EXHIBIT 10.3
EXECUTION COPY
[REDACTED] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED
BY BRACKETS AND THE WORD "REDACTED", HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.
INVESTMENT AGREEMENT
dated as of March 15, 2005
among
WEXFORD CAPITAL LLC,
REPUBLIC AIRWAYS HOLDINGS INC.,
US AIRWAYS GROUP, INC.
and
US AIRWAYS, INC.
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS...................................................... 2
Section 1.01 Definitions............................................... 2
ARTICLE II ISSUANCE AND PURCHASE OF NEW COMMON STOCK....................... 10
Section 2.01 Issuance and Purchase of New Common Stock................. 10
Section 2.02 Slots Option.............................................. 10
Section 2.03 Closing................................................... 10
Section 2.04 Terms of Additional Investments........................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................. 11
Section 3.01 Corporate Organization and Qualification.................. 11
Section 3.02 Authorization; No Contravention........................... 12
Section 3.03 Consents; No Conflicts.................................... 12
Section 3.04 Court Orders.............................................. 12
Section 3.05 Capitalization; Securities................................ 12
Section 3.06 Subsidiaries.............................................. 13
Section 3.07 Company Reports; Financial Statements..................... 13
Section 3.08 Information Provided...................................... 14
Section 3.09 Absence of Certain Changes or Events...................... 14
Section 3.10 Property.................................................. 14
Section 3.11 Taxes..................................................... 14
Section 3.12 Financial Advisors and Brokers............................ 14
Section 3.13 Insurance................................................. 15
Section 3.14 Regulatory Status......................................... 15
Section 3.15 Collective Bargaining Agreements and Employee Contracts... 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.................. 15
Section 4.01 Organization.............................................. 15
Section 4.02 Authorization of Agreements............................... 15
Section 4.03 Consents; No Conflicts.................................... 16
Section 4.04 Financial Advisors and Brokers............................ 16
Section 4.05 Ownership of Equity Securities; Purpose of Investment..... 16
Section 4.06 Citizenship............................................... 16
Section 4.07 Financing................................................. 16
ARTICLE V GOVERNANCE....................................................... 16
Section 5.01 Board of Directors........................................ 16
Section 5.02 Directors' Liability and Indemnification.................. 17
ARTICLE VI PRE-CLOSING COVENANTS........................................... 17
Section 6.01 Taking of Necessary Action................................ 17
Section 6.02 Notifications............................................. 18
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Section 6.03 Republic Aircraft Transaction............................. 18
Section 6.04 Definitive Existing Jet Service Agreement................. 18
Section 6.05 Maintenance of Properties: Insurance..................... 18
Section 6.06 Delivery of Reports....................................... 19
Section 6.07 HSR....................................................... 19
Section 6.08 Notification from Investor................................ 19
Section 6.09 Business Plan............................................. 19
Section 6.10 Effectiveness Prior to Omnibus Order...................... 20
ARTICLE VII ADDITIONAL COVENANTS........................................... 21
Section 7.01 Financial and Other Information........................... 21
Section 7.02 Publicity................................................. 21
Section 7.03 Registration Rights and Listing of New Common Stock....... 21
Section 7.04 Restrictions on Sale...................................... 21
Section 7.05 Additional Jet Service Aircraft........................... 22
Section 7.06 Investor Financing........................................ 22
Section 7.07 Chautauqua Pre-Petition Claim............................. 22
ARTICLE VIII CONDITIONS.................................................... 22
Section 8.01 Conditions to Investor's Obligations...................... 22
Section 8.02 Conditions to the Company's Obligations................... 26
ARTICLE IX TERMINATION..................................................... 28
Section 9.01 Termination of Agreement.................................. 28
Section 9.02 Effect of Termination..................................... 28
ARTICLE X MISCELLANEOUS.................................................... 29
Section 10.01 Fees and Expenses......................................... 29
Section 10.02 Survival of Representations and Warranties................ 29
Section 10.03 Specific Performance...................................... 29
Section 10.04 General Interpretive Principles........................... 29
Section 10.05 Notices................................................... 30
Section 10.06 Entire Agreement; Amendment............................... 31
Section 10.07 Counterparts.............................................. 31
Section 10.08 Governing Law............................................. 31
Section 10.09 Successors and Assigns.................................... 32
Section 10.10 No Third-Party Beneficiaries.............................. 32
Section 10.11 Confidentiality........................................... 32
EXHIBIT A-1 Slots Option
EXHIBIT A-2 Gates
EXHIBIT B Republic Aircraft Transaction
EXHIBIT C Amendments to Original Jet Service Agreement
EXHIBIT D Terms of New Jet Service Agreement
EXHIBIT E Additional Jet Service Aircraft
EXHIBIT F Lease Formula
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Schedule 1 Shares of New Common Stock
Schedule 3.03 Approvals Required of the Company and the Operating Companies
in connection with the Transactions
Schedule 3.06 Subsidiaries of the Company
Schedule 3.07(a) SEC Reports Not Filed
Schedule 3.15 Status of Collective Bargaining Agreements and Employment
Agreements
Schedule 4.03 Approvals Required by the Investor in connection with the
Transactions
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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
March 15, 2005, by and among Wexford Capital LLC, a Connecticut limited
liability company, on its own behalf and on behalf of its affiliated funds and
managed accounts (collectively, "Wexford"), Republic Airways Holdings Inc., a
Delaware corporation ("Republic", and together with Wexford, the "Investor"), US
Airways, 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) ("US Airways") 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").
WITNESSETH:
WHEREAS, on September 12, 2004, 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, in connection herewith US Airways intends to enter into and,
subject to the Omnibus Order, assume (under Section 365 of the Bankruptcy Code)
an amended and restated jet service agreement with Chautauqua, having the terms
set forth on Exhibit C (as amended and restated, the "Existing Jet Service
Agreement");
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 the New Common Stock;
WHEREAS, subject to the other terms and conditions contained herein,
the Investor desires to commit to provide equity financing to the Company;
WHEREAS, if the Company decides to draw down such commitment, then the
reorganized Company intends to issue and sell to the Investor, and the Investor
intends to purchase from the reorganized Company, the New Common Stock (such
purchase, issuance and sale, 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 and
simultaneously with the consummation of, the Plan (except as to those
transactions that are expressly intended to take effect at another date);
WHEREAS, the parties intend that all of the transactions contemplated
hereby are intended to be treated as a single integrated transaction subject to
the approval of the Bankruptcy Court as soon as reasonably practicable after the
date hereof and as part of a settlement of issues related to the Original Jet
Service Agreement; 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 Agreement:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
"Additional Jet Service Aircraft" has the meaning set forth in Exhibit
E.
"Affiliate" means, with respect to any specified Person, a Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the specified Person, where
"control" (including the terms "controlling," "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract, or otherwise;
provided, however, that when used with respect to the Company, "Affiliate" shall
not include Retirement Systems of Alabama Holdings LLC or any entity that would
be deemed an Affiliate of the Company solely by virtue of RSA's being a
stockholder in the Company.
"Agreement" has the meaning set forth in the preamble hereto.
"Air Wisconsin DIP Agreement" means the Junior Secured
Debtor-in-Possession Credit Facility Agreement dated as of February 18, 2005, by
and among US Airways, Inc., as Borrower, certain affiliates thereof as
guarantors, and Eastshore, as lender, as amended, supplemented or otherwise
modified from time to time.
"Amended Business Plan" has the meaning set forth in Section 6.09(b)
hereof.
"Approvals" has the meaning set forth in Section 8.01(d) hereof.
"ATSB Lender Parties" has the meaning set forth in the definition of
"ATSB Loan Agreement" below.
"ATSB Loan Agreement" means that certain $1,000,000,000 Loan
Agreement, dated as of March 31, 2003, among the Company, the Operating
Companies and the ATSB Lender Parties specified therein (the "ATSB Lender
Parties"), together with all agreements and instruments entered into in
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connection therewith, including, without limitation, the cash collateral orders
relating to the Company's and the Operating Companies' use of cash collateral
during the pendency of the Cases, in each case as amended, supplemented or
otherwise modified from time to time.
"Bankruptcy Code" has the meaning set forth in the recitals hereto.
"Bankruptcy Court" has the meaning set forth in the recitals hereto.
"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.
"Bylaws" means the bylaws of the Company, as amended from time to time
(including, with respect to periods following the Effective Date, the bylaws of
the reorganized Company).
"Cases" has the meaning set forth in the recitals hereto.
"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).
"Certificated Air Carrier" means a Citizen of the United States
holding an aircraft operating certificate issued pursuant to Chapter 447 of
Title 49 of the United States Code or any analogous successor provision of the
United States Code, for aircraft capable of carrying ten or more individuals or
6,000 pounds or more of cargo or that otherwise is certified or registered to
the extent required to fall within the purview of 11 U.S.C. Section 1110 or any
analogous successor provision of the Bankruptcy Code.
"Chapter 11" means Chapter 11 of the Bankruptcy Code.
"Chautauqua" means Chautauqua Airlines, Inc.
"Citizen of the United States" has the meaning given to such term in
Section 40102(a)(15) of Title 49 of the Transportation Code, or any subsequent
legislation that amends, supplements or supersedes such provisions.
"Closing" means the closing of the issuance, sale and purchase of the
New Common Stock pursuant to Section 2.01 hereof.
"Closing Date" has the meaning set forth in Section 2.03(a) hereof.
"Collective Bargaining Agreements" means collectively the collective
bargaining agreements between (A) US Airways and (i) the Transport Workers Union
Locals 545, 546 and 547, as modified during the Cases with the Bankruptcy
Court's approval pursuant to the
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October 26, 2004 Consent Order Approving Modifications to Debtors' Collective
Bargaining Agreements With Certain Groups Within the Transport Workers Union,
(ii) the Communications Workers of America, AFL-CIO, as modified during the
Cases with the Bankruptcy Court's approval pursuant to the January 6, 2005
Consent Order Approving Modifications to Debtors' Collective Bargaining
Agreement with the Communications Workers of America; (iii) the Air Line Pilots
Association, International, as modified during the Cases with the Bankruptcy
Court's approval pursuant to the October 26, 2004 Consent Order Approving
Modifications to the Debtors' Collective Bargaining Agreement with the Air Line
Pilots Association, International; (iv) the Association of Flight
Attendants-CWA, AFL-CIO which was approved by the Bankruptcy Court's January 11,
2005 Order Approving Debtors' Entry Into Collective Bargaining Agreement with
the Association of Flight Attendants-CWA, AFL-CIO; and (v) the International
Association of Machinists and Aerospace Workers: Mechanical and Related
(District 142), Maintenance Training Specialists (District 142), and Fleet
Service (District 141), which were approved by the Bankruptcy Court's January
27, 2005 Order Approving Debtors' Entry into Collective Bargaining Agreements
with the International Association of Machinists and Aerospace Workers; (B)
Allegheny Airlines and (i) the Air Line Pilots in the service of Allegheny
Airlines, Inc. as represented by the Air Line Pilots Association, effective May
1, 1999; (ii) the Mechanics and Related Employees in the service of Allegheny
Airlines, Inc. as represented by the Air Line Pilots Association, International,
effective April 2, 2001; and (iii) the International Brotherhood of Teamsters,
effective December 16, 2001; (C) Piedmont Airlines and (i) the Association of
Flight Attendants, AFL-CIO, effective October 31, 2001; (ii) the Air Line Pilots
Association, International, effective May 16, 2000; (iii) the International
Association of Machinists and Aerospace Workers: Flight Dispatchers (District
141), effective March 1, 1999; Mechanic & Related (District 141), effective
January 25, 1999; and, Stock Clerks (District 141), effective September 29,
2000; (D) PSA Airlines and (i) the Air Line Pilots Association, International,
effective May 10, 2002; (ii) the Association of Flight Attendants, AFL-CIO,
effective January 1, 1997; (iii) the International Association of Machinists and
Aerospace Workers: Air Transport (District 141M), effective September 24, 2001;
and (iv) the International Brotherhood of Teamsters, effective March 3, 1997.
"Company" has the meaning set forth in the preamble hereto.
"Confirmation Order" means a Final Order of the Bankruptcy Court
approving the Plan.
"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" means the Committee of Unsecured Creditors
appointed in the Cases pursuant to Section 1102 of the Bankruptcy Code.
"DCA" means Xxxxxx Xxxxxx Washington National Airport.
"Debtors" has the meaning set forth in the recitals hereto.
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"Debtor Subsidiaries" has the meaning set forth in the recitals
hereto.
"Disclosure Statement" means a disclosure statement with respect to
the Plan.
"Eastshore" means Eastshore Aviation, LLC.
"Effective Date" means the effective date of the Plan.
"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.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Existing Jet Service Agreement" has the meaning set forth in the
recitals hereto.
"FAA" means Federal Aviation Administration.
"Final Approved Business Plan" has the meaning set forth in Section
6.09(b) hereof.
"Final Order" means an order or judgment of the Bankruptcy Court, or
other court of competent jurisdiction, as entered on the docket in the Cases or
the docket of any other court of competent jurisdiction, that has not been
reversed, stayed, modified or amended, and as to which the time to appeal or
seek certiorari or move for a new trial, reargument or rehearing has expired,
and no appeal or petition for certiorari or other proceedings for a new trial,
reargument or rehearing has been timely taken, or as to which any appeal that
has been taken or any petition for certiorari that has been timely filed has
been withdrawn or resolved by the highest court to which the order or judgment
was appealed or from which certiorari was sought or the new trial, reargument or
rehearing shall have been denied or resulted in no modification of such order.
"Fully Diluted Basis" means the number of shares of New Common Stock,
without duplication, which are issued and outstanding or owned or held, as
applicable, at the date of determination plus the number of shares of New Common
Stock issuable pursuant to any Equity Securities then outstanding convertible
into or exchangeable or exercisable for (whether or not subject to contingencies
or passage of time, or both) shares of New Common Stock, exclusive of shares of
New Common Stock issuable to General Electric Capital Corporation ("GECC") in
accordance with the Convertible Note (the "GECC Convertible Note") to be
received by GECC upon the Debtors emergence from the Cases pursuant to that
certain Master Memorandum of Understanding and related term sheets entered into
as of November 24, 2004, among the Debtors and GECC.
"GAAP" means U.S. generally accepted accounting principles as in
effect at the relevant time or for the relevant period.
5
"Gates Option" has the meaning set forth in Exhibit A-1.
"Gates" shall mean all of the right, title, privilege, interest and
authority held by the Operating Companies in connection with the right to use or
occupy space at three (3) gates at DCA and two (2) gates at LGA for the
embarkation/boarding and debarkation/deboarding of passengers, including but not
limited to, related preferential use or exclusive use holdrooms and jetways, and
shall include related airport facilities necessary for an air carrier to conduct
scheduled operations at such airports including ticket counter space, baggage
claim and makeup space, and administrative office space, all as more
specifically set forth on Exhibit A-2.
"GECC" has the meaning set forth in the definition of "Fully Diluted
Basis" above.
"GECC Convertible Note" has the meaning set forth in the definition of
"Fully Diluted Basis" above.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Hearing" means the hearing conducted in the Cases in the Bankruptcy
Court seeking approval of the Motion and the Omnibus Order.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the regulations promulgated thereunder.
"Independent Director" means a member of the Board of the reorganized
Company who meets the standards for independence of the Nasdaq National Market
or the national stock exchange on which the New Common Stock is then quoted or
listed as of the time of such determination.
"Initial Business Plan" has the meaning set forth in Section 6.09(a)
hereof.
"Initial Business Plan Review Period" has the meaning set forth in
Section 6.09(a) hereof.
"Investor" has the meaning set forth in the preamble hereto.
"Investor Director" means any member of the Board or the reorganized
Company nominated by the Investor in accordance with Section 5.01 hereof.
"Investment" has the meaning set forth in the recitals hereto.
"Investment Price" has the meaning set forth in Section 2.01 hereof.
6
"Jet Service Agreements" means the Existing Jet Service Agreement and
the New Jet Service Agreement, and individually, a Jet Service Agreement.
"Law" means any law, treaty, statute, ordinance, code, rule or
regulation of a Governmental Authority or judgment, decree, order, writ, award,
injunction or determination of an arbitrator or court or other Governmental
Authority.
"LGA" means La Guardia Airport.
"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).
"Material Adverse Effect" means any condition, circumstance or event
or series of conditions, circumstances or events that, individually or in the
aggregate, has had or could reasonably be expected to have (a) a material
adverse effect on the condition (financial or otherwise), properties, assets,
business, results of operations or prospects of the Company and its Subsidiaries
taken as a whole, or (b) could reasonably be expected to prevent or limit or
restrict in any material respect the Company or any of its Subsidiaries or the
Investor from performing their respective obligations hereunder or under any of
the Transaction Documents to which any of them are a party or consummating any
of the transactions hereunder or thereunder, provided that, in addition to and
not by way of limitation of the foregoing, any of the following shall be deemed
to constitute a Material Adverse Effect: (i) a material increase in the cost of
fuel over the cost assumed in the most recent Final Approved Business Plan or
(ii) a terrorist event or war (whether declared or not) that causes the
cessation or any material interruption of a material portion of the Operating
Companies' business operations.
"Motion" means the motion and any supporting papers seeking approval
of the Transactions, in form and substance reasonably acceptable to the Investor
and providing, inter alia, not less than a ten (10) day notice period prior to
the Hearing and providing for confidential treatment of portions of the
Transaction Documents as mutually agreed by the Company and the Investor.
"New Common Stock" has the meaning set forth in Section 2.01 hereof.
"New Jet Service Agreement" has the meaning set forth in Exhibit A-1
hereto.
"Omnibus Order" means the Final Order of the Bankruptcy Court
authorizing the Company and its Subsidiaries to enter into and execute
definitive Transaction Documents and approving the Transactions under Sections
105, 363, 364 and 365 of the Bankruptcy Code and applicable Bankruptcy Rules, in
form and substance reasonably acceptable to the Investor and the Company.
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"Operating Companies" means US Airways, PSA Airlines, Inc., a
Pennsylvania corporation, Piedmont Airlines, Inc., a Maryland corporation and
Material Services Company, Inc., a Delaware corporation.
"Original Jet Service Agreement" means the Jet Service Agreement
between Chautauqua and US Airways, dated March 19, 1999, as amended through the
date hereof.
"Owned Aircraft Leaseback" has the meaning set forth in Exhibit B
hereto.
"Person" means any individual, corporation, company, association,
partnership, limited liability company, joint venture, trust, unincorporated
organization, or Governmental Authority.
"Plan" has the meaning set forth in the recitals hereto.
"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.
"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
Authorities (and shall not include clearance or approval under the HSR Act or
any other Law that may require waiting periods prior to consummation of the
Transactions).
"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.
"Republic" has the meaning set forth in the preamble hereto.
"Republic Aircraft Transaction" means the aircraft purchase and lease
transactions described more specifically in Exhibit B.
"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.
"Slot" means all of the rights and operational authority now or
hereafter acquired or held by any of the Operating Companies in and to the
operating authority granted by the FAA pursuant to Title 14 of the United States
Code of Federal Regulations, Part 93, Subparts K and S (as amended from time to
time by regulation or statute, or any successor or recodified regulation)
8
to conduct one Instrument Flight Rules (as defined under the federal aviation
regulations) landing or takeoff operation in a specified time period at LGA or
DCA.
"Slots Option" means the option described more specifically in Exhibit
A-1.
"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.
"Substantial Investor" means a new investor who, individually or
together with such investor's Affiliates, invests in the aggregate at least $100
million in New Common Stock in the reorganized Company in connection with the
Plan, which shall include Eastshore (to the extent it qualifies as such in the
Air Wisconsin DIP Agreement) and, if the Closing occurs, the Investor. For
purposes of the definition in the immediately preceding sentence, an investor
and its Affiliates shall be deemed one and the same Substantial Investor if they
satisfy the criteria of such definition.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, fees, deductions, charges or withholdings imposed by any Governmental
Authority.
"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.
"Transactions" means the execution, delivery and performance of this
Agreement and the issuance of New Common Stock hereunder, and the execution,
delivery and performance of the documents described in Articles II, V and VIII
hereof, in each case by the applicable party thereto, including, without
limitation, the Slots Option, the Gates Option, the Jet Service Agreements, the
documents relating to the Republic Aircraft Transaction and the payment of fees
to the Investor as provided herein.
"Transaction Documents" means this Agreement, the Plan, the
Confirmation Order, the documents described in Articles II, V and VIII and all
other documents necessary to consummate the Transactions and other arrangements
contemplated hereby.
"Transportation Code" means Title 49 of the United States Code which,
among other things, recodified and replaced the U.S. Transportation Code of 1958
and the regulations promulgated thereunder, or any subsequent legislation that
amends, supplements or supersedes such provisions.
"Unrestricted Commuter Slots" means the Slots allocated by FAA as
commuter slots under Title 14 of the United States Code of Federal Regulations,
Part 93, Subparts K and S (as amended from time to time by regulation or
statute, or any successor or recodified
9
regulation), to which no restrictions or limitations apply (other than those
expressly set forth in such Subparts).
"US Airways" has the meaning set forth in the preamble hereto.
"Wexford" has the meaning set forth in the preamble hereto.
ARTICLE II
ISSUANCE AND PURCHASE OF NEW COMMON STOCK
Section 2.01 Issuance and Purchase of New Common Stock.
Upon the terms and subject to the conditions set forth in this
Agreement, and in reliance upon the representations and warranties hereinafter
set forth, the Investor grants to the Company an option to require the Investor
to purchase for an aggregate purchase price of one hundred twenty five million
dollars ($125,000,000) (the "Investment Price"), that number of shares of common
stock of the reorganized Company (the "New Common Stock") on a Fully Diluted
Basis determined in accordance with Schedule 1 attached hereto; provided,
however, that in no event shall the New Common Stock issuable to the Investor on
a Fully Diluted Basis as of the Effective Date represent less than 19.2308% of
the total New Common Stock of the reorganized Company. Notwithstanding the
immediately preceding sentence, to the extent that Eastshore agrees to amend the
Air Wisconsin DIP Agreement to provide for a reduction in its equity ownership
in the Company on a Fully Diluted Basis below 19.2308% in the event that any
Substantial Investor makes an investment in the Company, the Investor will also
agree to a comparable (on a pari passu basis with Eastshore and on terms and
conditions no less favorable to the Investor as are accorded to Eastshore in
connection with such agreement) reduction in its equity ownership in the Company
on a Fully Diluted Basis; provided, that in no event shall Investors' equity
ownership on a Fully Diluted Basis be reduced below 16.6666%. At the Closing, if
the Company exercises the option described above, the reorganized Company will
issue, sell and deliver to the Investor, and the Investor will purchase from the
reorganized Company, the New Common Stock in accordance with the first sentence
of this Section 2.01. The foregoing option shall be deemed terminated and
cancelled if the Company shall not have given the Investor written notice at
least sixty (60) days prior to the Effective Date of its exercise of the option
(indicating the amount it will require Investor to purchase) and such notice
shall be irrevocable unless otherwise consented to by the Investor in its sole
discretion.
Section 2.02 Slots Option. Subject to the terms and conditions hereof,
the Investor hereby grants US Airways (and its successor under the Plan) the
Slots Option.
Section 2.03 Closing. (a) Subject to the satisfaction or, if
permissible, waiver of the conditions set forth in Sections 8.01 and 8.02
hereof, the Closing shall take place at the offices of Xxxxxx & Xxxxxx LLP, 000
Xxxxxxx Xxxxxx, XX, Xxxxxxxxxx X.X. 00000, at 10:00 a.m., Washington D.C. time,
on the Effective Date or at such other time, date 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.
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(b) At the Closing, (i) the reorganized Company shall deliver to
the Investor certificates representing the shares of Common Stock 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 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 (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.
Section 2.04 Terms of Additional Investments. If the Company, the
Operating Companies or any of their respective Affiliates provides to any Person
(including, but not limited to, any other Substantial Investor) that commits to
acquire any shares of New Common Stock or any other Equity Securities of the
reorganized Company in connection with the Plan, any terms relating to such
acquisition more favorable than those applicable to the Investor pursuant to
this Agreement, then, in each such case, the Company shall provide written
notice to the Investor of such more favorable terms (the "Notice"). Within ten
(10) Business Days following receipt of the Notice, the Investor may by written
notice to the Borrower elect to accept any of the more favorable terms to apply
to the Investor hereunder. If the Investor does not so elect within such ten
(10) Business Day period, the Investor shall have waived its right to accept the
more advantageous terms that were described in the Notice. Anything in this
Section 2.04 to the contrary notwithstanding, the election provided to the
Investor herein shall not be applicable with respect to any distributions of New
Common Stock, subscription rights, or securities exchangeable for or convertible
into equity securities in the reorganized Company to the extent that the
distributions of such securities and rights are to any creditors, shareholders,
management, or employees of the Company or of any of its Subsidiaries, or on
account of the GECC Convertible Note, in connection with the Plan.
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
Company, each Operating Company and each of their respective Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and, pursuant to Sections 1107 and 1108 of the
Bankruptcy Code and the orders of the Bankruptcy Court, has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, does not result in a
Material Adverse Effect, is qualified to do business in, and is in good standing
in, every jurisdiction where such qualification is required.
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Section 3.02 Authorization; No Contravention. The Transactions to be
consummated by the Company and the Operating Companies are within the respective
corporate powers of the Company and the Operating Companies (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) and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement and each other Transaction Document entered
into as of the date hereof have been duly executed and delivered by the Company
and the Operating Companies party thereto (as applicable) and constitute
(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), a legal, valid and binding obligation of the Company and
such Operating Companies, respectively, enforceable in accordance with its
terms.
Section 3.03 Consents; No Conflicts. Except as set forth on Schedule
3.03 hereto, with respect to the Company and the Operating Companies, the
consummation of the Transactions (i) does not require any consent or approval
of, registration or filing with, or any other action by, any Governmental
Authority (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), except such as have been obtained or made and
are in full force and effect and except where failure to obtain such consent,
approval, registration, filing or other action has not had a Material Adverse
Effect, (ii) will not violate (A) any applicable law or regulation or (B) the
charter, bylaws or other organizational documents of the Company or any of its
Subsidiaries or any order of any Governmental Authority and except, in each
case, where such violation of applicable law or regulation has not had a
Material Adverse Effect, (iii) will not violate or result in a default under any
Postpetition agreement or Postpetition loan agreement or any other Postpetition
indebtedness agreement or instrument of indebtedness binding upon the Company,
any Operating Company or any of their respective Subsidiaries or its assets
except where such default or violation has not had a Material Adverse Effect and
(iv) will not result in the creation or imposition of any Lien on any assets or
properties of the Company or any of its Subsidiaries.
Section 3.04 Court Orders. 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 performance of
any action by the Company or the Operating Companies required or contemplated by
this Agreement or any other Transaction Document is not restrained or enjoined
by any order of the Bankruptcy Court or by any Governmental Authority (either
temporarily, preliminarily or permanently).
Section 3.05 Capitalization; Securities. Upon the Closing and after
giving effect to the Confirmation Order, the Plan and the Investment, the
authorized, issued and outstanding capital stock of the reorganized Company
shall consist solely of New Common Stock. Upon the Closing Date, the New Common
Stock 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
rights, preferences and privileges of the capital stock of the Company shall be
as set forth in the Certificate of Incorporation of the Company, as amended
pursuant to the Plan and in effect upon the Closing.
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Section 3.06 Subsidiaries. As of the Closing Date and after giving
effect to the Plan and Confirmation Order, the reorganized Company 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).
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 XXXXX 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, 2004, 2003 and 2002;
(ii) the Quarterly Report on Form 10-Q of each of the Company and US Airways for
each of the periods ended March 31, 2004, June 30, 2004 and September 30, 2004;
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, 2001 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,
2001.
(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 Company or any of its
Subsidiaries 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 Company and its Subsidiaries have not incurred any material
13
liabilities or obligations other than those incurred in the ordinary course of
such company's business.
Section 3.08 Information Provided. All representations and warranties
made by the Company in this Agreement, and all written certificates, exhibits
and schedules provided by or on behalf of the Company to the Investor pursuant
to the terms of this Agreement, 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. The
Company has delivered to the Investor a true and correct copy of each of the
ATSB Loan Agreement and the Air Wisconsin DIP Agreement, including any
amendments, supplements and modifications through the date hereof.
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,
2003, and (ii) the Companies have not taken any actions, and no events have
occurred since December 31, 2003, that, individually or in the aggregate, have
had a Material Adverse Effect.
Section 3.10 Property. Each of the Company and the Operating Companies
has (i) good, marketable and insurable fee title to (in the case of fee
interests in real property), (ii) valid, and in the case of leasehold interests
in real property, insurable, leasehold interests in (in the case of leasehold
interests in real or personal property), or (iii) good title to (in the case of
all other personal property), all of the properties and assets necessary to the
conduct of its business, in each case except where the failure to have such
title or interest has not had a Material Adverse Effect.
Section 3.11 Taxes. Each of the Company and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (i) to the extent that the failure to do so has not had a
Material Adverse Effect, (ii) with respect to Taxes that are being contested in
good faith by appropriate proceedings and for which the Company or such
Subsidiary, as applicable, has set aside on its books adequate reserves, and
(iii) with respect to Taxes that 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.
Section 3.12 Financial Advisors and Brokers. Except for Seabury
Aviation Advisors LLC and/or its Affiliates ("Seabury"), no Person has acted,
directly or indirectly, as a broker, finder or financial advisor of the Company
or any of the Operating Companies in connection with the Transaction Documents
or the transactions contemplated thereby, and except
14
for Seabury, no Person acting for or on behalf of the Company or any of the
Operating 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 the Company or any of the Operating
Companies. A true and correct copy of the Company's agreement with Seabury
relating to the Transactions has been delivered to the Investor.
Section 3.13 Insurance. The properties, business and operations of the
Company and the Operating Companies are insured or reinsured with financially
sound and reputable insurance companies or by way of self-insurance, in such
amounts and against such risks as are customarily maintained by companies
engaged in the same or similar businesses.
Section 3.14 Regulatory Status. Neither the Company, nor any Operating
Company nor any of their respective Subsidiaries is (i) an "investment company"
as defined in, or subject to regulation under, the Investment Company Act of
1940 or (ii) a "holding company" as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935. US Airways is a Certificated Air
Carrier.
Section 3.15 Collective Bargaining Agreements and Employment
Agreements. Schedule 3.15 hereto sets forth a true and complete description of
the status of the Collective Bargaining Agreements and any employment agreements
with the Chief Executive Officer or any Executive Vice President of the Company,
including any proposed revisions thereto. Except for the Collective Bargaining
Agreements, as amended or supplemented after the date hereof, there is no
collective bargaining agreement (or equivalent agreement) which is binding on
the Company or any of its Affiliates or to which the Company or any of its
Affiliates is a party. The Company has provided to the Investor true, complete
and correct copies of all the Collective Bargaining Agreements.
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. Wexford Capital LLC is a Connecticut
limited liability company 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.
Republic is a Delaware corporation 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 and its Affiliates of their respective 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 and such Affiliates'
powers and have been duly authorized by all necessary action and do not and will
not contravene the terms of their respective governing documents.
15
Each Transaction Document when delivered will constitute a legal, valid and
binding obligation of the Investor or such Affiliate, as applicable, enforceable
against the Investor or such Affiliate, as applicable, 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 or
any Affiliate thereof 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 on the ability of the Investor or any such Affiliate to
consummate the Transactions, 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 on the ability of the
Investor to consummate the Transactions.
Section 4.04 Financial Advisors and Brokers. Other than Affiliates of
the Investor, 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, other than fees that may be
payable to Affiliates of the Investor by the Investor, 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 New Common Stock 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 assignee, as permitted
by Section 10.09 who acquires the New Common Stock hereunder at the Closing) is
a Citizen of the United States.
Section 4.07 Financing. Subject to Section 7.05, the Investor (or its
assignee, as permitted by Section 10.09 who acquires the New Common Stock
hereunder at the Closing) 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 Investor shall have the right to designate three (3) members of the Board of
Directors of the reorganized Company, two (2) of which shall be Independent
Directors qualified as such by the nominating committee of the Board. In
addition to the members designated by the Investor, the
16
Board of Directors shall include the Chief Executive Officer of the reorganized
Company and not less than two (2) Independent Directors designated by the Chief
Executive Officer after consultation with the Creditors' Committee, and shall
also include three (3) members, two (2) of which shall be Independent Directors,
designated by each Substantial Investor other than the Investor for each $100
million increment invested by such Substantial Investor in the reorganized
Company in connection with the Plan. Notwithstanding the foregoing, the Investor
shall be entitled to designate three (3) members of the Board of Directors of
the reorganized Company for so long as the Investor and its Affiliates
collectively shall maintain more than 50% of their initial investment in the
reorganized Company hereunder; the right to designate two (2) such members for
so long as they maintain 30% of such initial investment in the reorganized
Company; and the right to designate one (1) such member so long as it maintains
12% of such initial investment in the reorganized Company. All Independent
Directors designated by the Investor or any Substantial Investor shall be
qualified as such by the nominating committee of the Board, subject to the right
of such Investor or Substantial Investor to veto any Independent Director not
designated by such Investor or Substantial Investor, respectively.
(b) If the reorganized Company shall issue shares of New Common
Stock to any Substantial Investor who invests less than $200 million in New
Common Stock and is entitled to designate more than three (3) members of the
Board of Directors, the Investor shall be entitled to designate members to the
Board of Directors on the same proportionate basis as such Substantial Investor
(and with a proportionate number to be Independent Directors), and to the extent
necessary, the Board of Directors shall be increased accordingly.
Section 5.02 Directors' Liability and Indemnification.
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.
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 in accordance with the terms
hereof (including, without limitation, the preparation, negotiation and
execution of mutually satisfactory Transaction Documents). Without limiting the
foregoing, the Investor and the Company will cause their respective Affiliates
to enter into and perform any Transaction Documents to which any such Affiliates
are properly parties (subject in each case to the exercise of the Company's
option in Section 2.01, the exercise of the Slots Option and the other terms and
conditions contained herein).
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(b) The Company and US Airways shall use commercially reasonable
efforts to obtain as promptly as possible after the date hereof the entry of the
Omnibus Order.
(c) The Company shall use commercially reasonable efforts to, and
cause its Subsidiaries to, take all action necessary or advisable to maintain
the right to operate their respective Slots at LGA and DCA 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.
(d) The Company shall use commercially reasonable efforts to and
cause its Subsidiaries to take all action necessary or advisable to maintain
their respective rights, interests, privileges, title and authority in and to
the Gates at DCA and LGA.
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 material 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 Republic Aircraft Transaction. If the Company and/or US
Airways exercises and completes the Slots Option, the Investor shall complete
the Republic Aircraft Transaction (subject to the applicable conditions thereto
and to the terms and conditions of Exhibit B). If the Slots Option has not been
exercised, the Investor shall have a one-time option, exercisable by written
notice to the Company at any time during the thirty (30) day period commencing
upon either the Effective Date or the date of termination of this Agreement
(unless such termination is pursuant to Section 9.01(c) or (d) hereof), to
purchase the Owned Aircraft and to assume the leases of the Leased Aircraft
under the terms of the Republic Aircraft Transaction as provided in Exhibit B.
If so exercised, the Company shall cause its Affiliates to enter into the
Republic Aircraft Transaction (subject to the applicable conditions thereto)
within thirty (30) days of delivery of such notification (or such other date as
the Investor and the Company shall agree in writing). Prior to the expiration of
Republic's option, neither the Company nor US Airways shall, directly or
indirectly, enter into any agreement or arrangement with respect to such Owned
Aircraft and Leased Aircraft that would materially change the Company's or US
Airways' ownership interest in such Owned Aircraft or Leased Aircraft.
Section 6.04 Definitive Existing Jet Service Agreement. As soon as
reasonably practicable after the entry by the Bankruptcy Court of the Omnibus
Order, the Company and the Investor shall and shall cause their respective
applicable Affiliates to enter into the definitive Existing Jet Service
Agreement.
Section 6.05 Maintenance of Properties; Insurance. The Company shall
and shall cause its Subsidiaries to (a) keep and maintain the Slots, the Gates
and the aircraft subject to the Republic Aircraft Transaction in good working
order and condition, ordinary wear and tear excepted, and (b) maintain, with
financially sound and reputable insurance companies or by way
18
of self-insurance, insurance covering such assets in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses.
Section 6.06 Delivery of Reports. The Company and its Subsidiaries
shall deliver to the Investor the reports concerning the operating and financial
data of the Company and its Subsidiaries that are delivered to the ATSB Lender
Parties.
Section 6.07 HSR. Notwithstanding anything herein to the contrary, the
parties hereto agree to make any required filings and notifications under the
HSR Act or any other antitrust or similar competition Laws of any other country
or jurisdiction in connection with the Transactions as soon as reasonably
practicable and in no event later than 30 days after the Omnibus Order is
entered by the Bankruptcy Court. The Company shall be responsible for the
payment of all filing or other fees associated with making such filings and
notifications.
Section 6.08 Notification from Investor. Within two Business Days
prior to the Hearing, Wexford Capital LLC and Republic shall notify the Company
in writing as to the allocation of the rights and obligations of the Investor
hereunder in respect of the obligation of the Investor to make the investment
pursuant to Section 2.01 hereof, subject to the terms and conditions herein, as
between Wexford and Republic, and each of Wexford, Republic and the Company
shall promptly thereafter execute and deliver to each other appropriate
documentation reflecting such allocation. Upon delivery of such notification,
only the Persons identified by the Investor as being responsible for such
allocated obligations shall bear responsibility for such obligations and no
other Person otherwise comprising the Investor shall retain any liability or
obligation with respect thereto. Other than the obligation to make such
Investment, subject to the terms and conditions herein, the obligations of the
Investor to consummate any other Transactions, subject to the terms and
conditions herein, shall be performed by Republic.
Section 6.09 Business Plan.
(a) Subject to and following the Bankruptcy Court's entry of the
Omnibus Order, the Company shall prepare and deliver to the Investor not less
than twenty-one (21) days prior to the Closing Date a new business plan and the
associated financial forecasts for the years ending December 31, 2005, 2006 and
2007 for the reorganized Company and its Subsidiaries, which shall include,
without limitation, projected cash balances, fleet composition, revenues, debt
levels, expenses, cash flows and such other projections and similar data and
information, including the detailed assumptions used to prepare such
projections, as would be required under the Bankruptcy Code to be included in a
disclosure statement related to the Plan (the "Initial Business Plan"). During
the twenty-one day period following the Investor's receipt of the Initial
Business Plan (such period, the "Initial Business Plan Review Period"), in
addition to and not by way of limitation of the obligations of the Company under
Section 7.01 hereof, the Company shall (and shall cause each of the Operating
Companies to) afford to the Investor, its Affiliates and their respective
Representatives access to all information, data, facilities, properties, books,
contracts, commitments, records (including information regarding any material
pending or threatened legal proceeding to which any of such companies is, or
reasonably expects to be, a party and negotiations relating to any labor
agreements or labor disputes involving the Company or any of its Subsidiaries),
key personnel, officers, independent accountants and legal counsel, including,
without limitation, all data, information and materials underlying the
assumptions in
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the Initial Business Plan. Not later than the last day of the Initial Business
Plan Review Period, the Investor shall notify the Company in writing as to
whether the Investor approves or disapproves the Initial Business Plan,
including the assumptions underlying the Initital Business Plan, which
determination shall be made in the sole and absolute discretion of the Investor.
The failure by the Investor to give such notification within such twenty-one
(21) day period shall be deemed an approval of the Initial Business Plan.
(b) If at any time and from time to time after the Company shall
have delivered the Initial Business Plan under Section 6.09(a) above (or an
Amended Business Plan (as defined below), the Company makes a material
modification or supplement to the Initial Business Plan, taken as a whole (as
modified or supplemented, an "Amended Business Plan"), the Investor shall have
the same rights to approve in its sole and absolute discretion such Amended
Business Plan, in the manner provided in Section 6.09(a), and the Company's
obligations and the Investor's rights under Section 6.09(a) shall apply mutatis
mutandis to this Section 6.09(b). The Initial Business Plan or the most recent
Amended Business Plan delivered to and approved by the Investor in accordance
with the terms hereof, is hereinafter referred to as the "Final Approved
Business Plan".
(c) If at any time and from time to time on or prior to the
Effective Date, the Company proposes to offer any shares of New Common Stock or
any other Equity Securities of the reorganized Company in connection with the
Plan on terms different, in any material respect, than those contained in this
Agreement, the Company shall promptly, but in any event not less than five (5)
Business Days prior to making an offer to sell such New Common Stock or Equity
Securities to a third party, provide Investor with written notice of its intent
to make such offer (an "Alternative Equity Offer Notice") describing in detail
all of the material terms and conditions of such offer, including the proposed
ancillary arrangements and closing contingencies relating thereto (an
"Alternative Equity Offer"). Delivery of an Alternative Equity Offer Notice by
the Company shall constitute an irrevocable offer by the Company to the Investor
to purchase the New Common Stock or Equity Securities on the terms and
conditions of the Alternative Equity Offer. The Investor shall have a period of
five (5) Business Days from the date of receipt of such Alternative Equity Offer
Notice to notify the Company in writing of its intention to accept the offer to
purchase the New Common Stock or Equity Securities on the terms and conditions
of the Alternative Equity Offer and the failure to deliver such notice by the
Investor shall be deemed a rejection thereof. If the Company fails to comply
with this Section 6.09(c), it will lose certain of its rights under the Jet
Service Agreement (as described in Exhibit C, paragraph 3(g)) to terminate
aircraft.
Section 6.10 Effectiveness Prior to Omnibus Order. The parties agree
that unless and until the Omnibus Order has been entered, except with respect to
the parties' obligations under Sections 2.04, 6.01, 6.02, 6.05, 6.08, 7.02,
Article IX and Sections 10.03 through 10.11 of Article X, and any related
provisions regarding the parties' obligations regarding filing of the Motion and
seeking entry of the Omnibus Order and the negotiation of final forms of the
definitive Transaction Documents, none of the parties hereto (or their
Affiliates) shall be bound or obligated by this Agreement or any of the
schedules or exhibits thereto.
20
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 the Operating Companies to)
afford to the Investor, its Affiliates and their respective Representatives,
including qualified prospective lenders to the Investor that sign appropriate
confidentiality agreements, access, upon reasonable notice and in such manner as
will not unreasonably interfere with the conduct of such companies' respective
businesses, to their respective facilities, properties, books, contracts,
commitments, records (including information regarding any material pending or
threatened legal proceeding to which any of such companies is, or reasonably
expects to be, a party and negotiations relating to any labor agreements or
labor disputes involving the Company or any of its Subsidiaries), 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 of
the Leased Aircraft to cooperate with the Investor, its Affiliates and their
respective Representatives in connection with the Transactions.
Section 7.02 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. To the extent either party is required to file
this Agreement or any Transaction Document with the SEC or any other
Governmental Authority (including the Bankruptcy Court), the parties shall
consult with each other concerning information for which confidential treatment
will be requested.
Section 7.03 Registration Rights and Listing of New Common Stock.
After the consummation of the Plan, the reorganized Company shall use its
commercially reasonable efforts to cause (i) the listing or quotation of the New
Common Stock on a national stock exchange or the NASDAQ National Market System
as soon as reasonably practicable, but in all events not later than 180 days
after the consummation of the Plan, and (ii) a registration statement to be
filed and declared effective upon the expiration of 12 months from the
consummation of the Plan, and shall keep such registration statement effective
for two (2) years thereafter.
Section 7.04 Restrictions on Sale. The Investor agrees not to sell any
New Common Stock prior to the earlier of the first anniversary of the Effective
Date and the date that is six (6) months after the date on which shares of New
Common Stock are first distributed under the Plan to the holders of allowed,
unsecured claims in the Cases, and thereafter agrees that
21
during any six (6) month period the Investor shall not sell, transfer or dispose
of more than twenty-five percent (25%) of the New Common Stock issued to the
Investor in connection with the consummation of the Plan, provided that,
notwithstanding any of the foregoing, the Investor may transfer any of its New
Common Stock to any of its Affiliates, so long as such Affiliate agrees to be
bound by the terms of this Agreement and, if requested by the Company,
Investor's counsel provides the Company with an opinion that such transfer is
exempt from the registration requirements of the Securities Act. In addition,
the Investor agrees not to sell, transfer or dispose of the New Common Stock in
any manner that will, in one or more transactions involving the Investor, cause
a change of control event for purposes of any of the Collective Bargaining
Agreements in effect on the date hereof or as may be modified after the date
hereof in a manner that does not adversely affect the Investor for purposes of
this restriction.
Section 7.05 Additional Jet Service Aircraft. The Investor hereby
grants US Airways the option, if the Closing occurs, to cause the Investor to
purchase, finance, and operate for US Airways in "US Airways Express" service
the Additional Jet Service Aircraft, subject to the terms of and as more fully
described in Exhibit E hereto.
Section 7.06 Investor Financing. The Investor shall maintain
sufficient and adequate resources to consummate the transactions contemplated by
this Agreement at the Closing.
Section 7.07 Chautauqua Pre-Petition Claim. The Company agrees that
the general unsecured pre-petition claims of Chautauqua under the Original Jet
Service Agreement shall be allowed, none of the Company nor any of its
Subsidiaries shall challenge or dispute (or support any challenge) such claim
and the Omnibus Order shall contain provisions to such effect, provided,
however, that the Company will not be required to cure any default under the
Original Jet Service Agreement in connection with the assumption of the Existing
Jet Service Agreement.
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 shall have been prepared, negotiated
and, to the extent applicable, executed by the parties (or, as applicable, their
Affiliates), and approval by the Bankruptcy Court of such documents pursuant to
a Final Order, as necessary, shall have been obtained. All Transaction Documents
(in form and substance satisfactory to the Investor), to the extent applicable,
shall have been executed by the parties thereto (other than the Investor and its
Affiliates) 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. All
corporate and other proceedings to be taken by the Company or its Affiliates in
connection with the Transaction Documents and the transactions contemplated
22
thereby to be completed at the Closing and documents incident thereto shall have
been completed in form and substance 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.
Without limiting the generality of the foregoing, in connection
with the consummation of the Plan, the reorganized Company and the Investor
shall have entered into certain agreements relative to the Investor's investment
in the reorganized Company, as follows:
(i) The Investor and the reorganized Company shall have
entered into a shareholders agreement with the other Substantial Investor(s)
containing customary terms and conditions reasonably acceptable to the Investor,
including, without limitation, provisions intended to preserve the corporate
governance agreements provided for above, provisions providing appropriate
representation on committees of the Board, and restrictions on transactions by
the reorganized Company or its Subsidiaries with Affiliates and to supercede the
provisions in Sections 7.01, 7.02, 7.03 and 7.04.
(ii) The Investor and the reorganized Company shall have
entered into an investor rights agreement with the other Substantial Investor(s)
containing customary terms and conditions reasonably acceptable to the Investor,
including, without limitation, rights typically available to significant equity
investors, including rights commonly referred to as "tag-a-long rights,"
"registration rights" and "piggyback registration rights."
(b) Delivery. The reorganized Company shall have executed and
delivered to the Investor the shares of New Common Stock pursuant to and in
accordance with Section 2.01 hereof.
(c) Board Representation. As contemplated by Section 5.01 hereof,
the Investor Directors designated by the Investor shall have been elected or
appointed to the Board effective as of the Closing Date.
(d) Approvals. The Company shall have received (i) all material
Regulatory Approvals, 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 on the ability of the
Investor or the Company or their respective Affiliates to consummate the
Transactions, 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 to be completed or performed as contemplated by the Transaction
Documents and to permit the reorganized Company and its Affiliates 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. Subject to the proviso in the first sentence of Section 6.01(a), all
waiting periods imposed by applicable Law (including, without limitation, under
the HSR Act) in connection with the Transactions shall have expired or been
23
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. In connection with the emergence of
the Company and the Operating Companies from Chapter 11 and the consummation of
the Plan, the reorganized Company will have received on the Effective Date cash
equity investments of not less than $350,000,000 (including any loans converted
into equity under the Air Wisconsin DIP Agreement), which with all other equity
capital of the reorganized Company, will be invested only in a single class of
common stock, the New Common Stock, with all such New Common Stock having the
same voting rights, and shall have no other class of capital stock authorized in
its charter other than the New Common Stock. The reorganized Company alone, and
not any Affiliate of the reorganized Company, shall have issued Equity
Securities in connection with the consummation of the Plan.
(f) Financial Performance. The financial performance of US
Airways during the calendar quarter and month prior to the Effective Date shall
have been consistent with the most recent Final Approved Business Plan.
(g) No Material Adverse Effect. There shall have occurred no
Material Adverse Effect between the date of the most recent Final Approved
Business Plan and the Closing.
(h) Effective Date. The Effective Date shall have occurred not
later than December 31, 2005.
(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 Authority 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 on the ability of the Investor or the Company or their respective
Affiliates to consummate the Transactions; (iii) no Governmental Authority shall
have instituted any legal proceeding that seeks to restrain, enjoin, prevent,
delay, prohibit or otherwise make illegal the performance of any of the
Transaction Documents, except for any such legal proceedings which have a
significant possibility of being brought to a conclusion which could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of the Investor or the Company or their respective
Affiliates to consummate the Transactions, and (iv) there is no pending or
threatened investigation or litigation by any other Person relating to the
Transactions which, if determined adversely to the Company or the Investor,
would materially impair or limit the rights and benefits of the Investor under
the Transaction Documents or the economic benefits to the Investor of the
Transactions in the aggregate and which the Investor reasonably believes, based
on the advice of counsel, has a reasonable likelihood of success.
24
(j) Slots Option. US Airways shall have exercised and consummated
the Slots Option and the purchase of the Owned Aircraft under the Republic
Aircraft Transaction shall have been consummated.
(k) Air Wisconsin Jet Service Agreement. The costs with respect
to the Air Wisconsin Jet Service Agreement, taken as a whole, shall not be
materially different in costs to US Airways, on an average stage length of
approximately 380 miles and approximately a 10.2 hour daily block hour
utilization, to the terms under the Existing Jet Service Agreement.
(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 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, 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(1) have
been satisfied.
(m) Certificate of Incorporation and Bylaws. The Certificate of
Incorporation and Bylaws, 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 delivered to the Investor a complete and correct copy of the
certificates of incorporation and the bylaws or comparable governing instruments
of each of the Operating Companies, in full force and effect as of the Closing
Date.
(n) Business Plan. The Investor shall be satisfied, in its sole
and absolute discretion, that (i) from the date of delivery of the Final
Approved Business Plan through the Closing Date, the financial performance of
the Company and its Subsidiaries shall be consistent, in all material respects,
with the Final Approved Business Plan, (ii) the assumptions underlying the Final
Approved Business Business Plan continue to be reasonable as of the Closing Date
and (iii) there shall have been no Material Adverse Effect between the date of
delivery of the Final Approved Business Plan and the Closing Date.
(o) Assumption of Material Contracts. All material contractual
agreements necessary for the successful implementation of the Plan shall have
been assumed or be assumable by the Company.
(p) Appointment of Chief Executive Officer. The Board of
Directors of the Company shall have appointed as Chief Executive Officer, with
effect not later than and as
25
of the Effective Date, the individual selected by the majority of the
Substantial Investors, voting in proportion to their holdings of New Common
Stock.
(q) No Conversion to Chapter 7. Neither the Company's Chapter 11
Case nor US Airways Chapter 11 Case shall have been converted to a case under
chapter 7 of the Bankruptcy Code and no trustee shall have been appointed under
any chapter of the Bankruptcy Code in respect of either such case.
(r) Directors' and Officers' Insurance. The Company shall have
procured and maintained in full force and effect directors' and officers'
liability insurance with respect to members of the Board of Directors of the
Company, which insurance shall be at least $100 million, and shall cover such
risks, as is customary for a corporation in the Company's and its Affiliates
respective businesses or other similar businesses.
(s) Collective Bargaining Agreements. The Collective Bargaining
Agreements shall be in full force and effect, without any material disputes or
arbitrations.
(t) No Breaches. There shall have been no breaches or defaults by
the Company or any of its Affiliates under any of the Transaction Documents.
(u) Approval of Business Plan. The Investor shall have approved
the Final Approved Business Plan in accordance with Section 6.09
Section 8.02 Conditions to the Company's Obligations. The obligation
of the Company to issue and sell the New Common Stock pursuant to Section 2.01
hereof at the Closing is subject to the Company's exercise in writing of its
option in Section 2.01 and to the 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 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 on the ability of the
Investor or its Affiliates to consummate the Transactions. 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
26
Authority or other Person 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 on the ability of the Investor or the Company
or their respective Affiliates to consummate the Transactions; and (iii) no
Governmental Authority shall have instituted any legal proceeding that seeks to
restrain, enjoin, prevent, delay, prohibit or otherwise make illegal the
performance of any of the Transaction Documents, except for any legal
proceedings which have a significant possibility of being brought to a
conclusion which could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of the Investor or the
Company or their respective Affiliates to consummate the Transactions.
(c) 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 on the
ability of the Investor or the Company or their respective Affiliates to
consummate the Transactions, 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. Without
limiting the generality of clause (ii), any and all required approvals under the
ATSB Loan Agreement, the Air Wisconsin DIP Agreement and any other material
financing agreements to which the Company or any Operating Company is a party
shall have been obtained. 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) 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 (or,
as applicable, their Affiliates), and approval by the Bankruptcy Court of such
documents, as necessary, shall have been obtained. All Transaction Documents (in
form and substance satisfactory to the Company), to the extent applicable, shall
have been executed by the parties thereto (other than the Company and its
Affiliates) 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. All
corporate and other proceedings to be taken by the Investor
27
or its Affiliates 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 satisfactory to
the Company, and the Company 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.
(g) Citizenship. The Company shall have received reasonably
satisfactory assurances as it may request that the Investor is a Citizen of the
United States.
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 or the Company, if the Closing shall not have
occurred on or before December 31, 2005;
(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 thirty (30) days following receipt by the Company
of written notice from the Investor of 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 thirty (30) days following receipt by the
Investor of written notice from the Company of such breach, 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, if the Omnibus Order has not been entered by
the Bankruptcy Court by April 20, 2005; and
(e) mutual agreement in writing by the Company and the Investor.
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
and Article X hereof and, providing the termination does not occur under Section
9.01(c) or (d), the one-time option to acquire the Owned Aircraft and the Leased
Aircraft in Section 6.03, as more fully described in Exhibit B, 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. A termination shall not void or affect any of the constituent
transactions consummated prior to such termination or any sections hereof which
by their terms survive termination.
28
ARTICLE X
MISCELLANEOUS
Section 10.01 Fees and Expenses. (a) Upon the Effective Date, the
Company shall pay to the Investor non-refundable fully paid fees as follows: (i)
$735,000, if the Slot Option has been exercised, irrespective of whether the
Company elects to cause the Investor to make the investment contemplated hereby,
and (ii) $200,000, if the Slot Option has not been exercised.
(b) Except as expressly provided herein or in any Transaction
Document, each party shall bear its own costs and expenses incurred in
connection with this Agreement or any of the Transactions; provided, that, in
the event this Agreement is terminated for any reason or terminates by its terms
and the Slot Option has not been exercised, the Company shall within five (5)
Business Days of such termination reimburse the Investor for all reasonable fees
and 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, 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 aggregate amount of such reimbursement shall
not exceed $200,000. For the avoidance of doubt, any payment to Investor under
this Section 10.01(b) is in lieu of and not in addition to any fee earned under
Section 10.01(a).
(c) 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
to the merits to obtain such relief, each party waives any objection to the
imposition of such relief.
Section 10.04 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
29
and Schedules hereto), and references herein to Articles or Sections refer to
Articles or Sections of this Agreement.
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.
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telecopy No. 000-000-0000
With a copy to:
Xxxxxx & Xxxxxx LLP
000 Xxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx Xxxxxx, Esq.
Telecopier No. 202-942-5999
(ii) If to the Investor, to:
Wexford Capital LLC
Wexford Plaza
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: President and General Counsel
Telecopier: (000) 000-0000 and (000) 000-0000
and:
Republic Airways Holdings Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
With a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
30
Attention: Xxxxxx Xxxxxxxxx, Esq.
Telecopier: (000) 000-0000
and
Xxxxx & Xxxxxxx LLP
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx X.X. 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telecopier: (000) 000 0000
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 10.06 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
31
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 or obligations hereunder shall be assignable by
any party hereto without the prior written consent of the other party hereto,
provided that (i) Republic shall be permitted to assign all or any portion of
its rights and obligations hereunder to any of its wholly owned Subsidiaries, so
long as such Subsidiaries are Certificated Air Carriers (if required in
connection with the rights or obligations being assigned) and capable of
performing each of Republic's obligations and agreements proposed to be
assigned, without any other party's consent and (ii) Wexford shall be permitted
to assign all or any portion of its rights and obligations hereunder to any of
its Affiliates so long as such Affiliate has the financial resources to perform
each of Wexford's obligations and agreements proposed to be assigned, without
any other party's consent; and provided further that such assignee Subsidiary or
Affiliate is not a "major airline" or "low cost carrier", as such terms are
commonly understood in the airline industry, or an Affiliate thereof.
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 5.02 (and the provisions relating to directors' and officers' insurance)
shall inure to the benefit of and be enforceable by the Investor Directors and
the provisions herein and in the Schedules hereto for the benefit of Chautauqua
shall inure to the benefit of and be enforceable by Chautauqua.
Section 10.11 Confidentiality. A version of this Agreement with
certain competitively sensitive information redacted will be filed by the
Company with the Motion. Each party hereto agrees not to disclose the unredacted
version of this Agreement to any third parties (other than disclosure required
by the SEC or any other Governmental Authority (including the Bankruptcy Court)
or pursuant to any listing agreement with or requirement of any relevant
national exchange or national quotation system) without appropriate
confidentiality agreements with such third parties being in place that are
reasonably acceptable to the other parties hereto.
32
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.
WEXFORD CAPITAL LLC
By: /s/
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
REPUBLIC AIRWAYS HOLDINGS INC.
By: /s/
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
US AIRWAYS GROUP, INC.
By: /s/
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
US AIRWAYS, INC.
By: /s/
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
33
EXHIBIT A-1
SLOTS OPTION
The completion of the transactions contemplated in this Exhibit A-1 is
subject to the negotiation and execution of definitive documentation
incorporating the terms set forth in this Exhibit A-1 and customary
representations, warranties, covenants and conditions for a transaction of this
type, as well as events of default and remedies in respect thereof. The parties
will use reasonable commercial efforts to complete such definitive documents
prior to the entry of the Omnibus Order. The execution of the definitive
documentation for certain aspects of the transactions described herein will
require the consent and approval of the ATSB Lender Parties.
1. SLOT/GATE OPTION. At US Airways' discretion, upon thirty (30) days'
prior written notice to the Investor and prior to the Effective Date of the
Plan, but in any event no later than December 31, 2005, US Airways may exercise
its option to sell to Investor and license from Investor the right to use
certain Slots at LGA and DCA which Investor will commit to acquire as follows
(the "Slots Option") and the Company will provide the Investor with an option to
acquire the Gates under certain specified conditions as specified below:
(a) PURCHASE OF SLOTS. Investor will purchase one hundred
thirteen (113) Unrestricted Commuter Slots at DCA and twenty-four (24)
Unrestricted Commuter Slots at LGA ("Slots") for an aggregate purchase price of
$51.64 million, less the reasonable legal fees and expenses of the Investor
incurred in connection with the purchase and license back of the Slots. The
purchase of the Slots shall be subject to and concurrent with the consummation
of the purchase of the Currently Owned Aircraft under the Republic Aircraft
Transaction. Schedule 1 to this Exhibit A-1 contains a description of the Slots.
(b) SALE/LICENSE. Investor will enter into a license agreement
with US Airways (the "Slot License") to license US Airways' right to use the
Slots for a period equal to the later term of (a) the Existing Jet Service
Agreement or (b) such other jet service agreement as may be entered into between
Republic or its Affiliate and US Airways relating to the EMB-170 and EMB-190
aircraft contemplated to be operated pursuant to a jet service agreement in the
event the Republic Aircraft Transaction or the Additional Jet Service Aircraft
transactions are consummated (the "New Jet Service Agreement", and together with
the Existing Jet Service Agreement, the "Jet Service Agreements")(1). The DCA
Slots will be licensed at an annual license fee in an amount equal to [REDACTED]
of the purchase price, payable monthly in arrears. The LGA Slots will be
licensed at an annual license fee, payable monthly in arrears, in an amount
equal to the level monthly payments sufficient to fully amortize the purchase
price over the earlier of the expiration of the term of the New Jet Service
Agreement or that date on which the Slots or their functional equivalent expire
at an annual interest rate of [REDACTED].
----------
(1) The Existing Jet Service Agreement and the New Jet Service Agreement will
have identical terms, except as otherwise contemplated on Exhibit D hereto
and shall be cross-defaulted.
34
(c) TERMINATION. In the event that (i) US Airways consummates a
chapter 11 plan of reorganization in the Cases, including a liquidating chapter
11 plan, and neither it nor its successor under the plan continues to operate as
an airline, and substantially all of US Airways' flight operations are,
therefore, discontinued, or (ii) US Airways' Case is dismissed or converted to a
case under chapter 7 of the Bankruptcy Code, or US Airways is otherwise
liquidated, and as a result of such dismissal, conversion or liquidation,
substantially all of US Airways' flight operations are discontinued, US Airways
may reject or terminate either or both of the Jet Service Agreements by
providing ten (10) business days prior written notice to Chautauqua, Republic or
the applicable Republic Affiliate, as the case may be, and US Airways shall be
deemed to have breached such Jet Service Agreement(s) as of the effective date
of the applicable notice (the "Breach Date") and Chautauqua, Republic or the
applicable Republic Affiliate, as the case may be, shall have, subject to
objection as provided below: (x) administrative expense claims under sections
503 and 507 of the Bankruptcy Code for any obligations arising prior to the
Breach Date with respect to the applicable Jet Service Agreement and (y) general
unsecured pre-petition claims under section 502(g) of the Bankruptcy Code for
future damages resulting from such rejection or termination and for obligations
that arise after the Breach Date with respect to the applicable Jet Service
Agreement. In each case the amount of the respective claims shall be subject to
the ordinary claims process, including the right of parties in interest to
object to the amount (but only the amount) of such claims. In the event that US
Airways materially defaults on either of the Jet Service Agreements or the Owned
Aircraft Leaseback or the Jet Service Agreements otherwise terminate, other than
in connection with a material breach by Chautauqua/Republic thereunder, the Slot
License will terminate. A default under the Slot License shall constitute a
default under the Jet Service Agreements giving rise to the Investors' right to
terminate either or both Jet Service Agreements.
(d) REPURCHASE OPTION. Provided that US Airways is not in
material default under the Jet Service Agreements, the Owned Aircraft Leaseback
or the Slot License, US Airways will have the right to repurchase all, but not
less than all, of the DCA Slots (by acquiring the equity of the Special Purpose
Trust referred to below) at a price equal to the Investor's purchase price and
the LGA Slots at a price equal to the greater of unamortized amount of the
purchase price for such Slots and $1 (the "Repurchase Option") (a) at any time
after US Airways' emergence from the Chapter 11 Case and prior to the expiration
of the term of the Slot License, or (b) upon the termination of either of the
Jet Service Agreements by US Airways as a result of a material breach by
Chautauqua/Republic. As a condition precedent to the granting of the Repurchase
Option, the Company shall, among other things, grant to the Investor (i.e., the
buyer of the Slots) a perfected security interest in and first lien on the
Repurchase Option and all proceeds thereof (including, without limitation, the
assets acquired upon the exercise of the Repurchase Option) to secure the
Company's obligations under the Jet Service Agreements. Upon exercise by the
Company of the Repurchase Option, (i) the Slots shall be transferred to a
bankruptcy remote, special purpose trust (the "Special Purpose Trust") whose
sole beneficial owner will initially be the Investor, who shall immediately
transfer such equity to the Company, (ii) the notice of exercise of such option
shall include a paragraph in which US Airways expressly grants in favor of
Investor a perfected, first priority security interest in the equity of the
Special Purpose Trust, (iii) such interest shall be transferred subject to the
retention by the Investor of a perfected, first priority security interest in
such equity, (iv) such equity will constitute proceeds of and shall be subject
to a perfected security interest and first lien in favor of the Investor and (v)
the Company shall simultaneously cause the Special Purpose Trust to grant to the
Investor a perfected, first priority security interest in the Slots. Provided
that the Company or any of its Subsidiaries is not in default under either of
the Jet Service Agreements, the Investment Agreement or any other document
contemplated therein, at the expiration of two (2) years following exercise of
the Repurchase Option, the liens and security interests shall terminate unless
on or prior to such date the Company becomes subject to a bankruptcy proceeding,
in which event the two year period shall be extended for a period equal to the
period it takes to obtain a final order either dismissing or closing such
proceeding.
(e) OPTION TO ACQUIRE GATES. Investor will be granted options to
acquire (through sublease, assignment or otherwise) US Airways' rights to the
Gates, subject to any restrictions contained in the existing underlying leases
and to the receipt of all necessary airport and regulatory approvals and third
party consents (the "Gates Option").
35
(i) OPTION EXERCISE. The Gates Option shall only be
exercisable in the event that US Airways defaults under the Slot License or is
in default under either of the Jet Service Agreements and such default is not
cured by US Airways within thirty (30) days of receipt of written notice of
default by Investor; provided that Investor must exercise the Gates Option
within thirty (30) days after the expiration of such cure period.
(ii) TERMS. The exercise price for the Gates Option shall be
an amount equal to the fair market value of US Airways' rights to the Gates
determined on a basis as if no Gates Option existed, to be agreed upon at the
time of exercise, or in the event the parties are unable to agree, to be
determined by mandatory binding baseball arbitration.
36
SCHEDULE 1 TO EXHIBIT A-1
DESCRIPTION OF SLOTS
DCA HELD COMMUTER SLOTS
Preliminary
FAA
Day(s) of COMMENTS
Arp Slot Begin Time End Slot Type Slot Id Operation 3/9/05
--- ---------- -------- --------- ------- --------- -----------
DCA 600 659 A/D 17 12345
DCA 600 659 A/D 22 12345
DCA 600 659 A/D 33 00000
XXX 000 659 A/D 184 1234567
DCA 700 759 A/D 43 123456 6-B
DCA 700 759 A/D 73 00000
XXX 000 759 A/D 190 12345
DCA 700 759 A/D 191 12345
DCA 700 759 A/D 193 12345
DCA 700 759 A/D 202 12345
DCA 700 759 A/D 233 12345
DCA 800 859 A/D 36 123456 6-B
DCA 800 859 A/D 59 12345
DCA 800 859 A/D 83 123456 6-B
DCA 800 859 A/D 149 123456
DCA 800 859 A/D 150 123456
DCA 800 859 A/D 177 00000
XXX 000 859 A/D 215 12345
DCA 900 959 A/D 29 1234567 7-B
DCA 900 959 A/D 31 12345 7 7-B
DCA 900 959 A/D 77 12345
DCA 900 959 A/D 85 123456
DCA 900 959 A/D 89 00000
XXX 000 959 A/D 108 12345
DCA 900 959 A/D 151 12345
DCA 900 959 A/D 183 123456 6-B
DCA 1000 1059 A/D 3 1234567
DCA 1000 1059 A/D 21 1234567
DCA 1000 1059 A/D 53 12345 7
DCA 1000 1059 A/D 79 12345
DCA 1000 1059 A/D 123 12345
DCA 1000 1059 A/D 131 12345
DCA 1000 1059 A/D 148 12345
DCA 1000 1059 A/D 168 1234567 7-B
DCA 1000 1059 A/D 229 12345 7 7-B
DCA 1100 1159 A/D 11 12345
DCA 1100 1159 A/D 34 12345 7
DCA 1100 1159 A/D 51 12345 7 7-B
37
Preliminary
FAA
Day(s) of COMMENTS
Arp Slot Begin Time End Slot Type Slot Id Operation 3/9/05
--- ---------- -------- --------- ------- --------- -----------
DCA 1100 1159 A/D 60 12345 7
DCA 1100 1159 A/D 119 12345
DCA 1100 1159 A/D 212 12345 7
DCA 1100 1159 A/D 219 1234567
DCA 1200 1259 A/D 7 12345
DCA 1200 1259 A/D 15 12345 7
DCA 1200 1259 A/D 71 1234567 6-B
DCA 1200 1259 A/D 72 12345
DCA 1200 1259 A/D 100 12345 7
DCA 1200 1259 A/D 211 1234567
DCA 1200 1259 A/D 231 1234567 6-B
DCA 1300 1359 A/D 6 1234567 6-B
DCA 1300 1359 A/D 19 12345 7
DCA 1300 1359 A/D 80 12345 7
DCA 1300 1359 A/D 110 12345 7
DCA 1300 1359 A/D 154 12345 7
DCA 1300 1359 A/D 180 12345
DCA 1300 1359 A/D 197 1234567 6-B
DCA 1300 1359 A/D 198 1234567
DCA 1300 1359 A/D 210 1234567
DCA 1300 1359 A/D 220 12345
DCA 1400 1459 A/D 27 1234567
DCA 1400 1459 A/D 47 12345 7
DCA 1400 1459 A/D 96 1234567
DCA 1400 1459 A/D 118 12345
DCA 1400 1459 A/D 120 1234567
DCA 1400 1459 A/D 134 12345 7
DCA 1400 1459 A/D 174 12345 7
DCA 1400 1459 A/D 226 1234567 6-B
DCA 1500 1559 A/D 35 12345 7
DCA 1500 1559 A/D 48 12345 7
DCA 1500 1559 A/D 81 12345 7
DCA 1500 1559 A/D 101 12345 7
DCA 1500 1559 A/D 107 12345 7
DCA 1500 1559 A/D 109 12345 7
DCA 1500 1559 A/D 113 1234567 6-B
DCA 1500 1559 A/D 140 1234567 6-B
DCA 1500 1559 A/D 189 12345 7
DCA 1600 1659 A/D 9 12345 7
DCA 1600 1659 A/D 102 1234567
DCA 1600 1659 A/D 105 12345
DCA 1600 1659 A/D 124 12345
38
Preliminary
FAA
Day(s) of COMMENTS
Arp Slot Begin Time End Slot Type Slot Id Operation 3/9/05
--- ---------- -------- --------- ------- --------- -----------
DCA 1600 1659 A/D 129 12345 7
DCA 1600 1659 A/D 160 1234567
DCA 1600 1659 A/D 167 12345 7
DCA 1700 1759 A/D 1 12345 7
DCA 1700 1759 A/D 16 1234567 6-B
DCA 1700 1759 A/D 49 12345 7
DCA 1700 1759 A/D 56 12345 7
DCA 1700 1759 A/D 58 12345 7
DCA 1700 1759 A/D 64 12345 7
DCA 1700 1759 A/D 76 12345 7
DCA 1700 1759 A/D 91 12345
DCA 1700 1759 A/D 115 12345 7
DCA 1700 1759 A/D 178 12345 7
DCA 1800 1859 A/D 2 12345 7
DCA 1800 1859 A/D 4 12345
DCA 1800 1859 A/D 50 12345 7
DCA 1800 1859 A/D 61 12345 7
DCA 1800 1859 A/D 182 12345 7
DCA 1800 1859 A/D 214 12345 7
DCA 1800 1859 A/D 227 12345 7
DCA 1900 1959 A/D 38 1234567
DCA 1900 1959 A/D 41 12345
DCA 1900 1959 A/D 65 12345 7
DCA 1900 1959 A/D 67 1234567
DCA 1900 1959 A/D 93 12345 7
DCA 1900 1959 A/D 142 12345 7
DCA 1900 1959 A/D 153 12345 7
DCA 1900 1959 A/D 179 12345
DCA 2000 2059 A/D 12 12345 7
DCA 2000 2059 A/D 45 12345 7
DCA 2000 2059 A/D 68 12345 7
DCA 2000 2059 A/D 145 12345 7
DCA 2000 2059 A/D 159 12345 7
DCA 2300 2359 A/D 69 12345 7
Data Current as of Xxxxx 0, 0000
X/X = Slots may be used for either a departure or arrival
FAA COMMENTS: "B" INDICATES A SLOT ALLOCATED SUBJECT TO RECALL.
CANNOT BE TRANSFERRED.
39
LGA HELD COMMUTER SLOTS
Preliminary
FAA
Day(s) of COMMENTS
Arp Slot Begin Time End Slot Type Slot Id Operation 3/9/05
--- ---------- -------- --------- ------- --------- -----------
LGA 600 629 D 2013 12345
LGA 630 659 A 2056 12345
LGA 730 759 A 2189 12345
LGA 800 829 D 2055 123456
LGA 900 929 D 2127 12345
LGA 900 929 D 2225 123456 6-B
LGA 930 959 A 2077 12345
LGA 1100 1129 A 2050 12345
LGA 1100 1129 A 2197 1234567 67-B
LGA 1200 1229 A 2091 12345
LGA 1230 1259 D 2005 12345 7
LGA 1230 1259 D 2053 12345 7
LGA 1300 1329 A 2155 12345 7 7-B
LGA 1330 1359 D 2144 12345
LGA 1400 1429 A 2113 12345 7
LGA 1430 1459 D 2137 12345 7
LGA 1430 1459 A 2243 12345
LGA 1430 1459 A 2246 12345 7
LGA 1500 1529 D 2235 1234567 6-B
LGA 1530 1559 D 2099 12345 7
LGA 1530 1559 D 2107 12345 7
LGA 1700 1729 A 2131 12345
LGA 1700 1729 D 2169 12345
LGA 1700 1729 A 2181 12345 7
Data current as of March 6, 2005
A or D = Slot may be used for either a departure or arrival depending on type
FAA COMMENTS: "B" INDICATES A SLOT ALLOCATED SUBJECT TO RECALL.
CANNOT BE TRANSFERRED.
40
EXHIBIT A-2
GATES
The completion of the transactions contemplated in this Exhibit A-2 is
subject to the negotiation and execution of definitive documentation
incorporating the terms set forth in this Exhibit A-2 and customary
representations, warranties, covenants and conditions for a transaction of this
type, as well as events of default and remedies in respect thereof. The parties
will use reasonable commercial efforts to complete such definitive documents
prior to the entry of the Omnibus Order. The execution of the definitive
documentation for certain aspects of the transactions described herein will
require the consent and approval of the ATSB Lender Parties.
[Floor plans and schematics of gates and related airport facilities at
Xxxxxx Xxxxxx National Airport and LaGuardia Airport
to be subject to the Gates Option.]
[REDACTED]
41
EXHIBIT B
REPUBLIC AIRCRAFT TRANSACTION
The completion of the transactions contemplated in this Exhibit B is
subject to the negotiation and execution of definitive documentation
incorporating the terms set forth in this Exhibit B and customary
representations, warranties, covenants and conditions for a transaction of this
type, as well as events of default and remedies in respect thereof. The parties
will use reasonable commercial efforts to complete such definitive documents
prior to the entry of the Omnibus Order. The execution of the definitive
documentation for certain aspects of the transactions described herein will
require the consent and approval of the ATSB Lender Parties.
2. ACQUISITION OF EMB-170 AIRCRAFT.
(a) SLOTS OPTION EXERCISED. In the event that US Airways
exercises and consummates the Slots Option, Republic will at the same time
purchase the ten (10) EMB-170 aircraft currently owned by US Airways (the
"Currently Owned Aircraft") and, at US Airways' option, and so long as US
Airways has arranged for 100% lease financing to have been made available to
Republic at such time and on terms reasonably acceptable to Republic, the three
(3) EMB-170 aircraft currently committed to be delivered by Embraer (the "EMB
Committed Aircraft" and, in the event the Company acquires the EMB Committed
Aircraft prior to the purchase of the Currently Owned Aircraft by Republic, then
together with the Currently Owned Aircraft, the "Owned Aircraft"; the EMB
Committed Aircraft, together with any Additional Jet Service Aircraft described
in Exhibit E, are the "Growth Aircraft") and, subject to Republic's satisfaction
with the terms and conditions thereof and arrangements with respect thereto
mutually agreed upon by Investor, US Airways and GECC, assume the leases for the
fifteen (15) EMB-170 aircraft that are currently leased by US Airways (the
"Leased Aircraft"), and, subject to terms mutually agreed upon among Investor,
US Airways and Embraer, Investor shall further assume US Airways obligations to
purchase additional aircraft from Embraer (the "Aircraft Orders"). Republic
acknowledges that it has no right to any pre-delivery deposits posted with
Embraer on account of the EMB Committed Aircraft.
(b) SLOTS OPTION NOT EXERCISED. If the Slots Option has not been
exercised, the Investor shall have a one-time option, exercisable by written
notice to the Company at any time during the thirty (30) day period commencing
upon either the Effective Date or the date of termination of the Investment
Agreement (unless such termination is pursuant to Section 9.01(c) or (d)
thereof), to purchase the Owned Aircraft and to assume the leases of the Leased
Aircraft under the terms of this Exhibit B. If so exercised, the Company shall
cause its Affiliates to enter into the Republic Aircraft Transaction (subject to
the applicable conditions thereto) within thirty (30) days of delivery of such
notification (or such other date as the Investor and the Company shall agree in
writing).
(c) PURCHASE PRICE/DEBT ASSUMPTION. The purchase price for the
Owned Aircraft shall be a price equal to the fair market value of US Airways'
equity in such aircraft, which shall be $44.0 million for the Currently Owned
Aircraft, (i) less any accrued maintenance costs, which shall be set at a rate
of [REDACTED], (ii) plus any pay down of debt on account of
42
the Currently Owned Aircraft from the date of the Investment Agreement to
Closing, (iii) less assumed depreciation of $55,000 per aircraft per month,
commencing October 1, 2005 and (iv) less any loss discovered through inspection
of the aircraft that is not covered by effective warranty. In connection with
such purchase Republic will assume all current debt obligations associated with
the Owned Aircraft, currently in the approximate amount of $169.4 million,
subject to assignment to and assumption by Investor of such outstanding debt and
Investor being satisfied with the terms and conditions of such debt and
arrangements with respect thereto mutually agreed upon by Investor, US Airways
and Embraer, and US Airways will assign to Republic any remaining support
package made available by Embraer in respect of such aircraft. The purchase of
the Owned Aircraft is subject to the inspection of such aircraft by the
Investor.
(d) LEASE OF OWNED AIRCRAFT. Republic will initially lease the
Owned Aircraft back to US Airways at a monthly rate, payable monthly in advance
and determined in accordance with the Lease Formula (as defined in Exhibit F),
for a period beginning on the purchase date and continuing until the successful
completion of transition of each aircraft to the Republic certificate (the
"Owned Aircraft Leaseback"). In addition to the monthly rates set forth in the
Lease Formula, the monthly lease payments shall include maintenance reserves,
determined based on a rate of [REDACTED], assuming [REDACTED], payable bi-weekly
in advance. At the inception of each lease, US Airways shall pay Republic a
deposit of two months' lease payments. Concurrent with transferring each
aircraft to Republic's certificate, Republic will return the two months'
security deposit, any portion of the rent paid in advance by US Airways for such
aircraft pertaining to a monthly period not fully elapsed and any excess
maintenance reserves. Republic will provide the Company with a monthly
reconciliation of maintenance reserves compared with actual flight hours within
fifteen (15) days following the end of each month and the next lease payment
will be adjusted, up or down, to reflect the actual flight hours.
(e) LEASED AIRCRAFT. US Airways will assign its rights and
Republic will assume all of US Airways' obligations under the current lease
agreements covering the Leased Aircraft, subject to US Airways paying any cure
costs related thereto and to Republic's satisfaction with the terms and
conditions of such lease agreements; such assignment and assumption to occur as
the leased aircraft are transitioned to the Republic Certificate as provided
below and begin operation under the New Jet Service Agreement. To the extent
that US Airways has made payments in the form of security deposits or excess
rent payments to or for the benefit of a lessor which have resulted in payments
in excess of the cumulative amount of GAAP rent (defined as the average periodic
rental payments due under the applicable lease) owing to such lessor, then such
excess amount shall be recaptured by US Airways through lower payments under the
Jet Service Agreement in a manner consistent with recognizing that US Airways
should benefit by such higher initial rent payments. Republic and US Airways
agree to negotiate in good faith to ensure that US Airways obtains the full
benefit of such overpayments during the term of the Jet Service Agreement and so
long as US Airways is not in material breach of any payment obligation under the
Jet Service Agreement. Republic's obligation to assume any remaining leases of
Leased Aircraft to be assumed shall terminate upon (i) the material breach by
the Company of any of the Transaction Documents or (ii) the termination of the
Investment Agreement (other than a termination under Section 9.01(c) or (d)
thereof).
43
(f) TRANSITION OF OWNED AND LEASED AIRCRAFT. Beginning the later
of [REDACTED] and sixty (60) days after Republic's acquisition of the Owned
Aircraft and Leased Aircraft, Republic will use commercially reasonable efforts
to transition the Owned Aircraft and Leased Aircraft to the Republic Certificate
at a rate of three (3) aircraft per month; provided that the Currently Owned
Aircraft shall be transitioned first and, if the EMB Committed Aircraft are
acquired by Republic, the EMB Committed Aircraft shall be the first of the
Leased Aircraft to be transitioned. Without limiting the foregoing, the parties
will agree upon a schedule for the transition of the Owned Aircraft and Leased
Aircraft, including outside dates by which the leases must be assigned to and
assumed by Republic. In the event that the Company leases the EMB Committed
Aircraft, the parties will agree to a schedule for the assumption of such
leases.
(g) OPERATION OF OWNED AIRCRAFT AND LEASED AIRCRAFT. Upon
transition of the Owned Aircraft and Leased Aircraft as described above,
Republic will operate the Owned Aircraft and Leased Aircraft as US Airways
Express under the terms of the New Jet Service Agreement, as amended in
accordance with the terms of Exhibit D.
(h) PREFERENTIAL HIRING. Republic will comply with the terms of
Letter of Agreement #91 to the US Airways - ALPA Collective Bargaining Agreement
with respect to the flight crews currently employed by US Airways' EMB-170
Division ("Mid-Atlantic"), and will offer preferential hiring to any flight
attendants and mechanics currently employed at Mid-Atlantic. Furthermore
Republic will comply with such Letter of Agreement #91 associated with any
additional aircraft.
(i) MAINTENANCE FACILITY. In the event the Investor acquires the
Owned Aircraft and the Leased Aircraft, Republic agrees to relocate its
EMB-170/-190 heavy overhaul maintenance facility to a location specified by US
Airways that is east of the Mississippi River and is consistent with Republic
maintaining low operating costs in order to enhance US Airways' ability to
attract additional financial support, provided that Republic receives local
government economic and other support relative to the establishment of such
facility reasonably satisfactory to the Investor.
(j) PURCHASE OF OTHER ASSETS. In the event the Investor acquires
the Owned Aircraft and the Leased Aircraft, Investor will purchase, free and
clear of all liens, a flight simulator and a cabin door trainer (together with
all licenses and agreements related to the operation thereof) for an aggregate
purchase price equal to the fair market value thereof of approximately $9.5
million, and will also purchase certain spare parts and tooling equipment at an
aggregate purchase price equal to the fair market value thereof and not to
exceed $5.0 million. Any such purchase shall be subject to inspection by
Investor.
(k) FEES OF AIRCRAFT ADVISOR. In the event Investor acquires any
Growth Aircraft, Republic agrees to undertake any obligations owing to US
Airways' aircraft advisor with respect to fees payable in connection with
financing agreements with respect to Growth Aircraft. Any such costs shall be
capitalized with the cost of the aircraft and passed through as a cost to US
Airways under the New Jet Service Agreement and will be incremental to the lease
rates calculated in accordance with the Lease Formula on Exhibit F.
44
EXHIBIT C
AMENDMENTS TO ORIGINAL JET SERVICE AGREEMENT
The Original Jet Service Agreement shall be amended and restated to
reflect the following changes. Except as set forth below, the substantive terms
and conditions of the Original Jet Service Agreement shall not change (although
the form of such agreement will be modified).
(1) EXISTING JET SERVICE AGREEMENT COSTS (as contained in the Original Jet
Service Agreement, with the following modifications):
[REDACTED]
(2) COMPARABLE TERMS TO AIR WISCONSIN. In the Existing Jet Service Agreement, US
Airways will represent to Chautaqua that the costs specified in Section 1 of
this Exhibit C, taken as a whole, are not materially different in costs to US
Airways, on an average stage length of approximately 380 miles and approximately
a 10.2 hour daily block hour utilization, to the terms under the Air Wisconsin
Airline Corporation Jet Service Agreement as approved by the Bankruptcy Court on
February 28, 2005.
(3) TERM. The term of the Original Jet Service Agreement shall be modified as
follows:
(a) In the event that US Airways does not exercise the Slots Option,
at US Airways' option, US Airways shall have the one-time right to
terminate up to five (5) of the ERJ-145 aircraft flown under the
Existing Jet Service Agreement, subject to 60 days' written notice to
Chautauqua prior to the termination of the first of such aircraft. US
Airways may exercise this right by providing notice prior to the
Effective Date (after which date such right shall expire), which
notice shall specify the termination dates for such aircraft.
(b) Subject to Section 3(e) below and upon prior written notice
delivered not later than the Effective Date, in the event US Airways
exercises and consummates the Slots Option, at US Airways' option, US
Airways shall have the one-time right to terminate five (5) ERJ-145
aircraft flown under the Existing Jet Service Agreement as follows:
one (1) ERJ-145 aircraft may be terminated on the date that is the
later of (x) the date each fifth Owned Aircraft or Leased Aircraft,
collectively, is placed into service under the New Jet Service
Agreement or (y) the dates for such termination rights set forth in
Schedule I to this Exhibit C.
(c) Subject to Section 3(e) below, in the event US Airways exercises
its option to cause Republic to acquire the Growth Aircraft (and the
parties reach agreement on the delivery dates and other terms and
conditions with respect to such Growth Aircraft), US Airways shall
have the right to terminate two (2) ERJ-145 aircraft flown under the
Existing Jet Service Agreement for every five (5) Growth Aircraft
45
flown under the New Jet Service Agreement as follows: two (2) ERJ-145
aircraft may be terminated on the date that is the later of (x) the
date each fifth such Growth Aircraft is placed into service under the
New Jet Service Agreement or (y) the dates for such termination rights
set forth in Schedule I to this Exhibit C.
(d) At any time and from time to time during the period in which US
Airways has the right to terminate ERJ-145 aircraft flown under the
Existing Jet Service Agreement under any of Section 3(a), Section
3(b), Section 3(c) or Section 3(g) of this Exhibit C, Chautauqua shall
have the right to deliver to US Airways written notice (a "Preliminary
Chautauqua Termination Notice") that it desires to terminate up to an
aggregate number of ERJ-145 aircraft flown under the Existing Jet
Service Agreement that does not exceed fifteen (15) less any such
aircraft that have been previously terminated under Section 3(a),
Section 3(b), Section 3(c) or Section 3(g) or this Section 3(d).
Within 10 Business Days of receipt of a Preliminary Chautauqua
Termination Notice, US Airways shall have the right to notify
Chautauqua as to whether it accepts or rejects (which acceptance or
rejection may be as to all, some or none of the aircraft designated
for termination by Chautauqua in such Preliminary Chautauqua
Termination Notice) Chautauqua's Preliminary Chautauqua Termination
Notice. The failure of US Airways to deliver such notification within
such 10 Business Day period shall be deemed an acceptance of
Chautauqua's Preliminary Chautauqua Termination Notice. In the event
US Airways gives timely written notice to Chautauqua that it rejects
Chautauqua's Preliminary Chautauqua Termination Notice as to any or
all of aircraft designated for termination, then the total number of
aircraft that US Airways may terminate under Section 3(a), 3(b), 3(c)
or 3(g) shall be reduced by the number of aircraft so rejected by US
Airways (it being understood and agreed that the aircraft shall be
reduced in the chronological order in which they are then eligible for
termination under any of Section 3(a), 3(b), 3(c) or 3(g)). In the
event US Airways accepts (or is deemed to accept) Chautauqua's written
notice, then Chautauqua shall have the right to give US Airways
written notice (a "Final Chautauqua Termination Notice"), within not
more than sixty (60) days from the acceptance or deemed acceptance of
the Preliminary Chautauqua Termination Notice, as to the date(s) on
which some or all of the aircraft designated for termination in the
Preliminary Chautauqua Termination Notice will be removed from service
under the Existing Jet Service Agreement, and the number of such
aircraft to be removed on each such date, provided, however, that the
removal of the first of such aircraft shall commence no earlier than
sixty (60) days, and no later than one hundred twenty (120) days, from
the date of the Final Chautauqua Termination Notice, and the Existing
Jet Service Agreement shall terminate as to each such aircraft on the
date specified in the Final Chautauqua Termination Notice. If
Chautauqua does not give such Final Chautauqua Termination Notice
within the required sixty (60) day period, then Chautauqua may not
terminate the aircraft subject to the Preliminary Chautauqua
Termination Notice unless it again complies with the provisions of
this Section 3(d). In the event that Chautauqua exercises its right
under this Section 3(d), US Airways will not be required to terminate
more than two (2) aircraft in any thirty (30) day period.
46
(e) US Airways shall not have the right to terminate ERJ-145 aircraft
as provided for in Sections 3(b) and 3(c) of this Exhibit C in the
event and for so long as US Airways is then flying regional jet
aircraft directly or indirectly owned or operated by any regional jet
provider flying as "US Airways Express" other than (a) Air Wisconsin
Airline Corporation, under the Air Wisconsin Jet Service Agreement (up
to a maximum of 70 aircraft) or (b) any other such regional jet
provider flying 50-seater aircraft that makes an equity investment in
connection with the Plan in the Company which equates to at least
[REDACTED] in each aircraft in such regional jet provider's fleet then
flying for US Airways; provided, however, that with respect any such
other regional jet provider, at such time as US Airways has reduced
the size of such other regional jet provider's 50-seater fleet being
operated by US Airways to a point where such other regional jet
provider's investment in US Airways equates to at least [REDACTED] per
aircraft, then US Airways may thereafter terminate ERJ-145 aircraft of
Chautauqua under the Existing Jet Service Agreement pursuant to
Sections (3)(b) and (3)(c) of this Exhibit C in proportion to the rate
at which US Airways terminates the remaining 50-seater fleet of such
other regional jet provider.
(f) The term of the Existing Jet Service Agreement with respect to
ERJ-145 aircraft not terminated pursuant to Sections 3(a) or 3(b) of
this Exhibit C shall be March 1, 2013 (i.e., a one-year extension).
(g) If (i) the Company exercises its option to require the Investor to
purchase New Common Stock under Section 2.01 of the Investment
Agreement and, in connection therewith, exercises the Slot Option, to
be consummated upon the Investor's purchase of the New Common Stock,
(ii) the Investor has not consummated the purchase of New Common Stock
other than as a result of a failure of a condition to be satisfied or
waived by the Investor under Section 8.01 (other than the condition
that the Investor shall have approved the Initial Business Plan and
any Amended Business Plan, or the condition that the Company shall
have consummated the Slot Option, to the extent that such failure to
consummate the Slot Option results from the Investor's election not to
consummate the purchase of the New Common Stock), (iii) the sale of
New Common Stock is completed with a third party investor in
connection with the consummation of the Plan on terms and conditions
substantially identical, in all material respects, or on terms more
favorable to the investor to those contained in the Investment
Agreement and, if more favorable, that were offered to the Investor
under Section 6.09(c) of the Agreement and that the Investor declined
to accept, and (iv) the Slot Option is not and has not been
consummated with the Investor, then US Airways shall have the one-time
right to terminate up to ten (10) additional aircraft flown under the
Existing Jet Service Agreement, subject to six (6) month's prior
written notice to Chautauqua, which notice shall specify the number of
aircraft to be terminated, and upon US Airways' exercise of such
aircraft termination right, US Airways shall have no further right to
exercise or consummate the Slot Option.
(h) Notwithstanding anything in Sections 3(a) through (g) (or Schedule
I to this Exhibit C) to the contrary, (i) in no event may US Airways
terminate, in the aggregate, more than two (2) aircraft in any thirty
(30) day period and (ii) Republic Airways will have the right to
designate the specific aircraft to be terminated.
(4) TREATMENT OF CLAIMS. In the event that (i) US Airways consummates a chapter
11 plan of reorganization in the Cases, including a liquidating chapter 11 plan,
and neither it nor its successor under the plan continues to operate as an
airline, and substantially all of US Airways' flight operations are, therefore,
discontinued, or (ii) US Airways' Case is dismissed or converted to a case under
chapter 7 of the Bankruptcy Code, or US Airways is otherwise liquidated, and as
a result of such dismissal, conversion or liquidation, substantially all of US
Airways' flight operations are discontinued, US Airways may reject or terminate
either or both of the Jet Service Agreements by providing ten (10) business days
prior written notice to Chautauqua, Republic or the applicable Republic
Affiliate, as the case may be, and US Airways shall be deemed to have breached
such Jet Service
47
Agreement(s) as of the effective date of the applicable notice (the "Breach
Date") and Chautauqua, Republic or the applicable Republic Affiliate, as the
case may be, shall have, subject to objection as provided below: (x)
administrative expense claims under sections 503 and 507 of the Bankruptcy Code
for any obligations arising prior to the Breach Date with respect to the
applicable Jet Service Agreement and (y) general unsecured pre-petition claims
under section 502(g) of the Bankruptcy Code for future damages resulting from
such rejection or termination and for obligations that arise after the Breach
Date with respect to the applicable Jet Service Agreement.
48
SCHEDULE I TO EXHIBIT C
US Airways ERJ-145 Termination Rights
Note: hereunder, "DOE" shall mean the Effective Date.
US AIRWAYS OWNED/LEASED AIRWAYS GROWTH
TERMINATION AIRCRAFT TERMINATION AIRCRAFT
RIGHT DATE TERMINATED RIGHT DATE TERMINATED
----------- ------------ ----------- ---------
[REDACTED]
The parties will use commercially reasonable efforts to align a termination
right date [REDACTED] with the closest normal schedule change date.
49
EXHIBIT D
TERMS OF NEW JET SERVICE AGREEMENT
The terms of the New Jet Service Agreement shall be substantially
identical to the Existing Jet Service Agreement, with the following
modifications:
XXX-000 XXX-000
----------- -----------
[REDACTED]
[REDACTED] $[REDACTED] $[REDACTED]
[REDACTED] [REDACTED] [REDACTED]
[REDACTED] [REDACTED] [REDACTED]
TOTAL PER A/C PER DAY [REDACTED] [REDACTED]
[REDACTED]
[REDACTED] [REDACTED] [REDACTED]
[REDACTED] [REDACTED] [REDACTED]
[REDACTED] [REDACTED] [REDACTED]
TOTAL PER BLOCK HOUR [REDACTED] [REDACTED]
[REDACTED]
[REDACTED] [REDACTED] [REDACTED]
[REDACTED] [REDACTED] [REDACTED]
[REDACTED] [REDACTED] [REDACTED]
TOTAL PER FLIGHT HOUR [REDACTED] [REDACTED]
[REDACTED]
[REDACTED] [REDACTED] [REDACTED]
[REDACTED] [REDACTED] [REDACTED]
TOTAL PER DEPARTURE [REDACTED] [REDACTED]
[REDACTED]
[REDACTED] [REDACTED] [REDACTED]
TOTAL FIXED COST PER AIRCRAFT PER DAY [REDACTED] [REDACTED]
[REDACTED]
[REDACTED] [REDACTED] [REDACTED]
TOTAL PER SPARE ENGINE PER DAY [REDACTED] [REDACTED]
[REDACTED]
[REDACTED] $[REDACTED] $[REDACTED]
TOTAL PROFIT MARGIN PER ASM $[REDACTED] $[REDACTED]
START-UP EXPENSES PER AIRCRAFT INTRO [REDACTED] [REDACTED]
Upon transition of the Owned Aircraft and Leased Aircraft as described in
Exhibit B, Republic will operate the Owned Aircraft and Leased Aircraft as US
Airways Express under the terms of the New Jet Service Agreement, as amended in
accordance with the terms hereof. The term of the New Jet Service Agreement with
respect to the Owned Aircraft and the Leased Aircraft shall be 10 years from the
date that the first such aircraft goes into service. The term of the New Jet
50
Service Agreement with respect to any Additional Jet Service Aircraft, if
operated under the New Jet Service Agreement, shall be 10 years from the date
that the first such aircraft goes into service.
51
EXHIBIT E
ADDITIONAL JET SERVICE AIRCRAFT
The completion of the transactions contemplated in this Exhibit E is
subject to the negotiation and execution of definitive documentation
incorporating the terms set forth in this Exhibit E and customary
representations, warranties, covenants and conditions for a transaction of this
type, as well as events of default and remedies in respect thereof. The parties
will use reasonable commercial efforts to complete such definitive documents
prior to the entry of the Omnibus Order. The execution of the definitive
documentation for certain aspects of the transactions described herein will
require the consent and approval of the ATSB.
In the event that the Closing under the Investment Agreement occurs,
the Company will have the option to have Republic purchase, finance, and operate
for US Airways in US Airways Express service an additional six (6) EMB-170
aircraft and sixteen (16) additional EMB-170 or EMB-190 aircraft (the
"Additional Jet Service Aircraft"). The agreement to place such aircraft into
service is subject to Republic's ability to secure financing for such aircraft
predicated upon lease rates calculated in accordance with the Lease Formula on
Exhibit F, subject to mutual agreement on delivery dates and notices.
Republic will operate the Additional Jet Service Aircraft as US
Airways Express under the terms of the New Jet Service Agreement, as amended in
accordance with Exhibit D.
52
EXHIBIT F
LEASE FORMULA
ASSUMPTIONS: LOAN AMOUNT MONTHLY PAYMENT
------------ ----------- ---------------
Spread [REDACTED] [REDACTED] [REDACTED]
Fixed Rate Base [REDACTED]
Implied Rate [REDACTED]
Term (in years) [REDACTED]
Aircraft Price [REDACTED]
Debt Leverage [REDACTED]
Amortization [REDACTED]
Payment Schedule [REDACTED]
Aircraft Lease Rate [REDACTED]
Notes:
1) The [REDACTED] is the Maximum Lease Rate (in the case of [REDACTED] ERJ
[REDACTED] aircraft being leased by Investor to US Airways) and the Maximum
Reimbursement Rate (to the extent the aircraft are being flown by Investor under
the JSA) for such aircraft being purchased by the Investor at a price of
[REDACTED]; provided however that to the extent the Fixed Rate Base increases
above or decreases below the [REDACTED] rate used in this model to arrive at the
[REDACTED] Aircraft Lease Rate, the Maximum Lease Rate and Maximum Reimbursement
Rate, as applicable, will be recalculated using the actual Fixed Rate Base; such
calculation shall be made upon the closing of the purchase of the aircraft.
2) To the extent that the Investor is able to [REDACTED], the Aircraft Lease
Rent will be adjusted downward by [REDACTED] of the difference between the
Maximum Lease Rate, or Maximum Reimbursement Rate, as applicable, as calculated
above and the debt service calculated assuming a loan at [REDACTED] of Aircraft
price, self liquidating over [REDACTED] with [REDACTED] payments [REDACTED],
using the lower Spread [REDACTED] used in determining the rate on the loan;
provided however that if a different base rate, such as [REDACTED], is used
instead of [REDACTED], the difference between [REDACTED] will be added to the
Spread; further provided that the savings will be calculated only after
reimbursing Republic for the third party legal, brokerage, fees to lender, and
other out of pocket costs associated with securing the financing, which costs
shall be reimbursed by capitalizing them into the debt.
3) To the extent that the Investor acquires any additional aircraft beyond the
[REDACTED] ERJ [REDACTED] aircraft, the lease/reimbursement rate shall be based
on the actual Aircraft Price and actual Fixed Rate Base used to determine the
rate on the loan, plus the actual Spread required by the lender. To the extent
that this spread is in excess of [REDACTED] bps, US Airways shall have the right
not to have the Investor place the aircraft into service under the JSA.
53
SCHEDULE 1
SHARES OF NEW COMMON STOCK
In USD millions
ADDITIONAL INVESTOR'S
INVESTOR'S EQUITY PRE-MONEY TOTAL EQUITY
INVESTMENT INVESTMENT(1) EQUITY EQUITY VALUE OWNERSHIP(2)
---------- ------------- --------- ------------ ------------
125.0 125.0 250.0 500.0 25.0000%
125.0 150.0 250.0 525.0 23.8095%
125.0 175.0 250.0 550.0 22.7273%
125.0 200.0 250.0 575.0 21.7391%
125.0 225.0 250.0 600.0 20.8333%
125.0 250.0 250.0 625.0 20.0000%
125.0 275.0 250.0 650.0 19.2308%
----------
(1). Includes Eastshore Equity Commitment
(2). If new money investment is more than $400 million, Investor's Equity
Ownership, on a Fully-Diluted Basis, will in no case be lower than
19.2308%.
54
SCHEDULE 3.03
APPROVALS REQUIRED OF THE COMPANY AND THE OPERATING COMPANIES IN
CONNECTION WITH THE TRANSACTIONS
[To be provided supplementally]
55
SCHEDULE 3.06
SUBSIDIARIES OF THE COMPANY
US Airways, Inc.
Piedmont Airlines, Inc.
PSA Airlines, Inc.
Material Services Company, Inc.
Airways Assurance, Ltd.
56
SCHEDULE 3.07(A)
SEC REPORTS NOT FILED
Following the distribution to employees of their grants of Common Stock of the
Company as restricted stock in August, 2003, pursuant to the Plan of
Reorganization after emergence from the prior bankruptcy of the Company, a
number of employees complained to several regional offices of the SEC that the
method of distribution and notification of vesting employed by the Company
resulted in giving unfair advantage to some employees and perhaps management
over others. In each instance, the SEC office in question forwarded to the
Company and inquiry requesting an explanation. The Company responded to each
request with a full explanation of the method of distribution and vesting
provisions. The Company did not receive any further communication from the SEC
regarding these complaints. These inquiries arrived and were responded to during
the second half of 2003.
57
SCHEDULE 3.15
STATUS OF COLLECTIVE BARGAINING AGREEMENTS
AND EMPLOYMENT AGREEMENTS
The Company's Annual Report on Form 10-K, as filed with the SEC on March 1,
2005, contains a current description of the status of the collective bargaining
and employment agreements.
58
SCHEDULE 4.03
APPROVALS REQUIRED BY THE INVESTOR
IN CONNECTION WITH THE TRANSACTIONS
[To be provided supplementally]
59
