Exhibit 10.1
INVESTMENT AGREEMENT
dated as of September 26, 2002
between
THE RETIREMENT SYSTEMS OF ALABAMA
and
US AIRWAYS GROUP, INC.
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.............................................................................................2
Section 1.01 Definitions.................................................................................2
ARTICLE II ISSUANCE AND PURCHASE OF COMMON STOCK, WARRANTS AND CLASS A PREFERRED SHARES.........................11
Section 2.01 Issuance and Purchase of Common Stock, Warrants and Class A Preferred
Shares.....................................................................................11
Section 2.02 Closing....................................................................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................................12
Section 3.01 Corporate Organization and Qualification...................................................12
Section 3.02 Authorization; No Contravention............................................................13
Section 3.03 Consents; No Conflicts.....................................................................14
Section 3.04 Bankruptcy Court Orders....................................................................14
Section 3.05 Capitalization; Securities.................................................................14
Section 3.06 Subsidiaries; Equity Investments...........................................................15
Section 3.07 Company Reports; Financial Statements......................................................16
Section 3.08 Information Provided.......................................................................17
Section 3.09 Absence of Certain Changes or Events.......................................................17
Section 3.10 Property...................................................................................17
Section 3.11 Litigation.................................................................................18
Section 3.12 Compliance with Laws; Regulatory Approvals.................................................19
Section 3.13 Taxes......................................................................................19
Section 3.14 ERISA and Other Employment Matters.........................................................20
Section 3.15 Labor Matters..............................................................................21
Section 3.16 Contracts..................................................................................21
Section 3.17 Financial Advisors and Brokers.............................................................22
Section 3.18 Insurance..................................................................................22
Section 3.19 Environmental Matters......................................................................23
Section 3.20 Controls...................................................................................23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE INVESTOR........................................................23
Section 4.01 Organization...............................................................................23
Section 4.02 Authorization of Agreements................................................................23
Section 4.03 Consents; No Conflicts.....................................................................23
Section 4.04 Financial Advisors and Brokers.............................................................24
Section 4.05 Ownership of Equity Securities; Purpose of Investment......................................24
Section 4.06 Citizenship................................................................................24
Section 4.07 Financing..................................................................................24
ARTICLE V GOVERNANCE.............................................................................................24
Section 5.01 Board of Directors.........................................................................24
Section 5.02 Committees; Meetings.......................................................................26
Section 5.03 Directors' Liability and Indemnification...................................................27
ARTICLE VI PRE-CLOSING COVENANTS.................................................................................27
Section 6.01 Taking of Necessary Action.................................................................27
Section 6.02 Notifications..............................................................................28
Section 6.03 Compliance with the Bidding Procedures Order...............................................28
ARTICLE VII ADDITIONAL COVENANTS.................................................................................28
Section 7.01 Financial and Other Information............................................................28
Section 7.02 Company Reports; Financial Statements......................................................29
Section 7.03 Publicity..................................................................................29
Section 7.04 Registration Rights Agreement..............................................................29
Section 7.05 Slots and Routes...........................................................................30
Section 7.06 Tax Contests...............................................................................30
Section 7.07 Investor Financing.........................................................................30
ARTICLE VIII CONDITIONS..........................................................................................31
Section 8.01 Conditions to Investor's Obligations.......................................................31
Section 8.02 Conditions to the Company's Obligations....................................................34
ARTICLE IX TERMINATION...........................................................................................36
Section 9.01 Termination of Agreement...................................................................36
Section 9.02 Effect of Termination......................................................................37
ARTICLE X MISCELLANEOUS..........................................................................................37
Section 10.01 Fees and Expenses.........................................................................37
Section 10.02 Survival of Representations and Warranties................................................38
Section 10.03 Specific Performance......................................................................38
Section 10.04 Indemnification...........................................................................38
Section 10.05 Notices...................................................................................40
Section 10.06 Entire Agreement; Amendment...............................................................41
Section 10.07 Counterparts..............................................................................41
Section 10.08 Governing Law.............................................................................41
Section 10.09 Successors and Assigns....................................................................41
Section 10.10 No Third-Party Beneficiaries..............................................................42
Section 10.11 General Interpretive Principles...........................................................42
Section 10.12 MidAtlantic Airways, Inc..................................................................42
EXHIBIT A Provisions of the Reorganized Company's Certificate of Incorporation
EXHIBIT B Form of Class A-1 Warrants
EXHIBIT C Form of Class A-2 Warrants
EXHIBIT D Certificate of Designation of Class A Preferred Shares
EXHIBIT E Certificate of Designation of Class B Preferred Shares
EXHIBIT F Certificate of Designation of Class C Preferred Shares
EXHIBIT G Bidding Procedures Order
EXHIBIT H Summary of Principal Terms of the Plan
EXHIBIT I Official Committee of Unsecured Creditors Letter
Schedule 3.03 Approvals Required of the Companies in connection with the
Transactions
Schedule 3.06(a) Subsidiaries of the Companies
Schedule 3.06(b) Equity Securities Beneficially Owned by the Companies;
Obligations to Purchase Equity Securities
Schedule 3.07(a) SEC Reports Not Filed
Schedule 3.10(a) Owned Real Property or Leased Real Property with
Defects in Title Schedule 3.10(c) Slots Held by the Companies
Schedule 3.10(d)(iii) Intellectual Property Claims or Litigation
Schedule 3.10(d)(iv) Third Party Rights under IP Agreements Schedule
3.12(b) Failures to Obtain or Comply with Regulatory Approvals
Schedule 3.13(a) Tax Returns; Payment of Taxes; Material Tax
Liabilities
Schedule 3.13(b) Tax Audits or Investigations;
Extensions
Schedule 3.13(d) Failure to Withhold
Schedule 3.14(a) Employee Plans; Contributions to Multi-Employer Plans; Other
Obligations in respect of Employee Plans
Schedule 3.14(b) Modification of Compensation or Employee Benefits
Schedule 3.14(d) Compliance with ERISA
Schedule 3.14(e) Non-qualified Employee Plans
Schedule 3.15(a) Collective Bargaining Agreements & Labor
Agreements; Notifications of Efforts to Organize; Unfair Labor
Practices
Schedule 3.15(b) Change of Control Provisions under
Collective Bargaining Agreements
Schedule 3.16(a) Employment & Similar Agreements
Schedule 3.16(c) Change of Control Provisions
under Employment Agreements
Schedule 3.17 Financial Advisors and Brokers
Schedule 3.18 Description of Insurance; Insurance Policies
Expiring prior to Closing; Notices relating to Insurance Policies;
Pending Insurance Claims
Schedule 3.19 Failure to Comply with
Environmental Laws
Schedule 4.03 Approvals Required by the Investor
in connection with the Transactions
Schedule 8.01(p) Operational and Financial Benchmarks
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (together with all exhibits and
schedules hereto and as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof, the
"Agreement"), dated as of September 26, 2002, by and between The Retirement
Systems of Alabama (the "Investor"), and US Airways Group, Inc., a Delaware
corporation, and its successors (including, as the context may require, on or
after the Effective Date, as reorganized pursuant to the Bankruptcy Code) (the
"Company").
W I T N E S S E T H:
-------------------
WHEREAS, on August 11, 2002, the Company and certain of its
Subsidiaries (the "Debtor Subsidiaries" and, together with the Company, the
"Debtors") filed voluntary petitions (the "Cases") for protection under
chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the
United States Bankruptcy Court for the Eastern District of Virginia,
Alexandria Division (the "Bankruptcy Court") to enable the Debtors to be
restructured pursuant to one or more plans of reorganization (collectively,
the "Plan");
WHEREAS, the Debtors have continued in the possession of
their assets and in the management of their businesses pursuant to Sections
1107 and 1108 of the Bankruptcy Code;
WHEREAS, pursuant to the Plan, the reorganized Company
intends to cancel the existing outstanding Equity Securities of the Company
upon the Effective Date and issue (i) fifty-one million one hundred thousand
(51,100,000) Class A common shares of the Company, having the terms set forth
in Exhibit A attached hereto (the "Class A Common Shares"), (ii) five million
(5,000,000) Class B common shares of the Company, having the terms set forth
in Exhibit A attached hereto (the "Class B Common Shares"), (iii) twenty
million two hundred fifty thousand (20,250,000) warrants, exercisable into
Class A Common Shares of the Company, having the terms set forth in Exhibit B
attached hereto (the "Class A-1 Warrants"), (iv) four million (4,000,000)
warrants, exercisable into Class A Common Shares of the Company, having the
terms set forth in Exhibit C attached hereto (the "Class A-2 Warrants"), (v)
twenty-four million two hundred fifty thousand (24,250,000) non-convertible
Class A preferred shares of the Company, having the terms set forth in Exhibit
D attached hereto (the "Class A Preferred Shares"), (vi) fifty million
(50,000,000) non-convertible, redeemable Class B preferred shares of the
Company, having the terms set forth in Exhibit E attached hereto (the "Class B
Preferred Shares") and (vii) at the option of the Company, up to three (3)
non-convertible Class C preferred shares of the Company, which shall be issued
in up to three series, having the terms set forth in Exhibit F attached hereto
(the "Class C Preferred Shares");
WHEREAS, simultaneously with the consummation of the Plan,
the Investor intends to purchase from the reorganized Company, and the
reorganized Company intends to issue and sell to the Investor, subject to the
terms and conditions contained herein, (i) twenty million (20,000,000) Class A
Common Shares, (ii) five million (5,000,000) Class B Common Shares, (iii) five
million (5,000,000) Class A-1 Warrants and (iv) five million (5,000,000) Class
A Preferred Shares (such transactions collectively, the "Investment") in
exchange for the Investment Price;
WHEREAS, the parties intend that the transactions
contemplated hereby will be implemented by, and take effect subject to the
occurrence of the Effective Date simultaneously with the consummation of, the
Plan; and
WHEREAS, the Company and the Investor desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated herein;
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements contained herein,
the parties hereto agree as follows, in the case of the Company, subject to
Bankruptcy Court approval of this Investment Agreement:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below:
"Affiliate" has the meaning set forth in Rule 12b-2 under
the Exchange Act as in effect as on the date hereof.
"Agreement" has the meaning set forth in the preamble
hereto.
"AFA" means the Association of Flight Attendants.
"ALPA" has the meaning set forth in Section 5.01(b) hereof.
"ALPA Director" has the meaning set forth in Section 5.01(b)
hereof.
"Alternative Transaction" means a transaction pursuant to
which the control of the Business is sold, merged, combined, consolidated or
otherwise disposed of in a single transaction or a series of Related
Transactions either pursuant to 11 U.S.C. Section 363 or pursuant to a Chapter
11 plan of reorganization.
"Approvals" has the meaning set forth in Section 8.01(d)
hereof.
"ATSB Loan" has the meaning set forth in the definition of
"Constituents" herein.
"Bankruptcy Code" has the meaning set forth in the recitals
hereto.
"Bankruptcy Court" has the meaning set forth in the recitals
hereto.
"Beneficial Ownership" with respect to any securities has
the meaning set forth in Rule 13d-3 under the Exchange Act as in effect on the
date hereof, except that a Person shall be deemed to have Beneficial Ownership
of all such securities that such Person has the right to acquire whether such
right is exercisable immediately or after the passage of time. The term
"Beneficially Own" has a correlative meaning.
"Bidding Procedures Order" means the order entered by the
Bankruptcy Court establishing the procedures relating to the solicitation,
submission, acceptance and approval of bids to acquire or invest in the
reorganized Company.
"Board" means the board of directors of the Company
(including, with respect to periods following the Effective Date, the
reorganized Company).
"Business Day" means any day other than a Saturday, Sunday
or a day on which banking institutions of the State of New York are authorized
by law or executive order to close.
"Business" means one or more of the businesses of the
Debtors, or portions thereof that, together, accounted for at least
seventy-five percent (75%) of the aggregate revenue of the Debtors (determined
in accordance with GAAP, consistently applied) during the four (4) fiscal
quarters immediately preceding the effective date or the closing date of the
plan, sale or other transaction of the type that would qualify as an
Alternative Transaction.
"By-Laws" means the by-laws of the Company, as amended from
time to time (including, with respect to periods following the Effective Date,
the by-laws of the reorganized Company).
"Cases" has the meaning set forth in the recitals hereto.
"Cash Equivalents" means any of the following types of
investments, to the extent owned by any of the Companies free and clear of all
Liens:
(i) marketable securities (a) issued or directly and
unconditionally guaranteed as to interest and principal by the United States
government or (b) issued by any agency or instrumentality of the United States
government, the obligations of which are backed by the full faith and credit
of the United States government, in each case maturing no more than 180 days
after such date; (ii) commercial paper issued by domestic corporations or
institutions, states or municipalities maturing no more than 180 days after
such date if such commercial paper, at the time of the acquisition thereof,
has a rating of at least A-1 from Standard & Poor's or at least P-1 from
▇▇▇▇▇'▇; (iii) time deposits, certificates of deposit or bankers' acceptances
maturing no more than 180 days after such date and issued or accepted by any
lender or by any commercial bank organized under the Laws of the United States
of America or any state thereof or the District of Columbia that (a) is at
least "adequately capitalized" (as defined in the regulations of its primary
Federal banking regulator) and (b) has net assets of not less than
$1,000,000,000 and that has a rating of at least AA from Standard & Poor's or
at least Aa2 from ▇▇▇▇▇'▇; (iv) shares of any money market mutual fund
registered with the SEC under Rule 2a-7 that guarantees 100% same day
liquidity and has net assets not less than $1,000,000,000; (v) marketable
medium term notes maturing no more than 90 days after such date that, at the
time of the acquisition thereof, have a rating of at least A- from Standard &
Poor's or at least A3 from ▇▇▇▇▇'▇; (vi) corporate bonds maturing no more than
90 days after such date that, at the time of the acquisition thereof, have a
rating of at least A- from Standard & Poor's or at least A3 from ▇▇▇▇▇'▇; and
(vii) asset-backed securities maturing no more than 90 days after such date
and issued by an originator that has a rating of at least A from Standard &
Poor's or A2 from ▇▇▇▇▇'▇; provided, however, that in the case of Cash
Equivalents set forth in clauses (ii) through (vii) above, such Cash
Equivalents shall not have a yield of more than the yield on treasury
securities with a maturity comparable to such Cash Equivalents plus 1.50% per
annum.
"CEO" has the meaning set forth in Section 5.01(b) hereof.
"CERCLA" has the meaning set forth in the definition of
"Environmental Laws" herein.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company, as amended from time to time, including any
certificate of designation relating to any Equity Securities of the Company
(including, in each case, with respect to periods following the Effective
Date, of the reorganized Company).
"Chapter 11" means Chapter 11 of the Bankruptcy Code.
"Class A Common Shares" has the meaning set forth in the
recitals hereto.
"Class A Preferred Shares" has the meaning set forth in the
recitals hereto.
"Class A-1 Warrants" has the meaning set forth in the
recitals hereto.
"Class A-2 Warrants" has the meaning set forth in the
recitals hereto.
"Class B Common Shares" has the meaning set forth in the
recitals hereto.
"Class B Preferred Shares" has the meaning set forth in the
recitals hereto.
"Class C Preferred Shares" has the meaning set forth in the
recitals hereto.
"Closing" means the closing of the sale and purchase of the
Common Stock, Class A-1 Warrants and Class A Preferred Shares pursuant to
Section 2.01 hereof.
"Closing Date" has the meaning set forth in Section 2.02(a)
hereof.
"Code" means the U.S. Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
"Common Stock" means the Class A Common Shares together with
the Class B Common Shares.
"Companies" means the Company, together with its
Subsidiaries.
"Company" has the meaning set forth in the preamble hereto.
"Company Forecast" has the meaning set forth in Schedule
8.01(p) hereof.
"Confirmation Order" has the meaning set forth in the
definition of "Effective Date" herein.
"Constituents" means (i) the employees of the Debtors that
are subject to collective bargaining agreements that have been, or will be,
amended and assumed in connection with the consummation of the Plan, (ii) the
Air Transportation Stabilization Board, as guarantor, and other participants,
lenders and counter-guarantors in the $1 billion loan to the Company to be
provided as exit financing upon consummation of the Plan (the "ATSB Loan"),
(iii) entities providing aircraft financing pursuant to, or as contemplated
by, the Plan and (iv) the holders of other allowed claims against the Debtors.
"Contests" has the meaning set forth in Section 7.06 hereof.
"Contractual Obligation" means, as to any Person, any
obligation arising out of any indenture, mortgage, deed of trust, contract,
agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound (including, without limitation,
any debt security issued by such Person).
"Creditors' Committee" has the meaning set forth in Section
5.01(b) hereof.
"Creditors' Committee Director" has the meaning set forth in
Section 5.01(b) hereof.
"Debtors" has the meaning set forth in the recitals hereto.
"Debtor Subsidiaries" has the meaning set forth in the
recitals hereto.
"DIP Credit Agreement" means the Senior Secured
Superpriority Debtor-in-Possession Credit Agreement, dated as of September 26,
2002, among the Debtors, The Retirement Systems of Alabama and the other
Lenders and agents from time to time party thereto, as amended, supplemented,
modified or any substitutions therefor.
"DIP Facilities" means the Company's debtor-in-possession
term loan facility, revolving credit facility and/or letter of credit facility
provided under the DIP Credit Agreement, as the same may exist from time to
time while the Cases are pending.
"Disclosure Statement" means a disclosure statement with
respect to the Plan.
"Effective Date" means the effective date of the Plan;
provided that, unless the Investor agrees otherwise, in no event shall the
Effective Date occur (a) earlier than 11 days after the Bankruptcy Court
approves and enters the order confirming the Plan (the "Confirmation Order"),
(b) before all Approvals are obtained and have become final (provided that, if
an appeal of such Approval is pending and such appeal has a significant
possibility of being resolved adversely to the Company in a manner that would
reasonably be expected to have a Material Adverse Effect, this clause (b)
shall be deemed not to be satisfied) and (c) before all applicable waiting
periods imposed by Law in connection with the transactions contemplated by the
Transaction Documents have expired or have been terminated.
"Employee Plans" has the meaning set forth in Section
3.14(a) hereof.
"Employment Agreement" means any employment, consulting,
retention, change in control or severance agreement or other similar
arrangement between any of the Companies, on the one hand, and any
Representative thereof, on the other.
"Environmental Laws" means any federal, state or local law,
statute, ordinance, order, decree, rule, regulation or permit or other binding
determination of any Governmental Entity relating to, or otherwise imposing
standards of conduct or liability with respect to (i) actual or threatened
releases, discharges, emissions, spills, leaks, migrations, injections or
disposals to air, water, land or groundwater of any Hazardous Material; (ii)
the use, handling, storage, treatment, management, transportation or disposal
of any Hazardous Material, including but not limited to, polychlorinated
byphenyls, asbestos or urea formaldehyde; (iii) exposure to any Hazardous
Material or any other toxic, hazardous or controlled, prohibited or regulated
substances; or (iv) the investigation, remediation, removal, cleanup or
compensation for any conditions resulting from the presence of any Hazardous
Materials in air, water, land or groundwater. Environmental Laws shall
include, but shall not be limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601, et seq. ("CERCLA"),
the Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq. ("RCRA"),
the Toxic Substances Control Act, 15 U.S.C. 2601, et seq. ("TSCA"), the
Occupational, Safety and Health Act, 29 U.S.C. 651, et seq., the Clean Air
Act, 42 U.S.C. 7401, et seq., the Federal Water Pollution Control Act, 33
U.S.C. 1251, et seq., the Safe Drinking ▇▇▇▇▇ ▇▇▇, ▇▇ ▇.▇.▇. ▇▇▇▇, et seq.,
the Hazardous Materials Transportation act, 49 U.S.C. 1802 et seq. ("HMTA"),
the Federal Insecticide, Fungicide, and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇ ▇.▇.▇. ▇▇▇▇ et
seq., and the Emergency Planning and Community Right to Know Act, 42 U.S.C.
11001 et seq. ("EPCRA"), and other comparable state and local laws and all
rules and regulations promulgated pursuant thereto or published thereunder.
"EPCRA" has the meaning set forth in the definition of
"Environmental Laws" herein.
"Equity Securities" shall mean (i) capital stock of, or
other equity interests in, any Person, (ii) securities convertible into or
exchangeable for shares of capital stock, voting securities or other equity
interests in such Person or (iii) options, warrants or other rights to acquire
the securities described in clauses (i) and (ii), whether fixed or contingent,
matured or unmatured, contractual, legal, equitable or otherwise.
"ERISA" means the Employee Retirement Security Act of 1974,
as amended, and all regulations promulgated thereunder, as in effect from time
to time.
"Exchange Act" means the U.S. Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Expenses" has the meaning set forth in Section 10.01(a)
hereof.
"FAA" means Federal Aviation Administration.
"GAAP" means U.S. generally accepted accounting principles
as in effect at the relevant time or for the relevant period.
"Governmental Entity" means any government or political
subdivision or department thereof, any governmental or regulatory body,
commission, board, bureau, agency or instrumentality, or any court or
arbitrator or alternative dispute resolution body, in each case whether
federal, state, local or foreign.
"Hazardous Materials" shall mean each and every element,
compound, chemical mixture, contaminant, pollutant, material, waste or other
substance that is defined, determined or identified as hazardous or toxic
under Environmental Laws or the release of which is regulated under
Environmental Laws. Without limiting the generality of the foregoing, the term
includes: "hazardous substances" as defined in CERCLA; "extremely hazardous
substances" as defined in EPCRA; "hazardous waste" as defined in RCRA;
"hazardous materials" as defined in HMTA; "chemical substance or mixture" as
defined in TSCA; crude oil, petroleum or petroleum-derived products or wastes
or any fraction thereof; radioactive materials including source, byproduct or
special nuclear materials; polychlorinated biphenyls, dioxins, asbestos or
asbestos-containing materials; chlorinated fluorocarbons; and radon.
"HMTA" has the meaning set forth in the definition of
"Environmental Laws" herein.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and the regulations promulgated thereunder.
"IAMAW" has the meaning set forth in Section 5.01(b) hereof.
"IAMAW Director" has the meaning set forth in Section
5.01(b) hereof.
"Indemnified Parties" has the meaning set forth in Section
10.04(a) hereof.
"Indemnity Claim" has the meaning set forth in Section
10.04(b) hereof.
"Independent Directors" has the meaning set forth in Section
5.01(b) hereof.
"Intellectual Property" means all intellectual property
rights including, but not limited to, patents, patent rights, trade secrets,
know-how, trademarks, service marks, trade names, copyrights, licenses and
proprietary processes and formulae.
"Investor" has the meaning set forth in the preamble hereto.
"Investor Director" has the meaning set forth in Section
5.01(b) hereof.
"Investment" has the meaning set forth in the recitals
hereto.
"Investment Price" has the meaning set forth in Section 2.01
hereof.
"IP Agreements" has the meaning set forth in Section 3.10(d)
hereof.
"Labor Director" has the meaning set forth in Section
5.01(b) hereof.
"Law" means any law, treaty, statute, ordinance, code, rule
or regulation of a Governmental Entity or judgment, decree, order, writ,
award, injunction or determination of an arbitrator or court or other
Governmental Entity.
"Leased Real Property" means the real property leased by any
of the Companies, as tenants, together with all buildings and other
structures, facilities or improvements currently or hereafter located thereon,
all fixtures, systems, equipment and items of personal property leased by any
of the Companies attached or appurtenant to such real property and all
easements, licenses, rights and appurtenances relating to the foregoing.
"Lien" means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
charge, or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever intended for security (including
any conditional sale or other title retention agreement, any easement, right
of way or other encumbrance on title to real property, and any financing lease
having substantially the same economic effect as any of the foregoing).
"Losses" has the meaning set forth in Section 10.04(a)
hereof.
"Material Adverse Effect" means a material adverse effect on
(i) the business, condition or prospects (financial or otherwise) of the
Companies, taken as whole (other than those which customarily occur as a
result of events leading up to and following the commencement of a case under
Chapter 11) or (ii) the ability of the Debtors, as applicable, to consummate
the transactions contemplated by the Transaction Documents or to perform their
obligations thereunder; provided that deferrals of payments to aircraft
lessors and lenders with respect to grounded aircraft and other aircraft in
the Companies' fleet (and any associated ratings down grade) shall not, in and
of themselves, give rise to a Material Adverse Effect.
"MidAtlantic" has the meaning set forth in Section 3.01
hereof.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and any
successor thereto.
"Outstanding Amount" means the then-current balance of the
debt obligation owed to the Investor in respect of its participation in or
guaranty of the DIP Facilities plus actual out-of-pocket expenses incurred by
the Investor in connection therewith that have not been advanced or reimbursed
by the Companies, it being understood that, with respect to any participation
by the Investor in the DIP Facilities in the form of a guarantee, that only
amounts that have actually been advanced by the Investor to the applicable
guaranteed lender and not repaid shall count towards the Outstanding Amount.
"Owned Real Property" means the real property owned by any
of the Companies, together with all buildings and other structures, facilities
or improvements currently or hereafter located thereon, all fixtures, systems,
equipment and items of personal property attached or appurtenant thereto and
all easements, licenses, rights and appurtenances relating to the foregoing.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means any individual, corporation, company,
association, partnership, limited liability company, joint venture, trust,
unincorporated organization, or Governmental Entity.
"Plan" has the meaning set forth in the recitals hereto.
"Policies" has the meaning set forth in Section 3.18 hereof.
"Postpetition", when used with respect to any agreement,
instrument or any obligation arising thereunder, any claim or proceeding or
any other matter, means an agreement or instrument that was first entered into
or first became effective, an obligation, claim or proceeding that first arose
or was first instituted, or another matter that first occurred, after the
commencement of the Cases.
"Proceeding" has the meaning set forth in Section 3.11
hereof.
"RCRA" has the meaning set forth in the definition of
"Environmental Laws" herein.
"Registration Rights Agreement" has the meaning set forth in
Section 7.03 hereof.
"Regulatory Approvals" means, to the extent necessary in
connection with the consummation of the transactions contemplated by the
Transaction Documents, any and all certificates, permits, licenses,
franchises, concessions, grants, consents, approvals, orders, registrations,
authorizations, waivers, variances or clearances from, or filings or
registrations with, Governmental Entities (and shall not include waiting
periods under the HSR Act or otherwise imposed by Law).
"Related Transactions" means a series of transactions that
are in fact related and are consummated within a nine (9) month period, which
period shall be measured from the time of the consummation of the first
transaction in such series; provided that such series consists of one
principal transaction and the other transactions are necessary or desirable to
implement or consummate the principal transaction.
"Representatives" means, with respect to any Person, such
Person's officers, directors, employees, agents, attorneys, accountants,
consultants, equity financing partners or financial advisors or other Person
associated with, or acting on behalf of, such a Person.
"Schedules" means the schedules of assets and liabilities
and the statements of financial affairs filed in the Cases by the Debtors.
"Seabury" has the meaning set forth in Section 3.17 hereof.
"SEC" means the U.S. Securities and Exchange Commission.
"SEC Reports" has the meaning set forth in Section 3.07(a)
hereof.
"Securities Act" means the U.S. Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Series 1 Class C Preferred Shares" means the Class C
Preferred Shares to be issued, as of the Effective Date, to or for the benefit
of employees of the Debtors that are subject to the collective bargaining
agreement between any Debtor and ALPA.
"Series 2 Class C Preferred Shares" means the Class C
Preferred Shares to be issued, as of the Effective Date, to or for the benefit
of employees of the Debtors that are subject to the collective bargaining
agreement between any Debtor and IAMAW.
"Series 3 Class C Preferred Shares" means the Class C
Preferred Shares to be issued, as of the Effective Date, to or for the benefit
of employees of the Debtors that are subject to new or amended collective
bargaining agreements between any Debtor and a labor union (other than ALPA
and IAMAW).
"Slot" means the right and operational authority held by any
of the Companies granted by the FAA pursuant to Title 14 to conduct one
Instrument Flight Rules (as defined under the federal aviation regulations)
landing or takeoff operation in a specified time period at LaGuardia Airport,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ International Airport and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Washington National
Airport.
"Standard & Poor's" means Standard & Poor's Rating Services,
a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and any successor thereto.
"Subsidiary" means as to any Person, any other Person of
which more than fifty percent (50%) of the shares of the voting stock or other
voting interests are owned or controlled, or the ability to select or elect
more than fifty percent (50%) of the directors or similar managers is held,
directly or indirectly, by such first Person or one or more of its
Subsidiaries or by such first Person and one or more of its Subsidiaries.
"Subsequent Reports" has the meaning set forth in Section
7.02(a) hereof.
"Tax" means all taxes, including any interest, liabilities,
fines, penalties or additions to tax that may become payable in respect
thereof, imposed by any Governmental Entity, which taxes shall include,
without limiting the generality of the foregoing, income taxes (including, but
not limited to, U.S. federal income taxes and state income taxes), payroll and
employee withholding taxes, unemployment insurance, social security, sales and
use taxes, excise taxes, franchise taxes, gross or net receipts taxes,
occupation taxes, real and personal property taxes, ad valorem taxes, stamp
taxes, transfer taxes, capital taxes, import duties, withholding taxes,
workers' compensation, and other obligations of the same or of a similar
nature whether arising before, on or after the Closing Date.
"Tax Returns" has the meaning set forth in Section 3.13(a)
hereof.
"Title 14" means Title 14 of the United States Code, as
amended and in effect from time to time, and the regulations promulgated
pursuant thereunder.
"Title 49" means Title 49 of the Code of Federal
Regulations, as amended and in effect from time to time.
"Transaction Documents" has the meaning set forth in Section
3.02 hereof.
"TWU" means Transport Workers Union.
"TSCA" has the meaning set forth in the definition of
"Environmental Laws" herein.
"US Airways" has the meaning set forth in Section 3.01
hereof.
"Warrants" means the Class A-1 Warrants together with the
Class A-2 Warrants.
"Winning Plan Sponsor" means the Person who makes the
highest and best investment proposal, as determined in accordance with the
Bidding Procedures Order.
ARTICLE II
ISSUANCE AND PURCHASE OF COMMON STOCK, WARRANTS AND
CLASS A PREFERRED SHARES
Section 2.01 Issuance and Purchase of Common Stock, Warrants
and Class A Preferred Shares.
(a) Upon the terms and subject to the conditions set forth
in this Agreement, and in reliance upon the representations and warranties
hereinafter set forth, at the Closing, the reorganized Company will issue,
sell and deliver to the Investor, and the Investor will purchase from the
reorganized Company, (i) twenty million (20,000,000) Class A Common Shares,
(ii) five million (5,000,000) Class B Common Shares, (iii) five million
(5,000,000) Class A-1 Warrants and (iv) five million (5,000,000) Class A
Preferred Shares, in each case, free and clear of all Liens, for an aggregate
purchase price of two hundred forty million dollars ($240,000,000) (the
"Investment Price").
(b) Notwithstanding the foregoing, (i) should each of them
so determine, the Investor and the Company may, by mutual agreement, modify
the foregoing structure in a manner consistent with the contemplated economic
consequences to the Company and the Investor in order to enable the
reorganized Company to more fully utilize the Company's existing tax
attributes and (ii) the Investor may, in its sole discretion, elect to (A) be
issued any combination of Class A Common Shares and Class B Common Shares,
provided that the total number such of shares of Common Stock to be issued to
the Investor hereunder shall not exceed twenty-five million (25,000,000)
(excluding any shares to be acquired pursuant the exercise of Class A-1
Warrants) and the number of Class B Common Shares to be issued to the Investor
shall not exceed five million (5,000,000), (B) delay the issuance and its
receipt of all or any portion of the Class A Common Shares or the Class B
Common Shares until the Class A Common Shares and Class A Preferred Shares are
distributed to certain of the Constituents.
Section 2.02 Closing. (a) Subject to the satisfaction or, if
permissible, waiver of the conditions set forth in Sections 8.01 and 8.02
hereof (other than the conditions set forth in Sections 8.01(b), 8.01(h),
8.01(k), 8.01(m), 8.01(r), 8.02(e) and 8.02(f) hereof, which conditions may be
satisfied either prior to, or simultaneously with, the Closing), the Closing
shall take place at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, 4
Times Square, New York, New York, at 10:00 a.m., New York City time, on the
third Business Day following satisfaction or, if permissible, waiver, of the
conditions set forth in Sections 8.01 and 8.02 hereof (other than the
conditions set forth in Sections 8.01(b), 8.01(h), 8.01(k), 8.01(m), 8.01(r),
8.02(e) and 8.02(f) hereof, which conditions may be satisfied either prior to,
or simultaneously with, the Closing), or at such other time and place as the
parties may agree (the date on which the Closing occurs, the "Closing Date");
provided that the parties shall use commercially reasonable efforts to have
the Closing take place on the Effective Date.
(b) At the Closing, (i) the reorganized Company shall
deliver to the Investor certificates representing the shares of Common Stock,
Class A-1 Warrants and Class A Preferred Shares to be purchased by, and sold
to, the Investor pursuant to Section 2.01 hereof (registered in the names and
in the denominations designated by the Investor at least two Business Days
prior to the Closing Date), together with the other documents, certificates
and opinions to be delivered pursuant to Section 8.01 hereof, and (ii) the
Investor, in full payment for the shares of Common Stock, Class A-1 Warrants
and Class A Preferred Shares to be purchased by, and sold to, the Investor
pursuant to Section 2.01 hereof, shall pay to the reorganized Company as
provided in Section 2.01 hereof, an aggregate amount equal to (x) the
Investment Price minus (y) any amounts due as of the Closing Date to the
Investor pursuant to Section 10.01 hereof to the extent the Investor provides
invoices and supporting documentation for such expenses (it being understood
that the Investor shall continue to be entitled to seek reimbursement for
amounts becoming due from and after the Closing to the extent properly
reimbursable pursuant to Section 10.01 hereof) minus (z) the Outstanding
Amount (such payment to be made in immediately available funds by wire
transfer to the account designated by the Company, or by such other means as
may be agreed between the parties hereto), and shall deliver the certificate
required pursuant to Section 8.02(a) hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to, and agrees
with, the Investor as follows:
Section 3.01 Corporate Organization and Qualification. Each
of the Companies (a) is a corporation, partnership or limited liability
company duly organized or formed, validly existing and in good standing under
the Laws of the jurisdiction of its incorporation or organization, (b) has all
requisite corporate power and authority to own or lease its assets and carry
on its business, (c) has all requisite governmental licenses, authorizations,
consents and approvals to own or lease its assets and carry on its business
and (d) is duly qualified and is licensed and in good standing under the Laws
of each jurisdiction where its ownership, lease or operation of properties or
the conduct of its business requires such qualification or license; except in
each case referred to in clause (c) or (d), to the extent that failure to do
so could not reasonably be expected to have a Material Adverse Effect. As of
the date hereof, the Company has made available to the Investor a complete and
correct copy of the certificate of incorporation and the by-laws or comparable
governing instruments of the Company and each of its Subsidiaries, each as
amended to date and each of which as so delivered is in full force and effect.
Subject to Section 10.12 hereof, each of US Airways, Inc. ("US Airways"),
MidAtlantic Airways, Inc. ("MidAtlantic"), Allegheny Airlines, Inc., PSA
Airlines, Inc. and Piedmont Airlines, Inc. is an "air carrier" within the
meaning of Section 40102 of Title 49 and holds a certificate under Section
41102 of Title 49 or a commuter air carrier authorization. Each such Person
holds air carrier operating certificates issued pursuant to Chapter 447 of
Title 49. Each of the Companies that is an "air carrier" is a "citizen of the
United States" as defined in Section 40102(a)(15) of Title 49. Subject to
Section 10.12, each of the Companies that is an "air carrier" possesses all
necessary certificates, franchises, licenses, permits, rights, authorizations
and concessions and consents which are material to the operation of the routes
flown by it and the conduct of its business and operations as currently
conducted.
Section 3.02 Authorization; No Contravention. Subject and
after giving effect to any required approvals of the Bankruptcy Court
(including, without limitation, to the extent applicable, the Confirmation
Order) and the Plan, the execution, delivery and/or performance of obligations
under this Agreement, the Plan, the Bidding Procedures Order, the Confirmation
Order, the Registration Rights Agreement, the Equity Securities and all other
documents necessary to consummate the transactions and arrangements
contemplated hereby (collectively, the "Transaction Documents"), to the extent
that such documents have been delivered as of such date, by the Company, and
any Debtor Subsidiary that is a party thereto, as applicable, and the
consummation of the transactions contemplated by the Transaction Documents in
accordance with the terms and conditions of such documents, are within the
Company's (including, as applicable, the reorganized Company's), and, with
respect to any such Debtor Subsidiary (including, as applicable, any Debtor
Subsidiary as reorganized pursuant to the Plan) that is a party thereto, such
Debtor Subsidiary's, corporate or other powers, have been duly authorized by
all necessary corporate or other organizational action and do not and will not
(i) contravene the terms of any certificate of incorporation or by-laws or
comparable governing instruments of any of the Companies assuming such
instruments will be, or have been, as applicable, amended as of the Effective
Date, including as set forth in Exhibit A attached hereto, (ii) conflict with
or result in the breach or contravention of, or the creation of any Lien
under, or require any payment to be made under (x) any Postpetition
Contractual Obligation or contracts assumed in connection with the
consummation of the Plan to which any of the Companies is a party or affecting
any of the Companies or the properties of any of the Companies that could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or (y) any order, injunction, writ or decree of any
Governmental Entity or any arbitral award to which any of the Companies or its
property is subject, (iii) give rise to any preemptive rights, rights of first
refusal or other similar rights on behalf of any Person under any applicable
Law or any provision of any certificate of incorporation or by-laws or any
agreement or instrument applicable to any of the Companies or (iv) violate any
Law. Each Transaction Document when delivered will constitute, subject, in the
case of the Debtors, to approval by the Bankruptcy Court, a legal, valid and
binding obligation of the Companies that are parties thereto, enforceable
against each of such Companies in accordance with its terms. The Board has
approved the entry by the Company into this Agreement and the other
Transaction Documents and has approved the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents.
Section 3.03 Consents; No Conflicts. No Approval (other than
approval by the Bankruptcy Court) is necessary or required in connection with
the execution, delivery or performance by, or enforcement against, any of the
Companies of this Agreement or any other Transaction Document, or for the
consummation of the transactions contemplated hereby and thereby, except for
such Approvals listed on Schedule 3.03 hereto or that could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect,
and all of which have been duly obtained, taken, given or made and are in full
force and effect, except as indicated on Schedule 3.03 hereto or for Approvals
that could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
Section 3.04 Bankruptcy Court Orders. The Debtors have
complied with the terms of all orders of the Bankruptcy Court in respect of
the Investment, this Agreement and the Bidding Procedures Order, except to the
extent that any such failure to comply can be shown by the Debtors not to be
material to the Company or to the Investor.
Section 3.05 Capitalization; Securities. Upon the Closing
and after giving effect to the Confirmation Order, the Plan and the
Investment, the authorized capital stock of the reorganized Company shall
consist solely of (i) two hundred million (200,000,000) Class A Common Shares,
the principal terms of which are set forth in Exhibit A attached hereto, (ii)
five million (5,000,000) Class B Common Shares, the principal terms of which
are set forth in Exhibit A attached hereto, (iii) twenty million two hundred
fifty thousand (20,250,000) Class A-1 Warrants, the principal terms of which
are set forth in Exhibit B attached hereto, (iv) four million (4,000,000)
Class A-2 Warrants, the principal terms of which are set forth in Exhibit C
attached hereto, (v) twenty-four million two hundred fifty thousand
(24,250,000) Class A Preferred Shares, the principal terms of which are set
forth in Exhibit D attached hereto, (vi) eighty-five million (85,000,000)
Class B Preferred Shares, the principal terms of which are set forth in
Exhibit E attached hereto and (vii) at the option of the Company, up to three
(3) Class C Preferred Shares, issuable in up to three (3) series, the
principal terms of which are set forth in Exhibit F attached hereto, which, in
each case, will be authorized and issued or reserved for issuance. Upon the
Closing (prior to giving effect to the Investment) there shall not be
outstanding any (A) Class A Common Shares, other than (x) up to twenty-seven
million three hundred fifty thousand (27,350,000) Class A Common Shares to be
issued by the Company to or for the benefit of the Constituents upon the
Effective Date and (y) up to three million seven hundred fifty thousand
(3,750,000) Class A Common Shares to be issued by the Company to members of
management of the Company upon the Effective Date; (B) Class B Common Shares,
(C) Class A-1 Warrants, other than (x) up to eleven million five hundred
thousand (11,500,000) Class A-1 Warrants to be issued to or for the benefit of
the Constituents upon the Effective Date and (y) up to three million seven
hundred fifty thousand (3,750,000) Class A-1 Warrants to be issued by the
Company to members of management of the Company upon the Effective Date;
provided, that the Company may elect to have comparable options issued in
place of Class A-1 Warrants described in this subsection and this Agreement
shall be deemed to be amended to reflect such issuance, (D) Class A Preferred
Shares other than (x) up to fifteen million five hundred thousand (15,500,000)
Class A Preferred Shares to be issued to or for the benefit of the
Constituents upon the Effective Date and (y) up to three million seven hundred
fifty thousand (3,750,000) Class A Preferred Shares to be issued to members of
management of the Company upon the Effective Date and (E) Class B Preferred
Shares, other than up to fifty million (50,000,000) Class B Preferred Shares
to be issued to or for the benefit of the Constituents upon the Effective
Date. Upon the Effective Date, all authorized Class A-2 Warrants and Class C
Preferred Shares shall have been issued to or for the benefit of the
Constituents. Upon the Closing Date, all of such outstanding securities,
including, without limitation, the Equity Securities to be issued and
delivered to the Investor pursuant to the terms hereof, shall have been duly
authorized and validly issued, fully paid, nonassessable and not subject to
preemptive or similar rights of third parties or reserved for issuance in
accordance with the terms of the Plan and Confirmation Order. The Class A
Common Shares issuable upon the exercise of the Warrants, when issued and
delivered to the Warrant holders, shall have been duly authorized and be
validly issued, fully paid, nonassessable and not subject to preemptive or
similar rights of third parties. Upon the Closing and after giving effect to
the Confirmation Order and the Plan, (i) there shall be no voting trusts,
voting agreements, proxies, first refusal rights, first offer rights, co-sale
rights, options, transfer restrictions or other agreements, instruments or
understandings (whether oral, formal or informal) with respect to the voting,
transfer or disposition of capital stock of the Company or any Subsidiary to
which the Company or any Subsidiary is a party or by which it is bound, or, to
the knowledge of the Company, among or between any persons other than the
Company or any Subsidiary (as the case may be), and (ii) except as set forth
herein, there shall be no options, warrants, rights, calls, commitments or
agreements of any character to which the Company or any Subsidiary is a party,
or by which the Company or any Subsidiary is bound, calling for the issuance
of shares of capital stock or other equity securities of the Company or any
Subsidiary or any securities convertible into or exercisable or exchangeable
for, or representing the right to purchase or otherwise receive, any such
capital stock or other equity securities, or other arrangement to acquire, at
any time or under any circumstance, capital stock of the Company or any
Subsidiary or any such other securities. The rights, preferences and
privileges of the capital stock of the Company shall be as set forth in the
Certificate of Incorporation (including any Certificates of Designation, as
applicable) of the Company, as amended pursuant to the Plan and in effect upon
the Closing.
Section 3.06 Subsidiaries; Equity Investments. (a) As of the
Closing Date and after giving effect to the Plan and Confirmation Order, each
of the Companies will have no Subsidiaries other than those specifically
disclosed in Schedule 3.06(a) and all of the capital stock of, or other equity
interests in, each Subsidiary will have been validly issued, will be fully
paid and non-assessable and will be owned by the reorganized Company, directly
or indirectly in the amounts specified in Schedule 3.06(a), free and clear of
all Liens and free of any other restriction (including, without limitation,
any restriction on the right to vote, sell or otherwise dispose of such
capital stock or other equity interest other than those arising under
applicable Law). As of the Closing Date, there shall not be any outstanding
obligations of the reorganized Company or any Subsidiary to issue, repurchase,
redeem or otherwise acquire any Equity Securities of a Subsidiary.
(b) Schedule 3.06(b) hereto is a complete and accurate list
of the Equity Securities, and any other equity interest, equity investment or
other ownership interest in any other Person, Beneficially Owned by any of the
Companies, other than Cash Equivalents and the Equity Securities of the
Subsidiaries disclosed in Schedule 3.06(a). None of the Companies has any
equity investments in any other corporation or entity other than those
specifically disclosed in Schedule 3.06(a) or Schedule 3.06(b). Other than as
set forth on Schedule 3.06(b) hereto, as of the date hereof, none of the
Companies is obligated, pursuant to any agreement or instrument applicable to
the Company or such Subsidiary, to purchase any Equity Securities of, or make
any other equity investment in, any Person.
Section 3.07 Company Reports; Financial Statements. (a)
Except as set forth on Schedule 3.07(a) hereto, the Company has made available
(including by filing publicly by ▇▇▇▇▇ with the SEC) to the Investor a true
and complete copy of (i) the Annual Report on Form 10-K of each of the Company
and, if applicable, US Airways for each of the fiscal years ended December 31,
2001, 2000, 1999, 1998 and 1997; (ii) the Quarterly Report on Form 10-Q of
each of the Company and US Airways for each of the periods ended March 31,
2002 and June 30, 2002; and (iii) each registration statement, report on Form
8-K, proxy statement, information statement or other report or statement
required to be filed by the Company or US Airways with the SEC since December
31, 1997 and prior to the date hereof, in each case, in the form (including
exhibits and any amendments thereto) filed with the SEC (collectively, the
"SEC Reports"). As of their respective dates, the SEC Reports (i) were timely
filed with the SEC; (ii) complied, in all material respects, with the
applicable requirements of the Exchange Act and the Securities Act; (iii) did
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and (iv) presented fairly, in each case in accordance with
GAAP applied on a consistent basis throughout the periods covered (except as
stated therein or in the notes thereto), the financial position and results of
operations of the entity to which such report applies as of the date and for
the period set forth therein. Other than the SEC Reports, neither the Company
nor US Airways has filed or been required to file any other reports or
statements with the SEC since December 31, 1997.
(b) Each of the consolidated balance sheets (including the related notes and
schedules) included in or incorporated by reference into the SEC Reports
fairly presents, in all material respects, the consolidated financial position
of the entities to which it applies as of the date thereof; and each of the
consolidated statements of income (or statements of results of operations),
stockholders' equity and cash flows (including the related notes and
schedules) included in or incorporated by reference into the SEC Reports
fairly presents, in all material respects, the results of operations, retained
earnings and cash flows, as the case may be, of the entities to which it
applies (on a consolidated basis) for the periods or as of the dates, as the
case may be, set forth therein, in each case in accordance with GAAP applied
on a consistent basis throughout the periods covered (except as stated therein
or in the notes thereto) and in compliance with the rules and regulations of
the SEC.
(c) Except as disclosed in the SEC Reports, there were no
material liabilities or obligations of any nature of the Companies required
under GAAP or the rules and regulations of the SEC to be disclosed as of the
date of such SEC Reports. Since the date of the most recently filed SEC
Report, except as disclosed in this Agreement or the SEC Reports, the
Companies have not incurred any material liabilities or obligations other than
those incurred in the ordinary course of such company's business and other
than in connection with the DIP Facilities.
Section 3.08 Information Provided. All representations and
warranties made by the Company in this Agreement, and all written statements,
memoranda, exhibits, documents, certificates, schedules or other written
information provided by or on behalf of the Companies to the Investor or any
of its Representatives in connection with the transactions contemplated hereby
or by the Transaction Documents, when considered as a whole, are true and
correct in all material respects and do not contain any untrue statement of
material fact or omit to state any material fact necessary in order to make
the statements contained therein not misleading in light of the circumstances
under which they were made. To the extent that any such information contained
projections, such projections were prepared in good faith on the basis of (i)
assumptions, methods and tests that are consistent with the Company's past
practices and are believed by the Company to be reasonable and (ii)
information believed by the Company to have been accurate based upon
information available to the Company at the time such projections were
furnished to the Investor.
Section 3.09 Absence of Certain Changes or Events. Except
for the filing of the Cases, the transactions contemplated by the Transaction
Documents or as otherwise disclosed in the SEC Reports or this Agreement, (i)
the Companies, taken as a whole, have in all material respects conducted their
respective businesses in the ordinary course of business since December 31,
2001, and (ii) the Companies have not taken any actions, and no events have
occurred since December 31, 2001, that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.
Section 3.10 Property. (a) Except as set forth on Schedule
3.10(a), the Company and each of its Subsidiaries has good record and
marketable title in fee simple to all Owned Real Property and valid leasehold
or subleasehold interests in all Leased Real Property, except for such defects
in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as otherwise disclosed in
the SEC Reports or permitted under the DIP Credit Agreement, the Owned Real
Property and the leasehold or subleasehold interests in the Leased Real
Property are subject to no material Liens.
(b) The Company and each of its Subsidiaries has good title
to all tangible personal property necessary or used in the ordinary conduct of
its business, except for such defects in title as could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
(c) Set forth on Schedule 3.10(c) hereto is a complete and
accurate list of all Slots owned by any of the Companies on the date hereof.
(d) (i) Each of the Companies owns all right, title and
interest in and to, or possesses the rights to use all Intellectual Property
that is used or reasonably necessary for the conduct of its business, except
as could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
(ii) To the knowledge of the Company, the operation of the
Companies' respective businesses as currently conducted, or as
contemplated to be conducted and the use of the Intellectual Property
in connection therewith do not infringe, misappropriate, conflict
with, or otherwise violate the rights of any other Person, except for
such violations that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The
Intellectual Property is subsisting and has not been adjudicated
invalid or unenforceable in whole or in part, and to the knowledge of
the Company, is valid and enforceable and will not cease to be in
full force and effect in accordance with its terms by virtue of the
consummation of the transactions contemplated by the Transaction
Documents.
(iii) Except as specifically disclosed in Schedule
3.10(d)(iii), no claim or litigation has been asserted or is pending
or, to the knowledge of the Company, threatened, that, either
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect, alleging that the Companies' rights
in or use of the Intellectual Property or the operation of the
businesses of the Companies infringe, misappropriate, or otherwise
violate the rights of any other Person. To the knowledge of the
Company, no Person is engaging in any activity that infringes,
misappropriates, or otherwise violates the Intellectual Property,
except for such violations that could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(iv) With respect to each material agreement, permit,
consent, order and franchise relating to the license, development,
use or disclosure of any of the Intellectual Property to which any of
the Companies, now or hereafter, is a party or a beneficiary
(collectively, the "IP Agreements"): (A) such IP Agreement is valid
and binding and in full force and effect; (B) such IP Agreement will
not cease to be valid and binding and in full force and effect on
terms identical to those currently in effect as a result of the
rights and interest granted herein, nor will the grant of such rights
and interest constitute a breach or default under such IP Agreement
or otherwise give any party thereto a right to terminate such IP
Agreement; (C) none of the Companies have received any notice of
termination, cancellation or received any notice of a breach or
default under such IP Agreement; (iv) except as set forth on Schedule
3.10(d)(iv), none of the Companies has granted to any other third
party any rights, adverse or otherwise, under such IP Agreement; and
(v) none of the Companies and, to the Company's knowledge, no other
party to such IP Agreement, is in breach or default thereof in any
material respect, and, to the Company's knowledge, no event has
occurred that, with notice or lapse of time or both, would constitute
such a breach or default or permit termination, modification or
acceleration under such IP Agreement.
Section 3.11 Litigation. Except as has been publicly
disclosed in the SEC Reports or litigation filed in connection with the Cases,
there are no actions, suits, proceedings, claims or disputes (each, a
"Proceeding") pending or, to the knowledge of the Company after due and
diligent investigation, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Entity, by or against the Company or
any of its Subsidiaries or against any of their properties or revenues that
either individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect. The performance of any action by any of the Companies
required or contemplated by any of the Transaction Documents is not restrained
or enjoined (either temporarily, preliminary or permanently). There are no
actions, suits or proceedings pending that challenge the validity of any of
the Transaction Documents or the applicability or enforceability of any
Transaction Document.
Section 3.12 Compliance with Laws; Regulatory Approvals. (a)
Each of the Companies is in compliance with the requirements of all applicable
Laws, except in instances in which (i) such requirement of Law is being
contested in good faith by appropriate proceedings diligently conducted, (ii)
the failure to comply therewith, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, (iii) on or prior to
the Effective Date, compliance with such Law is excused or stayed by the
Bankruptcy Code or by order of the Bankruptcy Court, and (iv) after the
Effective Date, compliance with such Law is permanently excused or stayed by
the Bankruptcy Code or by order of the Bankruptcy Court.
(b) Each of the Companies has obtained, and is in compliance with the terms
and conditions of, all Regulatory Approvals required to conduct their
respective businesses and all such Regulatory Approvals are in full force and
effect, except (i) as set forth in Schedule 3.12(b), (ii) to the extent that
failure to obtain, or to comply with, any Regulatory Approval, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect, (iii) if, on or prior to the Effective Date, such failure to obtain,
or to comply with, any Regulatory Approval is excused or stayed by the
Bankruptcy Code or by order of the Bankruptcy Court, or (iv) after the
Effective Date, such failure to obtain, or to comply with, any Regulatory
Approval is permanently excused or stayed by the Bankruptcy Code or by order
of the Bankruptcy Court.
Section 3.13 Taxes. (a) Except as disclosed in Schedule
3.13(a) hereto, the Companies have filed all material U.S. federal, state,
local, foreign and other tax returns (including any information returns,
reports and statements) (the "Tax Returns") that are required to have been
filed by them with the appropriate taxing authorities, and all information
provided in such Tax Returns is complete and accurate in all material
respects. Except as disclosed in Schedule 3.13(a), the Companies have paid all
material Taxes owed by them (whether or not actually shown on such Tax
Returns), other than in those instances in which such Taxes (i) are being
contested in good faith by appropriate proceedings diligently conducted and
for which adequate reserves have been provided in accordance with GAAP in
respect of all such Taxes and/or (ii) relate to a Tax period (or portion
thereof) ending on or before the commencement of the Cases and that first
became due and payable after the time of the commencement of the Cases. Except
as disclosed in Schedule 3.13(a) hereto, there is no material Tax liability
proposed by any taxing authority to be imposed upon the Company or any of the
Subsidiaries for the fiscal year ended December 31, 2002 and all prior years
for which there is not an adequate reserve.
(b) Except as disclosed in Schedule 3.13(b) hereto, no
audits or investigations relating to any Taxes for which any of the Companies
may be liable are pending or threatened in writing by any taxing authority.
Except as disclosed in Schedule 3.13(b) hereto, there are no agreements or
applications by any of the Companies for the extension of the time for filing
any material Tax Return or paying any material Tax nor have there been any
waivers of any statutes of limitation for the assessment of any material
Taxes.
(c) Except as disclosed in Schedule 3.13(c), none of the
Companies is a party to any agreements with any Person other than one or more
of the other Companies relating to the sharing or allocation of Taxes, except
for tax indemnification agreements in leasing transactions.
(d) Except as disclosed in Schedule 3.13(d) hereto, the
Companies have withheld from their employees and timely paid to the
appropriate taxing authority proper and accurate amounts in all material
respects through all periods in compliance in all material respects with all
employee Tax withholding provisions of all applicable Laws.
Section 3.14 ERISA and Other Employment Matters.
(a) Schedule 3.14(a) lists each material employee benefit
plan (within the meaning of Section 3(3) of ERISA, whether or not subject to
ERISA) and each material bonus, incentive or deferred compensation, stock
option or other equity based, severance, termination, or fringe benefit or
other material benefit, plan, program or policy, maintained, sponsored or
contributed to by any of the Companies or to which any such Person is or has
been obligated to contribute (collectively, the "Employee Plans"). Each such
Employee Plan subject to Section 412 of the Code or Section 302 of ERISA shall
be so identified. Except as set forth on Schedule 3.14(a) hereto, none of the
Companies is or, within the preceding six years, has been obligated to
contribute to any "multiemployer plan" as defined in Section 3(37) of ERISA.
Except as set forth on Schedule 3.14(a), none of the Companies has an express
or implied commitment (i) to create or incur liability with respect to or
cause to exist any employee benefit plan, program or arrangement other than
the Employee Plans or (ii) except for amendments necessary or appropriate to
comply with applicable Law, to modify, change or terminate any Employee Plan.
(b) Except as set forth in Schedule 3.14(b), neither the
execution and delivery of the Transaction Documents nor the consummation of
the transactions contemplated thereby will accelerate the time of payment,
vesting or funding of, or increase or modify the amount or terms of, any
compensation or benefits that are or may become payable from or by any of the
Companies to or in respect of any current or former executive officer or other
key employee of any such Person.
(c) All employer and employee contributions, and material
premiums and expenses due and payable to or in respect of any Employee Plan or
required by Law or any Employee Plan or labor agreement or arrangement have
been timely paid, or, if not yet due, have been fully and adequately accrued
as a liability on the Company's most recent financial statements included in
the SEC Reports in accordance with applicable Law.
(d) Except as set forth on Schedule 3.14(d), (i) no trade or
business, whether or not incorporated, is or has been treated as a single
employer together with the Company for any purpose under ERISA or Section 414
of the Code other than the Company's Subsidiaries, (ii) no liability under
Sections 406, 409, 502(i), 502(l), or Part 6 of Title I, of ERISA or Title IV
of ERISA (other than premiums to the PBGC which have been timely paid) or the
penalty or excise tax provisions of the Code relating to employee benefit
plans or employee compensation has been incurred (directly or indirectly,
including as a result of any indemnification obligation or agreement) by any
of the Companies and is still outstanding, and no event, transaction or
condition has occurred or exists which could reasonably be expected to result
in any such liability, and (iii) no reportable event, within the meaning of
Section 4043 of ERISA and the regulations of the PBGC promulgated thereunder
(other than a reportable event as to which notice is waived) has occurred, or
will occur, in connection with the consummation of the transactions
contemplated by the Transaction Documents, with respect to any Employee Plan.
(e) Each Employee Plan has been operated and administered,
and is in compliance with, all applicable Laws in all material respects.
Except as set forth in Schedule 3.14(e), each Employee Plan that is intended
to qualify under Section 401(a) of the Code has received a favorable
determination from the Internal Revenue Service as to its qualification or an
initial application for a determination letter is pending with the Internal
Revenue Service and, to the knowledge of the Company or any Subsidiary, no
event or condition has occurred or exists since the date of such letter that
could reasonably be expected to result in the disqualification of such
Employee Plan.
(f) Each of the representations set forth in Sections
3.14(a), (d) and (e) shall be determined to be accurate unless the failure to
be so accurate could, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
Section 3.15 Labor Matters. (a) Except as set forth on
Schedule 3.15(a) hereto, US Airways, Inc. is not a party to or bound by any
labor agreement or collective bargaining agreement respecting the employees in
or relating to its business. Except as set forth on Schedule 3.15(a), US
Airways, Inc. has not received any written notification of any efforts to
organize employees in respect of any labor or union organization in or
relating to its business. Except as set forth in Schedule 3.15(a) hereto,
there is no unfair labor practice or similar charge or complaint against US
Airways, Inc. relating to its business pending, or to the knowledge of US
Airways, Inc., threatened. Each of the Companies is in compliance with all
applicable Laws respecting employment practices, term and conditions of
employment, collective bargaining agreements and wages and hours and is not
engaged in any unfair labor practice.
(b) Except as set forth in Schedule 3.15(b) hereto, neither
the execution and delivery of the Transaction Documents nor the consummation
of the transactions contemplated thereby will result in the breach of,
constitute a default or a change in control under, or otherwise provide any
Person with a right to terminate, rescind, amend, renegotiate or be released
from any labor agreement or collective bargaining agreement, or any provisions
thereof, to which any of the Companies is a party.
(c) Each of the representations set forth in Section 3.15(a)
shall be determined to be accurate unless the failure to be so accurate could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 3.16 Contracts. (a) Except as set forth on Schedule
3.16(a) hereto, none of the Companies is a party or subject to any of the
following (whether written or oral, express or implied): (i) any Postpetition
Employment Agreement, understanding or obligation with respect to severance,
termination, retention or change in control, to pay liabilities or fringe
benefits, with any present or former Representative of any of the Companies,
or any such agreement, understanding or obligation, the assumption of which
has been approved by the Bankruptcy Court, or (ii) any plan, contract or
understanding providing for bonuses, pensions, options, deferred compensation,
retirement payments, royalty payments, profit sharing or similar payment or
benefit with respect to any present or former Representative of any of the
Companies, that could, in either case, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) None of the Companies is in breach or violation of, or
in default under or with respect to, any contract, the assumption of which has
been approved by the Bankruptcy Court or any Postpetition Contractual
Obligation that could, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(c) Except as set forth in Schedule 3.16(c) hereto, neither
the execution and delivery of the Transaction Documents nor the consummation
of the transactions contemplated thereby will result in the breach of,
constitute a default or a change in control under, or otherwise provide any
Person with a right to terminate, rescind, amend, renegotiate or be released
from any Employment Agreement, or any provisions thereof, that could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 3.17 Financial Advisors and Brokers. Except for
Seabury Securities LLC and/or its Affiliates ("Seabury"), or as otherwise set
forth on Schedule 3.17 hereto, no Person has acted, directly or indirectly, as
a broker, finder or financial advisor of any of the Companies in connection
with the Transaction Documents or the transactions contemplated thereby, and
except for Seabury and any Person listed on Schedule 3.17, no Person acting
for or on behalf of the Companies is entitled to receive any broker's,
finder's or similar fee or commission in respect thereof based in any way on
any agreement, arrangement or understanding made by or on behalf of any of the
Companies. True and correct copies of the Company's agreement with Seabury and
all agreements between any of the Companies, on the one hand, and each Person
listed on Schedule 3.17 (or any of their respective Affiliates), on the other,
have been delivered to the Investor.
Section 3.18 Insurance. Set forth on Schedule 3.18 hereto is
a description that is correct and complete in all material respects
(specifying the insurer, the policy number or covering note number with
respect to binders and amount of coverage) of insurance policies, binders,
contracts or instruments (collectively, the "Policies") to which any of the
Companies is a party or by which any of their assets or any of their
employees, officers or directors (in such capacity) are covered by property,
fire and casualty, professional liability, public and product liability,
workers' compensation, extended coverage, business interruption, directors'
and officers' liability insurance and other forms of insurance provided to any
of the Companies in connection with their respective businesses. All premiums
required to be paid with respect to the Policies covering all periods up to
and including the date hereof have been paid. Except as set forth on Schedule
3.18 hereto, all such Policies are in full force and effect, and will remain
in full force and effect after the Closing, in accordance with their
respective terms. Except as set forth on Schedule 3.18 hereto, none of the
Companies has received any notice of default, cancellation or termination with
respect to any provision of any such Policies, or any notice that the Insurer
is unwilling to renew any such Policy following the currently scheduled
expiration of such Policy or intends to materially modify any term of any such
renewed Policy as compared to the existing Policy. With respect to its
directors' and officers' liability insurance policies, none of the Companies
has failed to give any notice or present any claim thereunder in due and
timely fashion or as required by any such policies so as to jeopardize full
recovery under such Policies. Except as set forth on Schedule 3.18 hereto,
none of the Companies have any claims pending under the Policies in a stated
amount in excess of $10,000,000.
Section 3.19 Environmental Matters. Except as set forth on
Schedule 3.19 hereto or to the extent that such inaccuracies could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, the Companies (i) are in compliance with any and all
applicable Environmental Laws, (ii) have received and are in compliance with
all permits, licenses or other approvals required under applicable
Environmental Laws for the conduct of their respective businesses, and such
permits, licenses or other approvals remain in full force and effect, (iii)
have not received notice of any unpaid penalty or liability or any pending or
threatened enforcement action associated with any previously corrected
violation of any Environmental Law and (iv) have not received notice of any
actual or potential liability for the investigation, removal, remediation or
cleanup of any disposal or release of Hazardous Materials.
Section 3.20 Controls. Each of the Debtors maintains
internal information systems, cash management systems and other controls
sufficient to provide reasonable assurance that material transactions are
executed in accordance with management's general or specific authorizations
and are recorded in a manner that permits the preparation of financial
statements in accordance with GAAP.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to, and agrees with,
the Company as follows:
Section 4.01 Organization. The Investor is an
instrumentality of the State of Alabama having all requisite power and
authority and all requisite governmental licenses, authorizations, consents
and approvals to execute, deliver and perform its obligations under the
Transaction Documents.
Section 4.02 Authorization of Agreements. The execution,
delivery and performance by the Investor of its obligations under the
Transaction Documents, to the extent that such documents have been delivered
as of such date, and the consummation of the transactions contemplated by the
Transaction Documents, are within the Investor's powers and have been duly
authorized by all necessary action and do not and will not contravene the
terms of its governing documents. Each Transaction Document when delivered
will constitute a legal, valid and binding obligation of the Investor,
enforceable against the Investor in accordance with its terms.
Section 4.03 Consents; No Conflicts. No Approval (other than
approval by the Bankruptcy Court) is necessary or required in connection with
the execution, delivery or performance by, or enforcement against, the
Investor of this Agreement or any other Transaction Document, or for the
consummation of the transactions contemplated hereby and thereby, except for
such Approvals listed on Schedule 4.03 hereto or that could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect,
and all of which have been duly obtained, taken, given or made and are in full
force and effect, except as indicated on Schedule 4.03 hereto or for Approvals
that could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
Section 4.04 Financial Advisors and Brokers. Except for
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, no Person has acted directly or indirectly as a
broker, finder or financial advisor of the Investor in connection with the
Transaction Documents or the transactions contemplated thereby, and no Person
acting for or on behalf of the Investor is entitled to receive any broker's,
finder's or similar fee or commission in respect thereof based in any way on
any agreement, arrangement or understanding made by or on behalf of the
Investor.
Section 4.05 Ownership of Equity Securities; Purpose of
Investment. The Investor is acquiring the Common Stock, Class A-1 Warrants and
Class A Preferred Shares under this Agreement solely for the purpose of
investment and not with a view to, or for sale in connection with, any
distribution thereof in violation of the Securities Act and applicable state
securities or "blue sky laws". The Investor is an "Accredited Investor" as
such term is defined in Regulation D of the Securities Act.
Section 4.06 Citizenship. The Investor or its designee, as
permitted by Section 10.09, who acquires the Equity Securities hereunder at
the Closing will be a "citizen of the United States," as the term is used in
Section 40102(a)(15) of Title 49 or any similar legislation of the United
States enacted in substitution or replacement therefore.
Section 4.07 Financing. The Investor has sufficient and
adequate resources to consummate the transactions contemplated by this
Agreement.
ARTICLE V
GOVERNANCE
Section 5.01 Board of Directors. (a) From and after the
Closing Date, the Board shall be composed of 13 directors.
(b) As of the Closing Date and after giving effect to the
Confirmation Order and Plan, the Board shall consist of: (i) 5 members
designated by the Investor and reasonably satisfactory to the Company (each,
an "Investor Director"), (ii) 2 members designated by the Official Committee
of Unsecured Creditors (the "Creditors' Committee") and reasonably
satisfactory to the Company and the Investor (subject, in the case of the
Investor, to Section 5.01(e) below) (each, a "Creditors' Committee Director"),
(iii) one (1) member designated by the Airline Pilots Association,
International ("ALPA", such member, the "ALPA Director"), (iv) one (1) member
designated by the International Association of Machinists and Aerospace
Workers ("IAMAW", such member, the "IAMAW Director"), (v) one (1) member
designated by the collective decision of the unions (other than ALPA and the
IAMAW) that have entered into new or amended collective bargaining agreements
with the Company which provide for such Board member (the "Labor Director"),
(vi) the chief executive officer of the Company (the "CEO"), and (vii) 2
members, neither of whom is an employee or an affiliate of the Company or the
Investor, identified by a majority of the Board and reasonably satisfactory to
the Company and the Investor (subject, in the case of the Investor, to Section
5.01(e) below) (each, an "Independent Director"). Notwithstanding the
foregoing, the composition of the Board (and the committees thereof) shall
comply with all applicable rules of the primary national securities exchange
or national quotation system on which the Common Stock is then listed or
quoted.
(c) In the event of the death, disability, resignation or
removal of a member of the Board, the Person designating such member shall
designate a replacement for such director, which replacement shall be
reasonably satisfactory to the Company and/or the Investor, if applicable, as
provided above, and the Company shall cause such replacement to be elected to
the Board; provided that if such member was a Creditors' Committee Director,
and at the time of such death, disability resignation or removal, the
Creditors Committee is not in existence, such replacement member shall be
reasonably acceptable to the Company and the Investor (subject, in the case of
the Investor, to Section 5.01(e) below).
(d) From and after the Closing Date, the reorganized Company
shall cause the following to constitute the slate of nominees recommended by
the Board for election as directors at each annual meeting of the
stockholders: (i) 5 Investor Directors; (ii) for the three-year period
beginning on the Closing Date, 2 Creditors' Committee Directors; (iii) for so
long as the Series 1 Class C Preferred Share remains outstanding, one (1) ALPA
Director designated and elected by the holder of the Series 1 Class C
Preferred Share; (iv) for so long as the Series 2 Class C Preferred Share
remains outstanding, one (1) IAMAW Director designated and elected by the
holder of the Series 2 Class C Preferred Share; (v) one (1) Labor Director
reasonably acceptable to the Company and designated by, at the Company's
option, either the labor groups entitled to designate such Labor Director or
the holder of the Series 3 Class C Preferred Share for so long as the labor
groups retain the right to so designate the Labor Director or the Series 3
Class C Preferred Share remains outstanding, as applicable; (vi) the CEO; and
(vii) the remainder shall be Independent Directors reasonably acceptable to
the Company and the Investor, and the Company shall use its best efforts to
cause the election of such persons; provided that if the Board shall determine
in good faith in the exercise of its fiduciary duties, following the receipt
of advice of outside counsel, that nomination of any member of the Board for
reelection would not be in the best interests of the reorganized Company, then
the reorganized Company shall promptly notify the person designating such
member, and thereafter, such person shall have a period of no less than
fifteen (15) Business Days to designate a new nominee; provided further that
if either of the Creditors' Committee Directors elect not to stand for
reelection, and at the time of such election, the Creditors' Committee is not
in existence, such Creditors' Committee Directors shall be determined in the
same manner as Independent Directors and reasonably acceptable to the Company
and the Investor (subject, in the case of the Investor, to Section 5.01(e)
below).
(e) For purposes of this Section 5.01, the requirement that
the Creditors' Committee Directors and the Independent Directors be reasonably
acceptable to the Investor is not intended, and shall not be interpreted, to
provide the Investor with the power to maintain a continuing vacancy in the
associated director's position, generally preventing the appointment of any
director to fill such vacant position. Instead, if a particular Creditors'
Committee Director or Independent Director, as the case may be, is not
reasonably acceptable to the Investor, the Investor shall consult in good
faith with the designating party in a good faith effort to agree with
reasonable promptness upon a reasonably acceptable alternative designee.
(f) To the extent not prohibited by the rules of the primary
national securities exchange or national quotation system on which the Common
Stock is then listed or quoted, the Creditors' Committee Directors, the ALPA
Director, the IAMAW Director and the Labor Director shall be considered
"independent directors".
(g) Notwithstanding the foregoing provisions of this Section
5.01, the total number of Investor Directors the Investor is entitled to
designate for election to the Board shall be reduced to: (i) four (4), if the
Investor and its Affiliates beneficially own at least 67% but less than 83% of
the Common Stock beneficially owned by the Investor and its Affiliates as of
the Closing, (including Class A-1 Warrants on an as-exercised basis) (the
"Investor's Closing Shares"); (ii) three (3), if the Investor and its
Affiliates beneficially own at least 50% but less than 67% of the Investor's
Closing Shares; (iii) two (2), if the Investor and its Affiliates beneficially
own at least 33% but less than 50% of the Investor's Closing Shares; (iv) one
(1), if the Investor and its Affiliates beneficially own at least 16% but less
than 33% of the Investor's Closing Shares; and (v) zero (0), if the Investor
and its Affiliates beneficially own less than 16% of the Investor's Closing
Shares. In the event that the number of Investor Directors the Investor is
entitled to designate is reduced pursuant to this Section 5.01(h), the
Investor shall be entitled to designate which Investor Director shall resign
from the Board. Such Investor Director shall resign from the Board no later
than the thirtieth (30th) day following the day on which the Investor's
beneficial ownership of the Investor's Closing Shares referenced above drops
below the relevant thresholds set forth above. Notwithstanding any of the
foregoing, the Investor will no longer be entitled to designate any Investor
Directors for election to the Board at and after the fifth (5th) anniversary
hereof.
Section 5.02 Committees; Meetings. (a) Effective as of the
Closing Date, the Investor shall have the option to designate members of each
committee of the Board in the same proportion as the Investor's representation
on the Board, rounded up or down to the nearest whole director, except to the
extent prohibited by the rules of the primary national securities exchange or
national quotation system on which the Common Stock is then listed or quoted.
The reorganized Company and the Board shall use best efforts to comply with
any rules of such exchange in such fashion as to achieve, to the greatest
extent possible, the appointment of such percentage of Investor Directors to
each of the committees of the Board; and in the event that the Investor
Directors are so prohibited from membership on any committee, such directors
shall be permitted to attend all meetings of such committee as observers
(except to the extent that their attendance would constitute a breach of the
Board's fiduciary duty), and the reorganized Company shall notify each
Investor Director of each such meeting no later than the time at which it
notifies any member of the committee. In the event the Investor elects to have
an Investor Director appointed to a committee of the Board, the Investor shall
so notify the reorganized Company in writing, and the reorganized Company
shall appoint such nominee to such committee no later than the earlier of (i)
ten (10) days following the delivery of such notice by the Investor and (ii)
the next regular meeting of such committee.
(b) In the event of the death, disability, resignation or
removal of any member of a committee of the Board, the Person designating such
member shall have the right to designate a replacement member to such
committee, and the Company shall nominate such replacement to the committee,
except to the extent prohibited by the rules of the primary national
securities exchange or national quotation system on which the Common Stock is
then listed or quoted.
(c) From and after the Closing Date, the Board shall have an audit committee,
a governance committee, an executive committee and a compensation committee.
Each committee established by the Board shall have such powers and authority
as granted to it by the Board.
Section 5.03 Directors' Liability and Indemnification.
(a) Upon and at all times after consummation of the Plan,
the Certificate of Incorporation shall contain provisions that (i) eliminate
the personal liability of the Company's former, present and future directors
for monetary damages resulting from breaches of their fiduciary duties to the
fullest extent permitted by applicable Law and (ii) require the Company,
subject to appropriate procedures, to indemnify the Company's former, present
and future directors and executive officers to the fullest extent permitted by
applicable Law. In addition, upon consummation of the Plan, the reorganized
Company shall enter into written agreements with each Person who is a director
or executive officer of the reorganized Company on the date hereof providing
for similar indemnification of such Person and providing that no recourse or
liability whatsoever with respect to this Agreement, the other Transaction
Documents, the Plan or the consummation of the transactions contemplated
hereby or thereby shall be had, directly or indirectly, by or in the right of
the reorganized Company against such person, to the fullest extent permitted
under applicable Law.
(b) On or prior to the Effective Date, the Company shall
procure, and, so long as any Investor Director serves as a member of the
Board, maintain in full force and effect directors' and officers' liability
insurance with respect to such person, which insurance shall be in an amount,
and shall cover such risks, as is customary for a corporation in the
Companies' respective businesses or other similar businesses.
ARTICLE VI
PRE-CLOSING COVENANTS
Section 6.01 Taking of Necessary Action. (a) Each of the
parties hereto agrees to use its commercially reasonable efforts promptly to
take or cause to be taken all actions and promptly to do or cause to be done
all things necessary, proper or advisable under applicable Laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement in accordance with the terms hereof (including, without
limitation, the preparation, negotiation and execution of the Transaction
Documents). Without limiting the foregoing, the Investor and the Company will
use their commercially reasonable efforts to make all filings (including
filings under the HSR Act) with respect to, and to obtain, all consents or
other approvals required pursuant to Sections 8.01(c), 8.01(d), 8.01(e),
8.01(h), 8.01(i), 8.01(m), 8.02(c), 8.02(d) and 8.02(e) hereof or, in the
reasonable opinion of the Investor or the Company, otherwise advisable, to
permit the consummation of the transactions contemplated hereby.
(b) The Company shall use commercially reasonable efforts to
obtain as promptly as possible after the date hereof the entry of (i) the
Bidding Procedures Order as attached hereto as Exhibit G, or in form and
substance otherwise reasonably satisfactory to the Investor and (ii) the
Confirmation Order in form and substance satisfactory to the Investor.
(c) The Company shall file a Disclosure Statement (with a
plan of reorganization attached as an exhibit thereto), in each case on terms
reasonably satisfactory to the Investor on or prior to December 31, 2002 and
shall use commercially reasonable efforts to obtain approval of such
Disclosure Statement (with a plan of reorganization attached as an exhibit
thereto) on or prior to March 31, 2003.
Section 6.02 Notifications. At all times prior to the
Closing Date, the Investor shall promptly notify the Company and the Company
shall promptly notify the Investor in writing of any fact, change, condition,
circumstance or occurrence or nonoccurrence of any event that will or is
reasonably likely to result in the failure to satisfy the conditions to be
complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 6.02 shall not limit or
otherwise affect the remedies available hereunder to any party giving or
receiving such notice.
Section 6.03 Compliance with the Bidding Procedures Order.
The Company shall comply in all respects with its obligations under the
Bidding Procedures Order from and after the date of its entry, and except as
contemplated by the Bidding Procedures Order, the Company (i) shall not
endorse, support, propose, recommend, or file any motion seeking approval of,
any plan of reorganization, recapitalization transaction or sale of all or
substantially all of the business or operations of the Company (whether by
merger, consolidation or otherwise) to any Person other than the Plan and the
transactions contemplated hereby and (ii) shall not enter into any agreement
with any such Person relating thereto other than this Agreement with the
Investor.
ARTICLE VII
ADDITIONAL COVENANTS
Section 7.01 Financial and Other Information. From and after
the date hereof, the Company shall (and shall cause each of its Subsidiaries,
Representatives and Affiliates to) afford to the Investor, its Affiliates and
their respective Representatives complete access, upon reasonable notice and
in such manner as will not unreasonably interfere with the conduct of the
Companies' respective businesses, to their respective facilities, properties,
books, contracts, commitments, records (including information regarding any
pending or threatened Proceeding to which any of the Companies is, or
reasonably expects to be, a party), key personnel, officers, independent
accountants and legal counsel; provided, however, that the Company will not be
required to provide access to employee personnel files if providing such files
would be unreasonable or a violation of applicable Law. The Company shall use
its commercially reasonable efforts to cause its lessors to cooperate with the
Investor, its Affiliates and their respective Representatives.
Section 7.02 Company Reports; Financial Statements.
(a) From and after the date hereof, the Company and US
Airways shall file, in a timely manner, each Annual Report on Form 10-K,
Quarterly Report on Form 10-Q and each registration statement, report on Form
8-K, proxy statement, information statement or other report or statement with
the SEC, as required (the "Subsequent Reports"). Each Subsequent Report shall
(i) comply in all material respects with the applicable requirements of the
Exchange Act and Securities Act, (ii) not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading and (iii) present
fairly, in each case in accordance with GAAP applied on a consistent basis
throughout the periods covered (except as stated therein or in the notes
thereto), the financial position and results of operation of the entity to
which it applies as of the date and for the period set forth therein.
(b) Each of the consolidated balance sheets (including the
related notes and schedules) included in or incorporated by reference into the
Subsequent Reports shall fairly present, in all material respects, the
consolidated financial position of the entities to which it applies as of the
date thereof, and each of the consolidated statements of income (or statements
of results of operations), stockholders' equity and cash flows (including the
related notes and schedules) included in or incorporated by reference into the
Subsequent Reports shall fairly present, in all material respects, the results
of operations, retained earnings and cash flows, as the case may be, of the
entities to which it applies (on a consolidated basis) for the periods or as
of the dates, as the case may be, set forth therein, in each case in
accordance with GAAP applied on a consistent basis throughout the periods
covered (except as stated therein or in the notes thereto) and in compliance
with the rules and regulations of the SEC.
Section 7.03 Publicity. Except as required by Law or by
obligations pursuant to any listing agreement with or requirement of any
national securities exchange or national quotation system on which the Common
Stock is listed, admitted to trading or quoted, neither the Company (nor any
of its Affiliates) nor the Investor (nor any of its Affiliates) shall, without
the prior written consent of each other party hereto, which consent shall not
be unreasonably withheld or delayed, make any public announcement or issue any
press release with respect to the transactions contemplated by this Agreement.
Prior to making any public disclosure required by applicable Law or pursuant
to any listing agreement with or requirement of any relevant national exchange
or national quotation system, the disclosing party shall consult with the
other parties hereto, to the extent feasible, as to the content and timing of
such public announcement or press release.
Section 7.04 Registration Rights Agreement. Each class of
Common Stock, the Class A-1 Warrants and Class A Preferred Shares shall be
registered by the Company under the Securities Act. The Company and the
Investor shall use commercially reasonable efforts to promptly enter into a
registration rights agreement (the "Registration Rights Agreement") on
mutually acceptable terms and conditions, pursuant to which the Company shall
file a resale registration statement pursuant to Rule 415 under the Securities
Act permitting free resale of the Class A Common Shares, the Class B Common
Shares and the Class A-1 Warrants issued under the Plan promptly after the
Closing Date, and use its commercially reasonable efforts to cause to be
declared effective and, subject to the conditions set forth in the
Registration Rights Agreement, to maintain the effectiveness of, such
registration statement.
Section 7.05 Slots and Routes. The Company shall use
commercially reasonable efforts to, and cause its Subsidiaries to, take all
action necessary or advisable, to the extent consistent with past practices,
to maintain the right, if any, to operate their respective Slots at LaGuardia
Airport and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Washington National Airport in compliance in all
material respects with the terms, conditions and regulations set forth in Part
93 of Title 14 of the Code of Federal Regulations, including the usage and
reporting requirements set forth in Section 93.227 thereof, and to continue
operations on their existing routes where the discontinuation of service would
have a Material Adverse Effect.
Section 7.06 Tax Contests. The Company shall keep the
Investor apprised of any material Tax audits, examinations, assessments,
administrative or court proceedings, or other disputes with respect to any
material Tax matter of the Company or any of its Subsidiaries ("Contests"). If
the Investor is the Winning Plan Sponsor, the Company shall thereafter provide
the Investor with copies of all written materials received from any relevant
taxing authority in respect of any Contest, shall consult with the Investor in
good faith regarding the conduct of such Contest, and shall consider in good
faith suggestions made by the Investor and its Representatives regarding the
conduct of such Contest. Notwithstanding any other confidentiality agreements
to which the Investor and the Companies are parties (which agreements are not
affected hereby), the Investor (i) shall, and shall cause its Representatives
to, hold in strict confidence all information it or they receive pursuant to
this Section 7.06 and (ii) shall not release or disclose such information
except to its Representatives who need to know such information and who shall
be advised of and agree to act in accordance with the provisions of this
Section 7.06 or as required by Law; provided, that prior to making any
disclosure required by Law, the Investor shall consult with the Company as to
the content and timing of such disclosure and shall give the Company
reasonable notice so as to allow the Company time to seek a protective order
or take such other protective action with respect to the information to be
disclosed.
Section 7.07 Investor Financing. The Investor shall have
sufficient and adequate resources to consummate the transactions contemplated
by this Agreement at the Closing.
Section 7.08 Capital Restructuring.
(a) If the Investor is prohibited from consummating the
transactions contemplated by the Transaction Documents (and does not designate
an assignee in accordance with Section 10.09 that is not so prohibited) as a
result of the Investor failing to be a "citizen of the United States," as the
term is used in Section 40102(a)(15) of Title 49, in any similar legislation
of the United States enacted in substitution or replacement therefore, or as
interpreted by the Department of Transportation, then the Investor and the
Company shall take such actions, including modifying the terms and structure
of the transactions contemplated by the Transaction Documents and such actions
as shall be required by the Department of Transportation, which actions shall,
to the extent reasonably feasible, be consistent with the contemplated
consequences to the Company and the Investor in order to enable the
reorganized Company to remain in compliance with the applicable statutory,
regulatory and interpretive restrictions regarding foreign (or non-U.S.)
ownership and control of U.S. air carriers and provide the Investor with the
benefit and value of its bargain hereunder.
(b) Subject to Section 7.08(a), the parties agree that if
the benefits to the Investor of the transactions contemplated by the
Transaction Documents are changed as a result of taking action pursuant to
this Section 7.08, then such parties shall use commercially reasonable efforts
to restore such benefits to the Investor as soon as reasonably practicable. In
addition, the parties agree to reasonably cooperate to avoid or limit the
adverse effect of Section 7.08(a).
ARTICLE VIII
CONDITIONS
Section 8.01 Conditions to Investor's Obligations. The
obligation of the Investor to make the Investment pursuant to Section 2.01
hereof is subject to satisfaction or waiver of each of the following
conditions precedent:
(a) Definitive Documents. Definitive Transaction Documents
necessary to consummate the transactions contemplated herein shall have been
prepared, negotiated and, to the extent applicable, executed by the parties,
and approval by the Bankruptcy Court of such documents, as necessary, shall
have been obtained. All Transaction Documents (in form and substance
reasonably satisfactory to the Investor), to the extent applicable, shall have
been executed by the parties thereto on or prior to the Effective Date, shall
not have been modified, shall be in effect and the consummation of the
transactions contemplated thereby shall not be stayed, and all conditions to
the obligations of the parties under the Transaction Documents shall have been
satisfied or effectively waived (other than the conditions set forth in
Sections 8.01(b), 8.01(h), 8.01(k), 8.01(m) and 8.01(r) hereof, which
conditions may be satisfied either prior to, or simultaneously with, the
Closing). All corporate and other proceedings to be taken by the Company in
connection with the Transaction Documents and the transactions contemplated
thereby to be completed at the Closing and documents incident thereto shall
have been completed in form and substance reasonably satisfactory to the
Investor, and the Investor shall have received all such counterpart originals
or certified or other copies of the Transaction Documents and such other
documents as it may reasonably request.
(b) Delivery. The reorganized Company shall have executed
and delivered to the Investor the shares of Common Stock, Class A-1 Warrants
and Class A Preferred Shares pursuant to and in accordance with Section 2.01
hereof.
(c) Bidding Procedures Order. The Bankruptcy Court shall
have approved and entered the Bidding Procedures Order on or prior to October
10, 2002, which Bidding Procedures Order shall be as attached hereto as
Exhibit G, or in form and substance otherwise reasonably satisfactory to the
Investor, and, once entered, shall not have been modified without the
Investor's prior written consent in a manner materially adverse to the
Investor, reversed or vacated and such order shall be in effect and not be
stayed.
(d) Regulatory Approvals. The Company shall have received
(i) all material Regulatory Approvals (other than waiting periods imposed by
applicable Law as referred to later in this paragraph), which shall have
become final (provided that, if an appeal of such Regulatory Approval is
pending and such appeal has a significant possibility of being resolved
adversely to the Company in a manner that would reasonably be expected to have
a Material Adverse Effect, this clause (i) shall be deemed not to be
satisfied), and (ii) all other material approvals, permits, authorizations,
exemptions, consents, licenses and agreements from other third parties that
are necessary to permit the transactions contemplated hereby and to permit the
reorganized Company to carry on its business after such transactions in a
manner not materially inconsistent with the manner in which it was carried on
prior to the Effective Date (together with the Regulatory Approvals, the
"Approvals"), which Approvals shall not contain any condition or restriction
that, in the Investor's reasonable judgment, materially impairs the
reorganized Company's ability to carry on its business. All waiting periods
imposed by applicable Law (including, without limitation, under the HSR Act)
in connection with the transactions contemplated by the Transaction Documents
shall have expired or been terminated without any action having been taken by
any court of competent jurisdiction restraining, preventing or imposing
materially adverse conditions upon such transactions.
(e) Plan of Reorganization. The Plan (including all
securities of the reorganized Company to be issued pursuant thereto), the
principal terms of which are summarized in Exhibits H and I hereto, the
Disclosure Statement and the Confirmation Order shall be, subject to Section
7.08, reasonably satisfactory in form and substance in all material respects
to the Investor and such Plan as confirmed by the Bankruptcy Court shall,
among other things, (i) accommodate and incorporate the Transaction Documents
and the transactions contemplated thereby, to the extent applicable or
appropriate, (ii) reflect the concessions obtained and to be obtained from the
Debtors' employees, creditors, lessors and other claimants not materially
inconsistent with the Company Forecast, and (iii) reflect a corporate and
capital structure of the reorganized Company that is as described in Section
3.05 hereof or, subject to Section 7.08, is otherwise reasonably satisfactory
to the Investor.
(f) Disclosure Statement. The order approving the Disclosure
Statement relating to the Plan and the Transaction Documents, to the extent
applicable or appropriate, or the modifications thereto (subject to Section
7.08, to the extent reasonably satisfactory to the Investor) shall have been
entered by the Bankruptcy Court and, once entered, shall not have been
modified without the Investor's prior written consent in any manner materially
adverse to the Investor, shall be in effect and shall not have been stayed.
(g) Confirmation Order. The Confirmation Order, subject to
Section 7.08, satisfactory in form and substance in all respects to the
Investor, shall have been entered by the Bankruptcy Court and, once entered,
shall not have been modified without the Investor's prior written consent in
any manner materially adverse to the Investor, shall be in effect and shall
not have been stayed.
(h) Effective Date. The Effective Date shall have occurred.
(i) Compliance with Laws; No Adverse Action or Decision.
Since the date hereof, (i) no Law shall have been promulgated, enacted or
entered that restrains, enjoins, prevents, materially delays, prohibits or
otherwise makes illegal the performance of any of the Transaction Documents;
(ii) no preliminary or permanent injunction or other order by any Governmental
Entity that restrains, enjoins, prevents, delays, prohibits or otherwise makes
illegal the performance of any of the Transaction Documents shall have been
issued and remain in effect, except for such injunctions that, if obtained,
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and (iii) no Governmental Entity shall have
instituted any Proceeding that seeks to restrain, enjoin, prevent, delay,
prohibit or otherwise make illegal the performance of any of the Transaction
Documents, except for any Proceedings, which, have a significant possibility
of being brought to a conclusion which could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(j) Marketing Arrangement. The minimum statutory and
regulatory objection periods or review periods, as applicable, shall have
expired with respect to US Airways, Inc.'s marketing arrangement with United
Air Lines, Inc. and neither the U.S. Department of Transportation nor any
other applicable regulatory agencies shall have filed any objection to such
marketing arrangement that is material in the reasonable judgment of the
Investor and that has not been resolved.
(k) ATSB Financing. The definitive documents relating to the
ATSB Loan shall have been executed providing for gross proceeds of $1 billion
to the reorganized Company, and a guarantee of at least $900 million of such
loan, on terms and conditions reasonably satisfactory to the Investor, and all
conditions precedent to the closing of the ATSB Loan shall have been satisfied
or waived (other than any condition requiring the Closing of the Investment,
it being understood that the closing of the ATSB Loan shall only occur either
prior to, or simultaneously with, the Closing and shall not occur after the
Investment).
(l) Representations and Warranties; Covenants. The
representations and warranties of the Company set forth in Article III hereof
(without giving effect to any Material Adverse Effect, materiality or similar
qualifier) shall have been true and correct in all respects on and as of the
date hereof and at the time immediately prior to the Closing (except where
such representation and warranty speaks by its terms of "at Closing," in which
case it shall be true and correct as of the time of Closing) as if made on the
Closing Date (except where such representation and warranty speaks by its
terms of a different date, in which case it shall be true and correct as of
such date), except to the extent that such inaccuracies in any such
representation or warranty have not had, and would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
Company shall have performed in all material respects all obligations and
complied with all agreements, undertakings, covenants and conditions required
to be performed by it hereunder at or prior to the Closing, and the Company
shall have delivered to the Investor at the Closing a certificate in form and
substance reasonably satisfactory to the Investor dated the Closing Date and
signed by the chief executive officer and the chief financial officer of the
Company to the effect that the conditions set forth in this Section 8.01(l)
have been satisfied.
(m) Certificate of Incorporation and By-Laws. The
Certificate of Incorporation and By-Laws, as provided for in the Plan, shall
contain the terms contemplated hereby (including, without limitation, relating
to governance and capital structure), shall otherwise be reasonably
satisfactory to the Investor and shall have been filed with and accepted by
the Secretary of State of the State of Delaware and shall have become
effective. As of the Closing Date, the Company shall have made available to
the Investor a complete and correct copy of the certificates of incorporation
and the by-laws or comparable governing instruments of each of the Companies,
in full force and effect as of the Closing Date.
(n) Board Representation. (i) As contemplated by Section
5.02 hereof, 5 Investor Directors designated by the Investor shall have been
elected or appointed to the 13 member Board effective as of the Closing Date,
and (ii) directors' and officers' liability insurance shall be available to
the Investor Directors on terms reasonably satisfactory to the Investor and in
an amount of coverage at least equal to fifty million dollars ($50,000,000).
(o) No Material Adverse Effect. Since the date hereof,
except for the filing of the Cases, the transactions contemplated by the
Transaction Documents or as otherwise disclosed in the SEC Reports, this
Agreement or the DIP Credit Agreement, no event, circumstance or matter shall
have occurred or arisen, or come to the attention of the Investor, that has
had, or would reasonably be expected to have, a Material Adverse Effect.
(p) Operational and Financial Benchmarks. The Company shall
have achieved the operational and financial benchmarks specified in Schedule
8.01(p) attached hereto.
(q) Foreign Ownership. The Company shall be in compliance
with the applicable statutory, regulatory and interpretive restrictions
regarding foreign ownership or control of U.S. air carriers, except to the
extent that any failure to be in compliance is a result of the Investor's
citizenship status.
(r) Registration Rights Agreement. The Company shall have
executed the Registration Rights Agreement.
(s) Litigation. There shall be no threatened or pending
suit, action, investigation, inquiry or other proceeding by or before any
court of competent jurisdiction (excluding the Cases or any other proceeding
disclosed by the Company prior to the execution of the Investment Agreement)
which is likely to have a Material Adverse Effect or materially impair the
Investor's ability to realize the benefits and value of the Investment.
Section 8.02 Conditions to the Company's Obligations. The
obligation of the Company to issue and sell the Common Stock, Class A-1
Warrants and Class A Preferred Shares pursuant to Section 2.01 hereof at the
Closing is subject to satisfaction or waiver of each of the following
conditions precedent:
(a) Representations and Warranties; Covenants. The
representations and warranties of the Investor set forth in Article IV hereof
(without giving effect to any Material Adverse Effect, materiality or similar
qualifier) shall have been true and correct in all respects, on and as of the
date hereof and at the time immediately prior to the Closing (except where
such representation and warranty speaks by its terms of "at Closing," in which
case it shall be true and correct as of the time of Closing) as if made on the
Closing Date (except where such representation and warranty speaks by its
terms as of a different date, in which case it shall be true and correct as of
such date), except to the extent that such inaccuracies have not had, and
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Investor shall have performed in all material
respects all obligations and complied with all agreements, undertakings,
covenants and conditions required to be performed by it at or prior to the
Closing, and the Investor shall have delivered to the Company at the Closing a
certificate in form and substance reasonably satisfactory to the Company dated
the Closing Date and signed on behalf of a member of the Investor to the
effect that the conditions set forth in this Section 8.02(a) have been
satisfied.
(b) Compliance with Laws; No Adverse Action or Decision.
Since the date hereof, (i) no Law shall have been promulgated, enacted or
entered that restrains, enjoins, prevents, materially delays, prohibits or
otherwise makes illegal the performance of any of the Transaction Documents
with respect to the transactions contemplated thereby to be completed at the
Closing; (ii) no preliminary or permanent injunction or other order by any
Governmental Entity that restrains, enjoins, prevents, delays, prohibits or
otherwise makes illegal the performance of any of the Transaction Documents
shall have been issued and remain in effect, except for such injunctions that,
if obtained, could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; and (iii) no Governmental Entity
shall have instituted any Proceeding that seeks to restrain, enjoin, prevent,
delay, prohibit or otherwise make illegal the performance of any of the
Transaction Documents, except for any Proceedings, which have a significant
possibility of being brought to a conclusion which could, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
(c) Regulatory Approvals. The Company shall have received
(i) all material Regulatory Approvals (other than waiting periods imposed by
applicable Law as referred to later in this paragraph), which shall have
become final (provided that, if an appeal of such Regulatory Approval is
pending and such appeal has a significant possibility of being resolved
adversely to the Company in a manner that would reasonably be expected to have
a Material Adverse Effect, this clause (i) shall be deemed not to be
satisfied), and (ii) all other Approvals, which Approvals shall not contain
any condition or restriction that, in the Company's reasonable judgment,
materially impairs the reorganized Company's ability to carry on its business.
All waiting periods imposed by applicable Law (including, without limitation,
under the HSR Act) in connection with the transactions contemplated by the
Transaction Documents shall have expired or been terminated without any action
having been taken by any court of competent jurisdiction restraining,
preventing or imposing materially adverse conditions upon such transactions.
(d) Confirmation Order. The Confirmation Order, satisfactory
in form and substance in all respects to the Company, shall have been entered
by the Bankruptcy Court and, once entered, shall not have been modified
without the Company's prior written consent in any manner materially adverse
to the Company, shall be in effect and shall not have been stayed.
(e) Effective Date. The Effective Date shall have occurred.
(f) ATSB Financing. The definitive documents relating to the
ATSB Loan shall have been executed providing for gross proceeds of $1 billion
to the reorganized Company, and a guarantee of at least $900 million of such
loan, and all conditions precedent to the closing of the ATSB Loan shall have
been satisfied or waived (other than any condition requiring the Closing of
the Investment, it being understood that the closing of the ATSB Loan may
occur either prior to, or simultaneously with, the Closing).
(g) Citizenship. The Company shall have received reasonably
satisfactory assurances as it may request that the Investor is a "citizen of
the United States," as the term is used in Section 40102(a)(15) of Title 49 or
any similar legislation of the United States enacted in substitution or
replacement therefor.
ARTICLE IX
TERMINATION
Section 9.01 Termination of Agreement. Subject to Section
9.02 hereof, this Agreement may be terminated by notice in writing at any time
prior to the Closing by:
(a) the Investor, if (i) the Closing shall not have occurred
on or before June 30, 2003, or (ii) the Confirmation Order shall not have been
entered by June 15, 2003;
(b) the Investor, if (i) there shall have been a breach by
the Company of any material representation, warranty, covenant or agreement
contained in this Agreement, which breach would result in the failure to
satisfy any condition set forth in Section 8.01 hereof to the Investor's
obligations and that has not been cured within ten (10) days following receipt
by the Company of written notice from the Investor of such breach or if such
breach is not capable of being cured, immediately upon such breach, or (ii)
any condition set forth in Section 8.01 hereof to the Investor's obligations
is not capable of being satisfied;
(c) the Company, if (i) there shall have been a breach by
the Investor of any material representation, warranty, covenant or agreement
contained in this Agreement which breach would result in the failure to
satisfy any condition set forth in Section 8.02 hereof to the Company's
obligations and that has not been cured within ten (10) days following receipt
by the Investor of written notice from the Company of such breach or if such
breach is not capable of being cured, or (ii) any condition set forth in
Section 8.02 hereof to the Company's obligations is not capable of being
satisfied;
(d) the Investor or the Company, if the Investor is not the
Winning Plan Sponsor;
(e) the Investor, if (i) the Bankruptcy Court denies the
motion to approve the Bidding Procedures Order, (ii) the Bankruptcy Court
fails to approve the Bidding Procedures Order as attached hereto as Exhibit G
or in form and substance otherwise reasonably satisfactory to the Investor on
or prior to October 10, 2002 or (iii) the Bankruptcy Court or any court of
competent jurisdiction to which a decision relating to the Cases has been
appealed modifies the Bidding Procedures Order without the prior written
consent of the Investor in a manner materially adverse to the Investor, or
reverses, vacates or stays such order following its entry;
(f) the Investor, upon the maturity (whether by
acceleration, termination or mandatory prepayment) of the DIP Facilities prior
to the Effective Date;
(g) the Investor, if the Company enters into a binding
letter of intent to enter into an Alternative Transaction with a third party
unrelated to the Investor; and
(h) mutual agreement in writing by the Company and the
Investor.
If the Investor elects to terminate this Agreement pursuant to (i) Section
9.01(b) as a result of a failure by the Company to satisfy Sections 8.01(e) or
8.01(f) hereof, it must do so on or before the tenth (10th) Business Day after
the date of approval of such Plan or Disclosure Statement that does not
satisfy the requirements set forth in Section 8.01(e) or 8.01(f) hereof, as
applicable; (ii) Section 9.01(b) as a result of a failure by the Company to
satisfy Section 8.01(g) hereof, it must do so on or before the tenth (10th)
Business Day after the date of entry of a Confirmation Order that does not
satisfy the requirements set forth in Section 8.01(g) hereof; or (iii) Section
9.01(e), as a result of a failure by the Company to satisfy Section 8.01(c)
hereof, it must do so on or before the tenth (10th) Business Day after the
later of (A) October 10, 2002, and (B) the date of entry of a Bidding
Procedures Order that does not satisfy the requirements set forth in Section
8.01(c) hereof. If the Investor fails to terminate the Agreement by the dates
set forth in the immediately preceding sentence, the Investor shall not
thereafter be entitled to terminate this Agreement as a result of such
failure.
If the Company elects to terminate this Agreement pursuant to Section 9.01(c)
as a result of a failure by the Investor to satisfy Section 8.02(d) hereof, it
must do so on or before the tenth (10th) Business Day after the date of entry
of a Confirmation Order that does not satisfy the requirements set forth in
Section 8.02(d) hereof. If the Company fails to so terminate the Agreement,
the Company shall not thereafter be entitled to terminate this Agreement as a
result of such failure.
Section 9.02 Effect of Termination. If this Agreement is
terminated in accordance with Section 9.01 hereof and the transactions
contemplated hereby are not consummated, this Agreement shall become null and
void and of no further force and effect except that (i) the terms and
provisions of this Section 9.02, Section 7.02, Section 7.06 and Article X
hereof shall remain in full force and effect and (ii) any termination of this
Agreement shall not relieve any party hereto from any liability for any breach
of its obligations hereunder.
ARTICLE X
MISCELLANEOUS
Section 10.01 Fees and Expenses. (a) The Company shall
reimburse the Investor for all reasonable fees and expenses (the "Expenses")
incurred by or on behalf of the Investor in connection with the negotiation,
preparation, execution and delivery of the Transaction Documents and the
transactions contemplated thereby, including, but not limited to, reasonable
fees and expenses of its legal counsel and third-party consultants engaged by
it to assist in such transactions and reasonable fees and expenses incurred by
the Investor in connection with any due diligence, collateral reviews and
field examinations; provided, that the Company shall pay only the monthly fees
of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, and not any success, transaction, financing,
mergers and acquisitions or similar fees; provided further that such
reasonable fees and expenses of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ shall be
consistent with a schedule of expenses provided to the Company prior to the
date hereof. The Investor will render monthly invoices to the Company for
Expenses reimbursable hereunder, and the Company shall pay to the Investor or
its designated affiliate all amounts due under such invoice within ten (10)
days of receipt thereof.
(b) All amounts payable under this Agreement shall be paid
in immediately available funds to an account or accounts designated by the
recipient of such amounts, except as otherwise provided herein.
Section 10.02 Survival of Representations and Warranties.
None of the representations and warranties contained in this Agreement shall
survive the Closing Date.
Section 10.03 Specific Performance. The parties hereto
specifically acknowledge that monetary damages are not an adequate remedy for
violations of this Agreement, and that any party hereto may, in its sole
discretion, apply to a court of competent jurisdiction for specific
performance or injunctive or such other relief as such court may deem just and
proper in order to enforce this Agreement or prevent any violation hereof and,
to the extent permitted by applicable Law and to the extent the party seeking
such relief would be entitled on the merits to obtain such relief, each party
waives any objection to the imposition of such relief.
Section 10.04 Indemnification. (a) The Company shall
indemnify and hold harmless the Investor and each of its partners, Affiliates
and Representatives (collectively, the "Indemnified Parties") from and against
any and all losses, penalties, judgments, suits, costs, claims, liabilities,
damages and expenses (including, without limitation, reasonable attorneys'
fees and disbursements (collectively, "Losses"), incurred by, imposed upon or
asserted against any of the Indemnified Parties as a result of, relating to or
arising out of (i) the breach of any representation, warranty, agreement or
covenant made by the Company in this Agreement or any other Transaction
Document, or in any certificate delivered by the Company pursuant to this
Agreement or any other Transaction Document, (ii) the transactions
contemplated by this Agreement (except to the extent the Investment would be
illegal as a result solely of actions or attributes of the Investor), or (iii)
any actions, inactions or omissions in any manner relating hereto or thereto
or any actions or transactions contemplated hereby or thereby (including,
without limitation, any litigation to which an Indemnified Party is made a
party as a result thereof), except to the extent that such Losses are finally
determined in a non-appealable decision of a court of competent jurisdiction
to have resulted solely from fraud, willful misconduct or gross negligence of
such Indemnified Party; provided that nothing in this Section 10.04(a) shall
require the Company to indemnify any Indemnified Party with respect to any
Loss resulting solely from a decline in the market value of the Equity
Securities issued to the Indemnified Party in connection with the transactions
contemplated hereby.
(b) The following provisions shall apply to claims for
Losses from claims by a third party (an "Indemnity Claim"). An Indemnified
Party entitled to any indemnification in respect of, arising out of or
involving an Indemnity Claim shall notify the indemnifying party in writing,
and in reasonable detail, of the Indemnity Claim within 10 Business Days after
receipt by such Indemnified Party of written notice of the Indemnity Claim;
provided, however, that failure to give such notification shall not affect the
indemnification provided hereunder unless and to the extent such failure to
deliver timely notice adversely impacts the indemnifying party. If an
Indemnity Claim is made against an Indemnified Party, the indemnifying party
shall be entitled to participate in the defense thereof and, if it so chooses
and unconditionally acknowledges its obligation to indemnify the Indemnified
Party with respect to such Indemnity Claim, to assume the defense thereof with
counsel selected by the indemnifying party and reasonably acceptable to the
Indemnified Party; provided that the indemnifying party shall not take any
action that would materially and adversely affect the Indemnified Party
without such Indemnified Party's consent.
(c) If the indemnifying party elects to assume the defense
of any Indemnity Claim, all of the Indemnified Parties shall cooperate with
the indemnifying party in the defense or prosecution thereof. Such cooperation
shall include (upon the indemnifying party's reasonable request) the provision
to the indemnifying party of existing records and information that are
reasonably relevant to such Indemnity Claim, and making themselves (in the
case of individuals) and using reasonable efforts to make their employees and
their Representatives, if any, available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder, and to attend depositions, give testimony or otherwise appear at
any trial or hearing to the extent reasonably requested by the indemnifying
party. Whether or not the indemnifying party shall have assumed the defense of
an Indemnity Claim, the indemnifying party shall not admit any liability with
respect to, or settle, compromise or discharge, such Indemnity Claim without
the Indemnified Party's prior written consent. If the indemnifying party shall
have assumed the defense of an Indemnity Claim, the indemnifying party shall
not take any action in the conduct of such defense that would materially and
adversely affect the Indemnified Party without the consent of the Indemnified
Party; provided, however, that the Indemnified Party shall agree to any
settlement, compromise or discharge of an Indemnity Claim that the
indemnifying party may recommend and which, by its terms, obligates the
indemnifying party to pay the full amount of the liability in connection with
such Indemnity Claim, which releases the Indemnified Party completely in
connection with such Indemnity Claim, and that would not otherwise materially
and adversely affect the Indemnified Party.
(d) Notwithstanding the foregoing, the indemnifying party
shall not be entitled to assume the defense of any Indemnity Claim (but shall
be liable for the reasonable fees and expenses of counsel incurred by the
Indemnified Party in defending such Indemnity Claim, which reasonable fees and
expenses the indemnifying party shall pay as incurred in advance of the final
disposition of such Indemnity Claim) if (i) the Indemnity Claim seeks an
order, injunction or other equitable relief or relief for other than money
damages against the Indemnified Party that the Indemnified Party reasonably
determines, after conferring with its outside counsel, cannot be separated
from any related claim for money damages, (ii) the indemnifying party shall
have failed to assume the defense of such action or proceeding and employ
counsel reasonably satisfactory to the Indemnified Party in any such action or
proceeding, (iii) the use of counsel chosen by the indemnifying party to
represent the Indemnified Party or Parties would present such counsel with a
conflict of interest, or (iv) the named parties to any such action or
proceeding (including any impleaded parties) include both the Indemnified
Party and the indemnifying party and the Indemnified Party shall have been
advised by counsel that there may be one or more legal defenses available to
it that are different from or additional to those available to the
indemnifying party; provided, however, that, with respect to clause (i), if
such equitable relief or other relief portion of the Indemnity Claim can be so
separated from that for money damages, the indemnifying party shall be
entitled to assume the defense of the portion relating to money damages; and
provided further that in the event that the indemnifying party is not
permitted to assume the defense of any Indemnity Claim pursuant to this
Section 10.04(d), the Indemnified Party shall not agree to any settlement,
compromise or discharge of such Indemnity Claim, which by its terms obligates
the indemnifying party to pay any monetary damages or otherwise imposes any
obligation on the indemnifying party without the prior written consent of the
indemnifying party.
(e) All payments under this Section 10.04 shall be due
promptly following the occurrence of the related Loss; provided that, if a
final, non-appealable judicial determination is made that an Indemnified Party
is not entitled to any such payment, it will promptly repay the appropriate
amounts to the appropriate indemnifying party.
Section 10.05 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given, if
delivered personally, by telecopier or sent by first class mail, postage
prepaid, as follows:
(i) If to the Company, to:
US Airways Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Executive Vice President - Corporate Affairs
and General Counsel
With a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(ii) If to the Investor, to:
The Retirement Systems of Alabama
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief Investment Officer
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Section 10.06 Entire Agreement; Amendment. This Agreement
and the documents described herein (including the Plan) or attached or
delivered pursuant hereto (including, without limitation, the other
Transaction Documents) set forth the entire agreement between the parties
hereto with respect to the transactions contemplated by this Agreement. Any
provision of this Agreement may only be amended, modified or supplemented in
whole or in part at any time by an agreement in writing among the parties
hereto executed in the same manner as this Agreement. No failure on the part
of any party to exercise, and no delay in exercising, any right shall operate
as waiver thereof, nor shall any single or partial exercise by either party of
any right preclude any other or future exercise thereof or the exercise of any
other right. No investigation by a party hereto of any other party hereto
prior to or after the date hereof shall stop or prevent the exercise of any
right hereunder or be deemed to be a waiver of any such right.
Section 10.07 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed to constitute an
original, but all of which together shall constitute one and the same
document.
Section 10.08 Governing Law. To the extent not governed by
the Bankruptcy Code, this Agreement shall be governed by, and interpreted in
accordance with, the Laws of the State of New York applicable to contracts
made and to be performed in that State without reference to its conflict of
laws rules. The parties hereto agree that the appropriate and exclusive forum
for any disputes arising out of this Agreement solely between the Company and
the Investor shall be the Bankruptcy Court, or if such court will not hear any
such suit, the U.S. District Court for the Southern District of New York, and,
the parties hereto irrevocably consent to the exclusive jurisdiction of such
courts, and agree to comply with all requirements necessary to give such
courts jurisdiction. The parties hereto further agree that the parties will
not bring suit with respect to any disputes arising out of this Agreement
except as expressly set forth below for the execution or enforcement of
judgment, in any jurisdiction other than the above specified courts. Each of
the parties hereto irrevocably consents to the service of process in any
action or proceeding hereunder by the mailing of copies thereof by registered
or certified airmail, postage prepaid, to the address specified in Section
10.05 hereof. The foregoing shall not limit the rights of any party hereto to
serve process in any other manner permitted by the Law or to obtain execution
of judgment in any other jurisdiction. The parties further agree, to the
extent permitted by Law, that final and non-appealable judgment against any of
them in any action or proceeding contemplated above shall be conclusive and
may be enforced in any other jurisdiction within or outside the United States
by suit on the judgment, a certified or exemplified copy of which shall be
conclusive evidence of the fact and the amount of indebtedness. THE PARTIES
AGREE TO WAIVE ANY AND ALL RIGHTS THAT THEY MAY HAVE TO A JURY TRIAL WITH
RESPECT TO DISPUTES ARISING OUT OF THIS AGREEMENT.
Section 10.09 Successors and Assigns. Except as otherwise
expressly provided herein, the provisions hereof shall inure to the benefit
of, and be binding upon, the Company's and the Investor's successors and
assigns. Neither this Agreement nor any rights hereunder shall be assignable
by any party hereto without the prior written consent of the other party
hereto; provided, however, that the Investor may assign all or part of its
interest in this Agreement and its rights hereunder to any of its Affiliates;
provided, further, that any such assignment by the Investor shall not relieve
it of its obligations thereunder. Following such assignment by the Investor,
the term "Investor," as applied to the assigning Investor, shall include any
such Affiliate to the extent of such assignment and shall mean the assigning
Investor and such Affiliates taken collectively.
Section 10.10 No Third-Party Beneficiaries. This Agreement
is for the sole benefit of the parties hereto and their respective successors
and permitted assigns and nothing herein, express or implied, is intended or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, except
that the provisions of Section 5.03 shall inure to the benefit of and be
enforceable by the Investor Directors and the provisions of Section 10.04
shall inure to the benefit of and be enforceable by each Indemnified Party.
Section 10.11 General Interpretive Principles. Whenever used
in this Agreement, except as otherwise expressly provided or unless the
context otherwise requires, any noun or pronoun shall be deemed to include the
plural as well as the singular and to cover all genders. The name assigned
this Agreement and the Section captions used herein are for convenience of
reference only and shall not be construed to affect the meaning, construction
or effect hereof. Unless otherwise specified, any references to a party's
"judgment", "satisfaction" or words of a similar import shall mean in such
party's sole judgment. Unless otherwise specified, the terms "hereof,"
"herein" and similar terms refer to this Agreement as a whole (including the
Exhibits and Schedules hereto), and references herein to Articles or Sections
refer to Articles or Sections of this Agreement.
Section 10.12 MidAtlantic Airways, Inc. Notwithstanding
anything to the contrary contained herein, any reference to MidAtlantic,
whether specifically or as part of the Companies, Debtors, Debtor Subsidiaries
or Subsidiaries, shall mean MidAtlantic in its current form and operational
status, with the express acknowledgement that, with respect to this Agreement
and any representation, warranty, covenant or agreement contained herein,
MidAtlantic needs to reactivate its commuter air carrier authorization or
secure a Section 41102 certificate and reactivate its FAA operating
certificate prior to resuming scheduled service.
IN WITNESS WHEREOF, this Agreement has been executed on
behalf of the parties hereto by their respective duly authorized officers, all
as of the date first above written.
THE RETIREMENT SYSTEMS OF ALABAMA
By:
-----------------------------
Name:
Title:
US AIRWAYS GROUP, INC.
By:
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President Finance and
Chief Financial Officer