.
"Tax Agreement" means the Tax Exemption Certificate and Agreement with
respect to the Bonds, dated as of the date of the delivery of the Bonds, among
the Company, the Issuer and the Trustee, as from time to time amended and
supplemented.
"Trust Estate" means the property conveyed to the Trustee pursuant to
the Granting Clauses hereof.
"Trustee" means Norwest Bank Arizona, N.A., as trustee hereunder, and
any successor trustee pursuant to Section 9.06 or 9.09 hereof at the time
serving as successor Trustee hereunder, and any co-trustee serving as such
hereunder.
"Written Consent of the Issuer," "Written Order of the Issuer,"
"Written Request of the Issuer" and "Written Requisition of the Issuer" mean,
respectively, a written consent, order, request or requisition signed by or on
behalf of the Issuer by an authorized Issuer Representative.
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<PAGE> 20
ARTICLE II
THE BONDS
SECTION 2.01. AUTHORIZED AMOUNT AND PURPOSE OF BONDS. No Bonds
may be issued under the provisions of this Indenture except in accordance with
this Article. The total principal amount of Bonds that may be issued hereunder
is hereby expressly limited to $29,300,000 except as provided in Section 2.06
hereof. The Bonds shall be issued for the purpose of refinancing the cost of the
Project by refunding the Prior Bonds, as provided in the Agreement.
SECTION 2.02. ISSUANCE OF BONDS. The Issuer may issue the Bonds
following the execution of this Indenture; and the Trustee shall, at the
Issuer's written request, authenticate such Bonds and deliver them as specified
in such request. The Bonds shall be designated "The Industrial Development
Authority of the City of Phoenix, Arizona Airport Facilities Refunding Bonds
(America West Airlines, Inc. Project) Series 1998." The Bonds shall be
substantially in the form hereinabove set forth with such appropriate
variations, omissions and insertions as are permitted or required by this
Indenture. The Bonds shall be issuable as fully registered bonds without coupons
in Authorized Denominations. Unless the Issuer shall otherwise direct, the Bonds
shall be numbered R-1 and upwards.
Each Bond shall be dated as of April 1, 1998 and shall mature, subject
to prior redemption, upon the terms and conditions hereinafter set forth, on
April 1, 2023. The Bonds shall bear interest at the rate of six and three tenths
percent (6.30%) per annum from and including the date thereof until payment of
the principal or redemption price thereof shall have been made or provided for
in accordance with the provisions hereof, whether at maturity, upon redemption
or otherwise. Interest on the Bonds shall be computed upon the basis of a
360-day year, consisting of twelve (12) thirty (30) day months. Each Bond shall
bear interest on overdue principal and, to the extent permitted by law, on
overdue interest at the rate borne by the Bonds. The Trustee shall insert the
date of authentication of each Bond in the place provided for such purpose in
the form of certificate of authentication of Trustee to be printed on each Bond.
The principal of, and premium, if any, and interest on, the Bonds shall
be payable in any coin or currency of the United States of America which, at the
respective dates of payment thereof, is legal tender for the payment of public
and private debts, and except as otherwise provided for Book Entry Bonds as
permitted by Section 2.09 hereof, such principal and premium, if any, shall be
payable at the Corporate Trust Office of the Trustee. Payment of interest on any
Interest Payment Date on any Bond shall be made to the Owner thereof as of the
close of business on the Record Date immediately prior thereto and except as
otherwise provided for Book Entry Bonds as permitted by Section 2.09 hereof,
shall be (i) made by check or draft mailed on the Interest Payment Date to such
Owner at his address as it appears on the registration books of the Issuer
maintained by the Trustee or at such other address as is furnished to the
Trustee in writing by such Owner not later than the close of business on such
Record Date or (ii) transmitted by wire transfer to an account with a commercial
bank located within the United States of America if such Owner owns at least
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<PAGE> 21
$1,000,000 in aggregate principal amount of the Bonds and shall have provided
wire transfer instructions to the Trustee prior to the close of business on such
Record Date, except that, if and to the extent that there shall be a default in
the payment of the interest due on such Interest Payment Date, such defaulted
interest shall be paid to the Owners in whose names any such Bonds are
registered at the close of business on the fifth Business Day next preceding the
date of payment of such defaulted interest.
Interest on the Bonds shall be payable on each Interest Payment Date
for the period ending on the day immediately preceding such Interest Payment
Date and commencing on the immediately preceding Interest Payment Date, or if no
interest has been paid on the Bonds, on the date of the Bonds. Notwithstanding
the foregoing, if as shown by the records of the Trustee, interest on the Bonds
shall be in default, Bonds issued in exchange for Bonds surrendered for
registration of transfer or exchange shall bear interest from the date to which
interest has been paid in full on the Bonds, or if no interest has been paid on
the Bonds, from the date of the Bonds.
SECTION 2.03. OWNERSHIP, TRANSFER, EXCHANGE AND REGISTRATION OF
BONDS. The Issuer shall cause books for the registration and for the transfer of
the Bonds as provided herein to be kept at the Corporate Trust Office of the
Trustee, which is hereby constituted and appointed the Bond Registrar and
transfer agent for the Bonds. The Issuer shall prepare and deliver to the
Trustee, and the Trustee shall keep custody of, a supply of forms of Bonds duly
executed by the Issuer, as provided in Section 2.04 hereof, for use in the
transfer and exchange of Bonds. The Trustee is hereby authorized and directed to
complete such forms of Bonds as to principal amounts and registered owners, in
accordance with the provisions hereof, in effecting transfers and exchanges of
Bonds as provided herein.
Upon surrender for transfer of any Bond at the Corporate Trust Office
of the Trustee, duly endorsed for transfer or accompanied by a written
instrument or instruments of transfer in form satisfactory to the Trustee duly
executed by the Owner or his attorney duly authorized in writing, the Trustee
shall date and execute the certificate of authentication on and deliver in the
name of the transferee or transferees a new Bond or Bonds duly executed by the
Issuer of Authorized Denominations and for a like aggregate principal amount.
Any Bond or Bonds may be exchanged at the Corporate Trust Office of the
Trustee for a new Bond or Bonds of like aggregate principal amount of other
Authorized Denominations. Upon surrender of any Bond or Bonds for exchange, the
Trustee shall date and execute the certificate of authentication on and deliver
a new Bond or Bonds duly executed by the Issuer which the Bondholder making the
exchange is entitled to receive.
The Trustee shall not be required to transfer or exchange any Bond
after the mailing of notice calling such Bond or portion thereof for redemption,
nor during the period of fifteen days next preceding the mailing of such notice
of redemption.
The person in whose name any Bond shall be registered shall be deemed
and regarded as the absolute owner thereof for all purposes, and payment of the
principal of, or premium,
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<PAGE> 22
if any, or interest on, any Bond shall be made only to or upon the written order
of the registered Owner thereof or his legal representative, but such
registration may be changed as hereinabove provided. All such payments shall be
valid and effective to satisfy and discharge the liability upon such Bond to the
extent of the sum or sums so paid.
The Trustee shall require the payment by the Bondholder requesting
exchange or transfer (other than an exchange upon a partial redemption of a
Bond) of any tax, fee or other governmental charge required to be paid with
respect to such exchange or transfer, but otherwise no charge shall be made to
the Bondholder for such exchange or transfer.
SECTION 2.04. EXECUTION; LIMITED OBLIGATION. The Bonds shall be
executed on behalf of the Issuer with the manual or facsimile signature of its
President and attested with the manual or facsimile signature of its Secretary.
All authorized facsimile signatures shall have the same force and effect as if
manually signed. The Bonds, together with interest thereon, are not general
obligations of the Issuer but are special, limited obligations payable solely
from the Revenues, and shall be a valid claim of the respective Owners thereof
only against the Bond Fund and the Revenues, which Revenues are hereby pledged,
assigned and otherwise secured for the equal and ratable payment of the Bonds
and shall be used for no other purpose than to pay the principal of, premium, if
any, and interest on the Bonds, except as may be otherwise expressly authorized
in this Indenture or the Tax Agreement. The Bonds and interest and premium, if
any, thereon shall never constitute the debt or indebtedness of the Issuer
within the meaning of any provision or limitation of the Constitution of the
State or statutes and shall not constitute nor give rise to a pecuniary
liability of the Issuer or a charge against its general credit. The Issuer has
no taxing power. In case any official of the Issuer whose signature or facsimile
of whose signature shall appear on the Bonds shall cease to be such official
before the delivery of such Bonds, such signature or such facsimile shall
nevertheless be valid and sufficient for all purposes, the same as if he had
remained in office until delivery.
SECTION 2.05. AUTHENTICATION. No Bond shall be valid for any
purpose until the certificate of authentication on such Bond shall have been
duly executed by the Trustee, and such authentication shall be conclusive proof
that such Bond has been duly authenticated and delivered under this Indenture
and that the Owner thereof is entitled to the benefits of the trust hereby
created. The Trustee's certificate of authentication on any Bond shall be deemed
to have been executed by it if manually signed by an authorized signatory of the
Trustee, but it shall not be necessary that the same signatory sign the
certificate of authentication on all of the Bonds issued hereunder.
SECTION 2.06. MUTILATED, DESTROYED, LOST OR STOLEN BONDS. In the
event any Bond or temporary Bond is mutilated, lost, stolen or destroyed, the
Trustee may authenticate a new Bond duly executed by the Issuer of like date and
denomination as that mutilated, lost, stolen or destroyed; provided that, in the
case of any mutilated Bond, such mutilated Bond shall first be surrendered to
the Trustee, and in the case of any lost, stolen or destroyed Bond, there shall
be first furnished to the Trustee evidence of such loss, theft or destruction
satisfactory to the Trustee, together with indemnity to the Issuer, the Trustee
and the Company satisfactory to them. In the event any such Bond shall have
matured or been
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<PAGE> 23
redeemed, instead of issuing a duplicate Bond, the Trustee on behalf of the
Issuer may pay the same without surrender thereof. The Issuer and the Trustee
may charge the Owner of such Bond with their reasonable fees and expenses in
this connection. The Issuer shall cooperate with the Trustee in connection with
the issue of replacement Bonds, but nothing in this Section shall be construed
in derogation of any rights which the Issuer, the Company or the Trustee may
have to receive indemnification against liability, or payment or reimbursement
of expenses, in connection with the issue of a replacement Bond. All Bonds shall
be held and owned upon the express condition that the foregoing provisions are,
to the extent permitted by law, exclusive with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Bonds, and shall preclude any
and all other rights or remedies.
SECTION 2.07. CANCELLATION AND DESTRUCTION OF SURRENDERED BONDS.
Whenever any Outstanding Bond shall be delivered to the Trustee for transfer,
exchange or cancellation pursuant to this Indenture, upon payment of the
principal amount represented thereby, or for replacement pursuant to Section
2.06 hereof, such Bond shall be promptly cancelled and cremated or otherwise
destroyed by the Trustee.
SECTION 2.08. DELIVERY OF THE BONDS. Upon the execution and
delivery of this Indenture, the Issuer shall execute and deliver to the Trustee
and the Trustee shall authenticate the Bonds and deliver them to the Original
Purchasers as directed by the Issuer as hereinafter in this Section provided.
Prior to the delivery by the Trustee of any of the Bonds there shall be
filed with the Trustee:
(1) A duly certified copy of the Resolution.
(2) Original executed counterparts of the Agreement, the Tax
Agreement and this Indenture.
(3) An opinion of Bond Counsel to the effect that the Bonds
have been validly issued under this Indenture and that all requirements
under this Indenture precedent to the delivery of the Bonds have been
satisfied.
(4) A request and authorization to the Trustee on behalf of
the Issuer and signed by the Executive Officer to authenticate and
deliver the Bonds to or as directed by the Original Purchaser,
registered in the names and in the Authorized Denominations specified
to the Trustee by the Original Purchaser, upon payment by the Original
Purchaser of a sum specified in such request to the Trustee (such sum
to be applied in accordance with the Written Order of the Issuer
furnished to the Trustee on the Issue Date), plus accrued interest, if
any, on the Bonds to the date of delivery (which accrued interest shall
be deposited in the Bond Fund).
(5) Original executed Investor Letter(s) in the form attached
as Exhibit I hereto.
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<PAGE> 24
SECTION 2.09. BOOK ENTRY SYSTEM. The Trustee and the Issuer (or
the Issuer with advice to the Trustee), at the direction of the Company, may
from time to time enter into, and discontinue, an agreement with a "clearing
agency" (securities depository) registered under Section 17A of the Securities
Exchange Act of 1934, as amended (the "Securities Depository"), which is the
owner of the Bonds, to establish procedures with respect to the Bonds not
inconsistent with the provisions of this Indenture; provided, however, that,
notwithstanding any other provisions of this Indenture, any such agreement may
provide:
(a) that the Securities Depository is not required to present
a Bond to the Trustee in order to receive a partial payment of
principal;
(b) that different provisions for notice to such Securities
Depository may be set forth therein; and
(c) that a legend shall appear on each Bond so long as the
Bonds are subject to such agreement.
With respect to Bonds registered in the name of a Securities Depository
(or its nominee) neither the Trustee, the Issuer nor the Company shall have any
obligation to any of its members or participants or to any person on behalf of
whom an interest is held in the Bonds.
It is hereby acknowledged that the Issuer has entered into an agreement
(the "Letter of Representation") with DTC which applies to the Bonds, and while
the Letter of Representations is in effect, the procedures established by DTC
shall apply to the Bonds notwithstanding any other provisions of this Indenture
to the contrary. As long as DTC is the Securities Depository with respect to the
Bonds, the Trustee shall be a DTC Participant.
ARTICLE III
REDEMPTION OF BONDS BEFORE MATURITY
SECTION 3.01. OPTIONAL REDEMPTION. The Bonds shall be subject to
redemption, at the option of the Company, prior to maturity on or after April 1,
2008, in whole or in part on the dates set forth below, at the redemption prices
(expressed as percentages of the principal amount) set forth in the following
table, plus accrued interest, if any, to the redemption date:
<TABLE>
<CAPTION>
Redemption Dates Redemption Prices
---------------- -----------------
<S> <C> <C>
April 1, 2008 and October 1, 2008 102%
April 1, 2009 and October 1, 2009 101%
</TABLE>
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<PAGE> 25
<TABLE>
<CAPTION>
<S> <C> <C>
April 1, 2010 and any Interest Payment Date thereafter. 100%
</TABLE>
SECTION 3.02. RESERVED.
SECTION 3.03. MANDATORY REDEMPTION. The Bonds shall be subject
to mandatory redemption prior to maturity in whole, or as hereafter provided in
part, at any time prior to their maturity at a redemption price equal to 100% of
the principal amount thereof plus accrued interest, if any, to the redemption
date, not more than one hundred eighty (180) days after (i) receipt by the
Company of written notice of the issuance of a private letter ruling or a
technical advice memorandum by the Internal Revenue Service in a proceeding in
connection with which the Company has had the opportunity to participate or (ii)
the Company receives written notice of a final determination by any court of
competent jurisdiction of the United States in a proceeding to which the Company
is a party or in which the Company has had the opportunity to participate, in
either case, to the effect that, as a result of a failure by the Company to
observe any covenant, agreement, representation or warranty in the Agreement or
the Project Certificate, the interest payable on the Bonds is included in the
gross income for federal income tax purposes of the Owners or beneficial owners
thereof (other than a person who is a "substantial user" of the Project or a
"related person" within the meaning of Section 147(a) of the Code or Section
103(b)(13) of the 1954 Code). Upon the occurrence of any event described in the
first sentence of this Section 3.03, the Bonds shall be redeemed in whole
unless, in the opinion of Bond Counsel, the redemption of a portion of the
Outstanding Bonds would have the result that interest payable on the Bonds
remaining Outstanding after such redemption would not be included in the gross
income for federal income tax purposes of any Owners or beneficial owners of the
Bonds (other than a person who is a "substantial user" of the Project or a
"related person" within the meaning of Section 147(a) of the Code or Section
103(b)(13) of the Prior Code), in which event only such portion of the
Outstanding Bonds shall be redeemed.
SECTION 3.04. NOTICE OF REDEMPTION. Upon receipt of notice given
by the Company pursuant to Section 7.3 of the Agreement, notice of the call for
any redemption of Bonds or any portions thereof pursuant to Section 3.01 or 3.03
hereof identifying the Bonds or portions thereof to be redeemed, specifying the
redemption date, the redemption price, the place and manner of payment and that
from the redemption date interest will cease to accrue (provided that funds for
the redemption of such Bonds or portions thereof are on deposit with the Trustee
on such redemption date) shall be given by the Trustee by mailing a copy of the
redemption notice by first-class mail to the Owner of each Bond to be redeemed
in whole or in part at the address shown on the registration books; provided,
however, except in the case of a conditional notice of optional redemption as
described in the next succeeding paragraph, the Trustee shall not give any
notice of redemption unless funds sufficient for such redemption are then on
deposit with the Trustee. Notice of redemption shall be provided at least thirty
(30) days prior to the date fixed for redemption to the Owners of Bonds to be
redeemed; provided, however, that failure to duly give such notice, or any
defect therein, shall not affect the validity of any proceedings for the
redemption of Bonds with respect to which no such failure or defect occurred.
Upon presentation and
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<PAGE> 26
surrender of Bonds so called for redemption in whole or in part at the place or
places of payment, such Bonds or portions thereof shall be redeemed.
With respect to any notice of optional redemption of Bonds, unless upon
the giving of such notice such Bonds shall be deemed to have been paid within
the meaning of Article VII hereof, such notice may state (if so directed by the
Company in writing) that such redemption shall be conditioned upon the receipt
by the Trustee on or prior to the date fixed for such redemption of moneys
sufficient to pay the principal of, and premium, if any, and interest on, such
Bonds to be redeemed, and that if such moneys shall not have been so received
said notice shall be of no force and effect and the Issuer shall not be required
to redeem such Bonds. In the event that such notice of redemption contains such
a condition and such moneys are not so received, the redemption shall not be
made and the Trustee shall within a reasonable time thereafter give notice, in
the manner in which the notice of redemption was given, that such moneys were
not so received.
Any notice mailed as provided in this Section shall be conclusively
presumed to have been duly given, whether or not the Owner receives the notice.
In addition to the foregoing notice, further notice may be given by the
Trustee as set out below, but no defect in said further notice nor any failure
to give all or any portion of such further notice shall in any manner defeat the
effectiveness of a call for redemption if notice thereof is given as above
prescribed.
A. Each further notice of redemption given hereunder shall contain
the information required above for an official notice of redemption plus (i) the
CUSIP number of the Bonds; (ii) the Dated Date of the Bonds; (iii) the rate of
interest borne by the Bonds; (iv) the maturity date of the Bonds; and (v) any
other descriptive information needed to identify accurately the Bonds being
redeemed.
B. Each further notice of redemption shall be sent at least five
days before the date the redemption notice to the Owners is required to be given
as provided in the first paragraph of this Section 3.04, by registered or
certified mail or overnight delivery service, to all registered securities
depositories then in the business of holding substantial amounts of obligations
of types comprising the Bonds (such depositories now being Depository Trust
Company of New York, New York; Midwest Securities Trust Company of Chicago,
Illinois; Pacific Securities Depository Trust Company of San Francisco,
California; and Philadelphia Depository Trust Company of Philadelphia,
Pennsylvania).
C. Each further notice of redemption may be published one time in
the Bond Buyer of New York, New York or, if such publication is impractical, in
some other financial newspaper or journal which regularly carries notices of
redemption of other obligations similar to the Bonds, such publication to be
made at the time the redemption notice to the Owners is required to be given as
provided in the first paragraph of this Section 3.04.
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<PAGE> 27
D. Each further notice of redemption shall be given at least two
days before the date the redemption notice to the Owners is required to be given
as provided in the first paragraph of this Section 3.04, by (i) registered or
certified mail, postage prepaid, or (ii) overnight delivery service, to two of
the following services selected by the Company and at the address provided to
the Trustee by the Company:
(1) Financial Information, Inc.'s Financial Daily Called
Bond Service;
(2) Interactive Data Corporation's Bond Service;
(3) Kenny Information Service's Called Bond Service;
(4) Moody's Municipal and Government Called Bond Service;
or
(5) Standard & Poor's Called Bond Record.
The Company shall pay, or shall reimburse the Trustee for payment of,
all costs and expenses of redeeming Bonds.
SECTION 3.05. DEPOSIT OF FUNDS. For the redemption of any of the
Bonds, the Issuer shall cause to be deposited in the Bond Fund out of the
Revenues moneys sufficient to pay when due the principal of, and premium, if
any, and interest on, the Bonds or portions thereof to be redeemed on the
redemption date. Moneys in the Bond Fund which are available therefor shall be
credited against any moneys which the Issuer is required to cause to be so
deposited in the Bond Fund.
SECTION 3.06. PARTIAL REDEMPTION OF BONDS. In case a Bond is of
a denomination larger than the minimum Authorized Denomination, all or a portion
of such Bond may be redeemed in an Authorized Denomination. Upon surrender of
any Bond for redemption in part only, the Issuer shall execute and the Trustee
shall authenticate and deliver to the Owner thereof, without cost to the Owner,
a new Bond or Bonds of Authorized Denominations in aggregate principal amount
equal to the unredeemed portion of the Bond surrendered.
SECTION 3.07. SELECTION OF BONDS FOR REDEMPTION. If less than
all of the Bonds are called for redemption, the Trustee shall select the Bonds
or portions thereof to be redeemed from the Bonds outstanding not previously
called for redemption, in such manner as in the Trustee's sole discretion it
shall deem appropriate and fair. If it is determined that one or more, but not
all, of the portions of principal amount represented by any such Bond is to be
called for redemption, then, upon notice of intention to redeem such portion or
portions, the Owner of such Bond shall forthwith surrender such Bond to the
Trustee for (a) payment to such Owner of the redemption price of the portion or
portions of principal amount called for redemption, and (b) delivery to such
Owner of a new Bond or Bonds in the aggregate principal amount of the unredeemed
portion of the principal amount of such Bond. New Bonds representing the
unredeemed portion of the principal amount of such Bond shall be issued to the
Owner thereof, without charge therefor. If the Owner of any
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<PAGE> 28
such Bond shall fail to present such Bond to the Trustee for payment and
exchange as aforesaid, such Bond shall, nevertheless, become due and payable on
the date fixed for redemption to the extent of the portion or portions of
principal amount called for redemption (and to that extent only) and interest
with respect to such portion or portions will cease to accrue.
ARTICLE IV
PAYMENT; FURTHER ASSURANCES
SECTION 4.01. PAYMENT OF PRINCIPAL OR REDEMPTION PRICE OF AND
INTEREST ON BONDS. The Issuer shall promptly pay or cause to be paid the
principal of, and premium, if any, and interest on, every Bond issued hereunder
according to the terms thereof, but shall be required to make such payment or
cause such payment to be made only out of Revenues. The Issuer hereby appoints
the Trustee to act as the Paying Agent for the Bonds and designates the
Corporate Trust Office of the Trustee as the place of payment of principal and
premium, if any, of the Bonds.
SECTION 4.02. PERFORMANCE OF COVENANTS; THE ISSUER. The Issuer
covenants that it will faithfully perform at all times any and all covenants,
undertakings, stipulations and provisions contained in this Indenture, in any
and every Bond executed, authenticated and delivered hereunder and in all of its
proceedings pertaining thereto; provided, however, that except for the matters
set forth in Section 4.01 hereof the Issuer shall not be obligated to take any
action or execute any instrument pursuant to any provision hereof until it shall
have been requested to do so by the Company, or shall have received the
instrument to be executed and at the Issuer's option shall have received from
the Company assurance satisfactory to Issuer that the Issuer shall be reimbursed
for its reasonable expenses incurred or to be incurred in connection with taking
such action or executing such instrument. The Bonds and interest and premium, if
any, thereon, and any obligation of the Issuer under the Agreement or this
Indenture, shall never constitute a debt or indebtedness of the Issuer within
the meaning of any constitutional or statutory provision or limitation and shall
not constitute nor give rise to a pecuniary liability of the Issuer or a charge
against its general credit. The Issuer has no taxing power.
SECTION 4.03. RIGHT TO PAYMENTS UNDER AGREEMENT; INSTRUMENTS OF
FURTHER ASSURANCE. The Issuer covenants that it will defend its right to the
payment of amounts due from the Company under the Agreement to the Trustee, for
the benefit of the Owners of the Bonds against the claims and demands of all
persons whomsoever. Notwithstanding the foregoing, the Issuer shall not be
obligated to take any action under this Section 4.03 unless the Issuer receives
satisfactory indemnification for the reimbursement of all expenses to which it
may be put and to protect it against all liability. The Issuer covenants that it
will do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered, such indentures supplemental hereto and such further
acts, instruments and transfers as the Trustee may reasonably require for the
better assuring, transferring, conveying, pledging, assigning and confirming
unto the Trustee all and
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<PAGE> 29
singular the rights assigned hereby and the amounts pledged hereto, to the
payment of the principal of, and premium, if any, and interest on, the Bonds.
The Issuer covenants and agrees that, except as herein and in the Agreement and
the Tax Agreement provided, it will not sell, convey, mortgage, encumber or
otherwise dispose of any part of the Revenues or its rights under the Agreement.
No provision of this Indenture shall require the Issuer to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it believes that repayment of such funds or adequate indemnity
against such risk or liability is not assured to it.
SECTION 4.04. FINANCING STATEMENTS. The Issuer shall cause a
financing statement related to this Indenture to be filed at the time of
execution and delivery of the Bonds. The Company shall provide to the Trustee
thirty days prior to the sixth anniversary of such financing statement (or any
continuation statement with respect thereto) a certificate as to whether a
continuation statement under Arizona Revised Statutes Section 47-9403B is
required to be filed to continue the effectiveness of the financing statement
and if a continuation statement is required, the Company shall provide the
completed continuation statement to the Trustee. The Trustee and the Issuer
shall, if necessary, execute or join in the execution of the continuation
statement and file or join in the filing thereof at such time or times and in
such place or places as it may be advised by said certificate will preserve the
effectiveness of the financing statement until the principal and interest on the
Bonds shall have been paid or provided for. The Trustee shall, to the extent
reasonably possible, take such actions as may be specified in such certificate,
but shall have no further obligation or responsibility to take any other actions
to preserve the lien of this Indenture upon the Trust Estate or any part
thereof.
SECTION 4.05. INSPECTION OF PROJECT BOOKS. The Issuer and the
Trustee covenant and agree that all books and documents in their possession
relating to the Project and the Revenues derived from the Project shall at all
times be open to inspection by such accountants or other agencies as the other
party may from time to time designate.
SECTION 4.06. RIGHTS UNDER AGREEMENT. The Agreement, a duly
executed counterpart of which has been filed with the Trustee, sets forth the
covenants and obligations of the Issuer and the Company, and reference is hereby
made to the same for a detailed statement of said covenants and obligations of
the Company thereunder, and the Issuer agrees that the Trustee in its name or in
the name of the Issuer may enforce all rights of the Issuer and all obligations
of the Company under and pursuant to the Agreement for and on behalf of the
Bondholders, whether or not the Issuer is in default hereunder. Nothing herein
contained shall be construed to prevent the Issuer from enforcing directly any
and all of its rights under Sections 4.2(d), 4.2(e), 5.3 and 6.4 of the
Agreement.
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<PAGE> 30
ARTICLE V
REVENUES AND FUNDS
SECTION 5.01. SOURCE OF PAYMENT OF BONDS. The Bonds and all
payments required of the Issuer hereunder are not general obligations of the
Issuer but are limited obligations as described in Section 2.04 hereof. The
Revenues are pledged and assigned to the payment of the principal of, and
premium, if any, and interest on, the Bonds. The payments provided in Sections
4.2(a) of the Agreement are to be remitted directly to the Trustee and deposited
in the Bond Fund. Such payments, sufficient in amount to insure the prompt
payment of the principal of, and premium, if any, and interest on, the Bonds,
are pledged to such payment.
SECTION 5.02. CREATION OF THE BOND FUND. There is hereby created
by the Issuer and ordered established with the Trustee a trust fund to be
designated "The Industrial Development Authority of the City of Phoenix, Arizona
- - Airport Facilities Refunding Bond Fund - America West Airlines, Inc. Project -
Series 1998", which shall be used to pay the principal of, and premium, if any,
and the interest on, the Bonds.
SECTION 5.03. PAYMENTS INTO THE BOND FUND. There shall be
deposited into the Bond Fund from time to time the following:
(a) all accrued interest, if any, paid by the Original
Purchaser of the Bonds;
(b) all payments specified in Section 4.2 (a) of the
Agreement; and
(c) all other moneys received by the Trustee under and
pursuant to any of the provisions of the Agreement or otherwise, when
accompanied by directions from the person depositing such moneys that
such moneys are to be paid into the Bond Fund.
The Issuer hereby covenants and agrees that so long as any of the Bonds
issued hereunder are outstanding it will cause to be deposited in the Bond Fund
sufficient amounts from Revenues promptly to meet and pay the principal of, and
premium, if any, and interest on, the Bonds as the same become due and payable.
Nothing herein shall be construed as requiring the Issuer to use any funds or
revenues from any source other than Revenues.
SECTION 5.04. USE OF MONEYS IN THE BOND FUND. Except as provided
in Sections 5.06, 5.09 and 9.03 hereof, moneys in the Bond Fund shall be used
solely for the payment of the principal of, and premium, if any, and interest
on, the Bonds as the same shall become due and payable at maturity, upon
redemption or otherwise.
SECTION 5.05. CUSTODY OF THE BOND FUND. The Bond Fund shall be
in the custody of the Trustee, and the Issuer hereby authorizes and directs the
Trustee to withdraw sufficient funds from the Bond Fund to pay the principal of,
and premium, if any, and interest on, the Bonds as the same become due and
payable and to comply with Article VI of the Tax Agreement, which authorization
and direction the Trustee hereby accepts.
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<PAGE> 31
SECTION 5.06. NON-PRESENTMENT OF BONDS. In the event any Bond shall not be
presented for payment when the principal thereof becomes due, either at maturity
or otherwise, or on the date fixed for the redemption thereof, or in the event
any interest payment thereon is unclaimed, if moneys sufficient to pay such Bond
and premium, if any, or interest shall have been deposited in the Bond Fund, all
liability of the Issuer to the Owner thereof for the payment of such Bond and
premium, if any, or interest shall forthwith cease, determine and be completely
discharged, and thereupon it shall be the duty of the Trustee to hold such
moneys, without liability for interest thereon, for the benefit of the Owner of
such Bond who shall thereafter be restricted exclusively to such moneys, for any
claim of whatever nature on his part under this Indenture or on, or with respect
to, said Bond. Any moneys so deposited with and held by the Trustee not so
applied to the payment of Bonds and premium, if any, or interest, if any, within
one (1) year after the date on which the same shall have become due shall be
paid by the Trustee to the Company upon the written direction of an Authorized
Company Representative and thereafter Owners shall be entitled to look only to
the Company for payment, and then only to the extent of the amount so repaid,
and the Company shall not be liable for any interest thereon and shall not be
regarded as a trustee of such moneys and the Trustee shall have no further
responsibility with respect to such moneys.
SECTION 5.07. TRUSTEE'S FEES, CHARGES AND EXPENSES. The Trustee agrees
that the Issuer shall have no liability for any fees, charges and expenses of
the Trustee, and the Trustee agrees to look only to the Company for the payment
of all fees, charges and expenses of the Trustee as provided in the Agreement
and in this Indenture.
SECTION 5.08. MONEYS TO BE HELD IN TRUST. All moneys and securities held
by the Trustee in the Bond Fund, all moneys required to be deposited with or
paid to the Trustee for deposit into the Bond Fund under any provision hereof,
all moneys withdrawn from the Bond Fund and held by the Trustee, shall be held
by the Trustee in trust, and such moneys (other than as provided in Sections
5.06 and 5.12 hereof and subject to the provisions of the Tax Agreement as
provided in Section 5.13 hereof) shall, while so held, constitute part of the
Trust Estate and be subject to the lien hereof.
SECTION 5.09. REPAYMENT TO THE COMPANY FROM THE BOND FUND. Any amounts
remaining in the Bond Fund after payment in full of the principal of, and
premium, if any, and interest on, the Bonds (or provision for payment thereof as
provided in this Indenture), the fees, charges and expenses of the Issuer and
the Trustee and all other amounts required to be paid under the Agreement and
this Indenture shall be paid to the Company as provided in Section 8.5 of the
Agreement, subject to the provisions of the Tax Agreement.
SECTION 5.10. REVENUES TO BE PAID OVER TO TRUSTEE. The Issuer will cause
the Revenues to be paid to the Trustee for deposit in the Bond Fund in
accordance with the terms of this Indenture to effect payment of the principal
of, and premium, if any, and interest on, the Bonds as the same become due.
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SECTION 5.11. PAYMENTS OF PRINCIPAL AND INTEREST. The Trustee shall pay
from Revenues received by the Trustee the principal of, and premium, if any, and
interest on, the Bonds as the same become due and payable.
SECTION 5.12. REVENUES TO BE HELD FOR ALL BONDHOLDERS; CERTAIN EXCEPTIONS.
Revenues and investments thereof shall, until applied as provided in this
Indenture, be held by the Trustee for the benefit of the Owners of all
Outstanding Bonds (except as provided by Section 5.06 hereof), except that any
portion of the Revenues representing principal of, and premium, if any, and
interest on, any Bonds previously called for redemption in accordance with
Article III of this Indenture shall be held for the benefit of the Owners of
such Bonds only and shall not be deposited or invested pursuant to Article VI
hereof, notwithstanding any provision of Article VI.
SECTION 5.13. TAX AGREEMENT. Notwithstanding anything in the Agreement or
this Indenture to the contrary, the Trustee is hereby authorized to deposit
moneys in the Bond Fund and to withdraw moneys from the Bond Fund, and to
establish and administer the Rebate Fund, if any, in order to comply with the
provisions of the Tax Agreement.
SECTION 5.14. COST OF ISSUANCE FUND. The Trustee is authorized to create a
Costs of Issuance Fund to be funded solely from amounts paid by the Company.
Amounts in such Fund shall be disbursed at the written direction of the Company.
The Issuer shall direct the Trustee in writing on the date of issuance of the
Bonds as to whether such fund shall be created.
ARTICLE VI
INVESTMENT OF MONEYS
SECTION 6.01. INVESTMENT OF BOND FUND MONEYS. Subject to the provisions of
the Tax Agreement and Sections 5.06 and 5.12 hereof, any moneys held as part of
the Bond Fund, shall be invested and reinvested by the Trustee at the direction
of the Company in accordance with the provisions of Section 3.5 of the
Agreement. Any such investments shall be held by or under the control of the
Trustee and shall be deemed at all times a part of the Bond Fund. The interest
accruing thereon, any profit realized from such investments and any loss
resulting from such investments shall be credited or charged to such fund in
accordance with Section 3.5 of the Agreement. The Trustee shall sell and reduce
to cash a sufficient amount of such investments in the Bond Fund whenever the
cash balance in the Bond Fund is insufficient to pay the principal of, and
premium, if any, and interest on, the Bonds when due and whenever required in
order to comply with the provisions of the Tax Agreement.
SECTION 6.02. INVESTMENTS; ARBITRAGE. The Trustee may make any and all
investments permitted by the provisions of Section 6.01 hereof through its own
investment department or that of an affiliate. The Company has covenanted in
Section 3.6 of the Agreement that none of the proceeds of the Bonds or the
payments to be made under the
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Agreement, or any other funds which may be deemed to be proceeds of the Bonds
pursuant to Section 148(a) of the Code, will be invested in such a way as to
cause the Bonds to be treated as "arbitrage bonds" within the meaning of Section
148(a) of the Code.
ARTICLE VII
DEFEASANCE
SECTION 7.01. DEFEASANCE. If the Issuer shall pay or cause to be paid, or
there shall be otherwise paid or provision for payment made to or for the Owners
of the Bonds the principal, premium, if any, and interest due or to become due
thereon at the times and in the manner stipulated therein, and if the Issuer
shall keep, perform and observe all and singular the covenants and promises in
the Bonds and in this Indenture expressed as to be kept, performed and observed
by it or on its part, and shall pay or cause to be paid to the Trustee all sums
of money due or to become due according to the provisions hereof, then this
Indenture and the lien, rights and interests created hereby shall cease,
determine and become null and void (except as to any surviving rights of
payment, registration, transfer or exchange of Bonds herein provided for),
whereupon the Trustee upon written request of an Authorized Issuer
Representative shall cancel and discharge this Indenture, and execute and
deliver to the Issuer such instruments in writing as shall be requested by an
Authorized Issuer Representative and requisite to discharge this Indenture, and
release, assign and deliver unto the Issuer any and all of the estate, right,
title and interest in and to any and all rights assigned or pledged to the
Trustee or otherwise subject to this Indenture, except amounts in the Bond Fund
required to be paid to the Company under Section 5.09 hereof and except moneys
or securities held by the Trustee for the payment of the principal of and
premium, if any, and interest on the Bonds and except for any amounts required
to be transferred to the Rebate Fund.
Any Bond or Authorized Denomination thereof shall be deemed to be paid
within the meaning of this Indenture when (a) payment of the principal of, and
premium, if any, on, such Bond or Authorized Denomination thereof, plus interest
thereon to the due date thereof (whether such due date is by reason of maturity
or upon redemption as provided herein) either (i) shall have been made or caused
to be made in accordance with the terms thereof or (ii) shall have been provided
for by irrevocably depositing with the Trustee in trust and irrevocably set
aside exclusively for such payment (1) moneys sufficient to make such payment
and/or (2) Government Obligations maturing as to principal and interest in such
amount and at such time as will insure the availability of sufficient moneys to
make such payment, and (b) all necessary and proper fees, compensation and
expenses of the Trustee pertaining to any such deposit shall have been paid or
the payment thereof provided for to the satisfaction of the Trustee. At such
times as a Bond or Authorized Denomination thereof shall be deemed to be paid
hereunder, as aforesaid, such Bond or Authorized Denomination thereof shall no
longer be secured by or entitled to the benefits of this Indenture (except as to
any surviving rights to payment, registration of transfer, exchange or
replacement of Bonds herein provided for, and except for the purposes of any
such payment from such moneys or Government Obligations).
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Notwithstanding the foregoing paragraph, in the case of a Bond or
Authorized Denomination thereof which by its terms may be redeemed prior to the
stated maturity thereof, no deposit under clause (a)(ii) of the immediately
preceding paragraph shall be deemed a payment of such Bond or Authorized
Denomination thereof as aforesaid until proper notice of redemption of such Bond
or Authorized Denomination thereof shall have been previously given in
accordance with Article III of this Indenture, or in the event said Bond or
Authorized Denomination thereof is not to be redeemed within the next succeeding
sixty (60) days, until the Company shall have given the Trustee on behalf of the
Issuer, in form satisfactory to the Trustee, irrevocable instructions to notify,
as soon as practicable, the Owner of such Bond or Authorized Denomination
thereof in accordance with Article III hereof, that the deposit required by
(a)(ii) above has been made with the Trustee and that said Bond or Authorized
Denomination thereof is deemed to have been paid in accordance with this Article
and stating the maturity or redemption date upon which moneys are to be
available for the payment of the principal of and the applicable premium, if
any, on said Bond or Authorized Denomination thereof, plus interest thereon to
the due date thereof.
Notwithstanding any provision of any other Article of this Indenture which
may be contrary to the provisions of this Article, all moneys or Government
Obligations set aside and held in trust pursuant to the provisions of this
Article for the payment of Bonds or Authorized Denominations thereof (including
interest and premium thereon, if any) shall be applied to and used solely for
the payment of the particular Bonds or Authorized Denominations thereof
(including interest and premium thereon, if any) with respect to which such
moneys and Government Obligations have been so set aside in trust.
Anything in Article X hereof to the contrary notwithstanding, if moneys or
Government Obligations have been deposited or set aside with the Trustee
pursuant to this Article for the payment of Bonds or Authorized Denominations
thereof and the interest and premium, if any, thereon and such Bonds or
Authorized Denominations thereof and the interest and premium, if any, thereon
shall not have in fact been actually paid in full, no amendment to the
provisions of this Article shall be made without the consent of the Owner of
each of the Bonds affected thereby.
ARTICLE VIII
DEFAULT PROVISIONS; REMEDIES
SECTION 8.01. DEFAULTS; EVENTS OF DEFAULT. If any of the following events
occurs, it is hereby defined as and declared to be and to constitute a default
or an event of default:
(a) Failure to make due and punctual payment of any installment of
interest on any Bond when the same shall have become due and payable and
the continuation of such failure for a period of two (2) Business Days
after such payment has become due and payable;
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(b) Failure to make due and punctual payment of the principal of and
premium, if any, on any Bond at the stated maturity thereof, or upon
proceedings for the unconditional redemption thereof;
(c) The occurrence of an "event of default" under the Agreement;
(d) Failure on the part of the Issuer to perform or observe any of
its covenants, agreements or conditions in this Indenture or in the Bonds
contained and failure to remedy the same after notice thereof pursuant to
Section 8.10 hereof.
SECTION 8.02. ACCELERATION. Upon the occurrence of an event of default
under Section 8.01 the Trustee may, and upon the written request of the Owners
of not less than a majority in aggregate principal amount of Bonds then
outstanding shall, declare the principal of all Bonds then outstanding and the
interest accrued thereon immediately due and payable, and such principal and
interest shall thereupon become and be immediately due and payable. The Trustee
shall immediately thereafter give notice of such declaration to the Company and
the Issuer. After such declaration of acceleration the Trustee shall immediately
declare all indebtedness payable under Section 4.2(a) of the Agreement to be
immediately due and payable in accordance with Section 6.2 of the Agreement.
The above provisions are subject to waiver, rescission and annulment as
provided in Section 8.09 hereof.
SECTION 8.03. REMEDIES; RIGHTS OF BONDHOLDERS. Upon the occurrence and
continuation of an event of default the Trustee may pursue any available remedy
at law or in equity by suit, action, mandamus or other proceeding to enforce the
payment of the principal of, and premium, if any, and interest on, the Bonds
then outstanding, and to enforce and compel the performance of the duties and
obligations of the Issuer as herein set forth. In addition, the Trustee may,
without notice to the Issuer or the Company, exercise any and all remedies
afforded the Issuer under Article VI of the Agreement in its name or the name of
the Issuer without the necessity of joining the Issuer.
If an event of default shall have occurred and be continuing and if
requested so to do by the Owners of not less than a majority in aggregate
principal amount of Bonds then outstanding and upon being indemnified as
provided in Section 9.01(i) hereof, the Trustee shall be obligated to exercise
such one or more of the rights and powers conferred by this Section 8.03 and
Section 8.02 hereof as the Trustee being advised by Counsel shall deem most
expedient in the interests of the Bondholders.
No remedy by the terms of this Indenture conferred upon or reserved to the
Trustee (or to the Bondholders) is intended to be exclusive of any other remedy,
but each and every such remedy shall be cumulative and shall be in addition to
any other remedy given to the Trustee or to the Bondholders hereunder or now or
hereafter existing at law or in equity or by statute.
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No delay or omission to exercise any right, power or remedy accruing upon
any event of default shall impair any such right, power or remedy or shall be
construed to be a waiver of any such event of default or acquiescence therein;
and every such right, power or remedy may be exercised from time to time and as
often as may be deemed expedient.
No waiver of any event of default hereunder, whether by the Trustee or by
the Bondholders, shall extend to or shall affect any subsequent event of default
or shall impair any rights or remedies consequent thereon.
SECTION 8.04. RIGHT OF BONDHOLDERS TO DIRECT PROCEEDINGS. Anything in this
Indenture to the contrary notwithstanding, the Owners of not less than a
majority in aggregate principal amount of Bonds then outstanding shall have the
right, at any time, by an instrument or instruments in writing executed and
delivered to the Trustee, to direct the time, method and place of conducting all
proceedings to be taken in connection with the enforcement of the terms and
conditions of this Indenture, or for the appointment of a receiver or any other
proceedings hereunder; provided, that such direction shall not be otherwise than
in accordance with the provisions of law and of this Indenture.
SECTION 8.05. APPLICATION OF MONEYS. All moneys received by the Trustee
pursuant to any right given or action taken under the provisions of this Article
shall, after payment of the costs and expenses of the proceedings resulting in
the collection of such moneys and of the fees, expenses, liabilities and
advances incurred or made by the Trustee and its Counsel, be deposited in the
Bond Fund and all such moneys and all other moneys then on deposit in the Bond
Fund (except as provided in Section 5.06 hereof and subject to the Tax
Agreement) shall be applied to the payment of the principal of, premium, if any,
and interest then due and unpaid upon the Bonds (except as provided in Section
5.06 hereof), without preference or priority of any kind, ratably, according to
the amounts due and payable on such Bonds for principal, premium, if any, and
interest, respectively, to the persons entitled thereto without any
discrimination or privilege.
Whenever moneys are to be applied pursuant to the provisions of this
Section, such moneys shall be applied at such times, and from time to time, as
the Trustee shall determine. Whenever the Trustee shall apply such moneys, it
shall fix the date (which shall be an Interest Payment Date unless it shall deem
another date more suitable) upon which such application is to be made and upon
such date interest on the amounts of principal to be paid on such date shall
cease to accrue. The Trustee shall give such notice as it may deem appropriate
of the deposit with it of any such moneys and of the fixing of any such date.
Whenever all principal of, and premium, if any, and interest on, all Bonds have
been paid under the provisions of this Section 8.05 and all expenses and charges
of the Trustee have been paid, any balance remaining in the Bond Fund shall be
paid to the Company as provided in Section 5.09 hereof, subject to the
provisions of the Tax Agreement.
SECTION 8.06. REMEDIES VESTED IN TRUSTEE. All rights of action (including
the right to file proofs of claims) under this Indenture or under any of the
Bonds may be enforced by the Trustee without the possession of any of the Bonds
or the production thereof in any trial or other proceedings relating thereto and
any such suit or proceeding instituted
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by the Trustee shall be brought in its name as Trustee without the necessity of
joining as plaintiffs or defendants any Owners of the Bonds, and any recovery of
judgment shall be for the equal and ratable benefit of the Owners of the
outstanding Bonds.
SECTION 8.07. RIGHTS AND REMEDIES OF BONDHOLDERS. No Owner of any Bond
shall have any right to institute any suit, action or proceeding in equity or at
law for the enforcement of this Indenture or for the execution of any trust
thereof or for the appointment of a receiver or any other remedy hereunder,
unless (i) a default has occurred of which the Trustee is deemed to have notice
or has been notified as provided in Section 9.0l(g) hereof, (ii) such default
shall have become an event of default and be continuing, (iii) the Owners of not
less than a majority in aggregate principal amount of Bonds then outstanding
shall have made written request to the Trustee, either to proceed to exercise
the powers herein granted or to institute such action, suit or proceeding in its
own name, and shall have offered to the Trustee indemnity as provided in Section
9.01(i), and (iv) the Trustee shall for sixty (60) days after such notice,
request and offer of indemnity fail or refuse to exercise the powers herein
granted, or to institute such action, suit or proceeding in its own name; and
such notification, request and offer of indemnity are hereby declared in every
case at the option of the Trustee to be conditions precedent to the execution of
the powers and trusts of this Indenture, and to any action or cause of action
for the enforcement of this Indenture, or for the appointment of a receiver or
for any other remedy hereunder. No one or more Owners of the Bonds shall have
any right in any manner whatsoever to enforce any right hereunder except in the
manner herein provided, and all proceedings at law or in equity shall be
instituted, had and maintained in the manner herein provided and for the equal
and ratable benefit of the Owners of all Bonds then outstanding. Nothing in this
Indenture contained shall, however, affect or impair the right of any Bondholder
to enforce the payment of the principal of, and premium, if any, and interest
on, any Bond at and after the maturity thereof.
SECTION 8.08. TERMINATION OF PROCEEDINGS. In case the Trustee shall have
proceeded to enforce any right under this Indenture by the appointment of a
receiver or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely, then and in
every such case the Issuer, the Trustee and the Bondholders shall be restored to
their former positions and rights hereunder, respectively, and all rights,
remedies and powers of the Trustee shall continue as if no such proceedings had
been taken.
SECTION 8.09. WAIVERS OF EVENTS OF DEFAULT. The Trustee may in its
discretion waive any event of default hereunder and rescind its consequences and
shall do so upon the written request of the Owners of not less than a majority
in aggregate principal amount of all Bonds then outstanding; provided, however,
that there shall not be waived any event of default in the payment of the
principal of, or premium on, any outstanding Bonds when due (whether at maturity
or by redemption), or any event of default in the payment when due of the
interest on any such Bonds, unless prior to such waiver and rescission, all
arrears of principal of and interest, with interest at the rate borne by the
Bonds on overdue principal and (to the extent permitted by law) on overdue
installments of interest, and all arrears of premium, if any, when due, together
with the reasonable fees and expenses of the Trustee
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and of the holders of such Bonds, including reasonable attorneys' fees paid or
incurred, shall have been paid or provided for; provided further, that if the
Owners of not less than a majority in aggregate principal amount of the Bonds
then outstanding shall have made the written request specified in the first
paragraph of Section 8.02 hereof, then only upon receipt by the Trustee of the
express written consent of the Owners of a majority in principal amount of the
Bonds then outstanding (which consents the Trustee shall have no duty or
obligation to solicit). In the case of any such waiver and rescission, or in
case any proceeding taken by the Trustee on account of any such default shall
have been discontinued or abandoned or determined adversely, then and in every
such case the Issuer, the Trustee and the Bondholders shall be restored to their
former positions and rights hereunder, respectively, but no such waiver and
rescission shall extend to any subsequent or other default, or impair any right
consequent thereon. All waivers under this Indenture shall be in writing and a
copy thereof shall be delivered to the Issuer and to the Company.
SECTION 8.10. OPPORTUNITY OF COMPANY TO CURE EVENTS OF DEFAULT. Anything
herein to the contrary notwithstanding, no default under Section 8.01(d) hereof
shall constitute an event of default until actual notice of such default by
registered or certified mail shall be given to the Issuer and the Company by the
Trustee or to the Issuer and the Company and the Trustee by the Owners of not
less than a majority in aggregate principal amount of all Bonds Outstanding, and
the Company shall have had sixty days after receipt of such notice to correct
said default or cause said default to be corrected, and shall not have corrected
said default or caused said default to be corrected within the applicable
period; provided, however, if said default be such that it cannot be corrected
within the applicable period, it shall not constitute an event of default if
corrective action is instituted within the applicable period and diligently
pursued until the default is corrected.
Whenever, so long as the Company is not in default under the Agreement,
after a reasonable request by the Company, the Issuer shall fail, refuse or
neglect to give any direction to the Trustee or to require the Trustee to take
any other action which the Issuer is required to have the Trustee take pursuant
to the provisions of the Agreement or this Indenture, the Company instead of the
Issuer may give any such direction to the Trustee or require the Trustee to take
any such action. Upon receipt by the Trustee of a written notice signed by the
Authorized Company Representative stating that the Company has made reasonable
request of the Issuer, and that the Issuer has failed, refused or neglected to
give any direction to the Trustee or to require the Trustee to take any such
action (subject to indemnification which the Trustee deems adequate), the
Trustee is hereby irrevocably empowered and directed to accept such direction
from the Company as sufficient for all purposes of this Indenture. The Company
shall have the direct right to cause the Trustee to comply with any of the
Trustee's obligations under this Indenture to the same extent that the Issuer is
empowered so to do.
Certain actions or failures to act by the Issuer under this Indenture may
create or result in an event of default under this Indenture and the Issuer
hereby grants the Company full authority, to the extent permitted by law, for
the account of the Issuer to perform or observe any covenant or obligation of
the Issuer alleged in a written notice to the Issuer and the Company from the
Trustee or from the requisite percentage of Owners of the Bonds not
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to have been performed or observed, in the name and stead of the Issuer with
full power to do any and all things and acts to remedy any default.
ARTICLE IX
THE TRUSTEE
SECTION 9.01. ACCEPTANCE OF THE TRUSTS. The Trustee hereby accepts the
trusts imposed upon it by this Indenture, represents and covenants that it is
fully empowered to accept said trusts, and agrees to perform said trusts, but
only upon and subject to the following express terms and conditions, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee:
(a) The Trustee may execute any of the trusts or powers hereof and
perform any of its duties by or through attorneys, agents, receivers or
employees and shall not be responsible for the acts of any attorneys,
agents or receivers appointed by it in good faith and without negligence,
shall not be responsible for the acts of any agents over which the Trustee
has no control and has no power to appoint or remove and shall be entitled
to advice of Counsel concerning all matters of trusts hereof and the
duties hereunder, and may in all cases require that the Company pay such
reasonable compensation to all such attorneys, agents and receivers as may
reasonably be employed by the Trustee in connection with the trusts
hereof. The Trustee may act upon the opinion or advice of Counsel. The
Trustee shall not be responsible for any loss or damage resulting from any
action or non-action in good faith in reliance upon such opinion or advice
or any misconduct or negligence on the part of any agent or attorney
appointed with due care.
(b) Except for its certificate of authentication on the Bonds, the
Trustee shall not be responsible for any recital herein or in the Bonds,
or the validity, priority, recording, or re-recording, filing, or refiling
of this Indenture or any financing statement, amendments to this
Indenture, or continuation statements, or for reviewing any annual
reports, financial statements or audits, or for insuring the Project or
collecting any insurance moneys, or for the validity of the execution by
the Issuer of this Indenture or for any supplements hereto or instruments
of further assurance, or for the sufficiency of the security for the Bonds
issued hereunder or intended to be secured hereby, for the value or title
of the Project or as to the maintenance of the security hereof. The
Trustee makes no representations as to the value or condition of the Trust
Estate or any part thereof, or as to the title of the Issuer thereto or as
to the security afforded thereby or hereby, or as to the validity or
genuineness of any securities at any time pledged and deposited with the
Trustee hereunder, or as to the validity or sufficiency of this Indenture
or of the Bonds. The Trustee shall not be accountable for the use or
application by the Company of the proceeds of the Bonds or of any money
paid to the Company or upon the order of the Company under any provision
hereof. The Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any covenants, conditions or agreements on
the part of
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the Issuer or on the part of the Company under the Agreement, except as
hereinafter set forth, but the Trustee may require of the Issuer or the
Company full information and advice as to the performance of the
covenants, conditions and agreements aforesaid. Except as otherwise
provided in Sections 8.02 and 8.03 hereof, the Trustee shall have no
obligation to perform any of the rights or duties of the Issuer under the
Agreement. The Trustee shall not be responsible or liable for any loss
suffered in connection with any investment of funds made by it in
accordance with Article VI hereof including, without limitation, any loss
suffered in connection with the sale of any investment pursuant to Article
VI hereof.
(c) The Trustee shall not be accountable for the use of any Bonds
authenticated or delivered hereunder. The Trustee, in its individual
capacity, may become the owner of Bonds with the same rights which it
would have if it were not Trustee.
(d) The Trustee shall be protected in acting in good faith upon any
notice, request, resolution, consent, certificate, affidavit, letter,
telegram, fax or other paper or document, or oral communication or
direction, believed to be genuine and correct and to have been signed or
sent or given by the proper person or persons. Any action taken by the
Trustee pursuant to this Indenture upon the request or authority or
consent of any person who at the time of making such request or giving
such authority or consent is the owner of any Bond shall be conclusive and
binding upon all future owners of the same Bond and upon Bonds issued in
exchange therefor or upon transfer or in place thereof.
(e) As to the existence or non-existence of any fact or as to the
sufficiency or validity of any instrument, paper or proceeding, the
Trustee shall be entitled to rely upon a certificate signed on behalf of
the Issuer by an Authorized Issuer Representative as sufficient evidence
of the facts therein contained, and prior to the occurrence of a default
of which the Trustee has been notified as provided in subsection (g) of
this Section, or subsequent to the waiver, rescission or annulment of a
default as provided in Article VIII hereof, shall also be at liberty to
accept a similar certificate to the effect that any particular dealing,
transaction or action is necessary or expedient, but may at its discretion
secure such further evidence deemed necessary or advisable, but shall in
no case be bound to secure the same. The Trustee may accept a certificate
signed on behalf of the Issuer by the Recording Officer to the effect that
a resolution or ordinance in the form therein set forth has been adopted
by the Issuer as conclusive evidence that such resolution or ordinance has
been duly adopted, and is in full force and effect.
(f) The permissive right of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty and the Trustee shall not
be liable in the performance of its obligations hereunder except for its
negligence or willful misconduct.
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(g) The Trustee shall not be required to take notice or be deemed to
have notice of any default hereunder, except failure by the Issuer to
cause to be made any of the payments to the Trustee required to be made by
Article IV and all defaults under Section 8.01(a) or (b), unless the
Trustee shall be specifically notified in writing of such default by the
Issuer or the Owners of at least a majority in aggregate principal amount
of all Bonds then affected or outstanding.
(h) The Trustee shall not be required to give any bond or surety in
respect of the execution of its trusts and powers hereunder.
(i) Before taking any action under Article VIII hereof or this
Section at the request or direction of the Bondholders, the Trustee may
require that a satisfactory indemnity bond be furnished by the
Bondholders, for the reimbursement of all expenses to which it may be put
and to protect it against all liability, except liability which is
adjudicated to have resulted from its negligence or willful misconduct in
connection with any action so taken.
(j) All moneys received by the Trustee shall, until used or applied
as herein provided, be held in trust for the purposes for which they were
received but need not be segregated from other funds except to the extent
required by law or this Indenture. The Trustee shall not be under any
liability for interest on any moneys received hereunder except such as may
be agreed upon.
(k) The Trustee, prior to the occurrence of an event of default
specified in Section 8.0l of this Indenture of which it is deemed to have
knowledge pursuant to clause (g) above and after the curing of all events
of default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and, in
the absence of bad faith on its part, the Trustee may conclusively rely,
as to the truth of the statements and correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee
and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform
to the requirements of this Indenture. In case an event of default has
occurred (which has not been cured or waived) of which it is deemed to
have knowledge pursuant to clause (g) above, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the
same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(l) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) This subsection shall not be construed to limit the effect
of subsection (k) of this Section;
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(ii) The Trustee shall not be liable for any error of judgment
made in good faith by an officer of the Trustee unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent
facts;
(iii) The Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the Owners of a majority in aggregate principal
amount of the Bonds outstanding relating to the time, method and
place of conducting any proceeding or any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture; and
(iv) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in
the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(m) Notwithstanding anything elsewhere in this Indenture contained,
the Trustee shall have the right, but shall not be required, to demand, in
respect of the authentication of any Bonds, the withdrawal of any cash,
the release of any property, or any action whatsoever within the purview
of this Indenture, any showings, certificates, opinions, appraisals or
other information, or corporate action or evidence thereof, in addition to
that by the terms hereof required as a condition of such action by the
Trustee, deemed desirable for the purpose of establishing the right of the
Issuer to the authentication of any Bonds, the withdrawal of any cash, or
as a condition to the taking of any action by the Trustee.
SECTION 9.02. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all
times be a Trustee hereunder which shall be a corporation organized and doing
business and authorized under such laws to exercise corporate trust powers,
authorized to accept and exercise the trusts herein provided, having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 9.02, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article, and shall immediately provide notice of such resignation by registered
or certified mail to the Issuer, the Company and the Owner of each Bond.
SECTION 9.03. FEES, CHARGES AND EXPENSES OF TRUSTEE. The Trustee shall be
entitled to payment and/or reimbursement from the Company for reasonable fees
for its Ordinary Services rendered hereunder and all advances, Counsel fees and
other Ordinary Expenses reasonably and necessarily made or incurred by the
Trustee in connection with
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such Ordinary Services hereunder and under the Tax Agreement and, in the event
that it should become necessary that the Trustee perform Extraordinary Services,
it shall be entitled to reasonable extra compensation therefor from the Company,
and to reimbursement from the Company for reasonable and necessary Extraordinary
Expenses (including fees of Counsel) in connection therewith; provided, that if
such Extraordinary Services or Extraordinary Expenses are occasioned by the
neglect or misconduct of the Trustee it shall not be entitled to compensation or
reimbursement therefor. The Trustee shall be entitled to payment and
reimbursement from the Company for the reasonable fees and charges of the
Trustee as Bond Registrar and Paying Agent. Upon the occurrence and continuation
of an Event of Default hereunder, the Trustee shall have a first lien with right
of payment prior to payment on account of interest or principal of, or premium,
if any, on any Bond upon all moneys in its possession under any provisions
hereof for the foregoing advances, fees, costs and expenses incurred.
SECTION 9.04. NOTICE TO BONDHOLDERS IF DEFAULT OCCURS. If a default occurs
of which the Trustee is by Section 9.01(g) hereof required to take notice or if
notice of default be given as in said Section 9.01(g) provided, the Trustee
shall, within fifteen (15) days thereafter (unless such default is cured or
waived), give notice of such default to each Owner of Bonds then outstanding,
provided that, except in the case of a default in the payment of the principal
of, or premium, if any, or interest on, any Bond, the Trustee may withhold such
notice to the Bondholders if and so long as the board of directors, the
executive committee, or a trust committee of directors and/or responsible
officers, of the Trustee in good faith determine that the withholding of such
notice is in the interests of the Bondholders.
SECTION 9.05. INTERVENTION BY TRUSTEE. In any judicial proceeding to which
the Issuer is a party and which in the opinion of the Trustee and its counsel
has a substantial bearing on the interests of Owners of the Bonds, the Trustee
may intervene on behalf of Bondholders and, subject to the provisions of Section
9.01(i), shall do so if requested in writing by the Owners of a majority in
aggregate principal amount of all Bonds then outstanding.
SECTION 9.06. SUCCESSOR TRUSTEE. Any corporation or association into which
the Trustee may be merged, or with which it may be consolidated, or to which it
may sell, lease or transfer its corporate trust business and assets as a whole
or substantially as a whole, shall be and become successor Trustee hereunder and
shall be vested with all the trusts, powers, rights, obligations, duties,
remedies, immunities and privileges hereunder as was its predecessor, without
the execution or filing of any instrument on the part of any of the parties
hereto.
SECTION 9.07. RESIGNATION BY THE TRUSTEE. The Trustee may at any time
resign from the trusts hereby created by giving sixty (60) days written notice
by registered or certified mail to the Issuer, the Company and the Owner of each
Bond, and such resignation shall take effect at the appointment of a successor
Trustee pursuant to the provisions of Section 9.09 hereof and acceptance by the
successor Trustee of such trusts. If no successor Trustee shall have been so
appointed and have accepted appointment within forty-five (45)
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days of the giving of written notice by the resigning Trustee as aforesaid, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
SECTION 9.08. REMOVAL OF THE TRUSTEE. The Trustee may be removed at any
time, by an instrument or concurrent instruments in writing delivered to the
Trustee, the Issuer and the Company and signed by the Owners of a majority in
aggregate principal amount of Bonds then Outstanding, or (so long as no event of
default is then existing under Section 6.1 of the Agreement or under Section
8.01 of this Indenture) by the Company by written instrument delivered to the
Trustee and the Issuer, and such removal shall only take effect at the
appointment of a successor Trustee pursuant to the provisions of Section 9.09
hereof and acceptance by the successor Trustee of such trusts.
SECTION 9.09. APPOINTMENT OF SUCCESSOR TRUSTEE. In case the Trustee
hereunder shall:
(a) resign pursuant to Section 9.02 or 9.07 hereof;
(b) be removed pursuant to Section 9.08 hereof; or
(c) be dissolved, taken under the control of any public officer or
officers or of a receiver appointed by a court, or otherwise become
incapable of acting hereunder,
a successor shall be appointed by the Issuer at the direction of the Company;
provided, that if a successor Trustee is not so appointed within ten (10) days
after notice of resignation is mailed or instrument of removal is delivered as
provided under Sections 9.02, 9.07 and 9.08 hereof, respectively, or within ten
(10) days of Issuer's knowledge of any of the events specified in (c)
hereinabove, then the Owners of a majority in aggregate principal amount of
Bonds then outstanding, by an instrument or concurrent instruments in writing
signed by or on behalf of such Owners, may designate a successor Trustee. Every
such successor Trustee appointed pursuant to the provisions of this Section
shall meet the requirements of Section 9.02 hereof and shall be a trust company
or bank in good standing, shall be eligible to serve as Trustee under the Act,
and willing to accept the trusteeship and all other terms and conditions
hereunder under the terms and conditions of this Indenture.
In case at any time the Trustee shall resign and no appointment of a
successor Trustee shall be made pursuant to the foregoing provisions of this
Article IX prior to the date specified in the notice of resignation as the date
when such resignation shall take effect, the Owner of any Bond may apply to any
court of competent jurisdiction to appoint a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.
SECTION 9.10. CONCERNING ANY SUCCESSOR TRUSTEES. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor
and also to the Issuer and the Company, an instrument in writing accepting such
appointment hereunder,
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and thereupon such successor shall become fully vested with all the trusts,
powers, rights, obligations, duties, remedies, immunities and privileges of its
predecessor; but, nevertheless, (l) such predecessor shall, on the written
request of the Issuer at the direction of the Company, execute and deliver an
instrument transferring to such successor Trustee all the trusts, powers,
rights, obligations, duties, remedies, immunities and privileges of such
predecessor hereunder and (2) such predecessor shall deliver all securities and
moneys held by it as Trustee hereunder (net of any amounts owing to it
hereunder) to its successor. Should any instrument in writing from the Issuer be
required by any successor Trustee for more fully and certainly vesting in such
successor the trusts, powers, rights, obligations, duties, remedies, immunities
and privileges hereby vested in the predecessor any and all such instruments in
writing shall, on request, be executed, acknowledged and delivered by the Issuer
at the expense of the Company. The resignation of any Trustee and the instrument
or instruments removing any Trustee and appointing a successor hereunder,
together with all other instruments provided for in this Article, shall be filed
or recorded by the successor Trustee in each recording office, if any, where the
Indenture or a financing statement relating thereto shall have been filed or
recorded.
SECTION 9.11. APPOINTMENT OF CO-TRUSTEE. It is the purpose of this
Indenture that there shall be no violation of any law of any jurisdiction
(including particularly the law of the State) denying or restricting the right
of banking corporations or associations to transact business as trustee in such
jurisdiction. It is recognized that in case of litigation under this Indenture
or the Agreement, and in particular in case of the enforcement thereof on
default, or in the case the Trustee deems that by reason of any present or
future law of any jurisdiction it may not exercise any of the powers, rights or
remedies herein granted to the Trustee or hold title to the properties, in
trust, as herein granted, or take any action which may be desirable or necessary
in connection therewith, it may be necessary that the Trustee appoint an
additional individual or institution as a separate or co-trustee. The following
provisions of this Section are adapted to these ends.
In the event that the Trustee appoints an additional individual or
institution as a separate or co-trustee, each and every remedy, power, right,
claim, demand, cause of action, immunity, estate, title, interest and lien
expressed or intended by this Indenture to be exercised by or vested in or
conveyed to the Trustee with respect thereto shall be exercisable by and vest in
such separate or co-trustee but only to the extent necessary to enable such
separate or co-trustee to exercise such powers, rights and remedies, and only to
the extent that the Trustee by the laws of any jurisdiction (including
particularly the State) is incapable of exercising such powers, rights and
remedies and every covenant and obligation necessary to the exercise thereof by
such separate or co-trustee shall run to and be enforceable by either of them.
Should any instrument in writing from the Issuer be required by the
separate or co-trustee so appointed by the Trustee for more fully and certainly
vesting in and confirming to him or it such properties, rights, powers, trusts,
duties and obligations, any and all such instruments in writing shall, on
request, be executed, acknowledged and delivered by the Issuer at the expense of
the Company; provided, that if an event of default shall have occurred and be
continuing, if the Issuer does not execute any such instrument within fifteen
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(15) days after request therefor (which request shall contain notification of
such fifteen (15) day deadline), the Trustee shall be empowered as an
attorney-in-fact for the Issuer to execute any such instrument in the Issuer's
name and stead. In case any separate or co-trustee or a successor to either
shall die, become incapable of acting, resign or be removed, all the estates,
properties, rights, powers, trusts, duties and obligations of such separate or
co-trustee, so far as permitted by law, shall vest in and be exercised by the
Trustee until the appointment of a new trustee or successor to such separate or
co-trustee.
The Trustee shall be entitled to remove any co-trustee so appointed by the
Trustee upon written notice to such co-trustee, the Issuer and the Company.
ARTICLE X
SUPPLEMENTAL INDENTURES
SECTION 10.01. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF
BONDHOLDERS. The Issuer and the Trustee may without the consent of or notice to
any of the Bondholders enter into an indenture or indentures supplemental to
this Indenture for any one or more of the following purposes:
A. to add to the covenants and agreements of, and limitations and
restrictions upon, the Issuer in this Indenture other covenants,
agreements, limitations and restrictions to be observed by the Issuer
which are not contrary to or inconsistent with this Indenture as
theretofore in effect;
B. to grant to or confer or impose upon the Trustee for the benefit
of the Bondholders any additional rights, remedies, powers, authority,
security, liabilities or duties which may lawfully be granted, conferred
or imposed and which are not contrary to or inconsistent with this
Indenture as heretofore in effect;
C. to cure any ambiguity or omission or to cure, correct or
supplement any defective provision of this Indenture in each case in such
manner as shall not adversely affect the Bondholders;
D. to evidence the appointment of a separate Trustee or a co-trustee
or to evidence the succession of a new Trustee hereunder;
E. to comply with the requirements of the Trust Indenture Act of
1939, as from time to time amended;
F. to subject to this Indenture additional revenues, properties or
collateral;
G. to provide for the issuance of coupon bonds (provided, however,
that the Issuer and the Trustee have received an opinion of Bond Counsel
to the affect that issuance of such coupon bonds complies with the
applicable laws and will not
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adversely affect the exclusion from gross income for federal income tax
purposes of interest on any of the Bonds);
H. to provide for the use or discontinuance of a book entry system;
I. to maintain ratings on the Bonds;
J. to preserve the exemption from Federal income taxes of interest
on the Bonds, or any of them; or
K. to modify, alter, amend or supplement this Indenture in any
other respect which is not adverse to the Bondholders and which does not
involve a change described in clauses (a), (b), (c) or (d) of the first
paragraph of Section 10.02 hereof and which, in the judgment of the
Trustee, is not to the prejudice of the Trustee.
SECTION 10.02. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF BONDHOLDERS.
Exclusive of supplemental indentures covered by Section 10.01 hereof and subject
to the terms and provisions contained in this Section, and not otherwise, the
holders of not less than a majority in aggregate principal amount of the Bonds
then outstanding shall have the right, from time to time, anything contained in
this Indenture to the contrary notwithstanding, to consent to and approve the
execution by the Issuer and the Trustee of such other indenture or indentures
supplemental hereto for the purpose of modifying, amending, adding to or
rescinding, in any particular, any of the terms or provisions contained in this
Indenture; provided, however, that nothing in this Section contained shall
permit or be construed as permitting without the consent of the owners of 100%
in aggregate principal amount of the Bonds then outstanding (a) an extension of
the maturity date of the principal of or the interest on any Bond issued
hereunder, or (b) a reduction in the principal amount of, or premium, if any,
on, any Bond or the rate of interest thereon, or (c) a privilege or priority of
any Bond or Bonds over any other Bond or Bonds, or (d) a reduction in the
aggregate principal amount of the Bonds the owners of which are required to
consent to such supplemental indenture.
If at any time the Issuer shall request the Trustee to enter into any such
supplemental indenture for any of the purposes allowed by this Section, the
Trustee shall, at the request of the Issuer and upon being satisfactorily
indemnified with respect to expenses, cause notice of the proposed execution of
such supplemental indenture to be mailed in substantially the manner provided in
the first paragraph of Section 3.04 hereof with respect to redemption of Bonds.
Such notice shall briefly set forth the nature of the proposed supplemental
indenture and shall state that copies thereof are on file at the Corporate Trust
Office of the Trustee for inspection by all Bondholders. If, within sixty (60)
days or such longer period of time as shall be prescribed by the Issuer
following the mailing of such notice, the Owners of not less than a majority or
100%, as the case may be, in aggregate principal amount of the Bonds outstanding
at the time of the execution of any such supplemental indenture shall have
consented to and approved the execution thereof as herein provided, no Owner of
any Bond shall have any right to object to any of the terms and provisions
contained therein, or the operation thereof, or in any manner to question the
propriety of the execution thereof, or to
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enjoin or restrain the Trustee or the Issuer from executing the same or from
taking any action pursuant to the provisions thereof. The Issuer shall have the
right to extend from time to time the period within which such consent and
approval may be obtained from Bondholders. Upon the execution of any such
supplemental indenture as in this Section permitted and provided, this Indenture
shall be and be deemed to be modified and amended in accordance therewith.
SECTION 10.03. CONSENTS TO SUPPLEMENTAL INDENTURES. Anything herein to the
contrary notwithstanding, a supplemental indenture under this Article X which
affects any rights or obligations of the Company shall not become effective
unless and until the Company shall have consented to the execution and delivery
of such supplemental indenture. The Company shall be given prior written notice
of the proposed execution and delivery of any supplemental indenture whether or
not its rights or obligations are affected. In this regard, the Trustee shall
cause notice of the proposed execution and delivery of any such supplemental
indenture together with a copy of the proposed supplemental indenture to be
mailed by certified or registered mail to the Company at least fifteen (15) days
prior to the date of the first mailing of notice of the proposed execution of
such supplemental indenture as hereinbefore in Section 10.02 provided. The
Company shall be deemed to have consented to the execution and delivery of any
such supplemental indenture if the Trustee does not receive at its principal
corporate trust office a letter of protest or objection thereto signed by or on
behalf of the Company on or before 4:30 o'clock P.M., New York time, of the
fifteenth day after the mailing of said notice and a copy of the proposed
supplemental indenture.
SECTION 10.04. RELIANCE ON OPINIONS OF COUNSEL. The Issuer and the Trustee
may rely on an opinion of Counsel to the effect that any supplemental indenture
entered into by the Issuer and the Trustee complies with the provisions of this
Article X and an opinion of Bond Counsel that any such supplemental indenture
does not adversely affect the exclusion from federal gross income of interest on
the Bonds.
ARTICLE XI
AMENDMENT OF AGREEMENT
SECTION 11.01. AMENDMENTS, ETC., TO AGREEMENT NOT REQUIRING CONSENT OF
BONDHOLDERS. The Issuer and the Company may, with the written consent of the
Trustee, but without the consent of or notice to any of the Bondholders, enter
into any amendment, change or modification of the Agreement (a) as may be
required by the provisions of the Agreement or this Indenture, (b) for the
purpose of curing any ambiguity or formal defect or omission in the Agreement,
(c) to preserve the exemption from Federal income taxes of interest on the
Bonds, or any of them, (d) to change Exhibit A to the Agreement in accordance
with the provisions of the Agreement or the Project Certificate or (e) in
connection with any other change therein which is not to the prejudice of the
Trustee or the Owners of the Bonds.
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SECTION 11.02. AMENDMENTS, ETC., TO AGREEMENT REQUIRING CONSENT OF
BONDHOLDERS. Except for the amendments, changes or modifications as provided in
Section 11.01 hereof, the Issuer and the Company shall not enter into, and the
Trustee shall not consent to, any other amendment, change or modification of the
Agreement without mailing of notice to, and the written approval or consent of,
the Owners of not less than a majority in aggregate principal amount of the
Bonds at the time outstanding given and procured as provided in this Section;
provided, however, that nothing in this Section or Section 11.01 hereof shall
permit or be construed as permitting without the consent of the owners of 100%
in aggregate principal amount of the Bonds then outstanding (a) an extension of
the time of the payment of any amounts payable under Section 4.2(a) of the
Agreement, or (b) a reduction in the amount of any payment or in the total
amount due under Section 4.2(a) of the Agreement or (c) a reduction in the
aggregate principal amount of the Bonds required for consent to an amendment of
the Agreement. If at any time the Issuer and the Company shall request the
consent of the Trustee to any such proposed amendment, change or modification of
the Agreement, the Trustee shall, at the request of the Issuer and upon being
satisfactorily indemnified with respect to expenses, cause notice of such
proposed amendment, change or modification to be mailed to the Owners of Bonds
in the same manner as provided by the first paragraph of Section 3.04 hereof
with respect to redemption of Bonds. Such notice shall briefly set forth the
notice of such proposed amendment, change or modification and shall state that
copies of the instrument embodying the same are on file with the Trustee for
inspection by all Bondholders. If, within sixty (60) days, or such longer period
as shall be prescribed by the Issuer in its reasonable judgment, following the
mailing of such notice, the Owners of not less than a majority or 100%, as the
case may be, in aggregate principal amount of the Bonds outstanding at the time
of the execution of any such amendment, change or modification shall have
consented to and approved the execution thereof as herein provided, no Owner of
any Bond shall have any right to object to any of the terms and provisions
contained therein, or the operation thereof, or in any manner to question the
propriety of the execution thereof, or to enjoin or restrain the Company or the
Issuer from executing the same or from taking any action pursuant to the
provisions thereof, or the Trustee from consenting thereto. The Issuer shall
have the right to extend from time to time the period within which such consent
and approval may be obtained from Bondholders. Upon the execution of any such
amendment, change or modification as in this Section permitted and provided, the
Agreement shall be and be deemed to be modified, changed and amended in
accordance therewith.
SECTION 11.03. RELIANCE ON OPINIONS OF COUNSEL. The Issuer and the Trustee
may rely upon an opinion of Counsel to the effect that any proposed amendment,
change or modification to the Agreement will comply with the provisions of this
Article XI and an opinion of Bond Counsel that any such amendment, change or
modification does not adversely affect the exclusion from federal gross income
of interest on the Bonds.
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ARTICLE XII
MISCELLANEOUS
SECTION 12.01. CONSENTS, ETC., OF BONDHOLDERS. Any consent, approval,
direction or other instrument required by this Indenture to be signed and
executed by the Bondholders may be in any number of concurrent writings of
similar tenor and may be signed or executed by such Bondholders in person or by
agent appointed in writing. Proof of the execution of any such consent,
approval, direction or other instrument or of the writing appointing any such
agent, if made in the following manner, shall be sufficient for any of the
purposes of this Indenture, and shall be conclusive in favor of the Trustee with
regard to any action taken under such request or other instrument, namely:
(a) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any officer in
any jurisdiction who by law has power to take acknowledgments within such
jurisdiction that the Person signing such instrument or writing
acknowledged before him the execution thereof, or by affidavit of any
witness to such execution or in any other manner satisfactory to the
Trustee;
(b) The fact of ownership of Bonds and the amount or amounts,
numbers and other identification of such Bonds, and the date of acquiring
the same shall be proved by the registration books of the Issuer
maintained by the Trustee pursuant to Section 2.03 hereof.
SECTION 12.02. LIMITATION OF RIGHTS. With the exception of rights herein
expressly conferred, nothing expressed or mentioned in or to be implied from
this Indenture or the Bonds is intended or shall be construed to give to any
person other than the parties hereto, the Company and the Owners of the Bonds
any legal or equitable right, remedy or claim under or in respect to this
Indenture. This Indenture and all of the covenants, conditions and provisions
hereof are intended to be and being for the sole and exclusive benefit of the
parties hereto, the Owners of the Bonds and the Company as herein provided.
SECTION 12.03. SEVERABILITY. If any provision of this Indenture shall be
invalid, inoperative or unenforceable as applied in any particular case in any
jurisdiction or jurisdictions or in all jurisdictions, or in all cases because
it conflicts with any other provision or provisions hereof or any constitution
or statute or rule of public policy, or for any other reason, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatever. The invalidity of any one or more phrases, sentences,
clauses or Sections in this Indenture contained, shall not affect the remaining
portions of this Indenture, or any part thereof.
SECTION 12.04. NOTICES. Except as otherwise expressly provided herein, all
notices, certificates or other communications hereunder shall be sufficiently
given and shall be
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deemed given on the day on which the same have been mailed by first class mail
postage prepaid, or delivered by hand, or sent by telecopy or similar facsimile
transmission, as follows: if to the Issuer, c/o Lewis and Roca, LLP., 40 North
Central Avenue, Phoenix, Arizona 85004-4429, or to telecopy number (602)
262-5311; if to the Company, at 4000 East Sky Harbor Boulevard, Phoenix, Arizona
85034, or to telecopy number (602) 693-8953, Attention: Treasurer; if to the
Trustee, at 3300 North Central Avenue, 15th Floor, Phoenix, Arizona 85012,
Attention: Corporate Trust Services; provided, however, that notice to the
Trustee shall be deemed given when received by the Trustee. A duplicate copy of
each notice, certificate or other communication given hereunder by either the
Issuer or the Trustee to the other shall also be given to the Company. The
Issuer, the Company and the Trustee may, by notice given hereunder, designate
any further or different addresses to which subsequent notices, certificates or
other communications shall be sent.
SECTION 12.05. HOLIDAYS. Except as otherwise expressly set forth herein,
if the date for making any payment or the last date for performance of any act
or the exercising of any right, as provided in this Indenture, is not a Business
Day, such payment may be made or act performed or right exercised on the next
succeeding Business Day with the same force and effect as if done on the nominal
date provided in this Indenture.
SECTION 12.06. COUNTERPARTS. This Indenture may be simultaneously executed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
SECTION 12.07. APPLICABLE LAW. The power and authority of the Issuer to
issue the Bonds and the rights and obligations of the Issuer hereunder shall be
governed by and construed in accordance with the laws of the State, except that
the Trustee's rights, duties, immunities and its standard of care in the
performance of its responsibilities under this Indenture shall be governed by
and construed in accordance with the laws of the state in which is located the
Trustee's Corporate Trust Office.
SECTION 12.08. CAPTIONS. The captions or headings in this Indenture are
for convenience only and in no way define, limit, or describe the scope or
intent of any provisions or sections of this Indenture.
SECTION 12.09. NOTICE REGARDING CANCELLATION OF CONTRACTS. As required by
the provisions of Section 38-511, Arizona Revised Statutes, as amended, notice
is hereby given that political subdivisions of the State of Arizona or any of
their departments or agencies may, within three (3) years of its execution,
cancel any contract, without penalty or further obligation, made by the
political subdivisions or any of their departments or agencies on or after
September 30, 1988, if any person significantly involved in initiating,
negotiating, securing, drafting or creating the contract on behalf of the
political subdivisions or any of their departments or agencies is, at any time
while the contract or any extension of the contract is in effect, an employee or
agent of any other party to the contract in any capacity or a consultant to any
other party of the contract with respect to the subject matter of the contract.
The cancellation shall be effective when written notice from the chief
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executive officer or governing body of the political subdivision is received by
all other parties to the contract unless the notice specifies a later time.
The Trustee covenants and agrees not to employ as an employee, agent or,
with respect to the subject matter of the Indenture, a consultant, any person
significantly involved in initiating, negotiating, securing, drafting or
creating this Indenture on behalf of the Issuer within three (3) years from the
execution hereof, unless a waiver is provided by the Issuer.
IN WITNESS WHEREOF, THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF
PHOENIX, Arizona, has caused these presents to be signed in its name and behalf
by its President and its corporate seal to be hereunto affixed and attested by
its Secretary, and to evidence its acceptance of the trusts hereby created
Norwest Bank Arizona, N.A. has caused these presents to be signed in its name
and behalf as of the first day of April, 1998.
THE INDUSTRIAL DEVELOPMENT AUTHORITY OF
THE CITY OF PHOENIX, ARIZONA
By
-------------------------------------
President
Attest:
- ----------------------------------
Assistant Secretary
NORWEST BANK ARIZONA, N.A., as Trustee
By /s/ illegible
-------------------------------------
Its Assistant Vice President
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IN WITNESS WHEREOF, THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF
PHOENIX, ARIZONA, has caused these presents to be signed in its name and behalf
by its President and its corporate seal to be hereunto affixed and attested by
its Secretary, and to evidence its acceptance of the trusts hereby created
Norwest Bank Arizona, N.A. has caused these presents to be signed in its name
and behalf by one of its and its official seal to be
hereunto affixed, and the same to be attested by one of its , all
as of the first day of April, 1998.
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE CITY OF PHOENIX, ARIZONA
By /s/ illegible
----------------------------------
President
Attest:
/s/ illegible
- ----------------------------------
Assistant Secretary
NORWEST BANK ARIZONA, N.A., as Trustee
By
-----------------------------------
Its
--------------------------------
(SEAL)
Attest:
- ----------------------------------
Its
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-49-
<PAGE> 54
EXHIBIT I
INVESTOR LETTER
April 2, 1998
City of Phoenix
Phoenix, Arizona
The Industrial Development Authority
of the City of Phoenix, Arizona
Re: THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE CITY OF PHOENIX, ARIZONA
AIRPORT FACILITIES REFUNDING BONDS
(AMERICA WEST AIRLINES, INC. PROJECT)
SERIES 1998
Ladies and Gentlemen:
The undersigned, [insert name of purchaser] (the "Purchaser"), has
purchased $29,300,000 principal amount of the Bonds. In connection with such
purchase, The Industrial Development Authority of the City of Phoenix, Arizona
(the "Issuer") and the City of Phoenix, Arizona (the "City") require that the
Purchaser make certain representations as to the Purchaser's willingness to
accept the risks of investing in the Bonds, the Purchaser's investigation of
such risks, and such other matters. Accordingly, the Purchaser represents and
warrants to the Issuer, the City, and other addressees hereof as follows:
A. QUALIFICATION. The Purchaser is either a "qualified institutional
buyer" (a "Qualified Institutional Buyer") within the meaning of Rule 144A of
the Securities Act of 1933 (the "Securities Act") or a non-natural "accredited
investor" as defined in Rule 501 of Regulation D of the United States Securities
and Exchange Commission (an "Accredited Investor"). The Purchaser can bear the
economic risk of the purchase of the Bonds and has such knowledge and experience
in business and financial matters, including the analysis of the purchase of
similar investments, as to be capable of evaluating the merits and risks of an
investment in the Bonds on the basis of the information requested and reviewed
by us and our review as described herein.
B. NO REGISTRATION; TRANSFERABILITY. The Purchaser acknowledges that the
Bonds are not currently required to be, have not been, and are not intended to
be, registered under the Securities Act or registered or otherwise qualified
under the securities laws of any
EXHIBIT I
<PAGE> 55
state or other jurisdiction, and that any sale or other transfer of the Bonds
may be only in accordance with such laws. The Bonds are rated "____" by Moody's
Investors Service, Inc., and their transferability is limited to Qualified
Institutional Buyers or Accredited Investors.
C. INDEPENDENT EVALUATION; WAIVER OF ISSUER'S DUE DILIGENCE; RELEASE. The
Purchaser has independently evaluated the factors associated with its investment
decision. The Purchaser has been given full and complete access to and has been
furnished with all information requested by the Purchaser regarding the Company,
and has conducted such other investigations relating to the Issuer, the Company,
the Project, and the Bonds, as in the opinion of the Purchaser was necessary in
connection with its purchase of the Bonds. The Purchaser acknowledges that the
Issuer, the members of its Board of Directors, its officers, Quarles & Brady,
its counsel and Villanueva & Company, its financial advisor and the City and its
City Council and agents of any of the foregoing (each individually an "Issuer
Party" and all collectively the "Issuer Parties") have not undertaken to furnish
information to the Purchaser, or to ascertain the accuracy or completeness of
any information that may have been furnished to the Purchaser by or on behalf of
the Issuer or the Company relating to the operations, financial conditions or
future prospects of the Company or the Project and that none of the Issuer
Parties have made any representations concerning the accuracy or completeness of
any information supplied to the Purchaser or relating to the Company and the
Project. The Purchaser hereby waives any requirements of due diligence in
investigation or inquiry on the part of any of the Issuer Parties and all
claims, actions, or causes of action which the Purchaser may have directly or
indirectly from or relating to any action which the Issuer and its Board of
Directors or the City and its City Council took, or could have taken, in
connection with the issuance and sale of the Bonds to the Purchaser.
D. DISCLOSURE STATEMENT. We have carefully read the Limited Offering
Memorandum relating to the Bonds in its entirety and understand the risks
described therein and understand and acknowledge that there may be other risks
in such investment which are not described therein. We acknowledge that the
Bonds are a speculative investment and that there is a high degree of risk in
such investment.
E. SOPHISTICATION. The Purchaser is sufficiently knowledgeable and
experienced in financial and business matters, including the purchase and
ownership of municipal and other tax-exempt obligations, to be able to evaluate
the risks and merits of the investment represented by the purchase of the Bonds,
and is capable of and has made its own investigation of the Borrower and the
Project in connection with its decision to purchase the Bonds.
F. LEGAL AUTHORIZATION. The Purchaser is duly and legally authorized to
purchase the Bonds, and the Purchaser is duly and legally authorized to execute
this Investor Letter. The Purchaser has satisfied itself that the Bonds are a
lawful investment for it under all applicable laws.
F. SPECIAL LIMITED OBLIGATIONS. The Purchaser understand that the Bonds
are special limited, and not general obligations of the Issuer payable solely
from the revenues received by Norwest Bank Arizona, National Association, as
trustee (the "Trustee"). The
I-2
<PAGE> 56
Purchaser understands that the Bonds are not secured by any obligations or the
pledge of any monies received or to be received from taxation or from the State
of Arizona (the "State") or any political subdivision or taxing district thereof
(including, without implied limitation, the Issuer or the City), and that the
Bonds will never represent or constitute a general obligation, debt, or bonded
indebtedness of the City, the State, or any political subdivision thereof, and
that no right will exist to have taxes levied by the City, the State, or any
political subdivision thereof, for the payment of the principal of, premium, if
any, and interest on the Bonds, and that payment of the principal of, premium,
if any, and interest on the Bonds depends upon the general credit of the
Company. The Purchaser understands that the Issuer has no taxing power.
H. SURVIVAL. All representations of the Purchaser contained herein shall
survive the sale and delivery of the Bonds to the Purchaser as representations
of fact existing as of the date of execution and delivery of this Investor
Letter.
I. DEFINED TERMS. The initial capitalized terms not defined herein shall
the meaning ascribed to such terms in the Indenture of Trust which secures the
payment of the Bonds.
J. WAIVER OF DUE DILIGENCE. Notwithstanding anything to the contrary
herein, the Purchaser waives any requirement of due diligence and investigation
or inquiry on the part of any of the Issuer Parties.
The above representations are provided solely for the benefit of the
addressees of this Investor Letter and may not be relied upon by or furnished to
any other person without our prior written consent.
______________________________
By __________________________________________
__________________________________________
Its ________________________________________
[Note: The signatory must be Chief Financial
Officer or other executive officer.]
I-3
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